[Congressional Record Volume 149, Number 117 (Friday, August 1, 2003)]
[Senate]
[Pages S10919-S10923]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SANTORUM (for himself and Mr. Graham of South Carolina):
  S. 1570. A bill to amend the Internal Revenue Code, of 1986 to allow 
individuals a refundable credit against income tax for the purchase of 
private health insurance, and to establish State health insurance 
safety-net programs; to the Committee on Finance.
  Mr. SANTORUM. Mr. President I rise to join my colleague Senator 
Lindsey Graham in reintroducing the Fair Care for the Uninsured Act, 
legislation aimed at ensuring that all Americans, regardless of income, 
have a basic level of resources to purchase health insurance. I am 
pleased that Congressman Mark Kennedy of Minnesota has joined in 
introducing companion legislation in the House of Representatives that 
now has 120 bipartisan cosponsors.
  As we all know, the growing ranks of uninsured Americans--currently 
more than 40 million--remains a major national problem that must be 
addressed as Congress considers improvements to our healthcare delivery 
system.
  An Urban Institute study released earlier this year estimated that 
the nation annually spends about $35 billion on uncompensated care 
received by the uninsured, both those who are uninsured for a full year 
and those who lack coverage for part of a year. About two-thirds of 
uncompensated care, almost $24 billion, is provided by hospitals caring 
for uninsured people in emergency rooms, outpatient departments, and as 
inpatients. This study also estimated that a substantial portion of 
uncompensated care, perhaps as much as $30 billion, is already being 
financed by taxpayers through programs such as: Medicare and Medicaid 
Disproportionate Share Payments; Medicaid Upper Payment Limit payments; 
state and local tax appropriations, primarily to public hospitals and 
clinics; federal grants to community health centers, and federal direct 
care provided by the Department of Veterans Affairs and the Indian 
Health Service.
  These sobering statistics reveal that the price of being uninsured is 
very high, and they ought to serve as a catalyst for us to address the 
problem of uninsured Americans in a deliberate yet responsible fashion.
  The Fair Care for the Uninsured Act represents a major step toward 
helping the uninsured obtain health insurance coverage through the 
creation of a new refundable tax credit for the purchase of private 
health insurance, a concept which again, enjoys bipartisan support.
  This legislation directly addresses one of the main barriers now 
inhibiting access to health insurance for millions of Americans: 
discrimination in the tax code. Most Americans obtain health insurance 
through their place of work, and for good reason: workers receive their 
employer's contribution toward health insurance completely free from 
federal taxation, including payroll taxes. The Federal Government 
effectively subsidizes employer-provided health insurance to the tune 
of more than $80 billion per year. By contrast, individuals who 
purchase their own health insurance get virtually no tax relief. They 
must buy insurance with after-tax dollars, forcing many to earn twice 
as much income before taxes in order to purchase the same insurance. 
This hidden health tax penalty effectively punishes people who try to 
buy their insurance outside the workplace.

[[Page S10920]]

  The Fair Care for the Uninsured Act would remedy his situation by 
creating a parallel system for working families who do not have access 
to health insurance through the workplace. Specifically, this 
legislation creates a refundable tax credit of $1,000 per adult and up 
to $3,000 per family, indexed for inflation, for the purchase of 
private health insurance; would be available to individuals and 
families who don't have access to coverage through the workplace or a 
federal government program; enables individuals to use their credit to 
shop for a basic plan that best suits their needs and which would be 
portable from job to job; and allows individuals to buy more generous 
coverage with after-tax dollars. And of course the States could 
supplement the credit.

  I would like to apprise our colleagues of one improvement in 
particular which we have added to last session's bill that we believe 
will help bring about an even more positive impact on America's 
uninsured population. In an effort to keep premiums affordable for 
older, sicker Americans, our Fair Care legislation augments funding 
provided in the Trade Act of 2002, P.L. 107-210, to State-run safety 
net insurance programs, currently operating in 30 States, and 
encourages more States to establish these important programs. And, as 
in our legislation last session of Congress, we seek to help further 
reduce premiums by permitting the creation of Individual Membership 
Associations, through which individuals can obtain basic coverage free 
of costly state benefit mandates.
  This legislation complements a bipartisan consensus which is emerging 
around this means for addressing the serious problem of uninsured 
Americans: Instead of creating new government entitlements to medical 
services, tax credits provide public financing to help uninsured 
Americans buy private health insurance. President Bush has proposed a 
similar tax credit for health insurance coverage, and Congress has 
already acknowledged the promise of this idea in passing into law the 
new Health Coverage Tax Credit, which helps folks who are eligible to 
receive Trade Adjustment Assistance or pension benefit payments from 
the Pension Benefit Guaranty Corporation. Some 200,000 people across 
the country who meet eligibility requirements--nearly 200,000 of whom 
reside in the Commonwealth of Pennsylvania--now can obtain a tax credit 
covering 65 percent of qualified health insurance premiums. They can 
get this assistance in two ways. First, they can claim it on their tax 
forms in a lump sum next year on April 15th. Or, beginning in August, 
the Health Coverage Tax Credit program will allow eligible individuals 
and their families to directly apply the credit to their health 
insurance premiums every month. This advance payment option could make 
a big difference for families that are just getting by month-to-month 
or week-to-week.
  In reducing the amount of uncompensated care that is offset through 
cost shifting to private insurance plans, and in substantially 
increasing the insurance base, a health insurance tax credit will help 
relieve some of the spiraling costs of our health care delivery system. 
It would also encourage insurance companies to write policies geared to 
the size of the credit, thus offering more options and making it 
possible for low-income families to obtain coverage without paying much 
more than the available credits.
  It is time that we reduced the tax bias against families who do not 
have access to coverage through their place of work or existing 
government programs, and to encourage the creation of an effective 
market for family-selected and family-owned plans, where Americans have 
more choice and control over their health care dollars. The Fair Care 
for the Uninsured Act would create tax fairness where currently none 
exists by requiring that all Americans receive the same tax 
encouragement to purchase health insurance, regardless of employment.
  It is my hope that our colleagues will join Senator Graham and me in 
endorsing this legislation to provide people who purchase health 
insurance on their own similar tax treatment as those who have access 
to insurance through their employer.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1570

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Fair Care for the Uninsured 
     Act of 2003''.

        TITLE I--REFUNDABLE CREDIT FOR HEALTH INSURANCE COVERAGE

     SEC. 101. REFUNDABLE CREDIT FOR HEALTH INSURANCE COVERAGE.

       (a) In General.--Subpart C of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     refundable credits) is amended by redesignating section 36 as 
     section 37 and by inserting after section 35 the following 
     new section:

     ``SEC. 36. HEALTH INSURANCE COSTS.

       ``(a) In General.--In the case of an individual, there 
     shall be allowed as a credit against the tax imposed by this 
     subtitle an amount equal to the amount paid during the 
     taxable year for qualified health insurance for the taxpayer, 
     his spouse, and dependents.
       ``(b) Limitations.--
       ``(1) In general.--The amount allowed as a credit under 
     subsection (a) to the taxpayer for the taxable year shall not 
     exceed the sum of the monthly limitations for coverage months 
     during such taxable year for each individual referred to in 
     subsection (a) for whom the taxpayer paid during the taxable 
     year any amount for coverage under qualified health 
     insurance.
       ``(2) Monthly limitations.--
       ``(A) In general.--The monthly limitation for an individual 
     for each coverage month of such individual during the taxable 
     year is the amount equal to \1/12\ of--
       ``(i) $1,000 if such individual is the taxpayer,
       ``(ii) $1,000 if--

       ``(I) such individual is the spouse of the taxpayer,
       ``(II) the taxpayer and such spouse are married as of the 
     first day of such month, and
       ``(III) the taxpayer files a joint return for the taxable 
     year, and

       ``(iii) $500 if such individual is an individual for whom a 
     deduction under section 151(c) is allowable to the taxpayer 
     for such taxable year.
       ``(B) Limitation to 2 dependents.--Not more than 2 
     individuals may be taken into account by the taxpayer under 
     subparagraph (A)(iii).
       ``(C) Special rule for married individuals.--In the case of 
     an individual--
       ``(i) who is married (within the meaning of section 7703) 
     as of the close of the taxable year but does not file a joint 
     return for such year, and
       ``(ii) who does not live apart from such individual's 
     spouse at all times during the taxable year,
     the limitation imposed by subparagraph (B) shall be divided 
     equally between the individual and the individual's spouse 
     unless they agree on a different division.
       ``(3) Coverage month.--For purposes of this subsection--
       ``(A) In general.--The term `coverage month' means, with 
     respect to an individual, any month if--
       ``(i) as of the first day of such month such individual is 
     covered by qualified health insurance, and
       ``(ii) the premium for coverage under such insurance for 
     such month is paid by the taxpayer.
       ``(B) Employer-subsidized coverage.--
       ``(i) In general.--Such term shall not include any month 
     for which such individual is eligible to participate in any 
     subsidized health plan (within the meaning of section 
     162(l)(2)) maintained by any employer of the taxpayer or of 
     the spouse of the taxpayer.
       ``(ii) Premiums to nonsubsidized plans.--If an employer of 
     the taxpayer or the spouse of the taxpayer maintains a health 
     plan which is not a subsidized health plan (as so defined) 
     and which constitutes qualified health insurance, employee 
     contributions to the plan shall be treated as amounts paid 
     for qualified health insurance.
       ``(C) Cafeteria plan and flexible spending account 
     beneficiaries.--Such term shall not include any month during 
     a taxable year if any amount is not includable in the gross 
     income of the taxpayer for such year under section 106 with 
     respect to--
       ``(i) a benefit chosen under a cafeteria plan (as defined 
     in section 125(d)), or
       ``(ii) a benefit provided under a flexible spending or 
     similar arrangement.
       ``(D) Medicare and medicaid.--Such term shall not include 
     any month with respect to an individual if, as of the first 
     day of such month, such individual--
       ``(i) is entitled to any benefits under title XVIII of the 
     Social Security Act, or
       ``(ii) is a participant in the program under title XIX or 
     XXI of such Act.
       ``(E) Certain other coverage.--Such term shall not include 
     any month during a taxable year with respect to an individual 
     if, at any time during such year, any benefit is provided to 
     such individual under--
       ``(i) chapter 89 of title 5, United States Code,
       ``(ii) chapter 55 of title 10, United States Code,
       ``(iii) chapter 17 of title 38, United States Code, or
       ``(iv) any medical care program under the Indian Health 
     Care Improvement Act.

[[Page S10921]]

       ``(F) Prisoners.--Such term shall not include any month 
     with respect to an individual if, as of the first day of such 
     month, such individual is imprisoned under Federal, State, or 
     local authority.
       ``(G) Insufficient presence in united states.--Such term 
     shall not include any month during a taxable year with 
     respect to an individual if such individual is present in the 
     United States on fewer than 183 days during such year 
     (determined in accordance with section 7701(b)(7)).
       ``(4) Coordination with deduction for health insurance 
     costs of self-employed individuals.--In the case of a 
     taxpayer who is eligible to deduct any amount under section 
     162(l) for the taxable year, this section shall apply only if 
     the taxpayer elects not to claim any amount as a deduction 
     under such section for such year.
       ``(c) Qualified Health Insurance.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified health insurance' 
     means insurance which constitutes medical care as defined in 
     section 213(d) without regard to--
       ``(A) paragraph (1)(C) thereof, and
       ``(B) so much of paragraph (1)(D) thereof as relates to 
     qualified long-term care insurance contracts.
       ``(2) Exclusion of certain other contacts.--Such term shall 
     not include insurance if a substantial portion of its 
     benefits are excepted benefits (as defined in section 
     9832(c)).
       ``(d) Medical Savings Account Contributions.--
       ``(1) In general.--If a deduction would (but for paragraph 
     (2)) be allowed under section 220 to the taxpayer for a 
     payment for the taxable year to the medical savings account 
     of an individual, subsection (a) shall be applied by treating 
     such payment as a payment for qualified health insurance for 
     such individual.
       ``(2) Denial of double benefit.--No deduction shall be 
     allowed under section 220 for that portion of the payments 
     otherwise allowable as a deduction under section 220 for the 
     taxable year which is equal to the amount of credit allowed 
     for such taxable year by reason of this subsection.
       ``(e) Special Rules.--
       ``(1) Coordination with medical expense deduction.--The 
     amount which would (but for this paragraph) be taken into 
     account by the taxpayer under section 213 for the taxable 
     year shall be reduced by the credit (if any) allowed by this 
     section to the taxpayer for such year.
       ``(2) Denial of credit to dependents.--No credit shall be 
     allowed under this section to any individual with respect to 
     whom a deduction under section 151 is allowable to another 
     taxpayer for a taxable year beginning in the calendar year in 
     which such individual's taxable year begins.
       ``(3) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2004, each dollar 
     amount contained in subsection (b)(2)(A) shall be increased 
     by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2003' 
     for `calendar year 1992' in subparagraph (B) thereof.

     Any increase determined under the preceding sentence shall be 
     rounded to the nearest multiple of $50 ($25 in the case of 
     the dollar amount in subsection (b)(2)(A)(iii)).''.
       (b) Information Reporting.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 of such Code (relating to information concerning 
     transactions with other persons) is amended by adding at the 
     end the following new section:

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

       ``(a) In General.--Any person who, in connection with a 
     trade or business conducted by such person, receives payments 
     during any calendar year from any individual for coverage of 
     such individual or any other individual under creditable 
     health insurance, shall make the return described in 
     subsection (b) (at such time as the Secretary may by 
     regulations prescribe) with respect to each individual from 
     whom such payments were received.
       ``(b) Form and Manner of Returns.--A return is described in 
     this subsection if such return--
       ``(1) is in such form as the Secretary may prescribe, and
       ``(2) contains--
       ``(A) the name, address, and TIN of the individual from 
     whom payments described in subsection (a) were received,
       ``(B) the name, address, and TIN of each individual who was 
     provided by such person with coverage under creditable health 
     insurance by reason of such payments and the period of such 
     coverage, and
       ``(C) such other information as the Secretary may 
     reasonably prescribe.
       ``(c) Creditable Health Insurance.--For purposes of this 
     section, the term `creditable health insurance' means 
     qualified health insurance (as defined in section 36(c)) 
     other than--
       ``(1) insurance under a subsidized group health plan 
     maintained by an employer, or
       ``(2) to the extent provided in regulations prescribed by 
     the Secretary, any other insurance covering an individual if 
     no credit is allowable under section 36 with respect to such 
     coverage.
       ``(d) Statements To Be Furnished to Individuals With 
     Respect to Whom Information Is Required.--Every person 
     required to make a return under subsection (a) shall furnish 
     to each individual whose name is required under subsection 
     (b)(2)(A) to be set forth in such return a written statement 
     showing--
       ``(1) the name and address of the person required to make 
     such return and the phone number of the information contact 
     for such person,
       ``(2) the aggregate amount of payments described in 
     subsection (a) received by the person required to make such 
     return from the individual to whom the statement is required 
     to be furnished, and
       ``(3) the information required under subsection (b)(2)(B) 
     with respect to such payments.

     The written statement required under the preceding sentence 
     shall be furnished on or before January 31 of the year 
     following the calendar year for which the return under 
     subsection (a) is required to be made.
       ``(e) Returns Which Would be Required To Be Made by 2 or 
     More Persons.--Except to the extent provided in regulations 
     prescribed by the Secretary, in the case of any amount 
     received by any person on behalf of another person, only the 
     person first receiving such amount shall be required to make 
     the return under subsection (a).''.
       (2) Assessable penalties.--
       (A) Subparagraph (B) of section 6724(d)(1) of such Code 
     (relating to definitions) is amended by redesignating clauses 
     (xi) through (xviii) as clauses (xii) through (xix), 
     respectively, and by inserting after clause (x) the following 
     new clause:
       ``(xi) section 6050U (relating to returns relating to 
     payments for qualified health insurance),''.
       (B) Paragraph (2) of section 6724(d) of such Code is 
     amended by striking ``or'' at the end of subparagraph (AA), 
     by striking the period at the end of subparagraph (BB) and 
     inserting ``, or'', and by adding at the end the following 
     new subparagraph:
       ``(CC) section 6050U(d) (relating to returns relating to 
     payments for qualified health insurance).''.
       (3) Clerical amendment.--The table of sections for subpart 
     B of part III of subchapter A of chapter 61 of such Code is 
     amended by adding at the end the following new item:

``Sec. 6050U. Returns relating to payments for qualified health 
              insurance.''.
       (d) Conforming Amendments.--
       (1) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting before the period ``, or 
     from section 36 of such Code''.
       (2) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 of such Code is amended by striking 
     the last item and inserting the following new items:

``Sec. 36. Health insurance costs.
``Sec. 37. Overpayments of tax.''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2003.

     SEC. 102. ADVANCE PAYMENT OF CREDIT FOR PURCHASERS OF 
                   QUALIFIED HEALTH INSURANCE.

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

     ``SEC 7528. ADVANCE PAYMENT OF HEALTH INSURANCE CREDIT FOR 
                   PURCHASERS OF QUALIFIED HEALTH INSURANCE.

       ``(a) General Rule.--In the case of an eligible individual, 
     the Secretary shall make payments to the provider of such 
     individual's qualified health insurance equal to such 
     individual's qualified health insurance credit advance amount 
     with respect to such provider.
       ``(b) Eligible Individual.--For purposes of this section, 
     the term `eligible individual' means any individual--
       ``(1) who purchases qualified health insurance (as defined 
     in section 36(c)), and
       ``(2) for whom a qualified health insurance credit 
     eligibility certificate is in effect.
       ``(c) Qualified Health Insurance Credit Eligibility 
     Certificate.--For purposes of this section, a qualified 
     health insurance credit eligibility certificate is a 
     statement furnished by an individual to the Secretary which--
       ``(1) certifies that the individual will be eligible to 
     receive the credit provided by section 36 for the taxable 
     year,
       ``(2) estimates the amount of such credit for such taxable 
     year, and
       ``(3) provides such other information as the Secretary may 
     require for purposes of this section.
       ``(d) Qualified Health Insurance Credit Advance Amount.--
     For purposes of this section, the term `qualified health 
     insurance credit advance amount' means, with respect to any 
     provider of qualified health insurance, the Secretary's 
     estimate of the amount of credit allowable under section 36 
     to the individual for the taxable year which is attributable 
     to the insurance provided to the individual by such provider.
       ``(e) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this section.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     77 of such Code is amended by adding at the end the following 
     new item:


[[Page S10922]]


``Sec. 7528. Advance payment of health insurance credit for purchasers 
              of qualified health insurance.''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2004.

            TITLE II--STATE HIGH RISK HEALTH INSURANCE POOLS

     SEC. 201. EXTENSION OF FUNDING FOR OPERATION OF STATE HIGH 
                   RISK HEALTH INSURANCE POOLS.

       Section 2745(c)(2) of the Public Health Service Act, as 
     inserted by section 201 of the Trade Act of 2002 (Public Law 
     107-210), is amended--
       (1) in subsection (b)(1), by striking ``established a 
     qualified health risk pool that'' and all that follows 
     through the end of subparagraph (C) and inserting 
     ``established a qualified health risk pool that provides for 
     premium rates and covered benefits for such coverage 
     consistent with standards included in the NAIC Model Health 
     Plan for Uninsurable Individuals'';
       (2) in subsection (b)(2), by striking ``number of uninsured 
     individuals'' and inserting ``enrollees in qualified high 
     risk pools''; and
       (3) in subsection (c)(2), by striking ``$40,000,000 for 
     each of fiscal years 2003 and 2004'' and inserting 
     ``$40,000,000 for fiscal year 2003 and $75,000,000 for each 
     of fiscal years 2004 through 2009''.

             TITLE III--INDIVIDUAL MEMBERSHIP ASSOCIATIONS

     SEC. 301. EXPANSION OF ACCESS AND CHOICE THROUGH INDIVIDUAL 
                   MEMBERSHIP ASSOCIATIONS (IMAS).

       The Public Health Service Act is amended by adding at the 
     end the following new title:

            ``TITLE XXIX--INDIVIDUAL MEMBERSHIP ASSOCIATIONS

     ``SEC. 2901. DEFINITION OF INDIVIDUAL MEMBERSHIP ASSOCIATION 
                   (IMA).

       ``(a) In General.--For purposes of this title, the terms 
     `individual membership association' and `IMA' mean a legal 
     entity that meets the following requirements:
       ``(1) Organization.--The IMA is an organization operated 
     under the direction of an association (as defined in section 
     2904(1)).
       ``(2) Offering health benefits coverage.--
       ``(A) Different groups.--The IMA, in conjunction with those 
     health insurance issuers that offer health benefits coverage 
     through the IMA, makes available health benefits coverage in 
     the manner described in subsection (b) to all members of the 
     IMA and the dependents of such members in the manner 
     described in subsection (c)(2) at rates that are established 
     by the health insurance issuer or a policy or product 
     specific basis and that may vary only as permissible under 
     State law.
       ``(B) Nondiscrimination in coverage offered.--
       ``(i) In general.--Subject to clause (ii), the IMA may not 
     offer health benefits coverage to a member of an IMA unless 
     the same coverage is offered to all such members of the IMA.
       ``(ii) Construction.--Nothing in this title shall be 
     construed as requiring or permitting a health insurance 
     issuer to provide coverage outside the service area of the 
     issuer, as approved under State law, or preventing a health 
     insurance issuer from excluding or limiting the coverage on 
     any individual, subject to the requirement of section 2741.
       ``(C) No financial underwriting.--The IMA provides health 
     benefits coverage only through contracts with health 
     insurance issuers and does not assume insurance risk with 
     respect to such coverage.
       ``(3) Geographic areas.--Nothing in this title shall be 
     construed as preventing the establishment and operation of 
     more than one IMA in a geographic area or as limiting the 
     number of IMAs that may operate in any area.
       ``(4) Provision of administrative services to purchasers.--
       ``(A) In general.--The IMA may provide administrative 
     services for members. Such services may include accounting, 
     billing, and enrollment information.
       ``(B) Construction.--Nothing in this subsection shall be 
     construed as preventing an IMA from serving as an 
     administrative service organization to any entity
       ``(5) Filing information.--The IMA files with the Secretary 
     information that demonstrates the IMA's compliance with the 
     applicable requirements of this title.

       ``(b) Health Benefits Coverage Requirements.--
       ``(1) Compliance with consumer protection requirements.--
     Any health benefits coverage offered through an IMA shall--
       ``(A) be underwritten by a health insurance issuer that--
       ``(i) is licensed (or otherwise regulated) under State law,
       ``(ii) meets all applicable State standards relating to 
     consumer protection, subject to section 2902(2), and
       ``(iii) offers the coverage under a contract with the IMA; 
     and
       ``(B) subject to paragraph (2) and section 2902(2), be 
     approved or otherwise permitted to be offered under State 
     law.
       ``(2) Examples of types of coverage.--The benefits coverage 
     made available through an IMA may include, but is not limited 
     to, any of the following if it meets the other applicable 
     requirements of this title:
       ``(A) Coverage through a health maintenance organization.
       ``(B) Coverage in connection with a preferred provider 
     organization.
       ``(C) Coverage in connection with a licensed provider-
     sponsored organization.
       ``(D) Indemnity coverage through an insurance company.
       ``(E) Coverage offered in connection with a contribution 
     into a medical savings account or flexible spending account.
       ``(F) Coverage that includes a point-of-service option.
       ``(G) Any combination of such types of coverage.
       ``(3) Health insurance coverage options.--An IMA shall 
     include a minimum of 2 health insurance coverage options. At 
     least 1 option shall meet all applicable State benefit 
     mandates.
       ``(4) Wellness bonuses for health promotion.--Nothing in 
     this title shall be construed as precluding a health 
     insurance issuer offering health benefits coverage through an 
     IMA from establishing premium discounts or rebates for 
     members or from modifying otherwise applicable copayments or 
     deductibles in return for adherence to programs of health 
     promotion and disease prevention so long as such programs are 
     agreed to in advance by the IMA and comply with all other 
     provisions of this title and do not discriminate among 
     similarly situated members.
       ``(c) Members; Health Insurance Issuers.--
       ``(1) Members.--
       ``(A) In general.--Under rules established to carry out 
     this title, with respect to an individual who is a member of 
     an IMA, the individual may apply for health benefits coverage 
     (including coverage for dependents of such individual) 
     offered by a health insurance issuer through the IMA.
       ``(B) Rules for enrollment.--Nothing in this paragraph 
     shall preclude an IMA from establishing rules of enrollment 
     and reenrollment of members. Such rules shall be applied 
     consistently to all members within the IMA and shall not be 
     based in any manner on health status-related factors.
       ``(2) Health insurance issuers.--The contract between an 
     IMA and a health insurance issuer shall provide, with respect 
     to a member enrolled with health benefits coverage offered by 
     the issuer through the IMA, for the payment of the premiums 
     collected by the issuer.

     ``SEC. 2902. APPLICATION OF CERTAIN LAWS AND REQUIREMENTS.

       ``State laws insofar as they relate to any of the following 
     are superseded and shall not apply to health benefits 
     coverage made available through an IMA:
       ``(1) Benefit requirements for health benefits coverage 
     offered through an IMA, including (but not limited to) 
     requirements relating to coverage of specific providers, 
     specific services or conditions, or the amount, duration, or 
     scope of benefits, but not including requirements to the 
     extent required to implement title XXVII or other Federal law 
     and to the extent the requirement prohibits an exclusion of a 
     specific disease from such coverage.
       ``(2) Any other requirement (including limitations on 
     compensation arrangements) that, directly or indirectly, 
     preclude (or have the effect of precluding) the offering of 
     such coverage through an IMA, if the IMA meets the 
     requirements of this title.
     Any State law or regulation relating to the composition or 
     organization of an IMA is preempted to the extent the law or 
     regulation is inconsistent with the provisions of this title.

     ``SEC. 2903. ADMINISTRATION.

       ``(a) In General.--The Secretary shall administer this 
     title and is authorized to issue such regulations as may be 
     required to carry out this title. Such regulations shall be 
     subject to Congressional review under the provisions of 
     chapter 8 of title 5, United States Code. The Secretary shall 
     incorporate the process of `deemed file and use' with respect 
     to the information filed under section 2901(a)(5)(A) and 
     shall determine whether information filed by an IMA 
     demonstrates compliance with the applicable requirements of 
     this title. The Secretary shall exercise authority under this 
     title in a manner that fosters and promotes the development 
     of IMAs in order to improve access to health care coverage 
     and services.
       ``(b) Periodic Reports.--The Secretary shall submit to 
     Congress a report every 30 months, during the 10-year period 
     beginning on the effective date of the rules promulgated by 
     the Secretary to carry out this title, on the effectiveness 
     of this title in promoting coverage of uninsured individuals. 
     The Secretary may provide for the production of such reports 
     through one or more contracts with appropriate private 
     entities.

     ``SEC. 2904. DEFINITIONS.

       ``For purposes of this title:
       ``(1) Association.--The term `association' means, with 
     respect to health insurance coverage offered in a State, an 
     association which--
       ``(A) has been actively in existence for at least 5 years;
       ``(B) has been formed and maintained in good faith for 
     purposes other than obtaining insurance;
       ``(C) does not condition membership in the association on 
     any health status-related factor relating to an individual 
     (including an employee of an employer or a dependent of an 
     employee); and
       ``(D) does not make health insurance coverage offered 
     through the association available other than in connection 
     with a member of the association.

[[Page S10923]]

       ``(2) Dependent.--The term `dependent', as applied to 
     health insurance coverage offered by a health insurance 
     issuer licensed (or otherwise regulated) in a State, shall 
     have the meaning applied to such term with respect to such 
     coverage under the laws of the State relating to such 
     coverage and such an issuer. Such term may include the spouse 
     and children of the individual involved.
       ``(3) Health benefits coverage.--The term `health benefits 
     coverage' has the meaning given the term health insurance 
     coverage in section 2791(b)(1).
       ``(4) Health insurance issuer.--The term `health insurance 
     issuer' has the meaning given such term in section 
     2791(b)(2).
       ``(5) Health status-related factor.--The term `health 
     status-related factor' has the meaning given such term in 
     section 2791(d)(9).
       ``(6) IMA; individual membership association.--The terms 
     `IMA' and `individual membership association' are defined in 
     section 2901(a).
       ``(7) Member.--The term `member' means, with respect to the 
     IMA, an individual who is a member of the association to 
     which the IMA is offering coverage.''.

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