[Congressional Record Volume 144, Number 31 (Thursday, March 19, 1998)]
[Senate]
[Pages S2304-S2305]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KENNEDY:
  S. 1804. A bill to amend title XXVII of the Public Health Service Act 
to limit the amount of any increase in the payments required by health 
insurance issuers for health insurance coverage provided to individuals 
who are guaranteed an offer of enrollment under individual health 
insurance coverage relative to other individuals who purchase health 
insurance coverage; to the Committee on Labor and Human Resources.


                affordable health INSURANCE AcT of 1998

  Mr. KENNEDY. Mr. President, a recent GAO report makes clear that 
significant insurance company abuses are undercutting the effectiveness 
of one of the key parts of the Kassebaum-Kennedy health insurance 
reforms enacted in 1996. The legislation that I am introducing today 
will stop these unconscionable practices.

  The 1996 legislation was enacted in response to several serious 
problems. Large numbers of Americans felt locked into their jobs 
because of pre-existing health conditions that would have subjected 
them to exclusions coverage if they changed jobs.
  Many more who did change jobs found themselves and members of their 
families exposed to devastating financial risks because of exclusions 
for such conditions. Other families faced the same problems if their 
employers changed insurance plans. Still others were unable to buy 
individual coverage because of health problems if they left their job 
or lost their job and did not have access to employer-based coverage.
  The legislation addressed each of these problems. It banned 
exclusions for pre-existing conditions for people who maintained 
coverage, even if they changed jobs or changed insurers. It required 
insurance companies to sell insurance policies to small businesses and 
individuals losing group coverage, regardless of their health status. 
It banned higher charges for those in poor health in employment-based 
groups.
  A GAO study in 1995 had found that 25 million Americans faced one or 
more of these problems and would be helped by the Kassebaum-Kennedy 
proposal. For the vast majority of these Americans, the legislation is 
working well. They can change jobs without fear of new exclusions for 
pre-existing conditions, denial of coverage, or insurance company 
gouging.
  But as the GAO study released last week makes clear, many of the two 
million people a year who lose employer-based group coverage are 
vulnerable to flagrant industry price-gouging if they try to purchase 
individual coverage. Under the Kassebaum-Kennedy legislation, 
individuals who leave their jobs and want to buy coverage in the 
individual market are guaranteed access to coverage without regard to 
their health status and without being subject to pre-existing condition 
exclusions. But there is no clear limit in the Federal law on how much 
they can be charged for that coverage--and some unscrupulous companies 
are taking advantage of that loophole to effectively deny coverage to 
those in poor health by requiring them to pay exorbitant premiums.
  We recognized that potential problem in 1996, but Republican 
opposition blocked clear, strict federal limits to prevent such abuse, 
on the ground that state regulation would be an adequate remedy. At 
least in some states, as the GAO report makes clear, state regulation 
is no match for insurance industry price-gouging.
  The legislation that I am introducing today is a straightforward 
response to that problem. It will limit insurance company charges to 
eligible individuals, so that they will have to pay no more than 150% 
of the rate charged to those in good health. That is well within the 
range that the American Academy of Actuaries said would have negligible 
impact on the premiums of those who already have coverage, but it will 
end the worst of the current price-gouging. This approach of limiting 
premium increases based on health conditions has worked and worked well 
in the small group market for many years. It should have been included 
in the 1996 bill, and Congress should act on it promptly this year.
  The verdict of experience is in. The GAO report makes clear that some 
insurance firms are guilty of abuse beyond a reasonable doubt, and 
Congress has to act.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1804

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Affordable Health Insurance 
     Act of 1998''.

     SEC. 2. AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT.

       (a) Premium Limitations With Respect to Individual 
     Coverage.--Section 2741 of the Public Health Service Act (42 
     U.S.C. 300gg-41) is amended--
       (1) by redesignating the second subsection (e) and 
     subsection (f) as subsection (f) and (g) respectively; and
       (2) by adding at the end thereof the following:
       ``(h) Premium Limitations.--
       ``(1) In general.--With respect to an eligible individual 
     desiring to enroll in, or renew, individual health insurance 
     coverage under this section, the health insurance issuer that 
     offers such coverage shall not charge such individual a 
     premium rate for such coverage that is higher than a rate 
     equal to 150 percent of the average standard risk rate (as 
     determined under paragraph (2)) of the issuer for individual 
     health insurance offered in the State or applicable marketing 
     or service area (as determined pursuant to regulations).
       ``(2) Average standard risk rate.--As used in paragraph 
     (1), the term `average standard risk rate' means the 
     following:
       ``(A) Guaranteed issue of all policies.--In the case of a 
     health insurance issuer that meets the requirements of this 
     section with respect to individual health insurance coverage 
     by meeting the requirements of subsection (a)(1), the 
     standard risk rate for the policy in which the eligible 
     individual is enrolled or desires to enroll.
       ``(B) Guaranteed issue of two most popular policies.--In 
     the case of a health insurance issuer that meets the 
     requirements of this section with respect to individual 
     health insurance coverage through a mechanism described in 
     subsection (c)(2), the standard risk rate for the policy in 
     which the eligible individual is enrolled or desires to 
     enroll.
       ``(C) Guaranteed issue of two policy forms with 
     representative coverage.--In the case of a health insurance 
     issuer that meets the requirements of this section with 
     respect to individual health insurance coverage through a 
     mechanism described in subsection (c)(3), the average of the 
     standard risk rates for the most common policy forms offered 
     by the issuer in the State or applicable marketing or service 
     area (as determined pursuant to regulations), established 
     using reasonable actuarial techniques to adjust for the 
     difference in actuarial values among

[[Page S2305]]

     such policy forms, subject to review and approval or 
     disapproval of the applicable regulatory authority.
       (b) State Flexibility.--Section 2744(c) of the Public 
     Health Service Act (42 U.S.C. 300gg-44(c)) is amended--
       (1) in paragraph (1), by inserting before the period the 
     following: ``, except that in applying any such model act, an 
     eligible individual shall not be charged a premium rate that 
     is higher than a rate equal to 150 percent of the standard 
     risk rate of the issuer'';
       (2) in paragraph (2)(B), by inserting before the period the 
     following: ``, except that an eligible individual shall not 
     be charged a premium rate that is higher than a rate equal to 
     150 percent of the standard risk rate as determined under the 
     Model Plan''; and
       (3) by adding at the end the following:
       ``(4) Limitation.--
       ``(A) In general.--In the case of a mechanism described in 
     subparagraph (A) or (B) of paragraph (3), a State shall not 
     be considered to be implementing an acceptable alternative 
     mechanism unless the mechanism limits the amount of premium 
     rates that may be charged to eligible individuals to not more 
     than 150 percent of the standard risk rate.
       ``(B) Standard risk rate.--For purposes of subparagraph 
     (A), the term `standard risk rate' means--
       ``(i) in the case of a mechanism under paragraph (3)(A), 
     and as determined by the Secretary to be appropriate with 
     respect to the State mechanism involved--
       ``(I) the rate determined under section 2741(h)(2)(A);
       ``(II) the rate determined pursuant to the standards 
     included in the Model Plan described in paragraph (2)(B); or
       ``(III) the rate determined pursuant to such other method 
     of calculation as is determined by the State and approved by 
     the Secretary as appropriate to achieve the goal of this 
     subsection; and
       ``(ii) in the case of a mechanism under paragraph (3)(B), 
     the rate determined under section 2741(h)(2)(A).''.

     SEC. 3. EFFECTIVE DATE.

       The amendments made by--
       (1) section 2(a) shall apply to health insurance coverage 
     offered, sold, issued, renewed, in effect, or operated in the 
     individual market on the date that is 6 months after the date 
     of enactment of this Act; and
       (2) section 2(b) shall apply with respect to a State that 
     adopted an alternative mechanism under section 2744 of the 
     Public Health Service Act (42 U.S.C. 300gg-44) on the date 
     that is 1 year after the date of enactment of this Act.
                                 ______