[Congressional Record Volume 151, Number 17 (Wednesday, February 16, 2005)]
[Senate]
[Pages S1541-S1550]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. SNOWE (for herself, Mr. Talent, Mr. Bond, Mr. Byrd, Mrs. 
        Dole, Mr. McCain, Mrs. Hutchison, Mr. Coleman, Mr. Vitter, and 
        Mr. Martinez):
  S. 406. A bill to amend title I of the Employee Retirement Security 
Act of 1974 to improve access and choice for entrepreneurs with small 
businesses with respect to medical care for their employees; to the 
Committee on Health, Education, Labor, and Pensions.
  Ms. SNOWE. Mr. President, as Chair of the Committee on Small Business 
and Entrepreneurship, I rise to introduce the Small Business Health 
Fairness Act of 2005. I am joined in this bipartisan effort by Senators 
Talent, Bond, Byrd, Dole, McCain, Hutchison, Coleman, Vitter and 
Martinez.
  This bill creates Association Health Plans (AHPs), also called Small 
Business Health Plans, that give small businesses the same market based 
advantages and leverage that large employers and unions currently enjoy 
when providing health insurance to their employees.
  AHPs directly address one of the most critical issues facing small 
businesses nationwide: the crisis small businesses face trying to 
provide health insurance for their employees. No other issue has been 
mentioned so frequently or by so many of the small businesses with whom 
I have met since I became Chair. While the problem has been growing for 
years, the outcry has built so that now it is indeed a loud chorus of 
small businesses desperate for relief and demanding that something be 
done.
  Without exception, every small business person who has approached me 
has asked me to do something about the crushing burden from increased 
health insurance costs. The anecdotal accounts that I have heard have 
been confirmed by reports detailing how much health insurance costs are 
increasing across the board for all employers and especially for small 
businesses.
  The Kaiser Family Foundation has reported that health insurance 
premiums increased between the spring of 2003 and spring of 2004 by 
11.2 percent. This is the fourth such year of double digit increases 
and follows increases of 13.9 percent, 12.9 percent and 10.9 percent. 
In contrast, overall inflation during the last three years was 2.3 
percent, 2.2 percent and 1.6 percent, wage gains for non-supervisory 
workers were similarly stable at 2.2 percent, 3.1 percent and 3.2 
percent, respectively. This is an astonishing trend.
  Not only are the costs for employers increasing, but these are now 
being passed onto the employees. As a result, the amount of premium 
employees pay for family coverage has increased almost 64 percent over 
the past 4 years, from $1,619 to $2,661. As I have heard from many 
small businesses, increases in insurance costs often mean employees do 
not get the benefit of salary and wage increases. Employers are 
rewarding employees with raises and then requiring them to pay more of 
their health insurance. These employers are disheartened that they are 
giving a raise with one hand and then turning around and taking it away 
with the other.
  The Kaiser report also shows that this year, firms with 3 to 199 
workers had premium increases of 9.1 percent and the smallest firms 
with 3 to 9 workers averaged 12.4 percent increases. So we see that as 
bad as things have gotten they're worse for the smallest businesses who 
are the source of as much as 75 percent of our country's new jobs. In 
my meetings with small businesses, they invariably report increases far 
greater than even these percentages, generally 30 percent, 40 percent 
or more.
  The increase in these costs can not be dismissed as just another cost 
of doing business and absorbed or passed on to customers, because we 
know small businesses often have lower profit margins for their goods 
and services than other businesses. These skyrocketing costs often mean 
the difference between the business expanding or struggling to survive.
  The high cost of health insurance can even make the difference in 
whether a small business creates new jobs. Small businesses have told 
me that the high cost of providing health care is preventing small 
businesses from adding more employees because they can not afford the 
additional health insurance expenses. In other cases, employers are 
turning to temporary or part time employees, again to avoid paying 
outrageous health insurance costs.
  The result of these higher costs is that, according to the U.S. 
Census Bureau, in 2003 there were 45 million people without insurance, 
1.4 million more than the year before and 3.8 million since 2001. This 
is being attributed to a decrease in the number of people covered by 
insurance through their employers--down 61 percent in 2004. 
Disturbingly, the Kaiser study says that only 52 percent of firms with 
3 to 9 employees offer health benefits. Indeed, sometimes I wonder how 
small businesses can provide insurance at all. The fact that so many do 
is testimony to their recognition of how essential this is to their 
employees, and their determination to offer this benefit even in the 
face of constantly skyrocketing costs.
  Last year's Kaiser report suggests that the greater increase in 
premiums for traditionally insured plans of 15.6 percent versus self 
insured plans at 12.4 percent ``may indicate that part of the rise in 
health care premiums is due to insurers expanding their underwriting 
gains.'' They also say that one of the factors driving the high rate of 
premium growth appears to be ``insurers' efforts to emphasize 
profitability in their pricing.''
  What these statements really mean is that insurance companies are 
getting as much as they can out of their small business customers 
because they know these customers have no other options. Large 
employers, unlike small businesses, have competition for their business 
because they have many employees through whom to spread the risks. This 
makes them attractive to insurance companies who compete for their 
business.
  Large employers also have the option of self insuring under ERISA 
which is only practical for employers who are large enough to afford 
the costs. This approach, though, offers significant savings by 
eliminating the administrative costs of the middle man--the insurance 
companies. A study by SBA's Office of Advocacy has shown that these 
plans have administrative costs as much as 30 percent lower.
  Small businesses from my home state of Maine have made it clear that 
they have only one choice for their health care. Even when they band 
together in local purchasing pools, they are unable to attract any 
other insurance carriers to provide them with less expensive and more 
flexible options. Right after small businesses tell me how high their 
rates are they tell me how they have no choices and in some cases are 
even lucky to have anyone offering them any coverage at all.
  In response to this health care crisis facing the small business 
community, I am introducing the Small Business Health Fairness Act of 
2005.
  This bill creates national Association Health Plans which allow small 
businesses to pool their employees together under the auspices of their 
bona fide associations to get the same bulk purchasing and 
administrative efficiencies already enjoyed by large employers and 
unions with their health care plans. It builds on the success of the 
ERISA self

[[Page S1542]]

insurance plans used by large employers and the Taft-Hartley plans 
available to union employers. These two types of plans currently 
provide health benefits for 72 million people, more than half of the 
130 million total people who get their health insurance through their 
employer.
  It is ludicrous that we have a two tiered health insurance system in 
this country where one group of employers--large ones and those who are 
union employers--get preferential treatment over those who create over 
75 percent of the new jobs. I am at a loss to understand why small 
businesses should be denied the same advantages that these other 
employers already have. This is a matter of basic fairness.
  AHPs will be able to offer less expensive plans, and also greater 
flexibility because they will be exempt from the myriad state benefit 
regulations. Associations will be able to design their plans to meet 
the needs of their members and their employees. By administering one 
national plan, it will further reduce the administrative costs instead 
of trying to administer a plan subject to the mandates of each state.
  Even though the benefit mandates will not be in effect, associations 
will need to design their plans so that enough members participate in 
them to attract the necessary employees to make them work. This means 
that they will naturally provide a full range of benefits similar to 
what many states currently require. In many cases, the plans offered by 
large employers and unions, which are also exempt from the state 
benefit mandates, are the most generous plans available. People will 
often stay in those jobs specifically to keep their health care 
coverage.
  The bill would also provide extensive new protections to ensure that 
the health care coverage is there when employees need it. Associations 
sponsoring these plans would need to be established for at least three 
years for purposes other than providing health insurance--this is 
intended to prevent the current epidemic of fraud and abuse that is 
occurring through sham associations who take money from unsuspecting 
small businesses and then cease to exist when someone files a claim.
  In addition, self-funded AHPs would be required to have sufficient 
funds in reserve, specific stop-loss insurances, indemnification 
insurance, and other funding and certification requirements to make 
sure the insurance coverage would be available when needed. None of 
these requirements apply to any of the plans currently regulated by the 
Department of Labor, either the large employer plans under the Employee 
Retirement Income Security Act (ERISA), or the union plans under the 
Taft-Hartley Act.

  Yet, the opponents of this bill have mis-characterized it in ways 
that make it sound like this would be the worst thing in the world for 
small businesses.
  They have said that this bill would lead to ``cherry picking''--where 
AHPs would only take young healthy people. There is language in the 
bill which explicitly states that an association which offers a plan 
must offer it to all of their members, and a member who participates in 
the plan must offer the plan to every employee. Violation of these 
requirements is subject to enforcement by the Department of Labor under 
ERISA.
  They have said that the Department of Labor would not be able to 
handle their responsibilities under this bill. The Department of Labor 
is already overseeing 275,000 similarly structured plans. We do not 
hear employees complain about these plans, or that they are failing and 
leaving subscribers without coverage. The additional plans from AHPs 
would not add that much of a burden to their operations and the 
Secretary of Labor has testified before the Small Business Committee 
that sufficient resources would be available to make sure the 
Department fulfilled its obligations.
  Opponents have claimed that AHPs would not be subject to any solvency 
protections or other insurance regulations. This is flat out not true. 
The bill specifies detailed solvency protections that self funded AHPs 
would have to implement which are far beyond anything current self 
funded large employer plans have to implement. In fact those plans are 
not required to have any solvency protections. Insurance companies that 
would provide the coverage for fully insured AHPs would continue to be 
subject to state solvency requirements, as well as other state 
protections in the same way as they are now.
  Opponents of this bill are basically saying that small businesses do 
not need more options and that they should be satisfied with the few 
that they have. They want to preserve the status quo which does nothing 
for small businesses. This bill would create competition in the small 
group market where there currently is none. If we expect our small 
employers to provide health insurance to their employees, we must pass 
AHP legislation to give them the same advantages enjoyed by large 
employers and union employers.
  Giving small businesses better and more affordable options for their 
health care will also have an impact on the larger problem of the 
uninsured. The latest Census Bureau figures indicate that in 2003 
approximately 45 million people had no health insurance. We also know 
that about 60 percent of these uninsured work for a small business, or 
are in a family of someone who works for a small business. The CBO has 
estimated that 600,000 people would go from being uninsured to being 
insured if AHPs were available. There are other studies that show this 
number could be more like 4.5 million and possibly as high as 8.5 
million. What is clear is that giving small businesses AHPs as an 
option will mean that more of them who currently do not offer health 
insurance will be able to provide this benefit to their employees and 
their families.
  This bill is supported by a large coalition of small business 
interests with approximately 12 million employers who represent about 
80 million employees. President Bush included AHPs in the State of the 
Union and has made this part of his agenda for providing more health 
care options and helping small businesses. During the campaign he 
called for passage of this bill on almost a daily basis. And he 
continues to call for its passage. Our Majority Leader has indicated 
his support for taking up this bill. The House has passed the bill 
several times with strong bipartisan support and will pass it again 
this year. Significantly, the Senate Task Force on the Uninsured 
included AHPs among its recommendation for increasing coverage. The 
time has come to get this bill through the Senate. We must pass AHPs 
this session.
  In the time I have been Chair of the Small Business Committee, I have 
come to understand even more that the entrepreneurial spirit burns 
bright throughout our nation. There are millions of people who seek a 
better life and personal satisfaction through starting and running 
small businesses. These folks are not looking for a handout, or 
preferential treatment. They are merely looking to us to recognize the 
absolutely essential role they play in our economy and to be treated 
accordingly and fairly. If we want more jobs, and better family lives, 
we must give small businesses the support they are seeking.
  While this bill has passed the House with bipartisan support on 
several occasions, it has not been considered in the Senate. I intend 
to change that. I will work with Senator Enzi as the new chair of the 
HELP Committee, Senate Leaders, and others to find ways and develop 
enhancements to get this bill through the Senate. If there are changes 
that can be made, I am willing to consider them.
  I believe we will see movement on this issue this Congress, and I 
look forward to working with my colleagues to bring relief and 
assistance to our nation's small businesses.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 406

       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 2005''.
       (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.

[[Page S1543]]

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 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 2005.
       ``(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.
       ``(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 2005.
       ``(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).

[[Page S1544]]

       ``(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 
     2005, 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) In general.--The contribution rates for any 
     participating small employer shall not vary on the basis of 
     any health status-related factor in relation to employees of 
     such employer or their beneficiaries and shall not vary on 
     the basis of the type of business or industry in which such 
     employer is engaged.
       ``(B) Effect of title.--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.
       ``(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) 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) of subparagraph (B) 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

[[Page S1545]]

     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 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 2005, 
     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.
       ``(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

[[Page S1546]]

     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 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;

[[Page S1547]]

       ``(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 2005.
       ``(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.--
       ``(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 2005, 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:

[[Page S1548]]

       ``(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 2005 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 Congress Regarding Certification of Self-
     Insured Association Health Plans.--Not later than January 1, 
     2010, the Secretary of Labor shall report to the Committee on 
     Health, Education, Labor, and Pensions of the Senate and the 
     Committee on Education and the Workforce of the House of 
     Representatives 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

``801. Association health plans.
``802. Certification of association health plans.
``803. Requirements relating to sponsors and boards of trustees.
``804. Participation and coverage requirements.
``805. Other requirements relating to plan documents, contribution 
              rates, and benefit options.
``806. Maintenance of reserves and provisions for solvency for plans 
              providing health benefits in addition to health insurance 
              coverage.
``807. Requirements for application and related requirements.
``808. Notice requirements for voluntary termination.
``809. Corrective actions and mandatory termination.
``810. Trusteeship by the Secretary of insolvent association health 
              plans providing health benefits in addition to health 
              insurance coverage.
``811. State assessment authority.
``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)), 2 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 2 
     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 2 
     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

[[Page S1549]]

     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 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 after 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 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 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.

  Mr. BOND. Mr. President, with approximately 45 million uninsured 
Americans, expanding access to quality, affordable health care should 
be a top priority for the Senate. We hear about the cost explosion that 
insurance companies are imposing on small businesses and how small 
business owners are now finding it virtually impossible to provide the 
health insurance coverage that they, as well as their employees, need. 
No one is harder hit by large premium increases than small business--
studies indicate more than 60 percent of these uninsured Americans 
either work for a small business or are dependent upon someone who 
does. As health care costs skyrocket and place more and more small 
business employees in jeopardy of losing their health benefits, it 
becomes more important that Congress turn its attention to the 
uninsured and act in a swift and bipartisan manner to address this 
problem.
  Today we are here to offer hope to the millions of uninsured. Today 
we are here to talk about a solution that can help millions of small 
business employees access the same type of health care that their 
counterparts in large corporations and unions already enjoy.
  The solution to this problem is to allow small businesses across the 
country to pool together and access health insurance through their 
membership with a bona fide trade or professional organization. This 
will provide small businesses the same opportunities as other large 
insurance purchasers. These Association Health Plans, AHPs, would 
reduce costs through greater economies of scale to spread costs and 
risk, increase group bargaining power with large insurance companies, 
and generate more insurance options for small businesses.
  AHPs are not a new idea. They have been talked about, bandied about, 
argued about and compromised about for almost a decade. And during that 
period, what was once thought to be a manageable problem--became the 
crisis that we have today. Had we passed AHP legislation, we would not 
be seeing the problems we see today for small business.
  The principle underpinning AHPs is simple. This is the same principle 
that makes it cheaper to buy your soda by the case instead of by 
individual cans. Bulk purchasing is why large companies and unions can 
get better rates for their employees than small businesses and it is 
about time that we bring Fortune 500 style health benefits to the 
Nation's Main Street small businesses and their employees.
  In the words of President Bush, ``It makes no sense in America, to 
isolate small businesses as little health care islands unto 
themselves.'' AHPs will mean more coverage for the employees of these 
companies, especially their families and children.
  It is time that we take control and find a way to curtail the 
explosive costs of health care. Small businesses deserve a chance to 
channel these funds toward other needs, such as expanding and creating 
more jobs for the

[[Page S1550]]

economy. Association Health Plans will level the playing field and 
break down the barriers that prevent small businesses from providing 
health insurance.
  I commend Senator Snowe for taking the lead on this critical issue 
and for using her position as chairwomen of the Small Business 
Committee to advance the number one health care priority of the small 
business community. With the support of President Bush, the Department 
of Labor, the Small Business Administration, and a broad and diverse 
coalition of over 100 groups, I hope that this bill will more quickly.
  For the sake of small businesses throughout this country, their 
employees, and their families we must pass AHP legislation. We must 
bring fortune 500 health care to small business. The time to act is 
now. I thank Senators Snowe and Talent for their leadership, dedication 
and commitment on behalf of small business, and I look forward to 
working with them to pass Association Health Plans legislation in the 
Senate.
                                 ______