[Congressional Record Volume 142, Number 45 (Thursday, March 28, 1996)]
[House]
[Pages H3045-H3147]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
{time} 1815
HEALTH COVERAGE AVAILABILITY AND AFFORDABILITY ACT OF 1996
Mr. ARCHER. Mr. Speaker, pursuant to House Resolution 392, I call up
the bill (H.R. 3103), to amend the Internal Revenue Code of 1986 to
improve portability and continuity of health insurance coverage in the
group and individual markets, to combat waste, fraud, and abuse in
health insurance and health care delivery, to promote the use of
medical savings accounts, to improve access to long-term care services
and coverage, to simplify the administration of health insurance, and
for other purposes, and ask for its immediate consideration in the
House.
The Clerk read the title of the bill.
The SPEAKER pro tempore (Mr. Combest). Pursuant to House Resolution
392, the amendment in the nature of a substitute consisting of the text
of H.R. 3160 modified by the amendment specified in part 1 of House
Report 104-501 is adopted.
The text of H.R. 3103 consisting of the text of H.R. 3160, as
modified, is as follows:
H.R. 3160
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 ``Health
Coverage Availability and Affordability Act of 1996''.
(b) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents.
TITLE I--IMPROVED AVAILABILITY AND PORTABILITY OF HEALTH INSURANCE
COVERAGE
Subtitle A--Coverage Under Group Health Plans
Sec. 101. Portability of coverage for previously covered individuals.
Sec. 102. Limitation on preexisting condition exclusions; no
application to certain newborns, adopted children, and
pregnancy.
Sec. 103. Prohibiting exclusions based on health status and providing
for enrollment periods.
Sec. 104. Enforcement.
Subtitle B--Certain Requirements for Insurers and HMOs in the Group and
Individual Markets
Part 1--Availability of Group Health Insurance Coverage
Sec. 131. Guaranteed availability of general coverage in the small
group market.
Sec. 132. Guaranteed renewability of group coverage.
[[Page H3046]]
Part 2--Availability of Individual Health Insurance Coverage
Sec. 141. Guaranteed availability of individual health insurance
coverage to certain individuals with prior group
coverage.
Sec. 142. Guaranteed renewability of individual health insurance
coverage.
Part 3--Enforcement
Sec. 151. Incorporation of provisions for State enforcement with
Federal fallback authority.
Subtitle C--Affordable and Available Health Coverage Through Multiple
Employer Pooling Arrangements
Sec. 161. Clarification of duty of the Secretary of Labor to implement
provisions of current law providing for exemptions and
solvency standards for multiple employer health plans.
``Part 7--Rules Governing Regulation of Multiple Employer Health Plans
``Sec. 701. Definitions.
``Sec. 702. Clarification of duty of the Secretary to implement
provisions of current law providing for exemptions and
solvency standards for multiple employer health plans.
``Sec. 703. Requirements relating to sponsors, boards of trustees, and
plan operations.
``Sec. 704. Other requirements for exemption.
``Sec. 705. Maintenance of reserves.
``Sec. 706. Notice requirements for voluntary termination.
``Sec. 707. Corrective actions and mandatory termination.
``Sec. 708. Additional rules regarding State authority.''.
Sec. 162. Affordable and available fully insured health coverage
through voluntary health insurance associations.
Sec. 163. State authority fully applicable to self-insured multiple
employer welfare arrangements providing medical care
which are not exempted under new part 7.
Sec. 164. Clarification of treatment of single employer arrangements.
Sec. 165. Clarification of treatment of certain collectively bargained
arrangements.
Sec. 166. Treatment of church plans.
Sec. 167. Enforcement provisions relating to multiple employer welfare
arrangements.
Sec. 168. Cooperation between Federal and State authorities.
Sec. 169. Filing and disclosure requirements for multiple employer
welfare arrangements offering health benefits.
Sec. 170. Single annual filing for all participating employers.
Sec. 171. Effective date; transitional rule.
Subtitle D--Definitions; General Provisions
Sec. 191. Definitions; scope of coverage.
Sec. 192. State flexibility to provide greater protection.
Sec. 193. Effective date.
Sec. 194. Rule of construction.
Sec. 195. Findings relating to exercise of commerce clause authority.
TITLE II--PREVENTING HEALTH CARE FRAUD AND ABUSE; ADMINISTRATIVE
SIMPLIFICATION; MEDICAL LIABILITY REFORM
Sec. 200. References in title.
Subtitle A--Fraud and Abuse Control Program
Sec. 201. Fraud and abuse control program.
Sec. 202. Medicare integrity program.
Sec. 203. Beneficiary incentive programs.
Sec. 204. Application of certain health anti-fraud and abuse sanctions
to fraud and abuse against Federal health care programs.
Sec. 205. Guidance regarding application of health care fraud and abuse
sanctions.
Subtitle B--Revisions to Current Sanctions for Fraud and Abuse
Sec. 211. Mandatory exclusion from participation in medicare and State
health care programs.
Sec. 212. Establishment of minimum period of exclusion for certain
individuals and entities subject to permissive exclusion
from medicare and State health care programs.
Sec. 213. Permissive exclusion of individuals with ownership or control
interest in sanctioned entities.
Sec. 214. Sanctions against practitioners and persons for failure to
comply with statutory obligations.
Sec. 215. Intermediate sanctions for medicare health maintenance
organizations.
Sec. 216. Additional exception to anti-kickback penalties for
discounting and managed care arrangements.
Sec. 217. Criminal penalty for fraudulent disposition of assets in
order to obtain medicaid benefits.
Sec. 218. Effective date.
Subtitle C--Data Collection
Sec. 221. Establishment of the health care fraud and abuse data
collection program.
Subtitle D--Civil Monetary Penalties
Sec. 231. Social security act civil monetary penalties.
Sec. 232. Clarification of level of intent required for imposition of
sanctions.
Sec. 233. Penalty for false certification for home health services.
Subtitle E--Revisions to Criminal Law
Sec. 241. Definitions relating to Federal health care offense.
Sec. 242. Health care fraud.
Sec. 243. Theft or embezzlement.
Sec. 244. False statements.
Sec. 245. Obstruction of criminal investigations of health care
offenses.
Sec. 246. Laundering of monetary instruments.
Sec. 247. Injunctive relief relating to health care offenses.
Sec. 248. Authorized investigative demand procedures.
Sec. 249. Forfeitures for Federal health care offenses.
Sec. 250. Relation to ERISA authority.
Subtitle F--Administrative Simplification
Sec. 251. Purpose.
Sec. 252. Administrative simplification.
``Part C--Administrative Simplification
``Sec. 1171. Definitions.
``Sec. 1172. General requirements for adoption of standards.
``Sec. 1173. Standards for information transactions and data elements.
``Sec. 1174. Timetables for adoption of standards.
``Sec. 1175. Requirements.
``Sec. 1176. General penalty for failure to comply with requirements
and standards.
``Sec. 1177. Wrongful disclosure of individually identifiable health
information.
``Sec. 1178. Effect on State law.
Sec. 253. Changes in membership and duties of National Committee on
Vital and Health Statistics.
Subtitle G--Duplication and Coordination of Medicare-Related Plans
Sec. 261. Duplication and coordination of medicare-related plans.
Subtitle H--Medical Liability Reform
Part 1--General Provisions
Sec. 271. Federal reform of health care liability actions.
Sec. 272. Definitions.
Sec. 273. Effective date.
Part 2--Uniform Standards for Health Care Liability Actions
Sec. 281. Statute of limitations.
Sec. 282. Calculation and payment of damages.
Sec. 283. Alternative dispute resolution.
TITLE III--TAX-RELATED HEALTH PROVISIONS
Sec. 300. Amendment of 1986 code.
Subtitle A--Medical Savings Accounts
Sec. 301. Medical savings accounts.
Subtitle B--Increase in Deduction for Health Insurance Costs of Self-
Employed Individuals
Sec. 311. Increase in deduction for health insurance costs of self-
employed individuals.
Subtitle C--Long-Term Care Services and Contracts
Part I--General Provisions
Sec. 321. Treatment of long-term care insurance.
Sec. 322. Qualified long-term care services treated as medical care.
Sec. 323. Reporting requirements.
Part II--Consumer Protection Provisions
Sec. 325. Policy requirements.
Sec. 326. Requirements for issuers of long-term care insurance
policies.
Sec. 327. Coordination with State requirements.
Sec. 328. Effective dates.
Subtitle D--Treatment of Accelerated Death Benefits
Sec. 331. Treatment of accelerated death benefits by recipient.
Sec. 332. Tax treatment of companies issuing qualified accelerated
death benefit riders.
Subtitle E--High-Risk Pools
Sec. 341. Exemption from income tax for State-sponsored organizations
providing health coverage for high-risk individuals.
Subtitle F--Organizations Subject to Section 833
Sec. 351. Organizations subject to section 833.
TITLE IV--REVENUE OFFSETS
Sec. 400. Amendment of 1986 Code.
Subtitle A--Repeal of Bad Debt Reserve Method for Thrift Savings
Associations
Sec. 401. Repeal of bad debt reserve method for thrift savings
associations.
Subtitle B--Reform of the Earned Income Credit
Sec. 411. Earned income credit denied to individuals not authorized to
be employed in the United States.
Subtitle C--Treatment of Individuals Who Lose United States Citizenship
Sec. 421. Revision of income, estate, and gift taxes on individuals who
lose United States citizenship.
Sec. 422. Information on individuals losing United States citizenship.
Sec. 423. Report on tax compliance by United States citizens and
residents living abroad.
[[Page H3047]]
TITLE I--IMPROVED AVAILABILITY AND PORTABILITY OF HEALTH INSURANCE
COVERAGE
Subtitle A--Coverage Under Group Health Plans
SEC. 101. PORTABILITY OF COVERAGE FOR PREVIOUSLY COVERED
INDIVIDUALS.
(a) Crediting Periods of Previous Coverage Toward
Preexisting Condition Restrictions.--Subject to the
succeeding provisions of this section, a group health plan,
and an insurer or health maintenance organization offering
health insurance coverage in connection with a group health
plan, shall provide that any preexisting condition limitation
period (as defined in subsection (b)(2)) is reduced by the
length of the aggregate period of qualified prior coverage
(if any, as defined in subsection (b)(3)) applicable to the
participant or beneficiary as of the date of commencement of
coverage under the plan.
(b) Definitions and Other Provisions Relating to
Preexisting Conditions.--
(1) Preexisting condition.--
(A) In general.--For purposes of this subtitle, subject to
subparagraph (B), the term ``preexisting condition'' means a
condition, regardless of the cause of the condition, for
which medical advice, diagnosis, care, or treatment was
recommended or received within the 6-month period ending on
the day before--
(i) the effective date of the coverage of such participant
or beneficiary, or
(ii) the earliest date upon which such coverage could have
been effective if there were no waiting period applicable,
whichever is earlier.
(B) Treatment of genetic information.--For purposes of this
section, genetic information shall not be considered to be a
preexisting condition, so long as treatment of the condition
to which the information is applicable has not been sought
during the 6-month period described in subparagraph (A).
(2) Preexisting condition limitation period.--For purposes
of this subtitle, the term ``preexisting condition limitation
period'' means, with respect to coverage of an individual
under a group health plan or under health insurance coverage,
the period during which benefits with respect to treatment of
a condition of such individual are not provided based on the
fact that the condition is a preexisting condition.
(3) Aggregate period of qualified prior coverage.--
(A) In general.--For purposes of this section, the term
``aggregate period of qualified prior coverage'' means, with
respect to commencement of coverage of an individual under a
group health plan or health insurance coverage offered in
connection with a group health plan, the aggregate of the
qualified coverage periods (as defined in subparagraph (B))
of such individual occurring before the date of such
commencement. Such period shall be treated as zero if there
is more than a 60-day break in coverage under a group health
plan (or health insurance coverage offered in connection with
such a plan) between the date the most recent qualified
coverage period ends and the date of such commencement.
(B) Qualified coverage period.--
(i) In general.--For purposes of this paragraph, subject to
subsection (c), the term ``qualified coverage period'' means,
with respect to an individual, any period of coverage of the
individual under a group health plan, health insurance
coverage, under title XVIII or XIX of the Social Security
Act, coverage under the TRICARE program under chapter 55 of
title 10, United States Code, a program of the Indian Health
Service, and State health insurance coverage or risk pool,
and includes coverage under a health plan offered under
chapter 89 of title 5, United States Code.
(ii) Disregarding periods before breaks in coverage.--Such
term does not include any period occurring before any 60-day
break in coverage described in subparagraph (A).
(C) Waiting period not treated as a break in coverage.--For
purposes of subparagraphs (A) and (B), any period that is in
a waiting period for any coverage under a group health plan
(or for health insurance coverage offered in connection with
a group health plan) shall not be considered to be a break in
coverage described in subparagraph (B)(ii).
(D) Establishment of period.--A qualified coverage period
with respect to an individual shall be established through
presentation of certifications described in subsection (c) or
in such other manner as may be specified in regulations to
carry out this title.
(c) Certifications of Coverage; Conforming Coverage.--
(1) In general.--The plan administrator of a group health
plan, or the insurer or HMO offering health insurance
coverage in connection with a group health plan, shall, on
request made on behalf of an individual covered (or
previously covered within the previous 18 months) under the
plan or coverage, provide for a certification of the period
of coverage of the individual under such plan or coverage and
of the waiting period (if any) imposed with respect to the
individual for any coverage under the plan.
(2) Standard method.--Subject to paragraph (3), a group
health plan, or insurer or HMO offering health insurance
coverage in connection with a group health plan, shall
determine qualified coverage periods under subsection
(b)(3)(B) by including all periods described in such
subsection, without regard to the specific benefits offered
during such a period.
(3) Alternative method.--Such a plan, insurer, or HMO may
elect to make such determination on a benefit-specific basis
for all participants and beneficiaries and not to include as
a qualified coverage period with respect to a specific
benefit coverage during a previous period unless such
previous coverage for that benefit was included at the end of
the most recent period of coverage. In the case of such an
election--
(A) the plan, insurer, or HMO shall prominently state in
any disclosure statements concerning the plan or coverage and
to each enrollee at the time of enrollment under the plan (or
at the time the health insurance coverage is offered for sale
in the group health market) that the plan or coverage has
made such election and shall include a description of the
effect of this election; and
(B) upon the request of the plan, insurer, or HMO, the
entity providing a certification under paragraph (1)--
(i) shall promptly disclose to the requesting plan,
insurer, or HMO the plan statement (insofar as it relates to
health benefits under the plan) or other detailed benefit
information on the benefits available under the previous plan
or coverage, and
(ii) may charge for the reasonable cost of providing such
information.
SEC. 102. LIMITATION ON PREEXISTING CONDITION EXCLUSIONS; NO
APPLICATION TO CERTAIN NEWBORNS, ADOPTED
CHILDREN, AND PREGNANCY.
(a) Limitation of Period.--
(1) In general.--Subject to the succeeding provisions of
this section, a group health plan, and an insurer or HMO
offering health insurance coverage in connection with a group
health plan, shall provide that any preexisting condition
limitation period (as defined in section 101(b)(2)) does not
exceed 12 months, counting from the effective date of
coverage.
(2) Extension of period in the case of late enrollment.--In
the case of a participant or beneficiary whose initial
coverage commences after the date the participant or
beneficiary first becomes eligible for coverage under the
group health plan, the reference in paragraph (1) to ``12
months'' is deemed a reference to ``18 months''.
(b) Exclusion Not Applicable to Certain Newborns and
Certain Adoptions.--
(1) In general.--Subject to paragraph (2), a group health
plan, and an insurer or HMO offering health insurance
coverage in connection with a group health plan, may not
provide any limitation on benefits based on the existence
of a preexisting condition in the case of--
(A) an individual who within the 30-day period beginning
with the date of birth, or
(B) an adopted child or a child placed for adoption
beginning at the time of adoption or placement if the
individual, within the 30-day period beginning on the date of
adoption or placement,
becomes covered under a group health plan or otherwise
becomes covered under health insurance coverage (or covered
for medical assistance under title XIX of the Social Security
Act).
(2) Loss if break in coverage.--Paragraph (1) shall no
longer apply to an individual if the individual does not have
any coverage described in section 101(b)(3)(B)(i) for a
continuous period of 60 days, not counting in such period any
days that are in a waiting period for any coverage under a
group health plan.
(3) Placed for adoption defined.--In this subsection and
section 103(e), the term ``placement'', or being ``placed'',
for adoption, in connection with any placement for adoption
of a child with any person, means the assumption and
retention by such person of a legal obligation for total or
partial support of such child in anticipation of adoption of
such child. The child's placement with such person terminates
upon the termination of such legal obligation.
(c) Exclusion Not Applicable to Pregnancy.--For purposes of
this section, pregnancy shall not be treated as a preexisting
condition.
(d) Eligibility Period Imposed by Health Maintenance
Organizations as Alternative to Preexisting Condition
Limitation.--A health maintenance organization which offers
health insurance coverage in connection with a group health
plan and which does not use the preexisting condition
limitations allowed under this section and section 101 with
respect to any particular coverage option may impose an
eligibility period for such coverage option, but only if such
period does not exceed--
(1) 60 days, in the case of a participant or beneficiary
whose initial coverage commences at the time such participant
or beneficiary first becomes eligible for coverage under the
plan, or
(2) 90 days, in the case of a participant or beneficiary
whose initial coverage commences after the date on which such
participant or beneficiary first becomes eligible for
coverage.
Such an HMO may use alternative methods, from those described
in the previous sentence, to address adverse selection as
approved by the applicable State authority. For purposes of
this subsection, the term ``eligibility period'' means a
period which, under the terms of the health insurance
coverage offered by the health maintenance organization, must
expire before the health insurance coverage becomes
effective. Any such eligibility period shall be treated for
purposes of this subtitle as a waiting period under the plan
and shall run concurrently
[[Page H3048]]
with any other applicable waiting period under the plan.
SEC. 103. PROHIBITING EXCLUSIONS BASED ON HEALTH STATUS AND
PROVIDING FOR ENROLLMENT PERIODS.
(a) Prohibition of Exclusion of Participants or
Beneficiaries Based on Health Status.--
(1) In general.--A group health plan, and an insurer or HMO
offering health insurance coverage in connection with a group
health plan, may not exclude an employee or his or her
beneficiary from being (or continuing to be) enrolled as a
participant or beneficiary under the terms of such plan or
coverage based on health status (as defined in section
191(c)(6)).
(2) Construction.--Nothing in this subsection shall be
construed as preventing the establishment of preexisting
condition limitations and restrictions to the extent
consistent with the provisions of this subtitle.
(b) Prohibition of Discrimination in Premium Contributions
of Individual Participants or Beneficiaries Based on Health
Status.--
(1) In general.--A group health plan, and an insurer or HMO
offering health insurance coverage in connection with a group
health plan, may not require a participant or beneficiary to
pay a premium or contribution which is greater than such
premium or contribution for a similarly situated participant
or beneficiary solely on the basis of the health status of
the participant or beneficiary.
(2) Construction.--Nothing in this subsection is intended--
(A) to effect the premium rates an insurer or HMO may
charge an employer for health insurance coverage provided in
connection a group health plan,
(B) to prevent a group health plan (or insurer or HMO in
health insurance coverage offered in connection with such a
plan) from establishing premium discounts or modifying
otherwise applicable copayments or deductibles in return for
adherence to programs of health promotion and disease
prevention, or
(C) to prevent such a plan, insurer, or HMO from varying
the premiums or contributions required of participants or
beneficiaries based on factors (such as scope of benefits,
geographic area of residence, or wage levels) that are not
directly related to health status.
(c) Enrollment of Eligible Individuals Who Lose Other
Coverage.--A group health plan shall permit an uncovered
employee who is otherwise eligible for coverage under the
terms of the plan (or an uncovered dependent, as defined
under the terms of the plan, of such an employee, if family
coverage is available) to enroll for coverage under the plan
under at least one benefit option if each of the following
conditions is met:
(1) The employee or dependent was covered under a group
health plan or had health insurance coverage at the time
coverage was previously offered to the employee or
individual.
(2) The employee stated in writing at such time that
coverage under a group health plan or health insurance
coverage was the reason for declining enrollment.
(3) The employee or dependent lost coverage under a group
health plan or health insurance coverage (as a result of loss
of eligibility for the coverage, termination of employment,
or reduction in the number of hours of employment).
(4) The employee requests such enrollment within 30 days
after the date of termination of such coverage.
(d) Dependent Beneficiaries.--
(1) In general.--If a group health plan makes family
coverage available, the plan may not require, as a condition
of coverage of an individual as a dependent (as defined under
the terms of the plan) of a participant in the plan, a
waiting period applicable to the coverage of a dependent
who--
(A) is a newborn,
(B) is an adopted child or child placed for adoption
(within the meaning of section 102(b)(3)), at the time of
adoption or placement, or
(C) is a spouse, at the time of marriage,
if the participant has met any waiting period applicable to
that participant.
(2) Timely enrollment.--
(A) In general.--Enrollment of a participant's beneficiary
described in paragraph (1) shall be considered to be timely
if a request for enrollment is made within 30 days of the
date family coverage is first made available or, in the case
described in--
(i) paragraph (1)(A), within 30 days of the date of the
birth,
(ii) paragraph (1)(B), within 30 days of the date of the
adoption or placement for adoption, or
(iii) paragraph (1)(C), within 30 days of the date of the
marriage with such a beneficiary who is the spouse of the
participant,
if family coverage is available as of such date.
(B) Coverage.--If available coverage includes family
coverage and enrollment is made under such coverage on a
timely basis under subparagraph (A), the coverage shall
become effective not later than the first day of the first
month beginning 15 days after the date the completed request
for enrollment is received.
(e) Multiemployer Plans, Multiple Employer Health Plans,
and Multiple Employer Welfare Arrangements.--A group health
plan which is a multi-employer plan, a multiple employer
health plan (as defined in section 701(4) of the Employee
Retirement Income Security Act of 1974), or a multiple
employer welfare arrangement (to the extent to which benefits
under the arrangement consist of medical care) may not deny
an employer whose employees are covered under such a plan or
arrangement continued access to the same or different
coverage under the terms of such a plan or arrangement, other
than--
(1) for nonpayment of contributions,
(2) for fraud or other intentional misrepresentation of
material fact by the employer,
(3) for noncompliance with material plan or arrangement
provisions,
(4) because the plan or arrangement is ceasing to offer any
coverage in a geographic area,
(5) for failure to meet the terms of an applicable
collective bargaining agreement, to renew a collective
bargaining or other agreement requiring or authorizing
contributions to the plan, or to employ employees covered by
such an agreement,
(6) in the case of a plan or arrangement to which
subparagraph (C), (D), or (E) of section 3(40) of the
Employee Retirement Income Security Act of 1974 applies, to
the extent necessary to meet the requirements of such
subparagraph, or
(7) in the case of a multiple employer health plan (as
defined in section 701(4) of such Act), for failure to meet
the requirements under part 7 of subtitle B of title I of
such Act for exemption under section 514(b)(6)(B) of such
Act.
SEC. 104. ENFORCEMENT.
(a) Enforcement Through COBRA Provisions in Internal
Revenue Code.--
(1) Application of cobra sanctions.--Subsection (a) of
section 4980B of the Internal Revenue Code of 1986 is amended
by striking ``the requirements of'' and all that follows and
inserting ``the requirements of--
``(1) subsection (f) with respect to any qualified
beneficiary, or
``(2) subject to subsection (h)--
``(A) section 101 or 102 of the Health Coverage
Availability and Affordability Act of 1996 with respect to
any individual covered under the group health plan, or
``(B) section 103 (other than subsection (e)) of such Act
with respect to any individual.''.
(2) Notice requirement.--Section 4980B(f)(6)(A) of such
Code is amended by inserting before the period the following:
``and subtitle A of title I of the Health Coverage
Availability and Affordability Act of 1996''.
(3) Special rules.--Section 4980B of such Code is amended
by adding at the end the following:
``(h) Special Rules.--For purposes of applying this section
in the case of requirements described in subsection (a)(2)
relating to section 101, section 102, or section 103 (other
than subsection (e)) of the Health Coverage Availability and
Affordability Act of 1996--
``(1) In general.--
``(A) Definition of group health plan.--The term `group
health plan' has the meaning given such term in section
191(a) of the Health Coverage Availability and Affordability
Act of 1996.
``(B) Qualified beneficiary.--Subsections (b), (c), and (e)
shall be applied by substituting the term `individual' for
the term `qualified beneficiary' each place it appears.
``(C) Noncompliance period.--Clause (ii) of subsection
(b)(2)(B) and the second sentence of subsection (b)(2) shall
not apply.
``(D) Limitation on tax.--Subparagraph (B) of subsection
(c)(3) shall not apply.
``(E) Liability for tax.--Paragraph (2) of subsection (e)
shall not apply.
``(2) Deferral to state regulation.--No tax shall be
imposed by this section on any failure to meet the
requirements of such section by any entity which offers
health insurance coverage and which is an insurer or health
maintenance organization (as defined in section 191(c) of the
Health Coverage Availability and Affordability Act of 1996)
regulated by a State unless the Secretary of Health and Human
Services has made the determination described in section
104(c)(2) of such Act with respect to such State, section,
and entity.
``(3) Limitation for insured plans.--In the case of a group
health plan of a small employer (as defined in section 191 of
the Health Coverage Availability and Affordability Act of
1996) that provides health care benefits solely through a
contract with an insurer or health maintenance organization
(as defined in such section), no tax shall be imposed by this
section upon the employer on a failure to meet such
requirements if the failure is solely because of the product
offered by the insurer or organization under such contract.
``(4) Limitation on imposition of tax.--In no case shall a
tax be imposed by this section for a failure to meet such a
requirement if--
``(A) a civil money penalty has been imposed by the
Secretary of Labor under part 5 of subtitle A of title I of
the Employee Retirement Income Security Act of 1974 with
respect to such failure, or
``(B) a civil money penalty has been imposed by the
Secretary of Health and Human Services under section 104(c)
of the Health Coverage Availability and Affordability Act of
1996 with respect to such failure.''.
(b) Enforcement Through ERISA Sanctions for Certain Group
Health Plans.--
(1) In general.--Subject to the succeeding provisions of
this subsection, sections 101 through 103 of this subtitle
(and subtitle D insofar as it is applicable to such sections)
shall be deemed to be provisions of title I of the Employee
Retirement Income Security
[[Page H3049]]
Act of 1974 for purposes of applying such title.
(2) Federal enforcement only if no enforcement through
state.--The Secretary of Labor shall enforce each section
referred to in paragraph (1) with respect to any entity which
is an insurer or health maintenance organization regulated by
a State only if the Secretary of Labor determines that such
State has not provided for enforcement of State laws which
govern the same matters as are governed by such section and
which require compliance by such entity with at least the
same requirements as those provided under such section.
(3) Limitations on liability.--
(A) No application where failure not discovered exercising
reasonable diligence.--No liability shall be imposed under
this subsection on the basis of any failure during any period
for which it is established to the satisfaction of the
Secretary of Labor that none of the persons against whom the
liability would be imposed knew, or exercising reasonable
diligence would have known, that such failure existed.
(B) No application where failure corrected within 30
days.--No liability shall be imposed under this subsection on
the basis of any failure if such failure was due to
reasonable cause and not to willful neglect, and such failure
is corrected during the 30-day period beginning on the first
day any of the persons against whom the liability would be
imposed knew, or exercising reasonable diligence would have
known, that such failure existed.
(4) Avoiding duplication of certain penalties.--In no case
shall a civil money penalty be imposed under the authority
provided under paragraph (1) for a violation of this subtitle
for which an excise tax has been imposed under section 4980B
of the Internal Revenue Code of 1986 or a civil money penalty
imposed under subsection (c).
(c) Enforcement Through Civil Money Penalties.--
(1) Imposition.--
(A) In general.--Subject to the succeeding provisions of
this subsection, any group health plan, insurer, or
organization that fails to meet a requirement of this
subtitle (other than section 103(e)) is subject to a civil
money penalty under this section.
(B) Liability for penalty.--Rules similar to the rules
described in section 4980B(e) of the Internal Revenue Code of
1986 for liability for a tax imposed under section 4980B(a)
of such Code shall apply to liability for a penalty imposed
under subparagraph (A).
(C) Amount of penalty.--
(i) In general.--The maximum amount of penalty imposed
under this paragraph is $100 for each day for each individual
with respect to which such a failure occurs.
(ii) Considerations in imposition.--In determining the
amount of any penalty to be assessed under this paragraph,
the Secretary of Health and Human Services shall take into
account the previous record of compliance of the person being
assessed with the applicable requirements of this subtitle,
the gravity of the violation, and the overall limitations for
unintentional failures provided under section 4980B(c)(4) of
the Internal Revenue Code of 1986.
(iii) Limitations.--
(I) Penalty not to apply where failure not discovered
exercising reasonable diligence.--No civil money penalty
shall be imposed under this paragraph on any failure during
any period for which it is established to the satisfaction of
the Secretary that none of the persons against whom the
penalty would be imposed knew, or exercising reasonable
diligence would have known, that such failure existed.
(II) Penalty not to apply to failures corrected within 30
days.--No civil money penalty shall be imposed under this
paragraph on any failure if such failure was due to
reasonable cause and not to willful neglect, and such failure
is corrected during the 30-day period beginning on the first
day any of the persons against whom the penalty would be
imposed knew, or exercising reasonable diligence would have
known, that such failure existed.
(D) Administrative review.--
(i) Opportunity for hearing.--The person assessed shall be
afforded an opportunity for hearing by the Secretary upon
request made within 30 days after the date of the issuance of
a notice of assessment. In such hearing the decision shall be
made on the record pursuant to section 554 of title 5, United
States Code. If no hearing is requested, the assessment shall
constitute a final and unappealable order.
(ii) Hearing procedure.--If a hearing is requested, the
initial agency decision shall be made by an administrative
law judge, and such decision shall become the final order
unless the Secretary modifies or vacates the decision. Notice
of intent to modify or vacate the decision of the
administrative law judge shall be issued to the parties
within 30 days after the date of the decision of the judge. A
final order which takes effect under this paragraph shall be
subject to review only as provided under subparagraph (D).
(E) Judicial review.--
(i) Filing of action for review.--Any person against whom
an order imposing a civil money penalty has been entered
after an agency hearing under this paragraph may obtain
review by the United States district court for any district
in which such person is located or the United States District
Court for the District of Columbia by filing a notice of
appeal in such court within 30 days from the date of such
order, and simultaneously sending a copy of such notice be
registered mail to the Secretary.
(ii) Certification of administrative record.--The Secretary
shall promptly certify and file in such court the record upon
which the penalty was imposed.
(iii) Standard for review.--The findings of the Secretary
shall be set aside only if found to be unsupported by
substantial evidence as provided by section 706(2)(E) of
title 5, United States Code.
(iv) Appeal.--Any final decision, order, or judgment of
such district court concerning such review shall be subject
to appeal as provided in chapter 83 of title 28 of such Code.
(F) Failure to pay assessment; maintenance of action.--
(i) Failure to pay assessment.--If any person fails to pay
an assessment after it has become a final and unappealable
order, or after the court has entered final judgment in favor
of the Secretary, the Secretary shall refer the matter to the
Attorney General who shall recover the amount assessed by
action in the appropriate United States district court.
(ii) Nonreviewability.--In such action the validity and
appropriateness of the final order imposing the penalty shall
not be subject to review.
(G) Payment of penalties.--Except as otherwise provided,
penalties collected under this paragraph shall be paid to the
Secretary (or other officer) imposing the penalty and shall
be available without appropriation and until expended for the
purpose of enforcing the provisions with respect to which the
penalty was imposed.
(2) Federal enforcement only if no enforcement through
state.--Paragraph (1) shall apply to enforcement of the
requirements of section 101, 102, or 103 (other than section
103(e)) with respect to any entity which offers health
insurance coverage and which is an insurer or HMO regulated
by a State only if the Secretary of Health and Human Services
has determined that such State has not provided for
enforcement of State laws which govern the same matters as
are governed by such section and which require compliance by
such entity with at least the same requirements as those
provided under such section.
(3) Nonduplication of sanctions.--In no case shall a civil
money penalty be imposed under this subsection for a
violation of this subtitle for which an excise tax has been
imposed under section 4980B of the Internal Revenue Code of
1986 or for which a civil money penalty has been imposed
under the authority provided under subsection (b).
(d) Coordination in Administration.--The Secretaries of the
Treasury, Labor, and Health and Human Services shall issue
regulations that are nonduplicative to carry out this
subtitle. Such regulations shall be issued in a manner that
assures coordination and nonduplication in their activities
under this subtitle.
Subtitle B--Certain Requirements for Insurers and HMOs in the Group and
Individual Markets
PART 1--AVAILABILITY OF GROUP HEALTH INSURANCE COVERAGE
SEC. 131. GUARANTEED AVAILABILITY OF GENERAL COVERAGE IN THE
SMALL GROUP MARKET.
(a) Issuance of Coverage.--
(1) In general.--Subject to the succeeding subsections of
this section, each insurer or HMO that offers health
insurance coverage in the small group market in a State--
(A) must accept every small employer in the State that
applies for such coverage; and
(B) must accept for enrollment under such coverage every
eligible individual (as defined in paragraph (2)) who applies
for enrollment during the initial period in which the
individual first becomes eligible for coverage under the
group health plan and may not place any restriction which is
inconsistent with section 103(a) on an individual being a
participant or beneficiary so long as such individual is an
eligible individual.
(2) Eligible individual defined.--In this section, the term
``eligible individual'' means, with respect to an insurer or
HMO that offers health insurance coverage to any small
employer in the small group market, such an individual in
relation to the employer as shall be determined--
(A) in accordance with the terms of such plan,
(B) as provided by the insurer or HMO under rules of the
insurer or HMO which are uniformly applicable, and
(C) in accordance with all applicable State laws governing
such insurer or HMO.
(b) Special Rules for Network Plans and HMOs.--
(1) In general.--In the case of an insurer that offers
health insurance coverage in the small group market through a
network plan and in the case of an HMO that offers health
insurance coverage in connection with such a plan, the
insurer or HMO may--
(A) limit the employers that may apply for such coverage to
those with eligible individuals whose place of employment or
residence is in the service area for such plan or HMO;
(B) limit the individuals who may be enrolled under such
coverage to those whose place of residence or employment is
within the service area for such plan or HMO; and
(C) within the service area of such plan or HMO, deny such
coverage to such employers if the insurer or HMO demonstrates
that--
(i) it will not have the capacity to deliver services
adequately to enrollees of any additional groups because of
its obligations to
[[Page H3050]]
existing group contract holders and enrollees, and
(ii) it is applying this paragraph uniformly to all
employers without regard to the claims experience of those
employers and their employees (and their beneficiaries) or
the health status of such employees and beneficiaries.
(2) 180-day suspension upon denial of coverage.--An insurer
or HMO, upon denying health insurance coverage in any service
area in accordance with paragraph (1)(C), may not offer
coverage in the small group market within such service area
for a period of 180 days after such coverage is denied.
(c) Special Rule for Financial Capacity Limits.--
(1) In general.--An insurer or HMO may deny health
insurance coverage in the small group market if the insurer
or HMO demonstrates to the applicable State authority that--
(A) it does not have the financial reserves necessary to
underwrite additional coverage, and
(B) it is applying this paragraph uniformly to all
employers without regard to the claims experience or duration
of coverage of those employers and their employees (and their
beneficiaries) or the health status of such employees and
beneficiaries.
(2) 180-day suspension upon denial of coverage.--An insurer
or HMO upon denying health insurance coverage in connection
with group health plans in any service area in accordance
with paragraph (1) may not offer coverage in connection with
group health plans in the small group market within such
service area for a period of 180 days after such coverage is
denied.
(d) Exception to Requirement for Issuance of Coverage by
Reason of Failure by Plan To Meet Certain Minimum
Participation or Contribution Rules.--
(1) In general.--Subsection (a) shall not apply in the case
of any group health plan with respect to which--
(A) participation rules of an insurer or HMO which are
described in paragraph (2) are not met, or
(B) contribution rules of an insurer or HMO which are
described in paragraph (3) are not met.
(2) Participation rules.--For purposes of paragraph (1)(A),
participation rules (if any) of an insurer or HMO shall be
treated as met with respect to a group health plan only if
such rules are uniformly applicable and in accordance with
applicable State law and the number or percentage of eligible
individuals who, under the plan, are participants or
beneficiaries equals or exceeds a level which is
determined in accordance with such rules.
(3) Contribution rules.--For purposes of paragraph (1)(B),
contribution rules (if any) of an insurer or HMO shall be
treated as met with respect to a group health plan only if
such rules are in accordance with applicable State law.
SEC. 132. GUARANTEED RENEWABILITY OF GROUP COVERAGE.
(a) In General.--Except as provided in this section, if an
insurer or health maintenance organization offers health
insurance coverage in the small or large group market, the
insurer or organization must renew or continue in force such
coverage at the option of the employer.
(b) General Exceptions.--An insurer or organization may
nonrenew or discontinue health insurance coverage offered an
employer based only on one or more of the following:
(1) Nonpayment of premiums.--The employer has failed to pay
premiums or contributions in accordance with the terms of the
health insurance coverage or the insurer or organization has
not received timely premium payments.
(2) Fraud.--The employer has performed an act or practice
that constitutes fraud or made an intentional
misrepresentation of material fact under the terms of the
coverage.
(3) Violation with participation or contribution rules.--
The employer has failed to comply with a material plan
provision relating to participation or contribution rules in
accordance with section 131(d).
(4) Termination of plan.--Subject to subsection (c), the
insurer or organization is ceasing to offer coverage in the
small or large group market in a State (or, in the case of a
network plan or HMO, in a geographic area).
(5) Movement outside service area.--The employer has
changed the place of employment in such manner that employees
and dependents reside and are employed outside the service
area of the insurer or organization or outside the area for
which the insurer or organization is authorized to do
business.
Paragraph (5) shall apply to an insurer or HMO only if it is
applied uniformly without regard to the claims experience of
employers and their employees (and their beneficiaries) or
the health status of such employees and beneficiaries.
(c) Exceptions for Uniform Termination of Coverage.--
(1) Particular type of coverage not offered.--In any case
in which a insurer or HMO decides to discontinue offering a
particular type of health insurance coverage in the small or
large group market, coverage of such type may be discontinued
by the insurer or organization only if--
(A) the insurer or organization provides notice to each
employer provided coverage of this type in such market (and
participants and beneficiaries covered under such coverage)
of such discontinuation at least 90 days prior to the date of
the discontinuation of such coverage;
(B) the insurer or organization offers to each employer in
the small employer or large employer market provided coverage
of this type, the option to purchase any other health
insurance coverage currently being offered by the insurer or
organization for employers in such market; and
(C) in exercising the option to discontinue coverage of
this type and in offering one or more replacement coverage,
the insurer or organization acts uniformly without regard to
the health status or insurability of participants or
beneficiaries covered or new participants or beneficiaries
who may become eligible for such coverage.
(2) Discontinuance of all coverage.--
(A) In general.--Subject to subparagraph (C), in any case
in which an insurer or HMO elects to discontinue offering all
health insurance coverage in the small group market or the
large group market, or both markets, in a State, health
insurance coverage may be discontinued by the insurer or
organization only if--
(i) the insurer or organization provides notice to the
applicable State authority and to each employer (and
participants and beneficiaries covered under such coverage)
of such discontinuation at least 180 days prior to the date
of the expiration of such coverage, and
(ii) all health insurance issued or delivered for issuance
in the State in such market (or markets) are discontinued and
coverage under such health insurance coverage in such market
(or markets) is not renewed.
(B) Prohibition on market reentry.--In the case of a
discontinuation under subparagraph (A) in one or both
markets, the insurer or organization may not provide for the
issuance of any health insurance coverage in the market and
State involved during the 5-year period beginning on the date
of the discontinuation of the last health insurance coverage
not so renewed.
(d) Exception for Uniform Modification of Coverage.--At the
time of coverage renewal, an insurer or HMO may modify the
coverage offered to a group health plan in the group health
market so long as such modification is effective on a uniform
basis among group health plans with that type of coverage.
PART 2--AVAILABILITY OF INDIVIDUAL HEALTH INSURANCE COVERAGE
SEC. 141. GUARANTEED AVAILABILITY OF INDIVIDUAL HEALTH
INSURANCE COVERAGE TO CERTAIN INDIVIDUALS WITH
PRIOR GROUP COVERAGE.
(a) Goals.--The goals of this section are--
(1) to guarantee that any qualifying individual (as defined
in subsection (b)(1)) is able to obtain qualifying coverage
(as defined in subsection (b)(2)); and
(2) to assure that qualifying individuals obtaining such
coverage receive credit for their prior coverage toward the
new coverage's preexisting condition exclusion period (if
any) in a manner consistent with subsection (b)(3).
(b) Qualifying Individual and Health Insurance Coverage
Defined.--In this section--
(1) Qualifying individual.--The term ``qualifying
individual'' means an individual--
(A)(i) for whom, as of the date on which the individual
seeks coverage under this section, the aggregate of the
qualified coverage periods (as defined in section
101(b)(3)(B)) is 18 or more months and (ii) whose most recent
prior coverage was under a group health plan, governmental
plan, or church plan (or health insurance coverage offered in
connection with any such plan);
(B) who is not eligible for coverage under (i) a group
health plan, (ii) part A or part B of title XVIII of the
Social Security Act, or (iii) a State plan under title XIX of
such Act (or any successor program), and does not have
individual health insurance coverage;
(C) with respect to whom the most recent coverage within
the coverage period described in subparagraph (A)(i) was not
terminated based on a factor described in paragraph (1) or
(2) of section 132(b);
(D) if the individual had been offered the option of
continuation coverage under a COBRA continuation provision or
under a similar State program, who elected such coverage; and
(E) who, if the individual elected such continuation
coverage, has exhausted such continuation coverage.
In applying subparagraph (A)(i), the reference in section
101(b)(3)(B)(ii) to a 60-day break in coverage is deemed a
reference to a 60-day break in any coverage described in
section 101(b)(3)(B)(i).
(2) Qualifying coverage.--
(A) In general.--The term ``qualifying coverage'' means,
with respect to an insurer or HMO in relation to an
qualifying individual, individual health insurance coverage
for which the actuarial value of the benefits is not less
than--
(i) the weighted average actuarial value of the benefits
provided by all the individual health insurance coverage
issued by the insurer or HMO in the State during the previous
year (not including coverage issued under this section), or
(ii) the weighted average of the actuarial value of the
benefits provided by all the individual health insurance
coverage issued by all insurers and HMOs in the State during
the previous year (not including coverage issued under this
section),
[[Page H3051]]
as elected by the plan or by the State under subsection
(c)(1).
(B) Assumptions.--For purposes of subparagraph (A), the
actuarial value of benefits provided under individual health
insurance coverage shall be calculated based on a
standardized population and a set of standardized utilization
and cost factors.
(3) Crediting for previous coverage.--Crediting is
consistent with this paragraph only if any preexisting
condition exclusion period is reduced at least to the extent
such a period would be reduced if the coverage under this
section were under a group health plan to which section
101(a) applies. In carrying out this subsection, provisions
similar to the provisions of section 101(c) shall apply.
(c) Optional State Establishment of Mechanisms To Achieve
Goals of Guaranteeing Availability of Coverage.--
(1) In general.--Any State may establish, to the extent of
the State's authority, public or private mechanisms
reasonably designed to meet the goals specified in subsection
(a). If a State implements such a mechanism by the deadline
specified in paragraph (4), the State may elect to have such
mechanisms apply instead of having subsection (d)(3) apply in
the State. An election under this paragraph shall be by
notice from the chief executive officer of the State to the
Secretary of Health and Human Services on a timely basis
consistent with the deadlines specified in paragraph (4). In
establishing what is qualifying coverage under such a
mechanism under this subsection, a State may exercise the
election described in subsection (b)(2)(A) with respect to
each insurer or HMO in the State (or on a collective basis
after exercising such election for each such insurer or HMO).
(2) Types of mechanisms.--State mechanisms under this
subsection may include one or more (or a combination) of the
following:
(A) Health insurance coverage pools or programs authorized
or established by the State.
(B) Mandatory group conversion policies.
(C) Guaranteed issue of one or more plans of individual
health insurance coverage to qualifying individuals.
(D) Open enrollment by one or more insurers or HMOs.
The mechanisms described in the previous sentence are not an
exclusive list of the mechanisms (or combinations of
mechanisms) that may be used under this subsection.
(3) Safe harbor for benefits under current risk pools.--In
the case of a State that has a health insurance coverage pool
or risk pool in effect on March 12, 1996, and that implements
the mechanism described in paragraph (2)(A), the benefits
under such mechanism (or benefits the actuarial value of
which is not less than the actuarial value of such current
benefits, using the assumptions described in subsection
(b)(2)(B)) are deemed, for purposes of this section, to
constitute qualified coverage.
(4) Deadline for state implementation.--
(A) In general.--Subject to subparagraph (B), the deadline
under this paragraph is July 1, 1997.
(B) Extension to permit legislation.--The deadline under
this paragraph is July 1, 1998, in the case of a State the
legislature of which does not have a regular legislative
session at any time between January 1, 1997, and June 30,
1997.
(C) Construction.--Nothing in this section shall be
construed as preventing a State from--
(i) implementing guaranteed availability mechanisms before
the deadline,
(ii) continuing in effect mechanisms that are in effect
before the date of the enactment of this Act,
(iii) offering guaranteed availability of coverage that is
not qualifying coverage, or
(iv) offering guaranteed availability of coverage to
individuals who are not qualifying individuals.
(d) Fallback Provisions.--
(1) No state election.--If a State has not provided notice
to the Secretary of an election on a timely basis under
subsection (c), the Secretary shall notify the State that
paragraph (3) will be applied in the State.
(2) Preliminary determination after state election.--If--
(A) a State has provided notice of an election on a timely
basis under subsection (c), and
(B) the Secretary finds, after consultation with the chief
executive officer of the State and the insurance commissioner
or chief insurance regulatory official of the State, that
such a mechanism (for which notice was provided) is not
reasonably designed to meet the goals specified in subsection
(a),
the Secretary shall notify the State of such preliminary
determination, of the consequences under paragraph (3) of a
failure to implement such a mechanism, and permit the State a
reasonable opportunity in which to modify the mechanism (or
to adopt another mechanism) that is reasonably designed to
meet the goals specified in subsection (a). The Secretary
shall not make such a determination on any basis other than
the basis described in subparagraph (B). If, after providing
such notice and opportunity, the Secretary finds that the
State has not implemented such a mechanism, the Secretary
shall notify the State that paragraph (3) will be applied in
the State.
(3) Description of fallback mechanism.--As provided under
paragraphs (1) and (2) and subject to paragraph (5), each
insurer or HMO in the State involved that issues individual
health insurance coverage--
(A) shall offer qualifying health insurance coverage, in
which qualifying individuals obtaining such coverage receive
credit for their prior coverage toward the new coverage's
preexisting condition exclusion period (if any) in a manner
consistent with subsection (b)(3), to each qualifying
individual in the State, and
(B) may not decline to issue such coverage to such an
individual based on health status (except as permitted under
paragraph (4)).
(4) Application of network and capacity limits.--Under
regulations, the provisions of subsections (b) and (c) of
section 131 shall apply to an individual in the individual
health insurance market under this subsection in the same
manner as they apply under section 131 to an employer in the
small group market.
(5) Termination of fallback mechanism.--The provisions of
this subsection shall cease to apply to a State if the
Secretary finds that a State has implemented a mechanism that
is reasonably designed to meet the goals specified in
subsection (a), and until the Secretary finds that such
mechanism is no longer being implemented.
(e) Construction.--
(1) Premiums.--Nothing in this section shall be construed
to affect the determination of an insurer or HMO as to the
amount of the premium payable under an individual health
insurance coverage under applicable state law.
(2) Market requirements.--
(A) In general.--The provisions of subsection (a) shall not
be construed to require that an insurer or HMO offering
health insurance coverage only in connection with a group
health plan or an association offer individual health
insurance coverage.
(B) Conversion policies.--An insurer or HMO offering health
insurance coverage in connection with a group health plan
under subtitle A shall not be deemed to be an insurer or HMO
offering an individual health insurance coverage solely
because such insurer or HMO offers a conversion policy.
(3) Disregard of association coverage.--An insurer or HMO
that offers health insurance coverage only in connection with
a group health plan or in connection with individuals based
on affiliation with one or more bona fide associations is not
considered, for purposes of this subtitle, to be offering
individual health insurance coverage.
(4) Marketing of plans.--Nothing in this section shall be
construed to prevent a State from requiring insurer or HMOs
offering individual health insurance coverage to actively
market such coverage.
SEC. 142. GUARANTEED RENEWABILITY OF INDIVIDUAL HEALTH
INSURANCE COVERAGE.
(a) Guaranteed Renewability.--Subject to the succeeding
provisions of this section, an insurer or HMO that provides
individual health insurance coverage to an individual shall
renew or continue such coverage at the option of the
individual.
(b) Nonrenewal Permitted in Certain Cases.--An insurer or
HMO may nonrenew or discontinue individual health insurance
coverage of an individual only based on one or more of the
following:
(1) Nonpayment.--The individual fails to pay payment of
premiums or contributions in accordance with the terms of the
coverage or the insurer or organization has not failed to
receive timely premium payments.
(2) Fraud.--The individual has performed an act or practice
that constitutes fraud or made an intentional
misrepresentation of material fact under the terms of the
coverage.
(3) Termination of coverage.--Subject to subsection (c),
the insurer or HMO is ceasing to offer health insurance
coverage in the individual market in a State (or, in the case
of a network plan or HMO, in a geographic area).
(4) Movement outside service area.--The individual has
changed residence and resides outside the service area of the
insurer or organization or outside the area for which the
insurer or organization is authorized to do business.
Paragraph (4) shall apply to an insurer or HMO only if it is
applied uniformly without regard to the claims experience of
employers and their employees (and their beneficiaries) or
the health status of such employees and beneficiaries.
(c) Termination of Individual Coverage.--The provisions of
section 132(c) shall apply to this section in the same manner
as they apply under section 132, except that any reference to
an employer or market is deemed a reference to the covered
individual or the individual market, respectively.
(d) Exception for Uniform Modification of Coverage.--The
provisions of section 132(d) shall apply to individual health
insurance coverage in the individual market under this
section in the same manner as it applies to health insurance
coverage offered in connection with a group health plan in
the group market under such section.
PART 3--ENFORCEMENT
SEC. 151. INCORPORATION OF PROVISIONS FOR STATE ENFORCEMENT
WITH FEDERAL FALLBACK AUTHORITY.
The provisions of paragraphs (1) and (2) of section 104(c)
shall apply to enforcement of requirements in each section in
part 1 or part 2 with respect to insurers and HMOs regulated
by a State in the same manner as such provisions apply to
enforcement of requirements in section 101, 102, or 103 with
respect to insurers and HMOs regulated by a State.
[[Page H3052]]
Subtitle C--Affordable and Available Health Coverage Through Multiple
Employer Pooling Arrangements
SEC. 161. CLARIFICATION OF DUTY OF THE SECRETARY OF LABOR TO
IMPLEMENT PROVISIONS OF CURRENT LAW PROVIDING
FOR EXEMPTIONS AND SOLVENCY STANDARDS FOR
MULTIPLE EMPLOYER HEALTH PLANS.
(a) Rules Governing Regulation of Multiple Employer Health
Plans.--Subtitle B of title I of the Employee Retirement
Income Security Act of 1974 (as amended by the preceding
provisions of this title) is amended by inserting after part
6 the following new part:
``PART 7--RULES GOVERNING REGULATION OF MULTIPLE EMPLOYER HEALTH PLANS
``SEC. 701. DEFINITIONS.
``For purposes of this part--
``(1) Fully insured.--A particular benefit under a group
health plan or a multiple employer welfare arrangement is
`fully insured' if such benefit (irrespective of any recourse
available against other parties) is provided by an insurer or
a health maintenance organization in a manner so that such
benefit constitutes insurance regulated by the law of a State
(within the meaning of section 514(b)(2)(A)).
``(2) Insurer.--The term `insurer' means an insurance
company, insurance service, or insurance organization which
is licensed to engage in the business of insurance in a State
and which is subject to State law which regulates insurance
(within the meaning of section 514(b)(2)(A)).
``(3) Health maintenance organization.--The terms `health
maintenance organization' means--
``(A) a Federally qualified health maintenance organization
(as defined in section 1301(a) of the Public Health Service
Act (42 U.S.C. 300e(a))),
``(B) an organization recognized under State law as a
health maintenance organization, or
``(C) a similar organization regulated under State law for
solvency in the same manner and to the same extent as such a
health maintenance organization,
if it is subject to State law which regulates insurance
(within the meaning of section 514(b)(2)(A)).
``(4) Multiple employer health plan.--The term `multiple
employer health plan' means a multiple employer welfare
arrangement which provides medical care and which is or has
been exempt under section 514(b)(6)(B).
``(5) Participating employer.--The term `participating
employer' means, in connection with a multiple employer
welfare arrangement, any employer if any of its employees, or
any of the individuals who are dependents (as defined under
the terms of the arrangement) of its employees, are or were
covered under such arrangement in connection with the
employment of the employees.
``(6) Sponsor.--The term `sponsor' means, in connection
with a multiple employer welfare arrangement, the association
or other entity which establishes or maintains the
arrangement.
``(7) State insurance commissioner.--The term `State
insurance commissioner' means the insurance commissioner (or
similar official) of a State.
``SEC. 702. CLARIFICATION OF DUTY OF THE SECRETARY TO
IMPLEMENT PROVISIONS OF CURRENT LAW PROVIDING
FOR EXEMPTIONS AND SOLVENCY STANDARDS FOR
MULTIPLE EMPLOYER HEALTH PLANS.
``(a) Treatment as Employee Welfare Benefit Plan Which Is a
Group Health Plan.--
``(1) In general.--A multiple employer welfare
arrangement--
``(A) under which the benefits consist solely of medical
care (disregarding such incidental benefits as the Secretary
shall specify by regulation), and
``(B) under which some or all benefits are not fully
insured,
shall be treated for purposes of subtitle A and the other
parts of this title as an employee welfare benefit plan which
is a group health plan if the arrangement is exempt under
section 514(b)(6)(B) in accordance with this part.
``(2) Exception.--In the case of a multiple employer
welfare arrangement which would be described in section
3(40)(A)(i) but solely for the failure to meet the
requirements of section 3(40)(C)(ii), paragraph (1) shall
apply with respect to such arrangement, but only with respect
to benefits provided thereunder which constitute medical
care.
``(b) Treatment Under Preemption Rules.--
``(1) In general.--The Secretary shall prescribe
regulations described in section 514(b)(6)(B)(i), applicable
to multiple employer welfare arrangements described in
subparagraphs (A) and (B) of subsection (a)(1), providing a
procedure for granting exemptions from section
514(b)(6)(A)(ii) with respect to such arrangements. Under
such regulations, any such arrangement treated under
subsection (a) as an employee welfare benefit plan shall be
deemed to be an arrangement described in section
514(b)(6)(B)(ii).
``(2) Standards.--Under the procedure prescribed pursuant
to paragraph (1), the Secretary shall grant an arrangement
described in subsection (a) an exemption described in
subsection (a) only if the Secretary finds that--
``(A) such exemption--
``(i) is administratively feasible,
``(ii) is not adverse to the interests of the individuals
covered under the arrangement, and
``(iii) is protective of the rights and benefits of the
individuals covered under the arrangement,
``(B) the application for the exemption meets the
requirements of paragraph (3), and
``(C) the requirements of sections 703 and 704 are met with
respect to the arrangement.
``(3) Information to be included in application for
exemption.--An application for an exemption described in
subsection (a) meets the requirements of this paragraph only
if it includes, in a manner and form prescribed in
regulations of the Secretary, at least the following
information:
``(A) Identifying information.--The names and addresses
of--
``(i) the sponsor, and
``(ii) the members of the board of trustees of the
arrangement.
``(B) States in which arrangement intends to do business.--
The States in which individuals covered under the arrangement
are to be located and the number of such individuals expected
to be located in each such State.
``(C) Bonding requirements.--Evidence provided by the board
of trustees that the bonding requirements of section 412 will
be met as of the date of the application or (if later)
commencement of operations.
``(D) Plan documents.--A copy of the documents governing
the arrangement (including any bylaws and trust agreements),
the summary plan description, and other material describing
the benefits and coverage that will be provided to
individuals covered under the arrangement.
``(E) Agreements with service providers.--A copy of any
agreements between the arrangement and contract
administrators and other service providers.
``(F) Funding report.--A report setting forth information
determined as of a date within the 120-day period ending with
the date of the application, including the following:
``(i) Reserves.--A statement, certified by the board of
trustees of the arrangement, and a statement of actuarial
opinion, signed by a qualified actuary, that all applicable
requirements of section 705 are or will be met in accordance
with regulations which the Secretary shall prescribe.
``(ii) Adequacy of contribution rates.--A statement of
actuarial opinion, signed by a qualified actuary, which sets
forth a description of the extent to which contribution rates
are adequate to provide for the payment of all obligations
and the maintenance of required reserves under the
arrangement for the 12-month period beginning with such date
within such 120-day period, taking into account the expected
coverage and experience of the arrangement. If the
contribution rates are not fully adequate, the statement of
actuarial opinion shall indicate the extent to which the
rates are inadequate and the changes needed to ensure
adequacy.
``(iii) Current and projected value of assets and
liabilities.--A statement of actuarial opinion signed by a
qualified actuary, which sets forth the current value of the
assets and liabilities accumulated under the arrangement and
a projection of the assets, liabilities, income, and expenses
of the arrangement for the 12-month period referred to in
clause (ii). The income statement shall identify separately
the arrangement's administrative expenses and claims.
``(iv) Costs of coverage to be charged and other
expenses.--A statement of the costs of coverage to be
charged, including an itemization of amounts for
administration, reserves, and other expenses associated with
the operation of the arrangement.
``(v) Other information.--Any other information which may
be prescribed in regulations of the Secretary as necessary to
carry out the purposes of this part.
``(4) Filing fee.--Under the procedure prescribed pursuant
to paragraph (1), a multiple employer welfare arrangement
shall pay to the Secretary at the time of filing an
application for an exemption referred to in subsection (a) a
filing fee in the amount of $5,000, which shall be available,
to the extent provided in appropriation Acts, to the
Secretary for the sole purpose of administering the exemption
procedures applicable with respect to such arrangement.
``(5) Class exemption treatment for existing large
arrangements.--Under the procedure prescribed pursuant to
paragraph (1), if--
``(A) at the time of application for an exemption under
section 514(b)(6)(B) with respect to an arrangement which has
been in existence as of the date of the enactment of the
Health Coverage Availability and Affordability Act of 1996
for at least 3 years, either (A) the arrangement covers at
least 1,000 participants and beneficiaries, or (B) with
respect to the arrangement there are at least 2,000 employees
of eligible participating employers,
``(B) a complete application for the exemption with respect
to the arrangement has been filed and is pending, and
``(C) the application meets such requirements (if any) as
the Secretary may provide with respect to class exemptions
under this subsection,
the exemption shall be treated as having been granted with
respect to the arrangement unless and until the Secretary
provides appropriate notice that the exemption has been
denied.
[[Page H3053]]
``(c) Filing Notice of Exemption With States.--An exemption
granted under section 514(b)(6)(B) to a multiple employer
welfare arrangement shall not be effective unless written
notice of such exemption is filed with the State insurance
commissioner of each State in which at least 5 percent of the
individuals covered under the arrangement are located. For
purposes of this subsection, an individual shall be
considered to be located in the State in which a known
address of such individual is located or in which such
individual is employed. The Secretary may by regulation
provide in specified cases for the application of the
preceding sentence with lesser percentages in lieu of such 5
percent amount.
``(d) Notice of Material Changes.--In the case of any
multiple employer welfare arrangement exempt under section
514(b)(6)(B), descriptions of material changes in any
information which was required to be submitted with the
application for the exemption under this part shall be filed
in such form and manner as shall be prescribed in regulations
of the Secretary. The Secretary may require by regulation
prior notice of material changes with respect to specified
matters which might serve as the basis for suspension or
revocation of the exemption.
``(e) Reporting Requirements.--Under regulations of the
Secretary, the requirements of sections 102, 103, and 104
shall apply with respect to any multiple employer welfare
arrangement which is or has been exempt under section
514(b)(6)(B) in the same manner and to the same extent as
such requirements apply to employee welfare benefit plans,
irrespective of whether such exemption continues in effect.
The annual report required under section 103 for any plan
year in the case of any such multiple employer welfare
arrangement shall also include information described in
subsection (b)(3)(F) with respect to the plan year and,
notwithstanding section 104(a)(1)(A), shall be filed not
later than 90 days after the close of the plan year.
``(f) Engagement of Qualified Actuary.--The board of
trustees of each multiple employer welfare arrangement which
is or has been exempt under section 514(b)(6)(B) shall
engage, on behalf of all covered individuals, a qualified
actuary who shall be responsible for the preparation of the
materials comprising information necessary to be submitted by
a qualified actuary under this part. The qualified actuary
shall utilize such assumptions and techniques as are
necessary to enable such actuary to form an opinion as to
whether the contents of the matters reported under this
part--
``(1) are in the aggregate reasonably related to the
experience of the arrangement and to reasonable expectations,
and
``(2) represent such actuary's best estimate of anticipated
experience under the arrangement.
The opinion by the qualified actuary shall be made with
respect to, and shall be made a part of, the annual report.
``SEC. 703. REQUIREMENTS RELATING TO SPONSORS, BOARDS OF
TRUSTEES, AND PLAN OPERATIONS.
``(a) In General.--A complete application for an exemption
under section 514(b)(6)(B) shall include information which
the Secretary determines to be complete and accurate and
sufficient to demonstrate that the following requirements are
met with respect to the arrangement:
``(1) Sponsor.--The sponsor is, and has been (together with
its immediate predecessor, if any) for a continuous period of
not less than 5 years before the date of the application,
organized and maintained in good faith, with a constitution
and bylaws specifically stating its purpose and providing for
periodic meetings on at least an annual basis, as a trade
association, an industry association, a professional
association, or a chamber of commerce (or similar business
group, including a corporation or similar organization that
operates on a cooperative basis (within the meaning of
section 1381 of the Internal Revenue Code of 1986)), for
substantial purposes other than that of obtaining or
providing medical care (within the meaning of section
607(1)), and the applicant demonstrates to the satisfaction
of the Secretary that the sponsor is established as a
permanent entity which receives the active support of its
members and collects dues or contributions from its members
on a periodic basis, without conditioning such dues or
contributions on the basis of the health status of the
employees of such members or the dependents of such employees
or on the basis of participation in a group health plan. Any
sponsor consisting of an association of entities meeting the
preceding requirements of this paragraph shall be treated as
meeting the requirements of this paragraph.
``(2) Board of trustees.--The arrangement is operated,
pursuant to a trust agreement, by a board of trustees which
has complete fiscal control over the arrangement and which is
responsible for all operations of the arrangement, and the
board of trustees has in effect rules of operation and
financial controls, based on a 3-year plan of operation,
adequate to carry out the terms of the arrangement and to
meet all requirements of this title applicable to the
arrangement. The members of the board of trustees are
individuals selected from individuals who are the owners,
officers, directors, or employees of the participating
employers or who are partners in the participating employers
and actively participate in the business. No such member is
an owner, officer, director, or employee of, or partner in, a
contract administrator or other service provider to the
arrangement, except that officers or employees of a sponsor
which is a service provider (other than a contract
administrator) to the arrangement may be members of the board
if they constitute not more than 25 percent of the membership
of the board and they do not provide services to
the arrangement other than on behalf of the sponsor. The
board has sole authority to approve applications for
participation in the arrangement and to contract with a
service provider to administer the day-to-day affairs of
the arrangement.
``(3) Covered persons.--The instruments governing the
arrangement include a written instrument which provides that,
effective upon becoming an arrangement exempt under section
514(b)(6)(B)--
``(A) all participating employers must be members or
affiliated members of the sponsor, except that, in the case
of a sponsor which is a professional association or other
individual-based association, if at least one of the
officers, directors, or employees of an employer, or at least
one of the individuals who are partners in an employer and
who actively participates in the business, is a member or
affiliated member of the sponsor, participating employers may
also include such employer,
``(B) all individuals thereafter commencing coverage under
the arrangement must be--
``(i) active or retired owners (including self-employed
individuals), officers, directors, or employees of, or
partners in, participating employers, or
``(ii) the beneficiaries of individuals described in clause
(i), and
``(C) no participating employer may provide health
insurance coverage in the individual market for any employee
not covered under the arrangement which is similar to the
coverage contemporaneously provided to employees of the
employer under the arrangement, if such exclusion of the
employee from coverage under the arrangement is based in
whole or in part on the health status of the employee and
such employee would, but for such exclusion on such basis, be
eligible for coverage under the arrangement.
``(4) Inclusion of eligible employers and employees.--No
employer described in paragraph (3) is excluded as a
participating employer (except to the extent that
requirements of the type referred to in section 131(d)(2) of
the Health Coverage Availability and Affordability Act of
1996 are not met) and the requirements of section 103 of such
Act (as referred to in section 104(b)(1) of such Act) are
met.
``(5) Restriction on variations of premium rates.--Premium
rates under the arrangement with respect to any particular
employer do not vary on the basis of the claims experience of
such employer alone.
``(b) Treatment of Franchise Networks.--In the case of a
multiple employer welfare arrangement which is established
and maintained by a franchisor for a franchise network
consisting of its franchisees, the requirements of subsection
(a)(1) shall not apply with respect to such network in any
case in which such requirements would be met if the
franchisor were deemed to be the sponsor referred to in
subsection (a)(1), such network were deemed to be an
association described in subsection (a)(1), and each
franchisee were deemed to be a member (of the association and
the sponsor) referred to in subsection (a)(1).
``(c) Certain Collectively Bargained Arrangements.--In the
case of a multiple employer welfare arrangement in existence
on March 6, 1996, which would be described in section
3(40)(A)(i) but solely for the failure to meet the
requirements of section 3(40)(C)(ii) or (to the extent
provided in regulations of the Secretary) solely for the
failure to meet the requirements of subparagraph (D) or (F)
of section 3(40)--
``(1) subsection (a)(1) shall not apply, and
``(2) the joint board of trustees shall be considered the
board of trustees required under subsection (a)(2).
``(d) Certain Arrangements Not Meeting Single Employer
Requirement.--
``(1) In general.--In any case in which the majority of the
employees covered under a multiple employer welfare
arrangement are employees of a single employer (within the
meaning of clauses (i) and (ii) of section 3(40)(B)), if all
other employees covered under the arrangement are employed by
employers who are related to such single employer--
``(A) subsection (a)(1) shall not apply if the sponsor of
the arrangement is the person who would be the plan sponsor
if the related employers were disregarded in determining
whether the requirements of section 3(40)(B) are met, and
``(B) subsection (a)(2) shall be treated as satisfied if
the board of trustees is the named fiduciary in connection
with the arrangement.
``(2) Related employers.--For purposes of paragraph (1),
employers are `related' if there is among all such employers
a common ownership interest or a substantial commonality of
business operations based on common suppliers or customers.
``SEC. 704. OTHER REQUIREMENTS FOR EXEMPTION.
``A multiple employer welfare arrangement exempt under
section 514(b)(6)(B) shall meet the following requirements:
``(1) Contents of governing instruments.--The instruments
governing the arrangement include a written instrument,
meeting the requirements of an instrument required under
section 402(a)(1), which--
[[Page H3054]]
``(A) provides that the board of trustees serves as the
named fiduciary required for plans under section 402(a)(1)
and serves in the capacity of a plan administrator (referred
to in section 3(16)(A)),
``(B) provides that the sponsor of the arrangement is to
serve as plan sponsor (referred to in section 3(16)(B)), and
``(C) incorporates the requirements of section 705.
``(2) Contribution rates.--The contribution rates referred
to in section 702(b)(3)(F)(ii) are adequate.
``(3) Regulatory requirements.--Such other requirements as
the Secretary may prescribe by regulation as necessary to
carry out the purposes of this part.
``SEC. 705. MAINTENANCE OF RESERVES.
``(a) In General.--Each multiple employer welfare
arrangement which is or has been exempt under section
514(b)(6)(B) and under which benefits are not fully insured
shall establish and maintain reserves, consisting of--
``(1) a reserve sufficient for unearned contributions,
``(2) a reserve sufficient for benefit liabilities which
have been incurred, which have not been satisfied, and for
which risk of loss has not yet been transferred, and for
expected administrative costs with respect to such benefit
liabilities, and
``(3) a reserve, in an amount recommended by the qualified
actuary, for any other obligations of the arrangement.
``(b) Minimum Amount for Certain Reserves.--The total of
the reserves described in subsection (a)(2) shall not be less
than an amount equal to the greater of--
``(1) 25 percent of expected incurred claims and expenses
for the plan year, or
``(2) $400,000.
``(c) Required Margin.--In determining the amounts of
reserves required under this section in connection with any
multiple employer welfare arrangement, the qualified actuary
shall include a margin for error and other fluctuations
taking into account the specific circumstances of such
arrangement.
``(d) Additional Requirements.--The Secretary may provide
such additional requirements relating to reserves and excess/
stop loss coverage as the Secretary considers appropriate.
Such requirements may be provided, by regulation or
otherwise, with respect to any arrangement or any class of
arrangements.
``(e) Adjustments for Excess/Stop Loss Coverage.--The
Secretary may provide for adjustments to the levels of
reserves otherwise required under subsections (a) and (b)
with respect to any arrangement or class of arrangements to
take into account excess/stop loss coverage provided with
respect to such arrangement or arrangements.
``(f) Alternative Means of Compliance.--The Secretary may
permit an arrangement to substitute, for all or part of the
requirements of this section, such security, guarantee, hold-
harmless arrangement, or other financial arrangement as the
Secretary determines to be adequate to enable the arrangement
to fully meet all its financial obligations on a timely
basis. The Secretary may take into account, for purposes of
this subsection, evidence provided by the arrangement or
sponsor which demonstrates an assumption of liability with
respect to the arrangement. Such evidence may be in the form
of a contract of indemnification, lien, bonding, insurance,
letter of credit, recourse under applicable terms of the
arrangement in the form of assessments of participating
employers, security, or other financial arrangement.
``SEC. 706. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.
``Except as provided in section 707(b), a multiple employer
welfare arrangement which is or has been exempt under section
514(b)(6)(B) may terminate only if the board of trustees--
``(1) not less than 60 days before the proposed termination
date, provides to the participants and beneficiaries a
written notice of intent to terminate stating that such
termination is intended and the proposed termination date,
``(2) develops a plan for winding up the affairs of the
arrangement in connection with such termination in a manner
which will result in timely payment of all benefits for which
the arrangement is obligated, and
``(3) submits such plan in writing to the Secretary.
Actions required under this paragraph shall be taken in such
form and manner as may be prescribed in regulations of the
Secretary.
``SEC. 707. CORRECTIVE ACTIONS AND MANDATORY TERMINATION.
``(a) Actions To Avoid Depletion of Reserves.--A multiple
employer welfare arrangement which is or has been exempt
under section 514(b)(6)(B) shall continue to meet the
requirements of section 705, irrespective of whether such
exemption continues in effect. The board of trustees of such
arrangement shall determine quarterly whether the
requirements of section 705 are met. In any case in which the
committee determines that there is reason to believe that
there is or will be a failure to meet such requirements, or
the Secretary makes such a determination and so notifies the
committee, the committee shall immediately notify the
qualified actuary engaged by the arrangement, and such
actuary shall, not later than the end of the next following
month, make such recommendations to the committee for
corrective action as the actuary determines necessary to
ensure compliance with section 705. Not later than 10 days
after receiving from the actuary recommendations for
corrective actions, the committee shall notify the Secretary
(in such form and manner as the Secretary may prescribe by
regulation) of such recommendations of the actuary for
corrective action, together with a description of the actions
(if any) that the committee has taken or plans to take in
response to such recommendations. The committee shall
thereafter report to the Secretary, in such form and
frequency as the Secretary may specify to the committee,
regarding corrective action taken by the committee until the
requirements of section 705 are met.
``(b) Mandatory Termination.--In any case in which--
``(1) the Secretary has been notified under subsection (a)
of a failure of a multiple employer welfare arrangement which
is or has been exempt under section 514(b)(6)(B) to meet the
requirements of section 705 and has not been notified by the
board of trustees of the arrangement that corrective action
has restored compliance with such requirements, and
``(2) the Secretary determines that the continuing failure
to meet the requirements of section 705 can be reasonably
expected to result in a continuing failure to pay benefits
for which the arrangement is obligated,
the board of trustees of the arrangement shall, at the
direction of the Secretary, terminate the arrangement and, in
the course of the termination, take such actions as the
Secretary may require, including recovering for the
arrangement any liability under section 705(f), as necessary
to ensure that the affairs of the arrangement will be, to the
maximum extent possible, wound up in a manner which will
result in timely provision of all benefits for which the
arrangement is obligated.
``SEC. 708. ADDITIONAL RULES REGARDING STATE AUTHORITY.
``(a) Exclusion of Arrangements From the Small Group Market
in any State Upon State's Certification of Guaranteed Access
to Health Insurance Coverage in Such State.--
``(1) In general.--If a State certifies to the Secretary
that such State provides to its residents guaranteed access
to health insurance coverage, during the period for which
such certification is in effect, the law of such State may
regulate any health care coverage provided in the small group
market in such State (or prohibit the provision of such
coverage) by a multiple employer welfare arrangement which is
otherwise exempt under section 514(b)(6)(B) and whose sponsor
is described in section 703(a)(1), notwithstanding such
exemption. Any such certification shall be in effect for such
period, not greater than 3 years, as is designated in such
certification. Such certification shall apply with respect to
such arrangements as are identified, individually or by
class, in the certification.
``(2) Guaranteed access.--For purposes of this subsection,
the certification by a State that such State provides
`guaranteed access' to health insurance coverage to the
residents of such State means--
``(A) certification that the number of residents of such
State who are covered by a group health plan or otherwise
have health insurance coverage exceeds 90 percent of the
total number of the residents of such State, or
``(B) certification that--
``(i) the small group market in such State provides
guaranteed issue for employees with respect to at least one
option of health insurance coverage offered by insurers and
health maintenance organizations in such market, and
``(ii) the State has implemented rating reforms in the
small group market in such State which are designed to make
health insurance coverage more affordable.
``(b) Exceptions.--
``(1) Certain multistate associations.--Subsection (a)
shall not apply in the case of a multiple employer welfare
arrangement operating in any State which has made a
certification under subsection (a)(2)(B) if--
``(A) in the application for the exemption under section
514(b)(6)(B), the sponsor of such arrangement demonstrates to
the Secretary (in such form and manner as shall be prescribed
in regulations of the Secretary) that--
``(i) such sponsor operates in the majority of the 50
States and in at least 2 of the regions of the United States,
and
``(ii) the arrangement covers, or is to cover (in the case
of a newly established arrangement), at least 7,500
participants and beneficiaries, and
``(B) at the time of such application, the arrangement does
not have pending against it any enforcement action by the
State.
``(2) Existing arrangements.--Subsection (a) shall not
apply with respect to an arrangement operating in any State
if--
``(A) such arrangement was operating in such State as of
March 6, 1996, and
``(B) at the time of the application for the exemption
under section 514(b)(6), the arrangement does not have
pending against it any enforcement action by the State.
``(3) Limitations.--Paragraphs (1) and (2) shall not apply
in the case of any State which has made a certification under
subsection (a) and which, as of January 1, 1996, had enacted
a law that either--
``(A) provided guaranteed issue of individual health
insurance coverage offered by insurers and health maintenance
organizations
[[Page H3055]]
in the individual market using pure community rating and did
not provide for any transition period (after the effective
date of the guaranteed issue requirement) in the
implementation of pure community rating; or
``(B) required insurers offering health insurance coverage
in connection with group health plans to reimburse insurers
offering individual health insurance coverage for losses
resulting from those insurers offering individual health
insurance coverage on an open enrollment basis.
Regulations under this part may provide for an exemption from
the applicability of paragraph (1) in the case of certain
arrangements that are limited to a single industry.
``(c) Assessment Authority With Respect to New
Arrangements.--
``(1) In general.--Notwithstanding section 514, a State may
impose by law a premium tax on multiple employer welfare
arrangements which are otherwise exempt under section
514(b)(6)(B) and the sponsor of which is described in section
703(a)(1)--
``(A) in the case of an arrangement established after March
6, 1996, and
``(B) in the case of an arrangement in existence as of
March 6, 1996, if the arrangement commenced operations in
such State after March 6, 1996.
``(2) Premium tax.--For purposes of this subsection, the
term `premium tax' imposed by a State on a multiple employer
welfare arrangement means any tax imposed by such State if--
``(A) such tax is computed by applying a rate to the amount
of premiums or contributions received by the arrangement from
participating employers located in such State with respect to
individuals covered under the arrangement who are residents
of such State,
``(B) the rate of such tax does not exceed the rate of any
tax imposed by such State on premiums or contributions
received by insurers or health maintenance organizations for
health insurance coverage offered in such State in connection
with a group health plan,
``(C) such tax is otherwise nondiscriminatory, and
``(D) the amount of any such tax assessed on the
arrangement is reduced by the amount of any tax or assessment
imposed by the State on premiums or contributions received by
insurers or health maintenance organizations for health
insurance coverage (or other insurance related to the
provision of medical care under the arrangement) provided by
such insurers or health maintenance organizations in such
State to such arrangement.
``(d) Definitions.--For purposes of this section--
``(1) Small group market.--The term `small group market'
means the health insurance coverage market under which
individuals obtain health insurance coverage (directly or
through any arrangement) on behalf of themselves (and their
dependents) on the basis of employment or other relationship
with respect to a small employer.
``(2) Small employer.--The term `small employer' means, in
connection with a group health plan with respect to a
calandar year, an employer who employs at least 2 but fewer
than 51 employees on a typical business day in the year. For
purposes of this paragraph, 2 or more trades or businesses,
whether or not incorporated, shall be deemed a single
employer if such trades or businesses are within the same
control group (within the meaning of section 3(40)(B)(ii)).
``(3) Region.--The term `region' means any of the following
regions:
``(A) The East Region, consisting of the States of Maine,
New Hampshire, Vermont, New York, Massachusetts, Rhode
Island, Connecticut, New Jersey, Pennsylvania, Delaware,
Maryland, West Virginia, and Ohio, and the District of
Columbia.
``(B) The Southeast Region, consisting of the States of
Texas, Arkansas, Louisiana, Mississippi, Alabama, Georgia,
Florida, South Carolina, North Carolina, Virginia, and
Tennessee.
``(C) The Midwest Region, consisting of the States of
Montana, South Dakota, North Dakota, Nebraska, Kansas,
Oklahoma, Minnesota, Iowa, Missouri, Wisconsin, Michigan,
Illinois, and Indiana.
``(D) The West Region, consisting of the States of Oregon,
Washington, Idaho, Nevada, California, New Mexico, Arizona,
Nebraska, Wyoming, Hawaii, Alaska, Colorado, and Utah.''.
(b) Conforming Amendments to Preemption Rules.--
(1) Section 514(b)(6)(A)(i) of such Act (29 U.S.C.
1144(b)(6)(A)(i)) is amended by striking ``is fully insured''
and inserting ``under which all benefits are fully insured'',
and by inserting ``and which is not described in section
702(a)(1)'' after ``subparagraph (B)''.
(2) Section 514(b)(6)(B) of such Act (29 U.S.C.
1144(b)(6)(B)) is amended--
(A) by inserting ``(i)'' after ``(B)'';
(B) by striking ``which are not fully insured'' and
inserting ``under which any benefit is not fully insured'';
and
(C) by striking ``Any such exemption'' and inserting:
``(ii) Subject to part 7, any exemption under clause (i)''.
(c) Conforming Amendment to Definition of Plan Sponsor.--
Section 3(16)(B) of such Act (29 U.S.C. 1002(16)(B)) is
amended by adding at the end the following new sentence:
``Such term also includes the sponsor (as defined in section
701(6)) of a multiple employer welfare arrangement which is
or has been a multiple employer health plan (as defined in
section 701(4)).''.
(d) Definitions.--
(1) Group health plan.--Section 3 of such Act (29 U.S.C.
1002) is amended by adding at the end the following new
paragraph:
``(42) Except as otherwise provided in this title, the term
`group health plan' means an employee welfare benefit plan to
the extent that the plan provides medical care (within the
meaning of section 607(1)) to employees or their dependents
(as defined under the terms of the plan) directly or through
insurance, reimbursement, or otherwise.''.
(2) Inclusion of certain partners and self-employed
sponsors in definition of participant.--Section 3(7) of such
Act (29 U.S.C. 1002(7)) is amended--
(A) by inserting ``(A)'' after ``(7)''; and
(B) by adding at the end the following new paragraph:
``(B) In the case of a group health plan, such term
includes--
``(i) in connection with a group health plan maintained by
a partnership, an individual who is a partner in relation to
the partnership, or
``(ii) in connection with a group health plan maintained by
a self-employed individual (under which one or more employees
are participants), the self-employed individual,
if such individual is or may become eligible to receive a
benefit under the plan or such individual's beneficiaries may
be eligible to receive any such benefit.''.
(3) Health insurance coverage.--Section 3 of such Act (as
amended by paragraph (1)) is amended further by adding at the
end the following new paragraph:
``(43)(A) Except as provided in subparagraph (B), the term
`health insurance coverage' means benefits consisting of
medical care (provided directly, through insurance or
reimbursement, or otherwise) under any hospital or medical
service policy or certificate, hospital or medical service
plan contract, or health maintenance organization group
contract offered by an insurer or a health maintenance
organization.
``(B) Such term does not include coverage under any
separate policy, certificate, or contract only for one or
more of any of the following:
``(i) Coverage for accident, credit-only, vision,
disability income, long-term care, nursing home care,
community-based care dental, on-site medical clinics, or
employee assistance programs, or any combination thereof.
``(ii) Medicare supplemental health insurance (within the
meaning of section 1882(g)(1) of the Social Security Act (42
U.S.C. 1395ss(g)(1))) and similar supplemental coverage
provided under a group health plan.
``(iii) Coverage issued as a supplement to liability
insurance.
``(iv) Liability insurance, including general liability
insurance and automobile liability insurance.
``(v) Workers' compensation or similar insurance.
``(vi) Automobile medical-payment insurance.
``(vii) Coverage for a specified disease or illness.
``(viii) Hospital or fixed indemnity insurance.
``(ix) Short-term limited duration insurance.
``(x) Such other coverage, comparable to that described in
previous clauses, as may be specified in regulations.''.
(4) Medical care.--Section 607(1) of such Act (29 U.S.C.
1167(1)) is amended--
(A) by striking ``The term'' and inserting the following:
``(A) In general.--The term'';
(B) by striking ``(as defined'' and all that follows
through ``1986)''; and
(C) by adding at the end the following new subparagraph:
``(B) Medical care.--For purposes of this paragraph, the
term `medical care' means--
``(i) amounts paid for, or items or services in the form
of, the diagnosis, cure, mitigation, treatment, or prevention
of disease, or amounts paid for, or items or services
provided for, the purpose of affecting any structure or
function of the body,
``(ii) amounts paid for, or services in the form of,
transportation primarily for and essential to medical care
referred to in clause (i), and
``(iii) amounts paid for insurance covering medical care
referred to in clauses (i) and (ii).''.
(5) Other definitions.--Section 514 of such Act is further
amended by adding at the end the following new subsection:
``(e) For purposes of this section, the terms `fully
insured', `health maintenance organization', and `insurer'
have the meanings given such terms in section 701.''.
(e) Clerical Amendment.--The table of contents in section 1
of the Employee Retirement Income Security Act of 1974 (as
amended by section 102(g)) is amended by inserting after the
item relating to section 609 the following new items:
``Part 7--Rules Governing Regulation of Multiple Employer Health Plans
``Sec. 701. Definitions.
``Sec. 702. Clarification of duty of the Secretary to implement
provisions of current law provising for exemptions and
solvency standards for multiple employer health plans.
``Sec. 703. Requirements relating to sponsors, boards of trustees, and
plan operations.
``Sec. 704. Other requirements for exemption.
[[Page H3056]]
``Sec. 705. Maintenance of reserves.
``Sec. 706. Notice requirements for voluntary termination.
``Sec. 707. Corrective actions and mandatory termination.
``Sec. 708. Additional rules regarding State authority.
SEC. 162. AFFORDABLE AND AVAILABLE FULLY INSURED HEALTH
COVERAGE THROUGH VOLUNTARY HEALTH INSURANCE
ASSOCIATIONS.
Section 514 of the Employee Retirement Income Security Act
of 1974 is amended--
(1) by redesignating subsections (d) as subsection (e); and
(2) by inserting after subsection (c) the following new
subsection:
``(d)(1) The provisions of this title shall supercede any
and all State laws which regulate insurance insofar as they
may now or hereafter--
``(A) preclude an insurer or health maintenance
organization from offering health insurance coverage under
voluntary health insurance associations,
``(B) preclude an insurer or health maintenance
organization from setting premium rates under a voluntary
health insurance association based on the claims experience
of the voluntary health insurance association (without
varying the premium rates of any particular employer on the
basis of the claims experience of such employer alone), or
``(C) require--
``(i) health insurance coverage in connection with a
voluntary health insurance association to include specific
items or services consisting of medical care, or
``(ii) an insurer or health maintenance organization
offering health insurance coverage in connection with a
voluntary health insurance association to include in such
health insurance coverage specific items or services
consisting of medical care,
except to the extent that such State laws prohibit an
exclusion for a specific disease in such health insurance
coverage.
Subparagraph (C) shall apply only with respect to items and
services which shall be specified in a list which shall be
prescribed in regulations of the Secretary.
``(2)(A) If a State certifies to the Secretary that such
State provides to its residents guaranteed access to health
insurance coverage, during the period for which such
certification is in effect, the law of such State may
regulate any health insurance coverage provided in the small
group market in such State (or prohibit the provision of such
coverage) by a voluntary health insurance association. Any
such certification shall be in effect for such period, not
greater than 3 years, as is designated in such certification.
``(B) For purposes of this paragraph, the certification by
a State that such State provides `guaranteed access' to
health insurance coverage to the residents of such State
means--
``(i) certification that the number of residents of such
State who are covered by a group health plan or otherwise
have health insurance coverage exceeds 90 percent of the
total number of the residents of such State, or
``(ii) certification that--
``(I) the small group market in such State provides
guaranteed issue for employees with respect to at least one
option of health insurance coverage offered by insurers and
health maintenance organizations in such market, and
``(II) the State has implemented rating reforms in the
small group market in such State which are designed to make
health insurance coverage more affordable.
``(3)(A) Paragraph (2) shall not apply in the case of any
voluntary health insurance association with respect to any
State if the qualified association demonstrates to the
Secretary (in such form and manner as shall be prescribed in
regulations of the Secretary) that--
``(i) such qualified association operates in the majority
of the 50 States and in at least 2 of the regions of the
United States,
``(ii) the arrangement covers, or is to cover (in the case
of a newly established arrangement), at least 7,500
participants and beneficiaries, and
``(iii) under the terms of the arrangement, either--
``(I) the qualified association does not exclude from
membership any small employer in the State, or
``(II) the arrangement accepts every small employer in the
State that applies for coverage.
``(B)(i) Subject to clause (ii), paragraph (2) shall not
apply with respect to a voluntary health insurance
association operating in any State if such association was
operating in such State as of March 6, 1996.
``(ii) Clause (i) shall apply in the case of an arrangement
in connection with any State only if the qualified
association demonstrates to the Secretary (in such form and
manner as shall be prescribed in regulations of the
Secretary) either--
``(I) that the qualified association does not exclude from
membership any small employer in the State, or
``(II) that the arrangement accepts every small employer in
such State that applies for coverage.
``(C) Subparagraphs (A) and (B) shall not apply in the case
of any State which has made a certification under paragraph
(2) and which, as of January 1, 1996, had enacted a law that
either--
``(i) provided guaranteed issue of individual health
insurance coverage offered by insurers and health maintenance
organizations in the individual market using pure community
rating and did not provide for any transition period (after
the effective date of the guaranteed issue requirement) in
the implementation of pure community rating; or
``(ii) required insurers offering health insurance coverage
in connection with group health plans to reimburse insurers
offering individual health insurance coverage for losses
resulting from those insurers offering individual health
insurance coverage on an open enrollment basis.
``(5) For purposes of this subsection--
``(A) The term `voluntary health insurance association'
means a multiple employer welfare arrangement--
``(i) under which benefits include medical care (within the
meaning of section 607(1)),
``(ii) under which all benefits consisting of such medical
care are fully insured,
``(iii) which is maintained by a qualified association,
``(iv) under which no employer is excluded as a
participating employer (except to the extent that
requirements of the type referred to in section 131(d)(2) of
the Health Coverage Availability and Affordability Act of
1996 are not met), the requirements of section 103 of such
Act (as referred to in section 104(b)(1) of such Act) are
met, and all health insurance coverage options are
aggressively marketed to eligible employees and their
dependents, and
``(v) under which, with respect to the operations of the
arrangement in any State, the health insurance coverage is
provided by an insurer or health maintenance organization to
which the laws of such State applies.
``(B) The term `qualified association' means an association
with respect to which the following requirements are met:
``(i) The sponsor of the association is, and has been
(together with its immediate predecessor, if any) for a
continuous period of not less than 5 years, organized and
maintained in good faith, with a constitution and bylaws
specifically stating its purpose, as a trade association, an
industry association, a professional association, or a
chamber of commerce (or similar business group), for
substantial purposes other than that of obtaining or
providing medical care (within the meaning of section
607(1)).
``(ii) The sponsor of the association is established as a
permanent entity which receives the active support of its
members.
``(iii) The constitution and bylaws of the association
provide for periodic meetings on at least an annual basis.
``(iv) The association collects dues or contributions from
its members on a periodic basis, without conditioning such
dues or contributions on the basis of the health status of
the employees of such members or the dependents of such
employees or on the basis of participation in a group health
plan or voluntary health insurance association.
Such term includes a group of qualified associations, as
defined in the preceding provisions of this clause.
``(C) The term `small group market' means the health
insurance coverage market under which individuals obtain
health insurance coverage (directly or through any
arrangement) on behalf of themselves (and their dependents)
on the basis of employment or other relationship with respect
to a small employer.
``(D) The term `small employer' means, in connection with a
group health plan with respect to a calandar year, an
employer who employs at least 2 but fewer than 51 employees
on a typical business day in the year. For purposes of this
paragraph, 2 or more trades or businesses, whether or not
incorporated, shall be deemed a single employer if such
trades or businesses are within the same control group
(within the meaning of section 3(40)(B)(ii)).
``(E) The term `region' means any of the following regions:
``(i) The East Region, consisting of the States of Maine,
New Hampshire, Vermont, New York, Massachusetts, Rhode
Island, Connecticut, New Jersey, Pennsylvania, Delaware,
Maryland, West Virginia, and Ohio and the District of
Columbia.
``(ii) The Southeast Region, consisting of the States of
Texas, Arkansas, Louisiana, Mississippi, Alabama, Georgia,
Florida, South Carolina, North Carolina, Virginia, and
Tennessee.
``(iii) The Midwest Region, consisting of the States of
Montana, South Dakota, North Dakota, Nebraska, Kansas,
Oklahoma, Minnesota, Iowa, Missouri, Wisconsin, Michigan,
Illinois, and Indiana.
``(iv) The West Region, consisting of the States of Oregon,
Washington, Idaho, Nevada, California, New Mexico, Arizona,
Nebraska, Wyoming, Hawaii, Alaska, Colorado, and Utah.''.
SEC. 163. STATE AUTHORITY FULLY APPLICABLE TO SELF-INSURED
MULTIPLE EMPLOYER WELFARE ARRANGEMENTS
PROVIDING MEDICAL CARE WHICH ARE NOT EXEMPTED
UNDER NEW PART 7.
(a) In General.--Section 514(b)(6)(A)(ii) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1144(b)(6)(A)(ii)) is amended by inserting before the period
the following: ``, except that, in any such case, if the
arrangement provides medical care (within the meaning of
section 607(1)), such a law of any State may apply without
limitation under this title''.
(b) Cross-Reference.--Section 514(b)(6) of such Act (29
U.S.C. 1144(b)(6)) (as amended by section 301) is amended by
adding at the end the following new subparagraph:
[[Page H3057]]
``(G) For additional rules relating to exemption from
subparagraph (A)(ii) of multiple employer health plans, see
part 7.''.
SEC. 164. CLARIFICATION OF TREATMENT OF SINGLE EMPLOYER
ARRANGEMENTS.
Section 3(40)(B) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1002(40)(B)) is amended--
(1) in clause (i), by inserting ``for any plan year of any
such plan, or any fiscal year of any such other
arrangement,'' after ``single employer'', and by inserting
``during such year or at any time during the preceding 1-year
period'' after ``control group'';
(2) in clause (iii)--
(A) by striking ``common control shall not be based on an
interest of less than 25 percent'' and inserting ``an
interest of greater than 25 percent may not be required as
the minimum interest necessary for common control''; and
(B) by striking ``similar to'' and inserting ``consistent
and coextensive with'';
(3) by redesignating clauses (iv) and (v) as clauses (v)
and (vi), respectively; and
(4) by inserting after clause (iii) the following new
clause:
``(iv) in determining, after the application of clause (i),
whether benefits are provided to employees of two or more
employers, the arrangement shall be treated as having only 1
participating employer if, after the application of clause
(i), the number of individuals who are employees and former
employees of any one participating employer and who are
covered under the arrangement is greater than 75 percent of
the aggregate number of all individuals who are employees or
former employees of participating employers and who are
covered under the arrangement,''.
SEC. 165. CLARIFICATION OF TREATMENT OF CERTAIN COLLECTIVELY
BARGAINED ARRANGEMENTS.
(a) In General.--Section 3(40)(A)(i) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1002(40)(A)(i)) is amended to read as follows:
``(i)(I) under or pursuant to one or more collective
bargaining agreements which are reached pursuant to
collective bargaining described in section 8(d) of the
National Labor Relations Act (29 U.S.C. 158(d)) or paragraph
Fourth of section 2 of the Railway Labor Act (45 U.S.C. 152,
paragraph Fourth) or which are reached pursuant to labor-
management negotiations under similar provisions of State
public employee relations laws, and (II) in accordance with
subparagraphs (C), (D), and (E),''.
(b) Limitations.--Section 3(40) of such Act (29 U.S.C.
1002(40)) is amended by adding at the end the following new
subparagraphs:
``(C) A plan or other arrangement is established or
maintained in accordance with this subparagraph only if the
following requirements are met:
``(i) The plan or other arrangement, and the employee
organization or any other entity sponsoring the plan or other
arrangement, do not--
``(I) utilize the services of any licensed insurance agent
or broker for soliciting or enrolling employers or
individuals as participating employers or covered individuals
under the plan or other arrangement, or
``(II) pay a commission or any other type of compensation
to a person, other than a full time employee of the employee
organization (or a member of the organization to the extent
provided in regulations of the Secretary), that is related
either to the volume or number of employers or individuals
solicited or enrolled as participating employers or covered
individuals under the plan or other arrangement, or to the
dollar amount or size of the contributions made by
participating employers or covered individuals to the plan or
other arrangement,
except to the extent that the services used by the plan,
arrangement, organization, or other entity consist solely of
preparation of documents necessary for compliance with the
reporting and disclosure requirements of part 1 or
administrative, investment, or consulting services unrelated
to solicitation or enrollment of covered individuals.
``(ii) As of the end of the preceding plan year, the number
of covered individuals under the plan or other arrangement
who are identified to the plan or arrangement and who are
neither--
``(I) employed within a bargaining unit covered by any of
the collective bargaining agreements with a participating
employer (nor covered on the basis of an individual's
employment in such a bargaining unit), nor
``(II) present employees (or former employees who were
covered while employed) of the sponsoring employee
organization, of an employer who is or was a party to any of
the collective bargaining agreements, or of the plan or other
arrangement or a related plan or arrangement (nor covered on
the basis of such present or former employment),
does not exceed 15 percent of the total number of individuals
who are covered under the plan or arrangement and who are
present or former employees who are or were covered under the
plan or arrangement pursuant to a collective bargaining
agreement with a participating employer. The requirements of
the preceding provisions of this clause shall be treated as
satisfied if, as of the end of the preceding plan year, such
covered individuals are comprised solely of individuals who
were covered individuals under the plan or other arrangement
as of the date of the enactment of the Health Coverage
Availability and Affordability Act 1996 and, as of the end of
the preceding plan year, the number of such covered
individuals does not exceed 25 percent of the total number of
present and former employees enrolled under the plan or other
arrangement.
``(iii) The employee organization or other entity
sponsoring the plan or other arrangement certifies to the
Secretary each year, in a form and manner which shall be
prescribed in regulations of the Secretary that the plan or
other arrangement meets the requirements of clauses (i) and
(ii).
``(D) A plan or arrangement is established or maintained in
accordance with this subparagraph only if--
``(i) all of the benefits provided under the plan or
arrangement are fully insured (as defined in section 701(2)),
or
``(ii)(I) the plan or arrangement is a multiemployer plan,
and
``(II) the requirements of clause (B) of the proviso to
clause (5) of section 302(c) of the Labor Management
Relations Act, 1947 (29 U.S.C. 186(c)) are met with respect
to such plan or other arrangement.
``(E) A plan or arrangement is established or maintained in
accordance with this subparagraph only if--
``(i) the plan or arrangement is in effect as of the date
of the enactment of the Health Coverage Availability and
Affordability Act of 1996, or
``(ii) the employee organization or other entity sponsoring
the plan or arrangement--
``(I) has been in existence for at least 3 years or is
affiliated with another employee organization which has been
in existence for at least 3 years, or
``(II) demonstrates to the satisfaction of the Secretary
that the requirements of subparagraphs (C) and (D) are met
with respect to the plan or other arrangement.''.
(c) Conforming Amendments to Definitions of Participant and
Beneficiary.--Section 3(7) of such Act (29 U.S.C. 1002(7)) is
amended by adding at the end the following new sentence:
``Such term includes an individual who is a covered
individual described in paragraph (40)(C)(ii).''.
SEC. 166. TREATMENT OF CHURCH PLANS.
(a) Special Rules for Church Plans.--
(1) In general.--Part 7 of subtitle B of title I of such
Act (as added and amended by the preceding provisions of this
Act) is amended by adding at the end the following new
section:
``SEC. 709. SPECIAL RULES FOR CHURCH PLANS.
``(a) Election for Church Plans.--
``(1) In general.--Notwithstanding section 4(b)(2), if the
church or convention or association of churches which
maintains a church plan covered under this section makes an
election with respect to such plan under this subsection (in
such form and manner as the Secretary may by regulations
prescribe), then, subject to this section, the provisions of
this part (and other provisions of this title to the extent
that they apply to group health plans which are multiple
employer welfare arrangements) shall apply to such church
plan, with respect to benefits provided under such plan
consisting of medical care, as if--
``(A) section 4(b)(2) did not contain an exclusion for
church plans, and
``(B) such plan were an arrangement eligible to apply for
an exemption under this part.
``(2) Election irrevocable.--An election under this
subsection with respect to any church plan shall be binding
with respect to such plan, and, once made, shall be
irrevocable.
``(b) Covered Church Plans.--A church plan is covered under
this section if such plan provides benefits which include
medical care and some or all of such benefits are not fully
insured.
``(c) Sponsor and Board of Trustees.--For purposes of this
part, in the case of a church plan to which this part applies
pursuant to an election under subsection (a), in treating
such plan as if it were a multiple employer welfare
arrangement under this part--
``(1) the church, convention or association of churches, or
other organization described in section 3(33)(C)(i) which is
the entity maintaining the plan shall be treated as the
sponsor referred to in section 703(a)(1), and the
requirements of section 703(a)(1) shall not apply, and
``(2) the board of trustees, board of directors, or other
similar governing body of such sponsor shall be treated as
the board of trustees referred to in section 703(a)(2),
and the requirements of section 703(a)(2) shall be deemed
satisfied with respect to the board of trustees.
``(d) Deemed Satisfaction of Trust Requirements.--The
requirements of section 403 shall not be treated as not
satisfied with respect to a church plan to which this part
applies pursuant to an election under subsection (a) solely
because assets of the plan are held by an organization
described in section 3(33)(C)(i), if--
``(1) such organization is incorporated separately from the
church or convention or association of churches involved, and
``(2) such assets with respect to medical care are
separately accounted for.
``(e) Deemed Satisfaction of Exclusive Benefit
Requirements.--The requirements of section 404 shall not be
treated as not satisfied with respect to a church plan to
which this part applies pursuant to an election under
subsection (a) solely because assets of the plan which are in
excess of reserves required for exemption under section
514(b)(6)(B) are held in a fund in which such assets are
pooled with assets of other church plans, if the assets held
by such fund may not, under the terms of the plan and the
[[Page H3058]]
terms governing such fund, be used for, or diverted to, any
purpose other than for the exclusive benefit of the
participants and beneficiaries of the church plans whose
assets are pooled in such fund.
``(f) Inapplicability of Certain Provisions.--
``(1) Prohibited transactions.--Section 406 shall not apply
to a church plan by reason of an election under subsection
(a).
``(2) Continuation coverage.--Section 601 shall not apply
to a church plan by reason of an election under subsection
(a).''.
(b) Conforming Amendments.--
(1) Section 4(b)(2) of such Act (29 U.S.C. 1003(b)(2)) is
amended by inserting before the semicolon the following: ``,
except with respect to provisions made applicable under any
election made under section 704(a) of this Act''.
(2) Section 514 of such Act (29 U.S.C. 1144) is amended--
(A) in subsection (a), by inserting ``(including a church
plan which is not exempt under section 4(b)(2) by reason of
an election under section 704)'' before the period in the
first sentence; and
(B) in subsection (b)(2)(B), by inserting ``and including a
church plan which is not exempt under section 4(b)(2) by
reason of an election under section 704'' after ``death
benefits''.
(c) Clerical Amendment.--The table of contents in section 1
of such Act (as amended by the preceding provisions of this
title) is further amended by inserting after the item
relating to section 703 the following new item:
``Sec. 709. Special rules for church plans.''.
SEC. 167. ENFORCEMENT PROVISIONS RELATING TO MULTIPLE
EMPLOYER WELFARE ARRANGEMENTS.
(a) Enforcement of Filing Requirements.--Section 502 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1132) (as amended by sections 102(c)) is further amended--
(1) in subsection (a)(6), by striking ``paragraph (2) or
(5)'' and inserting ``paragraph (2), (5), or (6)''; and
(2) by adding at the end of subsection (c) the following
new paragraph:
``(6) The Secretary may assess a civil penalty against any
person of up to $1,000 a day from the date of such person's
failure or refusal to file the information required to be
filed with the Secretary under section 101(g).''.
(b) Actions by States in Federal Court.--Section 502(a) of
such Act (29 U.S.C. 1132(a)) is amended--
(1) in paragraph (8), by striking ``or'' at the end;
(2) in paragraph (9), by striking the period and inserting
``, or''; and
(3) by adding at the end the following:
``(10) by a State official having authority under the law
of such State to enforce the laws of such State regulating
insurance, to enjoin any act or practice which violates any
requirement under part 7 for an exemption under section
514(b)(6)(B) which such State has the power to enforce
pursuant to section 506(c)(1).''.
(c) Criminal Penalties for Certain Willful
Misrepresentations.--Section 501 of such Act (29 U.S.C. 1131)
is amended--
(1) by inserting ``(a)'' after ``Sec. 501.''; and
(2) by adding at the end the following new subsection:
``(b) Any person who, either willfully or with willful
blindness, falsely represents, to any employee, any
employee's beneficiary, any employer, the Secretary, or any
State, an arrangement established or maintained for the
purpose of offering or providing any benefit described in
section 3(1) to employees or their beneficiaries as--
``(1) being a multiple employer welfare arrangement to
which an exemption has been granted under section
514(b)(6)(B),
``(2) having been established or maintained under or
pursuant to one or more collective bargaining agreements
which are reached pursuant to collective bargaining described
in section 8(d) of the National Labor Relations Act (29
U.S.C. 158(d)) or paragraph Fourth of section 2 of the
Railway Labor Act (45 U.S.C. 152, paragraph Fourth) or which
are reached pursuant to labor-management negotiations under
similar provisions of State public employee relations laws,
or
``(3) being a plan or arrangement with respect to which the
requirements of subparagraph (C), (D), or (E) of section
3(40) are met,
shall, upon conviction, be imprisoned not more than five
years, be fined under title 18, United States Code, or
both.''.
(d) Cessation of Activities in Absence of Effective State
Regulation unless Standards under ERISA Exemption Are Met.--
Section 502 of such Act (29 U.S.C. 1132) is amended by adding
at the end the following new subsection:
``(n)(1) Subject to paragraph (2), upon application by the
Secretary showing the operation, promotion, or marketing of a
multiple employer welfare arrangement providing benefits
consisting of medical care (within the meaning of section
607(1)) that--
``(A) is not licensed, registered, or otherwise approved
under the insurance laws of the States in which the
arrangement offers or provides benefits, and
``(B) if there is in effect with respect to such
arrangement an exemption under section 514(b)(6)(B), is not
operating in accordance with the requirements under part 7
for such an exemption,
a district court of the United States shall enter an order
requiring that the arrangement cease activities.
``(2) Paragraph (1) shall not apply in the case of a
multiple employer welfare arrangement if the arrangement
shows that--
``(A) all benefits under it referred to in paragraph (1)
are fully insured, within the meaning of section 701(1), and
``(B) with respect to each State in which the arrangement
offers or provides benefits, the arrangement is operating in
accordance with applicable State insurance laws that are not
superseded under section 514.
``(3) The court may grant such additional equitable relief,
including any relief available under this title, as it deems
necessary to protect the interests of the public and of
persons having claims for benefits against the
arrangement.''.
(e) Responsibility for Claims Procedure.--Section 503 of
such Act (29 U.S.C. 1133) is amended by adding at the end
(after and below paragraph (2)) the following new sentence:
``The terms of each multiple employer health plan (within the
meaning of section 701(4)) shall require the board of
trustees or the named fiduciary (as applicable) to ensure
that the requirements of this section are met in connection
with claims filed under the plan.''.
SEC. 168. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.
Section 506 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1136) is amended by adding at the end the
following new subsection:
``(c) State Authority With Respect to Multiple Employer
Welfare Arrangements.--
``(1) State enforcement.--
``(A) Agreements with states.--A State may enter into an
agreement with the Secretary for delegation to the State of
some or all of the Secretary's authority under sections 502
and 504 to enforce the requirements under section 514(d) or
the requirements under part 7 for an exemption under section
514(b)(6)(B). The Secretary shall enter into the agreement if
the Secretary determines that the delegation provided for
therein would not result in a lower level or quality of
enforcement of the provisions of this title.
``(B) Delegations.--Any department, agency, or
instrumentality of a State to which authority is delegated
pursuant to an agreement entered into under this paragraph
may, if authorized under State law and to the extent
consistent with such agreement, exercise the powers of the
Secretary under this title which relate to such authority.
``(C) Concurrent authority of the secretary.--If the
Secretary delegates authority to a State in an agreement
entered into under subparagraph (A), the Secretary may
continue to exercise such authority concurrently with the
State.
``(D) Recognition of primary domicile state.--In entering
into any agreement with a State under subparagraph (A), the
Secretary shall ensure that, as a result of such agreement
and all other agreements entered into under subparagraph (A),
only one State will be recognized, with respect to any
particular multiple employer welfare arrangement, as the
primary domicile State to which authority has been delegated
pursuant to such agreements.
``(2) Assistance to states.--The Secretary shall--
``(A) provide enforcement assistance to the States with
respect to multiple employer welfare arrangements, including,
but not limited to, coordinating Federal and State efforts
through the establishment of cooperative agreements with
appropriate State agencies under which the Pension and
Welfare Benefits Administration keeps the States informed of
the status of its cases and makes available to the States
information obtained by it,
``(B) provide continuing technical assistance to the States
with respect to issues involving multiple employer welfare
arrangements and this Act,
``(C) make readily available to the States timely and
complete responses to requests for advisory opinions on
issues described in subparagraph (B), and
``(D) distribute copies of all advisory opinions described
in subparagraph (C) to the State insurance commissioner of
each State.''.
SEC. 169. FILING AND DISCLOSURE REQUIREMENTS FOR MULTIPLE
EMPLOYER WELFARE ARRANGEMENTS OFFERING HEALTH
BENEFITS.
(a) In General.--Section 101 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1021) is amended--
(1) by redesignating subsection (g) as subsection (i); and
(2) by inserting after subsection (f) the following new
subsections:
``(g) Registration of Multiple Employer Welfare
Arrangements.--(1) Each multiple employer welfare arrangement
shall file with the Secretary a registration statement
described in paragraph (2) within 60 days before
commencing operations (in the case of an arrangement
commencing operations on or after January 1, 1997) and no
later than February 15 of each year (in the case of an
arrangement in operation since the beginning of such
year), unless, as of the date by which such filing
otherwise must be made, such arrangement provides no
benefits consisting of medical care (within the meaning of
section 607(1))).
``(2) Each registration statement--
``(A) shall be filed in such form, and contain such
information concerning the multiple employer welfare
arrangement and any persons involved in its operation
(including
[[Page H3059]]
whether coverage under the arrangement is fully insured), as
shall be provided in regulations which shall be prescribed by
the Secretary, and
``(B) if any benefits under the arrangement consisting of
medical care (within the meaning of section 607(1)) are not
fully insured, shall contain a certification that copies of
such registration statement have been transmitted by
certified mail to--
``(i) in the case of an arrangement which is a multiple
employer health plan (as defined in section 701(4)), the
State insurance commissioner of the domicile State of such
arrangement, or
``(ii) in the case of an arrangement which is not a
multiple employer health plan, the State insurance
commissioner of each State in which the arrangement is
located.
``(3) The person or persons responsible for filing the
annual registration statement are--
``(A) the trustee or trustees so designated by the terms of
the instrument under which the multiple employer welfare
arrangement is established or maintained, or
``(B) in the case of a multiple employer welfare
arrangement for which the trustee or trustees cannot be
identified, or upon the failure of the trustee or trustees of
an arrangement to file, the person or persons actually
responsible for the acquisition, disposition, control, or
management of the cash or property of the arrangement,
irrespective of whether such acquisition, disposition,
control, or management is exercised directly by such person
or persons or through an agent designated by such person or
persons.
``(4) Any agreement entered into under section 506(c) with
a State as the primary domicile State with respect to any
multiple employer welfare arrangement shall provide for
simultaneous filings of reports required under this
subsection with the Secretary and with the State insurance
commissioner of such State.
``(5) For purposes of this subsection, the term `domicile
State' means, in connection with a multiple employer welfare
arrangement, the State in which, according to the application
for an exemption under this 514(b)(6)(B), most individuals to
be covered under the arrangement are located, except that, in
any case in which information contained in the latest annual
report of the arrangement filed under this part indicates
that most individuals covered under the arrangement are
located in a different State, such term means such different
State.
``(6) The Secretary may exempt from the requirements of
this subsection such class of multiple employer welfare
arrangements as the Secretary deems appropriate.
``(h) Filing Requirements for Multiple Employer Welfare
Arrangements.--
``(1) In general.--A multiple employer welfare arrangement
which provides benefits consisting of medical care (within
the meaning of section 607(1)) shall issue to each
participating employer--
``(A) a document equivalent to the summary plan description
required of plans under this part,
``(B) information describing the contribution rates
applicable to participating employers, and
``(C) a statement indicating--
``(i) that the arrangement is not a licensed insurer under
the laws of any State,
``(ii) the extent to which any benefits under the
arrangement are fully insured,
``(iii) if any benefits under the arrangement are not fully
insured, whether the arrangement has been granted an
exemption under section 514(b)(6)(B) (or whether such an
exemption has ceased to be effective).
``(2) Time for disclosure.--Such information shall be
issued to employers within such reasonable period of time
before becoming participating employers as may be prescribed
in regulations of the Secretary.''.
(b) Effective Dates.--Section 101(g) of the Employee
Retirement Income Security Act of 1974 (added by subsection
(a)) shall take effect on the date of the enactment of this
Act. Section 101(h) of such Act (added by subsection (a))
shall take effect as provided in section 171.
SEC. 170. SINGLE ANNUAL FILING FOR ALL PARTICIPATING
EMPLOYERS.
(a) In General.--Section 110 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1030) is amended by
adding at the end the following new subsection:
``(c) The Secretary shall prescribe by regulation or
otherwise an alternative method providing for the filing of a
single annual report (as referred to in section 104(a)(1)(A))
with respect to all employers who are participating employers
under a multiple employer welfare arrangement under which all
coverage consists of medical care (within the meaning of
section 607(1)) and is fully insured (as defined in section
701(1)).''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act.
The Secretary of Labor shall prescribe the alternative method
referred to in section 110(c) of the Employee Retirement
Income Security Act of 1974, as added by such amendment,
within 90 days after the date of the enactment of this Act.
SEC. 171. EFFECTIVE DATE; TRANSITIONAL RULE.
(a) Effective Date.--Except as otherwise provided in
section 170(b), the amendments made by this subtitle shall
take effect January 1, 1998. The Secretary shall issue all
regulations necessary to carry out the amendments made by
this subtitle before January 1, 1998.
(b) Transitional Rule.--
(1) In general.--If the sponsor of a multiple employer
welfare arrangement which, as of the effective date specified
in subsection (a), provides benefits consisting of medical
care (within the meaning of section 607(1) of the Employee
Retirement Income Security Act of 1974) files with the
Secretary of Labor an application for an exemption under
section 514(b)(6)(B) of such Act within 180 days after such
date and the Secretary has not, as of 90 days after receipt
of such application, found such application to be materially
deficient, then section 514(b)(6)(A) of such Act (29 U.S.C.
1144(b)(6)(A)) shall not apply with respect to such
arrangement during the period following such date and ending
on the earlier of--
(A) the date on which the Secretary denies the application
under the amendments made by this title or determines, in the
Secretary's sole discretion, that such exclusion from
coverage under the provisions of such section 514(b)(6)(A) of
such arrangement would be detrimental to the interests of
individuals covered under such arrangement, or
(B) 18 months after such effective date.
(2) No pending state action.--Subparagraph (A) shall apply
in the case of an arrangement only if, at the time of the
application for the exemption under section 514(b)(6)(B), the
arrangement does not have pending against it an enforcement
action by a State.
Subtitle D--Definitions; General Provisions
SEC. 191. DEFINITIONS; SCOPE OF COVERAGE.
(a) Group Health Plan.--
(1) Definition.--Subject to the succeeding provisions of
this subsection and subsection (d)(1), the term ``group
health plan'' means an employee welfare benefit plan to
the extent that the plan provides medical care (as defined
in subsection (c)(9)) to employees or their dependents (as
defined under the terms of the plan) directly or through
insurance, reimbursement, or otherwise, and includes a
group health plan (within the meaning of section
5000(b)(1) of the Internal Revenue Code of 1986).
(2) Limitation of requirements to plans with 2 or more
employee participants.--The requirements of subtitle A and
part 1 of subtitle B shall apply in the case of a group
health plan for any plan year, or for health insurance
coverage offered in connection with a group health plan for a
year, only if the group health plan has two or more
participants as current employees on the first day of the
plan year.
(3) Exclusion of plans with limited coverage.--An employee
welfare benefit plan shall be treated as a group health plan
under this title only with respect to medical care which is
provided under the plan and which does not consist of
coverage excluded from the definition of health insurance
coverage under subsection (c)(4)(B).
(4) Treatment of church plans.--
(A) Exclusion.--The requirements of this title insofar as
they apply to group health plans shall not apply to church
plans.
(B) Optional disregard in determining period of coverage.--
For purposes of applying section 101(b)(3)(B)(i), a group
health plan may elect to disregard periods of coverage of an
individual under a church plan that, pursuant to subparagraph
(A), is not subject to the requirements of this title.
(5) Treatment of governmental plans.--
(A) Election to be excluded.--If the plan sponsor of a
governmental plan which is a group health plan to which the
provisions of this subtitle otherwise apply makes an election
under this paragraph for any specified period (in such form
and manner as the Secretary of Health and Human Services may
by regulations prescribe), then the requirements of this
title insofar as they apply to group health plans shall not
apply to such governmental plans for such period.
(B) Optional disregard in determining period of coverage if
election made.--For purposes of applying section
101(b)(3)(B)(i), a group health plan may elect to disregard
periods of coverage of an individual under a governmental
plan that, under an election under subparagraph (A), is not
subject to the requirements of this title.
(6) Treatment of medicaid plan as group health plan.--A
State plan under title XIX of the Social Security Act shall
be treated as a group health plan for purposes of applying
section 101(c)(1), unless the State elects not to be so
treated.
(7) Treatment of medicare and indian health service
programs as group health plan.--Title XVIII of the Social
Security Act and a program of the Indian Health Service shall
be treated as a group health plan for purposes of applying
section 101(c)(1).
(b) Incorporation of Certain Definitions in Employee
Retirement Income Security Act of 1974.--Except as provided
in this section, the terms ``beneficiary'', ``church plan'',
``employee'', ``employee welfare benefit plan'',
``employer'', ``governmental plan'', ``multiemployer plan'',
``multiple employer welfare arrangement'', ``participant'',
``plan sponsor'', and ``State'' have the meanings given such
terms in section 3 of the Employee Retirement Income Security
Act of 1974.
(c) Other Definitions.--For purposes of this title:
(1) Applicable state authority.--The term ``applicable
State authority'' means, with respect to an insurer or health
maintenance organization in a State, the State insurance
commissioner or official or officials
[[Page H3060]]
designated by the State to enforce the requirements of this
title for the State involved with respect to such insurer or
organization.
(2) Bona fide association.--The term ``bona fide
association'' means an association which--
(A) has been actively in existence for at least 5 years,
(B) has been formed and maintained in good faith for
purposes other than obtaining insurance,
(C) does not condition membership in the association on
health status,
(D) makes health insurance coverage offered through the
association available to all members regardless of health
status,
(E) does not make health insurance coverage offered through
the association available to any individual who is not a
member (or dependent of a member) of the association at the
time the coverage is initially issued,
(F) does not impose preexisting condition exclusions except
in a manner consistent with the requirements of sections 101
and 102 as they relate to group health plans, and
(G) provides for renewal and continuation of health
insurance coverage in a manner consistent with the
requirements of section 132 as they relate to the renewal and
continuation in force of coverage in a group market.
(3) COBRA continuation provision.--The term ``COBRA
continuation provision'' means any of the following:
(A) Section 4980B of the Internal Revenue Code of 1986,
other than subsection (f)(1) of such section insofar as it
relates to pediatric vaccines.
(B) Part 6 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1161 et
seq.), other than section 609.
(C) Title XXII of the Public Health Service Act.
(4) Health insurance coverage.--
(A) In general.--Except as provided in subparagraph (B),
the term ``health insurance coverage'' means benefits
consisting of medical care (provided directly, through
insurance or reimbursement, or otherwise) under any hospital
or medical service policy or certificate, hospital or medical
service plan contract, or health maintenance organization
group contract offered by an insurer or a health maintenance
organization.
(B) Exception.--Such term does not include coverage under
any separate policy, certificate, or contract only for one or
more of any of the following:
(i) Coverage for accident, credit-only, vision, disability
income, long-term care, nursing home care, community-based
care dental, on-site medical clinics, or employee assistance
programs, or any combination thereof.
(ii) Medicare supplemental health insurance (within the
meaning of section 1882(g)(1) of the Social Security Act (42
U.S.C. 1395ss(g)(1))) and similar supplemental coverage
provided under a group health plan.
(iii) Coverage issued as a supplement to liability
insurance.
(iv) Liability insurance, including general liability
insurance and automobile liability insurance.
(v) Workers' compensation or similar insurance.
(vi) Automobile medical-payment insurance.
(vii) Coverage for a specified disease or illness.
(viii) Hospital or fixed indemnity insurance.
(ix) Short-term limited duration insurance.
(x) Such other coverage, comparable to that described in
previous clauses, as may be specified in regulations
prescribed under this title.
(5) Health maintenance organization; hmo.--The terms
``health maintenance organization'' and ``HMO'' mean--
(A) a Federally qualified health maintenance organization
(as defined in section 1301(a) of the Public Health Service
Act (42 U.S.C. 300e(a))),
(B) an organization recognized under State law as a health
maintenance organization, or
(C) a similar organization regulated under State law for
solvency in the same manner and to the same extent as such a
health maintenance organization,
if (other than for purposes of part 2 of subtitle B) it is
subject to State law which regulates insurance (within the
meaning of section 514(b)(2) of the Employee Retirement
Income Security Act of 1974).
(6) Health status.--The term ``health status'' includes,
with respect to an individual, medical condition, claims
experience, receipt of health care, medical history, genetic
information, evidence of insurability (including conditions
arising out of acts of domestic violence), or disability.
(7) Individual health insurance coverage.--The term
``individual health insurance coverage'' means health
insurance coverage offered to individuals if the coverage is
not offered in connection with a group health plan (other
than such a plan that has fewer than two participants as
current employees on the first day of the plan year).
(8) Insurer.--The term ``insurer'' means an insurance
company, insurance service, or insurance organization which
is licensed to engage in the business of insurance in a State
and which (except for purposes of part 2 of subtitle B) is
subject to State law which regulates insurance (within the
meaning of section 514(b)(2)(A) of the Employee Retirement
Income Security Act of 1974).
(9) Medical care.--The term ``medical care'' means--
(A) amounts paid for, or items or services in the form of,
the diagnosis, cure, mitigation, treatment, or prevention of
disease, or amounts paid for, or items or services provided
for, the purpose of affecting any structure or function of
the body,
(B) amounts paid for, or services in the form of,
transportation primarily for and essential to medical care
referred to in subparagraph (A), and
(C) amounts paid for insurance covering medical care
referred to in subparagraphs (A) and (B).
(10) Network plan.--The term ``network plan'' means, with
respect to health insurance coverage, an arrangement of an
insurer or a health maintenance organization under which the
financing and delivery of medical care are provided, in whole
or in part, through a defined set of providers under contract
with the insurer or health maintenance organization.
(11) Waiting period.--The term ``waiting period'' means,
with respect to a group health plan and an individual who is
a potential participant or beneficiary in the plan, the
minimum period that must pass with respect to the individual
before the individual is eligible to be covered for benefits
under the plan.
(d) Treatment of Partnerships.--
(1) Treatment as a group health plan.--Any plan, fund, or
program which would not be (but for this paragraph) an
employee welfare benefit plan and which is established or
maintained by a partnership, to the extent that such plan,
fund, or program provides medical care to present or former
partners in the partnership or to their dependents (as
defined under the terms of the plan, fund, or program),
directly or through insurance, reimbursement, or otherwise,
shall be treated (subject to paragraph (1)) as an employee
welfare benefit plan which is a group health plan.
(2) Treatment of partnership and partners and employer and
participants.--In the case of a group health plan--
(A) the term ``employer'' includes the partnership in
relation to any partner; and
(B) the term ``participant'' includes--
(i) in connection with a group health plan maintained by a
partnership, an individual who is a partner in relation to
the partnership, or
(ii) in connection with a group health plan maintained by a
self-employed individual (under which one or more employees
are participants), the self-employed individual,
if such individual is or may become eligible to receive a
benefit under the plan or such individual's beneficiaries may
be eligible to receive any such benefit.
(e) Definitions Relating to Markets and Small Employers.--
As used in this title:
(1) Individual market.--The term ``individual market''
means the market for health insurance coverage offered to
individuals and not to employers or in connection with a
group health plan and does not include the market for such
coverage issued only by an insurer or HMO that makes such
coverage available only on the basis of affiliation with a
bona fide association (as defined in subsection (c)(2)).
(2) Large group market.--The term ``large group market''
means the market for health insurance coverage offered to
employers (other than small employers) on behalf of their
employees (and their dependents) and does not include health
insurance coverage available solely in connection with a bona
fide association (as defined in subsection (c)(2)).
(3) Small employer.--The term ``small employer'' means, in
connection with a group health plan with respect to a
calendar year, an employer who employs at least 2 but fewer
than 51 employees on a typical business day in the year. All
persons treated as a single employer under subsection (a) or
(b) of section 52 of the Internal Revenue Code of 1986 shall
be treated as a single employer for purposes of this title.
(4) Small group market.--The term ``small group market''
means the health insurance market under which individuals
obtain health insurance coverage (directly or through any
arrangement) on behalf of themselves (and their dependents)
on the basis of employment or other relationship with respect
to a small employer and does not include health insurance
coverage available solely in connection with a bona fide
association (as defined in subsection (c)(2)).
SEC. 192. STATE FLEXIBILITY TO PROVIDE GREATER PROTECTION.
(a) State Flexibility To Provide Greater Protection.--
Subject to subsection (b), nothing in this subtitle or
subtitle A or B shall be construed to preempt State laws--
(1) that relate to matters not specifically addressed in
such subtitles; or
(2) that require insurers or HMOs--
(A) to impose a limitation or exclusion of benefits
relating to the treatment of a preexisting condition for a
period that is shorter than the applicable period provided
for under such subtitles;
(B) to allow individuals, participants, and beneficiaries
to be considered to be in a period of previous qualifying
coverage if such individual, participant, or beneficiary
experiences a lapse in coverage that is greater than the 60-
day periods provided for under sections 101(b)(3)(A),
101(b)(3)(B)(ii), and 102(b)(2); or
[[Page H3061]]
(C) in defining pre-existing condition, to have a look-back
period that is shorter than the 6-month period described in
section 101(b)(1)(A).
(b) No Override of ERISA Preemption.--Except as provided
specifically in subtitle C, nothing in this Act shall be
construed to affect or modify the provisions of section 514
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1144).
SEC. 193. EFFECTIVE DATE.
(a) In General.--Except as otherwise provided for in this
title, the provisions of this title shall apply with respect
to--
(1) group health plans, and health insurance coverage
offered in connection with group health plans, for plan years
beginning on or after January 1, 1998, and
(2) individual health insurance coverage issued, renewed,
in effect, or operated on or after July 1, 1998.
(b) Consideration of Previous Coverage.--The Secretaries of
Health and Human Services, Treasury, and Labor shall jointly
establish rules regarding the treatment (in determining
qualified coverage periods under sections 102(b) and 141(b))
of coverage before the applicable effective date specified in
subsection (a).
(c) Timely Issuance of Regulations.--The Secretaries of
Health and Human Services, the Treasury, and Labor shall
issue such regulations on a timely basis as may be required
to carry out this title.
SEC. 194. RULE OF CONSTRUCTION.
Nothing in this title or any amendment made thereby may be
construed to require (or to authorize any regulation that
requires) the coverage of any specific procedure, treatment,
or service under a group health plan or health insurance
coverage.
SEC. 195. FINDINGS RELATING TO EXERCISE OF COMMERCE CLAUSE
AUTHORITY.
Congress finds the following in relation to the provisions
of this title:
(1) Provisions in group health plans and health insurance
coverage that impose certain pre-existing conditions impact
the ability of employees to seek employment in interstate
commerce, thereby impeding such commerce.
(2) Health insurance coverage is commercial in nature and
is in and affects interstate commerce.
(3) It is a necessary and proper exercise of Congressional
authority to impose requirements under this title on group
health plans and health insurance coverage (including
coverage offered to individuals previously covered under
group health plans) in order to promote commerce among the
States.
(4) Congress, however, intends to defer to States, to the
maximum extent practicable, in carrying out such requirements
with respect to insurers and health maintenance organizations
that are subject to State regulation, consistent with the
provisions of the Employee Retirement Income Security Act of
1974.
TITLE II--PREVENTING HEALTH CARE FRAUD AND ABUSE; ADMINISTRATIVE
SIMPLIFICATION; MEDICAL LIABILITY REFORM
SEC. 200. REFERENCES IN TITLE.
Except as otherwise specifically provided, whenever in this
title an amendment is expressed in terms of an amendment to
or repeal of a section or other provision, the reference
shall be considered to be made to that section or other
provision of the Social Security Act.
Subtitle A--Fraud and Abuse Control Program
SEC. 201. FRAUD AND ABUSE CONTROL PROGRAM.
(a) Establishment of Program.--Title XI (42 U.S.C. 1301 et
seq.) is amended by inserting after section 1128B the
following new section:
``fraud and abuse control program
``Sec. 1128C. (a) Establishment of Program.--
``(1) In general.--Not later than January 1, 1997, the
Secretary, acting through the Office of the Inspector General
of the Department of Health and Human Services, and the
Attorney General shall establish a program--
``(A) to coordinate Federal, State, and local law
enforcement programs to control fraud and abuse with respect
to health plans,
``(B) to conduct investigations, audits, evaluations, and
inspections relating to the delivery of and payment for
health care in the United States,
``(C) to facilitate the enforcement of the provisions of
sections 1128, 1128A, and 1128B and other statutes applicable
to health care fraud and abuse,
``(D) to provide for the modification and establishment of
safe harbors and to issue advisory opinions and special fraud
alerts pursuant to section 1128D, and
``(E) to provide for the reporting and disclosure of
certain final adverse actions against health care providers,
suppliers, or practitioners pursuant to the data collection
system established under section 1128E.
``(2) Coordination with health plans.--In carrying out the
program established under paragraph (1), the Secretary and
the Attorney General shall consult with, and arrange for the
sharing of data with representatives of health plans.
``(3) Guidelines.--
``(A) In general.--The Secretary and the Attorney General
shall issue guidelines to carry out the program under
paragraph (1). The provisions of sections 553, 556, and 557
of title 5, United States Code, shall not apply in the
issuance of such guidelines.
``(B) Information guidelines.--
``(i) In general.--Such guidelines shall include guidelines
relating to the furnishing of information by health plans,
providers, and others to enable the Secretary and the
Attorney General to carry out the program (including
coordination with health plans under paragraph (2)).
``(ii) Confidentiality.--Such guidelines shall include
procedures to assure that such information is provided and
utilized in a manner that appropriately protects the
confidentiality of the information and the privacy of
individuals receiving health care services and items.
``(iii) Qualified immunity for providing information.--The
provisions of section 1157(a) (relating to limitation on
liability) shall apply to a person providing information to
the Secretary or the Attorney General in conjunction with
their performance of duties under this section.
``(4) Ensuring access to documentation.--The Inspector
General of the Department of Health and Human Services is
authorized to exercise such authority described in paragraphs
(3) through (9) of section 6 of the Inspector General Act of
1978 (5 U.S.C. App.) as necessary with respect to the
activities under the fraud and abuse control program
established under this subsection.
``(5) Authority of inspector general.--Nothing in this Act
shall be construed to diminish the authority of any Inspector
General, including such authority as provided in the
Inspector General Act of 1978 (5 U.S.C. App.).
``(b) Additional Use of Funds by Inspector General.--
``(1) Reimbursements for investigations.--The Inspector
General of the Department of Health and Human Services is
authorized to receive and retain for current use
reimbursement for the costs of conducting investigations and
audits and for monitoring compliance plans when such costs
are ordered by a court, voluntarily agreed to by the payor,
or otherwise.
``(2) Crediting.--Funds received by the Inspector General
under paragraph (1) as reimbursement for costs of conducting
investigations shall be deposited to the credit of the
appropriation from which initially paid, or to appropriations
for similar purposes currently available at the time of
deposit, and shall remain available for obligation for 1 year
from the date of the deposit of such funds.
``(c) Health Plan Defined.--For purposes of this section,
the term `health plan' means a plan or program that provides
health benefits, whether directly, through insurance, or
otherwise, and includes--
``(1) a policy of health insurance;
``(2) a contract of a service benefit organization; and
``(3) a membership agreement with a health maintenance
organization or other prepaid health plan.''.
(b) Establishment of Health Care Fraud and Abuse Control
Account in Federal Hospital Insurance Trust Fund.--Section
1817 (42 U.S.C. 1395i) is amended by adding at the end the
following new subsection:
``(k) Health Care Fraud and Abuse Control Account.--
``(1) Establishment.--There is hereby established in the
Trust Fund an expenditure account to be known as the `Health
Care Fraud and Abuse Control Account' (in this subsection
referred to as the `Account').
``(2) Appropriated amounts to trust fund.--
``(A) In general.--There are hereby appropriated to the
Trust Fund--
``(i) such gifts and bequests as may be made as provided in
subparagraph (B);
``(ii) such amounts as may be deposited in the Trust Fund
as provided in sections 242(b) and 249(c) of the Health
Coverage Availability and Affordability Act of 1996, and
title XI; and
``(iii) such amounts as are transferred to the Trust Fund
under subparagraph (C).
``(B) Authorization to accept gifts.--The Trust Fund is
authorized to accept on behalf of the United States money
gifts and bequests made unconditionally to the Trust Fund,
for the benefit of the Account or any activity financed
through the Account.
``(C) Transfer of amounts.--The Managing Trustee shall
transfer to the Trust Fund, under rules similar to the rules
in section 9601 of the Internal Revenue Code of 1986, an
amount equal to the sum of the following:
``(i) Criminal fines recovered in cases involving a Federal
health care offense (as defined in section 982(a)(6)(B) of
title 18, United States Code).
``(ii) Civil monetary penalties and assessments imposed in
health care cases, including amounts recovered under titles
XI, XVIII, and XIX, and chapter 38 of title 31, United States
Code (except as otherwise provided by law).
``(iii) Amounts resulting from the forfeiture of property
by reason of a Federal health care offense.
``(iv) Penalties and damages obtained and otherwise
creditable to miscellaneous receipts of the general fund of
the Treasury obtained under sections 3729 through 3733 of
title 31, United States Code (known as the False Claims Act),
in cases involving claims related to the provision of health
care items and services (other than funds awarded to a
relator, for restitution or otherwise authorized by law).
``(3) Appropriated amounts to account for fraud and abuse
control program, etc.--
[[Page H3062]]
``(A) Departments of health and human services and
justice.--
``(i) In general.--There are hereby appropriated to the
Account from the Trust Fund such sums as the Secretary and
the Attorney General certify are necessary to carry out the
purposes described in subparagraph (C), to be available
without further appropriation, in an amount not to exceed--
``(I) for fiscal year 1997, $104,000,000,
``(II) for each of the fiscal years 1998 through 2003, the
limit for the preceding fiscal year, increased by 15 percent;
and
``(III) for each fiscal year after fiscal year 2003, the
limit for fiscal year 2003.
``(ii) Medicare and medicaid activities.--For each fiscal
year, of the amount appropriated in clause (i), the following
amounts shall be available only for the purposes of the
activities of the Office of the Inspector General of the
Department of Health and Human Services with respect to the
medicare and medicaid programs--
``(I) for fiscal year 1997, not less than $60,000,000 and
not more than $70,000,000;
``(II) for fiscal year 1998, not less than $80,000,000 and
not more than $90,000,000;
``(III) for fiscal year 1999, not less than $90,000,000 and
not more than $100,000,000;
``(IV) for fiscal year 2000, not less than $110,000,000 and
not more than $120,000,000;
``(V) for fiscal year 2001, not less than $120,000,000 and
not more than $130,000,000;
``(VI) for fiscal year 2002, not less than $140,000,000 and
not more than $150,000,000; and
``(VII) for each fiscal year after fiscal year 2002, not
less than $150,000,000 and not more than $160,000,000.
``(B) Federal bureau of investigation.--There are hereby
appropriated from the general fund of the United States
Treasury and hereby appropriated to the Account for transfer
to the Federal Bureau of Investigation to carry out the
purposes described in subparagraph (C), to be available
without further appropriation--
``(i) for fiscal year 1997, $47,000,000;
``(ii) for fiscal year 1998, $56,000,000;
``(iii) for fiscal year 1999, $66,000,000;
``(iv) for fiscal year 2000, $76,000,000;
``(v) for fiscal year 2001, $88,000,000;
``(vi) for fiscal year 2002, $101,000,000; and
``(vii) for each fiscal year after fiscal year 2002,
$114,000,000.
``(C) Use of funds.--The purposes described in this
subparagraph are to cover the costs (including equipment,
salaries and benefits, and travel and training) of the
administration and operation of the health care fraud and
abuse control program established under section 1128C(a),
including the costs of--
``(i) prosecuting health care matters (through criminal,
civil, and administrative proceedings);
``(ii) investigations;
``(iii) financial and performance audits of health care
programs and operations;
``(iv) inspections and other evaluations; and
``(v) provider and consumer education regarding compliance
with the provisions of title XI.
``(4) Appropriated amounts to account for medicare
integrity program.--
``(A) In general.--There are hereby appropriated to the
Account from the Trust Fund for each fiscal year such amounts
as are necessary to carry out the Medicare Integrity Program
under section 1893, subject to subparagraph (B) and to be
available without further appropriation.
``(B) Amounts specified.--The amount appropriated under
subparagraph (A) for a fiscal year is as follows:
``(i) For fiscal year 1997, such amount shall be not less
than $430,000,000 and not more than $440,000,000.
``(ii) For fiscal year 1998, such amount shall be not less
than $490,000,000 and not more than $500,000,000.
``(iii) For fiscal year 1999, such amount shall be not less
than $550,000,000 and not more than $560,000,000.
``(iv) For fiscal year 2000, such amount shall be not less
than $620,000,000 and not more than $630,000,000.
``(v) For fiscal year 2001, such amount shall be not less
than $670,000,000 and not more than $680,000,000.
``(vi) For fiscal year 2002, such amount shall be not less
than $690,000,000 and not more than $700,000,000.
``(vii) For each fiscal year after fiscal year 2002, such
amount shall be not less than $710,000,000 and not more than
$720,000,000.
``(5) Annual report.--The Secretary and the Attorney
General shall submit jointly an annual report to Congress on
the amount of revenue which is generated and disbursed, and
the justification for such disbursements, by the Account in
each fiscal year.''.
SEC. 202. MEDICARE INTEGRITY PROGRAM.
(a) Establishment of Medicare Integrity Program.--Title
XVIII is amended by adding at the end the following new
section:
``medicare integrity program
``Sec. 1893. (a) Establishment of Program.--There is hereby
established the Medicare Integrity Program (in this section
referred to as the `Program') under which the Secretary shall
promote the integrity of the medicare program by entering
into contracts in accordance with this section with eligible
private entities to carry out the activities described in
subsection (b).
``(b) Activities Described.--The activities described in
this subsection are as follows:
``(1) Review of activities of providers of services or
other individuals and entities furnishing items and services
for which payment may be made under this title (including
skilled nursing facilities and home health agencies),
including medical and utilization review and fraud review
(employing similar standards, processes, and technologies
used by private health plans, including equipment and
software technologies which surpass the capability of the
equipment and technologies used in the review of claims under
this title as of the date of the enactment of this section).
``(2) Audit of cost reports.
``(3) Determinations as to whether payment should not be,
or should not have been, made under this title by reason of
section 1862(b), and recovery of payments that should not
have been made.
``(4) Education of providers of services, beneficiaries,
and other persons with respect to payment integrity and
benefit quality assurance issues.
``(5) Developing (and periodically updating) a list of
items of durable medical equipment in accordance with section
1834(a)(15) which are subject to prior authorization under
such section.
``(c) Eligibility of Entities.--An entity is eligible to
enter into a contract under the Program to carry out any of
the activities described in subsection (b) if--
``(1) the entity has demonstrated capability to carry out
such activities;
``(2) in carrying out such activities, the entity agrees to
cooperate with the Inspector General of the Department of
Health and Human Services, the Attorney General of the United
States, and other law enforcement agencies, as appropriate,
in the investigation and deterrence of fraud and abuse in
relation to this title and in other cases arising out of such
activities;
``(3) the entity demonstrates to the Secretary that the
entity's financial holdings, interests, or relationships will
not interfere with its ability to perform the functions to be
required by the contract in an effective and impartial
manner; and
``(4) the entity meets such other requirements as the
Secretary may impose.
In the case of the activity described in subsection (b)(5),
an entity shall be deemed to be eligible to enter into a
contract under the Program to carry out the activity if the
entity is a carrier with a contract in effect under
section 1842.
``(d) Process for Entering Into Contracts.--The Secretary
shall enter into contracts under the Program in accordance
with such procedures as the Secretary shall by regulation
establish, except that such procedures shall include the
following:
``(1) The Secretary shall determine the appropriate number
of separate contracts which are necessary to carry out the
Program and the appropriate times at which the Secretary
shall enter into such contracts.
``(2)(A) Except as provided in subparagraph (B), the
provisions of section 1153(e)(1) shall apply to contracts and
contracting authority under this section.
``(B) Competitive procedures must be used when entering
into new contracts under this section, or at any other time
considered appropriate by the Secretary, except that the
Secretary may contract with entities that are carrying out
the activities described in this section pursuant to
agreements under section 1816 or contracts under section 1842
in effect on the date of the enactment of this section.
``(3) A contract under this section may be renewed without
regard to any provision of law requiring competition if the
contractor has met or exceeded the performance requirements
established in the current contract.
``(e) Limitation on Contractor Liability.--The Secretary
shall by regulation provide for the limitation of a
contractor's liability for actions taken to carry out a
contract under the Program, and such regulation shall, to the
extent the Secretary finds appropriate, employ the same or
comparable standards and other substantive and procedural
provisions as are contained in section 1157.''.
(b) Elimination of FI and Carrier Responsibility for
Carrying Out Activities Subject to Program.--
(1) Responsibilities of fiscal intermediaries under part
a.--Section 1816 (42 U.S.C. 1395h) is amended by adding at
the end the following new subsection:
``(l) No agency or organization may carry out (or receive
payment for carrying out) any activity pursuant to an
agreement under this section to the extent that the activity
is carried out pursuant to a contract under the Medicare
Integrity Program under section 1893.''.
(2) Responsibilities of carriers under part b.--Section
1842(c) (42 U.S.C. 1395u(c)) is amended by adding at the end
the following new paragraph:
``(6) No carrier may carry out (or receive payment for
carrying out) any activity pursuant to a contract under this
subsection to the extent that the activity is carried out
pursuant to a contract under the Medicare Integrity Program
under section 1893. The previous sentence shall not apply
with respect to the activity described in section 1893(b)(5)
(relating to prior authorization of certain items of durable
medical equipment under section 1834(a)(15)).''.
SEC. 203. BENEFICIARY INCENTIVE PROGRAMS.
(a) Clarification of Requirement to Provide Explanation of
Medicare Benefits.--
[[Page H3063]]
The Secretary of Health and Human Services (in this section
referred to as the ``Secretary'') shall provide an
explanation of benefits under the medicare program under
title XVIII of the Social Security Act with respect to each
item or service for which payment may be made under the
program which is furnished to an individual, without regard
to whether or not a deductible or coinsurance may be imposed
against the individual with respect to the item or service.
(b) Program To Collect Information on Fraud and Abuse.--
(1) Establishment of program.--Not later than 3 months
after the date of the enactment of this Act, the Secretary
shall establish a program under which the Secretary shall
encourage individuals to report to the Secretary information
on individuals and entities who are engaging or who have
engaged in acts or omissions which constitute grounds for the
imposition of a sanction under section 1128, section 1128A,
or section 1128B of the Social Security Act, or who have
otherwise engaged in fraud and abuse against the medicare
program for which there is a sanction provided under law. The
program shall discourage provision of, and not consider,
information which is frivolous or otherwise not relevant or
material to the imposition of such a sanction.
(2) Payment of portion of amounts collected.--If an
individual reports information to the Secretary under the
program established under paragraph (1) which serves as the
basis for the collection by the Secretary or the Attorney
General of any amount of at least $100 (other than any amount
paid as a penalty under section 1128B of the Social Security
Act), the Secretary may pay a portion of the amount collected
to the individual (under procedures similar to those
applicable under section 7623 of the Internal Revenue Code of
1986 to payments to individuals providing information on
violations of such Code).
(c) Program To Collect Information on Program Efficiency.--
(1) Establishment of program.--Not later than 3 months
after the date of the enactment of this Act, the Secretary
shall establish a program under which the Secretary shall
encourage individuals to submit to the Secretary suggestions
on methods to improve the efficiency of the medicare program.
(2) Payment of portion of program savings.--If an
individual submits a suggestion to the Secretary under the
program established under paragraph (1) which is adopted by
the Secretary and which results in savings to the program,
the Secretary may make a payment to the individual of such
amount as the Secretary considers appropriate.
SEC. 204. APPLICATION OF CERTAIN HEALTH ANTI-FRAUD AND ABUSE
SANCTIONS TO FRAUD AND ABUSE AGAINST FEDERAL
HEALTH CARE PROGRAMS.
(a) In General.--Section 1128B (42 U.S.C. 1320a-7b) is
amended as follows:
(1) In the heading, by striking ``medicare or state health
care programs'' and inserting ``federal health care
programs''.
(2) In subsection (a)(1), by striking ``a program under
title XVIII or a State health care program (as defined in
section 1128(h))'' and inserting ``a Federal health care
program''.
(3) In subsection (a)(5), by striking ``a program under
title XVIII or a State health care program'' and inserting
``a Federal health care program''.
(4) In the second sentence of subsection (a)--
(A) by striking ``a State plan approved under title XIX''
and inserting ``a Federal health care program'', and
(B) by striking ``the State may at its option
(notwithstanding any other provision of that title or of such
plan)'' and inserting ``the administrator of such program may
at its option (notwithstanding any other provision of such
program)''.
(5) In subsection (b), by striking ``title XVIII or a State
health care program'' each place it appears and inserting ``a
Federal health care program''.
(6) In subsection (c), by inserting ``(as defined in
section 1128(h))'' after ``a State health care program''.
(7) By adding at the end the following new subsection:
``(f) For purposes of this section, the term `Federal
health care program' means--
``(1) any plan or program that provides health benefits,
whether directly, through insurance, or otherwise, which is
funded directly, in whole or in part, by the United States
Government (other than the health insurance program under
chapter 89 of title 5, United States Code); or
``(2) any State health care program, as defined in section
1128(h).''.
(b) Effective Date.--The amendments made by this section
shall take effect on January 1, 1997.
SEC. 205. GUIDANCE REGARDING APPLICATION OF HEALTH CARE FRAUD
AND ABUSE SANCTIONS.
Title XI (42 U.S.C. 1301 et seq.), as amended by section
201, is amended by inserting after section 1128C the
following new section:
``guidance regarding application of health care fraud and abuse
sanctions
``Sec. 1128D. (a) Solicitation and Publication of
Modifications to Existing Safe Harbors and New Safe
Harbors.--
``(1) In general.--
``(A) Solicitation of proposals for safe harbors.--Not
later than January 1, 1997, and not less than annually
thereafter, the Secretary shall publish a notice in the
Federal Register soliciting proposals, which will be accepted
during a 60-day period, for--
``(i) modifications to existing safe harbors issued
pursuant to section 14(a) of the Medicare and Medicaid
Patient and Program Protection Act of 1987 (42 U.S.C. 1320a-
7b note);
``(ii) additional safe harbors specifying payment practices
that shall not be treated as a criminal offense under section
1128B(b) and shall not serve as the basis for an exclusion
under section 1128(b)(7);
``(iii) advisory opinions to be issued pursuant to
subsection (b); and
``(iv) special fraud alerts to be issued pursuant to
subsection (c).
``(B) Publication of proposed modifications and proposed
additional safe harbors.--After considering the proposals
described in clauses (i) and (ii) of subparagraph (A), the
Secretary, in consultation with the Attorney General, shall
publish in the Federal Register proposed modifications to
existing safe harbors and proposed additional safe harbors,
if appropriate, with a 60-day comment period. After
considering any public comments received during this period,
the Secretary shall issue final rules modifying the existing
safe harbors and establishing new safe harbors, as
appropriate.
``(C) Report.--The Inspector General of the Department of
Health and Human Services (in this section referred to as the
`Inspector General') shall, in an annual report to Congress
or as part of the year-end semiannual report required by
section 5 of the Inspector General Act of 1978 (5 U.S.C.
App.), describe the proposals received under clauses (i) and
(ii) of subparagraph (A) and explain which proposals were
included in the publication described in subparagraph (B),
which proposals were not included in that publication, and
the reasons for the rejection of the proposals that were not
included.
``(2) Criteria for modifying and establishing safe
harbors.--In modifying and establishing safe harbors under
paragraph (1)(B), the Secretary may consider the extent to
which providing a safe harbor for the specified payment
practice may result in any of the following:
``(A) An increase or decrease in access to health care
services.
``(B) An increase or decrease in the quality of health care
services.
``(C) An increase or decrease in patient freedom of choice
among health care providers.
``(D) An increase or decrease in competition among health
care providers.
``(E) An increase or decrease in the ability of health care
facilities to provide services in medically underserved areas
or to medically underserved populations.
``(F) An increase or decrease in the cost to Federal health
care programs (as defined in section 1128B(f)).
``(G) An increase or decrease in the potential
overutilization of health care services.
``(H) The existence or nonexistence of any potential
financial benefit to a health care professional or provider
which may vary based on their decisions of--
``(i) whether to order a health care item or service; or
``(ii) whether to arrange for a referral of health care
items or services to a particular practitioner or provider.
``(I) Any other factors the Secretary deems appropriate in
the interest of preventing fraud and abuse in Federal health
care programs (as so defined).
``(b) Advisory Opinions.--
``(1) Issuance of advisory opinions.--The Secretary shall
issue written advisory opinions as provided in this
subsection.
``(2) Matters subject to advisory opinions.--The Secretary
shall issue advisory opinions as to the following matters:
``(A) What constitutes prohibited remuneration within the
meaning of section 1128B(b).
``(B) Whether an arrangement or proposed arrangement
satisfies the criteria set forth in section 1128B(b)(3) for
activities which do not result in prohibited remuneration.
``(C) Whether an arrangement or proposed arrangement
satisfies the criteria which the Secretary has established,
or shall establish by regulation for activities which do not
result in prohibited remuneration.
``(D) What constitutes an inducement to reduce or limit
services to individuals entitled to benefits under title
XVIII or title XIX or title XXI within the meaning of section
1128B(b).
``(E) Whether any activity or proposed activity constitutes
grounds for the imposition of a sanction under section 1128,
1128A, or 1128B.
``(3) Matters not subject to advisory opinions.--Such
advisory opinions shall not address the following matters:
``(A) Whether the fair market value shall be, or was paid
or received for any goods, services or property.
``(B) Whether an individual is a bona fide employee within
the requirements of section 3121(d)(2) of the Internal
Revenue Code of 1986.
``(4) Effect of advisory opinions.--
``(A) Binding as to secretary and parties involved.--Each
advisory opinion issued by the Secretary shall be binding as
to the Secretary and the party or parties requesting the
opinion.
``(B) Failure to seek opinion.--The failure of a party to
seek an advisory opinion may not be introduced into evidence
to prove that the party intended to violate the provisions of
sections 1128, 1128A, or 1128B.
``(5) Regulations.--
[[Page H3064]]
``(A) In general.--Not later than 180 days after the date
of the enactment of this section, the Secretary shall issue
regulations to carry out this section. Such regulations shall
provide for--
``(i) the procedure to be followed by a party applying for
an advisory opinion;
``(ii) the procedure to be followed by the Secretary in
responding to a request for an advisory opinion;
``(iii) the interval in which the Secretary shall respond;
``(iv) the reasonable fee to be charged to the party
requesting an advisory opinion; and
``(v) the manner in which advisory opinions will be made
available to the public.
``(B) Specific contents.--Under the regulations promulgated
pursuant to subparagraph (A)--
``(i) the Secretary shall be required to respond to a party
requesting an advisory opinion by not later than 30 days
after the request is received; and
``(ii) the fee charged to the party requesting an advisory
opinion shall be equal to the costs incurred by the Secretary
in responding to the request.
``(c) Special Fraud Alerts.--
``(1) In general.--
``(A) Request for special fraud alerts.--Any person may
present, at any time, a request to the Inspector General for
a notice which informs the public of practices which the
Inspector General considers to be suspect or of particular
concern under the medicare program or a State health care
program, as defined in section 1128(h) (in this subsection
referred to as a `special fraud alert').
``(B) Issuance and publication of special fraud alerts.--
Upon receipt of a request described in subparagraph (A), the
Inspector General shall investigate the subject matter of the
request to determine whether a special fraud alert should be
issued. If appropriate, the Inspector General shall issue a
special fraud alert in response to the request. All special
fraud alerts issued pursuant to this subparagraph shall be
published in the Federal Register.
``(2) Criteria for special fraud alerts.--In determining
whether to issue a special fraud alert upon a request
described in paragraph (1), the Inspector General may
consider--
``(A) whether and to what extent the practices that would
be identified in the special fraud alert may result in any of
the consequences described in subsection (a)(2); and
``(B) the volume and frequency of the conduct that would be
identified in the special fraud alert.''.
Subtitle B--Revisions to Current Sanctions for Fraud and Abuse
SEC. 211. MANDATORY EXCLUSION FROM PARTICIPATION IN MEDICARE
AND STATE HEALTH CARE PROGRAMS.
(a) Individual Convicted of Felony Relating to Health Care
Fraud.--
(1) In general.--Section 1128(a) (42 U.S.C. 1320a-7(a)) is
amended by adding at the end the following new paragraph:
``(3) Felony conviction relating to health care fraud.--Any
individual or entity that has been convicted after the date
of the enactment of the Health Coverage Availability and
Affordability Act of 1996, under Federal or State law, in
connection with the delivery of a health care item or service
or with respect to any act or omission in a health care
program (other than those specifically described in paragraph
(1)) operated by or financed in whole or in part by any
Federal, State, or local government agency, of a criminal
offense consisting of a felony relating to fraud, theft,
embezzlement, breach of fiduciary responsibility, or other
financial misconduct.''.
(2) Conforming amendment.--Paragraph (1) of section 1128(b)
(42 U.S.C. 1320a-7(b)) is amended to read as follows:
``(1) Conviction relating to fraud.--Any individual or
entity that has been convicted after the date of the
enactment of the Health Coverage Availability and
Affordability Act of 1996, under Federal or State law--
``(A) of a criminal offense consisting of a misdemeanor
relating to fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct--
``(i) in connection with the delivery of a health care item
or service, or
``(ii) with respect to any act or omission in a health care
program (other than those specifically described in
subsection (a)(1)) operated by or financed in whole or in
part by any Federal, State, or local government agency; or
``(B) of a criminal offense relating to fraud, theft,
embezzlement, breach of fiduciary responsibility, or other
financial misconduct with respect to any act or omission in a
program (other than a health care program) operated by or
financed in whole or in part by any Federal, State, or local
government agency.''.
(b) Individual Convicted of Felony Relating to Controlled
Substance.--
(1) In general.--Section 1128(a) (42 U.S.C. 1320a-7(a)), as
amended by subsection (a), is amended by adding at the end
the following new paragraph:
``(4) Felony conviction relating to controlled substance.--
Any individual or entity that has been convicted after the
date of the enactment of the Health Coverage Availability and
Affordability Act of 1996, under Federal or State law, of a
criminal offense consisting of a felony relating to the
unlawful manufacture, distribution, prescription, or
dispensing of a controlled substance.''.
(2) Conforming amendment.--Section 1128(b)(3) (42 U.S.C.
1320a-7(b)(3)) is amended--
(A) in the heading, by striking ``Conviction'' and
inserting ``Misdemeanor conviction''; and
(B) by striking ``criminal offense'' and inserting
``criminal offense consisting of a misdemeanor''.
SEC. 212. ESTABLISHMENT OF MINIMUM PERIOD OF EXCLUSION FOR
CERTAIN INDIVIDUALS AND ENTITIES SUBJECT TO
PERMISSIVE EXCLUSION FROM MEDICARE AND STATE
HEALTH CARE PROGRAMS.
Section 1128(c)(3) (42 U.S.C. 1320a-7(c)(3)) is amended by
adding at the end the following new subparagraphs:
``(D) In the case of an exclusion of an individual or
entity under paragraph (1), (2), or (3) of subsection (b),
the period of the exclusion shall be 3 years, unless the
Secretary determines in accordance with published regulations
that a shorter period is appropriate because of mitigating
circumstances or that a longer period is appropriate because
of aggravating circumstances.
``(E) In the case of an exclusion of an individual or
entity under subsection (b)(4) or (b)(5), the period of the
exclusion shall not be less than the period during which the
individual's or entity's license to provide health care is
revoked, suspended, or surrendered, or the individual or the
entity is excluded or suspended from a Federal or State
health care program.
``(F) In the case of an exclusion of an individual or
entity under subsection (b)(6)(B), the period of the
exclusion shall be not less than 1 year.''.
SEC. 213. PERMISSIVE EXCLUSION OF INDIVIDUALS WITH OWNERSHIP
OR CONTROL INTEREST IN SANCTIONED ENTITIES.
Section 1128(b) (42 U.S.C. 1320a-7(b)) is amended by adding
at the end the following new paragraph:
``(15) Individuals controlling a sanctioned entity.--(A)
Any individual--
``(i) who has a direct or indirect ownership or control
interest in a sanctioned entity and who knows or should know
(as defined in section 1128A(i)(6)) of the action
constituting the basis for the conviction or exclusion
described in subparagraph (B); or
``(ii) who is an officer or managing employee (as defined
in section 1126(b)) of such an entity.
``(B) For purposes of subparagraph (A), the term
`sanctioned entity' means an entity--
``(i) that has been convicted of any offense described in
subsection (a) or in paragraph (1), (2), or (3) of this
subsection; or
``(ii) that has been excluded from participation under a
program under title XVIII or under a State health care
program.''.
SEC. 214. SANCTIONS AGAINST PRACTITIONERS AND PERSONS FOR
FAILURE TO COMPLY WITH STATUTORY OBLIGATIONS.
(a) Minimum Period of Exclusion for Practitioners and
Persons Failing To Meet Statutory Obligations.--
(1) In general.--The second sentence of section 1156(b)(1)
(42 U.S.C. 1320c-5(b)(1)) is amended by striking ``may
prescribe)'' and inserting ``may prescribe, except that such
period may not be less than 1 year)''.
(2) Conforming amendment.--Section 1156(b)(2) (42 U.S.C.
1320c-5(b)(2)) is amended by striking ``shall remain'' and
inserting ``shall (subject to the minimum period specified in
the second sentence of paragraph (1)) remain''.
(b) Repeal of ``Unwilling or Unable'' Condition for
Imposition of Sanction.--Section 1156(b)(1) (42 U.S.C. 1320c-
5(b)(1)) is amended--
(1) in the second sentence, by striking ``and determines''
and all that follows through ``such obligations,''; and
(2) by striking the third sentence.
SEC. 215. INTERMEDIATE SANCTIONS FOR MEDICARE HEALTH
MAINTENANCE ORGANIZATIONS.
(a) Application of Intermediate Sanctions for any Program
Violations.--
(1) In general.--Section 1876(i)(1) (42 U.S.C.
1395mm(i)(1)) is amended by striking ``the Secretary may
terminate'' and all that follows and inserting ``in
accordance with procedures established under paragraph (9),
the Secretary may at any time terminate any such contract or
may impose the intermediate sanctions described in paragraph
(6)(B) or (6)(C) (whichever is applicable) on the eligible
organization if the Secretary determines that the
organization--
``(A) has failed substantially to carry out the contract;
``(B) is carrying out the contract in a manner
substantially inconsistent with the efficient and effective
administration of this section; or
``(C) no longer substantially meets the applicable
conditions of subsections (b), (c), (e), and (f).''.
(2) Other intermediate sanctions for miscellaneous program
violations.--Section 1876(i)(6) (42 U.S.C. 1395mm(i)(6)) is
amended by adding at the end the following new subparagraph:
``(C) In the case of an eligible organization for which the
Secretary makes a determination under paragraph (1) the basis
of which is not described in subparagraph (A), the Secretary
may apply the following intermediate sanctions:
[[Page H3065]]
``(i) Civil money penalties of not more than $25,000 for
each determination under paragraph (1) if the deficiency that
is the basis of the determination has directly adversely
affected (or has the substantial likelihood of adversely
affecting) an individual covered under the organization's
contract.
``(ii) Civil money penalties of not more than $10,000 for
each week beginning after the initiation of procedures by the
Secretary under paragraph (9) during which the deficiency
that is the basis of a determination under paragraph (1)
exists.
``(iii) Suspension of enrollment of individuals under this
section after the date the Secretary notifies the
organization of a determination under paragraph (1) and until
the Secretary is satisfied that the deficiency that is the
basis for the determination has been corrected and is not
likely to recur.''.
(3) Procedures for imposing sanctions.--Section 1876(i) (42
U.S.C. 1395mm(i)) is amended by adding at the end the
following new paragraph:
``(9) The Secretary may terminate a contract with an
eligible organization under this section or may impose the
intermediate sanctions described in paragraph (6) on the
organization in accordance with formal investigation and
compliance procedures established by the Secretary under
which--
``(A) the Secretary first provides the organization with
the reasonable opportunity to develop and implement a
corrective action plan to correct the deficiencies that were
the basis of the Secretary's determination under paragraph
(1) and the organization fails to develop or implement such a
plan;
``(B) in deciding whether to impose sanctions, the
Secretary considers aggravating factors such as whether an
organization has a history of deficiencies or has not taken
action to correct deficiencies the Secretary has brought to
the organization's attention;
``(C) there are no unreasonable or unnecessary delays
between the finding of a deficiency and the imposition of
sanctions; and
``(D) the Secretary provides the organization with
reasonable notice and opportunity for hearing (including the
right to appeal an initial decision) before imposing any
sanction or terminating the contract.''.
(4) Conforming amendments.--Section 1876(i)(6)(B) (42
U.S.C. 1395mm(i)(6)(B)) is amended by striking the second
sentence.
(b) Agreements With Peer Review Organizations.--Section
1876(i)(7)(A) (42 U.S.C. 1395mm(i)(7)(A)) is amended by
striking ``an agreement'' and inserting ``a written
agreement''.
(c) Effective Date.--The amendments made by this section
shall apply with respect to contract years beginning on or
after January 1, 1996.
SEC. 216. ADDITIONAL EXCEPTION TO ANTI-KICKBACK PENALTIES FOR
DISCOUNTING AND MANAGED CARE ARRANGEMENTS.
(a) In General.--Section 1128B(b)(3) (42 U.S.C. 1320a-
7b(b)(3)) is amended--
(1) by striking ``and'' at the end of subparagraph (D);
(2) by striking the period at the end of subparagraph (E)
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(F) any remuneration between an organization and an
individual or entity providing items or services, or a
combination thereof, pursuant to a written agreement between
the organization and the individual or entity if the
organization is an eligible organization under section 1876
or if the written agreement places the individual or entity
at substantial financial risk for the cost or utilization of
the items or services, or a combination thereof, which the
individual or entity is obligated to provide, whether through
a withhold, capitation, incentive pool, per diem payment, or
any other similar risk arrangement which places the
individual or entity at substantial financial risk.''.
(b) Effective Date.--The amendments made by this section
shall apply to written agreements entered into on or after
January 1, 1997.
SEC. 217. CRIMINAL PENALTY FOR FRAUDULENT DISPOSITION OF
ASSETS IN ORDER TO OBTAIN MEDICAID BENEFITS.
Section 1128B(a) (42 U.S.C. 1320a-7b(a)) is amended--
(1) by striking ``or'' at the end of paragraph (4);
(2) by adding ``or'' at the end of paragraph (5); and
(3) by inserting after paragraph (5) the following new
paragraph:
``(6) knowingly and willfully disposes of assets (including
by any transfer in trust) in order for an individual to
become eligible for medical assistance under a State plan
under title XIX, if disposing of the assets results in the
imposition of a period of ineligibility for such assistance
under section 1917(c),''.
SEC. 218. EFFECTIVE DATE.
Except as otherwise provided, the amendments made by this
subtitle shall take effect January 1, 1997.
Subtitle C--Data Collection
SEC. 221. ESTABLISHMENT OF THE HEALTH CARE FRAUD AND ABUSE
DATA COLLECTION PROGRAM.
(a) In General.--Title XI (42 U.S.C. 1301 et seq.), as
amended by sections 201 and 205, is amended by inserting
after section 1128D the following new section:
``health care fraud and abuse data collection program
``Sec. 1128E. (a) General Purpose.--Not later than January
1, 1997, the Secretary shall establish a national health care
fraud and abuse data collection program for the reporting of
final adverse actions (not including settlements in which no
findings of liability have been made) against health care
providers, suppliers, or practitioners as required by
subsection (b), with access as set forth in subsection (c).
``(b) Reporting of Information.--
``(1) In general.--Each Government agency and health plan
shall report any final adverse action (not including
settlements in which no findings of liability have been made)
taken against a health care provider, supplier, or
practitioner.
``(2) Information to be reported.--The information to be
reported under paragraph (1) includes:
``(A) The name and TIN (as defined in section 7701(a)(41)
of the Internal Revenue Code of 1986) of any health care
provider, supplier, or practitioner who is the subject of a
final adverse action.
``(B) The name (if known) of any health care entity with
which a health care provider, supplier, or practitioner is
affiliated or associated.
``(C) The nature of the final adverse action and whether
such action is on appeal.
``(D) A description of the acts or omissions and injuries
upon which the final adverse action was based, and such other
information as the Secretary determines by regulation is
required for appropriate interpretation of information
reported under this section.
``(3) Confidentiality.--In determining what information is
required, the Secretary shall include procedures to assure
that the privacy of individuals receiving health care
services is appropriately protected.
``(4) Timing and form of reporting.--The information
required to be reported under this subsection shall be
reported regularly (but not less often than monthly) and in
such form and manner as the Secretary prescribes. Such
information shall first be required to be reported on a date
specified by the Secretary.
``(5) To whom reported.--The information required to be
reported under this subsection shall be reported to the
Secretary.
``(c) Disclosure and Correction of Information.--
``(1) Disclosure.--With respect to the information about
final adverse actions (not including settlements in which no
findings of liability have been made) reported to the
Secretary under this section respecting a health care
provider, supplier, or practitioner, the Secretary shall, by
regulation, provide for--
``(A) disclosure of the information, upon request, to the
health care provider, supplier, or licensed practitioner, and
``(B) procedures in the case of disputed accuracy of the
information.
``(2) Corrections.--Each Government agency and health plan
shall report corrections of information already reported
about any final adverse action taken against a health care
provider, supplier, or practitioner, in such form and manner
that the Secretary prescribes by regulation.
``(d) Access to Reported Information.--
``(1) Availability.--The information in this database shall
be available to Federal and State government agencies and
health plans pursuant to procedures that the Secretary shall
provide by regulation.
``(2) Fees for disclosure.--The Secretary may establish or
approve reasonable fees for the disclosure of information in
this database (other than with respect to requests by Federal
agencies). The amount of such a fee shall be sufficient to
recover the full costs of operating the database. Such fees
shall be available to the Secretary or, in the Secretary's
discretion to the agency designated under this section to
cover such costs.
``(e) Protection From Liability for Reporting.--No person
or entity, including the agency designated by the Secretary
in subsection (b)(5) shall be held liable in any civil action
with respect to any report made as required by this section,
without knowledge of the falsity of the information contained
in the report.
``(f) Definitions and Special Rules.--For purposes of this
section:
``(1) Final adverse action.--
``(A) In general.--The term `final adverse action'
includes:
``(i) Civil judgments against a health care provider,
supplier, or practitioner in Federal or State court related
to the delivery of a health care item or service.
``(ii) Federal or State criminal convictions related to the
delivery of a health care item or service.
``(iii) Actions by Federal or State agencies responsible
for the licensing and certification of health care providers,
suppliers, and licensed health care practitioners,
including--
``(I) formal or official actions, such as revocation or
suspension of a license (and the length of any such
suspension), reprimand, censure or probation,
``(II) any other loss of license or the right to apply for,
or renew, a license of the provider, supplier, or
practitioner, whether by operation of law, voluntary
surrender, non-renewability, or otherwise, or
``(III) any other negative action or finding by such
Federal or State agency that is publicly available
information.
``(iv) Exclusion from participation in Federal or State
health care programs.
``(v) Any other adjudicated actions or decisions that the
Secretary shall establish by regulation.
[[Page H3066]]
``(B) Exception.--The term does not include any action with
respect to a malpractice claim.
``(2) Practitioner.--The terms `licensed health care
practitioner', `licensed practitioner', and `practitioner'
mean, with respect to a State, an individual who is licensed
or otherwise authorized by the State to provide health care
services (or any individual who, without authority holds
himself or herself out to be so licensed or authorized).
``(3) Government agency.--The term `Government agency'
shall include:
``(A) The Department of Justice.
``(B) The Department of Health and Human Services.
``(C) Any other Federal agency that either administers or
provides payment for the delivery of health care services,
including, but not limited to the Department of Defense and
the Veterans' Administration.
``(D) State law enforcement agencies.
``(E) State medicaid fraud control units.
``(F) Federal or State agencies responsible for the
licensing and certification of health care providers and
licensed health care practitioners.
``(4) Health plan.--The term `health plan' has the meaning
given such term by section 1128C(c).
``(5) Determination of conviction.--For purposes of
paragraph (1), the existence of a conviction shall be
determined under paragraph (4) of section 1128(i).''.
(b) Improved Prevention in Issuance of Medicare Provider
Numbers.--Section 1842(r) (42 U.S.C. 1395u(r)) is amended by
adding at the end the following new sentence: ``Under such
system, the Secretary may impose appropriate fees on such
physicians to cover the costs of investigation and
recertification activities with respect to the issuance of
the identifiers.''.
Subtitle D--Civil Monetary Penalties
SEC. 231. SOCIAL SECURITY ACT CIVIL MONETARY PENALTIES.
(a) General Civil Monetary Penalties.--Section 1128A (42
U.S.C. 1320a-7a) is amended as follows:
(1) In the third sentence of subsection (a), by striking
``programs under title XVIII'' and inserting ``Federal health
care programs (as defined in section 1128B(f)(1))''.
(2) In subsection (f)--
(A) by redesignating paragraph (3) as paragraph (4); and
(B) by inserting after paragraph (2) the following new
paragraph:
``(3) With respect to amounts recovered arising out of a
claim under a Federal health care program (as defined in
section 1128B(f)), the portion of such amounts as is
determined to have been paid by the program shall be repaid
to the program, and the portion of such amounts attributable
to the amounts recovered under this section by reason of the
amendments made by the Health Coverage Availability and
Affordability Act of 1996 (as estimated by the Secretary)
shall be deposited into the Federal Hospital Insurance Trust
Fund pursuant to section 1817(k)(2)(C).''.
(3) In subsection (i)--
(A) in paragraph (2), by striking ``title V, XVIII, XIX, or
XX of this Act'' and inserting ``a Federal health care
program (as defined in section 1128B(f))'',
(B) in paragraph (4), by striking ``a health insurance or
medical services program under title XVIII or XIX of this
Act'' and inserting ``a Federal health care program (as so
defined)'', and
(C) in paragraph (5), by striking ``title V, XVIII, XIX, or
XX'' and inserting ``a Federal health care program (as so
defined)''.
(4) By adding at the end the following new subsection:
``(m)(1) For purposes of this section, with respect to a
Federal health care program not contained in this Act,
references to the Secretary in this section shall be deemed
to be references to the Secretary or Administrator of the
department or agency with jurisdiction over such program and
references to the Inspector General of the Department of
Health and Human Services in this section shall be deemed to
be references to the Inspector General of the applicable
department or agency.
``(2)(A) The Secretary and Administrator of the departments
and agencies referred to in paragraph (1) may include in any
action pursuant to this section, claims within the
jurisdiction of other Federal departments or agencies as long
as the following conditions are satisfied:
``(i) The case involves primarily claims submitted to the
Federal health care programs of the department or agency
initiating the action.
``(ii) The Secretary or Administrator of the department or
agency initiating the action gives notice and an opportunity
to participate in the investigation to the Inspector General
of the department or agency with primary jurisdiction over
the Federal health care programs to which the claims were
submitted.
``(B) If the conditions specified in subparagraph (A) are
fulfilled, the Inspector General of the department or agency
initiating the action is authorized to exercise all powers
granted under the Inspector General Act of 1978 with respect
to the claims submitted to the other departments or agencies
to the same manner and extent as provided in that Act with
respect to claims submitted to such departments or
agencies.''.
(b) Excluded Individual Retaining Ownership or Control
Interest in Participating Entity.--Section 1128A(a) (42
U.S.C. 1320a-7a(a)) is amended--
(1) by striking ``or'' at the end of paragraph (1)(D);
(2) by striking ``, or'' at the end of paragraph (2) and
inserting a semicolon;
(3) by striking the semicolon at the end of paragraph (3)
and inserting ``; or''; and
(4) by inserting after paragraph (3) the following new
paragraph:
``(4) in the case of a person who is not an organization,
agency, or other entity, is excluded from participating in a
program under title XVIII or a State health care program in
accordance with this subsection or under section 1128 and
who, at the time of a violation of this subsection--
``(A) retains a direct or indirect ownership or control
interest in an entity that is participating in a program
under title XVIII or a State health care program, and who
knows or should know of the action constituting the basis for
the exclusion; or
``(B) is an officer or managing employee (as defined in
section 1126(b)) of such an entity;''.
(c) Modifications of Amounts of Penalties and
Assessments.--Section 1128A(a) (42 U.S.C. 1320a-7a(a)), as
amended by subsection (b), is amended in the matter following
paragraph (4)--
(1) by striking ``$2,000'' and inserting ``$10,000'';
(2) by inserting ``; in cases under paragraph (4), $10,000
for each day the prohibited relationship occurs'' after
``false or misleading information was given''; and
(3) by striking ``twice the amount'' and inserting ``3
times the amount''.
(d) Claim for Item or Service Based on Incorrect Coding or
Medically Unnecessary Services.--Section 1128A(a)(1) (42
U.S.C. 1320a-7a(a)(1)) is amended--
(1) in subparagraph (A) by striking ``claimed,'' and
inserting ``claimed, including any person who engages in a
pattern or practice of presenting or causing to be presented
a claim for an item or service that is based on a code that
the person knows or should know will result in a greater
payment to the person than the code the person knows or
should know is applicable to the item or service actually
provided,'';
(2) in subparagraph (C), by striking ``or'' at the end; and
(3) by inserting after subparagraph (D) the following new
subparagraph:
``(E) is for a medical or other item or service that a
person knows or should know is not medically necessary; or''.
(e) Sanctions Against Practitioners and Persons for Failure
To Comply With Statutory Obligations.--Section 1156(b)(3) (42
U.S.C. 1320c-5(b)(3)) is amended by striking ``the actual or
estimated cost'' and inserting ``up to $10,000 for each
instance''.
(f) Procedural Provisions.--Section 1876(i)(6) (42 U.S.C.
1395mm(i)(6)), as amended by section 215(a)(2), is amended by
adding at the end the following new subparagraph:
``(D) The provisions of section 1128A (other than
subsections (a) and (b)) shall apply to a civil money penalty
under subparagraph (B)(i) or (C)(i) in the same manner as
such provisions apply to a civil money penalty or proceeding
under section 1128A(a).''.
(g) Prohibition Against Offering Inducements to Individuals
Enrolled Under Programs or Plans.--
(1) Offer of remuneration.--Section 1128A(a) (42 U.S.C.
1320a-7a(a)), as amended by subsection (b), is amended--
(A) by striking ``or'' at the end of paragraph (3);
(B) by striking the semicolon at the end of paragraph (4)
and inserting ``; or''; and
(D) by inserting after paragraph (4) the following new
paragraph:
``(5) offers to or transfers remuneration to any individual
eligible for benefits under title XVIII of this Act, or under
a State health care program (as defined in section 1128(h))
that such person knows or should know is likely to influence
such individual to order or receive from a particular
provider, practitioner, or supplier any item or service for
which payment may be made, in whole or in part, under title
XVIII, or a State health care program (as so defined);''.
(2) Remuneration defined.--Section 1128A(i) (42 U.S.C.
1320a-7a(i)) is amended by adding at the end the following
new paragraph:
``(6) The term `remuneration' includes the waiver of
coinsurance and deductible amounts (or any part thereof), and
transfers of items or services for free or for other than
fair market value. The term `remuneration' does not include--
``(A) the waiver of coinsurance and deductible amounts by a
person, if--
``(i) the waiver is not offered as part of any
advertisement or solicitation;
``(ii) the person does not routinely waive coinsurance or
deductible amounts; and
``(iii) the person--
``(I) waives the coinsurance and deductible amounts after
determining in good faith that the individual is in financial
need;
``(II) fails to collect coinsurance or deductible amounts
after making reasonable collection efforts; or
``(III) provides for any permissible waiver as specified in
section 1128B(b)(3) or in regulations issued by the
Secretary;
``(B) differentials in coinsurance and deductible amounts
as part of a benefit plan design as long as the differentials
have been disclosed in writing to all beneficiaries, third
party payers, and providers, to whom claims are presented and
as long as the differentials meet the standards as defined in
regulations promulgated by the Secretary not later than
[[Page H3067]]
180 days after the date of the enactment of the Health
Coverage Availability and Affordability Act of 1996; or
``(C) incentives given to individuals to promote the
delivery of preventive care as determined by the Secretary in
regulations so promulgated.''.
(h) Effective Date.--The amendments made by this section
shall take effect January 1, 1997.
SEC. 232. CLARIFICATION OF LEVEL OF INTENT REQUIRED FOR
IMPOSITION OF SANCTIONS.
(a) Clarification of Level of Knowledge Required for
Imposition of Civil Monetary Penalties.--
(1) In general.--Section 1128A(a) (42 U.S.C. 1320a-7a(a))
is amended--
(A) in paragraphs (1) and (2), by inserting ``knowingly''
before ``presents'' each place it appears; and
(B) in paragraph (3), by striking ``gives'' and inserting
``knowingly gives or causes to be given''.
(2) Definition of standard.--Section 1128A(i) (42 U.S.C.
1320a-7a(i)), as amended by section 231(g)(2), is amended by
adding at the end the following new paragraph:
``(7) The term `should know' means that a person, with
respect to information--
``(A) acts in deliberate ignorance of the truth or falsity
of the information; or
``(B) acts in reckless disregard of the truth or falsity of
the information,
and no proof of specific intent to defraud is required.''.
(b) Effective Date.--The amendments made by this section
shall apply to acts or omissions occurring on or after
January 1, 1997.
SEC. 233. PENALTY FOR FALSE CERTIFICATION FOR HOME HEALTH
SERVICES.
(a) In General.--Section 1128A(b) (42 U.S.C. 1320a-7a(b))
is amended by adding at the end the following new paragraph:
``(3)(A) Any physician who executes a document described in
subparagraph (B) with respect to an individual knowing that
all of the requirements referred to in such subparagraph are
not met with respect to the individual shall be subject to a
civil monetary penalty of not more than the greater of--
``(i) $5,000, or
``(ii) three times the amount of the payments under title
XVIII for home health services which are made pursuant to
such certification.
``(B) A document described in this subparagraph is any
document that certifies, for purposes of title XVIII, that an
individual meets the requirements of section 1814(a)(2)(C) or
1835(a)(2)(A) in the case of home health services furnished
to the individual.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to certifications made on or after the date of
the enactment of this Act.
Subtitle E--Revisions to Criminal Law
SEC. 241. DEFINITIONS RELATING TO FEDERAL HEALTH CARE
OFFENSE.
(a) In General.--Chapter 1 of title 18, United States Code,
is amended by adding at the end the following:
``Sec. 24. Definitions relating to Federal health care
offense
``(a) As used in this title, the term `Federal health care
offense' means a violation of, or a criminal conspiracy to
violate--
``(1) section 669, 1035, 1347, or 1518 of this title; or
``(2) section 287, 371, 664, 666, 1001, 1027, 1341, 1343,
or 1954 of this title, if the violation or conspiracy relates
to a health care benefit program.
``(b) As used in this title, the term `health care benefit
program' means any public or private plan or contract,
affecting commerce, under which any medical benefit, item, or
service is provided to any individual, and includes any
individual or entity who is providing a medical benefit,
item, or service for which payment may be made under the plan
or contract.''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 2 of title 18, United States Code, is
amended by inserting after the item relating to section 23
the following new item:
``24. Definitions relating to Federal health care offense.''.
SEC. 242. HEALTH CARE FRAUD.
(a) Offense.--
(1) In general.--Chapter 63 of title 18, United States
Code, is amended by adding at the end the following:
``Sec. 1347. Health care fraud
``Whoever knowingly executes, or attempts to execute, a
scheme or artifice--
``(1) to defraud any health care benefit program; or
``(2) to obtain, by means of false or fraudulent pretenses,
representations, or promises, any of the money or property
owned by, or under the custody or control of, any health care
benefit program,
in connection with the delivery of or payment for health care
benefits, items, or services, shall be fined under this title
or imprisoned not more than 10 years, or both. If the
violation results in serious bodily injury (as defined in
section 1365 of this title), such person shall be fined under
this title or imprisoned not more than 20 years, or both; and
if the violation results in death, such person shall be fined
under this title, or imprisoned for any term of years or for
life, or both.''.
(2) Clerical amendment.--The table of sections at the
beginning of chapter 63 of title 18, United States Code, is
amended by adding at the end the following:
``1347. Health care fraud.''.
(b) Criminal Fines Deposited in Federal Hospital Insurance
Trust Fund.--The Secretary of the Treasury shall deposit into
the Federal Hospital Insurance Trust Fund pursuant to section
1817(k)(2)(C) of the Social Security Act (42 U.S.C. 1395i) an
amount equal to the criminal fines imposed under section 1347
of title 18, United States Code (relating to health care
fraud).
SEC. 243. THEFT OR EMBEZZLEMENT.
(a) In General.--Chapter 31 of title 18, United States
Code, is amended by adding at the end the following:
``Sec. 669. Theft or embezzlement in connection with health
care
``(a) Whoever embezzles, steals, or otherwise without
authority knowingly converts to the use of any person other
than the rightful owner, or intentionally misapplies any of
the moneys, funds, securities, premiums, credits, property,
or other assets of a health care benefit program, shall be
fined under this title or imprisoned not more than 10 years,
or both; but if the value of such property does not exceed
the sum of $100 the defendant shall be fined under this title
or imprisoned not more than one year, or both.
``(b) As used in this section, the term `health care
benefit program' has the meaning given such term in section
1347(b) of this title.''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 31 of title 18, United States Code, is
amended by adding at the end the following:
``669. Theft or embezzlement in connection with health care.''.
SEC. 244. FALSE STATEMENTS.
(a) In General.--Chapter 47 of title 18, United States
Code, is amended by adding at the end the following:
``Sec. 1035. False statements relating to health care matters
``(a) Whoever, in any matter involving a health care
benefit program, knowingly--
``(1) falsifies, conceals, or covers up by any trick,
scheme, or device a material fact; or
``(2) makes any false, fictitious, or fraudulent statements
or representations, or makes or uses any false writing or
document knowing the same to contain any false, fictitious,
or fraudulent statement or entry,
in connection with the delivery of or payment for health care
benefits, items, or services, shall be fined under this title
or imprisoned not more than 5 years, or both.
``(b) As used in this section, the term `health care
benefit program' has the meaning given such term in section
1347(b) of this title.''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 47 of title 18, United States Code, is
amended by adding at the end the following new item:
``1035. False statements relating to health care matters.''.
SEC. 245. OBSTRUCTION OF CRIMINAL INVESTIGATIONS OF HEALTH
CARE OFFENSES.
(a) In General.--Chapter 73 of title 18, United States
Code, is amended by adding at the end the following:
``Sec. 1518. Obstruction of criminal investigations of health
care offenses
``(a) Whoever willfully prevents, obstructs, misleads,
delays or attempts to prevent, obstruct, mislead, or delay
the communication of information or records relating to a
violation of a Federal health care offense to a criminal
investigator shall be fined under this title or imprisoned
not more than 5 years, or both.
``(b) As used in this section the term `criminal
investigator' means any individual duly authorized by a
department, agency, or armed force of the United States to
conduct or engage in investigations for prosecutions for
violations of health care offenses.''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 73 of title 18, United States Code, is
amended by adding at the end the following new item:
``1518. Obstruction of criminal investigations of health care
offenses.''.
SEC. 246. LAUNDERING OF MONETARY INSTRUMENTS.
Section 1956(c)(7) of title 18, United States Code, is
amended by adding at the end the following:
``(F) Any act or activity constituting an offense involving
a Federal health care offense.''.
SEC. 247. INJUNCTIVE RELIEF RELATING TO HEALTH CARE OFFENSES.
(a) In General.--Section 1345(a)(1) of title 18, United
States Code, is amended--
(1) by striking ``or'' at the end of subparagraph (A);
(2) by inserting ``or'' at the end of subparagraph (B); and
(3) by adding at the end the following:
``(C) committing or about to commit a Federal health care
offense.''.
(b) Freezing of Assets.--Section 1345(a)(2) of title 18,
United States Code, is amended by inserting ``or a Federal
health care offense'' after ``title)''.
SEC. 248. AUTHORIZED INVESTIGATIVE DEMAND PROCEDURES.
(a) In General.--Chapter 223 of title 18, United States
Code, is amended by adding after section 3485 the following:
``Sec. 3486. Authorized investigative demand procedures
``(a) Authorization.--In any investigation relating to any
act or activity involving a
[[Page H3068]]
Federal health care offense, the Attorney General or the
Attorney General's designee may issue in writing and cause to
be served a subpoena requiring the production of any records
(including any books, papers, documents, electronic media, or
other objects or tangible things), which may be relevant to
an authorized law enforcement inquiry, that a person or legal
entity may possess or have care, custody, or control. A
subpoena shall describe the objects required to be produced
and prescribe a return date within a reasonable period of
time within which the objects can be assembled and made
available.
``(b) Service.--A subpoena issued under this section may be
served by any person designated in the subpoena to serve it.
Service upon a natural person may be made by personal
delivery of the subpoena to him. Service may be made upon a
domestic or foreign corporation or upon a partnership or
other unincorporated association which is subject to suit
under a common name, by delivering the subpoena to an
officer, to a managing or general agent, or to any other
agent authorized by appointment or by law to receive service
of process. The affidavit of the person serving the subpoena
entered on a true copy thereof by the person serving it shall
be proof of service.
``(c) Enforcement.--In the case of contumacy by or refusal
to obey a subpoena issued to any person, the Attorney General
may invoke the aid of any court of the United States within
the jurisdiction of which the investigation is carried on or
of which the subpoenaed person is an inhabitant, or in which
he carries on business or may be found, to compel compliance
with the subpoena. The court may issue an order requiring the
subpoenaed person to appear before the Attorney General to
produce records, if so ordered, or to give testimony touching
the matter under investigation. Any failure to obey the order
of the court may be punished by the court as a contempt
thereof. All process in any such case may be served in any
judicial district in which such person may be found.
``(d) Immunity From Civil Liability.--Notwithstanding any
Federal, State, or local law, any person, including officers,
agents, and employees, receiving a summons under this
section, who complies in good faith with the summons and thus
produces the materials sought, shall not be liable in any
court of any State or the United States to any customer or
other person for such production or for nondisclosure of that
production to the customer.
``(e) Limitation on Use.--(1) Health information about an
individual that is disclosed under this section may not be
used in, or disclosed to any person for use in, any
administrative, civil, or criminal action or investigation
directed against the individual who is the subject of the
information unless the action or investigation arises out of
and is directly related to receipt of health care or payment
for health care or action involving a fraudulent claim
related to health; or if authorized by an appropriate order
of a court of competent jurisdiction, granted after
application showing good cause therefor.
``(2) In assessing good cause, the court shall weigh the
public interest and the need for disclosure against the
injury to the patient, to the physician-patient relationship,
and to the treatment services.
``(3) Upon the granting of such order, the court, in
determining the extent to which any disclosure of all or any
part of any record is necessary, shall impose appropriate
safeguards against unauthorized disclosure.''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 223 of title 18, United States Code, is
amended by inserting after the item relating to section 3485
the following new item:
``3486. Authorized investigative demand procedures.''.
(c) Conforming Amendment.--Section 1510(b)(3)(B) of title
18, United States Code, is amended by inserting ``or a
Department of Justice subpoena (issued under section 3486 of
title 18),'' after ``subpoena''.
SEC. 249. FORFEITURES FOR FEDERAL HEALTH CARE OFFENSES.
(a) In General.--Section 982(a) of title 18, United States
Code, is amended by adding after paragraph (5) the following
new paragraph:
``(6) The court, in imposing sentence on a person convicted
of a Federal health care offense, shall order the person to
forfeit property, real or personal, that constitutes or is
derived, directly or indirectly, from gross proceeds
traceable to the commission of the offense.''.
(b) Conforming Amendment.--Section 982(b)(1)(A) of title
18, United States Code, is amended by inserting ``or (a)(6)''
after ``(a)(1)''.
(c) Property Forfeited Deposited in Federal Hospital
Insurance Trust Fund.--
(1) In general.--After the payment of the costs of asset
forfeiture has been made, and notwithstanding any other
provision of law, the Secretary of the Treasury shall deposit
into the Federal Hospital Insurance Trust Fund pursuant to
section 1817(k)(2)(C) of the Social Security Act, as added by
section 301(b), an amount equal to the net amount realized
from the forfeiture of property by reason of a Federal health
care offense pursuant to section 982(a)(6) of title 18,
United States Code.
(2) Costs of asset forfeiture.--For purposes of paragraph
(1), the term ``payment of the costs of asset forfeiture''
means--
(A) the payment, at the discretion of the Attorney General,
of any expenses necessary to seize, detain, inventory,
safeguard, maintain, advertise, sell, or dispose of property
under seizure, detention, or forfeited, or of any other
necessary expenses incident to the seizure, detention,
forfeiture, or disposal of such property, including payment
for--
(i) contract services;
(ii) the employment of outside contractors to operate and
manage properties or provide other specialized services
necessary to dispose of such properties in an effort to
maximize the return from such properties; and
(iii) reimbursement of any Federal, State, or local agency
for any expenditures made to perform the functions described
in this subparagraph;
(B) at the discretion of the Attorney General, the payment
of awards for information or assistance leading to a civil or
criminal forfeiture involving any Federal agency
participating in the Health Care Fraud and Abuse Control
Account;
(C) the compromise and payment of valid liens and mortgages
against property that has been forfeited, subject to the
discretion of the Attorney General to determine the validity
of any such lien or mortgage and the amount of payment to be
made, and the employment of attorneys and other personnel
skilled in State real estate law as necessary;
(D) payment authorized in connection with remission or
mitigation procedures relating to property forfeited; and
(E) the payment of State and local property taxes on
forfeited real property that accrued between the date of the
violation giving rise to the forfeiture and the date of the
forfeiture order.
SEC. 250. RELATION TO ERISA AUTHORITY.
Nothing in this subtitle shall be construed as affecting
the authority of the Secretary of Labor under section 506(b)
of the Employee Retirement Income Security Act of 1974,
including the Secretary's authority with respect to
violations of title 18, United States Code (as amended by
this subtitle).
Subtitle F--Administrative Simplification
SEC. 251. PURPOSE.
It is the purpose of this subtitle to improve the medicare
program under title XVIII of the Social Security Act, the
medicaid program under title XIX of such Act, and the
efficiency and effectiveness of the health care system, by
encouraging the development of a health information system
through the establishment of standards and requirements for
the electronic transmission of certain health information.
SEC. 252. ADMINISTRATIVE SIMPLIFICATION.
(a) In General.--Title XI (42 U.S.C. 1301 et seq.) is
amended by adding at the end the following:
``Part C--Administrative Simplification
``definitions
``Sec. 1171. For purposes of this part:
``(1) Clearinghouse.--The term `clearinghouse' means a
public or private entity that processes or facilitates the
processing of nonstandard data elements of health information
into standard data elements.
``(2) Code set.--The term `code set' means any set of codes
used for encoding data elements, such as tables of terms,
medical concepts, medical diagnostic codes, or medical
procedure codes.
``(3) Health care provider.--The term `health care
provider' includes a provider of services (as defined in
section 1861(u)), a provider of medical or other health
services (as defined in section 1861(s)), and any other
person furnishing health care services or supplies.
``(4) Health information.--The term `health information'
means any information, whether oral or recorded in any form
or medium that--
``(A) is created or received by a health care provider,
health plan, public health authority, employer, life insurer,
school or university, or clearinghouse; and
``(B) relates to the past, present, or future physical or
mental health or condition of an individual, the provision of
health care to an individual, or the past, present, or future
payment for the provision of health care to an individual.
``(5) Health plan.--The term `health plan' means a plan
which provides, or pays the cost of, health benefits. Such
term includes the following, and any combination thereof:
``(A) Part A or part B of the medicare program under title
XVIII.
``(B) The medicaid program under title XIX.
``(C) A medicare supplemental policy (as defined in section
1882(g)(1)).
``(D) A long-term care policy, including a nursing home
fixed indemnity policy (unless the Secretary determines that
such a policy does not provide sufficiently comprehensive
coverage of a benefit so that the policy should be treated as
a health plan).
``(E) Health benefits of an employee welfare benefit plan,
as defined in section 3(1) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002(1)), but only to the
extent the plan is established or maintained for the purpose
of providing health benefits and has 50 or more participants
(as defined in section 3(7) of such Act).
``(F) An employee welfare benefit plan or any other
arrangement which is established or maintained for the
purpose of offering or providing health benefits to the
employees of 2 or more employers.
``(G) The health care program for active military personnel
under title 10, United States Code.
[[Page H3069]]
``(H) The veterans health care program under chapter 17 of
title 38, United States Code.
``(I) The Civilian Health and Medical Program of the
Uniformed Services (CHAMPUS), as defined in section 1073(4)
of title 10, United States Code.
``(J) The Indian health service program under the Indian
Health Care Improvement Act (25 U.S.C. 1601 et seq.).
``(K) The Federal Employees Health Benefit Plan under
chapter 89 of title 5, United States Code.
``(6) Individually identifiable health information.--The
term `individually identifiable health information' means any
information, including demographic information collected from
an individual, that--
``(A) is created or received by a health care provider,
health plan, employer, or clearinghouse; and
``(B) relates to the past, present, or future physical or
mental health or condition of an individual, the provision of
health care to an individual, or the past, present, or future
payment for the provision of health care to an individual,
and--
``(i) identifies the individual; or
``(ii) with respect to which there is a reasonable basis to
believe that the information can be used to identify the
individual.
``(7) Standard.--The term `standard', when used with
reference to a data element of health information or a
transaction referred to in section 1173(a)(1), means any such
data element or transaction that meets each of the standards
and implementation specifications adopted or established by
the Secretary with respect to the data element or transaction
under sections 1172 through 1174.
``(8) Standard setting organization.--The term `standard
setting organization' means a standard setting organization
accredited by the American National Standards Institute,
including the National Council for Prescription Drug
Programs, that develops standards for information
transactions, data elements, or any other standard that is
necessary to, or will facilitate, the implementation of this
part.
``general requirements for adoption of standards
``Sec. 1172. (a) Applicability.--Any standard adopted under
this part shall apply, in whole or in part, to the following
persons:
``(1) An health plan.
``(2) A clearinghouse.
``(3) A health care provider who transmits any health
information in electronic form in connection with a
transaction referred to in section 1173(a)(1).
``(b) Reduction of Costs.--Any standard adopted under this
part shall be consistent with the objective of reducing the
administrative costs of providing and paying for health care.
``(c) Role of Standard Setting Organizations.--
``(1) In general.--Except as provided in paragraph (2), any
standard adopted under this part shall be a standard that has
been developed, adopted, or modified by a standard setting
organization.
``(2) Special rules.--
``(A) Different standards.--The Secretary may adopt a
standard that is different from any standard developed,
adopted, or modified by a standard setting organization, if--
``(i) the different standard will substantially reduce
administrative costs to health care providers and health
plans compared to the alternatives; and
``(ii) the standard is promulgated in accordance with the
rulemaking procedures of subchapter III of chapter 5 of title
5, United States Code.
``(B) No standard by standard setting organization.--If no
standard setting organization has developed, adopted, or
modified any standard relating to a standard that the
Secretary is authorized or required to adopt under this
part--
``(i) paragraph (1) shall not apply; and
``(ii) subsection (f) shall apply.
``(d) Implementation Specifications.--The Secretary shall
establish specifications for implementing each of the
standards adopted under this part.
``(e) Protection of Trade Secrets.--Except as otherwise
required by law, a standard adopted under this part shall not
require disclosure of trade secrets or confidential
commercial information by a person required to comply with
this part.
``(f) Assistance to the Secretary.--In complying with the
requirements of this part, the Secretary shall rely on the
recommendations of the National Committee on Vital and Health
Statistics established under section 306(k) of the Public
Health Service Act (42 U.S.C. 242k(k)) and shall consult with
appropriate Federal and State agencies and private
organizations. The Secretary shall publish in the Federal
Register any recommendation of the National Committee on
Vital and Health Statistics regarding the adoption of a
standard under this part.
``(g) Application to Modifications of Standards.--This
section shall apply to a modification to a standard
(including an addition to a standard) adopted under section
1174(b) in the same manner as it applies to an initial
standard adopted under section 1174(a).
``standards for information transactions and data elements
``Sec. 1173. (a) Standards to Enable Electronic Exchange.--
``(1) In general.--The Secretary shall adopt standards for
transactions, and data elements for such transactions, to
enable health information to be exchanged electronically,
that are appropriate for--
``(A) the financial and administrative transactions
described in paragraph (2); and
``(B) other financial and administrative transactions
determined appropriate by the Secretary consistent with the
goals of improving the operation of the health care system
and reducing administrative costs.
``(2) Transactions.--The transactions referred to in
paragraph (1)(A) are the following:
``(A) Claims (including coordination of benefits) or
equivalent encounter information.
``(B) Claims attachments.
``(C) Enrollment and disenrollment.
``(D) Eligibility.
``(E) Health care payment and remittance advice.
``(F) Premium payments.
``(G) First report of injury.
``(H) Claims status.
``(I) Referral certification and authorization.
``(3) Accommodation of specific providers.--The standards
adopted by the Secretary under paragraph (1) shall
accommodate the needs of different types of health care
providers.
``(b) Unique Health Identifiers.--
``(1) In general.--The Secretary shall adopt standards
providing for a standard unique health identifier for each
individual, employer, health plan, and health care provider
for use in the health care system. In carrying out the
preceding sentence for each health plan and health care
provider, the Secretary shall take into account multiple uses
for identifiers and multiple locations and specialty
classifications for health care providers.
``(2) Use of identifiers.--The standards adopted under
paragraphs (1) shall specify the purposes for which a unique
health identifier may be used.
``(c) Code Sets.--
``(1) In general.--The Secretary shall adopt standards
that--
``(A) select code sets for appropriate data elements for
the transactions referred to in subsection (a)(1) from among
the code sets that have been developed by private and public
entities; or
``(B) establish code sets for such data elements if no code
sets for the data elements have been developed.
``(2) Distribution.--The Secretary shall establish
efficient and low-cost procedures for distribution (including
electronic distribution) of code sets and modifications made
to such code sets under section 1174(b).
``(d) Security Standards for Health Information.--
``(1) Security standards.--The Secretary shall adopt
security standards that--
``(A) take into account--
``(i) the technical capabilities of record systems used to
maintain health information;
``(ii) the costs of security measures;
``(iii) the need for training persons who have access to
health information;
``(iv) the value of audit trails in computerized record
systems; and
``(v) the needs and capabilities of small health care
providers and rural health care providers (as such providers
are defined by the Secretary); and
``(B) ensure that a clearinghouse, if it is part of a
larger organization, has policies and security procedures
which isolate the activities of the clearinghouse with
respect to processing information in a manner that prevents
unauthorized access to such information by such larger
organization.
``(2) Safeguards.--Each person described in section 1172(a)
who maintains or transmits health information shall maintain
reasonable and appropriate administrative, technical, and
physical safeguards--
``(A) to ensure the integrity and confidentiality of the
information;
``(B) to protect against any reasonably anticipated--
``(i) threats or hazards to the security or integrity of
the information; and
``(ii) unauthorized uses or disclosures of the information;
and
``(C) otherwise to ensure compliance with this part by the
officers and employees of such person.
``(e) Privacy Standards for Health Information.--The
Secretary shall adopt standards with respect to the privacy
of individually identifiable health information transmitted
in connection with the transactions referred to in subsection
(a)(1). Such standards shall include standards concerning at
least the following:
``(1) The rights of an individual who is a subject of such
information.
``(2) The procedures to be established for the exercise of
such rights.
``(3) The uses and disclosures of such information that are
authorized or required.
``(f) Electronic Signature.--
``(1) In general.--
``(A) Standards.--The Secretary, in coordination with the
Secretary of Commerce, shall adopt standards specifying
procedures for the electronic transmission and authentication
of signatures with respect to the transactions referred to in
subsection (a)(1).
``(B) Effect of compliance.--Compliance with the standards
adopted under subparagraph (A) shall be deemed to satisfy
Federal and State statutory requirements for written
signatures with respect to the transactions referred to in
subsection (a)(1).
[[Page H3070]]
``(2) Payments for services and premiums.--Nothing in this
part shall be construed to prohibit payment for health care
services or health plan premiums by debit, credit, payment
card or numbers, or other electronic means.
``(g) Transfer of Information Among Health Plans.--The
Secretary shall adopt standards for transferring among health
plans appropriate standard data elements needed for the
coordination of benefits, the sequential processing of
claims, and other data elements for individuals who have more
than one health plan.
``timetables for adoption of standards
``Sec. 1174. (a) Initial Standards.--The Secretary shall
carry out section 1173 not later than 18 months after the
date of the enactment of the Health Coverage Availability and
Affordability Act of 1996, except that standards relating to
claims attachments shall be adopted not later than 30 months
after such date.
``(b) Additions and Modifications to Standards.--
``(1) In general.--Except as provided in paragraph (2), the
Secretary shall review the standards adopted under section
1173, and shall adopt modifications to the standards
(including additions to the standards), as determined
appropriate, but not more frequently than once every 6
months. Any addition or modification to a standard shall be
completed in a manner which minimizes the disruption and cost
of compliance.
``(2) Special rules.--
``(A) First 12-month period.--Except with respect to
additions and modifications to code sets under subparagraph
(B), the Secretary may not adopt any modification to a
standard adopted under this part during the 12-month period
beginning on the date the standard is initially adopted,
unless the Secretary determines that the modification is
necessary in order to permit compliance with the standard.
``(B) Additions and modifications to code sets.--
``(i) In general.--The Secretary shall ensure that
procedures exist for the routine maintenance, testing,
enhancement, and expansion of code sets.
``(ii) Additional rules.--If a code set is modified under
this subsection, the modified code set shall include
instructions on how data elements of health information that
were encoded prior to the modification may be converted or
translated so as to preserve the informational value of the
data elements that existed before the modification. Any
modification to a code set under this subsection shall be
implemented in a manner that minimizes the disruption and
cost of complying with such modification.
``requirements
``Sec. 1175. (a) Conduct of Transactions by Plans.--
``(1) In general.--If a person desires to conduct a
transaction referred to in section 1173(a)(1) with a health
plan as a standard transaction--
``(A) the health plan may not refuse to conduct such
transaction as a standard transaction;
``(B) the health plan may not delay such transaction, or
otherwise adversely affect, or attempt to adversely affect,
the person or the transaction on the ground that the
transaction is a standard transaction; and
``(C) the information transmitted and received in
connection with the transaction shall be in the form of
standard data elements of health information.
``(2) Satisfaction of requirements.--A health plan may
satisfy the requirements under paragraph (1) by--
``(A) directly transmitting and receiving standard data
elements of health information; or
``(B) submitting nonstandard data elements to a
clearinghouse for processing into standard data elements and
transmission by the clearinghouse, and receiving standard
data elements through the clearinghouse.
``(3) Timetable for compliance.--Paragraph (1) shall not be
construed to require a health plan to comply with any
standard, implementation specification, or modification to a
standard or specification adopted or established by the
Secretary under sections 1172 through 1174 at any time prior
to the date on which the plan is required to comply with the
standard or specification under subsection (b).
``(b) Compliance With Standards.--
``(1) Initial compliance.--
``(A) In general.--Not later than 24 months after the date
on which an initial standard or implementation specification
is adopted or established under sections 1172 and 1173, each
person to whom the standard or implementation specification
applies shall comply with the standard or specification.
``(B) Special rule for small health plans.--In the case of
a small health plan, paragraph (1) shall be applied by
substituting `36 months' for `24 months'. For purposes of
this subsection, the Secretary shall determine the plans that
qualify as small health plans.
``(2) Compliance With modified standards.--If the Secretary
adopts a modification to a standard or implementation
specification under this part, each person to whom the
standard or implementation specification applies shall comply
with the modified standard or implementation specification at
such time as the Secretary determines appropriate, taking
into account the time needed to comply due to the nature and
extent of the modification. The time determined appropriate
under the preceding sentence may not be earlier than the last
day of the 180-day period beginning on the date such
modification is adopted. The Secretary may extend the time
for compliance for small insurance plans, if the Secretary
determines that such extension is appropriate.
``general penalty for failure to comply with requirements and standards
``Sec. 1176. (a) General Penalty.--
``(1) In general.--Except as provided in subsection (b),
the Secretary shall impose on any person who violates a
provision of this part a penalty of not more than $100 for
each such violation, except that the total amount imposed on
the person for all violations of an identical requirement or
prohibition during a calendar year may not exceed $25,000.
``(2) Procedures.--The provisions of section 1128A (other
than subsections (a) and (b) and the second sentence of
subsection (f)) shall apply to the imposition of a civil
money penalty under this subsection in the same manner as
such provisions apply to the imposition of a penalty under
such section 1128A.
``(b) Limitations.--
``(1) Offenses otherwise punishable.--A penalty may not be
imposed under subsection (a) with respect to an act if the
act constitutes an offense punishable under section 1177.
``(2) Noncompliance not discovered.--A penalty may not be
imposed under subsection (a) with respect to a provision of
this part if it is established to the satisfaction of the
Secretary that the person liable for the penalty did not
know, and by exercising reasonable diligence would not have
known, that such person violated the provision.
``(3) Failures due to reasonable cause.--
``(A) In general.--Except as provided in subparagraph (B),
a penalty may not be imposed under subsection (a) if--
``(i) the failure to comply was due to reasonable cause and
not to willful neglect; and
``(ii) the failure to comply is corrected during the 30-day
period beginning on the first date the person liable for the
penalty knew, or by exercising reasonable diligence would
have known, that the failure to comply occurred.
``(B) Extension of period.--
``(i) No penalty.--The period referred to in subparagraph
(A)(ii) may be extended as determined appropriate by the
Secretary based on the nature and extent of the failure to
comply.
``(ii) Assistance.--If the Secretary determines that a
person failed to comply because the person was unable to
comply, the Secretary may provide technical assistance to the
person during the period described in subparagraph (A)(ii).
Such assistance shall be provided in any manner determined
appropriate by the Secretary.
``(4) Reduction.--In the case of a failure to comply which
is due to reasonable cause and not to willful neglect, any
penalty under subsection (a) that is not entirely waived
under paragraph (3) may be waived to the extent that the
payment of such penalty would be excessive relative to the
compliance failure involved.
``wrongful disclosure of individually identifiable health information
``Sec. 1177. (a) Offense.--A person who knowingly and in
violation of this part--
``(1) uses or causes to be used a unique health identifier;
``(2) obtains individually identifiable health information
relating to an individual; or
``(3) discloses individually identifiable health
information to another person,
shall be punished as provided in subsection (b).
``(b) Penalties.--A person described in subsection (a)
shall--
``(1) be fined not more than $50,000, imprisoned not more
than 1 year, or both;
``(2) if the offense is committed under false pretenses, be
fined not more than $100,000, imprisoned not more than 5
years, or both; and
``(3) if the offense is committed with intent to sell,
transfer, or use individually identifiable health information
for commercial advantage, personal gain, or malicious harm,
fined not more than $250,000, imprisoned not more than 10
years, or both.
``effect on state law
``Sec. 1178. (a) General Effect.--
``(1) General rule.--Except as provided in paragraph (2), a
provision or requirement under this part, or a standard or
implementation specification adopted or established under
sections 1172 through 1174, shall supersede any contrary
provision of State law, including a provision of State law
that requires medical or health plan records (including
billing information) to be maintained or transmitted in
written rather than electronic form.
``(2) Exceptions.--A provision or requirement under this
part, or a standard or implementation specification adopted
or established under sections 1172 through 1174, shall not
supersede a contrary provision of State law, if the provision
of State law--
``(A) imposes requirements, standards, or implementation
specifications that are more stringent than the requirements,
standards, or implementation specifications under this part
with respect to the privacy of individually identifiable
health information; or
``(B) is a provision the Secretary determines--
[[Page H3071]]
``(i) is necessary to prevent fraud and abuse, or for other
purposes; or
``(ii) addresses controlled substances.
``(b) Public Health Reporting.--Nothing in this part shall
be construed to invalidate or limit the authority, power, or
procedures established under any law providing for the
reporting of disease or injury, child abuse, birth, or death,
public health surveillance, or public health investigation or
intervention.''.
(b) Conforming Amendments.--
(1) Requirement for medicare providers.--Section 1866(a)(1)
(42 U.S.C. 1395cc(a)(1)) is amended--
(A) by striking ``and'' at the end of subparagraph (P);
(B) by striking the period at the end of subparagraph (Q)
and inserting ``; and''; and
(C) by inserting immediately after subparagraph (Q) the
following new subparagraph:
``(R) to contract only with a clearinghouse (as defined in
section 1171) that meets each standard and implementation
specification adopted or established under part C of title XI
on or after the date on which the clearinghouse is required
to comply with the standard or specification.''.
(2) Title heading.--Title XI (42 U.S.C. 1301 et seq.) is
amended by striking the title heading and inserting the
following:
``TITLE XI--GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE
SIMPLIFICATION''.
SEC. 253. CHANGES IN MEMBERSHIP AND DUTIES OF NATIONAL
COMMITTEE ON VITAL AND HEALTH STATISTICS.
Section 306(k) of the Public Health Service Act (42 U.S.C.
242k(k)) is amended--
(1) in paragraph (1), by striking ``16'' and inserting
``18'';
(2) by amending paragraph (2) to read as follows:
``(2) The members of the Committee shall be appointed from
among persons who have distinguished themselves in the fields
of health statistics, electronic interchange of health care
information, privacy and security of electronic information,
population-based public health, purchasing or financing
health care services, integrated computerized health
information systems, health services research, consumer
interests in health information, health data standards,
epidemiology, and the provision of health services. Members
of the Committee shall be appointed for terms of 4 years.'';
(3) by redesignating paragraphs (3) through (5) as
paragraphs (4) through (6), respectively, and inserting after
paragraph (2) the following:
``(3) Of the members of the Committee--
``(A) 1 shall be appointed, not later than 60 days after
the date of the enactment of the Health Coverage Availability
and Affordability Act of 1996, by the Speaker of the House of
Representatives after consultation with the minority leader
of the House of Representatives;
``(B) 1 shall be appointed, not later than 60 days after
the date of the enactment of the Health Coverage Availability
and Affordability Act of 1996, by the President pro tempore
of the Senate after consultation with the minority leader of
the Senate; and
``(C) 16 shall be appointed by the Secretary.'';
(4) by amending paragraph (5) (as so redesignated) to read
as follows:
``(5) The Committee--
``(A) shall assist and advise the Secretary--
``(i) to delineate statistical problems bearing on health
and health services which are of national or international
interest;
``(ii) to stimulate studies of such problems by other
organizations and agencies whenever possible or to make
investigations of such problems through subcommittees;
``(iii) to determine, approve, and revise the terms,
definitions, classifications, and guidelines for assessing
health status and health services, their distribution and
costs, for use (I) within the Department of Health and Human
Services, (II) by all programs administered or funded by the
Secretary, including the Federal-State-local cooperative
health statistics system referred to in subsection (e), and
(III) to the extent possible as determined by the head of the
agency involved, by the Department of Veterans Affairs, the
Department of Defense, and other Federal agencies concerned
with health and health services;
``(iv) with respect to the design of and approval of health
statistical and health information systems concerned with the
collection, processing, and tabulation of health statistics
within the Department of Health and Human Services, with
respect to the Cooperative Health Statistics System
established under subsection (e), and with respect to the
standardized means for the collection of health information
and statistics to be established by the Secretary under
subsection (j)(1);
``(v) to review and comment on findings and proposals
developed by other organizations and agencies and to make
recommendations for their adoption or implementation by
local, State, national, or international agencies;
``(vi) to cooperate with national committees of other
countries and with the World Health Organization and other
national agencies in the studies of problems of mutual
interest;
``(vii) to issue an annual report on the state of the
Nation's health, its health services, their costs and
distributions, and to make proposals for improvement of the
Nation's health statistics and health information systems;
and
``(viii) in complying with the requirements imposed on the
Secretary under part C of title XI of the Social Security
Act;
``(B) shall study the issues related to the adoption of
uniform data standards for patient medical record information
and the electronic exchange of such information;
``(C) shall report to the Secretary not later than 4 years
after the date of the enactment of the Health Coverage
Availability and Affordability Act of 1996 recommendations
and legislative proposals for such standards and electronic
exchange; and
``(D) shall be responsible generally for advising the
Secretary and the Congress on the status of the
implementation of part C of title XI of the Social Security
Act.''; and
(5) by adding at the end the following:
``(7) Not later than 1 year after the date of the enactment
of the Health Coverage Availability and Affordability Act of
1996, and annually thereafter, the Committee shall submit to
the Congress, and make public, a report regarding--
``(A) the extent to which persons required to comply with
part C of title XI of the Social Security Act are cooperating
in implementing the standards adopted under such part;
``(B) the extent to which such entities are meeting the
privacy and security standards adopted under such part and
the types of penalties assessed for noncompliance with such
standards;
``(C) whether the Federal and State Governments are
receiving information of sufficient quality to meet their
responsibilities under such part;
``(D) any problems that exist with respect to
implementation of such part; and
``(E) the extent to which timetables under such part are
being met.''.
Subtitle G--Duplication and Coordination of Medicare-Related Plans
SEC. 261. DUPLICATION AND COORDINATION OF MEDICARE-RELATED
PLANS.
(a) Treatment of Certain Health Insurance Policies as
Nonduplicative.--Effective as if included in the enactment of
section 4354 of the Omnibus Budget Reconciliation Act of
1990, section 1882(d)(3)(A) (42 U.S.C. 1395ss(d)(3)(A)) is
amended--
(1) in clause (iii), by striking ``clause (i)'' and
inserting ``clause (i)(II)''; and
(2) by adding at the end the following:
``(iv) For purposes of this subparagraph, a health
insurance policy providing for benefits which are payable to
or on behalf of an individual without regard to other health
benefit coverage of such individual is not considered to
`duplicate' any health benefits under this title, under title
XIX, or under a health insurance policy, and subclauses (I)
and (III) of clause (i) does not apply to such a policy.
``(v)(I) For purposes of this subparagraph, a health
insurance policy (or a rider to an insurance contract which
is not a health insurance policy), providing benefits for
long-term care, nursing home care, home health care, or
community-based care and that coordinates against or
excludes items and services available or paid for under
this title and (for policies sold or issued on or after 90
days after the date of enactment of this clause) that
discloses such coordination or exclusion in the policy's
outline of coverage, is not considered to `duplicate'
health benefits under this title.
``(II) For purposes of this subparagraph, a health
insurance policy (which may be a contract with a health
maintenance organization) that is a replacement product for
another health insurance policy that is being terminated by
the issuer, that is being provided to an individual entitled
to benefits under part A on the basis of section 226(b), and
that coordinates against or excludes items and services
available or paid for under this title is not considered to
`duplicate' health benefits under this title.
``(III) For purposes of this clause, the terms
`coordinates' and `coordination' mean, with respect to a
policy in relation to health benefits under this title, that
the policy under its terms is secondary to, or excludes from
payment, items and services to the extent available or paid
for under this title.
``(vi) Notwithstanding any other provision of law, no
criminal or civil penalty may be imposed at any time under
this subparagraph and no legal action may be brought or
continued at any time in any Federal or State court if the
penalty or action is based on an act or omission that
occurred after November 5, 1991, and before the date of the
enactment of this clause, and relates to the sale, issuance,
or renewal of any health insurance policy or rider during
such period, if such policy or rider meets the nonduplication
requirements of clause (iv) or (v).
``(vii) A State may not impose, in the case of the sale,
issuance, or renewal of a health insurance policy (other than
a medicare supplemental policy) or rider to an insurance
contract which is not a health insurance policy, that meets
the nonduplication requirements of this section pursuant to
clause (iv) or (v) to an individual entitled to benefits
under part A or enrolled under part B, any requirement
relating to any duplication (or nonduplication) of health
benefits under such policy or rider with health benefits to
which the individual is otherwise entitled to under this
title.''.
(b) Conforming Amendments.--Section 1882(d)(3) (42 U.S.C.
1395ss(d)(3)) is amended--
(1) in subparagraph (C)--
(A) by striking ``with respect to (i)'' and inserting
``with respect to'', and
[[Page H3072]]
(B) by striking ``, (ii) the sale'' and all that follows up
to the period at the end; and
(2) by striking subparagraph (D).
Subtitle H--Medical Liability Reform
PART 1--GENERAL PROVISIONS
SEC. 271. FEDERAL REFORM OF HEALTH CARE LIABILITY ACTIONS.
(a) Applicability.--This subtitle shall apply with respect
to any health care liability action brought in any State or
Federal court, except that this subtitle shall not apply to--
(1) an action for damages arising from a vaccine-related
injury or death to the extent that title XXI of the Public
Health Service Act applies to the action, or
(2) an action under the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1001 et seq.).
(b) Preemption.--This subtitle shall preempt any State law
to the extent such law is inconsistent with the limitations
contained in this subtitle. This subtitle shall not preempt
any State law that provides for defenses or places
limitations on a person's liability in addition to those
contained in this subtitle or otherwise imposes greater
restrictions than those provided in this subtitle.
(c) Effect on Sovereign Immunity and Choice of Law or
Venue.--Nothing in subsection (b) shall be construed to--
(1) waive or affect any defense of sovereign immunity
asserted by any State under any provision of law;
(2) waive or affect any defense of sovereign immunity
asserted by the United States;
(3) affect the applicability of any provision of the
Foreign Sovereign Immunities Act of 1976;
(4) preempt State choice-of-law rules with respect to
claims brought by a foreign nation or a citizen of a foreign
nation; or
(5) affect the right of any court to transfer venue or to
apply the law of a foreign nation or to dismiss a claim of a
foreign nation or of a citizen of a foreign nation on the
ground of inconvenient forum.
(d) Amount in Controversy.--In an action to which this
subtitle applies and which is brought under section 1332 of
title 28, United States Code, the amount of noneconomic
damages or punitive damages, and attorneys' fees or costs,
shall not be included in determining whether the matter in
controversy exceeds the sum or value of $50,000.
(e) Federal Court Jurisdiction Not Established on Federal
Question Grounds.--Nothing in this subtitle shall be
construed to establish any jurisdiction in the district
courts of the United States over health care liability
actions on the basis of section 1331 or 1337 of title 28,
United States Code.
SEC. 272. DEFINITIONS.
As used in this subtitle:
(1) Actual damages.--The term ``actual damages'' means
damages awarded to pay for economic loss.
(2) Alternative dispute resolution system; adr.--The term
``alternative dispute resolution system'' or ``ADR'' means a
system established under Federal or State law that provides
for the resolution of health care liability claims in a
manner other than through health care liability actions.
(3) Claimant.--The term ``claimant'' means any person who
brings a health care liability action and any person on whose
behalf such an action is brought. If such action is brought
through or on behalf of an estate, the term includes the
claimant's decedent. If such action is brought through or on
behalf of a minor or incompetent, the term includes the
claimant's legal guardian.
(4) Clear and convincing evidence.--The term ``clear and
convincing evidence'' is that measure or degree of proof that
will produce in the mind of the trier of fact a firm belief
or conviction as to the truth of the allegations sought to be
established. Such measure or degree of proof is more than
that required under preponderance of the evidence but less
than that required for proof beyond a reasonable doubt.
(5) Collateral source payments.--The term ``collateral
source payments'' means any amount paid or reasonably likely
to be paid in the future to or on behalf of a claimant, or
any service, product, or other benefit provided or reasonably
likely to be provided in the future to or on behalf of a
claimant, as a result of an injury or wrongful death,
pursuant to--
(A) any State or Federal health, sickness, income-
disability, accident or workers' compensation Act;
(B) any health, sickness, income-disability, or accident
insurance that provides health benefits or income-disability
coverage;
(C) any contract or agreement of any group, organization,
partnership, or corporation to provide, pay for, or reimburse
the cost of medical, hospital, dental, or income disability
benefits; and
(D) any other publicly or privately funded program.
(6) Drug.--The term ``drug'' has the meaning given such
term in section 201(g)(1) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 321(g)(1)).
(7) Economic loss.--The term ``economic loss'' means any
pecuniary loss resulting from injury (including the loss of
earnings or other benefits related to employment, medical
expense loss, replacement services loss, loss due to death,
burial costs, and loss of business or employment
opportunities), to the extent recovery for such loss is
allowed under applicable State law.
(8) Harm.--The term ``harm'' means any legally cognizable
wrong or injury for which punitive damages may be imposed.
(9) Health benefit plan.--The term ``health benefit plan''
means--
(A) a hospital or medical expense incurred policy or
certificate,
(B) a hospital or medical service plan contract,
(C) a health maintenance subscriber contract,
(D) a multiple employer welfare arrangement or employee
benefit plan (as defined under the Employee Retirement Income
Security Act of 1974), or
(E) a MedicarePlus product (offered under part C of title
XVIII of the Social Security Act),
that provides benefits with respect to health care services.
(10) Health care liability action.--The term ``health care
liability action'' means a civil action brought in a State or
Federal court against a health care provider, an entity which
is obligated to provide or pay for health benefits under any
health benefit plan (including any person or entity acting
under a contract or arrangement to provide or administer any
health benefit), or the manufacturer, distributor, supplier,
marketer, promoter, or seller of a medical product, in which
the claimant alleges a claim (including third party claims,
cross claims, counter claims, or distribution claims) based
upon the provision of (or the failure to provide or pay for)
health care services or the use of a medical product,
regardless of the theory of liability on which the claim is
based or the number of plaintiffs, defendants, or causes of
action.
(11) Health care liability claim.--The term ``health care
liability claim'' means a claim in which the claimant alleges
that injury was caused by the provision of (or the failure to
provide) health care services.
(12) Health care provider.--The term ``health care
provider'' means any person that is engaged in the delivery
of health care services in a State and that is required by
the laws or regulations of the State to be licensed or
certified by the State to engage in the delivery of such
services in the State.
(13) Health care service.--The term ``health care service''
means any service for which payment may be made under a
health benefit plan including services related to the
delivery or administration of such service.
(14) Medical device.--The term ``medical device'' has the
meaning given such term in section 201(h) of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 321(h)).
(15) Noneconomic damages.--The term ``noneconomic damages''
means damages paid to an individual for pain and suffering,
inconvenience, emotional distress, mental anguish, loss of
consortium, injury to reputation, humiliation, and other
nonpecuniary losses.
(16) Person.--The term ``person'' means any individual,
corporation, company, association, firm, partnership,
society, joint stock company, or any other entity, including
any governmental entity.
(17) Product seller.--The term ``product seller'' means a
person who, in the course of a business conducted for that
purpose, sells, distributes, rents, leases, prepares, blends,
packages, labels a product, is otherwise involved in placing
a product in the stream of commerce, or installs, repairs, or
maintains the harm-causing aspect of a product. The term does
not include--
(A) a seller or lessor of real property;
(B) a provider of professional services in any case in
which the sale or use of a product is incidental to the
transaction and the essence of the transaction is the
furnishing of judgment, skill, or services; or
(C) any person who--
(i) acts in only a financial capacity with respect to the
sale of a product; or
(ii) leases a product under a lease arrangement in which
the selection, possession, maintenance, and operation of the
product are controlled by a person other than the lessor.
(18) Punitive damages.--The term ``punitive damages'' means
damages awarded against any person not to compensate for
actual injury suffered, but to punish or deter such person or
others from engaging in similar behavior in the future.
(19) State.--The term ``State'' means each of the several
States, the District of Columbia, Puerto Rico, the Virgin
Islands, Guam, American Samoa, the Northern Mariana Islands,
and any other territory or possession of the United States.
SEC. 273. EFFECTIVE DATE.
This subtitle will apply to any health care liability
action brought in a Federal or State court and to any health
care liability claim subject to an alternative dispute
resolution system, that is initiated on or after the date of
enactment of this subtitle, except that any health care
liability claim or action arising from an injury occurring
prior to the date of enactment of this subtitle shall be
governed by the applicable statute of limitations provisions
in effect at the time the injury occurred.
PART 2--UNIFORM STANDARDS FOR HEALTH CARE LIABILITY ACTIONS
SEC. 281. STATUTE OF LIMITATIONS.
A health care liability action may not be brought after the
expiration of the 2-year period that begins on the date on
which the alleged injury that is the subject of the action
was discovered or should reasonably have been discovered, but
in no case after the expiration of the 5-year period that
begins on the date the alleged injury occurred.
[[Page H3073]]
SEC. 282. CALCULATION AND PAYMENT OF DAMAGES.
(a) Treatment of Noneconomic Damages.--
(1) Limitation on noneconomic damages.--The total amount of
noneconomic damages that may be awarded to a claimant for
losses resulting from the injury which is the subject of a
health care liability action may not exceed $250,000,
regardless of the number of parties against whom the action
is brought or the number of actions brought with respect to
the injury.
(2) Joint and several liability.--In any health care
liability action brought in State or Federal court, a
defendant shall be liable only for the amount of noneconomic
damages attributable to such defendant in direct proportion
to such defendant's share of fault or responsibility for the
claimant's actual damages, as determined by the trier of
fact. In all such cases, the liability of a defendant for
noneconomic damages shall be several and not joint.
(b) Treatment of Punitive Damages.--
(1) General rule.--Punitive damages may, to the extent
permitted by applicable State law, be awarded in any health
care liability action for harm in any Federal or State court
against a defendant if the claimant establishes by clear and
convincing evidence that the harm suffered was the result of
conduct--
(A) specifically intended to cause harm, or
(B) conduct manifesting a conscious, flagrant indifference
to the rights or safety of others.
(2) Proportional awards.--The amount of punitive damages
that may be awarded in any health care liability action
subject to this subtitle shall not exceed 3 times the amount
of damages awarded to the claimant for economic loss, or
$250,000, whichever is greater. This paragraph shall be
applied by the court and shall not be disclosed to the jury.
(3) Applicability.--This subsection shall apply to any
health care liability action brought in any Federal or State
court on any theory where punitive damages are sought. This
subsection does not create a cause of action for punitive
damages. This subsection does not preempt or supersede any
State or Federal law to the extent that such law would
further limit the award of punitive damages.
(4) Bifurcation.--At the request of any party, the trier of
fact shall consider in a separate proceeding whether punitive
damages are to be awarded and the amount of such award. If a
separate proceeding is requested, evidence relevant only to
the claim of punitive damages, as determined by applicable
State law, shall be inadmissible in any proceeding to
determine whether actual damages are to be awarded.
(5) Drugs and devices.--
(A) In general.--(i) Punitive damages shall not be awarded
against a manufacturer or product seller of a drug or medical
device which caused the claimant's harm where--
(I) such drug or device was subject to premarket approval
by the Food and Drug Administration with respect to the
safety of the formulation or performance of the aspect of
such drug or device which caused the claimant's harm, or the
adequacy of the packaging or labeling of such drug or device
which caused the harm, and such drug, device, packaging, or
labeling was approved by the Food and Drug Administration; or
(II) the drug is generally recognized as safe and effective
pursuant to conditions established by the Food and Drug
Administration and applicable regulations, including
packaging and labeling regulations.
(ii) Clause (i) shall not apply in any case in which the
defendant, before or after premarket approval of a drug or
device--
(I) intentionally and wrongfully withheld from or
misrepresented to the Food and Drug Administration
information concerning such drug or device required to be
submitted under the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 301 et seq.) or section 351 of the Public Health
Service Act (42 U.S.C. 262) that is material and relevant to
the harm suffered by the claimant, or
(II) made an illegal payment to an official or employee of
the Food and Drug Administration for the purpose of securing
or maintaining approval of such drug or device.
(B) Packaging.--In a health care liability action for harm
which is alleged to relate to the adequacy of the packaging
or labeling of a drug which is required to have tamper-
resistant packaging under regulations of the Secretary of
Health and Human Services (including labeling regulations
related to such packaging), the manufacturer or product
seller of the drug shall not be held liable for punitive
damages unless such packaging or labeling is found by the
court by clear and convincing evidence to be substantially
out of compliance with such regulations.
(c) Periodic Payments for Future Losses.--
(1) General rule.--In any health care liability action in
which the damages awarded for future economic and noneconomic
loss exceeds $50,000, a person shall not be required to pay
such damages in a single, lump-sum payment, but shall be
permitted to make such payments periodically based on when
the damages are found likely to occur, as such payments are
determined by the court.
(2) Finality of judgment.--The judgment of the court
awarding periodic payments under this subsection may not, in
the absence of fraud, be reopened at any time to contest,
amend, or modify the schedule or amount of the payments.
(3) Lump-sum settlements.--This subsection shall not be
construed to preclude a settlement providing for a single,
lump-sum payment.
(d) Treatment of Collateral Source Payments.--
(1) Introduction into evidence.--In any health care
liability action, any defendant may introduce evidence of
collateral source payments. If any defendant elects to
introduce such evidence, the claimant may introduce evidence
of any amount paid or contributed or reasonably likely to be
paid or contributed in the future by or on behalf of the
claimant to secure the right to such collateral source
payments.
(2) No subrogation.--No provider of collateral source
payments shall recover any amount against the claimant or
receive any lien or credit against the claimant's recovery or
be equitably or legally subrogated the right of the claimant
in a health care liability action.
(3) Application to settlements.--This subsection shall
apply to an action that is settled as well as an action that
is resolved by a fact finder.
SEC. 283. ALTERNATIVE DISPUTE RESOLUTION.
Any ADR used to resolve a health care liability action or
claim shall contain provisions relating to statute of
limitations, non-economic damages, joint and several
liability, punitive damages, collateral source rule, and
periodic payments which are identical to the provisions
relating to such matters in this subtitle.
TITLE III--TAX-RELATED HEALTH PROVISIONS
SEC. 300. AMENDMENT OF 1986 CODE.
Except as otherwise expressly provided, whenever in this
title an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the
reference shall be considered to be made to a section or
other provision of the Internal Revenue Code of 1986.
Subtitle A--Medical Savings Accounts
SEC. 301. MEDICAL SAVINGS ACCOUNTS.
(a) In General.--Part VII of subchapter B of chapter 1
(relating to additional itemized deductions for individuals)
is amended by redesignating section 220 as section 221 and by
inserting after section 219 the following new section:
``SEC. 220. MEDICAL SAVINGS ACCOUNTS.
``(a) Deduction Allowed.--In the case of an individual who
is an eligible individual for any month during the taxable
year, there shall be allowed as a deduction for the taxable
year an amount equal to the aggregate amount paid in cash
during such taxable year by such individual to a medical
savings account of such individual.
``(b) Limitations.--
``(1) In general.--Except as otherwise provided in this
subsection, the amount allowable as a deduction under
subsection (a) to an individual for the taxable year shall
not exceed--
``(A) except as provided in subparagraph (B), the lesser
of--
``(i) $2,000, or
``(ii) the annual deductible limit for any individual
covered under the high deductible health plan, or
``(B) in the case of a high deductible health plan covering
the taxpayer and any other eligible individual who is the
spouse or any dependent (as defined in section 152) of the
taxpayer, the lesser of--
``(i) $4,000, or
``(ii) the annual limit under the plan on the aggregate
amount of deductibles required to be paid by all individuals.
The preceding sentence shall not apply if the spouse of such
individual is covered under any other high deductible health
plan.
``(2) Special rule for married individuals.--
``(A) In general.--This subsection shall be applied
separately for each married individual.
``(B) Special rule.--If individuals who are married to each
other are covered under the same high deductible health plan,
then the amounts applicable under paragraph (1)(B) shall be
divided equally between them unless they agree on a different
division.
``(3) Coordination with exclusion for employer
contributions.--No deduction shall be allowed under this
section for any amount paid for any taxable year to a medical
savings account of an individual if--
``(A) any amount is paid to any medical savings account of
such individual which is excludable from gross income under
section 106(b) for such year, or
``(B) in a case described in paragraph (2)(B), any amount
is paid to any medical savings account of either spouse which
is so excludable for such year.
``(4) Proration of limitation.--
``(A) In general.--The limitation under paragraph (1) shall
be the sum of the monthly limitations for months during the
taxable year that the individual is an eligible individual
if--
``(i) such individual is not an eligible individual for all
months of the taxable year,
``(ii) the deductible under the high deductible health plan
covering such individual is not the same throughout such
taxable year, or
``(iii) such limitation is determined under paragraph
(1)(B) for some but not all months during such taxable year.
``(B) Monthly limitation.--The monthly limitation for any
month shall be an amount
[[Page H3074]]
equal to \1/12\ of the limitation which would (but for this
paragraph and paragraph (3)) be determined under paragraph
(1) if the facts and circumstances as of the first day of
such month that such individual is covered under a high
deductible health plan were true for the entire taxable year.
``(5) Denial of deduction to dependents.--No deduction
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.
``(c) Definitions.--For purposes of this section--
``(1) Eligible individual.--
``(A) In general.--The term `eligible individual' means,
with respect to any month, any individual--
``(i) who is covered under a high deductible health plan as
of the 1st day of such month, and
``(ii) who is not, while covered under a high deductible
health plan, covered under any health plan--
``(I) which is not a high deductible health plan, and
``(II) which provides coverage for any benefit which is
covered under the high deductible health plan.
``(B) Certain coverage disregarded.--Subparagraph (A)(ii)
shall be applied without regard to--
``(i) coverage for any benefit provided by permitted
insurance, and
``(ii) coverage (whether through insurance or otherwise)
for accidents, disability, dental care, vision care, or long-
term care.
``(2) High deductible health plan.--The term `high
deductible health plan' means a health plan which--
``(A) has an annual deductible limit for each individual
covered by the plan which is not less than $1,500, and
``(B) has an annual limit on the aggregate amount of
deductibles required to be paid with respect to all
individuals covered by the plan which is not less than
$3,000.
Such term does not include a health plan if substantially all
of its coverage is coverage described in paragraph (1)(B). A
plan shall not fail to be treated as a high deductible health
plan by reason of failing to have a deductible for preventive
care if the absence of a deductible for such care is required
by State law.
``(3) Permitted insurance.--The term `permitted insurance'
means--
``(A) Medicare supplemental insurance,
``(B) insurance if substantially all of the coverage
provided under such insurance relates to--
``(i) liabilities incurred under workers' compensation
laws,
``(ii) tort liabilities,
``(iii) liabilities relating to ownership or use of
property, or
``(iv) such other similar liabilities as the Secretary may
specify by regulations,
``(C) insurance for a specified disease or illness, and
``(D) insurance paying a fixed amount per day (or other
period) of hospitalization.
``(d) Medical Savings Account.--For purposes of this
section--
``(1) Medical savings account.--The term `medical savings
account' means a trust created or organized in the United
States exclusively for the purpose of paying the qualified
medical expenses of the account holder, but only if the
written governing instrument creating the trust meets the
following requirements:
``(A) Except in the case of a rollover contribution
described in subsection (f)(5), no contribution will be
accepted--
``(i) unless it is in cash, or
``(ii) to the extent such contribution, when added to
previous contributions to the trust for the calendar year,
exceeds $4,000.
``(B) The trustee is a bank (as defined in section 408(n)),
an insurance company (as defined in section 816), or another
person who demonstrates to the satisfaction of the Secretary
that the manner in which such person will administer the
trust will be consistent with the requirements of this
section.
``(C) No part of the trust assets will be invested in life
insurance contracts.
``(D) The assets of the trust will not be commingled with
other property except in a common trust fund or common
investment fund.
``(E) The interest of an individual in the balance in his
account is nonforfeitable.
``(2) Qualified medical expenses.--
``(A) In general.--The term `qualified medical expenses'
means, with respect to an account holder, amounts paid by
such holder for medical care (as defined in section 213(d))
for such individual, the spouse of such individual, and any
dependent (as defined in section 152) of such individual, but
only to the extent such amounts are not compensated for by
insurance or otherwise.
``(B) Health insurance may not be purchased from account.--
``(i) In general.--Subparagraph (A) shall not apply to any
payment for insurance.
``(ii) Exceptions.--Clause (i) shall not apply to any
expense for coverage under--
``(I) a health plan during any period of continuation
coverage required under any Federal law,
``(II) a qualified long-term care insurance contract (as
defined in section 7702B(b)), or
``(III) a health plan during a period in which the
individual is receiving unemployment compensation under any
Federal or State law.
``(3) Account holder.--The term `account holder' means the
individual on whose behalf the medical savings account was
established.
``(4) Certain rules to apply.--Rules similar to the
following rules shall apply for purposes of this section:
``(A) Section 219(d)(2) (relating to no deduction for
rollovers).
``(B) Section 219(f)(3) (relating to time when
contributions deemed made).
``(C) Except as provided in section 106(b), section
219(f)(5) (relating to employer payments).
``(D) Section 408(g) (relating to community property laws).
``(E) Section 408(h) (relating to custodial accounts).
``(e) Tax Treatment of Accounts.--
``(1) In general.--A medical savings account is exempt from
taxation under this subtitle unless such account has ceased
to be a medical savings account by reason of paragraph (2) or
(3). Notwithstanding the preceding sentence, any such account
is subject to the taxes imposed by section 511 (relating to
imposition of tax on unrelated business income of charitable,
etc. organizations).
``(2) Account terminations.--Rules similar to the rules of
paragraphs (2) and (4) of section 408(e) shall apply to
medical savings accounts, and any amount treated as
distributed under such rules shall be treated as not used to
pay qualified medical expenses.
``(f) Tax Treatment of Distributions.--
``(1) Amounts used for qualified medical expenses.--
``(A) In general.--Any amount paid or distributed out of a
medical savings account which is used exclusively to pay
qualified medical expenses of any account holder (or any
spouse or dependent of the holder) shall not be includible in
gross income.
``(B) Treatment after death of account holder.--
``(i) Treatment if holder is spouse.--If, after the death
of the account holder, the account holder's interest is
payable to (or for the benefit of) the holder's spouse, the
medical savings account shall be treated as if the spouse
were the account holder.
``(ii) Treatment if designated holder is not spouse.--In
the case of an account holder's interest in a medical savings
account which is payable to (or for the benefit of) any
person other than such holder's spouse upon the death of such
holder--
``(I) such account shall cease to be a medical savings
account as of the date of death, and
``(II) an amount equal to the fair market value of the
assets in such account on such date shall be includible if
such person is not the estate of such holder, in such
person's gross income for the taxable year which includes
such date, or if such person is the estate of such holder, in
such holder's gross income for the last taxable year of such
holder.
``(2) Inclusion of amounts not used for qualified medical
expenses.--
``(A) In general.--Any amount paid or distributed out of a
medical savings account which is not used exclusively to pay
the qualified medical expenses of the account holder or of
the spouse or dependents of such holder shall be included in
the gross income of such holder.
``(B) Special rules.--For purposes of subparagraph (A)--
``(i) all medical savings accounts of the account holder
shall be treated as 1 account,
``(ii) all payments and distributions during any taxable
year shall be treated as 1 distribution, and
``(iii) any distribution of property shall be taken into
account at its fair market value on the date of the
distribution.
``(3) Excess contributions returned before due date of
return.--If the aggregate contributions (other than rollover
contributions) for a taxable year to the medical savings
accounts of an individual exceed the amount allowable as a
deduction under this section for such contributions,
paragraph (2) shall not apply to distributions from such
accounts (in an amount not greater than such excess) if--
``(A) such distribution is received by the individual on or
before the last day prescribed by law (including extensions
of time) for filing such individual's return for such taxable
year, and
``(B) such distribution is accompanied by the amount of net
income attributable to such excess contribution.
Any net income described in subparagraph (B) shall be
included in the gross income of the individual for the
taxable year in which it is received.
``(4) Penalty for distributions not used for qualified
medical expenses.--
``(A) In general.--The tax imposed by this chapter on the
account holder for any taxable year in which there is a
payment or distribution from a medical savings account of
such holder which is includible in gross income under
paragraph (2) shall be increased by 10 percent of the amount
which is so includible.
``(B) Exception for disability or death.--Subparagraph (A)
shall not apply if the payment or distribution is made after
the account holder becomes disabled within the meaning of
section 72(m)(7) or dies.
``(C) Exception for distributions after age 59\1/2\.--
Subparagraph (A) shall not apply to any payment or
distribution after the date on which the account holder
attains age 59\1/2\.
``(5) Rollover contribution.--An amount is described in
this paragraph as a rollover contribution if it meets the
requirements of subparagraphs (A) and (B).
[[Page H3075]]
``(A) In general.--Paragraph (2) shall not apply to any
amount paid or distributed from a medical savings account to
the account holder to the extent the amount received is paid
into a medical savings account for the benefit of such
holder not later than the 60th day after the day on which
the holder receives the payment or distribution.
``(B) Limitation.--This paragraph shall not apply to any
amount described in subparagraph (A) received by an
individual from a medical savings account if, at any time
during the 1-year period ending on the day of such receipt,
such individual received any other amount described in
subparagraph (A) from a medical savings account which was not
includible in the individual's gross income because of the
application of this paragraph.
``(6) Coordination with medical expense deduction.--For
purposes of determining the amount of the deduction under
section 213, any payment or distribution out of a medical
savings account for qualified medical expenses shall not be
treated as an expense paid for medical care.
``(7) Transfer of account incident to divorce.--The
transfer of an individual's interest in a medical savings
account to an individual's spouse or former spouse under a
divorce or separation instrument described in subparagraph
(A) of section 71(b)(2) shall not be considered a taxable
transfer made by such individual notwithstanding any other
provision of this subtitle, and such interest shall, after
such transfer, be treated as a medical savings account with
respect to which the spouse is the account holder.
``(g) Cost-of-Living Adjustment.--
``(1) In general.--In the case of any taxable year
beginning in a calendar year after 1997, each dollar amount
in subsection (b)(1), (c)(2), or (d)(1)(A) shall be increased
by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the medical care cost adjustment for such calendar
year.
If any increase under the preceding sentence is not a
multiple of $50, such increase shall be rounded to the
nearest multiple of $50.
``(2) Medical care cost adjustment.--For purposes of
paragraph (1), the medical care cost adjustment for any
calendar year is the percentage (if any) by which--
``(A) the medical care component of the Consumer Price
Index (as defined in section 1(f)(5)) for August of the
preceding calendar year, exceeds
``(B) such component for August of 1996.
``(h) Reports.--The Secretary may require the trustee of a
medical savings account to make such reports regarding such
account to the Secretary and to the account holder with
respect to contributions, distributions, and such other
matters as the Secretary determines appropriate. The reports
required by this subsection shall be filed at such time and
in such manner and furnished to such individuals at such time
and in such manner as may be required by those regulations.''
(b) Deduction Allowed Whether or Not Individual Itemizes
Other Deductions.--Subsection (a) of section 62 is amended by
inserting after paragraph (15) the following new paragraph:
``(16) Medical savings accounts.--The deduction allowed by
section 220.''
(c) Exclusions for Employer Contributions to Medical
Savings Accounts.--
(1) Exclusion from income tax.--The text of section 106
(relating to contributions by employer to accident and health
plans) is amended to read as follows:
``(a) General Rule.--Except as otherwise provided in this
section, gross income of an employee does not include
employer-provided coverage under an accident or health plan.
``(b) Contributions to Medical Savings Accounts.--
``(1) In general.--In the case of an employee who is an
eligible individual, gross income does not include amounts
contributed by such employee's employer to any medical
savings account of such employee.
``(2) Coordination with deduction limitation.--The amount
excluded from the gross income of an employee under this
subsection for any taxable year shall not exceed the
limitation under section 220(b)(1) (determined without regard
to this subsection) which is applicable to such employee for
such taxable year.
``(3) No constructive receipt.--No amount shall be included
in the gross income of any employee solely because the
employee may choose between the contributions referred to in
paragraph (1) and employer contributions to another health
plan of the employer.
``(4) Special rule for deduction of employer
contributions.--Any employer contribution to a medical
savings account, if otherwise allowable as a deduction under
this chapter, shall be allowed only for the taxable year in
which paid.
``(5) Definitions.--For purposes of this subsection, the
terms `eligible individual' and `medical savings account'
have the respective meanings given to such terms by section
220.''
(2) Exclusion from employment taxes.--
(A) Social security taxes.--
(i) Subsection (a) of section 3121 is amended by striking
``or'' at the end of paragraph (20), by striking the period
at the end of paragraph (21) and inserting ``; or'', and by
inserting after paragraph (21) the following new paragraph:
``(22) any payment made to or for the benefit of an
employee if at the time of such payment it is reasonable to
believe that the employee will be able to exclude such
payment from income under section 106(b).''
(ii) Subsection (a) of section 209 of the Social Security
Act is amended by striking ``or'' at the end of paragraph
(17), by striking the period at the end of paragraph (18) and
inserting ``; or'', and by inserting after paragraph (18) the
following new paragraph:
``(19) any payment made to or for the benefit of an
employee if at the time of such payment it is reasonable to
believe that the employee will be able to exclude such
payment from income under section 106(b) of the Internal
Revenue Code of 1986.''
(B) Railroad retirement tax.--Subsection (e) of section
3231 is amended by adding at the end the following new
paragraph:
``(10) Medical savings account contributions.--The term
`compensation' shall not include any payment made to or for
the benefit of an employee if at the time of such payment it
is reasonable to believe that the employee will be able to
exclude such payment from income under section 106(b).''
(C) Unemployment tax.--Subsection (b) of section 3306 is
amended by striking ``or'' at the end of paragraph (15), by
striking the period at the end of paragraph (16) and
inserting ``; or'', and by inserting after paragraph (16) the
following new paragraph:
``(17) any payment made to or for the benefit of an
employee if at the time of such payment it is reasonable to
believe that the employee will be able to exclude such
payment from income under section 106(b).''
(D) Withholding tax.--Subsection (a) of section 3401 is
amended by striking ``or'' at the end of paragraph (19), by
striking the period at the end of paragraph (20) and
inserting ``; or'', and by inserting after paragraph (20) the
following new paragraph:
``(21) any payment made to or for the benefit of an
employee if at the time of such payment it is reasonable to
believe that the employee will be able to exclude such
payment from income under section 106(b).''
(d) Medical Savings Account Contributions Not Available
Under Cafeteria Plans.--Subsection (f) of section 125 of such
Code is amended by inserting ``106(b),'' before ``117''.
(e) Exclusion of Medical Savings Accounts From Estate
Tax.--Part IV of subchapter A of chapter 11 is amended by
adding at the end the following new section:
``SEC. 2057. MEDICAL SAVINGS ACCOUNTS.
``For purposes of the tax imposed by section 2001, the
value of the taxable estate shall be determined by deducting
from the value of the gross estate an amount equal to the
value of any medical savings account (as defined in section
220(d)) included in the gross estate.''
(f) Tax on Excess Contributions.--Section 4973 (relating to
tax on excess contributions to individual retirement
accounts, certain section 403(b) contracts, and certain
individual retirement annuities) is amended--
(1) by inserting ``MEDICAL SAVINGS ACCOUNTS,'' after
``ACCOUNTS,'' in the heading of such section,
(2) by striking ``or'' at the end of paragraph (1) of
subsection (a),
(3) by redesignating paragraph (2) of subsection (a) as
paragraph (3) and by inserting after paragraph (1) the
following:
``(2) a medical savings account (within the meaning of
section 220(d)), or'', and
(4) by adding at the end the following new subsection:
``(d) Excess Contributions to Medical Savings Accounts.--
For purposes of this section, in the case of a medical
savings accounts (within the meaning of section 220(d)), the
term `excess contributions' means the sum of--
``(1) the amount by which the amount contributed for the
taxable year to the accounts (other than rollover
contributions described in section 220(f)(5)) exceeds the
amount allowable as a deduction under section 220 for such
contributions, and
``(2) the amount determined under this subsection for the
preceding taxable year, reduced by the sum of distributions
out of the account included in gross income under section
220(f) (2) or (3) and the excess (if any) of the maximum
amount allowable as a deduction under section 220 for the
taxable year over the amount contributed to the accounts.
For purposes of this subsection, any contribution which is
distributed out of the medical savings account in a
distribution to which section 220(f)(3) applies shall be
treated as an amount not contributed.''
(g) Tax on Prohibited Transactions.--
(1) Section 4975 (relating to tax on prohibited
transactions) is amended by adding at the end of subsection
(c) the following new paragraph:
``(4) Special rule for medical savings accounts.--An
individual for whose benefit a medical savings account
(within the meaning of section 220(d)) is established shall
be exempt from the tax imposed by this section with respect
to any transaction concerning such account (which would
otherwise be taxable under this section) if, with respect to
such transaction, the account ceases to be a medical savings
account by reason of the application of section 220(e)(2) to
such account.''
(2) Paragraph (1) of section 4975(e) is amended to read as
follows:
``(1) Plan.--For purposes of this section, the term `plan'
means--
``(A) a trust described in section 401(a) which forms a
part of a plan, or a plan described in section 403(a), which
trust or plan is exempt from tax under section 501(a),
[[Page H3076]]
``(B) an individual retirement account described in section
408(a),
``(C) an individual retirement annuity described in section
408(b),
``(D) a medical savings account described in section
220(d), or
``(E) a trust, plan, account, or annuity which, at any
time, has been determined by the Secretary to be described in
any preceding subparagraph of this paragraph.''
(h) Failure To Provide Reports on Medical Savings
Accounts.--
(1) Subsection (a) of section 6693 (relating to failure to
provide reports on individual retirement accounts or
annuities) is amended to read as follows:
``(a) Reports.--
``(1) In general.--If a person required to file a report
under a provision referred to in paragraph (2) fails to file
such report at the time and in the manner required by such
provision, such person shall pay a penalty of $50 for each
failure unless it is shown that such failure is due to
reasonable cause.
``(2) Provisions.--The provisions referred to in this
paragraph are--
``(A) subsections (i) and (l) of section 408 (relating to
individual retirement plans), and
``(B) section 220(h) (relating to medical savings
accounts).''
(i) Exception From Capitalization of Policy Acquisition
Expenses.--Subparagraph (B) of section 848(e)(1) (defining
specified insurance contract) is amended by striking ``and''
at the end of clause (ii), by striking the period at the end
of clause (iii) and inserting ``, and'', and by adding at the
end the following new clause:
``(iv) any contract which is a medical savings account (as
defined in section 220(d)).''.
(j) Clerical Amendments.--
(1) The table of sections for part VII of subchapter B of
chapter 1 is amended by striking the last item and inserting
the following:
``Sec. 220. Medical savings accounts.
``Sec. 221. Cross reference.''
(2) The table of sections for part IV of subchapter A of
chapter 11 is amended by adding at the end the following new
item:
``Sec. 2057. Medical savings accounts.''
(k) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1996.
Subtitle B--Increase in Deduction for Health Insurance Costs of Self-
Employed Individuals
SEC. 311. INCREASE IN DEDUCTION FOR HEALTH INSURANCE COSTS OF
SELF-EMPLOYED INDIVIDUALS.
(a) In General.--Paragraph (1) of section 162(l) is amended
to read as follows:
``(1) Allowance of deduction.--
``(A) In general.--In the case of an individual who is an
employee within the meaning of section 401(c)(1), there shall
be allowed as a deduction under this section an amount equal
to the applicable percentage of the amount paid during the
taxable year for insurance which constitutes medical care for
the taxpayer, his spouse, and dependents.
``(B) Applicable percentage.--For purposes of subparagraph
(A), the applicable percentage shall be determined under the
following table:
``For taxable years beginning The applicable
in calendar year-- percentage is--
1998................................................35 percent
1999, 2000, or 2001.................................40 percent
2002................................................45 percent
2003 or thereafter................................50 percent.''
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
1997.
Subtitle C--Long-Term Care Services and Contracts
PART I--GENERAL PROVISIONS
SEC. 321. TREATMENT OF LONG-TERM CARE INSURANCE.
(a) General Rule.--Chapter 79 (relating to definitions) is
amended by inserting after section 7702A the following new
section:
``SEC. 7702B. TREATMENT OF QUALIFIED LONG-TERM CARE
INSURANCE.
``(a) In General.--For purposes of this title--
``(1) a qualified long-term care insurance contract shall
be treated as an accident and health insurance contract,
``(2) amounts (other than policyholder dividends, as
defined in section 808, or premium refunds) received under a
qualified long-term care insurance contract shall be treated
as amounts received for personal injuries and sickness and
shall be treated as reimbursement for expenses actually
incurred for medical care (as defined in section 213(d)),
``(3) any plan of an employer providing coverage under a
qualified long-term care insurance contract shall be treated
as an accident and health plan with respect to such coverage,
``(4) except as provided in subsection (e)(3), amounts paid
for a qualified long-term care insurance contract providing
the benefits described in subsection (b)(2)(A) shall be
treated as payments made for insurance for purposes of
section 213(d)(1)(D), and
``(5) a qualified long-term care insurance contract shall
be treated as a guaranteed renewable contract subject to the
rules of section 816(e).
``(b) Qualified Long-Term Care Insurance Contract.--For
purposes of this title--
``(1) In general.--The term `qualified long-term care
insurance contract' means any insurance contract if--
``(A) the only insurance protection provided under such
contract is coverage of qualified long-term care services,
``(B) such contract does not pay or reimburse expenses
incurred for services or items to the extent that such
expenses are reimbursable under title XVIII of the Social
Security Act or would be so reimbursable but for the
application of a deductible or coinsurance amount,
``(C) such contract is guaranteed renewable,
``(D) such contract does not provide for a cash surrender
value or other money that can be--
``(i) paid, assigned, or pledged as collateral for a loan,
or
``(ii) borrowed,
other than as provided in subparagraph (E) or paragraph
(2)(C),
``(E) all refunds of premiums, and all policyholder
dividends or similar amounts, under such contract are to be
applied as a reduction in future premiums or to increase
future benefits, and
``(F) such contract meets the requirements of subsection
(f).
``(2) Special rules.--
``(A) Per diem, etc. payments permitted.--A contract shall
not fail to be described in subparagraph (A) or (B) of
paragraph (1) by reason of payments being made on a per diem
or other periodic basis without regard to the expenses
incurred during the period to which the payments relate.
``(B) Special rules relating to medicare.--
``(i) Paragraph (1)(B) shall not apply to expenses which
are reimbursable under title XVIII of the Social Security Act
only as a secondary payor.
``(ii) No provision of law shall be construed or applied so
as to prohibit the offering of a qualified long-term care
insurance contract on the basis that the contract coordinates
its benefits with those provided under such title.
``(C) Refunds of premiums.--Paragraph (1)(E) shall not
apply to any refund on the death of the insured, or on a
complete surrender or cancellation of the contract, which
cannot exceed the aggregate premiums paid under the contract.
Any refund on a complete surrender or cancellation of the
contract shall be includible in gross income to the extent
that any deduction or exclusion was allowable with respect to
the premiums.
``(c) Qualified Long-Term Care Services.--For purposes of
this section--
``(1) In general.--The term `qualified long-term care
services' means necessary diagnostic, preventive,
therapeutic, curing, treating, mitigating, and rehabilitative
services, and maintenance or personal care services, which--
``(A) are required by a chronically ill individual, and
``(B) are provided pursuant to a plan of care prescribed by
a licensed health care practitioner.
``(2) Chronically ill individual.--
``(A) In general.--The term `chronically ill individual'
means any individual who has been certified by a licensed
health care practitioner as--
``(i) being unable to perform (without substantial
assistance from another individual) at least 2 activities of
daily living for a period of at least 90 days due to a loss
of functional capacity,
``(ii) having a level of disability similar (as determined
by the Secretary in consultation with the Secretary of Health
and Human Services) to the level of disability described in
clause (i), or
``(iii) requiring substantial supervision to protect such
individual from threats to health and safety due to severe
cognitive impairment.
Such term shall not include any individual otherwise meeting
the requirements of the preceding sentence unless within the
preceding 12-month period a licensed health care practitioner
has certified that such individual meets such requirements.
``(B) Activities of daily living.--For purposes of
subparagraph (A), each of the following is an activity of
daily living:
``(i) Eating.
``(ii) Toileting.
``(iii) Transferring.
``(iv) Bathing.
``(v) Dressing.
``(vi) Continence.
Nothing in this section shall be construed to require a
contract to take into account all of the preceding activities
of daily living.
``(3) Maintenance or personal care services.--The term
`maintenance or personal care services' means any care the
primary purpose of which is the provision of needed
assistance with any of the disabilities as a result of which
the individual is a chronically ill individual (including the
protection from threats to health and safety due to severe
cognitive impairment).
``(4) Licensed health care practitioner.--The term
`licensed health care practitioner' means any physician (as
defined in section 1861(r)(1) of the Social Security Act) and
any registered professional nurse, licensed social worker, or
other individual who meets such requirements as may be
prescribed by the Secretary.
``(d) Aggregate Payments in Excess of Limits.--
``(1) In general.--If the aggregate amount of periodic
payments under all qualified long-term care insurance
contracts with respect to an insured for any period exceeds
the dollar amount in effect for such period
[[Page H3077]]
under paragraph (3), such excess payments shall be treated as
made for qualified long-term care services only to the extent
of the costs incurred by the payee (not otherwise
compensated for by insurance or otherwise) for qualified
long-term care services provided during such period for
such insured.
``(2) Periodic payments.--For purposes of paragraph (1),
the term `periodic payment' means any payment (whether on a
periodic basis or otherwise) made without regard to the
extent of the costs incurred by the payee for qualified long-
term care services.
``(3) Dollar amount.--The dollar amount in effect under
this subsection shall be $175 per day (or the equivalent
amount in the case of payments on another periodic basis).
``(4) Inflation adjustment.--In the case of a calendar year
after 1997, the dollar amount contained in paragraph (3)
shall be increased at the same time and in the same manner as
amounts are increased pursuant to section 213(d)(10).
``(e) Treatment of Coverage Provided as Part of a Life
Insurance Contract.--Except as otherwise provided in
regulations prescribed by the Secretary, in the case of any
long-term care insurance coverage (whether or not qualified)
provided by a rider on or as part of a life insurance
contract--
``(1) In general.--This section shall apply as if the
portion of the contract providing such coverage is a separate
contract.
``(2) Application of 7702.--Section 7702(c)(2) (relating to
the guideline premium limitation) shall be applied by
increasing the guideline premium limitation with respect to a
life insurance contract, as of any date--
``(A) by the sum of any charges (but not premium payments)
against the life insurance contract's cash surrender value
(within the meaning of section 7702(f)(2)(A)) for such
coverage made to that date under the contract, less
``(B) any such charges the imposition of which reduces the
premiums paid for the contract (within the meaning of section
7702(f)(1)).
``(3) Application of section 213.--No deduction shall be
allowed under section 213(a) for charges against the life
insurance contract's cash surrender value described in
paragraph (2), unless such charges are includible in income
as a result of the application of section 72(e)(10) and the
rider is a qualified long-term care insurance contract under
subsection (b).
``(4) Portion defined.--For purposes of this subsection,
the term `portion' means only the terms and benefits under a
life insurance contract that are in addition to the terms and
benefits under the contract without regard to the coverage
under a qualified long-term care insurance contract.''
(b) Long-Term Care Insurance Not Permitted Under Cafeteria
Plans or Flexible Spending Arrangements.--
(1) Cafeteria plans.--Section 125(f) is amended by adding
at the end the following new sentence: ``Such term shall not
include any long-term care insurance contract (as defined in
section 4980C).''
(2) Flexible spending arrangements.--Section 106 (relating
to contributions by employer to accident and health plans),
as amended by section 301(c), is amended by adding at the end
the following new subsection:
``(c) Inclusion of Long-Term Care Benefits Provided Through
Flexible Spending Arrangements.--
``(1) In general.--Effective on and after January 1, 1997,
gross income of an employee shall include employer-provided
coverage for qualified long-term care services (as defined in
section 7702B(c)) to the extent that such coverage is
provided through a flexible spending or similar arrangement.
``(2) Flexible spending arrangement.--For purposes of this
subsection, a flexible spending arrangement is a benefit
program which provides employees with coverage under which--
``(A) specified incurred expenses may be reimbursed
(subject to reimbursement maximums and other reasonable
conditions), and
``(B) the maximum amount of reimbursement which is
reasonably available to a participant for such coverage is
less than 500 percent of the value of such coverage.
In the case of an insured plan, the maximum amount reasonably
available shall be determined on the basis of the underlying
coverage.''
(c) Continuation Coverage Excise Tax Not To Apply.--
Subsection (f) of section 4980B is amended by adding at the
end the following new paragraph:
``(9) Continuation of long-term care coverage not
required.--A group health plan shall not be treated as
failing to meet the requirements of this subsection solely by
reason of failing to provide coverage under any qualified
long-term care insurance contract (as defined in section
7702B(b)).''
(d) Clerical Amendment.--The table of sections for chapter
79 is amended by inserting after the item relating to section
7702A the following new item:
``Sec. 7702B. Treatment of qualified long-term care insurance.''.
(e) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to contracts issued after December 31, 1996.
(2) Continuation of existing policies.--In the case of any
contract issued before January 1, 1997, which met the long-
term care insurance requirements of the State in which the
contract was sitused at the time the contract was issued--
(A) such contract shall be treated for purposes of the
Internal Revenue Code of 1986 as a qualified long-term care
insurance contract (as defined in section 7702B(b) of such
Code), and
(B) services provided under, or reimbursed by, such
contract shall be treated for such purposes as qualified
long-term care services (as defined in section 7702B(c) of
such Code).
(3) Exchanges of existing policies.--If, after the date of
enactment of this Act and before January 1, 1998, a contract
providing for long-term care insurance coverage is exchanged
solely for a qualified long-term care insurance contract (as
defined in section 7702B(b) of such Code), no gain or loss
shall be recognized on the exchange. If, in addition to a
qualified long-term care insurance contract, money or other
property is received in the exchange, then any gain shall be
recognized to the extent of the sum of the money and the fair
market value of the other property received. For purposes of
this paragraph, the cancellation of a contract providing for
long-term care insurance coverage and reinvestment of the
cancellation proceeds in a qualified long-term care insurance
contract within 60 days thereafter shall be treated as an
exchange.
(4) Issuance of certain riders permitted.--For purposes of
applying sections 101(f), 7702, and 7702A of the Internal
Revenue Code of 1986 to any contract--
(A) the issuance of a rider which is treated as a qualified
long-term care insurance contract under section 7702B, and
(B) the addition of any provision required to conform any
other long-term care rider to be so treated,
shall not be treated as a modification or material change of
such contract.
SEC. 322. QUALIFIED LONG-TERM CARE SERVICES TREATED AS
MEDICAL CARE.
(a) General Rule.--Paragraph (1) of section 213(d)
(defining medical care) is amended by striking ``or'' at the
end of subparagraph (B), by redesignating subparagraph (C)
as subparagraph (D), and by inserting after subparagraph
(B) the following new subparagraph:
``(C) for qualified long-term care services (as defined in
section 7702B(c)), or''.
(b) Technical Amendments.--
(1) Subparagraph (D) of section 213(d)(1) (as redesignated
by subsection (a)) is amended by inserting before the period
``or for any qualified long-term care insurance contract (as
defined in section 7702B(b))''.
(2)(A) Paragraph (1) of section 213(d) is amended by adding
at the end the following new flush sentence:
``In the case of a qualified long-term care insurance
contract (as defined in section 7702B(b)), only eligible
long-term care premiums (as defined in paragraph (10)) shall
be taken into account under subparagraph (D).''
(B) Subsection (d) of section 213 is amended by adding at
the end the following new paragraphs:
``(10) Eligible long-term care premiums.--
``(A) In general.--For purposes of this section, the term
`eligible long-term care premiums' means the amount paid
during a taxable year for any qualified long-term care
insurance contract (as defined in section 7702B(b)) covering
an individual, to the extent such amount does not exceed the
limitation determined under the following table:
``In the case of an individual
with an attained age before the The limitation
close of the taxable year of: is:
40 or less............................................$ 200
More than 40 but not more than 50........................375
More than 50 but not more than 60........................750
More than 60 but not more than 70......................2,000
More than 70...........................................2,500.
``(B) Indexing.--
``(i) In general.--In the case of any taxable year
beginning in a calendar year after 1997, each dollar amount
contained in subparagraph (A) shall be increased by the
medical care cost adjustment of such amount for such calendar
year. If any increase determined under the preceding sentence
is not a multiple of $10, such increase shall be rounded to
the nearest multiple of $10.
``(ii) Medical care cost adjustment.--For purposes of
clause (i), the medical care cost adjustment for any calendar
year is the percentage (if any) by which--
``(I) the medical care component of the Consumer Price
Index (as defined in section 1(f)(5)) for August of the
preceding calendar year, exceeds
``(II) such component for August of 1996.
The Secretary shall, in consultation with the Secretary of
Health and Human Services, prescribe an adjustment which the
Secretary determines is more appropriate for purposes of this
paragraph than the adjustment described in the preceding
sentence, and the adjustment so prescribed shall apply in
lieu of the adjustment described in the preceding sentence.
``(11) Certain payments to relatives treated as not paid
for medical care.--An amount paid for a qualified long-term
care service (as defined in section 7702B(c)) provided to an
individual shall be treated as not paid for medical care if
such service is provided--
[[Page H3078]]
``(A) by the spouse of the individual or by a relative
(directly or through a partnership, corporation, or other
entity) unless the service is provided by a licensed
professional with respect to such service, or
``(B) by a corporation or partnership which is related
(within the meaning of section 267(b) or 707(b)) to the
individual.
For purposes of this paragraph, the term `relative' means an
individual bearing a relationship to the individual which is
described in any of paragraphs (1) through (8) of section
152(a). This paragraph shall not apply for purposes
of section 105(b) with respect to reimbursements through
insurance.''
(3) Paragraph (6) of section 213(d) is amended--
(A) by striking ``subparagraphs (A) and (B)'' and inserting
``subparagraphs (A), (B), and (C)'', and
(B) by striking ``paragraph (1)(C)'' in subparagraph (A)
and inserting ``paragraph (1)(D)''.
(4) Paragraph (7) of section 213(d) is amended by striking
``subparagraphs (A) and (B)'' and inserting ``subparagraphs
(A), (B), and (C)''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1996.
(2) Deduction for long-term care services.--Amounts paid
for qualified long-term care services (as defined in section
7702B(c) of the Internal Revenue Code of 1986, as added by
this Act) furnished in any taxable year beginning before
January 1, 1998, shall not be taken into account under
section 213 of the Internal Revenue Code of 1986.
SEC. 323. REPORTING REQUIREMENTS.
(a) In General.--Subpart B of part III of subchapter A of
chapter 61 is amended by adding at the end the following new
section:
``SEC. 6050Q. CERTAIN LONG-TERM CARE BENEFITS.
``(a) Requirement of Reporting.--Any person who pays long-
term care benefits shall make a return, according to the
forms or regulations prescribed by the Secretary, setting
forth--
``(1) the aggregate amount of such benefits paid by such
person to any individual during any calendar year, and
``(2) the name, address, and TIN of such individual.
``(b) Statements To Be Furnished to Persons 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 to be set forth in such
return a written statement showing--
``(1) the name of the person making the payments, and
``(2) the aggregate amount of long-term care benefits paid
to the individual which are required to be shown on such
return.
The written statement required under the preceding sentence
shall be furnished to the individual on or before January 31
of the year following the calendar year for which the return
under subsection (a) was required to be made.
``(c) Long-Term Care Benefits.--For purposes of this
section, the term `long-term care benefit' means--
``(1) any amount paid under a long-term care insurance
policy (within the meaning of section 4980C(e)), and
``(2) payments which are excludable from gross income by
reason of section 101(g).''.
(b) Penalties.--
(1) Subparagraph (B) of section 6724(d)(1) is amended by
redesignating clauses (ix) through (xiv) as clauses (x)
through (xv), respectively, and by inserting after clause
(viii) the following new clause:
``(ix) section 6050Q (relating to certain long-term care
benefits),''.
(2) Paragraph (2) of section 6724(d) is amended by
redesignating subparagraphs (Q) through (T) as subparagraphs
(R) through (U), respectively, and by inserting after
subparagraph (P) the following new subparagraph:
``(Q) section 6050Q(b) (relating to certain long-term care
benefits),''.
(c) Clerical Amendment.--The table of sections for subpart
B of part III of subchapter A of chapter 61 is amended by
adding at the end the following new item:
``Sec. 6050Q. Certain long-term care benefits.''
(d) Effective Date.--The amendments made by this section
shall apply to benefits paid after December 31, 1996.
PART II--CONSUMER PROTECTION PROVISIONS
SEC. 325. POLICY REQUIREMENTS.
Section 7702B (as added by section 321) is amended by
adding at the end the following new subsection:
``(f) Consumer Protection Provisions.--
``(1) In general.--The requirements of this subsection are
met with respect to any contract if any long-term care
insurance policy issued under the contract meets--
``(A) the requirements of the model regulation and model
Act described in paragraph (2),
``(B) the disclosure requirement of paragraph (3), and
``(C) the requirements relating to nonforfeitability under
paragraph (4).
``(2) Requirements of model regulation and act.--
``(A) In general.--The requirements of this paragraph are
met with respect to any policy if such policy meets--
``(i) Model regulation.--The following requirements of the
model regulation:
``(I) Section 7A (relating to guaranteed renewal or
noncancellability), and the requirements of section 6B of the
model Act relating to such section 7A.
``(II) Section 7B (relating to prohibitions on limitations
and exclusions).
``(III) Section 7C (relating to extension of benefits).
``(IV) Section 7D (relating to continuation or conversion
of coverage).
``(V) Section 7E (relating to discontinuance and
replacement of policies).
``(VI) Section 8 (relating to unintentional lapse).
``(VII) Section 9 (relating to disclosure), other than
section 9F thereof.
``(VIII) Section 10 (relating to prohibitions against post-
claims underwriting).
``(IX) Section 11 (relating to minimum standards).
``(X) Section 12 (relating to requirement to offer
inflation protection), except that any requirement for a
signature on a rejection of inflation protection shall permit
the signature to be on an application or on a separate form.
``(XI) Section 23 (relating to prohibition against
preexisting conditions and probationary periods in
replacement policies or certificates).
``(ii) Model act.--The following requirements of the model
Act:
``(I) Section 6C (relating to preexisting conditions).
``(II) Section 6D (relating to prior hospitalization).
``(B) Definitions.--For purposes of this paragraph--
``(i) Model provisions.--The terms `model regulation' and
`model Act' mean the long-term care insurance model
regulation, and the long-term care insurance model Act,
respectively, promulgated by the National Association of
Insurance Commissioners (as adopted as of January 1993).
``(ii) Coordination.--Any provision of the model regulation
or model Act listed under clause (i) or (ii) of subparagraph
(A) shall be treated as including any other provision of such
regulation or Act necessary to implement the provision.
``(iii) Determination.--For purposes of this section and
section 4980C, the determination of whether any requirement
of a model regulation or the model Act has been met shall be
made by the Secretary.
``(3) Disclosure requirement.--The requirement of this
paragraph is met with respect to any policy if such policy
meets the requirements of section 4980C(d)(1).
``(4) Nonforfeiture requirements.--
``(A) In general.--The requirements of this paragraph are
met with respect to any level premium long-term care
insurance policy, if the issuer of such policy offers to the
policyholder, including any group policyholder, a
nonforfeiture provision meeting the requirements of
subparagraph (B).
``(B) Requirements of provision.--The nonforfeiture
provision required under subparagraph (A) shall meet the
following requirements:
``(i) The nonforfeiture provision shall be appropriately
captioned.
``(ii) The nonforfeiture provision shall provide for a
benefit available in the event of a default in the payment of
any premiums and the amount of the benefit may be adjusted
subsequent to being initially granted only as necessary to
reflect changes in claims, persistency, and interest as
reflected in changes in rates for premium paying policies
approved by the Secretary for the same policy form.
``(iii) The nonforfeiture provision shall provide at least
one of the following:
``(I) Reduced paid-up insurance.
``(II) Extended term insurance.
``(III) Shortened benefit period.
``(IV) Other similar offerings approved by the Secretary.
``(5) Long-term care insurance policy defined.--For
purposes of this subsection, the term `long-term care
insurance policy' has the meaning given such term by section
4980C(e).''.
SEC. 326. REQUIREMENTS FOR ISSUERS OF LONG-TERM CARE
INSURANCE POLICIES.
(a) In General.--Chapter 43 is amended by adding at the end
the following new section:
``SEC. 4980C. REQUIREMENTS FOR ISSUERS OF LONG-TERM CARE
INSURANCE POLICIES.
``(a) General Rule.--There is hereby imposed on any person
failing to meet the requirements of subsection (c) or (d) a
tax in the amount determined under subsection (b).
``(b) Amount.--
``(1) In general.--The amount of the tax imposed by
subsection (a) shall be $100 per policy for each day any
requirements of subsection (c) or (d) are not met with
respect to each long-term care insurance policy.
``(2) Waiver.--In the case of a failure which is due to
reasonable cause and not to willful neglect, the Secretary
may waive part or all of the tax imposed by subsection (a) to
the extent that payment of the tax would be excessive
relative to the failure involved.
``(c) Responsibilities.--The requirements of this
subsection are as follows:
``(1) Requirements of model provisions.--
``(A) Model regulation.--The following requirements of the
model regulation must be met:
``(i) Section 13 (relating to application forms and
replacement coverage).
``(ii) Section 14 (relating to reporting requirements),
except that the issuer shall also
[[Page H3079]]
report at least annually the number of claims denied during
the reporting period for each class of business (expressed as
a percentage of claims denied), other than claims denied for
failure to meet the waiting period or because of any
applicable preexisting condition.
``(iii) Section 20 (relating to filing requirements for
marketing).
``(iv) Section 21 (relating to standards for marketing),
including inaccurate completion of medical histories, other
than sections 21C(1) and 21C(6) thereof, except that--
``(I) in addition to such requirements, no person shall, in
selling or offering to sell a long-term care insurance
policy, misrepresent a material fact; and
``(II) no such requirements shall include a requirement to
inquire or identify whether a prospective applicant or
enrollee for long-term care insurance has accident and
sickness insurance.
``(v) Section 22 (relating to appropriateness of
recommended purchase).
``(vi) Section 24 (relating to standard format outline of
coverage).
``(vii) Section 25 (relating to requirement to deliver
shopper's guide).
``(B) Model act.--The following requirements of the model
Act must be met:
``(i) Section 6F (relating to right to return), except that
such section shall also apply to denials of applications and
any refund shall be made within 30 days of the return or
denial.
``(ii) Section 6G (relating to outline of coverage).
``(iii) Section 6H (relating to requirements for
certificates under group plans).
``(iv) Section 6I (relating to policy summary).
``(v) Section 6J (relating to monthly reports on
accelerated death benefits).
``(vi) Section 7 (relating to incontestability period).
``(C) Definitions.--For purposes of this paragraph, the
terms `model regulation' and `model Act' have the meanings
given such terms by section 7702B(f)(2)(B).
``(2) Delivery of policy.--If an application for a long-
term care insurance policy (or for a certificate under a
group long-term care insurance policy) is approved, the
issuer shall deliver to the applicant (or policyholder or
certificateholder) the policy (or certificate) of insurance
not later than 30 days after the date of the approval.
``(3) Information on denials of claims.--If a claim under a
long-term care insurance policy is denied, the issuer shall,
within 60 days of the date of a written request by the
policyholder or certificateholder (or representative)--
``(A) provide a written explanation of the reasons for the
denial, and
``(B) make available all information directly relating to
such denial.
``(d) Disclosure.--The requirements of this subsection are
met if the issuer of a long-term care insurance policy
discloses in such policy and in the outline of coverage
required under subsection (c)(1)(B)(ii) that the policy is
intended to be a qualified long-term care insurance contract
under section 7702B(b).
``(e) Long-Term Care Insurance Policy Defined.--For
purposes of this section, the term `long-term care insurance
policy' means any product which is advertised, marketed, or
offered as long-term care insurance.''.
(b) Conforming Amendment.--The table of sections for
chapter 43 is amended by adding at the end the following new
item:
``Sec. 4980C. Requirements for issuers of long-term care insurance
policies.''.
SEC. 327. COORDINATION WITH STATE REQUIREMENTS.
Nothing in this part shall prevent a State from
establishing, implementing, or continuing in effect standards
related to the protection of policyholders of long-term care
insurance policies (as defined in section 4980C(e) of the
Internal Revenue Code of 1986), if such standards are not in
conflict with or inconsistent with the standards established
under such Code.
SEC. 328. EFFECTIVE DATES.
(a) In General.--The provisions of, and amendments made by,
this part shall apply to contracts issued after December 31,
1996. The provisions of section 321(g) (relating to
transition rule) shall apply to such contracts.
(b) Issuers.--The amendments made by section 326 shall
apply to actions taken after December 31, 1996.
Subtitle D--Treatment of Accelerated Death Benefits
SEC. 331. TREATMENT OF ACCELERATED DEATH BENEFITS BY
RECIPIENT.
(a) In General.--Section 101 (relating to certain death
benefits) is amended by adding at the end the following new
subsection:
``(g) Treatment of Certain Accelerated Death Benefits.--
``(1) In general.--For purposes of this section, the
following amounts shall be treated as an amount paid by
reason of the death of an insured:
``(A) Any amount received under a life insurance contract
on the life of an insured who is a terminally ill individual.
``(B) Any amount received under a life insurance contract
on the life of an insured who is a chronically ill individual
(as defined in section 7702B(c)(2)) but only if such amount
is received under a rider or other provision of such contract
which is treated as a qualified long-term care insurance
contract under section 7702B and such amount is treated under
section 7702B (after the application of subsection (d)
thereof) as a payment for qualified long-term care services
(as defined in such section).
``(2) Treatment of viatical settlements.--
``(A) In general.--In the case of a life insurance contract
on the life of an insured described in paragraph (1), if--
``(i) any portion of such contract is sold to any viatical
settlement provider, or
``(ii) any portion of the death benefit is assigned to such
a provider,
the amount paid for such sale or assignment shall be treated
as an amount paid under the life insurance contract by reason
of the death of such insured.
``(B) Viatical settlement provider.--The term `viatical
settlement provider' means any person regularly engaged in
the trade or business of purchasing, or taking assignments
of, life insurance contracts on the lives of insureds
described in paragraph (1) if--
``(i) such person is licensed for such purposes in the
State in which the insured resides, or
``(ii) in the case of an insured who resides in a State not
requiring the licensing of such persons for such purposes--
``(I) such person meets the requirements of sections 8 and
9 of the Viatical Settlements Model Act of the National
Association of Insurance Commissioners, and
``(II) meets the requirements of the Model Regulations of
the National Association of Insurance Commissioners (relating
to standards for evaluation of reasonable payments) in
determining amounts paid by such person in connection with
such purchases or assignments.
``(3) Definitions.--For purposes of this subsection--
``(A) Terminally ill individual.--The term `terminally ill
individual' means an individual who has been certified by a
physician as having an illness or physical condition which
can reasonably be expected to result in death in 24 months or
less after the date of the certification.
``(B) Physician.--The term `physician' has the meaning
given to such term by section 1861(r)(1) of the Social
Security Act (42 U.S.C. 1395x(r)(1)).
``(4) Exception for business-related policies.--This
subsection shall not apply in the case of any amount paid to
any taxpayer other than the insured if such taxpayer has an
insurable interest with respect to the life of the insured by
reason of the insured being a director, officer, or employee
of the taxpayer or by reason of the insured being financially
interested in any trade or business carried on by the
taxpayer.''
(b) Effective Date.--The amendment made by subsection (a)
shall apply to amounts received after December 31, 1996.
SEC. 332. TAX TREATMENT OF COMPANIES ISSUING QUALIFIED
ACCELERATED DEATH BENEFIT RIDERS.
(a) Qualified Accelerated Death Benefit Riders Treated as
Life Insurance.--Section 818 (relating to other definitions
and special rules) is amended by adding at the end the
following new subsection:
``(g) Qualified Accelerated Death Benefit Riders Treated as
Life Insurance.--For purposes of this part--
``(1) In general.--Any reference to a life insurance
contract shall be treated as including a reference to a
qualified accelerated death benefit rider on such contract.
``(2) Qualified accelerated death benefit riders.--For
purposes of this subsection, the term `qualified accelerated
death benefit rider' means any rider on a life insurance
contract if the only payments under the rider are payments
meeting the requirements of section 101(g).
``(3) Exception for long-term care riders.--Paragraph (1)
shall not apply to any rider which is treated as a long-term
care insurance contract under section 7702B.''
(b) Effective Date.--
(1) In general.--The amendment made by this section shall
take effect on January 1, 1997.
(2) Issuance of rider not treated as material change.--For
purposes of applying sections 101(f), 7702, and 7702A of the
Internal Revenue Code of 1986 to any contract--
(A) the issuance of a qualified accelerated death benefit
rider (as defined in section 818(g) of such Code (as added by
this Act)), and
(B) the addition of any provision required to conform an
accelerated death benefit rider to the requirements of such
section 818(g),
shall not be treated as a modification or material change of
such contract.
Subtitle E--High-Risk Pools
SEC. 341. EXEMPTION FROM INCOME TAX FOR STATE-SPONSORED
ORGANIZATIONS PROVIDING HEALTH COVERAGE FOR
HIGH-RISK INDIVIDUALS.
(a) In General.--Subsection (c) of section 501 (relating to
list of exempt organizations) is amended by adding at the end
the following new paragraph:
``(26) Any membership organization if--
``(A) such organization is established by a State
exclusively to provide coverage for medical care (as defined
in section 213(d)) on a not-for-profit basis to individuals
described in subparagraph (B) through--
``(i) insurance issued by the organization, or
``(ii) a health maintenance organization under an
arrangement with the organization,
[[Page H3080]]
``(B) the only individuals receiving such coverage through
the organization are individuals--
``(i) who are residents of such State, and
``(ii) who, by reason of the existence or history of a
medical condition, are unable to acquire medical care
coverage for such condition through insurance or from a
health maintenance organization or are able to acquire such
coverage only at a rate which is substantially in excess of
the rate for such coverage through the membership
organization,
``(C) the composition of the membership in such
organization is specified by such State, and
``(D) no part of the net earnings of the organization
inures to the benefit of any private shareholder or
individual.''
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
1996.
Subtitle F--Organizations Subject to Section 833
SEC. 351. ORGANIZATIONS SUBJECT TO SECTION 833.
(a) In General.--Section 833(c) (relating to organization
to which section applies) is amended by adding at the end the
following new paragraph:
``(4) Treatment as existing blue cross or blue shield
organization.--
``(A) In general.--Paragraph (2) shall be applied to an
organization described in subparagraph (B) as if it were a
Blue Cross or Blue Shield organization.
``(B) Applicable organization.--An organization is
described in this subparagraph if it--
``(i) is organized under, and governed by, State laws which
are specifically and exclusively applicable to not-for-profit
health insurance or health service type organizations, and
``(ii) is not a Blue Cross or Blue Shield organization or
health maintenance organization.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years ending after December 31, 1996.
TITLE IV--REVENUE OFFSETS
SEC. 400. AMENDMENT OF 1986 CODE.
Except as otherwise expressly provided, whenever in this
title an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the
reference shall be considered to be made to a section or
other provision of the Internal Revenue Code of 1986.
Subtitle A--Repeal of Bad Debt Reserve Method for Thrift Savings
Associations
SEC. 401. REPEAL OF BAD DEBT RESERVE METHOD FOR THRIFT
SAVINGS ASSOCIATIONS.
(a) In General.--Section 593 (relating to reserves for
losses on loans) is amended by adding at the end the
following new subsections:
``(f) Termination of Reserve Method.--Subsections (a), (b),
(c), and (d) shall not apply to any taxable year beginning
after December 31, 1995.
``(g) 6-Year Spread of Adjustments.--
``(1) In general.--In the case of any taxpayer who is
required by reason of subsection (f) to change its method of
computing reserves for bad debts--
``(A) such change shall be treated as a change in a method
of accounting,
``(B) such change shall be treated as initiated by the
taxpayer and as having been made with the consent of the
Secretary, and
``(C) the net amount of the adjustments required to be
taken into account by the taxpayer under section 481(a)--
``(i) shall be determined by taking into account only
applicable excess reserves, and
``(ii) as so determined, shall be taken into account
ratably over the 6-taxable year period beginning with the
first taxable year beginning after December 31, 1995.
``(2) Applicable excess reserves.--
``(A) In general.--For purposes of paragraph (1), the term
`applicable excess reserves' means the excess (if any) of--
``(i) the balance of the reserves described in subsection
(c)(1) (other than the supplemental reserve) as of the close
of the taxpayer's last taxable year beginning before December
31, 1995, over
``(ii) the lesser of--
``(I) the balance of such reserves as of the close of the
taxpayer's last taxable year beginning before January 1,
1988, or
``(II) the balance of the reserves described in subclause
(I), reduced in the same manner as under section
585(b)(2)(B)(ii) on the basis of the taxable years described
in clause (i) and this clause.
``(B) Special rule for thrifts which become small banks.--
In the case of a bank (as defined in section 581) which was
not a large bank (as defined in section 585(c)(2)) for its
first taxable year beginning after December 31, 1995--
``(i) the balance taken into account under subparagraph
(A)(ii) shall not be less than the amount which would be the
balance of such reserves as of the close of its last taxable
year beginning before such date if the additions to such
reserves for all taxable years had been determined under
section 585(b)(2)(A), and
``(ii) the opening balance of the reserve for bad debts as
of the beginning of such first taxable year shall be the
balance taken into account under subparagraph (A)(ii)
(determined after the application of clause (i) of this
subparagraph).
The preceding sentence shall not apply for purposes of
paragraphs (5) and (6) or subsection (e)(1).
``(3) Recapture of pre-1988 reserves where taxpayer ceases
to be bank.--If, during any taxable year beginning after
December 31, 1995, a taxpayer to which paragraph (1) applied
is not a bank (as defined in section 581), paragraph (1)
shall apply to the reserves described in paragraph (2)(A)(ii)
and the supplemental reserve; except that such reserves shall
be taken into account ratably over the 6-taxable year period
beginning with such taxable year.
``(4) Suspension of recapture if residential loan
requirement met.--
``(A) In general.--In the case of a bank which meets the
residential loan requirement of subparagraph (B) for the
first taxable year beginning after December 31, 1995, or for
the following taxable year--
``(i) no adjustment shall be taken into account under
paragraph (1) for such taxable year, and
``(ii) such taxable year shall be disregarded in
determining--
``(I) whether any other taxable year is a taxable year for
which an adjustment is required to be taken into account
under paragraph (1), and
``(II) the amount of such adjustment.
``(B) Residential loan requirement.--A taxpayer meets the
residential loan requirement of this subparagraph for any
taxable year if the principal amount of the residential loans
made by the taxpayer during such year is not less than the
base amount for such year.
``(C) Residential loan.--For purposes of this paragraph,
the term `residential loan' means any loan described in
clause (v) of section 7701(a)(19)(C) but only if such loan is
incurred in acquiring, constructing, or improving the
property described in such clause.
``(D) Base amount.--For purposes of subparagraph (B), the
base amount is the average of the principal amounts of the
residential loans made by the taxpayer during the 6 most
recent taxable years beginning on or before December 31,
1995. At the election of the taxpayer who made such loans
during each of such 6 taxable years, the preceding sentence
shall be applied without regard to the taxable year in which
such principal amount was the highest and the taxable year in
such principal amount was the lowest. Such an election may be
made only for the first taxable year beginning after such
date, and, if made for such taxable year, shall apply to the
succeeding taxable year unless revoked with the consent of
the Secretary.
``(E) Controlled groups.--In the case of a taxpayer which
is a member of any controlled group of corporations described
in section 1563(a)(1), subparagraph (B) shall be applied with
respect to such group.
``(5) Continued application of fresh start under section
585 transitional rules.--In the case of a taxpayer to which
paragraph (1) applied and which was not a large bank (as
defined in section 585(c)(2)) for its first taxable year
beginning after December 31, 1995:
``(A) In general.--For purposes of determining the net
amount of adjustments referred to in section
585(c)(3)(A)(iii), there shall be taken into account only the
excess (if any) of the reserve for bad debts as of the close
of the last taxable year before the disqualification year
over the balance taken into account by such taxpayer under
paragraph (2)(A)(ii) of this subsection.
``(B) Treatment under elective cut-off method.--For
purposes of applying section 585(c)(4)--
``(i) the balance of the reserve taken into account under
subparagraph (B) thereof shall be reduced by the balance
taken into account by such taxpayer under paragraph
(2)(A)(ii) of this subsection, and
``(ii) no amount shall be includible in gross income by
reason of such reduction.
``(6) Suspended reserve included as section 381(c) items.--
The balance taken into account by a taxpayer under paragraph
(2)(A)(ii) of this subsection and the supplemental reserve
shall be treated as items described in section 381(c).
``(7) Conversions to credit unions.--In the case of a
taxpayer to which paragraph (1) applied which becomes a
credit union described in section 501(c) and exempt from
taxation under section 501(a)--
``(A) any amount required to be included in the gross
income of the credit union by reason of this subsection shall
be treated as derived from an unrelated trade or business (as
defined in section 513), and
``(B) for purposes of paragraph (3), the credit union shall
not be treated as if it were a bank.
``(8) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out this subsection
and subsection (e), including regulations providing for the
application of such subsections in the case of acquisitions,
mergers, spin-offs, and other reorganizations.''
(b) Conforming Amendments.--
(1) Subsection (d) of section 50 is amended by adding at
the end the following new sentence:
``Paragraphs (1)(A), (2)(A), and (4) of the section 46(e)
referred to in paragraph (1) of this subsection shall not
apply to any taxable year beginning after December 31,
1995.''
(2) Subsection (e) of section 52 is amended by striking
paragraph (1) and by redesignating paragraphs (2) and (3) as
paragraphs (1) and (2), respectively.
(3) Subsection (a) of section 57 is amended by striking
paragraph (4).
(4) Section 246 is amended by striking subsection (f).
[[Page H3081]]
(5) Clause (i) of section 291(e)(1)(B) is amended by
striking ``or to which section 593 applies''.
(6) Subparagraph (A) of section 585(a)(2) is amended by
striking ``other than an organization to which section 593
applies''.
(7)(A) The material preceding subparagraph (A) of section
593(e)(1) is amended by striking ``by a domestic building and
loan association or an institution that is treated as a
mutual savings bank under section 591(b)'' and inserting ``by
a taxpayer having a balance described in subsection
(g)(2)(A)(ii)''.
(B) Subparagraph (B) of section 593(e)(1) is amended to
read as follows:
``(B) then out of the balance taken into account under
subsection (g)(2)(A)(ii) (properly adjusted for amounts
charged against such reserves for taxable years beginning
after December 31, 1987),''.
(C) Paragraph (1) of section 593(e) is amended by adding at
the end the following new sentence: ``This paragraph shall
not apply to any distribution of all of the stock of a bank
(as defined in section 581) to another corporation if,
immediately after the distribution, such bank and such other
corporation are members of the same affiliated group (as
defined in section 1504) and the provisions of section 5(e)
of the Federal Deposit Insurance Act (as in effect on
December 31, 1995) or similar provisions are in effect.''
(8) Section 595 is hereby repealed.
(9) Section 596 is hereby repealed.
(10) Subsection (a) of section 860E is amended--
(A) by striking ``Except as provided in paragraph (2),
the'' in paragraph (1) and inserting ``The'',
(B) by striking paragraphs (2) and (4) and redesignating
paragraphs (3) and (5) as paragraphs (2) and (3),
respectively, and
(C) by striking in paragraph (2) (as so redesignated) all
that follows ``subsection'' and inserting a period.
(11) Paragraph (3) of section 992(d) is amended by striking
``or 593''.
(12) Section 1038 is amended by striking subsection (f).
(13) Clause (ii) of section 1042(c)(4)(B) is amended by
striking ``or 593''.
(14) Subsection (c) of section 1277 is amended by striking
``or to which section 593 applies''.
(15) Subparagraph (B) of section 1361(b)(2) is amended by
striking ``or to which section 593 applies''.
(16) The table of sections for part II of subchapter H of
chapter 1 is amended by striking the items relating to
sections 595 and 596.
(c) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply
to taxable years beginning after December 31, 1995.
(2) Subsection (b)(7).--The amendments made by subsection
(b)(7) shall not apply to any distribution with respect to
preferred stock if--
(A) such stock is outstanding at all times after October
31, 1995, and before the distribution, and
(B) such distribution is made before the date which is 1
year after the date of the enactment of this Act (or, in the
case of stock which may be redeemed, if later, the date which
is 30 days after the earliest date that such stock may be
redeemed).
(3) Subsection (b)(8).--The amendment made by subsection
(b)(8) shall apply to property acquired in taxable years
beginning after December 31, 1995.
(4) Subsection (b)(10).--The amendments made by subsection
(b)(10) shall not apply to any residual interest held by a
taxpayer if such interest has been held by such taxpayer at
all times after October 31, 1995.
Subtitle B--Reform of the Earned Income Credit
SEC. 411. EARNED INCOME CREDIT DENIED TO INDIVIDUALS NOT
AUTHORIZED TO BE EMPLOYED IN THE UNITED STATES.
(a) In General.--Section 32(c)(1) (relating to individuals
eligible to claim the earned income credit) is amended by
adding at the end the following new subparagraph:
``(F) Identification number requirement.--The term
`eligible individual' does not include any individual who
does not include on the return of tax for the taxable year--
``(i) such individual's taxpayer identification number, and
``(ii) if the individual is married (within the meaning of
section 7703), the taxpayer identification number of such
individual's spouse.''.
(b) Special Identification Number.--Section 32 is amended
by adding at the end the following new subsection:
``(l) Identification Numbers.--Solely for purposes of
subsections (c)(1)(F) and (c)(3)(D), a taxpayer
identification number means a social security number issued
to an individual by the Social Security Administration (other
than a social security number issued pursuant to clause (II)
(or that portion of clause (III) that relates to clause (II))
of section 205(c)(2)(B)(i) of the Social Security Act).''.
(c) Extension of Procedures Applicable to Mathematical or
Clerical Errors.--Section 6213(g)(2) (relating to the
definition of mathematical or clerical errors) is amended by
striking ``and'' at the end of subparagraph (D), by striking
the period at the end of subparagraph (E) and inserting a
comma, and by inserting after subparagraph (E) the following
new subparagraphs:
``(F) an omission of a correct taxpayer identification
number required under section 32 (relating to the earned
income credit) to be included on a return, and
``(G) an entry on a return claiming the credit under
section 32 with respect to net earnings from self-employment
described in section 32(c)(2)(A) to the extent the tax
imposed by section 1401 (relating to self-employment tax) on
such net earnings has not been paid.''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1995.
Subtitle C--Treatment of Individuals Who Lose United States Citizenship
SEC. 421. REVISION OF INCOME, ESTATE, AND GIFT TAXES ON
INDIVIDUALS WHO LOSE UNITED STATES CITIZENSHIP.
(a) In General.--Subsection (a) of section 877 is amended
to read as follows:
``(a) Treatment of Expatriates.--
``(1) In general.--Every nonresident alien individual who,
within the 10-year period immediately preceding the close of
the taxable year, lost United States citizenship, unless such
loss did not have for 1 of its principal purposes the
avoidance of taxes under this subtitle or subtitle B, shall
be taxable for such taxable year in the manner provided in
subsection (b) if the tax imposed pursuant to such subsection
exceeds the tax which, without regard to this section, is
imposed pursuant to section 871.
``(2) Certain individuals treated as having tax avoidance
purpose.--For purposes of paragraph (1), an individual shall
be treated as having a principal purpose to avoid such taxes
if--
``(A) the average annual net income tax (as defined in
section 38(c)(1)) of such individual for the period of 5
taxable years ending before the date of the loss of United
States citizenship is greater than $100,000, or
``(B) the net worth of the individual as of such date is
$500,000 or more.
In the case of the loss of United States citizenship in any
calendar year after 1996, such $100,000 and $500,000 amounts
shall be increased by an amount equal to such dollar amount
multiplied by the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year by substituting `1994'
for `1992' in subparagraph (B) thereof. Any increase under
the preceding sentence shall be rounded to the nearest
multiple of $1,000.''
(b) Exceptions.--
(1) In general.--Section 877 is amended by striking
subsection (d), by redesignating subsection (c) as subsection
(d), and by inserting after subsection (b) the following new
subsection:
``(c) Tax Avoidance Not Presumed in Certain Cases.--
``(1) In general.--Subsection (a)(2) shall not apply to an
individual if--
``(A) such individual is described in a subparagraph of
paragraph (2) of this subsection, and
``(B) within the 1-year period beginning on the date of the
loss of United States citizenship, such individual submits a
ruling request for the Secretary's determination as to
whether such loss has for 1 of its principal purposes the
avoidance of taxes under this subtitle or subtitle B.
``(2) Individuals described.--
``(A) Dual citizenship, etc.--An individual is described in
this subparagraph if--
``(i) the individual became at birth a citizen of the
United States and a citizen of another country and continues
to be a citizen of such other country, or
``(ii) the individual becomes (not later than the close of
a reasonable period after loss of United States citizenship)
a citizen of the country in which--
``(I) such individual was born,
``(II) if such individual is married, such individual's
spouse was born, or
``(III) either of such individual's parents were born.
``(B) Long-term foreign residents.--An individual is
described in this subparagraph if, for each year in the 10-
year period ending on the date of loss of United States
citizenship, the individual was present in the United States
for 30 days or less. The rule of section 7701(b)(3)(D)(ii)
shall apply for purposes of this subparagraph.
``(C) Renunciation upon reaching age of majority.--An
individual is described in this subparagraph if the
individual's loss of United States citizenship occurs before
such individual attains age 18\1/2\.
``(D) Individuals specified in regulations.--An individual
is described in this subparagraph if the individual is
described in a category of individuals prescribed by
regulation by the Secretary.''
(2) Technical amendment.--Paragraph (1) of section 877(b)
of such Code is amended by striking ``subsection (c)'' and
inserting ``subsection (d)''.
(c) Treatment of Property Disposed of in Nonrecognition
Transactions; Treatment of Distributions From Certain
Controlled Foreign Corporations.--Subsection (d) of section
877, as redesignated by subsection (b), is amended to read as
follows:
``(d) Special Rules for Source, Etc.--For purposes of
subsection (b)--
``(1) Source rules.--The following items of gross income
shall be treated as income from sources within the United
States:
``(A) Sale of property.--Gains on the sale or exchange of
property (other than stock or debt obligations) located in
the United States.
``(B) Stock or debt obligations.--Gains on the sale or
exchange of stock issued by a domestic corporation or debt
obligations of
[[Page H3082]]
United States persons or of the United States, a State or
political subdivision thereof, or the District of Columbia.
``(C) Income or gain derived from controlled foreign
corporation.--Any income or gain derived from stock in a
foreign corporation but only--
``(i) if the individual losing United States citizenship
owned (within the meaning of section 958(a)), or is
considered as owning (by applying the ownership rules of
section 958(b)), at any time during the 2-year period ending
on the date of the loss of United States citizenship, more
than 50 percent of--
``(I) the total combined voting power of all classes of
stock entitled to vote of such corporation, or
``(II) the total value of the stock of such corporation,
and
``(ii) to the extent such income or gain does not exceed
the earnings and profits attributable to such stock which
were earned or accumulated before the loss of citizenship and
during periods that the ownership requirements of clause (i)
are met.
``(2) Gain recognition on certain exchanges.--
``(A) In general.--In the case of any exchange of property
to which this paragraph applies, notwithstanding any other
provision of this title, such property shall be treated as
sold for its fair market value on the date of such exchange,
and any gain shall be recognized for the taxable year which
includes such date.
``(B) Exchanges to which paragraph applies.--This paragraph
shall apply to any exchange during the 10-year period
described in subsection (a) if--
``(i) gain would not (but for this paragraph) be recognized
on such exchange in whole or in part for purposes of this
subtitle,
``(ii) income derived from such property was from sources
within the United States (or, if no income was so derived,
would have been from such sources), and
``(iii) income derived from the property acquired in the
exchange would be from sources outside the United States.
``(C) Exception.--Subparagraph (A) shall not apply if the
individual enters into an agreement with the Secretary which
specifies that any income or gain derived from the property
acquired in the exchange (or any other property which has a
basis determined in whole or part by reference to such
property) during such 10-year period shall be treated as from
sources within the United States. If the property transferred
in the exchange is disposed of by the person acquiring such
property, such agreement shall terminate and any gain which
was not recognized by reason of such agreement shall be
recognized as of the date of such disposition.
``(D) Secretary may extend period.--To the extent provided
in regulations prescribed by the Secretary, subparagraph (B)
shall be applied by substituting the 15-year period beginning
5 years before the loss of United States citizenship for the
10-year period referred to therein.
``(E) Secretary may require recognition of gain in certain
cases.--To the extent provided in regulations prescribed by
the Secretary--
``(i) the removal of appreciated tangible personal property
from the United States, and
``(ii) any other occurrence which (without recognition of
gain) results in a change in the source of the income or gain
from property from sources within the United States to
sources outside the United States,
shall be treated as an exchange to which this paragraph
applies.
``(3) Substantial diminishing of risks of ownership.--For
purposes of determining whether this section applies to any
gain on the sale or exchange of any property, the running of
the 10-year period described in subsection (a) shall be
suspended for any period during which the individual's risk
of loss with respect to the property is substantially
diminished by--
``(A) the holding of a put with respect to such property
(or similar property),
``(B) the holding by another person of a right to acquire
the property, or
``(C) a short sale or any other transaction.''
(d) Credit for Foreign Taxes Imposed on United States
Source Income.--
(1) Subsection (b) of section 877 is amended by adding at
the end the following new sentence: ``The tax imposed solely
by reason of this section shall be reduced (but not below
zero) by the amount of any income, war profits, and excess
profits taxes (within the meaning of section 903) paid to any
foreign country or possession of the United States on any
income of the taxpayer on which tax is imposed solely by
reason of this section.''
(2) Subsection (a) of section 877, as amended by subsection
(a), is amended by inserting ``(after any reduction in such
tax under the last sentence of such subsection)'' after
``such subsection''.
(e) Comparable Estate and Gift Tax Treatment.--
(1) Estate tax.--
(A) In general.--Subsection (a) of section 2107 is amended
to read as follows:
``(a) Treatment of Expatriates.--
``(1) Rate of tax.--A tax computed in accordance with the
table contained in section 2001 is hereby imposed on the
transfer of the taxable estate, determined as provided in
section 2106, of every decedent nonresident not a citizen
of the United States if, within the 10-year period ending
with the date of death, such decedent lost United States
citizenship, unless such loss did not have for 1 of its
principal purposes the avoidance of taxes under this
subtitle or subtitle A.
``(2) Certain individuals treated as having tax avoidance
purpose.--
``(A) In general.--For purposes of paragraph (1), an
individual shall be treated as having a principal purpose to
avoid such taxes if such individual is so treated under
section 877(a)(2).
``(B) Exception.--Subparagraph (A) shall not apply to a
decedent meeting the requirements of section 877(c)(1).''
(B) Credit for foreign death taxes.--Subsection (c) of
section 2107 is amended by redesignating paragraph (2) as
paragraph (3) and by inserting after paragraph (1) the
following new paragraph:
``(2) Credit for foreign death taxes.--
``(A) In general.--The tax imposed by subsection (a) shall
be credited with the amount of any estate, inheritance,
legacy, or succession taxes actually paid to any foreign
country in respect of any property which is included in the
gross estate solely by reason of subsection (b).
``(B) Limitation on credit.--The credit allowed by
subparagraph (A) for such taxes paid to a foreign country
shall not exceed the lesser of--
``(i) the amount which bears the same ratio to the amount
of such taxes actually paid to such foreign country in
respect of property included in the gross estate as the value
of the property included in the gross estate solely by reason
of subsection (b) bears to the value of all property
subjected to such taxes by such foreign country, or
``(ii) such property's proportionate share of the excess
of--
``(I) the tax imposed by subsection (a), over
``(II) the tax which would be imposed by section 2101 but
for this section.
``(C) Proportionate share.--For purposes of subparagraph
(B), a property's proportionate share is the percentage of
the value of the property which is included in the gross
estate solely by reason of subsection (b) bears to the total
value of the gross estate.''
(C) Expansion of inclusion in gross estate of stock of
foreign corporations.--Paragraph (2) of section 2107(b) is
amended by striking ``more than 50 percent of'' and all that
follows and inserting ``more than 50 percent of--
``(A) the total combined voting power of all classes of
stock entitled to vote of such corporation, or
``(B) the total value of the stock of such corporation,''.
(2) Gift tax.--
(A) In general.--Paragraph (3) of section 2501(a) is
amended to read as follows:
``(3) Exception.--
``(A) Certain individuals.--Paragraph (2) shall not apply
in the case of a donor who, within the 10-year period ending
with the date of transfer, lost United States citizenship,
unless such loss did not have for 1 of its principal purposes
the avoidance of taxes under this subtitle or subtitle A.
``(B) Certain individuals treated as having tax avoidance
purpose.--For purposes of subparagraph (A), an individual
shall be treated as having a principal purpose to avoid such
taxes if such individual is so treated under section
877(a)(2).
``(C) Exception for certain individuals.--Subparagraph (B)
shall not apply to a decedent meeting the requirements of
section 877(c)(1).
``(D) Credit for foreign gift taxes.--The tax imposed by
this section solely by reason of this paragraph shall be
credited with the amount of any gift tax actually paid to any
foreign country in respect of any gift which is taxable under
this section solely by reason of this paragraph.''
(f) Comparable Treatment of Lawful Permanent Residents Who
Cease To Be Taxed as Residents.--
(1) In general.--Section 877 is amended by redesignating
subsection (e) as subsection (f) and by inserting after
subsection (d) the following new subsection:
``(e) Comparable Treatment of Lawful Permanent Residents
Who Cease To Be Taxed as Residents.--
``(1) In general.--Any long-term resident of the United
States who--
``(A) ceases to be a lawful permanent resident of the
United States (within the meaning of section 7701(b)(6)), or
``(B) commences to be treated as a resident of a foreign
country under the provisions of a tax treaty between the
United States and the foreign country and who does not waive
the benefits of such treaty applicable to residents of the
foreign country,
shall be treated for purposes of this section and sections
2107, 2501, and 6039F in the same manner as if such resident
were a citizen of the United States who lost United States
citizenship on the date of such cessation or commencement.
``(2) Long-term resident.--For purposes of this subsection,
the term `long-term resident' means any individual (other
than a citizen of the United States) who is a lawful
permanent resident of the United States in at least 8 taxable
years during the period of 15 taxable years ending with the
taxable year during which the event described in subparagraph
(A) or (B) of paragraph (1) occurs. For purposes of the
preceding sentence, an individual shall not be treated as a
lawful permanent resident for any taxable year if such
individual is treated as a resident of a foreign country for
the taxable year under the provisions of a tax treaty between
the United States and the foreign country and does not waive
the benefits of such treaty applicable to residents of the
foreign country.
[[Page H3083]]
``(3) Special rules.--
``(A) Exceptions not to apply.--Subsection (c) shall not
apply to an individual who is treated as provided in
paragraph (1).
``(B) Step-up in basis.--Solely for purposes of determining
any tax imposed by reason of this subsection, property which
was held by the long-term resident on the date the individual
first became a resident of the United States shall be treated
as having a basis on such date of not less than the fair
market value of such property on such date. The preceding
sentence shall not apply if the individual elects not to have
such sentence apply. Such an election, once made, shall be
irrevocable.
``(4) Authority to exempt individuals.--This subsection
shall not apply to an individual who is described in a
category of individuals prescribed by regulation by the
Secretary.
``(5) Regulations.--The Secretary shall prescribe such
regulations as may be appropriate to carry out this
subsection, including regulations providing for the
application of this subsection in cases where an alien
individual becomes a resident of the United States during the
10-year period after being treated as provided in paragraph
(1).''
(2) Conforming amendments.--
(A) Section 2107 is amended by striking subsection (d), by
redesignating subsection (e) as subsection (d), and by
inserting after subsection (d) (as so redesignated) the
following new subsection:
``(e) Cross Reference.--
``For comparable treatment of long-term lawful permanent residents
who ceased to be taxed as residents, see section 877(e).''
(B) Paragraph (3) of section 2501(a) (as amended by
subsection (e)) is amended by adding at the end the following
new subparagraph:
``(E) Cross reference.--
``For comparable treatment of long-term lawful permanent residents
who ceased to be taxed as residents, see section 877(e).''
(g) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to--
(A) individuals losing United States citizenship (within
the meaning of section 877 of the Internal Revenue Code of
1986) on or after February 6, 1995, and
(B) long-term residents of the United States with respect
to whom an event described in subparagraph (A) or (B) of
section 877(e)(1) of such Code occurs on or after February 6,
1995.
(2) Special rule.--
(A) In general.--In the case of an individual who performed
an act of expatriation specified in paragraph (1), (2), (3),
or (4) of section 349(a) of the Immigration and Nationality
Act (8 U.S.C. 1481(a)(1)-(4)) before February 6, 1995, but
who did not, on or before such date, furnish to the United
States Department of State a signed statement of voluntary
relinquishment of United States nationality confirming the
performance of such act, the amendments made by this section
and section 11349 shall apply to such individual except
that--
(i) the 10-year period described in section 877(a) of such
Code shall not expire before the end of the 10-year period
beginning on the date such statement is so furnished, and
(ii) the 1-year period referred to in section 877(c) of
such Code, as amended by this section, shall not expire
before the date which is 1 year after the date of the
enactment of this Act.
(B) Exception.--Subparagraph (A) shall not apply if the
individual establishes to the satisfaction of the Secretary
of the Treasury that such loss of United States citizenship
occurred before February 6, 1994.
SEC. 422. INFORMATION ON INDIVIDUALS LOSING UNITED STATES
CITIZENSHIP.
(a) In General.--Subpart A of part III of subchapter A of
chapter 61 is amended by inserting after section 6039E the
following new section:
``SEC. 6039F. INFORMATION ON INDIVIDUALS LOSING UNITED STATES
CITIZENSHIP.
``(a) In General.--Notwithstanding any other provision of
law, any individual who loses United States citizenship
(within the meaning of section 877(a)) shall provide a
statement which includes the information described in
subsection (b). Such statement shall be--
``(1) provided not later than the earliest date of any act
referred to in subsection (c), and
``(2) provided to the person or court referred to in
subsection (c) with respect to such act.
``(b) Information To Be Provided.--Information required
under subsection (a) shall include--
``(1) the taxpayer's TIN,
``(2) the mailing address of such individual's principal
foreign residence,
``(3) the foreign country in which such individual is
residing,
``(4) the foreign country of which such individual is a
citizen,
``(5) in the case of an individual having a net worth of at
least the dollar amount applicable under section
877(a)(2)(B), information detailing the assets and
liabilities of such individual, and
``(6) such other information as the Secretary may
prescribe.
``(c) Acts Described.--For purposes of this section, the
acts referred to in this subsection are--
``(1) the individual's renunciation of his United States
nationality before a diplomatic or consular officer of the
United States pursuant to paragraph (5) of section 349(a) of
the Immigration and Nationality Act (8 U.S.C. 1481(a)(5)),
``(2) the individual's furnishing to the United States
Department of State a signed statement of voluntary
relinquishment of United States nationality confirming the
performance of an act of expatriation specified in paragraph
(1), (2), (3), or (4) of section 349(a) of the Immigration
and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
``(3) the issuance by the United States Department of State
of a certificate of loss of nationality to the individual, or
``(4) the cancellation by a court of the United States of a
naturalized citizen's certificate of naturalization.
``(d) Penalty.--Any individual failing to provide a
statement required under subsection (a) shall be subject to a
penalty for each year (of the 10-year period beginning on the
date of loss of United States citizenship) during any portion
of which such failure continues in an amount equal to the
greater of--
``(1) 5 percent of the tax required to be paid under
section 877 for the taxable year ending during such year, or
``(2) $1,000,
unless it is shown that such failure is due to reasonable
cause and not to willful neglect.
``(e) Information To Be Provided to Secretary.--
Notwithstanding any other provision of law--
``(1) any Federal agency or court which collects (or is
required to collect) the statement under subsection (a) shall
provide to the Secretary--
``(A) a copy of any such statement, and
``(B) the name (and any other identifying information) of
any individual refusing to comply with the provisions of
subsection (a),
``(2) the Secretary of State shall provide to the Secretary
a copy of each certificate as to the loss of American
nationality under section 358 of the Immigration and
Nationality Act which is approved by the Secretary of State,
and
``(3) the Federal agency primarily responsible for
administering the immigration laws shall provide to the
Secretary the name of each lawful permanent resident of the
United States (within the meaning of section 7701(b)(6))
whose status as such has been revoked or has been
administratively or judicially determined to have been
abandoned.
Notwithstanding any other provision of law, not later than 30
days after the close of each calendar quarter, the Secretary
shall publish in the Federal Register the name of each
individual losing United States citizenship (within the
meaning of section 877(a)) with respect to whom the Secretary
receives information under the preceding sentence during such
quarter.
``(f) Reporting by Long-Term Lawful Permanent Residents Who
Cease To Be Taxed as Residents.--In lieu of applying the last
sentence of subsection (a), any individual who is required to
provide a statement under this section by reason of section
877(e)(1) shall provide such statement with the return of tax
imposed by chapter 1 for the taxable year during which the
event described in such section occurs.
``(g) Exemption.--The Secretary may by regulations exempt
any class of individuals from the requirements of this
section if he determines that applying this section to such
individuals is not necessary to carry out the purposes of
this section.''
(b) Clerical Amendment.--The table of sections for such
subpart A is amended by inserting after the item relating to
section 6039E the following new item:
``Sec. 6039F. Information on individuals losing United States
citizenship.''
(c) Effective Date.--The amendments made by this section
shall apply to--
(1) individuals losing United States citizenship (within
the meaning of section 877 of the Internal Revenue Code of
1986) on or after February 6, 1995, and
(2) long-term residents of the United States with respect
to whom an event described in subparagraph (A) or (B) of
section 877(e)(1) of such Code occurs on or after such date.
In no event shall any statement required by such amendments
be due before the 90th day after the date of the enactment of
this Act.
SEC. 423. REPORT ON TAX COMPLIANCE BY UNITED STATES CITIZENS
AND RESIDENTS LIVING ABROAD.
Not later than 90 days after the date of the enactment of
this Act, the Secretary of the Treasury shall prepare and
submit to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate a
report--
(1) describing the compliance with subtitle A of the
Internal Revenue Code of 1986 by citizens and lawful
permanent residents of the United States (within the meaning
of section 7701(b)(6) of such Code) residing outside the
United States, and
(2) recommending measures to improve such compliance
(including improved coordination between executive branch
agencies).
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Texas [Mr. Archer], the gentleman from California [Mr. Stark], the
gentleman from Virginia [Mr. Bliley], and the gentleman from Michigan
[Mr. Dingell] will each be recognized for 22\1/2\ minutes; and the
gentleman from Pennsylvania [Mr. Goodling] and the gentleman from
Missouri [Mr. Clay] will each be recognized for 15 minutes.
[[Page H3084]]
The Chair recognizes the gentleman from Texas [Mr. Archer].
general leave
Mr. ARCHER. Mr. Speaker, I ask unanimous consent that all Members
have 5 legislative days in which to revise and extend their remarks and
include extraneous materials on the bill, H.R. 3103.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Texas?
There was no objection.
Mr. ARCHER. Mr. Speaker, I yield such time as he may consume to the
gentleman from Ohio [Mr. Hobson].
(Mr. HOBSON asked and was given permission to revise and extend his
remarks.)
Mr. HOBSON. Mr. Speaker, I rise in support of the bill.
Mr. Speaker, I want to thank the members and staff of the Commerce
and Ways and Means Committees for including administrative
simplification in the Health Coverage Availability and Affordability
Act. This provision is based on legislation that Tom Sawyer, Nancy
Johnson, and I introduced earlier in this Congress.
We have the most advanced health care services in the world due
mainly to our success in using technology. We can use this same
technology to improve the way our health care system is run. Our
provision removes the barriers that have prevented modern technology
from replacing outdated, paper-based health information systems.
Today, the lack of uniform standards for financial and administrative
health information is a barrier to modernizing health information
systems. Most health plans already transmit data electronically, but
the data is nonstandard or incomplete, and cannot be used to coordinate
benefits or effectively track fraud and abuse.
Uniform standards for health information would enable the private
sector to reduce paperwork (which adds nearly 10 cents to every health
care dollar), expose fraud (which is difficult to do in a confusing,
disjointed paperwork system), and provide consumers with the
information they need to compare health plans and services.
The Health Care Financing Administration [HCFA] is implementing a
Medicare transaction system for handling standardized Medicare claims.
Under current law, HCFA has the authority to adopt Government standards
for health information, and to mandate the use of those standards by
the private sector.
Our administrative simplification provision, as it was included in
this bill, limits HCFA to adopting standards that already have been
developed by a voluntary, consensus process that has included input
from the private and public sectors. It establishes a process for the
standardization of health data that builds on progress in the private
sector.
Our provision was developed over several years in a cooperative
effort between the private and public sectors. Political support for
our provision is bipartisan and bicameral--it was introduced as H.R.
1766 by Representatives Dave Hobson, Tom Sawyer, and Nancy Johnson, and
as S. 872 by Senators Kit Bond and Joseph Lieberman.
Also, as the original author of this provision, I want to clarify
that our intention is that health benefits under employee welfare
benefit plans would not include hospital or fixed indemnity, specified
disease, accident, disability income, dental, and vision benefits.
These provisions and the overall bill respond to the need for health
care reform in a responsible way. I encourage Members to vote for the
bill.
Mr. ARCHER. Mr. Speaker, I yield 30 seconds to the gentleman from
Ohio [Mr. Kasich], the chairman of the Committee on the Budget.
Mr. KASICH. Mr. Speaker, I want to congratulate all of the chairmen
on what we are producing here today, which is a fantastic improvement
in the lives for all Americans who have been held hostage from changing
jobs because of a lack of portability, which we guarantee in this bill,
and to give them security in knowing that preexisting conditions that
have denied them health insurance or have denied them the ability to be
secure in their homes are being removed with this bill.
This is a great day for the American people, a great day for the
American family, and we did it without socializing the system. I thank
my colleagues for producing this bill.
Mr. ARCHER. Mr. Speaker, I yield such time as he may consume to the
gentleman from Georgia [Mr. Collins].
(Mr. COLLINS of Georgia asked and was given permission to revise and
extend his remarks.)
Mr. COLLINS of Georgia. Mr. Speaker, I rise in full support of this
legislation.
Mr. Speaker, the health care reform legislation now under
consideration by the Republican-controlled House of Representatives
draws a dramatic contrast against the health care reform legislation
considered by Congress in 1994 under a Democrat majority.
The legislation of 1994, crafted by President Clinton and introduced
by the Democrat leader, Mr. Richard Gephardt, would have created a new
bureaucratic government agency with authority over most of the health
care choices each private citizen makes.
This year, however, under a Republican-controlled House, we are
considering health care reform legislation that avoids the explosion of
government bureaucracy. This legislation is a direct response to the
views and concerns expressed by American citizens during the 1994
health care debate when we defeated the Clinton socialistic health care
proposal.
This year's reform legislation will provide greater access to health
care without increasing government bureaucracy. It will eliminate
permanent preexisting condition limitations; ensure greater insurance
portability so those who change jobs will have access to coverage;
offer greater tax fairness for individuals; provide tax deductible
contributions to medical savings accounts targeting those middle-income
individuals and families without health care; streamline administrative
costs and procedures; combat fraud and abuse in the health care
industry; invoke medical malpractice reform that discourages
unnecessary litigation currently driving up the cost of health care;
and above all preserve the quality and freedom of choice that exists in
our current market-based system.
One of the most important and unique components of this health care
reform legislation is the creation of medical savings accounts [MSA's].
This provision will allow individuals and families to purchase a high
deductible health plan and make tax deductible contributions to MSA's
for the purpose of saving money for health care expenditures. In
addition, contributions by employers on behalf of their employees will
be excludable from taxable income. This proposal will finally provide
an ideal way for young individuals and young families just starting
out, to obtain affordable, quality health care coverage.
Estimates indicate that at least 1 million people will open medical
savings accounts. Approximately 650,000 people who earn between $40,000
and $75,000 per year will choose MSA's; while 120,000 people who earn
between $30,000 and $40,000 per year will join. The vast majority of
those benefiting from the MSA will be middle-income families who, in
today's market, face the most difficult challenge in obtaining
coverage.
MSA's create more fairness for small employers and their employees by
eliminating barriers to coverage. As a small business owner, I know
first hand what kind of limitations small businesses face when trying
to establish health care coverage for their employees. Often, providing
health care becomes too complicated or too expensive for these
employers.
MSA's will be an ideal way for small businesses to assist employees
in obtaining health care coverage. MSA's may very well mean the
difference between those employees who have no insurance and those that
have access to affordable health care.
MSA's will provide the maximum degree of portability for employees.
When an employee leaves, he or she will take the MSA to the next job.
MSA's will ultimately reduce the long-term care expenditures of
medicare and Medicaid by promoting the purchase of long-term care
insurance. The provision will allow individuals to make a tax-free
withdrawal for the purposes of paying long-term care insurance
premiums. Long-term is among the largest expenditures in entitlement
health care programs. Encouraging citizens to purchase coverage in the
private markets means reduced costs to the taxpayers.
MSA's will provide the maximum amount of choice for health care
consumers. Individuals and families will have the maximum amount of
control over the choices they make in their health care. Maximizing the
ability of the consumer to choose means increased competition and cost
savings for that individual or family purchasing health coverage.
MSA's have a long history of bipartisan support. In 1994, the
Democrat party leader, Representative Gephardt, endorsed MSA's. In
1994, Senator Paul Simon introduced legislation to establish MSA's. In
addition, States
[[Page H3085]]
have passed State-level legislation that exempt MSA deposits from
State-level taxes.
Mr. Speaker, the MSA provision is one of several very important
health care reform components of the Health Coverage Availability and
Affordability Act. The health care debate began during the last
Congress (103d). Today, in the 104th Congress we are fulfilling the
commitment to enact common sense health care reform that will provide
greater portability and accessibility of health care for all Americans.
Mr. ARCHER. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, today the House considers the Health Coverage
Availability and Affordability Act of 1996. This bill, Mr. Speaker, is
truly historic. After years of talking about health reform, we are now,
with the new Republican majority in this House, going to enact health
reform. Most importantly, H.R. 3103 reflects what Americans want in
health reform because it addresses the two issues that concern our
citizens the most, availability and affordability of health insurance
coverage and health care.
A key to increasing the availability of health insurance is insuring
portability of coverage if a breadwinner changes jobs. No one should
ever say no to a new job simply because he or she fears that the new
health insurance company will say no to them. This bill tells workers
that they will not have to worry about preexisting conditions limiting
their ability to get coverage if they change jobs.
Both to increase the availability and affordability of health care
coverage, we establish medical savings accounts. Deductions for MSA's
with health insurance protection ought to be an option available to
working Americans. MSA's offer Americans the ultimate in portability
because, with an MSA, you take the money with you and retain the
savings to spend on your health care needs regardless of a change in
your employment or life circumstances.
A new study by the Joint Committee on Taxation demonstrates that the
M in MSA stands for middle income. The joint committee estimates that
650,000 out of the 1 million people who will be covered by MSA's earn
between $40,000 and $75,000 a year while another 120,000 people who
will choose MSA's earn below $40,000 per year.
The bill further insures affordability of coverage by raising the
deductibility of health insurance for 3.2 million self-employed
Americans. At the beginning of this Congress the deduction had expired.
Congress increased it to 30 percent last year, and now we increase it
to 50 percent.
H.R. 3103 also provides important incentives for Americans to protect
their families through the purchase of long-term care insurance, and it
allows for accelerated death benefits for those with terminal illnesses
such as cancer or HIV. Both of these important measures were part of
our Contract With America.
Our bill makes health insurance and medical care more affordable by
attacking a key health care cost driver that runs up costs for
everyone, and that is fraud and abuse. It is tough on health care
crooks by creating new criminal penalties for health care fraud,
expanding other penalties and providing the necessary funds for Federal
investigator to route out health care crime.
Another cost driver this bill addresses is the current quagmire of
paperwork. The bill will make the process cheaper and easier by
promoting a common claims form and electronic transmission of this
information.
Finally H.R. 3103 undermines one of the major cost drivers, and that
is medical malpractice. It gives real reform and will promote health
insurance pooling for small employers.
The bill was truly a group effort by four of the House committees
with health jurisdiction. I cannot stress enough the leadership
provided in developing this joint initiative by the gentleman from
Illinois [Mr. Hastert] and all the chairmen of the committees involved
and their subcommittee. I am particularly grateful for the contribution
of the bill's chief cosponsor, the Committee on Ways and Means'
Subcommittee on Health chairman, the gentleman from California [Mr.
Thomas].
Availability and affordability, two issues important to all
Americans; both are the prescription for real achievable private sector
health care reform this year. I am confident my colleagues will join me
in supporting the Health Coverage Availability and Affordability act of
1996.
Mr. Speaker, I reserve the balance of my time.
Mr. STARK. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, this bill is called the Health Coverage Availability and
Affordability Act, but it ain't. Because of the medical savings
accounts and other provisions in here, the Republicans have managed
through some legislative legerdemain to turn a silk purse into a sow's
ear.
The Democratic substitute will, in fact, bring back the Roukema-
Kassebaum-Kennedy bill with some technical corrections to make sure
that it limits preexisting conditions, and would by far be a better
bill, a truly bipartisan bill, one that will pass in the Senate and one
that would in fact be signed by the President.
Now, if the Republican intention is to fill up prime time with a bill
that they know will pass, it is to me a very sick trick to play on the
seniors.
First of all, this bill purports to increase the deduction for self-
employed, but really it only does it for 50 percent, and that is in
2003. The Democratic alternative does it at 8 percent, and it does it
right up front and pays for it. It is not flimflamming the American
public into thinking they are getting something that they are not.
It is also a bad bill because the insurance reforms are weaker. It
limits individuals to just one policy and guarantees issue only to
small firms of less than 50 people. The rest are out on the street. It
spends over $2.5 billion of Medicare money on MSA tax breaks. We should
save easy anti-fraud money for Medicare trust fund relief. Not only are
the MSA's a bad policy, they are a payoff to the Golden Rule Insurance
Company who has contributed almost $1.5 million to Speaker Gingrich's
political operations.
If that is not bad enough policy, I do not know what is.
This bill actually increases costs in traditional insurance pools.
The MSA's, the mean ones, will drive up the rates for most people.
The GOP has mislabeled their bill, I suspect intentionally. The GOP
anti-fraud provisions contain 3 pro-fraud loopholes: advisory opinions,
harder proof for civil monetary penalties, and they are allowing
kickbacks in managed care plans. The CBO, the Republican CBO, says
their plans will cost the system a billion dollars.
There is also a payoff to American Family Life. It takes out the
Medigap anti-duplication laws, will return us to the days of ripping
off seniors by unscrupulous insurance salesmen.
{time} 1830
The payoff to the AMA is in the malpractice caps that reward doctors.
I would remind Members that it was released today that there are over
13,000 doctors convicted of sex crimes and other crimes who are still
practicing in this country, who will go untouched if the Republicans
remove the malpractice caps.
Mr. Speaker, the GOP expatriate language is too weak. We should keep
it simple. We should support the Dingell-Spratt-Bentsen substitute, and
give the people true portability and true reform.
Mr. Speaker, I reserve the balance of my time.
Mr. ARCHER. Mr. Speaker, I yield 2 minutes to the gentlewoman from
Connecticut [Mrs. Johnson], the most respected chairman of the
Subcommittee on Oversight of the Committee on Ways and Means.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I thank the gentleman, the
chairman of the committee, for yielding time to me.
Mr. Speaker, this is a great day or night for Americans. Health
security is important to every man, woman, and child. Tonight we take a
giant step toward guaranteeing coverage, in spite of preexisting
conditions, protecting millions of Americans and their families.
I introduced the first insurance reform bill, and in fact, with our
former colleague Rod Chandler, introduced the first legislation to
enable small businesses to group together to provide
[[Page H3086]]
lower cost insurance for businesses. Tonight we bring a lot of that
thinking, 5 years old, to fruition, and for the first time, we are
going to put on the President's desk a reform bill that will really
directly affect the lives of our constituents and create for them the
opportunity to move from job to job, developing their careers, without
fear of losing health coverage for their spouse and children.
Twenty-five million workers and dependents are affected by changes in
employment every single year; 3.6 million will face job lock. That is
3.6 million workers, but all of their dependents as well. They are the
people whose fears will be allayed by tonight's legislation. One
hundred and thirty-eight million workers and their dependents are
covered by employer plans, and any one of them at any time could need
what we do here tonight. This is, indeed, a giant step toward health
security for all working Americans.
Underneath that bill, included in it, is the accomplishment of other
goals that we have long aspired to. For 5 years we have tried to spread
long-term care insurance to protect seniors against the cost of nursing
home care, without forcing them to spend down to poverty. This is a
remarkable piece of legislation. It is long overdue. It represents the
culmination of solid study over 5 years. Mr. Speaker, I urge the
Members' support.
Mr. STARK. Mr. Speaker, I yield 3 minutes to the distinguished
gentlewoman from Connecticut [Mrs. Kennelly].
Mrs. KENNELLY. Mr. Speaker, this could have been a great night in
this Chamber. In fact, we came very close to having this a great night
in this Chamber.
Mr. Speaker, Senator Kassebaum and Senator Kennedy introduced a piece
of legislation, very simple, very precise, very direct. What that
legislation said was, ``If you lose your job or if you change your job
and you have a preexisting health condition, you will not lose your
health insurance.''
What happened? Senator Kassebaum daily appealed to her colleagues to
keep the bill direct and simple. This very afternoon, Senator Bradley
stood next to Senator Kassebaum. He was very much interested, as many
of us have been, that if you have a baby you should be allowed to stay
in the hospital for 48 hours. What did he say? He said, ``I will not
put forth my amendment because it might jeopardize Senator Kassebaum's
bill.''
Mr. Speaker, did that happen over in this side of the House? It
certainly did not. The bill that we have before us tonight has 301
additional pages of insurance changes. As I listened to people talk,
and we have talked about this bill all day, I hear some on the majority
side say that the additions to the bill have a very definite policy
objective; namely, to make health insurance more affordable. How I wish
that was true.
However, two of the most controversial riders, tax breaks for medical
savings accounts, and an exemption from State insurance laws for
certain health plans, could actually make health insurance higher for
many, many people, the cost of health insurance. Both of these
provisions would promote risk skimming, which puts the healthiest
Americans in a separate health care plan. For anyone who knows about
insurance, you know when you do not have a decent risk pool, the risk
pool does not work.
Mr. Speaker, we have an opportunity tonight to move forward in a
bipartisan legislative manner. Senator Kassebaum and Kennedy's bill was
put forth here by the gentlewoman from Connecticut, Mrs. Roukema, and
many Members of this body. We could take this bill, this simple,
precise bill, and have portability for health insurance. That is all we
have to do. We do not have to do everything that would just complicate
matters. We can help millions of Americans by doing a simple, good
bill.
Mr. ARCHER. Mr. Speaker, I yield 1 minute to the gentleman from New
York [Mr Houghton], a respected member of the Committee on Ways and
Means.
(Mr. HOUGHTON asked and was given permission to revise and extend his
remarks.)
Mr. HOUGHTON. Mr. Speaker, I would like to talk on the portability
issue. I think it is an important one. I know that a lot of people have
talked on it. It will not be the last discussion about this. However, I
think it is important. I know a little bit about it, and it is really
at the heart of this whole bill.
Mr. Speaker, basically what it does is to free up somebody to work
wherever he or she wants. That is not a bad concept. You work for
company A and you want to move to company B, but company B does not
have any health insurance program. You get a job at company C, but at a
far less salary. You would rather take the job at company B. You cannot
do it. You cannot help your family.
Under this condition, you must be given an opportunity to have an
insurance policy yourself or through the company, irrespective of where
you are working or irrespective of the preexisting conditions. It makes
a lot of sense, Mr. Speaker. I fully endorse this.
Mr. STARK. Mr. Speaker, I yield 3 minutes to the gentleman from
Maryland [Mr. Cardin].
Mr. CARDIN. Mr. Speaker, I thank my friend, the gentleman from
California, for yielding me this time.
Mr. Speaker, let me say to my good friend, the chairman of the
Committee on Ways and Means, this bill has certainly changed since it
left the Committee on Ways and Means. That is unfortunate, because I
know that the chairman agrees with me that we are trying to return
power to our States. This bill moves in exactly the opposite direction.
By preempting our States in health insurance, which has been a
traditional role for State governments to regulate, this bill moves in
the wrong direction. It preempts our States without providing adequate
Federal protection.
Mr. Speaker, let me just give one example of the impact that this
bill will have, if it becomes law, on the State of Maryland. We enacted
small market reform in our State. It covers employers that have
employees, between 2 and 50 employees. It also covers the association
plans, and now also covers our self-employed. The plan is working.
Mr. Speaker, let me just read from a letter that I received from our
State officials:
The reforms went into effect July 1, 1994. . . . The small
business community (the Maryland Chamber, Retail Merchants
Association, individual businesses) and insurance agents
report the reforms have stabilized the market, increased
price competition, and increased choice of delivery systems.
The reforms proved so successful to the general assembly that they
expanded it to include the self-employed.
Yet, the provisions that are included in this bill would seriously
jeopardize our ability to continue that plan in Maryland, for, you see,
companies would be able to come under Federal regulation and void the
State plan, and therefore, defeat the purpose of the pooling
arrangements in our State. That is unfortunate and it is wrong.
Let me give a second example. My State has passed the emergency room
care legislation, that uses the ``reasonable lay person'' definition on
when that person should be reimbursed for care in an emergency room. We
are not waiting for the Federal Government to act on it. The Federal
Government has not acted on it. Do not penalize my State by allowing
more and more insurance plans to be able to get out from under State
regulation and be able to avoid their responsibility to cover emergency
room care. That is what this bill will allow to happen. More and more
companies will be able to avoid State regulation. That is wrong. It
should not happen. We should allow the States to respond.
Let me quote, if I might, from the National Association of Insurance
Commissioners:
Unfortunately, we continue to have grave concerns that
subtitle C of title I of H.R. 3160 would significantly erode
existing State level insurance reforms. The net effect of the
final provisions relating to MEWA's is extremely damaging to
States authority to govern their own insurance market.
Mr. Speaker, I do not understand why we are moving in the wrong
direction by taking more power, rather than giving our States the
ability to control health insurance. The National Association of State
legislators opposed those provisions in the bill, and for good reason.
I regret that the only option we have is to support the Democratic
substitute if we want to deal with preexisting conditions.
[[Page H3087]]
Mr. ARCHER. Mr. Speaker, I yield 1 minute to the gentleman from
California [Mr. Herger], another respected member of the Committee on
Ways and Means.
Mr. HERGER. Mr. Speaker, I thank the gentleman for yielding time to
me.
Mr. Speaker, in 1996, an estimated 3.1 million self-employed
Americans will be unfairly denied adequate tax relief for their health
insurance costs. Individuals that receive health coverage through their
employers do no pay taxes on those benefits while self-employed
individuals are only allowed to deduct 30 percent of what they spend on
health care insurance.
Mr. Speaker, this mere 30 percent deduction inadequate,
discriminatory, and discourages the self-employed from obtaining proper
medical coverage and care. While this bill doesn't completely end this
inequitable tax treatment of the self-employed, it moves us closer to
that goal by increasing the health care deduction for the self-employed
to 50 percent.
Mr. Speaker, I urge my colleagues to support the self-employed in
this country by adopting this much-needed legislation.
Mr. STARK. Mr. Speaker, I yield 4 minutes to the gentleman from
Michigan [Mr. Levin].
(Mr. LEVIN asked and was given permission to revise and extend his
remarks.)
Mr. LEVIN. Mr. Speaker, I support Kennedy-Kassebaum. This bill before
us now is not Kennedy-Kassebaum-plus, it is Kennedy-Kassebaum-minus. In
a way, this bill is the story of this session so far. When the
Republicans have a chance to do something good, they ruin it by
overreaching. They simply cannot resist excess, and they cannot resist
turning a bipartisan bill, which Kennedy-Kassebaum is, into a partisan
one.
Mr. Speaker, why is this Kennedy-Kassebaum-minus? I think it is very
clear, when someone who is covered by group insurance leaves and must
have individual insurance, there is going to be less protection for
affordability under the bill we have here than Kennedy-Kassebaum,
period. It is likely that the individual will pay more.
Second, they have included MSA's, which are likely to draw the
healthiest away and hurt everybody else in terms of premiums. Let me
just say one thing about MSA's. They are really a potential tax shelter
for wealthy people, because if you put money into them, you do not pay
Social Security taxes. You indefinitely defer income taxes. And if you
keep them until death, you avoid estate taxes. IRA's are structured to
avoid that kind of sheltering. What these MSA's, as the Republicans
here in the House, once again going to an extreme, what they have done
is to promote tax sheltering for very wealthy families.
One last point, and we have made it a number of times, on fraud and
abuse. Why make it tougher for the Government to impose civil and
monetary penalties in the case of fraud and abuse? Why do that? Why do
you require that the proof be recklessness instead of negligence, when
the Government relies on the providers, the tens of thousands, to
submit accurate bills? Mr. Speaker, I do not understand what pressure
group you are reacting to, but it is bad for the public at large.
So for all of these reasons, I urge that we reject this bill.
Unfortunately, once again, they have gone much too far. Nothing exceeds
like excess, as has been said many years ago. I think we have no
alternative but then to vote for the substitute. Let us do Kennedy-
Kassebaum, taking care of the self-employed. Let us not go backward.
Let us not turn this into a political issue. This reform is long
overdue.
Mr. ARCHER. Mr. Speaker, I yield 1 minute to the gentleman from
Louisiana [Mr. McCrery], a respected member of the Committee on Ways
and Means.
(Mr. McCRERY asked and was given permission to revise and extend his
remarks.)
Mr. McCRERY. Mr. Speaker, medical savings accounts will provide
hardworking Americans the freedom to personally manage and even save a
portion of their health care dollars. By granting consumers complete
control, MSA's allow working men and women and their families to tailor
health care spending to their individual needs. This element of
personal responsibility will lead to more cost-conscious and cost-
efficient spending choices.
MSA's are easily portable from one job to another and provide total
freedom when choosing a family's health care provider. In the case of a
serious illness or injury, MSA beneficiaries will continue to have
comprehensive medical coverage through a high-deductible health plan
which meets those costs. Furthermore, this bill helps individuals plan
for their future long-term care needs by allowing MSA funds to be used
to purchase long-term care insurance or services.
In short, Mr. Speaker, MSA's provide hard-working American families
the ultimate in health insurance: choice, flexibility, and portability.
Mr. STARK. Mr. Speaker, I yield 4 minutes to the gentleman from
Washington [Mr. McDermott].
(Mr. McDERMOTT asked and was given permission to revise and extend
his remarks.)
Mr. McDERMOTT. Mr. Speaker, I wish that we were out here voting on
the Kennedy-Kassebaum-Roukema bill, but we are not. HIAA, the Health
Insurance Association of America, did not want that bill to come to the
floor, and so we have this bill we have before us. This bill was
written by, or at least for, the insurance industry.
The first thing in it is data collection. I mentioned that under the
rule, they collect data, they have electronic clearinghouses that can
shift that information. There is no privacy protection in this bill
whatsoever. This is the first time the Federal Government has gotten
into collecting health care data, and there are no privacy protections.
But worst about this bill is that it purports to be about
portability. Portability means you have insurance, you lose your job,
what happens to you? Well, how can you carry your insurance until you
get your next job, or what do you do to cover your family? Now, this
bill says that, if you were in a company that had 50 people or you had
a group insurance and you go out there and you start looking for
insurance, the insurance company or the State can decide what they are
going to offer you.
Mr. Speaker, we are not going to get the same policy we have now. No
one listening to this should think that portability means what I have
now I will have tomorrow, because it simply is not so. We give the
insurance companies the ability to say, we will give you the average
actuarial value policy. What does that mean? It has never been done in
the United States. This is a pig in a poke. Anybody who thinks that the
insurance companies when they do not have to give you insurance are
going to give you the same thing, they are going to jack the price. And
you are going to get less benefits, particularly if you have any kind
of medical problem.
They are going to medically underwrite you. If you have cancer or
heart attack or anything, diabetes, whatever, you suddenly are going to
find out you do not have the same benefits you had under your old group
policy.
Now, let us say we have a job and we lose it and move to another
company. We may get into the next company, but the company that has
more than 50 employees has no guarantee that they can go out and buy a
policy. There is no guarantee of issue to an employer who has more than
50 people.
Mr. Speaker, all of these proposals fit the insurance company's
ability to cherry pick and avoid the sick people and make their choices
and find ways to make money. Anything that is in this bill could be
done now by the insurance companies. The Republicans have put out there
essentially what I say is a guarantee that we can buy a Cadillac in
this country. Now, we can pass a bill and say everybody can buy a
Cadillac. We guarantee that Cadillac dealerships must issue us the keys
to a Cadillac.
Mr. Speaker, why do people not have Cadillacs? They have not got the
money to buy Cadillacs. This bill is a fraud because it says, we get
portability. But just like a bill that says we get a Cadillac, we would
not get one.
Now, if that were not enough, if it were not just the issue of
portability, the opportunities for fraud by insurance companies are
increased in this bill. We passed a law since I came to Congress that
said that insurance companies could not sell a policy to old
[[Page H3088]]
people for things that are covered by Medicare. We could not duplicate
without saying to the old folks: This policy covers what is under your
Medicare. Now, any old folk would say to that: Well, that is stupid.
Why should I buy that policy?
So they quit selling those policies. This bill says that an insurance
company can go out selling something all over the place that covers
what is covered by Medicare. It is simply an opportunity to legalize
their fraud.
This is a bad bill. Vote for Dingell, Spratt, and Bentsen.
Mr. ARCHER. Mr. Speaker, I yield 1 minute to the gentleman from
Minnesota [Mr. Ramstad].
Mr. RAMSTAD. I thank the gentleman for yielding me the time.
Mr. Speaker, last year alone, $31 billion was lost to Medicare fraud
and abuse, Medicare and Medicaid fraud and abuse. Everyone here talks
about doing something about waste, fraud and abuse in our health care
system. This bill finally does something to eliminate these parasites
on our health care system.
Mr. Speaker, our bill establishes the Medicare integrity program,
which increases the ability of Medicare to prevent payments for
fraudulent, abusive or erroneous claims.
We, for the first time, require the Health Care Finance Agency to use
state-of-the-art computer software, the same type used by private
insurers, and to hire private sector companies with proven track
records to prevent fraud and abuse. This will result, according to the
CBO, in a net savings of almost $2 billion over the next 6 years.
The other provisions that fight health care fraud and abuse are
listed on this chart, Mr. Speaker. I urge approval of this bill to get
at waste, fraud, and abuse.
Mr. STARK. Mr. Speaker, I yield myself such time as I may consume.
It is interesting that the previous speaker spoke about parasites I
think here to enlighten us about parasites. is the gentleman from
Virginia [Mr. Moran], who will tell us about the Golden Rule Insurance
Company, which gave Mr. Gingrich's political operations over $1.5
million, which is why we are discussing these MSA's.
Mr. Speaker, I yield 3 minutes to the gentleman from Virginia [Mr.
Moran].
Mr. MORAN. Mr. Speaker, as the gentleman from California [Mr. Stark]
has explained, I think we know why MSA's are included in this
legislation and why the Republican Party wants so much to make them
into law. The principal beneficiary of this legislation would be Golden
Rule Insurance Co.
All we have to do is to track the campaign contributions to the
Speaker and GOPAC and the Republican committee.
Let me explain why the Democrats are not supporting Golden Rule
Insurance Co. and their medical savings accounts. In the 1992 annual
statement, only 54 cents out of every premium dollar was actually going
into medical costs. Imagine. Half of the revenue went into shareholder
profits and the like.
Let me explain why the State of Vermont kicked these medical savings
account of Golden Rule Insurance Co. out of the State. It is because
half of the people in Vermont, 5,000 people have these policies, half
of them found that in the tiny writing at the bottom that Golden Rule
had excluded whole body parts from coverage. They excluded their arms,
their breasts, their backs, their hips, their hands, their legs, their
circulatory system. Imagine excluding these things from coverage.
Let me tell my colleagues why the State of Kentucky had so much
problem with Golden Rule Insurance Co. Golden Rule Insurance Co. does
not want to cover newborns. They will not cover them until they prove
that the newborn is healthy. Kentucky passed a law that says you have
to cover newborns for the first 30 days of life. Golden Rule sued the
State because they do not want to cover newborns for the first 30 days
of life.
Mr. Speaker, let me tell my colleagues about some other folks who had
specific experience. Carol Schreul of Aurora, IL, Golden Rule rejected
her insurance for a brain tumor, $39,000. They would not cover it. They
said that she listed her weight as 190 pounds but that it was actually
210 pounds.
Let me tell my colleagues about another Golden Rule policyholder who
suffered a stroke, $20,000 in bills. James Anderle was a Milwaukee
barber. It turns out that they said he had a preexisting condition,
that he had the flu, and that this was a preexisting condition. And so
they did not want to cover it.
Claims for $49,000 were denied Harry Baglayan, a self-employed
repairman. He underwent bypass surgery. They said that he did not tell
them that he had nausea 4 months earlier, and that was a preexisting
condition.
I will just quote from the Wall Street Journal, which, it seems to
me, probably has a little bit of credibility around these parts. The
Wall Street Journal says that they are a sham, that in fact they are
most known for cherry picking. In fact, when a claim actually is
accepted, they wind up suing the beneficiary and the State. They have
piled up $1 billion in assets. It is a sham, Mr. Speaker. We should not
include this in our bill.
Mr. ARCHER. Mr. Speaker, I yield myself 15 seconds simply to say that
the previous speaker made a very interesting emotional presentation. It
just so happens that it has no relevancy to what we are talking about
today.
Mr. Speaker, I yield 1 minute to the gentleman from Texas [Mr. Sam
Johnson].
Mr. SAM JOHNSON of Texas. Mr. Speaker, medical savings accounts are
for middle-income America. There is a chart that proves it. Medical
savings accounts, therefore, must be part of any health care plan we
pass. They are an important option for both employers and employees.
They give enhanced portability, preserve consumer choice, allow
retirement savings and contain costs.
Medical savings accounts offer all Americans the opportunity to buy a
plan that best meets their individual needs.
Mr. Speaker, middle-income Americans are my constituents. They
repeatedly tell me that one of the most important things that they want
is the ability to choose their own doctor. Medical savings accounts do
that. They will allow people to achieve control over their own health
care dollars, make it more cost-conscious and bring down the total cost
of medical costs for everyone.
Medical savings accounts are good for America. Medical savings
accounts offer Americans a freedom they deserve.
Mr. STARK. Mr. Speaker, I reserve the balance of my time.
Mr. ARCHER. Mr. Speaker, I yield 1 minute to the gentleman from Ohio
[Mr. Portman].
Mr. PORTMAN. Mr. Speaker, I rise today in strong support of the bill
and I do so because I think it will provide greater security to
millions of working Americans by eliminating some significant obstacles
to health care.
I think this is precisely the kind of health care reform, Mr.
Speaker, that the American people have called for. It is targeted
reform. It is incremental reform. It makes commonsense improvements to
an imperfect system.
Let me give my colleagues an example. This bill helps level the
playing field between those who are self-employed and those who work
for corporations. The health insurance deduction for the self-employed
goes from 30 percent to 50 percent over a 7-year period. With this
single step, we are making health care more affordable for 3.2 million
Americans, many of those Americans who are now caught in the net,
Americans who are now uninsured. That means the mon and pop grocery
store down the street. That means that our favorite barber. That means
that our local mechanic. All of these people may be self-employed.
In my State of Ohio alone, this enhanced deduction will affect more
than 50,000 farm families. It makes sense. Corporations receive a
significant deduction, and it is only fair that the self-employed do,
too.
{time} 1900
Mr. ARCHER. Mr. Speaker, I yield 1 minute to the gentleman from
Nevada [Mr. Ensign], a respected member of the Committee on Ways and
Means.
(Mr. ENSIGN asked and was given permission to revise and extend his
remarks.)
Mr. ENSIGN. Mr. Speaker, in southern Nevada, with the fastest-growing
senior population in the country, I constantly hear from elderly
constituents
[[Page H3089]]
about the exorbitant costs of long-term care. People like our parents
and grandparents are paying about $40,000 a year for nursing home care.
If they do not have the money, Medicaid requires that they lose
virtually everything or legally hide everything before they can get
help with long-term care from the government.
Currently, there is no provision in the Tax Code that relates to
long-term care expenses. Most people incorrectly believe that private
insurance will pick up this tab when they need it. But this is simply
not the case for 98 percent of long-term care recipients. This bill
incorporates the Ensign amendment that treats long-term care expenses
as tax-deductible medical expenses. Some of my senior Democratic Ways
and Means Committee members have told me they have been trying to do
this for over 10 years. Best of all, it is fully paid by making
billionaires who renounce their U.S. citizenship for tax purposes pay
their fair share. This should have been done years ago, and certainly
we should all support this bill with this amendment.
Mr. ARCHER. Mr. Speaker, I yield 1 minute to the gentleman from
Nebraska [Mr. Christensen], a respected member of the Committee on Ways
and Means.
(Mr. CHRISTENSEN asked and was given permission to revise and extend
his remarks.)
Mr. CHRISTENSEN. Mr. Speaker, I rise today to speak in favor of a
provision that will help senior citizens in my home State of Nebraska,
and throughout the country.
What I am referring to are the provisions in this bill that
dramatically improve the way we treat long-term care, making long-term
care more affordable and accessible.
This bill puts long-term care on a level playing field with other
important forms of insurance and provides a much-needed incentive for
individuals to take personal responsibility for their long-term care
needs.
First, this legislation requires that long-term care insurance be
treated like accident and health insurance, meaning that it will
generally be excluded from an employee's gross income for tax purposes.
Second, thanks in large part to my colleague Mr. Ensign from Nevada,
this bill provides that many long-term care expenses will now be
deductible.
We as a nation must come together in a bipartisan fashion to put an
end to a long-term care system that pulls seniors into poverty and
forces taxpayers to step in to bear the burden.
This legislation does just that.
Once again we are doing what we said we would do by ensuring a bright
future for our senior citizens.
Mr. STARK. Mr. Speaker, I yield 2 minutes to the gentleman from New
York [Mr. Rangel].
(Mr. RANGEL asked and was given permission to revise and extend his
remarks.)
Mr. RANGEL. Mr. Speaker, I think the Republicans should be lauded for
attempting at least to pick up the pieces of what has to be a concern
to all Americans, and that is inadequate health care for most of our
citizens, especially those people who are working and do not have
access to insurance. They are not insured by the Federal Government,
because they make too much money, and, of course, they do not have
enough money to get their own insurance.
But why the Republicans would come in with an insurance plan that
allows tax exemptions for people who can afford just to put it in a
bank account and if they make certain that it is a high deductible,
that is that the only time that they can use it is for catastrophic
diseases, then it just seems to me that what we are doing is allowing
the insurance companies to cherry-pick and select those people who are
healthy and then those people who are not insured by that can come
right back and fall on the regular public system that is there.
What we do need is a comprehensive insurance program that really was
the one that was initiated before, and perhaps it was too much to
consume at one time, but we cannot forget that there are 40 million
people out there in the United States that have no insurance at all,
and these are the people that are the most vulnerable and these are the
people that cannot afford to have these type of savings accounts which
are there to protect those who already have.
I think that instead of just selecting those parts of the people that
they believe would give political support, that what we have to have in
this country is an insurance, a health insurance system where every
American, regardless of how much money they have or whether they do not
have any at all, can say in this great country that people will not die
just because they lack access to health care.
All over we see we are cutting back the public share. If we want to
do more in the private sector, let it be fairer.
Mr. ARCHER. Mr. Speaker, I yield myself 1 minute.
I think the debate, Mr. Speaker, has been very curious today. On the
one hand, the Democrats accuse us of overreaching, of having too
comprehensive a bill. This is from the same people that gave us the
unbelievably complex Government takeover of the entire health care
system in 1994. It is fascinating. And then they come and say, oh, we
are concerned about insurance companies taking a part of the money paid
on the premiums and not spending it on health care, but they want to
deny medical savings accounts where the individual spends his or her
own money without regard to a third-party payer.
There is an enormous inconsistency here, but in a sense it is
consistent because in 1994 they wanted to deny choice to the people of
this country and now they want to deny choice to the people of this
country to have their own medical savings accounts.
Mr. Speaker, I reserve the balance of my time.
Mr. STARK. Mr. Speaker, I yield myself the balance of my time.
I would just suggest that the Republicans would like to spend almost
$4 billion on long-term care insurance at the same time they cut $90
billion out of Medicaid, which pays for long-term care for the poorest.
It is true that we had a bill that would have provided health insurance
to all Americans, and there are 40 million Americans out there
uninsured who obviously the Republicans do not give a hoot about. All
they care about are the rich, who can enjoy the medical savings
accounts.
So if you do not have insurance and your children do not have
insurance, the Republicans are doing nothing. If you are very rich or
you know some rich people, they get helped by this bill.
The Dingell-Spratt-Bentsen amendment would be the bill to support,
which would get us the Roukema-Kennedy-Kassebaum bill, which does all
the good things on a bipartisan basis that we need to do and does away
with the claptrap that has been added on to this bill with the awful
intention of killing it, which to me is cynical, and it is cynical
because it is going to hurt the poor and the elderly while it helps the
rich, like Ross Perot and the friends of the Republicans. And that is
not what this country needs.
We have 40 million people who do not, whose COBRA benefits could
protect them; 3\1/2\ million who will expire. The Republicans voted
against extending it.
Support the Dingell-Spratt-Bentsen amendment.
Mr. ARCHER. Mr. Speaker, I yield the balance of my time to the
gentleman from California [Mr. Thomas], the highly respected, helpful
creator of a big part of this bill, the chairman of the health
subcommittee of the Committee on Ways and Means.
Mr. THOMAS. Mr. Speaker, I thank the chairman, the gentleman from
Texas [Mr. Archer], for yielding me this time. I want to compliment him
as I want to compliment the chairmen of the other committees, the
gentleman from Virginia [Mr. Bliley] and the gentleman from
Pennsylvania [Mr. Goodling]. It really is exciting, and I am pleased
that this new majority for the first time in more than 40 years has a
work product on the floor that could not be produced by the former
majority.
The Democrats had more than 40 years. In fact, it has been more than
10 years since the last health insurance bill has been on the floor.
The Democrats owned Washington in the entire 103d Congress; the
Democrats had a majority in the House. They had a majority in the
Senate. They had a President. Not one product to deal with the plight
of the American worker, so eloquently described by the Democrats
[[Page H3090]]
over and over again, on this floor ever came to the floor. We were
never provided the opportunity to help. We had the opportunity to hear
of the plight of the poor worker just as we did a few minutes ago. The
gentlewoman from Connecticut talked about that poor beleaguered person,
and I am sure he is and he has been for a long time and he was during
the entire time the Democrats were in the majority.
The major committees in the House, not just one committee, the major
committees of responsibility have come together and we have produced
H.R. 3103. It is not too much, it is not too little, it is just about
right for responsible and reasonable health care reform. We have
actually accomplished a modest improvement for the self-employed. We
moved their deductibility from 30 percent to 50 percent, prospectively.
That is really all that we thought was prudent and appropriate.
Criticism from the minority over this? We do not do enough, fast
enough. Who was it that left those same self-employed without any
protection whatsoever for the entire calendar year of 1994? All of a
sudden they want to do something for these people. When they were in
control they did absolutely nothing. They allowed the deductibility for
health care to lapse. When you were running the place, why were not you
more responsible?
H.R. 3103 reforms tort law in the area of medical malpractice. Is it
radical? Half the States limit noneconomic damages. Is it
controversial? Last March, with 247 votes, 44 Democrats, 23 from the
North, 21 from the South, joining the new majority, the responsible
Democrats and the Republicans passed medical malpractice reform. We put
it in the product liability bill. The exact same language as passed the
floor of the House is in this bill. We have put together increased
penalties for fraud and abuse. Tougher rules, stiffer penalties. We
find it, we fix it, and we make sure that we can fight it. Stiffer
penalties, stronger rules. What is wrong with requiring the government
to tell people when they ask the government is this OK?
What is wrong with advisory opinions? Apparently, the gentleman from
California [Mr. Stark] did not find anything wrong with advisory
opinions last June, outside the context of the political responses we
have been hearing today. In H.R. 1912, the gentleman from California
[Mr. Stark] introduced a bill to deal with health care fraud and abuse.
On page 41, the gentleman from California has a provision, subtitled
(d), advisory opinions, on kickbacks, and self-referrals.
We also have greater availability and greater affordability of health
insurance, you have heard from many of my colleagues in the area of
medical savings accounts. We have heard over here from the minority,
how horrendous is this provision. Well, is it really? It is choice. It
does not say that you must, it says you can. It does not say you shall,
it says you may. It is a choice. It is one more choice. Possibly it is
a product that people who now cannot find a product in the marketplace
will use.
Who are those people? We have heard the profile of those individuals
characterized as the healthy and the wealthy. Take a look at, again,
the chart that the gentleman from Texas, Mr. Sam Johnson, focused on.
According to the Joint Tax Committee, 51 percent of the people who are
going to find this a useful product are in the $50,000 to $74,000
range, middle class. On the far right of the chart that is $100,000 and
above; that is everybody who makes more than $100,000, $200,000,
$300,000, $400,000, a million. That is out there less than 12%. That is
that enormous group on the other end of the chart. Let us look at the
lower end, from $40,000 to $49,000, 13 percent, from $30,000 to
$39,000, 11 percent, the vast majority of people who will find this
product usable are the middle and the lower middle class.
{time} 1915
What is wrong with small employers being able to voluntarily pool
their resources so they can save on their health insurance, just like
large employers? We begin to make sure that people who more and more
need to invest in long-term health care, their cost of the insurance,
and the cost of the health care itself, thanks to the gentleman from
Nevada, an amendment in the Committee on Ways and Means, will be
allowed under the Tax Code. Long overdue, and never done by the
Democrats when they were in the majority.
Finally, the heart of the matter: The American worker will no longer
have to worry about changing jobs or losing insurance.
H.R. 3103 is a good bill support it.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Virginia [Mr. Bliley] is recognized for 22\1/2\ minutes and the
gentleman from Michigan [Mr. Dingell] is recognized for 22\1/2\
minutes.
The Chair recognizes the gentleman from Virginia [Mr. Bliley].
Mr. BLILEY. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in support of the substitute to H.R. 3103, The
Health Coverage Availability and Affordability Act of 1996. During my
tenure in Congress, I do not recall the House ever passing a health
insurance market reform bill. We are about to take an historic action
to change that.
The legislation before you today makes real reforms, and most
importantly, it makes health insurance coverage both available--and
affordable--for millions of Americans.
The substitute represents a consensus agreement that was developed as
a result of the provisions that were reported out of the Commerce
Committee, as well as those developed by the Committee on Ways and
Means, the Committee on the Judiciary, and the Committee on Economic
and Educational Opportunities. It is designed to address the
interrelated issues of accessibility and affordability of health
insurance coverage.
The provisions of this bill within the jurisdiction of the Commerce
Committee are designed to deal with the difficult problem of job lock,
or, put more simply, an employee's reluctance to change jobs because of
pre-existing condition exclusions in health care coverage. This bill
will ensure that individuals who have an opportunity to move to new or
better jobs will not have to face limitations in their coverage for
pre-existing medical conditions that will affect them or their
families. This bill will also assure people in group health plans that
they cannot be excluded from coverage, or from renewing their coverage,
based on their health status. It provides limits on the period of
exclusion for a pre-existing condition and assures that, once covered,
the condition will not be excluded from future coverage if the
individual meets the requirements of the bill.
The Commerce Committee reported provisions also provide for
guaranteed availability of coverage to employees in the small group
market. Each insurer that offers coverage in the small group market
would have to accept every small employer and every eligible individual
within the group.
The bill would also ensure portability of health insurance for
qualifying individuals moving from group to individual coverage. This
is accomplished by giving States flexibility to achieve individual
coverage through a variety of means that include risk pools, group
conversion policies, open enrollment by one or more insurers and
guaranteed issue.
The bill also contains a number of other provisions which we strongly
support. It allows small employers to take advantage of pooling so they
can purchase affordable health insurance coverage. It reforms the
medical malpractice system which will help contain costs and it
provides for new health choices for those who want to purchase medical
savings accounts.
It also includes provisions on fraud and abuse and administrative
simplification. The General Accounting Office has estimated that fraud
and abuse accounts for one out of every ten dollars spent on health
care. Regrettably, fraud and abuse not only contributes to the ever-
increasing cost of health care, it also leads to a lack of confidence
in the health care system and its providers. Providing concrete laws
and guidelines and stringent penalties for violations will ensure the
continued integrity of the nation's health care system.
The administrative simplification provisions are needed to ensure
that there are standards for the transmission of financial and
administrative data. Much of this information is currently transmitted
in an electronic format. However, there is not a uniform
[[Page H3091]]
standard and there are no consistent security standards or safeguards
regarding the use of this information.
I urge my colleagues to join me in supporting this bill which will
begin to help solve some very real problems for many Americans.
Mr. Speaker, I reserve the balance of my time.
Mr. DINGELL. Mr. Speaker, I yield myself 3 minutes.
(Mr. DINGELL asked and was given permission to revise and extend his
remarks.)
Mr. DINGELL. Mr. Speaker, today we choose between the people who
carry a lunchbox to work, and the people who carry Gucci briefcases and
wear imported loafers.
The people who carry lunchboxes aren't asking for special favors or
special treatment. They're not asking for a tax loophole. What they
want is very simple. When they change jobs, or if they fall prey to
downsizing, or if a loved one contracts cancer or diabetes, they want
to be able to buy health insurance. That's all.
I am afraid that this very modest request from the people who carry
lunchboxes is going to fall on deaf ears in this House. The majority
has instead constructed a monument to the influence industry.
We can pass a bill that makes health insurance portable and prohibits
discrimination or restrictions because of pre-existing conditions. This
simple bill would help 25 million Americans. Another provision in this
bill on the tax deductibility of health insurance for the self-employed
would help 3 million Americans.
We could pass that bill, sail it through the Senate, and have it on
the President's desk for signature tonight. Instead, we're going to be
voting on a Christmas tree bill adorned with ornaments for various
special interests. And like a Christmas tree, it's soon going to be put
out on the lawn for garbage pickup.
I know whose side I'm on. I'm voting with the people who carry
lunchboxes. I urge my colleagues to do the same.
Mr. Speaker, I submit the following material for the Record:
Health Care? You Compare
H.R. 3103 Base Text
A stripped-down Roukema/Kassebaum bill: no choice of plans
for workers who lose their jobs; no guarantees for businesses
with more than 50 workers; preempts State laws that protect
consumers.
Limits deductibility of health insurance premiums for the
self-employed to 50%.
Controversial Medical Savings Accounts.
Controversial medical malpractice law changes.
Controversial repeal of protections for seniors so they
won't be ripped off by sale of useless, duplicative health
insurance policies.
Controversial provisions overriding state insurance laws.
Controversial provisions making it harder to find and
punish wrongdoers.
Dingell/Spratt/Bentsen
A clean Roukema/Kassebaum bill: full portability;
protection against discrimination due to preexisting
conditions; guaranteed renewal.
Increases deductibility of health insurance premiums for
the self-employed from 30% to 80%.
No other controversial provisions to weigh down the bill,
slow down the conference, or provoke a Presidential veto.
Keep it simple. Keep it clean. Give the American people
what they need.
Support the substitute. Oppose H.R. 3103's base text.
Mr. Speaker, I reserve the balance of my time.
Mr. BLILEY. Mr. Speaker, I yield myself 30 seconds to respond to my
good friend, the gentleman from Michigan.
What a difference, my colleagues, 2 years makes. On this very night,
the night before we broke for our Easter recess, 2 years ago, I sat
over there next to my then chairman, the gentleman from Michigan, and
said, ``Mr. Chairman, the President's bill is too heavy. It is too
much. It is socialized medicine. We can't move it. We ought to take up
the Rowland-Bilirakis bill, bipartisan bill, which was modest, like our
bill, and deal with it and mark it up in committee.'' He said ``It
can't be done. I am sorry.'' Now he is back. What a difference.
Mr. Speaker, I yield 5 minutes to the gentleman from Florida [Mr.
Bilirakis] the chairman of the subcommittee.
Mr. BILIRAKIS. Mr. Speaker, I thank the gentleman for yielding me
time.
Mr. Speaker, I am pleased to be here today to add my voice to those
in favor of health care reform for America's families.
I must say that this moment is both satisfying and, at the same time,
deeply ironic. For, now, the House finally has the opportunity to
approve health care reforms many of us have advocated for many years.
The irony lies in the fact we could have accomplished many of these
reforms over 2 years ago if the former leadership had been willing to
act and the current administration willing to compromise.
Despite all the political attacks you may hear today--and make no
mistake, they are political attacks--health care reform is an idea
whose time has come--again and again. The problems we seek to fix today
we identified long ago along with many of the solutions contained in
this legislation.
Many of you in this Chamber may remember that during the 103d
Congress, Congressman Roy Rowland and I introduced consensus health
reform legislation. The Rowland-Bilirakis bill was the only true
bipartisan bill--but we never got our day in court. Not one vote was
ever scheduled on our proposal despite broad support for the provisions
contained in the bill.
Despite the great hue and cry in 1994 for reform, my own Commerce
Committee did not even schedule a markup on my bill--or any other
version of health reform. Today, we have the opportunity to change all
that.
We finally have the opportunity to cast a historic vote on a health
reform package which contains many of the items advocated by the
Rowland-Bilirakis bill in the last Congress.
Like my previous proposal, this legislation will raise deductions for
the self-employed, enact provisions on fraud and abuse, promote
administrative simplification, establish pooling for small employers,
provide for medical malpractice reform, and ensure insurance
portability.
To be sure, not all items in this legislation are precisely as we
proposed back in 1994. But many of the core items have been subject to
bipartisan agreement in the past and should now be viewed in a similar
light. I urge my colleagues, on both sides of the aisle, to set aside
any remaining differences and pass this bill.
Indeed, it is thus somewhat mystifying when I hear that this bill is
somehow too loaded up. And it is a little more than ironic when the
main criticism of the previous Rowland-Bilirakis bill was that it
didn't do enough.
You can't have it both ways. We have to do something to resolve
problems in our health care system now, in this Congress. We never had
the chance in 1994.
Health care is too expensive. This bill will help make health care
more affordable for millions of families. Access to health care is too
restricted--this bill allows policies to be carried from one job to
another. Too many people have too few choices with regard to health
care--this bill will expand the number of opportunities we all have to
secure an effective health care plan for our family.
These are problems we can solve now and which will improve the lives
of millions of working Americans. We cannot let this moment pass
without passing this bill. I strongly urge my colleagues to support our
efforts to improve our Nation's health care delivery system and help
make health care in this country both more accessible and affordable.
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished
gentlewoman from New Jersey [Mrs. Roukema].
(Mrs. ROUKEMA asked and was given permission to revise and extend her
remarks.)
Mrs. ROUKEMA. Mr. Speaker, I am very happy to be here today. Many of
my colleagues know that I am the House sponsor of the Kassebaum-Kennedy
health insurance reform package. If I had my way, we would be debating
and quickly passing a clean version of that legislation.
The portability and the guaranteed issue that it will deliver to 30
million Americans now.
Kassebaum-Kennedy-Roukema is legislation that has been cosponsored in
the House by a wide multitude of bipartisan support and in the Senate,
Senate Committee on Labor and Resources, it was passed unanimously. It
deserves bipartisan support.
[[Page H3092]]
The American people want health care reform, and they need it. They
are sick and tired of partisan bickering and political gamesmanship.
They want results and they want them now.
Unfortunately, I fear the Hastert omnibus bill will inevitably lead
to more gridlock and inaction. I fear that, in the end, the American
people will not get the common sense reforms that they deserve.
I think it should be noted right here and now that within the last 24
hours, two prominent Republican leaders in the Senate, Senator
Kassebaum and Senator Bennett, have confirmed their firm opposition to
an omnibus bill. I think we should keep that in mind today.
I expect that if this should be blocked and it should end up in
gridlock, I expect that the American people will hold us responsible in
November.
Now, do not get me wrong. Some of the reforms that are not part of
the Kassebaum-Roukema bill, such as medical malpractice reforms, I have
supported in the past and will continue to support. But let us
understand and be frank about it. Whether we support them or do not
support them, the key components, malpractice, expansion and medical
savings account, let us understand and be frank about that, that
medical malpractice reform, medical savings account and ERISA expansion
are controversial components. They are controversial, they are complex,
and they demand individual consideration as individual pieces of
legislation.
Mr. Speaker, I again say that we must answer to the American people
and pass this legislation in its clean form tonight.
Mr. Speaker, I rise this evening in support of commonsense health
insurance reform.
Many of my colleagues know that I am the House sponsor of the
Kassebaum-Kennedy health insurance reform package. If I had my way, we
would be debating and quickly passing a ``clean'' version of the
Kassebaum-Roukema plan today and the portability and guaranteed issue
that it presents to 30 million Americans.
Kassebaum-Roukema is legislation that has been cosponsored by 193
House members, and which the Senate Labor and Human Resources Committee
approved unanimously.
The American people want healthcare reform. They are sick and tired
of partisan bickering and political gamesmanship. They want results and
they want them now.
Unfortunately, I fear the Hastert omnibus package will inevitably
lead to more gridlock and inaction. And I fear that, in the end, the
American people will not get the commonsense reform they deserve.
And it should be noted that within the last 24 hours 2 prominent
Republican leaders in the Senate have confirmed their firm opposition
to an omnibus bill.
Should that happen, I expect the American people to hold the 104th
Congress accountable, as well they should.
Now don't get me wrong. Some of the reforms in H.R. 3103 that are not
part of the Kassebaum-Roukema plan--such as medical malpractice
reforms--I have supported in the past, and will continue to support in
the future.
However, there can be no doubt that certain elements of the
underlying bill (such as medical malpractice reform, medical savings
accounts, and an ERISA expansion) should be fully debated by the
Congress on a case-by-case basis--not wrapped-up into one gigantic
package. Each one of these components are complex and controversial and
should be properly considered independently.
In the past, I have been a very strong advocate of medical
malpractice reforms so that physicians can stop practicing defensive
medicine in order to insulate themselves from frivolous lawsuits that
only lead to over-utilization of the health care system and higher
liability insurance premiums. I will vigorously support these reforms
in the future as well.
Nevertheless, I recognize that medical malpractice reform is a very
controversial idea that faces serious obstacles in the Senate, and
perhaps a veto by President Clinton.
With regard to medical savings accounts, I have some very serious
reservations about this idea.
While the notion of empowering individuals to make their own health
care decisions has a certain amount of merit, I am concerned that
medical savings accounts could, in the long term, serve to ruin the
health insurance market.
Medical savings accounts could serve to segregate the population into
two groups: Young, healthy people using medical savings accounts and
older, sicker people in conventional health plans. If this kind of
risk-segmentation happened, the health insurance premiums for older,
sicker individuals would sky-rocket beyond imagination.
I refuse to support health reform legislation that makes this
scenario a reality. Medical savings accounts should be reviewed and
debated on their own merit--not as part of some, larger package.
Finally, I want to discuss my concerns about those provisions in the
omnibus package that expand the ERISA pre-emption of state insurance
laws.
For many years, I served as the ranking minority member of the then
House Education and Labor Subcommittee on Labor and Management
Relations, which had jurisdiction over ERISA, the Federal law governing
employee benefits such as health care or pensions.
The single, most important lesson I learned about ERISA from my time
on the subcommittee was this: the more you think you've learned about
ERISA and how it works, the more you realize how little you truly know.
I am increasingly of the view that while ERISA as originally devised
served a useful purpose, we need a new ERISA for the modern context.
As more and more employers self-insure, thereby receiving a pre-
emption from any State insurance rule, regulation or law, employees
find themselves at the mercy of their employer's choice of health
benefit plan.
For example, New Jersey and other States have enacted laws that
require at least 48 hours of hospitalization coverage for women giving
birth. These laws are a response to the efforts of managed care
networks to discharge women, and their newborn children, within 24
hours of labor and delivery.
When employers self-insure, their employees do not receive the
benefit of any of these protections because of the ERISA preemption.
With the expected rapid growth in managed care networks and their
enrolles in the future, this trend will only get worse, not better.
Consequently, rather than the significant expansion of the current
ERISA as envisioned in H.R. 3103, I believe we need to carefully
examine ERISA and devise a new form of this law to meet our current
needs.
We should not be considering any ERISA expansion as part of a larger
package, where these kinds of issues get lost in the shuffle.
Passing a clean version of the Kassebaum-Roukema plan avoids all of
these problems. I hope that we don't let this golden opportunity to
slip through our collective fingers.
{time} 1930
Mr. BLILEY. Mr. Speaker, I yield 2 minutes to the gentleman from Iowa
[Mr. Ganske], a valued member of the committee.
Mr. GANSKE. Mr. Speaker, this bill will help fix a health care system
that has been beyond the means for many Americans.
Now a worker who wants to pursue his career but cannot change jobs
because of an illness in the family would be covered by a new
employer's insurance, group-to-group portability. Now an employee who
is laid off or between jobs and cannot get individual coverage for his
preexisting condition would be able to get coverage, group-to-
individual portability. Now the small business employee, whose employer
cannot afford to purchase insurance for the firm's five employees
because one of them has a chronic illness, would be able to better
afford health insurance.
Mr. Speaker, this bill makes it easier for Americans to get and keep
health insurance. It is important that this bill includes medical
savings accounts. They will return control over health care spending to
consumers, save money, and lower health care overutilization. I am
pleased that this bill also increases the health insurance deduction
for self-employed individuals from 30 percent to 50 percent by the year
2003. While big businesses have been able to deduct all their health
care costs, millions of self-employed individuals have been left
without a similar benefit. That is not fair. We must give people more
incentives and more options to carry health insurance for their
families.
The Health Coverage Availability and Affordability Act will also
crack down on fraud and abuse, saving millions of dollars. This, too,
would keep the cost of your premiums down.
Mr. Speaker, finally, medical malpractice reform will help hold down
the cost of defensive medicine and help keep premiums down. If health
care is more affordable, more people will have real access to it.
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the gentleman from New
Jersey [Mr. Pallone].
Mr. PALLONE. Mr. Speaker, I am so pleased that my colleague, the
gentlewoman from New Jersey [Mrs. Roukema] spoke just before me,
because basically she pointed out that what we
[[Page H3093]]
really need tonight is a clean bill, not loaded down with medical
savings accounts and all the other things that are being suggested by
the Republican leadership.
Mr. Speaker, the gentlewoman was trying to address portability and
preexisting conditions, essentially expand coverage for many people now
who cannot get coverage, and also keep health insurance affordable, and
she achieves that essentially by saying that if you lose your job or
change jobs, the insurance companies still have to provide you with
individual coverage. She also limits the situations where the insurance
companies can refuse to cover you because of preexisting medical
conditions.
This is a very modest bill. We, on the Democratic side, managed to
get 172 Members here to cosponsor her bill. In the Senate, there are 54
current cosponsors of the Kassebaum-Kennedy bill, so we know we can
move this legislation, and the legislation is good because it is very
modest. It basically keeps the insurance pool intact. It does not
encourage healthy people to opt out. It does not bring in a lot of new
people who are unemployed or who cannot afford insurance or who are
critically ill that would increase the costs of health insurance.
But lo and behold, what do we get from the Republican leadership?
They throw in the medical savings accounts, and what does that do? It
breaks the risk pool. It breaks the insurance risk pool. Essentially
what it does is to encourage healthy people and wealthy people to opt
out and buy catastrophic coverage and get a tax break to put their
money aside and leave everyone else in this risk pool so that they have
to pay higher premiums, because it is going to cost more to insure
them. It does the very thing, the very opposite, if you will, of what
the gentlewoman from New Jersey, Mrs. Roukema, and Senators Kassebaum
and Kennedy strove to do.
Mr. Speaker, what will be the ultimate result of increasing the costs
of health insurance who remain and do not opt for the medical savings
accounts? there will be fewer people insured, fewer people insured.
Mr. BLILEY. Mr. Speaker, I reserve the balance of my time.
Mr. DINGELL. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman
from New Mexico [Mr. Richardson].
(Mr. RICHARDSON asked and was given permission to revise and extend
his remarks.)
Mr. RICHARDSON. Mr. Speaker, the chance for basic bipartisan health
care reform may be slipping away, because some have taken a good idea
and loaded it up with a lot of gifts to special interests. Why do we
not put the American people first for a change?
Mr. Speaker, we all agree there are a few minor changes that we could
make to our health care system that would cost the American taxpayer
nothing, would offer security to millions of Americans in need of basic
health care coverage. I say let us do those things that we can agree
on. That is preexisting condition and portability.
We have to stop the unjust practice of denying those with preexisting
conditions insurance coverage. Many people who need insurance the most
cannot get it because of these preexisting conditions. Another 4
million Americans who have insurance are afraid to leave their jobs,
fearing that they never might be insured at another job again.
Mr. Speaker, we should ask ourselves, how many are throwing
themselves, begging for a medical savings account? That is for the
healthy and for the wealthy. All our constituents are definitely
knocking down our doors, demanding us to cut important services like
medicare and medicaid and education so that we can spend billions on
creating medical savings account.
There are too many controversial malpractice reforms in this bill.
Why do we have to load it up? Why can we not do like the other body
does and for a change let us say they have taken the right path and
pass a bill like Roukema-Kennedy-Kassebaum. That is what we were
elected to do. We all said we would do it. Now we have other political
agendas that might prevent a good bipartisan health package from being
enacted.
Mr. BLILEY. Mr. Speaker, I yield 2 minutes to the gentleman from
Georgia [Mr. Norwood].
Mr. NORWOOD. Mr. Speaker, I rise today in support of the Health Care
Coverage Availability and Affordability Act. In this time of economic
insecurity and increasing pressure on America's working-class families,
this bill is a common sense approach to health care access that also
makes health care more affordable. In 1993, the Clinton administration
and the liberals in Congress lined up behind the big government
socialized medicine plan. This plan was an utter failure, not because
the American people did not want security in their health coverage but
because it was the wrong approach, though our Committee on Commerce in
the 103d Congress had the right approach with the gentleman from
Florida [Mr. Bilirakis] and Dr. Rowland of Georgia.
H.R. 3103 takes the right approach in dealing with their anxiety,
ensuring that people who change or lose their jobs will have access to
health care, regardless of preexisting conditions. This is important
and deals with the same issues as the Kassebaum bill. However, while
this is a good starting point, it just does not go far enough.
Providing portability is important but on its own, it fails to deal
with the forces that drive health care costs higher.
Mr. Speaker, it is nonsense to tell the American people that we will
increase their access to health care without making health care more
affordable. If we do nothing to bring down the cost of health care, we
have the same old problem. We will be told that some provisions were
included in this bill to kill health care reform. That is bull.
Increasing access and reducing health care costs are two sides of the
same coin.
This bill attempts to remove the influence of the trial lawyers in
medicine by reforming the medical liability system. It gives young
people, a large portion of whom do not have coverage, more health care
choices. We must pass H.R. 3103.
Mr. DINGELL. Mr. Speaker, I yield 1 minute to the gentleman from
Massachusetts [Mr. Studds].
Mr. STUDDS. Mr. Speaker, if I might have the attention of the
distinguished chairman.
Am I correct that his bill prohibits group health plans or insurers
offering coverage through group health plans from requiring a
participant to pay a premium contribution that is greater than a
premium contribution for a similarly situated participant or
beneficiary solely on the basis of the health status of the participant
or beneficiary?
Mr. BLILEY. Mr. Speaker, will the gentleman yield?
Mr. STUDDS. I yield to the gentleman from Virginia.
Mr. BLILEY. Mr. Speaker, the gentleman is correct.
Mr. STUDDS. Am I further correct that the word ``solely'' in this
provision means that there can be no discrimination at all in the
setting of premium contribution amounts for a participant on the basis
of health status?
Mr. BLILEY. Mr. Speaker, if the gentleman will continue to yield, the
gentleman is correct.
Mr. STUDDS. Mr. Speaker, although I am somewhat underwhelmed by both
of the propositions before us, I think this is a significant step in
the right direction.
Mr. BLILEY. Mr. Speaker, how much time is remaining on both sides?
The SPEAKER pro tempore (Mr. Combest). The gentleman from Virginia
[Mr. Bliley] has 11 minutes remaining, and the gentleman from Michigan
[Mr. Dingell] has 12\3/4\ minutes remaining.
Mr. BLILEY. Mr. Speaker, I reserve the balance of my time.
Mr. DINGELL. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman
from Maryland [Mr. Hoyer].
(Mr. HOYER asked and was given permission to revise and extend his
remarks.)
Mr. HOYER. Mr. Speaker, I rise in support of the Kassebaum-Roukema-
Kennedy legislation. I rise lamenting the fact that we will not take
``yes'' for an answer. Very frankly, the Kennedy-Kassebaum-Roukema bill
was bottled up in the Senate until the heat got so high recently that
the Republican in the Senate who then publicly admitted holding up the
bill said no, let it go forward.
Mr. Speaker, all of us in a bipartisan way agree that we ought to
preclude
[[Page H3094]]
preexisting conditions being an impediment to our citizens getting
insurance. All of us believe that people ought not to be locked into
their jobs because they do not have portability of health care security
through their insurance. All of us believe that in a bipartisan way.
That is what the gentlewoman from New Jersey [Mrs. Roukema] was saying.
That is what Senator Kassebaum is saying from Kansas. But we are having
trouble taking yes for an answer.
Mr. Speaker, I personally believe that the medical savings account,
although superficially appearing to provide some options, in fact will
increase the cost for those who are less healthy and less wealthy. That
is not just a fancy phrase. I think it is reality.
In addition, as my colleague, the gentleman from Maryland [Mr.
Cardin] expressed when he spoke on Ways and Means, our State is very
concerned about precluding it from making determinations. In fact, we
are stopping States from having the flexibility that our Republican
colleagues say they ought to have.
Mr. BLILEY. Mr. Speaker, I yield 2 minutes to the gentleman from
Florida [Mr. Stearns], a distinguished member of the committee.
(Mr. STEARNS asked and was given permission to revise and extend his
remarks.)
Mr. STEARNS. Mr. Speaker, I rise in support of the Archer/Bliley bill
because I believe the issue of genetic privacy is of tremendous
importance. I introduced H.R. 2690, the Genetic Privacy and
Nondiscrimination Act of 1995. My bill would ban discrimination based
on a person's genetic profile.
I wish to acknowledge my colleague and good friend Representative Joe
Kennedy who is helping me on the other side of the aisle. He and I are
working together on this bill.
With new forms of genetic testing able to reveal an individual's
likelihood of contracting a number of diseases, the possibility arises
that employers and health insurers could use that information to
discriminate.
This is a civil rights issue. People who are already at risk due to
their genetic makeup shouldn't have to worry about the additional
hardship of losing their job or health insurance.
Like a companion bill introduced by Senators Mark Hatfield and Connie
Mack, H.R. 2690 would also ban the disclosure of genetic information by
anyone without the written authorization of the individual. This
safeguard would protect the privacy of individuals who would rather
their genetic information be kept private.
I am pleased that I was able to add a portion of my bill to the
Archer-Bliley bill.
{time} 1945
Genetic testing has proved effective in certain cases, and it can be
argued that the detection of a gene or a certain genetic characteristic
will not necessarily result in the onset of a particular illness. So,
we have an ambiguity here. We have an opportunity where somebody could
have a defect which somebody would interpret different ways which would
prevent them from having good health care insurance.
Genetic testing is moving along, as we all know, and it raises many
ethical and legal and social questions relating to access to genetic
testing, insurability and employability, and we need to make this
confidential. The purpose of the Genetic Privacy Act, which I have
provided, is to establish some guidelines concerning disclosure and use
of genetic information with the goal of balancing the rights of the
individuals against the needs of society.
Mr. DINGELL. Mr. Speaker, I yield 1\1/2\ minutes to the distinguished
gentleman from New Jersey [Mr. Menendez].
(Mr. MENENDEZ asked and was given permission to revise and extend his
remarks.)
Mr. MENENDEZ. Mr. Speaker, I rise in support of the substitute which
gives us an opportunity to pass a reform we know will be signed by the
President.
In the last Congress we saw the demise of comprehensive health care
reform, and those who objected to that initiative said that it was too
much. We ended up with nothing. Hundreds of thousands of New Jerseyans
and millions of Americans continued to languish in the insecurity of no
health care coverage.
Today we can address one major concern of millions of working
Americans, the fear of moving from job to job because of the possible
loss of comprehensive health insurance. We can eliminate the condition
referred to as job lock and free up opportunities for working men and
women to seek new employment.
We also have an opportunity to provide necessary protection for those
Americans with preexisting illnesses who are trapped in a job solely
because of their inability to become insured if they leave their
position. We have the opportunity to eliminate the discriminatory
practice of denying continued health care to people with diabetes and
other illnesses for which insurance coverage has been nearly impossible
to obtain.
But the committee's bill contains provisions which are unacceptable
to the President, the Senate and which, if included, may end any hope
of enacting even modest health care reform, and I hope this is not the
cynical reason behind the bill.
Twenty-five percent of my constituents have no health care insurance
whatsoever. If we have to enact health care reform one step at a time,
so be it. But let us take the first step today by insuring more people,
liberating them in their choices through the adoption of the Democratic
substitute.
Mr. BLILEY. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from
Pennsylvania [Mr. Fox].
Mr. FOX of Pennsylvania. Mr. Speaker, I rise to support the Archer-
Bliley bill, which will be the antidote to the problem we have in the
United States of making sure we have sufficient coverage for all
Americans.
As my colleagues know, the United States spends far more per capita
on health care than any other major Nation in the world. But yet
despite the rising costs of health care, millions of Americans are
without health insurance and millions more expected to join the ranks
of the uninsured.
The solution to the problem, I believe, Mr. Speaker, is in fact
contained in H.R. 3103. The reforms before us here tonight in the House
reform current health care insurance practices to make health insurance
more available and more affordable.
The bill encourages insurance companies to provide coverages to the
workers who change from one-employer provided plan to another. It gives
the portability everybody wants. They lose their job and move to a job
without coverage. It allows small employers to join together to
purchase group health insurance for the first time, to do so for their
employees, and allows self-employed individuals, Mr. Speaker, to deduct
increasing percentages of their health insurance premiums from their
income taxes.
This is an idea whose time has arrived, and I would ask for my
colleagues to support this legislation for those reasons, but still a
few more. It allows organizations such as trade associations and
chambers of commerce to voluntarily associate to purchase health
insurance which would be available to all member organizations.
Further, it provides incentives to encourage individuals and their
employers to make tax-deductible contributions in lieu of health
insurance premiums.
Finally, Mr. Speaker, it increases penalties for fraud.
Mr. DINGELL. Mr. Speaker, I yield 1\1/2\ minutes to the distinguished
gentleman from Ohio [Mr. Brown].
Mr. BROWN of Ohio. Mr. Speaker, three years ago the insurance
industry spent $100 million to kill comprehensive health care reform .
How many of these companies are ominously silent on this Gingrich
special interest health care bill.
One politically active insurance company located in Indiana would
benefit handsomely under the Gingrich plan thinks to a special interest
giveaway larded onto the Republican bill. Medical savings accounts will
enrich a select group of high-end catastrophic providers, skim the
well-off and the healthy out of the insurance pool, and increase costs
for everyone left behind.
This Gingrich special interest plan is a bill written by the
insurance companies, of the insurance companies, and for the insurance
companies. Approximately 40 million Americans are without health care
and without health insurance. A majority of these Americans are from
working families, working hard, paying their taxes, playing by
[[Page H3095]]
the rules. They need our help in this Chamber tonight.
Mr. Speaker, pass the Dingell substitute. Defeat the Gingrich special
interest bill.
Mr. BILILEY. Mr. Speaker, I yield 1 minute to the distinguished
gentleman from Georgia [Mr. Kingston].
Mr. KINGSTON. Mr. Speaker, I find it appalling that the Democrats
would bring in this special interest thing. The integrity of the
debate; is it possible to have a honest debate any more at all?
I mean if my colleagues want to talk about special interests, read
yesterday's Hill newspaper article. The American Trial Lawyers just
gave $2.2 million to candidates last year, 94 percent going to
Democrats opposed to this bill because it has tort reform. My
colleagues want to talk special interests? Weigh on in, because my
colleagues are the ones who are in the pocket of the American trial
bar.
Let us get to the real issue here. Medical savings accounts gives
choice to Americans. It takes it away from our Washington bureaucrat
command and control allies and puts it in the hands of the American
public where it belongs. That is what our constituents want, and once
they start making their own decisions on health care, they are going to
decide a whole lot of other things, like they may need somebody else to
represent them in Congress.
I think it is important to also know that our colleagues are standing
one more time against small businesses by opposing legislation that
would allow pet stores and clothing stores and barber shops to pool
together and buy their insurance as a group.
Mr. DINGELL. Mr. Speaker, I yield 1\1/2\ minutes to the distinguished
gentleman from Vermont [Mr. Sanders].
Mr. SANDERS. Mr. Speaker, I thank the gentleman for yielding me the
time.
Mr. Speaker, more women in the United States are injured and killed
through domestic violence than by automobile accidents, muggings, and
rapes by strangers combined. Domestic violence is a terrible plague in
American society.
Given that reality, it is an absolute outrage that a number of
insurance companies deny health insurance to women who have been
battered and who have been victims of domestic violence. These
insurance companies argue that domestic violence is a preexisting
condition and that it might not be profitable for them to insure these
women. Under these conditions women are being abused twice, first by
their batterers and, secondly, by the insurance companies who refuse to
insure them and their families.
Mr. Speaker, I am delighted that both the Republican and Democratic
health care bills before us tonight include an amendment which I
offered which would once and for all put an end to this outrage. Women
who are battered are entitled to health insurance just like anyone
else.
Mr. BLILEY. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from California [Mr. Cox], chairman of the Republican Policy
Committee.
Mr. COX of California. Mr. Speaker, I would just like to thank my
colleague from Vermont. My understanding of his remarks is that he is
pleased with the bill because it includes provisions that will make
sure that domestic violence is covered, that it is not excluded from
our protections as a preexisting condition.
That is my understanding. Is that correct?
Mr. SANDERS. Mr. Speaker, will the gentleman yield?
Mr. COX of California. I yield to the gentleman from Vermont.
Mr. SANDERS. Included both in the Republican bill and the Dingell
bill as well, yes.
Mr. COX of California. I thank the gentleman for pointing out that
additional salutary impact of this legislation.
There is something else in this legislation that I would like to
highlight, in addition to the fact that it will solve the problems that
we have all agreed need to be solved on preexisting conditions and on
portability of coverage. That is reducing costs in the way that the
Congressional Budget Office has told us is the most effective way
possible.
A September 1993 Office of Technology Assessment report said that a
ceiling on noneconomic damages in medical lawsuits is the best way that
we can get a grip on costs. Earlier in this session we have devoted our
attention to this issue, and this Congress has, by overwhelming
bipartisan vote, approved this kind of health care liability reform
that, I want to point out, is also included in this bill and provides a
very solid reason for voting for it.
One of the key elements is what in California we call MICRA. It is
health care cost control that we have had in place for many, many
years. It was passed by a Democratic legislature, signed by a
Democratic governor. It is bipartisan in this Congress, as well. I was
very pleased to be the Member who offered this legislation in the first
session of Congress and to see the strong bipartisan support that it
won.
We do have too many frivolous lawsuits, and, as a matter of fact, we
can through this proven technique, already a law in California, control
them for the benefit of every single individual insured person in
America. Driving down health care costs this way is very, very
important.
Mr. DINGELL. I yield 1\1/2\ minutes to the distinguished gentleman
from Massachusetts [Mr. Olver].
Mr. OLVER. Mr. Speaker, I thank the gentleman for yielding me the
time.
Mr. Speaker, among the many provisions, hundreds of pages of
provisions which the insurance industry added to the Kennedy-Kassebaum
bill that passed the Senate with, God forbid, bipartisan support, the
most insidious of those provisions are those that provide for the
medical savings accounts because they would set off a chain reaction.
First, they encourage the healthy and particularly the wealthy who
can afford the high deductibles of MSA's to opt out of their current
insurance pool. That shrinks the insurance pool needed to keep premiums
more affordable for everybody.
Next, that is injury to hard-working middle-income people left behind
in the pool because they are going to see their premiums go up, they
are going to have to make up the loss of the healthiest and wealthiest.
And, finally to add insult to injury, the same middle-income workers
paying higher premiums will also be paying taxes to replace the tax
breaks handed to those who can afford these accounts.
Mr. Speaker, that is wrong, and I urge my colleagues to support the
substitute which is a clean Kennedy-Kassebaum-Roukema bill. It is real
reform with several clean good steps toward real health insurance
reform. It eliminates the denials for preexisting conditions when
someone changes jobs, it eliminates some of the job lock which keeps
people from changing jobs due to fear of losing their insurance, and it
reduces the burden on the self-employed by raising their health
insurance deduction to 50 percent.
Mr. BLILEY. Mr. Speaker, I have only one speaker left, and I reserve
the balance of my time. I understand I have the right to close.
{time} 2000
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished
gentlewoman from Connecticut [Ms. DeLauro].
Ms. DeLAURO. Mr. Speaker, we have a real opportunity tonight to do
something for the working families in this country. The American public
is clamoring for health care relief. It is one of the fundamental
concerns of the people of this country. People in this Nation are
frightened that they will lose their jobs, that they will lose their
health care, that they will be denied health insurance because of a
preexisting condition that they may have or that their children may
have.
Mr. Speaker, the Kassebaum-Kennedy-Roukema bill takes a first step
toward addressing these problems. It is a good bill, it is a bipartisan
bill. It addresses the needs of the American people. Do not load up the
bill with politically contentious issues that are designed to kill this
bill, this opportunity for health care reform. It is wrong. It is not
what the people of this Nation have sent us here to do. It is not what
our jobs are about.
Mr. Speaker, the authors of this bill have asked for a clean bill,
not to be loaded up. Mrs. Kassebaum earlier
[[Page H3096]]
today said, ``I think there are some who, by design, would like to see
problems.'' The Washington Times today says that ``Riders Imperil
Health Care Reforms,'' and it says that ``House and Senate Republicans
said they planned to add a series of controversial provisions to a
popular health insurance reform bill, clouding chances for quick
passage.''
The gentleman from Virginia [Mr. Bliley] himself has said that, ``If
you load up the wagon, it is heavier to pull.'' Do not sacrifice health
care reform. Do not sacrifice the American public for special interests
tonight. It is wrong to do that. We have a golden opportunity to do
something, not for the Golden Rule Insurance Co., but for the American
people, for the working families of this country who deserve to have
relief from the perils of a disastrous illness. Vote against this bill,
vote for the Democratic substitute.
Mr. DINGELL. Mr. Speaker, I yield 1\1/2\ minutes to the distinguished
gentleman from California [Mr. Fazio].
Mr. FAZIO of California. Mr. Speaker, when President Clinton stood
here a few months ago and announced his support for a bill that had
been authored by Senator Kassebaum and the gentlewoman from New Jersey,
Mrs. Roukema, to be joined by the gentlemen from Massachusetts, Senator
Ted Kennedy, and Joseph Kennedy, the country was ecstatic. They were
convinced for the first time we would actually do something about the
need to make health insurance portable and to prevent prior conditions
from making insurance either unavailable or unaffordable to many
people.
Tragically, we are here tonight debating a bill that goes far beyond
that consensus, that moves us into conflict on issues like MSAs, that
are a pure giveaway to a gentleman from Indiana named Mr. Rooney, who
legitimate insurance salesmen in my district claim they would never
sell policies for.
We have watered down portability, we have limited the ability to
prevent prior conditions from being remedied in this legislation,
because we have taken an approach that does not really give people what
they have been told they will get. They will pay more if there are
fortunate enough at all to be able to continue to have health coverage.
They are not going to be able to keep the kind of plan they have had.
This proposal ensures they will pay more.
Tragically, in the process of making this bill difficult to pass and
sign, we have not done enough to help small business people who need 80
percent, if not 100 percent, deductibility, and we have weakened
consumer protections and gutted State law.
Please oppose this bill and support the substitute.
Mr. Speaker, I offer my strong support for the Democratic substitute.
The Republican bill is loaded down with special interest amendments
like MSA's political paybacks for the Golden Rule Insurance Co.
These paybacks mean everyone else will have to pay more for their
insurance.
The Democratic substitute will help tens of millions of Americans
keep their health insurance when they switch jobs, regardless of their
condition.
The Democratic substitute addresses several fundamental problems.
If an employee who has been covered for at least 18 months switches
or loses his or her job, that employee could buy insurance without
exclusions for pre-existing medical conditions.
Workers will no longer be locked into jobs or prevented from starting
their own businesses for fear of losing their own coverage.
The substitute also contains an increase in the deductibility of
health insurance for the self-employed.
Greater deductibility serves two important goals.
First, greater deductibility increases affordability. Increasing
deductibility will help millions of farmers, small businesses, and
other working families afford the high cost of health care insurance.
Second, greater deductibility ensures greater fairness in our tax
code. Corporations have long enjoyed full deductibility for their
health insurance costs. It is time to narrow the gap between Wall
Street and Main Street.
This substitute represents legislation that we can pass today and
that the President would sign tomorrow. It has received wide bipartisan
support, both here in the House and in the other body.
Let us not miss this opportunity to enact health care insurance
reform that will benefit millions of hard-working Americans.
I urge a yes vote on this substitute.
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from Massachusetts [Mr. Markey] to conclude debate on this
side.
Mr. MARKEY. Mr. Speaker, it is with sorrow and frustration that I
rise to oppose this bill. Reform of our health care system is long
overdue. The fact that some 40 million Americans do not have health
insurance is an absolute disgrace, and it is high time that we do
something about it. Last week the Committee on Commerce unanimously
approved legislation that would have provided at least some relief to
millions of hardworking American families by ending job lock and
limiting the use of preexisting condition clauses.
It was a good first step. It was incremental, to be sure. It would
have guaranteed that health care was affordable, but at least it would
have been accessible. It was modest, and for that reason I had hoped
that a large majority of Members from both sides of the aisle could
support it.
Mr. Speaker, my mother always says that a half a loaf is better than
none, and I supported that bill, even though it was really only a
couple of slices. I know the American people want the whole loaf.
Unfortunately, the leadership has taken a couple of good, wholesome
slices of health insurance reform and slapped a whole lot of extraneous
junk food on top, creating a health care hoagie of medical savings
accounts, caps on medical malpractice awards, and other unhealthy
additives. These anchovies and olives and onions are sure to tickle the
taste buds of a very few special interests, but cause heartburn for
millions of consumers.
Barry Goldwater's old words can be twisted here this evening, because
now the Republican Party believes that extremism and the defense of
special interests is no vice. ``The American Medical Association wants
it, we will just toss it into this bill.''
Barbara Tuchman wrote a very famous book back in the early 1980's,
entitled the ``March of Folly'', basically chronicling throughout the
ages the mistakes.
Mr. BLILEY. Mr. Speaker, it is with pleasure that I yield the balance
of my time to the gentleman from Illinois [Mr. Hastert], the chief
deputy whip, a gentleman who has worked tirelessly on this legislation.
The SPEAKER pro tempore (Mr. Combest). The gentleman from Illinois
[Mr. Hastert] is recognized for 4\1/2\ minutes.
Mr. HASTERT. Mr. Speaker, I thank the chairman of the Committee on
Energy and Commerce for yielding time to me. As a matter of fact, Mr.
Speaker, I thank all of those chairmen of the committees who have
worked together to make this bill possible, and the subcommittee
chairmen, and I would be remiss if I did not thank the staff of the
combined committees, who did an excellent job in working together to
make sure that this bill was successful.
Mr. Speaker, I have heard a lot of outrageous statements from the
other side of the aisle tonight, and even one from our side of the
aisle. But it questions me, it wonders me, I guess you would say, who
are those special interests that everybody is talking about? Is it the
small businessman who needs to have the ability, the deductibility;
that if he has a small business and wants to get his employees covered,
85 percent of which are people who work today and do not have insurance
and end up in situations with one family member that works for a small
business, that we give them the ability to pool that and take it to the
marketplace with the same advantages that big business gets? Is that a
special interest?
Is it a special interest for a family who wants to get health care
and make choices of their own, instead of having an HMO or a doctor or
an insurance company tell them, is that the special interest they talk
about?
Maybe, Mr. Speaker, there are some dinosaurs still in this Congress
that do not want to have change, some dinosaurs that still want to have
big Federal health care take care of everything, and take over
everything, and if they cannot have it their way, then they are going
to do the very minimum, the very minimum to cover the ladies and
gentleman of this country and the families of this country.
Mr. Speaker, we have traveled a long road in a short period of time
with this
[[Page H3097]]
reform bill. For that, I applaud the cooperation of everybody. It must
be noted that with this legislation, we have succeeded where previous
Congresses have failed, and we have put together reforms in the health
care delivery system that will help people today. Our legislature will
lower the cost of health care insurance while making it more available
and affordable to middle-income American families.
Who among our critics will deny that health insurance is too
expensive? Who among our critics will deny that American families
should have more control over their health care spending? Who among our
critics will deny that patients deserve more health care dollars than
bureaucrats and trial lawyers? I have listened with intent interest,
and the charges of some of the members of the minority party are just
outrageous.
They claim our bill does too much, that it goes too far, and that it
is too ambitious for this Congress. This claim, coming from proponents
of the President's ill-conceived centralized, federalized health care
scheme, can only be seen as a farce. I contend that the President's
first health care bill was far too big. The Kennedy approach now
advocated by the President is just too small. Our health care plan is
just right for the American family.
Our colleagues in the other body deserve a great deal of credit for
trying to remove the barriers created by preexisting conditions. It is
a needed reform, and it is contained in our bill. This bill gives
people who lose or change jobs the insurance that they can keep their
health insurance when they need it most.
One other misstatement of fact. The Senate has not passed the Kennedy
bill. It has only moved out of committee. Only yesterday the letter
comes out of the Senate that the leadership in the U.S. Senate approves
of our bill. They ratify our bill. They commend us for doing these
things, for doing more for the American people.
I have to say that a letter from the small business groups in this
country says that this is the right thing to do for the American
working people, for those people who have to carry a lunch bucket to
work. It gives them choice, it gives them coverage, and Mr. Speaker,
the time has come to pass this legislation. I ask for its approval.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Pennsylvania [Mr. Goodling] will be recognized for 15 minutes, and the
gentleman from Missouri [Mr. Clay] will be recognized for 15 minutes.
The Chair recognizes the gentleman from Pennsylvania [Mr. Goodling].
Mr. GOODLING. Mr. Speaker, I yield myself 4\1/2\ minutes.
(Mr. GOODLING asked and was given permission to revise and extend his
remarks.)
Mr. GOODLING. Mr. Speaker, today this House of the people has a
historic opportunity to cast their vote for landmark legislation
designed to address the health insurance concerns expressed by the
people.
For nearly three decades the American people have looked to Congress
to improve private health insurance accessibility, affordability, and
accountability. Unfortunately, until this point, efforts to nationalize
health care have deprived our people of the added security that would
result from the commonsense and bipartisan elements of targeted health
insurance reform contained in the measure we are now considering. These
elements, such as health insurance portability, renewability, and
pooling for small employers, have been long debated and included in
various legislative proposals offered by the members of the Economic
and Educational Opportunities Committee and many others.
These needed well-targeted reforms did not advance in the last
Congress because of the failed efforts by the President to promote his
government-run health care plan. The American people were not fooled--
the elements of the President's plan proved too costly, too
bureaucratic, and would have led to health care rationing. However, our
efforts here today give evidence that we are seriously taking President
Clinton at his word which was given in his State of the Union address
last year, ``Let's do it step by step; let's do whatever we have to do
to get something done'' in regard to incremental health insurance
reform.
That is why the legislation before us is deliberately more modest in
scope. Rather than trying to create a new health care system, the
Health Coverage Availability and Affordability Act seeks to build on
those elements of the Nation's employment-based system that work well--
namely the fully insured and self-insured group health plans under
ERISA--while at the same time making the important changes to the
current system which are needed.
The changes called for by the American people, like the people who
have spoken at my town meetings in York, PA, include helping end job-
lock for employees seeking new employment by limiting preexisting
condition restrictions under the new employer's plan and eliminating
such restrictions for those who maintain continuous health insurance
coverage. This proposal, like the bill reported by our Committee, does
that and more.
In addition, an employer would not be able to exclude new workers
from their company health plan simply because that worker or a member
of his or her family may have a serious health condition. Such
individuals would have to be permitted to enroll and be able to choose
a benefit package under the plan. If family coverage is offered under a
group health plan, spouses who lose other coverage and newborns would
have to be allowed to be enrolled.
Smaller businesses have also expressed concern that insurers not be
able to drop their coverage because of the health status of their
employees. The legislation addresses this concern by prohibiting
insurers and multiple employer plans from failing to renew health
insurance coverage because of adverse claims experience or other
reasons. Smaller employers and their employees would also have an
expanded choice of health insurance coverage because of provisions in
the bill allowing employers to choose their coverage from among all of
the products offered by insurers and HMO's participating in the small
group market.
I believe these changes reflect the kind of important reforms the
American public expect of us. But we must also help those who have no
coverage at all. The problem of the uninsured is primarily one of small
businesses that cannot afford to buy insurance for their workers.
The many witnesses who spoke at our committee's hearings stressed
that making health insurance more affordable was the key to making it
more available to the American worker and his or her family. Therefore,
the legislation contains provisions that will help achieve the goal of
expanding coverage to the nearly 34 million individuals in working
families who now do not have health insurance coverage. It does this by
clarifying the ERISA law to allow employers, especially smaller
employers, to form multiple employer plans through the associations
that represent the Nation's trades and businesses and by allowing
employers and employees to choose and negotiate for the type of
coverage they need and can afford.
In 1974, Congress enacted the Employee Retirement Income Security Act
or, as it came to be known, ERISA. In doing so, Congress shaped and put
into place the cornerstone of our country's employee benefits law. More
importantly, it laid the foundation upon which employers and negotiated
multiemployer plans have been able to successfully provide benefits to
workers and their families, including pensions, health, and other
benefits. As Dr. Richard Lesher, president of the U.S. Chamber of
Commerce, has testified, ``Our membership is convinced that
preservation of ERISA is a critical step on the road to significant
health care reform. We support H.R. 995 [the bill reported by the
Committee] as it builds upon ERISA by including needed insurance market
reform.''
This is one issue on which employers and unions agree. For example,
Mr. Robert Georgine, chairman of the National Coordinating Committee
for Multiemployer Plans, stated in testimony that:
``Given this reality [that there will be no employer
mandate] the next best approach is a policy that encourages
an expansion of voluntary, employment-based coverage without
imposing additional costs on existing health plans. * * *
H.R. 995 [the bill reported by the Committee] takes this
approach. We are pleased that the bill uses ERISA as its
vehicle.''
By utilizing the time-tested features contained in ERISA, the
provision under subtitle C, like those under H.R. 995, build upon the
successes produced by private sector innovation and market competition.
[[Page H3098]]
Under subtitle C of the bill, multiple employer plans could self-
insure or fully insure, gaining all of the advantages this entails
including economies-of-scale and lower costs. Small employers who now
do not have access to coverage, or cannot afford it, would be
automatically eligible for more affordable health coverage through the
plans sponsored by their business and trade associations. Together with
other provisions of the bill, such as the increase in the deduction of
health insurance costs for the self-employed, this legislation will
unleash small employers into a more competitive health insurance
marketplace, thus enabling them to secure more affordable health
coverage in the same manner as do larger employers.
Subtitle C also brings more accountability to the health insurance
market. The Department of Labor inspector general, Mr. Charles Masten,
testified that this is necessary and important legislation to stop
health insurance fraud perpetrated by bogus unions and other
illegitimate operators. Legitimate plans will be made accountable and
fraudulent schemes will be halted when these provisions are enacted.
In sum, subtitle C and the other provisions of the Health Coverage
Availabilty and Affordability Act present this Congress with perhaps
its best opportunity since the passage of ERISA to expand access to
affordable health insurance for many American families.
The measure is superior to other bills in either body in regard to
protecting the American worker and his family and offering the
opportunity for true portability of health insurance coverage, by
increasing the likelihood that the mobile worker's next employer will
also be offering a health plan. The fact that small employers strongly
support the pooling provisions in the bill is testament to the vast
potential multiple employer plans have for expanding coverage and
reducing the cost-shifting from the uninsured to the insured worker
that currently takes place.
The House bill is also more protective under its portability
provisions. The bill would allow a 60-day lapse in coverge before
portability protection for preexisting conditions would be interrupted
while other bills would allow only a 30-day lapse in coverage to
terminate an employee's portability protection. The House bill has also
been crafted carefully to be both more protective and administrable
with regard to the evidence employees must give to received portability
credit for prior coverage. It is anticipated that under the House bill
most group health plans would utilize the simpler portability rule
which credits employees with period of prior coverage for purposes of
reducing a new 12-month preexisting condition period without requiring
a demonstration that the prior coverage actually covered the
preexisting condition--a potentially lengthy and costly determination.
The House bill has also been carefully drawn to avoid issues that
made the Clinton plan so controversial such as provisions requiring
group health plans to include particular forms or types of benefit.
In sum, the provisions of the Health Coverage Availability and
Affordability Act represent the best opportunity in decades for
American workers and their families to gain increased access to more
affordable and accountable health insurance coverage. I urge my
colleagues to vote for this workable responsible targeted health
insurance reform bill. The American people will thank you for the
increased security they will have when you make history by passing this
landmark health coverage legislation.
{time} 2015
Mr. CLAY. Mr. Speaker, I yield myself 3 minutes.
(Mr. CLAY asked and was given permission to revise and extend his
remarks.)
Mr. CLAY. Mr. Speaker, I rise in opposition to H.R. 3103. The
Republican leadership is passing up a golden opportunity today to pass
a realistic, bipartisan health reform bill. Instead of bringing to the
floor the Roukema-Kassebaum-Kennedy bill, the leadership is bringing up
for consideration H.R. 3103. This bill is so weighted down with
complex, controversial, and special interest provisions that it could
doom health reform for 1996.
Members will have a chance, however, to vote for sensible, bipartisan
health reform legislation today. The democratic substitute is the
Roukema bill, and I urge my colleagues to support it.
The Nation cries out for the reasonable, constructive approach of the
Roukema bill. Democrats and Republicans should unite behind this bill.
It has broad bipartisan support in both Houses of Congress. The
President has said he will sign it.
The House Republican leadership is on the verge of dashing the hopes
of millions of people. They are on the verge of blocking the modest
legislative objectives of a large, bipartisan group of Members in the
House and Senate.
Mr. SPEAKER, included in H.R. 3103 is a proposal to exempt self-
funded, multi-employer health plans, or MEWA's, from State law. This
proposal is opposed by the National Conference of State Legislatures
and the National Association of Insurance Commissioners.
The large, self-funded health plans created by this bill would be
financial disasters waiting to happen. There is a reason Congress
delegated responsibility for regulating MEWA's to the States in 1983.
While many legitimate, successful MEWA's exist, the MEWA business
continues to attract unscrupulous operators and to experience an
inordinate failure rate.
Considering the fraud and abuse that has long been associated with
MEWA's, it is incredible that the bill would grandfather existing
MEWA's. The bill would immediately exempt large, existing MEWA's--the
good, the bad, and the ugly--from State solvency and insurance laws.
Having obtained this instant ``Good Housekeeping Seal of Approval,''
unscrupulous and inadequately financed operators could begin preying on
the public--one step ahead of the Labor Department which might still be
reviewing their application for a Federal certificate.
The bill's solvency standards are inadequate to the task assigned to
the Labor Department to regulate hundreds of multistate, multiemployer
health plans enrolling up to as many as 20 million people. Consumers
could find very little standing behind a Federal MEWA if it should get
into financial trouble.
This bill is an ironic example of legislative forum shopping; it
greatly expands Federal authority over the private sector. The Federal
Government for the first time would be in the business of chartering
and regulating the solvency of privately run, national health plans.
Perhaps nothing the Republicans have passed during the 104th Congress
would increase Federal financial exposure more than this bill's MEWA
provision. It would only be a matter of time before a large, multistate
MEWA would go under, leaving consumers with millions of dollars in
unpaid medical bills.
And to whom will these angry, aggrieved consumers turn when this
happens? Their State insurance regulator? No. Consumers will turn to
the Labor Department and Members of Congress for relief. And, as with
the savings and loans insolvencies of the 1980's, the urge and
political pressure to bail out these MEWA's and protect constituents
will be irresistible.
Finally, considering the hostility, not to mention the appropriations
riders and budget cuts, that has met Labor Department regulatory
activity during this Congress, it is almost certain that the Labor
Department will be a weak regulator.
Do you want the Federal Government to assume responsibility for
regulating large, multistate health plans whose insolvencies could
expose the Federal Government to multimillion-dollar bailouts--
especially in an era of Federal Government downsizing, anti-regulating
zeal, and diminishing budgets?
Mr. Speaker, this bill brings market fragmentation to an even higher
plain. It carves up the multiemployer plan market, treating large plans
differently than small plans, old plans differently than new plans,
single industry plans differently than multiindustry plans, plans in
one State differently than plans in another.
Its exemptions, its exceptions to the exemptions, and its loopholes
to the exceptions to the exemptions--never mind the bill's
grandfathering of scoundrels along with the saints--makes this bill
look like swiss cheese and smell like limburger.
Finally, the United States has an extremely fragmented health
insurance market. This bill would make it worse. The expansion of self-
funded plans would greatly exacerbate market fragmentation.
The bill's expansion of the ERISA preemption to self-funded
multiemployer plans, and the cost savings associated with not having to
comply with State solvency and insurance rules, will make being a
Federal MEWA an extremely attractive option for existing multiemployer
plans and trade association plans that currently offer
[[Page H3099]]
fully insured products to their members. Many of these plans would seek
to become federally chartered self-funded MEWA's. And, many employers
that now offer an insured product to their employees--through Blue
Cross-Blue Shield, for example--will transfer their coverage to these
Federal MEWA's.
These Federal, self-funded MEWA's will siphon healthier, younger
groups from traditional insurance markets and, as a consequence, will
undermine those markets as well as State health reform initiatives. As
healthier groups exit the insurance market, premiums will rise, forcing
some individuals to drop coverage. In addition, shrinkage in the size
of insurance markets means a shrinkage in both a State's insurance
premium tax base and high risk pool assessment base; H.R. 3103 would
cost States millions and millions of dollars in lost revenues--revenues
which States use to finance high risk pools for the uninsured. This
bill will make it more difficult for States to maintain and expand
their efforts to expand coverage to the uninsured. That would be a
travesty.
I urge Members to oppose H.R. 3103 and to support the Democratic
substitute.
National Association of
Insurance Commissioners,
Washington, DC, March 28, 1996.
Hon. Newt Gingrich,
Speaker of the House, Washington, DC.
Dear Mr. Speaker: I am writing to comment upon the ``Health
Coverage Availability and Affordability Act of 1996'', H.R.
3160, adopted by the House Rules Committee yesterday and
scheduled for a vote by the full House of Representatives
today. As you are aware, over the last few weeks, the
National Association of Insurance Commissioners' (NAIC)
Special Committee on Health Insurance (the ``NAIC
Committee''), together with the National Conference of State
Legislatures (``NCSL''), has provided comments upon H.R. 995,
H.R. 3063 and H.R. 3070.
We appreciate the legislation's extension of portability
reforms to self-funded health care plans governed by the
Federal Employee Retirement Income Security Act (``ERISA'');
the NAIC has long called for these reforms and federal
intervention in this area is laudable. We also appreciate
certain clarification that were made to provisions in the
bills adopted by the committees of jurisdiction relating to
state flexibility and the Medicare anti-duplication
prohibitions. However, as detailed below, we continue to have
serious concerns with the bill's provisions relating to
multiple employer welfare arrangements (``MEWAs'').
We commend the additional clarifications made within Title
1, Subtitle D, Section 192, relating to ``State Flexibility
to Provide Greater Protection''. The bill contains further
limits on the scope of its preemption than were contained in
H.R. 3063 and H.R. 3070. The legislative now states that it
does not preempt those state laws ``that related to matters
not specifically addressed'' in the bill. The bill also
specifically saves several areas of state laws. We appreciate
this enhanced state flexibility. We do, however, remain
concerned about the absence of a broader construction clause
explicitly saving from preemption any state laws that are not
inconsistent with the bill and which provide greater
beneficiary protection. In the absence of such a clause, the
bill might be construed to ``preempt the field'' of any state
law that touches upon any area minimally mentioned in the
bill, even if the bill's provisions were not intended to
preempt such state law. Since this a new area of federal
intervention, we urge caution and care in the final
crafting of preemption language.
We also appreciate the significant strides made in refining
the range of health insurance policies which are not to be
considered duplicative for the purposes of the application of
the new Medicare anti-duplication provisions. We would
appreciate the opportunity to clarify the states' remaining
jurisdiction concerning health insurance policies governed by
these provisions (possibly within legislative history) and to
provide technical comments. We would like to commend you for
tightening the consumer protections in these provisions from
the earlier provisions adopted by amendment in committee.
We reiterate the concerns raised in our letter of March 18,
1996 to Chairmen Archer and Bliley concerning the long term
care insurance related provisions within the legislation.
Unfortunately, we continue to have grave concerns that
Subtitle C of Title 1 of H.R. 3160 would significantly erode
existing state-level insurance reforms. The net effect of the
final provisions relating to MEWAs is extremely damaging to
states' authority to govern their own insurance market. The
final language contains many layers of savings for, and
exemptions from, state laws. This maze clouds the picture.
Upon close examination of the multiple tiers of provisions,
the bill preempts state laws governing health insurance,
including those governing MEWAs, in all but a small number of
states.
In sum, the changes made to Subtitle C do not represent a
significant improvement from those contained within H.R. 995.
We therefore remain opposed to most of the provisions
contained within Subtitle C of Title I of the bill and
reiterate the prior concerns expressed by the NAIC Committee
on this topic. (See Joint NAIC Committee/NCSL letter dated
March 5, 1996 to Representative William Goodling).
In addition, the bill still preempts state rating laws
applicable to association plans thereby creating an unlevel
playing field between these plans and other insured plans.
Market fragmentation will thereby worsen and costs within the
insured market could spiral. With respect to association
plans, the bill also preempts state mandated benefit laws
which have been enacted by the states.
The state budgetary impact of the bill is still likely to
be significant. The bill only allows states to apply premium
taxes to newly-formed or newly operating arrangements. Any
arrangement that can argue they were already ``operating'' in
a state cannot be taxed on a level playing field with state-
regulated insurers. This provision thus promotes unfair
competition and could significantly diminish state premium
tax income.
The bill strips states of their oversight responsibility
over a significant class of MEWAs. We question whether states
could in good conscience accept responsibility for MEWA
activities by asking the U.S. Department of Labor, pursuant
to the option in the bill, for the authority to enforce the
inadequate federal standards set forth in the bill. While
gaps and ambiguities in federal law have led to some
enforcement difficulties, this should be addressed by
clarifications in federal law, not by the sweeping preemption
of state regulatory authority over MEWAs proposed through
H.R. 3160.
Thank you for your consideration of our comments. We look
forward to continuing to work together on legislation to
promote portability and availability of health insurance.
Please feel free to call Kevin Cronin, the NAIC's Acting
Executive Vice President and Washington Counsel at (202) 624-
7790, with any questions you may have.
Sincerely,
Brian K. Atchinson,
President, NAIC,
Superintendent, Maine Bureau of Insurance.
____
National Conference of State Legislatures,
Washington, DC, March 27, 1996.
Hon. John Joseph Moakley,
Ranking Member, Committee on Rules,
U.S. House of Representatives, Washington, DC.
Dear Representative Moakley: On behalf of the National
Conference of State Legislatures, I would like to share our
thoughts on H.R. 3160, pending health insurance reform
legislation. NCSL supports efforts to extend portability to
individuals covered by ERISA plans and to establish minimum
federal standards for insured plans. We are pleased that
Title I, Subtitles A and B, build on the foundation for
reform built by states over the last several years. We have
been assured that the intent of Subtitles A and B is to
continue to support state regulation and innovation in the
small group and individual markets. We are pleased that
changes have been made since the mark-up of H.R. 3070 and
H.R. 3103, to provide additional clarity with regard to the
ability of states to exceed the federal standards,
established in the bill. We continue to have some concerns.
For example, Section 103(b)(1) that states, ``. . . A group
health plan, and an insurer or HMO offering health insurance
coverage in connection with a group health plan, may not
require a participant or beneficiary to pay a premium or
contribution which is greater than such premium or
contribution for a similarly situated participant or
beneficiary solely on the basis of the health status of the
participant or beneficiary.'' NCSL is concerned that state
rating laws that prohibit or restrict the use of health
status in a manner different than prescribed in the bill, may
be preempted. For example, in cases where plans that include
a rating component in addition to health status, state rating
reforms may not apply. We hope to work with you to obtain
additional clarity.
While we support the thrust of Subtitles A and B of Title
I, NCSL opposes Subtitle C and urges you not to include these
provisions in the House health insurance reform bill.
Subtitle C fails to recognize the traditional role of states
in the regulation of insurance and the important
contributions state legislators have made in increasing
accessibility and portability of health insurance and
addressing fraud and consumer protection issues with regard
to Multiple Employer Welfare Associations, by eliminating
state authority to oversee Multiple Employer Welfare
Associations (MEWAs). Instead, Subtitle C: (1) creates
incentives for the establishment of federally regulated
MEWAs, moving more individuals out of the reach of state
insurance regulators and the protections those regulators
provide; (2) permits some MEWAs to operate without receiving
full federal approval; and (3) expands the Department of
Labor's (DOL) authority over employer solvency and MEWAs, but
fails to authorize funds for expanding DOL staff to perform
these functions. NCSL opposes this preemption of state
authority and the deregulation of MEWAs.
The MEWA provisions of H.R. 3160 would: (1) disrupt the
existing health insurance market, undermining existing state
efforts to improve access to health care and adversely
affecting insurance premiums overall, and (2) make it easier
for unscrupulous individuals to commit fraud under the
protective umbrella of this proposed federal law which fails
to provide adequate protections
[[Page H3100]]
for plan participants. NCSL supports and encourages the
development of public and private purchasing cooperatives and
other innovative ventures that permit individuals and groups
to negotiate affordable health care coverage on the same
basis as large groups. We also believe that these entities
should and must be regulated and that consumers must be
protected. Work remains to be done at both the state and
federal government levels to strike a reasonable balance for
MEWAs. NCSL urges you to retain the state role in regulating
MEWAs.
States have made tremendous progress in reforming the small
group insurance market. Since 1990 at least, 43 states have
enacted laws that require carriers to renew coverage
guaranteed renewal); 37 states have enacted laws that require
carriers to offer coverage to small groups regardless of the
health status of their employees or previous claims
experience (guaranteed issue); and 45 states limit pre-
existing condition waiting periods and require carriers to
give individuals credit for previous coverage. In addition,
similar efforts are underway in a number of states with
respect to the individual insurance market. Since 1991 at
least, 16 states have enacted guaranteed renewal; 11 states
have enacted guaranteed issue; and 22 states have limited
pre-existing condition waiting periods. Twenty-four states
have established state high-risk health insurance pools that
enrolled over 100,000 individuals last year. Finally, states
are continuing to work with MEWAs to strike a balance between
reasonable state regulations, plan flexibility and consumer
protection.
NCSL joins the many other groups in urging you to move
forward without further delay on these incremental, but
important steps toward health reform. NCSL looks forward to
working with you and your colleagues in the future as we work
together toward expanding health care access and
affordability.
Sincerely,
Wiliam Pound,
Executive Director.
Mr. CLAY. Mr. Speaker, I reserve the balance of my time.
Mr. GOODLING. Mr. Speaker, I yield such time as he may consume to the
gentleman from Indiana [Mr. Buyer].
(Mr. BUYER asked and was given permission to revise and extend his
remarks.)
Mr. BUYER. Mr. Speaker, I rise in support of the bill to open access
and make health care affordable.
Mr. Speaker, today, with the passage of this bill, H.R. 3103, we will
be expanding health care coverage to millions of Americans. After years
of discussing how best to bring reform to our health care system, this
bill brings meaningful incremental health care reform. H.R. 3103, the
Health Care Coverage Availability and Affordability Act, addresses two
crucial needs in our health care system--access and affordability.
First, let's review our current situation. Eighty-five percent of the
population has health insurance, mostly through their employer. The
uninsured, approximately 39 million Americans, today are not poor and
are not elderly. The poor are covered by Medicaid; the elderly are
covered by Medicare. Of the uninsured, 47 percent were employed full
time; 38 percent worked part-time; 16 percent were unemployed. If
incentives can be created in the market so more employed individuals
can get affordable coverage and those between jobs can get coverage;
then, the number of uninsured individuals will go down. Meaning
millions of Americans will be covered by medical insurance.
Furthermore, many individuals cannot get coverage due to pre-existing
conditions or because it is too expensive. Many businesses cannot get
coverage because one of the employees or a dependent of an employee has
a pre-existing condition. Employees are discouraged from changing jobs
or starting their own businesses because they cannot get coverage due
to a pre-existing condition.
H.R. 3103 will help create incentives so more individuals receive
affordable insurance. First, it addresses the problems of access and
affordability. Under H.R. 3103, group health plans (large employer
plans, insurers, health maintenance organizations) are prohibited from
imposing a pre-existing condition exclusion that exceeds 12 months for
conditions that were diagnosed or treated within the previous 6 months
on individuals that move from one group plan to another group plan.
Pre-existing conditions would not affect newborns, adopted children, or
pregnancy. Health insurance providers must reduce previous condition
exclusion periods for an individual who enrolls in another program by
the amount of time the individual was covered by a group health plan,
health insurance, and HMO or Medicaid. Health insurance providers may
not deny coverage to individuals in group health plans because of (1) a
medical condition, (2) claims experience, (3) receipt of treatments for
a medical condition, (4) medical history, (5) evidence of insurability
or (6) disability.
H.R. 3103 also ensures portability of health insurance for those
moving from group coverage to individual coverage, such as someone
leaving a large employer to start a business. Many States, including
Indiana, have addressed this issue. Under H.R. 3103, States are given
the flexibility to address this problem such as by risk pools, or
conversion policies, open enrollment periods, guaranteed issue, or any
means that a State sees fit. However, for those State's that have not
acted adequately, an insurer or HMO issuing individual health insurance
coverage would have to offer an insurance policy equal to the average
acturial value of the plans offered in the individual market by that
insurer. The insurer would be prohibited to decline to issue coverage
based on health status.
One of the key provisions of the bill allows small employers to
voluntarily form groups for the purpose of self-insuring or providing
health care coverage. Associations, like the NFIB or the Farm Bureau,
would be able to band their members together for health insurance
purposes and be treated like large multi-state employers. The
regulatory structure that enables General Motors or IBM or AT&T to
offer health insurance coverage, will now exist for the local hardware
store, the corner grocer, and the farmer to purchase affordable health
care coverage.
Voluntary health insurance associations are not new. In northwest
Indiana a group of businesses have banded together to gain market clout
to buy health care coverage for their employees. Typically, the
employers in the alliance enjoy savings of 10 percent to 40 percent and
can access 11 different health plans. H.R. 3103 should make their task
easier and the bill should encourage other entities to band together to
get access to affordable health insurance.
These provisions address the regulatory side of health insurance. By
themselves, they make this bill worthy of support, but H.R. 3103 does
not stop at insurance reform. It includes noteworthy tax relief as
well.
First, H.R. 3103 increases the health insurance deduction for self-
employed individuals from 30 percent to 50 percent by the year 2003. In
1995, Congress made this deduction permanent and raised it from 25
percent to 30 percent. We need to take care of the entrepreneurial
spirit of America which lies in small business. This bill will increase
the deduction to 50 percent. As large employers get a complete write-
off of health insurance expenses, this bill brings an element of tax
fairness to the system.
The bill also extends the medical expense tax deduction to include
long-term care services that are curing or rehabilitative in nature, or
are maintenance and personal care required by the chronically ill. This
should give some relief to taxpayers who need long-term care. In
additon, benefits paid out under life insurance ``accelerated death
benefits'' contracts would not be treated as taxable income to the
terminally or chronically ill beneficiary.
H.R. 3103 also includes Medical Savings Accounts. Individuals covered
by a high deductible health insurance plan or their employer could make
tax deductible contributions to a medical savings account. Funds could
only be used for qualified medical expenses and disbursements for non-
medical reasons would be treated as taxable income and subject to an
additional 10 percent penalty. MSAs are true portability. The account
belongs to the individual and is under the individual's control. This
is a creative solution to provide more affordable insurance coverage
and greater choice.
Finally, H.R. 3103 addresses fraud. Recent studies estimate that
fraud costs consumers 5 to 10 percent of ever health care dollar spent.
This is literally billions of dollars and leads to higher costs and
higher premiums. It authorizes the Secretary of Health and Human
Services and the Attorney General to jointly establish a national
program to combat health care fraud. Under Medicare, the Secretary of
HHS is required to establish a program to encourage individuals to
report suspected fraud and abuse in the Medicare Program. Individuals
who have been convicted of felonies relating to health care fraud or
controlled substances would be excluded from Medicare and State health
care programs for a minimum of 5 years. Criminal penalties would be
revised and enhanced.
H.R. 3103 is a good bill with much needed reform. It goes beyond
simple portability and addresses access, affordability, and choice.
Once enacted, it will mean that someone today without insurance has a
better chance of getting it and affording it tomorrow.
Mr. GOODLING. Mr. Speaker, I yield 4\1/2\ minutes to the gentleman
from Illinois [Mr. Fawell], who has spent probably hundreds of hours
putting this legislation together and guiding us in committee.
Mr. FAWELL. Mr. Speaker, I thank the gentleman for yielding me this
time.
Mr. Speaker, I rise to enthusiastically support H.R. 3160. The bill
includes key small business health insurance reform that was in H.R.
995, reported by the Economic Opportunities
[[Page H3101]]
Committee: It gives small employers the right to form groups for the
purpose of self-insuring or fully insuring and thereby gain access to
affordable health care with the economies of scale that large employers
and union plans have had for years under ERISA.
The problem of the uninsured is predominately a problem of small
business lacking access to affordable insurance. Eighty-five percent of
the 40 million uninsured are in families with at least one employed
worker, the majority of whom work in a small business. Small businesses
face health insurance premiums 30 percent higher than larger companies
due to higher administration costs, and an additional 30 percent more
due to costly State mandated coverages.
Small business people--through the National Federation of Independent
Business--call this reform ``A remarkable advancement for small
businesses over current law * * * a massive improvement''. Here's what
NFIB says. I am going to be quoting from a letter from them.
NFIB is seeking to correct a basic unfairness in our health
care system. Big business is allowed to buy health insurance
under a different set of rules than small business. Because
of ERISA, large self-insured businesses are exempted from
State law in their health plans while small business is stuck
with State insurance coverage mandates . . . and other forms
of regulation. This inequity between big business and small
business in large part explains why the premiums of corporate
America are going down, while small business premiums are
going up.
H.R. 3160 would stop this unfairness by allowing small
firms to band together across State lines to purchase health
insurance with nearly the same exemption from State law that
big business has. Small employers will be able to cut their
premiums by as much as a third. The legislation give(s) small
firms almost every advantage they lack in purchasing health
insurance today,
As I have indicated, big business has all of these advantages.
Achieving this is NFIB's highest health reform priority. Any
substitute that does not directly address this inequity between big and
small business is unacceptable to the more than 600,000 members of
NFIB.
Of course, NFIB is but one of dozens of employer groups that support
this approach. It is backed by the Chamber of Commerce, National
Association of Manufacturers, National Association of Wholesalers, the
National Restaurant Association, the National Retail Federation, the
church groups, and many others, and I might also add, by labor unions
that understand how valuable this type of legislation is.
A recent editorial in the Chicago Tribune entitled ``Free the Health
Insurance Market'' expressed it this way:
``Freed of the need to offer 50 different policies, an organization
such as the National Restaurant Association could arrange with an
insurer to offer a basic policy to all its members. Without mandating
coverage or capping premiums--two odious features of President
Clinton's failed reform plan--the (bill) spurs the private insurance
market to absorb a good portion of the Nation's 41 million uninsured,
the vast majority of whom either have jobs or have a jobholder in he
family.''
Unless we do something there by the way, what good is portability?
Mr. Speaker, many of the Governors had concerns about the original
H.R. 995 as introduced last year. I am pleased to report that we worked
very closely with many of them over the past year, and have addressed
their concerns. Several changes were made that are acceptable to the
Governors and the employer community.
Let me ask this one question, and think about it: Who benefits from
this legislation? The people who cut your hair, serve you at
restaurants, repair your car, clean your clothes--the millions of
people working in small businesses all over America and who produce
most of our new jobs.
I urge my colleagues to vote no on the substitute and vote yes on
final passage of H.R. 3160. Allow employees of small businesses the
same kind of access to affordable health care as that available to
employees of large businesses.
Section-by-Section Analysis of Provisions Relating to ERISA Group
Health Plans Considered By the Committee on Economic and Educational
Opportunities in The Health Coverage Availability and Affordability Act
of 1996
TITLE I--INCREASED AVAILABILITY AND PORTABILITY OF HEALTH PLAN
INSURANCE COVERAGE
Subtitle A--Coverage Under Group Health Plans
Sec. 101. Portability of coverage for previously covered
individuals, and
Sec. 102. Limitation on preexisting condition exclusions;
no application to certain newborns, adopted children, and
pregnancy.
Group health plans, insurers, and health maintenance
organizations would be prohibited from imposing a preexisting
condition exclusion that exceeded 12 months for conditions
for which medical advice, diagnosis, or treatment was
received or recommended within the previous 6 months prior to
becoming insured. In the event that the individual was a late
enrollee, the preexisting condition exclusion could not
exceed 18 months.
Preexisting condition exclusions or limitations could not
be applied to newborns and adopted children so long as these
individuals become insured within 30 days of birth or
placement for adoption. Pregnancy could not be treated as a
preexisting condition. In addition, genetic information could
not be considered a preexisting condition, so long as
treatment of the condition to which the information was
applicable had not been sought during the 6 months prior to
becoming covered.
Group health plans, insurers, and health maintenance
organizations (HMOs) would be required to credit periods of
qualified previous coverage toward the fulfillment of a
preexisting condition exclusion period when an individual
moves from one source of group health coverage to another.
Specifically, a preexisting condition limitation period would
be reduced by the length of the aggregate period of any
qualified prior coverage. Prior coverage would not have to be
credited toward a preexisting condition limitation period if
the individual experienced a break in qualified group
coverage of more than 60 days. (Qualified group coverage
means any period of coverage of the individual under a group
health plan, health insurance coverage, Medicaid, Medicare,
military health care, the Indian Health Service, state health
insurance coverage or state risk pool, and coverage under the
Federal Employee Health Benefits Program (FEHBP).) A waiting
period for any coverage under a group health plan (or for
health insurance coverage offered in connection with a group
health plan) would not be considered a break in coverage.
Presentation of a certification of prior coverage would
establish an individual's eligibility for credit against a
preexisting condition limitation period. Group health plan
administrators, insurers, HMOs, and state Medicaid programs
would be required to provide such certifications of coverage
upon request of the individual.
In determining whether an individual has met qualified
coverage periods, a group health plan, insurer, or HMO
offering group coverage could elect one of two methods. Under
the first, it could include all periods, without regard to
the specific benefits offered during the period of prior
coverage. Under the second, it could look at periods of prior
coverage on a benefit-specific basis and not include as a
qualified coverage period a specific benefit unless coverage
for that benefit was included at the end of the most recent
period of coverage. Entities electing the second method would
have to state prominently in any disclosure statements
concerning the plan or coverage and to each enrollee at the
time of enrollment or sale that the plan or coverage had made
such an election and would have to include a description of
the effect of this election. Upon the request of the plan,
insurer, or HMO, the entity providing the certification would
have to promptly disclose information on benefits under its
plan. It could charge the reasonable cost for providing this
information.
Sec. 103. Prohibiting exclusions based on health status and
providing for enrollment periods.
This section provides for availability of coverage. The
bill would ensure that employees and their dependents could
not, based on health status, be excluded from enrolling in
their group health plan and being continually enrolled.
Health status is defined to include, with respect to an
individual, medical condition, claims experience, receipt of
health care, medical history, genetic information, evidence
of insurability (including conditions arising out of acts of
domestic violence), or disability.
Group health plans would be required to provide for special
enrollment periods for eligible individuals who lose other
sources of coverage if certain conditions were met. An
individual would have to be allowed to enroll under at least
one benefit option if: (1) the employee (or dependent) had
been covered under another group health plan at the time
coverage was previously offered, (2) that this was the reason
for declining enrollment, (3) that the individual lost their
coverage as a result of certain events (loss of eligibility
for coverage, termination or employment, or reduction in the
number of hours of employment), and (4) the employee
requested such enrollment within 30 days of termination of
the coverage.
In the event that a group health plan provided family
coverage, the plan could not require, as a condition of
coverage of a beneficiary or participant in the plan a
waiting period applicable to the coverage of a beneficiary
who is a newborn, an adopted child or child placed for
adoption, or a spouse, at the time of marriage, if the
participant has met any waiting period applicable to that
participant. The bill defines timely enrollment as being
within 30 days of the birth, adoption,
[[Page H3102]]
or marriage if family coverage was available as of that date.
Renewability requirements apply to certain arrangements to
assure continued access of employers to health coverage to
offer their employees. A group health plan which is a
multiemployer plan, a multiple employer health plan (as
defined in section 704 of ERISA), and a multiple employer
welfare arrangement (providing medical care) may not deny an
employer whose employees are covered under such a plan or
arrangement continued access to the same or other coverage
under the terms of such plan or arrangement other than (1)
for nonpayment of premiums or contributions, (2) for fraud or
other intentional misrepresentation of material fact by
the employer, (3) for noncompliance with material plan or
arrangement provisions, (4) because the plan or
arrangement is ceasing to offer any coverage in a
geographic area, (5) for failure to meet the terms of an
applicable collective bargaining agreement, to renew a
collective bargaining or other agreement requiring or
authorizing contributions to the plan, or to employ
employees covered by such an agreement, (6) in the case of
a plan or arrangement to which subparagraph (C), (D), or
(E) of section 3(40) of ERISA applies, to the extent
necessary to meet the requirement of such subparagraph, or
(7) in the case of a multiple employer health plan (as
defined in section 701(4) of such Act), for failure to
meet the requirements under part 7 of ERISA for exemption
under section 514(b)(6)(B) of such Act. It is not included
that anything in this section be construed to preclude any
such plan or arrangement from establishing employer
contribution requirements or group participation
requirements not otherwise prohibited by this Act.
Sec. 104. Enforcement.
The above provisions would be enforced through penalties
assessed through the Internal Revenue Code (IRC), Employee
Retirement Income Security Act (ERISA), or through civil
money penalties assessed by the Secretary of Health and Human
Services (HHS). The Secretaries of Treasury, Labor, and HHS
would be required to issue regulations that are
nonduplicative and in a manner that assures coordination and
nonduplication in their activities as provided for under this
Act.
Enforcement through ERISA. Sections 101, 102, and 103 of
Subtitle A (and the definitions under Subtitle D insofar as
they are applicable to such sections) are deemed to be
provisions of Title I of the Employee Retirement Income
Security Act of 1974 (ERISA) for purposes of applying the
enforcement, fiduciary and other provisions of such title.
The Secretary of Labor would only apply the sanctions under
ERISA to an insurer or HMO that was subject to state law
(within the meaning of section 514(b)(2)(A)) in the event
that the Secretary determines that the state has not provided
for enforcement of the above provisions of the Act. Sanctions
would not apply in the event that the Secretary of Labor
established that none of the persons against whom the
liability would be imposed knew, or exercising reasonable
diligence, would have known that a failure existed, or if the
noncomplying entity acted within 30 days to correct the
failure. In no case would a civil money penalty be imposed
under ERISA for a violation for which an excise tax under the
COBRA enforcement provisions under the Internal Revenue Code
was imposed or for which a civil money penalty was imposed by
the Security of HHS.
Enforcement through the IRC. IRC enforcement would be done
through the Consolidated Omnibus Budget Reconciliation Act
(COBRA) health insurance continuation provisions (section
4980B). In general, a noncomplying plan would be subject to
an excise tax of $100 per day per violation. Penalties would
not be assessed in the event that the failure was determined
to be unintentional or a correction was made within 30 days.
For purposes of applying the COBRA enforcement language,
special rules would apply: (1) no tax could be imposed by
this provision on a noncomplying insurer or HMO subject to
state insurance regulation if the Secretary of HHS
determined that the state had an effective enforcement
mechanism; (2) in the case of a group health plan of a
smaller employer that provided coverage solely through a
contract with an insurer or HMO, no tax would be imposed
upon the employer if the failure was solely because of the
product offered by the insurer or HMO; and (3) no tax
penalty would be assessed for a failure under this
provision if a sanction had been imposed under ERISA or by
the Secretary of HHS with respect to such failure.
Enforcement through Civil Money Penalties. A group health
plan, insurer, or HMO that failed to meet the above
requirements would be subject to a civil money penalty. Rules
similar to those imposed under the COBRA penalties would
apply. The maximum amount of penalty would be a $100 for each
day for each individual with respect to which a failure
occurred. In determining the penalty amount, the Secretary
would be required to take into account the previous record of
compliance of the person being assessed with the applicable
requirements of the bill, the gravity of the violation, and
the overall limitations for unintentional failures provided
under the IRC COBRA provisions. No penalty could be assessed
if the failure was not intentional or if the failure was
corrected within 30 days. A procedure would be available for
administrative and judicial review of a penalty assessment.
The authority for the Secretary of HHS to impose civil
money penalties would not apply to enforcement with respect
to any entity which offered health insurance coverage and
which was an insurer or HMO subject to state regulation
(within the meaning of section 514(b)(2)(A) of ERISA) by an
applicable state authority if the Secretary of HHS determined
that the state had established an enforcement plan. In no
case would a civil money penalty be imposed under this
provision for a violation for which an excise tax under COBRA
or civil money penalty under ERISA was assessed.
Subtitle B--Certain Requirements for Insurers and HMOs in the
Group and Individual Markets
Part 1. Availability of Group Health Insurance Coverage
Sec. 131. Guaranteed availability of general coverage in
the small group market.
This section provides for guaranteed availability of
general coverage in the small group market. Each insurer or
HMO that offered general coverage in the small group market
in a state would have to: (1) accept every small employer in
the state that applied for such coverage; and (2) accept for
enrollment every eligible individual who applied for
enrollment during the initial enrollment period in which the
individual first became eligible for coverage under the group
health plan. No restriction based on health status could be
placed on the ability of an eligible individual to enroll.
The small group market is generally defined as employer
groups with more than 2 and less than 51 employees. An
eligible individual is one in relation to the employer as
determined: (1) in accordance with the terms of the plan; (2)
as provided by the insurer or HMO under rules which would
have to be applied uniformly; and (3) in accordance with
applicable state laws. Special rules would apply to
network plans and HMOs to ensure that this guaranteed
availability provision did not lead to capacity problems.
In addition, such entities would not have to enroll a
small group whose employees worked or lived outside the
entity's service area. Insurers and HMOs could deny
enrollment to an eligible small group in the event that
the group failed to meet certain minimum participation or
contribution requirements that were consistent with state
law.
Sec. 132. Guaranteed Renewability of group coverage.
This section provides for guaranteed renewability of group
coverage. If an insurer or HMO offered health insurance
coverage in the small or large group market, the coverage
would have to be renewed or continued in forced at the option
of the employer. (An insurer or HMO could modify the coverage
offered to a group health plan so long as the modification
was effective on a uniform basis among group health plans
with that type of coverage.) Exceptions to the guaranteed
renewability requirement would apply in the event that the
employer failed to pay the premiums, committed fraud,
violated the participation rules, or moved outside the
service area. In addition, guaranteed renewability would not
apply if: (a) the insurer or HMO ceased to offer any such
coverage in a state (or in the case of a network plan, in a
geographic area); (b) in the event that the insurer or HMO
uniformly terminated offering a particular type of coverage
and provided adequate notice and the opportunity to elect
other health insurance being offered in that market; and (c)
in the event that the entity discontinued offering all health
insurance coverage in the small or large group market or in
both markets in a state, provided for adequate notice. In the
last instance, such an entity could not reenter the market it
left for at least 5 years.
Subtitle C--Affordable and Available Health Coverage Through
Multiple Employer Pooling Arrangements
Sec. 161. Clarification of duty of the Secretary of Labor
to implement provisions of current law providing for
exemptions from State regulation of multiple employer health
plans.
Sec. 161, Subsection (a). Rules governing state regulation
of multiple employer health plans.
This subsection adds a new Part 7 (Rules Governing State
Regulation of Multiple Employer Health Plans) to Title I of
ERISA, as follows:
``Sec. 701. Definitions.
This section defines the following terms: insurer, fully-
insured, medical care (as under current law), multiple
employer health plan, participating employer, sponsor, and
state insurance commissioner.
``Sec. 702. Clarification of duty of the Secretary of Labor
to implement provisions of current law providing for
exemptions from State regulation of multiple employer health
plans.
This section clarifies the conditions under which multiple
employer health plans (MEHPs), non-fully-insured multiple
employer arrangements providing medical care, may apply for
an exemption from certain state laws. The exemption process
is contained in current ERISA law, which also contains
restrictions on the ability of states to fully regulate such
entities. Specifically, existing section 514(b)(6)(A)(ii) of
ERISA provides that in the case of such a partly insured or
fully self-insured arrangement, any law of any State which
regulates insurance may apply only ``to the extent not
inconsistent with other parts of ERISA.'' However, under
section 514(b)(6)(B), the Department of Labor (DOL) may issue
an exemption from
[[Page H3103]]
state law with respect to such self-insured arrangements.
``Section 702 clarifies that only certain legitimate
association health plans and other arrangements (described
below) which are not fully insured are eligible for an
exemption and thereby treated as ERISA employee welfare
benefit plans. This is accomplished by clarifying the duty of
the Secretary of Labor to implement the provisions of current
law section 514(b)(6)(B) to provide such exemptions for
MEHPs. Under section 514(a) of ERISA, States are preempted
from regulating employee welfare benefit plans, but an
exception is made under section 702 to allow states to
enforce the conditions of an exemption granted a MEHP.
``Section 702 further sets forth criteria which a self-
insured arrangement must meet to qualify for an exemption and
thus become a MEHP. The Secretary shall grant an exemption to
an arrangement only if: (1) a complete application has been
filed, accompanied by the filing fee of $5,000; (2) the
application demonstrates compliance with requirements
established in sections 703 and 704 below; (3) the Secretary
finds that the exemption is administratively feasible, not
adverse to the interests of the individuals covered under it,
and protective of the rights and benefits of the individuals
covered under the arrangement, and (4) all other terms of the
exemption are met (including financial, actuarial, reporting,
participation, and such other requirements as may be
specified as a condition of the exemption).
``The application must include the following: (1)
identifying information about the arrangement and the states
in which it will operate; (2) evidence that ERISA's bonding
requirements will be met; (3) copies of all plan documents
and agreements with service providers; (4) a funding report
indicating that the reserve requirements of section 705 will
be met, the contribution rates will be adequate to cover
obligations, and that a qualified actuary (a member in good
standing of the American Academy of Actuaries or an actuary
meeting such other standards the Secretary considers
adequate) has issued an opinion with respect to the
arrangement's assets, liabilities, and projected costs; and
(5) any other information prescribed by the Secretary. Exempt
arrangements must notify the Secretary of any material
changes in this information at any time, must file annual
reports with the Secretary, and must engage a qualified
actuary.
``Section 702 also provides for a class exemption from
section 514(b)(6(A)(ii) of ERISA for large MEHPs that have
been in operation for at least five years on the date of
enactment. An arrangement qualified for this class exemption
if: (1) at the time of application for exemption, the
arrangement covers at least 1,000 participants and
beneficiaries, or has at least 2,000 employees of eligible
participating employers; (2) a complete application has been
filed and is pending; and (3) the application meets
requirements established by the Secretary with respect to
class exemptions. Class exemptions would be treated as having
been granted with respect to the arrangement unless the
Secretary provides appropriate notice that the exemption has
been denied. It is expected that the standards applicable to
entities eligible for a class exemption will be no less
protective than if an individual exemption were granted to
such an entity.
``Sec. 703. Requirements relating to sponsors, board of
trustees, and plan operations.
This section establishes eligibility requirements for
MEHPs. Applications must comply with requirements established
by the Secretary. Applications must demonstrate that the
arrangement's sponsor has been in existence for a continuous
period of at least 5 years and is organized and maintained in
good faith, with a constitution and bylaws specifically
stating its purpose and providing for a least annual
meetings, as a trade association, an industry association, a
professional association, or a chamber of commerce (or
similar business group, including a corporation or similar
organization that operates on a cooperative basis within the
meaning of section 1381 of the IRC) for purposes other than
that of obtaining or providing medical care. Also, the
applicant must demonstrate that the sponsor is established as
a permanent entity, has the active support of its members,
and collects dues from its members without conditioning such
on the basis of the health status or claims experience of
plan participants or beneficiaries or on the basis of the
member's participation in the MEHP.
``Section 703 also requires that the arrangement be
operated, pursuant to a trust agreement, by a ``board of
trustees'' which has complete fiscal control and which is
responsible for all operations of the arrangement. The board
of trustees must develop rules of operation and financial
control based on a three-year plan of operation which is
adequate to carry out the terms of the arrangement and to
meet all applicable requirements of the exemption and Title I
of ERISA. The rules also require that all employers who are
association members be eligible for participation under the
terms of the plan. Eligible individuals of such participating
employers cannot be excluded from enrolling in the plan
because of health status as required under section 103 of the
Act (nor be excluded by purchasing an individual policy of
health insurance coverage for a person based on their health
status). The rules also stipulate that premium rates
established under the plan with respect to any particular
participating employer cannot be based on the claims
experience of the particular employer.
``In addition to the associations described above, certain
other entities are eligible to seek an exemption as MEHPs
under section 514(b)(6)(B) of ERISA. These include (1)
franchise networks (section 703(b)), (2) certain existing
collectively bargained arrangements which fail to meet the
statutory exemption criteria (section 703(c)), and (3)
certain arrangements not meeting the statutory exemption
criteria for single employer plans (section 703(d)). (Section
709 of ERISA, added by Section 166, also makes eligible
certain church plans electing to seek an exemption.)''
``Sec. 704. Other Requirements For Exemption.
``Section 704 requires a MEHP to meet the following
requirements: (1) its governing instruments must provide that
the board of trustees serves as the named fiduciary and plan
administrator, that the sponsor serves as plan sponsor, and
that the reserve requirements of section 705 are met; (2) the
contribution rates must be adequate, and (3) any other
requirements set out in regulations by the Secretary must be
met.''
``Sec. 705. Maintenance of Reserves.
``Section 705 requires MEHPs to establish and maintain
reserves sufficient for unearned contributions, benefit
liabilities incurred but not yet satisfied and for which risk
of loss has not been transferred, expected administrative
costs, and any other obligations and margin for error
recommended by the qualified actuary. The minimum reserves
must be no less than 25% of expected incurred claims and
expenses for the year or $400,000. The Secretary may provide
additional requirements relating to reserves and excess/stop
loss coverage and may provide adjustments to the levels of
reserves otherwise required to take into account excess/stop
loss coverage or other financial arrangements.''
``Sec. 706. Notice Requirements for Voluntary Termination.
``Section 706 provides that, except as permitted in section
707, a MEHP may terminate only if the board of trustees
provides 60 days advance written notice to participants and
beneficiaries and submits to the Secretary a plan providing
for timely payment of all benefit obligations.''
``Sec. 707. Corrective Actions and Mandatory Termination.
``Section 707 requires a MEHP to continue to meet the
reserve requirements even if its exemption is no longer in
effect. The board of trustees must quarterly determine
whether the reserve requirements of section 705 are being met
and, if they are not, must, in consultation with the
qualified actuary, develop a plan to ensure compliance and
report such information to the Secretary. In any case where a
MEHP notifies the Secretary that it has failed to meet the
reserve requirements and corrective action has not restored
compliance, and the Secretary determines that the failure
will result in a continuing failure to pay benefit
obligations, the Secretary may direct the board to
terminate the arrangement.''
``Sec. 708. Additional Rules Regarding State Authority.
Under section 708(a), a state which certifies to the
Secretary that it provides guaranteed access to health
coverage may elect to opt out of the MEHP provisions outlined
above and deny a MEHP the right to offer coverage in the
small group market (or otherwise regulate such MEHP with
respect to such coverage), except as described below. A state
is considered to provide such guaranteed access, if (1) the
state certifies that at least 90% of all state residents are
covered by a group health plan or otherwise have health
insurance coverage, or (2) the state has, in the small group
market, provided for guaranteed issue of at least one
standard benefits package and for rating reforms designed to
make health insurance coverage more affordable. In states
without such guaranteed access, MEHPs could offer coverage in
the small group market in the state as long as they meet the
standards set forth in Part 7. For purposes of item (2) above
and the similar provision under section 162 of the bill, it
is intended that states that have achieved very high levels
of health insurance coverage through means such as tax-
preferred status for entities required to provide guaranteed
issue, community-rated coverage be considered to meet the
requirement under (2) regardless of how long a state law
requiring such has been in effect.
``Section 708(b) provides a limited exception to the above
described state opt out for certain large, multi-state
arrangements. The state opt out (described in item (2) in the
above paragraph) does not apply to new and existing MEHPs
that meet the following criteria: (1) the sponsor operates in
a majority of the 50 states and in at least 2 of the regions
of the country; (2) the arrangement covers or will cover at
least 7,500 participants and beneficiaries; and (3) at the
time the application to become a MEHP is filed, the
arrangement does not have pending against it any enforcement
action by the state. In addition, the state opt out
(described in items (1) and (2) in the above paragraph) does
not apply in a state in which an arrangement meeting the MEHP
standards operates on March 6, 1996, to the extent a state
enforcement action is not pending against such an entity at
the time an application for an exemption is made. The above
two exceptions do not apply to any state which, as of January
1, 1996, either (1) has enacted a law providing for
guaranteed issue of
[[Page H3104]]
fully community rated individual health insurance coverage
offered by insurers and HMOs, or (2) requires insurers
offering group health coverage to reimburse insurers
individual coverage for losses resulting from their offering
individual coverage on an open enrollment basis. Regulations
may also apply certain limitations to single industry plans.
``Under section 708, a state could assess new association-
based MEHPs (former after March 6, 1996) nondiscriminatory
state premium taxes set at a rate no greater than that
applicable to any insurer or health maintenance organization
offering health insurance coverage in the state. MEHPs
existing as of March 6, 1996 would remain exempt from state
premium taxes; however, if they expand into a new state,
the state could apply the above rule.
Section 162. Affordable and Available Fully-Insured Health
Coverage Through Voluntary Health Insurance Associations.
This section adds a new subsection (d) to section 514 of
ERISA which provides for the establishment of Voluntary
Health Insurance Associations (VHIAs). Under this section, a
VHIA is defined as a multiple employer welfare arrangement,
maintained by a qualified association, under which all
medical benefits are fully-insured, under which no employer
is excluded as a participating employer (subject to minimum
participation requirements of an insurer), under which the
enrollment requirements of section 103 of the Act apply,
under which all health insurance coverage options are
aggressively marketed, and under which the health insurance
coverage is provided by an insurer or HMO to which the laws
of the state in which it operates apply.
The term qualified association means an association in
which the sponsor of the association is, and has been
(together with its immediate predecessor, if any) for a
continuous period of not less than 5 years, organized and
maintained in good faith, with a constitution and bylaws
specifically stating its purpose, as a trade association, an
industry association, a professional association, or a
chamber of commerce (or similar business group), for
substantial purposes other than that of obtaining or
providing medical care (within the meaning of section 607(1)
of ERISA), is established as a permanent entity which
receives the active support of its members and meets at least
annually, and collects dues without conditioning such dues on
the basis of the health status or claims experience of plan
participants or beneficiaries or on the basis of
participation in a VHIA.
Section 162 sets forth the preemption rules applicable to
VHIAs. This provision would preempt two types of state laws
and leave unaffected any other applicable state law not
otherwise preempted under current law (i.e., section 514 of
ERISA). The first type of law preempted is a law which might
otherwise preclude an insurer or HMO from setting premium
rates based on the claims experience of the employers
participating in a VHIA (without varying the premium rates of
a particular employer on the basis of the employer's own
experience). As a result of this provision, a qualified
association could form a VHIA and offer health insurance
coverage and establish and distribute plan costs in a manner
similar to that permitted under current law for self-insured
plans. This will empower employees and employers to form
groups to more effectively and cost-efficiently purchase
fully-insured health insurance coverage.
Section 162 also preempts a second type of State law that
requires health insurance coverage in connection with group
health plans to cover specific items or services consisting
of medical care (but does not preempt laws prohibiting the
exclusion of specific diseases). This will enable employers
and employees to establish health insurance packages which
include benefits which they want and which they can afford.
Under this section, a state which certifies to the
Secretary that it provides ``guaranteed access''' to health
coverage may deny a VHIA the right to offer coverage in the
small group market (or otherwise regulate such VHIA with
respect to such coverage), except as described below. A state
is considered to provide such guaranteed access if (1) the
state certifies that at least 90% of all state residents are
covered by a group health plan or otherwise have health
insurance coverage, or (2) the state has, in the small group
market, provided for guaranteed issue of at least one
standard benefits package and for rating reforms designed to
make health insurance coverage more affordable. In a state
without such guaranteed access, VHIAs could offer coverage in
the small group market in the state as long as they meet the
standards for such entities.
This section also provides a limited exception to the above
described state opt out for certain large, multi-state
arrangements. The state opt out (described in item (2) in the
paragraph above) does not apply to VHIAs that meet the
following criteria: (1) the sponsor operates in a majority of
the 50 states and in at least 2 of the regions of the
country; (2) the arrangement covers or will cover at least
7,500 participants and beneficiaries; and (3) under the terms
of the arrangement, either the qualified association does not
exclude from membership any small employer in the state, or
the arrangement accepts every small employer in the state
that applies for coverage.
In addition, the state opt out (described in items (1) and
(2) in the paragraph two paragraphs above) does not apply in
a state in which an arrangement operates on March 6, 1996 and
under the terms of the arrangement, either the qualified
association does not exclude from membership any small
employer in the state, or the arrangement accepts every small
employer in the state that applies for coverage.
The above exceptions for multi-state plans and existing
plans do not apply to any state which, as of January 1, 1996,
either (1) has enacted a law providing for guaranteed issue
of fully community rated individual health insurance coverage
offered by insurers and HMOs, or (2) requires insurers
offering group health coverage to reimburse insurers offering
individual coverage for losses resulting from their offering
individual coverage on an open enrollment basis.
Sec. 163. State authority fully applicable to self-insured
multiple employer welfare arrangements providing medical care
which are not exempted under new part 7.
This section clarifies the scope of ERISA preemption to
make clear the authority of states to fully regulate non-
fully-insured MEWAs which are not provided an exemption under
new Part 7 of ERISA.
Sec. 164. Clarification of treatment of single employer
arrangements
This section modifies the treatment of certain single
employer arrangements under the section of ERISA that defines
a MEWA (section 3(40)). The treatment of a single employer
plan as being excluded from the definition of MEWA (and thus
from state law) is clarified by defining the minimum interest
required for two or more entities to be in ``common
control'' as a percentage which cannot be required to be
greater than 25%. Also a plan would be considered a single
employer plan if less than 25% of the covered employees
are employed by other participating employers.
Sec. 165. Clarification of treatment of certain
collectively bargained arrangements.
This section clarifies the conditions under which
multiemployer and other collectively-bargained arrangements
are exempted from the MEWA definition, and thus exempt from
state law. This is intended to address the problem of ``bogus
unions'' and other illegitimate health insurance operators.
The provision amends the definition of MEWA to exclude a plan
or arrangement which is established or maintained under or
pursuant to a collective bargaining agreement (as described
in the National Labor Relations Act, the Railway Labor Act,
and similar state public employee relation laws). (Current
law requires the Secretary to ``find'' that a collective
bargaining agreement exists, but no such finding has ever
been issued). It then specifies additional conditions which
must be met for such a plan to be a statutorily excluded
collectively bargained arrangement and thus not a MEWA. These
include:
(1) The plan cannot utilize the services of any licensed
insurance agent or broker to solicit or enroll employers or
pay a commission or other form of compensation to certain
persons that is related to the volume or number of employers
or individuals solicited or enrolled in the plan.
(2) A maximum 15 percent rule applies to the number of
covered individuals in the plan who are not employees (or
their beneficiaries) within a bargaining unit covered by any
of the collective bargaining agreements with a participating
employer or who are not present or former employees (or their
beneficiaries) of sponsoring employee organizations or
employers who are or were a party to any of the collective
bargaining agreements.
(3) The employee organization or other entity sponsoring
the plan or arrangement must certify annually to the
Secretary the plan has met the previous requirements.
(4) If the plan or arrangement is not fully insured, it
must be a multiemployer plan meeting specific requirements of
the Labor Management Relations Act (i.e., the requirement for
joint labor-management trusteeship under section
302(c)(5)(B)).
(5) If the plan or arrangement is not in effect as of the
date of enactment, the employee organization or other entity
sponsoring the plan or arrangement must have existed for at
least 3 years or have been affiliated with another employee
organization in existence for at least 3 years, or
demonstrate to the Secretary that certain of the above
requirements have been met.
Sec. 166. Treatment of church plans.
This section adds a new section 709 to ERISA permitting
church plans to voluntarily elect to apply to the Department
of Labor for an exemption under section 514(b)(6)(B) and in
accordance with new ERISA Part 7. An exempted church plan
would, with certain exceptions, have to comply with the
provisions of ERISA Title I in order to receive an exception
from state law. The election to be covered by ERISA would be
irrevocable. A church plan is covered under this section if
the plan provides benefits which include medical care and
some or all of the benefits are not fully insured.
Sec. 167. Enforcement provisions relating to multiple
employer welfare arrangements.
This section amends specific provisions of ERISA to
establish enforcement provisions relating to the multiple
employer elements of the bill: (1) a civil penalty applies
for failure of MEWAs to file registration statements under
section 169 of the bill; (2) the section provides for State
enforcement through Federal courts with respect to violations
by multiple employer health plans, subject to the existence
of enforcement agreements described in section 168 below; (3)
willful misrepresentation that an entity is an exempted
[[Page H3105]]
MEWA or collectively-bargained arrangement may result in
criminal penalties; (4) the section provides for cease
activity orders for arrangements found to be neither
licensed, registered, or otherwise approved under State
insurance law, or operating in accordance with the terms of
an exemption granted by the Secretary under new part 7; and
(5) the section provides for the responsibility of the
fiduciary or board of trustees of a MEHP to comply with the
required claims procedure under ERISA.
Sec. 168. Cooperation between Federal and State
authorities.
This section amends section 506 of ERISA (relating to
coordination and responsibility of agencies enforcing ERISA
and related laws) to specify State responsibility with
respect to self-insured Multiple Employer Health Plans and
Voluntary Health Insurance Associations. A State may enter
into an agreement with the Secretary for delegation to the
State of some or all of the Secretary's authority to enforce
provisions of ERISA applicable to exempted MEHPs or to VHIAs.
The Secretary is required to enter into the agreement if the
Secretary determines that delegation to the State would not
result in a lower level or quality of enforcement. However,
if the Secretary delegates authority to a State, the
Secretary can continue to exercise such authority
concurrently with the State. The Secretary is required to
provide enforcement assistance to the States with respect to
MEWAs.
Sec. 169. Filing requirements for multiple employer welfare
arrangements offering health benefits.
This section amends the reporting and disclosure
requirements of ERISA to require MEWAs offering health
benefits to file with the Secretary a registration statement
within 60 days before beginning operations (for those
starting on or after January 1, 1997) and no later than
February 15 of each year. The section also requires MEWAs
providing medical care to issue to participating employers
certain information including summary plan descriptions,
contribution rates, and the status of the arrangement
(whether fully-insured or an exempted self-insured plan).
Sec. 170. Single annual filing for all participating
employers.
This section amends ERISA's section 110 (relating to
alternative methods of compliance with reporting and
disclosure requirements) to provide for a single annual
filing for all participating employers of fully insured
MEWAs.
Sec. 171. Effective date; transitional rule.
This section provides that, in general, the amendments made
by this title are effective January 1, 1998. In addition, the
Secretary is required to issue all regulations needed to
carry out the amendments before January 1, 1998. The section
provides for transition rules for self-insured MEWAs in
operation as of the effective date so that those applying to
the Secretary for an exemption from State regulation are
deemed to be excluded for a period not to exceed 18 months
unless the Secretary denies the exemption or finds the MEWAs
application deficient, provided that the arrangement does not
have pending against it an enforcement action by a state. The
Secretary can revoke the exemption at any time if it would be
detrimental to the interests of individuals covered under the
Act.
Subtitle D--Definitions; General Provisions
Sec. 191. Definitions; scope of coverage, and
Sec. 192. State flexibility to provide greater protection.
In addition to providing definitions of terms used in this
title of the Act, this subtitle provides that, subject to the
ERISA savings clause below, nothing in Subtitle A, B, or D
should be construed to preempt state laws: (1) that relate to
matters not specifically addressed in such subtitles, (2)
that require insurers or HMOs to impose a limitation or
exclusion of benefits relating to the treatment of a
preexisting condition period for a period that is shorter
than the applicable period provided under such subtitles; (3)
that allow individuals, participants, and beneficiaries to be
considered to be in a period of previous qualifying coverage
if such individual, participant, or beneficiary experiences a
lapse in coverage that is greater than the 60-day periods
provided for under sections 101 and 102, or (4) that, in
defining ``preexisting condition'' to have a look-back period
that is shorter than 6 months. The ERISA savings clause
states that, except as provided specifically in subtitle C,
nothing in this Act shall be construed to affect or modify
the provisions of section 514 of ERISA (relating to federal
preemption of state laws relating to employee benefit plans).
Sec. 193. Effective Date.
In general, except as otherwise provided for in this title,
the provisions of this title would apply with respect to: (1)
group health plans and health insurance coverage offered in
connection with group health plans, for plan years beginning
on or after January 1, 1998; and (2) individual insurance
coverage issued, renewed, in effect, or operated on or after
January 1, 1998.
The Secretaries of HHS, Treasury, and Labor would be
required to issue regulations on a timely basis as may be
required to carry out this title.
Sec. 194. Rule of Construction.
Nothing in this title or any amendment made thereby may be
construed to require the coverage of any specific procedure,
treatment, or service as part of a group health plan or
health insurance coverage under this title or through
regulation.
Mr. CLAY. Mr. Speaker, I yield 3 minutes to the gentleman from Texas,
Mr. Gene Green.
Mr. GENE GREEN of Texas. Mr. Speaker, I would like to thank my
colleague and ranking member from Missouri for yielding me the time.
Mr. Speaker, I rise in opposition to H.R. 3103, and a little
background. I was honored to serve 20 years in the Texas legislature,
Mr. Speaker, and work for many of those years with the statehouse
members to beef up and strengthen our State health insurance regulation
laws so that people who buy group insurance would know what they are
purchasing. Here today I see this bill would actually abolish that
protection, not only in the State of Texas, but State legislatures all
over the country have worked for many years to provide and strengthen
State oversight of these laws.
Mr. Speaker, yesterday I asked the Committee on Rules to make in
order my amendment striking the preemption of these multiple employer
welfare arrangements, also known as the MEWA insurance laws, because
what happens now is in all of our States, we regulate them. This bill
will take away that State regulation and move it to Washington to
definitely a universal national standard developed and implemented from
Washington and will replace these carefully crafted local State
insurance laws that meet the needs of our local States and not
necessarily what is from Washington.
Mr. Speaker, that is right. The majority of the Republicans want to
move the regulation of these insurance laws from the States to an
agency led by what one of my Republican colleagues said in his turn
were Communists.
We hear a lot of rhetoric from the other side about giving more power
to the States, and yet in this issue the Republicans want to take away
the States' authority to regulate these health plans and give it to the
Federal Government. While we have heard about local control rhetoric so
much, the House Republicans want to expand the authority of the
Department of Labor with these regulations.
In his own estimates, Secretary Reich will have to develop 26 new
regulations to deal with the federalization of multiple employer
welfare arrangements. The Federal Government got out of this business
of regulating MEWA's in 1983 because the States were better equipped to
deal with the high instances of fraud on the local level. But now we
see this bill will preempt those States rights, and what will it mean
to the average American family. State statutes requiring that certain
benefits covered by health insurance policies may no longer apply.
Again, let me give an example from the State of Texas. In 1973 we
changed the law that required insurance policies in Texas have to cover
newborn infants. Up until then, a newborn infant had to survive 14 days
before the group insurance policy would cover them. That was a mandated
benefit, and this bill would possibly take that away unless the
Department of Labor somehow says, OK, we are going to have this minimum
benefit. This protection would be no longer available, at least on the
local level, that the States have decided need to be provided to the
purchasers of insurance.
Unlike block grants, States have tested and successfully regulated
MEWA's, and there is no compelling reason or need to preempt State
authority in this area.
Mr. CLAY. Mr. Speaker, I yield 3 minutes to the gentleman from New
Jersey [Mr. Andrews].
(Mr. ANDREWS asked and was given permission to revise and extend his
remarks.)
Mr. ANDREWS. Mr. Speaker, I would like to thank the gentleman from
Missouri [Mr. Clay], the ranking member, for yielding me this time.
Mr. Speaker, there are two sets of ideas before the House tonight.
There is a set of ideas on which there is disagreement, whether we
should limit the amount people can recover if they are a victim of
malpractice; whether or not people should have medical savings
accounts; whether or not there should be pooling arrangements for small
businesses. There is legitimate disagreement about those things.
Then there is another set of ideas on which there is virtual
unanimous agreement, broad consensus that we should make it illegal to
say you cannot deny someone an insurance policy
[[Page H3106]]
because they have been sick, and that people should be able to take
their insurance from job to job.
{time} 2030
Mr. Speaker, logical people would say that we put aside the things on
which we cannot agree and debate about them and try to refine them and
deal with them another day and then we take the things on which we do
agree and pass them so we can send them to the President of the United
States and make them law.
But we are not going to do that. What we are going to do tonight in
the bill that is before us is take a lot of controversial provisions
and maybe pass them out of here and send them to a conference that
will, in likelihood, I believe they will wither on the vine and die.
Now, this is not just another cynical example of the cynical exercise
of how politics is practiced in our country. It is more than that. It
has a lot to do with real people in real families and their real lives.
Mr. Speaker, the American people understand this. A woman with breast
cancer, a man who has had a triple bypass heart operation, a shipyard
worker who has had asbestosis can be denied health insurance coverage
now because the have been sick. If the substitute offered by the
gentlewoman from New Jersey [Mrs. Roukema] does not pass tonight, they
can still be denied that coverage. We need to make it illegal, illegal
for an insurance company in this country to say to that woman with
breast cancer of that man with asbestosis or that person who has had
the triple bypass operation that, we are not going to sell you a policy
or that we are going to charge you the Moon and the stars to buy the
policy. A unanimous vote in a Senate committee said they agreed with
that. Dozens of Republicans and Democrats, if not hundreds around here,
have said they agree with that. The President of the United States has
said he would sign that. But unless the Roukema substitute passes, we
are not going do do that.
Do the right thing tonight. Vote ``yes'' on the Roukema substitute
and ``no'' on this bill.
Mr. CLAY. Mr. Speaker, I yield 2 minutes to the gentleman from New
York [Mr. Engel].
Mr. ENGEL. Mr. Speaker, I thank the ranking member for yielding me
this time.
Mr. Speaker, this bill ought to be defeated. We should be considering
a clean version of the Kennedy-Kassebaum-Roukema health reform bill,
and I would say that the reason we are not considering a clean version
of the Kennedy-Kassebaum-Roukema health reform bill is because the
Republican leadership really does not want to see health care reform
come into law.
They really want to see it defeated. But, quite frankly, they do not
have the guts to say it. So they are weighing this bill down with all
kinds of extraneous things that do not belong in the bill, knowing full
well that this will kill the bill.
The Senate is going to pass a clean version. The President has said
he will sign a clean version, and yet what we are doing today is a
political charade. We are not passing a clean version, we are
deliberately not passing the version the Senate is passing, and we know
that the President will not agree.
So it is a charade. And, again, the Republican leadership does not
have the guts to say the truth. You know, the gentleman from Texas [Mr.
DeLay], the Republican whip, had it right before, when he said on the
House floor, and I quote the gentleman from Texas from his speech on
the House floor, ``This is blatant politics and blatant hypocrisy.''
Except he was wrong in directing it to me and the Democrats. It seems
to me the blatant, as the gentleman from Texas [Mr. DeLay] said,
``blatant politics and blatant hypocrisy'' is on the part of the
gentleman from Texas [Mr. DeLay] and the Republican leadership because
they do not have the guts to say we are against health care reform;
instead, they are just weighing down this bill with a bunch of
nonsense.
We believe that portability ought to become law. We believe that
preexisting conditions is not a reason to deny people health care
coverage. The Roukema bill does that. The Roukema bill will pass. The
Roukema bill has the votes to pass, yet what they are doing is making
it impossible for the Roukema bill to pass, and that to me is, quote,
as the gentleman from Texas [Mr. DeLay] says, ``blatant politics and
blatant hypocrisy.''
Mr. GOODLING. Mr. Speaker, I yield 1 minute to the gentlewoman from
Kansas [Mrs. Meyers].
(Mrs. MEYERS of Kansas asked and was given permission to revise and
extend her remarks.)
Mrs. MEYERS of Kansas. Mr. Speaker, I rise in strong support of H.R.
3103 because it allows small employers to form Multiple Employer Health
Plans [MEHPs] which can cross State lines. Small businesses operate
closer to the bottom line than larger businesses, and are often unable
to obtain coverage at any price. They pay higher premiums if they do
obtain coverage, and cannot count on stable premiums.
MEHPs can self insure, in which case they would be required to
register and maintain substantial capital reserves--a minimum of
$400,000 or 25 percent of the expected claims--whichever was higher.
MEHPs would allow small employers to band together around the
country, thereby avoiding expensive State-mandated benefits. Right now,
small businesses pay up to 30 percent more in premiums than big
businesses that can make use of ERISA exemptions.
The substitute does not allow small employers to form MEHPs across
State lines.
I urge my colleagues to support 3103.
Mr. GOODLING. Mr. Speaker, I yield 1 minute to the gentleman from
North Carolina [Mr. Ballenger].
Mr. BALLENGER. Mr. Speaker, I thank the gentleman for yielding this
time to me.
Mr. Speaker, I rise in strong support of H.R. 3103, and want to
address the provisions relating to medical savings accounts for MSA's.
During the debate over the President's health care reform package
during the 103d Congress, we saw that Americans view choice as
fundamental to our health care system. By allowing people the chance to
choose a high-deductible health insurance plan and to place the premium
savings into a personal savings account, we are providing a way for
people to manage their health care expenses. This plan would be used to
cover major health costs while the savings account would cover routine
and preventive care.
Under this bill, individuals could deposit up to $2,000 per year and
could save, in the account, what they didn't use. Any withdrawals from
the account for non-medical expenses would be taxable and subject to an
early withdrawal penalty of 10 percent. Also, MSAs would allow patients
to choose their own doctors and participate in their own care. These
accounts belong to the individual and are portable during a job change.
Employers are currently able to offer MSA-like plans. However, unlike
other traditional plans, the Government does not allow these plans to
be tax deductible. MSAs should receive equal treatment, because recent
studies indicate that these plans reduce the health care costs for
employers by around 12 percent compared to traditional plans. This cost
reduction directly enables employers to maintain quality health benefit
plans to their employees at no additional charge. As we look for
market-oriented ways to contain the costs of health care, MSAs should
be viewed as an attractive option.
Mr. CLAY. Mr. Speaker, I yield 2 minutes to the gentleman from
Indiana [Mr. Roemer].
(Mr. ROEMER asked and was given permission to revise and extend his
remarks.)
Mr. ROEMER. Mr. Speaker, I wish for once Members of Congress would
put themselves in the shoes of hard-working Americans, whether those
shoes are loafers or construction boots, and then Americans would work
together to reform in a simplistic and bipartisan commonsense way our
health care system.
Now, we have two choices tonight: We can either support H.R. 3103, a
convoluted measure that is highly controversial, with all kinds of
special-interest provisions that will never become law, or we can
support a bipartisan provision from Senator Kennedy, Senator Kassebaum,
and the gentlewoman from New Jersey [Mrs. Roukema].
There is a bipartisan approach, a commonsense approach to provide
[[Page H3107]]
portability, to provide health care for workers who lose their jobs.
Let me give an example of why this is important. IBM has laid off
40,000 people; AT&T 40,000 people. These people are hard workers. They
have children that may have diabetes or leukemia. And now health
insurance companies can say, ``We don't want to cover you anymore.'' If
you vote for the Roukema Bill, the Kennedy-Kassebaum bill, you will
allow these hard-working Americans to take their insurance with them
and to not let the insurance companies be prejudiced against these
people.
Vote for our children. Vote for our hard-working people in America,
and vote for commonsense bipartisanship.
Mr. GOODLING. Mr. Speaker, I yield 1 minute to the gentleman from
Michigan [Mr. Knollenberg].-
Mr. KNOLLENBERG. Mr. Speaker, I rise in strong support of H.R. 3103
and commend my colleague, the gentleman from Illinois [Mr. Fawell] for
his efforts in bringing this legislation, which is badly needed, to the
floor.
H.R. 3103 is not about big insurance companies or some Government
takeover, as some would suggest. It is about providing coverage for
millions of uninsured, and it allows them to get it on an accessible
and affordable basis.
H.R. 3103 is about providing insurance to those millions of people
that are currently unable to get insurance. For too long this system
has stacked the deck against small business. Big businesses, such as
GM, IBM, I just heard, have had the luxury of providing employees
insurance through self-insuring, while small businesses lack the
resources to self-insure. This bill directly addresses the inequality
by allowing small businesses to join together to self-insure.
Mr. Speaker, Kassebaum-Kennedy is a Cadillac coverage program, one
size fits all, without affordability. I urge my colleagues to vote for
H.R. 3103.
Mr. GOODLING. Mr. Speaker, I yield 1 minute to the gentleman from
Florida [Mr. Weldon].
Mr. WELDON of Florida. Mr. Speaker, I thank the gentleman for
yielding me this time.
I rise in strong support of this bill for a variety of different
reasons, probably chief of which is that it will allow many small
employers to pool their resources together and purchase health care
benefits in bulk.
This is an advantage the has been held by large corporations for many
years and has been denied small businesses, and, as a consequence of
that, those small businesses have to pay a much higher premium and they
therefore choose not to provide coverage.
I would like to also additionally briefly address the issue of
medical savings accounts. We have heard a lot of discussion about how
bad these supposedly are, but I would assert that if medical savings
accounts were available to the employees that work for Members of the
minority, the majority of their employees would select medical savings
accounts because medical savings accounts truly give the health care
consumer the freedom to choose how to spend their health care dollars.
It has been shown repeatedly that they over and over save a
considerable amount of money. One of the biggest problems in our health
car system is the third-party payer system.
Mr. CLAY. Mr. Speaker, I yield the balance of my time to the
gentleman from New York [Mr. Owens].
(Mr. OWENS asked and was given permission to revise and extend his
remarks.)
Mr. OWENS. Mr. Speaker, the Dingell-Kennedy-Kassebaum substitute is a
modest but significant step forward for health care. I rise in support
of the substitute.
It is good that we are here addressing problems such as portability
or increased deductibility for small businesses and preexisting
condition discrimination. These small steps forward are important, but
the American people should not be misled.
{time} 2045
The noble goal of universal health care, health care for all
Americans, is not being discussed tonight. The administration bill in
the 103d Congress was striving to help Americans join the other
civilized, industrialized nations and provide health care for the 43
million Americans who are not covered with any health care plan.
This bill moves us no closer to health care for everybody. Looming
over all of us in our present health care system is the dangerous
threat to the Medicaid entitlement. That is not being discussed, but
the Medicaid entitlement is America's beachhead for universal health
care. Even if we pass the highly desirable Kennedy-Kassebaum-Dingell
substitute, we will be taking a giant step backward if we throw away
the Medicaid entitlement within a few weeks.
The American people must not be swindled. Two actions are needed.
Tonight we have to pass the substitute, and we also have to make
certain that in the future, the next few weeks, we deny the Governors,
the majority Republicans in this body, the opportunity to roll back the
clock to destroy 30 years of good health care by eliminating the
Medicaid entitlement. The Medicaid entitlement is absolutely necessary
for the 43 million Americans who are not covered. The hope for those 43
million lies in keeping the Medicaid entitlement and expanding it.
This was the noble goal of the administration's bill in the 103d
Congress. It was very difficult because they were looking to close that
gap. It was very difficult because the 103d Congress proposal by the
administration was attempting to have America join the other civilized
industrialized nations for universal health care.
Mr. GOODLING. Mr. Speaker, I yield 1 minute to the gentleman from
Delaware [Mr. Castle].
Mr. CASTLE. Mr. Speaker, I am proud to be an original cosponsor of
H.R. 3103. Approximately 17 percent of our nonelderly population does
not have health care insurance coverage in the United States of
America. This very important piece of legislation decreases that rank
of the uninsured, that 17 percent, by making health insurance more
readily available and affordable. Many things we should have done many
years ago: Guaranteeing the portability of health insurance for workers
changing or leaving jobs, limiting the ability of insurers to use
preexisting conditions to deny health insurance coverage, making health
insurance more affordable by reforming malpractice laws and cracking
down on fraud and abuse, and several other measures which are here.
This focused reform bill compliments the efforts of States to expand
health insurance coverage within their borders rather than superseding
them.
I would like to say a word or two about those who argue that this
would kill Kassebaum-Kennedy. This bill does not kill what our
colleagues in the Senate have accomplished. This bill builds upon the
sound principles to expand availability contained in Kassebaum-Kennedy,
but also addresses affordability, which is not addressed in that bill.
Mr. Speaker, I encourage all of us to support this excellent piece of
legislation.
Mr. GOODLING. Mr. Speaker, I yield 30 seconds to the gentleman from
Illinois [Mr. Fawell].
Mr. FAWELL. Mr. Speaker, I think all one can say, I would just
compliment the leadership on this side of the aisle. I would like to
point out, too, that you will notice that no one, no one on this side
of the aisle, criticized the legislation that that side is pushing. Yet
I think it is fair to say we have had an abundance of criticism from
that side.
We are simply asking that small employers have the rights that mid-
sized and large employers have had for a long time, and that is to be
able to self-insure. They preempt state law. You have heard it say
there are 138 million people today under the ERISA law.
Mr. DeFazio. Mr. Speaker, I rise in opposition to H.R. 3103, the so-
called ``Health Coverage Availability and Affordability Act,'' and in
support of the Democratic substitute.
We all agree that the American system of health care is in dire need
of an overhaul. Health care costs are skyrocketing out of control.
Having doubled in the last decade, they're far beyond the reach of any
American who's uninsured and can't afford exorbitant insurance
premiums. Four million Americans lost health insurance between 1988 and
1994. Millions more are just a pinkslip away from losing all of their
health care coverage.
There are provisions in H.R. 3103 that I support. I agree that it is
high time Congress acts to correct some of the more egregious practices
of insurance companies. Denying insurance to individuals because of
pre-existing conditions, genetic information, or a history of
[[Page H3108]]
domestic violence is outrageous. It is a good start to ban these
practices.
I've supported legislation that would correct these policies. I've
authored legislation that would prohibit using domestic violence as a
risk factor. I've also co-sponsored the Kennedy-Kassebaum-Roukema
health care reform bill, which has the support of Senate Republicans
and Democrats as well as the President.
The Democratic substitute would replace H.R. 3103 with language from
the Kennedy-Kassebaum-Roukema bill. This bill would expand access to
health insurance for Americans by increasing portability and limiting
insurance companies' ability to deny coverage because of pre-existing
conditions. The political consensus for the Kennedy-Kassebaum-Roukema
bill means that it could become law in a matter of weeks.
But H.R. 3103 embraces controversial, divisive policies that doom any
chance of insurance reform and minimal health security for the American
people.
As a long-time advocate of fiscal responsibility, I must oppose the
provisions in this bill establishing generous Medical Savings Accounts
[MSAs]. The MSAs would result in a significant loss of taxpayer dollars
without a substantial revenue offset. Under this bill, individuals
could deposit up to $2,000 annually and families up to $4,000 in tax-
free MSAs. The Joint Committee on Taxation has estimated that this
provision alone would cost the U.S. taxpayers approximately $2 billion.
This flies in the face of the deficit reduction goals to which this
Congress purports to aspire.
The Republican leadership counters that the bill contains budgetary
savings to offset the revenue loss from MSAs. This assertion is
laughable and cynical. The budgetary savings are achieved through
``reforms'' in the Medicare program--the health plan for America's
senior citizens. This is the same Medicare program that the Republicans
claim is in such a dire financial crisis.
Any savings achieved through Medicare reforms should be used to shore
up the Medicare trust fund. Failing that, these savings should be used
to lower deductibles and increase benefits for Medicare beneficiaries.
It makes no sense to use this savings to offset a tax break for the
limited number of individuals who can afford MSAs.
Individuals who choose to open MSAs will likely be healthier,
wealthier and younger than average. Unfortunately, the majority of the
Medicare population is among the older and sicker and would not benefit
from MSAs. The Republican leadership's bill would, therefore, steal
money from Medicare recipients to pay for tax breaks for healthier
Americans.
Ironically, H.R. 3103 would also remove state oversight and replace
it with Federal regulation to advantage insurance companies. This would
be a severe blow to the States' rights movement. For the past year we
have heard Republicans disparage the role of the Federal Government.
Yet, under this legislation, the Republican leadership conveniently
tosses aside this argument in favor of Federal supremacy over insurance
coverage. This legislation preempts existing state insurance reforms
and State regulation of self-funded multiple employer plans [MEWAs].
In Oregon, local leaders have developed a series of health care
initiatives with the active support of insurers, consumers and the
business community. H.R. 3103 could seriously jeopardize these reforms,
as well as reforms already enacted in other States.
Every American should have lifetime access to quality, affordable
health care. All of our major economic competitors have adopted
comprehensive health care reforms. Surely the United States of America,
the greatest industrial power on Earth, can adopt the minimal
protections in the Kennedy-Kassebaum-Roukema bill.
If you truly want to bring some relief to our constituents, I urge my
colleagues to support the Democratic substitute which would replace the
controversial Republican leadership's proposal with the language in the
Kennedy-Kassebaum-Roukema bill.
Mr. CLINGER. Mr. Speaker, I rise in strong support of the ``Health
Coverage Availability and Affordability Act of 1996.'' This legislation
takes very practical, needed steps to ensure working Americans that
they will always have access to health insurance regardless of their
health, their family's health, or their employer. H.R. 3103 will ensure
Americans portability and renewability of their health coverage while
eliminating the fear of losing coverage because of pre-existing
condition limitations when changing or losing a job.
I am particularly pleased to see provisions in the bill that set
tough policies to combat health care fraud and abuse. Recent studies
estimate that overcharging, double billing, and charging for services
not rendered to patients cost consumers up to 10 percent of every
health care dollar spent. This results in both higher health care costs
and insurance premiums for everyone.
Under H.R. 3103, penalties for defrauding the Government through
Federal health care programs, such as Medicare and Medicaid, will be
stiffened. Furthermore, the bill will require the Secretary of Health
and Human Services and the Attorney General to jointly establish a
national health care fraud and abuse control program to coordinate
Federal, State and local law enforcement to combat fraud with respect
to health plans.
In addition, the ``Health Coverage Availability and Affordability Act
of 1996'' will require the Secretary of Health and Human Services to
exclude from Medicare and State health care programs for a minimum of 5
years individuals and entities who have been convicted of felony
offenses relating to health care fraud; require the Secretary to
provide beneficiaries with an explanation of each item or service for
which payment was made under Medicare; and require the Secretary to
establish a program to encourage individuals to report suspected fraud
and abuse in the Medicare program.
I firmly believe that the fraud and abuse provisions in H.R. 3103 are
long overdue and represent a serious effort to reduce fraudulent
activity, which drives up the cost of health care for everyone. The
Government Reform and Oversight Committee, which I chair, has held
several hearings on this very issue, and I feel strongly that we need
to act now to crack down on health care fraud and abuse.
Also, as a representative of a largely rural district, I am pleased
to see provisions in H.R. 3103 that will allow small businesses to join
together to form purchasing cooperatives. This provision exempts small
businesses from certain State insurance regulations--an exemption that
big business now enjoys. This change will make health insurance
affordable for small businesses who cannot afford it at the present
time--a problem that is particularly noticeable in rural areas. Some
predict that small employers will be able to cut their business
premiums by as much as a third, even while paying State premium taxes,
which is provided for under the bill. This provision will certainly
increase access to quality health care to rural individuals.
Again, I urge my colleagues to support this sensible, responsible
approach to health care reform.
Mr. GILMAN. Mr. Speaker, I rise in strong support of H.R. 3103, the
Health Coverage Availability and Affordability Act and urge my
colleagues to support this well intentioned bill.
As one of the Republican cosponsors of the Roukema/Kassebaum/Kennedy
portability measure, I am acutely aware of the need for Congress to
approve a health coverage measure which will ensure working people and
families that they will always have access to health insurance
regardless of their health, their family's health, or their employer.
Accordingly, I commend my colleague, Representative Roukema, for her
efforts in the House to bring this portability measure before the House
today.
Similarly, I am pleased that the House will have an opportunity to
make a good bill better. In addition to making health insurance more
available to all Americans, H.R. 3103 makes it more affordable and
provides more choices.
H.R. 3103 will provide incentives to encourage individuals, and their
employers, to make tax deductible contributions--in lieu of health
insurance premiums--to a specialized savings account [MSA] to be used
at a later date for health expenses; it increases penalties for fraud
and abuse of the federally-funded health care system; and allows self
employed individuals and small businesses to voluntarily associate to
purchase health insurance which would be available to all member
organizations.
All of these provisions mentioned above will help our Nation's
farmers, self-employed, and small business entrepreneurs to provide
health insurance for their families and employees.
Though H.R. 3103 may not be a perfect bill it does provide important
health insurance reforms that will ensure broad health coverage for our
constituents.
Furthermore, this measure is a step in the right direction. I look
forward to working further with my colleagues on health care reform
measures which will protect those Americans who currently do not have
health insurance coverage.
I urge my colleagues to support H.R. 3103.
Mr. STENHOLM. Mr. Speaker, in an effort to keep health insurance
reform moving through the legislative process, I rise with some
reservation to support H.R. 3103, the Health Coverage Availability Act
of 1996.
My record clearly reflects my strong support of health insurance
reform. In addition to efforts on rural health issues and system-wide
reform, I have worked for many years to make health insurance both
accessible and affordable for millions of underserved Americans, many
of whom reside in the 17th District of Texas. In one very recent
example, I heard from a constituent who has been employed since 1954,
working the last 10 years with her sister in a bookkeeping and
secretarial business. At one point, she had hospitalization insurance,
but the price of the policy continually
[[Page H3109]]
increased to the point that she finally had to drop it because she
could no longer afford it. She now worries about the health and
economic vulnerability of her situation.
While this legislation does not specifically address all of her
needs, I believe certain provisions such as portability of health
insurance, limitation on pre-existing conditions, increased tax
deductibility for the self-employed, and guaranteed availability of
insurance for small employers, are definitely steps in the right
direction.
Because the Senate has taken the lead on a health insurance reform
bill which the President has pledged to sign, I must express my
concerns about the political ramifications of loading this bill down
with some of the more controversial issues that have been included here
today. I recall just a few years ago, during a similar health care
debate, when my friends on the other side of the aisle were criticizing
Democrats for ``overreaching'' on health care reform proposals. Now, I
fear we are back to square one.
Like many Members of this body, I would like to see additional health
care reforms, including reforms to develop rural health networks and
preserve rural health services. Facing political reality, however, I
realize that this might not be the proper vehicle to achieve these
goals.
I am also concerned that rather than promoting the goals of greater
health insurance access and affordability, some provisions in this bill
may have the reverse impact in the long run because sufficient
safeguards were not added to the provisions. For example, I have
strongly supported small employer pooling arrangements with effective
certification and solvency standards, as well as protections to ensure
that the pool is large enough to manage risk. However, I am worried
that the pooling section of this legislation fails to meet those
concerns.
I am especially concerned that the bill we are considering today
includes provisions and changes which were made after the Committees of
jurisdiction reported out their components of the bill.
While I am not convinced that this House bill meets many of my
concerns, I do believe that these issues can be worked out in
conference. Therefore, in the spirit of keeping the process moving
forward, I intend to vote yes on final passage. It is my hope that we
not let another opportunity to achieve some type of bipartisan health
care reform pass us by, simply because we again overreach the
boundaries of consensus. That is why I am cautiously supporting H.R.
3103, with the hope that the conference committee will inject
bipartisan commonsense into the process and develop a health insurance
reform bill that will get a Presidential signature.
After all, without both a congressional majority and a Presidential
signature, my constituents in the 17th district, or Americans anywhere
else, will receive no benefit from this political exercise. In the
final analysis, I would hope that the ultimate goal for us all is
weighed not in political, special interest terms, but in terms of
caring for the health needs of our un- and under-insured populations.
Mr. HORN. Mr. Speaker, there has been a campaign of misinformation
about this legislation. Americans have been told that this bill would
deny them continued health insurance coverage for alternative medical
treatments. This is untrue.
This bill does not deal with health insurance coverage for
alternative medical treatments. This is an issue that must be addressed
by the States. H.R. 3103 only requires that each State implement a
mechanism to ensure individual coverage.
This bill does increase choices for health care delivery systems by
providing for medical savings accounts. With these accounts, Americans
can utilize their health care dollars for whatever treatment fits their
needs. That is the way to ensure that alternative medical treatments
remain available for anyone who wants them.
Mr. FRANKS of Connecticut. Mr. Speaker, H.R. 3103, the Health Care
Coverage Availability and Affordability Act will ensure that Americans
have access to health care coverage. More importantly, however, the
bill will insure that people do not lose their insurance coverage when
they switch jobs.
During the March 17th hearing this subcommittee held on insurance
reform I stated that I had worked for both small businesses and for
Fortune 500 companies. During my tenure in the business world I saw
first hand the concern of individuals who have worked hard and suddenly
found themselves without employment or insurance coverage. These
individuals worry about how they will make their insurance payments to
COBRA. COBRA benefits are supposed to cover individuals during periods
of unemployment, but without a job how can the individual keep up his
or her COBRA payments. They can't, so they simply slip through the
cracks in our insurance industry. These are the individuals that we
must be most concerned with.
This same scenario can be applied to the self employed. Should a
self-employed individual's company fail, what would happen during the
period of unemployment. I have recently reintroduced legislation I
sponsored during the 103d Congress. My bill would allow us to look at
the situation I just described in a similar fashion to the way in which
we look at unemployment compensation, with the exception that the
employer will not have to contribute. While a person is employed, why
not have that person make contributions to an uninsurance trust. The
employee would be able to contribute money to the trust and then access
it during periods of unemployment. We also need this kind of return.
The bill before us today brings about much-needed reform to the
insurance industry in this country. It addresses such important issues
as portability and pre-existing conditions. Individuals will no longer
have to remain in a job they do not like in order to maintain insurance
coverage. Under this bill if an individual changes jobs his or her
insurance coverage will follow. Also, according to this bill insurance
companies will no longer be able to deny coverage to individuals with
pre-existing conditions.
H.R. 3103 addresses the problem of medical malpractice as well. The
bill establishes uniform standards for health care liability suits
brought in court. Malpractice lawsuit awards are capped at $250,000 for
non-economic damages and $250,000 or three times the non-economic
damages for punitive damages. This capping of damages will aid in
driving down health care costs.
This bill will allow organizations, like trade associations, to
voluntarily associate to purchase health care insurance. This insurance
would then be available to all member organizations. The voluntary
association organizations for the purpose of buying health insurance
will allow them to increase their purchasing power, thus allowing them
to purchase insurance at a significant savings.
The bill provides relief for self-employed individuals by allowing
them to deduct increasing percentages of their health insurance costs
from their income taxes. This provision, like many of the others
contained in this bill, will make the purchasing of health insurance
more affordable. This is especially important for self-employed
individuals because all too often they fall through the cracks in our
health insurance industry.
Penalties for fraud and abuse of the federally funded health care
system are increased under this legislation. Overcharging, double
billing, and charging for services not rendered has become too
prevalent. These types of fraud cost consumes 5 to 10 percent of ever
health care dollar. This results in higher health care costs as well as
higher in insurance premiums.
Finally the bill allows for the establishment of medical savings
accounts, MSA's. MSA's will bring about changes to health insurance.
These accounts will place the consumer in charge of his or her health
care. The consumer will have total control over his or her health care.
This will allow the consumer to spend his or her health care dollars as
he or she wants.
Mr. Speaker, the legislation before us takes important steps toward
reforming the health insurance industry in this country. I applaud this
legislation and look forward to its passage. Thank you and I yield back
the balance of my time.
Mr. OXLEY. Mr. Speaker, I rise today in support of the Health
Coverage Availability and Affordability Act of 1996. This bill includes
provisions I have long supported on paperwork reduction.
I am pleased to see that today, the House will have the opportunity
to vote on these and other needed reforms. Legislation aimed at making
health insurance more available and affordable while reducing
administrative paperwork is long overdue. While President George Bush
introduced similar legislation in 1992, the then Democrat-controlled
Congress blocked its consideration. It was not until the defeat of
President Clinton's nationalized health care system that a consensus
coalesced around these market-based reforms.
Currently, excessive paperwork, redtape, and duplicative
administrative costs add nearly 10 cents to every health care dollar
spent in the United States. In response to this concern I introduced
legislation during the 102d Congress, along with our former colleague,
Alex McMillan, to reduce these unnecessary costs through the
establishment of uniform health claims and electronic billing
standards.
Following this first ever free-standing bill on billing
simplification, my Ohio colleague, Dave Hobson, took up the cause,
improving upon our efforts. Congressman Hobson's work has been integral
in the promotion of the benefits of a uniform electronic billing
system.
Mr. Speaker, I support the passage of the Health Care Coverage
Availability and Affordability Act. American working families need and
deserve the flexibility and cost-saving measures this bill provides.
Mr. PARKER. I want to congratulate the many Members who have been
instrumental
[[Page H3110]]
in bringing to the floor this important health care reform legislation.
In the 103d Congress, a number of us worked diligently on a similar,
incremental package that would have corrected many identifiable
problems in our health care delivery system.
Unfortunately, we never had an opportunity to vote on such a measure.
Today, however, I am pleased that we will finally be able to tell our
constituents that help is on the way--changes will be made to address
many of their health care concerns.
The passage of this legislation will assure people that they can
change jobs and obtain group health insurance coverage through a new
employer, without pre-existing condition limitations.
For those individuals who are between jobs and have been unable to
obtain coverage due to a pre-existing condition, this bill will make it
possible for them to do so.
For small employers, new pooling arrangements and an increased
deduction for health insurance premiums will make it easier for them to
purchase insurance coverage for their employees.
For individuals and families, medical savings accounts will now be
available that allow them to control their own health care decisions
and costs.
And for the many States like my own that provide health care coverage
for uninsured high-risk individuals, this bill will clarify the tax-
exempt status of State-established health insurance risk pools.
Currently, such risk pools are not automatically exempt from Federal
income taxes.
This bill provides the necessary legislative fix to assist States in
making much-needed medical insurance available to uninsurable
residents.
Of course this bill, like the proposal I worked on in the last
Congress, also includes provisions addressing such important needs as
administrative simplification, fraud and abuse elimination, and medical
malpractice reform.
In closing, we are taking the critical first steps toward a health
care delivery system that is more accessible and affordable.
H.R. 3103 establishes a strong foundation on which future reforms in
our health care delivery system can be based.
We should not let this opportunity to improve the Nation's health
care system slip away once again.
Mr. CONYERS. Mr. Speaker, medical malpractice is a widespread and
serious problem in our society. Studies have established that it is the
third leading cause of preventable death, second only to those deaths
associated with cigarette smoking and alcohol abuse. More than 1.3
million hospitalized Americans, or nearly 1 in 25, are estimated to be
injured annually by medical treatment, and about 100,000 such patients,
or 1 in 400, die each year as a direct result of such injuries.
Unfortunately, in federalizing this state law matter, the Republican
proposals would absolutely decimate the protections the states have
provided for against medical malpractice and other forms of misconduct.
A summary of these provisions follows:
A. Statute of Limitations/Sec. 281--Prohibits victims from bringing
any state health care liability action more than two years after an
injury is discovered or five years after the negligent conduct that
caused the injury first occurred. Such a proposed new federal statute
of limitations takes no account of the fact that many injuries caused
by medical malpractice or faulty drugs often take years to manifest
themselves. Thus under the proposal, a patient who is negligently
inflicted with HIV-infected blood and develops AIDs six years later
would be forever barred from filing a medical malpractice or product
liability claim.
B. $250,000 Cap on Non-economic Damages/Sec. 282(a)(1)--Caps the
award of non-economic damages in medical malpractice actions at
$250,000. The bulk of data indicates that dollar caps do not provide
significant savings. Using information derived from a 1992 GAO study,
the ABA's Special Committee on Medical Professional Liability found
that state tort reform proposals ``have not had any measurable impact
on overall health [care] costs'' and that personal health care spending
had doubled between 1982 and 1990, regardless of the type of
``reforms'' adopted. A 1986 GAO study on the impact of specific tort
changes on medical malpractice claims revealed that claims and
insurance costs continue to rise despite state-adopted limits on victim
compensation.
Even the total elimination of malpractice costs would provide only
negligible savings to the health care system. According to separate
reviews by the U.S. Department of Health and Human Services and CBO,
the total amount of all liability premiums paid in the United States
represents less than 1% of the Nation's health care costs. And
factoring in the costs of so-called ``defensive medicine'' would not
result in any significant additional savings to the health care system,
according to both the CBO and the Congressional Office of Technology
Assessment.
An additional concern with caps on non-economic damages is that they
could unfairly penalize those victims who suffer the most severe injury
and are most in need of financial security. Although harder to
scientifically measure, non-economic damages compensate victims for
real losses--such as loss of sight, disfigurement, inability to bear
children, incontinence, inability to feed or bathe oneself, or loss of
a limb--that are not accounted for in lost wages. And non-economic
damage caps have been found to have a disproportionately negative
impact on women, minorities, the poor, the young, and the unemployed;
since they generally have less wages, a greater proportion of their
losses is non-economic.
C. Joint and Several Liability/Sec. 282(a)(2)--Eliminates the state
doctrine of joint and several liability for non-economic damages. This
will allow wrongdoers to profit at the expense of innocent victims,
rather than forcing tortfeasors to allocate liability among themselves,
as has traditionally been the case under state law. And since women,
minorities, and the poor generally earn less wages, such limitations on
non-economic damages could have a disproportionately negative impact on
these groups.
D. Limits on Punitive Damages/Sec. 282(b)--Caps punitive damage
awards at the greater of $250,000 or three times economic damages;
limit the state law standard for the award of punitive damages to
intentional or ``consciously indifferent'' conduct; allow a bifurcated
proceeding to determine issues relating to punitive damages; and
completely ban punitive damages in the case of drugs or other devices
that have been approved by the FDA or any other drug ``generally
recognized as safe and effective'' pursuant to FDA-established
conditions.
These proposed limitations raise a number of concerns. Arbitrary caps
on punitive damages may provide unjustified windfalls to the few
tortfeasors responsible for blatant and wanton medical misconduct. (In
fact, studies have shown that only 265 medical malpractice punitive
awards were awarded in the United States in the 30 years between 1963
and 1993.) By insulating grossly negligent conduct, the proposed new
federal standard for establishing punitive damages comes close to
criminalizing tort law. Permitting defendants to bifurcate proceedings
concerning the award of punitive damages may well lead to far more
costly and time-consuming proceedings, again working to the
disadvantage of injured victims. And banning punitive damages for FDA-
approved products is likely to have a disproportionate impact on women,
since they make up the largest class of victims of medical products.
E. Periodic Payments/Sec. 282(c)--Grants wrongdoers the option of
paying damage awards in excess of $50,000 on a periodic basis. This
provision would apply not only to future economic damages realized over
time, such as lost wages, but to non-economic losses, like the loss of
a limb, that are realized all at once. Also, in contrast to many state
law periodic payment provisions, the Republican proposal does not seek
to protect the victim from the risk of nonpayment resulting from future
insolvency by the wrongdoer or to specify that future payments should
be increased to account for inflation or to reflect changed
circumstances.
F. Collateral Source and Subrogation/Sec. 282(d)--In most states
under the collateral source rule, a victim is able to obtain
compensation for the full amount of damages incurred, and his or her
health insurance provider is able to seek subrogation in respect of its
own payments to the victim. This ensures that the true cost of damages
lies with the wrongdoer while eliminating the possibility of double
recovery by the victim. The Republican proposal would turn this system
on its head by allowing tortfeasors to introduce evidence of potential
collateral payments owing from the insurer to the victim. This could
have the effect of shifting costs from negligent doctors to the health
insurance system in general and taxpayers in particular, resulting in
increased health premiums paid by workers and businesses.
Another problematic feature of Republican malpractice proposals has
been their one-sided, anti-victim nature. For example, their proposal
allows States to enact more restrictive caps and damage limitations,
but not permit the states freedom to grant victims any greater legal
rights. Their proposals also ignore a number of complex legal issues.
For example, in the state law context, various damage caps have been
held to violate state constitutional guarantees relating to equal
protection, due process, and rights of trial by jury and access to the
courts; and these very same concerns are likely to be present at the
federal level. And by layering a system of federal rules on top of a
two-century-old system of state common law, the Republican proposals
will inevitably lead to confusing conflicts, not only within the
federal and state courts, but between federal and state courts.
[[Page H3111]]
I urge opposition to these proposals which would harm victims and
insulate wrongdoers from liability.
Mr. NEAL of Massachusetts. Mr. Speaker, one lesson that both
Democrats and Republicans learned from the health care reform debate in
the 103d Congress is that retaining access to affordable health
insurance is an anxiety that plagues most American families.
We exhausted the health care debate a few years ago in this Congress
searching for ways to do it all--to make health care cheaper, better,
and more accessible for everyone. And though we didn't pass health care
reform legislation at that time, the fact that we are here today
talking about limiting pre-existing condition exclusions and making
health insurance portable--two consensus issues that Democrats and
Republicans both support--is proof that our efforts did not fail.
I'd like to take a moment today to applaud our President for choosing
to act upon America's health care concerns, and for having the courage
to bring the issue of health care reform to the forefront of our
national agenda.
The United States, and Massachusetts in particular, is home to the
best quality health care in the world, and it is our job as Members of
this House to make quality care available to Americans. The pre-
existing condition limits and portability provisions in this bill meet
this goal.
We also have a unique opportunity today to make health insurance more
affordable to the self-employed by increasing the deductibility of
health insurance premiums. Under current law, the self-employed are
allowed a 30 percent deduction. The bill before us today gradually
increases the deduction to 50 percent and 50 percent is not phased in
until 2003.
The Democratic substitute addresses this issue in a more sensible and
equitable manner. The Democratic substitute would increase the
deduction to 50 percent in 1997 and 80 percent in 2002. Affordability
is the greatest barrier to expanding health coverage. Increasing the
deduction to 50 percent in 1997 will help make insurance affordable to
those who lack coverage. Now, the self-employed may be able to fit into
their budget the cost of health insurance.
Equity in the tax code should be one of our primary focuses.
Corporations are allowed to deduct 100 percent of the cost of providing
health insurance. Narrowing the gap between corporations and the self-
employed restores greater tax equity.
Self-employed businesses range in spectrum from family farms to sole
practitioners. These businesses are a vital part of our economy. We
need to make health care affordable for them.
I urge you to support the Democratic substitute which tackles the
issues where there is agreement and will make a difference in the
health care of Americans.
Mrs. VUCANOVICH. Mr. Speaker, it took many years of debate, and
thousands of town hall meetings, but by George, I think we've got it.
Congress has finally stepped up to the plate to ensure that Americans
are able to obtain health insurance. Too many Americans are shut out of
health care insurance because of preexisting conditions, or because
they change jobs. With one swing of the bat in the first inning of the
game, we have successfully completed a ``Triple A''--much better than a
triple play. The bill provides ``A''-vailability, ``A''-ffordability
and ``A''-ccountability. It helps employees who try to obtain health
insurance, employers who try to provide health insurance, and the bill
tackles the high cost of health care.
It makes good on promises by raising the health deduction for self-
employed to 50 percent by the year 2003, provides citizens the
opportunity to contribute to Medical Savings Accounts, and allows
individuals to deduct long-term care expenses.
The House Committees' team has made the advancement up to third base,
and it's up to the rest of us to take it home. I urge my colleagues and
teammates to support this historic bill.
Mr. CUNNINGHAM. Mr. Speaker, today I rise in support of Health
Coverage Availability and Affordability Act, H.R. 3103, particularly
the provisions which will provide small employers with the ability to
reduce health insurance costs through the formation of multiple
employer arrangements [MEWAs]. H.R. 3103 will bring affordable health
care to millions of Americans who currently are uninsured, and will
also provide greater assurance that those who already have health
coverage will not lose it when they change jobs.
Without the small employer pooling provisions, any incremental health
reform measure only addresses the problem of security for those who
currently have health insurance. However, by providing small business
with the same tools that are already available to large corporations in
obtaining health coverage, we can also help the problem of the
uninsured.
Eighty-five percent of the forty million uninsured are persons in
families with at least one employed worker, and the majority of these
workers are employed in small businesses. As small business becomes a
larger portion of the economy, more and more people will find
themselves employed by smaller companies. Thus, if we are ever going to
make health coverage affordable for the uninsured, it is imperative
that we provide small business with the same opportunities that already
are available to large corporations for keeping health costs down.
Small employer pooling arrangements must operate uniformly across
state lines, just like large employer arrangements do currently. We
must provide a market-oriented, 21st century solution to the problem of
the uninsured.
I urge you to vote in favor of H.R. 3103 to increase health care
security and affordability for American workers.
Mr. LAZIO of New York. Mr. Speaker, I rise today in proud support of
H.R. 3103, the Health Coverage & Affordability Act of 1996, of which I
am a cosponsor.
This is a day which I have been looking forward to since I first took
office over 3 years ago. Today, we are taking a long overdue step to
provide real, substantive change to our health care system which will
help working class families across America, and in my home district of
Long Island.
For far too long, many Americans have worried that losing a job or
having a preexisting condition would jeopardize the portability of
their health insurance.
Because of this bill, workers will continue to have coverage if they
change or lose their job--even with preexisting conditions. General
Accounting Office [GAO] statistics show that 12 million workers with
employer-based insurance leave their jobs every year, and millions more
lose their jobs. H.R. 3103 would benefit up to 25 million Americans per
year, including those who face job-lock, by eliminating the preexisting
condition exclusions for persons with prior health insurance coverage.
An important feature of H.R. 3103 will eliminate discrimination based
on genetic information. This would allow thousands of men and women to
undergo genetic testing needed to preserve their health without fear of
losing their health insurance or not being able to acquire it. This
protection is essential for the women of Long Island, where instances
of breast cancer are among the highest in the country. With H.R. 3103
in place, these women can be tested for BRCA-1, a gene linked to the
disease, without fear of losing the insurance needed to meet their
medical needs.
As a result of our efforts today, health care will become more
affordable. H.R. 3103 tackles the problem created by rampant fraud and
lawsuit abuse that drives up the cost, and will increase penalties for
those who commit fraud and abuse. Importantly, this bill also increases
the health insurance deduction for self-employed individuals from 30
percent to 50 percent by 2003, and allows taxpayers to make tax-
deductible contributions to a medical savings account.
I urge my colleagues to support this bill and these reforms which
will ease some of those worries of families who are already being
squeezed by high taxes and falling wages by ensuring availability,
affordability, and accountability to those who receive health care
through their jobs. The American people deserve this and we owe it to
them to pass it by a wide bi-partisan margin.
Mr. KLECZKA. Mr. Speaker, Americans will today witness firsthand an
overt effort by the Republican leadership to sink a much-needed piece
of legislation for the sake of preserving their cozy relationship with
special-interests. A perfectly good insurance reform bill introduced by
Senators Kennedy and Kassebaum and Representative Roukema in the House
has been loaded with extra, controversial provisions that will make it
difficult, if not impossible, to pass into law.
While modest, the original bill could help 21 million Americans by
waiving the pre-existing condition exclusions for individuals who have
had continuous health coverage. As many as 4 million people who are
currently ``locked'' into their jobs for fear of losing needed health
coverage for themselves or their family would benefit from the bill's
national portability standards.
Yet, despite the fact that this bill will benefit 25 million
Americans, Republicans in the House do not support it. In the Ways and
Means Committee, the Kennedy-Kassebaum-Roukema bill did not receive one
Republican vote. Apparently, 25 million hard-working Americans are not
enough to convince the GOP that we need this legislation. Evidently,
[[Page H3112]]
unless it has the blessing of the Health Insurance Association of
America it is not worth voting for.
Why else would these Members condition their support for insurance
reform on adding ``sweeteners'' like medical liability provisions that
limit the legal rights of malpractice victims? Why do we need to permit
insurance companies to sell Medicare beneficiaries unnecessary and
costly policies that duplicate benefits they already have?
The Republican bill (H.R. 3103) includes other items that will likely
meet strong opposition in the Senate, namely, controversial provisions
that effectively limit the ability of States to enact health care
reforms by pre-empting existing state regulations on multi-employer
health plans. Already, a large percentage of employers are exempt from
state reforms under the ERISA. With this provision, Congress takes even
more health plans out of states' reach.
This add-on is especially puzzling since it flies in the face of the
States' rights argument we have been hearing over and over from the
Republicans. They want to block grant Medicaid, welfare, public
housing, senior employment programs and other Federal initiatives and
let the states administer and regulate them. Why not health care
reform? Their own argument that the states can do things better and
more efficiently than the Federal Government is contradicts this new
policy.
As one of only four Democrats that cast their vote in favor of the
Ways and Means insurance reform legislation, I strongly support
providing my constituents with health coverage they can take from job
to job. But, I differ from my Republican colleagues in one important
respect. Not only do I support it--I also want it to pass. This final
version of the bill bends over backwards so far to please so many
special interests that it severs the spine that holds it together and
paralyzes the legislative process.
Mr. Speaker, I support the clean Democratic substitute, which is
identical to the original Kennedy-Kassebaum-Roukema bill and I urge my
colleagues to do likewise.
The SPEAKER pro tempore (Mr. Combest). All time for debate has
expired.
Amendment in the nature of a substitute Offered by Mr. Dingell
Mr. DINGELL. Mr. Speaker, as the designee of the minority leader,
under the rule, and on behalf of myself and my two colleagues, the
gentleman from South Carolina [Mr. Spratt] and the gentleman from Texas
[Mr. Bentsen], I offer an amendment in the nature of a substitute.
The SPEAKER pro tempore. The Clerk will designate the amendment in
the nature of a substitute.
The text of the amendment in the nature of a substitute is as
follows:
Amendment in the nature of a substitute offered by Mr.
Dingell:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Health Insurance Reform Act
of 1996''.
TITLE I--HEALTH CARE ACCESS, PORTABILITY, AND RENEWABILITY
TABLE OF CONTENTS OF TITLE
Sec. 100. Definitions.
Subtitle A--Group Market Rules
Sec. 101. Guaranteed availability of health coverage.
Sec. 102. Guaranteed renewability of health coverage.
Sec. 103. Portability of health coverage and limitation on preexisting
condition exclusions.
Sec. 104. Special enrollment periods.
Sec. 105. Disclosure of information.
Subtitle B--Individual Market Rules
Sec. 110. Individual health plan portability.
Sec. 111. Guaranteed renewability of individual health coverage.
Sec. 112. State flexibility in individual market reforms.
Sec. 113. Definition.
Subtitle C--COBRA Clarifications
Sec. 121. Cobra clarification.
Subtitle D--Private Health Plan Purchasing Cooperatives
Sec. 131. Private health plan purchasing cooperatives.
Subtitle E--Application and Enforcement of Standards
Sec. 141. Applicability.
Sec. 142. Enforcement of standards.
Subtitle F--Miscellaneous Provisions
Sec. 191. Health coverage availability study.
Sec. 192. Effective date.
Sec. 193. Severability.
SEC. 100. DEFINITIONS.
As used in this title:
(1) Beneficiary.--The term ``beneficiary'' has the meaning
given such term under section 3(8) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002(8)).
(2) Employee.--The term ``employee'' has the meaning given
such term under section 3(6) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002(6)).
(3) Employer.--The term ``employer'' has the meaning given
such term under section 3(5) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002(5)), except that
such term shall include only employers of two or more
employees.
(4) Employee health benefit plan.--
(A) In general.--The term ``employee health benefit plan''
means any employee welfare benefit plan, governmental plan,
or church plan (as defined under paragraphs (1), (32), and
(33) of section 3 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1002 (1), (32), and (33))) that
provides or pays for health benefits (such as provider and
hospital benefits) for participants and beneficiaries
whether--
(i) directly;
(ii) through a group health plan offered by a health plan
issuer as defined in paragraph (8); or
(iii) otherwise.
(B) Rule of construction.--An employee health benefit plan
shall not be construed to be a group health plan, an
individual health plan, or a health plan issuer.
(C) Arrangements not included.--Such term does not include
the following, or any combination thereof:
(i) Coverage only for accident, or disability income
insurance, or any combination thereof.
(ii) Medicare supplemental health insurance (as defined
under section 1882(g)(1) of the Social Security Act).
(iii) Coverage issued as a supplement to liability
insurance.
(iv) Liability insurance, including general liability
insurance and automobile liability insurance.
(v) Workers compensation or similar insurance.
(vi) Automobile medical payment insurance.
(vii) Coverage for a specified disease or illness.
(viii) Hospital or fixed indemnity insurance.
(ix) Short-term limited duration insurance.
(x) Credit-only, dental-only, or vision-only insurance.
(xi) A health insurance policy providing benefits only for
long-term care, nursing home care, home health care,
community-based care, or any combination thereof.
(5) Family.--
(A) In general.--The term ``family'' means an individual,
the individual's spouse, and the child of the individual (if
any).
(B) Child.--For purposes of subparagraph (A), the term
``child'' means any individual who is a child within the
meaning of section 151(c)(3) of the Internal Revenue Code of
1986.
(6) Group health plan.--
(A) In general.--The term ``group health plan'' means any
contract, policy, certificate or other arrangement offered by
a health plan issuer to a group purchaser that provides or
pays for health benefits (such as provider and hospital
benefits) in connection with an employee health benefit plan.
(B) Arrangements not included.--Such term does not include
the following, or any combination thereof;
(i) Coverage only for accident, or disability income
insurance, or any combination thereof.
(ii) Medicare supplemental health insurance (as defined
under section 1882(g)(1) of the Social Security Act).
(iii) Coverage issued as a supplement to liability
insurance.
(iv) Liability insurance, including general liability
insurance and automobile liability insurance.
(v) Workers compensation or similar insurance.
(vi) Automobile medical payment insurance.
(vii) Coverage for a specified disease or illness.
(ix) Short-term limited duration insurance.
(x) Credit-only, dental-only, or vision-only insurance.
(xi) A health insurance policy providing benefits only for
long-term care, nursing home care, home health care,
community-based care, or any combination thereof.
(7) Group purchaser.--The term ``group purchaser'' means
any person (as defined under paragraph (9) of section 3 of
the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1002(9)) or entity that purchases or pays for health
benefits (such as provider or hospital benefits) on behalf of
two or more participants or beneficiaries in connection with
an employee health benefit plan. A health plan purchasing
cooperative established under section 131 shall not be
considered to be a group purchaser.
(8) Health plan issuer.--The term ``health plan issuer''
means any entity that is licensed (prior to or after the date
of enactment of this Act) by a State to offer a group health
plan or an individual health plan.
(9) Health status.--The term ``health status'' includes.
with respect to an individual, medical condition, claims
experience, receipt of health care, medical history, genetic
information, evidence of insurability (including conditions
arising out of acts of domestic violence), or disability.
(10) Participant.--The term ``participant'' has the meaning
given such term under section 3(7) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002(7)).
(11) Plan sponsor.--The term ``plan sponsor'' has the
meaning given such term under section 3(16)(B) of the
Employee Retirement
[[Page H3113]]
Income Security Act of 1974 (29 U.S.C. 1002(16)(B)).
(12) Secretary.--The term ``Secretary'', unless
specifically provided otherwise, means the Secretary of
Labor.
(13) State.--The term ``State'' means each of the several
States, the District of Columbia, Puerto Rico, the United
States Virgin Islands, Guam, American Samoa, and the
Commonwealth of the Northern Mariana Islands.
Subtitle A--Group Market Rules
SECTION 101. GUARANTEED AVAILABILITY OF HEALTH COVERAGE.
In General.--
(1) Nondiscrimination.--Except as provided in subsection
(b), section 102 and section 103--
(A) a health plan issuer offering a group health plan may
not decline to offer whole group coverage to a group
purchaser desiring to purchase such coverage; and
(B) an employee health benefit plan or a health plan issuer
offering a group health plan may establish eligibility,
continuation of eligibility, enrollment, or premium;
contribution requirements under the terms of such plan,
except that such requirements shall not be based on health
status (as defined in section 100(9)).
(2) Health promotion and disease prevention.--Nothing in
this subsection shall prevent an employee health benefit plan
or a health plan issuer from establishing premium; discounts
or modifying otherwise applicable copayments or deductibles
in return for adherence to programs of health promotion and
disease prevention.
(b) Application of Capacity Limits.--
(1) In general.--Subject to paragraph (2), a health plan
issuer offering a group health plan may cease offering
coverage to group purchasers under the plan if--
(A) the health plan issuer ceases to offer coverage to any
additional group purchasers; and
(B) the health plan issuer can demonstrate to the
applicable certifying authority (as defined in section
142(d)), if required, that its financial or provider capacity
to serve previously covered participants and beneficiaries
(and additional participants and beneficiaries who will be
expected to enroll because of their affiliation with a group
purchaser or such previously covered participants or
beneficiaries) will be impaired if the health plan issuer is
required to offer coverage to additional group purchasers.
Such health plan issuer shall be prohibited from offering
coverage after a cessation in offering coverage under this
paragraph for a 6-month period or until the health plan
issuer can demonstrate to the applicable certifying authority
(as defined in section 142(d)) that the health plan issuer
has adequate capacity, whichever is later.
(2) First-come-first-served.--A health plan issuer offering
a group health plan is only eligible to exercise the
limitations provided for in paragraph (1) if the health plan
issuer offers coverage to group purchasers under such plan on
a first-come-first-served basis or other basis established by
a State to ensure a fair opportunity to enroll in the plan
and avoid risk selection.
(e) Construction.--
(1) Marketing of group health plans.--Nothing in this
section shall be construed to prevent a State from requiring
health plan issuers offering group health plans to actively
market such plans.
(2) Involuntary offering of group health plans.--Nothing is
this section shall be construed to require a health plan
issuer to involuntarily offer group health plans in a
particular market. For the purposes of this paragraph, the
term ``market'' means either the large employer market or the
small employer market (as defined under applicable State law,
or if not so defined, an employer with not more than 50
employees).
SEC. 102. GUARANTEED RENEWABILITY OF HEALTH COVERAGE.
(A) In General.--
(1) Group purchaser.--Subject to subsections (b) and (c), a
group health plan shall be renewed or continued in force by a
health plan issuer at the option of the group purchaser,
except that the requirement of this subparagraph shall not
apply in the case of--
(A) the nonpayment of premiums or contributions by the
group purchaser in accordance with the terms of the group
health plan or where the health plan issuer has not received
timely premium payments;
(B) fraud or misrepresentation of material fact on the part
of the group purchaser;
(C) the termination of the group health plan in accordance
with subsection (b); or
(D) the failure of the group purchaser to meet contribution
or participation requirements in accordance with paragraph
(3).
(2) Paricipant.--Subject to subsections (b) and (c),
coverage under an employee health benefit plan or group
health plan shall be renewed or continued in force, if the
group purchaser elects to continue to provide coverage under
such plan, at the option of the participant (or beneficiary
where such right exists under the terms of the plan or under
applicable law), except that the requirement of this
paragraph shall not apply in the case of--
(A) the nonpayment of premiums or contributions by the
participant or beneficiary in accordance with the terms of
the employee health benefit plan or group health plan or
where such plan has not received timely premium payments.
(B) fraud or misrepresentation of material fact on the part
of the participant or beneficiary relating to an application
for coverage or claim for benefits;
(C) the termination of the employee health benefit plan or
group health plan;
(D) loss of eligibility for continuation coverage as
described in part 6 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1161 et
seq.); or
(E) failure of a participant or beneficiary to meet
requirements for eligibility for coverage under an employee
health benefit plan or group health plan that are not
prohibited by this title.
(3) Rules of construction.--Nothing in this subsection, nor
in section 101(a), shall be construed to--
(A) preclude a health plan issuer from establishing
employer contribution rules or group participation rules for
group health plans as allowed under applicable State law;
(B) preclude a plan defined in section 3(37) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1102(37)) from establishing employer contribution rules or
group participation rules; or
(C) permit individuals to decline coverage under an
employee health benefit plan if such right is not otherwise
available under such plan.
(b) Termination of Group Health Plans.--
(1) Particular type of group health plan not offered.--In
any case in which a health plan issuer decides to discontinue
offering a particular type of group health plan. A group
health plan of such type may be discontinued by the health
plan issuer only if--
(A) the health plan issuer provides notice to each group
purchaser covered under a group health plan of this type (and
participants and beneficiaries covered under such group
health plan) of such discontinuation at least 90 days prior
to the date of the discontinuation of such plan;
(B) the health plan issuer offers to each group purchaser
covered under a group health plan of this type, the option to
purchase any other group health plan currently being offered
by the health plan issuer; and
(C) in exercising the option to discontinue a group health
plan of this type and in offering one or more replacement
plans, the health plan issuer acts uniformly without regard
to the health status of participants or beneficiaries covered
under the group health plan, or new participants or
beneficiaries who may become eligible for coverage under the
group health plan.
(2) Discontinuance of all group health plans.--
(A) In general.--In any case in which a health plan issuer
elects to discontinue offering all group health plans in a
State, a group health plan may be discontinued by the health
plan issuer only if--
(i) the health plan issuer provides notice to the
applicable certifying authority (as defined in section
142(d)) and to each group purchaser (and participants and
beneficiaries covered under such group health plan) of such
discontinuation at least 180 days prior to the date of the
expiration of such plan, and
(ii) all group health plans issued or delivered for
issuance in the State or discontinued and coverage under such
plans is not renewed.
(B) Application of provisions.--The provisions of this
paragraph and paragraph (3) may be applied separately by a
health plan issuer--
(i) to all group health plans offered to small employers
(as defined under applicable State law, or if not so defined,
an employer with not more than 50 employees); or
(ii) to all other group health plans offered by the health
plan issuer in the State.
(3) Prohibition on market reentry.--In the case of a
discontinuation under paragraph (2), the health plan issuer
may not provide for the issuance of any group health plan in
the market sector (as described in paragraph (2)(B)) in which
issuance of such group health plan was discontinued in the
State involved during the 5-year period beginning on the date
of the discontinuation of the last group health plan not so
renewed.
Treatment of Network Plans.--
(1) Geographic limitations.--A network plan (as defined in
paragraph (2)) may deny continued participation under such
plan to participants or beneficiaries who neither live,
reside, nor work in an area in which such network plan is
offered, but only if such denial is applied uniformly,
without regard to health status of particular participants or
beneficiaries.
(2) Network plan.--As used in paragraph (1), the term
``network plan'' means an employee health benefit plan or a
group health plan that arranges for the financing and
delivery of health care services to participants or
beneficiaries covered under such plan, in whole or in part,
through arrangements with providers.
(d) COBRA Coverage.--Nothing in subsection (a)(2)(E) or
subsection (c) shall be construed to affect any right to
COBRA continuation coverage as described in part 6 of
subtitle B of title I of the employee Retirement Income
Security Act of 1974 (29 U.S.C. 1161 et seq.).
SEC. 103. PORTABILITY OF HEALTH COVERAGE AND LIMITATION ON
PREEXISTING CONDITION EXCLUSIONS.
(a) In General.--An employee health benefit plan or a
health plan issuer offering a group health plan may impose a
limitation or exclusion of benefits relating to treatment of
a preexisting condition based on the fact that the condition
existed prior to the coverage of the participant or
beneficiary under the plan only if--
[[Page H3114]]
(1) the limitation or exclusion extends for a period of not
more than 12 months after the date of enrollment in the plan;
(2) the limitation or exclusion does not apply to an
individual who, within 30 days of the date of birth or
placement for adoption (as determined under section
609(c)(3)(B) of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1169(c)(3)(B)), was covered under the
plan; and
(3) the limitation or exclusion does not apply to a
pregnancy.
(b) Crediting of Previous Qualifying Coverage.--
(1) In general.--Subject to paragraph (4), an employee
health benefit plan or a health plan issuer offering a group
health plan shall provide that if a participant or
beneficiary is in a period of previous qualifying coverage as
of the date of enrollment under such plan, any period of
exclusion or limitation of coverage with respect to a
preexisting condition shall be reduced by 1 month for each
month in which the participant or beneficiary was in the
period of previous qualifying coverage. With respect to an
individual described in subsection (a)(2) who maintains
continuous coverage, no limitation or exclusion of benefits
relating to treatment of a preexisting condition may be
applied to a child within the child's first 12 months of life
or within 12 months after the placement of a child for
adoption.
(2) Discharge of duty.--An employee health benefit plan
shall provide documentation of coverage to participants and
beneficiaries who coverage is terminated under the plan.
Pursuant to regulations promulgated by the Secretary, the
duty of an employee health benefit plan to verify previous
qualifying coverage with respect to a participant or
beneficiary is effectively discharged when such employee
health benefit plan provides documentation to a participant
or beneficiary that includes the following information:
(A) the dates that the participant or beneficiary was
covered under the plan; and
(B) the benefits and cost-sharing arrangement available to
the participant or beneficiary under such plan.
An employee health benefit plan shall retain the
documentation provided to a participant or beneficiary under
subparagraphs (A) and (B) for at least the 12-month period
following the date on which the participant or beneficiary
ceases to be covered under the plan. Upon request, an
employee health benefit plan shall provide a second copy of
such documentation or such participant or beneficiary within
the 12-month period following the date of such ineligibility.
(3) Definitions.--As used in this section:
(A) Previous qualifying coverage.--The term ``previous
qualifying coverage'' means the period beginning on the
date--
(i) a participant or beneficiary is enrolled under an
employee health benefit plan or a group health plan, and
ending on the date the participant or beneficiary is not so
enrolled; or
(ii) an individual is enrolled under an individual health
plan (as defined in section 113) or under a public or private
health plan established under Federal or State law, and
ending on the date the individual is not so enrolled;
for a continuous period of more than 30 days (without regard
to any waiting period).
(B) Limitation or exclusion of benefits relating to
treatment of a preexisting condition.--The term ``limitation
or exclusion of benefits relating to treatment of a
preexisting condition'' means a limitation or exclusion of
benefits imposed on an individual based on a preexisting
condition of such individual.
(4) Effect of previous coverage.--An employee health
benefit plan or a health plan issuer offering a group health
plan may impose a limitation or exclusion of benefits
relating to the treatment of a preexisting condition, subject
to the limits in subsection (a)(1), only to the extent that
such service or benefit was not previously covered under the
group health plan, employee health benefit plan, or
individual health plan in which the participant or
beneficiary was enrolled immediately prior to enrollment in
the plan involved.
(c) Late Enrollees.--Except as provided in section 104,
with respect to a participant or beneficiary enrolling in an
employee health benefit plan or group health plan during a
time that is other than the first opportunity to enroll
during an enrollment period of at least 30 days, coverage
with respect to benefits or services relating to the
treatment of a preexisting condition in accordance with
subsection (a) and (b) may be excluded except the period of
such exclusion may not exceed 18 months beginning on the date
of coverage under the plan.
(d) Affiliation Periods.--With respect to a participant or
beneficiary who would otherwise be eligible to receive
benefits under an employee health benefit plan or a group
health plan but for the operation of a preexisting condition
limitation or exclusion, if such plan does not utilize a
limitation or exclusion of benefits relating to the treatment
of a preexisting condition, such plan may impose an
affiliation period on such participant or beneficiary not to
exceed 60 days (or in the case of a late participant or
beneficiary described in subsection (c), 90 days) from the
date on which the participant or beneficiary would otherwise
be eligible to receive benefits under the plan. An employee
health benefit plan or a health plan issuer offering a group
health plan may also use alternative methods to address
adverse section as approved by the applicable certifying
authority (as defined in section 142(d)). During such an
affiliation period, the plan may not be required to provide
health care services or benefits and no premium shall be
charged to the participant or beneficiary.
(e) Preexisting Conditions.--For purposes of this section,
the term ``preexisting condition'' means a condition,
regardless of the cause of the condition, for which medical
advice, diagnosis, care, or treatment was recommended or
received within the 6-month period ending on the day before
the effective date of the coverage (without regard to any
waiting period).
(f) State Flexibility.--Nothing in this section shall be
construed to preempt State laws that--
(1) require health plan issuers to impose a limitation or
exclusion of benefits relating to the treatment of a
preexisting condition for periods that are shorter than those
provided for under this section; or
(2) allow individuals, participants, and beneficiaries to
be considered to be in a period of previous qualifying
coverage if such individual, participant, or beneficiary
experiences a lapse in coverage that is greater than the 30-
day period provided for under subsection (b)(3);
unless such laws are preempted by section 514 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1144).
SEC. 104. SPECIAL ENROLLMENT PERIODS.
In the case of a participant, beneficiary or family member
who--
(1) through marriage, separation, divorce, death, birth or
placement of a child for adoption, experiences a change in
family composition affecting eligibility under a group health
plan, individual health plan, or employee health benefit
plan;
(2) experiences a change in employment status, as described
in section 603(2) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1163(2)), that causes the loss of
eligibility for coverage, other than COBRA continuation
coverage under a group health plan, individual health plan,
or employee health benefit plan; or
(3) experiences a loss of eligibility under a group health
plan, individual health plan, or employee health benefit plan
because of a change in the employment status of a family
member;
each employee health benefit plan and each group health plan
shall provide for a special enrollment period extending for a
reasonable time after such event that would permit the
participant to change the individual or family basis of
coverage or to enroll in the plan if coverage would have been
available to such individual, participant, or beneficiary but
for failure to enroll during a previous enrollment period.
Such a special enrollment period shall ensure that a child
born or placed for adoption shall be deemed to be covered
under the plan as of the date of such birth or placement for
adoption if such child is enrolled within 30 days of the date
of such birth or placement for adoption.
SEC. 105. DISCLOSURE OF INFORMATION.
(a) Disclosure of Information by Health Plan Issuer.--
(1) In general.--In connection with the offering of any
group health plan to a small employer (as defined under
applicable State law, or if not so defined, an employer with
not more than 50 employees), a health plan issuer shall make
a reasonable disclosure to such employer, as part of its
solicitation and sales materials, of--
(A) the provisions of such group health plan concerning the
health plan issuer's right to change premium rates and the
factors that may affect changes in premium rates.
(B) the provisions of such group health plan relating to
renewability of coverage;
(C) the provisions of such group health plan relating to
any preexisting condition provision; and
(D) descriptive information about the benefits and premiums
available under all group health plans for which the employer
is qualified.
Information shall be provided to small employers under this
paragraph in a manner determined to be understandable by the
average small employer, and shall be sufficiently accurate
and comprehensive to reasonably inform small employers,
participants and beneficiaries of their rights and
obligations under the group health plan.
(2) Exception.--With respect to the requirement of
paragraph (1), any information that is proprietary and trade
secret information under applicable law shall not be subject
to the disclosure requirements of such paragraph.
(3) Construction.--Nothing in this subsection shall be
construed to preempt State reporting and disclosure
requirements to the extent that such requirements are not
preempted under section 514 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1144).
(b) Disclosure of Information to Participants and
Beneficiaries.--
(1) In general.--Section 104(b)(1) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1024(b)(1))
is amended in the matter following subparagraph (B)--
(A) by striking ``102(a)(1),'' and inserting ``102(a)(1)
that is not a material reduction in covered services or
benefits provided,''; and
(B) by adding at the end thereof the following new
sentences: ``If there is a modification or change described
in section 102(a)(1)
[[Page H3115]]
that is a material reduction in covered services or benefits
provided, a summary description of such modification or
change shall be furnished to participants not later than 60
days after the date of the adoption of the modification or
change. In the alternative, the plan sponsors may provide
such description at regular intervals of not more than 90
days. The Secretary shall issue regulations within 180 days
after the date of enactment of the Health Insurance Reform
Act of 1996, providing alternative mechanisms to delivery by
mail through which employee health benefit plans may notify
participants of material reductions in covered services or
benefits.''.
(2) Plan description and summary.--Section 102(b) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1022(b)) is amended--
(A) by inserting ``including the office or title of the
individual who is responsible for approving or denying claims
for coverage of benefits'' after ``type of administration of
the plan'';
(B) by inserting ``including the name of the organization
responsible for financing claims'' after ``source of
financing of the plan''; and
(C) by inserting ``including the office, contact, or title
of the individual at the Department of Labor through which
participants may seek assistance or information regarding
their rights under this Act and title I of the Health
Insurance Reform Act of 1996 with respect to health benefits
that are not offered through a group health plan.'' after
``benefits under the plan''.
Subtitle B--Individual Market Rules
SEC. 110. INDIVIDUAL HEALTH PLAN PORTABILITY.
(a) Limitation on Requirements.--
(1) In general.--Except as provided in subsections (b) and
(c), a health plan issuer described in paragraph (3) may not,
with respect to an eligible individual (as defined in
subsection (b)) desiring to enroll in an individual health
plan--
(A) decline to offer coverage to such individual, or deny
enrollment to such individual based on the health status of
the individual; or
(B) impose a limitation or exclusion of benefits otherwise
covered under the plan for the individual based on a
preexisting condition unless such limitation or exclusion
could have been imposed if the individual remained covered
under a group health plan or employee health benefit plan
(including providing credit for previous coverage in the
manner provided under subtitle A).
(2) Health promotion and disease prevention.--Nothing in
this subsection shall be construed to prevent a health plan
issuer offering an individual health plan from establishing
premium discounts or modifying otherwise applicable
copayments or deductibles in return for adherence to programs
of health promotion or disease prevention.
(3) Health plan issuer.--A health plan issuer described in
this paragraph in a health plan issuer that issues or renews
individual health plans.
(4) Premiums.--Nothing in this subsection shall be
construed to affect the determination of a health plan issuer
as to the amount of the premium payable under an individual
health plan under applicable State law.
(b) Definition of Eligible Individual.--As used in
subsection (a)(1), the term ``eligible individual'' means an
individual who--
(1) was a participant or beneficiary enrolled under one or
more group health plans, employee health benefit plans, or
public plans established under Federal or State law, for not
less than 18 months (without a lapse in coverage of more than
30 consecutive days) immediately prior to the date on which
the individual desired to enroll in the individual health
plan.
(2) is not eligible for coverage under a group health plan
or an employee health benefit plan;
(3) has not had coverage terminated under a group health
plan or employee health benefit plan for failure to make
required premium payments or contributions, or for fraud or
misrepresentation of material fact; and
(4) has, if applicable, accepted and exhausted the maximum
required period of continuous coverage as described in
section 602(2)(A) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1162(2)(A)) or under an equivalent
State program.
(c) Applicable of Capacity Limit.--
(1) In general.--Subject to paragraph (2), a health plan
issuer offering coverage to individuals under an individual
health plan may cease enrolling individuals under the plan
if--
(A) the health plan issuer ceases to enroll any new
individuals; and
(B) the health plan issuer can demonstrate to the
applicable certifying authority (as defined in section
142(d)), if required, that its financial or provider capacity
to serve previously covered individuals will be impaired if
the health plan issuer is required to enroll additional
individuals.
Such a health plan issuer shall be prohibited from offering
coverage after a cessation in offering coverage under this
paragraph for a 6-month period or until the health plan
issuer can demonstrate to the applicable certifying authority
(as defined in section 142(d)) that the health plan issuer
has adequate capacity, whichever is later.
(2) First-come-first-served.--A health plan issuer offering
coverage to individuals under an individual health plan is
only eligible to exercise the limitations provided for in
paragraph (1) if the health plan issuer provides for
enrollment of individuals under such plan on a first-come-
first-served basis or other basis established by a State to
ensure a fair opportunity to enroll in the plan and avoid
risk selection.
(d) Market Requirement.--
(1) In general.--The provisions of subsection (a) shall not
be construed to require that a health plan issuer offering
group health plans to group purchasers offer individual
health plans to individuals.
(2) Conversion policies.--A health plan issuer offering
group health plans to group purchasers under this title shall
not be deemed to be a health plan issuer offering an
individual health plan solely because such health plan issuer
offers a conversion policy.
(3) Marketing of plans.--Nothing in this section shall be
construed to prevent a State from requiring health plan
issuers offering coverage to individuals under an individual
health plan to actively market such plan.
SEC. 111. GUARANTEED RENEWABILITY OF INDIVIDUAL HEALTH
COVERAGE.
(a) In General.--Subject to subsections (b) and (c),
coverage for individuals under an individual health plan
shall be renewed or continued in force by a health plan
issuer at the option of the individual, except that the
requirement of this subsection shall not apply in the case
of--
(1) the nonpayment of premiums or contributions by the
individual in accordance with the terms of the individual
health plan or where the health plan issuer has not received
timely premium payments;
(2) fraud or misrepresentation of material fact on the part
of the individual; or
(3) the termination of the individual health plan in
accordance with subsection (b).
(b) Termination of Individual Health Plans.--
(1) Particular type of individual health plan not
offered.--In any case in which a health plan issuer decides
to discontinue offering a particular type of individual
health plan to individuals, an individual health plan may be
discontinued by the health plan issuer only if--
(A) the health plan issuer provides notice to each
individual covered under the plan of such discontinuation at
least 90 days prior to the date of the expiration of the
plan.
(B) the health plan issuer offers to each individual
covered under the plan the option to purchase any other
individual health plan currently being offered by the health
plan issuer to individuals; and
(C) in exercising the option to discontinue the individual
health plan and in offering one or more replacement plans,
the health plan issuer acts uniformly without regard to the
health status of particular individuals.
(21) Discontinuance of all individual health plans.--In any
case in which a health plan issuer elects to discontinue all
individual health plans in a State, an individual health plan
may be discontinued by the health plan issuer only if--
(A) the health plan issuer provides notice to the
applicable certifying authority (as defined in section
142(d)) and to each individual covered under the plan of such
discontinuation at least 180 days prior to the date of the
discontinuation of the plan; and
(B) all individual health plans issued or delivered for
issuance in the State are discontinued and coverage under
such plans is not renewed.
(3) Prohibition on market reentry.--In the case of a
discontinuation under paragraph (2), the health plan issuer
may not provide for the issuance of any individual health
plan in the State involved during the 5-year period beginning
on the date of the discontinuation of the last plan not so
renewed.
(c) Treatment of Network Plans.--
(1) Geographic limitations.--A health plan issuer which
offers a network plan (as defined in paragraph (2)) may deny
continued participation under the plan to individuals who
neither live, reside, nor work in an area in which the
individual health plan is offered, but only if such denial is
applied uniformly, without regard to health status of
particular individuals.
(2) Network play.--As used in paragraph (1), the term
``network plan'' means an individual health plan that
arranges for the financing and delivery of health care
services to individuals covered under such health plan, in
whole or in part, through arrangements with providers.
SEC. 112. STATE FLEXIBILITY IN INDIVIDUAL MARKET REFORMS.
(a) In General.--With respect to any State law with respect
to which the Governor of the State notifies the Secretary of
Health and Human Services that such State law will achieve
the goals of sections 110 and 111, and that is in effect on,
or enacted after, the date of enactment of this Act (such as
laws providing for guaranteed issue, open enrollment by one
or more health plan issuers, high-risk pools, or mandatory
conversion policies), such State law shall apply in lieu of
the standards described in sections 110 and 111 unless the
Secretary of Health and Human Services determines, after
considering the criteria described in subsection (b)(1), in
consultation with the Governor and Insurance Commissioner or
chief insurance regulatory official of the State, that such
State law does not achieve the goals of providing access to
affordable health care coverage for those individuals
described in sections 110 and 111.
(b) Determination.--
(1) In general.--In making a determination under subsection
(a), the Secretary of Health and Human Services shall only--
[[Page H3116]]
(A) evaluate whether the State law or program provides
guaranteed access to affordable coverage to individuals
described in sections 110 and 111;
(B) evaluate whether the State law or program provides
coverage for preexisting conditions (as defined in section
103(e)) that were covered under the individuals' previous
group health plan or employee health benefit plan for
individuals described in sections 110 and 111.
(C) evaluate whether the State law or program provides
individuals described in sections 110 and 111 with a choice
of health plans or a health plan providing comprehensive
coverage, and
(D) evaluate whether the application of the standards
described in sections 110 and 111 will have an adverse impact
on the number of individuals in such State having access to
affordable coverage.
(2) Notice of intent.--If, within 6 months after the date
of enactment of this Act, the Governor of a State notifies
the Secretary of Health and Human Services that the State
intends to enact a law, or modify an existing law, described
in subsection (a), the Secretary of Health and Human Services
may not make a determination under such subsection until the
expiration of the 12-month period beginning on the date on
which such notification is made, or until January 1, 1998,
whichever is later. With respect to a State that provides
notice under this paragraph and that has a legislature that
does not meet within the 12-month period beginning on the
date of enactment of this Act, the Secretary shall not make a
determination under subsection (a) prior to January 1, 1998.
(3) Notice to state.--If the Secretary of Health and Human
Services determines that a State law or program does not
achieve the goals described in subsection (a), the Secretary
of Health and Human Services shall provide the State with
adequate notice and reasonable opportunity to modify such law
or program to achieve such goals prior to making a final
determination under subsection (a).
(c) Adoption of NAIC Model.--If, not later than 9 months
after the date of enactment of this Act--
(1) the National Association of Insurance Commissioners
(hereafter referred to as the ``NAIC''), through a process
which the Secretary of Health and Human Services determines
has included consultation with representatives of the
insurance industry and consumer groups, adopts a model
standard or standards for reform of the individual health
insurance market, and
(2) the Secretary of Health and Human Services determines,
within 30 days of the adoption of such NAIC standard or
standards, that such standards comply with the goals of
sections 110 and 111:
a State that elects to adopt such model standards or
substantially adopt such model standards shall be deemed to
have met the requirements of sections 110 and 111 and shall
be subject to a determination under subsection (a).
SEC. 113. DEFINITION.
(a) In General.--As used this title, the term ``individual
health plan'' means any contract, policy, certificate or
other arrangement offered to individuals by a health plan
issuer that provides or pays for health benefits (such as
provider and hospital benefits) and that is not a group
health plan under section 2(6).
(b) Arrangements Not Included.--Such term does not include
the following, or any combination thereof:
(1) Coverage only for accident, or disability income
insurance, or any combination thereof.
(2) Medicare supplemental health insurance (as defined
under section 1882(g)(1) of the Social Security Act).
(3) Coverage issued as a supplement to liability insurance.
(4) Liability insurance, including general liability
insurance and automobile liability insurance.
(5) Workers' compensation or similar insurance.
(6) Automobile medical payment insurance.
(7) Coverage for a specified disease or illness.
(8) Hospital of fixed indemnity insurance.
(9) Short-term limited duration insurance.
(10) Credit-only, dental-only, or vision-only insurance.
(11) A health insurance policy providing benefits only for
long-term care, nursing home care, home health care,
community-based care, or any combination thereof.
Subtitle C--COBRA Clarifications
SEC. 121. COBRA CLARIFICATIONS.
(a) Public Health Service Act.--
(1) Period of coverage.--Section 2202(2) of the Public
Health Service Act (42 U.S.C. 300bb-2(2)) is amended--
(A) in subparagraph (A)--
(i) by transferring the sentence immediately preceding
clause (iv) so as to appear immediately following such clause
(iv); and
(ii) in the last sentence (as so transferred)--
(I) by inserting ``, or a beneficiary-family member of the
individual,'' after ``an individual''; and
(II) by striking ``at the time of a qualifying event
described in section 2203(2)'' and inserting ``at any time
during the initial 18-month period of continuing coverage
under this title'';
(B) in subparagraph (D)(i), by inserting before ``, or''
the following: ``, except that the exclusion or limitation
contained in this clause shall not be considered to apply to
a plan under which a preexisting condition or exclusion does
not apply to an individual otherwise eligible for
continuation coverage under this section because of the
provision of the Health Insurance Reform Act of 1996'', and
(C) in subparagraph (E), by striking ``at the time of a
qualifying event described in section 2203(2)'' and inserting
``at any time during the initial 18-month period of
continuing coverage under this title'',
(2) Election.--Section 2205(1)(C) of the Public Health
Service Act (42 U.S.C. 300bb-5(1)(C)) is amended--
(A) in clause (i), by striking ``or'' at the end thereof.
(B) in clause (ii), by striking the period and inserting
``, or'', and
(C) by adding at the end thereof the following new clause:
``(iii) in the case of an individual described in the last
sentence of section 2202(2)(A), or a beneficiary-family
member of the individual, the date such individual is
determined to have been disabled.''.
(3) Notices.--Section 2206(3) of the Public Health Service
Act (42 U.S.C. 300bb-6(3)) is amended by striking ``at the
time of a qualifying event described in section 2203(2)'' and
inserting ``at any time during the initial 18-month period of
continuing coverage under this title''.
(4) Birth or adoption of a child.--Section 2208(3)(A) of
the Public Health Service Act (42 U.S.C. 300bb-8(3)(A)) is
amended by adding at the end thereof the following new flush
sentence:
``Such term shall also include a child who is born to or
placed for adoption with the covered employee during the
period of continued coverage under this title.''.
(b) Employee Retirement Income Security Act of 1974.--
(1) Period of coverage.--Section 602(2) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1162(2)) is
amended--
(A) in the last sentence of subparagraph (A)--
(i) by inserting ``, or a beneficiary-family member of the
individual.'' after ``an individual''; and
(ii) by striking ``at the time of a qualifying event
described in section 603(2)'' and inserting ``at any time
during the initial 18-month period of continuing coverage
under this part'',
(B) in subparagraph (D)(i), by inserting before, ``, or''
the following ``, except that the exclusion or limitation
contained in this clause shall not be considered to apply to
a plan under which a preexisting condition or exclusion does
not apply to an individual otherwise eligible for
continuation coverage under this section because of the
provision of the Health Insurance Reform Act of 1996''; and
(C) in subparagraph (E), by striking ``at the time of a
qualifying event described in section 603(2)'' and inserting
``at any time during the initial 18-month period of
continuing coverage under this part''.
(2) Election.--Section 605(1)(C) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1165(1)(C)) is
amended--
(A) in clause (i), by striking ``or'' at the end thereof;
(B) in clause (ii), by striking the period and inserting
``, or''; and
(C) by adding at the end thereof the following new clause:
``(iii) in the case of an individual described in the last
sentence of section 602(2)(A), or a beneficiary-family member
of the individual, the date such individual is determined to
have been disabled.''.
(3) Notices.--Section 606(3) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1166(3)) is amended by
striking ``at the time of a qualifying event described in
section 603(2)'' and inserting ``at any time during the
initial 18-month period of continuing coverage under this
part''.
(4) Birth or adoption of a child.--Section 607(3)(A) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1167(3)) is amended by adding at the end thereof the
following new flush sentence:
``Such term shall also include a child who is born to or
placed for adoption with the covered employee during the
period of continued coverage under this part.''.
(c) Internal Revenue Code of 1986.--
(1) Period of coverage.--Section 4980B(f)(2)(B) of the
Internal Revenue Code of 1986 is amended--
(A) in the last sentence of clause (i) by striking ``at the
time of a qualifying event described in paragraph (3)(B)''
and inserting ``at any time during the initial 18-month
period of continuing coverage under this section''.
(B) in clause (iv)(I), by inserting before ``, or'' the
following: ``, except that the exclusion or limitation
contained in this subclause shall not be considered to apply
to a plan under which a preexisting condition or exclusion
does not apply to an individual otherwise eligible for
continuation coverage under this subsection because of the
provision of the Health Insurance Reform Act of 1996''; and
(C) in clause (v), by striking ``at the time of a
qualifying event described in paragraph (3)(B)'' and
inserting ``at any time during the initial 18-month period of
continuing coverage under this section''.
(2) Election.--Section 4980B(f)(5)(A)(ii) of the Internal
Revenue Code of 1986 is amended--
[[Page H3117]]
(A) in subclause (I), by striking ``or'' at the end
thereof;
(B) in subclause (II), by striking the period and inserting
``, or'', and
(C) by adding at the end thereof the following new
subclause:
``(III) in the case of an qualified beneficiary described
in the last sentence of paragraph (2)(B)(i), the date such
individual is determined to have been disabled.''.
(3) Notices.--Section 4980B(f)(6)(C) of the Internal
Revenue Code of 1986 is amended by striking ``at the time of
a qualifying event described in paragraph (3)(B)'' and
inserting ``at any time during the initial 18-month period of
continuing coverage under this section''.
(4) Birth or adoption of a child.--Section 4980B(g)(1)(A)
of the Internal Revenue Code of 1986 is amended by adding at
the end thereof the following new flush sentence:
``Such term shall also include a child who is born to or
placed for adoption with the covered employee during the
period of continued coverage under this section.''.
(d) Effective Date.--The amendments made by this section
shall apply to qualifying events occurring on or after the
date of enactment of this Act for plan years beginning after
December 31, 1997.
(e) Notification of Changes.--Not later than 60 days prior
to the date on which this section becomes effective, each
group health plan (covered under title XXII of the Public
Health Service Act, part 6 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974, and section
4980B(f) of the Internal Revenue Code of 1986) shall notify
each qualified beneficiary who has elected continuation
coverage under such title, part or section of the amendments
made by this section.
Subtitle D--Private Health Plan Purchasing Cooperatives
SEC. 131. PRIVATE HEALTH PLAN PURCHASING COOPERATIVES.
(a) Definition.--As used in this title, the term ``health
plan purchasing cooperative'' means a group of individuals or
employers that, on a voluntary basis and in accordance with
this section, form a cooperative for the purpose of
purchasing individual health plans or group health plans
offered by health plan issuers. A health plan issuer, agent,
broker or any other individual or entity engaged in the sale
of insurance may not underwrite a cooperative.
(b) Certification.--
(1) In general.--If a group described in subsection (a)
desires to form a health plan purchasing cooperative in
accordance with this section and such group appropriately
notifies the State and the Secretary of such desire, the
State, upon a determination that such group meets the
requirements of this section, shall certify the group as a
health plan purchasing cooperative. The State shall make a
determination of whether such group meets the requirements of
this section in a timely fashion. Each such cooperative shall
also be registered with the Secretary.
(2) State refusal to certify.--If a State fails to
implement a program for certifying health plan purchasing
cooperatives in accordance with the standards under this
title, the Secretary shall certify and oversee the operations
of such cooperative in such State.
(3) Interstate cooperatives.--For purposes of this section
a health plan purchasing cooperative operating in more than
one State shall be certified by the State in which the
cooperative is domiciled. States may enter into cooperative
agreements for the purpose of certifying and overseeing the
operation of such cooperatives. For purposes of this
subsection, a cooperative shall be considered to be domiciled
in the State in which most of the members of the cooperative
reside.
(c) Board of Directors.--
(1) In general.--Each health plan purchasing cooperative
shall be governed by a Board of Directors that shall be
responsible for ensuring the performance of the duties of the
cooperative under this section. The Board shall be composed
of a board cross-section of representatives of employers,
employees, and individuals participating in the cooperative.
A health plan issuer, agent, broker or any other individual
or entity engaged in the sale of individual health plans or
group health plans may not hold or control any right to vote
with respect to a cooperative.
(2) Limitation on compensation.--A health plan purchasing
cooperative may not provide compensation to members of the
Board of Directors. The cooperative may provide
reimbursements to such members for the reasonable and
necessary expenses incurred by the members in the performance
of their duties as members of the Board.
(3) Conflict of interest.--No member of the Board of
Directors (or family members of such members) nor any
management personnel of the cooperative may be employed by,
be a consultant of, be a member of the board of directors or,
be affiliated with an agent of, or otherwise be a
representative of any health plan issuer, health care
provider, or agent or broker. Nothing in the preceding
sentence shall limit a member of the Board from purchasing
coverage offered through the cooperative.
(d) Membership and Marketing Area.--
(1) Membership.--A health plan purchasing cooperative may
establish limits on the maximum size of employers who may
become members of the cooperative, and may determine whether
to permit individuals to become members. Upon the
establishment of such membership requirements, the
cooperative shall, except as provided in subparagraph (B),
accept all employers (or individuals) residing within the
area served by the cooperative who meet such requirements as
members on a first-come, first-served basis, or on another
basis established by the State to ensure equitable access to
the cooperative.
(2) Marketing area.--A State may establish rules regarding
the geographic area that must be served by a health plan
purchasing cooperative. With respect to a State that has not
established such rules, a health plan purchasing cooperative
operating in the State shall define the boundaries of the
area to be served by the cooperative, except that such
boundaries may not be established on the basis of health
status of the populations that reside in the area.
(e) Duties and Responsibilities.--
(1) In general.--A health plan purchasing cooperative
shall--
(A) enter into agreements with multiple, unaffiliated
health plan issuers, except that the requirement of this
subparagraph shall not apply in regions (such as remote or
frontier areas) in which compliance with such requirement is
not possible.
(B) enter into agreements with employers and individuals
who become members of the cooperative;
(C) participate in any program of risk-adjustment or
reinsurance, or any similar program, that is established by
the State.
(D) prepare and disseminate comparative health plan
materials (including information about cost, quality,
benefits, and other information concerning group health plans
and individual health plans offered through the cooperative);
(E) actively market to all eligible employers and
individuals residing within the service area; and
(F) act as an ombudsman for group health plan or individual
health plan enrollees.
(2) Permissible activities.--A health plan purchasing
cooperative may perform such other functions as necessary to
further the purposes of this title, including--
(A) collecting and distributing premiums and performing
other administrative functions;
(B) collecting and analyzing surveys of enrollee
satisfaction;
(C) charging membership fee to enrollees (such fees may not
be based on health status) and charging participation fees to
health plan issuers;
(D) cooperating with (or accepting as members) employers
who provide health benefits directly to participants and
beneficiaries only for the purpose of negotiating with
providers, and
(E) negotiating with health care providers and health plan
issuers.
(f) Limitations on Cooperative Activities.--A health plan
purchasing cooperative shall not--
(1) perform any activity relating to the licensing of
health plan issuers.
(2) assume financial risk directly or indirectly on behalf
of members of a health plan purchasing cooperative relating
to any group health plan or individual health plan;
(3) establish eligibility, continuation of eligibility,
enrollment, or premium contribution requirements for
participants, beneficiaries, or individuals based on health
status;
(4) operate on a for-profit or other basis where the legal
structure of the cooperative permits profits to be made and
not returned to the members of the cooperative, except that a
for-profit health plan purchasing cooperative may be formed
by a nonprofit organization--
(A) in which membership in such organization is not based
on health status; and
(B) that accepts as members all employers or individuals on
a first-come, first-served basis, subject to any established
limit on the maximum size of and employer that may become a
member; or
(5) perform any other activities that conflict or are
inconsistent with the performance of its duties under this
title.
(g) Limited Preemptions of Certain State Laws.--
(1) In general.--With respect to a health plan purchasing
cooperative that meets the requirements of this section,
State fictitious group laws shall be preempted.
(2) Health plan issuers.--
(A) Rating.--With respect to a health plan issuer offering
a group health plan or individual health plan through a
health plan purchasing cooperative that meets the
requirements of this section. State premium rating
requirement laws, except to the extent provided under
subparagraph (B), shall be preempted unless such laws permit
premium rates negotiated by the cooperative to be less than
rates that would otherwise be permitted under State law, if
such rating differential is not based on differences in
health status or demographic factors.
(B) Exception.--State laws referred to in subparagraph (A)
shall not be preempted if such laws--
(i) prohibit the variance of premium rates among employers,
plan sponsors, or individuals that are members of health plan
purchasing cooperative in excess of the amount of such
variations that would be permitted under such State rating
laws among employers, plan sponsors, and individuals that are
not members of the cooperative; and
(ii) prohibit a percentage increase in premium rates for a
new rating period that is in excess of that which would be
permitted under State rating laws.
(C) Benefits.--Except as provided in subparagraph (D), a
health plan issuer offering a
[[Page H3118]]
group health plan or individual health plan through a health
plan purchasing cooperative shall comply with all State
mandated benefit laws that require the offering of any
services, category or care, or services of any class or type
of provider.
(D) Exception.--In those states that have enacted laws
authorizing the issuance of alternative benefit plans to
small employers, health plan issuers may offer such
alternative benefit plans through a health plan purchasing
cooperative that meets the requirements of this section.
(h) Rules of Construction.--Nothing in this section shall
be construed to--
(1) require that a State organize, operate, or otherwise
create health plan purchasing cooperatives;
(2) otherwise require the establishment of health plan
purchasing cooperatives.
(3) require individuals, plan sponsors, or employers to
purchase group health plans or individual health plans
through a health plan purchasing cooperative;
(4) require that a health plan purchasing cooperative be
the only type of purchasing arrangement permitted to operate
in a State.
(5) confer authority upon a State that the State would not
otherwise have to regulate health plan issuers or employee
health benefits plans, or
(6) confer authority up a State (or the Federal Government)
that the State (or Federal Government) would not otherwise
have to regulate group purchasing arrangements, coalitions,
or other similar entities that do not desire to become a
health plan purchasing cooperative in accordance with this
section.
(i) Application of ERISA.--For purposes of enforcement
only, the requirements of parts 4 and 5 of subtitle B of
title I of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1101) shall apply to a health pan purchasing
cooperative as if such plan were an employee welfare benefit
plan.
Subtitle E--Application and Enforcement of Standards
SEC. 141. APPLICABILITY.
(A) Construction.--
(1) Enforcement.--
(A) In general.--A requirement or standard imposed under
this title on a group health plan or individual health plan
offered by a health plan issuer shall be deemed to be a
requirement or standard imposed on the health plan issuer.
Such requirements or standards shall be enforced by the State
insurance commissioner for the State involved or the official
or officials designated by the State to enforce the
requirements of this title. In the case of a group health
plan offered by a health plan issuer in connection with an
employee health benefit plan, the requirements of standards
imposed under the title shall be enforced with respect to the
health plan issuer by the State insurance commissioner for
the State involved or the official of officials designated by
the State to enforce the requirements of this title.
(B) Limitation.--Except as provided in subsection (c), the
Secretary shall not enforce the requirements or standards of
this title as they relate to health plan issuers, group
health plans, or individual health plans. In no case shall a
Sate enforce the requirements or standards of this title as
they relate to employee health benefit plans.
(2) Preemption of state law.--Nothing in this title shall
be construed to prevent a State from establishing,
implementing, or continuing in effect standards and
requirements--
(A) not prescribed in this title; or
(B) related to the issuance, renewal, or portability of
health insurance or the establishment or operation of group
purchasing arrangements, that are consistent with, and are
not in direct conflict with, this title and provide greater
protection or benefit to participants, beneficiaries or
individuals.
(b) Rule of Construction.--Nothing in this title shall be
construed to affect or modify the provisions of section 514
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1144).
(c) Continuation.--Nothing in this title shall be construed
as requiring a group health plan or an employee health
benefit plan to provide benefits to a particular participant
or beneficiary in excess of those provided under the terms of
such plan.
SEC. 202. ENFORCEMENT OF STANDARDS.
(a) Health Plan Issuers.--Each State shall require that
each group health plan and individual health plan issued,
sold, renewed, offered for sale or operated in such State by
a health plan issuer meet the standards established under
this title pursuant to an enforcement plan filed by the State
with the Secretary. A State shall submit such information as
required by the Secretary demonstrating effective
implementation of the State enforcement law.
(b) Employee Health Benefit Plans.--With respect to
employee health benefit plans, the Secretary shall enforce
the reform standards established under this title in the same
manner as provided for under sections 502, 504, 506, and 510
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1132, 1134, 1136, and 1140). The civil penalties
contained in paragraphs (1) and (2) of section 502(c) of such
Act (29 U.S.C. 1132(c) (1) and (2)) shall apply to any
information required by the Secretary to be disclosed and
reported under this section.
(c) Failure to Implement Plan.--In the case of the failure
of a State to substantially enforce the standards and
requirements set forth in this title with respect to group
health plans and individual health plans as provided for
under the State enforcement plan filed under subsection (a),
the Secretary, in consultation with the Secretary of Health
and Human Services, shall implement an enforcement plan
meeting the standards of this title in such State. In the
case of a State that fails to substantially enforce the
standards and requirements set forth in this title, each
health plan issuer operating in such State shall be subject
to civil enforcement as provided for under sections 502, 504,
506, and 510 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1132, 1134, 1136, and 1140). The civil
penalties contained in paragraphs (1) and (2) of section
502(c) of such Act (29 U.S.C. 1132(c) (1) and (2)) shall
apply to any information required by the Secretary to be
disclosed and reported under this section.
(d) Applicable Certifying Authority.--As used in this
title, the term ``applicable certifying authority''means,
with respect to--
(1) health plan issuers, the State insurance commissioner
or official or officials designated by the State to enforce
the requirements of this title for the State involved; and
(2) an employee health benefit, plan, the Secretary.
(e) Regulations.--The Secretary may promulgate such
regulations as may be necessary or appropriate to carry out
this title.
(f) Technical Amendment.--Section 508 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1138) is
amended by inserting ``and under the Health Insurance Reform
Act of 1996'' before the period.
Subtitle F--Miscellaneous Provisions
SEC. 191. HEALTH COVERAGE AVAILABILITY STUDY.
(a) In General.--The Secretary of Health and Human
Services, in consultation with the Secretary, representatives
of State officials, consumers, and other representatives of
individuals and entities that have expertise in health
insurance and employee benefits, shall conclude a two-part
study, and prepare and submit reports, in accordance with
this section.
(b) Evaluation of Availability.--Not later than January 1,
1998, the Secretary of Health and Human Services shall
prepare and submit to the appropriate committees of Congress
a report, concerning--
(1) an evaluation, based on the experience of States,
expert opinions, and such additional data as may be
available, of the various mechanisms used to ensure the
availability of reasonably priced health coverage to
employers purchasing group coverage and to individuals
purchasing coverage on a non-group basis; and
(2) whether standards that limit the variation in premiums
will further the purposes of this Act.
(c) Evaluation of Effectiveness.--Not later than January 1,
1999, the Secretary of Health and Human Services shall
prepare and submit to the appropriate committees of Congress
a report, concerning the effectiveness of the provisions of
this Act and the various State laws, in ensuring the
availability of reasonably priced health coverage to
employers purchasing group coverage and individuals
purchasing coverage on a nongroup basis.
SEC. 192. EFFECTIVE DATE.
Except as otherwise provided for in this title, the
provisions of this title shall apply as follows:
(1) With respect to group health plans and individual
health plans, such provisions shall apply to plans offered,
sold, issued, renewed, in effect, or operated on or after
January 1, 1997, and
(2) With respect to employee health benefit plans, on the
first day of the first plan year beginning on or after
January 1, 1997.
SEC. 193. SEVERABILITY.
If any provision of this title or the application of such
provision to any person or circumstance is held to be
unconstitutional, the remainder of this title and the
application of the provisions of such to any person or
circumstance shall not be affected thereby.
TITLE II--INCREASE IN DEDUCTION FOR HEALTH INSURANCE COSTS OF SELF-
EMPLOYED INDIVIDUALS
table of contents of title
TITLE II--INCREASE IN DEDUCTION FOR HEALTH INSURANCE COSTS OF SELF-
EMPLOYED INDIVIDUALS
Sec. 200. Amendment of 1986 Code.
Subtitle A--Increase in Deduction For Health Insurance Costs of Self-
Employed Individuals
Sec. 201. Increase in deduction for health insurance costs of self-
employed individuals.
Subtitle B--Revenue Offsets
Chapter 1--Treatment of Individuals Who Expatriate
Sec. 211. Revision of tax rules on expatriation.
Sec. 212. Information on individuals expatriating.
Chapter 2--Foreign Trust Tax Compliance
Sec. 221. Improved information reporting on foreign trusts.
Sec. 222. Modifications of rules relating to foreign trusts having one
or more United States beneficiary.
Sec. 223. Foreign persons not to be treated as owners under grantor
trust rules.
[[Page H3119]]
Sec. 224. Information reporting regarding foreign gifts.
Sec. 225. Modification of rules relating to foreign trusts which are
not grantor trusts.
Sec. 226. Residence of estates and trusts, etc.
Chapter 3--Repeal of Bad Debt Reserve Method for Thrift Savings
Associations
Sec. 231. Repeal of bad debt reserve method for thrift savings
associations.
SEC. 200. AMENDMENT OF 1986 CODE.
Except as otherwise expressly provided, whenever in this
title an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the
reference shall be considered to be made to a section or
other provision of the Internal Revenue Code of 1986.
Subtitle A--Increase in Deduction For Health Insurance Costs of Self-
Employed Individuals
SEC. 201. INCREASE IN DEDUCTION FOR HEALTH INSURANCE COSTS OF
SELF-EMPLOYED INDIVIDUALS.
(a) In General.--Paragraph (1) of section 162(l) is amended
to read as follows:
``(1) Allowance of deduction.--
``(A) In general.--In the case of an individual who is an
employee within the meaning of section 401(c)(1), there shall
be allowed as a deduction under this section an amount equal
to the applicable percentage of the amount paid during the
taxable year for insurance which constitutes medical care for
the taxpayer, his spouse, and dependents.
``(B) Applicable percentage.--For purposes of subparagraph
(A), the applicable percentage shall be determined under the
following table:
The applicable percentage is--in calendar year--
50 percent.and before 2002.............................................
80 percent.''after.....................................................
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
1996.
Subtitle B--Revenue Offsets
CHAPTER 1--TREATMENT OF INDIVIDUALS WHO EXPATRIATE
SEC. 211. REVISION OF TAX RULES ON EXPATRIATION.
(a) In General.--Subpart A of part II of subchapter N of
chapter 1 is amended by inserting after section 877 the
following new section:
``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.
``(a) General Rules.--For purposes of this subtitle--
``(1) Mark to market.--Except as provided in subsection
(f), all property of a covered expatriate to which this
section applies shall be treated as sold on the expatriation
date for its fair market value.
``(2) Recognition of gain or loss.--In the case of any sale
under paragraph (1)--
``(A) notwithstanding any other provision of this title,
any gain arising from such sale shall be taken into account
for the taxable year of the sale unless such gain is excluded
from gross income under part III of subchapter B, and
``(B) any loss arising from such sale shall be taken into
account for the taxable year of the sale to the extent
otherwise provided by this title, except that section 1091
shall not apply (and section 1092 shall apply) to any such
loss.
``(3) Exclusion for certain gain.--The amount which would
(but for this paragraph) be includible in the gross income of
any individual by reason of this section shall be reduced
(but not below zero) by $600,000. For purposes of this
paragraph, allocable expatriation gain taken into account
under subsection (f)(2) shall be treated in the same manner
as an amount required to be includible in gross income.
``(4) Election to continue to be taxed as united states
citizen.--
``(A) In general.--If an expatriate elects the application
of this paragraph--
``(i) this section (other than this paragraph) shall not
apply to the expatriate, but
``(ii) the expatriate shall be subject to tax under this
title, with respect to property to which this section would
apply but for such election, in the same manner as if the
individual were a United States citizen.
``(B) Limitation on amount of estate, gift, and generation-
skipping transfer taxes.--The aggregate amount of taxes
imposed under subtitle B with respect to any transfer of
property by reason of an election under subparagraph (A)
shall not exceed the amount of income tax which would be due
if the property were sold for its fair market value
immediately before the time of the transfer or death (taking
into account the rules of paragraph (2)).
``(c) Requirements.--Subparagraph (A) shall not apply to an
individual unless the individual--
``(i) provides security for payment of tax in such form and
manner, and in such amount, as the Secretary may require,
``(ii) consents to the waiver of any right of the
individual under any treaty of the United States which would
preclude assessment or collection of any tax which may be
imposed by reason of this paragraph, and
``(iii) complies with such other requirements as the
Secretary may prescribe.
``(D) Election.--An election under subparagraph (A) shall
apply to all property to which this section would apply but
for the election and, once made, shall be irrevocable. Such
election shall also apply to property the basis of which is
determined in whole or in part by reference to the property
with respect to which the election was made.
``(b) Election to Defer Tax.--
``(1) In general.--If the taxpayer elects the application
of this subsection with respect to any property--
``(A) no amount shall be required to be included in gross
income under subsection (a)(1) with respect to the gain for
such property for the taxable year of the sale, but
``(B) the taxpayer's tax for the taxable year in which such
property is disposed of shall be increased by the deferred
tax amount with respect to the property.
Except to the extent provided in regulations, subparagraph
(B) shall apply to a disposition whether or not gain or loss
is recognized in whole or in part on the disposition.
``(2) Deferred tax amount.--
``(A) In general.--For purposes of paragraph (1), the term
`deferred tax amount' means, with respect to any property, an
amount equal to the sum of--
``(i) the difference between the amount of tax paid for the
taxable year described in paragraph (1)(A) and the amount
which would have been paid for such taxable year if the
election under paragraph (1) had not applied to such
property, plus
``(ii) an amount of interest on the amount described in
clause (i) determined for the period--
``(I) beginning on the 91st day after the expatriation
date, and
``(II) ending on the due date for the taxable year
described in paragraph (1)(B),
by using the rates and method applicable under section 6621
for underpayments of tax for such period.
For purposes of clause (ii), the due date is the date
prescribed by law (determined without regard to extension)
for filing the return of the tax imposed by this chapter for
the taxable year.
``(B) Allocation of losses.--For purposes of subparagraph
(A), any losses described in subsection (a)(2)(B) shall be
allocated ratably among the gains described in subsection
(a)(2)(A).
``(3) Security.--
``(A) In general.--No election may be made under paragraph
(1) with respect to any property unless adequate security is
provided with respect to such property.
``(B) Adequate security.--For purposes of subparagraph (A),
security with respect to any property shall be treated as
adequate security if--
``(i) it is a bond in an amount equal to the deferred tax
amount under paragraph (2)(A) for the property, or
``(ii) the taxpayer otherwise establishes to the
satisfaction of the Secretary that the security is adequate.
``(4) Waiver of certain rights.--No election may be made
under paragraph (1) unless the taxpayer consents to the
waiver of any right under any treaty of the United States
which would preclude assessment or collection of any tax
imposed by reason of this section.
``(5) Dispositions.--For purposes of this subsection, a
taxpayer making an election under this subsection with
respect to any property shall be treated as having disposed
of such property--
``(A) immediately before death if such property is held at
such time, and
``(B) at any time the security provided with respect to the
property fails to meet the requirements of paragraph (3) and
the taxpayer does not correct such failure within the time
specified by the Secretary.
``(6) Elections.--An election under paragraph (1) shall
only apply to property described in the election and, once
made, is irrevocable. An election may be under paragraph (1)
with respect to an interest in a trust with respect to which
gain is required to be recognized under subsection (f)(1).
``(c) Covered Expatriate.--For purposes of this section--
``(1) In general.--The term `covered expatriate' means an
expatriate--
``(A) whose average annual net income tax (as defined in
section 38(c)(1)) for the period of 5 taxable years ending
before the expatriation date is greater than $100,000, or
``(B) whose net worth as of such date is $500,000 or more.
If the expatriation date is after 1996, such $100,000 and
$500,000 amounts shall be increased by an amount equal to
such dollar amount multiplied by the cost-of-living
adjustment determined under section 1(f)(3) for such calendar
year by substituting `1995' for `1992' in subparagraph (B)
thereof. Any increase under the preceding sentence shall be
rounded to the nearest multiple of $1,000.
``(2) Exceptions.--An individual shall not be treated as a
covered expatriate if--
``(A) the individual--
``(i) became at birth a citizen of the United States and a
citizen of another country and, as of the expatriation date,
continues to be a citizen of, and is taxed as a resident of,
such other country, and
``(ii) has been a resident of the United Stats (as defined
in section 7701(b)(1)(A)(ii)) for not more than 8 taxable
years during the 15-taxable year period ending with the
taxable year during which the expatriation date occurs, or
``(B)(i) the individual's relinquishment of United States
citizenship occurs before such individual attains age 18\1/
2\, and
``(ii) the individual has been a resident of the United
States (as so defined) for not more than 5 taxable years
before the date of relinquishment.
``(d) Property to Which Section Applies.--For purposes of
this section--
[[Page H3120]]
``(1) In general.--Except as otherwise provided by the
Secretary, this section shall apply to--
``(A) any interest in property held by a covered expatriate
on the expatriation date the gain from which would be
included in the gross income of the expatriate if such
interest had been sold for its fair market value on such data
in a transaction in which gain is recognized in whole or in
part, and
``(B) any other interest in a trust to which subsection (f)
applies.
``(2) Exceptions.--This section shall not apply to the
following property:
``(A) United States real property interests.--Any United
States real property interest (as defined in section
897(c)(1)), other than stock of a United States real property
holding corporation which does not, on the expatriation date,
meet the requirements of section 897(c)(2).
``(B) Interest in certain retirement plans.--
``(i) In general.--Any interest in a qualified retirement
plan (as defined in section 4974(c)), other than any interest
attributable to contributions which are in excess of any
limitation or which violate any condition for tax-favored
treatment.
``(ii) Foreign pension plans.--
``(I) In general.--Under regulations prescribed by the
Secretary, interests in foreign pension plans or similar
retirement arrangements or programs.
``(II) Limitation.--The value of property which is treated
as not sold by reason of this subparagraph shall not exceed
$500,000.
``(e) Definitions.--For purposes of this section--
``(1) Expatriate.--The term `expatriate' means--
``(A) any United States citizen who relinquishes his
citizenship, or
``(B) any long-term resident of the United States who--
``(i) ceases to be a lawful permanent resident of the
United States (within the meaning of section 7701(b)(6)), or
``(ii) commences to be treated as a resident of a foreign
country under the provisions of a tax treaty between the
United States and the foreign country and who does not waive
the benefits of such treaty applicable to residents of the
foreign country.
``(2) Expatriation date.--The term `expatriation date'
means--
``(A) the date an individual relinquishes United States
citizenship, or
``(B) in the case of a long-term resident of the United
States, the date of the event described in clause (i) or (ii)
of paragraph (1)(B).
``(3) Relinquishment of citizenship.--A citizen shall be
treated as relinquishing his United States citizenship on the
earliest of--
``(A) the date the individual renounces his United States
nationality before a diplomatic or consular officer of the
United States pursuant to paragraph (5) of section 349(a) of
the Immigration and Nationality Act (8 U.S.C. 1481(a)(5)).
``(B) the date the individual furnishes to the United
States Department of State a signed statement of voluntary
relinquishment of United States nationality confirming the
performance of an act of expatriation specified in paragraph
(1), (2), (3), or (4) of section 349(a) of the Immigration
and Nationality Act (8 U.S.C. 1481(a)(1)-(4)).
``(C) the date the United States Department of State issues
to the individual a certificate of loss of nationality, or
``(D) the date a court of the United States cancels a
naturalized citizen's certificate of naturalization.
Subparagraph (A) or (B) shall not apply to any individual
unless the renunciation or voluntary relinquishment is
subsequently approved by the issuance to the individual of a
certificate of loss of nationality by the United States
Department of State.
``(4) Long-term resident.--
``(A) In general.--The term `long-term resident' means any
individual (other than a citizen of the United States) who is
a lawful permanent resident of the United States in at least
8 taxable years during the period of 15 taxable years ending
with the taxable year during which the expatriation date
occurs. For purposes of the preceding sentence, an individual
shall not be treated as a lawful permanent resident for any
taxable year if such individual is treated as a resident of a
foreign country for the taxable year under the provisions of
a tax treaty between the United States and the foreign
country and does not waive the benefits of such treaty
applicable to residents of the foreign country.
``(B) Special rule.--For purposes of subparagraph (A),
there shall not be taken into account--
``(i) any taxable year during which any prior sale is
treated under subsection (a)(1) as occurring, or
``(ii) any taxable year prior to the taxable year referred
to in clause (i).
``(f) Special Rules Applicable to Beneficiaries' Interests
in Trust.--
``(1) In general.--Except as provided in paragraph (2), if
an individual is determined under paragraph (3) to hold an
interest in a trust--
``(A) the individual shall not be treated as having sold
such interest,
``(B) such interest shall be treated as a separate share in
the trust, and
``(C)(i) such separate share shall be treated as a separate
trust consisting of the assets allocable to such share,
``(ii) the separate trust shall be treated as having sold
its assets immediately before the expatriation date for their
fair market value and as having distributed all of its assets
to the individual as of such time, and
``(iii) the individual shall be treated as having
recontributed the assets to the separate trust.
Subsection (a)(2) shall apply to any income, gain, or loss of
the individual arising from a distribution described in
subparagraph (C)(ii).
``(2) Special rules for interests in qualified trusts.--
``(A) In general.--If the trust interest described in
paragraph (1) is an interest in a qualified trust--
``(i) paragraph (1) and subsection (a) shall not apply, and
``(ii) in addition to any other tax imposed by this title,
there is hereby imposed on each distribution with respect to
such interest a tax in the amount determined under
subparagraph (B).
``(B) Amount of tax.--The amount of tax under subparagraph
(A)(ii) shall be equal to the lesser of--
``(i) the highest rate of tax imposed by section 1(e) for
the taxable year in which the expatriation date occurs,
multiplied by the amount of the distribution, or
``(ii) the balance in the deferred tax account immediately
before the distribution determined without regard to any
increases under subparagraph (C)(ii) after the 30th day
preceding the distribution.
``(C) Deferred tax account.--For purposes of subparagraph
(B)(ii)--
``(i) Opening balance.--The opening balance in a deferred
tax account with respect to any trust interest in an amount
equal to the tax which would have been imposed on the
allocable expatriation gain with respect to the trust
interest if such gain had been included in gross income under
subsection (a).
``(ii) Increase for interest.--The balance in the deferred
tax account shall be increased by the amount of interest
determined (on the balance in the account at the time the
interest accrues), for periods after the 90th day after the
expatriation date, by using the rates and method applicable
under section 6621 for underpayments of tax for such periods.
``(iii) Decrease for taxes previously paid.--The balance in
the tax deferred account shall be reduced--
``(I) by the amount of taxes imposed by subparagraph (A) on
any distribution to the person holding the trust interest,
and
``(II) in the case of a person holding a nonvested
interest, to the extent provided in regulations, by the
amount of taxes imposed by subparagraph (A) on distributions
from the trust with respect to nonvested interests not held
by such person.
``(D) Allocable expatriation gain.--For purposes of this
paragraph, the allocable expatriation gain with respect to
any beneficiary's interest in a trust in the amount of gain
which would be allocable to such beneficiary's vested and
nonvested interests in the trust if the beneficiary held
directly all assets allocable to such interests.
``(E) Tax deducted and withheld.--
``(i) In general.--The tax imposed by subparagraph (A)(ii)
shall be deducted and withheld by the trustees from the
distribution to which it relates.
``(ii) Exception where failure to waive treaty rights.--If
an amount may not be deducted and withheld under clause (i)
by reason of the distributee failing to waive any treaty
right with respect to such distribution--
``(I) the tax imposed by subparagraph (A)(ii) shall be
imposed on the trust and each trustee shall be personally
liable for the amount of such tax, and
``(II) any other beneficiary of the trust shall be entitled
to recover from the distributee the amount of such tax
imposed on the other beneficiary.
``(F) Disposition.--If a trust ceases to be a qualified
trust at any time, a covered expatriate disposes of an
interest in a qualified trust, or a covered expatriate
holding an interest in a qualified trust dies, then, in lieu
of the tax imposed by subparagraph (A)(ii), there is hereby
imposed a tax equal to the lesser of--
``(i) the tax determined under paragraph (1) as if the
expatriation date were the date of such cessation,
disposition, or death, whichever is applicable, or
``(ii) the balance in the tax deferred account immediately
before such date.
Such tax shall be imposed on the trust and each trustee shall
be personally liable for the amount of such tax and any other
beneficiary of the trust shall be entitled to recover from
the covered expatriate or the estate the amount of such tax
imposed on the other beneficiary.
``(G) Definitions and special rule.--For purposes of this
paragraph--
``(i) Qualified trust.--The term `qualified trust' means a
trust--
``(I) which is organized under, and governed by, the laws
of the United States or a State, and
``(II) with respect to which the trust instrument requires
that at least 1 trustee of the trust be an individual citizen
of the United States or a domestic corporation.
``(ii) Vested interest.--The term `vested interest' means
any interest which, as of the expatriation date, is vested in
the beneficiary.
``(iii) Nonvested interest.--The term `nonvested interest'
means, with respect to any beneficiary, any interest in a
trust
[[Page H3121]]
which is not a vested interest. Such interest shall be
determined by assuming the maximum exercise of discretion in
favor of the beneficiary and the occurrence of all
contingencies in favor of the beneficiary.
``(iv) Adjustments.--The Secretary may provide for such
adjustments to the bases of assets in a trust or a deferred
tax account, and the timing of such adjustments, in order to
ensure that gain is taxed only once.
``(3) Determination of beneficiaries' interest in trust.--
``(A) Determinations under paragraph (1)--For purposes of
paragraph (1), a beneficiary's interest in a trust shall be
based upon all relevant facts and circumstances, including
the terms of the trust instrument and any letter of wishes or
similar document, historical patterns of trust distributions,
and the existence of and functions performed by a trust
protector or any similar advisor.
``(B) Other determinations.--For purposes of this section--
``(i) Constructive ownership.--If a beneficiary of a trust
is a corporation, partnership, trust, or estate, the
shareholders, partners, or beneficiaries shall be deemed to
be the trust beneficiaries for purposes of this section.
``(ii) Taxpayer return position.--A taxpayer shall clearly
indicate on its income tax return--
``(I) the methodology used to determine that taxpayer's
trust interest under this section, and
``(II) if the taxpayer knows (or has reason to know) that
any other beneficiary of such trust is using a different
methodology to determine such beneficiary's trust interest
under this section.
``(g) Termination of Deferrals, Etc.--On the date any
property held by an individual is treated as sold under
subsection (a), notwithstanding any other provision of this
title--
``(1) any period during which recognition of income or gain
is deferred shall terminate, and
``(2) any extension of time for payment of tax shall cease
to apply and the unpaid portion of such tax shall be due and
payable at the time and in the manner prescribed by the
Secretary.
``(h) Imposition of Tentative Tax.--
``(1) In general.--If an individual is required to include
any amount in gross income under subsection (a) for any
taxable year, there is hereby imposed, immediately before the
expatriation date, a tax in an amount equal to the amount of
tax which would be imposed if the taxable year were a short
taxable year ending on the expatriation date.
``(2) Due date.--The due date for any tax imposed by
paragraph (1) shall be the 90th day after the expatriation
date.
``(3) Treatment of tax.--Any tax paid under paragraph (1)
shall be treated as a payment of the tax imposed by this
chapter for the taxable year to which subsection (a) applies.
``(4) Deferral of tax.--The provisions of subsection (b)
shall apply to the tax imposed by this subsection to the
extent attributable to gain includible in gross income by
reason of this section.
``(i) Coordination With Estate and Gift Taxes.--If
subsection (a) applies to property held by an individual for
any taxable year and--
``(1) such property is includible in the gross estate of
such individual solely by reason of section 2107, or
``(2) section 2501 applies to a transfer of such property
by such individual solely by reason of section 2501(a)(3).
then there shall be allowed as a credit against the
additional tax imposed by section 2101 or 2501, whichever is
applicable, solely by reason of section 2107 or 2501(a)(3) an
amount equal to the increase in the tax imposed by this
chapter for such taxable year by reason of this section.
``(j) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section, including regulations--
``(1) to prevent double taxation by ensuring that--
``(A) appropriate adjustments are made to basis to reflect
gain recognized by reason of subsection (a) and the exclusion
provided by subsection (a)(3), and
``(B) any gain by reason of a deemed sale under subsection
(a) of an interest in a corporation, partnership, trust, or
estate is reduced to reflect that portion of such gain which
is attributable to an interest in a trust which a
shareholder, partner, or beneficiary is treated as holding
directly under subsection (f)(3)(B)(i), and
``(2) which provide for the proper allocation of the
exclusion under subsection (a)(3) to property to which this
section applies.
``(k) Cross Reference.--
``For income tax treatment of individuals who terminate United States
citizenship, see section 7701(a)(47).''.
(b) Inclusion in Income of Gifts and Inheritances From
Covered Expatriates.--Section 102 (relating to gifts, etc.
not included in gross income) is amended by adding at the end
the following new subsection:
``(d) Gifts and Inheritances From Covered Expatriates.--
Subsection (a) shall not exclude from gross income the value
of any property acquired by gift, bequest, devise, or
inheritance from a covered expatriate after the expatristion
date. For purposes of this subsection, any term used in this
subsection which is also used in section 877A shall have the
same meaning as when used in section 877A.''.
(c) Definition of Termination of United States
Citizenship.--Section 7701(a) is amended by adding at the end
the following new paragraph:
``(47) Termination of united states citizenship.--An
individual shall not cease to be treated as a United States
citizen before the date on which the individual's citizenship
is treated as relinquished under section 877A(e)(3).''.
(d) Conforming Amendments.--
(1) Section 877 is amended by adding at the end the
following new subsection:
``(f) Application.--This section shall not apply to any
individual who relinquishes (within the meaning of section
877A(e)(3)) United States citizenship on or after February 6,
1995.''.
(2) Section 2107(c) is amended by adding at the end the
following new paragraph:
``(3) Cross reference.--For credit against the tax imposed
by subsection (a) for expatriation tax, see section
877A(i).''.
(3) Section 2501(a)(3) is amended by adding at the end the
following new flush sentence: ``For credit against the tax
imposed under this section by reason of this paragraph, see
section 877A(i).''.
(4) Paragraph (10) of section 7701(b) is amended by adding
at the end the following new sentence: ``This paragraph shall
not apply to any long-term resident of the United States who
is an expatriate (as defined in section 877A(e)(1)).''.
(e) Clerical Amendment.--The table of sections for subpart
A of part II of subchapter N of chapter 1 is amended by
inserting after the item relating to section 877 the
following new item:
``Sec. 877A. Tax responsibilities of expatriation.''.
(f) Effective Date.--
(1) In general.--Except as provided in this subsection, the
amendments made by this section shall apply to expatriates
(within the meaning of section 877A(e) of the Internal
Revenue Code of 1986, as added by this section) whose
expatriation date (as so defined) occurs on or after February
6, 1995.
(2) Gifts and bequests.--Section 102(d) of the Internal
Revenue Code of 1986 (as added by subsection (b)) shall apply
to amounts received from expatriates (as so defined) whose
expatriation date (as so defined) occurs on and after
February 6, 1995.
(3) Special rules relating to certain acts occurring before
february 6, 1995.--In the case of an individual who took an
act of expatriation specified in paragraph (1), (2), (3), or
(4) of section 349(a) of the Immigration and Nationality Act
(8 U.S.C. 1481(a) (1)-(4)) before February 6, 1995, but whose
expatriation date (as so defined) occurs after February 6,
1995--
(A) the amendment made by subsection (c) shall not apply,
(B) the amendment made by subsection (d)(1) shall not apply
for any period prior to the expatriation date, and
(C) the other amendments made by this section shall apply
as of the expatriation date.
(4) Due date for tentative tax.--The due date under section
877A(h)(2) of such Code shall in no event occur before the
90th day after the date of the enactment of this Act.
SEC. 212. INFORMATION ON INDIVIDUALS EXPATRIATING.
(a) In General.--Subpart A of part III of subchapter A of
chapter 61 is amended by inserting after section 6039E the
following new section:
``SEC. 6039F. INFORMATION ON INDIVIDUALS EXPATRIATING.
``(a) Requirement.--
``(1) In general.--Notwithstanding any other provision of
law, any expatriate (within the meaning of section
877A(e)(1)) shall provide a statement which includes the
information described in subsection (b).
``(2) Timing.--
``(A) Citizens.--In the case of an expatriate described in
section 877(e)(1)(A), such statement shall be--
``(i) provided not later than the expatriation date (within
the meaning of section 877A(e)(2)), and
``(ii) provided to the person or court referred to in
section 877A(e)(3).
``(B) Noncitizens.--In the case of an expatriate described
in section 877A(e)(1)(B), such statement shall be provided to
the Secretary with the return of tax imposed by chapter 1 for
the taxable year during which the event described in such
section occurs.
``(b) Information To Be Provided.--Information required
under subsection (a) shall include--
``(1) the taxpayer's TIN,
``(2) the mailing address of such individual's principal
foreign residence,
``(3) the foreign country in which such individual is
residing,
``(4) the foreign country of which such individual is a
citizen,
``(5) in the case of an individual having a net worth of at
lease the dollar amount applicable under section
877A(c)(1)(B), information detailing the assets and
liabilities of such individual, and
``(6) such other information as the Secretary may
prescribe.
``(c) Penalty.--Any individual failing to provide a
statement required under subsection (a) shall be subject to a
penalty for each year during any portion of which such
failure continues in an amount equal to the greater of--
``(1) 5 percent of the additional tax required to be paid
under section 877A for such year, or
[[Page H3122]]
``(2) $1,000, unless it is shown that such failure is due
to reasonable cause and not to willful neglect.
``(d) Information To Be Provided to Secretary.--
Notwithstanding any other provision of law--
``(1) any Federal agency or court which collects (or is
required to collect) the statement under subsection (a) shall
provide to the Secretary--
``(A) a copy of any such statement, and
``(B) the name (and any other identifying information) of
any individual refusing to comply with the provisions of
subsection (a),
``(2) the Secretary of State shall provide to the Secretary
a copy of each certificate as to the loss of American
nationality under section 358 of the Immigration and
Nationality Act which is approved by the Secretary of State,
and
``(3) the Federal agency primarily responsible for
administering the immigration laws shall provide to the
Secretary the name of each lawful permanent resident of the
United States (within the meaning of section 7701(b)(6))
whose status as such has been revoked or has been
administratively or judicially determined to have been
abandoned.
Notwithstanding any other provision of law, not later than 30
days after the close of each calendar quarter, the Secretary
shall publish in the Federal Register the name of each
individual relinquishing United States citizenship (within
the meaning of section 877A(e)(3)) with respect to whom the
Secretary receives information under the preceding sentence
during such quarter.
``(e) Exemption.--The Secretary may by regulations exempt
any class of individuals from the requirements of this
section if the Secretary determines that applying this
section to such individuals is not necessary to carry out the
purposes of this section.''.
(b) Clerical Amendment.--The table of sections for such
subpart A is amended by inserting after the item relating to
section 6039E the following new item:
``Sec. 6039F. Information on individuals expatriating.''.
(c) Effective Date.--The amendments made by this section
shall apply to individuals to whom section 877A of the
Internal Revenue Code of 1986 applies and whose expatriation
date (as defined in section 877A(e)(2)) occurs on or after
February 6, 1995, except that no statement shall be required
by such amendments before the 90th day after the date of the
enactment of this Act.
CHAPTER 2--FOREIGN TRUST TAX COMPLIANCE
SEC. 221. IMPROVED INFORMATION REPORTING ON FOREIGN TRUSTS.
(a) In General.--Section 6048 (relating to returns as to
certain foreign trusts) is amended to read as follows:
``SEC. 6048. INFORMATION WITH RESPECT TO CERTAIN FOREIGN
TRUSTS.
``(a) Notice of Certain Events.--
``(1) General rule.--On or before the 90th day (or such
later day as the Secretary may prescribe) after any
reportable event, the responsible party shall provide written
notice of such event to the Secretary in accordance with
paragraph (2).
``(2) Contents of notice.--The notice required by paragraph
(1) shall contain such information as the Secretary may
prescribe, including--
``(A) the amount of money or other property (if any)
transferred to the trust in connection with the reportable
event, and
``(B) the identify of the trust and of each trustee and
beneficiary or class of beneficiaries) of the trust.
``(3) Reportable event.--For purposes of this subsection--
``(A) In general.--The term `reportable event' means--
``(i) the creation of any foreign trust by a United States
person,
``(ii) the transfer of any money or property (directly or
indirectly) to a foreign trust by a United States person,
including a transfer by reason of death, and
``(iii) the death of a citizen or resident of the United
States if--
``(I) the decedent was treated as the owner of any portion
of a foreign trust under the rules of subpart E of part I of
subchapter J of chapter 1, or
``(II) any portion of a foreign trust was included in the
gross estate of the decedent.
``(B) Exceptions.--
``(i) Fair market value sales.--Subparagraph (A)(ii) shall
not apply to any transfer of property to a trust in exchange
for consideration of at least the fair market value of the
transferred property. For purposes of the preceding sentence,
consideration other than cash shall be taken into account at
its fair market value and the rules of section 679(a)(3)
shall apply.
``(ii) Deferred compensation and charitable trusts.--
Subparagraph (A) shall not apply with respect to a trust
which is--
``(I) described in section 402(b), 404(a)(4), or 404A, or
``(II) determined by the Secretary to be described in
section 501(c)(3).
``(4) Responsible party.--For purposes of this subsection,
the term `responsible party' means--
``(A) the grantor in the case of the creation of an inter
vivos trust.
``(B) the transferor in the case of a reportable event
described in paragraph (3)(A)(ii) other than a transfer by
reason of death, and
``(C) the executor of the decedent's estate in any other
case.
``(b) United States Grantor of Foreign Trust.--
``(1) In general.--If, at any time during any taxable year
of a United States person, such person is treated as the
owner of any portion of a foreign trust under the rules of
subpart E of part I of subchapter J of chapter 1, such person
shall be responsible to ensure that
``(A) such trust makes a return for such year which sets
forth a full and complete accounting of all trust activities
and operations for the year, the name of the United States
agent for such trust, and such other information as the
Secretary may prescribe, and
``(B) such trust furnishes such information as the
Secretary may prescribe to each United States person (i) who
is treated as the owner of any portion of such trust or (ii)
who receives (directly or indirectly) any distribution from
the trust.
``(2) Trusts not having united states agent.--
``(A) In general.--If the rules of this paragraph apply to
any foreign trust, the determination of amounts required to
be taken into account with respect to such trust by a United
States person under the rules of subpart E of part I of
subchapter J of chapter 1 shall be determined by the
Secretary.
``(B) United States agent required.--The rules of this
paragraph shall apply to any foreign trust to which paragraph
(1) applies unless such trust agrees (in such manner, subject
to such conditions, and at such time as the Secretary shall
prescribe) to authorize a United States person to act as such
trust's limited agent solely for purposes of applying
sections 7602, 7603, and 7604 with respect to--
``(i) any request by the Secretary to examine records or
produce testimony related to the proper treatment of amounts
required to be taken into account under the rules referred to
in subparagraph (A), or
``(ii) any summons by the Secretary for such records or
testimony.
The appearance of persons or production of records by reason
of a United States person being such an agent shall not
subject such persons or records to legal process for any
purpose other than determining the correct treatment under
this title of the amounts required to be taken into account
under the rules referred to in subparagraph (A). A foreign
trust which appoints an agent described in this subparagraph
shall not be considered to have an office or a permanent
establishment in the United States, or to be engaged in a
trade or business in the United States, solely because of the
activities of such agent pursuant to this subsection.
``(C) Other rules to apply.--Rules similar to the rules of
paragraphs (2) and (4) of section 6038A(e) shall apply for
purposes of this paragraph.
``(c) Reporting by United States Beneficiaries of Foreign
Trusts.--
``(1) In general.--If any United States person receives
(directly or indirectly) during any taxable year of such
person any distribution from a foreign trust, such person
shall make a return with respect to such trust for such year
which includes--
``(A) the name of such trust,
``(B) the aggregate amount of the distributions so received
from such trust during such taxable year, and
``(C) such other information as the Secretary may
prescribe.
``(2) Inclusion in income if records not provided.--
``(A) In general.--If applicable records are not provided
to the Secretary to determine the proper treatment of any
distribution from a foreign trust, such distribution shall be
treated as an accumulation distribution includable in the
gross income of the distributee under chapter 1. To the
extent provided in regulations, the preceeding sentence shall
not apply if the foreign trust elects to be subject to rules
similar to the rules of subsection (b)(2)(B).
``(B) Application of accumulation distribution rules.--For
purposes of applying section 668 in a case to which
subparagraph (A) applies, the applicable number of years for
purposes of section 668(a) shall be \1/2\ of the number of
years the trust has been in existence.
``(d) Special Rules.--
``(1) Determination of whether united states person
receives distribution.--For purposes of this section, in
determining whether a United States person receives a
distribution from a foreign trust, the fact that a portion of
such trust is treated as owned by another person under the
rules of subpart E of part I of subchapter J of chapter 1
shall be disregarded.
``(2) Domestic trusts with foreign activities.--To the
extent provided in regulations, a trust which is a United
States person shall be treated as a foreign trust for
purposes of this section and section 6677 if such trust has
substantial activities, or holds substantial property,
outside the United States.
``(3) Time and manner of filing information.--Any notice or
return required under this section shall be made at such time
and in such manner as the Secretary shall prescribe.
``(4) Modification of return requirements.--The Secretary
is authorized to suspend or modify any requirement of this
section if the Secretary determines that the United States
has no significant tax interest in obtaining the required
information.''.
(b) Increased Penalties.--Section 6677 (relating to failure
to file information returns with respect to certain foreign
trusts) is amended to read as follows:
[[Page H3123]]
``SEC. 6677. FAILURE TO FILE INFORMATION WITH RESPECT TO
CERTAIN FOREIGN TRUSTS.
``(a) Civil Penalty.--In addition to any criminal penalty
provided by law, if any notice or return required to be filed
by section 6048--
``(1) is not filed on or before the time provided in such
section, or
``(2) does not include all the information required
pursuant to such section or includes incorrect information.
the person required to file such notice or return shall pay a
penalty equal to 35 percent of the gross reportable amount.
If any failure described in the preceding sentence continues
for more than 90 days after the day on which the Secretary
mails notice of such failure to the person required to pay
such penalty, such person shall pay a penalty (in addition to
the amount determined under the preceding sentence) of
$10,000 for each 30-day period (or fraction thereof) during
which such failure continues after the expiration of such 90-
day period. In no event shall the penalty under this
subsection with respect to any failure exceed the gross
reportable amount.
``(b) Special Rules for Returns Under Section 6048(b).--In
the case of a return required under section 6048(b)--
``(1) the United States person referred to in such section
shall be liable for the penalty imposed by subsection (a),
and
``(2) subsection (a) shall be applied by substituting `5
percent' for `35 percent'.
``(c) Gross Reportable Amount.--For purposes of subsection
(a), the term `gross reportable amount' means--
``(1) the gross value of the property involved in the event
(determined as of the date of the event) in the case of a
failure relating to section 6048(a),
``(2) the gross value of the portion of the trust's assets
at the close of the year treated as owned by the United
States person in the case of a failure relating to section
6048(b)(1), and
``(3) the gross amount of the distributions in the case of
a failure relating to section 6048(c).
``(d) Reasonable Cause Exception.--No penalty shall be
imposed by this section on any failure which is shown to be
due to reasonable cause and not due to willful neglect. The
fact that a foreign jurisdiction would impose a civil or
criminal penalty on the taxpayer (or any other person) for
disclosing the required information is not reasonable cause.
``(e) Deficiency Procedures Not To Apply.--Subchapter B of
chapter 63 (relating to deficiency procedures for income,
estate, gift, and certain excise taxes) shall not apply in
respect of the assessment or collection of any penalty
imposed by subsection (a).''.
(c) Conforming Amendments.--
(1) Paragraph (2) of section 6724(d), as amended by
sections 11004 and 11045, is amended by striking ``or'' at
the end of subparagraph (U), by striking the period at the
end of subparagraph (V) and inserting ``,or'', and by
inserting after subparagraph (V) the following new
subparagraph:
``(W) section 6048(b)(1)(B) (relating to foreign trust
reporting requirements).''.
(2) The table of sections for subpart B of part III of
subchapter A of chapter 61 is amended by striking the item
relating to section 6048 and inserting the following new
item:
``Sec. 604 Information with respect to certain foreign trusts.''.
(3) The table of sections for part I of subchapter B of
chapter 68 is amended by striking the item relating to
section 6677 and inserting the following new item:
``Sec. 6677. Failure to file information with respect to certain
foreign trusts''
(d) Effective Dates.--
(1) Reportable events.--To the extent related to subsection
(a) of section 6048 of the Internal Revenue Code of 1986, as
amended by this section, the amendments made by this section
shall apply to reportable events (as defined in such section
6048) occurring after the date of the enactment of this Act.
(2) Grantor trust reporting.--To the extent related to
subsection (b) of such section 6048, the amendments made by
this section shall apply to taxable years of United States
persons beginning after the date of the enactment of this
Act.
(3) Reporting by united states beneficiaries.--To the
extent related to subsection (c) of such section 6048, the
amendments made by this section shall apply to distributions
received after the date of the enactment of this Act.
SEC. 222. MODIFICATIONS OF RULES RELATING TO FOREIGN TRUSTS
HAVING ONE OR MORE UNITED STATES BENEFICIARIES.
(a) Treatment of Trust Obligations, Etc.--
(1) Paragraph (2) of section 679(a) is amended by striking
subparagraph (B) and inserting the following:
``(B) Transfers at fair market value.--To any transfer of
property to a trust in exchange for consideration of at least
the fair market value of the transferred property. For
purposes of the preceding sentence, consideration other than
cash shall be taken into account at its fair market value.''.
(2) Subsection (a) of section 679 (relating to foreign
trusts having one or more United States beneficiaries) is
amended by adding at the end the following new paragraph:
``(3) Certain obligations not taken into account under fair
market value exceptions.--
``(A) In general.--In determining whether paragraph (2)(B)
applies to any transfer by a person described in clause (ii)
or (iii) of subparagraph (C), there shall not be taken into
account--
``(i) except as provided in regulations, any obligation of
a person described in subparagraph (C), and
``(ii) to the extent provided in regulations, any
obligation which is guaranteed by a person described in
subparagraph (C).
``(B) Treatment of principal payments on obligation.--
Principal payments by the trust on any obligation referred to
in subparagraph (A) shall be taken into account on and after
the date of the payment in determining the portion of the
trust attributable to the property transferred.
``(C) Persons described.--The persons described in this
subparagraph are--
``(i) the trust,
``(ii) any grantor or beneficiary of the trust, and
``(iii) any person who is related (within the meaning of
section 643(i)(2)(B)) to any grantor or beneficiary of the
trust.''.
(b) Exemption of Transfers to Charitable Trusts.--
Subsection (a) of section 679 is amended by striking
``section 404(a)(4) or 404A'' and inserting ``section
6048(a)*(3)(B)(ii)''.
(c) Other Modifications.--Subsection (a) of section 679 is
amended by adding at the end the following new paragraphs:
``(4) Special rules applicable to foreign grantor who later
becomes a united states person.--
``(A) In general.--If a nonresident alien individual has a
residency starting date within 5 years after directly or
indirectly transferring property to a foreign trust, this
section and section 6048 shall be applied as if such
individual transferred to such trust on the residency
starting date an amount equal to the portion of such trust
attributable to the property transferred by such individual
to such trust in such transfer.
``(B) Treatment of undistributed income.--For purposes of
this section, undistributed net income for periods before
such individual's residency starting date shall be taken into
account in determining the portion of the trust which is
attributable to property transferred by such individual to
such trust but shall not otherwise be taken into account.
``(C) Residency starting date.--For purposes of this
paragraph, an individual's residency starting date is the
residency starting date determined under section
7701(b)(2)(A).
``(5) Outbound trust migrations.--If--
``(A) an individual who is a citizen or resident of the
United States transferred property to a trust which was not a
foreign trust, and
``(B) such trust becomes a foreign trust while such
individual is alive,
then this section and section 6048 shall be applied as if
such individual transferred to such trust on the date such
trust becomes a foreign trust an amount equal to the portion
of such trust attributable to the property previously
transferred by such individual to such trust. A rule similar
to the rule of paragraph (4)(B) shall apply for purposes of
this paragraph.''.
(d) Modification Relating to Whether Trust Has United
States Beneficiaries.--Subsection (c) of section 679 is
amended by adding at the end the following new paragraph:
``(3) Certain united states beneficiaries disregarded.--A
beneficiary shall not be treated as a United States person in
applying this section with respect to any transfer of
property to foreign trust if such beneficiary first became a
United States person more than 5 years after the date of such
transfer.''.
(e) Technical Amendment.--Subparagraph (A) of section
679(c)(2) is amended to read as follows:
``(A) in the case of a foreign corporation, such
corporation is a controlled foreign corporation (as defined
in section 957(a)),''.
(f) Regulations.--Section 679 is amended by adding at the
end the following new subsection:
``(d) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''.
(g) Effective Date.--The amendments made by this section
shall apply to transfers of property after February 6, 1995.
SEC. 233. FOREIGN PERSONS NOT TO BE TREATED AS OWNERS UNDER
GRANTOR TRUST RULES.
(a) General Rule.--
(1) Subsection (f) of section 672 (relating to special rule
where grantor is foreign person) is amended to read as
follows:
``(f) Subpart Not To Result in Foreign Ownership.--
``(1) In general.--Notwithstanding any other provision of
this subpart, this subpart shall apply only to the extent
such application results in an amount being currently taken
into account (directly or through 1 or more entities) under
this chapter in computing the income of a citizen or resident
of the United States or a domestic corporation.
``(2) Exceptions.--
``(A) Certain revocable and irrevocable trusts.--Paragraph
(1) shall not apply to any trust if--
``(i) the power to revest absolutely in the grantor title
to the trust property is exercisable solely by the grantor
without the approval or consent of any other person or with
[[Page H3124]]
the consent of a related or subordinate party who is
subservient to the grantor, or
``(ii) the only amounts distributable from such trust
(whether income or corpus) during the lifetime of the grantor
are amounts distributable to the grantor or the spouse of the
grantor.
``(B) Compensatory trusts.--Except as provided in
regulations, paragraph (1) shall not apply to any portion of
a trust distributions from which are taxable as compensation
for services rendered.
``(3) Special rules.--Except as otherwise provided in
regulations prescribed by the Secretary--
``(A) a controlled foreign corporation (as defined in
section 957) shall be treated as a domestic corporation for
purposes of paragraph (1), and
``(B) paragraph (1) shall not apply for purposes of
applying section 1296.
``(4) Recharacterization of purported gifts.--In the case
of any transfer directly or indirectly from a partnership or
foreign corporation which the transferee treats as a gift or
bequest, the Secretary may recharacterize such transfer in
such circumstances as the Secretary determines to be
appropriate to prevent the avoidance of the purposes of this
subsection.
``(5) Special rule where grantor is foreign person.--If--
``(A) but for this subsection, a foreign person would be
treated as the owner of any portion of a trust, and
``(B) such trust has a beneficiary who is a United States
person,
such beneficiary shall be treated as the grantor of such
portion to the extent such beneficiary has made transfers of
property by gift (directly or indirectly) to such foreign
person. For purposes of the preceding sentence, any gift
shall not be taken into account to the extent such gift would
be excluded from taxable gifts under section 2503(b).
``(6) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this subsection, including regulations
providing that paragraph (1) shall not apply in appropriate
cases.''.
(2) The last sentence of subsection (c) of section 672 of
such Code is amended by inserting ``subsection (f) and''
before ``sections 674''.
(b) Credit for Certain Taxes.--Paragraph (2) of section
665(d) is amended by adding at the end the following new
sentence: ``Under rules or regulations prescribed by the
Secretary, in the case of any foreign trust of which the
settlor or another person would be treated as owner of any
portion of the trust under subpart E but for section 672(f),
the term `taxes imposed on the trust' includes the allocable
amount of any income, war profits, and excess profits taxes
imposed by any foreign country or possession of the United
States on the settlor or such other person in respect of
trust gross income.''.
(c) Distribution by Certain Foreign Trusts Through
Nominees.--
(1) Section 643 is amended by adding at the end the
following new subsection:
``(h) Distribution by Certain Foreign Trusts Through
Nominees.--For purposes of this part, any amount paid to a
United States person which is derived directly or indirectly
from a foreign trust of which the payor is not the grantor
shall be deemed in the year of payment to have been directly
paid by the foreign trust to such United States person.''.
(2) Section 665 is amended by striking subsection (c).
(d) Effective Date.--
(1) In general.--Except as provided by paragraph (2), the
amendments made by this section shall take effort on the date
of the enactment of this Act.
(2) Exception for certain trusts.--The amendments made by
this section shall not apply to any trust--
(A) which is treated as owned by the grantor or another
person under section 676 or 677 (other than subsection (a)(3)
thereof) of the Internal Revenue Code of 1986, and
(B) which is in existence on September 19, 1995.
The preceding sentence shall not apply to the portion of any
such trust attributable to any transfer to such trust after
September 19, 1995.
(e) Transitional Rule.--If--
(1) by reason of the amendments made by this section, any
person other than a United States person ceases to be treated
as the owner of a portion of a domestic trust, and
(2) before January 1, 1997, such trust becomes a foreign
trust, or the assets of such trust are transferred to a
foreign trust,
no tax shall be imposed by section 1491 of the Internal
Revenue Code of 1986 by reason of such trust becoming a
foreign trust or the assets of such trust being transferred
to a foreign trust.
SEC. 224. INFORMATION REPORTING REGARDING FOREIGN GIFTS.
(a) In General.--Subpart A of part III of subchapter A of
chapter 61 is amended by inserting after section 6039F the
following new section:
``SEC. 6039G. NOTICE OF GIFTS RECEIVED FROM FOREIGN PERSONS.
``(a) In General.--If the value of the aggregate foreign
gifts received by a United States person (other than an
organization described in section 501(c) and exempt from tax
under section 501(a)) during any taxable year exceeds
$10,000, such United States person shall furnish (at such
time and in such manner as the Secretary shall prescribe)
such information as the Secretary may prescribe regarding
each foreign gift received during such year.
``(b) Foreign Gift.--For purposes of this section, the term
`foreign gift' means any amount received from a person other
than a United States person which the recipient treats as a
gift or bequest. Such term shall not include any qualified
transfer (within the meaning of section 2503(e)(2)).
``(c) Penalty for Failure To File Information.--
``(1) In general.--If a United States person fails to
furnish the information required by subsection (a) with
respect to any foreign gift within the time prescribed
therefor (including extensions)--
``(A) the tax consequences of the receipt of such gift
shall be determined by the Secretary in the Secretary's sole
discretion from the Secretary's own knowledge or from such
information as the Secretary may obtain through testimony or
otherwise, and
``(B) such United States person shall pay (upon notice and
demand by the Secretary and in the same manner as tax) an
amount equal to 5 percent of the amount of such foreign gift
for each month for which the failure continues (not to exceed
25 percent of such amount in the aggregate).
``(2) Reasonable cause exception.--Paragraph (1) shall not
apply to any failure to report a foreign gift if the United
States person shows that the failure is due to reasonable
cause and not due to willful neglect.
``(d) Cost-of-Living Adjustment.--In the case of any
taxable year beginning after December 31, 1996, the $10,000
amount under subsection (a) shall be increased by an amount
equal to the product of such amount and the cost-of-living
adjustment for such taxable year under section 1(f)(3),
except that subparagraph (B) thereof shall be applied by
substituting `1995' for `1992'.
``(e) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''.
``(b) Clerical Amendment.--The table of sections for such
subpart is amended by inserting after the item relating to
section 6039F the following new item:
``Sec. 6039G. Notice of large gifts received from foreign persons.''.
``(c) Effective Date.--The amendments made by this section
shall apply to amounts received after the date of the
enactment of this Act in taxable years ending after such
date.
SEC. 225. MODIFICATION OF RULES RELATING TO FOREIGN TRUSTS
WHICH ARE NOT GRANTOR TRUSTS.
``(a) Modification of Interest Charge on Accumulation
Distributions.--Subsection (a) of section 668 (relating to
interest charge on accumulation distributions from foreign
trusts) is amended to read as follows:
``(a) General Rule.--For purposes of the tax determined
under section 667(a)--
``(1) Interest determined using underpayment rates.--The
interest charge determined under this section with respect to
any distribution is the amount of interest which would be
determined on the partial tax computed under section 667(b)
for the period described in paragraph (2) using the rates and
the method under section 6621 applicable to underpayments of
tax.
``(2) Period.--For purposes of paragraph (1), the period
described in this paragraph is the period which begins on the
date which is the applicable number of years before the date
of the distribution and which ends on the date of the
distribution.
``(3) Applicable number of years.--For purposes of
paragraph (2)--
``(A) In general.--The applicable number of years with
respect to a distribution is the number determined by
dividing--
``(i) the sum of the products described in subparagraph (B)
with respect to each undistributed income year, by
``(ii) the aggregate undistributed net income.
The quotient determined under the preceding sentence shall be
rounded under procedures prescribed by the Secretary.
``(B) Product described.--For purposes of subparagraph (A),
the product described in this subparagraph with respect to
any undistributed income year is the product of--
``(i) the undistributed net income for such year, and
``(ii) the sum of the number of taxable years between such
year and the taxable year of the distribution (counting in
each case the undistributed income year but not counting the
taxable year of the distribution).
``(4) Undistributed income year.--For purposes of this
subsection, the term `undistributed income year' means any
prior taxable year of the trust for which there is
undistributed net income, other than a taxable year during
all of which the beneficiary receiving the distribution was
not a citizen or resident of the United States.
``(5) Determination of undistributed net income.--
Notwithstanding section 666, for purposes of this subsection,
an accumulation distribution from the trust shall be treated
as reducing proportionately the undistributed net income for
undistributed income years.
``(6) Periods before 1996.--Interest for the portion of the
period described in paragraph (2) which occurs before January
1, 1996, shall be determined--
``(A) by using an interest rate of 6 percent, and
``(B) without compounding until January 1, 1996.''.
[[Page H3125]]
(b) Abusive Transactions.--Section 643(a) is amended by
inserting after paragraph (6) the following new paragraph:
``(7) Abusive transactions.--The Secretary shall prescribe
such regulations as may be necessary or appropriate to carry
out the purposes of this part, including regulations to
prevent avoidance of such purposes.''.
(c) Treatment of Loans From Trusts.--
(1) In general.--Section 643 (relating to definitions
applicable to subparts A, B, C, and D) is amended by adding
at the end the following new subsection:
``(i) Loans From Foreign Trusts.--For purposes of subparts
B, C, and D--
``(1) General rule.--Except as provided in regulations, if
a foreign trust makes a loan of cash or marketable securities
directly or indirectly to--
``(A) any grantor or beneficiary of such trust who is a
United States person, or
``(B) any United States person not described in
subparagraph (A) who is related to such grantor or
beneficiary,
the amount of such loan shall be treated as a distribution by
such trust to such grantor or beneficiary (as the case may
be).
``(2) Definitions and special rules.--For purposes of this
subsection--
``(A) Cash.--The term `cash' includes foreign currencies
and cash equivalents.
``(B) Related person.--
``(i) In general.--A person is related to another person if
the relationship between such persons would result in a
disallowance of losses under section 267 or 707(b). In
applying section 267 for purposes of the preceding sentence,
section 267(c)(4) shall be applied as if the family of an
individual includes the spouses of the members of the family.
``(ii) Allocation.--If any person described in paragraph
(1)(B) is related to more than one person, the grantor or
beneficiary to whom the treatment under this subsection
applies shall be determined under regulations prescribed by
the Secretary.
``(C) Exclusion of tax-exempts.--The term `United States
person' does not include any entity exempt from tax under
this chapter.
``(D) Trust not treated as simple trust.--Any trust which
is treated under this subsection as making a distribution
shall be treated as not described in section 651.
``(3) Subsequent transactions regarding loan principal.--If
any loan is taken into account under paragraph (1), any
subsequent transaction between the trust and the original
borrower regarding the principal of the loan (by way of
complete or partial repayment, satisfaction, cancellation,
discharge, or otherwise) shall be disregarded for purposes of
this title.''
(2) Technical amendment.--Paragraph (8) of section 7872(f)
is amended by inserting ``, 643(i).'' before ``or 1274'' each
place it appears.
(d) Effective Dates.--
(1) Interest charge.--The amendment made by subsection (a)
shall apply to distributions after the date of the enactment
of this Act.
(2) Abusive transactions.--The amendment made by subsection
(b) shall take effect on the date of the enactment of this
Act.
(3) Loans from trusts.--The amendment made by subsection
(c) shall apply to loans of cash or marketable securities
after September 19, 1995.
SEC. 226. RESIDENCE OF ESTATES AND TRUSTS, ETC.
(a) Treatment as United States Person.--
(1) In general.--Paragraph (30) of section 7701(a) is
amended by striking subparagraph (D) and by inserting after
subparagraph (C) the following:
``(D) any estate or trust if--
``(i) a court within the United States is able to exercise
primary supervision over the administration of the estate or
trust, and
``(ii) in the case of a trust, one or more United States
fiduciaries have the authority to control all substantial
decisions of the trust.''.
(2) Conforming amendment.--Paragraph (31) of section
7701(a) is amended to read as follows:
``(31) Foreign estate or trust.--The term `foreign estate'
or `foreign trust' means any estate or trust other than an
estate or trust described in section 7701(a)(30)(D).''.
(3) Effective date.--The amendments made by this subsection
shall apply--
(A) to taxable years beginning after December 31, 1996, or
(B) at the election of the trustee of a trust, to taxable
years ending after the date of the enactment of this Act.
Such an election, once made, shall be irrevocable.
(b) Dometic Trusts Which Become Foreign Trusts.--
(1) In general.--Section 1491 (relating to imposition of
tax on transfers to avoid income tax) is amended by adding at
the end the following new flush sentence:
``If a trust which is not a foreign trust becomes a foreign
trust, such trust shall be treated for purposes of this
section as having transferred, immediately before becoming a
foreign trust, all of its assets to a foreign trust.''.
(2) Penalty.--Section 1494 is amended by adding at the end
the following new subsection:
``(c) Penalty.--In the case of any failure to file a return
required by the Secretary with respect to any transfer
described in section 1491 with respect to a trust, the person
required to file such return shall be liable for the
penalties provided in section 6677 in the same manner as if
such failure were a failure to file a return under section
6048(a).''.
(3) Effective date.--The amendments made by this subsection
shall take effect on the date of the enactment of this Act.
CHAPTER 3--REPEAL OF BAD DEBT RESERVE METHOD FOR THRIFT SAVINGS
ASSOCIATIONS
SEC. 231. REPEAL OF BAD DEBT RESERVE METHOD FOR THRIFT
SAVINGS ASSOCIATIONS.
(a) In General.--Section 593 (relating to reserves for
losses on loans) is amended by adding at the end the
following new subsections:
``(f) Termination of Reserve Method.--Subsections (a), (b),
(c), and (d) shall not apply to any taxable year beginning
after December 31, 1995.
``(g) 6-Year Spread of Adjustments.--
``(1) In general.--In the case of any taxpayer who is
required by reason of subsection (f) to change its method of
computing reserves for bad debts--
``(A) such change shall be treated as a change in a method
of accounting,
``(B) such change shall be treated as initiated by the
taxpayer and as having been made with the consent of the
Secretary, and
``(C) the net amount of the adjustments required to be
taken into account by the taxpayer under section 481(a)--
``(i) shall be determined by taking into account only
applicable excess reserves, and
``(ii) as so determined, shall be taken into account
ratably over the 6-taxable year period beginning with the
first taxable year beginning after December 31, 1995.
``(2) Applicable excess reserves.--
``(A) In general.--For purposes of paragraph (1), the term
`applicable excess reserves' means the excess (if any) of--
``(i) the balance of the reserves described in subsection
(c)(1) (other than the supplemental reserve) as of the close
of the taxpayer's last taxable year beginning before December
31, 1995, over
``(ii) the lesser of--
``(I) the balance of such reserves as of the close of the
taxpayer's last taxable year beginning before January 1,
1988, or
``(II) the balance of the reserves described in subclause
(I), reduced in the same manner as under section
585(b)(2)(B)(ii) on the basis of the taxable years described
in clause (i) and this clause.
``(B) Special rule for thrifts which become small banks.--
In the case of a bank (as defined in section 581) which was
not a large bank (as defined in section 585(c)(2)) for its
first taxable year beginning after December 31, 1995--
``(i) the balance taken into account under subparagraph
(A)(ii) shall not be less than the amount which would be the
balance of such reserves as of the close of its last taxable
year beginning before such date if the additions to such
reserves for all taxable years had been determined under
section 585(b)(2)(A), and
``(ii) the opening balance of the reserve for bad debts as
of the beginning of such first taxable year shall be the
balance taken into account under subparagraph (A)(ii)
(determined after the application of clause (i) of this
subparagraph).
The preceding sentence shall not apply for purposes of
paragraphs (5) and (6) or subsection (e)(1).
``(3) Recapture of pre-1988 reserves where taxpayer ceases
to be bank.--If, during any taxable year beginning after
December 31, 1995, a taxpayer to which paragraph (1) applied
is not a bank (as defined in section 581), paragraph (1)
shall apply to the reserves described in paragraph (2)(A)(ii)
and the supplemental reserve: except that such reserves shall
be taken into account ratably over the 6-taxable year period
beginning with such taxable year.
``(4) Suspension of recapture if residential loan
requirement met.--
``(A) In general.-- In the case of a bank which meets the
residential loan requirement of subparagraph (B) for the
first taxable year beginning after December 31, 1995, or for
the following taxable year--
``(i) no adjustment shall be taken into account under
paragraph (1) for such taxable year, and
``(ii) such taxable year shall be disregarded in
determining--
``(I) whether any other taxable year is a taxable year for
which an adjustment is required to be taken into account
under paragraph (1), and
``(II) the amount of such adjustment.
``(B) Residential loan requirement.--A taxpayer meets the
residential loan requirement of this subparagraph for any
taxable year if the principal amount of the residential loans
made by the taxpayer during such year is not less than the
base amount for such year.
``(C) Residential loan.--For purposes of this paragraph,
the term `residential loan' means any loan described in
clause (v) of section 7701(a)(19)(C) but only if such loan is
incurred in acquiring, constructing, or improving the
property described in such clause.
``(D) Base amount.--For purposes of subparagraph (B), the
base amount is the average of the principal amounts of the
residential loans made by the taxpayer during the 6 most
recent taxable years beginning on or before December 31,
1995. At the election of the taxpayer who made such loans
during each of such 6 taxable years, the preceding sentence
shall be applied without regard to
[[Page H3126]]
the taxable year in which such principal amount was the
highest and the taxable year in such principal amount was the
lowest. Such an election may be made only for the first
taxable year beginning after such date, and, if made for such
taxable year, shall apply to the succeeding taxable year
unless revoked with the consent of the Secretary.
``(E) Controlled groups.--In the case of a taxpayer which
is a member of any controlled group of corporations described
in section 1563(a)(1), subparagraph (B) shall be applied with
respect to such group.
``(5) Continued application of fresh start under section
585 transitional rules.--In the case of a taxpayer to which
paragraph (1) applied and which was not a large bank (as
defined in section 585(c)(2)) for its first taxable year
beginning after December 31, 1995.
``(A) In general.--For purposes of determining the net
amount of adjustments referred to in section
585(c)(3)(A)(iii), there shall be taken into account only the
excess (if any) of the reserve for bad debts as of the close
of the last taxable year before the disqualification year
over the balance taken into account by such taxpayer under
paragraph (2)(A)(ii) of this subsection.
``(B) Treatment under elective cutoff method.--For purposes
of applying section 585(c)(4)--
``(i) the balance of the reserve taken into account under
subparagraph (B) thereof shall be reduced by the balance
taken into account by such taxpayer under paragraph
(2)(A)(ii) of this subsection, and
``(ii) no amount shall be includable in gross income by
reason of such reduction.
``(6) Suspended reserve included as section 381(c) items.--
The balance taken into account by a taxpayer under paragraph
(2)(A)(ii) of this subsection and the supplemental reserve
shall be treated as items described in section 381(c).
``(7) Conversions to credit unions.--In the case of a
taxpayer to which paragraph (1) applied which becomes a
credit union described in section 501(c) and exempt from
taxation under section 501(a)--
``(A) any amount required to be included in the gross
income of the credit union by reason of this subsection shall
be treated as derived from an unrelated trade or business (as
defined in section 513), and
``(B) for purposes of paragraph (3), the credit union shall
not be treated as if it were a bank.
``(8) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out this subsection
and subsection (e), including regulations providing for the
application of such subsections in the case of acquisitions,
mergers, spinoffs, and other reorganizations.''
(b) Conforming Amendments.--
(1) Subsection (d) of section 50 is amended by adding at
the end the following new sentence:
``Paragraphs (1)(A), (2)(A), and (4) of the section 46(e)
referred to in paragraph (1) of this subsection shall not
apply to any taxable year beginning after December 31,
1995.''
(2) Subsection (e) of section 52 is amended by striking
paragraph (1) and by redesignating paragraph (2) and (3) as
paragraphs (1) and (2), respectively.
(3) Subsection (a) of section 57 is amended by striking
paragraph (4).
(4) Section 246 is amended by striking subsection (f).
(5) Clause (i) of section 291(e)(1)(B) is amended by
striking ``or to which section 593 applies''.
(6) Subparagraph (A) of section 585(a)(2) is amended by
striking ``other than an organization to which section 593
applies''.
(7)(A) The material preceding subparagraph (A) of section
593(e)(1) is amended by striking ``by a domestic building and
loan association or an institution that is treated as a
mutual savings bank under section 591(b)'' and inserting ``by
a taxpayer having a balance described in subsection
(g)(2)(A)(ii)''.
(B) Subparagraph (B) of section 593(e)(1) is amended to
read as follows:
(B) then out of the balance taken into account under
subsection (g)(2)(A)(ii) (properly adjusted for amounts
charged against such reserves for taxable years beginning
after December 31, 1987).''.
(C) Paragraph (1) of section 593(e) is amended by adding at
the end the following new sentence: ``This paragraph shall
not apply to any distribution of all of the stock of a bank
(as defined in section 581 to another corporation if,
immediately after the distribution, such bank and such other
corporation are members of the same affiliated group (as
defined in section 1504) and the provisions of section 5(e)
of the Federal Deposit Insurance Act (as in effect on
December 31, 1995) or similar provisions are in effect.''.
(8) Section 595 is hereby repealed.
(9) Section 596 is hereby repealed.
(10) Subsection (a) of section 860E is amended--
(A) by striking ``Except as provided in paragraph (2),
the'' in paragraph (1) and inserting ``The''.
(B) by striking paragraphs (2) and (4) and redesignating
paragraphs (3) and (5) as paragraphs (2) and (3),
respectively, and
(C) by striking in paragraph (2) (as so redesignated) all
that follows ``subsection'' and inserting a period.
(11) Paragraph (3) of section 992(d) is amended by striking
``or 593''.
(12) Section 1038 is amended by striking subsection (f).
(13) Clause (ii) of section 1042(c)(4)(B) is amended by
striking ``or 593''.
(14) Subsection (c) of section 1277 is amended by striking
``or to which section 593 applies''.
(15) Subparagraph (B) of section 1361(b)(2) is amended by
striking ``or to which section 593 applies''.
(16) The table of sections for part II of subchapter H of
chapter 1 is amended by striking the items relating to
sections 595 and 596.
(c) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply
to taxable years beginning after December 31, 1995.
(2) Subsection (b)(7).--The amendments made by subsection
(b)(7) shall not apply to any distribution with respect to
preferred stock if--
(A) such stock is outstanding at all times after October
31, 1995, and before the distribution, and
(B) such distribution is made before the date which is 1
year after the date of the enactment of this Act (or, in the
case of stock which may be redeemed, if later, the date which
is 30 days after the earliest date that such stock may be
redeemed).
(3) Subsection (b)(8).--The amendment made by subsection
(b)(8) shall apply to property acquired in taxable years
beginning after December 31, 1995.
(4) Subsection (b)(10).--The amendments made by subsection
(b)(10) shall not apply to any residual interest held by a
taxpayer if such interest has been held by such taxpayer at
all times after October 31, 1995.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Michigan [Mr. Dingell] and a Member opposed will each control 30
minutes.
The Chair recognizes the gentleman from Michigan [Mr. Dingell].
parliamentary inquiry
Mr. DINGELL. Mr. Speaker, I have a parliamentary inquiry.
The SPEAKER pro tempore. The gentleman will state it.
Mr. DINGELL. Mr. Speaker, I believe I will have the right to close
under this as the author of the amendment?
The SPEAKER pro tempore. Who seeks control in opposition?
Mr. THOMAS. Mr. Speaker, I seek to control the time in opposition.
The SPEAKER pro tempore. The Chair would state that because the
gentleman from California [Mr. Thomas] is a member of the Committee on
Ways and Means, the gentleman from California would have the right to
close.
Mr. DINGELL. Mr. Speaker, further parliamentary inquiry. Is it not
the rule that the author of the amendment has the right to close?
The SPEAKER pro tempore. The manager of the bill has the right to
close, and the Committee on Ways and Means is the reporting committee
on the pending bill.
Mr. DINGELL. That is a rather extraordinary ruling.
parliamentary inquiry
Mr. THOMAS. Mr. Speaker, I have a parliamentary inquiry.
The SPEAKER pro tempore. The gentleman will state it.
Mr. THOMAS. Mr. Speaker, is it rather unusual for the committee that
offers the bill on which a Member offers a substitute to the committee
bill not to close? Is that a rather unusual ruling, or is that the
ordinary rule around this place and has been for years?
The SPEAKER pro tempore. The Chair indicated that the representative
of the managing committee would have the right to close.
The Chair recognizes the gentleman from Michigan [Mr. Dingell].
Mr. DINGELL. Mr. Speaker, I yield 4 minutes to the distinguished
gentleman from Texas [Mr. Bentsen], a coauthor of the amendment.
(Mr. BENTSEN asked and was given permission to revise and extend his
remarks.)
Mr. BENTSEN. Mr. Speaker, I thank the gentleman from Michigan for
yielding me time.
Mr. Speaker, I am pleased to join with my distinguished colleagues,
Mr. Dingell and Mr. Spratt, in offering this substitute.
Mr. Speaker, earlier today, my wife called to tell me that our 2-
year-old daughter Meredith had gotten hold of her sister's cough
medicine. The doctor ordered her to the hospital and my wife rushed her
to the emergency room. As I drove to meet her, I was concerned about my
daughter, but I didn't worry about the bill. We in Congress have health
insurance. Fortunately, Meredith is OK, and we need not worry about how
we pay.
That's not the case for the young woman I recently met in my district
who could not purchase health insurance because here daughter had a
heart
[[Page H3127]]
condition. Her husband earns too much to be on Medicaid, nor does she
want to receive such assistance. She only wants the right to buy health
insurance, but her daughter's preexisting heart condition precludes
that. The Bentsen-Spratt-Dingell substitute would prohibit
discrimination based on such preexisting conditions and ensure that
this family could finally provide health care for their child without
falling into poverty.
Today, this House has the opportunity to pass simple, straightforward
steps that will help millions of Americans like this Channelview, TX,
family. If we focus on reforms that have broad, bipartisan support, and
put aside for now those proposals that divide us, as this substitute
does, we can begin to address the health care fears that weigh ever
heavier on the minds of families across this country.
I urge my colleagues to keep in mind the people we are trying to
help. Let us remember the 40 million Americans who are without health
insurance today, including 4.6 million people in my home State of
Texas. That is 1 million more Americans without insurance than when
Congress last debated health care 2 years ago. Millions more face
becoming uninsured if they lose or change jobs, and others are locked
in jobs they do not want because they or a family member have a
preexisting condition.
These are the people we must remember as we debate this issue today.
That young mother in Channelview needs our help now. She and millions
of other Americans do not have the luxury of waiting as we spend
months, even years, debating the controversial, untested provisions,
such as Medical Savings Accounts, that are in the bill before us. These
provisions may even have merit. But they should not be allowed to hold
up or kill the commonsense, bipartisan, noncontroversial reforms in our
substitute. The American people deserve what we in Congress have, and
our substitute provides that.
This substitute tracks the bipartisan Health Insurance Reform Act of
1996 as introduced in the other body by Senators Nancy Kassebaum and
Edward Kennedy and as filed in the House by our Republican colleague,
Marge Roukema. I want to congratulate my colleague from New Jersey for
her leadership on this issue and urge her and others on her side of the
aisle to join us in supporting this substitute.
This substitute ends insurance discrimination against people with
preexisting health conditions. It guarantees people access to group or
individual coverage if they change jobs, lose jobs, or get sick. It
helps small businesses to join together and purchase more affordable
coverage.
Our substitute makes one major addition to the Roukema bill. It
phases in an increase from 30 to 80 percent the amount that self-
employed individuals can deduct from their taxes for the cost of health
insurance, affording the same treatment to the self-employed as we do
to corporations.
Altogether, these reforms will help 28 million Americans to buy and
keep health insurance.
Mr. Speaker, I want to underscore the broad consensus for these
reforms. Most of us in this body from both sides of the aisle support
them. The President supports them. More than 135 organizations
representing business, workers, and health care providers support them.
These include the American Medical Association, the American Hospital
Association, the AFL-CIO, the Independent Insurance Agents, and the
National Association of Manufacturers.
We need to remember the lessons learned from Congresses past
regarding health care reform. A comprehensive, complicated reform bill
is too controversial and cannot be enacted in whole. Instead we should
pass this consensus bill of incremental reforms that will bring
immediate help to millions of Americans.
But the addition of controversial provisions isn't the only reason we
should pass this substitute. The Republican bill also has weaker
portability provisions than the substitute and weakens important
consumer protections.
The Republican bill weakens the portability provision by limiting
group to individual transfer to a single plan. This will ensure that
high risk individuals are pooled together and forced to pay exorbitant
premiums.
The Republican plan also would limit the number of businesses that
could benefit from this plan. The Republican plan only guarantees
first-time issuance of insurance for businesses employing between 2 and
50 people. All businesses with more than 51 employees would not be
protected.
This bill also would create a new class of insurance with lower
capital and solvency requirements, thus increasing risk to the small
businesses that purchase from these new plans. It would contradict the
McCarran-Ferguson Act, creating federally regulated insurance using
lower standards. And it provides a huge loophole for New York and New
Jersey, but not the other 48 States.
Finally, the Republican plan would weaken consumer protection laws by
eliminating regulations that prohibit the sale of duplicative health
insurance policies to senior citizens. Under the bill, insurance
companies would be permitted to sell policies that duplicate Medicare
benefits and then collect premiums from seniors who already are covered
under Medicare. They would pay twice. These plans are currently
prohibited and I am concerned that many seniors will not be aware of
the risks associated with purchasing such plans.
Mr. Speaker, this is a fairly easy vote. We can vote to increase the
economic security of hundreds of millions of Americans who are
currently covered by private insurance by passing this amendment and
end once and for all insurance discrimination against: people with a
preexisting medical condition; people who lose their job but still need
health insurance; and small businesses of any size that want to buy
safe, sound, and affordable health insurance for their employees.
It is a market-based plan that the American people support, that
addresses their real concerns, and that can become a reality tomorrow.
The Republican bill fails this test and will take years to even come
close to becoming law. My colleagues, tonight let's forget we are
Democrats and Republicans for one shining moment of compromise. Let us
put victory for the American people and their health security ahead of
political victory. Let's do right by the American people and pass the
Bentsen-Spratt-Dingell substitute.
Mr. THOMAS. Mr. Speaker, I yield 15 minutes to the gentleman from
Virginia [Mr. Bliley], the chairman of the Committee on Commerce, and
ask unanimous consent that he be allowed to allocate said time.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
There was no objection.
Mr. THOMAS. Mr. Speaker, I yield myself 4 minutes.
Mr. Speaker, the special rule for coordination of long-term care
policies has been misinterpreted by some in the administration. I want
to clarify that this rule applies to policies that provide health care
benefits only for long-term care and similar benefits, such as
community-based care, and would not apply to a policy that covers other
health care benefits.
Mr. Speaker, we have been hearing for some time that all the
Democrats want is Kassebaum. The gentleman from New York said ``Let's
have `pure' Kassebaum.''
Let me tell you, what you have in front of you is not pure Kassebaum.
As you might expect, the Democrats have changed the bill. They have
told you they have only added things to it. They said, ``We just wanted
to help the self-employed more than the Republicans.''
You left the self-employed stranded for a whole year in 1994 when you
were in the majority. Nice to have you come around and have you helping
the self-employed.
If this is supposed to be pure Kassebaum, why don't you include the
items on page 105? Title III, miscellaneous provisions. ``HMO's allowed
to offer plans with deductibles to individuals with medical savings
accounts.''
Kassebaum includes medical savings accounts and the ability to apply
to an HMO to receive benefits while you have a medical savings account.
You conveniently left that out. If you want pure Kassebaum, you would
have MSA's in the bill.
On page 106, Sense of the Senate. ``It is the sense of the Senate
that the Congress should take measures to further the purposes of this
act, including any necessary changes to the Internal Revenue Code of
1986 to encourage groups and individuals to obtain health coverage and
to promote access, equity, portability, affordability, and security of
health benefits.'' That is exactly what the Committee on Ways and Means
has done.
The Senate committee cried out in the Kassebaum bill, ``We don't have
jurisdiction over the Tax Code, but if we
[[Page H3128]]
did, these are the kinds of things that we would do.'' And what they
asked for, we have included in our bill.
Only one committee has looked at the Kassebaum bill in the Senate. It
is not on the floor of the Senate. They did not have jurisdiction over
the revenue code. Four committees in the House looked at our bill, and
given our distinct and unique jurisdictions, we contributed to and
improved to this bill. We did exactly what Senator Kassebaum asked us
to do. We added items that provided and promoted access, equity,
portability, affordability and security of health benefits.
Guess what you left in the bill? Notwithstanding all of the
protestations on the floor about the Democrats in terms of States
rights, and, after all, the Republicans are going to usurp the States
rights, and, after all, the Republicans are going to usurp the States
rights, take a look at page 91 in the Kassebaum bill.
It says under subtitle D(b), certification, number 2, State refusal
to certify. It says, ``If a state fails to implement a program for a
certifying health plan purchasing cooperative in accordance with the
standards under this act, the secretary shall certify and oversee
operations of such cooperative's Federal preemption.''
Notwithstanding all of your crocodile tears, about ``pure''
Kassebaum, the Feds have a role in play in your substitution.
I would tell my Republican colleagues, beware: This is not Kansas.
This bill is not from Dorothy. It isn't even from Toto. It has been
written and comes from the Land of Oz.
{time} 2100
Mr. BLILEY. Mr. Speaker, I reserve the balance of my time.
Mr. DINGELL. Mr. Speaker, I yield 3 minutes to the gentlewoman from
New Jersey [Mrs. Roukema].
(Mrs. ROUKEMA asked and was given permission to revise and extend her
remarks.)
Mrs. ROUKEMA. Mr. Speaker, I thank the gentleman from Michigan [Mr.
Dingell] for yielding me time to express my strong support for his
substitute to H.R. 3103, an omnibus package of health reform proposals.
The Dingell amendment is comprised, essentially, of two items: the
so-called Kassebaum-Kennedy-Roukema health insurance reform package and
a proposal to allow self-employed individuals to deduct 80 percent of
their health insurance premiums, rather than the 30 percent current law
allows for.
The difference between this package and H.R. 3103 is this simple: If
the House approves the Dingell plan it can be quickly passed by the
Senate and signed into law by President Clinton immediately. This will
immediately deliver insurance portability; eliminate job lock and give
guaranteed insurance to 30 million Americans who presently do not
qualify.
H.R. 3103, as brought to the House floor today, cannot.
The Republican leadership's package, which contains several very
controversial elements, faces a guaranteed Senate filibuster, or, if it
were to ever get that far, a certain veto at the White House.
If you want to vote in support of health insurance reform legislation
that will make a real difference in the daily lives of millions of
Americans this year, support the Dingell alternative.
Anything else won't survive the legislative process, and is simply a
political exercise rather than an attempt to enact commonsense,
bipartisan health reforms.
I am very proud to be the House author of the companion bill to the
Kassebaum-Kennedy measure, H.R. 2893--which currently has 193
cosponsors--17 Republicans and 176 Democrats--which encompasses
precisely the kind of incremental health reforms that the Republicans
so strongly advocated in 1993-94 when the 103d Congress was debating
President Clinton's massive health care reform plan.
This modest package of insurance reforms would simply make health
insurance plans portable for workers leaving one job for another;
restrict the ability of insurance carriers to impose pre-existing
condition limitations in their policies; and allow small employers to
pool together to purchase health benefits for their workers.
A very strong and broad coalition has endorsed the Kassebaum-Roukema
legislation including: The National Governors Association; the American
Medical Association; the American Hospital Association; the National
Association of Manufacturers; the Business Roundtable, and the AFL-
CIO--on the Senate side, the U.S. Chamber of Commerce has endorsed the
Kassebaum-Kennedy package, too; the Healthcare Leadership Council, and
the Independent Insurance Agents Association; and the ERISA Industry
Committee [ERIC], and the American Association of Retired Persons
[AARP] are just a few of the more prominent supporters of the
Kassebaum-Kennedy-Roukema legislation.
I might add that, during his State of the Union speech 2 months ago,
President Clinton endorsed this bill, and has repeatedly stated that he
is prepared to sign this legislation if we can just move it through the
Congress this year.
Some of the reforms in H.R. 3103--such as medical malpractice
reforms--I have supported in the past, and will continue to support in
the future as freestanding measures.
However, we must acknowledge that these issues raise significant
policy questions.
Reforms such as medical malpractice and medical savings accounts
should be debated by the Congress on an individual, case-by-case basis,
particularly given the level of controversy that these proposals raise
in both parties of the House and Senate.
In addition, it is highly unlikely that, given the limited number of
legislative days in our session this year, that the Senate would ever
be able to pass such a controversial and omnibus package of health
reforms.
In fact, prominent Republican Senators have repeatedly and publicly
stated their opposition to such an omnibus bill, as recently as a day
or 2 ago.
It's time for the Congress to stop playing these games--the American
people are sick and tired of bickering and political gamesmanship.
We must immediately enact common-sense, incremental health insurance
reforms.
The General Accounting Office [GAO] has estimated that up to 30
million American citizens would benefit from the health insurance
reforms incorporated in the Kassebaum-Roukema plan.
Let's not permit such a golden opportunity to help so many people
slip through our collective fingers because of partisan politics.
In closing, Mr. Speaker, I urge my colleagues to join me in support
of the Dingell substitute to H.R. 3103, because it's the right thing to
do for the American people now.
Mr. BLILEY. Mr. Speaker, I yield myself such time as I may consume.
(Mr. BLILEY asked and was given permission to revise and extend his
remarks.)
Mr. BLILEY. Mr. Speaker, first of all, with all due respect to my
good friend and colleague from new Jersey [Mrs. Roukema], we had a
bipartisan plan in the last Congress authored by my good friend from
Florida, the chairman now of our Subcommittee on Health and Environment
of the Committee on Commerce, and the gentleman from Georgia who is no
longer with us, Dr. Roy Rowland. I sat right over there on this night 2
years ago with then the chairman of my committee, and I said, you
cannot move this massive socialized medicine bill of the President's.
We have a good bipartisan bill and we ought to take it up. It was not
enough for him.
Mr. Speaker, but now all of a sudden, this bill, which is more modest
than the Bilirakis-Rowland bill, is too much. I find that rather
ironic.
Mr. Speaker, I rise in strong opposition to the substitute. While it
is a well-intentioned proposal, it simply falls short of the mark of
ensuring that health insurance is both available and affordable.
Our bill is focused on the real problems people encounter in
obtaining health insurance in the small business market. Small
employers who are trying to provide their employees and their families
with adequate coverage will not be helped by this substitute. They will
not be able to purchase affordable health insurance coverage.
In addition, a recent letter from the National Association of
Independent
[[Page H3129]]
Businesses points out that big business is in the position of
purchasing health insurance under a different set of rules than small
business. Their letter points out that the Health Coverage Availability
and Affordability Act would stop the unfairness by allowing small firms
to band together across State lines to purchase health insurance with
nearly the same exemption from State law that big business has.
Achieving this is NFIB's highest health reform priority. And I quote
from their letter: ``Any substitute amendment that does not directly
address this inequity between big and small business is unacceptable to
the more than 600,000 members of NFIB.''
Mr. Speaker, the Democratic substitute does not address this
inequity. It is all form and no substance. Its pooling provisions
simply allow the formation of purchasing cooperatives, which can be
formed under current law. Thus, it falls short of the mark in
addressing the key concerns of small business in reforming the small
employer health insurance market.
Mr. Speaker, I would also like to point out to my colleagues that
National Right to Life has raised a serious concern about the
nondiscrimination language in the substitute. The nondiscrimination
language could be read to apply to the content of a benefits package.
Thus, the language could be used to require the inclusion of elective
abortions in all health insurance plans. This problem has not been
addressed in the substitute and remains an issue for pro-life Members.
In addition, the Democrat substitute fails to allow for medical
savings accounts, an option that provides true portability for
individuals, including the self-employed. It does not encourage the
purchasing of long-term health insurance coverage, because it does not
allow expenses for long-term care and long-term care insurance premiums
to be tax deductible.
Mr. Speaker, it also fails to address the question of affordability
because it does nothing to address the increased costs our current
malpractice laws bring to the health care system.
Perhaps the substitute's most glaring omission is its failure to
address the issue of fraud and abuse, which has also contributed to the
high cost of health insurance coverage. According to the General
Accounting Office, each year as much as 10 percent of total health care
costs are lost to fraud and abuse. Given that annual health care costs
in the United States are now approaching $1 trillion, fraud and abuse
are costing taxpayers and policyholders large sums of money. Despite
the enormity of the problem, GAO has concluded that only a small
fraction of this fraud and abuse is detected. The failure of a health
reform bill to address this issue is unfortunate.
The HHS Inspector General in a letter to the ranking member of the
Committee on Commerce points out that the provisions in the Republican
bill will help to reduce fraud and abuse. It states:
Generally speaking, these provisions are excellent . . .
The bill contains many improvements to the laws intended to
address health care fraud. In our judgment, enactment of the
provisions . . . would be very effective in reducing the
amount of fraud and abuse in the health care system . . .
Finally, I feel I must address the constant refrain we have heard
that somehow Senators Kassebaum and Kennedy's bill, is the gold
standard and cannot be amended. It is absolutely absurd for us to say
that a bill cannot be improved. It is also rather naive for us to say
that a bill that come out of Committee in the Senate will not be
amended on the floor of that body where there are no germaneness rules
and anything can be attached to anything.
Mr. Speaker, do not expect a clean Kassebaum-Kennedy bill to come out
of the Senate. I assure my colleagues that whatever we do tonight, we
will be in conference.
Mr. Speaker, I reserve the balance of my time.
Mr. DINGELL. Mr. Speaker, I yield 3 minutes to the gentleman from
South Carolina [Mr. Spratt].
(Mr. SPRATT asked and was given permission to revise and extend his
remarks.)
Mr. SPRATT. Mr. Speaker, I thank the gentleman for yielding me the
time.
Mr. Speaker, I rise in strong support of Bentsen-Spratt-Dingell.
There is a lot on our agenda about which the American people are
undecided or divided, but clearly they want us to change the way that
health insurance in this country is written. They want the law to say
that if they lose their jobs or leave it, they can take their health
insurance with them; if they have an illness or an injury, they can
keep their insurance and not be ostracized by carriers as having
preexisting conditions.
Mr. Speaker, there is something else the American people want. They
want an end to partisan bickering. Our substitute goes to both goals.
It is not just a chance to change health insurance. It is a chance to
do something bipartisan. We make health insurance portable. We take
care of people with preexisting conditions, and we do it in a
bipartisan bill, a clean bill that is unencumbered by pet provisions.
Mr. Speaker, the differences between the base bill, H.R. 3103, and
our substitute, which is essentially Kennedy-Kassebaum-Roukema, are
seemingly small but the differences are potentially insidious.
First of all, let me just cover a couple. The base bill in our
substitute says that if you lose your job, you can convert from group
to individual coverage once your extension under COBRA has expired. But
in the substitute, we say that when you convert, you have the right to
pick among the policies that an insurance company offers.
In the base bill, people lose this flexibility. They have got a
Hobson's choice. That is because the base bill has been amended to let
the States restrict individuals to a single policy, and that one policy
is bound to become the high-risk pool for all the rejects and bad
risks. That will make the premium cost excessive, probably beyond the
reach of most people who need it, and we are not giving health
insurance availability unless we give health insurance affordability.
There is another provision very deep in this base bill which differs
from the substitute. Both of us permit small employers to band together
to purchase insurance, and, banded together, they can broaden their
risk pool and get better rates. So far, so good. But the base bill goes
on to exempt multiemployer health plans from State regulations that
govern other multiemployer health plans and places these under the
Department of Labor. You got it. The Republicans want to give the
Federal Government the power to regulate these insurance, self-
insurance plans, and take it away from the State government.
Here, do not take it from me, listen to what Mr. Gradison, a very
respected member of this body from the other side of the aisle, now
head of the Health Insurance Association of America, says about that
particular provision of the main bill before us. He says,
We strongly oppose the provision contained in the House
leadership bill which we believe will undermine the progress
States have made in reforming their small employer insurance
markets and leave an unstable health care market in its wake.
Mr. Speaker, we have a chance to pass a bipartisan bill, to keep this
bill on track and I urge support for the bill.
Mr. Speaker, there is much of our agenda about which the people are
undecided or divided. But clearly they want us to change the way health
insurance is written. They want the law to say that if they lose their
job or leave it, they don't have to lose their health insurance--they
can take it with them. And if they have an illness or injury, they can
keep their insurance, and not be ostracized by carriers for a
``preexisting condition.''
There's something else people want: They want an end to partisan
bickering.
Our substitute goes to both goals. It is not just a chance to change
health insurance, it's a chance to do something bipartisan. We make
health insurance portable; we take care of people with preexisting
conditions; and we do it in a bipartisan bill, a clean bill,
unencumbered by pet provisions and special concessions.
The differences between the base bill, H.R. 3103, and our substitute,
which is the Kennedy-Kassebaum-Roukema bill, are seemingly small but
potentially insidious.
First of all, both the base bill and our substitute say that if you
lose your job, you can convert from group to individual coverage once
your 18-month extension under COBRA has expired. But in the substitute,
we say that when you convert, you can pick among the policies a company
offers. In the base bill, you lose this flexibility. That's because the
base
[[Page H3130]]
bill was amended to let the States restrict individuals to a single
policy; and that one policy is bound to become the high-risk pool for
all the rejects and bad risks. This will make the premium cost
excessive, probably beyond the reach of most who need it. Our
substitute guarantees individual coverage, but it does not limit that
guarantee to one insurance policy. The person who converts may still
have his premium rated, adjusted upward for a preexisting condition;
but he can also buy into an insurance pool with lots of other people
who are ordinary, unrated risks. And while this bill gives that no one
protection against higher premiums, our substitute leaves the States
the power to regulate premiums, as many already have. And if you are in
an insurance pool with ordinary risks, the States can limit the rated
premium you have to pay for your policy, say, to 50 percent of the
standard premium. But if you end up in a risk pool with all bad risks,
there is no way to spread the cost and mitigate the premiums.
Next, the base bill, as well as our substitute, permits small
employers to band together to purchase insurance. In banding together,
they can broaden their risk pool and get better rates. But the base
bill exempts multiemployer health plans from the State regulations that
govern other multiemployer plans, and places these under the Department
of Labor. In by-passing State laws, particularly on what constitutes an
adequately capitalized plan, the base bill, in the words of the Health
Insurance Association of America, sets up ``a very flimsy safety net
for employees with self-insured, federally regulated coverage.'' It
puts the insured in peril of being in an unsound plan and not having
coverage when it is needed. Our bill respects the competency of the
States in this field, and leaves multiemployer insurance plans subject
to State law.
Next, the base bill includes Medicare fraud and abuse provisions, and
claims savings back into Medicare to boost the solvency of the Part A
trust fund. Instead these Medicare funds are used to offset the tax
revenues lost by allowing MSA's. This comes from the group that for the
past year has told seniors that deep cuts in Medicare were needed to
keep the trust fund solvent.
Next, the base bill raises the tax deduction allowed the self-
employed to 50 percent of the premiums they pay, but reaches that level
only in year 2003. On this subject, our substitute departs from
Kennedy-Kassebaum-Roukema; it too increases the tax deduction for the
self-employed, but we go to 80 percent by the year 2002. I am not
altogether opposed to MSA's, but I would much rather use the tax
offsets to cover the revenue losses to pay for a higher rate of
deductibility. More small business people, more self-employed
Americans, will benefit from being able to deduct 80 percent of their
health insurance premiums than will benefit from medical savings
accounts.
Finally, the base bill repeals current laws that we put in place to
regulate the sale of policies that duplicate Medicare coverage. These
protections were enacted to protect unsuspecting seniors from
purchasing coverage that they already have under Medicare. The base
bill opens a loophole that would allow insurers to sell Medicare
beneficiaries a policy that is not identical to Medicare coverage, say
offering additional homecare visits, but include a rider in the policy
that denies payment for any service covered by Medicare.
Mrs. Roukema tonight, and Senator Kassebaum several days ago, have
all warned against overloading this bill with extraneous stuff, like
medical savings accounts and malpractice reform. I am not opposed to
all those add-ons; I've voted for malpractice reform; but what I favor
most is moving this bill. It is a shame to bog it down with
controversial provisions, and a shame to blow this opportunity to do
something bipartisan for a change.
Let's keep this bill on track; let's keep it clean and make it
bipartisan. Vote for the Bentsen-Spratt-Dingell substitute.
Mr. THOMAS of California. Mr. Speaker, I yield 3 minutes to the
gentlewoman from Connecticut [Mrs. Johnson], an extremely important
member of the Committee on Ways and Means and the chairman of the
Subcommittee on Oversight.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I thank the chairman.
Mr. Speaker, I rise in strong opposition to the substitute, not
because it is not an admirable bill. In fact, Senators Kassebaum and
Kennedy deserve enormous credit for bringing this issue of insurance
reform to the top of the agenda of both Houses, but our bill is
literally better. My amendment conformed this bill in many of its
details to the Kassebaum-Kennedy bill, working with my chairman. Our
bill actually adds protection, not in the Kassebaum-Kennedy bill, to
assure that genetic information about an individual cannot be used to
exclude that person from health coverage. Our bill is far better on
portability. It is far more generous in its determination of what is
continuous coverage and what is a break in service because it counts,
that is gives credit for coverage, time on Medicare, Medicaid, DOD's
Tricare, the Indian Health Service, the Federal Employees Health
Benefits programs and State risk pools. Furthermore, our bill gives
protection that the Kennedy-Kassebaum bill does not give to people
covered under individual policies to assure that they can get into a
new policy without discrimination if they move outside the service area
or if the insurer goes out of business.
In many of its details, our bill is simply an improved version, a
stronger bill than the Kennedy-Kassebaum bill. In its breadth it is
also superior. This Chamber has had before it for 5 years, proposals to
allow people to deduct the premiums of long-term-care insurance so that
we can get employers providing long-term-care insurance and we can
encourage seniors to buy long-term-care insurance so that in the
future, seniors will not have to spend down to poverty, spend every
cent they worked for and were able to save, to cover the costs of
nursing home care.
{time} 2115
That kind of public-private partnership is imperative to providing
security and dignity to our seniors in their retirement years. This is
the only bill that has ever brought those long-term-care provisions to
the floor of the House in a form in which the President would sign the
bill.
Furthermore, this bill will allow deduction of long-term home care
costs. Think for how many seniors that is terribly important. For many,
it will probably wipe out their entire tax liability.
So this bill is a thoughtful broadening, an inclusion of a number of
terribly important health policy solutions that this House at other
times has supported, that are not that controversial, that the
President will clearly sign, and ought to be part of a health care
reform--and part of this Congress' accomplishments.
So do not yield to the siren song of all we can pass is Kennedy-
Kassebaum. It is simply far too little. It is too narrow a vision. It
does not answer the needs of the American people.
Mr. BLILEY. Mr. Speaker, I reserve the balance of my time.
Mr. BENTSEN. Mr. Speaker, I yield 3 minutes to the gentleman from
California [Mr. Waxman].
(Mr. WAXMAN asked and was given permission to revise and extend his
remarks.)
Mr. WAXMAN. Mr. Speaker, today employees who have insurance coverage
where they work fear that if they lose their job or change jobs they
will not be able to get insurance. If they have a medical problem, they
worry they will be excluded from coverage permanently or that they will
have a long waiting period before they can be covered. They face the
so-called ``job lock'' where they cannot move on to other or better
jobs because they cannot risk the loss of their health insurance
coverage, and if they lose their job, their situation is made worse by
facing the loss of that insurance.
The substitute before us would change that. It would guarantee them
access to health insurance coverage. It would assure them that an
existing health problem would not be a reason to exclude them from
coverage.
Now this base bill that we are seeking to amend has provisions that
are similar to Kennedy-Kassebaum, the Dingell bill, the Roukema bill.
There really is not a lot of difference between all these provisions.
There are some differences, but they are minor, and they are
differences that can be worked out if people sat down and talked them
through. In fact, I voted for the Kennedy-Kassebaum-Roukema version of
this legislation when it was in the Committee on Commerce. Everybody
did. It was a unanimous vote.
But the Republican proposal before us adds some things that I think
will make this legislation fail ultimately to become law. They take
medical savings accounts, which may or may not be a good idea; the
small employer pooling, which may or may not work. A lot of people fear
that it will lead to cherry-picking of the least risky people by
insurance companies. They make medical malpractice changes, which are
very controversial because some people fear that this will deprive
injured parties of their full redress. They take
[[Page H3131]]
savings from the Medicare Program because of an antifraud provision,
and they use those savings to fund the tax breaks for medical savings
accounts.
Those are controversial issues. They should not be in a bill that can
be passed on a bipartisan basis and turned into law.
There are things I would like us to do, because let us realize what
we are not addressing is the problem of the 40 million uninsured in
this country. I do not care what version of the bills we pass today,
they are not going to be covered after all is said and done.
I think there are important changes we need in our health care
system, but if we do not have a consensus to accomplish them, let us do
what we can and pass the bill that would prevent this job lock and
assure that people will get insurance if they leave their jobs and take
another job or want to buy a private insurance policy.
I would urge support for the substitute. I will not go through the
denigration of what the other people have to say. What I do say is let
us pass what we can into law. Let us not lose this chance.
Mr. BLILEY. Mr. Speaker, I yield 2 minutes to the gentleman from
Florida [Mr. Bilirakis], the chairman of the Health and Environment
Subcommittee, a pioneer in health care reform, the man who led the
bipartisan effort in the 103d Congress.
Mr. BILIRAKIS. I thank the gentleman for yielding the time to me.
Mr. Speaker, I rise in opposition to this substitute, and yet without
question I certainly support the goals of the substitute. Both bills
address insurance portability, eliminate preexisting condition
prohibitions, end job lock, and both bills address medical savings
accounts.
The Kassebaum bill amends the HMO act to allow the offering of high
deductible MSA's, and it also provides a sense of committee resolution
to encourage MSA's. But that is where the common elements end. The
substitute simply falls far short of the mark on true practical health
care reform.
Our bill offers more options to the American people. My constituents
are always asking me, I am sure my colleagues' are, what Congress is
doing to address fraud and abuse. What is Congress doing to eliminate
unnecessary paperwork? When will our medical malpractice laws be
changed? Our bill addresses these important areas.
In addition, it also extends the medical expenses deduction to long-
term care services which is important to our seniors. A Band-Aid
solution like the substitute proposes would not address more systematic
problems which drive up costs and limit access to our health care
system.
On health care reform, the American people deserve more than a Band-
Aid. They deserve our best efforts to fix what we can in a system which
everyone agrees is broken.
Mr. BENTSEN. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman
from Pennsylvania [Mr. Klink].
(Mr. KLINK asked and was given permission to revise and extend his
remarks.)
Mr. KLINK. Mr. Speaker, I just wanted to talk a little bit about the
matter that is before us. One of the previous speakers talked about a
bipartisan effort called Roland-Bilirakis. Mr. Speaker, While I respect
both of the people greatly who came out with that effort, it did not
pass this House, it did not have the necessary support, and so we are
here today trying to figure out what steps we can take to make an
improvement upon the trillion dollar industry that is health care in
this Nation.
Mr. Speaker, I would suggest that Roukema-Kassebaum-Kennedy is that
modest step. It is that first step that is going to help tens of
millions of Americans keep their health insurance when they switch
their jobs, regardless of preexisting health conditions.
The Republicans, though, in this House are proposing a health
insurance reform that is not as strong as Roukema-Kassebaum-Kennedy.
They are adding on what I believe to be special interest amendments and
paybacks that are going to sabotage the first real attempt we had to be
able to do a bipartisan step in the right direction for the working
people of this country.
Now, we are talking about two editions, that in one instance the CBO
is saying that the bill's profraud loopholes are going to cost $400
million. Less revenue coming in, and enforcement of fraud is going to
suffer. Why should we want to do this?
The MSA proposal is not going to fly in the Senate, it is not going
to fly with the President. Why would the Republicans want to doom this
package by adding these two things to it?
Mr. THOMAS. Mr. Speaker, I yield 2 minutes to the gentleman from
Florida [Mr. Shaw].
Mr. SHAW. Mr. Speaker, I thank the gentleman for yielding this time
to me.
Mr. Speaker, tonight I rise to deliver to my congressional colleagues
a message from the 180,000 Medicare beneficiaries who reside in my
south Florida district, and that message is simply:
Stop the fraudulent and abusive practices against the Medicare
Program, and do it now.
This substitute ignores the issue of fraud and abuse.
Mr. Speaker, this body has already voted for the Medicare fraud and
abuse provisions that are included in this bill when it passed the
Medicare Preservation Act, and, as we all remember, the Medicare
Preservation Act was vetoed by President Clinton. Now we have another
chance to move a step closer to saving the Medicare Program from
bankruptcy.
This bill is the toughest and most serious attempt that this Congress
has made to stop fraud and abuse in the Medicare Program and health
care generally with the new strong criminal penalties for offenses
against the American people. I am proud to have contributed to this
effort, and I know that when my constituents learn of their new rights
under the Medicare Program, they will be proud of this Congress, too.
Let us pass this bill and save Medicare millions of dollars and save
all the American taxpayers billions of dollars in reducing fraud and
abuse.
Mr. BENTSEN. Mr. Speaker, I yield 1 minute to the gentlewoman from
California [Ms. Roybal-Allard].
Ms. ROYBAL-ALLARD. Mr. Speaker, I rise in support of the Democratic
substitute. By correcting the most obvious deficiencies in the health
insurance market, this legislation is a much-needed, albeit small step
toward reforming our health care system, because it frees the American
worker from job lock which prevents millions from taking better jobs
for fear of losing their health care coverage.
It protects people with preexisting conditions by limiting the
exclusion period and prohibiting employers and insurers from denying
coverage to these individuals. It expands availability and access by
prohibiting insurers from denying coverage to specific employee groups,
and it increases the deduction for the self-employed to 80 percent in
support of America's small business.
The Democratic substitute brings a measure of fairness and justice to
our health insurance system without the special interest provisions in
the House Republican bill. I urge all Members to vote in favor of the
Democratic substitute.
Mr. BLILEY. Mr. Speaker, I yield 2 minutes to the gentleman from
Connecticut [Mr. Shays], a distinguished member of the Committee on the
Budget.
Mr. SHAYS. Mr. Speaker, I thank the gentleman for yielding me the
time.
Mr. Speaker, a number of years ago the President came in with major
reform of health care. It was wide reaching, it was well beyond what
anyone in this House wanted to do, and now we have a bill that in my
judgment is very sensible. It is very logical. The Roland-Bilirakis
bill never passed 2 years ago because it never had a vote. It never had
a vote because unfortunately the other party was jealously guarding the
jurisdictions of each committee.
This bill here has the input of the Committee on the Judiciary, the
Committee on Commerce, the Committee on Ways and Means, and the
Committee on Economic and Educational Opportunities, and in it there is
a very significant portion of this bill dealing with fraud, title II,
preventing health care fraud and abuse; it goes for about 70 pages. I
have a hard time understanding what is meant by a clean bill.
{time} 2130
What is a clean bill that does not deal with waste, fraud, and abuse?
We have been having hearings for decades about the waste, fraud, and
abuse. That
[[Page H3132]]
so-called clean substitute ignores it completely. This bill here deals
with waste, fraud, and abuse, and for the first time makes health care
fraud a Federal offense, an all-payer system, not just for Medicare and
Medicaid and Champus, but for all health care fraud. We are determined
that this House is going to do something responsible.
I will just conclude by saying I am totally convinced that this House
is going to pass a health care bill. It may not be exactly like this
one when we deal with our conference with the Senate, but it will be a
meaningful bill, and it will be far better than the substitute bill
presented. I urge my colleagues to take part in what we are doing. We
are going after waste, fraud, and abuse for the first time in a serious
way. It is happening under our watch. Be proud of it.
Mr. BENTSEN. Mr. Speaker, I yield 1 minute to the gentlewoman from
California [Ms. Woolsey].
(Ms. WOOLSEY asked and was given permission to revise and extend her
remarks.)
Ms. WOOLSEY. Once again, Mr. Speaker, the Gingrich Republicans are
standing in the way of meaningful health care reform and it's American
families who are going to wind up paying the price. While Speaker
Gingrich says his plan may make health insurance more available, it
does nothing whatsoever to make it affordable.
Thankfully, for the American people, we have another choice before us
today. We have the Democratic substitute. The one bill that will extend
coverage to 25 million Americans. The one bill that has bipartisan
support in the Senate. And the one bill that will be signed into law by
the President.
To my colleagues on the other side of the aisle: Don't use your vote
to scuttle significant health care reform this year. Instead, stand up
for working families, and support the Democratic substitute.
Mr. BENTSEN. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman
from Illinois [Mr. Durbin].
Mr. DURBIN. Mr. Speaker, several years ago I introduced legislation
which allowed a full 100 percent deductibility of health insurance
premiums for self-employed people. I represent a rural district. I
represent a lot of farm families. It is very difficult for them to buy
health insurance, and when they do, it is expensive, and they find that
they can only deduct now 30 percent of the cost of the premiums.
The real unfairness is the fact that corporations can deduct 100
percent of the cost of health insurance premiums. Self-employed people
cannot. What we do with the Democratic substitute is to address this in
an honest way. I hope some of my Republican colleagues will consider
breaking ranks tonight and joining in this bipartisan approach to
health care reform.
Let me tell the Members what we know now. The fastest growing sector
in the American economy are self-employed people, people who are
starting their own businesses. If you ask them their No. 1 headache,
you are going to find, to your surprise, it is health insurance; how to
pay for it, how to cover your family and a few employees.
What we do in the Democratic substitute is to allow up to 80 percent
deductibility over a period of several years. If Members take a look at
the alternative on the Republican side, they will find they only reach
50 percent. This is a big difference for a small business.
I hope that some of my colleagues will think twice and join us. I
think it is far better for us to come together, Democrats and
Republicans, pass real health care reform, instead of trying to score
some political victory for the Golden Rule Life Insurance Company. Let
us do something for the real self-employed people who need a helping
hand.
Mr. THOMAS. Mr. Speaker, it is my pleasure to yield 1 minute to the
gentleman from Illinois [Mr. Weller], who knows full well that in the
calendar year 1994 it was the Democrats who left the self-employed with
no deductibility whatsoever.
(Mr. WELLER asked and was given permission to revise and extend his
remarks.)
Mr. WELLER. Mr. Speaker, I rise to oppose the substitute and support
H.R. 3103, which deserves the votes of Democrats as well as
Republicans. Mr. Speaker, H.R. 3103 addresses a real problem faced by
almost 40 million Americans, 85 percent of whom are small business
people, the self-employed, farmers, and their families and workers.
I have listened over the last several years to many families unable
to afford health insurance. They say the prices of health insurance are
too high if they are self-employed or work for small business. H.R.
3103 helps the little guy, the self-employed, and small business;
frankly, people like my mother and father, fifth generation family
farmers who, because their rates are based on two, face very high
rates.
Mr. Speaker, H.R. 3103 helps make health insurance more affordable,
the risk pools allowing small employers, perhaps through the Farm
Bureau or the local Chamber of Commerce, to purchase in a cooperative
fashion a bigger group policy, getting more affordable rates, also
giving 100 percent tax deduction for long-term care, and raising the 50
percent self-employed taxes.
Mr. BENTSEN. Mr. Speaker, I yield 2 minutes to the gentleman from
North Dakota [Mr. Pomeroy].
Mr. POMEROY. Mr. Speaker, for 8 years I had the privilege of
representing North Dakota as its State insurance commissioner. During
that time I evaluated the health insurance crises experienced by
families all across the State. While undoubtedly there were many facets
to the problems I encountered, far and away the largest problem was
affordability.
I am astounded that the previous speaker could talk about
affordability as a health issue addressed by the majority plan and
deride the substitute, when in fact, deductibility of health insurance
premium geared specifically at enhancing the affordability of coverage
is the feature best exemplified in the substitute, as opposed to the
majority plan. Look at the facts: Fifty percent deductibility
immediately under the substitute, and only 30 percent under the
majority plan, phasing up to 80 percent deductibility under the
substitute plan, and only 50 percent in the majority plan.
The difference between 80 percent and 50 percent deductibility is the
difference between affordability and unaffordability of health
insurance for farm families, for self-employed families in North Dakota
and all across the country. The No. 1 problem for so many families with
health insurance tonight, Mr. Speaker, is affordability. Let us make it
more affordable by increasing the deductibility. Only the substitute,
in my opinion, goes the limits it needs to increasing the deductibility
for purposes of making this coverage more affordable.
Mr. BLILEY. Mr. Speaker, I yield 3 minutes to the deputy whip, the
gentleman from Illinois [Mr. Hastert], a gentleman who has put more
work into this bill than anyone on the Committee on Commerce.
Mr. HASTERT. Mr. Speaker, I thank the gentleman for yielding time to
me.
I guess we just need to straighten out some things. To my friend who
just talked over here about the deductibility, I guess plagiarism is
one of the best compliments there is. To my friend, the gentleman from
Illinois, who talked about the deductibility issue, it is interesting,
it is the same folks who for years just let the deductibility for small
businesses go to zero and left it there until we moved it to 30
percent. We are going to move it to 50 percent. They are talking about
something in 2002. It is a promise, folks. I would not count on that
promise.
Mr. Speaker, also I would say to my good friend from New Jersey, who
says that the Senate leadership wants this Kassebaum bill, it is
interesting, she did not read her papers, because the Senate leadership
endorses our bill. They are going to move an add-on to the Senate to
exactly what we have passed in this House tonight, so she might be
apprised of that.
Mr. Speaker, we have heard a lot of outrageous claims on the other
side of the aisle. I think now is the time of reckoning. This
substitute is just a whisper in the dark. It does not do anything to
help health care. We cover group-to-group, we cover group-to-
individual, and we also make health care affordable for the American
people.
If Members want real change in health care, if we really want to help
Americans from the shoestore and the barber shop and the truck drivers
and the real people that work out there in
[[Page H3133]]
America, defeat this substitute, the farce out here that they are
putting out as the substitute, and support the Republican bill.
Mr. BENTSEN. Mr. Speaker, I yield 1 minute to the gentleman from
Maryland [Mr. Cardin].
Mr. CARDIN. Mr. Speaker, I thank the gentleman for yielding time to
me.
Mr. Speaker, I urge my colleagues to support this substitute, this
alternative. It does two things, and it does them better than the
original bill. First, it provides for portability. It does it better
than the underlying bill, because if you lose your job and you lose
your insurance and you try to find an individual plan, the substitute
allows you to have some options and lets you be able to buy an
affordable individual plan.
The second thing this bill does is deal with the self-employed by
allowing them to be able to deduct 80 percent of their premium, whereas
the underlying bill is at 50 percent. It makes it better for the self-
employed. Both of these issues enjoy strong bipartisan support. This
bill, the alternate, if it is passed, will be signed quickly by the
President, will be approved by the Senate. It can be a reality. It is
stronger than the underlying bill, and it can be passed and enacted
into law.
Mr. Speaker, I urge my colleagues to support the substitute.
Mr. THOMAS. Mr. Speaker, it is my privilege to yield 1 minute to the
gentleman from Oregon [Mr. Bunn], who came here to make a difference,
and he does.
Mr. BUNN of Oregon. Mr. Speaker, I am pleased tonight to say that the
substitute is a good bill, but the Republican version is a better bill.
We have a win-win tonight. I think we ought to be pleased with that.
Mr. Speaker, I am also delighted that we had the opportunity to
address some concerns in the Committee on Rules, and the Committee on
Rules was willing to make the necessary changes to assure that this
bill is a floor, not a ceiling, so that reforms like Oregon passed just
last year will be maintained. I think we are on track to assuring that
Americans will have good, affordable health care, and State reforms
which will stay on track.
Again, we have a win-win. Theirs is good, ours is great. I support
maintaining the Republican version, which means saying no to a good
substitute.
Mr. Speaker, let me start by saying that I am glad that we were able
to protect State health insurance reform efforts within this bill. As
many people brought to my attention, including my State insurance
commissioner, State insurance reform efforts may have been jeopardized
by specific language not exempting them within this bill. I am proud to
say that the language currently in this bill is very similar to that of
the Democratic substitute, and while I support many of the reform
efforts contained in that bill, I believe the Republican bill goes even
further and ensures even broader coverage than that alternative. I am
supporting the base bill and opposing the substitute. I look forward to
reforming our national health insurance laws as soon as possible.
Mr. BENTSEN. Mr. Speaker, I yield 1\1/2\ minutes to the gentlewoman
from California [Ms. Waters].
(Ms. WATERS asked and was given permission to revise and extend her
remarks.)
Ms. WATERS. Mr. Speaker, I am pleased to join with my colleagues in
supporting the substitute. It is time to stop just talk about health
care reform, and accomplish some real health care reform. This
substitute represents a sensible approach to health care reform, and it
may be the only chance we have to enact affordable health care for the
American people. This bill would prohibit many of the current unfair
insurance practices which deny and exclude individuals and families
with significant health problems. Insurers often deny health coverage
for preexisting conditions, the very illnesses most likely to require
quality medical care.
Approximately 81 million Americans have medical conditions which
could result in the denial of coverage. We know from recent studies
that African-American women are dying at a faster rate from heart
disease and stroke. Minority children are dying and experiencing more
complications from asthma and other preventable respiratory diseases.
We are seeing an increase in the infection rate for HIV and AIDS among
young African-American males.
We know that low-income persons are dying because they simply cannot
purchase the ability to live. Many of those who are fortunate enough to
have insurance give up opportunities for new jobs because they are
afraid of losing what little coverage they have. We must have
portability. This substitute, while it does not address all health care
concerns, does move in the right direction.
Mr. BLILEY. Mr. Speaker, it gives me great pleasure to yield 2
minutes to the distinguished gentleman from Louisiana [Mr. McCrery], a
member of the Committee on Ways and Means.
(Mr. McCRERY asked and was given permission to revise and extend his
remarks.)
Mr. McCRERY. Mr. Speaker, I thank the gentleman for yielding time to
me.
Mr. Speaker, I want to congratulate the gentlewoman from New Jersey,
the gentleman from Michigan, the gentleman from South Carolina, the
gentleman from Texas, for I think putting forth a well-intentioned
effort to improve the lot of people in this country vis-a-vis the
health insurance system. It is a good effort. However, in the face of
what we should be doing in health care reform in this country, it is
weak. It is watered down. It is half-hearted.
Mr. Speaker, we should not be so timid in this House to bend to the
threats of the President of the United States, who is up for reelection
this year. We should do what we think is right for the American people
in our health care system. If you go to a town meeting and listen to
the people, what do they talk about? They talk about portability. That
is a problem. We solved that in our bill. But what is the main thing
they talk about? Cost. ``Mr. Congressman, do something about the
escalating cost in our health care system.''
The substitute, regrettably, does nothing for cost containment. Our
bill, on the other hand, has medical malpractice reform, which goes to
the heart of the escalation of costs in the health care system. We
attack fraud and abuse, waste in the system, which goes to the heart of
cost escalation. We introduce a new concept, make it tax-advantaged,
medical savings accounts, which will allow a lot of little people in
this country to get health care coverage for the first time.
{time} 2145
These are all things that we should be doing if we were not so timid.
We need to vote against the substitute and vote for the underlying
bill.
Mr. BENTSEN. Mr. Speaker, I yield 2 minutes to the gentleman from
Florida [Mr. Gibbons], the ranking member of the Committee on Ways and
Means.
Mr. GIBBONS. Mr. Speaker, I want to take just a couple of minutes to
explain why the medical savings account is not popular on our side of
the aisle, and why it probably is pretty popular with our colleagues
over here, our Republicans friends.
If we look at the average family in America, it has an average family
income of $34,000 a year, $34,000 a year. That is what half of the
taxpayers have as family income. Now, if we look very closely at that
family, they are paying about an 18- or 20-percent tax level, but only
3 or 4 percent of that tax is income tax. All the rest of it is FICA
tax. They are only getting a medical savings account deduction out of
income tax, not out of FICA tax.
So half of the people in the United States that we claim as
constituents and part of our party get absolutely nothing out of these
medical savings accounts. But what do we do for our very well-off
friends?
Mr. Speaker, first of all, they can afford it. They get a large
deduction percentage-wise in all of this as opposed to 2 or 3 percent
for our folks. Second, do not even make them pay FICA tax on that cash
that they get as income. So that is another tax reduction they get, and
we have not even talked about it here.
Third, and this is the insult of all, this allows them to exclude it
from their estate tax. Now, how many of our constituents over here even
have to worry about an estate tax? Obviously, many of my colleagues'
do. My colleagues exempt them from the estate tax.
Now, what do we have to have in the estate tax? Well, between husband
and wife, they can have millions of dollars and not pay any estate tax.
But when the last of the family dies, they have
[[Page H3134]]
an estate tax. They have to have $600,000 before they pay a penny's
worth of estate tax. This thing is just designed for very wealthy
people.
Mr. BLILEY. Mr. Speaker, I yield 1 minute to the gentleman from Ohio
[Mr. Hobson].
Mr. HOBSON. Mr. Speaker, I rise in opposition to the substitute. I
think the substitute is a laudable effort, but there are a lot of other
things that we can do that are important to this issue. There is a
bipartisan bill, it is called Hobson-Sawyer, and it is called Bond-
Lieberman in the Senate, and it is in our bill, it is not in this bill.
It is the administrative simplification bill.
It gets rid of a lot of forms that have to be transferred around, a
multiplicity of forms. It makes it simple. Everyone agrees that that is
good. It also gets at fraud. Everyone agrees we ought to do that, but
it is not in my colleagues' bill, and it should be in their bill.
Everybody agrees that it is a good bill. There is no opposition. This
part of the bill passed out of the committee 30 to zip. It is a good
piece of legislation, it ought to be passed. That is why I support our
bill and do not support the substitute.
Mr. BLILEY. Mr. Speaker, I have no further requests for time. I yield
my remaining 1 minute back to the gentleman from California [Mr.
Thomas].
Mr. THOMAS. Mr. Speaker, I have 5 minutes and I have one speaker
left. Under the rules we have the right to close.
Mr. BENTSEN. Mr. Speaker, I yield the balance of my time to the chief
sponsor of the amendment, the gentleman from Michigan [Mr. Dingell],
the ranking member of the Committee on Commerce.
(Mr. DINGELL asked and was given permission to revise and extend his
remarks.)
Mr. DINGELL. My colleagues, this has been a good debate. I think we
owe a great debt of gratitude to the distinguished gentlewoman from New
Jersey [Mrs. Roukema] for the leadership which she has shown in this
matter which has brought us to where we are tonight, and I would urge
my colleague to appreciate her great effort in this matter.
Having said that, it is very important to us to look at the situation
we confront here. As an old friend of mine once observed, the perfect
good is the enemy of the good. That means that, if we load this bill
down with a vast plethora of amendments, we are liable to get no bill
at all.
I yield to no man in my devotion to the concept that we must change
the medical practice in this country to afford greater opportunity in
this country to afford greater opportunity in this country and greater
security to all the people.
The fact is that we had that opportunity before us in the last
Congress and it was rejected. My Republican colleagues have made a
great talk about what it was that we did in those days and what we are
doing tonight. The hard fact of the matter is that neither of these
bills solves the problem.
But the real fact is that the bill and the substitute which is
offered by the Democratic Members has the ability to solve the problems
in large part of some 25 million Americans who need portability and who
need protection against prohibitions on preexisting conditions in
insurance policies. It also does something else. It ups the amount of
deductibility to 80 percent for individuals and small business. That is
extremely important in terms of making health insurance available to
large numbers of people who would otherwise be denied that benefit.
So I urge my colleagues to support the simpler and the cleaner bill,
and I would urge them to recognize that the special interest amendments
which are inserted in the Republican bill accomplish nothing but
benefiting special interests and denying people the real opportunity to
access to meaningful health insurance.
Mr. Speaker, let us look a little bit at what is in the Republican
bill. First of all, it is loaded down like a Christmas tree, and I am
satisfied that it will wind up with the same fate of a Christmas tree,
dumped on the lawn at the conclusion of the discussion. It affords no
chance for workers who lose their jobs to have a choice of plans. It
makes no guarantees of businesses with more than 50 workers. It
preempts State laws that protect consumers. It limits the deductibility
of insurance premiums only to 50 percent. It has the controversial
medical savings plans which do only one thing, and that is to benefit
the insurance companies that have spent millions of dollars lobbying
for this particular benefit for themselves, to benefit those who are
healthy and those who have money, not those who are ill and who have
need.
It has controversial medical malpractice law changes. Now I happen to
think we need some changes in medical malpractice, but I did not think
that we need the changes that are here. It also makes it harder to
catch and to punish wrongdoers. Perhaps one of the worst things that it
does is that it repeals protections that we invested in seniors some
years ago to prevent them from being ripped off by useless, duplicative
health insurance policies under which they pay for the same benefits
which they are getting from Medicare, but in which they are prohibited
from collecting benefits because of clauses in the legislation and
because the prior liability goes to the Medicare policies.
There are also controversial provisions in here which override State
insurance laws.
Mr. Speaker, the hard fact is that tonight we should be working to
make it simple. We should be working to make this a proposal which will
go to the President, which will pass quickly through the House and
Senate, which will move easily through conference, and which will go to
the President for quick and easy signature. To risk veto or to arrive
at a situation where we do not help the some 25 million people who are
dependent on the question of portability and who are afflicted with the
problems of not being able to have preexisting conditions treated under
their health insurance plans or under health insurance plans which
would be made available under this legislation is both unwise and
unnecessary and inconsistent with our responsibilities to the people.
I would hope that soon we will be able to address a really meaningful
proposal for health insurance for all the people, to see to it that we
provide that last element of security for the American people, which
every American finds to be troublesome in the extreme, because it is an
essential and important part of the security net which Americans think
that every American should have. Regrettably, that choice is not before
us. Regrettably, the Republican Members of this body have chosen not to
move forward on that.
President Clinton tried to do that 2 years ago and it was rejected
overwhelmingly on this side of the aisle. I would urge my colleagues to
recognize that a little that we can get quickly which will really help
people is a lot better than an illusory lot which will help no one and
not become law and not help anybody.
I would urge my colleagues to therefore vote for the substitute which
the Democratic Members will be offering tonight and to do something
which is going to benefit all of the people and which will be of
significant benefit to some 25 million who will derive benefits under
the portability and under the preexisting provisions.
I urge my colleagues to vote in the interests of the country. I urge
them to vote for the substitute. I urge them to vote for a proposal
which will give us significant progress, rather than the assurance of
further confusion, further controversy, and possible veto and loss of
this legislation in the Senate or in a conference between the House and
Senate.
Mr. Speaker, I yield myself 3 minutes, and ask unanimous consent to
revise and extend my remarks.
Mr. Speaker, we are faced today with a simple choice:
Will the House give the American people what they want--a
straightforward, simple, and uncontroversial bill to reform health
insurance, a bill that can go to conference with the Senate quickly and
be enacted into law?
Or will the House doom the chances for enacting such a bill by
erecting a Christmas tree, decorated with all manner of controversial
ornaments?
I want to commend my colleague from New Jersey, Mrs. Roukema, for
recognizing the simplicity of this equation early on, and for
introducing in the House the companion to Senator Kassebaum's bill in
the Senate. The Kassebaum-Roukema bill has enjoyed widespread and
bipartisan support. It has been endorsed by 135 organizations,
including the
[[Page H3135]]
AMA, the American Hospital Association, the Independent Insurance
Agents, the National Association of Manufacturers, and the Healthcare
Leadership Council.
Many of us have tried, on a bipartisan basis, to persuade the
leadership to keep this health insurance bill limited only to the
Roukema-Kassebaum bill and to tax deductibility of health insurance for
the self-employed, another uncontroversial provision with broad
support. But in spite of the very public pleas from our side of the
aisle, as well as from Representative Roukema, Senator Kassebaum, and
Senator Bennett on the Republican side, we have ended up instead with a
Christmas tree.
The Dingell-Spratt-Bentsen substitute incorporates the Roukema bill
as title I. The amendment is very simple. It ends discrimination
against people with preexisting conditions so they can get health
insurance. It guarantees that Americans who lose or change their jobs
can get health insurance. It requires health insurance companies to
renew people's policies. And in title II, it increases the health
insurance tax deduction for self-employed individuals from 30 percent
to 80 percent, a major priority for small businesses and family
farmers.
By voting for the substitute, my friends, you will be telling your
constituents that you want the House to pass a bill that can be signed
and become law. By voting against it, you will be telling them that
they will have wait longer for health insurance reform--and how long?
Perhaps years?--because you can't say no to the special interests who
want to load this bill up with controversial add-ons and thereby kill
its chances for passage.
Now I know that many of my colleagues, on both sides of the aisle,
don't happen to think that each and every one of these provisions added
by the Republican leadership is bad. Medical savings accounts,
antitrust relief, malpractice reform--there are strongly held views on
both sides of these issues. But regardless of our personal views on any
of them, one thing is clear: they are all controversial; they all weigh
this bill down; and they all significantly reduce the chances of
enacting the kind of simple health insurance reform the American people
are demanding.
Mr. Speaker, I urge my colleagues:
Don't kill this chance for health insurance reform by passing a
Christmas tree instead of a clean bill. Support a clean bill by
supporting the substitute. Vote ``yes'' on Dingell-Spratt-Bentsen.
Mr. THOMAS. Mr. Speaker, it is my privilege and honor to yield the
remainder of the majority's time on this substitute to the Speaker of
the House, the gentleman from Georgia [Mr. Gingrich].
Mr. GINGRICH. Mr. Speaker, I thank my friend from California for
yielding me the time to close, and I say I always rise with some slight
trepidation after my dear friend from Michigan, who has been a leader
in the House and is a very effective articulator of his side.
Mr. Speaker, I would say to him, however, that to describe as a
Christmas tree a series of things the American people want is different
than describing as a Christmas tree things only politicians want. And I
do plead guilty to the charge that on a bipartisan basis we tried to
reach out and actually listen to the American people, and that some
people are very grateful to us for that.
Let me start, for example, with the Alzheimer's Association. The
Alzheimer's Association wrote us and said:
The Alzheimer's Association is writing in general support
of the provisions in H.R. 3160 to clarify the Tax Code so
that taxpayers may deduct their long-term care expenses as
medical expenses. We are particularly pleased to note the
committee's addition of specific language to assure that this
deduction is available to taxpayers who are incurring
expenses for care for persons who are cognitively impaired.
They go on to say:
This change in the Tax Code has had strong bipartisan
support for a number of years and has appeared in virtually
every version of health reform legislation seriously
considered over the last two Congresses.
Now, maybe to some of our friends that is a Christmas tree. But if
one has a parent with Alzheimer's, if one has a loved one with
Alzheimer's, or if one has a child with a chronic disease, or a child
born with a genetic defect that requires permanent long-term care, this
provision is a good step in the right direction, and we should be proud
that we listened to the American people.
The American Health Care Association, largely representing folks who
are involved in nursing homes, an area where we have a growing
population and as more Americans live beyond 80 years of age there will
be even more Americans, they said: ``We applaud and support your
efforts to enact health insurance reform legislation that also
addresses long-term care.''
Now, that is very important. And yes, it is true we added it to the
bill because we listened. We think that, while the start in the Senate
was a useful start and we respect the work of the other body, we do not
think the House is bound automatically to simply say, oh, please send
us something that we can rubber stamp.
{time} 2200
The American Farm Bureau Federation wrote, and they said:
A provision of the Health Coverage Availability and
Affordability Act of 1996, one which deals with cooperative
insurance purchasing arrangements, is particularly important
to the 4.5-million-member families of the American Farm
Bureau Federation. Farmers are, by and large, self-employed,
and as such must purchase health insurance for themselves and
their families. Many join together in cooperative purchasing
arrangements in order to obtain quality health insurance
plans at affordable rates. The Farm Bureau applauds and
supports your effort on this issue and the section of the
legislation that would facilitate voluntary insurance
purchasing cooperatives so that individuals and small
companies can negotiate and receive the same price advantage
that many larger businesses presently receive.
So, yes, it is true we listened to the Farm Bureau, and we listened
to the rural families of America and to the small family farmers.
The National Federation of Independent Businesses, and I am
particularly surprised that so many of my friends who normally rail
against the rich and declare class warfare and worry about the giant
corporations, that they could get a letter like this from the National
Federation of Independent Businesses and ignore it.
Here is what the National Federation of Independent Businesses said:
As the House prepares to take up health care reform, I am
writing to let you know how important the small employer
pooling provisions of the Health Coverage Availability and
Affordability Act are to the members of the National
Federation of Independent Businesses. NFIB is seeking to
correct a basic unfairness in our current health system, the
fact that big business is allowed to buy health insurance
under a different set of rules than small business. Because
of the Employment Retirement Income Security Act, large self-
insured businesses are exempted from State law, in their
health plans, while small business is stuck with State
insurance coverage mandates, premium taxes, and other forms
of regulation. This inequity between big business and small
business in large part explains why the premiums of corporate
America are going down while small business premiums are
going up. State mandates alone can increase premiums for
small business by 30 percent. The Health Coverage
Availability and Affordability Act would stop this
unfairness by allowing small firms to band together across
State lines to purchase health insurance with nearly the
same exemption from State law that big business has.
Achieving this is NFIB's highest health reform priority.
Any substitute amendment that does not directly address
this inequity between big and small businesses is
unacceptable to the more than 600,000 members of the
National Federation of Independent Businesses. I hope you
will stand up for small business and oppose efforts to
remove the small employer pooling provisions of the Health
Coverage Availability and Affordability Act. Passage of
these pooling provisions will drive coverage up and
premiums down for small business.
I particularly congratulate the gentleman from Illinois [Mr. Fawell],
who has done such yeoman work in that area.
The Chamber of Commerce said here were the returns of their poll:
97.8 percent said they needed small employer pooling; 97.1 percent said
they needed to allow self-employed individuals to fully deduct the cost
of their health coverage; 96 percent said they needed administrative
simplification; 92 percent said they wanted medical malpractice reform.
Let me say to my good friends on the left, yes, it is true, we
listened to the American people. We heard the American people say that
access was a start but access was not enough, you also have to have
affordability because the truth is if you do not keep the price down,
you do not have access if you are too poor to pay the premium.
So just passing some Washington law with a Washington rule for a
Washington bureaucrat, that does not mean that a small business or a
family farm can actually pay for it, does not get the job done. So we
went to part 2, which was affordability. We guaranteed
[[Page H3136]]
accessibility, and we added affordability.
And there is a third part. We had strong provisions on fraud, and I
particularly want to congratulate the gentleman from Oklahoma [Mr.
Coburn], who is a medical doctor, who is infuriated at the level of
fraud that we have in the system today, and Dr. Coburn is a
Representative from Oklahoma who has worked tirelessly in his first
term to make sure that we have strong steps and strong penalties
against fraud.
When the General Accounting Office reports that fraud may account for
10 percent of health care costs, that is $100 billion a year. We have
anecdote after anecdote on this floor from Members who have had members
of their family involved in situations of clear-cut fraud, when you
watch on NBC as a woman reports that she called in to complain because
they had charged her for her autopsy and, since she was still alive,
she does not think she had one, and their answer was that must have
been an EKG. She said, ``Honey, I did not have that either.''
We had one of our colleagues who walked up to me one day and said,
you know, his mother had called him, she heard us talking about fraud,
and she said she got billed for two mammograms. She called the doctor's
office. She said, ``You did not have two mammograms.'' They said, ``Oh,
yes. We must have done two mammograms.'' She said, ``I had a mastectomy
7 years ago. I know you did not do two mammograms.'' Their next comment
was, ``What do you care?'' The Government will pay the bill.''
What this bill establishes is it directs the Secretary of Health and
Human Services to establish a system for senior citizens to turn in
fraud and to give senior citizens the power to help us police the
system so people engaged in ripping off you, the taxpayer, and rip off
the consumer of Medicare is better protected and has a better incentive
to turn in fraud.
I would say if you want accountability, we have it. If you want
access, we have better access. We give twice as long a period as
Kennedy-Kassebaum between insurance without losing coverage, twice as
long. We have a better system of access, and it is far more affordable
under our bill than it is under the substitute.
So I would simply say to my friends, do not be partisan about this.
Here is an occasion where we started with a bill that was bipartisan in
the Senate. We have improved the bill. Medical savings accounts is, in
fact, an issue of great concern to some people. It is a brand-new idea.
We believe it will help things.
I want the House to know that if the President sends up a veto
signal, we are not going to risk vetoing coverage for all Americans in
medical savings accounts, but we want to make the case. We want to try
to convince him that he ought to be willing to sign it.
There are other items in here. Malpractice reform, my good friend
admitted we need to do something, too, on malpractice reform. The trial
lawyers should not be ripping America off.
I talked about a week ago to the American dental association. It
occurred to me, if dentists acted like the Bar, they would be urging
every child to get cavities. There would be commercials to eat sugar
and not brush your teeth. Just think about it. It is terrible. A
patient walks into a doctor's office. They should both be on the same
team, fighting the disease, and there is a lawyer running an ad that
says, ``Why don't you walk in there as a potential plaintiff and see if
you can't find a good excuse to sue?'' It is culturally sick to have
this kind of litigation, conflict-ridden system. We take the first step
down the road.
If the President sends up a veto signal, maybe we would have to back
down. But we want a chance to convince him this is wrong to favor the
trial lawyers over the patients and the doctors.
But all I would say to my friends is, the substitute is well-meaning,
but it is inadequate. It is too little, it is too narrow, it is too
small. We can do better.
We have listened, and we are doing better. This is a better bill than
Kennedy-Kassebaum. This is a more complete bill. This offers better
access. It is more affordable, and it guarantees greater
accountability, and it is worthy of your consideration.
I will just close with this point: Five major leaders in the Senate
yesterday announced their endorsement of this bill. And this bill will
almost certainly be offered in the Senate as the substitute for the
earlier well-meaning, but weaker, bill that Kennedy-Kassebaum
introduced, and, with our help, we can send a signal to the Senate. Let
us get the job done a lot better, and let us do it for a lot more
people. That is why we should vote ``no'' on the substitute and ``yes''
on final passage.
Mrs. MINK of Hawaii. Mr. Speaker, I rise to speak in favor of the
Democratic substitute to H.R. 3103.
Why are we considering H.R. 3103? H.R. 3103 was reported with only
nine cosponsors. The Roukema bill, which the Democratic substitute is
based on, has 193 cosponsors. Seldom do we have legislation with such
widespread support. Instead of hearing the Roukema bill, we are
spending time on legislation loaded with controversy and doomed to
fail.
We now have before us an opportunity to provide relief for
hardworking Americans enslaved to their health care policies.
The core of the Democratic substitute is twofold. First it will
guarantee individuals leaving a job, where they are covered by group
insurance, to be able to obtain group or individual insurance at their
next job; and second, it will forbid insurance companies from denying
coverage because of preexisting conditions. These are two very simple
concepts with little opposition and if implemented would result in
enormous social benefits.
In addition, both the Republican bill and the Democratic substitute
increase the permitted health insurance tax deduction for self-employed
individuals. The levels allotted in the Democratic substitute, however,
are significantly higher. Health insurance costs for the self-employed
are often a heavy burden. Tax deductions at the levels proposed in the
Democratic substitute would ease this burden.
H.R. 1303 on the other hand contains many provisions which are not
well thought out and will be harmful to the overall health care
objectives.
One of these proposals relates to medical malpractice. Congress
should not set maximum monetary amounts that can be awarded for pain
and suffering, and for punitive damages. I cannot support this anti-
consumer provisions.
With respect to Medical Savings Accounts, I took a hard look at this
proposal. It seemed like a good idea to give individuals the option to
contribute to a tax deductible savings account which must be used for
medical purposes and also require them to enroll in a catastrophic
health care plan with relatively lower premiums and a high yearly
deductible.
Two questions came to mind: First, will this reform help the
uninsured; and second, will this reform divide the pool of insured
resulting in the systematic breakdown of the insurance system.
Medical Savings Accounts would not be attractive for the high risk
and the poor, those who need health care the most, because they would
be unable to afford the high yearly deductible over a extended period
of time. If the poor did enroll in this plan they would be unlikely to
obtain preventive care because it would have to be paid for from their
account or from their own pocket.
Meanwhile, the healthy and wealthy, who do not have a problem
obtaining health insurance, would be more likely to choose a Medical
Savings Account because they can afford the high deductible. The
different choices of these demographic groups will result in the
healthy vacating the traditional insurance pool leaving only high-risk
individuals remaining. The pool will be concentrated with high-risk
individuals and costs will rise causing insurance to be unaffordable
for many. Fewer people who need coverage will be insured. The
Republican proposal for Medical Savings Accounts will divide the
insurance pool leading to an insurance system breakdown.
Moreover, I feel compelled to speak out against the multiple employer
welfare arrangement [MEWA] provisions contained in this bill. I am
concerned that the federal regulation provided will not be adequate and
that by preempting established State systems, programs will be harmed.
As a result of these new MEWA provisions, I am concerned that Hawaii
may no longer be granted an ERISA exemption for the Hawaii Prepaid
Health Care Act. Majority committee staff indicated that Hawaii's ERISA
exemption was included in the bill reported out of the Committee on
Economic and Education Opportunities. However, due to the extreme
handicap of having to evaluate, debate, and vote on a bill mere hours
after it is printed and made public, I have been unable to confirm
whether or not Hawaii's exemption was preserved. The Federal Government
will not be able to take on this new responsibility, liability, and
expense. The retention of State authority is critical. Not to do so is
a fatal flaw.
Mr. Speaker, the Democratic substitute focuses solely on insurance
portability and prohibiting denial of coverage due to preexisting
[[Page H3137]]
conditions. We must not load up this bill with controversial provisions
that will incite opposition and thwart the enactment of valuable and
the noncontroversial provisions in this bill.
This substitute will not overhaul the health care system but will
provide greater health security and make a positive difference in the
lives of millions of Americans. We must not allow this opportunity to
slip through our fingers.
I urge a yes vote for the Democratic substitute.
Ms. EDDIE BERNICE JOHNSON of Texas. Mr. Speaker, I rise today as a
member of the health profession to encourage my colleagues to support a
comprehensive health care reform measure that would make appropriate
health care accessible for all Americans. As we consider H.R. 3103, the
Health Coverage Affordability and Availability Act, it is important
that we realize that there is no clear consensus on the best means to
attain universal coverage. Limitations on exclusions for preexisting
conditions and guarantees for portability will help millions of
Americans move away from job-lock and the terrifying prospect of losing
health care coverage that comes with job loss or change brought about
by corporate downsizing and other market forces.
As a nurse, it is my opinion that this Congress needs to continue to
foster high standards in the health care industry and promote the
economic and general welfare of Americans in the workplace. All year we
have heard that the Medicare hospital trust fund is about to go
bankrupt and therefore we have to make massive cuts in Medicare to save
it. Now they propose taking the easiest money in Medicare--the money
gained from fighting fraud--and spending it to give medical savings
account tax breaks to younger people who are likely to be in the
highest tax brackets and the healthiest members of our society.
Mr. Chairman, while considering health care legislation today, we as
a Congress must keep the process simple. There is no place for adding
on special interest amendments and pay backs that will sabotage the
passage of good reforms. We must also remember the working poor of this
Nation that are effectively priced-our of the health insurance market.
Mr. Chairman, I encourage my colleagues to support the Democratic
substitute to H.R. 3103 because the substitute does not contain any of
the bill's highly controversial provisions--such as medical savings
accounts--that would jeopardize any possibility of enacting health
insurance reform this year. The Kassebaum-Kennedy-Roukema bill, which
assures health insurance portability, enjoys broad bipartisan support
in both Chambers, and the President has endorsed it. We should not let
this opportunity for enacting meaningful health reform slip away by
loading down this bill with a number of controversial provisions. The
only way to enact health reform is to support the Kassebaum-Kennedy-
Roukema alternative which the substitute embodies.
I yield back the balance of my time.
Mr. VENTO. Mr. Speaker, I rise today to oppose the bill and support
the Democratic substitute on this important issue of health insurance
reform.
It is clear that there are serious problems with our current health
care system. In 1994, Congress was working to address these problems
and implement broad health care reforms, expanding access to health
care coverage and reining in escalating health care costs. Those
efforts were stymied, and during the past year and a half Republicans
have mostly concentrated on cutting back on health care, by attempting
to slash Medicare and Medicaid. In fact half the specified savings in
the GOP reconciliation plan were from health care, that is, Medicare
and Medicaid cuts.
In the absence of broader health care reforms, Americans are relying
on us to at least enact some limited but important insurance reforms.
There is some bipartisan support for many of the provisions before us
today, but unfortunately, the Republican leadership is polarizing and
threatening the enactment of these modest reforms. The GOP House
leadership is seriously jeopardizing the bill by loading it up like a
Christmas tree with controversial ornaments, like medical savings
accounts and medical malpractice reform. These ornaments are a
distraction from the issues and while they may be pretty to look at, we
should certainly examine and consider these provisos separately, not as
part of the basic agreed upon reforms.
In our dysfunctional health care system, insurance companies have too
often taken steps to shift costs and deny health care coverage to
people in order to lower their risk and increase their profit margin
and competitiveness. The Democratic substitute is the best alternative
today. It prohibits insurers and employers from limiting or denying
coverage because of a preexisting condition. It would prohibit insurers
from denying coverage to employers and prevent health plans from
excluding any employee on the basis of health status. Health plans
would be required to renew coverage for groups and individuals as long
as premiums are paid. The Democratic substitute would also guarantee
that individuals who leave group coverage will be able to purchase
individual health insurance policies.
Millions of Americans would benefit from such legislation. It would
allow people who want to change their jobs to take their health
insurance with them, ending the phenomenon of job lock. It would end
the unfair insurance practice of employing preexisting conditions
clauses to avoid coverage of categories of persons. These changes
proposed in the Democratic substitute are needed to increase health
care security for working American families.
However, the Republican proposal is disingenous and demonstrates
today their policy path; solve health care problems by changing the
topic. They have included a provision in their bill to establish
medical savings accounts which will in essence drive health care costs
up for most and balloon the deficit. This proposal will weaken the
overall health system as healthier and wealthier people leave the
traditional insurance risk pool. First of all most Americans cannot
afford to put aside $2,000 a year into a tax-free account. People with
existing health problems and without savings income would be left in
the traditional insurance pool and will find it more difficult to
afford escalating health care costs. I do not believe that this is the
kind of change in the health care system that the American people want.
This will further polarize and divide the concept of community rating.
In fact, the main beneficiaries of this proposal will be the insurance
companies.
For months, Republicans have delayed consideration of this bill until
they were embarrassed into bringing it to the floor by the President's
State of the Union statement. Now the Republicans are going to burden
the bill by overloading the vehicle so that it will sink. The
Republican political agenda apparently takes precedent over good people
policy. The special interests wish list that the Republican leadership
tries to satisfy threatens the passage of the core insurance reforms
necessary to secure health care coverage for millions of Americans.
This is wrong and should be rejected.
Congress must respond to the needs of the American people and enact
responsible health insurance reform, not sidetrack the issue and leave
the American people in the lurch. I urge my colleagues to oppose the
controversial provisions of the bill and support the Democratic
substitute.
Mr. RICHARDSON. Mr. Speaker, voting for this substitute means that
you are serious about allowing your constituents to have access to
health insurance.
This substitute is simple policy. If you want to tell insurance
companies they cannot deny Americans who have beat a life-threatening
disease or condition insurance coverage, vote for this substitute.
If you want to allow hard working families in your district to keep
their health care when they change jobs, vote for this substitute.
If you want to help small businesses and entrepreneurs afford health
care, vote for this substitute.
This substitute is a bipartisan effort. Republicans and Democrats in
the Senate agree on it.
A Republican Member introduced this bill in the House and over 170
Democrats have cosponsored it.
Mr. Speaker, this is not about partisan politics. It is about doing
what is right for the American people. About giving working American
families access to insurance coverage for themselves and their
families.
The SPEAKER pro tempore (Mr. Combest). Pursuant to House Resolution
392, the previous question is ordered on the bill as amended.
The question is on the amendment in the nature of a substitute
offered by the gentleman from Michigan [Mr. Dingell].
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Mr. BENTSEN. Mr. Speaker, I object to the vote on the ground that a
quorum is not present and make a point of order a quorum is not
present.
The SPEAKER pro tempore. Evidently a quorum is not present.
The Sergeant at Arms will notify absent Members.
The vote was taken by electronic device, and there were--yeas 192,
nays 226, not voting 14, as follows:
[Roll No. 104]
YEAS--192
Abercrombie
Ackerman
Andrews
Baesler
Baldacci
Barcia
Barrett (WI)
Becerra
Beilenson
Bentsen
Berman
Bevill
Bishop
Boehlert
Bonior
Borski
Boucher
Brewster
Browder
Brown (CA)
Brown (FL)
Brown (OH)
Cardin
Chapman
Clay
Clayton
Clement
Clyburn
Collins (MI)
Condit
[[Page H3138]]
Conyers
Costello
Coyne
Cramer
Danner
de la Garza
DeFazio
DeLauro
Dellums
Deutsch
Dicks
Dingell
Dixon
Doggett
Doyle
Duncan
Durbin
Edwards
Engel
Evans
Farr
Fattah
Fazio
Filner
Flake
Foglietta
Ford
Frank (MA)
Franks (NJ)
Frelinghuysen
Frost
Furse
Gejdenson
Gephardt
Geren
Gibbons
Gonzalez
Green
Gutierrez
Hall (OH)
Hamilton
Harman
Hastings (FL)
Hefner
Hilliard
Hinchey
Holden
Hoyer
Jackson (IL)
Jackson-Lee (TX)
Jacobs
Jefferson
Johnson (SD)
Johnson, E.B.
Johnston
Kanjorski
Kaptur
Kennedy (MA)
Kennedy (RI)
Kennelly
Kildee
Kleczka
Klink
LaFalce
Lantos
Levin
Lewis (GA)
Lincoln
Lipinski
Lofgren
Lowey
Luther
Maloney
Manton
Markey
Martinez
Martini
Mascara
Matsui
McCarthy
McDermott
McHale
McKinney
Meehan
Meek
Menendez
Miller (CA)
Minge
Mink
Moakley
Mollohan
Moran
Murtha
Nadler
Oberstar
Obey
Olver
Ortiz
Orton
Owens
Pallone
Pastor
Payne (NJ)
Payne (VA)
Pelosi
Peterson (FL)
Peterson (MN)
Pickett
Pomeroy
Poshard
Quinn
Rahall
Rangel
Reed
Richardson
Rivers
Roberts
Roemer
Rose
Roukema
Roybal-Allard
Rush
Sabo
Sanders
Sawyer
Schroeder
Schumer
Scott
Serrano
Sisisky
Skaggs
Skelton
Slaughter
Spratt
Stark
Stenholm
Studds
Stupak
Tanner
Tejeda
Thompson
Thornton
Thurman
Torkildsen
Torres
Torricelli
Towns
Traficant
Velazquez
Vento
Visclosky
Volkmer
Walsh
Ward
Waters
Watt (NC)
Waxman
Wilson
Wise
Woolsey
Wynn
Yates
NAYS--226
Allard
Archer
Armey
Bachus
Baker (CA)
Baker (LA)
Ballenger
Barr
Barrett (NE)
Bartlett
Barton
Bass
Bateman
Bereuter
Bilbray
Bilirakis
Bliley
Blute
Boehner
Bonilla
Bono
Brownback
Bryant (TN)
Bunn
Bunning
Burr
Burton
Buyer
Callahan
Calvert
Camp
Campbell
Canady
Castle
Chabot
Chambliss
Chenoweth
Christensen
Chrysler
Clinger
Coble
Coburn
Collins (GA)
Combest
Cooley
Cox
Crane
Crapo
Cremeans
Cubin
Cunningham
Davis
Deal
DeLay
Diaz-Balart
Dickey
Doolittle
Dornan
Dreier
Dunn
Ehlers
Ehrlich
Emerson
English
Ensign
Everett
Ewing
Fawell
Fields (TX)
Flanagan
Foley
Forbes
Fox
Franks (CT)
Frisa
Funderburk
Gallegly
Ganske
Gekas
Gilchrest
Gillmor
Gilman
Gingrich
Goodlatte
Goodling
Gordon
Goss
Graham
Greenwood
Gunderson
Gutknecht
Hall (TX)
Hancock
Hansen
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Heineman
Herger
Hilleary
Hobson
Hoekstra
Hoke
Horn
Hostettler
Houghton
Hunter
Hutchinson
Hyde
Inglis
Istook
Johnson (CT)
Johnson, Sam
Jones
Kasich
Kelly
Kim
King
Kingston
Klug
Knollenberg
Kolbe
LaHood
Largent
Latham
LaTourette
Laughlin
Lazio
Leach
Lewis (CA)
Lewis (KY)
Lightfoot
Linder
Livingston
LoBiondo
Longley
Lucas
Manzullo
McCollum
McCrery
McDade
McHugh
McInnis
McIntosh
McKeon
Metcalf
Meyers
Mica
Miller (FL)
Molinari
Montgomery
Moorhead
Morella
Myers
Myrick
Nethercutt
Neumann
Ney
Norwood
Nussle
Oxley
Packard
Parker
Paxon
Petri
Pombo
Porter
Portman
Pryce
Quillen
Radanovich
Ramstad
Regula
Riggs
Rogers
Rohrabacher
Roth
Royce
Salmon
Sanford
Saxton
Scarborough
Schaefer
Schiff
Seastrand
Sensenbrenner
Shadegg
Shaw
Shays
Shuster
Skeen
Smith (MI)
Smith (NJ)
Solomon
Souder
Spence
Stearns
Stockman
Stump
Talent
Tate
Tauzin
Taylor (MS)
Taylor (NC)
Thomas
Thornberry
Tiahrt
Upton
Vucanovich
Waldholtz
Walker
Wamp
Watts (OK)
Weldon (FL)
Weller
White
Whitfield
Wicker
Williams
Wolf
Young (AK)
Young (FL)
Zeliff
Zimmer
NOT VOTING--14
Bryant (TX)
Coleman
Collins (IL)
Dooley
Eshoo
Fields (LA)
Fowler
McNulty
Neal
Ros-Lehtinen
Smith (TX)
Smith (WA)
Stokes
Weldon (PA)
{time} 2225
Messrs. HILLEARY, NUSSLE, and STOCKMAN changed their vote from
``yea'' to ``nay.''
So the amendment in the nature of a substitute was rejected.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore (Mr. Combest). The question is on the
engrossment and third reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
{time} 2230
motion to recommit offered by mr. pallone
Mr. PALLONE. Mr. Speaker, I offer a motion to recommit.
The SPEAKER pro tempore (Mr. Combest). Is the gentleman opposed to
the bill?
Mr. PALLONE. Yes, Mr. Speaker, I am.
The SPEAKER pro tempore. The Clerk will report the motion to
recommit.
The Clerk read as follows:
Mr. Pallone moves to recommit the bill, H.R. 3103, to the
Committee on Ways and Means with instructions that the
Committee report the bill back to the House forthwith with
the following amendment:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Health Insurance Reform Act
of 1996''.
TITLE I--HEALTH CARE ACCESS, PORTABILITY, AND RENEWABILITY
TABLE OF CONTENTS OF TITLE
Sec. 100. Definitions.
Subtitle A--Group Market Rules
Sec. 101. Guaranteed availability of health coverage.
Sec. 102. Guaranteed renewability of health coverage.
Sec. 103. Portability of health coverage and limitation on preexisting
condition exclusions.
Sec. 104. Special enrollment periods.
Sec. 105. Disclosure of information.
Subtitle B--Individual Market Rules
Sec. 110. Individual health plan portability.
Sec. 111. Guaranteed renewability of individual health coverage.
Sec. 112. State flexibility in individual market reforms.
Sec. 113. Definition.
Subtitle C--COBRA Clarifications
Sec. 121. Cobra clarification.
Subtitle D--Private Health Plan Purchasing Cooperatives
Sec. 131. Private health plan purchasing cooperatives.
Subtitle E--Application and Enforcement of Standards
Sec. 141. Applicability.
Sec. 142. Enforcement of standards.
Subtitle F--Miscellaneous Provisions
Sec. 191. Health coverage availability study.
Sec. 192. Effective date.
Sec. 193. Severability.
SEC. 100. DEFINITIONS.
As used in this title:
(1) Beneficiary.--The term ``beneficiary'' has the meaning
given such term under section 3(8) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002(8)).
(2) Employee.--The term ``employee'' has the meaning given
such term under section 3(6) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002(6)).
(3) Employer.--The term ``employer'' has the meaning given
such term under section 3(5) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002(5)), except that
such term shall include only employers of two or more
employees.
(4) Employee health benefit plan.--
(A) In general.--The term ``employee health benefit plan''
means any employee welfare benefit plan, governmental plan,
or church plan (as defined under paragraphs (1), (32), and
(33) of section 3 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1002 (1), (32), and (33))) that
provides or pays for health benefits (such as provider and
hospital benefits) for participants and beneficiaries
whether--
(i) directly;
(ii) through a group health plan offered by a health plan
issuer as defined in paragraph (8); or
(iii) otherwise.
(B) Rule of construction.--An employee health benefit plan
shall not be construed to be a group health plan, an
individual health plan, or a health plan issuer.
(C) Arrangements not included.--Such term does not include
the following, or any combination thereof:
(i) Coverage only for accident, or disability income
insurance, or any combination thereof.
(ii) Medicare supplemental health insurance (as defined
under section 1882(g)(1) of the Social Security Act).
(iii) Coverage issued as a supplement to liability
insurance.
(iv) Liability insurance, including general liability
insurance and automobile liability insurance.
(v) Workers compensation or similar insurance.
(vi) Automobile medical payment insurance.
(vii) Coverage for a specified disease or illness.
(viii) Hospital or fixed indemnity insurance.
(ix) Short-term limited duration insurance.
[[Page H3139]]
(x) Credit-only, dental-only, or vision-only insurance.
(xi) A health insurance policy providing benefits only for
long-term care, nursing home care, home health care,
community-based care, or any combination thereof.
(5) Family.--
(A) In general.--The term ``family'' means an individual,
the individual's spouse, and the child of the individual (if
any).
(B) Child.--For purposes of subparagraph (A), the term
``child'' means any individual who is a child within the
meaning of section 151(c)(3) of the Internal Revenue Code of
1986.
(6) Group health plan.--
(A) In general.--The term ``group health plan'' means any
contract, policy, certificate or other arrangement offered by
a health plan issuer to a group purchaser that provides or
pays for health benefits (such as provider and hospital
benefits) in connection with an employee health benefit plan.
(B) Arrangements not included.--Such term does not include
the following, or any combination thereof;
(i) Coverage only for accident, or disability income
insurance, or any combination thereof.
(ii) Medicare supplemental health insurance (as defined
under section 1882(g)(1) of the Social Security Act).
(iii) Coverage issued as a supplement to liability
insurance.
(iv) Liability insurance, including general liability
insurance and automobile liability insurance.
(v) Workers compensation or similar insurance.
(vi) Automobile medical payment insurance.
(vii) Coverage for a specified disease or illness.
(ix) Short-term limited duration insurance.
(x) Credit-only, dental-only, or vision-only insurance.
(xi) A health insurance policy providing benefits only for
long-term care, nursing home care, home health care,
community-based care, or any combination thereof.
(7) Group purchaser.--The term ``group purchaser'' means
any person (as defined under paragraph (9) of section 3 of
the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1002(9)) or entity that purchases or pays for health
benefits (such as provider or hospital benefits) on behalf of
two or more participants or beneficiaries in connection with
an employee health benefit plan. A health plan purchasing
cooperative established under section 131 shall not be
considered to be a group purchaser.
(8) Health plan issuer.--The term ``health plan issuer''
means any entity that is licensed (prior to or after the date
of enactment of this Act) by a State to offer a group health
plan or an individual health plan.
(9) Health status.--The term ``health status'' includes.
with respect to an individual, medical condition, claims
experience, receipt of health care, medical history, genetic
information, evidence of insurability (including conditions
arising out of acts of domestic violence), or disability.
(10) Participant.--The term ``participant'' has the meaning
given such term under section 3(7) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002(7)).
(11) Plan sponsor.--The term ``plan sponsor'' has the
meaning given such term under section 3(16)(B) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1002(16)(B)).
(12) Secretary.--The term ``Secretary'', unless
specifically provided otherwise, means the Secretary of
Labor.
(13) State.--The term ``State'' means each of the several
States, the District of Columbia, Puerto Rico, the United
States Virgin Islands, Guam, American Samoa, and the
Commonwealth of the Northern Mariana Islands.
Subtitle A--Group Market Rules
SECTION 101. GUARANTEED AVAILABILITY OF HEALTH COVERAGE.
(a) In General.--
(1) Nondiscrimination.--Except as provided in subsection
(b), section 102 and section 103--
(A) a health plan issuer offering a group health plan may
not decline to offer whole group coverage to a group
purchaser desiring to purchase such coverage; and
(B) an employee health benefit plan or a health plan issuer
offering a group health plan may establish eligibility,
continuation of eligibility, enrollment, or premium;
contribution requirements under the terms of such plan,
except that such requirements shall not be based on health
status (as defined in section 100(9)).
(2) Health promotion and disease prevention.--Nothing in
this subsection shall prevent an employee health benefit plan
or a health plan issuer from establishing premium; discounts
or modifying otherwise applicable copayments or deductibles
in return for adherence to programs of health promotion and
disease prevention.
(b) Application of Capacity Limits.--
(1) In general.--Subject to paragraph (2), a health plan
issuer offering a group health plan may cease offering
coverage to group purchasers under the plan if--
(A) the health plan issuer ceases to offer coverage to any
additional group purchasers; and
(B) the health plan issuer can demonstrate to the
applicable certifying authority (as defined in section
142(d)), if required, that its financial or provider capacity
to serve previously covered participants and beneficiaries
(and additional participants and beneficiaries who will be
expected to enroll because of their affiliation with a group
purchaser or such previously covered participants or
beneficiaries) will be impaired if the health plan issuer is
required to offer coverage to additional group purchasers.
Such health plan issuer shall be prohibited from offering
coverage after a cessation in offering coverage under this
paragraph for a 6-month period or until the health plan
issuer can demonstrate to the applicable certifying authority
(as defined in section 142(d)) that the health plan issuer
has adequate capacity, whichever is later.
(2) First-come-first-served.--A health plan issuer offering
a group health plan is only eligible to exercise the
limitations provided for in paragraph (1) if the health plan
issuer offers coverage to group purchasers under such plan on
a first-come-first-served basis or other basis established by
a State to ensure a fair opportunity to enroll in the plan
and avoid risk selection.
(c) Construction.--
(1) Marketing of group health plans.--Nothing in this
section shall be construed to prevent a State from requiring
health plan issuers offering group health plans to actively
market such plans.
(2) Involuntary offering of group health plans.--Nothing is
this section shall be construed to require a health plan
issuer to involuntarily offer group health plans in a
particular market. For the purposes of this paragraph, the
term ``market'' means either the large employer market or the
small employer market (as defined under applicable State law,
or if not so defined, an employer with not more than 50
employees).
SEC. 102. GUARANTEED RENEWABILITY OF HEALTH COVERAGE.
(a) In General.--
(1) Group purchaser.--Subject to subsections (b) and (c), a
group health plan shall be renewed or continued in force by a
health plan issuer at the option of the group purchaser,
except that the requirement of this subparagraph shall not
apply in the case of--
(A) the nonpayment of premiums or contributions by the
group purchaser in accordance with the terms of the group
health plan or where the health plan issuer has not received
timely premium payments;
(B) fraud or misrepresentation of material fact on the part
of the group purchaser;
(C) the termination of the group health plan in accordance
with subsection (b); or
(D) the failure of the group purchaser to meet contribution
or participation requirements in accordance with paragraph
(3).
(2) Participant.--Subject to subsections (b) and (c),
coverage under an employee health benefit plan or group
health plan shall be renewed or continued in force, if the
group purchaser elects to continue to provide coverage under
such plan, at the option of the participant (or beneficiary
where such right exists under the terms of the plan or under
applicable law), except that the requirement of this
paragraph shall not apply in the case of--
(A) the nonpayment of premiums or contributions by the
participant or beneficiary in accordance with the terms of
the employee health benefit plan or group health plan or
where such plan has not received timely premium payments.
(B) fraud or misrepresentation of material fact on the part
of the participant or beneficiary relating to an application
for coverage or claim for benefits;
(C) the termination of the employee health benefit plan or
group health plan;
(D) loss of eligibility for continuation coverage as
described in part 6 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1161 et
seq.); or
(E) failure of a participant or beneficiary to meet
requirements for eligibility for coverage under an employee
health benefit plan or group health plan that are not
prohibited by this title.
(3) Rules of construction.--Nothing in this subsection, nor
in section 101(a), shall be construed to--
(A) preclude a health plan issuer from establishing
employer contribution rules or group participation rules for
group health plans as allowed under applicable State law;
(B) preclude a plan defined in section 3(37) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1102(37)) from establishing employer contribution rules or
group participation rules; or
(C) permit individuals to decline coverage under an
employee health benefit plan if such right is not otherwise
available under such plan.
(b) Termination of Group Health Plans.--
(1) Particular type of group health plan not offered.--In
any case in which a health plan issuer decides to discontinue
offering a particular type of group health plan. A group
health plan of such type may be discontinued by the health
plan issuer only if--
(A) the health plan issuer provides notice to each group
purchaser covered under a group health plan of this type (and
participants and beneficiaries covered under such group
health plan) of such discontinuation at least 90 days prior
to the date of the discontinuation of such plan;
(B) the health plan issuer offers to each group purchaser
covered under a group health plan of this type, the option to
purchase any other group health plan currently being offered
by the health plan issuer; and
(C) in exercising the option to discontinue a group health
plan of this type and in offering one or more replacement
plans, the
[[Page H3140]]
health plan issuer acts uniformly without regard to the
health status of participants or beneficiaries covered under
the group health plan, or new participants or beneficiaries
who may become eligible for coverage under the group health
plan.
(2) Discontinuance of all group health plans.--
(A) In general.--In any case in which a health plan issuer
elects to discontinue offering all group health plans in a
State, a group health plan may be discontinued by the health
plan issuer only if--
(i) the health plan issuer provides notice to the
applicable certifying authority (as defined in section
142(d)) and to each group purchaser (and participants and
beneficiaries covered under such group health plan) of such
discontinuation at least 180 days prior to the date of the
expiration of such plan, and
(ii) all group health plans issued or delivered for
issuance in the State or discontinued and coverage under such
plans is not renewed.
(B) Application of provisions.--The provisions of this
paragraph and paragraph (3) may be applied separately by a
health plan issuer--
(i) to all group health plans offered to small employers
(as defined under applicable State law, or if not so defined,
an employer with not more than 50 employees); or
(ii) to all other group health plans offered by the health
plan issuer in the State.
(3) Prohibition on market reentry.--In the case of a
discontinuation under paragraph (2), the health plan issuer
may not provide for the issuance of any group health plan in
the market sector (as described in paragraph (2)(B)) in which
issuance of such group health plan was discontinued in the
State involved during the 5-year period beginning on the date
of the discontinuation of the last group health plan not so
renewed.
(c) Treatment of Network Plans.--
(1) Geographic limitations.--A network plan (as defined in
paragraph (2)) may deny continued participation under such
plan to participants or beneficiaries who neither live,
reside, nor work in an area in which such network plan is
offered, but only if such denial is applied uniformly,
without regard to health status of particular participants or
beneficiaries.
(2) Network plan.--As used in paragraph (1), the term
``network plan'' means an employee health benefit plan or a
group health plan that arranges for the financing and
delivery of health care services to participants or
beneficiaries covered under such plan, in whole or in part,
through arrangements with providers.
(d) COBRA Coverage.--Nothing in subsection (a)(2)(E) or
subsection (c) shall be construed to affect any right to
COBRA continuation coverage as described in part 6 of
subtitle B of title I of the employee Retirement Income
Security Act of 1974 (29 U.S.C. 1161 et seq.).
SEC. 103. PORTABILITY OF HEALTH COVERAGE AND LIMITATION ON
PREEXISTING CONDITION EXCLUSIONS.
(a) In General.--An employee health benefit plan or a
health plan issuer offering a group health plan may impose a
limitation or exclusion of benefits relating to treatment of
a preexisting condition based on the fact that the condition
existed prior to the coverage of the participant or
beneficiary under the plan only if--
(1) the limitation or exclusion extends for a period of not
more than 12 months after the date of enrollment in the plan;
(2) the limitation or exclusion does not apply to an
individual who, within 30 days of the date of birth or
placement for adoption (as determined under section
609(c)(3)(B) of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1169(c)(3)(B)), was covered under the
plan; and
(3) the limitation or exclusion does not apply to a
pregnancy.
(b) Crediting of Previous Qualifying Coverage.--
(1) In general.--Subject to paragraph (4), an employee
health benefit plan or a health plan issuer offering a group
health plan shall provide that if a participant or
beneficiary is in a period of previous qualifying coverage as
of the date of enrollment under such plan, any period of
exclusion or limitation of coverage with respect to a
preexisting condition shall be reduced by 1 month for each
month in which the participant or beneficiary was in the
period of previous qualifying coverage. With respect to an
individual described in subsection (a)(2) who maintains
continuous coverage, no limitation or exclusion of benefits
relating to treatment of a preexisting condition may be
applied to a child within the child's first 12 months of life
or within 12 months after the placement of a child for
adoption.
(2) Discharge of duty.--An employee health benefit plan
shall provide documentation of coverage to participants and
beneficiaries who coverage is terminated under the plan.
Pursuant to regulations promulgated by the Secretary, the
duty of an employee health benefit plan to verify previous
qualifying coverage with respect to a participant or
beneficiary is effectively discharged when such employee
health benefit plan provides documentation to a participant
or beneficiary that includes the following information:
(A) the dates that the participant or beneficiary was
covered under the plan; and
(B) the benefits and cost-sharing arrangement available to
the participant or beneficiary under such plan.
An employee health benefit plan shall retain the
documentation provided to a participant or beneficiary under
subparagraphs (A) and (B) for at least the 12-month period
following the date on which the participant or beneficiary
ceases to be covered under the plan. Upon request, an
employee health benefit plan shall provide a second copy of
such documentation or such participant or beneficiary within
the 12-month period following the date of such ineligibility.
(3) Definitions.--As used in this section:
(A) Previous qualifying coverage.--The term ``previous
qualifying coverage'' means the period beginning on the
date--
(i) a participant or beneficiary is enrolled under an
employee health benefit plan or a group health plan, and
ending on the date the participant or beneficiary is not so
enrolled; or
(ii) an individual is enrolled under an individual health
plan (as defined in section 113) or under a public or private
health plan established under Federal or State law, and
ending on the date the individual is not so enrolled;
for a continuous period of more than 30 days (without regard
to any waiting period).
(B) Limitation or exclusion of benefits relating to
treatment of a preexisting condition.--The term ``limitation
or exclusion of benefits relating to treatment of a
preexisting condition'' means a limitation or exclusion of
benefits imposed on an individual based on a preexisting
condition of such individual.
(4) Effect of previous coverage.--An employee health
benefit plan or a health plan issuer offering a group health
plan may impose a limitation or exclusion of benefits
relating to the treatment of a preexisting condition, subject
to the limits in subsection (a)(1), only to the extent that
such service or benefit was not previously covered under the
group health plan, employee health benefit plan, or
individual health plan in which the participant or
beneficiary was enrolled immediately prior to enrollment in
the plan involved.
(c) Late Enrollees.--Except as provided in section 104,
with respect to a participant or beneficiary enrolling in an
employee health benefit plan or group health plan during a
time that is other than the first opportunity to enroll
during an enrollment period of at least 30 days, coverage
with respect to benefits or services relating to the
treatment of a preexisting condition in accordance with
subsection (a) and (b) may be excluded except the period of
such exclusion may not exceed 18 months beginning on the date
of coverage under the plan.
(d) Affiliation Periods.--With respect to a participant or
beneficiary who would otherwise be eligible to receive
benefits under an employee health benefit plan or a group
health plan but for the operation of a preexisting condition
limitation or exclusion, if such plan does not utilize a
limitation or exclusion of benefits relating to the treatment
of a preexisting condition, such plan may impose an
affiliation period on such participant or beneficiary not to
exceed 60 days (or in the case of a late participant or
beneficiary described in subsection (c), 90 days) from the
date on which the participant or beneficiary would otherwise
be eligible to receive benefits under the plan. An employee
health benefit plan or a health plan issuer offering a group
health plan may also use alternative methods to address
adverse section as approved by the applicable certifying
authority (as defined in section 142(d)). During such an
affiliation period, the plan may not be required to provide
health care services or benefits and no premium shall be
charged to the participant or beneficiary.
(e) Preexisting Conditions.--For purposes of this section,
the term ``preexisting condition'' means a condition,
regardless of the cause of the condition, for which medical
advice, diagnosis, care, or treatment was recommended or
received within the 6-month period ending on the day before
the effective date of the coverage (without regard to any
waiting period).
(f) State Flexibility.--Nothing in this section shall be
construed to preempt State laws that--
(1) require health plan issuers to impose a limitation or
exclusion of benefits relating to the treatment of a
preexisting condition for periods that are shorter than those
provided for under this section; or
(2) allow individuals, participants, and beneficiaries to
be considered to be in a period of previous qualifying
coverage if such individual, participant, or beneficiary
experiences a lapse in coverage that is greater than the 30-
day period provided for under subsection (b)(3);
unless such laws are preempted by section 514 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1144).
SEC. 104. SPECIAL ENROLLMENT PERIODS.
In the case of a participant, beneficiary or family member
who--
(1) through marriage, separation, divorce, death, birth or
placement of a child for adoption, experiences a change in
family composition affecting eligibility under a group health
plan, individual health plan, or employee health benefit
plan;
(2) experiences a change in employment status, as described
in section 603(2) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1163(2)), that causes the loss of
eligibility for coverage, other than COBRA continuation
coverage under a group health plan, individual health plan,
or employee health benefit plan; or
[[Page H3141]]
(3) experiences a loss of eligibility under a group health
plan, individual health plan, or employee health benefit plan
because of a change in the employment status of a family
member;
each employee health benefit plan and each group health plan
shall provide for a special enrollment period extending for a
reasonable time after such event that would permit the
participant to change the individual or family basis of
coverage or to enroll in the plan if coverage would have been
available to such individual, participant, or beneficiary but
for failure to enroll during a previous enrollment period.
Such a special enrollment period shall ensure that a child
born or placed for adoption shall be deemed to be covered
under the plan as of the date of such birth or placement for
adoption if such child is enrolled within 30 days of the date
of such birth or placement for adoption.
SEC. 105. DISCLOSURE OF INFORMATION.
(a) Disclosure of Information by Health Plan Issuer.--
(1) In general.--In connection with the offering of any
group health plan to a small employer (as defined under
applicable State law, or if not so defined, an employer with
not more than 50 employees), a health plan issuer shall make
a reasonable disclosure to such employer, as part of its
solicitation and sales materials, of--
(A) the provisions of such group health plan concerning the
health plan issuer's right to change premium rates and the
factors that may affect changes in premium rates.
(B) the provisions of such group health plan relating to
renewability of coverage;
(C) the provisions of such group health plan relating to
any preexisting condition provision; and
(D) descriptive information about the benefits and premiums
available under all group health plans for which the employer
is qualified.
Information shall be provided to small employers under this
paragraph in a manner determined to be understandable by the
average small employer, and shall be sufficiently accurate
and comprehensive to reasonably inform small employers,
participants and beneficiaries of their rights and
obligations under the group health plan.
(2) Exception.--With respect to the requirement of
paragraph (1), any information that is proprietary and trade
secret information under applicable law shall not be subject
to the disclosure requirements of such paragraph.
(3) Construction.--Nothing in this subsection shall be
construed to preempt State reporting and disclosure
requirements to the extent that such requirements are not
preempted under section 514 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1144).
(b) Disclosure of Information to Participants and
Beneficiaries.--
(1) In general.--Section 104(b)(1) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1024(b)(1))
is amended in the matter following subparagraph (B)--
(A) by striking ``102(a)(1),'' and inserting ``102(a)(1)
that is not a material reduction in covered services or
benefits provided,''; and
(B) by adding at the end thereof the following new
sentences: ``If there is a modification or change described
in section 102(a)(1) that is a material reduction in covered
services or benefits provided, a summary description of such
modification or change shall be furnished to participants not
later than 60 days after the date of the adoption of the
modification or change. In the alternative, the plan sponsors
may provide such description at regular intervals of not more
than 90 days. The Secretary shall issue regulations within
180 days after the date of enactment of the Health Insurance
Reform Act of 1996, providing alternative mechanisms to
delivery by mail through which employee health benefit plans
may notify participants of material reductions in covered
services or benefits.''.
(2) Plan description and summary.--Section 102(b) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1022(b)) is amended--
(A) by inserting ``including the office or title of the
individual who is responsible for approving or denying claims
for coverage of benefits'' after ``type of administration of
the plan'';
(B) by inserting ``including the name of the organization
responsible for financing claims'' after ``source of
financing of the plan''; and
(C) by inserting ``including the office, contact, or title
of the individual at the Department of Labor through which
participants may seek assistance or information regarding
their rights under this Act and title I of the Health
Insurance Reform Act of 1996 with respect to health benefits
that are not offered through a group health plan.'' after
``benefits under the plan''.
Subtitle B--Individual Market Rules
SEC. 110. INDIVIDUAL HEALTH PLAN PORTABILITY.
(a) Limitation on Requirements.--
(1) In general.--Except as provided in subsections (b) and
(c), a health plan issuer described in paragraph (3) may not,
with respect to an eligible individual (as defined in
subsection (b)) desiring to enroll in an individual health
plan--
(A) decline to offer coverage to such individual, or deny
enrollment to such individual based on the health status of
the individual; or
(B) impose a limitation or exclusion of benefits otherwise
covered under the plan for the individual based on a
preexisting condition unless such limitation or exclusion
could have been imposed if the individual remained covered
under a group health plan or employee health benefit plan
(including providing credit for previous coverage in the
manner provided under subtitle A).
(2) Health promotion and disease prevention.--Nothing in
this subsection shall be construed to prevent a health plan
issuer offering an individual health plan from establishing
premium discounts or modifying otherwise applicable
copayments or deductibles in return for adherence to programs
of health promotion or disease prevention.
(3) Health plan issuer.--A health plan issuer described in
this paragraph in a health plan issuer that issues or renews
individual health plans.
(4) Premiums.--Nothing in this subsection shall be
construed to affect the determination of a health plan issuer
as to the amount of the premium payable under an individual
health plan under applicable State law.
(b) Definition of Eligible Individual.--As used in
subsection (a)(1), the term ``eligible individual'' means an
individual who--
(1) was a participant or beneficiary enrolled under one or
more group health plans, employee health benefit plans, or
public plans established under Federal or State law, for not
less than 18 months (without a lapse in coverage of more than
30 consecutive days) immediately prior to the date on which
the individual desired to enroll in the individual health
plan.
(2) is not eligible for coverage under a group health plan
or an employee health benefit plan;
(3) has not had coverage terminated under a group health
plan or employee health benefit plan for failure to make
required premium payments or contributions, or for fraud or
misrepresentation of material fact; and
(4) has, if applicable, accepted and exhausted the maximum
required period of continuous coverage as described in
section 602(2)(A) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1162(2)(A)) or under an equivalent
State program.
(c) Applicable of Capacity Limit.--
(1) In general.--Subject to paragraph (2), a health plan
issuer offering coverage to individuals under an individual
health plan may cease enrolling individuals under the plan
if--
(A) the health plan issuer ceases to enroll any new
individuals; and
(B) the health plan issuer can demonstrate to the
applicable certifying authority (as defined in section
142(d)), if required, that its financial or provider capacity
to serve previously covered individuals will be impaired if
the health plan issuer is required to enroll additional
individuals.
Such a health plan issuer shall be prohibited from offering
coverage after a cessation in offering coverage under this
paragraph for a 6-month period or until the health plan
issuer can demonstrate to the applicable certifying authority
(as defined in section 142(d)) that the health plan issuer
has adequate capacity, whichever is later.
(2) First-come-first-served.--A health plan issuer offering
coverage to individuals under an individual health plan is
only eligible to exercise the limitations provided for in
paragraph (1) if the health plan issuer provides for
enrollment of individuals under such plan on a first-come-
first-served basis or other basis established by a State to
ensure a fair opportunity to enroll in the plan and avoid
risk selection.
(d) Market Requirement.--
(1) In general.--The provisions of subsection (a) shall not
be construed to require that a health plan issuer offering
group health plans to group purchasers offer individual
health plans to individuals.
(2) Conversion policies.--A health plan issuer offering
group health plans to group purchasers under this title shall
not be deemed to be a health plan issuer offering an
individual health plan solely because such health plan issuer
offers a conversion policy.
(3) Marketing of plans.--Nothing in this section shall be
construed to prevent a State from requiring health plan
issuers offering coverage to individuals under an individual
health plan to actively market such plan.
SEC. 111. GUARANTEED RENEWABILITY OF INDIVIDUAL HEALTH
COVERAGE.
(a) In General.--Subject to subsections (b) and (c),
coverage for individuals under an individual health plan
shall be renewed or continued in force by a health plan
issuer at the option of the individual, except that the
requirement of this subsection shall not apply in the case
of--
(1) the nonpayment of premiums or contributions by the
individual in accordance with the terms of the individual
health plan or where the health plan issuer has not received
timely premium payments;
(2) fraud or misrepresentation of material fact on the part
of the individual; or
(3) the termination of the individual health plan in
accordance with subsection (b).
(b) Termination of Individual Health Plans.--
(1) Particular type of individual health plan not
offered.--In any case in which a health plan issuer decides
to discontinue offering a particular type of individual
health plan to individuals, an individual health plan may be
discontinued by the health plan issuer only if--
[[Page H3142]]
(A) the health plan issuer provides notice to each
individual covered under the plan of such discontinuation at
least 90 days prior to the date of the expiration of the
plan.
(B) the health plan issuer offers to each individual
covered under the plan the option to purchase any other
individual health plan currently being offered by the health
plan issuer to individuals; and
(C) in exercising the option to discontinue the individual
health plan and in offering one or more replacement plans,
the health plan issuer acts uniformly without regard to the
health status of particular individuals.
(21) Discontinuance of all individual health plans.--In any
case in which a health plan issuer elects to discontinue all
individual health plans in a State, an individual health plan
may be discontinued by the health plan issuer only if--
(A) the health plan issuer provides notice to the
applicable certifying authority (as defined in section
142(d)) and to each individual covered under the plan of such
discontinuation at least 180 days prior to the date of the
discontinuation of the plan; and
(B) all individual health plans issued or delivered for
issuance in the State are discontinued and coverage under
such plans is not renewed.
(3) Prohibition on market reentry.--In the case of a
discontinuation under paragraph (2), the health plan issuer
may not provide for the issuance of any individual health
plan in the State involved during the 5-year period beginning
on the date of the discontinuation of the last plan not so
renewed.
(c) Treatment of Network Plans.--
(1) Geographic limitations.--A health plan issuer which
offers a network plan (as defined in paragraph (2)) may deny
continued participation under the plan to individuals who
neither live, reside, nor work in an area in which the
individual health plan is offered, but only if such denial is
applied uniformly, without regard to health status of
particular individuals.
(2) Network play.--As used in paragraph (1), the term
``network plan'' means an individual health plan that
arranges for the financing and delivery of health care
services to individuals covered under such health plan, in
whole or in part, through arrangements with providers.
SEC. 112. STATE FLEXIBILITY IN INDIVIDUAL MARKET REFORMS.
(a) In General.--With respect to any State law with respect
to which the Governor of the State notifies the Secretary of
Health and Human Services that such State law will achieve
the goals of sections 110 and 111, and that is in effect on,
or enacted after, the date of enactment of this Act (such as
laws providing for guaranteed issue, open enrollment by one
or more health plan issuers, high-risk pools, or mandatory
conversion policies), such State law shall apply in lieu of
the standards described in sections 110 and 111 unless the
Secretary of Health and Human Services determines, after
considering the criteria described in subsection (b)(1), in
consultation with the Governor and Insurance Commissioner or
chief insurance regulatory official of the State, that such
State law does not achieve the goals of providing access to
affordable health care coverage for those individuals
described in sections 110 and 111.
(b) Determination.--
(1) In general.--In making a determination under subsection
(a), the Secretary of Health and Human Services shall only--
(A) evaluate whether the State law or program provides
guaranteed access to affordable coverage to individuals
described in sections 110 and 111;
(B) evaluate whether the State law or program provides
coverage for preexisting conditions (as defined in section
103(e)) that were covered under the individuals' previous
group health plan or employee health benefit plan for
individuals described in sections 110 and 111.
(C) evaluate whether the State law or program provides
individuals described in sections 110 and 111 with a choice
of health plans or a health plan providing comprehensive
coverage, and
(D) evaluate whether the application of the standards
described in sections 110 and 111 will have an adverse impact
on the number of individuals in such State having access to
affordable coverage.
(2) Notice of intent.--If, within 6 months after the date
of enactment of this Act, the Governor of a State notifies
the Secretary of Health and Human Services that the State
intends to enact a law, or modify an existing law, described
in subsection (a), the Secretary of Health and Human Services
may not make a determination under such subsection until the
expiration of the 12-month period beginning on the date on
which such notification is made, or until January 1, 1998,
whichever is later. With respect to a State that provides
notice under this paragraph and that has a legislature that
does not meet within the 12-month period beginning on the
date of enactment of this Act, the Secretary shall not make a
determination under subsection (a) prior to January 1, 1998.
(3) Notice to state.--If the Secretary of Health and Human
Services determines that a State law or program does not
achieve the goals described in subsection (a), the Secretary
of Health and Human Services shall provide the State with
adequate notice and reasonable opportunity to modify such law
or program to achieve such goals prior to making a final
determination under subsection (a).
(c) Adoption of NAIC Model.--If, not later than 9 months
after the date of enactment of this Act--
(1) the National Association of Insurance Commissioners
(hereafter referred to as the ``NAIC''), through a process
which the Secretary of Health and Human Services determines
has included consultation with representatives of the
insurance industry and consumer groups, adopts a model
standard or standards for reform of the individual health
insurance market, and
(2) the Secretary of Health and Human Services determines,
within 30 days of the adoption of such NAIC standard or
standards, that such standards comply with the goals of
sections 110 and 111:
a State that elects to adopt such model standards or
substantially adopt such model standards shall be deemed to
have met the requirements of sections 110 and 111 and shall
be subject to a determination under subsection (a).
SEC. 113. DEFINITION.
(a) In General.--As used this title, the term ``individual
health plan'' means any contract, policy, certificate or
other arrangement offered to individuals by a health plan
issuer that provides or pays for health benefits (such as
provider and hospital benefits) and that is not a group
health plan under section 2(6).
(b) Arrangements Not Included.--Such term does not include
the following, or any combination thereof:
(1) Coverage only for accident, or disability income
insurance, or any combination thereof.
(2) Medicare supplemental health insurance (as defined
under section 1882(g)(1) of the Social Security Act).
(3) Coverage issued as a supplement to liability insurance.
(4) Liability insurance, including general liability
insurance and automobile liability insurance.
(5) Workers' compensation or similar insurance.
(6) Automobile medical payment insurance.
(7) Coverage for a specified disease or illness.
(8) Hospital of fixed indemnity insurance.
(9) Short-term limited duration insurance.
(10) Credit-only, dental-only, or vision-only insurance.
(11) A health insurance policy providing benefits only for
long-term care, nursing home care, home health care,
community-based care, or any combination thereof.
Subtitle C--COBRA Clarifications
SEC. 121. COBRA CLARIFICATIONS.
(a) Public Health Service Act.--
(1) Period of coverage.--Section 2202(2) of the Public
Health Service Act (42 U.S.C. 300bb-2(2)) is amended--
(A) in subparagraph (A)--
(i) by transferring the sentence immediately preceding
clause (iv) so as to appear immediately following such clause
(iv); and
(ii) in the last sentence (as so transferred)--
(I) by inserting ``, or a beneficiary-family member of the
individual,'' after ``an individual''; and
(II) by striking ``at the time of a qualifying event
described in section 2203(2)'' and inserting ``at any time
during the initial 18-month period of continuing coverage
under this title'';
(B) in subparagraph (D)(i), by inserting before ``, or''
the following: ``, except that the exclusion or limitation
contained in this clause shall not be considered to apply to
a plan under which a preexisting condition or exclusion does
not apply to an individual otherwise eligible for
continuation coverage under this section because of the
provision of the Health Insurance Reform Act of 1996'', and
(C) in subparagraph (E), by striking ``at the time of a
qualifying event described in section 2203(2)'' and inserting
``at any time during the initial 18-month period of
continuing coverage under this title'',
(2) Election.--Section 2205(1)(C) of the Public Health
Service Act (42 U.S.C. 300bb-5(1)(C)) is amended--
(A) in clause (i), by striking ``or'' at the end thereof.
(B) in clause (ii), by striking the period and inserting
``, or'', and
(C) by adding at the end thereof the following new clause:
``(iii) in the case of an individual described in the last
sentence of section 2202(2)(A), or a beneficiary-family
member of the individual, the date such individual is
determined to have been disabled.''.
(3) Notices.--Section 2206(3) of the Public Health Service
Act (42 U.S.C. 300bb-6(3)) is amended by striking ``at the
time of a qualifying event described in section 2203(2)'' and
inserting ``at any time during the initial 18-month period of
continuing coverage under this title''.
(4) Birth or adoption of a child.--Section 2208(3)(A) of
the Public Health Service Act (42 U.S.C. 300bb-8(3)(A)) is
amended by adding at the end thereof the following new flush
sentence:
``Such term shall also include a child who is born to or
placed for adoption with the covered employee during the
period of continued coverage under this title.''.
(b) Employee Retirement Income Security Act of 1974.--
(1) Period of coverage.--Section 602(2) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1162(2)) is
amended--
(A) in the last sentence of subparagraph (A)--
(i) by inserting ``, or a beneficiary-family member of the
individual.'' after ``an individual''; and
[[Page H3143]]
(ii) by striking ``at the time of a qualifying event
described in section 603(2)'' and inserting ``at any time
during the initial 18-month period of continuing coverage
under this part'',
(B) in subparagraph (D)(i), by inserting before, ``, or''
the following ``, except that the exclusion or limitation
contained in this clause shall not be considered to apply to
a plan under which a preexisting condition or exclusion does
not apply to an individual otherwise eligible for
continuation coverage under this section because of the
provision of the Health Insurance Reform Act of 1996''; and
(C) in subparagraph (E), by striking ``at the time of a
qualifying event described in section 603(2)'' and inserting
``at any time during the initial 18-month period of
continuing coverage under this part''.
(2) Election.--Section 605(1)(C) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1165(1)(C)) is
amended--
(A) in clause (i), by striking ``or'' at the end thereof;
(B) in clause (ii), by striking the period and inserting
``, or''; and
(C) by adding at the end thereof the following new clause:
``(iii) in the case of an individual described in the last
sentence of section 602(2)(A), or a beneficiary-family member
of the individual, the date such individual is determined to
have been disabled.''.
(3) Notices.--Section 606(3) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1166(3)) is amended by
striking ``at the time of a qualifying event described in
section 603(2)'' and inserting ``at any time during the
initial 18-month period of continuing coverage under this
part''.
(4) Birth or adoption of a child.--Section 607(3)(A) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1167(3)) is amended by adding at the end thereof the
following new flush sentence:
``Such term shall also include a child who is born to or
placed for adoption with the covered employee during the
period of continued coverage under this part.''.
(c) Internal Revenue Code of 1986.--
(1) Period of coverage.--Section 4980B(f)(2)(B) of the
Internal Revenue Code of 1986 is amended--
(A) in the last sentence of clause (i) by striking ``at the
time of a qualifying event described in paragraph (3)(B)''
and inserting ``at any time during the initial 18-month
period of continuing coverage under this section''.
(B) in clause (iv)(I), by inserting before ``, or'' the
following: ``, except that the exclusion or limitation
contained in this subclause shall not be considered to apply
to a plan under which a preexisting condition or exclusion
does not apply to an individual otherwise eligible for
continuation coverage under this subsection because of the
provision of the Health Insurance Reform Act of 1996''; and
(C) in clause (v), by striking ``at the time of a
qualifying event described in paragraph (3)(B)'' and
inserting ``at any time during the initial 18-month period of
continuing coverage under this section''.
(2) Election.--Section 4980B(f)(5)(A)(ii) of the Internal
Revenue Code of 1986 is amended--
(A) in subclause (I), by striking ``or'' at the end
thereof;
(B) in subclause (II), by striking the period and inserting
``, or'', and
(C) by adding at the end thereof the following new
subclause:
``(III) in the case of an qualified beneficiary described
in the last sentence of paragraph (2)(B)(i), the date such
individual is determined to have been disabled.''.
(3) Notices.--Section 4980B(f)(6)(C) of the Internal
Revenue Code of 1986 is amended by striking ``at the time of
a qualifying event described in paragraph (3)(B)'' and
inserting ``at any time during the initial 18-month period of
continuing coverage under this section''.
(4) Birth or adoption of a child.--Section 4980B(g)(1)(A)
of the Internal Revenue Code of 1986 is amended by adding at
the end thereof the following new flush sentence:
``Such term shall also include a child who is born to or
placed for adoption with the covered employee during the
period of continued coverage under this section.''.
(d) Effective Date.--The amendments made by this section
shall apply to qualifying events occurring on or after the
date of enactment of this Act for plan years beginning after
December 31, 1997.
(e) Notification of Changes.--Not later than 60 days prior
to the date on which this section becomes effective, each
group health plan (covered under title XXII of the Public
Health Service Act, part 6 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974, and section
4980B(f) of the Internal Revenue Code of 1986) shall notify
each qualified beneficiary who has elected continuation
coverage under such title, part or section of the amendments
made by this section.
Subtitle D--Private Health Plan Purchasing Cooperatives
SEC. 131. PRIVATE HEALTH PLAN PURCHASING COOPERATIVES.
(a) Definition.--As used in this title, the term ``health
plan purchasing cooperative'' means a group of individuals or
employers that, on a voluntary basis and in accordance with
this section, form a cooperative for the purpose of
purchasing individual health plans or group health plans
offered by health plan issuers. A health plan issuer, agent,
broker or any other individual or entity engaged in the sale
of insurance may not underwrite a cooperative.
(b) Certification.--
(1) In general.--If a group described in subsection (a)
desires to form a health plan purchasing cooperative in
accordance with this section and such group appropriately
notifies the State and the Secretary of such desire, the
State, upon a determination that such group meets the
requirements of this section, shall certify the group as a
health plan purchasing cooperative. The State shall make a
determination of whether such group meets the requirements of
this section in a timely fashion. Each such cooperative shall
also be registered with the Secretary.
(2) State refusal to certify.--If a State fails to
implement a program for certifying health plan purchasing
cooperatives in accordance with the standards under this
title, the Secretary shall certify and oversee the operations
of such cooperative in such State.
(3) Interstate cooperatives.--For purposes of this section
a health plan purchasing cooperative operating in more than
one State shall be certified by the State in which the
cooperative is domiciled. States may enter into cooperative
agreements for the purpose of certifying and overseeing the
operation of such cooperatives. For purposes of this
subsection, a cooperative shall be considered to be domiciled
in the State in which most of the members of the cooperative
reside.
(c) Board of Directors.--
(1) In general.--Each health plan purchasing cooperative
shall be governed by a Board of Directors that shall be
responsible for ensuring the performance of the duties of the
cooperative under this section. The Board shall be composed
of a board cross-section of representatives of employers,
employees, and individuals participating in the cooperative.
A health plan issuer, agent, broker or any other individual
or entity engaged in the sale of individual health plans or
group health plans may not hold or control any right to vote
with respect to a cooperative.
(2) Limitation on compensation.--A health plan purchasing
cooperative may not provide compensation to members of the
Board of Directors. The cooperative may provide
reimbursements to such members for the reasonable and
necessary expenses incurred by the members in the performance
of their duties as members of the Board.
(3) Conflict of interest.--No member of the Board of
Directors (or family members of such members) nor any
management personnel of the cooperative may be employed by,
be a consultant of, be a member of the board of directors or,
be affiliated with an agent of, or otherwise be a
representative of any health plan issuer, health care
provider, or agent or broker. Nothing in the preceding
sentence shall limit a member of the Board from purchasing
coverage offered through the cooperative.
(d) Membership and Marketing Area.--
(1) Membership.--A health plan purchasing cooperative may
establish limits on the maximum size of employers who may
become members of the cooperative, and may determine whether
to permit individuals to become members. Upon the
establishment of such membership requirements, the
cooperative shall, except as provided in subparagraph (B),
accept all employers (or individuals) residing within the
area served by the cooperative who meet such requirements as
members on a first-come, first-served basis, or on another
basis established by the State to ensure equitable access to
the cooperative.
(2) Marketing area.--A State may establish rules regarding
the geographic area that must be served by a health plan
purchasing cooperative. With respect to a State that has not
established such rules, a health plan purchasing cooperative
operating in the State shall define the boundaries of the
area to be served by the cooperative, except that such
boundaries may not be established on the basis of health
status of the populations that reside in the area.
(e) Duties and Responsibilities.--
(1) In general.--A health plan purchasing cooperative
shall--
(A) enter into agreements with multiple, unaffiliated
health plan issuers, except that the requirement of this
subparagraph shall not apply in regions (such as remote or
frontier areas) in which compliance with such requirement is
not possible.
(B) enter into agreements with employers and individuals
who become members of the cooperative;
(C) participate in any program of risk-adjustment or
reinsurance, or any similar program, that is established by
the State.
(D) prepare and disseminate comparative health plan
materials (including information about cost, quality,
benefits, and other information concerning group health plans
and individual health plans offered through the cooperative);
(E) actively market to all eligible employers and
individuals residing within the service area; and
(F) act as an ombudsman for group health plan or individual
health plan enrollees.
(2) Permissible activities.--A health plan purchasing
cooperative may perform such other functions as necessary to
further the purposes of this title, including--
(A) collecting and distributing premiums and performing
other administrative functions;
(B) collecting and analyzing surveys of enrollee
satisfaction;
[[Page H3144]]
(C) charging membership fee to enrollees (such fees may not
be based on health status) and charging participation fees to
health plan issuers;
(D) cooperating with (or accepting as members) employers
who provide health benefits directly to participants and
beneficiaries only for the purpose of negotiating with
providers, and
(E) negotiating with health care providers and health plan
issuers.
(f) Limitations on Cooperative Activities.--A health plan
purchasing cooperative shall not--
(1) perform any activity relating to the licensing of
health plan issuers.
(2) assume financial risk directly or indirectly on behalf
of members of a health plan purchasing cooperative relating
to any group health plan or individual health plan;
(3) establish eligibility, continuation of eligibility,
enrollment, or premium contribution requirements for
participants, beneficiaries, or individuals based on health
status;
(4) operate on a for-profit or other basis where the legal
structure of the cooperative permits profits to be made and
not returned to the members of the cooperative, except that a
for-profit health plan purchasing cooperative may be formed
by a nonprofit organization--
(A) in which membership in such organization is not based
on health status; and
(B) that accepts as members all employers or individuals on
a first-come, first-served basis, subject to any established
limit on the maximum size of and employer that may become a
member; or
(5) perform any other activities that conflict or are
inconsistent with the performance of its duties under this
title.
(g) Limited Preemptions of Certain State Laws.--
(1) In general.--With respect to a health plan purchasing
cooperative that meets the requirements of this section,
State fictitious group laws shall be preempted.
(2) Health plan issuers.--
(A) Rating.--With respect to a health plan issuer offering
a group health plan or individual health plan through a
health plan purchasing cooperative that meets the
requirements of this section. State premium rating
requirement laws, except to the extent provided under
subparagraph (B), shall be preempted unless such laws permit
premium rates negotiated by the cooperative to be less than
rates that would otherwise be permitted under State law, if
such rating differential is not based on differences in
health status or demographic factors.
(B) Exception.--State laws referred to in subparagraph (A)
shall not be preempted if such laws--
(i) prohibit the variance of premium rates among employers,
plan sponsors, or individuals that are members of health plan
purchasing cooperative in excess of the amount of such
variations that would be permitted under such State rating
laws among employers, plan sponsors, and individuals that are
not members of the cooperative; and
(ii) prohibit a percentage increase in premium rates for a
new rating period that is in excess of that which would be
permitted under State rating laws.
(C) Benefits.--Except as provided in subparagraph (D), a
health plan issuer offering a group health plan or individual
health plan through a health plan purchasing cooperative
shall comply with all State mandated benefit laws that
require the offering of any services, category or care, or
services of any class or type of provider.
(D) Exception.--In those states that have enacted laws
authorizing the issuance of alternative benefit plans to
small employers, health plan issuers may offer such
alternative benefit plans through a health plan purchasing
cooperative that meets the requirements of this section.
(h) Rules of Construction.--Nothing in this section shall
be construed to--
(1) require that a State organize, operate, or otherwise
create health plan purchasing cooperatives;
(2) otherwise require the establishment of health plan
purchasing cooperatives.
(3) require individuals, plan sponsors, or employers to
purchase group health plans or individual health plans
through a health plan purchasing cooperative;
(4) require that a health plan purchasing cooperative be
the only type of purchasing arrangement permitted to operate
in a State.
(5) confer authority upon a State that the State would not
otherwise have to regulate health plan issuers or employee
health benefits plans, or
(6) confer authority up a State (or the Federal Government)
that the State (or Federal Government) would not otherwise
have to regulate group purchasing arrangements, coalitions,
or other similar entities that do not desire to become a
health plan purchasing cooperative in accordance with this
section.
(i) Application of ERISA.--For purposes of enforcement
only, the requirements of parts 4 and 5 of subtitle B of
title I of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1101) shall apply to a health pan purchasing
cooperative as if such plan were an employee welfare benefit
plan.
Subtitle E--Application and Enforcement of Standards
SEC. 141. APPLICABILITY.
(a) Construction.--
(1) Enforcement.--
(A) In general.--A requirement or standard imposed under
this title on a group health plan or individual health plan
offered by a health plan issuer shall be deemed to be a
requirement or standard imposed on the health plan issuer.
Such requirements or standards shall be enforced by the State
insurance commissioner for the State involved or the official
or officials designated by the State to enforce the
requirements of this title. In the case of a group health
plan offered by a health plan issuer in connection with an
employee health benefit plan, the requirements of standards
imposed under the title shall be enforced with respect to the
health plan issuer by the State insurance commissioner for
the State involved or the official of officials designated by
the State to enforce the requirements of this title.
(B) Limitation.--Except as provided in subsection (c), the
Secretary shall not enforce the requirements or standards of
this title as they relate to health plan issuers, group
health plans, or individual health plans. In no case shall a
Sate enforce the requirements or standards of this title as
they relate to employee health benefit plans.
(2) Preemption of state law.--Nothing in this title shall
be construed to prevent a State from establishing,
implementing, or continuing in effect standards and
requirements--
(A) not prescribed in this title; or
(B) related to the issuance, renewal, or portability of
health insurance or the establishment or operation of group
purchasing arrangements, that are consistent with, and are
not in direct conflict with, this title and provide greater
protection or benefit to participants, beneficiaries or
individuals.
(b) Rule of Construction.--Nothing in this title shall be
construed to affect or modify the provisions of section 514
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1144).
(c) Continuation.--Nothing in this title shall be construed
as requiring a group health plan or an employee health
benefit plan to provide benefits to a particular participant
or beneficiary in excess of those provided under the terms of
such plan.
SEC. 202. ENFORCEMENT OF STANDARDS.
(a) Health Plan Issuers.--Each State shall require that
each group health plan and individual health plan issued,
sold, renewed, offered for sale or operated in such State by
a health plan issuer meet the standards established under
this title pursuant to an enforcement plan filed by the State
with the Secretary. A State shall submit such information as
required by the Secretary demonstrating effective
implementation of the State enforcement law.
(b) Employee Health Benefit Plans.--With respect to
employee health benefit plans, the Secretary shall enforce
the reform standards established under this title in the same
manner as provided for under sections 502, 504, 506, and 510
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1132, 1134, 1136, and 1140). The civil penalties
contained in paragraphs (1) and (2) of section 502(c) of such
Act (29 U.S.C. 1132(c) (1) and (2)) shall apply to any
information required by the Secretary to be disclosed and
reported under this section.
(c) Failure to Implement Plan.--In the case of the failure
of a State to substantially enforce the standards and
requirements set forth in this title with respect to group
health plans and individual health plans as provided for
under the State enforcement plan filed under subsection (a),
the Secretary, in consultation with the Secretary of Health
and Human Services, shall implement an enforcement plan
meeting the standards of this title in such State. In the
case of a State that fails to substantially enforce the
standards and requirements set forth in this title, each
health plan issuer operating in such State shall be subject
to civil enforcement as provided for under sections 502, 504,
506, and 510 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1132, 1134, 1136, and 1140). The civil
penalties contained in paragraphs (1) and (2) of section
502(c) of such Act (29 U.S.C. 1132(c) (1) and (2)) shall
apply to any information required by the Secretary to be
disclosed and reported under this section.
(d) Applicable Certifying Authority.--As used in this
title, the term ``applicable certifying authority''means,
with respect to--
(1) health plan issuers, the State insurance commissioner
or official or officials designated by the State to enforce
the requirements of this title for the State involved; and
(2) an employee health benefit, plan, the Secretary.
(e) Regulations.--The Secretary may promulgate such
regulations as may be necessary or appropriate to carry out
this title.
(f) Technical Amendment.--Section 508 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1138) is
amended by inserting ``and under the Health Insurance Reform
Act of 1996'' before the period.
Subtitle F--Miscellaneous Provisions
SEC. 191. HEALTH COVERAGE AVAILABILITY STUDY.
(a) In General.--The Secretary of Health and Human
Services, in consultation with the Secretary, representatives
of State officials, consumers, and other representatives of
individuals and entities that have expertise in health
insurance and employee benefits, shall conclude a two-part
study, and prepare and submit reports, in accordance with
this section.
(b) Evaluation of Availability.--Not later than January 1,
1998, the Secretary of
[[Page H3145]]
Health and Human Services shall prepare and submit to the
appropriate committees of Congress a report, concerning--
(1) an evaluation, based on the experience of States,
expert opinions, and such additional data as may be
available, of the various mechanisms used to ensure the
availability of reasonably priced health coverage to
employers purchasing group coverage and to individuals
purchasing coverage on a non-group basis; and
(2) whether standards that limit the variation in premiums
will further the purposes of this Act.
(c) Evaluation of Effectiveness.--Not later than January 1,
1999, the Secretary of Health and Human Services shall
prepare and submit to the appropriate committees of Congress
a report, concerning the effectiveness of the provisions of
this Act and the various State laws, in ensuring the
availability of reasonably priced health coverage to
employers purchasing group coverage and individuals
purchasing coverage on a nongroup basis.
SEC. 192. EFFECTIVE DATE.
Except as otherwise provided for in this title, the
provisions of this title shall apply as follows:
(1) With respect to group health plans and individual
health plans, such provisions shall apply to plans offered,
sold, issued, renewed, in effect, or operated on or after
January 1, 1997, and
(2) With respect to employee health benefit plans, on the
first day of the first plan year beginning on or after
January 1, 1997.
SEC. 193. SEVERABILITY.
If any provision of this title or the application of such
provision to any person or circumstance is held to be
unconstitutional, the remainder of this title and the
application of the provisions of such to any person or
circumstance shall not be affected thereby.
Mr. ARCHER (during the reading). Mr. Speaker, I ask unanimous consent
that the motion to recommit be considered as read and printed in the
Record.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Texas?
There was no objection.
Mr. PALLONE. Mr. Speaker, I have offered this motion to recommit with
instructions with my colleague from Missouri [Ms. McCarthy] because I
am concerned that we are about to go down a perilous path of ending any
chances of health insurance reform. Our motion to recommit incorporates
the Kennedy-Kassebaum-Roukema provisions without any additons. It would
make it easier for workers who lose or change jobs to buy health
coverage. It would limit the length of time that insurers could refuse
to cover an applicant's preexisting medical problems.
Mr. Speaker, there are two distinct choices that we can make with
this next vote. This House can make the decision to support this motion
and do the right thing for the American people, or the House can vote
against this motion and tell the American people that it is more
important to keep promises with various special interests.
The Kennedy-Kassebaum-Roukema bill is crafted to keep premiums
affordable, because it would not impact the insurance risk pool by
encouraging healthy individuals to drop their coverage. It has
bipartisan support in both the Senate and the House of Representatives.
The President has indicated that he will support the Roukema bill. The
motion to recommit will ensure that this legislation is enacted into
law.
Mr. Speaker, why does the Republican leadership insist on messing up
this legislation with controversial poison pill amendments? One of the
provisions that the Republican leadership insists on including is the
medical savings accounts, which will favor the wealthy and healthy.
MSA's will be just another tax shelter for the rich. Americans who do
not choose to join the MSA's because of the high risks involved will
see their health insurance premiums increase. The MSA's, among other
extraneous provisions, will guarantee the failure of any health
insurance reform in this Congress. We all know this, Mr. Speaker. The
gentlewoman from New Jersey [Mrs. Roukema], who courageously took this
floor tonight, has said as much. So has her counterpart in the other
body, Senator Kassebaum. These women should not be vilified tonight.
Instead, they should be thanked for doing the right thing for the
American people.
Mr. Speaker, let us all do the right thing tonight. I urge a ``yes''
vote on the motion to recommit if Members want health insurance reform
this year.
Mr. Speaker, I yield to the gentlewoman from Missouri [Ms. McCarthy].
Ms. McCARTHY. Mr. Speaker, I join with the gentleman from New Jersey
in moving to recommit this bill to committee with instruction to report
the Roukema bill, H.R. 2893, for final passage. Kennedy-Kassebaum-
Roukema has supported from the White House, from the American public,
from the health care industry, and bipartisan support in the Senate. It
is legislation which can be signed into law tonight.
To recommit puts sound public policy above special interests. To
recommit assures American families of security by providing genuine
health care reform. In a Congress that touts fiscal responsibility, to
vote against this motion is fiscally irresponsible. I urge my
colleagues to vote ``yes'' on this motion, to stand for true reform, to
stand against special interests, to stand for the American people. Vote
``yes'' to recommit.
Mr. ARCHER. Mr. Speaker, I rise in opposition to the motion to
recommit.
I yield to the gentleman from California [Mr. Thomas], chairman of
the Subcommittee on Health of the Committee on Ways and Means.
Mr. THOMAS. Mr. Speaker, I really do not know who to direct my
remarks to, because apparently this motion to recommit is Dingell minus
the increase for the self-employed. Two of our colleagues on the other
side, the gentleman from North Dakota and the gentleman from Illinois
[Mr. Durbin], took the well and talked about how much better the
Democrat substitute was because it did better for the self-employed.
Now what we have here is Dingell lite.
Mr. Speaker, is it not interesting and, by the way how, cynical they
were more for the self-employed if it was honey to attract people to
the Democratic substitute, and so I guess I am addressing my remarks to
the 10 Republicans who went for the improvement of Kassebaum because of
the self-employed provision. That is out. It lasted 5 minutes. Show
your commitment, it did not draw enough, so it is gone. It is not there
because they believe in the self-employed and want to increase the
deductibility, it was there to attract people. Since it did not get
anybody, they pulled it out.
If you did not like Dingell, they will not like Dingell lite. Vote
``no'' on the motion to recommit.
Mr. ARCHER. Mr. Speaker, as I listen to this debate, I must say that
I am puzzled by the reluctance of some Democrats to support a bill that
will provide millions of Americans with increased access to health care
insurance at a more affordable price. What a strange turnaround from 2
years ago when my friends across the aisle stood up and fought for a
big government takeover of our nation's health care system. Here is a
description of that plan that they offered and that they supported 2
years ago.
But tonight, they claim ours is too far-reaching, it should be shaved
back. The same people who presented this to us in 1994. It is broken,
they said. Health care is in crisis. We must fix it. The President and
Hillary Clinton know just how to get that done. Well, the big
government Democrat prescription for our Nation's health care ills was
rejected by the American people and properly so.
Mr. Speaker, America has the best health care system in the world, no
thanks to government, but thanks to our Nation's great private sector.
The answer does not lie in a big-government takeover of health care.
Rather, the way to provide the American people with health care that is
more available and affordable is through a targeted measure that relies
on the strength of the private sector, not the government, and that is
what this bill does.
It is a strong bill, a solid bill, a bill that will bring help to
millions of needy Americans, and it does it by relying on the private
sector, not the Government. It is exactly the right dose of medicine to
cure our health care ills. So why do some, thankfully not all, but some
Democrats oppose it?
Mr. Speaker, I conclude the reason the Democrat leadership opposes
this bill is because their big-government version of health care reform
failed and they do not want to see the Republicans move forward with
one that will succeed. They know that the American people support each
and every one of the targeted reforms that we have proposed, but the
Democrat leadership and their trial lawyer friends have rejected
[[Page H3146]]
a bipartisan approach to health care reform and instead offer only
obstruction and opposition.
The Democrat opposition stems from sour grapes and special interests.
Mr. Speaker, sour grapes and special interests. The bill we have today
before us is a landmark. It is a bill that brings me great pride and
satisfaction, and this is a very proud day for the House and for the
Nation. Health care reform is moving forward, and I predict it will be
signed into law. We look forward to working with the President and the
Senate on this bill. It will be our only chance to improve America's
health care system. We must be careful not to let it slip away, without
making as many changes as we can reasonably on behalf of the American
people.
Too much medicine is bad for the patient, but too little will not
help the patient get better. This bill is the right does of medicine.
Vote ``no'' on the motion to recommit and ``aye'' on the bill.
The SPEAKER pro tempore. Without objection, the previous question is
ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to recommit.
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
recorded vote
Mr. PALLONE. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The SPEAKER pro tempore. Pursuant to the provisions of clause 5 of
rule XV, the Chair announces that he will reduce to a minimum of 5
minutes the period of time within which a vote by electronic device
will be taken on the question of final passage.
The vote was taken by electronic device, and there were--ayes 182,
noes 236, not voting 13, as follows:
[Roll No. 105]
AYES--182
Abercrombie
Ackerman
Andrews
Baesler
Baldacci
Barcia
Barrett (WI)
Becerra
Beilenson
Bentsen
Berman
Bevill
Bishop
Bonior
Borski
Boucher
Browder
Brown (CA)
Brown (FL)
Brown (OH)
Cardin
Chapman
Clay
Clayton
Clement
Clyburn
Coleman
Collins (MI)
Condit
Conyers
Costello
Coyne
Cramer
Danner
de la Garza
DeFazio
DeLauro
Dellums
Deutsch
Dicks
Dingell
Dixon
Doggett
Dooley
Doyle
Durbin
Edwards
Engel
Evans
Farr
Fattah
Fazio
Filner
Flake
Foglietta
Ford
Frank (MA)
Frost
Furse
Gejdenson
Gephardt
Gibbons
Gonzalez
Green
Gutierrez
Hall (OH)
Hamilton
Harman
Hastings (FL)
Hefner
Hilliard
Hinchey
Holden
Hoyer
Jackson (IL)
Jackson-Lee (TX)
Jacobs
Jefferson
Johnson (SD)
Johnson, E. B.
Johnston
Kanjorski
Kaptur
Kennedy (MA)
Kennedy (RI)
Kennelly
Kildee
Kleczka
Klink
LaFalce
Lantos
Levin
Lewis (GA)
Lincoln
Lipinski
Lofgren
Lowey
Luther
Maloney
Manton
Markey
Mascara
Matsui
McCarthy
McDermott
McHale
McKinney
Meehan
Meek
Menendez
Miller (CA)
Minge
Mink
Moakley
Mollohan
Moran
Murtha
Nadler
Oberstar
Obey
Olver
Ortiz
Orton
Owens
Pallone
Pastor
Payne (NJ)
Payne (VA)
Pelosi
Peterson (FL)
Peterson (MN)
Pomeroy
Quinn
Rahall
Rangel
Reed
Richardson
Rivers
Roemer
Rose
Roukema
Roybal-Allard
Rush
Sabo
Sanders
Sawyer
Schroeder
Schumer
Scott
Serrano
Sisisky
Skaggs
Skelton
Slaughter
Spratt
Stark
Stenholm
Studds
Stupak
Tanner
Tejeda
Thompson
Thornton
Thurman
Torres
Torricelli
Towns
Traficant
Velazquez
Vento
Visclosky
Volkmer
Walsh
Ward
Waters
Watt (NC)
Waxman
Wilson
Wise
Woolsey
Wynn
Yates
NOES--236
Allard
Archer
Armey
Bachus
Baker (CA)
Baker (LA)
Ballenger
Barr
Barrett (NE)
Bartlett
Barton
Bass
Bateman
Bereuter
Bilbray
Bilirakis
Bliley
Blute
Boehlert
Boehner
Bonilla
Bono
Brewster
Brownback
Bryant (TN)
Bunn
Bunning
Burr
Burton
Buyer
Callahan
Calvert
Camp
Campbell
Canady
Castle
Chabot
Chambliss
Chenoweth
Christensen
Chrysler
Clinger
Coble
Coburn
Collins (GA)
Combest
Cooley
Cox
Crane
Crapo
Cremeans
Cubin
Cunningham
Davis
Deal
DeLay
Diaz-Balart
Dickey
Doolittle
Dornan
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Ensign
Everett
Ewing
Fawell
Fields (TX)
Flanagan
Foley
Forbes
Fox
Franks (CT)
Franks (NJ)
Frelinghuysen
Frisa
Funderburk
Gallegly
Ganske
Gekas
Geren
Gilchrest
Gillmor
Gilman
Goodlatte
Goodling
Gordon
Goss
Graham
Greenwood
Gunderson
Gutknecht
Hall (TX)
Hancock
Hansen
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Heineman
Herger
Hilleary
Hobson
Hoekstra
Hoke
Horn
Hostettler
Houghton
Hunter
Hutchinson
Hyde
Inglis
Istook
Johnson (CT)
Johnson, Sam
Jones
Kasich
Kelly
Kim
King
Kingston
Klug
Knollenberg
Kolbe
LaHood
Largent
Latham
LaTourette
Laughlin
Lazio
Leach
Lewis (CA)
Lewis (KY)
Lightfoot
Linder
Livingston
LoBiondo
Longley
Lucas
Manzullo
Martini
McCollum
McCrery
McDade
McHugh
McInnis
McIntosh
McKeon
Metcalf
Meyers
Mica
Miller (FL)
Molinari
Montgomery
Moorhead
Morella
Myers
Myrick
Nethercutt
Neumann
Ney
Norwood
Nussle
Oxley
Packard
Parker
Paxon
Petri
Pickett
Pombo
Porter
Portman
Poshard
Pryce
Quillen
Radanovich
Ramstad
Regula
Riggs
Roberts
Rogers
Rohrabacher
Roth
Royce
Salmon
Sanford
Saxton
Scarborough
Schaefer
Schiff
Seastrand
Sensenbrenner
Shadegg
Shaw
Shays
Shuster
Skeen
Smith (MI)
Smith (NJ)
Solomon
Souder
Spence
Stearns
Stockman
Stump
Talent
Tate
Tauzin
Taylor (MS)
Taylor (NC)
Thomas
Thornberry
Tiahrt
Torkildsen
Upton
Vucanovich
Waldholtz
Walker
Wamp
Watts (OK)
Weldon (FL)
Weller
White
Whitfield
Wicker
Williams
Wolf
Young (AK)
Young (FL)
Zeliff
Zimmer
NOT VOTING--13
Bryant (TX)
Collins (IL)
Eshoo
Fields (LA)
Fowler
Martinez
McNulty
Neal
Ros-Lehtinen
Smith (TX)
Smith (WA)
Stokes
Weldon (PA)
{time} 2257
So the motion to recommit was rejected.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore (Mr. Combest). The question is on the passage
of the bill.
Pursuant to House Resolution 392, the yeas and nays are ordered.
The yeas and nays were ordered.
The SPEAKER pro tempore. This will be a 5-minute vote.
The vote was taken by electronic device, and there were--yeas 267,
nays 151, not voting 14, as follows:
[Roll No. 106]
YEAS--267
Allard
Archer
Armey
Bachus
Baesler
Baker (CA)
Baker (LA)
Ballenger
Barcia
Barr
Barrett (NE)
Bartlett
Barton
Bass
Bateman
Bereuter
Bilbray
Bilirakis
Bliley
Blute
Boehlert
Boehner
Bonilla
Bono
Brewster
Browder
Brownback
Bryant (TN)
Bunn
Bunning
Burr
Burton
Buyer
Callahan
Calvert
Camp
Campbell
Canady
Castle
Chabot
Chambliss
Chenoweth
Christensen
Chrysler
Clement
Clinger
Coble
Coburn
Collins (GA)
Combest
Condit
Cooley
Cox
Cramer
Crane
Crapo
Cremeans
Cubin
Cunningham
Danner
Davis
de la Garza
Deal
DeLay
Diaz-Balart
Dickey
Dooley
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Ensign
Everett
Ewing
Fawell
Fields (TX)
Flanagan
Foley
Forbes
Fox
Franks (CT)
Franks (NJ)
Frelinghuysen
Frisa
Funderburk
Gallegly
Ganske
Gekas
Geren
Gilchrest
Gillmor
Gilman
Gingrich
Goodlatte
Goodling
Gordon
Goss
Graham
Greenwood
Gunderson
Gutknecht
Hall (OH)
Hall (TX)
Hamilton
Hancock
Hansen
Harman
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Hefner
Heineman
Herger
Hilleary
Hobson
Hoekstra
Hoke
Holden
Horn
Hostettler
Houghton
Hunter
Hutchinson
Hyde
Inglis
Istook
Jacobs
Johnson (CT)
Johnson, Sam
Jones
Kasich
Kelly
Kim
King
Kingston
Klug
Knollenberg
Kolbe
LaHood
Largent
Latham
LaTourette
Laughlin
Lazio
Leach
Lewis (CA)
Lewis (KY)
Lightfoot
Lincoln
Linder
Livingston
LoBiondo
Longley
Lucas
Manzullo
Martini
McCollum
McCrery
McDade
McHale
McHugh
McInnis
McIntosh
McKeon
Metcalf
Meyers
Mica
Miller (FL)
[[Page H3147]]
Minge
Molinari
Montgomery
Moorhead
Moran
Morella
Myers
Myrick
Nethercutt
Neumann
Ney
Norwood
Nussle
Orton
Oxley
Packard
Parker
Pastor
Paxon
Payne (VA)
Peterson (MN)
Petri
Pickett
Pombo
Porter
Portman
Poshard
Pryce
Quillen
Quinn
Radanovich
Ramstad
Regula
Riggs
Roberts
Rogers
Rohrabacher
Rose
Roth
Royce
Salmon
Sanford
Saxton
Scarborough
Schaefer
Schiff
Seastrand
Sensenbrenner
Shadegg
Shaw
Shays
Shuster
Sisisky
Skeen
Smith (MI)
Smith (NJ)
Solomon
Souder
Spence
Stearns
Stenholm
Stockman
Studds
Stump
Talent
Tanner
Tate
Tauzin
Taylor (MS)
Taylor (NC)
Thomas
Thornberry
Thornton
Tiahrt
Torkildsen
Traficant
Upton
Vucanovich
Waldholtz
Walker
Walsh
Wamp
Watts (OK)
Weldon (FL)
Weller
White
Whitfield
Wicker
Wolf
Young (AK)
Young (FL)
Zeliff
Zimmer
NAYS--151
Abercrombie
Ackerman
Andrews
Baldacci
Barrett (WI)
Becerra
Beilenson
Bentsen
Berman
Bevill
Bishop
Bonior
Borski
Boucher
Brown (CA)
Brown (FL)
Brown (OH)
Cardin
Chapman
Clay
Clayton
Clyburn
Coleman
Collins (MI)
Conyers
Costello
Coyne
DeFazio
DeLauro
Dellums
Deutsch
Dicks
Dingell
Dixon
Doggett
Doyle
Durbin
Edwards
Engel
Evans
Farr
Fattah
Fazio
Filner
Flake
Foglietta
Ford
Frank (MA)
Frost
Furse
Gejdenson
Gephardt
Gibbons
Gonzalez
Green
Gutierrez
Hastings (FL)
Hilliard
Hinchey
Hoyer
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson (SD)
Johnson, E. B.
Johnston
Kanjorski
Kaptur
Kennedy (MA)
Kennedy (RI)
Kennelly
Kildee
Kleczka
Klink
LaFalce
Lantos
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Luther
Maloney
Manton
Markey
Martinez
Mascara
Matsui
McCarthy
McDermott
McKinney
Meehan
Meek
Menendez
Miller (CA)
Mink
Moakley
Mollohan
Murtha
Nadler
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Payne (NJ)
Pelosi
Peterson (FL)
Pomeroy
Rahall
Rangel
Reed
Richardson
Rivers
Roemer
Roukema
Roybal-Allard
Rush
Sabo
Sanders
Sawyer
Schroeder
Schumer
Scott
Serrano
Skaggs
Slaughter
Spratt
Stark
Stupak
Tejeda
Thompson
Thurman
Torres
Torricelli
Towns
Velazquez
Vento
Visclosky
Volkmer
Ward
Waters
Watt (NC)
Waxman
Williams
Wilson
Wise
Woolsey
Wynn
Yates
NOT VOTING--14
Bryant (TX)
Collins (IL)
Dornan
Eshoo
Fields (LA)
Fowler
McNulty
Neal
Ros-Lehtinen
Skelton
Smith (TX)
Smith (WA)
Stokes
Weldon (PA)
{time} 2305
Mr. KENNEDY of Massachusetts and Mr. FOGLIETTA changed their vote
from ``yea'' to ``nay.''
So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
____________________