[Congressional Record Volume 151, Number 143 (Wednesday, November 2, 2005)]
[Senate]
[Pages S12242-S12251]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ENZI (for himself, Mr. Nelson of Nebraska, and Mr. Burns):
  S. 1955. A bill to amend title I of the Employee Retirement Security 
Act of 1974 and the Public Health Service Act to expand health care 
access and reduce costs through the creation of small business health 
plans and through modernization of the health insurance marketplace; to 
the Committee on Health, Education, Labor, and Pensions.
  Mr. ENZI. Mr. President, together with Senator Nelson of Nebraska and 
Senator Burns, I am pleased today to introduce ``The Health Insurance 
Marketplace Modernization and Affordability Act of 2005.'' This is a 
bipartisan effort aimed at relieving the worsening crisis of cost and 
coverage in America's health insurance system.
  As I speak today, we are nearing almost five years of double-digit 
growth in health insurance premiums--increases that have repeatedly 
exceeded more than five times the rate of inflation. Since 2000, for 
example, group premiums for family coverage have grown nearly 60 
percent, compared to an underlying inflation rate of 9.7 percent over 
the same period.
  Those hardest hit are America's small businesses and those 
individuals outside of employer-provided insurance. These are the ones 
with the least market leverage and the weakest ability to pool risk. 
Already, among the very smallest of our businesses, those with fewer 
than 10 employees, only 52 percent offer coverage to their employees.
  As a former small business owner, I understand the difficulties these 
employers face when trying to provide health insurance for their 
employees.
  A constituent of mine, Mitchell Blake of Jackson, WY recently told me 
his story, and it illustrates what is happening to thousands of small 
businesses across America. Mr. Blake owns a small architecture firm 
with eight employees. He believes, like so many small business owners 
across America, that providing insurance for his employees not only 
promotes a healthy workforce but is simply the right thing to do.
  In the nine years since his firm opened, the deductibles for 
employees' health insurance quadrupled, co-pays rose by more than 35 
percent, and monthly premiums grew by 20 percent. Since 2001, the 
company's profits have dropped by nearly one-third, due in large part 
to providing health insurance coverage.
  I am realistic. The biggest drivers of health care costs are ones 
that defy short-term solutions. These include advances in costly 
medical treatments, Americans' continuing appetite for such treatments, 
lack of transparency in pricing, and an outdated third-party payment 
system that insulates consumers from seeing the true cost of care they 
receive. Addressing these deep problems in a fundamental way will 
require years of effort and a great deal of political will.

  And yet, like most members in this body, I am hearing an ever-growing

[[Page S12243]]

chorus of concern from my constituents about health insurance--and most 
especially from small businesses.
  America's families and small businesses don't want us to wait for the 
perfect solution or the perfect moment. They need real help, and they 
need it now.
  Recognizing this increasing concern, and as the new Chairman of the 
Senate's Health, Education, Labor and Pensions Committee, I have made 
it a priority in recent months to seek the counsel of stakeholders, 
citizens, experts, and fellow members of Congress on how we might come 
together on a package of health insurance reforms we can realistically 
hope to enact in this Congress.
  The most well known proposal now on the table is the approach known 
as association health plans, or AHPs. Under this proposal, which was 
introduced in this Congress by Senators Snowe and Talent, qualifying 
trade associations would be permitted to band together their members 
for purposes of offering health coverage.
  Association health plans hold significant promise--particularly in 
the pooling of risk, economies of scale, and market clout they could 
lend to thousands of small businesses.
  At the same time, however, the AHP bills in their current form may 
also go too far in allowing some association plans to play by a 
separate set of rules than those governing the rest of the small group 
insurance marketplace--thereby tempting adverse selection and market 
disruption. Another concern is the fact that the current AHP proposals 
would shift primary oversight over many association plans away from the 
states and move it to the federal government.
  Regrettably, debate over these AHP pros and cons has hardened into a 
political and stakeholder stalemate--a stalemate that has helped block 
constructive action on new health insurance reform for nearly a decade.
  It is time we broke this logjam and moved forward.
  Toward this end, I sincerely appreciate the hard work of Senators 
Snowe and Talent and other AHP proponents in working with me on 
possible compromise approaches. And similarly, I am encouraged by what 
appears to be a growing pragmatic spirit among traditional AHP critics.
  The legislation we are introducing today is a compromise approach.
  This legislation blends a modified version of the current Snowe/
Talent AHP legislation with several additional reform initiatives 
applicable not just to association plans, but also to the wider health 
insurance marketplace.
  It is built around several fundamental principles, including: 1. 
giving associations a meaningful role, but on a level playing field; 2. 
streamlining the current hodgepodge of varying State regulation; 3. 
preserving the primary role of the States in health insurance oversight 
and consumer protection; 4. making lower-cost health plan options 
available; and 5. achieving meaningful reform without a big price tag 
that could cloud prospects for passage.
  With regard to association-based health plans, this bill preserves 
most of what is known as the ``fully insured'' component of the current 
AHP bill. That is, like the current AHP bill, my legislation would 
allow associations to independently pool their members for purposes of 
buying health coverage, thereby giving them needed strength in numbers 
and bargaining power.
  Unlike the current AHP bill, however, this legislation does not 
include the much more controversial option for associations to self-
insure. Primary regulatory oversight of coverage issued to associations 
would remain at the state level and would not be transferred to Federal 
control. Although far from perfect, our state insurance commissions are 
much closer to the real problems confronted by purchasers of insurance 
in their communities than would be a Federal agency in Washington.
  Like the current AHP bill, this legislation would enable associations 
to take advantage of more streamlined rules in the areas of benefit 
design and rating. In an important departure from the current AHP bill, 
however, this greater streamlining would be made available not just to 
associations, but also to other purchasers of insurance. This 
adjustment will go a long way toward easing critics' fears that the 
current AHP bill would create an unlevel playing field and market 
disruption.
  In short, association-based plans should have the opportunity to 
harness the advantage of independent pooling and play a commercially 
meaningful role in the coverage marketplace. However, the coverage 
offered to association members should be subject to underlying 
regulatory and consumer protection requirements substantially 
comparable to those applicable to other entities offering similar 
coverage.
  In addition to addressing coverage offered through associations, the 
legislation we are introducing today also makes several very important 
improvements in the health insurance marketplace as a whole.
  For example, this legislation would permit issuers of coverage, both 
to associations and others, to offer lower-cost health plans free from 
some, though not all, of the current state benefit mandates that have 
proliferated over the past decade.
  Under this bill, those mandates that are currently in place in at 
least 45 States would continue in effect, but carriers would be 
permitted to offer plans that do not include other mandated benefits. 
The intent of this provision is not only to enable the offering of more 
affordable plan options, but also to make it easier for carriers to 
offer coverage on a multi-state basis and in more markets.
  This legislation would also set in motion a process to create greater 
harmonization in the current costly and competition-inhibiting 
hodgepodge of varying State health insurance regulation.
  However, even as it moves the system to greater uniformity in the 
rules applied, this approach would also carefully retain the current 
structure of State-based oversight and administration of insurance.
  This harmonization approach is patterned in general terms after the 
process used in the early 1990s to achieve greater stability in the 
Medicare supplemental, Medigap, market.
  The bill would establish a harmonization commission under the 
Secretary of Health and Human Services to develop harmonized standards 
for health insurance regulation. The commission would work in close 
consultation with the NAIC and the States, and would consist of members 
representing a full range of perspectives and stakeholders.
  Upon issuance of model standards by the commission and their 
certification by the Secretary, the States would have two years to 
adopt them. If a state did not adopt the standards within the required 
timeframe, an insurer, following certain certification requirements, 
would be permitted to sell insurance in that State following the 
harmonized Federal rules.
  I want to take a moment to thank Senator Gregg, my predecessor as 
chairman of the HELP Committee. It is due in no small part to his 
efforts in the last Congress that health insurance market harmonization 
has matured in the policy community as a needed and valuable step. I 
look forward to working with him to make this and other aspects of this 
legislation as effective as it can possibly be.

  It is important to note that responsibility for oversight and 
management of the insurance market would remain with the States. What 
would change is that the rules being applied would become more uniform 
across State lines. This will enable a wider range of plans to be 
offered, because the offering of insurance on a multi-State basis will 
become easier. Competition will improve and costs will go down as more 
plans enter more markets.
  This bill reflects and incorporates much thoughtful input from those 
on many sides of this difficult issue. Such input continues even as I 
speak. Indeed, there are a number of important issues that remain to be 
worked on as we proceed with consideration of this bill.
  For example, we will be continuing discussions on how to smoothe the 
interaction between association-based plans and the individual 
insurance market. Similarly, work remains to be done in the calibration 
of transition rules, including with respect to the handling of older 
blocks of business vis a vis new plan options that will arise under the 
new system. Another issue deserving of further attention is the 
handling of the way carriers can become licensed in multiple States, 
and

[[Page S12244]]

opportunities for making this process as smooth as possible while 
maintaining the authority of State insurance commissioners.
  I am open to suggestions, and I am open to compromise--but I am not 
open to continued inaction.
  My intention is for this bill to serve as a foundation for the swift 
finalization and passage of a health insurance reform package that will 
deliver real relief to America's small businesses and struggling 
families.
  I ask unanimous consent that a summary of the legislation and the 
text of the bill be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

 Summary: Health Insurance Marketplace Modernization and Affordability 
                              Act of 2005

       The intent of the Health Insurance Marketplace 
     Modernization and Affordability Act of 2005 is to reduce 
     costs and improve access in the health insurance marketplace, 
     principally though not exclusively in the small group market.
       This legislation addresses these goals by blending a 
     modified version of the current AHP legislation--S. 406, 
     introduced by Senators Snowe and Talent with several 
     additional reform initiatives applicable not just to 
     association plans but also to the wider marketplace.
       The fundamental principle include: 1. giving associations a 
     meaningful role, but on a level playing field; 2. 
     streamlining the current hodgepodge of varying state 
     regulations; 3. preserving a strong state role in insurance 
     oversight and consumer protection; 4. making lower-cost 
     health plan options available; 5. achieving meaningful reform 
     without a big price tag clouding prospects for passage.
       Title I, regarding Small Business Health Plans (SBHPs), 
     resembles the ``fully insured'' component of the S. 406, but 
     does not include that bill's more controversial provisions 
     permitting association plans to self-insure. Associations 
     will be permitted to pool independently from the underlying 
     small group market.
       SBHPs may offer coverage free from many but not all benefit 
     mandates, which reflects a different approach but similar 
     intent to that included in S. 406. If a benefit mandate is in 
     place in at least 45 states, an SBHP must follow it, but it 
     may opt out of other mandated benefits. This approach 
     preserves the most widely agreed-upon mandates, but achieves 
     the goal of giving multi-state associations the uniformity 
     they need to operate effectively across State lines.
       Associations wishing to establish an SBHP will follow rules 
     very similar to those for AHPs under S. 406, the bill 
     introduced by Senators Snowe and Talent. An SBHP must: 1. be 
     established for purposes other than health coverage; 2. have 
     been in existence for at least 3 years; 3. do not condition 
     association membership or coverage on health status; 4. 
     obtain Federal certification; 5. be governed by a board of 
     directors with complete fiscal control.
       This bill also retains primary oversight and supervision of 
     insurance coverage at the State level, and does not shift it 
     to Federal oversight, as parts of S. 406 would require.
       Title II, the Near-Term Market Relief section, provides for 
     certain near-term changes in insurance regulation aimed at 
     reducing costs and expanding access. Ultimately, some of 
     these provisions will be superseded by the wider regulatory 
     harmonization process provided in Title III. These provisions 
     will apply not just to association plans (SBHPs) but also to 
     policies sold to others.
       Rating Relief: The first section of Title II deals with 
     rating relief. Under Title II, The National Association of 
     Insurance Commissioners (NAIC) model rules regarding rating, 
     the amount that premiums can vary from an insurer's base 
     rate, or average, that are now in effect in nearly half the 
     states would become the interim standard for rating. 
     Currently these NAIC rating rules are in effect in 24 states, 
     and about a dozen others are very close. The NAIC rules 
     require that premiums charged when the policy is issued 
     cannot vary more than +/- 25 percent from the base rate, and 
     +/- 15 percent upon renewal.
       Insurers licensed in a given state will be permitted to use 
     the NAIC standard even if State law differs. A graduated 
     transition process will apply for States that currently have 
     rating bands significantly different from the NAIC model.
       Lower-Cost Plan Options: The intent of the second provision 
     of Title II is to permit lower-cost plans to be offered that 
     are free from many of the current benefit mandates. Mirroring 
     the approach applied to benefit mandates for SBHPs in Title 
     I, if a benefit mandate is mandated in at least 45 States, an 
     insurer must offer it, but it may opt out of other mandated 
     benefits provided that the exercise of such opt-out is fully 
     disclosed in the policy. This approach preserves the most 
     widely agreed-upon mandates, but allows for greater 
     flexibility in the offering of more affordable coverage 
     options.
       Title II, which addresses regulatory harmonization, 
     establishes a process intended to create greater uniformity 
     in the current costly and competition-inhibiting hodgepodge 
     of varying state health insurance regulation. However, even 
     as this moves the system to greater uniformity in rules 
     applied, it also carefully retains the current structure of 
     State-based oversight and administration of insurance.
       This approach is patterned in general terms after the 
     process used in the early 1990s to achieve greater stability 
     in the Medicare supplemental, Medigap, market.
       To achieve uniformity, this legislation establishes a 
     harmonization commission under HHS to develop uniform 
     standards for insurance regulation. The commission will work 
     in close consultation with the NAIC and the States, and will 
     consist of members representing: 1. State insurance 
     regulators; 2. insurers; 3. business/employer 
     representatives; 4. consumer advocates; 5. agents; 6. 
     providers; 7. high risk pool administrators; and 8. 
     actuaries.
       The commission will address these areas of insurance 
     regulation: 1. rating; 2. consumer protections; and 3. access 
     to coverage, such as standards regarding issuance and 
     renewability.
       Upon issuance of model standards by the commission and 
     their certification by the Secretary, the States will have 
     two years to adopt them. If a State fails to adopt the 
     standards within the required timeframe, an insurer, 
     following certain certification requirements, will be 
     permitted to sell insurance in that State following the 
     harmonized Federal rules, rather than that State's rules.
       Responsibility for oversight and management of the 
     insurance market will remain with the States. What changes is 
     that the rules being applied will become more uniform across 
     State lines, thereby achieving a number of advantages, 
     including: 1. a wider range of plans offered, because 
     offering insurance on a multi-state basis will become easier; 
     2. improved competition and reduced costs as more plans enter 
     more markets; and 3. reduced administrative costs.
                                  ____


                                S. 1955

       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 ``Health 
     Insurance Marketplace Modernization and Affordability Act of 
     2005''.
       (b) Table of Contents.--The table of contents is as 
     follows:

Sec. 1. Short title and table of contents.

                  TITLE I--SMALL BUSINESS HEALTH PLANS

Sec. 101. Rules governing small business health plans.
Sec. 102. Cooperation between Federal and State authorities.
Sec. 103. Effective date and transitional and other rules.

                   TITLE II--NEAR-TERM MARKET RELIEF

Sec. 201. Near-term market relief.

           TITLE III--HARMONIZATION OF HEALTH INSURANCE LAWS

Sec. 301. Health Insurance Regulatory Harmonization.

                  TITLE I--SMALL BUSINESS HEALTH PLANS

     SEC. 101. RULES GOVERNING SMALL BUSINESS 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 SMALL BUSINESS HEALTH PLANS

     ``SEC. 801. SMALL BUSINESS HEALTH PLANS.

       ``(a) In General.--For purposes of this part, the term 
     `small business health plan' means a fully insured 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 SMALL BUSINESS HEALTH PLANS.

       ``(a) In General.--Not later than 6 months after the date 
     of enactment of this part, the

[[Page S12245]]

     applicable authority shall prescribe by interim final rule a 
     procedure under which the applicable authority shall certify 
     small business health plans which apply for certification as 
     meeting the requirements of this part.
       ``(b) Requirements Applicable to Certified Plans.--a small 
     business 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).
       ``(c) Requirements for Continued Certification.--The 
     applicable authority may provide by regulation for continued 
     certification of small business health plans under this part. 
     Such regulation shall provide for the revocation of a 
     certification if the applicable authority finds that the 
     small employer health plan involved is failing to comply with 
     the requirements of this part.
       ``(d) Class Certification for Fully Insured Plans.--The 
     applicable authority shall establish a class certification 
     procedure for small business 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 small business health plans upon 
     appropriate filing under such procedure in connection with 
     plans in such class and payment of the prescribed fee under 
     section 806(a).

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

       ``(a) Sponsor.--The requirements of this subsection are met 
     with respect to a small business 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 a small business health 
     plan if the following requirements are met:
       ``(1) Fiscal control.--The plan is operated, pursuant to a 
     plan document, by a board of trustees which pursuant to a 
     trust agreement 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 a small business health plan which is in existence on the 
     date of the enactment of the Health Insurance Marketplace 
     Modernization and Affordability 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 insurers and service providers.
       ``(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 a small business 
     health plan if, under the terms of the plan--
       ``(1) each participating employer must be--
       ``(A) a member of the sponsor;
       ``(B) the sponsor; or
       ``(C) an affiliated member of the sponsor with respect to 
     which the requirements of subsection (b) are met, except 
     that, in the case of a sponsor which is a professional 
     association or other individual-based association, if at 
     least one of the officers, directors, or employees of an 
     employer, or at least one of the individuals who are partners 
     in an employer and who actively participates in the business, 
     is a member or such an affiliated member of the sponsor, 
     participating employers may also include such employer; and
       ``(2) all individuals commencing coverage under the plan 
     after certification under this part must be--
       ``(A) active or retired owners (including self-employed 
     individuals), officers, directors, or employees of, or 
     partners in, participating employers; or
       ``(B) the beneficiaries of individuals described in 
     subparagraph (A).
       ``(b) Coverage of Previously Uninsured Employees.--In the 
     case of a small business health plan in existence on the date 
     of the enactment of the Health Insurance Marketplace 
     Modernization and Affordability 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 small business health plan.
       ``(c) Individual Market Unaffected.--The requirements of 
     this subsection are met with respect to a small business 
     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 a small business 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 a small business health plan if the following 
     requirements are met:
       ``(1) Contents of governing instruments.--
       ``(A) In general.--The instruments governing the plan 
     include a written instrument, meeting the requirements of an 
     instrument required under section 402(a)(1), which--
       ``(i) provides that the board of directors 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)); and
       ``(ii) provides that the sponsor of the plan is to serve as 
     plan sponsor (referred to in section 3(16)(B)).
       ``(B) Description of material provisions.--The terms of the 
     health insurance coverage (including the terms of any 
     individual certificates that may be offered to individuals in 
     connection with such coverage) describe the material benefit 
     and rating, and other provisions set forth in this section 
     and such material provisions are included in the summary plan 
     description.
       ``(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 a health 
     insurance issuer offering health insurance coverage in 
     connection with a small business health plan, and at the 
     request of such small business health plan, from--
       ``(i) setting contribution rates for the small business 
     health plan based on the claims experience of the plan so 
     long as any variation in such rates complies with the 
     requirements of clause (ii); or

[[Page S12246]]

       ``(ii) varying contribution rates for participating 
     employers in a small business health plan in a State to the 
     extent that such rates could vary using the same methodology 
     employed in such State for regulating premium rates, subject 
     to the terms of part I of subtitle A of title XXIX of the 
     Public Health Service Act (relating to rating requirements), 
     as added by title II of the Health Insurance Marketplace 
     Modernization and Affordability Act of 2005.
       ``(3) 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 Small Business Health Plans to Design 
     Benefit Options.--Nothing in this part or any provision of 
     State law (as defined in section 514(c)(1)) shall be 
     construed to preclude a small business health plan or a 
     health insurance issuer offering health insurance coverage in 
     connection with a small business health plan, from exercising 
     its sole discretion in selecting the specific benefits and 
     services consisting of medical care to be included as 
     benefits under such plan or coverage, except that such 
     benefits and services must meet the terms and specifications 
     of part II of subtitle A of title XXIX of the Public Health 
     Service Act (relating to lower cost plans), as added by title 
     II of the Health Insurance Marketplace Modernization and 
     Affordability Act of 2005, provided that, upon issuance by 
     the Secretary of Health and Human Services of the List of 
     Required Benefits as provided for in section 2922(a) of the 
     Public Health Service Act, the required scope and application 
     for each benefit or service listed in the List of Required 
     Benefits shall be--
       ``(1) if the domicile State mandates such benefit or 
     service, the scope and application required by the domicile 
     State; or
       ``(2) if the domicile State does not mandate such benefit 
     or service, the scope and application required by the non-
     domicile State that does require such benefit or service in 
     which the greatest number of the small business health plan's 
     participating employers are located.
       ``(c) State Licensure and Informational Filing.--
       ``(1) Domicile state.--Coverage shall be issued to a small 
     business health plan in the State in which the sponsor's 
     principal place of business is located.
       ``(2) Non-domicile states.--With respect to a State (other 
     than the domicile State) in which participating employers of 
     a small business health plan are located, an insurer issuing 
     coverage to such small business health plan shall not be 
     required to obtain full licensure in such State, except that 
     the insurer shall provide each State insurance commissioner 
     (or applicable State authority) with an informational filing 
     describing policies sold and other relevant information as 
     may be requested by the applicable State authority.

     ``SEC. 806. REQUIREMENTS FOR APPLICATION AND RELATED 
                   REQUIREMENTS.

       ``(a) Filing Fee.--Under the procedure prescribed pursuant 
     to section 802(a), a small business 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 small business 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, health insurance issuer, and 
     contract administrators and other service providers.
       ``(c) Filing Notice of Certification With States.--A 
     certification granted under this part to a small business 
     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 small 
     business 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.

     ``SEC. 807. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.

       ``A small business 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. 808. DEFINITIONS AND RULES OF CONSTRUCTION.

       ``(a) Definitions.--For purposes of this part--
       ``(1) 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 a small business health plan in 
     existence on the date of the enactment of the Health 
     Insurance Marketplace Modernization and Affordability Act of 
     2005, a person eligible to be a member of the sponsor or one 
     of its member associations.
       ``(2) Applicable authority.--The term `applicable 
     authority' means the Secretary, except that, in connection 
     with any exercise of the Secretary's authority with respect 
     to which the Secretary is required under section 506(d) to 
     consult with a State, such term means the Secretary, in 
     consultation with such State.
       ``(3) 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.
       ``(4) Group health plan.--The term `group health plan' has 
     the meaning provided in section 733(a)(1) (after applying 
     subsection (b) of this section).
       ``(5) Health insurance coverage.--The term `health 
     insurance coverage' has the meaning provided in section 
     733(b)(1).
       ``(6) Health insurance issuer.--The term `health insurance 
     issuer' has the meaning provided in section 733(b)(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) Medical care.--The term `medical care' has the 
     meaning provided in section 733(a)(2).
       ``(9) Participating employer.--The term `participating 
     employer' means, in connection with a small business 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.
       ``(10) Small employer.--The term `small employer' means, in 
     connection with a group health plan with respect to a plan 
     year, a small employer as defined in section 2791(e)(4).
       ``(b) Rule of Construction.--For purposes of determining 
     whether a plan, fund, or program is an employee welfare 
     benefit plan which is a small business health plan, and

[[Page S12247]]

     for purposes of applying this title in connection with such 
     plan, fund, or program so determined to be such an employee 
     welfare benefit plan--
       ``(1) 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
       ``(2) 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.''.
       (b) Conforming Amendments to Preemption Rules.--
       (1) Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) is 
     amended by adding at the end the following new subparagraph:
       ``(E) The preceding subparagraphs of this paragraph do not 
     apply with respect to any State law in the case of a small 
     business 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 a health 
     insurance issuer from offering health insurance coverage in 
     connection with a small business health plan which is 
     certified under part 8.
       ``(2) In any case in which health insurance coverage of any 
     policy type is offered under a small business 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 establish 
     rating and benefit requirements that would otherwise apply to 
     such coverage, provided the requirements of section 
     805(a)(2)(B) and (b) (concerning small business health plan 
     rating and benefits) are met.''.
       (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 by striking ``Nothing'' and 
     inserting ``(1) Except as provided in paragraph (2), 
     nothing''.
       (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 a small business health plan under part 8.''.
       (d) Savings Clause.--Section 731(c) of such Act is amended 
     by inserting ``or part 8'' after ``this part''.
       (e) 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 Small Business Health Plans

``801. Small business health plans.
``802. Certification of small business 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. Requirements for application and related requirements.
``807. Notice requirements for voluntary termination.
``808. Definitions and rules of construction.''.

     SEC. 102. 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 Small 
     Business Health Plans.--
       ``(1) Agreements with states.--The Secretary shall consult 
     with the State recognized under paragraph (2) with respect to 
     a small business 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 small business 
     health plans under part 8 in accordance with regulations of 
     the Secretary applicable to certification under part 8.
       ``(2) Recognition of domicile state.--In carrying out 
     paragraph (1), the Secretary shall ensure that only one State 
     will be recognized, with respect to any particular small 
     business health plan, as the State with which consultation is 
     required. In carrying out this paragraph such State shall be 
     the domicile State, as defined in section 805(c).''.

     SEC. 103. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

       (a) Effective Date.--The amendments made by this title 
     shall take effect 1 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 title within 1 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 
     808(a)(2) 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 
     trustees 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 or at such time that the arrangement provides 
     coverage to participants and beneficiaries in any State other 
     than the States in which coverage is provided on such date of 
     enactment.
       (2) Definitions.--For purposes of this subsection, the 
     terms ``group health plan'', ``medical care'', and 
     ``participating employer'' shall have the meanings provided 
     in section 808 of the Employee Retirement Income Security Act 
     of 1974, except that the reference in paragraph (7) of such 
     section to an ``small business health plan'' shall be deemed 
     a reference to an arrangement referred to in this subsection.

                   TITLE II--NEAR-TERM MARKET RELIEF

     SEC. 201. NEAR-TERM MARKET RELIEF.

       The Public Health Service Act (42 U.S.C. 201 et seq.) is 
     amended by adding at the end the following:

         ``TITLE XXIX--HEALTH CARE INSURANCE MARKETPLACE REFORM

     ``SEC. 2901. GENERAL INSURANCE DEFINITIONS.

       ``In this title, the terms `health insurance coverage', 
     `health insurance issuer', `group health plan', and 
     `individual health insurance' shall have the meanings given 
     such terms in section 2791.

                 ``Subtitle A--Near-Term Market Relief

                     ``PART I--RATING REQUIREMENTS

     ``SEC. 2911. DEFINITIONS.

       ``In this part:
       ``(1) Adopting state.--The term `adopting State' means a 
     State that has enacted either the NAIC model rules or the 
     National Interim Model Rating Rules in their entirety and as 
     the exclusive laws of the State that relate to rating in the 
     small group insurance market.
       ``(2) Commission.--The term `Commission' means the 
     Harmonized Standards Commission established under section 
     2921.
       ``(3) Eligible insurer.--The term `eligible insurer' means 
     a health insurance issuer that is licensed in a nonadopting 
     State and that--
       ``(A) notifies the Secretary, not later than 30 days prior 
     to the offering of coverage described in this subparagraph, 
     that the issuer intends to offer small group health insurance 
     coverage consistent with the National Interim Model Rating 
     Rules in a nonadopting State;
       ``(B) notifies the insurance department of a nonadopting 
     State (or other State agency), not later than 30 days prior 
     to the offering of coverage described in this subparagraph, 
     that the issuer intends to offer small group health insurance 
     coverage in that State consistent with the National Interim 
     Model Rating Rules, and provides with such notice a copy of 
     any insurance policy that it intends

[[Page S12248]]

     to offer in the State, its most recent annual and quarterly 
     financial reports, and any other information required to be 
     filed with the insurance department of the State (or other 
     State agency) by the Secretary in regulations; and
       ``(C) includes in the terms of the health insurance 
     coverage offered in nonadopting States (including in the 
     terms of any individual certificates that may be offered to 
     individuals in connection with such group health coverage) 
     and filed with the State pursuant to subparagraph (B), a 
     description in the insurer's contract of the National Interim 
     Model Rating Rules and an affirmation that such Rules are 
     included in the terms of such contract.
       ``(4) Health insurance coverage.--The term `health 
     insurance coverage' means any coverage issued in small group 
     health insurance market.
       ``(5) NAIC model rules.--The term `NAIC model rules' means 
     the rating rules provided for in the 1992 Adopted Small 
     Employer Health Insurance Availability Model Act of the 
     National Association of Insurance Commissioners.
       ``(6) National interim model rating rules.--The term 
     `National Interim Model Rating Rules' means the rules 
     promulgated under section 2912(a).
       ``(7) Nonadopting state.--The term `nonadopting State' 
     means a State that is not an adopting State.
       ``(8) Small group insurance market.--The term `small group 
     insurance market' shall have the meaning given the term 
     `small group market' in section 2791(e)(5).
       ``(9) State law.--The term `State law' means all laws, 
     decisions, rules, regulations, or other State actions 
     (including actions by a State agency) having the effect of 
     law, of any State.

     ``SEC. 2912. RATING RULES.

       ``(a) National Interim Model Rating Rules.--Not later than 
     6 months after the date of enactment of this title, the 
     Secretary, in consultation with the National Association of 
     Insurance Commissioners, shall, through expedited rulemaking 
     procedures, promulgate National Interim Model Rating Rules 
     that shall be applicable to the small group insurance market 
     in certain States until such time as the provisions of 
     subtitle B become effective. Such Model Rules shall apply in 
     States as provided for in this section beginning with the 
     first plan year after the such Rules are promulgated.
       ``(b) Utilization of NAIC Model Rules.--In promulgating the 
     National Interim Model Rating Rules under subsection (a), the 
     Secretary, except as otherwise provided in this subtitle, 
     shall utilize the NAIC model rules regarding premium rating 
     and premium variation.
       ``(c) Transition in Certain States.--
       ``(1) In general.--In promulgating the National Interim 
     Model Rating Rules under subsection (a), the Secretary shall 
     have discretion to modify the NAIC model rules in accordance 
     with this subsection to the extent necessary to provide for a 
     graduated transition, of not to exceed 3 years following the 
     promulgation of such National Interim Rules, with respect to 
     the application of such Rules to States.
       ``(2) Initial premium variation.--
       ``(A) In general.--Under the modified National Interim 
     Model Rating Rules as provided for in paragraph (1), the 
     premium variation provision of subparagraph (C) shall be 
     applicable only with respect to small group policies issued 
     in States which, on the date of enactment of this title, have 
     in place premium rating band requirements that vary by less 
     than 50 percent from the premium variation standards 
     contained in subparagraph (C) with respect to the standards 
     provided for under the NAIC model rules.
       ``(B) Other states.--Health insurance coverage offered in a 
     State that, on the date of enactment of this title, has in 
     place premium rating band requirements that vary by more than 
     50 percent from the premium variation standards contained in 
     subparagraph (C) shall be subject to such graduated 
     transition schedules as may be provided by the Secretary 
     pursuant to paragraph (1).
       ``(C) Amount of variation.--The amount of a premium rating 
     variation from the base premium rate due to health conditions 
     of covered individuals under this subparagraph shall not 
     exceed a factor of--
       ``(i) +/- 25 percent upon the issuance of the policy 
     involved; and
       ``(ii) +/- 15 percent upon the renewal of the policy.
       ``(3) Other transitional authority.--In developing the 
     National Interim Model Rating Rules, the Secretary may also 
     provide for the application of transitional standards in 
     certain States with respect to the following:
       ``(A) Independent rating classes for old and new business.
       ``(B) Such additional transition standards as the Secretary 
     may determine necessary for an effective transition.

     ``SEC. 2913. APPLICATION AND PREEMPTION.

       ``(a) Superceding of State Law.--
       ``(1) In general.--This part shall supersede any and all 
     State laws insofar as such State laws (whether enacted prior 
     to or after the date of enactment of this subtitle) relate to 
     rating in the small group insurance market as applied to an 
     eligible insurer, or small group health insurance coverage 
     issued by an eligible insurer, in a nonadopting State.
       ``(2) Nonadopting states.--This part shall supersede any 
     and all State laws of a nonadopting State insofar as such 
     State laws (whether enacted prior to or after the date of 
     enactment of this subtitle)--
       ``(A) prohibit an eligible insurer from offering coverage 
     consistent with the National Interim Model Rating Rules in a 
     nonadopting State; or
       ``(B) discriminate against or among eligible insurers 
     offering health insurance coverage consistent with the 
     National Interim Model Rating Rules in a nonadopting state.
       ``(b) Savings Clause and Construction.--
       ``(1) Nonapplication to adopting states.--Subsection (a) 
     shall not apply with respect to adopting states.
       ``(2) Nonapplication to certain insurers.--Subsection (a) 
     shall not apply with respect to insurers that do not qualify 
     as eligible insurers that offer small group health insurance 
     coverage in a nonadopting State.
       ``(3) Nonapplication where obtaining relief under state 
     law.--Subsection (a)(1) shall not apply to any State law in a 
     nonadopting State to the extent necessary to permit 
     individuals or the insurance department of the State (or 
     other State agency) to obtain relief under State law to 
     require an eligible insurer to comply with the terms of the 
     small group health insurance coverage issued in the 
     nonadopting State. In no case shall this paragraph, or any 
     other provision of this title, be construed to create a cause 
     of action on behalf of an individual or any other person 
     under State law in connection with a group health plan that 
     is subject to the Employee Retirement Income Security Act of 
     1974 or health insurance coverage issued in connection with 
     such a plan.
       ``(4) Nonapplication to enforce requirements relating to 
     the national rule.--Subsection (a)(1) shall not apply to any 
     State law in a nonadopting State to the extent necessary to 
     provide the insurance department of the State (or other State 
     agency) with the authority to enforce State law requirements 
     relating to the National Interim Model Rating Rules that are 
     not set forth in the terms of the small group health 
     insurance coverage issued in a nonadopting State, in a manner 
     that is consistent with the National Interim Model Rating 
     Rules and that imposes no greater duties or obligations on 
     health insurance issuers than the National Interim Model 
     Rating Rules.
       ``(5) Nonapplication to subsection (a)(2).--Paragraphs (3) 
     and (4) shall not apply with respect to subsection (a)(2).
       ``(6) No affect on preemption.--In no case shall this 
     subsection be construed to affect the scope of the preemption 
     provided for under the Employee Retirement Income Security 
     Act of 1974.
       ``(c) Effective Date.--This section shall apply beginning 
     in the first plan year following the issuance of the final 
     rules by the Secretary under the National Interim Model 
     Rating Rules.

     ``SEC. 2914. CIVIL ACTIONS AND JURISDICTION.

       ``(a) In General.--The district courts of the United States 
     shall have exclusive jurisdiction over civil actions 
     involving the interpretation of this part.
       ``(b) Actions.--A health insurance issuer may bring an 
     action in the district courts of the United States for 
     injunctive or other equitable relief against a nonadopting 
     State in connection with the application of a state law that 
     violates this part.
       ``(c) Violations of Section 2913.--In the case of a 
     nonadopting State that is in violation of section 2913(a)(2), 
     a health insurance issuer may bring an action in the district 
     courts of the United States for damages against the 
     nonadopting State and, if the health insurance issuer 
     prevails in such action, the district court shall award the 
     health insurance issuer its reasonable attorneys fees and 
     costs.

     ``SEC. 2915. SUNSET.

       ``The National Interim Model Rating Rules shall remain in 
     effect in a non-adopting State until such time as the 
     harmonized national rating rules are promulgated and 
     effective pursuant to part II. Upon such effective date, such 
     harmonized rules shall supersede the National Rules.

                      ``PART II--LOWER COST PLANS

     ``SEC. 2921. DEFINITIONS.

       ``In this part:
       ``(1) Adopting state.--The term `adopting State' means a 
     State that has enacted the State Benefit Compendium in its 
     entirety and as the exclusive laws of the State that relate 
     to benefit, service, and provider mandates in the group and 
     individual insurance markets.
       ``(2) Eligible insurer.--The term `eligible insurer' means 
     a health insurance issuer that is licensed in a nonadopting 
     State and that--
       ``(A) notifies the Secretary, not later than 30 days prior 
     to the offering of coverage described in this subparagraph, 
     that the issuer intends to offer group health insurance 
     coverage consistent with the State Benefit Compendium in a 
     nonadopting State;
       ``(B) notifies the insurance department of a nonadopting 
     State (or other State agency), not later than 30 days prior 
     to the offering of coverage described in this subparagraph, 
     that the issuer intends to offer group health insurance 
     coverage in that State consistent with the State Benefit 
     Compendium, and provides with such notice a copy of any 
     insurance policy that it intends to offer in the State, its 
     most recent annual and quarterly financial reports, and any 
     other information required to be filed with the insurance 
     department of the State (or other State agency) by the 
     Secretary in regulations; and
       ``(C) includes in the terms of the health insurance 
     coverage offered in nonadopting

[[Page S12249]]

     States (including in the terms of any individual certificates 
     that may be offered to individuals in connection with such 
     group health coverage) and filed with the State pursuant to 
     subparagraph (B), a description in the insurer's contract of 
     the State Benefit Compendium and that adherence to the 
     Compendium is included as a term of such contract.
       ``(3) Health insurance coverage.--The term `health 
     insurance coverage' means any coverage issued in the group or 
     individual health insurance markets.
       ``(4) Nonadopting state.--The term `nonadopting State' 
     means a State that is not an adopting State.
       ``(5) State benefit compendium.--The term `State Benefit 
     Compendium' means the Compendium issued under section 2922.
       ``(6) State law.--The term `State law' means all laws, 
     decisions, rules, regulations, or other State actions 
     (including actions by a State agency) having the effect of 
     law, of any State.

     ``SEC. 2922. OFFERING LOWER COST PLANS.

       ``(a) List of Required Benefits.--Not later than 3 months 
     after the date of enactment of this title, the Secretary 
     shall issue by interim final rule a list (to be known as the 
     `List of Required Benefits') of the benefit, service, and 
     provider mandates that are required to be provided by health 
     insurance issuers in at least 45 States as a result of the 
     application of State benefit, service, and provider mandate 
     laws.
       ``(b) State Benefit Compendium.--
       ``(1) Variance.--Not later than 12 months after the date of 
     enactment of this title, the Secretary shall issue by interim 
     final rule a compendium (to be known as the `State Benefit 
     Compendium') of harmonized descriptions of the benefit, 
     service, and provider mandates identified under subsection 
     (a). In developing the Compendium, with respect to 
     differences in State mandate laws identified under subsection 
     (a) relating to similar benefits, services, or providers, the 
     Secretary shall review and define the scope and application 
     of such State laws so that a common approach shall be 
     applicable under such Compendium in a uniform manner. In 
     making such determination, the Secretary shall adopt an 
     approach reflective of the approach used by a plurality of 
     the States requiring such benefit, service, or provider 
     mandate.
       ``(2) Effect.--The State Benefit Compendium shall provide 
     that any State benefit, service, and provider mandate law 
     (enacted prior to or after the date of enactment of this 
     title) other than those described in the Compendium shall not 
     be binding on health insurance issuers in an adopting State.
       ``(3) Implementation.--The effective date of the State 
     Benefit Compendium shall be the later of--
       ``(A) the date that is 12 months from the date of enactment 
     of this title; or
       ``(B) such subsequent date on which the interim final rule 
     for the State Benefit Compendium shall be issued.
       ``(c) Non-Association Coverage.--With respect to health 
     insurers selling insurance to small employers (as defined in 
     section 808(a)(10) of the Employee Retirement Income Security 
     Act of 1974), in the event the Secretary fails to issue the 
     State Benefit Compendium within 12 months of the date of 
     enactment of this title, the required scope and application 
     for each benefit or service listed in the List of Required 
     Benefits shall, other than with respect to insurance issued 
     to a Small Business Health Plan, be--
       ``(1) if the State in which the insurer issues a policy 
     mandates such benefit or service, the scope and application 
     required by such State; or
       ``(2) if the State in which the insurer issues a policy 
     does not mandate such benefit or service, the scope and 
     application required by such other State that does require 
     such benefit or service in which the greatest number of the 
     insurer's small employer policyholders are located.
       ``(d) Updating of State Benefit Compendium.--Not later than 
     2 years after the date on which the Compendium is issued 
     under subsection (b)(1), and every 2 years thereafter, the 
     Secretary, applying the same methodology provided for in 
     subsections (a) and (b)(1), in consultation with the National 
     Association of Insurance Commissioners, shall update the 
     Compendium. The Secretary shall issue the updated Compendium 
     by regulation, and such updated Compendium shall be effective 
     upon the first plan year following the issuance of such 
     regulation.

     ``SEC. 2923. APPLICATION AND PREEMPTION.

       ``(a) Superceding of State Law.--
       ``(1) In general.--This part shall supersede any and all 
     State laws (whether enacted prior to or after the date of 
     enactment of this title) insofar as such laws relate to 
     benefit, service, or provider mandates in the health 
     insurance market as applied to an eligible insurer, or health 
     insurance coverage issued by an eligible insurer, in a 
     nonadopting State.
       ``(2) Nonadopting states.--This part shall supersede any 
     and all State laws of a nonadopting State (whether enacted 
     prior to or after the date of enactment of this title) 
     insofar as such laws--
       ``(A) prohibit an eligible insurer from offering coverage 
     consistent with the State Benefit Compendium, as provided for 
     in section 2922(a), in a nonadopting State; or
       ``(B) discriminate against or among eligible insurers 
     offering or seeking to offer health insurance coverage 
     consistent with the State Benefit Compendium in a nonadopting 
     State.
       ``(b) Savings Clause and Construction.--
       ``(1) Nonapplication to adopting states.--Subsection (a) 
     shall not apply with respect to adopting States.
       ``(2) Nonapplication to certain insurers.--Subsection (a) 
     shall not apply with respect to insurers that do not qualify 
     as eligible insurers who offer health insurance coverage in a 
     nonadopting State.
       ``(3) Nonapplication where obtaining relief under state 
     law.--Subsection (a)(1) shall not apply to any State law of a 
     nonadopting State to the extent necessary to permit 
     individuals or the insurance department of the State (or 
     other State agency) to obtain relief under State law to 
     require an eligible insurer to comply with the terms of the 
     group health insurance coverage issued in a nonadopting 
     State. In no case shall this paragraph, or any other 
     provision of this title, be construed to create a cause of 
     action on behalf of an individual or any other person under 
     State law in connection with a group health plan that is 
     subject to the Employee Retirement Income Security Act of 
     1974 or health insurance coverage issued in connection with 
     such plan.
       ``(4) Nonapplication to enforce requirements relating to 
     the compendium.--Subsection (a)(1) shall not apply to any 
     State law in a nonadopting State to the extent necessary to 
     provide the insurance department of the State (or other state 
     agency) authority to enforce State law requirements relating 
     to the State Benefit Compendium that are not set forth in the 
     terms of the group health insurance coverage issued in a 
     nonadopting State, in a manner that is consistent with the 
     State Benefit Compendium and imposes no greater duties or 
     obligations on health insurance issuers than the State 
     Benefit Compendium.
       ``(5) Nonapplication to subsection (a)(2).--Paragraphs (3) 
     and (4) shall not apply with respect to subsection (a)(2).
       ``(6) No affect on preemption.--In no case shall this 
     subsection be construed to affect the scope of the preemption 
     provided for under the Employee Retirement Income Security 
     Act of 1974.
       ``(c) Effective Date.--This section shall apply upon the 
     first plan year following final issuance by the Secretary of 
     the State Benefit Compendium.

     ``SEC. 2924. CIVIL ACTIONS AND JURISDICTION.

       ``(a) In General.--The district courts of the United States 
     shall have exclusive jurisdiction over civil actions 
     involving the interpretation of this part.
       ``(b) Actions.--A health insurance issuer may bring an 
     action in the district courts of the United States for 
     injunctive or other equitable relief against a nonadopting 
     State in connection with the application of a State law that 
     violates this part.
       ``(c) Violations of Section 2923.--In the case of a 
     nonadopting State that is in violation of section 2923(a)(2), 
     a health insurance issuer may bring an action in the district 
     courts of the United States for damages against the 
     nonadopting State and, if the health insurance issuer 
     prevails in such action, the district court shall award the 
     health insurance issuer its reasonable attorneys fees and 
     costs.''.

           TITLE III--HARMONIZATION OF HEALTH INSURANCE LAWS

     SEC. 301. HEALTH INSURANCE REGULATORY HARMONIZATION.

       Title XXIX of the Public Health Service Act (as added by 
     section 201) is amended by adding at the end the following:

                 ``Subtitle B--Regulatory Harmonization

     ``SEC. 2931. DEFINITIONS.

       ``In this subtitle:
       ``(1) Access.--The term `access' means any requirements of 
     State law that regulate the following elements of access:
       ``(A) Renewability of coverage.
       ``(B) Guaranteed issuance as provided for in title XXVII.
       ``(C) Guaranteed issue for individuals not eligible under 
     subparagraph (B).
       ``(D) High risk pools.
       ``(E) Pre-existing conditions limitations.
       ``(2) Adopting state.--The term `adopting State' means a 
     State that has enacted the harmonized standards adopted under 
     this subtitle in their entirety and as the exclusive laws of 
     the State that relate to the harmonized standards.
       ``(3) Eligible insurer.--The term `eligible insurer' means 
     a health insurance issuer that is licensed in a nonadopting 
     State and that--
       ``(A) notifies the Secretary, not later than 30 days prior 
     to the offering of coverage described in this subparagraph, 
     that the issuer intends to offer health insurance coverage 
     consistent with the harmonized standards in a nonadopting 
     State;
       ``(B) notifies the insurance department of a nonadopting 
     State (or other State agency), not later than 30 days prior 
     to the offering of coverage described in this subparagraph, 
     that the issuer intends to offer group health insurance 
     coverage in that State consistent with the State Benefit 
     Compendium, and provides with such notice a copy of any 
     insurance policy that it intends to offer in the State, its 
     most recent annual and quarterly financial reports, and any 
     other information required to be filed with the insurance 
     department of the State (or other State agency) by the 
     Secretary in regulations; and
       ``(C) includes in the terms of the health insurance 
     coverage offered in nonadopting States (including in the 
     terms of any individual certificates that may be offered to 
     individuals in connection with such group health coverage) 
     and filed with the State

[[Page S12250]]

     pursuant to subparagraph (B), a description of the harmonized 
     standards published pursuant to section 2932(g)(2) and an 
     affirmation that such standards are a term of the contract.
       ``(4) Harmonized standards.--The term `harmonized 
     standards' means the standards adopted by the Secretary under 
     section 2932(d).
       ``(5) Health insurance coverage.--The term `health 
     insurance coverage' means any coverage issued in the health 
     insurance market.
       ``(6) Nonadopting state.--The term `nonadopting State' 
     means a State that fails to enact, within 2 years of the date 
     in which final regulations are issued by the Secretary 
     adopting the harmonized standards under this subtitle, the 
     harmonized standards in their entirety and as the exclusive 
     laws of the State that relate to the harmonized standards.
       ``(7) Patient protections.--The term `patient protections' 
     means any requirement of State law that regulate the 
     following elements of patient protections:
       ``(A) Internal appeals.
       ``(B) External appeals.
       ``(C) Direct access to providers.
       ``(D) Prompt payment of claims.
       ``(E) Utilization review.
       ``(F) Marketing standards.
       ``(8) Plurality requirement.--The term `plurality 
     requirement' means the most common substantially similar 
     requirements for elements within each area described in 
     section 2932(b)(1).
       ``(9) Rating.--The term `rating' means, at the time of 
     issuance or renewal, requirements of State law the regulate 
     the following elements of rating:
       ``(A) Limits on the types of variations in rates based on 
     health status.
       ``(B) Limits on the types of variations in rates based on 
     age and gender.
       ``(C) Limits on the types of variations in rates based on 
     geography, industry and group size.
       ``(D) Periods of time during which rates are guaranteed.
       ``(E) The review and approval of rates.
       ``(F) The establishment of classes or blocks of business.
       ``(G) The use of actuarial justifications for rate 
     variations.
       ``(10) State law.--The term `State law' means all laws, 
     decisions, rules, regulations, or other State actions 
     (including actions by a State agency) having the effect of 
     law, of any State.
       ``(11) Substantially similar.--The term `substantially 
     similar' means a requirement of State law applicable to an 
     element of an area identified in section 2932 that is similar 
     in most material respects. Where the most common State action 
     with respect to an element is to adopt no requirement for an 
     element of an area identified in such section 2932, the 
     plurality requirement shall be deemed to impose no 
     requirements for such element.

     ``SEC. 2932. HARMONIZED STANDARDS.

       ``(a) Commission.--
       ``(1) Establishment.--The Secretary, in consultation with 
     the NAIC, shall establish the Commission on Health Insurance 
     Standards Harmonization (referred to in this subtitle as the 
     `Commission') to develop recommendations that harmonize 
     inconsistent State health insurance laws in accordance with 
     the laws adopted in a plurality of the States.
       ``(2) Composition.--The Commission shall be composed of the 
     following individuals to be appointed by the Secretary:
       ``(A) Two State insurance commissioners, of which one shall 
     be a Democrat and one shall be a Republican, and of which one 
     shall be designated as the chairperson and one shall be 
     designated as the vice chairperson.
       ``(B) Two representatives of State government, one of which 
     shall be a governor of a State and one of which shall be a 
     State legislator, and one of which shall be a Democrat and 
     one of which shall be a Republican.
       ``(C) Two representatives of employers, of which one shall 
     represent small employers and one shall represent large 
     employers.
       ``(D) Two representatives of health insurers, of which one 
     shall represent insurers that offer coverage in all markets 
     (including individual, small, and large markets), and one 
     shall represent insurers that offer coverage in the small 
     market.
       ``(E) Two representatives of consumer organizations.
       ``(F) Two representatives of insurance agents and brokers.
       ``(G) Two representatives of healthcare providers.
       ``(H) Two independent representatives of the American 
     Academy of Actuaries who have familiarity with the actuarial 
     methods applicable to health insurance.
       ``(I) One administrator of a qualified high risk pool.
       ``(3) Terms.--The members of the Commission shall serve for 
     the duration of the Commission. The Secretary shall fill 
     vacancies in the Commission as needed and in a manner 
     consistent with the composition described in paragraph (2).
       ``(b) Development of Harmonized Standards.--
       ``(1) In general.--In accordance with the process described 
     in subsection (c), the Commission shall identify and 
     recommend nationally harmonized standards for the small group 
     health insurance market, the individual health insurance 
     market, and the large group health insurance market that 
     relate to the following areas:
       ``(A) Rating.
       ``(B) Access to coverage.
       ``(C) Patient protections.
       ``(2) Recommendations.--The Commission shall recommend 
     separate harmonized standards with respect to each of the 
     three insurance markets described in paragraph (1) and 
     separate standards for each element of the areas described in 
     subparagraph (A) through (C) of such paragraph within each 
     such market. Notwithstanding the previous sentence, the 
     Commission shall not recommend any harmonized standards that 
     disrupt, expand, or duplicate the benefit, service, or 
     provider mandate standards provided in the State Benefit 
     Compendium pursuant to section 2922(a).
       ``(c) Process for Identifying Harmonized Standards.--
       ``(1) In general.--The Commission shall develop 
     recommendations to harmonize inconsistent State insurance 
     laws with the laws adopted in a plurality of the States. In 
     carrying out the previous sentence, the Commission shall 
     review all State laws that regulate insurance in each of the 
     insurance markets and areas described in subsection (b)(1) 
     and identify the plurality requirement within each element of 
     such areas. Such plurality requirement shall be the 
     harmonized standard for such area in each such market.
       ``(2) Consultation.--The Commission shall consult with the 
     National Association of Insurance Commissioners in 
     identifying the plurality requirements for each element 
     within the area and in recommending the harmonized standards.
       ``(3) Review of federal laws.--The Commission shall review 
     whether any Federal law imposes a requirement relating to the 
     markets and areas described in subsection (b)(1). In such 
     case, such Federal requirement shall be deemed the plurality 
     requirement and the Commission shall recommend the Federal 
     requirement as the harmonized standard for such elements.
       ``(d) Recommendations and Adoption by Secretary.--
       ``(1) Recommendations.--Not later than 1 year after the 
     date of enactment of this title, the Commission shall 
     recommend to the Secretary the adoption of the harmonized 
     standards identified pursuant to subsection (c).
       ``(2) Regulations.--Not later than 120 days after receipt 
     of the Commission's recommendations under paragraph (1), the 
     Secretary shall issue final regulations adopting the 
     recommended harmonized standards. If the Secretary finds the 
     recommended standards for an element of an area to be 
     arbitrary and inconsistent with the plurality requirements of 
     this section, the Secretary may issue a unique harmonized 
     standard only for such element through the application of a 
     process similar to the process set forth in subsection (c) 
     and through the issuance of proposed and final regulations.
       ``(3) Effective date.--The regulations issued by the 
     Secretary under paragraph (2) shall be effective on the date 
     that is 2 years after the date on which such regulations were 
     issued.
       ``(e) Termination.--The Commission shall terminate and be 
     dissolved after making the recommendations to the Secretary 
     pursuant to subsection (d)(1).
       ``(f) Updated Harmonized Standards.--
       ``(1) In general.--Not later than 2 years after the 
     termination of the Commission under subsection (e), and every 
     2 years thereafter, the Secretary shall update the harmonized 
     standards. Such updated standards shall be adopted in 
     accordance with paragraph (2).
       ``(2) Updating of standards.--
       ``(A) In general.--The Secretary shall review all State 
     laws that regulate insurance in each of the markets and 
     elements of areas set forth in subsection (b)(1) and identify 
     whether a plurality of States have adopted substantially 
     similar requirements that differ from the harmonized 
     standards adopted by the Secretary pursuant to subsection 
     (d). In such case, the Secretary shall consider State laws 
     that have been enacted with effective dates that are 
     contingent upon adoption as a harmonized standard by the 
     Secretary. Substantially similar requirements for each 
     element within such area shall be considered to be an updated 
     harmonized standard for such an area.
       ``(B) Report.--The Secretary shall request the National 
     Association of Insurance Commissioners to issue a report to 
     the Secretary every 2 years to assist the Secretary in 
     identifying the updated harmonized standards under this 
     paragraph. Nothing in this subparagraph shall be construed to 
     prohibit the Secretary from issuing updated harmonized 
     standards in the absence of such a report.
       ``(C) Regulations.--The Secretary shall issue regulations 
     adopting updated harmonized standards under this paragraph 
     within 90 days of identifying such standards. Such 
     regulations shall be effective beginning on the date that is 
     2 years after the date on which such regulations are issued.
       ``(g) Publication.--
       ``(1) Listing.--The Secretary shall maintain an up to date 
     listing of all harmonized standards adopted under this 
     section on the Internet website of the Department of Health 
     and Human Services.
       ``(2) Sample contract language.--The Secretary shall 
     publish on the Internet website of the Department of Health 
     and Human Services sample contract language that incorporates 
     the harmonized standards adopted under this section, which 
     may be

[[Page S12251]]

     used by insurers seeking to qualify as an eligible insurer. 
     The types of harmonized standards that shall be included in 
     sample contract language are the standards that are relevant 
     to the contractual bargain between the insurer and insured.
       ``(h) State Adoption and Enforcement.--Not later than 2 
     years after the issuance by the Secretary of final 
     regulations adopting harmonized standards under this section, 
     the States may adopt such harmonized standards (and become an 
     adopting State) and, in which case, shall enforce the 
     harmonized standards pursuant to State law.

     ``SEC. 2933. APPLICATION AND PREEMPTION.

       ``(a) Superceding of State Law.--
       ``(1) In general.--The harmonized standards adopted under 
     this subtitle shall supersede any and all State laws (whether 
     enacted prior to or after the date of enactment of this 
     title) insofar as such State laws relate to the areas of 
     harmonized standards as applied to an eligible insurer, or 
     health insurance coverage issued by a eligible insurer, in a 
     nonadopting State.
       ``(2) Nonadopting states.--This subtitle shall supersede 
     any and all State laws of a nonadopting State (whether 
     enacted prior to or after the date of enactment of this 
     title) insofar as they may--
       ``(A) prohibit an eligible insurer from offering coverage 
     consistent with the harmonized standards in the nonadopting 
     State; or
       ``(B) discriminate against or among eligible insurers 
     offering or seeking to offer health insurance coverage 
     consistent with the harmonized standards in the nonadopting 
     State.
       ``(b) Savings Clause and Construction.--
       ``(1) Nonapplication to adopting states.--Subsection (a) 
     shall not apply with respect to adopting States.
       ``(2) Nonapplication to certain insurers.--Subsection (a) 
     shall not apply with respect to insurers that do not qualify 
     as eligible insurers who offer health insurance coverage in a 
     nonadopting State.
       ``(3) Nonapplication where obtaining relief under state 
     law.--Subsection (a)(1) shall not apply to any State law of a 
     nonadopting State to the extent necessary to permit 
     individuals or the insurance department of the State (or 
     other State agency) to obtain relief under State law to 
     require an eligible insurer to comply with the terms of the 
     health insurance coverage issued in a nonadopting State. In 
     no case shall this paragraph, or any other provision of this 
     subtitle, be construed to permit a cause of action on behalf 
     of an individual or any other person under State law in 
     connection with a group health plan that is subject to the 
     Employee Retirement Income Security Act of 1974 or health 
     insurance coverage issued in connection with such plan.
       ``(4) Nonapplication to enforce requirements relating to 
     the compendium.--Subsection (a)(1) shall not apply to any 
     State law in a nonadopting State to the extent necessary to 
     provide the insurance department of the State (or other state 
     agency) authority to enforce State law requirements relating 
     to the harmonized standards that are not set forth in the 
     terms of the health insurance coverage issued in a 
     nonadopting State, in a manner that is consistent with the 
     harmonized standards and imposes no greater duties or 
     obligations on health insurance issuers than the harmonized 
     standards.
       ``(5) Nonapplication to subsection (a)(2).--Paragraphs (3) 
     and (4) shall not apply with respect to subsection (a)(2).
       ``(6) No affect on preemption.--In no case shall this 
     subsection be construed to affect the scope of the preemption 
     provided for under the Employee Retirement Income Security 
     Act of 1974.
       ``(c) Effective Date.--This section shall apply beginning 
     on the date that is 2 years after the date on which final 
     regulations are issued by the Secretary under this subtitle 
     adopting the harmonized standards.

     ``SEC. 2934. CIVIL ACTIONS AND JURISDICTION.

       ``(a) In General.--The district courts of the United States 
     shall have exclusive jurisdiction over civil actions 
     involving the interpretation of this subtitle.
       ``(b) Actions.--A health insurance issuer may bring an 
     action in the district courts of the United States for 
     injunctive or other equitable relief against a nonadopting 
     State in connection with the application of a State law that 
     violates this subtitle.
       ``(c) Violations of Section 2933.--In the case of a 
     nonadopting State that is in violation of section 2933(a)(2), 
     a health insurance issuer may bring an action in the district 
     courts of the United States for damages against the 
     nonadopting State and, if the health insurance issuer 
     prevails in such action, the district court shall award the 
     health insurance issuer its reasonable attorneys fees and 
     costs.

     ``SEC. 2935. AUTHORIZATION OF APPROPRIATIONS.

       ``There are authorized to be appropriated such sums as may 
     be necessary to carry out this subtitle.''.
  Mr. NELSON of Nebraska. Mr. President, I am pleased to join with my 
good friend, Chairman Mike Enzi, in introducing the Health Insurance 
Marketplace Modernization and Affordability Act. This legislation will 
help bring much-needed relief to small businesses who are struggling to 
afford health insurance coverage for their employees.
  The affordability of health insurance coverage is a major problem 
facing America's businesses and consumers. According to the Kaiser 
Family Foundation, health insurance premiums for businesses rose 9.2 
percent last year. While health care cost increases have subsided 
somewhat, premium increases for last year alone were more than 3 times 
the growth in workers' wages and two-and-a-half times the rate of 
inflation.
  This legislation helps address the problem of rising health care 
costs. By providing small businesses with more ability to pool and by 
harmonizing and streamlining insurance regulations, this bill will help 
reduce the cost of coverage for small businesses. By lowering costs, 
this bill holds promise in reducing the number of working Americans who 
lack health insurance coverage. Our legislation will help reduce costs 
in a balanced and carefully targeted manner while avoiding some of the 
problems that other proposals have raised.
  In contrast to other proposals, such as Association Health Plans 
(AHP), our bill retains State-based regulation and oversight. State-
based oversight and enforcement is critical to protecting consumers. 
Unlike other AHP bills, associations cannot self insure and be outside 
of State oversight. As a former insurance director, this issue is 
critical for my support.
  Moreover, the bill maintains a level playing field in the health 
insurance marketplace by avoiding harmful provisions that would have 
led to rampant ``cherry-picking'' and adverse selection problems. The 
bill does not allow association health plans to abide by less 
comprehensive rules and under minimal oversight by the U.S. Department 
of Labor--which would allow these plans to attract only young and 
healthy groups while increasing costs for the vast majority of small 
businesses and their workers.
  I applaud the effort of Senator Enzi and his talented staff and am 
pleased to introduce the bill. However, I also recognize that is not a 
perfect solution; nor is it a panacea for all the problems facing our 
health care system.
  I look forward to working with Senator Enzi to assure that the bill 
preserves comprehensive and high-quality benefits while, at the same 
time, allowing small businesses to have access to affordable coverage.

                          ____________________