[Congressional Record Volume 146, Number 140 (Monday, October 30, 2000)]
[Senate]
[Pages S11374-S11377]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      Mr. REED:
  S. 3261. A bill to provide for the establishment of an HMO Guaranty 
Fund to provide payments to States to pay the outstanding health care 
provider claims of insolvent health maintenance organizations; to the 
Committee on Finance.


                        HMO Guaranty Act of 2000

  Mr. REED. Mr. President, I rise today to introduce legislation that I 
hope will help states which have been stricken by managed care plan 
failures to overcome the devastating effects of such an event on the 
health insurance sector.
  Over the past several years, we have seen an alarming upswing in the 
number of HMO failures across the nation. According to Weiss Rating, 
Inc., the nation's only provider of financial safety ratings for HMO's, 
the number of HMO failures grew 78 percent between 1998 and 1999. 
Furthermore, Weiss found another 10 HMO's were at high risk of failure 
due to mounting losses and capital deficits. The growing financial 
instability we are seeing in the managed care market has serious 
ramifications for state insurance regulators, not to mention hundreds 
of thousands of Americans who rely on these plans for their health 
care.
  In light of this volatility in the health insurance market, I believe 
that the Federal Government can be a constructive and stabilizing force 
for states dealing with the aftermath of an HMO liquidation. The 
legislation I am introducing today would create a mechanism that would 
provide an added layer of protection for providers and subscribers when 
a participant in the health insurance market fails. Specifically, the 
bill establishes an HMO Guaranty Fund, which would be used to pay 
outstanding health care providers' claims for uncovered expenditures 
and to fulfill contractual obligations made prior to an HMO's 
bankruptcy. For those families left without health insurance, the fund 
would also subsidize temporary coverage for subscribers as they seek 
alternative sources of health insurance.
  Many states have responded to a health plan insolvency and the unpaid 
bills they leave behind by creating a temporary fund designed to at 
least partially reimburse hospitals and providers for the expenses 
incurred during the course of providing care to patients. These 
guaranty funds are typically financed by levying a fairly sizable fee 
on the remaining health insurers in the state. While this may work in 
some cases, it is not necessarily appropriate in every circumstance. In 
other words, not every health care provider and subscriber has the 
opportunity to access this kind of guaranty fund.
  For instance, when Harvard Pilgrim Health Plan of New England failed 
in my home state of Rhode Island, there was discussion of setting up 
just such a fund. However, the extremely small size of our insurance 
market and the few plans that remained in operation simply could not 
support a bailout of this magnitude. Fortunately, the Rhode Island 
Insurance regulator was able to reach an agreement with the 
Massachusetts parent organization of Harvard Pilgrim to pay outstanding 
provider and hospital claims. Unfortunately, other States might not be 
as lucky.
  It is my view that the Federal Government may be better positioned 
than an individual State to spread the risk and the premiums required 
to subsidize the fund across health insurance plans operating around 
the country. Furthermore, it would also enable both ERISA and non-ERISA 
plans to be covered under a nationally-based standing fund.
  I hope the legislation I am introducing today will mark the beginning 
of an ongoing discussion that will explore some of the issues 
surrounding the financial health of HMO's in this Nation. In closing, 
Mr. President, while it is unlikely that action will be taken on this 
legislation late in the session. I look forward to working with 
interested organizations as well as my colleagues to strengthen and 
enhance the legislation I submit today.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.

[[Page S11375]]

  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 3261

       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 ``HMO Guaranty Act of 2000''.

     SEC. DEFINITIONS.

       In this Act:
       (1) Board.--The term ``Board'' means the Board of Directors 
     appointed under section 3(d).
       (2) Contractual obligation.--The term ``contractual 
     obligation'' means an obligation by a health maintenance 
     organization, under an agreement, policy, certificate, or 
     evidence of coverage involving a covered individual and the 
     organization, to pay or reimburse the covered individual (or 
     a health care provider who provided items or services to the 
     individual) for services provided prior to the declaration of 
     the insolvency of the health maintenance organization, that 
     remains unpaid at the time of such insolvency. Such term does 
     not include claims by former employees, including medical 
     professional employees, for deferred compensation, severance, 
     vacation, or other employment benefits.
       (3) Covered individual.--The term ``covered individual'' 
     means an enrollee or member of a health maintenance 
     organization.
       (4) Guaranty fund.--The term ``Guaranty Fund'' means the 
     Federal HMO Guaranty Fund established under section 3.
       (5) Health care provider.--The term ``health care 
     provider'' means a physician, hospital, or other person that 
     is licensed or otherwise authorized by the State to provide 
     health care services, and that provided health care services 
     to an enrollee of a health maintenance organization.
       (6) Health maintenance organization.--The term ``health 
     maintenance organization'' has the meaning given such term by 
     section 2791(b)(3) of the Public Health Service Act (42 
     U.S.C. 300gg-91(b)(3)).
       (7) Health maintenance organization contract.--The term 
     ``covered health maintenance organization contract'' means a 
     policy, certificate, or other evidence of health care 
     coverage that is issued by a health maintenance organization.
       (8) Insolvent organization.--The term ``insolvent 
     organization'' means a health maintenance organization that 
     is declared insolvent by court of competent jurisdiction and 
     placed under the control of a State Commissioner of Insurance 
     for the purpose of liquidation.
       (9) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services, in consultation with the 
     Secretary of Labor and the Secretary of the Treasury.
       (10) State.--The term ``State'' includes each of the 
     several States, the District of Columbia, the Commonwealth of 
     Puerto Rico, the Northern Mariana Islands, or any agency or 
     instrumentality thereof.
       (11) Uncovered expenditures.--The term ``uncovered 
     expenditures'' means the expenditures for the provision of 
     health care services that are the obligation of a health 
     maintenance organization that have not been paid by such 
     organization and for which no alternative payment 
     arrangements have been made.

     SEC. 3. ESTABLISHMENT OF HMO GUARANTY FUND.

       (a) In General.--There is established in the Treasury of 
     the United States a fund to be known as the HMO Guaranty Fund 
     to be used as provided for in this Act.
       (b) Amounts in Fund.--
       (1) In general.--There shall be deposited into the Guaranty 
     Fund--
       (A) amounts collected under section 5(a);
       (B) penalties collected under section 5(b); and
       (C) earnings on investments of monies in the Guaranty Fund.
       (2) Investments.--
       (A) In general.--The Secretary of the Treasury shall invest 
     amounts in the Guaranty Fund that are not required to meet 
     current withdrawals. Such investments may be made only in 
     interest-bearing obligations of the United States. For such 
     purpose, such obligations may be acquired on original issue 
     at the issue price, or by purchase of outstanding obligations 
     at the market price.
       (B) Availability of income.--Any interest derived from 
     obligations held by the Guaranty Fund and the proceeds from 
     any sale or redemption of such obligations, are hereby 
     appropriated to the Fund.
       (c) Use of Guaranty Fund.--Subject to section 4, amounts in 
     the Guaranty Fund shall be used to make payments to a State--
       (1) to pay the outstanding health care provider claims for 
     uncovered expenditures, and to fulfill contractual 
     obligations to covered individuals, with respect to an 
     insolvent health maintenance organization; and
       (2) to provide for a temporary continuation of health care 
     coverage for covered individuals.
       (d) Board of Directors.--
       (1) In general.--The Guaranty Fund shall be administered by 
     a Board of Directors to be composed of 9 individuals of 
     which--
       (A) three directors shall be appointed by the National 
     Association of Insurance Commissioners from among individuals 
     who serve as insurance regulators of a State;
       (B) three directors shall be appointed by a national 
     association which represents the health maintenance 
     organization industry of all States (as determined by the 
     Secretary) from among representatives of health maintenance 
     organizations; and
       (C) three directors shall be--
       (i) the Secretary of the Treasury, or the designee of the 
     Secretary;
       (ii) the Secretary of Health and Human Services, or the 
     designee of the Secretary; and
       (iii) the Secretary of Labor, or the designee of the 
     Secretary.
       (2) Terms, vacancies.--The members of the Board shall 
     establish the terms of service of the members of the Board 
     appointed under subparagraphs (A) and (B) of paragraph (1). 
     Any vacancy in the Board shall not affect its powers, and 
     shall be filled in the same manner as the original 
     appointment.
       (3) Compensation of members.--
       (A) In general.--Except as provided in subparagraph (B), 
     each member of the Board who is not an officer or employee of 
     the Federal Government shall serve without compensation. All 
     members of the Board who are officers or employees of the 
     United States shall serve without compensation in addition to 
     that received for their services as officers or employees of 
     the United States.
       (B) Travel expenses.--The members of the Board shall be 
     allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for employees of agencies 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from their homes or regular places of 
     business in the performance of services for the Board. Such 
     expenses shall be paid from the Guaranty Fund.
       (4) Voting.--Each member of the Board shall have 1 vote. 
     The Board shall set policy and decide all matters by a simple 
     majority of the votes cast.
       (5) Chairperson.--The Board shall elect a chairperson from 
     among its members.
       (6) Meetings.--The Board shall first meet not later than 30 
     days after the date on which all members are appointed under 
     paragraph (1). Subsequent meetings shall be at the call of 
     the chairperson. The Board may hold public hearings after 
     giving proper notice.
       (7) Fiduciary duty.--With respect to the members of the 
     Board that are not appointed under paragraph (1)(A), in 
     carrying out the duties of the Board such members shall have 
     a fiduciary duty to the Guaranty Fund that shall supersede 
     any duty to an employer or other special interest that the 
     member may otherwise represent.
       (8) Limitations on liability.--A member of the Board shall 
     not be liable, or in any way responsible, for the obligations 
     of the Guaranty Fund.
       (e) Duties.--The Board shall--
       (1) administer the Guaranty Fund;
       (2) adopt bylaws that permit the Board to enter into 
     contracts to receive contributions and make distributions in 
     accordance with this Act;
       (3) establish the application criteria and materials 
     necessary to enable a State to submit an application to the 
     Guaranty Fund;
       (4) review and make determination on applications received 
     under section 4(b); and
       (5) carry out other activities in accordance with this Act.

     SEC. 4. EXPENDITURES FROM THE GUARANTY FUND.

       (a) In General.--The Guaranty Fund shall be used to make 
     payments to a State to enable such State to pay the claims of 
     health care providers for health care services provided to 
     covered individuals prior to the declaration of insolvency of 
     a health maintenance organization and to provide for a 
     temporary continuation of health care coverage for such 
     individuals.
       (b) Procedure.--
       (1) In general.--Upon the declaration by a court of 
     competent jurisdiction that a health maintenance organization 
     is insolvent, the official responsible for regulating health 
     insurance in the State in which the declaration is made may 
     submit an application to the Guaranty Fund for payment under 
     this Act.
       (2) Contents of application.--An application submitted by a 
     State under paragraph (1) shall include the following:
       (A) Liquidation of assets and return of unused funds.--The 
     application shall contain an accounting of amounts received 
     (or expected to be received) as a result of the liquidation 
     of the assets of the insolvent organization.
       (B) Fund amount.--The application shall contain a request 
     for a specific amount of funds that will be used for the 
     uncovered expenditures and contractual obligations of an 
     insolvent organization.
       (C) Uncovered expenditures.--The application shall contain 
     an estimate of the aggregate number of uncovered individuals 
     and aggregate amount of uncovered expenditures with respect 
     to the insolvent organization involved.
       (D) Continuation coverage.--The application shall contain 
     an estimate of the aggregate amount of funds needed to 
     provide continuation coverage to uncovered individuals.
       (c) Consideration by Board.--Not later than 30 days after 
     the date on which the Guaranty Fund receives a completed 
     application from a State under subsection (b), the Board 
     shall make a determination with respect to payments to the 
     States.
       (d) Limitation.--The aggregate amount that may be paid to a 
     State under this section with respect to a single uncovered 
     individual shall not exceed $300,000.

[[Page S11376]]

       (e) Use for Continuation Coverage.--
       (1) In general.--A State may use amounts provided under 
     this section to provide for the continuation of health care 
     coverage for an uncovered individual through a health 
     maintenance organization or other health care coverage that 
     has been determined appropriate by the official responsible 
     for regulating health insurance in the State in collaboration 
     with the Board.
       (2) Limitation.--The period of continuation coverage with 
     respect to an uncovered individual under paragraph (1) shall 
     terminate on the earlier of--
       (A) the date that is 1 year after the date on which the 
     health maintenance organization was declared insolvent; or
       (B) or the date on which the contractual obligation of the 
     health maintenance organization to the individual was to 
     terminate.
       (f) Repayment of Funds.--The State shall repay to the 
     Guaranty Fund an amount equal to--
       (1) any amounts not utilized by the State on the date on 
     which the liquidation of the insolvent organization is 
     completed; and
       (2) any amounts recovered through liquidation that have not 
     been accounted for in the application of the State under 
     subsection (b)(2)(A).

     SEC. 5. CONTRIBUTIONS TO THE GUARANTY FUND.

       (a) Assessment on Health Maintenance Organizations.--
       (1) In general.--Not later than January 1, 2001, and every 
     6 months thereafter, each health maintenance organization 
     that is licensed by a State to provide health care coverage 
     shall pay to the Guaranty Fund an amount to be determined in 
     accordance with an assessment schedule to be established by 
     the Secretary not later than 180 days after the date of 
     enactment of this Act.
       (2) Deferment.--The Board, after consultation with the 
     official responsible for regulating health insurance in the 
     State involved may exempt, abate, or defer, in whole or in 
     part, the assessment of a health maintenance organization 
     under paragraph (1) if the organization demonstrates that the 
     payment of the assessment would endanger the ability of the 
     organization to fulfill its contractual obligations or place 
     the organization in an unsound financial condition.
       (3) Prohibition.--A health maintenance organization shall 
     not adjust the amount of premiums paid by enrollees to 
     account for the assessment paid under paragraph (1).
       (b) Failure to Pay.--A health maintenance organization that 
     fails to pay an assessment under subsection (a)(1) within 30 
     days after the date on which such assessment was to be paid 
     shall be subject to a civil penalty in an amount not to 
     exceed $1,000 per day.

     SEC. 6. STATE PREEMPTION.

       (a) In General.--Nothing in this Act shall be construed to 
     preempt or supersede any provision of State law that 
     establishes, implements, or continues in effect any standard 
     or requirement relating to health maintenance organizations.
       (b) Definition.--In this section, the term ``State law'' 
     means all laws, decisions, rules, regulations or other State 
     actions that have the effect of law.
                                 ______
                                 
      By Mr. JEFFORDS:
  S. 3262. A bill to amend the Communications Act of 1934 to make 
inapplicable certain political broadcasting provisions to noncommercial 
educational broadcasting stations; to the Committee on Commerce, 
Science, and Transportation.


             THE PUBLIC BROADCASTING INTEGRITY ACT OF 2000

  Mr. JEFFORDS. Mr. President, I rise today to introduce the Public 
Broadcasting Integrity Act of 2000, legislation that would make the 
Federal Communications Act's political broadcasting provisions 
inapplicable to noncommercial educational broadcasting stations.
  I believe the current law is well-intentioned to serve the public 
interest by allowing federal candidates to communicate their views to 
the general public. However, these provisions are having some 
unfortunate side effects as federal candidates are exploiting loopholes 
in the Act to the detriment of public broadcasting. Many Vermonters and 
my colleagues have seen in recent news reports that public radio and 
television stations are being forced to give free, uncensored air time 
to any Federal candidate under provisions of the Federal Communications 
Act. As a strong supporter of public radio and television, I find this 
phenomenon disturbing.
  I an concerned that this valuable public resource is being 
commandeered and exploited as a way to get free advertising. Unlike 
commercial stations, public radio and television are heavily dependent 
on listener contributions. Many of these listeners are reconsidering 
their future financial support of these stations if this loophole is 
not closed and programming is replaced by a flood of political 
advertising. It seems inevitable that the number of candidates using 
this avenue will increase dramatically in the next federal election 
unless we make this minor but important legislative correction.
  Mr. President, we can not allow this to happen which is why I am 
introducing this bill today. I believe this narrowly tailored 
legislation will close this loophole and preserve the integrity of 
public broadcasting. I call on my colleagues to join me and support 
this legislation.
                                 ______
                                 
      By Mr. LOTT (for Mr. Ashcroft):
  S. 3264. A bill to ensure that individuals with histories of mental 
illness and other persons prohibited from owning or possessing firearms 
are stopped from buying firearms by requiring instant background checks 
prior to making a firearms purchase, and for other purposes; to the 
Committee on the Judiciary.


              the records access improvements act of 2000

  Mr. ASHCROFT. Mr. President, issues surrounding possession and 
ownership of firearms have been some of the most divisive in this 
legislative session and political season. Americans hold a wide range 
of differing opinions regarding gun rights and responsibilities, and 
the proper balance of those rights against the need for public safety. 
But, despite the larger differences, most Americans agree that there 
are common sense actions that can be implemented to protect the rights 
of law-abiding citizens while preventing those with criminal records or 
histories of violent behavior from access to firearms.
  I support the provision in federal law that prohibits certain people 
from owning or possessing firearms. Under current law, certain 
categories of persons are unable to purchase guns. These include 
felons, fugitives from justice, illegal aliens, the mentally 
incompetent, and persons convicted of crimes of domestic violence. 
These proscriptions protect law-abiding citizens from those who have 
demonstrated they cannot use firearms responsibly. This law protects 
law-abiding gun owners because the fewer people who criminally misuse 
guns, the less sentiment that there will be to impose more restrictions 
on lawful gun owners.
  In 1994, the Congress passed the Brady Handgun Violence Prevention 
Act that instituted a system to check whether a prospective gun 
purchaser, prior to the transfer of a firearms, is ineligible to 
possess a gun because he or she falls into one of the nine prohibited 
categories. The permanent phase (phase II) of the Brady Act--that went 
into effect November 30, 1998--requires an instant background check be 
done on the buyer when a firearm is purchased from a licensed dealer. 
Either the State or the Federal Government conducts this check. This is 
to ensure that those prohibited by federal law from owning guns do not 
purchase them. It makes sense, and although the legislation was passed 
before I arrived in the Senate, I support the instant background check.
  Since the implementation of the Brady Act in 1994, through the end of 
calendar year 1999, 22 million background checks have been conducted on 
potential firearms purchasers. Of that 22 million, more than 536,000 
individuals were determined ineligible. And since phase II of the Brady 
Act went into effect in 1998--mandating Instant Background Checks in 
place of checks with a mandatory waiting period--more than 8.6 million 
requests for instant checks were received, with 2.4 percent of 
applicants being denied.
  I would note that unfortunately, this Administration has chosen not 
to prosecute those felons for attempting to buy a gun, which is a 
federal crime. Federal prosecutions have fallen at the same time 
background checks have given law enforcement a reliable tool for 
tracking down and locking up criminals trying to buy guns. In 1993, the 
Clinton-Gore Administration prosecuted 633 people for trying to 
illegally purchase a gun. That fell to 279 in 1997 and rose to 405 in 
1999. From 1994 to 1999, the Administration prosecuted an average of 
404 defendants for violations of the gun purchasing law annually--a 36-
percent drop from 1993. Obviously, we need to prosecute felons who are 
attempting to illegally buy guns.

  But there is another hole in the current law. While the federal 
database of state criminal records is fairly comprehensive, the same 
cannot be said of

[[Page S11377]]

mental incompetency records. Forty-one states, including the State of 
Missouri, do not permit records of the criminally insane to be searched 
prior to a firearm sale. This is a travesty. The result of this 
loophole is that individuals prohibited from purchasing firearms 
because of mental impairment are allowed to slip through the cracks--
often with tragic results.
  In April of this year, the New York Times did a series of four 
articles on what they termed as ``rampage'' killings--multiple-victim 
killings that were not primarily domestic or connected to a robbery or 
gang. The New York Times examined 102 killers in 100 rampage attacks in 
a computer-assisted study including the shooting in 1999 at Columbine 
High School in Littleton, Colorado, a day-trading firm in Atlanta, and 
a church in Fort Worth, Texas. The New York Times study found that at 
least half of the killers showed signs of serious mental health 
problems, and at least eight had been involuntarily committed. These 
articles highlight the difficulty of enforcing the provision of our gun 
control laws that prohibits people who have been involuntarily 
committed to mental institutions from buying a handgun.
  For example, Gracie Verduzco, was a 35-year-old paranoid 
schizophrenic who believed she had a transmitter in her left ear that 
received messages from a satellite and had been involuntarily 
hospitalized in Arizona twice. In addition, she had been committed to a 
mental hospital by a judge in the District of Columbia after she had 
threatened President Clinton. Despite three involuntary commitments, 
she was able to buy a .38-caliber revolver at a pawnshop in Tucson, 
Arizona by lying on her gun application. She used it to kill one person 
and wound four others there on May 21, 1998.
  According to the Justice Department, about 150,000 people a year are 
committed to mental institutions by court order in the United States. 
In total, there are now perhaps 2.7 million people who have been 
involuntarily committed at some point in their lives and are therefore 
barred by the federal law from buying a handgun. In response to some of 
the highly publicized cases, authorities in nine states have allowed 
law enforcement agencies some form of access to mental health records. 
And the number of ineligible individuals who attempt to purchase guns 
has been alarming. According to the Illinois State police, 3,699 people 
were turned down in Illinois from 1996 to 1998, when records showed 
they had been either voluntarily or involuntarily committed within the 
last 5 years, the legal test under Illinois law. An additional 5,585 
people who were hospitalized from 1996 to 1998 were found to already 
possess gun permits, which as a result, were revoked.
  The New York Times reported, ``But at the national level, as in most 
states, there has been no comparable effort to create access to court 
commitment records for gun checks. That lack of action is in stark 
contrast to the long effort by gun control groups and the Clinton 
administration in winning enactment of the Brady law to create 
databases screening out convicted felons, who like the involuntarily 
committed, were barred by the 1968 law from handgun purchases.''
  If we are serious about reducing the criminal misuse of firearms, 
this has to change. Federal law already makes the purchase or 
possession of firearms illegal for people the courts deem mentally 
incompetent, but the law is difficult, if not impossible to enforce 
because mental-health information is not currently part of 
computerized, instant background checks. That's why today I introduce 
the Records Access Improvement Act, to encourage states to make certain 
mental health information available to the National Instant Criminal 
Background Check System (NICS).
  At present, the instant check system is administered jointly by the 
states and by the Federal Bureau of Investigation. In 15 states, state 
agencies serve as points of contact (POCs), and conduct full background 
checks for both long guns and handguns. In 11 states, state agencies 
conduct partial background checks for handguns only. In POC states, 
federal firearm licensees contact the state agency, rather than the 
FBI. In non-POC States, Federal firearm licensees contact the FBI 
directly through the NICS system. Over half of the applications for 
firearm transfers were checked directly by the FBI, while the remainder 
of applications were checked by State or local agencies.
  In February 2000, the Bureau of Justice Statistics (BJS) reported 
that the identification of non-felons ineligible to purchase firearms 
is likely to remain problematic under NICS. The Bureau of Justice 
Statistics stated that new enabling statutes may be required to 
identify and access such information.
  The legislation I am introducing today is such a statute. 
Specifically, this bill will encourage states to make the information 
available to the NICS system by tying the receipt of grants made under 
the Violent Crime Reduction Trust Fund to the provision of relevant 
data to the Federal Bureau of Investigation. This bill will ensure that 
the NICS system is as complete as possible, so that the Instant 
Background Check will be as reliable as possible. The Federal gun law--
the Brady Act--makes it clear that certain persons are ineligible to 
purchase firearms. It is time that we take the steps necessary for 
enforcement of the law. This bill is a giant step toward reaching that 
goal.

                          ____________________