[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 3554 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 3554

    To provide employees of small employers with access to quality, 
                 affordable health insurance coverage.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

           September 24 (legislative day, September 17), 2008

  Mr. Smith (for himself and Mr. Lieberman) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
    To provide employees of small employers with access to quality, 
                 affordable health insurance coverage.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Affordable 
Coverage for Small Employers Act of 2008''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Definitions.
Sec. 4. National Health Coverage Policy Board.
Sec. 5. Health Coverage Exchange Regions.
Sec. 6. Regional Health Coverage Exchanges.
Sec. 7. Health plan offered through an Exchange.
Sec. 8. Refundable credit for health insurance coverage.
Sec. 9. Refundable credit for small employer health insurance expenses.
Sec. 10. Reports and evaluations.
Sec. 11. Reporting insurance status.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) Forty-seven million Americans lack consistent access to 
        quality, affordable health coverage. The chronic problem of the 
        uninsured ranks as one of the Nation's most pressing health 
        care challenges.
            (2) More than half of uninsured Americans are employed by 
        small businesses, or firms with fewer than 100 employees.
            (3) Research shows that affordability is a key barrier to 
        small businesses purchasing coverage in the private market. 
        Sixty-three percent of uninsured businesses cite affordability 
        as a major reason that they do not offer health benefits to 
        their employees.
            (4) Surveys also indicate that 71 percent of small 
        employers would offer their employees health benefits if the 
        government provided assistance with premiums.
            (5) Offering health benefits is not only good for 
        employees' health, it is good for the health of businesses. 
        Small employers report access to affordable health insurance 
        coverage as a key factor in their economic performance. Of 
        those small employers who do offer health benefits to their 
        employees, 64 percent believe it increases productivity by 
        keeping employees healthy and 58 percent claim it reduces 
        absenteeism.
            (6) While there may be varying ideas on how best to provide 
        affordable coverage to small employers, one thing is clear: the 
        solution lies in a cooperative effort between individuals, 
        employers, and Federal and State governments.
            (7) As part of reforming the Nation's health care system, 
        Congress should make it a priority to reduce the number of 
        uninsured by helping small businesses purchase affordable 
        coverage for their employees.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Employer.--The term ``employer'' has the meaning given 
        such term under section 3(5) of the Employee Retirement Income 
        Security Act of 1974.
            (2) Exchange.--The term ``Exchange'' means a Regional 
        Health Coverage Exchange established under section 6.
            (3) National policy board.--The term ``National Policy 
        Board'' means the National Health Coverage Policy Board 
        established under section 4.
            (4) Region.--The term ``Region'' means a Health Coverage 
        Exchange Region established under section 5.
            (5) Regional boards.--The term ``Regional Boards'' means 
        the board of a Regional Health Coverage Exchange established 
        under section 6.
            (6) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (7) Small employer.--
                    (A) In general.--The term ``small employer'' means, 
                with respect to a plan year, an employer who employed 
                an average of at least 2 but not more than 100 full-
                time employees on business days during the preceding 
                calendar year and who employs at least 2 employees on 
                the first day of the plan year. Such term may include a 
                sole proprietor if determined appropriate by a Regional 
                Board.
                    (B) Application of certain rules in determination 
                of employer size.--For purposes of this paragraph--
                            (i) Application of aggregation rule for 
                        employers.--All persons treated as a single 
                        employer under subsection (b), (c), (m), or (o) 
                        of section 414 of the Internal Revenue Code of 
                        1986 shall be treated as 1 employer.
                            (ii) Employers not in existence in 
                        preceding year.--In the case of an employer 
                        which was not in existence throughout the 
                        preceding calendar year, the determination of 
                        whether such employer is a small or large 
                        employer shall be based on the average number 
                        of employees that it is reasonably expected 
                        such employer will employ on business days in 
                        the current calendar year.
                            (iii) Predecessors.--Any reference in this 
                        subsection to an employer shall include a 
                        reference to any predecessor of such employer.
            (8) Sole proprietor.--The term ``sole proprietor'' means a 
        business structure in which an individual and his or her 
        company are considered a single entity for Federal tax and 
        liability purposes, and he or she reports business income or 
        losses on his or her individual income tax return.
            (9) State.--The term ``State'' means each of the several 
        States of the United States, the District of Columbia, and any 
        territory sufficiently regulating its insurance market as 
        determined by the National Association of Insurance 
        Commissioners.

SEC. 4. NATIONAL HEALTH COVERAGE POLICY BOARD.

    (a) Establishment.--
            (1) In general.--There shall be established as an 
        independent agency a National Health Coverage Policy Board that 
        shall be composed of 9 members, to be appointed by the 
        President not later than 12 months after the date of enactment 
        of this Act, by and with the advice and consent of the Senate, 
        for terms of 6 years, except that the terms of the initial 
        members of the National Policy Board shall be staggered. Upon 
        the expiration of their terms of office, members of the 
        National Policy Board shall continue to serve until their 
        successors are appointed and have qualified.
            (2) Requirement of expertise.--In selecting the members of 
        the National Policy Board, the President shall ensure that such 
        membership include representatives of insurance commissioners, 
        insurance issuers and producers, health care providers, small 
        employers, health plan accreditors, actuaries, health care 
        quality experts, and consumers, and that such members provide 
        geographical diversity.
            (3) Ex officio members.--The Secretary of Health and Human 
        Services and the Secretary of the Treasury, or their designees, 
        shall serve as ex officio members of the National Health 
        Coverage Policy Board.
            (4) Compensation.--A member of the National Policy Board 
        shall be entitled to compensation at the per diem equivalent of 
        the rate provided for level IV of the Executive Schedule under 
        section 5315 of title 5, United States Code, and while so 
        serving away from home and the member's regular place of 
        business, a member may be allowed travel expenses, as 
        authorized by the Chairperson of the National Policy Board.
    (b) Duties.--The National Policy Board shall--
            (1) apportion the United States into Health Coverage 
        Exchange Regions, pursuant to section 5;
            (2) provide for the establishment, and oversee the 
        administration of Regional Health Coverage Exchanges pursuant 
        to section 6;
            (3) establish and appoint members to the Regional Health 
        Coverage Exchange Board for each of the Regions established 
        under section 6;
            (4) determine a comprehensive, quality, and affordable 
        standard benefit package and cost sharing requirements in 
        accordance with subsection (c);
            (5) develop and recommend maximum rating guidelines for 
        each Exchange, which shall take into consideration existing 
        requirements in each State in the Region;
            (6) establish and update regularly the quality and 
        efficiency performance and reporting requirements for health 
        plans offered through an Exchange;
            (7) provide technical assistance to Regional Boards as 
        necessary;
            (8) submit an annual report to Congress concerning the 
        activities of the National Policy Board; and
            (9) carry out any other activities determined appropriate 
        by the Secretary.
    (c) Standard Benefit Package.--
            (1) In general.--The standard benefit package developed 
        under subsection (b)(4) shall, at a minimum, include coverage 
        for--
                    (A) preventive items and services (including well 
                baby care, well child care, and appropriate 
                immunizations), as recommended by the United States 
                Preventive Services Task Force;
                    (B) chronic disease care services, which may 
                include disease management, care coordination, and case 
                management programs;
                    (C) inpatient and outpatient hospital services 
                (including mental health care and maternity care);
                    (D) physicians' surgical and medical services;
                    (E) laboratory and imaging services; and
                    (F) dental and prescription drug coverage.
            (2) Initial package.--The initial standard benefit package 
        developed by the National Policy Board under subsection (b)(4) 
        shall have benefits that are similar to or not less than the 
        actuarial value of health benefits coverage in any of the 4 
        largest health benefits plans (determined by enrollment) 
        offered under the Federal Employee Health Benefit Program under 
        chapter 89 of title 5, United States Code. Such benefit package 
        shall remain in effect for a 2-year period.
            (3) Revisions.--Not later than 2 years after the 
        development of the standard benefit package under subsection 
        (b)(4), and annually thereafter, the National Policy Board, in 
        consultation with the Institute of Medicine, shall review and 
        make revisions to such benefit package to ensure that coverage 
        is provided for all medically reasonable and necessary items 
        and services. Such revisions shall be made in accordance with 
        available clinical practice guidelines and advances in medical 
        science which have been demonstrated to meaningfully improve 
        health outcomes.
    (d) Annual Audits.--The National Policy Board shall submit to 
Secretary and the appropriate committees of Congress an annual 
financial audit of the activities of the National Policy Board, to be 
conducted by an independent party.
    (e) Administrative Provisions.--
            (1) Chairperson.--Of the individuals appointed to the 
        National Policy Board under subsection (a)(1), one member shall 
        be designated by the President, by and with the advice and 
        consent of the Senate, to serve as the Chairperson of the 
        National Policy Board for a term of 6 years, and one shall be 
        designated by the President, by and with the consent of the 
        Senate, to serve as Vice Chairperson of the National Policy 
        Board for a term of 4 years. The Chairperson of the National 
        Policy Board, subject to its supervision, shall be its active 
        executive officer.
            (2) Quorum; approval.--
                    (A) Quorum.--A majority of the members of the 
                National Policy Board shall constitute a quorum, but a 
                lesser number of members may hold hearings.
                    (B) Approval.--An affirmative vote of a majority of 
                the members of the National Policy Board is required 
                for approval of all National Policy Board decisions.
            (3) Meetings.--
                    (A) In general.--The National Policy Board shall 
                meet at the call of the Chairperson. At meetings of the 
                National Policy Board the Chairperson shall preside, 
                and, in his or her absence, the vice chairperson shall 
                preside. In the absence of the Chairperson and the vice 
                chairperson, the National Policy Board shall elect a 
                member to act as chairperson pro tempore.
                    (B) Regional board meetings.--In addition to other 
                meetings the National Policy Board may hold, the 
                National Policy Board shall hold an annual meeting with 
                the Regional Boards, for the purpose of having Regional 
                Boards report progress towards expanding access to 
                health coverage for employees of small businesses and 
                for an exchange of information.
            (4) Hearings.--The National Policy Board may hold such 
        hearings, sit and act at such times and places, take such 
        testimony, and receive such evidence as the National Policy 
        Board considers advisable to carry out the purposes of this 
        section.
            (5) Information.--The National Policy Board may secure 
        directly from any Federal department or agency such information 
        as the National Policy Board considers necessary to carry out 
        the provisions of this section. Upon request of the Chairperson 
        of the National Policy Board, the head of such department of 
        agency shall furnish such information to the National Policy 
        Board if the head of such department or agency determines it 
        appropriate.
            (6) Postal services.--The National Policy Board may use the 
        United States mails in the same manner and under the same 
        conditions as other departments and agencies of the Federal 
        Government.
            (7) Travel expenses.--The members of the National Policy 
        Board shall be allowed travel expenses, including per diem in 
        lieu of subsistence, at rates authorized for employees of 
        agencies under subchapter I of chapter 57 of title 5, United 
        States Code, while away from their homes or regular places of 
        business in the performance of services for the National Policy 
        Board.
            (8) Offices.--The principal offices of the National Policy 
        Board shall be in the District of Columbia.
            (9) Experts and employees.--The National Policy Board shall 
        have the power to employ such attorneys, experts, assistants, 
        clerks, or other employees as may be deemed necessary to 
        conduct the business of the National Policy Board. All salaries 
        and fees shall be fixed in advance by the National Policy Board 
        and shall be paid in the same manner as the salaries of the 
        members of the National Policy Board.
            (10) Enforcement.--The National Policy Board may act in its 
        own name and through its own attorneys in enforcing any 
        provision of this Act, regulations promulgated hereunder, or 
        any other law or regulation, or in any action, suit, or 
        proceeding to which the National Policy Board is a party.
            (11) Detail of government employees.--Any Federal 
        Government employee may be detailed to the National Policy 
        Board without reimbursement, and such detail shall be without 
        interruption or loss of civil service status or privilege.
            (12) Temporary and intermittent services.--The Chairperson 
        of the National Policy Board may procure temporary and 
        intermittent services under section 3109(b) of title 5, United 
        States Code, at rates for individuals which do not exceed the 
        daily equivalent of the annual rate of basic pay prescribed for 
        level V of the Executive Schedule under section 5316 of such 
        title.
            (13) Annual request for funding.--The National Policy Board 
        shall submit an annual request to the Secretary for funding to 
        carry out this section.
            (14) Authorization of appropriations.--There is authorized 
        to be appropriated for each fiscal year, such sums as may be 
        necessary to maintain the functions of the National Policy 
        Board.

SEC. 5. HEALTH COVERAGE EXCHANGE REGIONS.

    (a) In General.--The National Policy Board shall divide the United 
States into Health Coverage Exchange Regions. Such Regions may be 
reapportioned and new Regions may from time to time be established by 
the National Policy Board. No Region may contain less than 2 States.
    (b) Apportionment.--
            (1) In general.--In establishing Regions under subsection 
        (a), the National Policy Board shall ensure that such Regions 
        are apportioned with due regard to the convenience and 
        customary course of business, including existing State 
        insurance rating guidelines and regulations.
            (2) Considerations.--Regions under this section need not 
        consist of coterminous States. In determining whether a Region 
        will consist of States that are not coterminous, the National 
        Policy Board shall consider the market availability of health 
        plans and whether plans in the Region can comply with State 
        network adequacy requirements.
            (3) Appeals.--A State may submit an appeal to the National 
        Policy Board if the State desires to be assigned to another 
        Health Coverage Exchange Region. In such an appeal, a State 
        shall provide reasonable justification that the convenience and 
        customary course of business of the State, including existing 
        State insurance rating guidelines and regulations, are more 
        similar to a Region other than the Region to which the State 
        was initially assigned by the National Policy Board.
    (c) Exchanges.--Within each Region, the National Policy Board shall 
establish a health coverage exchange as provided for under section 6.

SEC. 6. REGIONAL HEALTH COVERAGE EXCHANGES.

    (a) Regional Health Care Exchanges.--The Board shall establish 
Regional Health Coverage Exchanges to serve as central purchasing sites 
for health coverage, to provide information to purchasers and consumers 
about participating health plans, to facilitate enrollment, and to 
ensure health plan compliance with minimum requirements for benefit 
design, quality, efficiency and transparency.
    (b) Establishment and Appointment.--
            (1) In general.--The National Policy Board shall establish 
        and appoint the members of a Regional Health Coverage Exchange 
        Board for each Region. The National Policy Board shall--
                    (A) determine the number of members of each 
                Regional Board which shall be dependent upon the size 
                of the Region involved; and
                    (B) establish a process whereby State officials and 
                other stakeholders submit nominations for appointment 
                to each Regional Board.
            (2) Requirements.--At a minimum the membership of each 
        Regional Board shall include the State insurance commissioner 
        from each State in the Region involved and other members who 
        shall be representative of health insurance issuers and 
        producers, health care providers, health plan accreditors, 
        small employers, health care quality experts, and consumers.
            (3) Terms.--In appointing members of a Regional Board, the 
        National Policy Board shall ensure that the terms of service 
        for such members are staggered and that no term exceeds 6 
        years.
    (c) Duties.--The Regional Board, shall--
            (1) develop common rating guidelines relating to the health 
        insurance market for small employers, pursuant to subsection 
        (d);
            (2) establish and administer the Exchange to assist small 
        employers within the Region with purchasing health coverage for 
        themselves and their employees, as described in subsection (d);
            (3) provide assistance to States within the Region 
        concerning health plan quality and efficiency compliance and 
        enforcement;
            (4) consult with the National Association of Insurance 
        Commissioners and develop a mechanism to lessen such risk 
        selection as may occur among plans participating in the 
        Exchange through the application of regional risk adjustment 
        requirements that are submitted to and approved by the National 
        Policy Board;
            (5) collect data for evaluation, and for reporting to the 
        public and the National Policy Board, concerning the overall 
        effectiveness of the Exchange, which may include number of 
        enrollees, types of benefit options offered by health insurance 
        issuers, the rating guidelines implemented, marketing 
        practices, quality oversight, and any enforcement procedures 
        applied;
            (6) submit annual reports to the National Policy Board 
        concerning the activities and evaluation of the Exchange; and
            (7) carry out other activities determined appropriate by 
        the National Policy Board.
    (d) Common Regulatory Guidelines; State Adoption.--
            (1) Common regulatory guidelines.--
                    (A) In general.--Not later than 6 months after the 
                date on which the members of the Regional Board are 
                appointed, such Regional Board shall develop and submit 
                common rating guidelines to the National Policy Board 
                for review and approval.
                    (B) Approval.--The National Policy Board shall 
                notify the Regional Board of its decision with respect 
                to common rating guidelines within 60 days of the 
                receipt of the submission of such guidelines under 
                subparagraph (A). If the National Policy Board does not 
                approve such guidelines, the National Policy Board 
                shall provide the Regional Board with a justification 
                for such decision. The Regional Board may resubmit 
                modified common rating guidelines for approval within 
                the 30-day period beginning on that date of such 
                notification of the National Policy Board's initial 
                decision.
                    (C) Limitation.--The common guidelines under this 
                paragraph may not include--
                            (i) health status as an allowable rating 
                        factor; or
                            (ii) waiting periods or exclusion of 
                        coverage for pre-existing conditions.
                    (D) Modifications.--A Regional Board that desires 
                to modify the common rating guidelines approved by the 
                National Policy Board under subparagraph (A) shall 
                submit a report to the National Policy Board that 
                describes the proposed modification and how such 
                modification will affect consumer access to affordable 
                health coverage for review and approval. The National 
                Policy Board shall notify the Regional Board of its 
                decision with respect to such modification within 60 
                days of receipt of the modification request. Approval 
                of such proposed modifications shall be contingent upon 
                assurances that access to health coverage for small 
                employers and their employees would be maintained.
                    (E) Failure to develop.--If the Regional Board is 
                unable to develop common rating guidelines within the 
                period provided for under subparagraph (A), the 
                National Policy Board may develop such guidelines to be 
                applied by the Regional Board or reapportion the States 
                within the Region involved to other Regions.
            (2) State adoption.--
                    (A) In general.--Not later than 3 years after the 
                date on which the Regional Board is appointed, each 
                State in the Region involved shall enact the laws 
                necessary to regulate its small group insurance market 
                in accordance with the guidelines developed by the 
                Regional Board under paragraph (1). The National Policy 
                Board may permit a State to phase-in the enactment of 
                the guidelines developed under paragraph (1) over a 
                period not to exceed 3 years.
                    (B) Failure to enact.--If a State fails to enact 
                and implement the guidelines developed under paragraph 
                (1) within the period provided for under subparagraph 
                (A), the small employers in such State--
                            (i) shall not be permitted to purchase 
                        health coverage through the Exchange; and
                            (ii) shall not be eligible for the 
                        refundable income tax credit under section 36A 
                        of the Internal Revenue Code of 1986.
                    (C) Certain states.--States that have legislatures 
                meeting biennially and that make a good faith effort to 
                implement the rating guidelines for its Region may have 
                the penalties described in subparagraph (B) waived at 
                the discretion of the National Policy Board. If a State 
                fails to fully implement the Region's common guidelines 
                by the date that is 1 year after the end of its next 
                legislative session, the National Policy Board shall 
                enforce the penalties described in such subparagraph 
                with respect to such State.
                    (D) Determination by regions with respect to 
                coverage of additional populations.--A Regional Board 
                shall permit sole proprietors and individuals to 
                purchase coverage through the Exchange if the State 
                involved elects to permit such coverage. A State within 
                a Region that permits sole proprietors or individuals 
                to purchase coverage through the Exchange shall 
                regulate the individual health insurance markets within 
                the State in accordance with the common rating 
                guidelines provided for in this subsection. To mitigate 
                the risk of adverse selection within such markets, the 
                Regional Board may exercise additional flexibility by 
                taking group size into account when developing common 
                rating guidelines.
                    (E) Determination by states with respect to 
                exceeding small employer size limits.--States may 
                request that the definition of ``small employer'' be 
                expanded to include those small employers with more 
                than 100 employees. Such request shall be made in 
                writing and approved by the National Policy Board. The 
                National Policy Board shall take into consideration the 
                availability of refundable income tax credits under 
                section 36A of the Internal Revenue Code of 1986, as 
                well as potential impact on access to health coverage 
                for other small employers. The National Policy Board 
                shall act upon a request made under this section not 
                later than 60 days after receipt of such request.
                    (F) Crowd-out reduction.--Each Regional Board shall 
                develop a plan to decrease adverse selection relating 
                to health insurance coverage between the individual 
                market and the Exchange for individuals and sole 
                proprietors eligible to purchase coverage through the 
                Health Coverage Exchange. Such plan shall be submitted 
                to the National Policy Board for approval in 
                conjunction with the submission of common rating 
                guidelines described in this subsection.
                    (G) State opt out.--A State may submit a request to 
                the National Policy Board to opt out of the requirement 
                relating to the adoption of the common guidelines under 
                section 6 if the State can demonstrate that existing 
                State guidelines are more stringent than those 
                recommended by the Regional Board under such section.
    (e) Establishment and Administration of Exchange.--A Regional Board 
shall establish and administer an Exchange through the following 
activities:
            (1) The development of streamlined health insurance 
        marketing and enrollment mechanisms, through collaboration with 
        insurance producers, which shall include the establishment and 
        maintenance of an Internet website.
            (2) The development of contracting processes and the 
        conduct of negotiations with insurance issuers that desire to 
        participate in the Exchange.
            (3)(A) Collaboration with participating health insurance 
        issuers and producers to develop health coverage benefit 
        packages to be offered through the Exchange in addition to the 
        standard benefit package provided for in section 4.
            (B) If such standard benefit package does not include all 
        mandated benefits for each State in the Region, the Regional 
        Board may require that health plans participating in the 
        Exchange offer additional, modified plans that meet the 
        requirements of each State in the Region concerning mandated 
        benefits. Any premium adjustments for such modified plans shall 
        be based only on the cost of the added benefits.
            (4) The development of guidelines concerning rules for 
        enrollment periods during which employers may purchase health 
        coverage through the Exchange. Such guidelines shall provide 
        employers operating in States that have adopted the necessary 
        laws and regulations provided for in subsection (c), not less 
        than 12 months for initial enrollment once an Exchange is 
        determined to be operational by the Regional Board.
            (5) Assessing employers that purchase health coverage after 
        the close of the initial enrollment period a reasonable late 
        enrollment penalty unless such employers are able to provide 
        evidence of credible coverage (as provided for in a manner 
        similar to that provided for under section 2701 of the Public 
        Health Service Act) section prior to enrollment in a health 
        plan in the Exchange.

SEC. 7. HEALTH PLAN OFFERED THROUGH AN EXCHANGE.

    (a) In General.--To be eligible to offer health care coverage 
through an Exchange, a health insurance issuer shall--
            (1) be licensed in each State within the Region in which 
        the issuer operates or sells policies;
            (2) offer at least the standard benefit package developed 
        under section 4(b)(4), and may offer other options as approved 
        by the Regional Board under section 6;
            (3) meet quality and efficiency performance and reporting 
        requirements established by the National Policy Board under 
        section 4;
            (4) rate its insurance products based on the small group 
        market guidelines of the Region in which the product is being 
        offered; and
            (5) comply with State network adequacy and all other 
        consumer protection laws.
    (b) Reporting Requirements for Health Plans.--
            (1) In general.--As a condition of offering health care 
        coverage through the Exchange, a health insurance issuer shall 
        report to consumers, the Regional Board, and the National 
        Policy Board, information concerning quality, cost, 
        administration, and structure with respect to health plans 
        offered by the issuer. The National Policy Board, in 
        collaboration with the Institute of Medicine, may update and 
        modify reporting requirements for purposes of this paragraph on 
        an annual basis.
            (2) Quality.--A health insurance issuer, with respect to a 
        health plan offered through an Exchange, shall collect, 
        analyze, and report to the National Policy Board and consumers, 
        information on measures of health care quality. Such measures 
        shall--
                    (A) include evidence-based measures of 
                effectiveness, efficiency, patient satisfaction, and 
                other measures as determined appropriate by the 
                National Policy Board; and
                    (B) at a minimum, incorporate existing quality 
                measurement requirements by health plan accrediting 
                entities, including measures included in the Healthcare 
                Effectiveness Data and Information Set (HEDIS), and the 
                Consumer Assessment of Health Plan Survey administered 
                by the Agency for Healthcare Research and Quality.
            (3) Costs.--A health insurance issuer, with respect to a 
        health plan offered through an Exchange, shall report to the 
        public and the National Policy Board information concerning 
        cost transparency, through the provision of cost-sharing and 
        common cost estimates for medical procedures, health services 
        and prescription drugs for network hospitals and providers. 
        Such cost-sharing and costs estimates shall include--
                    (A) hospital and emergency room fees;
                    (B) imaging and radiology;
                    (C) laboratories and testing;
                    (D) medical supplies and equipment;
                    (E) physician office services and therapy services;
                    (F) costs for prescription drugs; and
                    (G) other data that the National Policy Board 
                determines appropriate.
            (4) Administration; structure.--A health insurance issuer, 
        with respect to a health plan offered through an Exchange, 
        shall report to the National Policy Board information 
        concerning--
                    (A) hospital and provider networks;
                    (B) methods of utilization management;
                    (C) economic and demographic data on enrollment, 
                revenues, costs, and profits, which may include medical 
                loss ratios;
                    (D) benefit packages;
                    (E) consumer disputes and complaints filed and 
                resolved; and
                    (F) solvency and reserves.
            (5) Submission.--Reporting required under this subsection 
        shall be submitted in print and electronic formats on at least 
        an annual basis.

SEC. 8. REFUNDABLE CREDIT FOR HEALTH INSURANCE COVERAGE.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by redesignating section 36 as section 37 and by inserting 
after section 35 the following new section:

``SEC. 36. HEALTH INSURANCE COSTS.

    ``(a) Allowance of Credit.--In the case of an eligible individual, 
there shall be allowed as a credit against the tax imposed by this 
subtitle for the taxable year an amount equal to the applicable 
percentage of the premiums paid by or on behalf of the taxpayer for 
qualified health insurance during such taxable year.
    ``(b) Eligible Individual.--For purposes of this section--
            ``(1) In general.--Except as provided in paragraph (2), the 
        term `eligible individual' means--
                    ``(A) any employee of a qualifying small employer 
                residing in a State which--
                            ``(i) has adopted and is applying the 
                        common rating guidelines developed under 
                        section 6 of the Affordable Coverage for Small 
                        Employers Act of 2008 in the small group market 
                        of such State, or
                            ``(ii) has been permitted by the National 
                        Policy Board to opt out of the requirement of 
                        subparagraph (A), pursuant to section 
                        6(d)(2)(G) of such Act, or
                    ``(B) any other individual residing in such State 
                who is permitted to purchase qualified health insurance 
                by a Regional Health Coverage Exchange Board under 
                section 6(d)(2)(D) of such Act.
            ``(2) Exceptions.--Such term shall not include any 
        individual for any month if, as of the first day of such month, 
        such individual--
                    ``(A) is entitled to any benefits under title XVIII 
                of the Social Security Act,
                    ``(B) is eligible for the program under title XIX 
                or XXI of such Act,
                    ``(C) is entitled to any benefit under--
                            ``(i) chapter 89 of title 5, United States 
                        Code,
                            ``(ii) chapter 55 of title 10, United 
                        States Code,
                            ``(iii) chapter 17 of title 38, United 
                        States Code, or
                            ``(iv) any medical care program under the 
                        Indian Health Care Improvement Act, or
                    ``(D) is imprisoned under Federal, State, or local 
                authority.
    ``(c) Applicable Percentage.--For purposes of this section--
            ``(1) In general.--The applicable percentage is equal to, 
        in the case of a taxpayer with modified adjusted gross income 
        for the preceding taxable year--
                    ``(A) not exceeding 150 percent of the Federal 
                poverty level (as defined in section 673(2) of the 
                Community Services Block Grant Act (42 U.S.C. 9902(2)) 
                applicable to a family of the size involved, 25 
                percent,
                    ``(B) exceeding 150 percent but not exceeding 200 
                percent of such Federal poverty level, 20 percent,
                    ``(C) exceeding 200 percent but not exceeding 250 
                percent of such Federal poverty level, 15 percent,
                    ``(D) exceeding 250 percent but not exceeding 300 
                percent of such Federal poverty level, 10 percent, and
                    ``(E) exceeding 300 percent of such Federal poverty 
                level, 0 percent.
            ``(2) Modified adjusted gross income.--The term `modified 
        adjusted gross income' means adjusted gross income determined 
        without regard to sections 103, 135, 911, 931 and 933.
    ``(d) Qualifying Small Employer.--For purposes of this section--
            ``(1) In general.--The term `qualifying small employer' 
        means any small employer which is located in a State described 
        in subsection (b)(1)(A).
            ``(2) Small employer.--
                    ``(A) In general.--The term `small employer' means, 
                with respect to a plan year, an employer who employed 
                an average of at least 2 but not more than 100 full-
                time employees on business days during the preceding 
                calendar year and who employs at least 2 employees on 
                the first day of the plan year. Such term may include 
                employers described in section 6(d)(2)(E) of the 
                Affordable Coverage for Small Employers Act of 2008 and 
                a sole proprietor if determined appropriate by a 
                Regional Health Coverage Exchange Board.
                    ``(B) Application of certain rules in determination 
                of employer size.--For purposes of this paragraph--
                            ``(i) Application of aggregation rule for 
                        employers.--All persons treated as a single 
                        employer under subsection (b), (c), (m), or (o) 
                        of section 414 shall be treated as 1 employer.
                            ``(ii) Employers not in existence in 
                        preceding year.--In the case of an employer 
                        which was not in existence throughout the 
                        preceding calendar year, the determination of 
                        whether such employer is a small or large 
                        employer shall be based on the average number 
                        of employees that it is reasonably expected 
                        such employer will employ on business days in 
                        the current calendar year.
                            ``(iii) Predecessors.--Any reference to an 
                        employer shall include a reference to any 
                        predecessor of such employer.
            ``(3) Employer.--The term `employer' has the meaning given 
        such term under section 3(5) of the Employee Retirement Income 
        Security Act of 1974.
    ``(e) Qualified Health Insurance.--For purposes of this section, 
the term `qualified health insurance' means any health plan offered 
through a Regional Health Coverage Exchange established under section 6 
of the Affordable Coverage for Small Employers Act of 2008 with 
standard benefit package coverage developed under section 4(b)(4) of 
such Act or a plan with benefits that are similar to or not less than 
the actuarial value of health benefits coverage under the standard 
benefit package.
    ``(f) Other Definitions.--For purposes of this section, any term 
used in this section which is also used in the Affordable Coverage for 
Small Employers Act of 2008 shall have the meaning given such term by 
such Act.
    ``(g) Archer MSA and Health Savings Account Contributions.--
            ``(1) In general.--If a deduction would (but for paragraph 
        (2)) be allowed under section 220 or 223 to the taxpayer for a 
        payment for the taxable year to the Archer MSA or health 
        savings account of an individual, subsection (a) shall be 
        applied by treating such payment as a payment for qualified 
        health insurance for such individual.
            ``(2) Denial of double benefit.--No deduction shall be 
        allowed under section 220 or 223 for that portion of the 
        payments otherwise allowable as a deduction under section 220 
        or 223 for the taxable year which is equal to the amount of 
        credit allowed for such taxable year by reason of this 
        subsection.
    ``(h) Special Rules.--For purposes of this section--
            ``(1) Married couples must file joint return.--
                    ``(A) In general.--If the taxpayer is married at 
                the close of the taxable year, the credit shall be 
                allowed under subsection (a) only if the taxpayer and 
                his spouse file a joint return for the taxable year.
                    ``(B) Marital status; certain married individuals 
                living apart.--Rules similar to the rules of paragraphs 
                (3) and (4) of section 21(e) shall apply for purposes 
                of this paragraph.
            ``(2) Denial of credit to dependents.--No credit shall be 
        allowed under this section to any individual with respect to 
        whom a deduction under section 151 is allowable to another 
        taxpayer for a taxable year beginning in the calendar year in 
        which such individual's taxable year begins.
            ``(3) Denial of double benefit.--No credit shall be allowed 
        under subsection (a) if the credit under section 35 is allowed 
        and no credit shall be allowed under 35 if a credit is allowed 
        under this section.
            ``(4) Coordination with deduction for health insurance 
        costs.--In the case of a taxpayer who is eligible to deduct any 
        amount under section 162(l) or 213 for the taxable year, this 
        section shall apply only if the taxpayer elects not to claim 
        any amount as a deduction under such section for such year.
            ``(5) Medical and health savings accounts.--The credit 
        allowed under subsection (a) for any taxable year shall be 
        reduced by the aggregate amount distributed from Archer MSAs 
        (as defined in section 220(d)) and health savings accounts (as 
        defined in section 223(d)) which are excludable from gross 
        income for such taxable years by reason of being used to pay 
        premiums for coverage of an individual under qualified health 
        insurance for any month.
            ``(6) Election not to claim credit.--This section shall not 
        apply to a taxpayer for any taxable year if such taxpayer 
        elects to have this section not apply for such taxable year.
            ``(7) Verification of coverage, etc.--No credit shall be 
        allowed under this section with respect to any individual 
        unless such individual's coverage (and such related information 
        as the Secretary may require) is verified in such manner as the 
        Secretary may prescribe.
            ``(8) Insurance which covers other individuals; treatment 
        of payments.--Rules similar to the rules of paragraphs (7) and 
        (8) of section 35(g) shall apply for purposes of this section.
    ``(i) Reduction in Credit for Advance Payments.--With respect to 
any taxable year, the amount which would (but for this subsection) be 
allowed as a credit to the taxpayer under subsection (a) shall be 
reduced (but not below zero) by the aggregate amount paid on behalf of 
such taxpayer under section 7529 for months beginning in such taxable 
year.
    ``(j) Regulations.--The Secretary shall prescribe such regulations 
and other guidance as may be necessary or appropriate to carry out the 
purposes of this section, section 6050X, and section 7529, including 
the application of the credit with respect to eligible individuals 
described in subsection (b)(1)(B).''.
    (b) Information Reporting.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 of the Internal Revenue Code of 1986 (relating to 
        information concerning transactions with other persons) is 
        amended by inserting after section 6050W the following new 
        section:

``SEC. 6050X. RETURNS RELATING TO PAYMENTS FOR QUALIFIED HEALTH 
              INSURANCE.

    ``(a) In General.--Any person who, in connection with a trade or 
business conducted by such person, receives payments during any 
calendar year from any individual for coverage of such individual or 
any other individual under creditable health insurance, shall make the 
return described in subsection (b) (at such time as the Secretary may 
by regulations prescribe) with respect to each individual from whom 
such payments were received.
    ``(b) Form and Manner of Returns.--A return is described in this 
subsection if such return--
            ``(1) is in such form as the Secretary may prescribe, and
            ``(2) contains--
                    ``(A) the name, address, and TIN of the individual 
                from whom payments described in subsection (a) were 
                received,
                    ``(B) the name, address, and TIN of each individual 
                who was provided by such person with coverage under 
                creditable health insurance by reason of such payments 
                and the period of such coverage, and
                    ``(C) such other information as the Secretary may 
                reasonably prescribe.
    ``(c) Creditable Health Insurance.--For purposes of this section, 
the term `creditable health insurance' means qualified health insurance 
(as defined in section 36(e)) other than, to the extent provided in 
regulations prescribed by the Secretary, any other insurance covering 
an individual if no credit is allowable under section 36 with respect 
to such coverage.
    ``(d) Statements To Be Furnished to Individuals With Respect to 
Whom Information Is Required.--Every person required to make a return 
under subsection (a) shall furnish to each individual whose name is 
required under subsection (b)(2)(A) to be set forth in such return a 
written statement showing--
            ``(1) the name and address of the person required to make 
        such return and the phone number of the information contact for 
        such person,
            ``(2) the aggregate amount of payments described in 
        subsection (a) received by the person required to make such 
        return from the individual to whom the statement is required to 
        be furnished, and
            ``(3) the information required under subsection (b)(2)(B) 
        with respect to such payments.
The written statement required under the preceding sentence shall be 
furnished on or before January 31 of the year following the calendar 
year for which the return under subsection (a) is required to be made.
    ``(e) Returns Which Would Be Required To Be Made by 2 or More 
Persons.--Except to the extent provided in regulations prescribed by 
the Secretary, in the case of any amount received by any person on 
behalf of another person, only the person first receiving such amount 
shall be required to make the return under subsection (a).''.
            (2) Assessable penalties.--
                    (A) Subparagraph (B) of section 6724(d)(1) of such 
                Code (relating to definitions) is amended by striking 
                ``or'' at the end of clause (xxi), by striking ``and'' 
                at the end of clause (xxii) and inserting ``or'', and 
                by adding after clause (xxii) the following new clause:
                            ``(xxiii) section 6050X (relating to 
                        returns relating to payments for qualified 
                        health insurance),''.
                    (B) Paragraph (2) of section 6724(d) of such Code 
                is amended by striking ``or'' at the end of 
                subparagraph (CC), by striking the period at the end of 
                subparagraph (DD) and inserting ``, or'' and by adding 
                at the end the following new subparagraph:
                    ``(EE) section 6050X(d) (relating to returns 
                relating to payments for qualified health 
                insurance).''.
            (3) Clerical amendment.--The table of sections for subpart 
        B of part III of subchapter A of chapter 61 of such Code is 
        amended by inserting after the item relating to section 6050W 
        the following new item:

``Sec. 6050X. Returns relating to payments for qualified health 
                            insurance.''.
    (c) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting before the period ``, or 
        from section 36 of such Code''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by striking the last item and inserting the 
        following new items:

``Sec. 36. Health insurance costs.
``Sec. 37. Overpayments of tax.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.
    (e) Advance Payment of Credit for Purchasers of Qualified Health 
Insurance.--
            (1) In general.--Chapter 77 of the Internal Revenue Code of 
        1986 (relating to miscellaneous provisions) is amended by 
        adding at the end the following new section:

``SEC. 7529. ADVANCE PAYMENT OF HEALTH INSURANCE CREDIT FOR PURCHASERS 
              OF QUALIFIED HEALTH INSURANCE.

    ``(a) General Rule.--In the case of an eligible individual, the 
Secretary shall make payments to the provider of such individual's 
qualified health insurance equal to such individual's qualified health 
insurance credit advance amount with respect to such provider.
    ``(b) Eligible Individual.--For purposes of this section, the term 
`eligible individual' means any individual--
            ``(1) who purchases qualified health insurance (as defined 
        in section 36(e)), and
            ``(2) for whom a qualified health insurance credit 
        eligibility certificate is in effect.
    ``(c) Qualified Health Insurance Credit Eligibility Certificate.--
For purposes of this section, a qualified health insurance credit 
eligibility certificate is a statement furnished by an individual to 
the Secretary which--
            ``(1) certifies that the individual will be eligible to 
        receive the credit provided by section 36 for the taxable year,
            ``(2) estimates the amount of such credit for such taxable 
        year, and
            ``(3) provides such other information as the Secretary may 
        require for purposes of this section.
    ``(d) Qualified Health Insurance Credit Advance Amount.--For 
purposes of this section, the term `qualified health insurance credit 
advance amount' means, with respect to any provider of qualified health 
insurance, the Secretary's estimate of the amount of credit allowable 
under section 36 to the individual for the taxable year which is 
attributable to the insurance provided to the individual by such 
provider.''.
            (2) Clerical amendment.--The table of sections for chapter 
        77 of the Internal Revenue Code of 1986 is amended by adding at 
        the end the following new item:

``Sec. 7529. Advance payment of health insurance credit for purchasers 
                            of qualified health insurance.''.
            (3) Effective date.--The amendments made by this section 
        shall apply to taxable years beginning after December 31, 2008.

SEC. 9. REFUNDABLE CREDIT FOR SMALL EMPLOYER HEALTH INSURANCE EXPENSES.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits), 
as amended by section 8, is amended by inserting after section 36 the 
following new section:

``SEC. 36A. SMALL EMPLOYER HEALTH INSURANCE EXPENSES.

    ``(a) Determination of Amount.--In the case of a qualifying small 
employer, there shall be allowed as a credit against the tax imposed by 
this subtitle for the taxable year an amount equal to the applicable 
percentage of the employer's contribution during such taxable year 
towards the cost of qualified employee health insurance expenses. No 
amount paid or incurred pursuant to a salary reduction arrangement 
shall be taken into account under the preceding sentence.
    ``(b) Applicable Percentage.--For purposes of subsection (a), the 
applicable percentage is equal to, in the case of an employer 
contribution of--
            ``(1) at least 50 but less than 60 percent of the cost of 
        qualified employee health insurance expenses, 10 percent,
            ``(2) at least 60 but less than 70 percent of such cost, 15 
        percent,
            ``(3) at least 70 but less than 80 percent of such cost, 20 
        percent, and
            ``(4) at least 80 percent of such cost, 25 percent.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualifying small employer.--The term `qualifying 
        small employer' has the meaning given such term by section 
        36(d).
            ``(2) Qualified employee health insurance expenses.--
                    ``(A) In general.--The term `qualified employee 
                health insurance expenses' means any expenses for 
                qualified health insurance (as defined in section 
                36(e)) to the extent attributable to coverage--
                            ``(i) provided to any employee while such 
                        employee is a qualified employee, or
                            ``(ii) for the employer, in the case of a 
                        sole proprietor.
                    ``(B) Qualified employee.--The term `qualified 
                employee' means any individual described in section 
                36(b) (determined without regard to paragraph (1)(B) 
                thereof).
    ``(d) Certain Rules Made Applicable.--For purposes of this section, 
rules similar to the rules of section 52 shall apply.
    ``(e) Coordination With Advance Payments of Credit.--With respect 
to any taxable year, the amount which would (but for this subsection) 
be allowed as a credit to the taxpayer under subsection (a) shall be 
reduced by the aggregate amount paid on behalf of such taxpayer under 
section 7530 for months beginning in such taxable year. If the amount 
determined under this subsection is less than zero, the taxpayer shall 
owe additional tax in such amount under this chapter.
    ``(f) Credits for Nonprofit Organizations.--Any credit which would 
be allowable under subsection (a) with respect to a qualifying small 
employer if such qualifying small employer were not exempt from tax 
under this chapter shall be treated as a credit allowable under this 
subpart to such qualifying small employer.''.
    (b) Advance Payments of Credit.--Chapter 77 of the Internal Revenue 
Code of 1986, as amended by section 8, is amended by inserting after 
section 7529 the following new section:

``SEC. 7530. ADVANCE PAYMENT OF CREDIT FOR HEALTH INSURANCE COSTS FOR 
              QUALIFYING SMALL EMPLOYERS.

    ``(a) General Rule.--Not later than December 31, 2008, the 
Secretary shall establish a program for making monthly payments on 
behalf of any qualifying small employer to providers of qualified 
health insurance for qualified employees of such employer. The amount 
of the monthly payment for a qualifying small employer shall be one 
twelfth of the amount of the credit for the tax year to which the 
qualifying small employer is entitled under section 36A. If a monthly 
payment is made by the Secretary for which the employer is not entitled 
to a corresponding credit, the employer shall owe additional tax in 
such amount under this chapter.
    ``(b) Definitions.--Any term used in this section which is also 
used in section 36A shall have the meaning given such term by section 
36A.''.
    (c) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, as amended by section 8, is amended by inserting 
        ``or 36A'' after ``36''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986, 
        as amended by section 8, is amended by inserting after the item 
        relating to section 36 the following new item:

``Sec. 36A. Small employer health insurance expenses.''.
            (3) The table of sections for chapter 77 of such Code, as 
        amended by section 8, is amended by adding at the end the 
        following new item:

``Sec. 7530. Advance payment of credit for health insurance costs for 
                            qualifying small employers.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred in taxable years beginning after 
December 31, 2008.

SEC. 10. REPORTS AND EVALUATIONS.

    (a) Annual Report to Congress.--Not later than 1 year after the 
date of enactment of this Act, and biennially thereafter, the 
Governmental Accountability Office shall submit to the National Policy 
Board and the appropriate committees of Congress a report concerning 
the activities of the National Policy Board and the Regional Boards 
under this Act.
    (b) Institute of Medicine.--Not later than 6 months after the date 
of enactment of this Act, and annually thereafter, the National Policy 
Board shall contract with the Institute of Medicine to review and make 
recommendations concerning the standard benefit package developed under 
section 4 and submit such recommendations to the National Policy Board 
and the appropriate committees of Congress.

SEC. 11. REPORTING INSURANCE STATUS.

    The Secretary of the Treasury shall develop a process to enable 
individuals to report the health insurance status of each member in 
their household on their Federal income tax return.
                                 <all>