[Congressional Record Volume 146, Number 37 (Wednesday, March 29, 2000)]
[Senate]
[Pages S1901-S1904]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. JEFFORDS (for himself, Mr. Breaux, Mr. Frist, Mrs. 
        Lincoln, and Ms. Snowe):
  S. 2320. A bill to amend the Internal Revenue Code of 1986 to allow a 
refundable tax credit for health insurance costs, and for other 
purposes; to the Committee on Finance.


         health coverage, access, relief, and equity (CARE) Act

  Mr. JEFFORDS. Mr. President, today, I am pleased to join with my 
colleagues in introducing the Health Coverage, Access, Relief and 
Equity Act or Health CARE Act. This legislation will provide low-income 
Americans with a refundable tax credit for the purchase of health 
insurance coverage. This effort marks the first major bipartisan, 
bicameral, market-based initiative on behalf of the uninsured since 
1994.
  I believe the issue of access to health coverage for the uninsured 
must be a top national priority. The uninsured often go without needed 
health care or face unaffordable medical bills. Insurance coverage 
guarantees providers reimbursement for their services, and it helps 
contain costs by encouraging more appropriate use of the health care 
system.
  Unfortunately, the main source of coverage--employer-based 
insurance--is simply not available to a significant number of working 
Americans and their families. High health care cost increases have 
caused more people to become uninsured.
  New Census Bureau data indicate that there are now 44 million 
Americans with no health coverage, an increase of one million from last 
year. This number is unacceptable for a prosperous nation with a strong 
economy.
  A new poll indicates that our bill is consistent with the main health 
care concern of average voters. When asked what they think is the most 
important problem about our health care system that the government 
should address, the top choice--selected by 29 percent of those 
sampled--was universal coverage.

[[Page S1902]]

  I believe the legislation we're introducing today can provide the 
necessary foundation for achieving the goal of expanded health 
coverage. The Health CARE tax credit is targeted to those who are most 
in need of help, due to their lack of income, access to subsidized 
employment-based coverage, and ineligibility for public programs.
  About one-half of the full-time working poor were uninsured last 
year. Many of these individuals work for small firms. In my own state 
of Vermont, only 27 percent of workers in firms employing fewer than 10 
people are offered health insurance.
  These uninsured working Americans have one thing in common: they are 
low wage workers--with nearly 70 percent making less than two times the 
minimum wage. Without additional resources, health insurance coverage 
is either beyond their reach or only purchased by giving up other basic 
necessities of life.
  The Health CARE Act will provide a refundable tax credit to help low 
and moderate-income individuals and families purchase health insurance.
  The legislation will provide a refundable tax credit of $1,000 for 
the purchase of individual coverage to those with adjusted gross 
incomes of up to $35,000 and it will provide a $2,000 credit for the 
purchase of family coverage for those with AGI of up to $55,000.
  The initial estimates show that this proposal will help almost 9 
million Americans. It will provide health coverage for 3.2 million 
Americans who are presently uninsured and give needed financial relief 
to another 5.5 million low-income Americans who are using their scarce 
dollars to buy individual health insurance policies.
  Realizing that insurance coverage is not the single answer for our 
nation's health access problems, we are also developing additional 
components to the Health CARE Act which will focus on improving access 
to health care services and safety net providers, such as community 
health centers and rural health clinics.
  We must do whatever we can to ensure that the Safety Net already in 
place becomes stronger and more reliable. Just last week, the 
Subcommittee on Public Health held a hearing on three of our nation's 
safety provider programs--the Consolidated Health Centers program, the 
National Health Service Corps, and the Community Access program.
  I look forward to working with Senator Frist on shoring up the Safety 
Net, and together we plan to introduce an additional component to the 
CARE Act on Safety Net providers that will become part of the larger 
health CARE Package.
  Our goal for this legislation is to maximize health coverage, tax 
equity, and cost efficiency, and we believe it should be included as an 
important element in any tax package that Congress enacts this year.
  The Health CARE Act will increase the number of Americans who have 
health insurance coverage by filling key gaps in the current system and 
supporting a system of health care financial and delivery that 
complements the employment-based system.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  Mr. President, I hope my colleagues will take a look at this. I hope 
they will join me in making sure we do what must be done to make sure 
the people who need it the most gets it.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2320

       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 ``Health Coverage, Access, 
     Relief, and Equity (C.A.R.E.) Act''.

     SEC. 2. REFUNDABLE HEALTH INSURANCE COSTS CREDIT.

       (a) In General.--Subpart C of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     refundable personal credits) is amended by redesignating 
     section 35 as section 36 and inserting after section 34 the 
     following new section:

     ``SEC. 35. HEALTH INSURANCE COSTS.

       ``(a) Allowance of Credit.--In the case of an individual, 
     there shall be allowed as a credit against the tax imposed by 
     this subtitle for the taxable year an amount equal to the 
     amount paid during the taxable year for qualified health 
     insurance for the taxpayer and the taxpayer's spouse and 
     dependents.
       ``(b) Limitations.--
       ``(1) Maximum dollar amount.--
       ``(A) In general.--The amount allowed as a credit under 
     subsection (a) to the taxpayer for the taxable year shall not 
     exceed the sum of the monthly limitations for coverage months 
     during such taxable year.
       ``(B) Monthly limitation.--The monthly limitation for each 
     coverage month during the taxable year is the amount equal to 
     1/12 of--
       ``(i) in the case of self-only coverage, $1,000, and
       ``(ii) in the case of family coverage, $2,000.
       ``(2) Phaseout of credit.--
       ``(A) In general.--The amount which would (but for this 
     paragraph) be taken into account under subsection (a) shall 
     be reduced (but not below zero) by the amount determined 
     under subparagraph (B).
       ``(B) Amount of reduction.--The amount determined under 
     this subparagraph is the amount which bears the same ratio to 
     the amount which would be so taken into account as--
       ``(i) the excess of--

       ``(I) the taxpayer's modified adjusted gross income for 
     such taxable year, over
       ``(II) $35,000 ($55,000 in the case of family coverage), 
     bears to

       ``(ii) $10,000.
       ``(C) Modified adjusted gross income.--The term `modified 
     adjusted gross income' means adjusted gross income 
     determined--
       ``(i) without regard to this section and sections 911, 931, 
     and 933, and
       ``(ii) after application of sections 86, 135, 137, 219, 
     221, and 469.
       ``(3) Coordination with deduction for health insurance 
     costs of self-employed individuals.--In the case of a 
     taxpayer who is eligible to deduct any amount under section 
     162(l) for the taxable year, this section shall apply only if 
     the taxpayer elects not to claim any amount as a deduction 
     under such section for such year.
       ``(c) Coverage Month Defined.--For purposes of this 
     section--
       ``(1) In general.--The term `coverage month' means, with 
     respect to an individual, any month if--
       ``(A) as of the first day of such month such individual is 
     covered by qualified health insurance, and
       ``(B) the premium for coverage under such insurance for 
     such month is paid by the taxpayer.
       ``(2) Employer-subsidized coverage.--
       ``(A) In general.--Such term shall not include any month 
     for which such individual is eligible to participate in any 
     subsidized health plan (within the meaning of section 
     162(l)(2)) maintained by any employer of the taxpayer or of 
     the spouse of the taxpayer.
       ``(B) Premiums to nonsubsidized plans.--If an employer of 
     the taxpayer or the spouse of the taxpayer maintains a health 
     plan which is not a subsidized health plan (as so defined) 
     and which constitutes qualified health insurance, employee 
     contributions to the plan shall be treated as amounts paid 
     for qualified health insurance.
       ``(3) Cafeteria plan and flexible spending account 
     beneficiaries.--Such term shall not include any month during 
     a taxable year if any amount is not includible in the gross 
     income of the taxpayer for such year under section 106 with 
     respect to--
       ``(A) a benefit chosen under a cafeteria plan (as defined 
     in section 125(d)), or
       ``(B) a benefit provided under a flexible spending or 
     similar arrangement.
       ``(4) Medicare and medicaid.--Such term shall not include 
     any month during a taxable year with respect to an individual 
     if, as of the first day of such month, such individual--
       ``(A) is eligible for any benefits under title XVIII of the 
     Social Security Act, or
       ``(B) is eligible to participate in the program under title 
     XIX or XXI of such Act.
       ``(5) Certain other coverage.--Such term shall not include 
     any month during a taxable year with respect to an individual 
     if, as of the first day of such month, such individual is 
     eligible--
       ``(A) for benefits under chapter 17 of title 38, United 
     States Code,
       ``(B) for benefits under chapter 55 of title 10, United 
     States Code,
       ``(C) to participate in the program under chapter 89 of 
     title 5, United States Code, or
       ``(D) for benefits under any medical care program under the 
     Indian Health Care Improvement Act or any other provision of 
     law.
       ``(6) Prisoners.--Such term shall not include any month 
     with respect to an individual if, as of the first day of such 
     month, such individual is imprisoned under Federal, State, or 
     local authority.
       ``(d) Qualified Health Insurance.--For purposes of this 
     section, the term `qualified health insurance' means health 
     insurance coverage (as defined in section 9832(b)(1)(A)), 
     including coverage under a high deductible health plan (as 
     defined in section 220(c)(2)) or a COBRA continuation 
     provision (as defined in section 9832(d)(1)).
       ``(e) Medical Savings Account Contributions.--
       ``(1) In general.--If a deduction would (but for paragraph 
     (2)) be allowed under section 220 to the taxpayer for a 
     payment for the taxable year to the medical savings account 
     of an individual, subsection (a) shall be applied by treating 
     such payment as a payment for qualified health insurance for 
     such individual.
       ``(2) Denial of double benefit.--No deduction shall be 
     allowed under section 220 for that portion of the payments 
     otherwise allowable as a deduction under section 220 for the 
     taxable year which is equal to the

[[Page S1903]]

     amount of credit allowed for such taxable year by reason of 
     this subsection.
       ``(f) Special Rules.--
       ``(1) Coordination with medical expense deduction.--The 
     amount which would (but for this paragraph) be taken into 
     account by the taxpayer under section 213 for the taxable 
     year shall be reduced by the credit (if any) allowed by this 
     section to the taxpayer for such year.
       ``(2) Denial of credit to dependents.--No credit shall be 
     allowed under this section to any individual with respect to 
     whom a deduction under section 151 is allowable to another 
     taxpayer for a taxable year beginning in the calendar year in 
     which such individual's taxable year begins.
       ``(3) Coordination with advance payment.--Rules similar to 
     the rules of section 32(g) shall apply to any credit to which 
     this section applies.
       ``(g) Expenses Must Be Substantiated.--A payment for 
     insurance to which subsection (a) applies may be taken into 
     account under this section only if the taxpayer substantiates 
     such payment in such form as the Secretary may prescribe.
       ``(h) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this section, including regulations under which--
       ``(1) an awareness campaign is established to educate the 
     public, insurance issuers, and agents or others who market 
     health insurance about the requirements and procedures under 
     this section, including--
       ``(A) criteria for insurance products and group health 
     coverage which constitute qualified health insurance under 
     this section, and
       ``(B) guidelines for marketing schemes and practices which 
     are appropriate and acceptable in connection with the credit 
     under this section, and
       ``(2) periodic reviews or audits of health insurance 
     policies and group health plans (and related promotional 
     marketing materials) which are marketed to eligible taxpayers 
     under this section are conducted for the purpose of 
     determining--
       ``(A) whether such policies and plans constitute qualified 
     health insurance under this section, and
       ``(B) whether offenses described in section 7276 occur.''.
       (b) Information Reporting.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 of such Code (relating to information concerning 
     transactions with other persons) is amended by inserting 
     after section 6050S the following new section:

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

       ``(a) In General.--Any person who, in connection with a 
     trade or business conducted by such person, receives payments 
     during any calendar year from any individual for coverage of 
     such individual or any other individual under creditable 
     health insurance, shall make the return described in 
     subsection (b) (at such time as the Secretary may by 
     regulations prescribe) with respect to each individual from 
     whom such payments were received.
       ``(b) Form and Manner of Returns.--A return is described in 
     this subsection if such return--
       ``(1) is in such form as the Secretary may prescribe, and
       ``(2) contains--
       ``(A) the name, address, and TIN of the individual from 
     whom payments described in subsection (a) were received,
       ``(B) the name, address, and TIN of each individual who was 
     provided by such person with coverage under creditable health 
     insurance by reason of such payments and the period of such 
     coverage,
       ``(C) the aggregate amount of payments described in 
     subsection (a),
       ``(D) the qualified health insurance credit advance amount 
     (as defined in section 7527(e)) received by such person with 
     respect to the individual described in subparagraph (A), and
       ``(E) such other information as the Secretary may 
     reasonably prescribe.
       ``(c) Creditable Health Insurance.--For purposes of this 
     section, the term `creditable health insurance' means 
     qualified health insurance (as defined in section 35(d)) 
     other than--
       ``(1) insurance under a subsidized group health plan 
     maintained by an employer, or
       ``(2) to the extent provided in regulations prescribed by 
     the Secretary, any other insurance covering an individual if 
     no credit is allowable under section 35 with respect to such 
     coverage.
       ``(d) Statements To Be Furnished to Individuals With 
     Respect to Whom Information Is Required.--Every person 
     required to make a return under subsection (a) shall furnish 
     to each individual whose name is required under subsection 
     (b)(2)(A) to be set forth in such return a written statement 
     showing--
       ``(1) the name and address of the person required to make 
     such return and the phone number of the information contact 
     for such person,
       ``(2) the aggregate amount of payments described in 
     subsection (a) received by the person required to make such 
     return from the individual to whom the statement is required 
     to be furnished,
       ``(3) the information required under subsection (b)(2)(B) 
     with respect to such payments, and
       ``(4) the qualified health insurance credit advance amount 
     (as defined in section 7527(e)) received by such person with 
     respect to the individual described in paragraph (2).
     The written statement required under the preceding sentence 
     shall be furnished on or before January 31 of the year 
     following the calendar year for which the return under 
     subsection (a) is required to be made.
       ``(e) Returns Which Would Be Required To Be Made by 2 or 
     More Persons.--Except to the extent provided in regulations 
     prescribed by the Secretary, in the case of any amount 
     received by any person on behalf of another person, only the 
     person first receiving such amount shall be required to make 
     the return under subsection (a).''.
       (2) Assessable penalties.--
       (A) Subparagraph (B) of section 6724(d)(1) of such Code 
     (relating to definitions) is amended by redesignating clauses 
     (xi) through (xvii) as clauses (xii) through (xviii), 
     respectively, and by inserting after clause (x) the following 
     new clause:
       ``(xi) section 6050T (relating to returns relating to 
     payments for qualified health insurance),''.
       (B) Paragraph (2) of section 6724(d) of such Code is 
     amended by striking ``or'' at the end of the next to last 
     subparagraph, by striking the period at the end of the last 
     subparagraph and inserting ``, or'', and by adding at the end 
     the following new subparagraph:
       ``(BB) section 6050T(d) (relating to returns relating to 
     payments for qualified health insurance).''.
       (3) Clerical amendment.--The table of sections for subpart 
     B of part III of subchapter A of chapter 61 of such Code is 
     amended by inserting after the item relating to section 6050S 
     the following new item:

``Sec. 6050T. Returns relating to payments for qualified health 
              insurance.''.

       (c) Criminal Penalty for Fraud.--Subchapter B of chapter 75 
     of such Code (relating to other offenses) is amended by 
     adding at the end the following new section:

     ``SEC. 7276. PENALTIES FOR OFFENSES RELATING TO HEALTH 
                   INSURANCE TAX CREDIT.

       ``Any person who knowingly misuses Department of the 
     Treasury names, symbols, titles, or initials to convey the 
     false impression of association with, or approval or 
     endorsement by, the Department of the Treasury of any 
     insurance products or group health coverage in connection 
     with the credit for health insurance costs under section 35 
     shall on conviction thereof be fined not more than $10,000, 
     or imprisoned not more than 1 year, or both.''.
       (d) Conforming Amendments.--
       (1) Section 162(l) of the Internal Revenue Code of 1986 is 
     amended by adding at the end the following new paragraph:
       ``(6) Election to have subsection apply.--No deduction 
     shall be allowed under paragraph (1) for a taxable year 
     unless the taxpayer elects to have this subsection apply for 
     such year.''.
       (2) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting before the period ``, or 
     from section 35 of such Code''.
       (3) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 of the Internal Revenue Code of 
     1986 is amended by striking the last item and inserting the 
     following new items:

``Sec. 35. Health insurance costs.
``Sec. 36. Overpayments of tax.''.

       (4) The table of sections for subchapter B of chapter 75 of 
     the Internal Revenue Code of 1986 is amended by adding at the 
     end the following new item:

``Sec. 7276. Penalties for offenses relating to health insurance tax 
              credit.''.

       (e) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after December 31, 2000.
       (2) Penalties.--The amendments made by subsections (c) and 
     (d)(4) shall take effect on the date of the enactment of this 
     Act.

     SEC. 3. ADVANCE PAYMENT OF CREDIT TO ISSUERS OF QUALIFIED 
                   HEALTH INSURANCE.

       (a) In General.--Chapter 77 of the Internal Revenue Code of 
     1986 (relating to miscellaneous provisions) is amended by 
     adding at the end the following new section:

     ``SEC. 7527. ADVANCE PAYMENT OF HEALTH INSURANCE CREDIT TO 
                   ISSUERS OF QUALIFIED HEALTH INSURANCE.

       ``(a) General Rule.--In the case of an eligible individual, 
     the Secretary shall make payments to the health insurance 
     issuer of such individual's qualified health insurance equal 
     to such individual's qualified health insurance credit 
     advance amount with respect to such issuer.
       ``(b) Eligible Individual.--For purposes of this section, 
     the term `eligible individual' means any individual--
       ``(1) who purchases qualified health insurance (as defined 
     in section 35(c)), and
       ``(2) for whom a qualified health insurance credit 
     eligibility certificate is in effect.
       ``(c) Health Insurance Issuer.--For purposes of this 
     section, the term `health insurance issuer' has the meaning 
     given such term by section 9832(b)(2).
       ``(d) Qualified Health Insurance Credit Eligibility 
     Certificate.--For purposes of this section, a qualified 
     health insurance credit eligibility certificate is a 
     statement furnished by an individual to a qualified health 
     insurance issuer which--

[[Page S1904]]

       ``(1) certifies that the individual will be eligible to 
     receive the credit provided by section 35 for the taxable 
     year,
       ``(2) estimates the amount of such credit for such taxable 
     year, and
       ``(3) provides such other information as the Secretary may 
     require for purposes of this section.
       ``(e) Qualified Health Insurance Credit Advance Amount.--
     For purposes of this section, the term `qualified health 
     insurance credit advance amount' means, with respect to any 
     qualified health insurance issuer of qualified health 
     insurance, an estimate of the amount of credit allowable 
     under section 35 to the individual for the taxable year which 
     is attributable to the insurance provided to the individual 
     by such issuer.
       ``(f) Required Documentation for Receipt of Payments of 
     Advance Amount.--No payment of a qualified health insurance 
     credit advance amount with respect to any eligible individual 
     may be made under subsection (a) unless the health insurance 
     issuer provides to the Secretary--
       ``(1) the qualified health insurance credit eligibility 
     certificate of such individual, and
       ``(2) the return relating to such individual under section 
     6050T.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this section.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     77 of such Code is amended by adding at the end the following 
     new item:

``Sec. 7527. Advance payment of health insurance credit for purchasers 
              of qualified health insurance.''.

       (c) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2001.
 Mr. FRIST. Mr. President, I am pleased to join my colleagues 
today and be part of the first bipartisan, bicameral group to address 
the growing number of individuals and families without health insurance 
coverage in this country.
  The problem has been made clear. America's uninsured population 
continues to rise. Despite the fact that we are enjoying strong 
economic times, the nation's uninsured population has grown to 44 
million over the past decade. We know that the majority of the 
uninsured--32 of the 44 million--earn an annual income of under 
$50,000. We also know that the rising cost of health insurance is the 
single most important reason for not purchasing health care coverage. 
Many Americans simply cannot afford to buy health insurance.
  The solutions are becoming clearer as well. A one-size fits all 
approach to expand health coverage and access to health care does not 
meet the various needs of the uninsured population. As a result, our 
proposal will take a multi-pronged approach that meets the needs of the 
uninsured and looks at innovative approaches to provide individuals 
greater ability to purchase coverage. We will seek to build upon the 
current employer-based system which continues to be the main source of 
health care coverage for most Americans.
  Our goal is to fill the coverage gaps that exist in the current 
system. A central piece of our proposal is to provide a refundable tax 
credit for low-income Americans who are not offered a contribution for 
their insurance through their employer and do not receive coverage 
through federal programs such as Medicaid or Medicare. The legislation 
introduced today will help hard working Americans who cannot afford to 
buy coverage on their own. For example, the part-time worker who is not 
offered employer-sponsored health insurance will be offered a $1,000 
tax credit to purchase health care coverage. The single mother with two 
children earning less than $50,000 a year, will be offered a $2,000 
credit to purchase health insurance.
  The legislation introduced today is the first of many steps that we 
will take to address the varying needs of the uninsured. Over the next 
several months, we will also explore a variety of options to assist 
individuals and their families in purchasing health coverage either 
through existing employer plans, the individual market, or through 
purchasing pools; seek ways to improve enrollment in existing federal 
programs, where approximately 5 million adults and 8 million children 
are eligible for Medicaid and the State Children's Health Insurance 
Program (S-CHIP) yet are not enrolled; and finally, as the Chairman of 
the Subcommittee on Public Health, I will work closely with my 
colleagues to explore ways to expand and sustain our safety net system 
to improve access to critical primary care services to the uninsured 
and medically underserved populations.
  I especially wish to thank the American Academy of Family Physicians, 
the American Hospital Association, the American Medical Association, 
the Americans for Tax Reform, the BlueCross BlueShield Association, the 
Chamber of Commerce of the USA, the Citizens Against Government Waste, 
the Galen Institute, the Healthcare Leadership Council, the Health 
Insurance Association of America, the Hispanic Business Roundtable, the 
National Center for Policy Analysis, the National Federation of 
Independent Business, and the Small Business Survival Committee for 
their support of this important legislation.
                                 ______