[Congressional Record Volume 149, Number 91 (Thursday, June 19, 2003)]
[House]
[Pages H5597-H5638]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               SMALL BUSINESS HEALTH FAIRNESS ACT OF 2003

  Mr. BOEHNER. Madam Speaker, pursuant to House Resolution 283, I call 
up the bill (H.R. 660) to amend title I of the Employee Retirement 
Income Security Act of 1974 to improve access and choice for 
entrepreneurs with small businesses with respect to medical care for 
their employees, and ask for its immediate consideration in the House.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. Pursuant to House Resolution 283, the bill 
is considered read for amendment.
  The text of H.R. 660 is as follows:

[[Page H5598]]

                                H.R. 660

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

     SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Small 
     Business Health Fairness Act of 2003''.
       (b) Table of Contents.--The table of contents is as 
     follows:

Sec. 1. Short title and table of contents.
Sec. 2. Rules governing association health plans.

           ``Part 8--Rules Governing Association Health Plans

``Sec. 801. Association health plans.
``Sec. 802. Certification of association health plans.
``Sec. 803. Requirements relating to sponsors and boards of trustees.
``Sec. 804. Participation and coverage requirements.
``Sec. 805. Other requirements relating to plan documents, contribution 
              rates, and benefit options.
``Sec. 806. Maintenance of reserves and provisions for solvency for 
              plans providing health benefits in addition to health 
              insurance coverage.
``Sec. 807. Requirements for application and related requirements.
``Sec. 808. Notice requirements for voluntary termination.
``Sec. 809. Corrective actions and mandatory termination.
``Sec. 810. Trusteeship by the Secretary of insolvent association 
              health plans providing health benefits in addition to 
              health insurance coverage.
``Sec. 811. State assessment authority.
``Sec. 812. Definitions and rules of construction.
Sec. 3. Clarification of treatment of single employer arrangements.
Sec. 4. Clarification of treatment of certain collectively bargained 
              arrangements.
Sec. 5. Enforcement provisions relating to association health plans.
Sec. 6. Cooperation between Federal and State authorities.
Sec. 7. Effective date and transitional and other rules.

     SEC. 2. RULES GOVERNING ASSOCIATION HEALTH PLANS.

       (a) In General.--Subtitle B of title I of the Employee 
     Retirement Income Security Act of 1974 is amended by adding 
     after part 7 the following new part:

           ``Part 8--Rules Governing Association Health Plans

     ``SEC. 801. ASSOCIATION HEALTH PLANS.

       ``(a) In General.--For purposes of this part, the term 
     `association health plan' means a group health plan whose 
     sponsor is (or is deemed under this part to be) described in 
     subsection (b).
       ``(b) Sponsorship.--The sponsor of a group health plan is 
     described in this subsection if such sponsor--
       ``(1) is 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 bona fide trade association, a bona fide industry 
     association (including a rural electric cooperative 
     association or a rural telephone cooperative association), a 
     bona fide professional association, or a bona fide chamber of 
     commerce (or similar bona fide business association, 
     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;
       ``(2) is established as a permanent entity which receives 
     the active support of its members and requires for membership 
     payment on a periodic basis of dues or payments necessary to 
     maintain eligibility for membership in the sponsor; and
       ``(3) does not condition membership, such dues or payments, 
     or coverage under the plan on the basis of health status-
     related factors with respect to the employees of its members 
     (or affiliated members), or the dependents of such employees, 
     and does not condition such dues or payments on the basis of 
     group health plan participation.

     Any sponsor consisting of an association of entities which 
     meet the requirements of paragraphs (1), (2), and (3) shall 
     be deemed to be a sponsor described in this subsection.

     ``SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH PLANS.

       ``(a) In General.--The applicable authority shall prescribe 
     by regulation, through negotiated rulemaking, a procedure 
     under which, subject to subsection (b), the applicable 
     authority shall certify association health plans which apply 
     for certification as meeting the requirements of this part.
       ``(b) Standards.--Under the procedure prescribed pursuant 
     to subsection (a), in the case of an association health plan 
     that provides at least one benefit option which does not 
     consist of health insurance coverage, the applicable 
     authority shall certify such plan as meeting the requirements 
     of this part only if the applicable authority is satisfied 
     that the applicable requirements of this part are met (or, 
     upon the date on which the plan is to commence operations, 
     will be met) with respect to the plan.
       ``(c) Requirements Applicable to Certified Plans.--An 
     association health plan with respect to which certification 
     under this part is in effect shall meet the applicable 
     requirements of this part, effective on the date of 
     certification (or, if later, on the date on which the plan is 
     to commence operations).
       ``(d) Requirements for Continued Certification.--The 
     applicable authority may provide by regulation, through 
     negotiated rulemaking, for continued certification of 
     association health plans under this part.
       ``(e) Class Certification for Fully Insured Plans.--The 
     applicable authority shall establish a class certification 
     procedure for association health plans under which all 
     benefits consist of health insurance coverage. Under such 
     procedure, the applicable authority shall provide for the 
     granting of certification under this part to the plans in 
     each class of such association health plans upon appropriate 
     filing under such procedure in connection with plans in such 
     class and payment of the prescribed fee under section 807(a).
       ``(f) Certification of Self-Insured Association Health 
     Plans.--An association health plan which offers one or more 
     benefit options which do not consist of health insurance 
     coverage may be certified under this part only if such 
     plan consists of any of the following:
       ``(1) a plan which offered such coverage on the date of the 
     enactment of the Small Business Health Fairness Act of 2003,
       ``(2) a plan under which the sponsor does not restrict 
     membership to one or more trades and businesses or industries 
     and whose eligible participating employers represent a broad 
     cross-section of trades and businesses or industries, or
       ``(3) a plan whose eligible participating employers 
     represent one or more trades or businesses, or one or more 
     industries, consisting of any of the following: agriculture; 
     equipment and automobile dealerships; barbering and 
     cosmetology; certified public accounting practices; child 
     care; construction; dance, theatrical and orchestra 
     productions; disinfecting and pest control; financial 
     services; fishing; foodservice establishments; hospitals; 
     labor organizations; logging; manufacturing (metals); mining; 
     medical and dental practices; medical laboratories; 
     professional consulting services; sanitary services; 
     transportation (local and freight); warehousing; wholesaling/
     distributing; or any other trade or business or industry 
     which has been indicated as having average or above-average 
     risk or health claims experience by reason of State rate 
     filings, denials of coverage, proposed premium rate levels, 
     or other means demonstrated by such plan in accordance with 
     regulations which the Secretary shall prescribe through 
     negotiated rulemaking.

     ``SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF 
                   TRUSTEES.

       ``(a) Sponsor.--The requirements of this subsection are met 
     with respect to an association health plan if the sponsor has 
     met (or is deemed under this part to have met) the 
     requirements of section 801(b) for a continuous period of not 
     less than 3 years ending with the date of the application for 
     certification under this part.
       ``(b) Board of Trustees.--The requirements of this 
     subsection are met with respect to an association health plan 
     if the following requirements are met:
       ``(1) Fiscal control.--The plan is operated, pursuant to a 
     trust agreement, by a board of trustees which has complete 
     fiscal control over the plan and which is responsible for all 
     operations of the plan.
       ``(2) Rules of operation and financial controls.--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 plan and to meet all requirements 
     of this title applicable to the plan.
       ``(3) Rules governing relationship to participating 
     employers and to contractors.--
       ``(A) In general.--Except as provided in subparagraphs (B) 
     and (C), 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.
       ``(B) Limitation.--
       ``(i) General rule.--Except as provided in clauses (ii) and 
     (iii), no such member is an owner, officer, director, or 
     employee of, or partner in, a contract administrator or other 
     service provider to the plan.
       ``(ii) Limited exception for providers of services solely 
     on behalf of the sponsor.--Officers or employees of a sponsor 
     which is a service provider (other than a contract 
     administrator) to the plan 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 plan other 
     than on behalf of the sponsor.
       ``(iii) Treatment of providers of medical care.--In the 
     case of a sponsor which is an association whose membership 
     consists primarily of providers of medical care, clause (i) 
     shall not apply in the case of any service provider described 
     in subparagraph (A) who is a provider of medical care under 
     the plan.
       ``(C) Certain plans excluded.--Subparagraph (A) shall not 
     apply to an association health plan which is in existence on 
     the date of the enactment of the Small Business Health 
     Fairness Act of 2003.

[[Page H5599]]

       ``(D) Sole authority.--The board has sole authority under 
     the plan to approve applications for participation in the 
     plan and to contract with a service provider to administer 
     the day-to-day affairs of the plan.
       ``(c) Treatment of Franchise Networks.--In the case of a 
     group health plan which is established and maintained by a 
     franchiser for a franchise network consisting of its 
     franchisees--
       ``(1) the requirements of subsection (a) and section 
     801(a)(1) shall be deemed met if such requirements would 
     otherwise be met if the franchiser were deemed to be the 
     sponsor referred to in section 801(b), such network were 
     deemed to be an association described in section 801(b), and 
     each franchisee were deemed to be a member (of the 
     association and the sponsor) referred to in section 801(b); 
     and
       ``(2) the requirements of section 804(a)(1) shall be deemed 
     met.

     The Secretary may by regulation, through negotiated 
     rulemaking, define for purposes of this subsection the terms 
     `franchiser', `franchise network', and `franchisee'.
       ``(d) Certain Collectively Bargained Plans.--
       ``(1) In general.--In the case of a group health plan 
     described in paragraph (2)--
       ``(A) the requirements of subsection (a) and section 
     801(a)(1) shall be deemed met;
       ``(B) the joint board of trustees shall be deemed a board 
     of trustees with respect to which the requirements of 
     subsection (b) are met; and
       ``(C) the requirements of section 804 shall be deemed met.
       ``(2) Requirements.--A group health plan is described in 
     this paragraph if--
       ``(A) the plan is a multiemployer plan; or
       ``(B) the plan is in existence on April 1, 2003, and would 
     be described in section 3(40)(A)(i) but solely for the 
     failure to meet the requirements of section 3(40)(C)(ii).
       ``(3) Construction.--A group health plan described in 
     paragraph (2) shall only be treated as an association health 
     plan under this part if the sponsor of the plan applies for, 
     and obtains, certification of the plan as an association 
     health plan under this part.

     ``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.

       ``(a) Covered Employers and Individuals.--The requirements 
     of this subsection are met with respect to an association 
     health plan if, under the terms of the plan--
       ``(1) each participating employer must be--
       ``(A) a member of the sponsor,
       ``(B) the sponsor, or
       ``(C) an affiliated member of the sponsor with respect to 
     which the requirements of subsection (b) are met,

     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 such an affiliated member of the sponsor, 
     participating employers may also include such employer; and
       ``(2) all individuals commencing coverage under the plan 
     after certification under this part must be--
       ``(A) active or retired owners (including self-employed 
     individuals), officers, directors, or employees of, or 
     partners in, participating employers; or
       ``(B) the beneficiaries of individuals described in 
     subparagraph (A).
       ``(b) Coverage of Previously Uninsured Employees.--In the 
     case of an association health plan in existence on the date 
     of the enactment of the Small Business Health Fairness Act of 
     2003, an affiliated member of the sponsor of the plan may be 
     offered coverage under the plan as a participating employer 
     only if--
       ``(1) the affiliated member was an affiliated member on the 
     date of certification under this part; or
       ``(2) during the 12-month period preceding the date of the 
     offering of such coverage, the affiliated member has not 
     maintained or contributed to a group health plan with respect 
     to any of its employees who would otherwise be eligible to 
     participate in such association health plan.
       ``(c) Individual Market Unaffected.--The requirements of 
     this subsection are met with respect to an association health 
     plan if, under the terms of the plan, no participating 
     employer may provide health insurance coverage in the 
     individual market for any employee not covered under the plan 
     which is similar to the coverage contemporaneously provided 
     to employees of the employer under the plan, if such 
     exclusion of the employee from coverage under the plan is 
     based on a health status-related factor with respect to the 
     employee and such employee would, but for such exclusion on 
     such basis, be eligible for coverage under the plan.
       ``(d) Prohibition of Discrimination Against Employers and 
     Employees Eligible To Participate.--The requirements of this 
     subsection are met with respect to an association health plan 
     if--
       ``(1) under the terms of the plan, all employers meeting 
     the preceding requirements of this section are eligible to 
     qualify as participating employers for all geographically 
     available coverage options, unless, in the case of any such 
     employer, participation or contribution requirements of the 
     type referred to in section 2711 of the Public Health Service 
     Act are not met;
       ``(2) upon request, any employer eligible to participate is 
     furnished information regarding all coverage options 
     available under the plan; and
       ``(3) the applicable requirements of sections 701, 702, and 
     703 are met with respect to the plan.

     ``SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, 
                   CONTRIBUTION RATES, AND BENEFIT OPTIONS.

       ``(a) In General.--The requirements of this section are met 
     with respect to an association health plan if the following 
     requirements are met:
       ``(1) Contents of governing instruments.--The instruments 
     governing the plan include a written instrument, meeting the 
     requirements of an instrument required under section 
     402(a)(1), which--
       ``(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 plan is to serve as 
     plan sponsor (referred to in section 3(16)(B)); and
       ``(C) incorporates the requirements of section 806.
       ``(2) Contribution rates must be nondiscriminatory.--
       ``(A) The contribution rates for any participating small 
     employer do not vary on the basis of any health status-
     related factor in relation to employees of such employer or 
     their beneficiaries and do not vary on the basis of the type 
     of business or industry in which such employer is engaged.
       ``(B) Nothing in this title or any other provision of law 
     shall be construed to preclude an association health plan, or 
     a health insurance issuer offering health insurance coverage 
     in connection with an association health plan, from--
       ``(i) setting contribution rates based on the claims 
     experience of the plan; or
       ``(ii) varying contribution rates for small employers in a 
     State to the extent that such rates could vary using the same 
     methodology employed in such State for regulating premium 
     rates in the small group market with respect to health 
     insurance coverage offered in connection with bona fide 
     associations (within the meaning of section 2791(d)(3) of the 
     Public Health Service Act),

     subject to the requirements of section 702(b) relating to 
     contribution rates.
       ``(3) Floor for number of covered individuals with respect 
     to certain plans.--If any benefit option under the plan does 
     not consist of health insurance coverage, the plan has as of 
     the beginning of the plan year not fewer than 1,000 
     participants and beneficiaries.
       ``(4) Marketing requirements.--
       ``(A) In general.--If a benefit option which consists of 
     health insurance coverage is offered under the plan, State-
     licensed insurance agents shall be used to distribute to 
     small employers coverage which does not consist of health 
     insurance coverage in a manner comparable to the manner in 
     which such agents are used to distribute health insurance 
     coverage.
       ``(B) State-licensed insurance agents.--For purposes of 
     subparagraph (A), the term `State-licensed insurance agents' 
     means one or more agents who are licensed in a State and are 
     subject to the laws of such State relating to licensure, 
     qualification, testing, examination, and continuing education 
     of persons authorized to offer, sell, or solicit health 
     insurance coverage in such State.
       ``(5) Regulatory requirements.--Such other requirements as 
     the applicable authority determines are necessary to carry 
     out the purposes of this part, which shall be prescribed by 
     the applicable authority by regulation through negotiated 
     rulemaking.
       ``(b) Ability of Association Health Plans To Design Benefit 
     Options.--Subject to section 514(d), nothing in this part or 
     any provision of State law (as defined in section 514(c)(1)) 
     shall be construed to preclude an association health plan, or 
     a health insurance issuer offering health insurance coverage 
     in connection with an association health plan, from 
     exercising its sole discretion in selecting the specific 
     items and services consisting of medical care to be included 
     as benefits under such plan or coverage, except (subject to 
     section 514) in the case of any law to the extent that it (1) 
     prohibits an exclusion of a specific disease from such 
     coverage, or (2) is not preempted under section 731(a)(1) 
     with respect to matters governed by section 711 or 712.

     ``SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS FOR 
                   SOLVENCY FOR PLANS PROVIDING HEALTH BENEFITS IN 
                   ADDITION TO HEALTH INSURANCE COVERAGE.

       ``(a) In General.--The requirements of this section are met 
     with respect to an association health plan if--
       ``(1) the benefits under the plan consist solely of health 
     insurance coverage; or
       ``(2) if the plan provides any additional benefit options 
     which do not consist of health insurance coverage, the plan--
       ``(A) establishes and maintains reserves with respect to 
     such additional benefit options, in amounts recommended by 
     the qualified actuary, consisting of--
       ``(i) a reserve sufficient for unearned contributions;
       ``(ii) 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;
       ``(iii) a reserve sufficient for any other obligations of 
     the plan; and

[[Page H5600]]

       ``(iv) a reserve sufficient for a margin of error and other 
     fluctuations, taking into account the specific circumstances 
     of the plan; and
       ``(B) establishes and maintains aggregate and specific 
     excess /stop loss insurance and solvency indemnification, 
     with respect to such additional benefit options for which 
     risk of loss has not yet been transferred, as follows:
       ``(i) The plan shall secure aggregate excess /stop loss 
     insurance for the plan with an attachment point which is not 
     greater than 125 percent of expected gross annual claims. The 
     applicable authority may by regulation, through negotiated 
     rulemaking, provide for upward adjustments in the amount of 
     such percentage in specified circumstances in which the plan 
     specifically provides for and maintains reserves in excess of 
     the amounts required under subparagraph (A).
       ``(ii) The plan shall secure specific excess /stop loss 
     insurance for the plan with an attachment point which is at 
     least equal to an amount recommended by the plan's qualified 
     actuary. The applicable authority may by regulation, through 
     negotiated rulemaking, provide for adjustments in the amount 
     of such insurance in specified circumstances in which the 
     plan specifically provides for and maintains reserves in 
     excess of the amounts required under subparagraph (A).
       ``(iii) The plan shall secure indemnification insurance for 
     any claims which the plan is unable to satisfy by reason of a 
     plan termination.

     Any regulations prescribed by the applicable authority 
     pursuant to clause (i) or (ii) of subparagraph (B) may allow 
     for such adjustments in the required levels of excess /
     stop loss insurance as the qualified actuary may 
     recommend, taking into account the specific circumstances 
     of the plan.
       ``(b) Minimum Surplus in Addition to Claims Reserves.--In 
     the case of any association health plan described in 
     subsection (a)(2), the requirements of this subsection are 
     met if the plan establishes and maintains surplus in an 
     amount at least equal to--
       ``(1) $500,000, or
       ``(2) such greater amount (but not greater than $2,000,000) 
     as may be set forth in regulations prescribed by the 
     applicable authority through negotiated rulemaking, based on 
     the level of aggregate and specific excess /stop loss 
     insurance provided with respect to such plan.
       ``(c) Additional Requirements.--In the case of any 
     association health plan described in subsection (a)(2), the 
     applicable authority may provide such additional requirements 
     relating to reserves and excess /stop loss insurance as the 
     applicable authority considers appropriate. Such requirements 
     may be provided by regulation, through negotiated rulemaking, 
     with respect to any such plan or any class of such plans.
       ``(d) Adjustments for Excess /Stop Loss Insurance.--The 
     applicable authority may provide for adjustments to the 
     levels of reserves otherwise required under subsections (a) 
     and (b) with respect to any plan or class of plans to take 
     into account excess /stop loss insurance provided with 
     respect to such plan or plans.
       ``(e) Alternative Means of Compliance.--The applicable 
     authority may permit an association health plan described in 
     subsection (a)(2) to substitute, for all or part of the 
     requirements of this section (except subsection 
     (a)(2)(B)(iii)), such security, guarantee, hold-harmless 
     arrangement, or other financial arrangement as the applicable 
     authority determines to be adequate to enable the plan to 
     fully meet all its financial obligations on a timely basis 
     and is otherwise no less protective of the interests of 
     participants and beneficiaries than the requirements for 
     which it is substituted. The applicable authority may take 
     into account, for purposes of this subsection, evidence 
     provided by the plan or sponsor which demonstrates an 
     assumption of liability with respect to the plan. Such 
     evidence may be in the form of a contract of indemnification, 
     lien, bonding, insurance, letter of credit, recourse under 
     applicable terms of the plan in the form of assessments of 
     participating employers, security, or other financial 
     arrangement.
       ``(f) Measures To Ensure Continued Payment of Benefits by 
     Certain Plans in Distress.--
       ``(1) Payments by certain plans to association health plan 
     fund.--
       ``(A) In general.--In the case of an association health 
     plan described in subsection (a)(2), the requirements of this 
     subsection are met if the plan makes payments into the 
     Association Health Plan Fund under this subparagraph when 
     they are due. Such payments shall consist of annual payments 
     in the amount of $5,000, and, in addition to such annual 
     payments, such supplemental payments as the Secretary may 
     determine to be necessary under paragraph (2). Payments under 
     this paragraph are payable to the Fund at the time determined 
     by the Secretary. Initial payments are due in advance of 
     certification under this part. Payments shall continue to 
     accrue until a plan's assets are distributed pursuant to a 
     termination procedure.
       ``(B) Penalties for failure to make payments.--If any 
     payment is not made by a plan when it is due, a late payment 
     charge of not more than 100 percent of the payment which was 
     not timely paid shall be payable by the plan to the Fund.
       ``(C) Continued duty of the secretary.--The Secretary shall 
     not cease to carry out the provisions of paragraph (2) on 
     account of the failure of a plan to pay any payment when due.
       ``(2) Payments by secretary to continue excess /stop loss 
     insurance coverage and indemnification insurance coverage for 
     certain plans.--In any case in which the applicable authority 
     determines that there is, or that there is reason to believe 
     that there will be: (A) a failure to take necessary 
     corrective actions under section 809(a) with respect to an 
     association health plan described in subsection (a)(2); or 
     (B) a termination of such a plan under section 809(b) or 
     810(b)(8) (and, if the applicable authority is not the 
     Secretary, certifies such determination to the Secretary), 
     the Secretary shall determine the amounts necessary to make 
     payments to an insurer (designated by the Secretary) to 
     maintain in force excess /stop loss insurance coverage or 
     indemnification insurance coverage for such plan, if the 
     Secretary determines that there is a reasonable expectation 
     that, without such payments, claims would not be satisfied by 
     reason of termination of such coverage. The Secretary shall, 
     to the extent provided in advance in appropriation Acts, pay 
     such amounts so determined to the insurer designated by 
     the Secretary.
       ``(3) Association health plan fund.--
       ``(A) In general.--There is established on the books of the 
     Treasury a fund to be known as the `Association Health Plan 
     Fund'. The Fund shall be available for making payments 
     pursuant to paragraph (2). The Fund shall be credited with 
     payments received pursuant to paragraph (1)(A), penalties 
     received pursuant to paragraph (1)(B); and earnings on 
     investments of amounts of the Fund under subparagraph (B).
       ``(B) Investment.--Whenever the Secretary determines that 
     the moneys of the fund are in excess of current needs, the 
     Secretary may request the investment of such amounts as the 
     Secretary determines advisable by the Secretary of the 
     Treasury in obligations issued or guaranteed by the United 
     States.
       ``(g) Excess /Stop Loss Insurance.--For purposes of this 
     section--
       ``(1) Aggregate excess /stop loss insurance.--The term 
     `aggregate excess /stop loss insurance' means, in connection 
     with an association health plan, a contract--
       ``(A) under which an insurer (meeting such minimum 
     standards as the applicable authority may prescribe by 
     regulation through negotiated rulemaking) provides for 
     payment to the plan with respect to aggregate claims under 
     the plan in excess of an amount or amounts specified in such 
     contract;
       ``(B) which is guaranteed renewable; and
       ``(C) which allows for payment of premiums by any third 
     party on behalf of the insured plan.
       ``(2) Specific excess /stop loss insurance.--The term 
     `specific excess /stop loss insurance' means, in connection 
     with an association health plan, a contract--
       ``(A) under which an insurer (meeting such minimum 
     standards as the applicable authority may prescribe by 
     regulation through negotiated rulemaking) provides for 
     payment to the plan with respect to claims under the plan in 
     connection with a covered individual in excess of an amount 
     or amounts specified in such contract in connection with such 
     covered individual;
       ``(B) which is guaranteed renewable; and
       ``(C) which allows for payment of premiums by any third 
     party on behalf of the insured plan.
       ``(h) Indemnification Insurance.--For purposes of this 
     section, the term `indemnification insurance' means, in 
     connection with an association health plan, a contract--
       ``(1) under which an insurer (meeting such minimum 
     standards as the applicable authority may prescribe through 
     negotiated rulemaking) provides for payment to the plan with 
     respect to claims under the plan which the plan is unable to 
     satisfy by reason of a termination pursuant to section 809(b) 
     (relating to mandatory termination);
       ``(2) which is guaranteed renewable and noncancellable for 
     any reason (except as the applicable authority may prescribe 
     by regulation through negotiated rulemaking); and
       ``(3) which allows for payment of premiums by any third 
     party on behalf of the insured plan.
       ``(i) Reserves.--For purposes of this section, the term 
     `reserves' means, in connection with an association health 
     plan, plan assets which meet the fiduciary standards under 
     part 4 and such additional requirements regarding liquidity 
     as the applicable authority may prescribe through negotiated 
     rulemaking.
       ``(j) Solvency Standards Working Group.--
       ``(1) In general.--Within 90 days after the date of the 
     enactment of the Small Business Health Fairness Act of 2003, 
     the applicable authority shall establish a Solvency Standards 
     Working Group. In prescribing the initial regulations under 
     this section, the applicable authority shall take into 
     account the recommendations of such Working Group.
       ``(2) Membership.--The Working Group shall consist of not 
     more than 15 members appointed by the applicable authority. 
     The applicable authority shall include among persons invited 
     to membership on the Working Group at least one of each of 
     the following:
       ``(A) a representative of the National Association of 
     Insurance Commissioners;
       ``(B) a representative of the American Academy of 
     Actuaries;
       ``(C) a representative of the State governments, or their 
     interests;

[[Page H5601]]

       ``(D) a representative of existing self-insured 
     arrangements, or their interests;
       ``(E) a representative of associations of the type referred 
     to in section 801(b)(1), or their interests; and
       ``(F) a representative of multiemployer plans that are 
     group health plans, or their interests.

     ``SEC. 807. REQUIREMENTS FOR APPLICATION AND RELATED 
                   REQUIREMENTS.

       ``(a) Filing Fee.--Under the procedure prescribed pursuant 
     to section 802(a), an association health plan shall pay to 
     the applicable authority at the time of filing an application 
     for certification under this part a filing fee in the amount 
     of $5,000, which shall be available in the case of the 
     Secretary, to the extent provided in appropriation Acts, for 
     the sole purpose of administering the certification 
     procedures applicable with respect to association health 
     plans.
       ``(b) Information To Be Included in Application for 
     Certification.--An application for certification under this 
     part meets the requirements of this section only if it 
     includes, in a manner and form which shall be prescribed by 
     the applicable authority through negotiated rulemaking, at 
     least the following information:
       ``(1) Identifying information.--The names and addresses 
     of--
       ``(A) the sponsor; and
       ``(B) the members of the board of trustees of the plan.
       ``(2) States in which plan intends to do business.--The 
     States in which participants and beneficiaries under the plan 
     are to be located and the number of them expected to be 
     located in each such State.
       ``(3) 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.
       ``(4) Plan documents.--A copy of the documents governing 
     the plan (including any bylaws and trust agreements), the 
     summary plan description, and other material describing the 
     benefits that will be provided to participants and 
     beneficiaries under the plan.
       ``(5) Agreements with service providers.--A copy of any 
     agreements between the plan and contract administrators and 
     other service providers.
       ``(6) Funding report.--In the case of association health 
     plans providing benefits options in addition to health 
     insurance coverage, a report setting forth information with 
     respect to such additional benefit options determined as of a 
     date within the 120-day period ending with the date of the 
     application, including the following:
       ``(A) Reserves.--A statement, certified by the board of 
     trustees of the plan, and a statement of actuarial opinion, 
     signed by a qualified actuary, that all applicable 
     requirements of section 806 are or will be met in accordance 
     with regulations which the applicable authority shall 
     prescribe through negotiated rulemaking.
       ``(B) 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 plan for 
     the 12-month period beginning with such date within such 120-
     day period, taking into account the expected coverage and 
     experience of the plan. 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.
       ``(C) 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 plan and a 
     projection of the assets, liabilities, income, and expenses 
     of the plan for the 12-month period referred to in 
     subparagraph (B). The income statement shall identify 
     separately the plan's administrative expenses and claims.
       ``(D) 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 plan.
       ``(E) Other information.--Any other information as may be 
     determined by the applicable authority, by regulation through 
     negotiated rulemaking, as necessary to carry out the purposes 
     of this part.
       ``(c) Filing Notice of Certification With States.--A 
     certification granted under this part to an association 
     health plan shall not be effective unless written notice of 
     such certification is filed with the applicable State 
     authority of each State in which at least 25 percent of the 
     participants and beneficiaries under the plan 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.
       ``(d) Notice of Material Changes.--In the case of any 
     association health plan certified under this part, 
     descriptions of material changes in any information which was 
     required to be submitted with the application for the 
     certification under this part shall be filed in such form and 
     manner as shall be prescribed by the applicable authority by 
     regulation through negotiated rulemaking. The applicable 
     authority may require by regulation, through negotiated 
     rulemaking, prior notice of material changes with respect to 
     specified matters which might serve as the basis for 
     suspension or revocation of the certification.
       ``(e) Reporting Requirements for Certain Association Health 
     Plans.--An association health plan certified under this part 
     which provides benefit options in addition to health 
     insurance coverage for such plan year shall meet the 
     requirements of section 503B by filing an annual report under 
     such section which shall include information described in 
     subsection (b)(6) with respect to the plan year and, 
     notwithstanding section 503C(a)(1)(A), shall be filed with 
     the applicable authority not later than 90 days after the 
     close of the plan year (or on such later date as may be 
     prescribed by the applicable authority). The applicable 
     authority may require by regulation through negotiated 
     rulemaking such interim reports as it considers appropriate.
       ``(f) Engagement of Qualified Actuary.--The board of 
     trustees of each association health plan which provides 
     benefits options in addition to health insurance coverage and 
     which is applying for certification under this part or is 
     certified under this part shall engage, on behalf of all 
     participants and beneficiaries, 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 plan and to reasonable expectations; and
       ``(2) represent such actuary's best estimate of anticipated 
     experience under the plan.

     The opinion by the qualified actuary shall be made with 
     respect to, and shall be made a part of, the annual report.

     ``SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.

       ``Except as provided in section 809(b), an association 
     health plan which is or has been certified under this part 
     may terminate (upon or at any time after cessation of 
     accruals in benefit liabilities) 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 
     plan in connection with such termination in a manner which 
     will result in timely payment of all benefits for which the 
     plan is obligated; and
       ``(3) submits such plan in writing to the applicable 
     authority.

     Actions required under this section shall be taken in such 
     form and manner as may be prescribed by the applicable 
     authority by regulation through negotiated rulemaking.

     ``SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMINATION.

       ``(a) Actions To Avoid Depletion of Reserves.--An 
     association health plan which is certified under this part 
     and which provides benefits other than health insurance 
     coverage shall continue to meet the requirements of section 
     806, irrespective of whether such certification continues in 
     effect. The board of trustees of such plan shall determine 
     quarterly whether the requirements of section 806 are met. In 
     any case in which the board determines that there is reason 
     to believe that there is or will be a failure to meet such 
     requirements, or the applicable authority makes such a 
     determination and so notifies the board, the board shall 
     immediately notify the qualified actuary engaged by the plan, 
     and such actuary shall, not later than the end of the next 
     following month, make such recommendations to the board for 
     corrective action as the actuary determines necessary to 
     ensure compliance with section 806. Not later than 30 days 
     after receiving from the actuary recommendations for 
     corrective actions, the board shall notify the applicable 
     authority (in such form and manner as the applicable 
     authority may prescribe by regulation through negotiated 
     rulemaking) of such recommendations of the actuary for 
     corrective action, together with a description of the actions 
     (if any) that the board has taken or plans to take in 
     response to such recommendations. The board shall thereafter 
     report to the applicable authority, in such form and 
     frequency as the applicable authority may specify to the 
     board, regarding corrective action taken by the board until 
     the requirements of section 806 are met.
       ``(b) Mandatory Termination.--In any case in which--
       ``(1) the applicable authority has been notified under 
     subsection (a) of a failure of an association health plan 
     which is or has been certified under this part and is 
     described in section 806(a)(2) to meet the requirements of 
     section 806 and has not been notified by the board of 
     trustees of the plan that corrective action has restored 
     compliance with such requirements; and
       ``(2) the applicable authority determines that there is a 
     reasonable expectation that the plan will continue to fail to 
     meet the requirements of section 806,

     the board of trustees of the plan shall, at the direction of 
     the applicable authority, terminate the plan and, in the 
     course of the termination, take such actions as the 
     applicable authority may require, including satisfying any 
     claims referred to in section 806(a)(2)(B)(iii) and 
     recovering for the plan

[[Page H5602]]

     any liability under subsection (a)(2)(B)(iii) or (e) of 
     section 806, as necessary to ensure that the affairs of the 
     plan will be, to the maximum extent possible, wound up in a 
     manner which will result in timely provision of all benefits 
     for which the plan is obligated.

     ``SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT 
                   ASSOCIATION HEALTH PLANS PROVIDING HEALTH 
                   BENEFITS IN ADDITION TO HEALTH INSURANCE 
                   COVERAGE.

       ``(a) Appointment of Secretary as Trustee for Insolvent 
     Plans.--Whenever the Secretary determines that an association 
     health plan which is or has been certified under this part 
     and which is described in section 806(a)(2) will be unable to 
     provide benefits when due or is otherwise in a financially 
     hazardous condition, as shall be defined by the Secretary by 
     regulation through negotiated rulemaking, the Secretary 
     shall, upon notice to the plan, apply to the appropriate 
     United States district court for appointment of the Secretary 
     as trustee to administer the plan for the duration of the 
     insolvency. The plan may appear as a party and other 
     interested persons may intervene in the proceedings at the 
     discretion of the court. The court shall appoint such 
     Secretary trustee if the court determines that the 
     trusteeship is necessary to protect the interests of the 
     participants and beneficiaries or providers of medical care 
     or to avoid any unreasonable deterioration of the financial 
     condition of the plan. The trusteeship of such Secretary 
     shall continue until the conditions described in the first 
     sentence of this subsection are remedied or the plan is 
     terminated.
       ``(b) Powers as Trustee.--The Secretary, upon appointment 
     as trustee under subsection (a), shall have the power--
       ``(1) to do any act authorized by the plan, this title, or 
     other applicable provisions of law to be done by the plan 
     administrator or any trustee of the plan;
       ``(2) to require the transfer of all (or any part) of the 
     assets and records of the plan to the Secretary as trustee;
       ``(3) to invest any assets of the plan which the Secretary 
     holds in accordance with the provisions of the plan, 
     regulations prescribed by the Secretary through negotiated 
     rulemaking, and applicable provisions of law;
       ``(4) to require the sponsor, the plan administrator, any 
     participating employer, and any employee organization 
     representing plan participants to furnish any information 
     with respect to the plan which the Secretary as trustee may 
     reasonably need in order to administer the plan;
       ``(5) to collect for the plan any amounts due the plan and 
     to recover reasonable expenses of the trusteeship;
       ``(6) to commence, prosecute, or defend on behalf of the 
     plan any suit or proceeding involving the plan;
       ``(7) to issue, publish, or file such notices, statements, 
     and reports as may be required by the Secretary by regulation 
     through negotiated rulemaking or required by any order of the 
     court;
       ``(8) to terminate the plan (or provide for its termination 
     in accordance with section 809(b)) and liquidate the plan 
     assets, to restore the plan to the responsibility of the 
     sponsor, or to continue the trusteeship;
       ``(9) to provide for the enrollment of plan participants 
     and beneficiaries under appropriate coverage options; and
       ``(10) to do such other acts as may be necessary to comply 
     with this title or any order of the court and to protect the 
     interests of plan participants and beneficiaries and 
     providers of medical care.
       ``(c) Notice of Appointment.--As soon as practicable after 
     the Secretary's appointment as trustee, the Secretary shall 
     give notice of such appointment to--
       ``(1) the sponsor and plan administrator;
       ``(2) each participant;
       ``(3) each participating employer; and
       ``(4) if applicable, each employee organization which, for 
     purposes of collective bargaining, represents plan 
     participants.
       ``(d) Additional Duties.--Except to the extent inconsistent 
     with the provisions of this title, or as may be otherwise 
     ordered by the court, the Secretary, upon appointment as 
     trustee under this section, shall be subject to the same 
     duties as those of a trustee under section 704 of title 11, 
     United States Code, and shall have the duties of a fiduciary 
     for purposes of this title.
       ``(e) Other Proceedings.--An application by the Secretary 
     under this subsection may be filed notwithstanding the 
     pendency in the same or any other court of any bankruptcy, 
     mortgage foreclosure, or equity receivership proceeding, or 
     any proceeding to reorganize, conserve, or liquidate such 
     plan or its property, or any proceeding to enforce a lien 
     against property of the plan.
       ``(f) Jurisdiction of Court.--
       ``(1) In general.--Upon the filing of an application for 
     the appointment as trustee or the issuance of a decree under 
     this section, the court to which the application is made 
     shall have exclusive jurisdiction of the plan involved and 
     its property wherever located with the powers, to the extent 
     consistent with the purposes of this section, of a court of 
     the United States having jurisdiction over cases under 
     chapter 11 of title 11, United States Code. Pending an 
     adjudication under this section such court shall stay, and 
     upon appointment by it of the Secretary as trustee, such 
     court shall continue the stay of, any pending mortgage 
     foreclosure, equity receivership, or other proceeding to 
     reorganize, conserve, or liquidate the plan, the sponsor, or 
     property of such plan or sponsor, and any other suit against 
     any receiver, conservator, or trustee of the plan, the 
     sponsor, or property of the plan or sponsor. Pending such 
     adjudication and upon the appointment by it of the Secretary 
     as trustee, the court may stay any proceeding to enforce a 
     lien against property of the plan or the sponsor or any other 
     suit against the plan or the sponsor.
       ``(2) Venue.--An action under this section may be brought 
     in the judicial district where the sponsor or the plan 
     administrator resides or does business or where any asset of 
     the plan is situated. A district court in which such action 
     is brought may issue process with respect to such action in 
     any other judicial district.
       ``(g) Personnel.--In accordance with regulations which 
     shall be prescribed by the Secretary through negotiated 
     rulemaking, the Secretary shall appoint, retain, and 
     compensate accountants, actuaries, and other professional 
     service personnel as may be necessary in connection with the 
     Secretary's service as trustee under this section.

     ``SEC. 811. STATE ASSESSMENT AUTHORITY.

       ``(a) In General.--Notwithstanding section 514, a State may 
     impose by law a contribution tax on an association health 
     plan described in section 806(a)(2), if the plan commenced 
     operations in such State after the date of the enactment of 
     the Small Business Health Fairness Act of 2003.
       ``(b) Contribution Tax.--For purposes of this section, the 
     term `contribution tax' imposed by a State on an association 
     health plan means any tax imposed by such State if--
       ``(1) such tax is computed by applying a rate to the amount 
     of premiums or contributions, with respect to individuals 
     covered under the plan who are residents of such State, which 
     are received by the plan from participating employers located 
     in such State or from such individuals;
       ``(2) 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;
       ``(3) such tax is otherwise nondiscriminatory; and
       ``(4) the amount of any such tax assessed on the plan is 
     reduced by the amount of any tax or assessment otherwise 
     imposed by the State on premiums, contributions, or both 
     received by insurers or health maintenance organizations for 
     health insurance coverage, aggregate excess /stop loss 
     insurance (as defined in section 806(g)(1)), specific excess 
     /stop loss insurance (as defined in section 806(g)(2)), other 
     insurance related to the provision of medical care under the 
     plan, or any combination thereof provided by such insurers or 
     health maintenance organizations in such State in connection 
     with such plan.

     ``SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION.

       ``(a) Definitions.--For purposes of this part--
       ``(1) Group health plan.--The term `group health plan' has 
     the meaning provided in section 733(a)(1) (after applying 
     subsection (b) of this section).
       ``(2) Medical care.--The term `medical care' has the 
     meaning provided in section 733(a)(2).
       ``(3) Health insurance coverage.--The term `health 
     insurance coverage' has the meaning provided in section 
     733(b)(1).
       ``(4) Health insurance issuer.--The term `health insurance 
     issuer' has the meaning provided in section 733(b)(2).
       ``(5) Applicable authority.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `applicable authority' means, in connection with an 
     association health plan--
       ``(i) the State recognized pursuant to subsection (c) of 
     section 506 as the State to which authority has been 
     delegated in connection with such plan; or
       ``(ii) if there if no State referred to in clause (i), the 
     Secretary.
       ``(B) Exceptions.--
       ``(i) Joint authorities.--Where such term appears in 
     section 808(3), section 807(e) (in the first instance), 
     section 809(a) (in the second instance), section 809(a) (in 
     the fourth instance), and section 809(b)(1), such term means, 
     in connection with an association health plan, the Secretary 
     and the State referred to in subparagraph (A)(i) (if any) in 
     connection with such plan.
       ``(ii) Regulatory authorities.--Where such term appears in 
     section 802(a) (in the first instance), section 802(d), 
     section 802(e), section 803(d), section 805(a)(5), section 
     806(a)(2), section 806(b), section 806(c), section 806(d), 
     paragraphs (1)(A) and (2)(A) of section 806(g), section 
     806(h), section 806(i), section 806(j), section 807(a) (in 
     the second instance), section 807(b), section 807(d), section 
     807(e) (in the second instance), section 808 (in the matter 
     after paragraph (3)), and section 809(a) (in the third 
     instance), such term means, in connection with an association 
     health plan, the Secretary.
       ``(6) Health status-related factor.--The term `health 
     status-related factor' has the meaning provided in section 
     733(d)(2).
       ``(7) Individual market.--
       ``(A) In general.--The term `individual market' means the 
     market for health insurance coverage offered to individuals 
     other than in connection with a group health plan.
       ``(B) Treatment of very small groups.--
       ``(i) In general.--Subject to clause (ii), such term 
     includes coverage offered in connection with a group health 
     plan that has

[[Page H5603]]

     fewer than 2 participants as current employees or 
     participants described in section 732(d)(3) on the first day 
     of the plan year.
       ``(ii) State exception.--Clause (i) shall not apply in the 
     case of health insurance coverage offered in a State if such 
     State regulates the coverage described in such clause in the 
     same manner and to the same extent as coverage in the small 
     group market (as defined in section 2791(e)(5) of the Public 
     Health Service Act) is regulated by such State.
       ``(8) Participating employer.--The term `participating 
     employer' means, in connection with an association health 
     plan, any employer, if any individual who is an employee of 
     such employer, a partner in such employer, or a self-employed 
     individual who is such employer (or any dependent, as defined 
     under the terms of the plan, of such individual) is or was 
     covered under such plan in connection with the status of such 
     individual as such an employee, partner, or self-employed 
     individual in relation to the plan.
       ``(9) Applicable state authority.--The term `applicable 
     State authority' means, with respect to a health insurance 
     issuer in a State, the State insurance commissioner or 
     official or officials designated by the State to enforce the 
     requirements of title XXVII of the Public Health Service Act 
     for the State involved with respect to such issuer.
       ``(10) Qualified actuary.--The term `qualified actuary' 
     means an individual who is a member of the American Academy 
     of Actuaries or meets such reasonable standards and 
     qualifications as the Secretary may provide by regulation 
     through negotiated rulemaking.
       ``(11) Affiliated member.--The term `affiliated member' 
     means, in connection with a sponsor--
       ``(A) a person who is otherwise eligible to be a member of 
     the sponsor but who elects an affiliated status with the 
     sponsor,
       ``(B) in the case of a sponsor with members which consist 
     of associations, a person who is a member of any such 
     association and elects an affiliated status with the sponsor, 
     or
       ``(C) in the case of an association health plan in 
     existence on the date of the enactment of the Small Business 
     Health Fairness Act of 2003, a person eligible to be a member 
     of the sponsor or one of its member associations.
       ``(12) Large employer.--The term `large employer' means, in 
     connection with a group health plan with respect to a plan 
     year, an employer who employed an average of at least 51 
     employees on business days during the preceding calendar year 
     and who employs at least 2 employees on the first day of the 
     plan year.
       ``(13) Small employer.--The term `small employer' means, in 
     connection with a group health plan with respect to a plan 
     year, an employer who is not a large employer.
       ``(b) Rules of Construction.--
       ``(1) Employers and employees.--For purposes of determining 
     whether a plan, fund, or program is an employee welfare 
     benefit plan which is an association health plan, and for 
     purposes of applying this title in connection with such plan, 
     fund, or program so determined to be such an employee welfare 
     benefit plan--
       ``(A) in the case of a partnership, the term `employer' (as 
     defined in section 3(5)) includes the partnership in relation 
     to the partners, and the term `employee' (as defined in 
     section 3(6)) includes any partner in relation to the 
     partnership; and
       ``(B) in the case of a self-employed individual, the term 
     `employer' (as defined in section 3(5)) and the term 
     `employee' (as defined in section 3(6)) shall include such 
     individual.
       ``(2) Plans, funds, and programs treated as employee 
     welfare benefit plans.--In the case of any plan, fund, or 
     program which was established or is maintained for the 
     purpose of providing medical care (through the purchase of 
     insurance or otherwise) for employees (or their dependents) 
     covered thereunder and which demonstrates to the Secretary 
     that all requirements for certification under this part would 
     be met with respect to such plan, fund, or program if such 
     plan, fund, or program were a group health plan, such plan, 
     fund, or program shall be treated for purposes of this title 
     as an employee welfare benefit plan on and after the date of 
     such demonstration.''.
       (b) Conforming Amendments to Preemption Rules.--
       (1) Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) is 
     amended by adding at the end the following new subparagraph:
       ``(E) The preceding subparagraphs of this paragraph do not 
     apply with respect to any State law in the case of an 
     association health plan which is certified under part 8.''.
       (2) Section 514 of such Act (29 U.S.C. 1144) is amended--
       (A) in subsection (b)(4), by striking ``Subsection (a)'' 
     and inserting ``Subsections (a) and (e)'';
       (B) in subsection (b)(5), by striking ``subsection (a)'' in 
     subparagraph (A) and inserting ``subsection (a) of this 
     section and subsections (a)(2)(B) and (b) of section 805'', 
     and by striking ``subsection (a)'' in subparagraph (B) and 
     inserting ``subsection (a) of this section or subsection 
     (a)(2)(B) or (b) of section 805'';
       (C) by redesignating subsection (d) as subsection (e); and
       (D) by inserting after subsection (c) the following new 
     subsection:
       ``(d)(1) Except as provided in subsection (b)(4), the 
     provisions of this title shall supersede any and all State 
     laws insofar as they may now or hereafter preclude, or have 
     the effect of precluding, a health insurance issuer from 
     offering health insurance coverage in connection with an 
     association health plan which is certified under part 8.
       ``(2) Except as provided in paragraphs (4) and (5) of 
     subsection (b) of this section--
       ``(A) In any case in which health insurance coverage of any 
     policy type is offered under an association health plan 
     certified under part 8 to a participating employer operating 
     in such State, the provisions of this title shall supersede 
     any and all laws of such State insofar as they may preclude a 
     health insurance issuer from offering health insurance 
     coverage of the same policy type to other employers operating 
     in the State which are eligible for coverage under such 
     association health plan, whether or not such other employers 
     are participating employers in such plan.
       ``(B) In any case in which health insurance coverage of any 
     policy type is offered under an association health plan in a 
     State and the filing, with the applicable State authority, of 
     the policy form in connection with such policy type is 
     approved by such State authority, the provisions of this 
     title shall supersede any and all laws of any other State in 
     which health insurance coverage of such type is offered, 
     insofar as they may preclude, upon the filing in the same 
     form and manner of such policy form with the applicable State 
     authority in such other State, the approval of the filing in 
     such other State.
       ``(3) For additional provisions relating to association 
     health plans, see subsections (a)(2)(B) and (b) of section 
     805.
       ``(4) For purposes of this subsection, the term 
     `association health plan' has the meaning provided in section 
     801(a), and the terms `health insurance coverage', 
     `participating employer', and `health insurance issuer' have 
     the meanings provided such terms in section 811, 
     respectively.''.
       (3) Section 514(b)(6)(A) of such Act (29 U.S.C. 
     1144(b)(6)(A)) is amended--
       (A) in clause (i)(II), by striking ``and'' at the end;
       (B) in clause (ii), by inserting ``and which does not 
     provide medical care (within the meaning of section 
     733(a)(2)),'' after ``arrangement,'', and by striking 
     ``title.'' and inserting ``title, and''; and
       (C) by adding at the end the following new clause:
       ``(iii) subject to subparagraph (E), in the case of any 
     other employee welfare benefit plan which is a multiple 
     employer welfare arrangement and which provides medical care 
     (within the meaning of section 733(a)(2)), any law of any 
     State which regulates insurance may apply.''.
       (4) Section 514(e) of such Act (as redesignated by 
     paragraph (2)(C)) is amended--
       (A) by striking ``Nothing'' and inserting ``(1) Except as 
     provided in paragraph (2), nothing''; and
       (B) by adding at the end the following new paragraph:
       ``(2) Nothing in any other provision of law enacted on or 
     after the date of the enactment of the Small Business Health 
     Fairness Act of 2003 shall be construed to alter, amend, 
     modify, invalidate, impair, or supersede any provision of 
     this title, except by specific cross-reference to the 
     affected section.''.
       (c) Plan Sponsor.--Section 3(16)(B) of such Act (29 U.S.C. 
     102(16)(B)) is amended by adding at the end the following new 
     sentence: ``Such term also includes a person serving as the 
     sponsor of an association health plan under part 8.''.
       (d) Disclosure of Solvency Protections Related to Self-
     Insured and Fully Insured Options Under Association Health 
     Plans.--Section 102(b) of such Act (29 U.S.C. 102(b)) is 
     amended by adding at the end the following: ``An association 
     health plan shall include in its summary plan description, in 
     connection with each benefit option, a description of the 
     form of solvency or guarantee fund protection secured 
     pursuant to this Act or applicable State law, if any.''.
       (e) Savings Clause.--Section 731(c) of such Act is amended 
     by inserting ``or part 8'' after ``this part''.
       (f) Report to the Congress Regarding Certification of Self-
     Insured Association Health Plans.--Not later than January 1, 
     2008, the Secretary of Labor shall report to the Committee on 
     Education and the Workforce of the House of Representatives 
     and the Committee on Health, Education, Labor, and Pensions 
     of the Senate the effect association health plans have had, 
     if any, on reducing the number of uninsured individuals.
       (g) Clerical Amendment.--The table of contents in section 1 
     of the Employee Retirement Income Security Act of 1974 is 
     amended by inserting after the item relating to section 734 
     the following new items:

           ``Part 8--Rules Governing Association Health Plans

``Sec. 801. Association health plans.
``Sec. 802. Certification of association health plans.
``Sec. 803. Requirements relating to sponsors and boards of trustees.
``Sec. 804. Participation and coverage requirements.
``Sec. 805. Other requirements relating to plan documents, contribution 
              rates, and benefit options.
``Sec. 806. Maintenance of reserves and provisions for solvency for 
              plans providing health benefits in addition to health 
              insurance coverage.

[[Page H5604]]

``Sec. 807. Requirements for application and related requirements.
``Sec. 808. Notice requirements for voluntary termination.
``Sec. 809. Corrective actions and mandatory termination.
``Sec. 810. Trusteeship by the Secretary of insolvent association 
              health plans providing health benefits in addition to 
              health insurance coverage.
``Sec. 811. State assessment authority.
``Sec. 812. Definitions and rules of construction.''.

     SEC. 3. 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 
     one 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. 4. 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) For purposes of subparagraph (A)(i)(II), a plan or 
     other arrangement shall be treated as 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 any 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 prescribed by the Secretary through negotiated 
     rulemaking), 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 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 Small Business Health 
     Fairness Act of 2003 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 by the Secretary through negotiated rulemaking 
     that the plan or other arrangement meets the requirements of 
     clauses (i) and (ii).
       ``(D) For purposes of subparagraph (A)(i)(II), a plan or 
     arrangement shall be treated as established or maintained in 
     accordance with this subparagraph only if--
       ``(i) all of the benefits provided under the plan or 
     arrangement consist of health insurance coverage; 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) For purposes of subparagraph (A)(i)(II), a plan or 
     arrangement shall be treated as 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 Small Business Health Fairness Act of 
     2003; or
       ``(ii) the employee organization or other entity sponsoring 
     the plan or arrangement--
       ``(I) 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. 5. ENFORCEMENT PROVISIONS RELATING TO ASSOCIATION HEALTH 
                   PLANS.

       (a) Criminal Penalties for Certain Willful 
     Misrepresentations.--Section 501 of the Employee Retirement 
     Income Security Act of 1974 (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 willfully falsely represents, to any 
     employee, any employee's beneficiary, any employer, the 
     Secretary, or any State, a plan or other 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 an association health plan which has been 
     certified under part 8;
       ``(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 5 years, 
     be fined under title 18, United States Code, or both.''.
       (b) Cease Activities Orders.--Section 502 of such Act (29 
     U.S.C. 1132), as amended by sections 141 and 143, is further 
     amended by adding at the end the following new subsection:
       ``(p) Association Health Plan Cease and Desist Orders.--
       ``(1) In general.--Subject to paragraph (2), upon 
     application by the Secretary showing the operation, 
     promotion, or marketing of an association health plan (or 
     similar arrangement providing benefits consisting of medical 
     care (as defined in section 733(a)(2))) that--
       ``(A) is not certified under part 8, is subject under 
     section 514(b)(6) to the insurance laws of any State in which 
     the plan or arrangement offers or provides benefits, and is 
     not licensed, registered, or otherwise approved under the 
     insurance laws of such State; or
       ``(B) is an association health plan certified under part 8 
     and is not operating in accordance with the requirements 
     under part 8 for such certification,

     a district court of the United States shall enter an order 
     requiring that the plan or arrangement cease activities.
       ``(2) Exception.--Paragraph (1) shall not apply in the case 
     of an association health plan or other arrangement if the 
     plan or arrangement shows that--
       ``(A) all benefits under it referred to in paragraph (1) 
     consist of health insurance coverage; and
       ``(B) with respect to each State in which the plan or 
     arrangement offers or provides

[[Page H5605]]

     benefits, the plan or arrangement is operating in accordance 
     with applicable State laws that are not superseded under 
     section 514.
       ``(3) Additional equitable relief.--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 plan.''.
       (c) Responsibility for Claims Procedure.--Section 503 of 
     such Act (29 U.S.C. 1133), as amended by section 301(b), is 
     amended by adding at the end the following new subsection:
       ``(c) Association Health Plans.--The terms of each 
     association health plan which is or has been certified under 
     part 8 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. 6. 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) Consultation With States With Respect to Association 
     Health Plans.--
       ``(1) Agreements with states.--The Secretary shall consult 
     with the State recognized under paragraph (2) with respect to 
     an association health plan regarding the exercise of--
       ``(A) the Secretary's authority under sections 502 and 504 
     to enforce the requirements for certification under part 8; 
     and
       ``(B) the Secretary's authority to certify association 
     health plans under part 8 in accordance with regulations of 
     the Secretary applicable to certification under part 8.
       ``(2) Recognition of primary domicile state.--In carrying 
     out paragraph (1), the Secretary shall ensure that only one 
     State will be recognized, with respect to any particular 
     association health plan, as the State to with which 
     consultation is required. In carrying out this paragraph, the 
     Secretary shall take into account the places of residence of 
     the participants and beneficiaries under the plan and the 
     State in which the trust is maintained.''.

     SEC. 7. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

       (a) Effective Date.--The amendments made by sections 2, 5, 
     and 6 shall take effect one year from the date of the 
     enactment. The amendments made by sections 3 and 4 shall take 
     effect on the date of the enactment of this Act. The 
     Secretary of Labor shall first issue all regulations 
     necessary to carry out the amendments made by this subtitle 
     within one year from the date of the enactment. Such 
     regulations shall be issued through negotiated rulemaking.
       (b) Exception.--Section 801(a)(2) of the Employee 
     Retirement Income Security Act of 1974 (added by section 2) 
     does not apply in connection with an association health plan 
     (certified under part 8 of subtitle B of title I of such Act) 
     existing on the date of the enactment of this Act, if no 
     benefits provided thereunder as of the date of the enactment 
     of this Act consist of health insurance coverage (as defined 
     in section 733(b)(1) of such Act).
       (c) Treatment of Certain Existing Health Benefits 
     Programs.--
       (1) In general.--In any case in which, as of the date of 
     the enactment of this Act, an arrangement is maintained in a 
     State for the purpose of providing benefits consisting of 
     medical care for the employees and beneficiaries of its 
     participating employers, at least 200 participating employers 
     make contributions to such arrangement, such arrangement has 
     been in existence for at least 10 years, and such arrangement 
     is licensed under the laws of one or more States to provide 
     such benefits to its participating employers, upon the filing 
     with the applicable authority (as defined in section 
     812(a)(5) of the Employee Retirement Income Security Act of 
     1974 (as amended by this subtitle)) by the arrangement of an 
     application for certification of the arrangement under part 8 
     of subtitle B of title I of such Act--
       (A) such arrangement shall be deemed to be a group health 
     plan for purposes of title I of such Act;
       (B) the requirements of sections 801(a)(1) and 803(a)(1) of 
     the Employee Retirement Income Security Act of 1974 shall be 
     deemed met with respect to such arrangement;
       (C) the requirements of section 803(b) of such Act shall be 
     deemed met, if the arrangement is operated by a board of 
     directors which--
       (i) is elected by the participating employers, with each 
     employer having one vote; and
       (ii) has complete fiscal control over the arrangement and 
     which is responsible for all operations of the arrangement;
       (D) the requirements of section 804(a) of such Act shall be 
     deemed met with respect to such arrangement; and
       (E) the arrangement may be certified by any applicable 
     authority with respect to its operations in any State only if 
     it operates in such State on the date of certification.

     The provisions of this subsection shall cease to apply with 
     respect to any such arrangement at such time after the date 
     of the enactment of this Act as the applicable requirements 
     of this subsection are not met with respect to such 
     arrangement.
       (2) Definitions.--For purposes of this subsection, the 
     terms ``group health plan'', ``medical care'', and 
     ``participating employer'' shall have the meanings provided 
     in section 812 of the Employee Retirement Income Security Act 
     of 1974, except that the reference in paragraph (7) of such 
     section to an ``association health plan'' shall be deemed a 
     reference to an arrangement referred to in this subsection.
  The SPEAKER pro tempore. The committee amendment in the nature of a 
substitute printed in the bill is adopted.
  The text of the committee amendment in the nature of a substitute is 
as follows:

                                H.R. 660

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

     SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Small 
     Business Health Fairness Act of 2003''.
       (b) Table of Contents.--The table of contents is as 
     follows:

Sec. 1. Short title and table of contents.
Sec. 2. Rules governing association health plans.

           ``Part 8--Rules Governing Association Health Plans

``Sec. 801. Association health plans.
``Sec. 802. Certification of association health plans.
``Sec. 803. Requirements relating to sponsors and boards of trustees.
``Sec. 804. Participation and coverage requirements.
``Sec. 805. Other requirements relating to plan documents, contribution 
              rates, and benefit options.
``Sec. 806. Maintenance of reserves and provisions for solvency for 
              plans providing health benefits in addition to health 
              insurance coverage.
``Sec. 807. Requirements for application and related requirements.
``Sec. 808. Notice requirements for voluntary termination.
``Sec. 809. Corrective actions and mandatory termination.
``Sec. 810. Trusteeship by the Secretary of insolvent association 
              health plans providing health benefits in addition to 
              health insurance coverage.
``Sec. 811. State assessment authority.
``Sec. 812. Definitions and rules of construction.
Sec. 3. Clarification of treatment of single employer arrangements.
Sec. 4. Enforcement provisions relating to association health plans.
Sec. 5. Cooperation between Federal and State authorities.
Sec. 6. Effective date and transitional and other rules.

     SEC. 2. RULES GOVERNING ASSOCIATION HEALTH PLANS.

       (a) In General.--Subtitle B of title I of the Employee 
     Retirement Income Security Act of 1974 is amended by adding 
     after part 7 the following new part:

           ``Part 8--Rules Governing Association Health Plans

     ``SEC. 801. ASSOCIATION HEALTH PLANS.

       ``(a) In General.--For purposes of this part, the term 
     `association health plan' means a group health plan whose 
     sponsor is (or is deemed under this part to be) described in 
     subsection (b).
       ``(b) Sponsorship.--The sponsor of a group health plan is 
     described in this subsection if such sponsor--
       ``(1) is 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 bona fide trade association, a bona fide industry 
     association (including a rural electric cooperative 
     association or a rural telephone cooperative association), a 
     bona fide professional association, or a bona fide chamber of 
     commerce (or similar bona fide business association, 
     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;
       ``(2) is established as a permanent entity which receives 
     the active support of its members and requires for membership 
     payment on a periodic basis of dues or payments necessary to 
     maintain eligibility for membership in the sponsor; and
       ``(3) does not condition membership, such dues or payments, 
     or coverage under the plan on the basis of health status-
     related factors with respect to the employees of its members 
     (or affiliated members), or the dependents of such employees, 
     and does not condition such dues or payments on the basis of 
     group health plan participation.
     Any sponsor consisting of an association of entities which 
     meet the requirements of paragraphs (1), (2), and (3) shall 
     be deemed to be a sponsor described in this subsection.

     ``SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH PLANS.

       ``(a) In General.--The applicable authority shall prescribe 
     by regulation a procedure under which, subject to subsection 
     (b), the applicable authority shall certify association 
     health plans which apply for certification as meeting the 
     requirements of this part.
       ``(b) Standards.--Under the procedure prescribed pursuant 
     to subsection (a), in the case of an association health plan 
     that provides at least one benefit option which does not 
     consist of health insurance coverage, the applicable 
     authority shall certify such plan as meeting the requirements 
     of this part only if the applicable authority is satisfied 
     that the applicable requirements of this part are met (or, 
     upon the

[[Page H5606]]

     date on which the plan is to commence operations, will be 
     met) with respect to the plan.
       ``(c) Requirements Applicable to Certified Plans.--An 
     association health plan with respect to which certification 
     under this part is in effect shall meet the applicable 
     requirements of this part, effective on the date of 
     certification (or, if later, on the date on which the plan is 
     to commence operations).
       ``(d) Requirements for Continued Certification.--The 
     applicable authority may provide by regulation for continued 
     certification of association health plans under this part.
       ``(e) Class Certification for Fully Insured Plans.--The 
     applicable authority shall establish a class certification 
     procedure for association health plans under which all 
     benefits consist of health insurance coverage. Under such 
     procedure, the applicable authority shall provide for the 
     granting of certification under this part to the plans in 
     each class of such association health plans upon appropriate 
     filing under such procedure in connection with plans in such 
     class and payment of the prescribed fee under section 807(a).
       ``(f) Certification of Self-Insured Association Health 
     Plans.--An association health plan which offers one or more 
     benefit options which do not consist of health insurance 
     coverage may be certified under this part only if such plan 
     consists of any of the following:
       ``(1) a plan which offered such coverage on the date of the 
     enactment of the Small Business Health Fairness Act of 2003,
       ``(2) a plan under which the sponsor does not restrict 
     membership to one or more trades and businesses or industries 
     and whose eligible participating employers represent a broad 
     cross-section of trades and businesses or industries, or
       ``(3) a plan whose eligible participating employers 
     represent one or more trades or businesses, or one or more 
     industries, consisting of any of the following: agriculture; 
     equipment and automobile dealerships; barbering and 
     cosmetology; certified public accounting practices; child 
     care; construction; dance, theatrical and orchestra 
     productions; disinfecting and pest control; financial 
     services; fishing; foodservice establishments; hospitals; 
     labor organizations; logging; manufacturing (metals); mining; 
     medical and dental practices; medical laboratories; 
     professional consulting services; sanitary services; 
     transportation (local and freight); warehousing; wholesaling/
     distributing; or any other trade or business or industry 
     which has been indicated as having average or above-average 
     risk or health claims experience by reason of State rate 
     filings, denials of coverage, proposed premium rate levels, 
     or other means demonstrated by such plan in accordance with 
     regulations.

     ``SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF 
                   TRUSTEES.

       ``(a) Sponsor.--The requirements of this subsection are met 
     with respect to an association health plan if the sponsor has 
     met (or is deemed under this part to have met) the 
     requirements of section 801(b) for a continuous period of not 
     less than 3 years ending with the date of the application for 
     certification under this part.
       ``(b) Board of Trustees.--The requirements of this 
     subsection are met with respect to an association health plan 
     if the following requirements are met:
       ``(1) Fiscal control.--The plan is operated, pursuant to a 
     trust agreement, by a board of trustees which has complete 
     fiscal control over the plan and which is responsible for all 
     operations of the plan.
       ``(2) Rules of operation and financial controls.--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 plan and to meet all requirements 
     of this title applicable to the plan.
       ``(3) Rules governing relationship to participating 
     employers and to contractors.--
       ``(A) Board membership.--
       ``(i) In general.--Except as provided in clauses (ii) and 
     (iii), 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.
       ``(ii) Limitation.--

       ``(I) General rule.--Except as provided in subclauses (II) 
     and (III), no such member is an owner, officer, director, or 
     employee of, or partner in, a contract administrator or other 
     service provider to the plan.
       ``(II) Limited exception for providers of services solely 
     on behalf of the sponsor.--Officers or employees of a sponsor 
     which is a service provider (other than a contract 
     administrator) to the plan 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 plan other 
     than on behalf of the sponsor.
       ``(III) Treatment of providers of medical care.--In the 
     case of a sponsor which is an association whose membership 
     consists primarily of providers of medical care, subclause 
     (I) shall not apply in the case of any service provider 
     described in subclause (I) who is a provider of medical care 
     under the plan.

       ``(iii) Certain plans excluded.--Clause (i) shall not apply 
     to an association health plan which is in existence on the 
     date of the enactment of the Small Business Health Fairness 
     Act of 2003.
       ``(B) Sole authority.--The board has sole authority under 
     the plan to approve applications for participation in the 
     plan and to contract with a service provider to administer 
     the day-to-day affairs of the plan.
       ``(c) Treatment of Franchise Networks.--In the case of a 
     group health plan which is established and maintained by a 
     franchiser for a franchise network consisting of its 
     franchisees--
       ``(1) the requirements of subsection (a) and section 801(a) 
     shall be deemed met if such requirements would otherwise be 
     met if the franchiser were deemed to be the sponsor referred 
     to in section 801(b), such network were deemed to be an 
     association described in section 801(b), and each franchisee 
     were deemed to be a member (of the association and the 
     sponsor) referred to in section 801(b); and
       ``(2) the requirements of section 804(a)(1) shall be deemed 
     met.
     The Secretary may by regulation define for purposes of this 
     subsection the terms `franchiser', `franchise network', and 
     `franchisee'.

     ``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.

       ``(a) Covered Employers and Individuals.--The requirements 
     of this subsection are met with respect to an association 
     health plan if, under the terms of the plan--
       ``(1) each participating employer must be--
       ``(A) a member of the sponsor,
       ``(B) the sponsor, or
       ``(C) an affiliated member of the sponsor with respect to 
     which the requirements of subsection (b) are met,
     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 such an affiliated member of the sponsor, 
     participating employers may also include such employer; and
       ``(2) all individuals commencing coverage under the plan 
     after certification under this part must be--
       ``(A) active or retired owners (including self-employed 
     individuals), officers, directors, or employees of, or 
     partners in, participating employers; or
       ``(B) the beneficiaries of individuals described in 
     subparagraph (A).
       ``(b) Coverage of Previously Uninsured Employees.--In the 
     case of an association health plan in existence on the date 
     of the enactment of the Small Business Health Fairness Act of 
     2003, an affiliated member of the sponsor of the plan may be 
     offered coverage under the plan as a participating employer 
     only if--
       ``(1) the affiliated member was an affiliated member on the 
     date of certification under this part; or
       ``(2) during the 12-month period preceding the date of the 
     offering of such coverage, the affiliated member has not 
     maintained or contributed to a group health plan with respect 
     to any of its employees who would otherwise be eligible to 
     participate in such association health plan.
       ``(c) Individual Market Unaffected.--The requirements of 
     this subsection are met with respect to an association health 
     plan if, under the terms of the plan, no participating 
     employer may provide health insurance coverage in the 
     individual market for any employee not covered under the plan 
     which is similar to the coverage contemporaneously provided 
     to employees of the employer under the plan, if such 
     exclusion of the employee from coverage under the plan is 
     based on a health status-related factor with respect to 
     the employee and such employee would, but for such 
     exclusion on such basis, be eligible for coverage under 
     the plan.
       ``(d) Prohibition of Discrimination Against Employers and 
     Employees Eligible To Participate.--The requirements of this 
     subsection are met with respect to an association health plan 
     if--
       ``(1) under the terms of the plan, all employers meeting 
     the preceding requirements of this section are eligible to 
     qualify as participating employers for all geographically 
     available coverage options, unless, in the case of any such 
     employer, participation or contribution requirements of the 
     type referred to in section 2711 of the Public Health Service 
     Act are not met;
       ``(2) upon request, any employer eligible to participate is 
     furnished information regarding all coverage options 
     available under the plan; and
       ``(3) the applicable requirements of sections 701, 702, and 
     703 are met with respect to the plan.

     ``SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, 
                   CONTRIBUTION RATES, AND BENEFIT OPTIONS.

       ``(a) In General.--The requirements of this section are met 
     with respect to an association health plan if the following 
     requirements are met:
       ``(1) Contents of governing instruments.--The instruments 
     governing the plan include a written instrument, meeting the 
     requirements of an instrument required under section 
     402(a)(1), which--
       ``(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 plan is to serve as 
     plan sponsor (referred to in section 3(16)(B)); and
       ``(C) incorporates the requirements of section 806.
       ``(2) Contribution rates must be nondiscriminatory.--
       ``(A) The contribution rates for any participating small 
     employer do not vary on the basis of any health status-
     related factor in relation to employees of such employer or 
     their beneficiaries and do not vary on the basis of the type 
     of business or industry in which such employer is engaged.
       ``(B) Nothing in this title or any other provision of law 
     shall be construed to preclude an association health plan, or 
     a health insurance issuer offering health insurance coverage 
     in connection with an association health plan, from--
       ``(i) setting contribution rates based on the claims 
     experience of the plan; or
       ``(ii) varying contribution rates for small employers in a 
     State to the extent that such rates

[[Page H5607]]

     could vary using the same methodology employed in such State 
     for regulating premium rates in the small group market with 
     respect to health insurance coverage offered in connection 
     with bona fide associations (within the meaning of section 
     2791(d)(3) of the Public Health Service Act),
     subject to the requirements of section 702(b) relating to 
     contribution rates.
       ``(3) Floor for number of covered individuals with respect 
     to certain plans.--If any benefit option under the plan does 
     not consist of health insurance coverage, the plan has as of 
     the beginning of the plan year not fewer than 1,000 
     participants and beneficiaries.
       ``(4) Marketing requirements.--
       ``(A) In general.--If a benefit option which consists of 
     health insurance coverage is offered under the plan, State-
     licensed insurance agents shall be used to distribute to 
     small employers coverage which does not consist of health 
     insurance coverage in a manner comparable to the manner in 
     which such agents are used to distribute health insurance 
     coverage.
       ``(B) State-licensed insurance agents.--For purposes of 
     subparagraph (A), the term `State-licensed insurance agents' 
     means one or more agents who are licensed in a State and are 
     subject to the laws of such State relating to licensure, 
     qualification, testing, examination, and continuing education 
     of persons authorized to offer, sell, or solicit health 
     insurance coverage in such State.
       ``(5) Regulatory requirements.--Such other requirements as 
     the applicable authority determines are necessary to carry 
     out the purposes of this part, which shall be prescribed by 
     the applicable authority by regulation.
       ``(b) Ability of Association Health Plans To Design Benefit 
     Options.--Subject to section 514(d), nothing in this part or 
     any provision of State law (as defined in section 514(c)(1)) 
     shall be construed to preclude an association health plan, or 
     a health insurance issuer offering health insurance coverage 
     in connection with an association health plan, from 
     exercising its sole discretion in selecting the specific 
     items and services consisting of medical care to be included 
     as benefits under such plan or coverage, except (subject to 
     section 514) in the case of (1) any law to the extent that it 
     is not preempted under section 731(a)(1) with respect to 
     matters governed by section 711, 712, or 713, or (2) any law 
     of the State with which filing and approval of a policy type 
     offered by the plan was initially obtained to the extent that 
     such law prohibits an exclusion of a specific disease from 
     such coverage.

     ``SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS FOR 
                   SOLVENCY FOR PLANS PROVIDING HEALTH BENEFITS IN 
                   ADDITION TO HEALTH INSURANCE COVERAGE.

       ``(a) In General.--The requirements of this section are met 
     with respect to an association health plan if--
       ``(1) the benefits under the plan consist solely of health 
     insurance coverage; or
       ``(2) if the plan provides any additional benefit options 
     which do not consist of health insurance coverage, the plan--
       ``(A) establishes and maintains reserves with respect to 
     such additional benefit options, in amounts recommended by 
     the qualified actuary, consisting of--
       ``(i) a reserve sufficient for unearned contributions;
       ``(ii) 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;
       ``(iii) a reserve sufficient for any other obligations of 
     the plan; and
       ``(iv) a reserve sufficient for a margin of error and other 
     fluctuations, taking into account the specific circumstances 
     of the plan; and
       ``(B) establishes and maintains aggregate and specific 
     excess /stop loss insurance and solvency indemnification, 
     with respect to such additional benefit options for which 
     risk of loss has not yet been transferred, as follows:
       ``(i) The plan shall secure aggregate excess /stop loss 
     insurance for the plan with an attachment point which is not 
     greater than 125 percent of expected gross annual claims. The 
     applicable authority may by regulation provide for upward 
     adjustments in the amount of such percentage in specified 
     circumstances in which the plan specifically provides for and 
     maintains reserves in excess of the amounts required under 
     subparagraph (A).
       ``(ii) The plan shall secure specific excess /stop loss 
     insurance for the plan with an attachment point which is at 
     least equal to an amount recommended by the plan's qualified 
     actuary. The applicable authority may by regulation provide 
     for adjustments in the amount of such insurance in specified 
     circumstances in which the plan specifically provides for and 
     maintains reserves in excess of the amounts required under 
     subparagraph (A).
       ``(iii) The plan shall secure indemnification insurance for 
     any claims which the plan is unable to satisfy by reason of a 
     plan termination.

     Any person issuing to a plan insurance described in clause 
     (i), (ii), or (iii) shall notify the Secretary of any failure 
     of premium payment meriting cancellation of the policy prior 
     to undertaking such a cancellation. Any regulations 
     prescribed by the applicable authority pursuant to clause (i) 
     or (ii) of subparagraph (B) may allow for such adjustments in 
     the required levels of excess /stop loss insurance as the 
     qualified actuary may recommend, taking into account the 
     specific circumstances of the plan.
       ``(b) Minimum Surplus in Addition to Claims Reserves.--In 
     the case of any association health plan described in 
     subsection (a)(2), the requirements of this subsection are 
     met if the plan establishes and maintains surplus in an 
     amount at least equal to--
       ``(1) $500,000, or
       ``(2) such greater amount (but not greater than $2,000,000) 
     as may be set forth in regulations prescribed by the 
     applicable authority, considering the level of aggregate and 
     specific excess /stop loss insurance provided with respect to 
     such plan and other factors related to solvency risk, such as 
     the plan's projected levels of participation or claims, the 
     nature of the plan's liabilities, and the types of assets 
     available to assure that such liabilities are met.
       ``(c) Additional Requirements.--In the case of any 
     association health plan described in subsection (a)(2), the 
     applicable authority may provide such additional requirements 
     relating to reserves, excess /stop loss insurance, and 
     indemnification insurance as the applicable authority 
     considers appropriate. Such requirements may be provided by 
     regulation with respect to any such plan or any class of such 
     plans.
       ``(d) Adjustments for Excess /Stop Loss Insurance.--The 
     applicable authority may provide for adjustments to the 
     levels of reserves otherwise required under subsections (a) 
     and (b) with respect to any plan or class of plans to take 
     into account excess /stop loss insurance provided with 
     respect to such plan or plans.
       ``(e) Alternative Means of Compliance.--The applicable 
     authority may permit an association health plan described in 
     subsection (a)(2) to substitute, for all or part of the 
     requirements of this section (except subsection 
     (a)(2)(B)(iii)), such security, guarantee, hold-harmless 
     arrangement, or other financial arrangement as the applicable 
     authority determines to be adequate to enable the plan to 
     fully meet all its financial obligations on a timely basis 
     and is otherwise no less protective of the interests of 
     participants and beneficiaries than the requirements for 
     which it is substituted. The applicable authority may take 
     into account, for purposes of this subsection, evidence 
     provided by the plan or sponsor which demonstrates an 
     assumption of liability with respect to the plan. Such 
     evidence may be in the form of a contract of indemnification, 
     lien, bonding, insurance, letter of credit, recourse under 
     applicable terms of the plan in the form of assessments of 
     participating employers, security, or other financial 
     arrangement.
       ``(f) Measures To Ensure Continued Payment of Benefits by 
     Certain Plans in Distress.--
       ``(1) Payments by certain plans to association health plan 
     fund.--
       ``(A) In general.--In the case of an association health 
     plan described in subsection (a)(2), the requirements of this 
     subsection are met if the plan makes payments into the 
     Association Health Plan Fund under this subparagraph when 
     they are due. Such payments shall consist of annual payments 
     in the amount of $5,000, and, in addition to such annual 
     payments, such supplemental payments as the Secretary may 
     determine to be necessary under paragraph (2). Payments under 
     this paragraph are payable to the Fund at the time determined 
     by the Secretary. Initial payments are due in advance of 
     certification under this part. Payments shall continue to 
     accrue until a plan's assets are distributed pursuant to a 
     termination procedure.
       ``(B) Penalties for failure to make payments.--If any 
     payment is not made by a plan when it is due, a late payment 
     charge of not more than 100 percent of the payment which was 
     not timely paid shall be payable by the plan to the Fund.
       ``(C) Continued duty of the secretary.--The Secretary shall 
     not cease to carry out the provisions of paragraph (2) on 
     account of the failure of a plan to pay any payment when due.
       ``(2) Payments by secretary to continue excess /stop loss 
     insurance coverage and indemnification insurance coverage for 
     certain plans.--In any case in which the applicable authority 
     determines that there is, or that there is reason to believe 
     that there will be: (A) a failure to take necessary 
     corrective actions under section 809(a) with respect to an 
     association health plan described in subsection (a)(2); or 
     (B) a termination of such a plan under section 809(b) or 
     810(b)(8) (and, if the applicable authority is not the 
     Secretary, certifies such determination to the Secretary), 
     the Secretary shall determine the amounts necessary to make 
     payments to an insurer (designated by the Secretary) to 
     maintain in force excess /stop loss insurance coverage or 
     indemnification insurance coverage for such plan, if the 
     Secretary determines that there is a reasonable expectation 
     that, without such payments, claims would not be satisfied by 
     reason of termination of such coverage. The Secretary shall, 
     to the extent provided in advance in appropriation Acts, pay 
     such amounts so determined to the insurer designated by the 
     Secretary.
       ``(3) Association health plan fund.--
       ``(A) In general.--There is established on the books of the 
     Treasury a fund to be known as the `Association Health Plan 
     Fund'. The Fund shall be available for making payments 
     pursuant to paragraph (2). The Fund shall be credited with 
     payments received pursuant to paragraph (1)(A), penalties 
     received pursuant to paragraph (1)(B); and earnings on 
     investments of amounts of the Fund under subparagraph (B).
       ``(B) Investment.--Whenever the Secretary determines that 
     the moneys of the fund are in excess of current needs, the 
     Secretary may request the investment of such amounts as the 
     Secretary determines advisable by the Secretary of the 
     Treasury in obligations issued or guaranteed by the United 
     States.
       ``(g) Excess /Stop Loss Insurance.--For purposes of this 
     section--
       ``(1) Aggregate excess /stop loss insurance.--The term 
     `aggregate excess /stop loss insurance' means, in connection 
     with an association health plan, a contract--
       ``(A) under which an insurer (meeting such minimum 
     standards as the applicable authority may prescribe by 
     regulation) provides for payment to the plan with respect to 
     aggregate

[[Page H5608]]

     claims under the plan in excess of an amount or amounts 
     specified in such contract;
       ``(B) which is guaranteed renewable; and
       ``(C) which allows for payment of premiums by any third 
     party on behalf of the insured plan.
       ``(2) Specific excess /stop loss insurance.--The term 
     `specific excess /stop loss insurance' means, in connection 
     with an association health plan, a contract--
       ``(A) under which an insurer (meeting such minimum 
     standards as the applicable authority may prescribe by 
     regulation) provides for payment to the plan with respect to 
     claims under the plan in connection with a covered individual 
     in excess of an amount or amounts specified in such contract 
     in connection with such covered individual;
       ``(B) which is guaranteed renewable; and
       ``(C) which allows for payment of premiums by any third 
     party on behalf of the insured plan.
       ``(h) Indemnification Insurance.--For purposes of this 
     section, the term `indemnification insurance' means, in 
     connection with an association health plan, a contract--
       ``(1) under which an insurer (meeting such minimum 
     standards as the applicable authority may prescribe by 
     regulation) provides for payment to the plan with respect to 
     claims under the plan which the plan is unable to satisfy by 
     reason of a termination pursuant to section 809(b) (relating 
     to mandatory termination);
       ``(2) which is guaranteed renewable and noncancellable for 
     any reason (except as the applicable authority may prescribe 
     by regulation); and
       ``(3) which allows for payment of premiums by any third 
     party on behalf of the insured plan.
       ``(i) Reserves.--For purposes of this section, the term 
     `reserves' means, in connection with an association health 
     plan, plan assets which meet the fiduciary standards under 
     part 4 and such additional requirements regarding liquidity 
     as the applicable authority may prescribe by regulation.
       ``(j) Solvency Standards Working Group.--
       ``(1) In general.--Within 90 days after the date of the 
     enactment of the Small Business Health Fairness Act of 2003, 
     the applicable authority shall establish a Solvency Standards 
     Working Group. In prescribing the initial regulations under 
     this section, the applicable authority shall take into 
     account the recommendations of such Working Group.
       ``(2) Membership.--The Working Group shall consist of not 
     more than 15 members appointed by the applicable authority. 
     The applicable authority shall include among persons invited 
     to membership on the Working Group at least one of each of 
     the following:
       ``(A) a representative of the National Association of 
     Insurance Commissioners;
       ``(B) a representative of the American Academy of 
     Actuaries;
       ``(C) a representative of the State governments, or their 
     interests;
       ``(D) a representative of existing self-insured 
     arrangements, or their interests;
       ``(E) a representative of associations of the type referred 
     to in section 801(b)(1), or their interests; and
       ``(F) a representative of multiemployer plans that are 
     group health plans, or their interests.

     ``SEC. 807. REQUIREMENTS FOR APPLICATION AND RELATED 
                   REQUIREMENTS.

       ``(a) Filing Fee.--Under the procedure prescribed pursuant 
     to section 802(a), an association health plan shall pay to 
     the applicable authority at the time of filing an application 
     for certification under this part a filing fee in the amount 
     of $5,000, which shall be available in the case of the 
     Secretary, to the extent provided in appropriation Acts, for 
     the sole purpose of administering the certification 
     procedures applicable with respect to association health 
     plans.
       ``(b) Information To Be Included in Application for 
     Certification.--An application for certification under this 
     part meets the requirements of this section only if it 
     includes, in a manner and form which shall be prescribed by 
     the applicable authority by regulation, at least the 
     following information:
       ``(1) Identifying information.--The names and addresses 
     of--
       ``(A) the sponsor; and
       ``(B) the members of the board of trustees of the plan.
       ``(2) States in which plan intends to do business.--The 
     States in which participants and beneficiaries under the plan 
     are to be located and the number of them expected to be 
     located in each such State.
       ``(3) 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.
       ``(4) Plan documents.--A copy of the documents governing 
     the plan (including any bylaws and trust agreements), the 
     summary plan description, and other material describing the 
     benefits that will be provided to participants and 
     beneficiaries under the plan.
       ``(5) Agreements with service providers.--A copy of any 
     agreements between the plan and contract administrators and 
     other service providers.
       ``(6) Funding report.--In the case of association health 
     plans providing benefits options in addition to health 
     insurance coverage, a report setting forth information with 
     respect to such additional benefit options determined as of a 
     date within the 120-day period ending with the date of the 
     application, including the following:
       ``(A) Reserves.--A statement, certified by the board of 
     trustees of the plan, and a statement of actuarial opinion, 
     signed by a qualified actuary, that all applicable 
     requirements of section 806 are or will be met in accordance 
     with regulations which the applicable authority shall 
     prescribe.
       ``(B) 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 plan for 
     the 12-month period beginning with such date within such 120-
     day period, taking into account the expected coverage and 
     experience of the plan. 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.
       ``(C) 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 plan and a 
     projection of the assets, liabilities, income, and expenses 
     of the plan for the 12-month period referred to in 
     subparagraph (B). The income statement shall identify 
     separately the plan's administrative expenses and claims.
       ``(D) 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 plan.
       ``(E) Other information.--Any other information as may be 
     determined by the applicable authority, by regulation, as 
     necessary to carry out the purposes of this part.
       ``(c) Filing Notice of Certification With States.--A 
     certification granted under this part to an association 
     health plan shall not be effective unless written notice of 
     such certification is filed with the applicable State 
     authority of each State in which at least 25 percent of the 
     participants and beneficiaries under the plan 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.
       ``(d) Notice of Material Changes.--In the case of any 
     association health plan certified under this part, 
     descriptions of material changes in any information which was 
     required to be submitted with the application for the 
     certification under this part shall be filed in such form and 
     manner as shall be prescribed by the applicable authority by 
     regulation. The applicable authority 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 certification.
       ``(e) Reporting Requirements for Certain Association Health 
     Plans.--An association health plan certified under this part 
     which provides benefit options in addition to health 
     insurance coverage for such plan year shall meet the 
     requirements of section 103 by filing an annual report 
     under such section which shall include information 
     described in subsection (b)(6) with respect to the plan 
     year and, notwithstanding section 104(a)(1)(A), shall be 
     filed with the applicable authority not later than 90 days 
     after the close of the plan year (or on such later date as 
     may be prescribed by the applicable authority). The 
     applicable authority may require by regulation such 
     interim reports as it considers appropriate.
       ``(f) Engagement of Qualified Actuary.--The board of 
     trustees of each association health plan which provides 
     benefits options in addition to health insurance coverage and 
     which is applying for certification under this part or is 
     certified under this part shall engage, on behalf of all 
     participants and beneficiaries, 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 plan and to reasonable expectations; and
       ``(2) represent such actuary's best estimate of anticipated 
     experience under the plan.
     The opinion by the qualified actuary shall be made with 
     respect to, and shall be made a part of, the annual report.

     ``SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.

       ``Except as provided in section 809(b), an association 
     health plan which is or has been certified under this part 
     may terminate (upon or at any time after cessation of 
     accruals in benefit liabilities) only if the board of 
     trustees, not less than 60 days before the proposed 
     termination date--
       ``(1) 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 
     plan in connection with such termination in a manner which 
     will result in timely payment of all benefits for which the 
     plan is obligated; and
       ``(3) submits such plan in writing to the applicable 
     authority.

     Actions required under this section shall be taken in such 
     form and manner as may be prescribed by the applicable 
     authority by regulation.

     ``SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMINATION.

       ``(a) Actions To Avoid Depletion of Reserves.--An 
     association health plan which is certified under this part 
     and which provides benefits other than health insurance 
     coverage shall continue to meet the requirements of section 
     806, irrespective of whether such certification continues in 
     effect. The board of trustees of such plan shall determine 
     quarterly whether

[[Page H5609]]

     the requirements of section 806 are met. In any case in which 
     the board determines that there is reason to believe that 
     there is or will be a failure to meet such requirements, or 
     the applicable authority makes such a determination and so 
     notifies the board, the board shall immediately notify the 
     qualified actuary engaged by the plan, and such actuary 
     shall, not later than the end of the next following month, 
     make such recommendations to the board for corrective action 
     as the actuary determines necessary to ensure compliance with 
     section 806. Not later than 30 days after receiving from the 
     actuary recommendations for corrective actions, the board 
     shall notify the applicable authority (in such form and 
     manner as the applicable authority may prescribe by 
     regulation) of such recommendations of the actuary for 
     corrective action, together with a description of the actions 
     (if any) that the board has taken or plans to take in 
     response to such recommendations. The board shall thereafter 
     report to the applicable authority, in such form and 
     frequency as the applicable authority may specify to the 
     board, regarding corrective action taken by the board until 
     the requirements of section 806 are met.
       ``(b) Mandatory Termination.--In any case in which--
       ``(1) the applicable authority has been notified under 
     subsection (a) (or by an issuer of excess /stop loss 
     insurance or indemnity insurance pursuant to section 806(a)) 
     of a failure of an association health plan which is or has 
     been certified under this part and is described in section 
     806(a)(2) to meet the requirements of section 806 and has not 
     been notified by the board of trustees of the plan that 
     corrective action has restored compliance with such 
     requirements; and
       ``(2) the applicable authority determines that there is a 
     reasonable expectation that the plan will continue to fail to 
     meet the requirements of section 806,
     the board of trustees of the plan shall, at the direction of 
     the applicable authority, terminate the plan and, in the 
     course of the termination, take such actions as the 
     applicable authority may require, including satisfying any 
     claims referred to in section 806(a)(2)(B)(iii) and 
     recovering for the plan any liability under subsection 
     (a)(2)(B)(iii) or (e) of section 806, as necessary to ensure 
     that the affairs of the plan will be, to the maximum extent 
     possible, wound up in a manner which will result in timely 
     provision of all benefits for which the plan is obligated.

     ``SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT 
                   ASSOCIATION HEALTH PLANS PROVIDING HEALTH 
                   BENEFITS IN ADDITION TO HEALTH INSURANCE 
                   COVERAGE.

       ``(a) Appointment of Secretary as Trustee for Insolvent 
     Plans.--Whenever the Secretary determines that an association 
     health plan which is or has been certified under this part 
     and which is described in section 806(a)(2) will be unable to 
     provide benefits when due or is otherwise in a financially 
     hazardous condition, as shall be defined by the Secretary by 
     regulation, the Secretary shall, upon notice to the plan, 
     apply to the appropriate United States district court for 
     appointment of the Secretary as trustee to administer the 
     plan for the duration of the insolvency. The plan may appear 
     as a party and other interested persons may intervene in the 
     proceedings at the discretion of the court. The court shall 
     appoint such Secretary trustee if the court determines that 
     the trusteeship is necessary to protect the interests of 
     the participants and beneficiaries or providers of medical 
     care or to avoid any unreasonable deterioration of the 
     financial condition of the plan. The trusteeship of such 
     Secretary shall continue until the conditions described in 
     the first sentence of this subsection are remedied or the 
     plan is terminated.
       ``(b) Powers as Trustee.--The Secretary, upon appointment 
     as trustee under subsection (a), shall have the power--
       ``(1) to do any act authorized by the plan, this title, or 
     other applicable provisions of law to be done by the plan 
     administrator or any trustee of the plan;
       ``(2) to require the transfer of all (or any part) of the 
     assets and records of the plan to the Secretary as trustee;
       ``(3) to invest any assets of the plan which the Secretary 
     holds in accordance with the provisions of the plan, 
     regulations prescribed by the Secretary, and applicable 
     provisions of law;
       ``(4) to require the sponsor, the plan administrator, any 
     participating employer, and any employee organization 
     representing plan participants to furnish any information 
     with respect to the plan which the Secretary as trustee may 
     reasonably need in order to administer the plan;
       ``(5) to collect for the plan any amounts due the plan and 
     to recover reasonable expenses of the trusteeship;
       ``(6) to commence, prosecute, or defend on behalf of the 
     plan any suit or proceeding involving the plan;
       ``(7) to issue, publish, or file such notices, statements, 
     and reports as may be required by the Secretary by regulation 
     or required by any order of the court;
       ``(8) to terminate the plan (or provide for its termination 
     in accordance with section 809(b)) and liquidate the plan 
     assets, to restore the plan to the responsibility of the 
     sponsor, or to continue the trusteeship;
       ``(9) to provide for the enrollment of plan participants 
     and beneficiaries under appropriate coverage options; and
       ``(10) to do such other acts as may be necessary to comply 
     with this title or any order of the court and to protect the 
     interests of plan participants and beneficiaries and 
     providers of medical care.
       ``(c) Notice of Appointment.--As soon as practicable after 
     the Secretary's appointment as trustee, the Secretary shall 
     give notice of such appointment to--
       ``(1) the sponsor and plan administrator;
       ``(2) each participant;
       ``(3) each participating employer; and
       ``(4) if applicable, each employee organization which, for 
     purposes of collective bargaining, represents plan 
     participants.
       ``(d) Additional Duties.--Except to the extent inconsistent 
     with the provisions of this title, or as may be otherwise 
     ordered by the court, the Secretary, upon appointment as 
     trustee under this section, shall be subject to the same 
     duties as those of a trustee under section 704 of title 11, 
     United States Code, and shall have the duties of a fiduciary 
     for purposes of this title.
       ``(e) Other Proceedings.--An application by the Secretary 
     under this subsection may be filed notwithstanding the 
     pendency in the same or any other court of any bankruptcy, 
     mortgage foreclosure, or equity receivership proceeding, or 
     any proceeding to reorganize, conserve, or liquidate such 
     plan or its property, or any proceeding to enforce a lien 
     against property of the plan.
       ``(f) Jurisdiction of Court.--
       ``(1) In general.--Upon the filing of an application for 
     the appointment as trustee or the issuance of a decree under 
     this section, the court to which the application is made 
     shall have exclusive jurisdiction of the plan involved and 
     its property wherever located with the powers, to the extent 
     consistent with the purposes of this section, of a court of 
     the United States having jurisdiction over cases under 
     chapter 11 of title 11, United States Code. Pending an 
     adjudication under this section such court shall stay, and 
     upon appointment by it of the Secretary as trustee, such 
     court shall continue the stay of, any pending mortgage 
     foreclosure, equity receivership, or other proceeding to 
     reorganize, conserve, or liquidate the plan, the sponsor, or 
     property of such plan or sponsor, and any other suit against 
     any receiver, conservator, or trustee of the plan, the 
     sponsor, or property of the plan or sponsor. Pending such 
     adjudication and upon the appointment by it of the Secretary 
     as trustee, the court may stay any proceeding to enforce a 
     lien against property of the plan or the sponsor or any other 
     suit against the plan or the sponsor.
       ``(2) Venue.--An action under this section may be brought 
     in the judicial district where the sponsor or the plan 
     administrator resides or does business or where any asset of 
     the plan is situated. A district court in which such action 
     is brought may issue process with respect to such action in 
     any other judicial district.
       ``(g) Personnel.--In accordance with regulations which 
     shall be prescribed by the Secretary, the Secretary shall 
     appoint, retain, and compensate accountants, actuaries, and 
     other professional service personnel as may be necessary in 
     connection with the Secretary's service as trustee under this 
     section.

     ``SEC. 811. STATE ASSESSMENT AUTHORITY.

       ``(a) In General.--Notwithstanding section 514, a State may 
     impose by law a contribution tax on an association health 
     plan described in section 806(a)(2), if the plan commenced 
     operations in such State after the date of the enactment of 
     the Small Business Health Fairness Act of 2003.
       ``(b) Contribution Tax.--For purposes of this section, the 
     term `contribution tax' imposed by a State on an association 
     health plan means any tax imposed by such State if--
       ``(1) such tax is computed by applying a rate to the amount 
     of premiums or contributions, with respect to individuals 
     covered under the plan who are residents of such State, which 
     are received by the plan from participating employers located 
     in such State or from such individuals;
       ``(2) 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;
       ``(3) such tax is otherwise nondiscriminatory; and
       ``(4) the amount of any such tax assessed on the plan is 
     reduced by the amount of any tax or assessment otherwise 
     imposed by the State on premiums, contributions, or both 
     received by insurers or health maintenance organizations for 
     health insurance coverage, aggregate excess /stop loss 
     insurance (as defined in section 806(g)(1)), specific excess 
     /stop loss insurance (as defined in section 806(g)(2)), other 
     insurance related to the provision of medical care under the 
     plan, or any combination thereof provided by such insurers or 
     health maintenance organizations in such State in connection 
     with such plan.

     ``SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION.

       ``(a) Definitions.--For purposes of this part--
       ``(1) Group health plan.--The term `group health plan' has 
     the meaning provided in section 733(a)(1) (after applying 
     subsection (b) of this section).
       ``(2) Medical care.--The term `medical care' has the 
     meaning provided in section 733(a)(2).
       ``(3) Health insurance coverage.--The term `health 
     insurance coverage' has the meaning provided in section 
     733(b)(1).
       ``(4) Health insurance issuer.--The term `health insurance 
     issuer' has the meaning provided in section 733(b)(2).
       ``(5) Applicable authority.--The term `applicable 
     authority' means the Secretary, except that, in connection 
     with any exercise of the Secretary's authority regarding 
     which the Secretary is required under section 506(d) to 
     consult with a State, such term means the Secretary, in 
     consultation with such State.
       ``(6) Health status-related factor.--The term `health 
     status-related factor' has the meaning provided in section 
     733(d)(2).
       ``(7) Individual market.--

[[Page H5610]]

       ``(A) In general.--The term `individual market' means the 
     market for health insurance coverage offered to individuals 
     other than in connection with a group health plan.
       ``(B) Treatment of very small groups.--
       ``(i) In general.--Subject to clause (ii), such term 
     includes coverage offered in connection with a group health 
     plan that has fewer than 2 participants as current employees 
     or participants described in section 732(d)(3) on the first 
     day of the plan year.
       ``(ii) State exception.--Clause (i) shall not apply in the 
     case of health insurance coverage offered in a State if such 
     State regulates the coverage described in such clause in the 
     same manner and to the same extent as coverage in the small 
     group market (as defined in section 2791(e)(5) of the Public 
     Health Service Act) is regulated by such State.
       ``(8) Participating employer.--The term `participating 
     employer' means, in connection with an association health 
     plan, any employer, if any individual who is an employee of 
     such employer, a partner in such employer, or a self-employed 
     individual who is such employer (or any dependent, as defined 
     under the terms of the plan, of such individual) is or was 
     covered under such plan in connection with the status of such 
     individual as such an employee, partner, or self-employed 
     individual in relation to the plan.
       ``(9) Applicable state authority.--The term `applicable 
     State authority' means, with respect to a health insurance 
     issuer in a State, the State insurance commissioner or 
     official or officials designated by the State to enforce the 
     requirements of title XXVII of the Public Health Service Act 
     for the State involved with respect to such issuer.
       ``(10) Qualified actuary.--The term `qualified actuary' 
     means an individual who is a member of the American Academy 
     of Actuaries.
       ``(11) Affiliated member.--The term `affiliated member' 
     means, in connection with a sponsor--
       ``(A) a person who is otherwise eligible to be a member of 
     the sponsor but who elects an affiliated status with the 
     sponsor,
       ``(B) in the case of a sponsor with members which consist 
     of associations, a person who is a member of any such 
     association and elects an affiliated status with the sponsor, 
     or
       ``(C) in the case of an association health plan in 
     existence on the date of the enactment of the Small Business 
     Health Fairness Act of 2003, a person eligible to be a member 
     of the sponsor or one of its member associations.
       ``(12) Large employer.--The term `large employer' means, in 
     connection with a group health plan with respect to a plan 
     year, an employer who employed an average of at least 51 
     employees on business days during the preceding calendar year 
     and who employs at least 2 employees on the first day of the 
     plan year.
       ``(13) Small employer.--The term `small employer' means, in 
     connection with a group health plan with respect to a plan 
     year, an employer who is not a large employer.
       ``(b) Rules of Construction.--
       ``(1) Employers and employees.--For purposes of determining 
     whether a plan, fund, or program is an employee welfare 
     benefit plan which is an association health plan, and for 
     purposes of applying this title in connection with such plan, 
     fund, or program so determined to be such an employee welfare 
     benefit plan--
       ``(A) in the case of a partnership, the term `employer' (as 
     defined in section 3(5)) includes the partnership in relation 
     to the partners, and the term `employee' (as defined in 
     section 3(6)) includes any partner in relation to the 
     partnership; and
       ``(B) in the case of a self-employed individual, the term 
     `employer' (as defined in section 3(5)) and the term 
     `employee' (as defined in section 3(6)) shall include such 
     individual.
       ``(2) Plans, funds, and programs treated as employee 
     welfare benefit plans.--In the case of any plan, fund, or 
     program which was established or is maintained for the 
     purpose of providing medical care (through the purchase of 
     insurance or otherwise) for employees (or their dependents) 
     covered thereunder and which demonstrates to the Secretary 
     that all requirements for certification under this part would 
     be met with respect to such plan, fund, or program if such 
     plan, fund, or program were a group health plan, such plan, 
     fund, or program shall be treated for purposes of this title 
     as an employee welfare benefit plan on and after the date of 
     such demonstration.''.
       (b) Conforming Amendments to Preemption Rules.--
       (1) Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) is 
     amended by adding at the end the following new subparagraph:
       ``(E) The preceding subparagraphs of this paragraph do not 
     apply with respect to any State law in the case of an 
     association health plan which is certified under part 8.''.
       (2) Section 514 of such Act (29 U.S.C. 1144) is amended--
       (A) in subsection (b)(4), by striking ``Subsection (a)'' 
     and inserting ``Subsections (a) and (d)'';
       (B) in subsection (b)(5), by striking ``subsection (a)'' in 
     subparagraph (A) and inserting ``subsection (a) of this 
     section and subsections (a)(2)(B) and (b) of section 805'', 
     and by striking ``subsection (a)'' in subparagraph (B) and 
     inserting ``subsection (a) of this section or subsection 
     (a)(2)(B) or (b) of section 805'';
       (C) by redesignating subsection (d) as subsection (e); and
       (D) by inserting after subsection (c) the following new 
     subsection:
       ``(d)(1) Except as provided in subsection (b)(4), the 
     provisions of this title shall supersede any and all State 
     laws insofar as they may now or hereafter preclude, or have 
     the effect of precluding, a health insurance issuer from 
     offering health insurance coverage in connection with an 
     association health plan which is certified under part 8.
       ``(2) Except as provided in paragraphs (4) and (5) of 
     subsection (b) of this section--
       ``(A) In any case in which health insurance coverage of any 
     policy type is offered under an association health plan 
     certified under part 8 to a participating employer operating 
     in such State, the provisions of this title shall supersede 
     any and all laws of such State insofar as they may preclude a 
     health insurance issuer from offering health insurance 
     coverage of the same policy type to other employers operating 
     in the State which are eligible for coverage under such 
     association health plan, whether or not such other employers 
     are participating employers in such plan.
       ``(B) In any case in which health insurance coverage of any 
     policy type is offered in a State under an association health 
     plan certified under part 8 and the filing, with the 
     applicable State authority (as defined in section 812(a)(9)), 
     of the policy form in connection with such policy type is 
     approved by such State authority, the provisions of this 
     title shall supersede any and all laws of any other State in 
     which health insurance coverage of such type is offered, 
     insofar as they may preclude, upon the filing in the same 
     form and manner of such policy form with the applicable State 
     authority in such other State, the approval of the filing in 
     such other State.
       ``(3) Nothing in subsection (b)(6)(E) or the preceding 
     provisions of this subsection shall be construed, with 
     respect to health insurance issuers or health insurance 
     coverage, to supersede or impair the law of any State--
       ``(A) providing solvency standards or similar standards 
     regarding the adequacy of insurer capital, surplus, reserves, 
     or contributions, or
       ``(B) relating to prompt payment of claims.
       ``(4) For additional provisions relating to association 
     health plans, see subsections (a)(2)(B) and (b) of section 
     805.
       ``(5) For purposes of this subsection, the term 
     `association health plan' has the meaning provided in section 
     801(a), and the terms `health insurance coverage', 
     `participating employer', and `health insurance issuer' have 
     the meanings provided such terms in section 812, 
     respectively.''.
       (3) Section 514(b)(6)(A) of such Act (29 U.S.C. 
     1144(b)(6)(A)) is amended--
       (A) in clause (i)(II), by striking ``and'' at the end;
       (B) in clause (ii), by inserting ``and which does not 
     provide medical care (within the meaning of section 
     733(a)(2)),'' after ``arrangement,'', and by striking 
     ``title.'' and inserting ``title, and''; and
       (C) by adding at the end the following new clause:
       ``(iii) subject to subparagraph (E), in the case of any 
     other employee welfare benefit plan which is a multiple 
     employer welfare arrangement and which provides medical care 
     (within the meaning of section 733(a)(2)), any law of any 
     State which regulates insurance may apply.''.
       (4) Section 514(e) of such Act (as redesignated by 
     paragraph (2)(C)) is amended--
       (A) by striking ``Nothing'' and inserting ``(1) Except as 
     provided in paragraph (2), nothing''; and
       (B) by adding at the end the following new paragraph:
       ``(2) Nothing in any other provision of law enacted on or 
     after the date of the enactment of the Small Business Health 
     Fairness Act of 2003 shall be construed to alter, amend, 
     modify, invalidate, impair, or supersede any provision of 
     this title, except by specific cross-reference to the 
     affected section.''.
       (c) Plan Sponsor.--Section 3(16)(B) of such Act (29 U.S.C. 
     102(16)(B)) is amended by adding at the end the following new 
     sentence: ``Such term also includes a person serving as the 
     sponsor of an association health plan under part 8.''.
       (d) Disclosure of Solvency Protections Related to Self-
     Insured and Fully Insured Options Under Association Health 
     Plans.--Section 102(b) of such Act (29 U.S.C. 102(b)) is 
     amended by adding at the end the following: ``An association 
     health plan shall include in its summary plan description, in 
     connection with each benefit option, a description of the 
     form of solvency or guarantee fund protection secured 
     pursuant to this Act or applicable State law, if any.''.
       (e) Savings Clause.--Section 731(c) of such Act is amended 
     by inserting ``or part 8'' after ``this part''.
       (f) Report to the Congress Regarding Certification of Self-
     Insured Association Health Plans.--Not later than January 1, 
     2008, the Secretary of Labor shall report to the Committee on 
     Education and the Workforce of the House of Representatives 
     and the Committee on Health, Education, Labor, and Pensions 
     of the Senate the effect association health plans have had, 
     if any, on reducing the number of uninsured individuals.
       (g) Clerical Amendment.--The table of contents in section 1 
     of the Employee Retirement Income Security Act of 1974 is 
     amended by inserting after the item relating to section 734 
     the following new items:


[[Page H5611]]



           ``Part 8--Rules Governing Association Health Plans

       ``Sec. 801. Association health plans.
       ``Sec. 802. Certification of association health plans.
       ``Sec. 803. Requirements relating to sponsors and boards of 
           trustees.
       ``Sec. 804. Participation and coverage requirements.
       ``Sec. 805. Other requirements relating to plan documents, 
           contribution rates, and benefit options.
       ``Sec. 806. Maintenance of reserves and provisions for 
           solvency for plans providing health benefits in 
           addition to health insurance coverage.
       ``Sec. 807. Requirements for application and related 
           requirements.
       ``Sec. 808. Notice requirements for voluntary termination.
       ``Sec. 809. Corrective actions and mandatory termination.
       ``Sec. 810. Trusteeship by the Secretary of insolvent 
           association health plans providing health benefits in 
           addition to health insurance coverage.
       ``Sec. 811. State assessment authority.
       ``Sec. 812. Definitions and rules of construction.''.

     SEC. 3. 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 after ``control group,'' 
     the following: ``except that, in any case in which the 
     benefit referred to in subparagraph (A) consists of medical 
     care (as defined in section 812(a)(2)), two or more trades or 
     businesses, whether or not incorporated, shall be deemed a 
     single employer for any plan year of such plan, or any fiscal 
     year of such other arrangement, if such trades or businesses 
     are within the same control group during such year or at any 
     time during the preceding 1-year period,'';
       (2) in clause (iii), by striking ``(iii) the 
     determination'' and inserting the following:
       ``(iii)(I) in any case in which the benefit referred to in 
     subparagraph (A) consists of medical care (as defined in 
     section 812(a)(2)), the determination of whether a trade or 
     business is under `common control' with another trade or 
     business shall be determined under regulations of the 
     Secretary applying principles consistent and coextensive with 
     the principles applied in determining whether employees of 
     two or more trades or businesses are treated as employed by a 
     single employer under section 4001(b), except that, for 
     purposes of this paragraph, an interest of greater than 25 
     percent may not be required as the minimum interest necessary 
     for common control, or
       ``(II) in any other case, the determination'';
       (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 any case in which the benefit referred to in 
     subparagraph (A) consists of medical care (as defined in 
     section 812(a)(2)), 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 one 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. 4. ENFORCEMENT PROVISIONS RELATING TO ASSOCIATION HEALTH 
                   PLANS.

       (a) Criminal Penalties for Certain Willful 
     Misrepresentations.--Section 501 of the Employee Retirement 
     Income Security Act of 1974 (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 willfully falsely represents, to any 
     employee, any employee's beneficiary, any employer, the 
     Secretary, or any State, a plan or other 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 an association health plan which has been 
     certified under part 8;
       ``(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 described in section 
     3(40)(A)(i),
     shall, upon conviction, be imprisoned not more than 5 years, 
     be fined under title 18, United States Code, or both.''.
       (b) Cease Activities Orders.--Section 502 of such Act (29 
     U.S.C. 1132) is amended by adding at the end the following 
     new subsection:
       ``(n) Association Health Plan Cease and Desist Orders.--
       ``(1) In general.--Subject to paragraph (2), upon 
     application by the Secretary showing the operation, 
     promotion, or marketing of an association health plan (or 
     similar arrangement providing benefits consisting of medical 
     care (as defined in section 733(a)(2))) that--
       ``(A) is not certified under part 8, is subject under 
     section 514(b)(6) to the insurance laws of any State in which 
     the plan or arrangement offers or provides benefits, and is 
     not licensed, registered, or otherwise approved under the 
     insurance laws of such State; or
       ``(B) is an association health plan certified under part 8 
     and is not operating in accordance with the requirements 
     under part 8 for such certification,
     a district court of the United States shall enter an order 
     requiring that the plan or arrangement cease activities.
       ``(2) Exception.--Paragraph (1) shall not apply in the case 
     of an association health plan or other arrangement if the 
     plan or arrangement shows that--
       ``(A) all benefits under it referred to in paragraph (1) 
     consist of health insurance coverage; and
       ``(B) with respect to each State in which the plan or 
     arrangement offers or provides benefits, the plan or 
     arrangement is operating in accordance with applicable State 
     laws that are not superseded under section 514.
       ``(3) Additional equitable relief.--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 plan.''.
       (c) Responsibility for Claims Procedure.--Section 503 of 
     such Act (29 U.S.C. 1133) is amended by inserting ``(a) In 
     General.--'' before ``In accordance'', and by adding at the 
     end the following new subsection:
       ``(b) Association Health Plans.--The terms of each 
     association health plan which is or has been certified under 
     part 8 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. 5. 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:
       ``(d) Consultation With States With Respect to Association 
     Health Plans.--
       ``(1) Agreements with states.--The Secretary shall consult 
     with the State recognized under paragraph (2) with respect to 
     an association health plan regarding the exercise of--
       ``(A) the Secretary's authority under sections 502 and 504 
     to enforce the requirements for certification under part 8; 
     and
       ``(B) the Secretary's authority to certify association 
     health plans under part 8 in accordance with regulations of 
     the Secretary applicable to certification under part 8.
       ``(2) Recognition of primary domicile state.--In carrying 
     out paragraph (1), the Secretary shall ensure that only one 
     State will be recognized, with respect to any particular 
     association health plan, as the State to with which 
     consultation is required. In carrying out this paragraph--
       ``(A) in the case of a plan which provides health insurance 
     coverage (as defined in section 812(a)(3)), such State shall 
     be the State with which filing and approval of a policy type 
     offered by the plan was initially obtained, and
       ``(B) in any other case, the Secretary shall take into 
     account the places of residence of the participants and 
     beneficiaries under the plan and the State in which the trust 
     is maintained.''.

     SEC. 6. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

       (a) Effective Date.--The amendments made by this Act shall 
     take effect one year from the date of the enactment. The 
     Secretary of Labor shall first issue all regulations 
     necessary to carry out the amendments made by this Act within 
     one year after the date of the enactment of this Act.
       (b) Treatment of Certain Existing Health Benefits 
     Programs.--
       (1) In general.--In any case in which, as of the date of 
     the enactment of this Act, an arrangement is maintained in a 
     State for the purpose of providing benefits consisting of 
     medical care for the employees and beneficiaries of its 
     participating employers, at least 200 participating employers 
     make contributions to such arrangement, such arrangement has 
     been in existence for at least 10 years, and such arrangement 
     is licensed under the laws of one or more States to provide 
     such benefits to its participating employers, upon the 
     filing with the applicable authority (as defined in 
     section 812(a)(5) of the Employee Retirement Income 
     Security Act of 1974 (as amended by this subtitle)) by the 
     arrangement of an application for certification of the 
     arrangement under part 8 of subtitle B of title I of such 
     Act--
       (A) such arrangement shall be deemed to be a group health 
     plan for purposes of title I of such Act;
       (B) the requirements of sections 801(a) and 803(a) of the 
     Employee Retirement Income Security Act of 1974 shall be 
     deemed met with respect to such arrangement;
       (C) the requirements of section 803(b) of such Act shall be 
     deemed met, if the arrangement is operated by a board of 
     directors which--
       (i) is elected by the participating employers, with each 
     employer having one vote; and
       (ii) has complete fiscal control over the arrangement and 
     which is responsible for all operations of the arrangement;
       (D) the requirements of section 804(a) of such Act shall be 
     deemed met with respect to such arrangement; and
       (E) the arrangement may be certified by any applicable 
     authority with respect to its operations in any State only if 
     it operates in such State on the date of certification.
     The provisions of this subsection shall cease to apply with 
     respect to any such arrangement at such time after the date 
     of the enactment of this Act as the applicable requirements 
     of this subsection are not met with respect to such 
     arrangement.
       (2) Definitions.--For purposes of this subsection, the 
     terms ``group health plan'', ``medical care'', and 
     ``participating employer'' shall

[[Page H5612]]

     have the meanings provided in section 812 of the Employee 
     Retirement Income Security Act of 1974, except that the 
     reference in paragraph (7) of such section to an 
     ``association health plan'' shall be deemed a reference to an 
     arrangement referred to in this subsection.

  The SPEAKER pro tempore. After 1 hour of debate on the bill, it shall 
be in order to consider the further amendment printed in House Report 
108-160, if offered, by the gentleman from Wisconsin (Mr. Kind) or his 
designee, which shall be considered read and shall be debatable for 1 
hour, equally divided and controlled by the proponent and an opponent.
  The gentleman from Ohio (Mr. Boehner) and the gentleman from New 
Jersey (Mr. Andrews) each will control 30 minutes.
  The Chair recognizes the gentleman from Ohio (Mr. Boehner).
  Mr. BOEHNER. Madam Speaker, I yield myself such time as I may 
consume.
  Madam Speaker, the most pressing crisis that we face in health care 
today is the number of Americans who lack basic health insurance 
benefits. It is a problem that can be illustrated by just a few 
numbers, so let us just look at the facts.
  Today, 41 million Americans are uninsured. This problem is not going 
to go away, and we have a responsibility to confront it. With health 
care costs continuing to rise sharply across the country, more and more 
employers and workers are sharing the burden of increased premiums. 
Employer-based health insurance premiums leaped an average of 15 
percent in 2003, the largest increase in at least a decade, according 
to a study just released June 11 by the Center for Studying Health 
System Change. We know that for every 1 percent increase in coverage, 
additional price increase, 300,000 more people lose their health 
insurance, according to a 1999 study by the Lewin Group, a national 
health care and human services consulting firm.
  The second number is 60. Sixty is the percentage of the 41 million 
uninsured Americans who either work for a small business or who are 
dependent upon someone who does. So let us remember, there are 60 
percent of the uninsured where they or one of their dependents works 
every day for a company that likely does not offer health insurance. 
Many of these Americans work for small employers who cannot afford to 
purchase quality health insurance benefits for their workers. Notably, 
the 2002 Census Bureau statistics show that employer-sponsored health 
care coverage has declined because small businesses with less than 25 
workers have been forced to drop coverage because of rising health care 
costs. These small employers are denied the ability to purchase quality 
health benefits that compare with the coverage that large, multi-State 
corporations and unions have been offering to their workers for 
decades.
  The last number is $130 billion. Yes, $130 billion is the cost to the 
American economy every year of poor health and premature deaths amongst 
those 41 million Americans who lack basic health insurance coverage, 
according to a study released just this week by the Institute of 
Medicine. Madam Speaker, $130 billion a year of additional costs to our 
society and disproportionately aimed at the 41 million Americans that 
do not have any health insurance.
  The implications of these numbers are tragic, not just for employers 
who cannot afford the high cost of health insurance, but the millions 
of uninsured families who are being denied access to quality care. 
Clearly, we need to focus on providing affordable health care to the 
uninsured as well as ensure that employers who provide health benefits 
to their employees are not forced to drop coverage because of rising 
premiums and high administrative costs.
  The Small Business Health Fairness Act, which we have on the floor 
today, responds to this problem and can help reduce the high cost of 
health insurance for small businesses and uninsured working families. 
By creating association health plans, which would be strictly regulated 
by the Department of Labor, small businesses could pool their resources 
and increase their bargaining power with benefit providers, which will 
allow them to negotiate better rates and purchase quality health care 
at a lower cost.
  President Bush addressed this point directly last year during his 
speech at the Women's Entrepreneurship Summit when he said, ``Small 
businesses will be able to pool together and spread their risk across a 
large employee base.

                              {time}  1400

  It makes no sense in America to isolate small businesses as little 
health care islands unto themselves. We must have association health 
plans.
  Well, the President is right, and we should help level this playing 
field so that small businesses can afford to offer the kind of quality 
coverage that large companies and unions do across America today.
  Importantly, the bill gives AHPs the freedom from costly State 
mandates because small businesses deserve to be treated in the same 
fashions as corporations like GM and UPS, and unions who receive the 
same exemption so that they can offer high quality plans and benefits 
to their workers. Clearly, State health care mandates are useless to 
families who do not have the health care coverage in the first place. 
And if you do not have health care coverage, State mandates requiring 
health plans to offer specific benefits to those they cover do you and 
your family no good at all.
  Let us be clear on the protections this bill provides workers, 
however, because it includes strong safeguards to protect workers. In 
fact, the solvency standards in the bill go far beyond what is required 
any single employer plan or labor union plan under law. And despite the 
bipartisan nature of this bill, some misinformation has been spread 
about the bill that I would like to take a moment to correct.
  The measure protects against cherrypicking because we make clear that 
the AHPs must comply with the 1996 Health Insurance Portability and 
Accountability Act, HIPAA, which prohibits group health plans from 
excluding or charging a higher rate to high-risk individuals with a 
high-claims experience.
  Under our bill, sick or high-risk groups or individuals cannot be 
denied coverage. In addition, AHPs cannot charge higher rates for 
employers with sicker individuals within the plan, except to the extent 
already allowed by State law based on where the employer is located.
  The bill also contains strict requirements under which only bona fide 
professional and trade associations can sponsor an association health 
plan, and therefore does not allow sham association plans set up by 
health insurance companies to go out and do what some did over the next 
decade or so. These organizations must be established for purposes 
other than providing health insurance and they have to be in existence 
for at least 3 years prior to the passage of this bill.
  This campaign of disinformation belies not just the need for the 
bill, but the bipartisan support behind it. Not only is it strongly 
supported by the President of the United States, President Bush and 
Secretary Chao at the Department of Labor, but it has more than 160 
bipartisan co-sponsors, including my colleague, the gentleman from 
Texas (Mr. Sam Johnson), the subcommittee chairman; the gentleman from 
Kentucky (Mr. Fletcher), the former member of our committee, now on the 
Committee on Energy and Commerce; or the Democrat member, the gentleman 
from California (Mr. Dooley); and the Democrat member, the gentlewoman 
from New York (Ms. Velazquez).
  It is noteworthy and significant that Republicans and Democrats alike 
are joining together to deal with the crisis affecting more than 41 
million uninsured Americans. Uninsured workers deserve the security of 
knowing that health care is not just a dream but a reality for them and 
for their families. This bill can help make that happen.
  Madam Speaker, I reserve the balance of my time.
  Mr. ANDREWS. Madam Speaker, I yield myself such time as I may 
consume.
  (Mr. ANDREWS asked and was given permission to revise and extend his 
remarks.)
  Mr. ANDREWS. Madam Speaker, I rise in strong opposition to this bill.
  The chairman of the committee is precisely right, that the problem of 
massive amounts of people not having health insurance is the central 
problem in health care. Most of the 41 million

[[Page H5613]]

Americans who have no health care who are adults work for a living. And 
most of those adults who work for a living work for a small business, 
so there is an intuitive appeal to an argument that says let us help 
make it easier for small businesses to acquire health insurance.
  In fact, the substitute that the gentleman from Wisconsin (Mr. Kind) 
and I will be offering later in this debate does that, and we would 
urge our colleagues to support that.
  The reality, though, is that small businesses who do not provide 
health care for their employees do not do so because the gap between 
what they can afford to pay and what they have must pay is huge. It is 
immense. Even the most optimistic proponents of this bill admit that 
the premium savings that could be generated by this bill will slender 
indeed, usually in the single digits of percentage points, if that.
  The reality is small businesses are not going to be able to afford to 
expand health care without significant public subsidies. That is a 
fact. The majority has drained well in excess of $2 trillion from the 
public Treasury with its insatiable appetite for tax cuts, and as a 
result, there is no money in the till. There is no money to provide 
those necessary subsidies. So this is the fig leaf. This is the shallow 
argument that says we can do something to help those small businesses.
  Frankly, this bill belongs in the Orwellian hall of fame for 
misnomers of a piece of legislation. It is called the Small Business 
Health Care Fairness Act. With respect to small businesses, it provides 
nothing in subsidies for employers who cannot afford health insurance, 
not a dime. It provides for market reforms that offer an illusory and 
ultimately empty promise of lower premiums.
  It is not a health care bill because what it does is supplant 
benefits that have been provided by State legislatures across this 
country by Republicans and Democrats, benefits that guarantee women 
breast cancer care, benefits that guarantee people with diabetes care 
for their illness, benefits that guarantee pregnant women and small 
children important care, benefits that protect consumers when they have 
been wronged by their HMO. Because this bill invalidates and wipes out 
those protections, the National Governors Association, Republicans and 
Democrats, oppose this bill. Because this bill invalidates those 
protections, the Attorneys General of a huge majority of the States 
oppose this bill. Because the bill eliminates protections for 
mammograms, for diabetes care, for well baby care, wipes them out, the 
insurance commissioners across this country oppose the bill.
  It is not a health care bill. It is a political bill designed to 
paper over the fact that the majority already spent the money it needs 
to provide real relief.
  Finally, it is called fairness. Where is the fairness in creating two 
sets of rules for those who attempt to buy health insurance for their 
employees? Because that is what this bill does. It sets up one set of 
rules where all the protections and regulations and safeguards that 
most people enjoy are wiped off the books for AHPs, and then another 
set of rules where the remaining insurance companies must compete on an 
unlevel playing field. Many of us who support the substitute believe in 
market competition, but we believe in market competition on a level 
playing field. That is not what this bill does.
  One of the of the most respected health care analysis firms in this 
country, Madam Speaker, Certified Public Accountants and Associates, 
looked at this bill and that firm concluded that the chairman would 
have to change one of his charts because he started with a chart that 
says there are 41 million uninsured. If this bill is enacted, the 
chairman will have to change his chart and X out the 41 and put 42 
uninsured, because that firm has concluded that the net effect of this 
bill will be to drive up the premiums for insurance companies who are 
not AHPs, drive them up so high that it will result in the loss of 
coverage for one million more Americans.
  This bill is an illusion. It should be defeated. Later in this 
debate, the gentleman from Wisconsin (Mr. Kind) and I will be 
presenting a substitute which we believe truly addresses the real needs 
of small businesses in America's uninsured.
  Madam Speaker, I reserve the balance of my time.
  Mr. SAM JOHNSON of Texas. Madam Speaker, I yield myself such time as 
I may consume.
  (Mr. SAM JOHNSON of Texas asked and was given permission to revise 
and extend his remarks.)
  Mr. SAM JOHNSON of Texas. Madam Speaker, to my friend, the gentleman 
from New Jersey (Mr. Andrews), that is total misinformation. And I 
would agree that the gentleman is politicizing this bill. But he is 
doing it, not us.
  This bill makes it illegal to cherrypick. This bill does not 
eliminate any form of insurance and the gentleman stated it did. It 
does not stop insurance companies from insuring on whatever they want 
to insure. And as a matter of fact, they probably will.
  Furthermore, one million more people became uninsured in the past 
year and it was primarily because of small businesses getting out of 
the insurance business because it is too expensive. And I think that 
there is the one way in which we can ensure that people will be 
insured, more of them through small businesses. As a matter of fact, a 
private study has said about 8.5 million more will be insured.
  Under our bill, sick or high risk groups or individuals cannot be 
denied coverage. Moreover, AHPs are severely limited in their ability 
to charge higher rates which my cohort said would happen. They can not 
charge higher rates for sicker people or groups within the plan. AHPs 
can only charge different rates to the extent allowed under the law of 
the State where the employer is based.
  The bill contains strict requirements under which only bona fide 
professional and trade associations can sponsor an AHP, and these 
organizations must be established for purposes other than providing 
health insurance for at least 3 years.
  Now, there is considerable comment about AHPs being exempts from 
State coverage. As we all know, labor unions and large corporations 
that self-insure are already exempt from State health care mandates, 
and they provide quality benefits because it is in the best interest of 
their employees. And I will charge you that small business would apply 
the same reasoning. It is really a moral fairness issue. If it is good 
enough for labor unions, good enough for Fortune 500 companies, it 
ought to be good enough for small business.
  We must remember that our ultimate goal here is to bring quality 
coverage to the 41 million Americans who have no insurance. Further, 
AHPs will significantly expand access to health coverage to uninsured 
Americans by increasing small businesses bargaining power with health 
care providers by giving employers freedom from costly State-mandated 
benefit packages.
  According to a private study, as I said, AHPs should increase the 
number of insured Americans by up to 8.5 million people. Sadly, last 
year one in seven Americans went without health insurance. The increase 
in the number of uninsured comes solely from the declining market in 
the small business community. With health insurance costs continuing to 
rise, businesses face increases more than double the national average. 
Health insurance costs are still rising and many small employers are 
forced to drop health coverage. Some cannot even offer it in the first 
place.
  The cost saving benefits of AHPs would help small employers of main 
street access coverage at a more affordable price. According to the 
Congressional Budget Office, AHPs would save small business owners and 
their employees as much as 25 percent of their health insurance costs. 
Just like buying a case of soda at a supermarket costs less per can 
than buying 24 individual cans at a vending machine, AHPs would allow 
groups like the National Restaurant Association to buy thousands of 
health insurance policies at a lower person policy cost and pass the 
savings along.
  Let us face facts. Costs are rising. Businesses are dropping 
coverage, and more people are going uninsured. Congress must address 
the uninsured problem and move forward with increasing the insured 
through association health plans. It is the least this Congress can do 
to make certain that the American people will receive better health 
care at a more reasonable price.

[[Page H5614]]

  Madam Speaker, I reserve the balance of my time.
  Mr. ANDREWS. Madam Speaker, I yield myself 15 seconds.
  Madam Speaker, I think it is important to point out for the record 
that the gentleman did admit that the benefit protections like 
mammogram screenings are, in fact, wiped out by the bill before us.

                              {time}  1415

  The bill before us will take away health coverage for more than 1 
million people and add to the uninsured.
  Madam Speaker, I yield 3 minutes to the gentleman from Wisconsin (Mr. 
Kind), who has offered a plan that will actually decrease the number of 
uninsured, which we will talk about later.
  Mr. KIND. Madam Speaker, I thank the gentleman from New Jersey for 
yielding me this time and also commend him for his leadership and the 
energy he has shown on this subject, as well as the ranking member, the 
gentleman from California (Mr. George Miller).
  Madam Speaker, there is a serious problem throughout America in 
regards to the rising cost of health insurance, double-digit premium 
increases. As I travel around my congressional district in western 
Wisconsin visiting businesses large and small alike, it is the number 
one topic on their lips, the difficulty of being able to provide health 
insurance coverage for their employees with the double-digit increases 
that they are facing today.
  Part of the problem in western Wisconsin deals with the inadequacy of 
Medicare reimbursement rates, which then is cost-shifted on to the 
private plans; but also part of the problem is the number of uninsured 
and the cost shifting that occurs when they receive treatment. We saw 
the statistics a little earlier, 41 million uninsured. Those numbers 
are going up. Between 50 and 60 percent of the uninsured are employees 
working in small businesses. It is a crisis situation out there, and I 
have not met a small business owner yet that is happy with the fact 
when they cannot provide some basic health coverage for their 
employees. Unless we deal with it in an honest and, I think, 
straightforward plan, the numbers will only get worse.
  There are some here today that think H.R. 660 is the answer to the 
crisis we are all experiencing in our own districts. I happen to 
disagree. I think there are some serious flaws with H.R. 660. I believe 
that, at best, the underlying legislation would do very little to 
address the plight of the uninsured. There is a recent CBO analysis 
that said that, at best, we might be able to extend additional coverage 
for half a million Americans, a far cry from the 41 million who are 
currently uninsured or the 25 million who are working right now in 
small businesses. At worst, there is a Mercer report that shows that 
because of the premium increases in other health plans, we could see 
another million Americans losing their health insurance coverage 
because of H.R. 660.
  What also is a major problem is that it exempts State laws. These are 
community value judgments made in each of our States in regards to what 
health care practices should be covered for the citizens. Yet the 
legislation today is calling for a preemption of that State law, an 
eradication of the federalism that has existed in this country for a 
very long period of time. It is one of the reasons why we have so many 
people opposing the legislation, from the National Governors' 
Association, from the Democratic Governors' Association and Republican 
Governors' Association, the State Attorneys General Association, not to 
mention the Association of Insurance Plans, as well as the National 
Conference of State Legislatures.
  Why would you, if you believe in the free market, as I think most of 
us do, and believe in price competition, try to set up an uneven system 
where you have two different sets of plans playing by two different 
sets of rules? It does not make sense. If you are going to force price 
competition in the free market system, you need to have everyone 
playing on a level playing field playing by the same set of rules, such 
as the State laws that exist right now, rather than exempting a whole 
category of people.
  I think our substitute offers a better alternative, and I would 
encourage our colleagues to support that.
  Mr. BOEHNER. Madam Speaker, I yield myself 15 seconds. What we want 
to do in this bill is to give small employers the same advantages in 
the marketplace that large companies and unions have today. And that is 
the real secret behind this. Why can they not go out as a group and 
design a plan that would meet their needs just like a big company can 
for their employees?
  Madam Speaker, I yield 4 minutes to the gentleman from Kentucky (Mr. 
Fletcher), the author of this bill and someone who has worked on it for 
many, many years.
  Mr. FLETCHER. Madam Speaker, I thank the gentleman for yielding me 
this time and for his leadership and work on this very important piece 
of legislation.
  Health care coverage is becoming more unaffordable for workers and 
small businesses all across America. In fact, the cost of providing 
health care now exceeds the cost of taxes. For that reason, I have 
introduced the Small Business Health Fairness Act to ensure that more 
workers can afford their health care, regardless of whether they work 
for a large international company or for just a small hardware store on 
Main Street. A farmer in Kentucky should have the same access to health 
benefits as someone who works for a large company like Ford Motor 
Company. That is where the fairness is.
  Why should small business employees not be able to obtain the same 
economies of scale, bargaining power, benefit design and choices now 
available to those in large corporations and to those in labor unions? 
You will not hear our opponents attack those plans, I do not believe. 
Ninety-eight percent of large businesses offer health insurance to 
their employees. Less than half of small businesses offer this 
important benefit.
  When we look at the fact that the morbidity rate of an uninsured 
hospitalized patient is more than twice that of an insured one, I think 
we can see that that is a resounding call to decrease the number of 
uninsured, which this bill will do. Experts estimate that up to 8\1/2\ 
million uninsured small business workers will be covered by AHP 
legislation. This plan will decrease the number of uninsured Americans, 
will reduce health care costs by up to 30 percent for small businesses, 
and provide new coverage options for self-employed, like farmers and 
small business workers across this Nation. It will not only give more 
health care coverage but allow small businesses to create more jobs.
  Many have made false claims against this bill, and I would like to 
take a moment to set the record straight. In redrafting this bill, we 
have taken great lengths to ensure that these plans remain solvent. We 
have set up strict solvency provisions that include reserves, cash 
reserves, surplus reserves, stop-loss insurance, both specific and 
aggregate, indemnification for plan termination, insolvency funds, and 
a certification fee required for application.
  Opponents of this legislation have also asserted AHP plans will 
engage in cherrypicking, taking only the young and healthy and leaving 
the sick to fend for themselves. These false accusers overlook or are 
unaware that all members of an association must be offered the plan 
coverage. Furthermore, plans must demonstrate that they have average or 
above-average risk to even be able to form an association health plan 
to begin with. That means an association could not be formed of young 
marathon runners just to provide a low-risk group.
  Opponents of this legislation falsely charge that the Department of 
Labor is unable to handle such a program. Such statements, I believe, 
are baseless and contradict the facts. The DOL currently administers 
2.5 million private job-based health plans. These programs serve 131 
million workers. Sixty-seven million individuals now are in self-
insured plans and are monitored exclusively under DOL oversight. DOL 
has the experience, the personnel, and the vision to monitor and 
enforce these plans. Besides, I know Secretary Elaine Chao. She is a 
friend of mine; she is a good Kentuckian. Believe me, she can 
effectively oversee these plans.
  In conclusion, the President favors association health plans and 
strongly supports them. The Department of Labor is ready for AHPs; and 
small businesses, farmers, and the self-employed are ready for 
association health

[[Page H5615]]

plans. Uninsured Americans have waited far too long, so I ask my 
colleagues to do the right thing for the uninsured Americans of small 
businesses, not only in Kentucky but across America. Support this bill.
  Mr. ANDREWS. Madam Speaker, I yield such time as he may consume to 
the gentleman from California (Mr. George Miller), the leader of our 
committee and one of the leading opponents of this plan that would take 
health care coverage away from 1 million people.
  Mr. GEORGE MILLER of California. Madam Speaker, I thank the gentleman 
for yielding me this time and for his leadership on this issue in our 
committee.
  Once again, as with pension legislation, unemployment assistance, tax 
policy, and many other examples, the Republican majority of this House 
is bringing forward a bill that they claim is in the interest of 
working families. But once again this is head-fakes and sleight of 
hand. This bill hurts working people, places their already-meager 
health insurance coverage at risk, and serves only the interest of the 
business lobbyists.
  I want to add that once again, as with those earlier bills, the 
Republican majority continues to deprive 206 Members of the House on 
the Democratic side and the tens of millions of people we represent 
from being able to conduct a serious debate on this issue. Once again, 
a contentious bill comes to the floor with no amendments allowed, just 
a substitute. So there is little time to debate the bill that will cost 
millions of Americans, including millions of children and women 
workers, their health coverage, with no ability to offer amendments to 
improve this bill. These tyrannical and corrupt rules under which we 
are operating under the Republican leadership in this House prevent us 
from having that debate and prevent the Republicans from taking votes 
on amendments we would like to offer.
  Let us be clear: this is not a question of whether or not we have 
time to devote to debate. Week in and week out the Congress comes in on 
Tuesday or late Monday night and leaves on Thursday or early Friday 
morning. The Congress has time to adjourn for fund-raisers, the 
Congress has time to adjourn for golf tournaments, the Congress has 
time to adjourn for the White House picnic; but apparently we do not 
have time to be able to offer amendments to legislation so that we can 
have an honest debate about the legislation before us or have 
opportunities to improve it or to offer an alternative view on how that 
should be carried out.
  So what do we find out now? We do not have that opportunity here when 
we are risking 8 million people's health care coverage, according to 
the Congressional Budget Office. So we will pass today, with almost 
entirely Republican votes, a bill that deprives 47 percent of the 
people in this country a role in debating and improving this 
legislation.
  The heart of this ill-conceived bill is a provision that overrides 
State laws requiring access to basic health care services. These State 
laws say to people that when they have a health insurance plan, that 
plan will mean something. It means that they will have access to 
mammograms, that means that they will have access to emergency 
services, that means that they will have maternity benefits and well-
baby care and diabetes treatment, and it means there will be some 
mental health coverage and cancer screening. Because those are the 
things that the American families need in a health care plan.
  Now, why are those the rules today in States across this country? Why 
did the States make this determination? Not to burden small businesses, 
not to burden health care plans, but because what people were being 
offered prior to that were essentially phantom plans. They were phantom 
plans that had little or no benefits to individuals, that did not meet 
the needs that families had. They had little or no benefits in terms of 
what women needed in their health care policies. That is the reason for 
these regulations, or these requirements, that health care insurance 
plans provide in their health care. That is the purpose of the plans. 
But that was not what was happening.
  So now what we see is that this comes along, and it says we are going 
to override the judgment of these States, we are going to overrides the 
judgment of the legislators, the collective wisdom of the Governors and 
legislatures, the attorneys general, the insurance commissioners and 
others to make sure that people have adequate health insurance. And the 
consequences are that we are stripping much of this treatment away from 
the individuals in terms of preventive services for men, women and 
children.
  We know that these services and treatments save money, we know they 
preserve health in the long run, and we know that these services were 
rarely provided voluntarily by employers in the past. That is precisely 
why so many States have moved to guarantee this coverage. The 
proponents of this legislation constantly want to say, well, this was 
good for labor unions and this was good for big industry. Yes, and in 
those instances the employees are organized and they negotiate on an 
equal level. That is not the situation with these plans. These people 
are given a health care plan which they can take or leave. And the 
purpose here is to reduce the cost of those plans.
  The fact of the matter is CBO has reported that approximately 8.5 
million workers would end up in AHPs, and over 95 percent would simply 
be dumped into those from existing health care plans. That means that 8 
million workers would be stripped of their current legal right to 
critical treatments and preventive health care services. Eight million 
people would end up with less health care the next morning than they 
currently have under this provision.
  I recognize that that means that new people will be given health 
insurance that do not have it, but we have to weigh the question of the 
people who will get this stripped-down policy as their health insurance 
to those people who have relatively decent policies who will lose their 
access to those policies. Because that is really what this is about. It 
is about cutting the cost to businesses, not about providing health 
insurance that families truly need.
  That is why, again, these plans were protected in the States and were 
regulated in the States, and that is why so many of the Governors, both 
Republican and Democrat, oppose this legislation. That also means that 
these people are not going to have the kind of peace of mind that so 
many of them now have with respect to their insurance policies.
  We also know that one of the reasons this bill is offered is that 
health insurance costs are increasing. They are increasing about 20, 25 
percent for small employers. What that suggests is that, as people move 
into these plans, the individuals with higher risk will be left out. 
Those people who stayed in those kinds of insured pools, those costs 
will continue to go up; and it means that we will have uneven health 
insurance for people in this country.

                              {time}  1430

  Madam Speaker, this is a very bad bill. It is a bad bill. It really 
is about false advertising. It is suggesting that somehow this is going 
to extend to millions of people health insurance that will cover their 
families. That is not what it is going to do. It would if we were not 
overriding State law, but here the majority has decided that the 
collective wisdom of the States and the protection of residents and 
consumers in those States, that is going to be overridden and 
individuals be under no requirements to offer those components as part 
of this health insurance plan. I would hope that the House would reject 
this plan when it comes time to vote on the legislation.


                             General Leave

  Mr. BOEHNER. Madam Speaker, I ask unanimous consent that all Members 
may have 5 legislative days within which to revise and extend their 
remarks on H.R. 660.
  The SPEAKER pro tempore (Mrs. Emerson). Is there objection to the 
request of the gentleman from Ohio?
  There was no objection.
  Mr. BOEHNER. Madam Speaker, I yield 2 minutes to the gentlewoman from 
New York (Ms. VELAZQUEZ).
  (Ms. VELAZQUEZ asked and was given permission to revise and extend 
her remarks.)
  Ms. VELAZQUEZ. Madam Speaker, our country is in a health care crisis. 
Today, in the world's largest remaining superpower, 41 million 
Americans live

[[Page H5616]]

without health insurance. No place in this epidemic is more apparent 
than with our Nation's small businesses. They represent 60 percent of 
this country's uninsured.
  Small business owners and their employees do not have health 
insurance, not because they do not want it or are trying to cut 
corners, but because they cannot afford it. Small companies see their 
insurance costs rising upwards of 25 percent each year. They are 
unfairly suffering this burden, and their employees are unfairly 
suffering without insurance.
  Small businesses provide more than half of the Nation's gross 
domestic product, create 75 percent of all new jobs, and give two-
thirds of Americans their first paychecks. Yet many small businesses 
are unable to provide the benefits they know the workers deserve.
  Today, with the passage of this bipartisan Small Business Health 
Fairness Act of 2003, we take an important first step in helping 
millions of Americans afford what so many in this Chamber take for 
granted, health care.
  During the debate on this legislation, Members are going to hear 
terms like cherrypicking, solvency, and MEWAs. If Members take one 
thing away from today's debate, it should be that H.R. 660 is simply 
about fairness, fairness for small business owners to offer health 
insurance to their employees just as large corporations and unions 
already do. If we trust large corporations and unions, we should trust 
small businesses in America.
  If it is good enough for IBM, Lockheed-Martin and GM, it should be 
good enough for mainstream American businesses. H.R. 660 will give 
small business owners the ability to provide quality health care for 
themselves, their families, and, most importantly, their workers. I 
urge my colleagues to vote yes on H.R. 660.
  Mr. ANDREWS. Madam Speaker, I yield 4 minutes to the gentleman from 
North Dakota (Mr. Pomeroy) who, as a former insurance commissioner from 
North Dakota, has direct experience with AHPs running out of money and 
not paying their claims.
  Mr. POMEROY. Madam Speaker, I appreciate the comments of my colleague 
about the crisis in small employer health care; but as we address this 
issue, I think we have to ascribe ourselves fully to the Hippocratic 
oath, First, do no harm.
  The AHP proposal before us would do a great deal of harm. I would 
recommend to my colleagues, study this issue before you vote, it is 
very serious. If there is not enough time to get into the technical 
details, just look at who is against this bill. This bill could be 
called a wonderful, unifying force because it has brought together 
people who do not agree on anything, but they do agree this is bad 
policy for this country. The Republican Governors Association, the 
Democrat Governors Association, 41 State attorneys general of both 
political parties, the National Association of Insurance Commissioners, 
again representing regulators of both political parties have reached 
their conclusion based on several fundamental facts.
  We have spent a lot of time in this Chamber debating the Patients' 
Bill of Rights worrying about protections. I guess we could call this 
the ``Patient Bill of No Rights'' because it literally exposes those 
who would be insured under these mechanisms to whatever might be 
written with no consumer protections and no State insurance department 
to go to for those protections.
  There is a nice populist argument which has been used this afternoon 
that if big companies can do it, little companies ought to be able to 
do it, too. I represent North Dakota. That is the place of small 
employers. The difference in a fundamental one. IBM can self-insure. 
They do it themselves. They basically pay themselves. A small hardware 
store in an AHP would be joining an association, sending their premiums 
not to themselves but off to others, and that is why we need the check. 
We have tried this before. What happens is promoters come up with these 
schemes, the employer goes for the lowest premium, they ship their 
hard-earned dollars off to provide the coverage for their employees, 
and someone makes off with the money. It has time and time again.
  The protections protect coverage, but they also protect to make sure 
the plan is solvent so they can pay the health claim when the insured 
needs it. We have seen this tried before under the guise of multiple 
employer trusts. They went bankrupt; there was a slew of scandals. We 
have seen it now under multiple employer welfare arrangements. There 
were scandals, busts, uncertain insurance framework for our consumers.
  Madam Speaker, now they want to call them AHPs, but the result will 
be precisely the same.
  If it were simply a benign issue of let the buyer beware, it would be 
one thing; but it is much worse than that because this makes the 
premiums go up for all who remain in existing insurance pools. Small 
employers insuring through insurance companies are not viewed just on 
their own little group, they are part of a pool. Well, as AHPs would 
take off smaller healthy groups, those left would be older, sicker 
groups. Premiums would go up, coverage would be diminished, or dropped 
altogether. It has been estimated that as many as a million people 
would lose their coverage.
  Again, do not take my word for it, look at what the Congressional 
Budget Office has written on this, or consider the quotes by the Mercer 
Consulting Group in analyzing this proposal, Health insurance premiums 
would increase 23 percent for small employers that continue to purchase 
State-regulated coverage. This would result from AHPs' ability to 
attract healthier-than-average firms out of the small, regulated 
market. This makes the problem worse.
  First, let us do no harm. We need to address small employers. The 
substitute to be presented has a better approach in that regard, but 
the underlying bill is a stinker, and let us beat it.
  Mr. BOEHNER. Madam Speaker, I yield myself 30 seconds.
  The foundation of our health insurance market in the United States is 
employer-provided coverage set up through ERISA, the Employee 
Retirement Income Security Act of 1974. It covers 150 million American 
lives. We are trying to allow small employers who belong to statewide 
associations, national associations, the opportunity to band together 
to create an insurance policy that will benefit not only the small 
business but, more importantly, their employees.
  Madam Speaker, I yield 2 minutes to the gentlewoman from Tennessee 
(Mrs. Blackburn).
  Mrs. BLACKBURN. Madam Speaker, I rise today in strong support of H.R. 
660, the Small Business Health Fairness Act. Small business owners know 
that it is far too important to their employees to let this issue slide 
off the table. Employees want to have health coverage and the 
increasing cost is making it ever more difficult. It is important to 
note also in my State of Tennessee, small business is the largest 
employer.
  This bill works to alleviate the problems by establishing the 
association health plans that would allow small businesses to band 
together under an umbrella of a bona fide trade association to act as a 
large purchaser of health insurance, having that ability to buy health 
care coverage as a large group for their employees. All employees 
benefit by having better coverage, increased options and lower 
deductibles.
  Madam Speaker, last weekend I had the opportunity to address a 
national convention of women. It was a national convention of women who 
own their own businesses. Their number one concern, their top priority 
is passing this legislation, seeing it passed. That is, millions of 
women who own and work for women-owned businesses and they are very 
concerned about this. It is at the top of their list.
  Madam Speaker, it is unfortunately that there are so many myths 
surrounding the debate of this bill. I join my colleagues in helping to 
dispel these myths, that it would allow cherrypicking. In reality, this 
legislation has explicit language prohibiting such. This legislation 
also contains solvency provisions to protect employees against the risk 
of health plans that default or go bankrupt. These health plans must 
certify through a qualified actuary that an AHP is financially sound on 
a quarterly basis.

[[Page H5617]]

  Madam Speaker, I agree with thousands of female business owners that 
it is time to pass this legislation now.
  Mr. ANDREWS. Madam Speaker, I yield 3 minutes to the gentlewoman from 
New York (Mrs. McCarthy).
  Mrs. McCARTHY of New York. Madam Speaker, I stand in strong 
opposition of H.R. 660. We are hearing all the time about do no harm, 
and I think Members need to remember, why do 48 States have good basic 
health care insurance? It is mainly because our advocates, breast 
cancer or diabetes, all of the diseases that we are trying to prevent, 
have made the States realize that the monies that we spend to make sure 
that people stay healthy certainly is cheaper in the long run. That is 
48 States including New York, and what we are doing here, we are wiping 
that out. We are wiping that out.
  As patients and advocates across this Nation quickly discovered that 
their basic health care needs were not being served by their insurance 
companies, that is why the States have forced the insurance companies 
to make sure that the treatments that we are asking for, like a 
mammogram, and how many lives have we saved over the years because we 
have made the insurance companies make sure they have it in their 
policies. The States made them do that.
  What we are doing here is taking that away. They demanded that their 
States step in and protect them. Madam Speaker, as I said in 48 States, 
we have our attorneys general, we have our governors, Republicans and 
Democrats. What we are doing here is harm. All of us, there is not one 
Member in this Chamber that does not want to make sure that our small 
businesses are able to offer health care insurance. That is why the 
gentleman from New Jersey (Mr. Andrews) and the gentleman from 
Wisconsin (Mr. Kind) are going to offer an amendment that will offer 
help to our small businesses.
  There is not one penny in this bill that is going to help small 
businesses get health care. The Kind-Andrews amendment will. As a nurse 
and certainly with the constituents I have coming into my office 
yesterday, today, last week, every single week, all they are asking for 
is to make sure that their basic health care needs are met. What we are 
doing here is taking it away. I will say again, there is not one 
Member, Republican or Democrat, that does not want to help our small 
businesses. We would like to see health care be out there for 
everybody. I certainly would, but again, we keep hearing about budget 
constraints. Well, if we had not passed those large tax cuts, maybe we 
could do some good health care policy around here.
  Madam Speaker, this bill will do harm to millions of people. It is 
always the devil is in the details, and on the top of this legislation 
it might look good, but in the end it is not. All 48 States, as I have 
said over and over again, have fought to make sure that our insurance 
companies give the services that our constituents need. That is why it 
was passed. That is why this bill should be defeated.

                              {time}  1445

  Mr. BOEHNER. Madam Speaker, as I said earlier, this bill does have 
broad bipartisan support. I am happy to yield 2 minutes to the 
gentleman from Maryland (Mr. Wynn).
  Mr. WYNN. Madam Speaker, I rise in strong support of this piece of 
legislation. It is interesting, in the 10 years I have been down here, 
we have been able to talk about regulations, talk about cherrypicking, 
corporations have had insurance, big unions have had insurance, Members 
of Congress have had insurance; but small businesses have been crying 
out as they have not had insurance, and those that had it lost it 
because the price continues to go up.
  Bottom line: we have not done anything to help small businesses and 
their employees have health insurance. It is time we do something.
  Second, I hear a lot of talk about the great State regulations and 
the protections they offer and these mandated benefits and those 
mandated benefits. Let me tell you something. If you do not have health 
insurance in the first place, the mandated benefits and the regulations 
and the protections do not mean anything because they do not apply to 
you because you do not have health insurance. The fundamental bottom 
line is you have to have health insurance. At the end of the day that 
will be the question you have to ask yourself: Do you want some health 
insurance, or do you want to continue with no health insurance?
  This plan works because it provides enhanced purchasing power for 
small businesses. They come together, and they have the leverage to put 
together an insurance plan to help those small businesses. They also 
can lower administrative costs so they get savings. Small businesses 
are very price sensitive. They will buy insurance even if they can get 
just a small amount of savings. So on balance it is a very good idea.
  We hear a lot of talk about the vaunted cherrypicking. Again if you 
do not have health insurance, there is no cherrypicking because you are 
not there to be picked. But the important issue is there are 
regulations in this bill strictly regarding cherrypicking, prohibiting 
cherrypicking, so that is not really a problem.
  Finally and most importantly, what people are saying is this is a 
bare bones policy and so you should not get it because it does not have 
all the protections that admittedly we would all like. I am submitting 
that it is better to have a basic policy that gets you into the 
doctor's office, because if you get into the doctor's office, your 
cancer, your heart attack, your diabetes and your blood pressure all 
can be picked up by your doctor. They say, it is a bare bones policy 
and no one's going to get it. Let me tell you, if it is that bare 
bones, if it is that bad, if it does not provide any benefits at all to 
the employee, they are not going to purchase it. They purchase it 
because it provides the basic insurance that they can use.
  It is not everything we would like, but it is better than nothing; 
and at the end of the day, half a loaf is better than none.
  Mr. ANDREWS. Madam Speaker, I yield myself 30 seconds. The gentleman 
is correct. At the end of the day, the question is whether one has 
health insurance or not. At the end of the day if this bill is enacted, 
1 million more people will not have health insurance than do today 
because of the damage that this bill does. That is one of the reasons 
why State legislators across this country oppose this bill. Our next 
colleague is someone who served in the Minnesota State legislature, who 
fought for laws that protect women against discrimination. She will 
point out that this law does not do that.
  Madam Speaker, I am happy to yield 3 minutes to the gentlewoman from 
Minnesota (Ms. McCollum).
  Ms. McCOLLUM. Madam Speaker, I rise today in strong opposition to the 
substandard health coverage that will be proposed in this bill. 
Americans deserve affordable, quality health care coverage for our 
children and for our families, not this substandard bill filled with 
gaps, holes and exceptions that leave women and children especially 
vulnerable. This bill leaves gaps for expecting mothers, leaves holes 
for children with diabetes, leaves exceptions for families requiring 
mental health care coverage. This legislation rewards bad medicine by 
preempting every State standard that guarantees quality health care, 
that protects women, children, and our families.
  As a Minnesota State legislator, I fought hard for our State's health 
care requirements. People were not getting the care that they needed or 
deserved. Families living with diabetes came into my office and would 
tell me how their health plans would cover their insulin but would not 
cover the needles to deliver the insulin or the test strips to test 
their sugar levels. This basic health care is needed to keep people 
with diabetes healthy and enables them to manage and control their 
disease. We passed laws in Minnesota mandating basic coverage that 
health plans were not providing. They were not providing basic health 
coverage.
  Today we are considering legislation that rolls back these basic 
health care protections. Minnesotans want comprehensive, affordable 
health care. Minnesota health care professionals in a hearing I held, 
nurses, pediatricians, psychologists and, yes, their patients, told me 
they strongly oppose these substandard association plans.
  Let us ensure quality. Let us ensure affordable health care that 
protects women, protects children, protects our families and does not 
only protect

[[Page H5618]]

them but protects those who we have heard over and over again, the 
million people who stand to lose health insurance should this bill be 
enacted.
  Mr. BOEHNER. Madam Speaker, I am pleased to yield 2 minutes to the 
gentleman from California (Mr. Dooley), one of my good friends and 
colleagues on the Committee on Agriculture.
  Mr. DOOLEY of California. Madam Speaker, I rise in strong support of 
this legislation. One of the most difficult challenges facing those of 
us in Congress is how do we deal with the growing number of uninsured 
in our country, a number that is currently over 40 million. With the 
increases in health care costs that we are going to be seeing in the 
near future, that number is only going to continue to grow. This piece 
of legislation is an attempt to ensure that we can find ways in which 
small employers and farmers across the country can come together to 
develop a purchasing power that can allow them to negotiate better 
benefits at a less cost for the people they employ.
  I represent a district in the central valley of California. It is 65 
percent Latino. Many of those families are farm-worker families. They 
are low-wage workers. They are almost without exception without health 
insurance today. If they do have health insurance, it is through an 
association health plan that was offered by Western growers. They have 
coverage today that is benefiting them, and it is just basic coverage. 
This legislation is an attempt to ensure that more of those low-wage 
workers will have access to health care. It is unfortunate that it is 
not going to be a plan that has all the mandates that some of the 
States would require, but what I get so frustrated with is that we are 
willing to deny the ability of employers to come together to offer a 
basic level of health insurance to a lot of their low-wage workers and 
their families that right now are not having access to care. We can do 
better. This legislation is an attempt to do so.
  I am struck by a lot of the opponents of this legislation that are 
saying that this is going to lead to cherrypicking. I will tell you 
today, there are not many insurance companies that are offering a plan 
through the State HIPCs or whatever else that are interested in coming 
out and trying to market a health insurance plan to a lot of the 
farmers and the farm workers whom they employ. This is an attempt to 
ensure that we can have an association of people who are committed to 
that industry and to those employers that will be able to come together 
to develop a basic health insurance product that will benefit the 
health of these low-wage workers. I urge my colleagues to support this 
legislation.
  Mr. ANDREWS. Madam Speaker, one of the Members who is opposed to 
expanding the ranks of the uninsured by 1 million people and, 
therefore, opposes this bill is the gentleman from New York (Mr. Meeks) 
to whom I yield 3 minutes.
  Mr. MEEKS of New York. Madam Speaker, when I first saw the headlines 
of the bill, I looked at the bill, it came across my desk, because 
everybody wants to do something about small business. I first said to 
my staff, let's get on this bill; it will help small business. But then 
after I read it a second time and a third time, the devil is always in 
the details. The devil is in the fine print. The devil is in what you 
read.
  When I really read the bill, I found that this bill would actually be 
devastating; it is what we call short-term gain for long-term pain. 
When you look over the years, the pain that really will happen to 
people who we are trying to help in the long-term will be devastating. 
Then when I looked even a little bit closer and tried to watch it to 
see how it affected those low-wage earners that my colleague just 
talked about and minorities and women in particular, then I noticed 
another substantial devastating event, the fact that what this bill 
does because many of the people that we want to help, they happen to be 
minority and women and how they disproportionately will be affected by 
this bill.
  In fact, when you look at it, certain diseases because of people who 
are of color, Latino and African American, you look at approximately 
2.8 million or 13 percent of all African Americans and 2 million or 
10.2 percent of all Latino Americans have diabetes. They would not be 
covered under this. They could be cherrypicked. African American men 
have a 20 percent higher incident rate and a 40 percent higher death 
rate from all forms of cancer combined than white men do. They will be 
affected by this bill disproportionately. African American women with 
breast cancer are 67 percent more likely to die from the disease than 
Caucasians. They will be disproportionately affected under this 
cherrypicking, what this bill will do to them.
  Hispanics experience the highest invasive cervical cancer incidence 
rates of any group other than Vietnamese. They will be hurt and 
devastated by this. Hispanics account for nearly one-fifth of HIV/AIDS 
cases in the United States. African Americans account for approximately 
35 percent of HIV/AIDS cases in the United States. They will not be 
covered. They will not be picked up by these folks.
  Now, more than ever, minority populations and women depend on health 
care. H.R. 660 stands to make this needed health care harder for those 
populations to obtain in the long run, not in the short run. In fact, 
most States require insurance to cover cancer screenings, maternity, 
diabetes treatment, and other benefits that provide medical care for 
minorities and women. However, Federal AHP legislation would allow 
certain insurers to avoid complying with these State laws. This means a 
loss of crucial benefits for many families, that 1 million that we hear 
my other colleagues talking about.
  While our Nation is faced with a new health care crisis, H.R. 660 is 
not the solution. It is absolutely not the solution. We must work to 
pass legislation that offers genuine relief to small employers while 
preserving the significant health care reforms undertaken by the 
States. I urge my colleagues to voice their opposition to H.R. 660, the 
so-called Small Business Health Fairness Act.
  Mr. SAM JOHNSON of Texas. Madam Speaker, I yield 2 minutes to the 
gentleman from Iowa (Mr. King), a member of the committee.
  Mr. KING of Iowa. Madam Speaker, I am amazed at how the race card can 
be played on every single trick and every single issue that comes up. 
To me, this is just simply dollars and cents.
  I started a small business in 1975 with actually a negative net worth 
of $5,000, no capital and a dream. By the mid-80s when then Congressman 
Grandy came to my hometown and held a hearing on health care, 70 or 80 
of us in the basement of the Lutheran church in Odebolt, Iowa, sitting 
in the front row because I do not hear that good, he said, how many of 
you provide health insurance for your employees? I raised my hand as 
did about 11 other people in that room. No, excuse me. I raised my hand 
when he said, how many of you are employers? I kept it up when he said, 
how many of you provide health insurance for your employees? I was the 
only one in that room that provided health insurance for my employees. 
I can tell you, I know why. It is because the cost is too high for a 
group plan. Because the rules and the laws discriminate against small 
business. This association health care plan is designed exactly to 
correct that.
  I have been involved in association work all of my life. That is the 
only bargaining chip that small business has. A sole proprietor of a 
small business is in a position where they cannot fully deduct all of 
their own health care insurance unless, of course, they happen to be a 
corporation and they are paying themselves a wage. That was put in 
place at the end of World War II when we had wage and price controls, 
and it was put in place because large business had the leverage, unions 
had the leverage, but small business did not. That is what this bill 
corrects, this association health care bill. It corrects the inequity 
to some degree, and it is a small degree, that was created in World War 
II.
  I as a small business owner simply just sold out to my oldest son, 
and now he is in that situation, that predicament, where he can utilize 
this. About 60 percent of the uninsured are employed or are the 
proprietors of small business. It is not because they do not care about 
their employees. It is because of the law; it is because of the 
structure of the regulations. It is essential that we pass this bill.

[[Page H5619]]

  Madam Speaker, that is why I rise here today to stand in support of 
this bill for association health care plans. It is essential to small 
business which provides most of the new jobs and most of the new 
innovation in America.
  Mr. ANDREWS. Madam Speaker, I yield myself 30 seconds. I want to 
again reemphasize that the objective analysis of this bill, contrary to 
what we have heard repeatedly today, is that it will increase the 
number of uninsured persons. It will do so because those who are not in 
AHPs who must still comply with the mandated benefits and other 
consumer protection laws will experience an escalation in premiums 
which will cause a reduction in coverage. We believe the record is 
clear, that the passage of this bill will increase the number of 
uninsured persons by 1 million people.
  Madam Speaker, I reserve the balance of my time.
  Mr. BOEHNER. Madam Speaker, I yield myself the balance of my time. We 
could look at the problem of the 41 million Americans through many 
different lenses, and we could talk about solutions. We believe that we 
are bringing a solution here where we are showing the glass half full.

                              {time}  1500

  My colleagues on the other side want to look at this solution as a 
glass that is half empty. The fact is that 41 million Americans have no 
health insurance, and we in this Congress, over the last decade, have 
talked about it and talked about it and talked about it. As a matter of 
fact, we brought this bill to the floor on two occasions before today, 
and unfortunately the other body did not see fit to move the 
legislation. But we are not going to quit because if we do not help 
these 41 million Americans who have no health insurance, guess what, 
they are going to continue to get sicker. They are going to end up 
getting treatment later in their illness, and they are going to 
continue to pile up massive amounts of healthcare debt that by and 
large they do not pay for, those who purchase health insurance pay for 
in terms of higher fees.
  We have heard all of the discussion about the fact that we do not 
mandate this coverage and mandate this coverage.
  The reason that we have the crisis in many States is because they 
have mandated every coverage known to man be stipulated in each of the 
policies, whether they need the coverage or not. Large employer plans 
do not have mandates other than two small mandates that are in ERISA. 
Neither did the union plans. They cover virtually all of these diseases 
and all of these treatments because that is what their employees want. 
We know that bare-bones policies do not work because employers do not 
buy them and their employees do not want them. And if we look at the 
best plans in America, they happen to be large employer plans, union 
plans that cover broad healthcare coverage and those employees love 
those plans.
  Why would we not allow small businesses to come together, and whether 
it is through the Ohio Chamber of Commerce or the National Restaurant 
Association or the Lumbermen's Association, or how about the Farm 
Bureau, why would we not allow them to allow their members to come 
together where they could offer them a package of healthcare plans? 
Maybe it is one or two, maybe it is four or five potential plans that 
their members would get to choose from.
  Take the issue of farmers, I have got a lot of farmers in my 
district. They are independent contractors. Their ability to go out and 
buy health insurance on not on their own is about zero unless they 
wants to pay $1,000 to $2,000 a month. If they were allowed to come 
together with other farmers around Ohio, other farmers around the 
country, guess what? They would get much better coverage than they are 
getting today at far less cost, and why should we not give them the 
opportunity to do this?
  So I say to my colleagues as we end the general debate today, this is 
a good bill. It has strong bipartisan support, and I urge my colleagues 
to support the underlying bill.
  Ms. MAJETTE. Madam Speaker, today I voted against passage of H.R. 
660, the legislation that would establish Association Health Plans 
(AHP's). Despite its intention to allow small businesses to band 
together in order to offer affordable health care benefits to their 
workers, this proposal will, in fact, make coverage more expensive for 
most small businesses and their employees. Though I support the intent 
of this legislation, some serious flaws became apparent during my 
consideration of the legislation in the Education and Workforce 
Committee, which prevented my support.
  According to the Congressional Budget Office, 4 out of 5 of the small 
businesses that now have health coverage would face higher costs if 
H.R. 660 was enacted. A recent report by Mercer Risk, Finance & 
Insurance Consulting for National Small Business United underscored 
this fact, finding that H.R. 660 would make health coverage more, not 
less expensive for many small businesses. In Georgia there are 722,535 
people that get insurance coverage through small businesses. If H.R. 
600 passes, 578,028 of these individuals will pay higher premiums.
  The problem with the legislation that will cause insurance costs to 
increase is a provision which preempts State laws regarding the degree 
to which insurance premiums can vary for different companies with a 
plan. Therefore, firms can be charged wildly different rates based on a 
variety of factors, including health status and age. This legislation 
would allow some nefarious companies to unfairly discriminate against 
consumers on the basis of age, gender or race. The ultimate effect, is 
that firms with sicker employees will not be able to afford coverage 
under an AHP. This means those firms and the firms currently in the 
traditional insurance market will end up paying higher premiums. 
Instead of offering a meaningful coverage alternative, AHP's would only 
help to those healthy enough to qualify for lower rates.
  Furthermore, this legislation prevents a State's insurance 
commissioner from protecting consumers' rights when they have concerns 
about their association health plan. The bill does not specify who has 
the duty or the authority to help consumers if they have a problem with 
their AHP. Instead, the bill creates a complex web of authority, in 
which consumers might only have recourse through the U.S. Department of 
Labor, which does not have the manpower or expertise to provide that 
help.
  When consumers have a serious problem with their health insurance 
coverage, they need to know they have somewhere they can go for real 
assistance. H.R. 660 just fails to guarantee that and could make it 
very difficult for consumers to get any assistance with their health 
insurance problems.
  I offered amendments in the Education and the Workforce Committee to 
correct both of these key concerns and improve H.R. 660, but both were 
rejected. For this reason, and because of my overarching concern that 
the bill falls short in delivering real help for small businesses, I 
opposed final passage of H.R. 660. In doing so, I was supported by a 
diverse array of over 500 national, State and local organizations 
including small business, consumer, insurance, union, provider, and 
patient advocate groups, as well as Georgia's Attorney General and 
Insurance Commissioner, who have joined in opposition to H.R. 660. I 
will continue to be an advocate for the interests of small businesses, 
but am convinced that H.R. 660 does not address the problems they face.
  I will continue to work with my colleagues to draft legislation that 
would give small businesses more options in offering health insurance 
without supplanting Georgia's consumer protection laws.
  Mrs. JONES of Ohio. Madam Speaker, I rise today in opposition to H.R. 
660. The bill will exempt those businesses that decide to form 
Association Health Plans from health insurance regulation of the 
various States. Thus, under the bill, these association health plans 
could operate in different States but would not be subject to the 
different health insurance regulations of those States. Instead, they 
would be subject to regulation by the Labor Department. This Bill would 
allow ``Cherry Picking.'' As the premiums rise, the employers will have 
the chance to pick who will receive the health care, which means, the 
employers will pick the youngest, and the healthiest for the plan so 
that it would not cost them as much. As a result, thousands of the 
sickest workers would end up losing coverage altogether. AHP will offer 
a very minimum benefits package that does not include cancer screening, 
mental health benefits, or autism coverage. CBO reports show that there 
are 41 million uninsured Americans and only 550,000 currently uninsured 
Americans would gain coverage and this number is less than one percent 
of the country's Americans uninsured. As health care cost rises, the 
problem of the uninsured shall only get worse. Ooh I get it!. Hurt 
small employers and make coverage unaffordable for all but the 
healthiest groups. According to the Congressional Budget Office.
  Two-thirds of the lower premiums realized through AHPs would come 
from risk selection, and most of the rest would come from eliminating 
benefits.

[[Page H5620]]

  Insured individuals switching from their current plan to an AHP would 
outnumber the newly insured 14-to-1.
  20 million individuals would face additional rate increases under 
AHPs, and 10,000 of the sickest individuals would lose coverage 
entirely.
  The 80 percent of small business employees not participating in AHPs 
would almost uniformly see their premiums increase.
  Madam Speaker, Associated Health Plans will hurt Small Businesses and 
increase the ranks of the uninsured.
  Mr. UDALL of Colorado. Madam Speaker, I rise in opposition to H.R. 
660, the Association Health Plan bill we are considering today.
  While I sympathize with the challenges that many small businesses 
face in providing health insurance to their employees, I do not think 
that exempting AHPs from State oversight is the right solution. I agree 
with the National Governor's Association, the National Association of 
Insurance Commissioners, the National Association of Attorneys General, 
the Health Insurance Association of America, and many other groups that 
oppose Federally regulated AHPs. I am most concerned that AHPs would be 
regulated under Federal laws and would be exempted from State laws that 
govern premium increases, benefits, consumer protections, and financial 
standards. H.R. 660 would override Colorado's new AHP law even before 
we have time to see if it is working. Additionally, H.R. 660 does not 
provide any resources to the Department of Labor to carry out important 
oversight functions. I believe this leaves room for much of the same 
abuse and fraud that we experienced with Multiple Employer Welfare 
Associations in the 1980s.
  Insurance is based on the principle of pooling healthy and sick 
groups together so that the cost is more evenly distributed. Under this 
bill, associations would be able to circumvent State pooling 
requirements and siphon off healthier groups. As a result, sicker 
people would be left in State regulated pools, and the cost of care for 
these individuals would be shifted to the rest of us through higher 
taxes and premiums. The non-partisan Congressional Budget Office 
estimates that 80 percent of small employers and their families would 
face rate increases under this legislation.
  I continue to believe that refundable health care tax credits and 
investments in our public health system would go much further in making 
health care more affordable and reducing the number of uninsured in our 
Nation. That's why I am supporting the substitute offered by Rep. Ron 
Kind, which would establish the Small Employer Health Benefits plan and 
provide Federal subsidies to small employers who have fewer than 100 
employees and offer health insurance to them.
  Madam Speaker, Americans are concerned that if they get sick, they 
won't have health insurance coverage, or they are worried they will 
lose their health care in this sluggish economy. I too am concerned 
about the rising cost of health care and the uninsured, but removing 
oversight over insurance and scaling back consumer protections, 
benefits and coverage is not the way to go. I will continue to work on 
meaningful health care reform that makes insurance more affordable and 
provides coverage to the uninsured.
  Mr. STARK. Madam Speaker, I rise today to oppose H.R. 660, the 
``Small Business Health Fairness Act of 2003.'' This bill is badly 
misnamed. Rather than make the cost of health insurance for small 
businesses more fair, this bill would have the perverse effect of 
increasing the cost of health insurance for many people and increase 
the number of people without health insurance altogether.
  This bill would allow these new entities, called Association Health 
Plans (AHPs), to bypass State regulation and offer bare-bones health 
insurance policies. Small businesses that don't choose to offer these 
inadequate policies would see their premiums increase by 23 percent on 
average. This premium hike would occur because AHPs, which would offer 
only skeletal coverage, would attract the healthiest individuals, 
leaving traditional health insurance plans with the sickest and most 
expensive patients. This shift would penalize businesses with sicker 
employees, and make health insurance for those who need it the most 
even more unaffordable.
  Further, this legislation would swell the ranks of the uninsured by 
over one million more individuals. As traditional health insurance 
becomes increasingly expensive, more and more businesses would have no 
choice but to drop health insurance for their employees, leaving these 
individuals with little or no opportunity to purchase health coverage.
  Contrary to what proponents of this bill claim, AHPs would not truly 
help small businesses purchase health insurance for their employees. 
Although proponents claim that AHPs would give small-employers 
bargaining power to purchase affordable health insurance, most States 
already have laws in place that allow for group purchasing 
arrangements. This bill would only harm existing laws while usurping 
the traditional role of States to regulate insurance.
  In fact, this bill would override key State laws and regulations that 
protect millions of Americans. For example, many States regulate 
insurance premiums to prevent insurers from discriminating against the 
ill. But under this bill those laws wouldn't apply. AHPs would be 
allowed to offer extremely-low ``teaser'' rates, and then rapidly 
increase the premium if the enrollee becomes sick. Furthermore, nearly 
all States have enacted external review laws which guarantee patients 
an independent doctor review if a health plan denies them coverage for 
a particular service. Patients who join AHPs would lose this vitally 
important consumer protection.
  This bill also exempts AHPs from State laws that require health 
insurance to cover particular benefits. These laws have helped to 
ensure that millions of Americans get access to the healthcare that 
they need--such as mammography screenings, maternity care, well-child 
care, and prompt payment rules. In my State, California, employees who 
join AHPs could well lose access to these services as well as certain 
emergency services, direct access to OB/GYNs, mental health parity, and 
other important benefits. Moreover, this law would allow health plans 
to ``gag'' doctors, the currently illegal practice of health insurers 
preventing doctors from discussing treatment options that the plan does 
not cover, even if some of those options are in the patient's best 
medical interest.
  The problems go on. AHPs are likely to create new fraud and abuse 
problems in health care as well. These plans are very similar to 
Multiple Employer Welfare Plans (MEWAs) which Congress created in the 
1970s. MEWAs were also exempt from State insurance regulation. The 
Department of Labor found that many of these plans were frauds and left 
their enrollees holding the bag for more than $123 million in unpaid 
health expenses. Congress had to come back and clean up the law to end 
this blatant abuse. We should learn from that mistake--not repeat it!
  This bill is bad for patients, bad for small business, and bad for 
States. It is opposed by over 500 organizations--including both the 
Democratic and Republican Governors Associations, local Chambers of 
Commerce, small business associations, physician organizations, labor 
unions, and healthcare coalitions. H.R. 660 would increase premiums, 
increase the number of uninsured, lead to massive fraud, and remove key 
State protections. I urge my colleagues to reject this legislation.
  Mr. CUMMINGS. Madam Speaker, I rise today to speak against the bill 
being considered today. With over 41 million Americans uninsured, 
Congress' chief objective should be to ensure that these people have 
access to quality health care coverage. However, today we consider 
legislation that actually would be an even greater detriment to the 
current health insurance coverage crisis, than doing nothing at all.
  The Congressional Budget Office estimates that over 4 million 
individuals who currently have health coverage will be switched to 
lower benefit Association Health Plans (AHP) if this bill is passed. 
This means that these individuals could be forced into plans that would 
exclude benefits such as mammography screening, cervical cancer 
screening, check-ups for children, bone marrow transplants and diabetic 
supplies. These are critical needs, not options and this is an unfair 
result.
  Another flaw with this bill is that it doesn't actually help small 
employers. The problem for most small employers is not their lack of 
desire to provide healthcare coverage, but often the lack of cash flow 
to afford monthly healthcare coverage. However, this bill does not 
assist small employers or their employees to afford rising monthly 
healthcare premiums. CBO found that the small businesses most likely to 
get more affordable coverage with lower premiums under AHPs would be 
those with the healthiest groups of employees. What this means is that 
least healthy, older employees and their employers would have higher 
premiums. This is just plain cherry-picking, which only puts the rest 
of non-AHP employees at risk of higher rates of coverage.
  The CBO also estimates that AHPs would provide coverage for less than 
one percent (1 percent) of the 41 million uninsured Americans. As such, 
H.R. 660 fails to significantly expand health coverage for the 
uninsured and in fact, would reduce coverage for those who are 
currently insured by forcing them to switch to lower benefit AHP health 
plans. This will drive up the costs for other insured and will result 
in the loss of affordable health care coverage for at least 1,000,000 
employees. This represents a net loss, not a net gain in helping the 41 
million uninsured in this country.
  Any bill that excludes significant health care benefits, especially 
for women, children and the elderly; that does not significantly expand 
health coverage for the uninsured; and that may allow minority 
communities and the elderly to be redlined and denied affordable health 
insurance, is ``fig leaf'' legislation which will do little to nothing 
to meet the needs of those small business employers it alleges to help.

[[Page H5621]]

  Every American, despite his/her employer deserves to have first-class 
health coverage. This bill does not accomplish this goal--which 
explains why it is opposed by over 500 groups, including the AFL-CIO, 
AFSCME, the National Governors' Association, many State Attorneys 
General and many consumer organizations. I lend my voice to this 
opposition and urge my colleagues to vote against H.R. 660.
  Mr. WELDON of Florida. Madam Speaker, one of the issues about which 
my constituents most frequently contact me is the high cost of health 
insurance and the need for affordable insurance coverage. We all know 
health insurance premiums are increasing significantly each year. As 
such, many small businesses are unable to afford health insurance for 
their employees. Furthermore, for those who can afford insurance for 
their employees, rising costs make U.S. products more expensive, 
harming U.S. competitiveness and costing American jobs.
  Just last month I received a letter in my office written by a small 
business owner in Palm Bay, Florida. In it he wrote, ``As an 
independent businessman, I can only afford the most basic of health 
insurance policies for myself, of which premiums have gone up over 100 
percent in the past two years, I might add. I sacrifice greatly to 
insure myself. But it is getting to the point I may not be able to 
afford health insurance myself.'' I know he is not alone. We have all 
heard similar stories.
  Small businesses are the backbone of our economy, but the financial 
viability of many small businesses is being hurt by the escalating 
costs of health insurance. This hurts job creation and economic growth. 
The U.S. Small Business Administration's Office of Advocacy found that 
administrative expenses for small health plans make up about 35 percent 
of total costs. This is not good for small business owners, their 
employees, or the American economy. Congress must address this problem, 
which is why I support H.R. 660, the Small Business Health Fairness 
Act.
  By passing H.R. 660 Congress will be leveling the playing field 
between small businesses, the self-employed and large corporations. 
This allows organizations of individuals and businesses to enter into 
an Association Health Plan (AHP). Under an AHP, small businesses can 
pool their resources and purchase health care similar to the way large 
corporations do. They can get better bargaining power in terms of costs 
and benefits for their employees. It gives workers, who do not have 
health insurance today, the opportunity to obtain health insurance 
coverage.
  Whether it is a small business, a trade association, a farm bureau, 
or a local community organization that is seeking to purchase more 
affordable health insurance, this legislation will help them.
  It is generally accepted that there are 41 million people in America 
without health insurance at any given time. According to the 
Congressional Budget Office, a more accurate estimate of the number of 
people who were uninsured for all of an entire year is 21 million to 31 
million. Regardless, almost 60 percent of those individuals are 
employed by a small business. As health care costs increase, fewer and 
fewer employers and working families will be able to afford coverage, 
and more Americans will be without adequate health insurance. Those who 
work for small businesses should have the same type of access to 
quality health insurance that their counterparts in large corporations 
already enjoy.
  I urge Congress to pass H.R. 660. Congress must pass this bipartisan 
legislation to give much needed relief to American small businesses, 
farmers, and hard working families.
  Mr. NORWOOD. Madam Speaker, it is my opinion that H.R. 660 will hurt 
the ability of small employers to access insurance coverage. Contrary 
to creating larger pools of small employers, H.R. 660 will fragment the 
small group insurance market into a myriad of smaller and smaller pools 
with healthy small firms separated from those firms with sick 
employees. The basic fabric of small employer insurance--that healthy 
and sick must be pooled together to create cross-subsidies--will be 
irreparably torn to the detriment of all small firms. Small firms will 
be returned to the unstable and erratic marketplace of the 1980's--
before states imposed small group reform protections. Specifically, the 
dissenting Members of the Committee find that H.R. 660 will lead to:
  (1) Higher Premiums for Most Small Firms and Rampant Discrimination
  (II) Widespread AHP Failure and Millions of Dollars in Unpaid Claims
  (III) More Uninsured--Particularly Among the Most Vulnerable
  (IV) Consumers Stripped of Their State Protections
  (V) No Administrative Cost Savings

  (1) Higher Premiums for Most Small Firms and Rampant Discrimination

  H.R. 660 would allow insured Association Health Plans (AHPs) to avoid 
covering the oldest and sickest smallest employers by charging them 
unaffordable rates that would not be allowed if the AHP was subject to 
state law. As a result, the Congressional Budget Office (CBO) found 
that 80 percent of small employers would see their premiums increased 
as a result of the passage of H.R. 660. A June 2003 Mercer study 
predicts health insurance premiums will increase by 23 percent for 
small employers that continue to purchase state regulated insurance.
  Under H.R. 660, insured AHPs could ``forum-shop'' for the state with 
the weakest rating rules (a handful of states lack any formal premium 
restrictions). Once the AHP's policy is approved in a weekly regulated 
state, the AHP may sell the coverage across the country without regard 
to the rating rules in the remaining 49 states.
  For instance, New York is normally a community rating state that does 
not allow variation of rates between small employers because of 
differences in the health status of their employees. But an insured AHP 
could sell coverage in New York that charges much higher premiums to 
small employers with sick employees. This will allow the AHP to attract 
low-risk employers from the state regulated pool--a  practice known as 
``cherry-picking''. Employers with sick employees would remain in the 
state regulated pool because they would be effectively barred from the 
AHP through the quotation of exorbitant rates. The Small Business 
Administration 2003 study on Association Health Plans describes it as 
follows:

       ``Thus AHPs located in states with the less stringent state 
     laws could offer insurance to the lower cost groups that are 
     now forced to subsidize higher cost groups in those states 
     that require community rating or narrow rate ``bands.''

  The American Academy of Actuaries warns against this exemption of 
AHPs from state rating rules:

       ``The result would be that small employers whose employees 
     are greater health risks are more likely to obtain coverage 
     from the private health insurance market, where rates are 
     limited, than through AHPs, who may not have the same 
     limitations. State small group legislation sought to 
     eliminate this sort of selection in the market by requiring 
     health insurers to put all their small groups in one pool and 
     to limit the premium charged to one employer relative to 
     another. Introducing AHPs that are not required to adhere to 
     the same rating rules brings selection back into the market. 
     The consequence will be that the rates for the two pools will 
     diverge, causing further instability in an already fragile 
     marketplace.''

  The Committee had an opportunity to clarify this critical point 
during the Committee mark-up. Representative Majette (D-GA) offered an 
amendment that would have prohibited AHPs from varying the rates of 
small employers beyond the variance allowed under state law. The 
Committee rejected this amendment.
  Indeed, it appears that proponents of AHP passage have long held 
evasion of state rating rules as a key objective. In ``Insuring the 
Uninsured through Association Health Plans,'' the AHP proponent 
National Center for Policy Analysis argues against premium rating 
restrictions in the small group market because they ``keep premiums 
artificially low for the sickest groups and artificially high for the 
healthiest.'' NCPA argues that ``in a competitive market, every new 
person in a plan will tend to be charged a premium that reflects the 
expected costs of that person's health care at the time of entry into 
the plan. . . . However, in health insurance the tradition is to scorn 
new entrants for `cherry picking.' Yet cherry picking is nothing more 
than trying to satisfy consumer needs better than a rival.''
  It is also important to recognize that H.R. 660 would allow 
discrimination against small firms with sick employees before and after 
enrollment with an AHP. In this cruel ``bait and switch'' game, a small 
firm believes it has secure health insurance coverage only to find it 
placed in jeopardy when an employee falls ill. The Small Business 
Administration 2003 study describes the post-enrollment discrimination 
process:

       The House legislation, however, would also permit some of 
     the abuses of the insurance principle that led states to 
     adopt the rate reform legislation in the early 1990's. Some 
     states still permit insurers to use forms of durational tier 
     rating based on claims experience or ``reunderwriting'', the 
     practice of processing claims information in a manner similar 
     to the initial underwriting process, typically using 
     diagnosis-based or other risk adjustment to determine like 
     future claims experience and appropriate rerating action. The 
     association's insurer could offer very low rates as long as 
     all of a group's members are in good health, but increase the 
     premium to reflect the fully anticipated cost when one or 
     more group members develop expensive health conditions. AHPs 
     would be mainly regulated by DOL which does not have the 
     resources and experience of state insurance departments. \7\

  The ability of AHP's to forum shop for the most lenient state means 
that a small firm enrolled in an AHP who has an employee contract 
cancer, or another dread disease, could

[[Page H5622]]

face an immediate--and unlimited--premium increase. The AHP would not 
necessarily have to wait until renewal to impose this premium increase 
and the premium increase could be of such a magnitude that the small 
firm would have no choice but to drop coverage. Although the firm could 
return to the state regulated market on a guaranteed issue basis, the 
premiums offered by regulated carriers would be very high because of 
the fact that AHPs had ``cherry picked'' the low-risk firms away from 
the state regulated pool. Ultimately, this dramatic adverse selection 
will drive carriers from the unsustainable state regulated small group 
market leaving high-risk small firms with no access to coverage within 
a short period following AHP passage.
  With regard to self-funded AHPs, H.R. 660 allows them to 
differentiate the premiums of small firms based on health status to the 
extent state law allows. This is contrary to the Committee's stated 
objective of furthering the ability of AHPs to play the same role that 
large employers play under ERISA. Section 702 (b) of ERISA--added by 
the Health Insurance Portability and Accountability Act--clearly 
prohibits large employers from charging similarly situated employees 
different premiums based on their health status:

       A group health plan, and a health insurance issuer offering 
     health insurance coverage in connection with a group health 
     plan, may not require any individual (as a condition of 
     enrollment or continued enrollment under the plan) to pay a 
     premium or contribution which is greater than such premium or 
     contribution for a similarly situated individual enrolled in 
     the plan on the basis of any health status-related factor in 
     relation to the individual or to an individual enrolled under 
     the plan as a dependent of the individual.

  This means that two computer engineers working in Seattle for 
Microsoft can expect to pay the same premium for their employer group 
health plan--even though one is very sick with cancer and the other 
perfectly healthy. Under H.R. 660 however, a sick computer engineer's 
firm could be charged a much higher premium than a healthy computer 
engineer's firm even though both firms are members of the same 
Association--perhaps a Seattle Association dedicated to technology 
start-ups.
  Clearly H.R. 660 is not furthering the ability of small employers to 
access the stability of large employer coverage; instead it is 
retracting the stabilizing protections small employers enjoy under 
current state law. Furthermore, limiting a self-funded AHP's ability to 
rate based upon health status to state law will not limit an AHP's 
ability to ``cherry-pick'' from the state regulated market. Ample 
opportunity for risk selection remains, including:
  Rating based upon age and gender: H.R. 660 would exempt AHPs from 
state rules that limit the ability to increase a firm's premiums based 
on the age and gender of employees. Older individuals typically 
generate claims costs nearly seven times those of younger individuals. 
In fact, actuaries consider age as a very close proxy for health 
status. Young females typically generate significantly higher claims 
than those of their male counterparts. With the unlimited age/gender 
rating flexibility granted under H.R. 660, AHPs could offer very low 
rates to firms with low-cost younger workers, draining the state 
regulated pool of the types of firms needed to keep premiums stable for 
firms dominated by older individuals or women in their childbearing 
years.
  Geographic ``Redlining'': H.R. 660 allows AHPs flexibility to 
determine their geographic service area. AHPs would be free to avoid 
geographic locations with high health care costs. They could choose to 
avoid certain parts of a city with populations with a high prevalence 
of expensive illnesses. For instance, Hispanic Americans have a 
disproportionately high rate of diabetes, and the African American 
community has been particularly hard hit by AIDS. AHPs could avoid 
selling coverage in minority neighborhoods--or charge a much higher 
premium to firms located in those areas--as a proxy for rating for 
health status. AHPs also could avoid geographic locations where 
significant portions of residents engage in high-risk occupations--they 
could avoid lumberjacking towns or farming communities. The League of 
United Latin American Citizens and the National Council of La Raza 
recognize these risks and have opposed H.R. 660.
  Exclusion of Very Small Firms: So-called ``baby groups''--firms with 
fewer than 5 employees--are actuarially very expensive to insure. Their 
claims expenses generally are much higher than those of firms with 
more employees. HIPAA requires insurers to accept these very small 
groups and states require insurers to pool these very small firms with 
the rest of the small group pool. H.R. 660 would allow AHPs to exclude 
very small firms from their membership altogether (e.g. establish a 
``mid-sized'' business association) or accept the small firms as 
members but charge them much higher premiums than their larger 
counterparts.

  The use of age, gender, geography and firm size in rating practices 
provide the flexibility necessary for self-funded AHPs to limit their 
covered lives to low-risk, low-cost firms. Opponents to this 
legislation recognize that the rampant cherry picking H.R. 660 will 
foster will hurt all small firms in the long run. That is why the 
American Academy of Actuaries and the National Association of Insurance 
Commissioners are joined in their opposition to H.R. 660 by the 
following business organizations:
  National Small Business United
  28 Chambers of Commerce
  Four Farm Bureaus
  10 Local Small Business Associations (e.g. New Hampshire High Tech 
Council)
  17 Labor Organizations

  (II) Widespread AHP Failure and Millions of Dollars in Unpaid Claims

  The General Accounting Office (GAO) reported that a previous 1974 
preemption of state law for Multiple Employer Welfare Arrangements 
(note: all AHPs are MEWAs) left nearly 400,000 consumers with over $123 
million in unpaid bills. H.R. 660 will force this sad history to repeat 
itself--but the unfortunate results will be magnified since the growth 
of the internet and other communications channels will allow unsound 
AHPs to attract vulnerable members at a much more rapid rate.
  Former Chief Counsel for the Senate Permanent Subcommittee on 
Investigations and Inspector General for the Department of Defense 
Eleanor Hill warns:

       AHPs are fundamentally the same types of organizations as 
     many MEWAs that have, in the past, been sponsored through 
     associations. If exempted from state regulation, AHPs would 
     pose the same kinds of unacceptable risks to consumers. . . . 
     Nothing in this legislation would prevent the same 
     proliferation of plan failures and consumers losses that 
     occurred when these types of organizations were last clearly 
     exempt from state regulation.\8\

  Former FDIC and Resolution Trust Corporation Chairman Bill Seidman 
also has issued warnings regarding the exemption of AHPs from state 
oversight: ``I am concerned that it places consumers at risk and could 
set the stage for a taxpayer bailout similar to the one necessitated by 
the savings and loan failures of the 1980's.

  AHP failures will be driven by three fundamental weaknesses in H.R. 
660:
  1. DOL Lacks Resources and Expertise to Takeover State Regulation of 
Self-funded AHPs
  2. Insured AHPs will Exist in a Regulatory Vacuum, with Neither the 
States or DOL Able to Regulate
  3. Solvency Standards are Inadequate


DOL Lacks Resources and Expertise to Takeover State Regulation of Self-
                              funded AHPs

  Transferring regulatory authority of self-funded AHPs to DOL will 
represent a monumental change in the scope of DOL's regulatory 
responsibilities. Although it is often quoted that DOL currently 
administers ERISA for current group health plans--DOL's role is very 
limited. They are not responsible for reviewing reserve levels or 
assuring that actuarially fair premiums are charged and they are not in 
constant monitoring mode as state insurance commissioners are. DOL has 
admitted that its enforcement efforts under ERISA are:

     . . . considerably different from and often more limited than 
     the remedies generally available to the states under their 
     insurance laws. In this regard, it is important to note that, 
     in many instances, states may be able to take immediate 
     action with respect to a MEWA upon determining that the MEWA 
     has failed to comply with licensing, contribution or reserve 
     requirements under State insurance laws whereas investigating 
     and substantiating a fiduciary breach under ERISA may take 
     considerably longer.

  In fact, H.R. 660 does not even authorize the Secretary to 
immediately terminate a failing AHP's operations. Instead, it directs 
the Secretary to apply to the appropriate United States district court 
for appointment as trustee to administer the termination of the plan.
  A 2002 General Accounting Office (GAO) report found that DOL's Office 
of Pension and Welfare Benefits Administration (PWBA) is understaffed 
for its current responsibilities. With regard to pension 
responsibilities, the report found that DOL faces an ``overabundance of 
work'' as well as ``limited investigative resources'' and ``staff 
shortages.'' It found that a review to determine pension plan 
noncompliance with ERISA would ``require PWBA's full investigative 
staff 90 years to fully and accurately complete.
  Similarly in 1997, Assistant Secretary of Labor Olena Berg testified: 
``An infrastructure adequate to handle the new responsibilities [for 
Association Health Plans] replicating the functions of 50 state 
insurance commissioners, simply does not exist.'' Berg noted that the 
current staff would be able to review each health plan once every 300 
years.
  H.R. 660 includes no provisions that would address this problem. No 
additional resources or retraining dollars for DOL are included.


Insured AHPs will Exist in a Regulatory Vacuum, with Neither the States 
                        nor DOL able to Regulate

  H.R. 660 includes very broad preemption language that appears to 
authorize an insured

[[Page H5623]]

AHPO to sell insurance coverage nationwide and disregard the laws of 49 
states once its policy is approved in one state. Thus once an AHP has 
an approved filing in Michigan, it could sell insurance coverage to New 
Yorkers. But who would protect the interests of New York policyholders? 
The New York state insurance commissioner will not know which consumer 
protection laws are or are not included in Michigan statute. And even 
if the New York commissioner was an expert regarding Michigan law, it 
is unlikely he would be authorized to enforce such protections. The 
enforcement authority of insurance commissioners is generally limited 
to the enforcement of their state's laws--not the laws of other states. 
Conversely, it is unlikely the Michigan insurance commissioner is 
authorized to take action against an insurer for behavior against a 
resident of another state. His role is to protect the interests of his 
residents.
  Thus, the insured AHP would exist in a regulatory vacuum. State 
insurance commissioners' hands would be tied by the Federal preemption 
provisions, and the Department of Labor's oversight authority is quite 
limited with regard to insured AHPs--the focus being on the initial 
certification of meeting the Board and other requirements to be 
considered a ``bona fide'' association. This regulatory vacuum will 
allow fraudulent and sham operations to flourish. Premium dollars will 
have disappeared into personal off-shore bank accounts before any 
action by regulators can be taken, leaving consumers uninsured and 
providers with large unpaid medical bills.


                   Solvency Standards are Inadequate

  The National Association of Insurance commissioners, the American 
Academy of Actuaries and others have all criticized H.R. 660 for 
inadequate solvency standards. H.R. 660 allows AHPs to maintain as 
little as $500,000 in surplus and caps even the largest AHPs at a 
$2,000,000 requirement--an amount equivalent to just two premature 
million dollar babies in a neo-natal intensive care unit. This is 
contrary to typical state solvency regimes which use open-ended rules, 
recognizing that the larger an AHP grows the larger a capital base is 
necessary. The American Academy of Actuaries notes:

       The proposed rules governing the minimum surplus 
     requirements for AHPs do not account for the growth of the 
     AHP. Historically, there have been many examples of AHP-like 
     organizations becoming insolvent. Following such events, most 
     states enacted solvency standards. To maintain the benefit of 
     these standards to consumers, the surplus standards should be 
     similar to the minimum requirements for Heath Risk-Based 
     Capital (RBC) developed by the National Association of 
     Insurance Commissioners (NAIC). Also the bills at issue rely 
     on affordable reinsurance vehicles that do not currently 
     exist in today's marketplace.

  Former Resolution Trust Chairman Bill Seidman warns that ``The 
Savings and Loan experience teaches us that a lack of adequate solvency 
standards or investment guidelines can quickly lead to financial 
failures.'' The NAIC also criticizes H.R. 660 as including ``woefully 
inadequate capital reserve requirements'' and further cautions:

       The most troubling aspect of the NFIB plan is it lacks 
     sufficient oversight to ensure that financial struggles do 
     not result in failures. Under the NFIB legislation, the AHP 
     would work with an actuary chosen by the company to set 
     reserve levels with little or no government oversight to 
     ensure the levels are sufficient or maintained. Also, that 
     AHP is required to ``self-report'' any financial problems. As 
     we have seen in recent months, relying on a company-picked 
     accountant or actuary to alert the government of any problems 
     can have dire consequences for the consumers who expect to 
     have protection under their health plan.

  The combination of a regulatory vacuum for insured AHPs, an 
understaffed and inexperienced DOL and inadequate solvency standards 
lay the seeds for a large crop of devastating AHP failures and frauds 
across the country that injures thousands of consumers. Organizations 
with vast experience in health care fraud--such as the National 
Association of Attorneys General--recognize that opposition to H.R. 660 
is imperative because ``State oversight and regulation is the best way 
to insure that plans remain solvent and that consumers are protected 
against fraud.

      (III) More Uninsured, Particularly Among the Most Vulnerable

  A June 2003 Mercer study performed for National Small Business United 
indicates that an additional one million individuals would lose 
coverage and become uninsured if H.R. 660 became law. A 1999 Urban 
Institute study predicted the uninsured would increase by 250,000 if 
AHPs were exempt from state law and the Congressional Budget Office 
(CBO) indicated that as many as 100,000 of the sickest individuals 
could lose coverage.
  While these reports differ in nagnitude, they all predict that AHPs 
will worsen the uninsured problem, not solve it as proponents contend.

           (IV) Consumers Stripped of Their State Protections

  States have enacted a broad pantheon of state consumer protections in 
the last decade. A sampling of these protections include:
  44 states ensure access to independent review;
  48 states limit how much insurers can charge sicker groups;
  50 states impose detailed requirements to assure fair marketing;
  50 states require mammography screening coverage; and
  47 states require diabetic supplies and education.
  Self-funded AHPs would be exempt from state consumer protection laws 
under H.R. 660. Insured AHPs could forum shop for the state with the 
least consumer protection laws and only use those limited protections 
when selling in the remaining 49 states. The Committee accepted an 
amendment by Rep. Van Hollen (D-MD) that would apply state prompt 
payment laws to insured AHPs. This amendment did not apply any other 
state consumer protection laws to insured AHPs, nor did it apply state 
prompt payment laws to self-funded AHPs. With one stroke, passage of 
H.R. 660 would eliminate thousands of state consumer protections across 
the country.

                   (V) No Administrative Cost Savings

  Numerous research reports have reviewed Association Health Plans and 
all found that lower premiums offered by AHPs would stem from ``cherry-
picking''--because the AHP limits its coverage to the healthiest small 
employers--and the avoidance of state mandated benefits. The 2003 Small 
Business Administration Study found:

       From an objective standpoint, AHPs are likely to lead to 
     moderately lower insurance premiums from a combination of 
     lower direct and indirect taxes, avoiding anti-selection and 
     other cross subsidies, avoiding some mandated benefits and 
     avoiding the cost to comply with multiple state regulations.

  The Congressional Budget Office assumed no administrative savings 
from AHPs and predicted that nearly two-thirds of any cost savings from 
AHPs would result from attracting healthier members from the existing 
insurance pool, with virtually all of the remaining savings stemming 
from reduced benefits.
  A June 2003 Mercer study estimates that AHPs would gain a pricing 
advantage through risk selection, not greater administrative 
efficiency. The modeling estimates that the average morbidity (a 
measure of whether a firm is ``sick'' or ``healthy'') of firms 
enrolling in AHPs would be 21 percent lower than the average morbidity 
of small employers in the market today.

  These reports found no administrative savings for AHPs because AHPs 
would need to perform the same functions as insurers today--enrollment, 
billing, claims administration. Providing health insurance to small 
firms is resource intensive because the insurer is often providing the 
types of services that a large employer receives internally from a 
dedicated employee benefits department. Research report after research 
report indicates that AHPs cannot avoid those costly functions and that 
their prime avenue for costs savings is ``cherry picking'' and benefit 
reduction.

                               Conclusion

  Exemptions from state law for Association Health Plans have been 
tried and failed before. Far from being a solution to the plight of the 
small employer, H.R. 660 would exacerbate the cost and stability 
problems in the small employer market. Consumers will find themselves 
uninsured just when they need coverage the most--when they fall ill. 
And providers will be left with millions in unpaid medical bills. 
Furthermore, H.R. 660 will undo the small group reforms woven together 
by states over the last decade to respond to the damage and pain that 
rampant cherry picking imposed on the small employer community in the 
late 80's.
  Mr. McKEON. Madam Speaker, I rise today in strong support of H.R. 
660, the Small Business Health Fairness Act, which will allow small 
businesses to join together to better provide their hard-working 
employees with health care coverage. This important legislation will 
solve a serious problem with the growing number of uninsured American 
workers.
  In September 2002, the Census Bureau reported that as many as 60 
percent of the 41 million uninsured Americans were employed in small 
businesses throughout the country. Over the last few years, small 
business employers have become unable to provide their workers with 
affordable health care as a result of the rapid and unjust rise in the 
cost of health insurance. A survey by Mercer Human Resource Consulting 
found that health insurance costs rose 14.7 percent in 2002.
  As a former small business owner, I understand the plight felt by 
employers, who want to provide employees and their families with 
quality health care.
  The Small Business Health Fairness Act will afford these smaller 
businesses the same rights that large corporations and unions have and 
enable their representative associations to form Association Health 
Plans (AHPs), which

[[Page H5624]]

will offer health care nationwide to member businesses. AHPs will be 
crucial in closing the gap the small business community is facing with 
the increase of uninsured American workers.
  The opponents of this bill will consistently tell wild tales about 
this legislation saying that AHPs will only offer health care to the 
healthiest. This assertion is wholly untrue, as the bill specifically 
prohibits AHPs from denying people on the basis of health status.
  It is imperative that we act now by passing this legislation so that 
our nation's small business employees can immediately begin receiving 
health care for their families.
  We can no longer allow these dedicated employees to live and work 
without health insurance.
  Mr. KILDEE. Madam Speaker, today we are considering a bill that will 
nullify coverage requirements and patient protections that states 
across the nation have determined are appropriate and necessary for the 
health and well-being of their citizens.
  Association health plans will be exempt from state laws that protect 
patients, including requirements for external independent review of 
denied claims and laws requiring coverage for, mammography screening, 
prostate screening, maternity benefits and coverage of diabetes 
supplies and education.
  The American Diabetes Association states that, ``if allowed to pass 
as written, this legislation will undermine state laws that ensure 
coverage of essential diabetes medication, equipment, supplies, and 
education by state-regulated health insurance policies. Over 475 
organizations have voiced their opposition to AHP's, including state 
governors, insurance commissioners, attorneys general, state 
legislators, providers and physician groups, consumer and advocacy 
organizations, chambers of commerce, unions, farm bureaus, and small 
business associations.
  H.R. 660 will not lead to health insurance cost decrease. According 
to the CBO, more than 800,000 workers in my state of Michigan will pay 
higher premiums under H.R. 660.
  I urge my colleagues to vote for the substitute and oppose H.R. 660, 
a bill that hurt, not help, the small business community.
  Ms. EDDIE BERNICE JOHNSON of Texas. Madam Speaker, I rise in strong 
opposition to the Small Business Health Fairness Act of 2003, H.R. 660. 
This legislation would exempt Association Health Plans from state 
regulations and oversight.
  As a former nurse, I have spent much of my public career working to 
ensure that the nation's health care system is affordable and provides 
the best services possible to all Americans.
  Although I agree in principle with the Small Business Health Fairness 
Act H.R. 660), legislation that attempts to reduce the high cost of 
health insurance for small businesses and the self-employed, after 
careful review I have developed.
  One of the problems I have with H.R. 660 is that it would exempt 
associated Health Plants (AHPs) from state regulation and oversight. I 
am afraid that this could lead to soaring insurance premiums, 
discriminatory coverage and loss of crucial protections, such as 
guaranteed access to medical care and critical benefits. With over 41 
million Americans uninsured, and almost 65 percent of them being 
Hispanic or African America, I am extremely concerned that this 
legislation coiuld lead to loss of critical health services for some of 
the neediest families.
  Madam Speaker, while proponents claim that federal AHPs would make 
insurance more affordable, and analysis by the Congressional Budget 
Office (CBO) concluded that AHPs would save money primarily by ``cherry 
picking'' the healthy from the existing insurance pool. The CBO 
estimated that as a result of the risk pool fragmentation caused by 
AHPS, health premiums would rise for 20 million workers and dependents 
while only 4.6 million would experience premium reductions. The CBO 
also found that the other source of savings would be the result of the 
elimination of state mandated benefits. Examples of benefits likely to 
be dropped by AHPs include mental health services, breast and prostate 
cancer screenings, maternity coverage and prescription drugs.
  I agree that all families should have access to a affordable health 
care coverage. But schemes that would exempt association health plans 
from state oversight would exacerbate existing problems by causing 
further segmentation of the risk pool and putting consumers at greater 
risk of plan insolvency and outright fraud. For these reasons urge my 
colleagues to oppose H.R. 660
  Mr. MARIO DIAZ-BALART. Madam Speaker, small businesses across the 
country face no greater challenge than access to affordable health 
care. Too often, small businesses are forced to sacrifice growth in 
order to provide health care to the employees. Many others are unable 
to meet the rising costs of health care and force their employees to go 
without altogether.
  Over 60 percent of the uninsured in America are small business owners 
and employees. Not only are high costs an enormous burden on small 
businesses and a large danger for employees, but also an unfortunate 
disincentive for growth. Capital lost on high health care costs limit 
economic growth of countless small businesses throughout the nation.
  No matter the size of business, all Americans deserve access to 
affordable health care. Small businesses should have the same access to 
health care as their counterparts in large corporations and unions. 
There is no rationale for punishing America's entrepreneurs by blocking 
the access to affordable health care.
  As an original cosponsor of the Small Business Health Fairness Act 
(H.R. 660), I stand committed to ending this great injustice to 
America's small businesses. As the true foundation of America's 
economy, it is essential to ensure small businesses have every 
incentive to grow and succeed. Without affordable health care for 
employees, small businesses will continue to be burdened with unfair 
health care costs resulting in reduced growth.
  Associated health plans will allow small businesses owners to join 
together in order to purchase health care for their families and 
employees. This will not only lower health care costs for small 
business owners, but will also provide greater choice.
  I ask my colleagues to join me in supporting H.R. 660 and helping the 
41 million uninsured Americans receive access to affordable health 
care.
  Mr. BEREUTER. Madam Speaker, this Member wishes to add his strong 
support for the Small Business Health Fairness Act of 2003 (H.R. 660) 
which would allow small business owners to band together across state 
lines through associations to purchase health insurance for families 
and employees.
  This Member would like to commend the distinguished gentleman from 
Ohio [Mr. Boehner], the Chairman of the House Committee on Education 
and the Workforce, and the distinguished gentleman from California [Mr. 
Miller], the ranking member of the House Committee on Education and the 
Workforce for bringing this important resolution to the House Floor 
today; this issue is very timely as this week is Small Business Week. 
This Member would also like to commend the distinguished gentleman from 
Kentucky [Mr. Fletcher] for sponsoring H.R. 660.
  Over the past several years, we have witnessed significant changes in 
our health care system. Congress, employers, and the American people 
are currently searching for ways to control the cost of health care. In 
doing so, it is important that we do not compromise access and quality. 
This Member believes that Congress must evaluate three key areas when 
considering heath care proposals: affordability so that people can 
purchase health care that best fits their needs; accountability, so 
patients are guaranteed the quality they were promised; and 
accessibility, so millions more Americans can receive high-quality 
health care coverage that best fits their personal and family needs.
  Access to affordable health insurance is a major problem for many of 
the 26 million uninsured Americans who live in families supported by 
the self-employed or small business employees. Professional societies 
and trade associations have tried to fill that void by offering health 
insurance plans to their members. Unfortunately, the myriad of state 
regulations and mandatory coverage requirements make it very difficult, 
expensive, and often impossible to offer coverage in all 50 states. If 
health insurance is not affordable it's not accessible.
  The Small Business Health Fairness Act is intended to enhance the 
purchasing power of small businesses so that they could purchase such 
insurance more cheaply, and thereby provide health insurance coverage 
to more people. The association health plans created by the measure 
would be exempt from health insurance regulations of the various 
states. Thus, under the bill, these association health plans could 
operate in different states but would not be subject to the different 
health insurance regulations of those states. Instead they would be 
subject to regulation by the Labor Department. Similar association 
health plan language has been included in patient protection bills that 
Congress has recently considered. This Member has always supported 
these proposals.
  Madam Speaker, in closing, this Member urges his colleagues to 
support H.R. 660.
  Mr. ANDREWS. Madam Speaker, for all the reasons we have stated, we 
oppose the bill.
  Madam Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. All time for debate on the bill has expired.


      Amendment in the Nature of a Substitute Offered by Mr. Kind

  Mr. KIND. Madam Speaker, I offer an amendment in the nature of a 
substitute.

[[Page H5625]]

  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. 
     Kind:
       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Small 
     Employer Health Benefits Program Act of 2003''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title.
Sec. 2. Establishment of Small Employer Health Benefits Program 
              (SEHBP).

            ``Part 8--Small Employer Health Benefits Program

``Sec. 801. Establishment of program.
``Sec. 802. Contracts with qualifying insurers.
``Sec. 803. Additional conditions.
``Sec. 804. Dissemination of information.
``Sec. 805. Subsidies.
``Sec. 806. Authorization of appropriations.

     SEC. 2. ESTABLISHMENT OF SMALL EMPLOYER HEALTH BENEFITS 
                   PROGRAM (SEHBP).

       (a) In General.--Subtitle B of title I of the Employee 
     Retirement Income Security Act of 1974 is amended by adding 
     after part 7 the following new part:

        ``Part 8--Small Employer Health Benefits Program (SEHBP)

     ``SEC. 801. ESTABLISHMENT OF PROGRAM.

       ``(a) In General.--The Secretary shall establish, in 
     accordance with this part, a program under which--
       ``(1) qualifying small employers (as defined in subsection 
     (b)) are provided access to qualifying health insurance 
     coverage (as defined in subsection (c)) for their employees, 
     and
       ``(2) such employees may elect alternative forms of 
     coverage offered by various health insurance issuers.
       ``(b) Qualifying Small Employer Defined; Other 
     Definitions.--For purposes of this part:
       ``(1) Qualifying small employer.--
       ``(A) In general.--The term `qualifying small employer' 
     means a small employer (as defined in paragraph (2)) that--
       ``(i) elects to offer health insurance coverage provided 
     under this part to each employee who has been employed by 
     that employer for 3 months or longer; and
       ``(ii) elects, with respect to an employee electing 
     coverage under qualified health insurance coverage, to pay at 
     least 50 percent of the total premium for qualifying health 
     insurance coverage provided under this part.
       ``(B) Elections.--Elections under subparagraph (A) may be 
     filed with the Secretary during the 180-day period beginning 
     with the first enrollment period occurring under section 803 
     and during open enrollment periods occurring thereafter under 
     such section. Such elections shall be filed in such form and 
     manner as shall be prescribed by the Secretary.
       ``(C) Part-time employment.--Under regulations of the 
     Secretary, in the case of an employee serving in a position 
     in which service is customarily less than 1,500 hours per 
     year, the reference in subparagraph (A)(ii) to `50 percent' 
     shall be deemed a percentage reduced to a percentage that 
     bears the same ratio to 50 percent as the number of hours of 
     service per year customarily in such position bears to 1,500.
       ``(2) Small employer.--The term `small employer' means, 
     with respect to a year, an employer who employed an average 
     of fewer than 100 employees on business days during the 
     preceding calendar year and who employs at least 2 employees 
     on the first day of the year.
       ``(3) SEHBP.--The term `SEHBP' means the small employer 
     health benefits program provided under this part.
       ``(c) Qualifying Health Insurance Coverage.--For purposes 
     of this part, the term `qualifying health insurance coverage' 
     means health insurance coverage that meets the following 
     requirements:
       ``(1) The coverage is offered by a health insurance issuer.
       ``(2) The benefits under such coverage are equivalent to or 
     greater than the lower level of benefits provided under the 
     service benefit plan described in section 8903(1) of title 5, 
     United States Code.
       ``(3) The coverage includes, with respect to an employee 
     that elects coverage, coverage of the same dependents that 
     would be covered if the coverage were offered under FEHBP.
       ``(4)(A) Subject to subparagraph (B), there is no 
     underwriting, through a preexisting condition limitation, 
     differential benefits, or different premium levels, or 
     otherwise, with respect to such coverage for covered 
     employees or their dependents.
       ``(B) The premiums charged for such coverage are community-
     rated for employees within any State and may vary only--
       ``(i) by individual or family enrollment, and
       ``(ii) to the extent permitted under the laws of such State 
     relating to health insurance coverage offered in the small 
     group market, on the basis of geography.
       ``(d) Other Terms.--
       ``(1) Health insurance coverage; health insurance issuer; 
     health status-related factor.--The terms `health insurance 
     coverage', `health insurance issuer', `health status-related 
     factor' have the meanings provided such terms in section 733.
       ``(2) Small group market.--The term `small group market' 
     has the meaning provided such term in section 2791(e)(5) of 
     the Public Health Service Act (42 U.S.C. 300gg-91(e)(5)).
       ``(3) FEHBP.--The term `FEHBP' means the Federal Employees 
     Health Benefits Program under chapter 89 of title 5, United 
     States Code.

     ``SEC. 802. CONTRACTS WITH QUALIFYING INSURERS.

       ``(a) In General.--The Secretary shall enter into contracts 
     with health insurance issuers for the offering of qualifying 
     health insurance coverage under this part in the States in 
     such manner as to offer coverage to employees of employers 
     that elect to offer coverage under this part. Nothing in this 
     part shall be construed as requiring the Secretary to enter 
     into arrangements with all such issuers seeking to offer 
     qualifying health insurance coverage in a State.
       ``(b) Continued Regulation.--Nothing in this part shall be 
     construed as preempting State laws applicable to health 
     insurance issuers that offer coverage under this part in such 
     State.
       ``(c) Coordination with State Insurance Commissioners.--The 
     Secretary shall coordinate with the insurance commissioners 
     for the various States in establishing a process for handling 
     and resolving any complaints relating to health insurance 
     coverage offered under this part, to the extent necessary to 
     augment processes otherwise available under State law.

     ``SEC. 803. ADDITIONAL CONDITIONS.

       ``(a) Limitation on Enrollment Periods.--The Secretary may 
     limit the periods of times during which employees may elect 
     coverage offered under this part, but such election shall be 
     consistent with the elections permitted for employees under 
     FEHBP and shall provide for at least annual open enrollment 
     periods and enrollment at the time of initial eligibility to 
     enroll and upon appropriate changes in family circumstances.
       ``(b) Authorizing Use of States in Making Arrangements for 
     Coverage.--In lieu of the coverage otherwise arranged by the 
     Secretary under this part, the Secretary may enter an 
     arrangement with a State under which a State arranges for the 
     provision of qualifying health insurance coverage to 
     qualifying small employers in such manner as the Secretary 
     would otherwise arrange for such coverage.
       ``(c) Use of FEHBP Model.--The Secretary shall carry out 
     the SEHBP using the model of the FEHBP to the extent 
     practicable and consistent with the provisions of this part, 
     and, in carrying out such model, the Secretary shall, to the 
     maximum extent practicable, negotiate the most affordable and 
     substantial coverage possible for small employers.

     ``SEC. 804. DISSEMINATION OF INFORMATION.

       ``The Secretary shall widely disseminate information about 
     SEHBP through the media, the Internet, public service 
     announcements, and other employer and employee directed 
     communications.

     ``SEC. 805. SUBSIDIES.

       ``(a) Employer Subsidies.--
       ``(1) Enrollment discount.--
       ``(A) In general.--In the case of a qualifying small 
     employer who is eligible under subparagraph (B), the portion 
     of the total premium for coverage otherwise payable by such 
     employer under this part shall be reduced by 5 percent. Such 
     reduction shall not cause an increase in the portion of the 
     total premium payable by employees.
       ``(B) Employers eligible for discounts.--A qualifying small 
     employer is eligible under this subparagraph if such employer 
     employed an average of fewer than 25 employees on business 
     days during the preceding calendar year.
       ``(2) Employer premium subsidy.--
       ``(A) In general.--The Secretary shall provide to 
     qualifying small employers who are eligible under 
     subparagraph (C) and who elect to offer health insurance 
     coverage under this part a subsidy for premiums paid by the 
     employer for coverage of employees whose individual income 
     (as determined by the Secretary) is at or below 200 percent 
     of the poverty line (as defined in section 673(2) of the 
     Community Services Block Grant Act (42 U.S.C. 9902(2)), 
     including any revision required by such section) for an 
     individual.
       ``(B) Subsidy scaled according to size of employer.--The 
     subsidy provided under subparagraph (A) shall be designed so 
     that the subsidy equals, for any calendar year--
       ``(i) 50 percent of the portion of the premium payable by 
     the employer for the coverage, in the case of eligible 
     qualifying small employers who employ an average of fewer 
     than 11 employees on business days during the preceding 
     calendar year;
       ``(ii) 35 percent of the portion of the premium payable by 
     the employer for the coverage, in the case of eligible 
     qualifying small employers who employ an average of more than 
     10 employees but fewer than 26 employees on business days 
     during the preceding calendar year; and
       ``(iii) 25 percent of the portion of the premium payable by 
     the employer for the coverage, in the case of eligible 
     qualifying small employers who employ an average of more than 
     25 employees but fewer than 51 employees on business days 
     during the preceding calendar year.

[[Page H5626]]

       ``(C) Employers eligible for premium subsidy.--A qualifying 
     small employer is eligible under this subparagraph if such 
     employer employed an average of fewer than 50 employees on 
     business days during the preceding calendar year.
       ``(b) Employee Subsidies.--
       ``(1) In general.--The Secretary shall provide subsidies to 
     employees whose family income (as determined by the 
     Secretary) is at or below 200 percent of the poverty line (as 
     defined in section 673(2) of the Community Services Block 
     Grant Act (42 U.S.C. 9902(2)), including any revision 
     required by such section) for a family of the size involved.
       ``(2) Amount of subsidy.--Such subsidies shall be in an 
     amount equal to the excess of the portion of the total 
     premium for coverage otherwise payable by the employee under 
     this part for any period, over 5 percent of the family income 
     (as determined under paragraph (1)(A)) of the employee for 
     such period.
       ``(3) Coordination of subsidies.--Notwithstanding paragraph 
     (1), under regulations of the Secretary, an employee may be 
     entitled to subsidies under this subsection for any period 
     only if such employee is not eligible for subsidies for such 
     period under any Federal or State health insurance subsidy 
     program (including a program under title V, XIX, or XXI of 
     the Social Security Act). For purposes of this paragraph, an 
     employee is `eligible' for a subsidy under a program if such 
     employee is entitled to such subsidy or would, upon filing 
     application therefore, be entitled to such subsidy.
       ``(4) Authority to expand eligibility.--The Secretary may, 
     to the extent of available funding, provide for expansion of 
     the subsidy program under this subsection to employees whose 
     family income (as defined by the Secretary) is at or below 
     300 percent of the poverty line (as determined under 
     paragraph (1)).
       ``(c) Procedures.--The Secretary shall establish by 
     regulation applications, methods, and procedures for carrying 
     out this section, including measures to ascertain or confirm 
     levels of income.

     ``SEC. 806. AUTHORIZATION OF APPROPRIATIONS.

       ``There are authorized to be appropriated, for the period 
     beginning with fiscal year 2004 and ending with fiscal year 
     2014, $50,000,000,000 to carry out this part, including the 
     establishment of subsidies under section 805.''.
       (b) Report on Offering National Health Plans.--Not later 
     than 18 months after the date of the enactment of this Act, 
     the Secretary of Labor shall report to Congress the 
     Secretary's recommendations regarding the feasibility of 
     offering national health plans under part 8 of subtitle B of 
     title I of the Employee Retirement Income Security Act of 
     1974, as added by subsection (a).
       (c) Clerical Amendment.--The table of contents in section 1 
     of the Employee Retirement Income Security Act of 1974 is 
     amended by inserting after the item relating to section 734 
     the following new items:

        ``Part 8--Small Employer Health Benefits Program (SEHBP)

``Sec. 801. Establishment of program.
``Sec. 802. Contracts with qualifying insurers.
``Sec. 803. Additional conditions.
``Sec. 804. Dissemination of information.
``Sec. 805. Subsidies.
``Sec. 806. Authorization of appropriations.''.

       Amend the title so as to read: ``A Bill to provide for the 
     establishment in the Department of Labor of a Small Employer 
     Health Benefits Program.''.

  The SPEAKER pro tempore. Pursuant to House Resolution 283, the 
gentleman from Wisconsin (Mr. Kind) and a Member opposed each will 
control 30 minutes.
  The Chair recognizes the gentleman from Wisconsin (Mr. Kind).
  Mr. KIND. Madam Speaker, I yield myself such time as I may consume.
  Madam Speaker, we have had I think a very enlightening discussion so 
far today in regards to the real impact of these associated health 
plans, what they are potentially capable of doing and what the danger 
of them are. As the gentleman from New Jersey (Mr. Andrews) has been 
citing repeatedly, there is an objective study there indicating the 
potential impact if this legislation enacted of increasing the ranks of 
the uninsured throughout the country by an additional million people. 
That is heading in the wrong direction considering we have 41 million 
uninsured today, many of them, between 50 and 60 percent of that 41 
million, working in small businesses throughout our Nation.
  We have a serious issue that requires a serious response and a 
serious plan to provide some real relief for small business employers 
to their employees. These are people who wake up every morning. They go 
to work. They play by the rules. They are asking for basic health care 
coverage like their neighbors next to them.
  Unfortunately, H.R. 660 pulls up a little bit short in a couple of 
respects. First of all, it creates a current two-tiered system 
exempting the health care plans from currently State-regulated 
requirements. These are decisions made by State legislatures reflecting 
community values in regards to what type of health care coverage is 
important for their citizens, for their communities, for the society at 
large. And what is being proposed now is exempting a whole category of 
health insurance plans from basic health coverage such as cancer 
screening, mammographies, prenatal care, maternity care, diabetes, 
autism coverage in some States, and for those whoever worked with 
autistic children understand the importance of treating autism is early 
recognition, early intervention, and a lot of times that will not occur 
unless there are health plans that provide such coverage, and if we do 
not intervene early in these children's lives, there are exponentially 
greater costs for society at large down the road.
  We offer a substitute, which I believe addresses the challenge that 
we are facing as a Nation more honestly and more fairly. The Democratic 
alternative that I have worked on with the gentleman from New Jersey 
(Mr. Andrews) and others on the committee would provide direct 
assistance to small businesses and their employees, another shortcoming 
of H.R. 660. There is no incentive, there is no help financially to 
enable employers to provide this type of coverage for their employees. 
And everyone I know is familiar with the small business employer that 
is operating on the margin, oftentimes losing money rather than making 
money.
  And if there is not some type of financial incentive that our 
substitute bill offers it is unlikely that they are going to be able to 
extend their health insurance coverage to their employees who currently 
do not have them.
  What our substitute would do is it would direct the Department of 
Labor to establish a small employer health benefit plan similar to the 
Federal Employee Health Benefits Plan. Many of the Members of Congress 
here today are members of the Federal Employee Health Benefits Plan. I 
have not encountered too much criticism of the health plan that Members 
of Congress are receiving. I think small business owners and their 
employees should be given the same opportunity on an affordable basis. 
The program would contract with State license insurers to offer a 
minimum insurance package for all employees of businesses of fewer than 
100 people. Small businesses would be eligible for a premium assistance 
under our plan as would employees earning below 200 percent of the 
poverty level.
  This alternative has the potential of providing health insurance 
coverage to 33 million Americans who currently go without it today. The 
number stands in stark contrast to the estimated 550,000 that the 
Congressional Budget Office has calculated under H.R. 660.
  Perhaps most importantly, our plan is paid for under the budget 
resolution that the majority party has passed earlier this year. It 
fits within the budget confines by providing these premium assistance 
to small business employers, and to those employees at 200 percent less 
of poverty, providing financial assistance and the financial means to 
actually access health plans and provide coverage for their employees. 
H.R. 660 does not provide any of those means.
  What we may see under their budget resolution coming back at us 
shortly is some form of tax credit or some type of tax deduction, which 
is not going to help the numerous employees and small businesses 
operating at 200 percent or less poverty level, who are paying very 
little Federal income taxes in order to qualify for such credits, 
unless they are willing to extend that coverage to those employees. But 
wait a minute. We are right now engaged in a heated debate over a child 
tax credit on these very same principles; so it is doubtful that they 
are going to be able to provide that type of tax relief to employees 
who need it and cannot afford health plans generally.
  I mean there is a reason why the National Governors Association, 
Republican and Democratic governors alike, are in opposition, why the 
State Attorney Generals Association is opposing, why the State 
legislatures throughout the country are opposing, why many consumer 
interest groups and health care providers are opposing H.R. 660, 
because they fear that the ultimate income will be expanding the ranks 
of

[[Page H5627]]

the uninsured rather than reducing that number.
  I think we all have the best intentions in the plans that we are 
advocating here today to try to reverse course on the 41 million, to 
try to provide small businesses with an opportunity of providing some 
health care coverage for their employees, but we believe there is a 
right and there is a wrong way of doing it. We believe that the 
Democratic substitute being offered which does not preempt State law, 
which does provide some financial assistance, premium assistance for 
small employers, which is paid for under the budget resolution is the 
way to go if we are truly interested in reducing the number of the 
uninsured in this country, and thereby affecting the premiums that 
other health plans have to pay.
  Because if the uninsured get sick or get hurt, they still go in, they 
still access, they still get care, but those costs are then shifted on 
to those plans that pay for it. Our plan would reduce the number of 
uninsured and thereby save costs and help reduce the premium increases 
that so many of our employers, large and small, are experiencing today. 
And with that, I encourage my colleagues to support the substitute. 
Vote no on the H.R. 660.
  Mr. Speaker, I reserve the balance of my time.
  Mr. BOEHNER. Mr. Speaker, I am opposed to the gentleman's amendment 
and claim the time in opposition.
  The SPEAKER pro tempore (Mr. Simpson). The gentleman from Ohio is 
recognized for 15 minutes.
  Mr. BOEHNER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, instead of embracing this bipartisan bill like many of 
their colleagues, some House Democrats have, instead, offered a 
substitute that is really no alternative at all.
  Their plan does nothing to address one of the real issues that is 
really at the heart of this debate, and that is cost. In fact, it takes 
us exactly in the wrong direction of where we are trying to going, 
raising costs for small businesses and imposing with new mandates on 
employers. Instead of relying on competition that AHPs would provide, 
thereby lowering costs, their alternative could drive small employers 
out of business altogether.
  Moreover, the substitute comes with a $50 billion price tag 
establishing a complex new Federal program that includes health care 
subsidies for certain small businesses and some workers who work in 
small businesses. It would establish a national Government-subsidized 
health care plan that attempts to model itself after the Federal 
Employee Health Benefits Plan, but instead imposes a new mandate such 
as requiring small employers to pay 50 percent of their premiums for 
employees.
  However, unlike the Federal Employee Health Benefits Plan that is 
exempt from costly State mandates and regulations, coverage offered 
under this substitute would subject this plan to the more than 1,500 
State mandates that make up about 15 percent of the rising cost of 
health insurance. In addition, in order to qualify, the substitute 
imposes new mandates on employer plans. For example, the substitute 
mandates that employers provide health care coverage to every employee 
who has been employed for at least 3 months.
  In addition, it mandates that employers pay 50 percent of the cost of 
health care premiums for employees and that they cover all dependents 
of their workers. Well meaning, but in the end, these mandates will 
prohibit employers from proceeding. Self-employed individuals, however, 
are not covered by the substitute and would receive no benefits.
  So let us make clear this fact. Small businesses today have the 
highest health care premiums of any other group. Premiums increased 
this year by at least 15 percent, the highest increase in a decade. And 
premiums are even higher for small businesses that see increases of 40 
to 50 percent a year as employers continue to get out of small group 
activities and States. In fact, the increase in the uninsured this 
year, now 41 million Americans, was made up entirely of small business 
workers who lost their health care coverage because their employers 
could not afford to continue to provide this benefit.
  So in answer to this, the substitute proposes to raise the cost to 
those small employers by adding new coverage requirements and 
subjecting it to more than 1,500 State mandates. And then we are going 
to spend $50 billion worth of Federal taxpayers' money to subsidize 
this coverage.
  In contrast, AHPs use the strengths of the employer-based system that 
cover about 150 million American lives today, and we rely on the 
private market. The benefits of competition, the economies of scales 
that are enjoyed by large unions and large companies all across the 
country to help lower costs and to provide better coverage for their 
workers.
  AHPs allow small businesses to access the benefits of ERISA that are 
currently offered to large employers and unions. ERISA exempts large 
employers and unions from State mandates so that they are able to offer 
a quality benefit package from one coast to another or in just several 
adjoining States.

                              {time}  1515

  This uniformity reduces the cost so that more of the health care 
dollar that they are spending can actually go to benefits for their 
employees, and the lowering of the administrative costs also allows 
these companies and unions to offer more benefits to their members.
  Through ERISA, employers and unions are able to offer benefits that 
best fit the needs of their employees. Their small business 
counterparts deserve the same opportunity to craft benefit packages 
that are both high quality and affordable.
  The substitute would offer employers a difficult Hobson's choice: 
Meet these conditions, which may strap a business to the point of going 
under; or face limited and costly alternatives to health care coverage; 
or they can just do what they do today, offer no health care coverage 
to their employees.
  Instead of making it possible for small businesses to access more 
affordable coverage, their coverage options will actually be more 
expensive, and then we are going to finance it with higher taxes.
  While AHP legislation would be implemented quickly, the Democrat 
substitute might take years to get up and running because we are going 
to require the Department of Labor to design this, then to figure out 
how they are going to sell it, and then figure out how they are going 
to parcel out the $50 billion. If the appropriation does not go 
through, then you have got a plan with no financing behind it at all.
  So, let me make myself clear, if I have not already: I believe our 
Nation's employer-sponsored health care system is a huge American 
success story. Employers provide coverage for the vast majority of our 
Nation's population, and almost 150 million Americans have coverage 
through ERISA.
  The Committee on Education and the Workforce and the Department of 
Labor through our oversight of ERISA have jurisdiction over employer-
sponsored health care, and I support the employer-based system to 
address the problem of the uninsured.
  However, the way that the substitute does that is not by building on 
our strengths to offer really good plans. The mandates in their bill 
will basically say to small employers, you either offer the best health 
care plan in the entire market that is possible to your employees, or 
you get no help at all.
  I think the strengths of the current system are good, and I think 
building on those by allowing Association Healthcare Plans will, in 
fact, work.
  This bill is being supported by our nation's small business 
associations. The NIFB, the National Retail Association, the National 
Association of Wholesale Distributors, the National Association of 
Homebuilders, the U.S. Chamber of Commerce and others strongly support 
this bill, and the same groups oppose the substitute that we have 
before us.
  So I hope Members will join me in offering assistance to our Nation's 
small businesses by supporting the underlying bill, and I ask my 
colleagues to reject the substitute we have before us.
  Mr. Speaker, I reserve the balance of my time.
  Mr. KIND. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, this is modeled after the Federal employee health plan. 
I

[[Page H5628]]

never heard so much complaining about the Federal employee health plan 
before, which Members of Congress participate in. It is the classic 
case of the double standard yet again.
  There are no new mandates. We respect State law. We do not preempt 
state law. Furthermore, their own Congressional Budget Office estimates 
that the Associated Health Plans will lead to higher insurance costs 
for 80 percent of small business employers and employees. Their 
legislation will impose a higher cost burden on small businesses 
throughout the country.
  Mr. Speaker, I yield 3 minutes to the distinguished gentleman from 
Rhode Island (Mr. Langevin), someone who is concerned about the 
increase of 1 million more uninsured under H.R. 660 and also 
understands the importance of State health insurance coverage.
  Mr. LANGEVIN. Mr. Speaker, I thank the gentleman for yielding me 
time.
  Mr. Speaker, I rise today in opposition to H.R. 660, the Small 
Business Health Fairness Act, and in support of the substitute.
  As health care costs soar and small business owners struggle to offer 
health benefits, it is critical to increase incentives for them to 
cover their workers. However, it is equally important that the health 
plans available to these workers be high quality and not jeopardize the 
stability of the health insurance marketplace.
  This legislation, as it is written, encourages the formation of 
federally certified Association Health Plans by exempting these plans 
from State laws that govern health insurance sold to small employers 
today.
  For years, patients have been denied necessary care as a result of 
HMOs' exemption from State regulation. As long as I have been in 
Congress, we have struggled to pass a meaningful Patients' Bill of 
Rights to assert the rights of individuals to a more basic minimum of 
health care.
  Creating more exemptions is contrary to our efforts to preserve and 
enhance the existing regulatory system. We must think creatively about 
how to make health insurance affordable for small business owners and 
employees without threatening the progress we have made in ensuring 
patients' protection.
  In Rhode Island, we have experimented with the successful program 
called RIte Share, which has made it possible for workers eligible for 
the State's Medicaid program who have access to employer-sponsored 
insurance to participate in the employer's programs. This month, I will 
reintroduce the Making Health Care Available for Low Income Workers 
Act, which would support demonstration projects such as RIte Share.
  As we look for innovative ways to provide health care to all, we must 
not sell small business owners and employees short. The National Small 
Business United opposes this legislation, as they recognize that it 
would ultimately have a detrimental impact on small employer premiums 
and would cause a significant number of small employers to drop 
coverage, thereby increasing the Nation's uninsured population and 
undermine the quality of available coverage.
  To that end, I urge my colleagues to vote against H.R. 660 and for 
the substitute.
  The SPEAKER pro tempore (Mr. Simpson). Does the gentleman from Texas 
(Mr. Sam Johnson) seek to control time for the opposition?
  Mr. SAM JOHNSON of Texas. Yes, Mr. Speaker.
  The SPEAKER pro tempore. Without objection, the gentleman from Texas 
(Mr. Sam Johnson) will control the time in opposition.
  There was no objection.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield 3 minutes to the 
gentleman from North Carolina (Mr. Ballenger), a member of the 
Committee on Education and Workforce and a long-time Member of Congress 
and a small businessman.
  Mr. BALLENGER. Mr. Speaker, I thank the gentleman for yielding me 
time.
  Mr. Speaker, today we are going to hear a lot of discussion, 
important discussion, about over 40 million Americans who are 
uninsured. Very few people in Congress have actually had the experience 
of dealing with employees and their health insurance. Well, I have, 
with them and their dependents.
  H.R. 660 will allow small business to pool their resources in 
Associated Health Plans, giving them healthcare purchasing power that 
they do not have today.
  As one Member who is a small business owner, I know firsthand that 
ballooning costs are a major reason why so many Americans are 
uninsured. When the company I founded employed only 5 or 10 workers, I 
was at the mercy of the insurance companies. Small companies lack the 
bargaining power that is necessary to find the best deal, and the 
smaller the company, the worse it gets.
  Like me, most employers care deeply about their employees and want to 
give them access to quality care. Unfortunately, skyrocketing costs 
have forced many of us to distribute health insurance costs to our 
employees, to drop health coverage or to close up shop altogether. And 
this is nothing short of a tragedy, not only for millions of uninsured 
or underinsured workers and their families, but also for employers who 
can no longer afford the high cost of health insurance.
  Mr. Speaker, the problem is not going away. While AHPs may not cover 
every uninsured American, I know that it will help many Americans gain 
access to quality care.
  Some Members of this Congress will only be satisfied with universal 
healthcare coverage. Let me just ask you, does small business want the 
U.S. Government as a partner? Well, not where I come from.
  These Members argue that we are somehow misguided when we want to 
take a common sense approach toward any American access to quality 
healthcare insurance. Associated Health Plans will allow small 
businesses to pool their resources and increase their bargaining power 
with insurance companies. This will allow them to negotiate better 
rates and purchase quality healthcare at a lower cost. In essence, AHPs 
will put small business on equal footing with the large, self-insured 
companies and unions.
  Mr. Speaker, it is good to talk about the plight of the uninsured, 
but let us do something to help them. Let us support AHPs.
  Mr. KIND. Mr. Speaker, I yield 2 minutes to the distinguished 
gentlewoman from California (Ms. Woolsey), a very knowledgeable member 
of the Committee on Education and the Workforce.
  Ms. WOOLSEY. Mr. Speaker, I thank the gentleman for yielding me time, 
and I thank the gentleman from New Jersey (Mr. Andrews) for this 
substitute that we have here today.
  Mr. Speaker, I rise in support of the Kind plan because it is 
actually kind to small businesses and it is kind to hard-working 
employees, and it makes affordable coverage accessible to the 
employees, the hard workers that need and deserve that coverage.
  As a small business owner, I know firsthand how difficult it is to 
provide workers with first-class health coverage, but the reality is 
these hard-working families need access to quality healthcare, not just 
bare bones, expensive coverage. I would have appreciated the Kind plan 
for my employees, I can tell you that.
  The Republican plan actually provides employers and employees with a 
false sense of security. It is a false security. They will assume they 
are paying for standard coverage, like the owner of the business has 
for his or her family. They will assume they are paying for mammograms, 
prenatal and postnatal coverage, coverage for illnesses like diabetes, 
and for prostate cancer, because these are generally State-mandated 
coverages. And when they find out differently after they have enrolled 
in one of these plans, it will be too late.
  I support the Kind substitute, because it gives small businesses the 
option to enroll in a health plan that is similar to the Federal 
Employees Health Benefit Plan, giving workers a choice of plans. Why 
should the hard-working people of America, those employed by small 
businesses, have fewer options than Federal workers?
  Mr. Speaker, the Kind substitute provides an affordable option to 
small businesses by granting subsidies. It gives them choices 
guaranteed to cover the most important medical procedures. This 
substitute provides working families, desperate for quality

[[Page H5629]]

health coverage, the choices they need and want, and I urge my 
colleagues to support the Kind substitute.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield 2 minutes to the 
gentlewoman from Illinois (Mrs. Biggert), a member of the committee.
  Mrs. BIGGERT. Mr. Speaker, I thank the gentleman for yielding me 
time.
  Mr. Speaker, I rise in strong opposition to the substitute to H.R. 
660. The mandates contained in this substitute will drive up costs and 
defeat the very purpose of H.R. 660, which is to make healthcare 
insurance more affordable.
  Talk to most business owners, small business owners, in my district, 
and they will say that the fastest growing cost to their businesses is 
rising health insurance premiums for their workers. Talk to other small 
business owners in my district, and they will say that they cannot 
afford to offer their workers healthcare coverage.
  In fact, if you talk to any of the 41 million Americans who have no 
health insurance, 6 out of 10 of them will say they work for a small 
business. It is not that these small business employers, employees or 
owners do not want health insurance or do not realize its importance; 
they simply cannot afford it.
  Health insurance is expensive, even if you work for a large company. 
Studies show health insurance costs rose by 14.7 percent in 2002, and 
others predict they will rise another 15 percent for 2003.
  In large companies, health coverage costs are spread out over many 
employees, making coverage more affordable for each employee. However, 
when there are fewer employees, each must bear a higher share of the 
costs and the cost per worker for the employer is very high. Far too 
often, small businesses either cannot afford to offer insurance, or, if 
they offer it, it is too costly and their employees cannot afford it.
  Let us give small businesses the same economies of scale that are 
enjoyed by large businesses. I urge my colleagues to vote against this 
substitute which would establish new mandates and turn the plan into a 
nationalized, government-subsidized health care plan.
  I urge a yes vote for final passage of H.R. 660. Let us give more 
working Americans access to affordable, quality insurance coverage.
  Mr. KIND. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, let me quickly dispel a couple of myths. We have heard a 
couple of occasions new mandates are going to add costs to the 
employers.
  First of all, there are no new mandates under the substitute. We 
merely respect State law. We do not require compliance. It is a 
voluntary program. If small business employers do not think it is a 
good financial deal for them, they do not have to join. There is 
nothing mandating their requirement.
  We have also heard the word ``taxes'' being used, too. Let me 
reiterate, this is paid for in their own budget resolution. So there is 
no new taxes that we are talking about with respect to this substitute.
  Mr. Speaker, I yield such time as he may consume to the gentleman 
from New Jersey (Mr. Andrews), the coauthor of this alternative bill.
  (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 
Wisconsin (Mr. Kind) for all the leadership he has shown on this, all 
the hard work he has done, and his usual, thoughtful approach to this 
problem.

                              {time}  1530

  Understand the desirability of the substitute versus the underlying 
bill. It would be helpful to think of a person who runs a tool and die 
shop with a dozen employees, or a cafe with 15 or 20 employees. Under 
the majority's Republican underlying bill, the most optimistic people 
believe there would be about a 15 percent premium savings for that 
employer. I think that is unduly optimistic, but let us give them the 
benefit of the doubt.
  In my State, it costs about $6,000 to provide a health care package 
for an individual, and about $12,000 for family coverage. That means 
for that individual plan, the price would drop from $6,000 down to 
about $5,100. For the owner of that tool and die shop or that cafe, 
even if that price drop would occur, it is not nearly enough to afford 
the premiums that would be involved.
  The majority's bill provides zero to the owner of that tool and die 
shop or that cafe to help them buy those premiums.
  The substitute goes to the majority's budget resolution, identifies, 
as the majority did, $50 billion over 5 years, without any increase in 
taxes or revenues, as the gentleman from Wisconsin (Mr. Kind) just 
said, and uses that $50 billion creatively and wisely to provide 
subsidies to what we estimate would be 5 million employers and 16 
million employees.
  The person running the tool and die shop or the cafe, even if you are 
right, and we think you are wrong, meaning the majority, even if that 
person enjoys a reduction in premiums from $6,000 down to $5,100, it is 
not enough to increase coverage.
  The plain fact is this: people who are employing people at the bottom 
of the wage ladder in low-margin businesses are not going to be able to 
afford the price of health insurance unless there is a significant 
subsidy. That is a fact. It is a fact the majority would choose to 
ignore, because the majority has taken over $2 trillion from the public 
Treasury that could be used to address the problem of 41 million 
uninsured people and flushed that money away. This substitute is an 
appropriate way to close that gap.
  I also again want to reiterate that we believe you do not have to 
make this false choice between people being covered, as our various 
States would have them covered, with mammogram protection, with 
diabetes care, with prenatal and well-baby care. You do not have to 
make the choice between providing those vital benefits and no coverage 
at all.
  The Mercer study shows that the underlying bill from the majority 
will result in an increase of 1 million people to the ranks of the 
uninsured. Eight million people, the CBO now tells us, will move from 
regular protected plans into these new unprotected, at-risk AHPs. We 
will get the worst of both worlds: eight million people for whom there 
is no guaranteed coverage against breast cancer, against diabetes, 
against the other diseases and conditions people worry about, and an 
increase in the number of uninsured.
  The plan that the gentleman from Wisconsin (Mr. Kind) has taken the 
lead on would do the opposite. It will address the real needs of the 
owner of that tool and die shop and the real needs of the owner of that 
cafe by providing him or her with a meaningful subsidy that would help 
purchase health insurance benefits for his or her employees. There is a 
5 million person difference when it comes to employers, a 16 million 
person difference when it comes to employees, and all the difference in 
the world when it comes to the approach here.
  The plan the gentleman from Wisconsin (Mr. Kind) has put forward will 
work. It will work within the contours of the majority's own budget 
resolution. It provides real help and real aid to those who need it, 
not the empty promise of the majority's bill.
  I urge our colleagues on both sides of the aisle to support the Kind 
substitute.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield 1 minute to the 
gentleman from Ohio (Mr. Boehner), the chairman of the Committee on 
Education and the Workforce.
  Mr. BOEHNER. Mr. Speaker, I thank my good colleague for yielding me 
this time.
  We have heard about these studies today; and the gentleman knows that 
is the study, or at least has heard me say that the study done by 
Mercer is very similar to the study done by the Congressional Budget 
Office, and they are both flawed. They are very flawed. They do not 
take into account the fact that we have anti-cherrypicking language in 
the bill, and they assume in their studies that cherrypicking would be 
allowed.
  Secondly, they assume that there would not be any difference in the 
administrative fees for running the plan. The fact is that we have 
studies that show that up to 8 million of the uninsured would have 
access to affordable, quality health insurance.
  Let me also point out exactly what our bill does. The gentleman from 
New Jersey just said in the State of New Jersey, for a single person to 
buy a

[[Page H5630]]

health insurance plan is about $6,000 and family coverage is about 
$12,000. The average cost for a large employer for the cost of their 
health insurance is about $3,300 for a single person and about $5,500 
for a family.
  Mr. ANDREWS. Mr. Speaker, would the gentleman yield?
  Mr. BOEHNER. I yield to the gentleman from New Jersey.
  Mr. ANDREWS. Mr. Speaker, would the gentleman care to cite the source 
of that statistic?
  Mr. BOEHNER. Mr. Speaker, I made some phone calls to find several 
plans that were both in the same area.
  The fact is, that is exactly what this bill does. It allows small 
employers to band together to get themselves into a larger pool to 
design their own plan so that they can, in fact, offer better coverage 
at lower cost to their employees.
  Mr. Speaker, I reserve the balance of my time.
  Mr. KIND. Mr. Speaker, I shudder to think we may be making major 
policy based on a few phone calls here today.
  Mr. Speaker, I yield 1 minute to the gentleman from New Jersey (Mr. 
Andrews).
  Mr. ANDREWS. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  I understand there are variations in plan costs around the country. I 
would once again say, however, that the most enthusiastic proponents of 
the AHP plan do not talk about a reduction of the magnitude that the 
chairman of the full committee just talked about; they talk, at best 
case, about a 15 or 16 percent premium reduction.
  If you live in a market that has a $6,000-per-person premium, which I 
do, that is nowhere near a $2,700 reduction which the chairman's phone 
calls have uncovered.
  Mr. BOEHNER. Mr. Speaker, would the gentleman yield?
  Mr. ANDREWS. I yield to the gentleman from Ohio.
  Mr. BOEHNER. Mr. Speaker, the 15 percent reduction is only the 
reduction in the administrative costs of running the plan. When you 
begin to look at what pooling and larger pools will do, it brings the 
costs down significantly.
  Mr. ANDREWS. Mr. Speaker, reclaiming my time, what premium benefit 
then would the chairman claim would result from this bill?
  I yield to the chairman to tell us what premium benefit he predicts 
would result from the underlying bill.
  Mr. BOEHNER. Mr. Speaker, we believe that the average reduction for a 
small employer would be somewhere between 15 and 30 percent.
  Mr. ANDREWS. Fifteen and 30 percent. That is a new number for us, Mr. 
Speaker.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield 4 minutes to the 
gentleman from Illinois (Mr. Manzullo), the chairman of the Committee 
on Small Business.
  Mr. MANZULLO. Mr. Speaker, as the chairman of the Committee on Small 
Business, our Nation's small businessmen and -women tell me over and 
over that accessible and affordable health care is their number one 
priority. I have heard from thousands of small employers in America who 
have been pleading for options to help them manage their surging health 
care costs. In fact, so many letters came in, we put them into a binder 
called ``Health Care Horror Stories from America's Small Employers.'' 
The NFIB assisted us in putting this together for us.
  The small business owners tell us regularly how they struggle to 
provide their workers with health insurance but, each year, they face 
double-digit increases. Small business owners tell me they do not know 
how much longer they can continue to provide health care for their 
employees. Mom and pop businesses tell me they want to provide health 
care for their employees, but they cannot because of the expense of the 
policy. My own brother who runs a family restaurant is drowning in the 
surging costs and the exorbitant costs of health care insurance. This 
is a family business. We know personally what it costs when you are 
little, when you have a very small pool. People like my brother Frank 
are horrified at the thought of not being able to have insurance.
  As one of my small business constituents wrote, ``I have always 
wanted to take care of my employees and provide them with competitive 
benefits and wages, but each year it gets more and more difficult. Our 
health insurance costs were raised 43 percent last year and 34 percent 
this year.''
  Another constituent: ``Health care costs and insurance are draining 
us. Last year we had a 14 percent increase, and now the costs are going 
up 21 percent again. I have nowhere else to go.''
  So they go out of business because they cannot afford insurance.
  Today we bring forward a great option, association health plans, to 
help control these outrageous costs. Of the 41 million Americans with 
no health insurance, 60 percent of these are small entrepreneurs, their 
families and their employees.
  Why should the small businesses of this country not have the same 
right to band together as local labor unions do to purchase their 
insurance in large pools? That is all this is. It is just that simple. 
The more people you have in the pool, the cheaper the rates are for the 
insurance. It is a matter of equity. The little guys out there, the 
people that are struggling, why can they not have the same right, the 
same legal right to get together as labor unions? Why does there have 
to be a double standard, to allow labor unions to get together and do 
the smart thing, which they have been doing for 60 or 70 years, and 
using the union as the center post around which to buy their insurance, 
and allow associations as a center post around which to buy insurance 
for the small business people?
  It is simply a matter of equity, it is a matter of fairness, and the 
biggest argument that we have here is this: the larger the pool, the 
lower the rate. There is not anybody here on the floor today or in this 
country that can dispute that fact. My brother is a pool of two, him 
and his wife, at the restaurant.
  As the Chairman of the Small Business Committee, our nation's small 
business men and women tell me over and over that accessible and 
affordable health care is their number one priority.
  I have heard from thousands of small employers in America who have 
been pleading for options to help them manage their surging health care 
costs.
  Small business owners tell me regularly how they struggle to provide 
their workers health insurance, but each year they face double digit 
increases.
  Small business owners tell me they don't know how much longer they 
can continue to provide health care for their employees because each 
year the premiums rise, their coverage decreases and out of pocket 
expenses soar.
  ``Mom and Pop'' businesses tell me how they want to provide 
healthcare for their employees, but they cannot because of the expense 
for a policy that covers less then ten people.
  My own brother, who runs the family restaurant, is staggering at the 
exorbitant cost of health care insurance.
  They are horrified at the thought of leaving their workers high and 
dry without health insurance.
  As one of my small business constituents wrote, ``I've always wanted 
to take care of my employees and provide them with competitive benefits 
and wages, but each year it is getting more and more difficult. Our 
health insurance costs were raised 43 percent last year and 34 percent 
this year and there is nothing we can do about it.``
  Another constituent writes, ``Health care costs and insurance are 
draining us. Last year, we had a 14 percent increase. Now, the costs 
are going up 21 percent again. I have nowhere to go.''
  They are hopeless. Our entrepreneurs, whose ingenuity and hard work 
ethic have driven the American economy, have run out of options to 
battle this crisis. They need our help.
  And today, we bring forward a great option--Association Health 
Plans--to help them control these outrageous costs and continue 
offering vital health insurance to their employees and their families.
  Of the 41 million Americans with no health insurance, 60 percent are 
small entrepreneurs, their families and their employees.
  One of the reasons small businesses cannot afford health coverage for 
their employees is that they are unable to achieve the economies of 
scale and purchasing power of larger corporations and unions.
  Small businesses suffer from unequal treatment--what they want most 
is a level playing field when it comes to health care.
  Large corporations and labor unions use the purchasing power of 
thousands of employees to offer affordable health insurance to their 
workers.
  Small business owners have to find their insurance on an individual 
basis, making it very difficult and expensive to find affordable health 
coverage.

[[Page H5631]]

  The premiums that small businesses pay for health insurance are 
typically 20-30 percent higher than those of large companies or unions 
which can self-insure.
  Additionally, the administrative costs incurred by small businesses 
are likewise higher than those of large businesses; 25-27 percent 
versus 5-11 percent for large businesses.
  Association Health Plans can provide hope to those who lack health 
care by expanding the pool of people and bringing down costs by 15 to 
30 percent.
  For small businesses, that savings can mean the difference between 
providing health care or not.
  That savings can be the difference between profitability or losing 
money.
  In March, I held a Small Business Committee hearing on this very 
topic.
  The Washington State Farm Bureau testified to the success they have 
enjoyed operating an AHP for the last 3\1/2\ years.
  Traditionally, farmers have had great difficulty buying health 
insurance because their business is usually made up entirely of their 
family.
  Of those who have taken advantage of the Washington State Farm 
Bureau's AHP, 25 percent did not have health insurance prior to 
enrolling.
  Additionally, the Washington State Farm Bureau AHP has operated with 
a 99 percent retention rate.
  The proof is irrefutable. AHPs work.
  I urge all of my colleagues to support H.R. 660.
  Mr. KIND. Mr. Speaker, would the gentleman yield?
  Mr. MANZULLO. I yield to the gentleman from Wisconsin.
  Mr. KIND. Mr. Speaker, with all due respect to the gentleman from 
Illinois, my good friend, that is why our substitute is much better. We 
have one comprehensive pool that small businesses can buy into if they 
choose, therefore leveraging their bargaining power.
  Mr. MANZULLO. Mr. Speaker, reclaiming my time, that is a government-
run pool with a government-run subsidy, and that will end up like every 
other government-run program: it will bankrupt the country, and the 
small businessperson will be at the end of it.
  Try this. See if this works. This is so simple. If it works for the 
labor unions, why can it not work for Frank and Mary Ann Manzullo?
  Mr. KIND. Mr. Speaker, would the gentleman yield?
  Mr. MANZULLO. I yield to the gentleman from Wisconsin.
  Mr. KIND. Mr. Speaker, one of the strengths of the labor union is 
they are there representing the workers. They leverage the number of 
workers there, and they are representing their interests, and they 
oftentimes reduce wages in order to get a better health care plan.
  The SPEAKER pro tempore (Mr. Simpson). The time of the gentleman from 
Illinois (Mr. Manzullo) has expired.
  Mr. KIND. Mr. Speaker, I yield such time as she may consume for the 
purposes of a colloquy to the gentlewoman from Minnesota (Ms. 
McCollum), a former State legislator and a colleague on the Committee 
on Education and the Workforce.
  Ms. McCOLLUM. Mr. Speaker, I just want to make sure that I understand 
clearly the benefits of the Kind amendment in contrast to the 
underlying bill that we will be asked to vote on later.
  One of the concerns I had in committee, as the gentleman knows, was 
that gender discrimination by the coverage that can be allowed under 
the existing bill that we are going to be voting on would have a direct 
impact on women's health care coverage, especially during their 
reproductive years.
  So I would like to know, under the Kind plan, is cervical cancer 
screening covered if States cover it?
  Mr. KIND. Mr. Speaker, would the gentlewoman yield?
  Ms. McCOLLUM. I yield to the gentleman from Wisconsin.
  Mr. KIND. Mr. Speaker, it would be, because we respect existing State 
law.
  Ms. McCOLLUM. Mr. Speaker, would contraceptive coverage be allowed 
for women under the Kind plan?
  Mr. KIND. Again, it is not mandated unless the State offers that 
right now.
  Ms. McCOLLUM. If the State requires mammography screening, is that 
covered under the Kind amendment?
  Mr. KIND. That would be covered.
  Ms. McCOLLUM. If a State requires maternity coverage so it is not the 
drive-through maternity coverage that we have heard about in past 
years, is that covered?
  Mr. KIND. That would also be covered under our substitute.
  Ms. McCOLLUM. Is a minimum mastectomy stay also covered if States 
have that as part of their law?
  Mr. KIND. That would be covered.
  Ms. McCOLLUM. Would a minimum maternity stay be covered?
  Mr. KIND. That is right.
  Ms. McCOLLUM. So we have good reproductive health coverage for women 
while we are expecting. But also I found with many of the women I have 
spoken with, and their husbands too, they would like to make sure that 
women have access to gynecologists, sometimes as their primary care 
physicians, and many States allow this. Would the Kind amendment allow 
this to continue?
  Mr. KIND. Yes, it would.
  Ms. McCOLLUM. And does the Kind amendment also allow for second 
automatic referrals if States allow for second opinions?
  Mr. KIND. It would, indeed.
  Ms. McCOLLUM. Mr. Speaker, I thank the gentleman.
  Mr. ANDREWS. Mr. Speaker, would the gentlewoman yield?
  Ms. McCOLLUM. I yield to the gentleman from New Jersey.
  Mr. ANDREWS. Mr. Speaker, and it is also true, is it not, like I said 
to my colleague from Minnesota, that in the underlying bill that the 
majority offered, that each one of those State protections that the 
gentlewoman just outlined would be invalidated?
  Ms. McCOLLUM. Mr. Speaker, reclaiming my time, that is totally 
correct. In fact, many of these I was directly involved in in the State 
of Minnesota, because we had families, women, mothers, husbands, 
brothers, aunts and uncles come and say that this was basic health care 
coverage that their mothers needed, that their grandmothers needed, 
that their nieces needed.
  Mr. ANDREWS. Mr. Speaker, if the gentlewoman would further yield, 
what the gentlewoman is saying is that if the insurance industry 
chooses to keep these protections, it may; but if it chooses not to, 
the person who is covered under the plan does not get any of the 
coverage the gentlewoman just spoke of; is that correct?
  Ms. McCOLLUM. That is correct. And it is my understanding that 
insurance companies did not offer these coverages because they were, in 
their opinion, too expensive to cover, and that put gender 
discrimination at risk for women in their reproductive years.

                              {time}  1545

  Mr. KIND. Mr. Speaker, will the gentlewoman yield?
  Ms. McCOLLUM. I yield to the gentleman from Wisconsin.
  Mr. KIND. One other significant difference between our substitute and 
H.R. 660 is ours would have a uniform premium rate for all employees. 
Employees could not be discriminated against with higher premium rates 
because they happen to be sicker than their fellow employees in the 
workforce. Ours would establish a uniform insurance premium rate for 
them so there would not be that type of price discrimination against 
the sicker in our population.
  Ms. McCOLLUM. I thank the gentleman. I will be supporting the Kind 
amendment because if the gentleman from Wisconsin (Mr. Kind), and the 
gentleman from New Jersey (Mr. Andrews) and I all worked for the same 
employer, I would like to think that my basic health care coverage, 
including my reproductive health, would be covered.
  The SPEAKER pro tempore (Mr. Simpson). Does the gentleman from Ohio 
(Mr. Boehner) wish to reclaim the time in opposition?
  Mr. BOEHNER. I do, Mr. Speaker.
  The SPEAKER pro tempore. Without objection, the gentlemen from Ohio 
will control the time in opposition.
  There was no objection.
  Mr. BOEHNER. Mr. Speaker, I yield 4 minutes to the gentleman from 
Georgia (Mr. Isakson), a member of our committee.
  Mr. ISAKSON. Mr. Speaker, I have not had any time to make any phone 
calls. I did not read the think tank studies. I did, however, for 22 
years prior to coming to Congress, manage a company. When we left, we 
had 220 employees covered by an ERISA-qualified

[[Page H5632]]

group medical insurance coverage. And their salaries was paid and my 
salary was paid by the proceeds of sales made by independent 
contractors of which 90 percent were women.
  Under the independent contractor law and IRS requirements, we could 
not offer them group medical insurance and they had no ERISA 
protection. They were at the mercy of what was available.
  Now, those 220 for whom we provided group medical insurance, I would 
have to resent the fact that the illusion was made that an employer who 
had that many women as a percentage of their workforce would not 
provide gynecological benefits and other reproductive benefits 
available to women. Of course you would.
  Now what this bill does it does not preclude a mandated 48-hour stay 
any more than it precludes any other benefit. It offers the employer 
the option of offering it. It is true there is an exemption from the 
State requirement. It is untrue that it necessarily, on its face, takes 
that benefit away from a company.
  Who in here would believe for a moment that an employer who wants to 
offer a benefit to his employees would take away the very benefit that 
is most important to those employees? Facts are stubborn things.
  The fact of the matter is, 41 million Americans do not have health 
insurance. Now there are contributing reasons to that. But one of the 
main contributing reasons are those independent contractors, small 
business people, laborers, people who make the money that pay the taxes 
who have no accessibility to health insurance.
  Now, I have lobbied on both sides about this and I care about this 
very deeply. I have a campaign staff right now and I am providing 
insurance to those few individuals I have employed because I know how 
important it is to have it, and I know how expensive it is to go out 
and get it on an individual basis, even though they are basically 
young. But understand this, this bill does not preclude a health care 
benefit for women that is mandated in State law from being offered.
  It gives the choice for companies to put together a cafeteria-type of 
plan which may or may not include it, but do not sell those employers 
short that they would not offer a benefit that the very basis of their 
employees have to have.
  Secondly, as I understand it, the cost of this is about $354 million 
in terms of CBO's estimate of H.R. 660 and $50 billion in terms of the 
substitute. I would say this, if we can make an investment that is 
$49,442,000,000 less expensive to offer insurance to 41 million 
Americans or a lot of them, we estimate 8 to 10, to provide benefits to 
give them health care that they do not have, then we should vote for 
the underlying bill. We should reject the substitute, and we should 
reject any false perception that this is taking away the integrity of a 
business in offering a qualified plan to their qualified employees.
  Mr. BOEHNER. Mr. Speaker, will the gentleman yield?
  Mr. ISAKSON. I yield to the gentleman from Ohio.
  Mr. BOEHNER. Mr. Speaker, the gentleman referred to his ability to 
offer a package under ERISA to your 220 employees on the business you 
managed, but what about those 900 real estate agents that work as 
independent contractors for this company, who had to go out and fight 
on their own, day in and day out, to get a policy for themselves or for 
their family? And under this bill, if I am correct, the National 
Association of Realtors or the Georgia Realtor Association could offer 
a group plan to their real estate agents which would bring their costs 
down substantially.
  Mr. ISAKSON. Mr. Speaker, the gentleman is absolutely correct, and if 
I may take the remainder of the time to tell the gentleman that in that 
exact scenario, since I could not offer those benefits because they 
were independent contractors, but because I cared very deeply about my 
independent contractors and the quality of life they had, I tried to 
scratch and find those.
  What this bill does, it opens up an opportunity for employers who 
have independent contractors as their employees, to take the benefits 
of pooling and provide for those independent contractors the benefit 
that ERISA guarantees the opportunity to provide in terms of the 
employees that company has. This is an important step forward for 41 
million Americans.
  Mr. KIND. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, again, we state that our substitute is fully paid for 
under the budget resolution, so we are not asking for new money. And 
with due respect to my friend from Georgia, we would hope a lot of 
employers would continue to offer the basic health care coverage that 
exists today. But the reason there were so many State battles 
throughout the country in State legislatures is because many of them 
were not. That is why these hard-fought battles need to be respected, 
and our substitute does.
  Mr. Speaker, I yield 3 minutes to the gentlewoman from the Virgin 
Islands (Mrs. Christensen).
  Mrs. CHRISTENSEN. Mr. Speaker, I thank the gentleman for yielding me 
time.
  Mr. Speaker, I rise today in opposition to H.R. 660, and in support 
of the Democratic substitute. As a member of the Committee on Small 
Business, a physician and former small business owner, the issue of 
meeting the health care needs of the small business community is a 
priority for me and it is alarming that their employees represent 60 
percent of our Nation's uninsured.
  Whereas, I commend my colleagues on both sides of the aisle for their 
work in bringing legislation to the floor, I cannot support H.R. 660. 
The Congressional Budget Office estimates that AHPs could insure 
additional 330,000 Americans, but would drive up health care costs for 
the rest of the Nation to such an extent that 1 million presently 
insured Americans would be unable to afford coverage.
  H.R. 660 would exempt AHPs from State insurance mandates regarding 
the coverage of such basic and life saving treatments as maternity 
care, emergency room visits, cancer screening and diabetes coverage, 
leaving it to individual plans to decide. More than 450 national and 
local organizations have joined in opposing Federal legislation that 
would allow associated health plans to operate without State oversight.
  The American Diabetes Association has said it would be a disaster for 
people with diabetes. The American Nurses Association argued that by 
removing coverage for cost effective benefits such as well-child care, 
AHPs created by H.R. 660 could drive up the cost of health care. States 
have enacted safeguards to ensure that the health insurance plans 
offered to small employers and their families are fairly priced, cover 
a specific set of benefits, that they can not cherrypick.
  Under the proposed legislation, small employers who have joint AHPs 
could lose these important safeguards. The Kind-Andrews Democrat 
substitute addresses these concerns. It would use the Federal Employee 
Health Benefits Program as a base benefit package without superseding 
State laws and regulations. Most importantly, the Kind-Andrews 
substitute offers incentives and subsidies to firms of fewer than 50 
employees and provides premium subsidies for employees who are below 
200 percent of poverty. The Kind-Andrews substitute would make a real 
difference in covering the uninsured while maintaining consumer, 
personal and professional rights.
  This is a good approach and a far better bill that can really do a 
lot to cover more than half of the 41 million uninsured.
  Mr. Speaker, I urge support for the Kind-Andrews substitute and urge 
a no vote on H.R. 660.
  Mr. BOEHNER. Mr. Speaker, I yield 1 minute to the gentleman from 
Pennsylvania (Mr. Shuster).
  Mr. SHUSTER. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, I rise in opposition today to the substitute and in 
support of H.R. 660, the Small Business Health Fairness Act.
  Of the more than 41 million Americans that are uninsured, almost 60 
percent of those individuals are from families that are employed by 
small businesses that cannot afford to pay health benefits. We can no 
longer stand by as health insurance premiums for small businesses are 
increasing at double digit rates. Their choices of plans and benefits 
continue to decrease.

[[Page H5633]]

  The passage of the Small Business Health Fairness Act would be an 
important step in providing access to affordable health insurance for 
millions of workers and their family, helping to stop the growing 
numbers of uninsured Americans. As a former small business owner for 13 
years, I struggled with the skyrocketing costs of health care benefits. 
Employers, small business owners must decide whether to scale back or 
cut coverage altogether. By allowing businesses to join together in 
associated health plans, they will have the same opportunities that 
large businesses and unions have. Hard working Americans employed by 
small businesses deserve access to quality and affordable health care 
too.
  Mr. Speaker, I would like to commend the gentleman from Ohio (Mr. 
Boehner), the gentleman from Illinois (Mr. Manzullo) and the gentleman 
from Kentucky (Mr. Fletcher) for their outstanding leadership, and as a 
small business owner, I urge my colleagues to support H.R. 660.
  The SPEAKER pro tempore. The gentleman from Ohio (Mr. Boehner) has 8 
minutes remaining. The gentleman from Wisconsin (Mr. Kind) has 5 
minutes remaining.
  Mr. BOEHNER. Mr. Speaker, I yield 2 minutes to the gentleman from 
Texas (Mr. Burgess)
  Mr. BURGESS. Mr. Speaker, today the United States is confronted with 
an increasing number of Americans who are without health insurance. The 
Census Bureau estimates that 41.2 million Americans are without 
insurance and the numbers continue to rise.
  Remarkably, the policy makers here in Washington have all too often 
made attempts to remedy this situation with convoluted policies that 
have just exacerbated this very serious problem.
  The bill before us today, H.R. 660, will make great strides in 
addressing this problem by not imposing a top-down Washington-type 
solution, but instead giving small businesses in Flower Mound, Texas 
and cities and towns, as in all of our districts, the ability to make 
responsible health care coverage decisions for their employees.
  H.R. 660 will make American families without health insurance and 
help small businesses struggling with the high cost of insurance for 
their employees. As the owner of a medical practice in Lewisville, 
Texas, I understand how difficult it can be to provide health care 
insurance to your employees. Only 10 percent of businesses with 50 or 
fewer employees offer their employees health care coverage. This number 
is low because group coverage for small businesses is costly and 
heavily regulated.
  H.R. 660 will give retailers, wholesalers, printers, medical 
practices, churches and other businesses the ability to purchase health 
insurance through associated health plans by freeing them from 
restrictive mandates and maximizing their ability to spread risks 
across a large number of employees. I believe this bill will decrease 
the number of uninsured in the United States, but I am afraid that the 
best our friends on the other side of the aisle can come up with in the 
form of this substitute is a continuation of the Washington, D.C. style 
solution that does not trust small business owners with decisions about 
what is best for their employees.
  The substitute places more mandates on small business and does 
nothing to increase access to health insurance. By stacking requirement 
on top of requirement, it is clear that they do not trust Americans to 
make their own health decisions.
  Mr. Speaker, the Democratic substitute is just another in a long line 
of unrealistic health care reform proposals that they simply cannot 
relinquish. I urge my colleagues to vote against the substitute and 
vote in favor of passage of H.R. 660.
  Mr. BOEHNER. Mr. Speaker, I yield 1 minute to the gentleman from 
South Bend, Indiana (Mr. Chocola).
  Mr. CHOCOLA. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, before coming to Congress, I was a small business owner. 
Now that I am a member of Congress, I am on the Committee on Small 
Business. And not a day goes by that I do not hear from a constituent 
at home or someone talking to the Committee on Small Business that is a 
small business owner about the horrors of trying to provide health care 
to their employees.
  We in government cannot make people successful. We cannot make 
businesses successful. But what we can do is create an environment that 
gives people and businesses the opportunity for success. In creating an 
environment where small business owners can join together with common 
interest on a nationwide basis and go out and provide health care for 
their employees to meet their particular employees needs, is exactly 
what we should be doing as Members of Congress.

                              {time}  1600

  I think that we have to pass this bill because the bottom line is 
that the people who have to live with the reality of providing health 
care for their employees will encounter lower costs and greater access 
to the health care coverage they wish to provide for their employees. 
So I urge my colleagues to vote in favor of H.R. 660 and against the 
substitute.
  Mr. KIND. Mr. Speaker, I yield 2 minutes to the gentlewoman from New 
York (Mrs. McCarthy), a distinguished member of the Committee on 
Education and the Workforce.
  Mrs. McCARTHY of New York. Mr. Speaker, I thank my colleague from the 
Committee on Education and the Workforce for yielding me this time and 
for introducing this bill, because this substitute is actually the 
answer to what we are looking for, and it is also paid for.
  Let me say what this amendment will do, the substitute. It provides 
small employees the same access to health benefits that Federal 
employees have. All small business employees and employers are offered 
coverage. It minimizes the adverse selection. ``The Secretary shall 
establish an initial open enrollment period and thereafter an annual 
enrollment period.'' It uses state-licensed insurers without preempting 
State laws.
  For some reason, I thought basically, especially on the other side of 
the aisle, that we never wanted to preempt State laws.
  This amendment provides a minimum benefit package similar to Federal 
employees. All participating insurers must offer benefits equal to or 
greater than the options offered to Federal employees. It also provides 
for affordable small employer premiums with premium assistance.
  This is the answer to help our small businesses. And again I will 
say, on the main bill, when we have Republican and Democratic Governors 
throughout this country saying this is not the answer, when we have 
State attorneys general saying this is not the answer, and that this 
substitute is the answer, then I believe this can help our small 
businesses. We all want to do that.
  So I would say to my colleagues here on the right, and certainly the 
right side and the left side of the aisle, that this substitute is the 
answer to what our Governors would like, certainly our State attorneys 
general would like. It would help the people and not take away the 
minimum health care benefits that we have been fighting for for gosh 
knows how many years.
  I will stress again and again that the only reason that we have 
decent basic health care coverage in our States, 48 of them, is because 
they realized that was the way to go.
  Mr. BOEHNER. Mr. Speaker, I am pleased to yield 2 minutes to the 
gentleman from Georgia (Mr. Gingrey), a member of our committee.
  Mr. GINGREY. Mr. Speaker, I rise in strong support of the Small 
Business Health Fairness Act, H.R. 660, and against the amendment.
  By anybody's estimate, 41 million uninsured Americans is entirely too 
many, and the Bureau of the Census has estimated that over 60 percent 
of those uninsured Americans are employed. They are not unemployed. 
They are just working for small businesses, small employers that cannot 
afford to go into that small market and purchase health insurance, 
which is rising at least 14 percent a year. The AHPs, with a minimum 
pool of 1,000 or more employees, spreads the risk, and it gives them 
the opportunity to get that same volume discount that the Fortune 500 
companies and the large labor unions enjoy.
  But maybe the most important savings and the reason that the premiums 
are lower is that they are not bound now by each and every of the 50 
States with their multiple mandates. The

[[Page H5634]]

other side wants to talk about how unfair it is that these plans could 
not include a routine screening mammogram or could not exclude the fact 
that some plans have so-called drive-through deliveries, and that 
patients might not be able to stay overnight when they had a radical 
mastectomy. Mr. Speaker, these plans that are being offered under ERISA 
protection have all of these provisions in them.
  What we are talking about, and I know this as a physician member of 
the State legislature, and the demands to include one mandate after 
another, things like coverage or screening for chronic adult fatigue 
syndrome, or carpal tunnel syndrome, or a blood test for this or a 
blood test for that, pretty soon they will be requiring routine 
screening for fissle phosphate levels in everybody's blood. It just 
goes on and on and on, and it becomes absolutely ridiculous and 
prohibitively expensive.
  So that is why we need this bill. That is why we need these AHPs. I 
think we will insure not 330,000 more people, but probably over 2 
million.
  Mr. KIND. Mr. Speaker, I yield 2 minutes to the gentleman from Texas 
(Mr. Hinojosa), a distinguished member of the Committee on Education 
and the Workforce.
  (Mr. HINOJOSA asked and was given permission to revise and extend his 
remarks.)
  Mr. HINOJOSA. Mr. Speaker, I rise today in strong opposition to H.R. 
660, the Small Business Health Fairness Act. Like many of my 
colleagues, I have heard from numerous industry groups, health plans, 
medical associations, and, most importantly, my constituents on whether 
or not AHPs are the best solution to address the growing number of 
uninsured in our Nation. I am particularly concerned about finding 
workable solutions for small business employers.
  Like many of my colleagues, my district in south Texas is built on 
the foundation of small businesses. They employ a large percentage of 
the workforce in the Rio Grande Valley. Most employers are faced with 
difficult choices on how to offer loyal employees the benefit they 
deserve or risk losing them to larger companies in larger cities. The 
high cost of health insurance is extremely burdensome for these small 
firms, and that is why we are here today.
  H.R. 660 is a well-intended bill. Many of the 41 million Americans 
without health insurance are employed by small businesses. If Congress 
can find a way to help these employers provide health insurance for 
their workforce, we will be well on our way to reducing the number of 
uninsured in this country. But in my view, AHPs are not the way to do 
it. AHPs will offer minimal coverage, sufficient only for the young and 
the healthy. Our workforce will have none of the protections that State 
benefit mandates offer. They will have no assurance against fraud or 
premium inflation and no assurance that Federal oversight by the 
Department of Labor will even be conducive to fair handling of 
disputes. AHPs create an entirely new health care crisis, with 8.5 
million newly underinsured Americans.
  As a member of a heavily Hispanic border district, I am particularly 
concerned about what this will mean for the diagnosis and the treatment 
of diabetes, a disease that strikes many of my Hispanic constituents.
  Mr. Speaker, over 11 million Americans have diagnosed diabetes, while 
another 6 million have diabetes but don't know it.
  Diabetes hits minority populations especially hard. Untreated, this 
disease leads to end-stage renal failure, blindness, amputations and 
over 200,000 deaths annually. However, it has been demonstrated that 
appropriate use of diabetes medications, equipment, supplies, and 
education can dramatically reduce the incidence and impact of 
complications associated with diabetes. President Bush surely knew this 
when he was Governor of Texas and signed into law the diabetes coverage 
mandated currently in effect in Texas.
  My principal concern is that the AHP legislation before us today 
preempts the State benefit mandates in Texas and 45 other States, your 
home States, for coverage of diabetes supplies and education. The 
amendment that the gentleman from Michigan, Mr. Kildee and I offered, 
unsuccessfully, in committee would have corrected this dangerous 
omission. We also tried, again without success, to have the amendment 
made in order during floor consideration.
  By refusing to include a requirement that AHPs adhere to State 
coverage laws associated with diabetes, we will be leaving millions of 
people with diabetes to fend for themselves. It is not a matter of cost 
effectiveness; it is a matter of right and wrong.
  Mr. Speaker, the Democratic substitute offers small business 
employers and their workers a fair alternative. It establishes a small 
employer health benefit plan with minimum coverage similar to the Blue 
Cross/Blue Shield standard plan.
  I urge my colleagues to support the Kind-Andrews substitute, and if 
that substitute is defeated, to vote against H.R. 660.
  Mr. BOEHNER. Mr. Speaker, I am pleased to yield 1 minute to the 
gentleman from Texas (Mr. Sam Johnson), the chairman of the 
Subcommittee on Employer-Employee Relations, the gentleman who 
shepherded this bill through our committee.
  (Mr. SAM JOHNSON of Texas asked and was given permission to revise 
and extend his remarks.)
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I rise in opposition to this 
amendment. We have been hearing all day that it is going to create all 
this stuff, and it is not going to create anything. Our bill allows for 
anything to be covered, and it will all be covered.
  This amendment creates an incredibly complex $50 billion government-
run program. The program sets up brand-new health care subsidies, but 
only for certain small businesses and some workers. Unlike the Federal 
employee plan, the new program would be subject to thousands of State 
mandates. As we have heard time and again, those mandates make up at 
least 15 percent of the rising cost of health insurance.
  Now, here is the real kicker. In order to qualify for the subsidy, 
employers are required to pay at least 50 percent of the cost for the 
care of their employees. The Democrat substitute will raise health care 
costs for small employers and then spend $50 billion to subsidize it.
  AHPs are going to give everybody the ability to obtain insurance. Mr. 
Speaker, I urge rejection of this substitute.
  Mr. KIND. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, this is a very important debate that we are having 
today. Just to correct one of the things just stated by the previous 
speaker, the Department of Labor, just like H.R. 660, would be in 
charge of administering the substitute plan that we have before us 
today. They would actually contract with state-licensed insurers to 
offer basic insurance plans.
  The significant difference, though, is that we are asking everyone to 
play on a level playing field, to respect States' rights, and to not 
have Federal preemption. Because for those who believe in the free 
market system, which I think most of us do, it can only work if 
everyone is playing by the same rules instead of trying to establish a 
two-tier system. And that, I believe, is going to be the best hope we 
have, through price competition, of keeping a check on rising premium 
costs.
  There has been a lot of citing of statistics throughout the 
afternoon, a lot from the Congressional Budget Office, and so I will 
provide for the Record a letter from the Congressional Budget Office 
stating their analysis of H.R. 660.
  Mr. Speaker, I would encourage our colleagues, in conclusion, to 
support the substitute, one that does provide an opportunity for more 
small employers to provide health care coverage to their employees, one 
that respects State law, one that provides some premium assistance so 
they can afford it. I encourage support of the substitute and a ``no'' 
vote on H.R. 660.
  Mr. Speaker, the letter referred to above is as follows:

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                    Washington, DC, June 18, 2003.
     Hon. George Miller,
     Senior Democratic Member, Committee on Education and the 
         Workforce, House of Representatives, Washington, DC.
       Dear Congressman: This letter responds to your request of 
     June 17, 2003, for additional information on CBO's estimate 
     of the impact of H.R. 660 on enrollment in the health 
     insurance markets for small employers and self-employed 
     workers. We expect that the effects of the bill would be 
     fully reflected in those markets by 2008, and all of the 
     following numbers refer to that year.
       Under current law, CBO estimates that approximately 30.1 
     million people will be enrolled in health insurance offered 
     by plans in the state-regulated small group insurance

[[Page H5635]]

     market. Under the bill, CBO estimates that combined 
     enrollment in state-regulated plans and association health 
     plans (AHPs) would rise by about 550,000 people to a total of 
     30.7 million people. Of this, approximately 23.2 million 
     people would retain coverage in the state-regulated market. 
     About 7.5 million people would be enrolled in AHPs, including 
     the additional 550,000 people who would not have been covered 
     by any small-employer plan under current law, and 6.9 million 
     people who would have been covered in the state-regulated 
     market.
       The same consideration apply to self-employed people. We 
     estimate that approximately 4.7 million people will be 
     enrolled in state-regulated coverage purchased by self-
     employed workers under current law. Under H.R. 660, CBO 
     estimates that combined enrollment through state-regulated 
     insurers and AHPs would rise by about 70,000 people to 4.8 
     million people. Of this, approximately 3.8 million people 
     would retain state-regulated coverage. About 1.0 million 
     people would obtain coverage through AHPs, including the 
     additional 70,000 people who would not have been insured 
     under current law, and 0.9 million people who would have been 
     covered in the state-regulated market.
       If you would like additional information on this estimate, 
     the CBO staff contact is Stuart Hagen, who can be reached at 
     225-2644.
           Sincerely,
                                              Douglas Holtz-Eakin,
                                                         Director.

  Mr. BOEHNER. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, we have 41 million Americans who do not have health 
insurance. As I said before, Congress has been talking about this for a 
decade. And while the underlying bill will not solve the entire 
problem, it will help in addressing the needs of the uninsured.
  As we heard before, some 60 percent either work for or have a 
dependent who works for a business, and so they have jobs. We are not 
talking about the poor here, because the poor get covered by Medicaid. 
We are talking about people who go to work every day, but they happen 
to work in an industry that maybe does not traditionally cover health 
insurance, or they work for a small employer who just cannot afford it 
because they are locked in a small State insurance pool.
  We know what the cost of health insurance and these increases do. It 
creates more uninsured. In the Wall Street Journal today, CALPERS, the 
country's largest health plan, is set to increase premiums on an 
average of 17 percent for the next year, a 17 percent increase from the 
largest health care plan in the country. It is time that we step up and 
take action.
  The underlying bill will in fact help small businesses create more 
coverage for more people. Small businesses. And who are small 
businesses? How about the dry cleaner down the street or the 
convenience store? How about the farmers in America today who have to 
go fend for themselves as an individual in the marketplace? They may be 
by themselves, maybe just family coverage. How about the real estate 
agents we talked about before, independent contractors, and others who 
may be self-employed that have to go fight to get insurance in very 
small risk pools in many States? If we allow them to come together with 
large State associations, national associations, and to group 
themselves, they can have real coverage for a much more reasonable 
cost.
  This is the right thing to do today, to help those who pay high 
premiums; and it is also the right thing to do to help those who have 
no insurance at all. Those plans that are out there covered under ERISA 
are the Cadillac of plans in the country. Why not let small employers 
have the same advantage.
  The SPEAKER pro tempore (Mr. Simpson). All time for debate on the 
amendment has expired.
  Pursuant to House Resolution 283, the previous question is ordered on 
the bill and on the amendment offered by the gentleman from Wisconsin 
(Mr. Kind).
  The question is on the amendment in the nature of a substitute 
offered by the gentleman from Wisconsin (Mr. Kind).
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. KIND. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The vote was taken by electronic device, and there were--yeas 183, 
nays 238, answered ``present'' 1, not voting 12, as follows:

                             [Roll No. 294]

                               YEAS--183

     Abercrombie
     Ackerman
     Alexander
     Allen
     Andrews
     Baca
     Baldwin
     Ballance
     Becerra
     Bell
     Berkley
     Berman
     Berry
     Bishop (GA)
     Bishop (NY)
     Blumenauer
     Boswell
     Boucher
     Brady (PA)
     Brown (OH)
     Brown, Corrine
     Capps
     Capuano
     Cardoza
     Clay
     Clyburn
     Cooper
     Crowley
     Cummings
     Davis (AL)
     Davis (CA)
     Davis (FL)
     Davis (IL)
     Davis (TN)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Doyle
     Edwards
     Emanuel
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank (MA)
     Frost
     Gordon
     Green (TX)
     Grijalva
     Harman
     Hill
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley (OR)
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind
     Kleczka
     Kucinich
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Lynch
     Majette
     Maloney
     Markey
     Marshall
     Matheson
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Michaud
     Millender-McDonald
     Miller (NC)
     Miller, George
     Mollohan
     Moore
     Murtha
     Nadler
     Napolitano
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Peterson (MN)
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rodriguez
     Ross
     Rothman
     Roybal-Allard
     Ruppersberger
     Rush
     Ryan (OH)
     Sabo
     Sanchez, Linda T.
     Sanchez, Loretta
     Sanders
     Sandlin
     Schakowsky
     Schiff
     Scott (GA)
     Scott (VA)
     Serrano
     Sherman
     Skelton
     Slaughter
     Snyder
     Solis
     Spratt
     Stark
     Stenholm
     Strickland
     Stupak
     Tanner
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Tierney
     Towns
     Udall (CO)
     Udall (NM)
     Van Hollen
     Visclosky
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                               NAYS--238

     Aderholt
     Akin
     Bachus
     Baker
     Ballenger
     Barrett (SC)
     Bartlett (MD)
     Barton (TX)
     Bass
     Beauprez
     Bereuter
     Biggert
     Bilirakis
     Bishop (UT)
     Blackburn
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonner
     Bono
     Boozman
     Boyd
     Bradley (NH)
     Brady (TX)
     Brown (SC)
     Brown-Waite, Ginny
     Burgess
     Burns
     Burr
     Burton (IN)
     Buyer
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Cardin
     Carson (OK)
     Carter
     Case
     Castle
     Chabot
     Chocola
     Coble
     Cole
     Collins
     Cox
     Cramer
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal (GA)
     DeLay
     DeMint
     Diaz-Balart, L.
     Diaz-Balart, M.
     Dooley (CA)
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Emerson
     English
     Everett
     Feeney
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gibbons
     Gilchrest
     Gillmor
     Gonzalez
     Goode
     Goodlatte
     Goss
     Granger
     Graves
     Green (WI)
     Greenwood
     Gutknecht
     Hall
     Harris
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hensarling
     Herger
     Hobson
     Hoekstra
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hyde
     Isakson
     Issa
     Istook
     Janklow
     Jenkins
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline
     Knollenberg
     Kolbe
     LaHood
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Manzullo
     McCotter
     McCrery
     McHugh
     McInnis
     McIntyre
     McKeon
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Moran (KS)
     Moran (VA)
     Murphy
     Musgrave
     Myrick
     Nethercutt
     Neugebauer
     Ney
     Northup
     Norwood
     Nunes
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pearce
     Pence
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Porter
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Renzi
     Reynolds
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Smith (MI)
     Smith (TX)
     Stearns
     Sullivan
     Sweeney
     Tancredo
     Tauscher
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Tiberi
     Toomey
     Turner (OH)
     Turner (TX)
     Upton
     Velazquez
     Vitter
     Walden (OR)
     Walsh
     Wamp
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)
     Young (FL)

                        ANSWERED ``PRESENT''--1

       
     Baird
       

[[Page H5636]]



                             NOT VOTING--12

     Carson (IN)
     Conyers
     Costello
     Gephardt
     Gingrey
     Gutierrez
     Hastings (FL)
     Neal (MA)
     Smith (NJ)
     Smith (WA)
     Souder
     Tiahrt


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (Mr. Simpson) (during the vote). Members are 
advised that 2 minutes remain in this vote.

                              {time}  1632

  Messrs. OSE, BLUNT, NEUGEBAUER and OXLEY 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.
  Stated against:
  Mr. GINGREY. Mr. Speaker, on rollcall No. 294, the voting machine did 
not properly record my vote. I would have voted ``nay.''
  The SPEAKER pro tempore. 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.


        Motion to Recommit Offered by Mrs. McCarthy of New York

  Mrs. McCARTHY of New York. Mr. Speaker, I offer a motion to recommit.
  The SPEAKER pro tempore. Is the gentlewoman opposed to the bill?
  Mrs. McCARTHY of New York. Yes, Mr. Speaker, in its present form.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:

       Mrs. McCarthy of New York moves to recommit the bill H.R. 
     660 to the Committee on Education and the Workforce with 
     instructions to report the same back to the House forthwith 
     with the following amendment:
       Page 14, insert after line 17 the following:
       ``(e) Protection of Existing Group Health Plan Coverage.--
       ``(1) In general.--The requirements of this section are not 
     met with respect to an association health plan if--
       ``(A) during the 1-year period preceding the date of the 
     enactment of the Small Business Health Fairness Act of 2003, 
     any participating employer of the plan maintained another 
     group health plan providing a type of coverage described in 
     paragraph (2), and
       ``(B) such association health plan does not provide such 
     type of coverage.
       ``(2) Types of coverage.--A type of coverage is described 
     in this paragraph if it consists of--
       ``(A) coverage for breast cancer screening and tests 
     recommended by a physician,
       ``(B) coverage for the expenses of pregnancy and 
     childbirth,
       ``(C) coverage for well child care, or
       ``(D) direct access to those obstetric or gynecological 
     services which are provided by the plan.
       ``(3) Predecessors and controlled groups.--For purposes of 
     this subsection, a predecessor of an employer or any member 
     of the employer's controlled group shall be treated as the 
     employer. For purposes of this paragraph, the term 
     `controlled group' means any group treated as a single 
     employer under subsection (b), (c), (m), or (o) of section 
     414 of the Internal Revenue Code of 1986.''

  Mrs. McCARTHY of New York (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 
gentlewoman from New York?
  There was no objection.
  The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from 
New York (Mrs. McCarthy) is recognized for 5 minutes in support of her 
motion.
  Mrs. McCARTHY of New York. Mr. Speaker, I yield myself 2 minutes.
  I rise in strong support for the motion to recommit. This motion will 
prohibit employers from joining association health plans if it allows 
for a reduction in coverage for breast cancer services. A vote against 
this motion and for the bill will allow employers that already cover 
basic mammograms to drop this coverage.
  Mr. Speaker, a reduction in health insurance in any form is a 
reduction in health care. It is just that simple. States know that 
without guaranteeing basic health care, patients will not get the 
services they desperately need. They will only seek help under extreme 
circumstances, requiring more expensive medical treatment for their 
disease, putting their lives and the lives of their children at risk.
  According to the American Cancer Society, over 211,000 new cases of 
breast cancer will be diagnosed in the United States this year alone. 
Two thousand of those cases will be in my State. Breast cancer is 
potentially fatal, but early detection through mammogram screenings is 
the key to proper treatment of this disease. Timely screening could 
prevent approximately 15 percent to 30 percent of all deaths from 
breast cancer among women over the age of 40. Currently, New York and 
47 other States require insurance companies to cover mammogram 
screenings. However, under this bill, associated health plans would be 
exempt from having to provide this critical benefit in these 48 States. 
This motion would at least present a reduction of health care services 
to those who already have this important benefit.
  As a nurse, I cannot believe this House, after hearing from cancer 
survivors for years about the need for treatments and screenings to 
beat this deadly disease, is now going to be rolling back these patient 
protections.
  Today before you vote, truly realize a vote against this motion to 
recommit will harm millions of patients across this country.
  Mr. Speaker, I yield 1\1/2\ minutes to the gentlewoman from Minnesota 
(Ms. McCollum).
  Ms. McCOLLUM. Mr. Speaker, I am proud to join my colleagues today in 
offering a motion to recommit to protect the coverage that women and 
children currently have today. This motion simply states that 
associated health plans cannot stop coverage for well-child visits, 
maternity or other types of visits that are vital to women's and 
children's health care. Children deserve a healthy start in life. 
Coverage to promote healthy children is required in Minnesota and 30 
other States. This coverage ensures that children have regular visits 
to pediatricians to get immunizations and preventive care. Why would we 
not want to protect our children?
  This coverage is particularly important because getting a good start 
in life can prevent avoidable illnesses, identify serious disabilities, 
and reduce future health care costs. We have all seen the importance of 
childhood immunizations. For example, today polio has been eradicated 
because of the determination and commitment our country had to immunize 
children when they were young. Regular doctor visits for newborns is 
absolutely critical. Thirty-three children are born every day with 
severe hearing loss. If caught early enough through preventive doctor 
visits, this screening can make a difference. It can make a difference 
in their lives and a difference in the money spent on special 
education.
  This motion ensures that families who currently have well-child 
visits and maternity coverage will not lose it tomorrow. We should be 
ensuring access to quality, comprehensive health care for our Nation's 
working families and not rolling back basic coverage. I urge my 
colleagues to support the motion to recommit.
  Mrs. McCARTHY of New York. Mr. Speaker, I yield 30 seconds to the 
gentlewoman from California (Ms. Woolsey).
  Ms. WOOLSEY. Mr. Speaker, few health services are as important to a 
woman as an annual mammogram. Early detection is necessary as a weapon 
in our fight against breast cancer. Breast cancer has already touched 
far too many families. I simply cannot accept the idea of even one 
woman in any of our districts forgoing her annual mammogram and then 
later being diagnosed with advanced breast cancer because her 
association health plan does not cover mammograms.
  Support this motion to recommit. Help save the lives of our wives, 
mothers, daughters, and sisters. The women of this country are counting 
on your vote.
  Mrs. McCARTHY of New York. Mr. Speaker, I yield the balance of my 
time to the gentleman from New Jersey (Mr. Andrews).
  The SPEAKER pro tempore. The gentleman from New Jersey is recognized 
for 1 minute.
  Mr. ANDREWS. Mr. Speaker, if the underlying bill becomes law, 4 
million American women who presently are guaranteed breast cancer care 
will only have it if the insurance companies they move to decide to let 
them have it. We can change that by voting ``yes'' on this motion to 
recommit. The question is simple: Do we want our mothers and our 
sisters and our daughters and our

[[Page H5637]]

wives to rely upon the whims of the insurance industry or the power of 
our votes? If you want to guarantee that this care goes forward, the 
only way to do it is to vote ``yes'' on the motion of the gentlewoman 
from New York. I urge a ``yes'' vote.
  Mr. BOEHNER. Mr. Speaker, I rise in opposition to the motion to 
recommit.
  The SPEAKER pro tempore. The gentleman from Ohio is recognized for 5 
minutes.
  Mr. BOEHNER. Mr. Speaker, the underlying bill seeks to address the 
needs of 41 million Americans who have no health insurance. What the 
motion to recommit does is essentially mandate coverage on association 
health care plans. If you have no health insurance, a mandate will do 
you no good. What we seek to do with the underlying bill is to cover 
more people. Sixty percent of the people who are uninsured either work 
in a small business or have a relative that works in a small business. 
What we are trying to do here is level the playing field so that small 
businesses can buy health insurance for their employees just like large 
companies and unions can do today.
  Under ERISA, there are but several small mandates. We do not mandate 
every coverage. But if you ask employees of large companies and you ask 
employees and members of large unions, they will tell you that they 
have the best health care plans in America. These large plans in our 
country have great benefits. They cover virtually all the illnesses and 
all the diseases that are there. But they are allowed to design one 
benefit issue for each of these mandates that covers all 50 States. It 
may not read the same in every particular State. What we are trying to 
do with the underlying bill is to give small businesses the same 
advantage in the marketplace that big businesses have today.
  I would urge my colleagues at this hour, reject the motion to 
recommit and vote for the final passage of this 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

  Mrs. McCARTHY of New York. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. Pursuant to clause 9 of rule XX, the Chair 
will reduce to 5 minutes the minimum time for any electronic vote on 
the question of final passage.
  The vote was taken by electronic device, and there were--ayes 192, 
noes 230, not voting 12, as follows:

                             [Roll No. 295]

                               AYES--192

     Abercrombie
     Ackerman
     Alexander
     Allen
     Andrews
     Baca
     Baird
     Baldwin
     Ballance
     Becerra
     Bell
     Berkley
     Berman
     Berry
     Bishop (GA)
     Bishop (NY)
     Blumenauer
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (OH)
     Brown, Corrine
     Capps
     Capuano
     Cardin
     Cardoza
     Carson (OK)
     Clay
     Clyburn
     Cooper
     Cramer
     Crowley
     Cummings
     Davis (AL)
     Davis (CA)
     Davis (FL)
     Davis (IL)
     Davis (TN)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Doyle
     Edwards
     Emanuel
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank (MA)
     Frost
     Gordon
     Green (TX)
     Grijalva
     Gutierrez
     Hall
     Harman
     Hill
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley (OR)
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind
     Kleczka
     Kucinich
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Lucas (KY)
     Lynch
     Majette
     Maloney
     Markey
     Marshall
     Matheson
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Michaud
     Millender-McDonald
     Miller (NC)
     Miller, George
     Mollohan
     Moore
     Murtha
     Nadler
     Napolitano
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Peterson (MN)
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rodriguez
     Ross
     Rothman
     Roybal-Allard
     Ruppersberger
     Rush
     Ryan (OH)
     Sabo
     Sanchez, Linda T.
     Sanchez, Loretta
     Sanders
     Sandlin
     Schakowsky
     Schiff
     Scott (GA)
     Scott (VA)
     Serrano
     Sherman
     Skelton
     Slaughter
     Snyder
     Solis
     Spratt
     Stark
     Stenholm
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Tierney
     Towns
     Udall (CO)
     Udall (NM)
     Van Hollen
     Visclosky
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                               NOES--230

     Aderholt
     Akin
     Bachus
     Baker
     Ballenger
     Barrett (SC)
     Bartlett (MD)
     Barton (TX)
     Bass
     Beauprez
     Bereuter
     Biggert
     Bilirakis
     Bishop (UT)
     Blackburn
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonner
     Bono
     Boozman
     Bradley (NH)
     Brady (TX)
     Brown (SC)
     Brown-Waite, Ginny
     Burgess
     Burns
     Burr
     Burton (IN)
     Buyer
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Carter
     Case
     Castle
     Chabot
     Chocola
     Coble
     Cole
     Collins
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal (GA)
     DeLay
     DeMint
     Diaz-Balart, L.
     Diaz-Balart, M.
     Dooley (CA)
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Emerson
     English
     Everett
     Feeney
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gibbons
     Gilchrest
     Gillmor
     Gingrey
     Gonzalez
     Goode
     Goodlatte
     Goss
     Granger
     Graves
     Green (WI)
     Greenwood
     Gutknecht
     Harris
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hensarling
     Herger
     Hobson
     Hoekstra
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hyde
     Isakson
     Issa
     Istook
     Janklow
     Jenkins
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline
     Knollenberg
     Kolbe
     LaHood
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (OK)
     Manzullo
     McCotter
     McCrery
     McHugh
     McInnis
     McKeon
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Moran (KS)
     Moran (VA)
     Murphy
     Musgrave
     Myrick
     Nethercutt
     Neugebauer
     Northup
     Norwood
     Nunes
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pearce
     Pence
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Porter
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Renzi
     Reynolds
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Smith (MI)
     Smith (TX)
     Souder
     Stearns
     Sullivan
     Sweeney
     Tancredo
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Tiberi
     Toomey
     Turner (OH)
     Turner (TX)
     Upton
     Velazquez
     Vitter
     Walden (OR)
     Walsh
     Wamp
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--12

     Carson (IN)
     Conyers
     Costello
     Cox
     Gephardt
     Hastings (FL)
     Johnson, E. B.
     Neal (MA)
     Ney
     Smith (NJ)
     Smith (WA)
     Tiahrt


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (Mr. Simpson) (during the vote). Members are 
advised that 2 minutes remain in this vote.

                              {time}  1700

  Mr. DOOLEY of California changed his vote from ``aye'' to ``no.''
  So the motion to recommit was rejected.
  The result of the vote was announced as above recorded.
  Stated against:
  Mr. NEY. Mr. Speaker, on June 19, 2003, I was unable to be present 
for rollcall vote 295 on H.R. 660, the Small Business Health Fairness 
Act of 2003 due to important business in the Subcommittee on Housing 
and Community Opportunity, which I chair. Had I been present I would 
have voted ``no'' on rollcall vote No. 295.
  The SPEAKER pro tempore. The question is on passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             Recorded Vote

  Mr. ANDREWS. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. This will be a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 262, 
noes 162, not voting 11, as follows:

[[Page H5638]]

                             [Roll No. 296]

                               AYES--262

     Aderholt
     Akin
     Bachus
     Baker
     Ballenger
     Barrett (SC)
     Bartlett (MD)
     Barton (TX)
     Bass
     Beauprez
     Bell
     Bereuter
     Biggert
     Bilirakis
     Bishop (GA)
     Bishop (UT)
     Blackburn
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonner
     Bono
     Boozman
     Bradley (NH)
     Brady (TX)
     Brown (SC)
     Brown-Waite, Ginny
     Burgess
     Burns
     Burr
     Burton (IN)
     Buyer
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Carson (OK)
     Carter
     Case
     Castle
     Chabot
     Chocola
     Coble
     Cole
     Collins
     Cooper
     Cox
     Cramer
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis (AL)
     Davis (IL)
     Davis (TN)
     Davis, Jo Ann
     Davis, Tom
     Deal (GA)
     DeLay
     DeMint
     Diaz-Balart, L.
     Diaz-Balart, M.
     Dooley (CA)
     Doolittle
     Dreier
     Duncan
     Dunn
     Edwards
     Ehlers
     Emerson
     English
     Everett
     Feeney
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gibbons
     Gilchrest
     Gillmor
     Gingrey
     Gonzalez
     Goode
     Goodlatte
     Goss
     Granger
     Graves
     Green (WI)
     Greenwood
     Gutknecht
     Hall
     Harman
     Harris
     Hart
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hensarling
     Herger
     Hobson
     Hoekstra
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hyde
     Isakson
     Israel
     Issa
     Istook
     Jackson-Lee (TX)
     Janklow
     Jenkins
     John
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline
     Knollenberg
     Kolbe
     LaHood
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     Lipinski
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Manzullo
     Marshall
     Matheson
     McCarthy (MO)
     McCotter
     McCrery
     McHugh
     McInnis
     McIntyre
     McKeon
     Meek (FL)
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Moran (KS)
     Moran (VA)
     Murphy
     Musgrave
     Myrick
     Nethercutt
     Neugebauer
     Ney
     Northup
     Nunes
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pearce
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Porter
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Renzi
     Reynolds
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Rothman
     Royce
     Rush
     Ryan (WI)
     Ryun (KS)
     Sanchez, Loretta
     Saxton
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Skelton
     Smith (MI)
     Smith (TX)
     Snyder
     Souder
     Stearns
     Stenholm
     Sullivan
     Sweeney
     Tancredo
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Tiberi
     Toomey
     Turner (OH)
     Turner (TX)
     Upton
     Velazquez
     Vitter
     Walden (OR)
     Walsh
     Wamp
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Wynn
     Young (AK)
     Young (FL)

                               NOES--162

     Abercrombie
     Ackerman
     Alexander
     Allen
     Andrews
     Baca
     Baird
     Baldwin
     Ballance
     Becerra
     Berkley
     Berman
     Berry
     Bishop (NY)
     Blumenauer
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (OH)
     Brown, Corrine
     Capps
     Capuano
     Cardin
     Cardoza
     Clay
     Clyburn
     Crowley
     Cummings
     Davis (CA)
     Davis (FL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Doyle
     Emanuel
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank (MA)
     Frost
     Gordon
     Green (TX)
     Grijalva
     Gutierrez
     Hill
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley (OR)
     Hoyer
     Inslee
     Jackson (IL)
     Jefferson
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind
     Kleczka
     Kucinich
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lofgren
     Lowey
     Lynch
     Majette
     Maloney
     Markey
     Matsui
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     Meehan
     Meeks (NY)
     Menendez
     Michaud
     Millender-McDonald
     Miller (NC)
     Miller, George
     Mollohan
     Moore
     Murtha
     Nadler
     Napolitano
     Norwood
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rodriguez
     Ross
     Roybal-Allard
     Ruppersberger
     Ryan (OH)
     Sabo
     Sanchez, Linda T.
     Sanders
     Sandlin
     Schakowsky
     Schiff
     Scott (GA)
     Scott (VA)
     Serrano
     Sherman
     Slaughter
     Solis
     Spratt
     Stark
     Strickland
     Stupak
     Tanner
     Tauscher
     Thompson (CA)
     Thompson (MS)
     Tierney
     Towns
     Udall (CO)
     Udall (NM)
     Van Hollen
     Visclosky
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu

                             NOT VOTING--11

     Carson (IN)
     Conyers
     Costello
     Gephardt
     Hastings (FL)
     Johnson, E. B.
     McNulty
     Neal (MA)
     Smith (NJ)
     Smith (WA)
     Tiahrt


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (during the vote). Members are advised that 2 
minutes remain in this vote.

                              {time}  1707

  Mr. RUSH changed his vote from ``no'' to ``aye.''
  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

                          ____________________