[Congressional Record Volume 141, Number 33 (Wednesday, February 22, 1995)]
[Extensions of Remarks]
[Pages E402-E403]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


            TARGETED INDIVIDUAL HEALTH INSURANCE REFORM ACT

                                 ______


                         HON. HARRIS W. FAWELL

                              of illinois

                    in the house of representatives

                      Wednesday, February 22, 1995
  Mr. FAWELL. Mr. Speaker, yesterday, I introduced H.R. 996, the 
Targeted Individual Health Insurance Reform Act of 1995, under which 
access to coverage will be expanded for individuals. Joining me as 
original cosponsors were Representatives Bill Goodling, Tom Petri, 
Marge Roukema, Cass Ballenger, Pete Hoekstra, Buck McKeon, Jan Meyers, 
Jim Talent, James Greenwood, Tim Hutchinson, Joe Knollenberg, Lindsey 
Graham, Dave Weldon, and David McIntosh.
  A section-by-section analysis of H.R. 996 follows:
       Targeted Health Insurance Reform in the Individual Market


                                Summary

       This legislation providing individual market reforms 
     presents a well-targeted and workable framework within which 
     incremental health insurance reform can be enacted this year.
       The bill contains targeted but important elements of health 
     insurance reform in the individual market including non-
     discrimination, portability, renewability, utilization 
     review, and fair rating standards.


          What the Targeted Health Insurance Reform Bill Does

     New protections and freedoms for workers in a mobile workforce

       Portability and limits on preexisting conditions under 
     health plans helps eliminate job-lock (e.g. if an employee 
     once chooses insurance coverage they do not have to again 
     satisfy a preexisting condition as long as some form of 
     coverage is continued, whether obtained in the individual 
     market or otherwise).
       Insurers and multiple employer plans must guarantee the 
     renewal of health coverage.

   Let the market roar: Increased health plan competition means more 
                     affordable choice of coverage

       State benefit mandates are limited.
       State anti-managed-care laws are restructured and, instead, 
     uniform standards are encouraged.
       Buyer cost awareness is encouraged through Medisave plans.

       Access to fully-insured coverage expanded for individuals

       Insurers must open their individual markets to all eligible 
     buyers.
       Fair rating standards limit premium variations among 
     similarly situated individuals which balances the need to 
     make insurance more affordable, but avoids ``sticker shock'' 
     for the currently insured.


       What the Targeted Health Insurance Reform Bill DOES NOT DO

       As important as what the Targeted bill does do, is what it 
     DOES NOT DO.
       It does not force Americans to give up their current health 
     insurance coverage, nor does it restrict their choice of 
     coverage (in fact, it will help expand their choice).
       It does not impose mandates that result in lost wages and 
     lost jobs.
       It does not require any new federal spending or new taxes.
       It does not have unfunded state or local mandates.
       It does not have price controls or impose government-
     prescribed health care budgets that would lead to rationing 
     or lower quality of care.
       It does not establish a government-run health care system, 
     nor does it create a massive bureaucracy.
       It does not impose a single, one-size-fits-all, national 
     benefits package determined by the government.
                                Title II

 Subtitle A--Increased availability and continuity of health coverage 
                            for individuals

       The purpose of this subtitle is to expand access to 
     affordable health coverage for individuals and their families 
     and to help eliminate job-lock and the exclusion of such 
     individuals from coverage due to preexisting condition 
     restrictions.

    Part I--Nondiscrimination, Portability, Renewability, and Plan 
                        Participation Standards

       Sec. 2001.--Nondiscrimination and limitations on 
     preexisting condition exclusions.
       Sec. 2002.--Portability.
       These sections limit preexisting condition restrictions 
     under all general health insurance coverage offered in the 
     individual market. This section provides that a child who is 
     covered at birth or adoption and remains covered shall not be 
     considered to have a preexisting condition at the time of 
     birth or adoption.
       The provisions will help end job-lock and help assure 
     continuous availability of health coverage for both the 
     employed who lack access to employer coverage as well as non-
     employed individuals by prohibiting preexisting condition 
     restrictions for those who are continuously covered. Coverage 
     is considered ``continuous'' as long as any lapse in coverage 
     is not longer than 3 months. Generally, plans may not have 
     more than a 6/12 preexisting exclusion (i.e. treatments or 
     diagnoses in the 6 months prior to coverage could be excluded 
     from coverage for up to 12 months). Insurers in the small 
     group market can also offer 12/12 coverage.
       Sec. 2003.--Requirements for renewability of coverage.
       This section prohibits health insurance coverage offered by 
     insurers from being canceled or denied renewability except 
     for reasons of: (a) nonpayment of premiums, (b) fraud or 
     misrepresentation, (c) noncompliance with plan provisions, 
     and (d) certain other conditions.

 Part 2--Encouragement of Private Standards Setting Organizations for 
                Provider Networks and Utilization Review

       Sec. 2011.--Encouragement of private standards setting 
     organizations for provider networks.
       Sec. 2011.--Encouragement of private standards setting 
     organizations for utilization review.
       This Subpart B encourages the establishment of private 
     standards setting organizations to provide certain guidelines 
     which would be applicable to provider networks and to 
     utilization review procedures under group health plans.
       The standards which health plans would look to from any 
     such private entity would be related to (1) reasonably prompt 
     access of individuals to covered services, (2) the extent to 
     which emergency services are provided to individuals outside 
     the provider network, (3) notification and review regarding 
     the termination of providers from a network, and (4) 
     conditions relating to utilization review, including timely 
     review and provider participation in such decisions.
 Part 3--Requirements for Insurers Providing Health Insurance Coverage 
                        in the Individual Market

       In general, the purpose of this Part is to expand access to 
     health insurance by making private health insurance coverage 
     marketed to individuals more affordable and available.
       Sec. 2021.--Requirements for insurers to offer general, 
     catastrophic, and Medisave coverage in the individual market.
       This section provides for the availability of health 
     insurance coverage to eligible individuals from those 
     insurers who sell health insurance in the individual health 
     insurance market. Insurers would be required to open their 
     general coverage market to individuals and to offer a 
     catastrophic plan with higher cost-sharing provisions (unless 
     the insurer is an HMO or does not otherwise offer fee-for-
     service coverage). Insurers may also offer a Medisave plan 
     that includes catastrophic coverage with an integrated family 
     medical savings account. Among the general policies offered 
     must be a fee-for-service option, a managed care option, and 
     point-of-service option, but only if these are made available 
     by the insurer under other policies of insurance.
       The extent to which an insurer may offer or deny coverage 
     with respect to an individual who would be expected to incur 
     disproportionately high health care costs is contingent on 
     the establishment of risk adjustment mechanisms, high-risk 
     pools, or other mechanisms. The suggestions of the NAIC, 
     actuaries, insurers, and other experts are solicited so that 
     a workable framework can be developed in this complex area.
       Sec. 2022.--Use of fair rating, uniform marketing 
     materials, and miscellaneous consumer protections.
       Under this section, insurers must use fair rating standards 
     in setting initial and renewal premiums in the individual 
     market. In general, premiums may vary for age, geographic 
     area, family class, and administrative category for a 
     particular benefit design.
       When the fair rating standards are first effective, the 
     premiums of two individuals having similar demographic 
     characteristics cannot vary by more than 100% based on 
     initial underwriting factors. Other rules apply in subsequent 
     years. This rule and the permitted one year surcharge for 
     coverage containing the less restrictive 6/12 preexisting 
     condition clause will help insulate the currently insured 
     from the premium ``sticker shock'' which could otherwise 
     result from more restrictive rules. Suggestions as to the 
     extent to which this 100% variation may be reduced over time 
     without reducing coverage are solicited from the NAIC and 
     other interested parties.

          Subtitle B--Establishment of standards; enforcement

       Sec. 2101.--Establishment of standards applicable to 
     insurers offering health insurance coverage in the individual 
     market.
       [[Page E403]] Sec. 2102.--Enforcement with respect to 
     insurers offering health insurance coverage in the individual 
     market.
       Sec. 2103.--Preemption.
       Sec. 2104.--Effective Date.
       With respect to the standards applicable to insurers, 
     states may (in accordance with sections 2101 and 2102) 
     implement and enforce the nationally uniform standards under 
     Parts 1 and 2, including the uniform regulations which may be 
     recommended by the NAIC. States that voluntarily elect to 
     implement such standards have the exclusive authority to 
     enforce such standards as they apply to insurers.
       Pursuant to the preemption provisions under Section 2103, a 
     state may not establish or enforce standards applicable to 
     insurers which are different than the nationally uniform 
     standards under this subpart. Certain state benefit mandates 
     and anti-managed care laws are also preempted under the bill.
       Sec. 2104. Effective date.
       In general the requirements of the bill apply on January 1, 
     1998 with regard to insurers offering health insurance 
     coverage in the individual market.
     

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