II 110th CONGRESS 1st Session S. 1298 IN THE SENATE OF THE UNITED STATES May 3, 2007 Mr. Kerry (for himself and Mr. Reed) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Social Security Act to establish a Federal Reinsurance Program for Catastrophic Health Care Costs.
1.
Short title
This Act may be cited as the Healthy Businesses, Healthy Workers Reinsurance Act of 2007.
2.
Findings
Congress finds the following: (1)The cost of health insurance premiums for families has risen 87 percent since 2000, nearly 4 times the growth in overall inflation and workers earnings. (2)Health insurance premium increases have resulted in a nearly 10 percentage point drop in the number of firms choosing to offer coverage to their workers over that time period. (3)Today, just 48 percent of firms with between 3 and 9 employees offer health insurance benefits, down from 58 percent in 2001. (4)The decline in employer-sponsored coverage has added to the growing problem of the uninsured. An additional 4 million Americans have been added to the ranks of the uninsured since 2001. (5)Health care costs are highly concentrated. Twenty percent of the population that is catastrophically or chronically ill accounts for 80 percent of the health care spending, with just 1 percent driving a full 22 percent of health care costs.
3.
Federal Reinsurance Program for Catastrophic Health Care Costs
(a)
Program
The Social Security Act (42 U.S.C. 301 et seq.) is amended by adding at the end the following new title: <enum>XXII</enum><header>Federal Reinsurance Program for Catastrophic Health Care Costs</header> <section id="id1C938B0B315D43C2A81DB06722451B43"><enum>2201.</enum><header>Office of Federal Reinsurance</header> <subsection id="id678BDA52A4C9442E83BF608E40D966A2"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">There is established within the Department of Health and Human Services an office to be known as the <quote>Office of Federal Reinsurance</quote>.</text> </subsection><subsection id="id58933B0D94294477BFB57684F282CEC5"><enum>(b)</enum><header>Duty</header><text>The Office of Federal Reinsurance shall establish and administer the Federal Reinsurance Program for Catastrophic Health Care Costs in accordance with the provisions of this title.</text> </subsection></section><section id="id12A7B4BCCE504927A9078C8BBBA8C18A"><enum>2202.</enum><header>Program</header> <subsection id="ID4FB1D28923CE42368D598B35C5E3A3D8"><enum>(a)</enum><header>Establishment</header> <paragraph id="id945610F0EC3A44A0BBDD34348DA50FA5"><enum>(1)</enum><header>In general</header><text>The Office shall establish and administer a Federal Reinsurance Program for Catastrophic Health Care Costs under which reinsurance payments are provided to eligible health plans that experience catastrophic health care costs during a year with respect to an individual covered under the plan. For purposes of this title, the term <quote>individual covered under the plan</quote> includes employees, retirees, spouses, and dependants.</text> </paragraph><paragraph id="id4D292F56FA7C4D0CB98F58BCDF87E478"><enum>(2)</enum><header>Program to begin in 2009</header><text>The Office shall establish the Program in a manner so that reinsurance payments are made with respect to catastrophic health care costs occurring on or after January 1, 2009.</text> </paragraph><paragraph id="idF4FD6A22A395465FA5C3F504102A099D"><enum>(3)</enum><header>Eligible health plan</header> <subparagraph id="id85782617F295450FB6E76FC6B805831A"><enum>(A)</enum><header>In general</header><text>In this title, the term <quote>eligible health plan</quote> means any of the following:</text> <clause id="id087A8A8BCB9E45F889BE1582F821DABC"><enum>(i)</enum><text>A group health plan that meets the requirements described in subparagraph (B).</text> </clause><clause id="idF65FBD7DBB524064B6EEC07FD72C95E9"><enum>(ii)</enum><text>A governmental plan (as defined in section 3(32) of the Employee Retirement Income Security Act of 1974) that meets the requirements described in subparagraph (B).</text> </clause><clause id="idE6FE76442F2846D79562CAE1B1384514"><enum>(iii)</enum><text>A multiemployer plan (as defined in section 3(37) of the Employee Retirement Income Security Act of 1974) that meets the requirements described in subparagraph (B).</text> </clause><clause id="id110D2A11D6424B24A956D4ADE5D08679"><enum>(iv)</enum><text>A plan that offers coverage through health purchasing cooperatives in conjunction with a State health program that makes available health insurance coverage to the small group market and the individual market on the same terms and that meets the requirements described in subparagraph (B).</text> </clause></subparagraph><subparagraph id="idE9F6B86AB91F4FED997A3004A19C8BD0"><enum>(B)</enum><header>Requirements</header><text>The requirements described in this subparagraph are that—</text> <clause id="idC509EB80A88F486CB0882F9C41B47BDB"><enum>(i)</enum><text>the plan involved—</text> <subclause id="idE3AC3BB42CF84762A919A9FA9DBC78BD"><enum>(I)</enum><text>provides eligibility for health insurance coverage (after any waiting period (as defined in section 9801(b)(4))) to all full-time employees of the employer maintaining or contributing to the plan;</text> </subclause><subclause id="id6679580C1F1F4751B3FDD969F51C0398"><enum>(II)</enum><text>ensures that if there is a deductible under the plan, such deductible does not exceed $1,000 for an individual and $2,000 for a family;</text> </subclause><subclause id="id70A0EA50B3624DF48C010643260189C5"><enum>(III)</enum><text>ensures that the plan offers preventative benefits; and</text> </subclause><subclause id="id9314B02E12D6445EBC4925867DB50C93"><enum>(IV)</enum><text>ensures that the plan employs effective high-cost case management tools (in accordance with the definition of disease management by the Disease Management Association of America) in order to reduce costs over time; and</text> </subclause></clause><clause id="idF5605E12B9B848AE88E662D6E82298E5"><enum>(ii)</enum><text>the employer maintaining or contributing to the plan involved pays at least 50 percent of the costs of health insurance coverage for each employee covered under the plan (regardless of whether the employee is a full-time or part-time employee).</text> </clause></subparagraph><subparagraph id="IDd399306a2b5c4156a5f3139a842abf52"><enum>(C)</enum><header>Cost-of-living adjustment</header> <clause id="IDe88743bcea1249a686ba4f04fa801aa2"><enum>(i)</enum><header>In general</header><text>In the case of any calendar year after 2009. each dollar amount in subparagraph (B)(ii) shall be increased by an amount equal to—</text> <subclause id="ID703334eb18604b6c93c26b7c05305636"><enum>(I)</enum><text>such dollar amount, multiplied by</text> </subclause><subclause id="id3D62525099344E8E95B55B3876484457"><enum>(II)</enum><text>the cost-of-living adjustment determined under section 1(f)(3) of the Internal Revenue Code of 1986 for such calendar year determined by substituting <quote>calendar year 2008</quote> for <quote>calendar year 1992</quote> in subparagraph (B) thereof.</text> </subclause></clause><clause id="id5C1679F51B7741BE84E41F21F5B483BA"><enum>(ii)</enum><header>Date for determination</header><text>For purposes of clause (i), section 1(f)(4) of such Code shall be applied by substituting <quote>March 31</quote> for <quote>August 31</quote>, and the Secretary of the Treasury shall publish the adjusted amounts under subparagraph (B)(ii) for the calendar year not later than June 1 of the preceding calendar year.</text> </clause><clause id="IDb633005e609f4ec88372a48ddafb41eb"><enum>(iii)</enum><header>Rounding</header><text>If any increase under clause (i) is not a multiple of $50, such increase shall be rounded to the nearest multiple of $50.</text> </clause></subparagraph><subparagraph id="id875A3AF06885467BB1690F8A520D1125"><enum>(D)</enum><header>Employer</header><text>For purposes of this title, the term <quote>employer</quote> includes the Federal government and any other governmental entity (within the meaning of section 5000(d) of Internal Revenue Code of 1986).</text> </subparagraph></paragraph></subsection><subsection id="idA64981A86FEB4D84AF932CD1F2291870"><enum>(b)</enum><header>Enrollment</header> <paragraph id="idFC2B049E1F1F49F497DFF490715AA3C5"><enum>(1)</enum><header>Procedures</header><text>The Office shall establish procedures for the enrollment of eligible health plans in the Program.</text> </paragraph><paragraph id="idDE9733D847854B3F9EE4CA9B81CD94DF"><enum>(2)</enum><header>Application and annual recertification</header> <subparagraph id="id9F01B056A5254BC3814101AA37741F91"><enum>(A)</enum><header>In general</header><text>The procedures established under paragraph (1) shall include a process for an eligible health plan—</text> <clause id="id216CA91FF0994BE4B8EC71B695D4529A"><enum>(i)</enum><text>to submit an application to the Office for enrollment in the Program; and</text> </clause><clause id="id943B4976D8304A4F812C503F0FDCC616"><enum>(ii)</enum><text>to be annually recertified for enrollment in the Program.</text> </clause></subparagraph><subparagraph id="id1CFACE7F37CF43DDA7FC9E396CD98598"><enum>(B)</enum><header>Requirement</header><text>The application and recertification process under subparagraph (A) shall require that an eligible health plan submit to the Office—</text> <clause id="id7C4E14B1C1474F38ADCF264FA1DCE3D6"><enum>(i)</enum><text>a detailed description of the projected and actual reduction in total costs under the plan that are a result of the Program, including both individual and employer portions; and</text> </clause><clause id="idD3DA31003653471194B88AC17B774773"><enum>(ii)</enum><text>such other information determined appropriate by the Office.</text> </clause></subparagraph></paragraph><paragraph id="idED4208541CE848AC9666A9CEEC52E350"><enum>(3)</enum><header>Approval</header> <subparagraph id="idCCCA72BAE58B4A39A8437A10600AC79D"><enum>(A)</enum><header>In general</header><text>The procedures established under paragraph (1) shall provide for the approval or disapproval of applications and requests for recertification submitted by eligible health plans under paragraph (2).</text> </subparagraph><subparagraph id="id9372629D4DBF4BE6ADAFCFC1F3B869C2"><enum>(B)</enum><header>Specific requirement</header><text>The Office shall not approve an application or a request for recertification unless the Office finds that the eligible health plan is reducing total costs under the plan, based on the information submitted under paragraph (2)(B) and audits conducted under paragraph (4).</text> </subparagraph></paragraph><paragraph id="idEE1CCE2FB64D48A98BA57EC32036E466"><enum>(4)</enum><header>Audits</header><text>The Office shall conduct audits of claims data of eligible health plans in order to ensure that the eligible health plan is in compliance with the requirements under the Program, including the requirement under paragraph (3)(B). An eligible health plan shall not be eligible for reinsurance payments unless it provides the Office with access to such data.</text> </paragraph></subsection><subsection id="idD648863F392A43C19D9C0820D6F065DA"><enum>(c)</enum><header>Cost-sharing in costs of Program</header> <paragraph id="id33DB1F0D81E84E1CB5544FA0F663B587"><enum>(1)</enum><header>In general</header><text>An eligible health plan that participates in the Program shall pay the fee established by the Office under paragraph (2).</text> </paragraph><paragraph id="id3EDE1F9CBF8D41BF954310D49FD835B5"><enum>(2)</enum><header>Authorization</header><text>The Office is authorized to charge a fee to each eligible health plan that participates in the Program. Any amounts collected shall be deposited into the Trust Fund.</text> </paragraph><paragraph id="idF96F199968DB4792BFF9F31F96992AFE"><enum>(3)</enum><header>Requirements</header><text>In establishing the fee under paragraph (2)—</text> <subparagraph id="id4758B2D709E34739ABBB654907F3B0DA"><enum>(A)</enum><text>the Office shall consult with interested parties; and</text> </subparagraph><subparagraph id="id65DB06FB67DC4A14A7E46E1922930335"><enum>(B)</enum><text>shall ensure that the amount of such fee is not excessive so as to unduly discourage eligible health plans from enrolling in the Program.</text> </subparagraph></paragraph></subsection><subsection id="id0434D1464F3245E285D91C9B84618FE7"><enum>(d)</enum><header>Appeals process</header><text>The Office shall establish an appeals process under the Program.</text> </subsection><subsection id="id07A26AEF6C9148C199B0655B4AD29608"><enum>(e)</enum><header>Procedures to protect against fraud, waste, and abuse</header><text>The Office shall establish procedures to protect against fraud, waste, and abuse under the Program.</text> </subsection></section><section id="ID4DB6CD48E625437AB80DB90710FC48C3"><enum>2203.</enum><header>Reinsurance payments</header> <subsection id="id42EC066DD49E4F4F82B8E5AA22D189AF"><enum>(a)</enum><header>Amount</header> <paragraph id="ID625BF0F576C94B43AA4367310385EF62"><enum>(1)</enum><header>In general</header><text>The amount of a reinsurance payment under the Program to an eligible health plan that experiences catastrophic health care costs in a year with respect to an individual covered under the plan shall be an amount equal to 75 percent of such costs.</text> </paragraph><paragraph id="idC0E2C362431E48B0A733A179E5C6FB31"><enum>(2)</enum><header>Catastrophic health care costs</header> <subparagraph id="id7ADA72DFDA964BA29768CBEA779C3DF7"><enum>(A)</enum><header>In general</header><text>In this title, the term <term>catastrophic health care costs</term> means, with respect to a year, costs for medical care (as defined in section 9832(d)(3) of the Internal Revenue Code of 1986) provided under an eligible health plan to an individual covered under the plan, but only with respect to such costs which exceed $50,000.</text> </subparagraph><subparagraph id="idDCE4422122F24E059E8CA0B2B4561F0E"><enum>(B)</enum><header>Negotiated prices</header><text>In determining the amount of catastrophic health care costs under the Program, the eligible health care plan shall take into account any negotiated price concessions, such as discounts, direct or indirect subsidies, rebates, and direct or indirect remunerations, obtained by the plan.</text> </subparagraph><subparagraph id="id25AD8386901F46FD87DDE0EE4658C497"><enum>(C)</enum><header>Inflation adjustment</header> <clause commented="no" display-inline="no-display-inline" id="idF008D1DC733146E1970EBF58FD8F3FC5"><enum>(i)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">In the case of a calendar year after 2009, the $50,000 amount in subparagraph (A) shall be increased by an amount equal to—</text> <subclause id="id44E73D7422F546DDAF8CB3541D6BCE57"><enum>(I)</enum><text>such dollar amount; multiplied by</text> </subclause><subclause id="id6EB1E6C3169D45B48A2548A0F383D58B"><enum>(II)</enum><text>the percentage (if any) by which the average of the medical care component of the Consumer Price Index for all urban consumers (United States city average) for the 12-month period ending with August of the preceding calendar year exceeds such average for the 12-month period ending with August 2008.</text> </subclause></clause><clause id="id437A936A617A4A158E9C833E30AF6C8B"><enum>(ii)</enum><header>Rounding</header><text>If any dollar amount after being increased under clause (i) is not a multiple of $1,000, such dollar amount shall be rounded to the nearest multiple of $1,000.</text> </clause></subparagraph></paragraph></subsection><subsection id="ID5F994ED0E2874F709D785D95DE3B388B"><enum>(b)</enum><header>Requests for payment</header><text>To be eligible for a reinsurance payment with respect to an individual for a year, an eligible health plan shall submit to the Office, at a time and in a manner determined appropriate by the Office, a request for payment that contains—</text> <paragraph id="ID89FCCB4013B7424AB3817555DC547148"><enum>(1)</enum><text>a certification—</text> <subparagraph id="idD7E7185EF853409CA72075646CC59448"><enum>(A)</enum><text>that the plan paid or incurred catastrophic health care costs during the year with respect to the individual; and</text> </subparagraph><subparagraph id="idE5C0CB10464245DE8FEA66A57D8EE266"><enum>(B)</enum><text>of the amount of such costs; and</text> </subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDFD80A47B49494EC5A0322D73A0AB2E4C"><enum>(2)</enum><text>such other information determined appropriate by the Office.</text> </paragraph></subsection><subsection commented="no" id="id7EB7C0A2578E43E793B1934056174F73"><enum>(c)</enum><header>Payments from Trust Fund</header> <paragraph commented="no" id="id51B6C87C840049FB93448BB8300CEFFE"><enum>(1)</enum><header>In general</header><text>Payments to eligible health plans under the Program shall be made from the Trust Fund.</text> </paragraph><paragraph commented="no" id="id37B216D255CA4A0E90B2FB433E08555D"><enum>(2)</enum><header>Tax treatment</header><text>For purposes of the Internal Revenue Code of 1986—</text> <subparagraph commented="no" id="idAE50F943035D4252857C0DCA7E31B0AF"><enum>(A)</enum><text>payments from the Trust Fund to the eligible health plan shall not be included in gross income; and</text> </subparagraph><subparagraph commented="no" id="idAC44F76035AB4CCEB144D1420F898538"><enum>(B)</enum><text>no deduction shall be allowed to the eligible health plan with respect to the payment of any catastrophic health care costs for the portion of such costs which was reimbursed from the Trust Fund.</text> </subparagraph></paragraph></subsection></section><section id="id91FD2F2D258E42BFBE144AB4BE5B69D9"><enum>2204.</enum><header>Federal Reinsurance for Catastrophic Health Care Costs Trust Fund</header> <subsection id="IDE1FA3E8E39D24EFE9CA7A9CFB11048BF"><enum>(a)</enum><header>Creation of Trust Fund</header><text>There is established in the Treasury of the United States a trust fund to be known as the <quote>Federal Reinsurance for Catastrophic Health Care Costs Trust Fund</quote>, consisting of such amounts as may be appropriated or credited to the Trust Fund (including any fees deposited under section 2202(c)).</text> </subsection><subsection id="id8C526D40A15044FA8FB1D53CFB96766A"><enum>(b)</enum><header>Mandatory appropriations</header><text>There are appropriated to the Trust Fund such sums as may be necessary in order to make the reinsurance payments required under section 2203.</text> </subsection><subsection id="id1791B043EED340CFACE828A02BCA7F51"><enum>(c)</enum><header>Rules regarding transfers to and management of Trust Fund</header><text>For purposes of this section, rules similar to the rules of sections 9601 and 9602 of the Internal Revenue Code of 1986 shall apply.</text> </subsection><subsection commented="no" display-inline="no-display-inline" id="id0BB3A0FCD1C840A297B1C985FE64B45B"><enum>(d)</enum><header>Distribution of amounts in Trust Fund</header><text display-inline="yes-display-inline">Amounts in the Trust Fund shall be available for making payments under section 2203.</text> </subsection></section><section commented="no" display-inline="no-display-inline" id="idC9751CE08086471EA69D9B508550811A"><enum>2205.</enum><header>Reports</header> <subsection commented="no" display-inline="no-display-inline" id="id1DB4E5217EA84CC08335FBDC143A1981"><enum>(a)</enum><header>Secretary</header> <paragraph commented="no" display-inline="no-display-inline" id="idD56037E71AF6439C8B3CA01473BF5199"><enum>(1)</enum><header>In general</header><text>Not later than March 1, 2011, and biennially thereafter, the Secretary shall submit to Congress a report on the Program.</text> </paragraph><paragraph commented="no" display-inline="no-display-inline" id="id075C2B1AE1AB4B219BF11953AE5780DB"><enum>(2)</enum><header>Requirements</header> <subparagraph commented="no" display-inline="no-display-inline" id="id5821D120FE804D94ADC1D1AA640237C4"><enum>(A)</enum><header>In general</header><text>Each report submitted under paragraph (1) shall contain—</text> <clause commented="no" display-inline="no-display-inline" id="idF254AF1161154F31B046736F4962AFE4"><enum>(i)</enum><text>a detailed description of the Program, including a detailed description of the impact the Program has had on reducing premiums for health insurance coverage and increasing the number of individuals with health insurance coverage; and</text> </clause><clause commented="no" display-inline="no-display-inline" id="id7D5033AECAB045A6BDE10F500DAD911F"><enum>(ii)</enum><text>any other information or recommendations determined appropriate by the Secretary.</text> </clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id984590401EBC44149C6FF71588453A0F"><enum>(B)</enum><header>Individual market</header><text>The first report submitted under paragraph (1) shall also contain recommendations regarding expanding the Program to the individual market.</text> </subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idC48AFA9CFCA540C18504842DE0CA24B9"><enum>(C)</enum><header>Consultation</header><text>The Secretary shall consult with the National Association of Insurance Commissioners in preparing each report under paragraph (1).</text> </subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id841687E0894E46359B80C9BE57E980E1"><enum>(b)</enum><header>GAO</header> <paragraph commented="no" display-inline="no-display-inline" id="id855F53D5FF224957905848EF43B9E19F"><enum>(1)</enum><header>In general</header><text>Not later than March 1, 2011, and biennially thereafter, the Comptroller General of the United States shall submit to Congress and the Secretary a report on the Program.</text> </paragraph><paragraph commented="no" display-inline="no-display-inline" id="id972F5546874B4F9487875EB5E49E92A5"><enum>(2)</enum><header>Requirements</header> <subparagraph commented="no" display-inline="no-display-inline" id="idD6850C782CC1421E805CDCC355923BF5"><enum>(A)</enum><header>In general</header><text>Each report submitted under paragraph (1) shall contain—</text> <clause commented="no" display-inline="no-display-inline" id="id70D63C0AED0548868643A3AE90615A3A"><enum>(i)</enum><text>a detailed description of the Program, including a detailed description of the impact the Program has had on reducing premiums for health insurance coverage and increasing the number of individuals with health insurance coverage; and</text> </clause><clause commented="no" display-inline="no-display-inline" id="idA3917CC548184D6D9E51AFDD92D7975A"><enum>(ii)</enum><text>any other information or recommendations determined appropriate by the Comptroller General.</text> </clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idFE02E5B17FDF47C2ACC0649E61E7BA14"><enum>(B)</enum><header>Individual market</header><text>The first report submitted under paragraph (1) shall also contain recommendations regarding expanding the Program to the individual market.</text> </subparagraph></paragraph></subsection></section><section id="id297909DDAEC049BCB139B97E93EAAD95"><enum>2206.</enum><header>Definitions</header><text display-inline="no-display-inline">In this title:</text> <paragraph id="idCDB4BB9926974FD58178F17F4A9906CA"><enum>(1)</enum><header>Group health plan</header><text>The term <term>group health plan</term> has the meaning given such term by section 5000(b)(1) of the Internal Revenue Code of 1986.</text> </paragraph><paragraph id="idB47508B4738A47469622F3B49B7F80E9"><enum>(2)</enum><header>Individual market; small group market</header><text>The terms <quote>individual market</quote> and <quote>small group market</quote> have the meanings given such terms by section 2791 of the Public Health Service Act.</text> </paragraph><paragraph id="idE56E0F289A3D4ECE94451DBF6FF2C2FA"><enum>(3)</enum><header>Office</header><text>The term <quote>Office</quote> means the Office of Federal Reinsurance established under section 2201.</text> </paragraph><paragraph id="idCC6657D9FC6C402DAFAE59CB2F25DCB5"><enum>(4)</enum><header>Program</header><text>The term <quote>Program</quote> means the Federal Reinsurance Program for Catastrophic Health Care Costs under this title.</text> </paragraph><paragraph id="idB34FD14E4DD5411E96B364A91D663B0E"><enum>(5)</enum><header>Trust Fund</header><text>The term <quote>Trust Fund</quote> means the Federal Reinsurance for Catastrophic Health Care Costs Trust Fund established under section 2204.</text> </paragraph></section>. (b)
Funding start-Up administrative costs for Program
(1)
In general
There are appropriated to the Secretary of Health and Human Services $200,000,000 to carry out the provisions of, and amendments made by, this Act. (2)
Availability
Amounts appropriated under paragraph (1) shall remain available until September 30, 2009.