[Congressional Record Volume 152, Number 56 (Wednesday, May 10, 2006)]
[Senate]
[Pages S4262-S4327]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  HEALTH INSURANCE MARKETPLACE MODERNIZATION AND AFFORDABILITY ACT OF 
                                  2006

  The PRESIDING OFFICER. The Senate will proceed to the consideration 
of S. 1955, which the clerk will report.
  The assistant legislative clerk read as follows:

       A bill (S. 1955) 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.

  The Senate proceeded to consider the bill which had been reported 
from the Committee on Health, Education, Labor, and Pensions, with an 
amendment in the nature of a substitute.
  (Strike the part shown in black brackets and insert the part shown in 
italic.)

                                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

[[Page S4263]]

     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 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

[[Page S4264]]

     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
       [``(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.

[[Page S4265]]

       [``(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 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

[[Page S4266]]

     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 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

[[Page S4267]]

     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 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--

[[Page S4268]]

       [``(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 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

[[Page S4269]]

     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 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.''.]

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS; PURPOSE.

       (a) Short Title.--This Act may be cited as the ``Health 
     Insurance Marketplace Modernization and Affordability Act of 
     2006''.
       (b) Table of Contents.--The table of contents is as 
     follows:

Sec. 1. Short title; table of contents; purposes.

                  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--MARKET RELIEF

Sec. 201. Market relief.

         TITLE III--HARMONIZATION OF HEALTH INSURANCE STANDARDS

Sec. 301. Health Insurance Standards Harmonization.
       (c) Purposes.--It is the purpose of this Act to--
       (1) make more affordable health insurance options available 
     to small businesses, working families, and all Americans;
       (2) assure effective State regulatory protection of the 
     interests of health insurance consumers; and
       (3) create a more efficient and affordable health insurance 
     marketplace through collaborative development of uniform 
     regulatory standards.

                  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 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;
       ``(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; and
       ``(4) does not condition membership on the basis of a 
     minimum group size.
     Any sponsor consisting of an association of entities which 
     meet the requirements of paragraphs (1), (2), (3), and (4) 
     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 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 business health plan involved is failing to comply with 
     the requirements of this part.
       ``(d) Expedited and Deemed Certification.--
       ``(1) In general.--If the Secretary fails to act on an 
     application for certification under this section within 90 
     days of receipt of such application, the applying small 
     business health plan

[[Page S4270]]

     shall be deemed certified until such time as the Secretary 
     may deny for cause the application for certification.
       ``(2) Civil penalty.--The Secretary may assess a civil 
     penalty against the board of trustees and plan sponsor 
     (jointly and severally) of a small business health plan that 
     is deemed certified under paragraph (1) of up to $500,000 in 
     the event the Secretary determines that the application for 
     certification of such small business health plan was 
     willfully or with gross negligence incomplete or inaccurate.

     ``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 2006.
       ``(B) Sole authority.--The board has sole authority under 
     the plan to approve applications for participation in the 
     plan and to contract with insurers.
       ``(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, 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 dependents of individuals described in 
     subparagraph (A).
       ``(b) 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.
       ``(c) 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) information regarding all coverage options available 
     under the plan is made readily available to any employer 
     eligible to participate; 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 trustees serves as the 
     named fiduciary required for plans under section 402(a)(1) 
     and serves in the capacity of a plan administrator (referred 
     to in section 3(16)(A)); 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), except that small business 
     health plans shall not be subject to paragraphs (1)(A) and 
     (3) of section 2911(b) of the Public Health Service Act; or
       ``(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 small group 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 2006.
       ``(3) Exceptions regarding self-employed and large 
     employers.--
       ``(A) Self employed.--
       ``(i) In general.--Small business health plans with 
     participating employers who are self-employed individuals 
     (and their dependents) shall enroll such self-employed 
     participating employers in accordance with rating rules that 
     do not violate the rating rules for self-employed individuals 
     in the State in which such self-employed participating 
     employers are located.
       ``(ii) Guarantee issue.--Small business health plans with 
     participating employers who are self-employed individuals 
     (and their dependents) may decline to guarantee issue to such 
     participating employers in States in which guarantee issue is 
     not otherwise required for the self-employed in that State.
       ``(B) Large employers.--Small business health plans with 
     participating employers that are larger than small employers 
     (as defined in section 808(a)(10)) shall enroll such large 
     participating employers in accordance with rating rules that 
     do not violate the rating rules for large employers in the 
     State in which such large participating employers are 
     located.
       ``(4) 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

[[Page S4271]]

     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 
     2006.
       ``(c) Domicile and Non-Domicile States.--
       ``(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 but in which the 
     insurer of the small business health plan in the domicile 
     State is not yet licensed, the following shall apply:
       ``(A) Temporary preemption.--If, upon the expiration of the 
     90-day period following the submission of a licensure 
     application by such insurer (that includes a certified copy 
     of an approved licensure application as submitted by such 
     insurer in the domicile State) to such State, such State has 
     not approved or denied such application, such State's health 
     insurance licensure laws shall be temporarily preempted and 
     the insurer shall be permitted to operate in such State, 
     subject to the following terms:
       ``(i) Application of non-domicile state law.--Except with 
     respect to licensure and with respect to the terms of 
     subtitle A of title XXIX of the Public Health Service Act 
     (relating to rating and benefits as added by the Health 
     Insurance Marketplace Modernization and Affordability Act of 
     2006), the laws and authority of the non-domicile State shall 
     remain in full force and effect.
       ``(ii) Revocation of preemption.--The preemption of a non-
     domicile State's health insurance licensure laws pursuant to 
     this subparagraph, shall be terminated upon the occurrence of 
     either of the following:

       ``(I) Approval or denial of application.--The approval of 
     denial of an insurer's licensure application, following the 
     laws and regulations of the non-domicile State with respect 
     to licensure.
       ``(II) Determination of material violation.--A 
     determination by a non-domicile State that an insurer 
     operating in a non-domicile State pursuant to the preemption 
     provided for in this subparagraph is in material violation of 
     the insurance laws (other than licensure and with respect to 
     the terms of subtitle A of title XXIX of the Public Health 
     Service Act (relating to rating and benefits added by the 
     Health Insurance Marketplace Modernization and Affordability 
     Act of 2006)) of such State.

       ``(B) No prohibition on promotion.--Nothing in this 
     paragraph shall be construed to prohibit a small business 
     health plan or an insurer from promoting coverage prior to 
     the expiration of the 90-day period provided for in 
     subparagraph (A), except that no enrollment or collection of 
     contributions shall occur before the expiration of such 90-
     day period.
       ``(C) Licensure.--Except with respect to the application of 
     the temporary preemption provision of this paragraph, nothing 
     in this part shall be construed to limit the requirement that 
     insurers issuing coverage to small business health plans 
     shall be licensed in each State in which the small business 
     health plans operate.
       ``(D) Servicing by licensed insurers.--Notwithstanding 
     subparagraph (C), the requirements of this subsection may 
     also be satisfied if the participating employers of a small 
     business health plan are serviced by a licensed insurer in 
     that State, even where such insurer is not the insurer of 
     such small business health plan in the State in which such 
     small business health plan is domiciled.

     ``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 the small business health 
     plans operate.
       ``(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, or
       ``(B) in the case of a sponsor with members which consist 
     of associations, a person who is a member or employee of any 
     such association and elects an affiliated status with the 
     sponsor.
       ``(2) Applicable authority.--The term `applicable 
     authority' means the Secretary of Labor, 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), except that such term shall not include excepted 
     benefits (as defined in section 733(c)).
       ``(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).
       ``(11) Trade association and professional association.--The 
     terms `trade association' and `professional association' mean 
     an entity that meets the requirements of section 1.501(c)(6)-
     1 of title 26, Code of Federal Regulations (as in effect on 
     the date of enactment of this Act).
       ``(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 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

[[Page S4272]]

       ``(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.
       ``(c) Renewal.--Notwithstanding any provision of law to the 
     contrary, a participating employer in a small business health 
     plan shall not be deemed to be a plan sponsor in applying 
     requirements relating to coverage renewal.
       ``(d) Health Savings Accounts.--Nothing in this part shall 
     be construed to inhibit the development of health savings 
     accounts pursuant to section 223 of the Internal Revenue Code 
     of 1986.''.
       (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 subtitle A of 
     title XXIX of the Public Health Service Act (as added by 
     title II of the Health Insurance Marketplace Modernization 
     and Affordability Act of 2006) (concerning health plan rating 
     and benefits) are met.''.
       (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 12 months 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 6 months 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--MARKET RELIEF

     SEC. 201. 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 MODERNIZATION

     ``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--Market Relief

                     ``PART I--RATING REQUIREMENTS

     ``SEC. 2911. DEFINITIONS.

       ``(a) General Definitions.--In this part:
       ``(1) Adopting state.--The term `adopting State' means a 
     State that, with respect to the small group market, has 
     enacted either the Model Small Group Rating Rules or, if 
     applicable to such State, the Transitional Model Small Group 
     Rating Rules, each in their entirety and as the exclusive 
     laws of the State that relate to rating in the small group 
     insurance market.
       ``(2) 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 
     insurance laws of such State.
       ``(3) Base premium rate.--The term `base premium rate' 
     means, for each class of business with respect to a rating 
     period, the lowest premium rate charged or that could have 
     been charged under a rating system for that class of business 
     by the small employer carrier to small employers with similar 
     case characteristics for health benefit plans with the same 
     or similar coverage
       ``(4) Eligible insurer.--The term `eligible insurer' means 
     a health insurance issuer that is licensed in a 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 Model Small Group Rating Rules or, as 
     applicable, transitional small group rating rules in a 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 Model Small Group 
     Rating Rules, 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); 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 Model Small 
     Group Rating Rules and an affirmation that such Rules are 
     included in the terms of such contract.

[[Page S4273]]

       ``(5) Health insurance coverage.--The term `health 
     insurance coverage' means any coverage issued in the small 
     group health insurance market, except that such term shall 
     not include excepted benefits (as defined in section 
     2791(c)).
       ``(6) Index rate.--The term `index rate' means for each 
     class of business with respect to the rating period for small 
     employers with similar case characteristics, the arithmetic 
     average of the applicable base premium rate and the 
     corresponding highest premium rate.
       ``(7)  Model small group rating rules.--The term ` Model 
     Small Group Rating Rules' means the rules set forth in 
     subsection (b).
       ``(8) Nonadopting state.--The term `nonadopting State' 
     means a State that is not an adopting State.
       ``(9) 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).
       ``(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.
       ``(b) Definition Relating to Model Small Group Rating 
     Rules.--The term `Model Small Group Rating Rules' means 
     adapted rating rules drawn from the Adopted Small Employer 
     Health Insurance Availability Model Act of 1993 of the 
     National Association of Insurance Commissioners consisting of 
     the following:
       ``(1) Premium rates.--Premium rates for health benefit 
     plans to which this title applies shall be subject to the 
     following provisions relating to premiums:
       ``(A) Index rate.--The index rate for a rating period for 
     any class of business shall not exceed the index rate for any 
     other class of business by more than 20 percent.
       ``(B) Class of businesses.--With respect to a class of 
     business, the premium rates charged during a rating period to 
     small employers with similar case characteristics for the 
     same or similar coverage or the rates that could be charged 
     to such employers under the rating system for that class of 
     business, shall not vary from the index rate by more than 25 
     percent of the index rate under subparagraph (A).
       ``(C) Increases for new rating periods.--The percentage 
     increase in the premium rate charged to a small employer for 
     a new rating period may not exceed the sum of the following:
       ``(i) The percentage change in the new business premium 
     rate measured from the first day of the prior rating period 
     to the first day of the new rating period. In the case of a 
     health benefit plan into which the small employer carrier is 
     no longer enrolling new small employers, the small employer 
     carrier shall use the percentage change in the base premium 
     rate, except that such change shall not exceed, on a 
     percentage basis, the change in the new business premium rate 
     for the most similar health benefit plan into which the small 
     employer carrier is actively enrolling new small employers.
       ``(ii) Any adjustment, not to exceed 15 percent annually 
     and adjusted pro rata for rating periods of less then 1 year, 
     due to the claim experience, health status or duration of 
     coverage of the employees or dependents of the small employer 
     as determined from the small employer carrier's rate manual 
     for the class of business involved.
       ``(iii) Any adjustment due to change in coverage or change 
     in the case characteristics of the small employer as 
     determined from the small employer carrier's rate manual for 
     the class of business.
       ``(D) Uniform application of adjustments.--Adjustments in 
     premium rates for claim experience, health status, or 
     duration of coverage shall not be charged to individual 
     employees or dependents. Any such adjustment shall be applied 
     uniformly to the rates charged for all employees and 
     dependents of the small employer.
       ``(E) Use of industry as a case characteristic.--A small 
     employer carrier may utilize industry as a case 
     characteristic in establishing premium rates, so long as the 
     highest rate factor associated with any industry 
     classification does not exceed the lowest rate factor 
     associated with any industry classification by more than 15 
     percent.
       ``(F) Consistent application of factors.--Small employer 
     carriers shall apply rating factors, including case 
     characteristics, consistently with respect to all small 
     employers in a class of business. Rating factors shall 
     produce premiums for identical groups which differ only by 
     the amounts attributable to plan design and do not reflect 
     differences due to the nature of the groups assumed to select 
     particular health benefit plans.
       ``(G) Treatment of plans as having same rating period.--A 
     small employer carrier shall treat all health benefit plans 
     issued or renewed in the same calendar month as having the 
     same rating period.
       ``(H) Restricted network provisions.--For purposes of this 
     subsection, a health benefit plan that contains a restricted 
     network provision shall not be considered similar coverage to 
     a health benefit plan that does not contain a similar 
     provision if the restriction of benefits to network providers 
     results in substantial differences in claims costs.
       ``(I) Prohibition on use of certain case characteristics.--
     The small employer carrier shall not use case characteristics 
     other than age, gender, industry, geographic area, family 
     composition, group size, and participation in wellness 
     programs without prior approval of the applicable State 
     authority.
       ``(J) Require compliance.--Premium rates for small business 
     health benefit plans shall comply with the requirements of 
     this subsection notwithstanding any assessments paid or 
     payable by a small employer carrier as required by a State's 
     small employer carrier reinsurance program.
       ``(2) Establishment of separate class of business.--Subject 
     to paragraph (3), a small employer carrier may establish a 
     separate class of business only to reflect substantial 
     differences in expected claims experience or administrative 
     costs related to the following:
       ``(A) The small employer carrier uses more than one type of 
     system for the marketing and sale of health benefit plans to 
     small employers.
       ``(B) The small employer carrier has acquired a class of 
     business from another small employer carrier.
       ``(C) The small employer carrier provides coverage to one 
     or more association groups that meet the requirements of this 
     title.
       ``(3) Limitation.--A small employer carrier may establish 
     up to 9 separate classes of business under paragraph (2), 
     excluding those classes of business related to association 
     groups under this title.
       ``(4) Additional groupings.--The applicable State authority 
     may approve the establishment of additional distinct 
     groupings by small employer carriers upon the submission of 
     an application to the applicable State authority and a 
     finding by the applicable State authority that such action 
     would enhance the efficiency and fairness of the small 
     employer insurance marketplace.
       ``(5) Limitation on transfers.--A small employer carrier 
     shall not transfer a small employer involuntarily into or out 
     of a class of business. A small employer carrier shall not 
     offer to transfer a small employer into or out of a class of 
     business unless such offer is made to transfer all small 
     employers in the class of business without regard to case 
     characteristics, claim experience, health status or duration 
     of coverage since issue.
       ``(6) Suspension of the rules.--The applicable State 
     authority may suspend, for a specified period, the 
     application of paragraph (1) to the premium rates applicable 
     to one or more small employers included within a class of 
     business of a small employer carrier for one or more rating 
     periods upon a filing by the small employer carrier and a 
     finding by the applicable State authority either that the 
     suspension is reasonable when considering the financial 
     condition of the small employer carrier or that the 
     suspension would enhance the efficiency and fairness of the 
     marketplace for small employer health insurance.

     ``SEC. 2912. RATING RULES.

       ``(a) Implementation of Model Small Group Rating Rules.--
     Not later than 6 months after the enactment of this title, 
     the Secretary shall promulgate regulations implementing the 
     Model Small Group Rating Rules pursuant to section 2911(b).
       ``(b) Transitional Model Small Group Rating Rules.--
       ``(1) In general.--Not later than 6 months after the date 
     of enactment of this title and to the extent necessary to 
     provide for a graduated transition to the Model Small Group 
     Rating Rules, the Secretary, in consultation with the NAIC, 
     shall promulgate Transitional Model Small Group Rating Rules 
     in accordance with this subsection, which shall be applicable 
     with respect to certain non-adopting States for a period of 
     not to exceed 5 years from the date of the promulgation of 
     the Model Small Group Rating Rules pursuant to subsection 
     (a). After the expiration of such 5-year period, the 
     transitional model small group rating rules shall expire, and 
     the Model Small Group Rating Rules shall then apply with 
     respect to all non-adopting States pursuant to the provisions 
     of this part.
       ``(2) Premium variation during transition.--
       ``(A) Transition states.--During the transition period 
     described in paragraph (1), small group health insurance 
     coverage offered in a non-adopting State that had in place 
     premium rating band requirements or premium limits that 
     varied by less than 12.5 percent from the index rate within a 
     class of business on the date of enactment of this title, 
     shall not be subject to the premium variation provision of 
     section 2911(b)(1) of the Model Small Group Rating Rules and 
     shall instead be subject to the Transitional Model Small 
     Group Rating Rules as promulgated by the Secretary pursuant 
     to paragraph (1).
       ``(B) Non-transition states.--During the transition period 
     described in paragraph (1), and thereafter, small group 
     health insurance coverage offered in a non-adopting State 
     that had in place premium rating band requirements or premium 
     limits that varied by more than 12.5 percent from the index 
     rate within a class of business on the date of enactment of 
     this title, shall not be subject to the Transitional Model 
     Small Group Rating Rules as promulgated by the Secretary 
     pursuant to paragraph (1), and instead shall be subject to 
     the Model Small Group Rating Rules effective beginning with 
     the first plan year or calendar year following the 
     promulgation of such Rules, at the election of the eligible 
     insurer.
       ``(3) Transitioning of old business.--In developing the 
     transitional model small group rating rules under paragraph 
     (1), the Secretary shall, after consultation with the 
     National Association of Insurance Commissioners and 
     representatives of insurers operating in the small group 
     health insurance market, promulgate special transition 
     standards and timelines with respect to independent rating 
     classes for old and new business, to the extent reasonably 
     necessary to protect health insurance consumers and to ensure 
     a stable and fair transition for old and new market entrants.
       ``(4) Other transitional authority.--In developing the 
     Transitional Model Small Group Rating Rules under paragraph 
     (1), the Secretary shall provide for the application of the 
     Transitional Model Small Group Rating Rules in transition 
     States as the Secretary may determine necessary for a an 
     effective transition.
       ``(c) Market Re-Entry.--

[[Page S4274]]

       ``(1) In general.--Notwithstanding any other provision of 
     law, a health insurance issuer that has voluntarily withdrawn 
     from providing coverage in the small group market prior to 
     the date of enactment of the Health Insurance Marketplace 
     Modernization and Affordability Act of 2006 shall not be 
     excluded from re-entering such market on a date that is more 
     than 180 days after such date of enactment.
       ``(2) Termination.--The provision of this subsection shall 
     terminate on the date that is 24 months after the date of 
     enactment of the Health Insurance Marketplace Modernization 
     and Affordability Act of 2006.

     ``SEC. 2913. APPLICATION AND PREEMPTION.

       ``(a) Superseding of State Law.--
       ``(1) In general.--This part shall supersede any and all 
     State laws of a non-adopting State 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, 
     including with respect to coverage issued to a small employer 
     through a small business health plan, in a 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, 
     marketing, or implementing small group health insurance 
     coverage consistent with the Model Small Group Rating Rules 
     or transitional model small group rating rules; or
       ``(B) have the effect of retaliating against or otherwise 
     punishing in any respect an eligible insurer for offering, 
     marketing, or implementing small group health insurance 
     coverage consistent with the Model Small Group Rating Rules 
     or transitional model small group rating rules.
       ``(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 supercede 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 Model Small 
     Group Rating Rules or transitional model small group rating 
     rules.
       ``(4) No effect on preemption.--In no case shall this part 
     be construed to limit or affect in any manner the preemptive 
     scope of sections 502 and 514 of the Employee Retirement 
     Income Security Act of 1974. In no case shall this part be 
     construed to create any cause of action under Federal or 
     State law or enlarge or affect any remedy available under the 
     Employee Retirement Income Security Act of 1974.
       ``(c) Effective Date.--This section shall apply, at the 
     election of the eligible insurer, beginning in the first plan 
     year or the first calendar year following the issuance of the 
     final rules by the Secretary under the Model Small Group 
     Rating Rules or, as applicable, the Transitional Model Small 
     Group Rating Rules, but in no event earlier than the date 
     that is 12 months after the date of enactment of this title.

     ``SEC. 2914. CIVIL ACTIONS AND JURISDICTION.

       ``(a) In General.--The courts of the United States shall 
     have exclusive jurisdiction over civil actions involving the 
     interpretation of this part.
       ``(b) Actions.--An eligible insurer may bring an action in 
     the district courts of the United States for injunctive or 
     other equitable relief against any officials or agents of a 
     nonadopting State in connection with any conduct or action, 
     or proposed conduct or action, by such officials or agents 
     which violates, or which would if undertaken violate, section 
     2913.
       ``(c) Direct Filing in Court of Appeals.--At the election 
     of the eligible insurer, an action may be brought under 
     subsection (b) directly in the United States Court of Appeals 
     for the circuit in which the nonadopting State is located by 
     the filing of a petition for review in such Court.
       ``(d) Expedited Review.--
       ``(1) District court.--In the case of an action brought in 
     a district court of the United States under subsection (b), 
     such court shall complete such action, including the issuance 
     of a judgment, prior to the end of the 120-day period 
     beginning on the date on which such action is filed, unless 
     all parties to such proceeding agree to an extension of such 
     period.
       ``(2) Court of appeals.--In the case of an action brought 
     directly in a United States Court of Appeal under subsection 
     (c), or in the case of an appeal of an action brought in a 
     district court under subsection (b), such Court shall 
     complete all action on the petition, including the issuance 
     of a judgment, prior to the end of the 60-day period 
     beginning on the date on which such petition is filed with 
     the Court, unless all parties to such proceeding agree to an 
     extension of such period.
       ``(e) Standard of Review.--A court in an action filed under 
     this section, shall render a judgment based on a review of 
     the merits of all questions presented in such action and 
     shall not defer to any conduct or action, or proposed conduct 
     or action, of a nonadopting State.

     ``SEC. 2915. ONGOING REVIEW.

       ``Not later than 5 years after the date on which the Model 
     Small Group Rating Rules are issued under this part, and 
     every 5 years thereafter, the Secretary, in consultation with 
     the National Association of Insurance Commissioners, shall 
     prepare and submit to the appropriate committees of Congress 
     a report that assesses the effect of the Model Small Group 
     Rating Rules on access, cost, and market functioning in the 
     small group market. Such report may, if the Secretary, in 
     consultation with the National Association of Insurance 
     Commissioners, determines such is appropriate for improving 
     access, costs, and market functioning, contain legislative 
     proposals for recommended modification to such Model Small 
     Group Rating Rules.

                      ``PART II--AFFORDABLE PLANS

     ``SEC. 2921. DEFINITIONS.

       ``In this part:
       ``(1) Adopting state.--The term `adopting State' means a 
     State that has enacted the Benefit Choice Standards in their 
     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) Benefit choice standards.--The term `Benefit Choice 
     Standards' means the Standards issued under section 2922.
       ``(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 Benefit Choice 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 health insurance coverage in 
     that State consistent with the Benefit Choice Standards, 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 pursuant to subparagraph (B), a 
     description in the insurer's contract of the Benefit Choice 
     Standards and that adherence to such Standards is included as 
     a term of such contract.
       ``(4) Health insurance coverage.--The term `health 
     insurance coverage' means any coverage issued in the group or 
     individual health insurance markets, except that such term 
     shall not include excepted benefits (as defined in section 
     2791(c)).
       ``(5) Nonadopting state.--The term `nonadopting State' 
     means a State that is not an adopting State.
       ``(6) 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).
       ``(7) 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 AFFORDABLE PLANS.

       ``(a) Benefit Choice Options.--
       ``(1) Development.--Not later than 6 months after the date 
     of enactment of this title, the Secretary shall issue, by 
     interim final rule, Benefit Choice Standards that implement 
     the standards provided for in this part.
       ``(2) Basic options.--The Benefit Choice Standards shall 
     provide that a health insurance issuer in a State, may offer 
     a coverage plan or plan in the small group market, individual 
     market, large group market, or through a small business 
     health plan, that does not comply with one or more mandates 
     regarding covered benefits, services, or category of provider 
     as may be in effect in such State with respect to such market 
     or markets (either prior to or following the date of 
     enactment of this title), if such issuer also offers in such 
     market or markets an enhanced option as provided for in 
     paragraph (3).
       ``(3) Enhanced option.--A health insurance issuer issuing a 
     basic option as provided for in paragraph (2) shall also 
     offer to purchasers (including, with respect to a small 
     business health plan, the participating employers of such 
     plan) an enhanced option, which shall at a minimum include 
     such covered benefits, services, and categories of providers 
     as are covered by a State employee coverage plan in one of 
     the 5 most populous States as are in effect in the calendar 
     year in which such enhanced option is offered.
       ``(4) Publication of benefits.--Not later than 3 months 
     after the date of enactment of this title, and on the first 
     day of every calendar year thereafter, the Secretary shall 
     publish in the Federal Register such covered benefits, 
     services, and categories of providers covered in that 
     calendar year by the State employee coverage plans in the 5 
     most populous States.
       ``(b) Effective Dates.--
       ``(1) Small business health plans.--With respect to health 
     insurance provided to participating employers of small 
     business health plans, the requirements of this part 
     (concerning lower cost plans) shall apply beginning on the 
     date that is 12 months after the date of enactment of this 
     title.
       ``(2) Non-association coverage.--With respect to health 
     insurance provided to groups or individuals other than 
     participating employers of small business health plans, the 
     requirements of this part shall apply beginning on the date 
     that is 15 months after the date of enactment of this title.

     ``SEC. 2923. APPLICATION AND PREEMPTION.

       ``(a) Superceding of State Law.--
       ``(1) In general.--This part shall supersede any and all 
     State laws insofar as such laws relate to mandates relating 
     to covered benefits,

[[Page S4275]]

     services, or categories of provider in the health insurance 
     market as applied to an eligible insurer, or health insurance 
     coverage issued by an eligible insurer, including with 
     respect to coverage issued to a small business health plan, 
     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, 
     marketing, or implementing health insurance coverage 
     consistent with the Benefit Choice Standards, as provided for 
     in section 2922(a); or
       ``(B) have the effect of retaliating against or otherwise 
     punishing in any respect an eligible insurer for offering, 
     marketing, or implementing health insurance coverage 
     consistent with the Benefit Choice Standards.
       ``(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 supercede 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 Benefit Choice 
     Standards.
       ``(4) No effect on preemption.--In no case shall this part 
     be construed to limit or affect in any manner the preemptive 
     scope of sections 502 and 514 of the Employee Retirement 
     Income Security Act of 1974. In no case shall this part be 
     construed to create any cause of action under Federal or 
     State law or enlarge or affect any remedy available under the 
     Employee Retirement Income Security Act of 1974.

     ``SEC. 2924. CIVIL ACTIONS AND JURISDICTION.

       ``(a) In General.--The courts of the United States shall 
     have exclusive jurisdiction over civil actions involving the 
     interpretation of this part.
       ``(b) Actions.--An eligible insurer may bring an action in 
     the district courts of the United States for injunctive or 
     other equitable relief against any officials or agents of a 
     nonadopting State in connection with any conduct or action, 
     or proposed conduct or action, by such officials or agents 
     which violates, or which would if undertaken violate, section 
     2923.
       ``(c) Direct Filing in Court of Appeals.--At the election 
     of the eligible insurer, an action may be brought under 
     subsection (b) directly in the United States Court of Appeals 
     for the circuit in which the nonadopting State is located by 
     the filing of a petition for review in such Court.
       ``(d) Expedited Review.--
       ``(1) District court.--In the case of an action brought in 
     a district court of the United States under subsection (b), 
     such court shall complete such action, including the issuance 
     of a judgment, prior to the end of the 120-day period 
     beginning on the date on which such action is filed, unless 
     all parties to such proceeding agree to an extension of such 
     period.
       ``(2) Court of appeals.--In the case of an action brought 
     directly in a United States Court of Appeal under subsection 
     (c), or in the case of an appeal of an action brought in a 
     district court under subsection (b), such Court shall 
     complete all action on the petition, including the issuance 
     of a judgment, prior to the end of the 60-day period 
     beginning on the date on which such petition is filed with 
     the Court, unless all parties to such proceeding agree to an 
     extension of such period.
       ``(e) Standard of Review.--A court in an action filed under 
     this section, shall render a judgment based on a review of 
     the merits of all questions presented in such action and 
     shall not defer to any conduct or action, or proposed conduct 
     or action, of a nonadopting State.

     ``SEC. 2925. RULES OF CONSTRUCTION.

       ``(a) In General.--Notwithstanding any other provision of 
     Federal or State law, a health insurance issuer in an 
     adopting State or an eligible insurer in a non-adopting State 
     may amend its existing policies to be consistent with the 
     terms of this subtitle (concerning rating and benefits).
       ``(b) Health Savings Accounts.--Nothing in this subtitle 
     shall be construed to inhibit the development of health 
     savings accounts pursuant to section 223 of the Internal 
     Revenue Code of 1986.''.

         TITLE III--HARMONIZATION OF HEALTH INSURANCE STANDARDS

     SEC. 301. HEALTH INSURANCE STANDARDS 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--Standards Harmonization

     ``SEC. 2931. DEFINITIONS.

       ``In this subtitle:
       ``(1) 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.
       ``(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 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 health insurance coverage in 
     that State consistent with the harmonized standards published 
     pursuant to section 2932(d), 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 health coverage) and 
     filed with the State 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.
       ``(3) Harmonized standards.--The term `harmonized 
     standards' means the standards certified by the Secretary 
     under section 2932(d).
       ``(4) Health insurance coverage.--The term `health 
     insurance coverage' means any coverage issued in the health 
     insurance market, except that such term shall not include 
     excepted benefits (as defined in section 2791(c).
       ``(5) Nonadopting state.--The term `nonadopting State' 
     means a State that fails to enact, within 18 months of the 
     date on which the Secretary certifies 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.
       ``(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. 2932. HARMONIZED STANDARDS.

       ``(a) Board.--
       ``(1) Establishment.--Not later than 3 months after the 
     date of enactment of this title, the Secretary, in 
     consultation with the NAIC, shall establish the Health 
     Insurance Consensus Standards Board (referred to in this 
     subtitle as the `Board') to develop recommendations that 
     harmonize inconsistent State health insurance laws in 
     accordance with the procedures described in subsection (b).
       ``(2) Composition.--
       ``(A) In general.--The Board shall be composed of the 
     following voting members to be appointed by the Secretary 
     after considering the recommendations of professional 
     organizations representing the entities and constituencies 
     described in this paragraph:
       ``(i) Four State insurance commissioners as recommended by 
     the National Association of Insurance Commissioners, of which 
     2 shall be Democrats and 2 shall be Republicans, and of which 
     one shall be designated as the chairperson and one shall be 
     designated as the vice chairperson.
       ``(ii) Four representatives of State government, two of 
     which shall be governors of States and two of which shall be 
     State legislators, and two of which shall be Democrats and 
     two of which shall be Republicans.
       ``(iii) Four representatives of health insurers, of which 
     one shall represent insurers that offer coverage in the small 
     group market, one shall represent insurers that offer 
     coverage in the large group market, one shall represent 
     insurers that offer coverage in the individual market, and 
     one shall represent carriers operating in a regional market.
       ``(iv) Two representatives of insurance agents and brokers.
       ``(v) Two independent representatives of the American 
     Academy of Actuaries who have familiarity with the actuarial 
     methods applicable to health insurance.
       ``(B) Ex officio member.--A representative of the Secretary 
     shall serve as an ex officio member of the Board.
       ``(3) Advisory panel.--The Secretary shall establish an 
     advisory panel to provide advice to the Board, and shall 
     appoint its members after considering the recommendations of 
     professional organizations representing the entities and 
     constituencies identified in this paragraph:
       ``(A) Two representatives of small business health plans.
       ``(B) Two representatives of employers, of which one shall 
     represent small employers and one shall represent large 
     employers.
       ``(C) Two representatives of consumer organizations.
       ``(D) Two representatives of health care providers.
       ``(4) Qualifications.--The membership of the Board shall 
     include individuals with national recognition for their 
     expertise in health finance and economics, actuarial science, 
     health plans, providers of health services, and other related 
     fields, who provide a mix of different professionals, broad 
     geographic representation, and a balance between urban and 
     rural representatives.
       ``(5) Ethical disclosure.--The Secretary shall establish a 
     system for public disclosure by members of the Board of 
     financial and other potential conflicts of interest relating 
     to such members. Members of the Board shall be treated as 
     employees of Congress for purposes of applying title I of the 
     Ethics in Government Act of 1978 (Public Law 95-521).
       ``(6) Director and staff.--Subject to such review as the 
     Secretary deems necessary to assure the efficient 
     administration of the Board, the chair and vice-chair of the 
     Board may--
       ``(A) employ and fix the compensation of an Executive 
     Director (subject to the approval of the Comptroller General) 
     and such other personnel as may be necessary to carry out its 
     duties (without regard to the provisions of title 5, United 
     States Code, governing appointments in the competitive 
     service);

[[Page S4276]]

       ``(B) seek such assistance and support as may be required 
     in the performance of its duties from appropriate Federal 
     departments and agencies;
       ``(C) enter into contracts or make other arrangements, as 
     may be necessary for the conduct of the work of the Board 
     (without regard to section 3709 of the Revised Statutes (41 
     U.S.C. 5));
       ``(D) make advance, progress, and other payments which 
     relate to the work of the Board;
       ``(E) provide transportation and subsistence for persons 
     serving without compensation; and
       ``(F) prescribe such rules as it deems necessary with 
     respect to the internal organization and operation of the 
     Board.
       ``(7) Terms.--The members of the Board shall serve for the 
     duration of the Board. Vacancies in the Board shall be filled 
     as needed 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 Board shall identify and recommend 
     nationally harmonized standards for each of the following 
     process categories:
       ``(A) Form filing and rate filing.--Form and rate filing 
     standards shall be established which promote speed to market 
     and include the following defined areas for States that 
     require such filings:
       ``(i) Procedures for form and rate filing pursuant to a 
     streamlined administrative filing process.
       ``(ii) Timeframes for filings to be reviewed by a State if 
     review is required before they are deemed approved.
       ``(iii) Timeframes for an eligible insurer to respond to 
     State requests following its review.
       ``(iv) A process for an eligible insurer to self-certify.
       ``(v) State development of form and rate filing templates 
     that include only non-preempted State law and Federal law 
     requirements for eligible insurers with timely updates.
       ``(vi) Procedures for the resubmission of forms and rates.
       ``(vii) Disapproval rationale of a form or rate filing 
     based on material omissions or violations of non-preempted 
     State law or Federal law with violations cited and explained.
       ``(viii) For States that may require a hearing, a rationale 
     for hearings based on violations of non-preempted State law 
     or insurer requests.
       ``(B) Market conduct review.--Market conduct review 
     standards shall be developed which provide for the following:
       ``(i) Mandatory participation in national databases.
       ``(ii) The confidentiality of examination materials.
       ``(iii) The identification of the State agency with primary 
     responsibility for examinations.
       ``(iv) Consultation and verification of complaint data with 
     the eligible insurer prior to State actions.
       ``(v) Consistency of reporting requirements with the 
     recordkeeping and administrative practices of the eligible 
     insurer.
       ``(vi) Examinations that seek to correct material errors 
     and harmful business practices rather than infrequent errors.
       ``(vii) Transparency and publishing of the State's 
     examination standards.
       ``(viii) Coordination of market conduct analysis.
       ``(ix) Coordination and nonduplication between State 
     examinations of the same eligible insurer.
       ``(x) Rationale and protocols to be met before a full 
     examination is conducted.
       ``(xi) Requirements on examiners prior to beginning 
     examinations such as budget planning and work plans.
       ``(xii) Consideration of methods to limit examiners' fees 
     such as caps, competitive bidding, or other alternatives.
       ``(xiii) Reasonable fines and penalties for material errors 
     and harmful business practices.
       ``(C) Prompt payment of claims.--The Board shall establish 
     prompt payment standards for eligible insurers based on 
     standards similar to those applicable to the Social Security 
     Act as set forth in section 1842(c)(2) of such Act (42 U.S.C. 
     1395u(c)(2)). Such prompt payment standards shall be 
     consistent with the timing and notice requirements of the 
     claims procedure rules to be specified under subparagraph 
     (D), and shall include appropriate exceptions such as for 
     fraud, nonpayment of premiums, or late submission of claims.
       ``(D) Internal review.--The Board shall establish standards 
     for claims procedures for eligible insurers that are 
     consistent with the requirements relating to initial claims 
     for benefits and appeals of claims for benefits under the 
     Employee Retirement Income Security Act of 1974 as set forth 
     in section 503 of such Act (29 U.S.C. 1133) and the 
     regulations thereunder.
       ``(2) Recommendations.--The Board shall recommend 
     harmonized standards for each element of the categories 
     described in subparagraph (A) through (D) of paragraph (1) 
     within each such market. Notwithstanding the previous 
     sentence, the Board shall not recommend any harmonized 
     standards that disrupt, expand, or duplicate the benefit, 
     service, or provider mandate standards provided in the 
     Benefit Choice Standards pursuant to section 2922(a).
       ``(c) Process for Identifying Harmonized Standards.--
       ``(1) In general.--The Board shall develop recommendations 
     to harmonize inconsistent State insurance laws with respect 
     to each of the process categories described in subparagraphs 
     (A) through (D) of subsection (b)(1).
       ``(2) Requirements.--In adopting standards under this 
     section, the Board shall consider the following:
       ``(A) Any model acts or regulations of the National 
     Association of Insurance Commissioners in each of the process 
     categories described in subparagraphs (A) through (D) of 
     subsection (b)(1).
       ``(B) Substantially similar standards followed by a 
     plurality of States, as reflected in existing State laws, 
     relating to the specific process categories described in 
     subparagraphs (A) through (D) of subsection (b)(1).
       ``(C) Any Federal law requirement related to specific 
     process categories described in subparagraphs (A) through (D) 
     of subsection (b)(1).
       ``(D) In the case of the adoption of any standard that 
     differs substantially from those referred to in subparagraphs 
     (A), (B), or (C), the Board shall provide evidence to the 
     Secretary that such standard is necessary to protect health 
     insurance consumers or promote speed to market or 
     administrative efficiency.
       ``(E) The criteria specified in clauses (i) through (iii) 
     of subsection (d)(2)(B).
       ``(d) Recommendations and Certification by Secretary.--
       ``(1) Recommendations.--Not later than 18 months after the 
     date on which all members of the Board are selected under 
     subsection (a), the Board shall recommend to the Secretary 
     the certification of the harmonized standards identified 
     pursuant to subsection (c).
       ``(2) Certification.--
       ``(A) In general.--Not later than 120 days after receipt of 
     the Board's recommendations under paragraph (1), the 
     Secretary shall certify the recommended harmonized standards 
     as provided for in subparagraph (B), and issue such standards 
     in the form of an interim final regulation.
       ``(B) Certification process.--The Secretary shall establish 
     a process for certifying the recommended harmonized standard, 
     by category, as recommended by the Board under this section. 
     Such process shall--
       ``(i) ensure that the certified standards for a particular 
     process area achieve regulatory harmonization with respect to 
     health plans on a national basis;
       ``(ii) ensure that the approved standards are the minimum 
     necessary, with regard to substance and quantity of 
     requirements, to protect health insurance consumers and 
     maintain a competitive regulatory environment; and
       ``(iii) ensure that the approved standards will not limit 
     the range of group health plan designs and insurance 
     products, such as catastrophic coverage only plans, health 
     savings accounts, and health maintenance organizations, that 
     might otherwise be available to consumers.
       ``(3) Effective date.--The standards certified by the 
     Secretary under paragraph (2) shall be effective on the date 
     that is 18 months after the date on which the Secretary 
     certifies the harmonized standards.
       ``(e) Termination.--The Board shall terminate and be 
     dissolved after making the recommendations to the Secretary 
     pursuant to subsection (d)(1).
       ``(f) Ongoing Review.--Not earlier than 3 years after the 
     termination of the Board under subsection (e), and not 
     earlier than every 3 years thereafter, the Secretary, in 
     consultation with the National Association of Insurance 
     Commissioners and the entities and constituencies represented 
     on the Board and the Advisory Panel, shall prepare and submit 
     to the appropriate committees of Congress a report that 
     assesses the effect of the harmonized standards on access, 
     cost, and health insurance market functioning. The Secretary 
     may, based on such report and applying the process 
     established for certification under subsection (d)(2)(B), in 
     consultation with the National Association of Insurance 
     Commissioners and the entities and constituencies represented 
     on the Board and the Advisory Panel, update the harmonized 
     standards through notice and comment rulemaking.
       ``(g) Publication.--
       ``(1) Listing.--The Secretary shall maintain an up to date 
     listing of all harmonized standards certified 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 certified under this section, which 
     may be 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 18 
     months after the certification by the Secretary of 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 certified under 
     this subtitle shall supersede any and all State laws of a 
     non-adopting State 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, including with respect to coverage issued to a small 
     business health plan, 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, 
     marketing, or implementing health insurance coverage 
     consistent with the harmonized standards; or
       ``(B) have the effect of retaliating against or otherwise 
     punishing in any respect an eligible insurer for offering, 
     marketing, or implementing health insurance coverage 
     consistent with the harmonized standards under this subtitle.

[[Page S4277]]

       ``(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 supercede 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 harmonized 
     standards under this subtitle.
       ``(4) No effect on preemption.--In no case shall this 
     subtitle be construed to limit or affect in any manner the 
     preemptive scope of sections 502 and 514 of the Employee 
     Retirement Income Security Act of 1974. In no case shall this 
     subtitle be construed to create any cause of action under 
     Federal or State law or enlarge or affect any remedy 
     available under the Employee Retirement Income Security Act 
     of 1974.
       ``(c) Effective Date.--This section shall apply beginning 
     on the date that is 18 months after the date on harmonized 
     standards are certified by the Secretary under this subtitle.

     ``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.--An eligible insurer may bring an action in 
     the district courts of the United States for injunctive or 
     other equitable relief against any officials or agents of a 
     nonadopting State in connection with any conduct or action, 
     or proposed conduct or action, by such officials or agents 
     which violates, or which would if undertaken violate, section 
     2933.
       ``(c) Direct Filing in Court of Appeals.--At the election 
     of the eligible insurer, an action may be brought under 
     subsection (b) directly in the United States Court of Appeals 
     for the circuit in which the nonadopting State is located by 
     the filing of a petition for review in such Court.
       ``(d) Expedited Review.--
       ``(1) District court.--In the case of an action brought in 
     a district court of the United States under subsection (b), 
     such court shall complete such action, including the issuance 
     of a judgment, prior to the end of the 120-day period 
     beginning on the date on which such action is filed, unless 
     all parties to such proceeding agree to an extension of such 
     period.
       ``(2) Court of appeals.--In the case of an action brought 
     directly in a United States Court of Appeal under subsection 
     (c), or in the case of an appeal of an action brought in a 
     district court under subsection (b), such Court shall 
     complete all action on the petition, including the issuance 
     of a judgment, prior to the end of the 60-day period 
     beginning on the date on which such petition is filed with 
     the Court, unless all parties to such proceeding agree to an 
     extension of such period.
       ``(e) Standard of Review.--A court in an action filed under 
     this section, shall render a judgment based on a review of 
     the merits of all questions presented in such action and 
     shall not defer to any conduct or action, or proposed conduct 
     or action, of a nonadopting State.

     ``SEC. 2935. AUTHORIZATION OF APPROPRIATIONS; RULE OF 
                   CONSTRUCTION.

       ``(a) Authorization of Appropriations.--There are 
     authorized to be appropriated such sums as may be necessary 
     to carry out this subtitle.
       ``(b) Health Savings Accounts.--Nothing in this subtitle 
     shall be construed to inhibit the development of health 
     savings accounts pursuant to section 223 of the Internal 
     Revenue Code of 1986.''.

  The PRESIDING OFFICER. The majority leader is recognized.
  Mr. FRIST. With the authorization of the majority of the HELP 
Committee members, I ask that the committee substitute be modified with 
the changes that are at the desk.
  The PRESIDING OFFICER. The substitute is so modified.
  The committee amendment in the nature of a substitute, as modified, 
is as follows:

                (Purpose: In the nature of a substitute)

       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS; PURPOSE.

       (a) Short Title.--This Act may be cited as the ``Health 
     Insurance Marketplace Modernization and Affordability Act of 
     2006''.
       (b) Table of Contents.--The table of contents is as 
     follows:

Sec. 1. Short title; table of contents; purposes.

                  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--MARKET RELIEF

Sec. 201. Market relief.

         TITLE III--HARMONIZATION OF HEALTH INSURANCE STANDARDS

Sec. 301. Health Insurance Standards Harmonization.

       (c) Purposes.--It is the purpose of this Act to--
       (1) make more affordable health insurance options available 
     to small businesses, working families, and all Americans;
       (2) assure effective State regulatory protection of the 
     interests of health insurance consumers; and
       (3) create a more efficient and affordable health insurance 
     marketplace through collaborative development of uniform 
     regulatory standards.

                  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 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;
       ``(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; and
       ``(4) does not condition membership on the basis of a 
     minimum group size.
     Any sponsor consisting of an association of entities which 
     meet the requirements of paragraphs (1), (2), (3), and (4) 
     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 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 business health plan involved is failing to comply with 
     the requirements of this part.
       ``(d) Expedited and Deemed Certification.--
       ``(1) In general.--If the Secretary fails to act on an 
     application for certification under this section within 90 
     days of receipt of such application, the applying small 
     business health plan shall be deemed certified until such 
     time as the Secretary may deny for cause the application for 
     certification.
       ``(2) Civil penalty.--The Secretary may assess a civil 
     penalty against the board of trustees and plan sponsor 
     (jointly and severally) of a small business health plan that 
     is deemed certified under paragraph (1) of up to $500,000 in 
     the event the Secretary determines that the application for 
     certification of such small business health plan was 
     willfully or with gross negligence incomplete or inaccurate.

     ``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

[[Page S4278]]

     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 2006.
       ``(B) Sole authority.--The board has sole authority under 
     the plan to approve applications for participation in the 
     plan and to contract with insurers.
       ``(c) Treatment of Franchises.--In the case of a group 
     health plan which is established and maintained by a 
     franchiser for a franchisor or for 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 franchisor were deemed to be the sponsor referred 
     to in section 801(b) and each franchisee were deemed to be a 
     member (of the sponsor) referred to in section 801(b); and
       ``(2) the requirements of section 804(a)(1) shall be deemed 
     met.
     For purposes of this subsection the terms `franchisor' and 
     `franchisee' shall have the meanings given such terms for 
     purposes of sections 436.2(a) through 436.2(c) of title 16, 
     Code of Federal Regulations (including any such amendments to 
     such regulation after the date of enactment of this part).

     ``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, 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 dependents of individuals described in 
     subparagraph (A).
       ``(b) 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.
       ``(c) 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) information regarding all coverage options available 
     under the plan is made readily available to any employer 
     eligible to participate; 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 trustees serves as the 
     named fiduciary required for plans under section 402(a)(1) 
     and serves in the capacity of a plan administrator (referred 
     to in section 3(16)(A)); 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, subject to subparagraph (B) and the 
     terms of this title.
       ``(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 that meets the 
     requirements of this part, 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 small 
     business health plan so long as any variation in such rates 
     for participating small employers complies with the 
     requirements of clause (ii), except that small business 
     health plans shall not be subject, in non-adopting states, to 
     subparagraphs (A)(ii) and (C) of section 2912(a)(2) of the 
     Public Health Service Act, and in adopting states, to any 
     State law that would have the effect of imposing requirements 
     as outlined in such subparagraphs (A)(ii) and (C); or
       ``(ii) varying contribution rates for participating small 
     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 small group 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 2006.
       ``(3) Exceptions regarding self-employed and large 
     employers.--
       ``(A) Self employed.--
       ``(i) In general.--Small business health plans with 
     participating employers who are self-employed individuals 
     (and their dependents) shall enroll such self-employed 
     participating employers in accordance with rating rules that 
     do not violate the rating rules for self-employed individuals 
     in the State in which such self-employed participating 
     employers are located.
       ``(ii) Guarantee issue.--Small business health plans with 
     participating employers who are self-employed individuals 
     (and their dependents) may decline to guarantee issue to such 
     participating employers in States in which guarantee issue is 
     not otherwise required for the self-employed in that State.
       ``(B) Large employers.--Small business health plans with 
     participating employers that are larger than small employers 
     (as defined in section 808(a)(10)) shall enroll such large 
     participating employers in accordance with rating rules that 
     do not violate the rating rules for large employers in the 
     State in which such large participating employers are 
     located.
       ``(4) 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

[[Page S4279]]

     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 2006.
       ``(c) Domicile and Non-Domicile States.--
       ``(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 but in which the 
     insurer of the small business health plan in the domicile 
     State is not yet licensed, the following shall apply:
       ``(A) Temporary preemption.--If, upon the expiration of the 
     90-day period following the submission of a licensure 
     application by such insurer (that includes a certified copy 
     of an approved licensure application as submitted by such 
     insurer in the domicile State) to such State, such State has 
     not approved or denied such application, such State's health 
     insurance licensure laws shall be temporarily preempted and 
     the insurer shall be permitted to operate in such State, 
     subject to the following terms:
       ``(i) Application of non-domicile state law.--Except with 
     respect to licensure and with respect to the terms of 
     subtitle A of title XXIX of the Public Health Service Act 
     (relating to rating and benefits as added by the Health 
     Insurance Marketplace Modernization and Affordability Act of 
     2006), the laws and authority of the non-domicile State shall 
     remain in full force and effect.
       ``(ii) Revocation of preemption.--The preemption of a non-
     domicile State's health insurance licensure laws pursuant to 
     this subparagraph, shall be terminated upon the occurrence of 
     either of the following:

       ``(I) Approval or denial of application.--The approval of 
     denial of an insurer's licensure application, following the 
     laws and regulations of the non-domicile State with respect 
     to licensure.
       ``(II) Determination of material violation.--A 
     determination by a non-domicile State that an insurer 
     operating in a non-domicile State pursuant to the preemption 
     provided for in this subparagraph is in material violation of 
     the insurance laws (other than licensure and with respect to 
     the terms of subtitle A of title XXIX of the Public Health 
     Service Act (relating to rating and benefits added by the 
     Health Insurance Marketplace Modernization and Affordability 
     Act of 2006)) of such State.

       ``(B) No prohibition on promotion.--Nothing in this 
     paragraph shall be construed to prohibit a small business 
     health plan or an insurer from promoting coverage prior to 
     the expiration of the 90-day period provided for in 
     subparagraph (A), except that no enrollment or collection of 
     contributions shall occur before the expiration of such 90-
     day period.
       ``(C) Licensure.--Except with respect to the application of 
     the temporary preemption provision of this paragraph, nothing 
     in this part shall be construed to limit the requirement that 
     insurers issuing coverage to small business health plans 
     shall be licensed in each State in which the small business 
     health plans operate.
       ``(D) Servicing by licensed insurers.--Notwithstanding 
     subparagraph (C), the requirements of this subsection may 
     also be satisfied if the participating employers of a small 
     business health plan are serviced by a licensed insurer in 
     that State, even where such insurer is not the insurer of 
     such small business health plan in the State in which such 
     small business health plan is domiciled.

     ``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 the small business health 
     plans operate.
       ``(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, or
       ``(B) in the case of a sponsor with members which consist 
     of associations, a person who is a member or employee of any 
     such association and elects an affiliated status with the 
     sponsor.
       ``(2) Applicable authority.--The term `applicable 
     authority' means the Secretary of Labor, 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), except that such term shall not include excepted 
     benefits (as defined in section 733(c)).
       ``(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).

[[Page S4280]]

       ``(11) Trade association and professional association.--The 
     terms `trade association' and `professional association' mean 
     an entity that meets the requirements of section 1.501(c)(6)-
     1 of title 26, Code of Federal Regulations (as in effect on 
     the date of enactment of this Act).
       ``(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 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.
       ``(c) Renewal.--Notwithstanding any provision of law to the 
     contrary, a participating employer in a small business health 
     plan shall not be deemed to be a plan sponsor in applying 
     requirements relating to coverage renewal.
       ``(d) Health Savings Accounts.--Nothing in this part shall 
     be construed to create any mandates for coverage of benefits 
     for HSA-qualified health plans that would require 
     reimbursements in violation of section 223(c)(2) of the 
     Internal Revenue Code of 1986.''.
       (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 subtitle A of 
     title XXIX of the Public Health Service Act (as added by 
     title II of the Health Insurance Marketplace Modernization 
     and Affordability Act of 2006) (concerning health plan rating 
     and benefits) are met.''.
       (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 12 months 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 6 months 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 has control over 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--MARKET RELIEF

     SEC. 201. 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 MODERNIZATION

     ``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--Market Relief

                     ``PART I--RATING REQUIREMENTS

     ``SEC. 2911. DEFINITIONS.

       ``In this part:
       ``(1) Adopting state.--The term `adopting State' means a 
     State that, with respect to the small group market, has 
     enacted small group rating rules that meet the minimum 
     standards set forth in section 2912(a)(1) or, as applicable, 
     transitional small group rating rules set forth in section 
     2912(b).
       ``(2) 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 
     insurance laws of such State.
       ``(3) Base premium rate.--The term `base premium rate' 
     means, for each class of business with respect to a rating 
     period, the lowest premium rate charged or that could have 
     been charged under a rating system for that class of business 
     by the small employer carrier to small employers with similar 
     case characteristics for health benefit plans with the same 
     or similar coverage
       ``(4) Eligible insurer.--The term `eligible insurer' means 
     a health insurance issuer that is licensed in a 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

[[Page S4281]]

     intends to offer health insurance coverage consistent with 
     the Model Small Group Rating Rules or, as applicable, 
     transitional small group rating rules in a 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 Model Small Group 
     Rating Rules, 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); 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 Model Small 
     Group Rating Rules and an affirmation that such Rules are 
     included in the terms of such contract.
       ``(5) Health insurance coverage.--The term `health 
     insurance coverage' means any coverage issued in the small 
     group health insurance market, except that such term shall 
     not include excepted benefits (as defined in section 
     2791(c)).
       ``(6) Index rate.--The term `index rate' means for each 
     class of business with respect to the rating period for small 
     employers with similar case characteristics, the arithmetic 
     average of the applicable base premium rate and the 
     corresponding highest premium rate.
       ``(7)  Model small group rating rules.--The term ` Model 
     Small Group Rating Rules' means the rules set forth in 
     section 2912(a)(2).
       ``(8) Nonadopting state.--The term `nonadopting State' 
     means a State that is not an adopting State.
       ``(9) 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).
       ``(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) Variation limits.--
       ``(A) Composite variation limit.--
       ``(i) In general.--The term `composite variation limit' 
     means the total variation in premium rates charged by a 
     health insurance issuer in the small group market as 
     permitted under applicable State law based on the following 
     factors or case characteristics:

       ``(I) Age.
       ``(II) Duration of coverage.
       ``(III) Claims experience.
       ``(IV) Health status.

       ``(ii) Use of factors.--With respect to the use of the 
     factors described in clause (i) in setting premium rates, a 
     health insurance issuer shall use one or both of the factors 
     described in subclauses (I) or (IV) of such clause and may 
     use the factors described in subclauses (II) or (III) of such 
     clause.
       ``(B) Total variation limit.--The term `total variation 
     limit' means the total variation in premium rates charged by 
     a health insurance issuer in the small group market as 
     permitted under applicable State law based on all factors and 
     case characteristics (as described in section 2912(a)(1)).

     ``SEC. 2912. RATING RULES.

       ``(a) Establishment of Minimum Standards for Premium 
     Variations and Model Small Group Rating Rules.--Not later 
     than 6 months after the date of enactment of this title, the 
     Secretary shall promulgate regulations establishing the 
     following Minimum Standards and Model Small Group Rating 
     Rules:
       ``(1) Minimum standards for premium variations.--
       ``(A) Composite variation limit.--The composite variation 
     limit shall not be less than 3:1.
       ``(B) Total variation limit.--The total variation limit 
     shall not be less than 5:1.
       ``(C) Prohibition on use of certain case characteristics.--
     For purposes of this paragraph, in calculating the total 
     variation limit, the State shall not use case characteristics 
     other than those used in calculating the composite variation 
     limit and industry, geographic area, group size, 
     participation rate, class of business, and participation in 
     wellness programs.
       ``(2) Model small group rating rules.--The following apply 
     to an eligible insurer in a non-adopting State:
       ``(A) Premium rates.--Premium rates for small group health 
     benefit plans to which this title applies shall comply with 
     the following provisions relating to premiums, except as 
     provided for under subsection (b):
       ``(i) Variation in premium rates.--The plan may not vary 
     premium rates by more than the minimum standards provided for 
     under paragraph (1).
       ``(ii) Index rate.--The index rate for a rating period for 
     any class of business shall not exceed the index rate for any 
     other class of business by more than 20 percent, excluding 
     those classes of business related to association groups under 
     this title.
       ``(iii) Class of businesses.--With respect to a class of 
     business, the premium rates charged during a rating period to 
     small employers with similar case characteristics for the 
     same or similar coverage or the rates that could be charged 
     to such employers under the rating system for that class of 
     business, shall not vary from the index rate by more than 25 
     percent of the index rate under clause (ii).
       ``(iv) Increases for new rating periods.--The percentage 
     increase in the premium rate charged to a small employer for 
     a new rating period may not exceed the sum of the following:

       ``(I) The percentage change in the new business premium 
     rate measured from the first day of the prior rating period 
     to the first day of the new rating period. In the case of a 
     health benefit plan into which the small employer carrier is 
     no longer enrolling new small employers, the small employer 
     carrier shall use the percentage change in the base premium 
     rate, except that such change shall not exceed, on a 
     percentage basis, the change in the new business premium rate 
     for the most similar health benefit plan into which the small 
     employer carrier is actively enrolling new small employers.
       ``(II) Any adjustment, not to exceed 15 percent annually 
     and adjusted pro rata for rating periods of less then 1 year, 
     due to the claim experience, health status or duration of 
     coverage of the employees or dependents of the small employer 
     as determined from the small employer carrier's rate manual 
     for the class of business involved.
       ``(III) Any adjustment due to change in coverage or change 
     in the case characteristics of the small employer as 
     determined from the small employer carrier's rate manual for 
     the class of business.

       ``(v) Uniform application of adjustments.--Adjustments in 
     premium rates for claim experience, health status, or 
     duration of coverage shall not be charged to individual 
     employees or dependents. Any such adjustment shall be applied 
     uniformly to the rates charged for all employees and 
     dependents of the small employer.
       ``(vi) Prohibition on use of certain case characteristic.--
     A small employer carrier shall not utilize case 
     characteristics, other than those permitted under paragraph 
     (1)(C), without the prior approval of the applicable State 
     authority.
       ``(vii) Consistent application of factors.--Small employer 
     carriers shall apply rating factors, including case 
     characteristics, consistently with respect to all small 
     employers in a class of business. Rating factors shall 
     produce premiums for identical groups which differ only by 
     the amounts attributable to plan design and do not reflect 
     differences due to the nature of the groups assumed to select 
     particular health benefit plans.
       ``(viii) Treatment of plans as having same rating period.--
     A small employer carrier shall treat all health benefit plans 
     issued or renewed in the same calendar month as having the 
     same rating period.
       ``(ix) Require compliance.--Premium rates for small 
     business health benefit plans shall comply with the 
     requirements of this subsection notwithstanding any 
     assessments paid or payable by a small employer carrier as 
     required by a State's small employer carrier reinsurance 
     program.
       ``(B) Establishment of separate class of business.--Subject 
     to subparagraph (C), a small employer carrier may establish a 
     separate class of business only to reflect substantial 
     differences in expected claims experience or administrative 
     costs related to the following:
       ``(i) The small employer carrier uses more than one type of 
     system for the marketing and sale of health benefit plans to 
     small employers.
       ``(ii) The small employer carrier has acquired a class of 
     business from another small employer carrier.
       ``(iii) The small employer carrier provides coverage to one 
     or more association groups that meet the requirements of this 
     title.
       ``(C) Limitation.--A small employer carrier may establish 
     up to 9 separate classes of business under subparagraph (B), 
     excluding those classes of business related to association 
     groups under this title.
       ``(D) Limitation on transfers.--A small employer carrier 
     shall not transfer a small employer involuntarily into or out 
     of a class of business. A small employer carrier shall not 
     offer to transfer a small employer into or out of a class of 
     business unless such offer is made to transfer all small 
     employers in the class of business without regard to case 
     characteristics, claim experience, health status or duration 
     of coverage since issue.
       ``(b) Transitional Model Small Group Rating Rules.--
       ``(1) In general.--Not later than 6 months after the date 
     of enactment of this title and to the extent necessary to 
     provide for a graduated transition to the minimum standards 
     for premium variation as provided for in subsection (a)(1), 
     the Secretary, in consultation with the National Association 
     of Insurance Commissioners (NAIC), shall promulgate State-
     specific transitional small group rating rules in accordance 
     with this subsection, which shall be applicable with respect 
     to non-adopting States and eligible insurers operating in 
     such States for a period of not to exceed 3 years from the 
     date of the promulgation of the minimum standards for premium 
     variation pursuant to subsection (a).
       ``(2) Compliance with transitional model small group rating 
     rules.--During the transition period described in paragraph 
     (1), a State that, on the date of enactment of this title, 
     has in effect a small group rating rules methodology that 
     allows for a variation that is less than the variation 
     provided

[[Page S4282]]

     for under subsection (a)(1) (concerning minimum standards for 
     premium variation), shall be deemed to be an adopting State 
     if the State complies with the transitional small group 
     rating rules as promulgated by the Secretary pursuant to 
     paragraph (1).
       ``(3) Transitioning of old business.--
       ``(A) In general.--In developing the transitional small 
     group rating rules under paragraph (1), the Secretary shall, 
     after consultation with the National Association of Insurance 
     Commissioners and representatives of insurers operating in 
     the small group health insurance market in non-adopting 
     States, promulgate special transition standards with respect 
     to independent rating classes for old and new business, to 
     the extent reasonably necessary to protect health insurance 
     consumers and to ensure a stable and fair transition for old 
     and new market entrants.
       ``(B) Period for operation of independent rating classes.--
     In developing the special transition standards pursuant to 
     subparagraph (A), the Secretary shall permit a carrier in a 
     non-adopting State, at its option, to maintain independent 
     rating classes for old and new business for a period of up to 
     5 years, with the commencement of such 5-year period to begin 
     at such time, but not later than the date that is 3 years 
     after the date of enactment of this title, as the carrier 
     offers a book of business meeting the minimum standards for 
     premium variation provided for in subsection (a)(1) or the 
     transitional small group rating rules under paragraph (1).
       ``(4) Other transitional authority.--In developing the 
     transitional small group rating rules under paragraph (1), 
     the Secretary shall provide for the application of the 
     transitional small group rating rules in transition States as 
     the Secretary may determine necessary for a an effective 
     transition.
       ``(c) Market Re-Entry.--
       ``(1) In general.--Notwithstanding any other provision of 
     law, a health insurance issuer that has voluntarily withdrawn 
     from providing coverage in the small group market prior to 
     the date of enactment of the Health Insurance Marketplace 
     Modernization and Affordability Act of 2006 shall not be 
     excluded from re-entering such market on a date that is more 
     than 180 days after such date of enactment.
       ``(2) Termination.--The provision of this subsection shall 
     terminate on the date that is 24 months after the date of 
     enactment of the Health Insurance Marketplace Modernization 
     and Affordability Act of 2006.

     ``SEC. 2913. APPLICATION AND PREEMPTION.

       ``(a) Superseding of State Law.--
       ``(1) In general.--This part shall supersede any and all 
     State laws of a non-adopting State 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, 
     including with respect to coverage issued to a small employer 
     through a small business health plan, in a 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, 
     marketing, or implementing small group health insurance 
     coverage consistent with the Model Small Group Rating Rules 
     or transitional model small group rating rules; or
       ``(B) have the effect of retaliating against or otherwise 
     punishing in any respect an eligible insurer for offering, 
     marketing, or implementing small group health insurance 
     coverage consistent with the Model Small Group Rating Rules 
     or transitional model small group rating rules.
       ``(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 supercede 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 Model Small 
     Group Rating Rules or transitional model small group rating 
     rules.
       ``(4) No effect on preemption.--In no case shall this part 
     be construed to limit or affect in any manner the preemptive 
     scope of sections 502 and 514 of the Employee Retirement 
     Income Security Act of 1974. In no case shall this part be 
     construed to create any cause of action under Federal or 
     State law or enlarge or affect any remedy available under the 
     Employee Retirement Income Security Act of 1974.
       ``(5) Preemption limited to rating.--Subsection (a) shall 
     not preempt any State law that does not have a reference to 
     or a connection with State rating rules that would otherwise 
     apply to eligible insurers.
       ``(c) Effective Date.--This section shall apply, at the 
     election of the eligible insurer, beginning in the first plan 
     year or the first calendar year following the issuance of the 
     final rules by the Secretary under the Model Small Group 
     Rating Rules or, as applicable, the Transitional Model Small 
     Group Rating Rules, but in no event earlier than the date 
     that is 12 months after the date of enactment of this title.

     ``SEC. 2914. CIVIL ACTIONS AND JURISDICTION.

       ``(a) In General.--The courts of the United States shall 
     have exclusive jurisdiction over civil actions involving the 
     interpretation of this part.
       ``(b) Actions.--An eligible insurer may bring an action in 
     the district courts of the United States for injunctive or 
     other equitable relief against any officials or agents of a 
     nonadopting State in connection with any conduct or action, 
     or proposed conduct or action, by such officials or agents 
     which violates, or which would if undertaken violate, section 
     2913.
       ``(c) Direct Filing in Court of Appeals.--At the election 
     of the eligible insurer, an action may be brought under 
     subsection (b) directly in the United States Court of Appeals 
     for the circuit in which the nonadopting State is located by 
     the filing of a petition for review in such Court.
       ``(d) Expedited Review.--
       ``(1) District court.--In the case of an action brought in 
     a district court of the United States under subsection (b), 
     such court shall complete such action, including the issuance 
     of a judgment, prior to the end of the 120-day period 
     beginning on the date on which such action is filed, unless 
     all parties to such proceeding agree to an extension of such 
     period.
       ``(2) Court of appeals.--In the case of an action brought 
     directly in a United States Court of Appeal under subsection 
     (c), or in the case of an appeal of an action brought in a 
     district court under subsection (b), such Court shall 
     complete all action on the petition, including the issuance 
     of a judgment, prior to the end of the 60-day period 
     beginning on the date on which such petition is filed with 
     the Court, unless all parties to such proceeding agree to an 
     extension of such period.
       ``(e) Standard of Review.--A court in an action filed under 
     this section, shall render a judgment based on a review of 
     the merits of all questions presented in such action and 
     shall not defer to any conduct or action, or proposed conduct 
     or action, of a nonadopting State.

     ``SEC. 2915. ONGOING REVIEW.

       ``Not later than 5 years after the date on which the Model 
     Small Group Rating Rules are issued under this part, and 
     every 5 years thereafter, the Secretary, in consultation with 
     the National Association of Insurance Commissioners, shall 
     prepare and submit to the appropriate committees of Congress 
     a report that assesses the effect of the Model Small Group 
     Rating Rules on access, cost, and market functioning in the 
     small group market. Such report may, if the Secretary, in 
     consultation with the National Association of Insurance 
     Commissioners, determines such is appropriate for improving 
     access, costs, and market functioning, contain legislative 
     proposals for recommended modification to such Model Small 
     Group Rating Rules.

                      ``PART II--AFFORDABLE PLANS

     ``SEC. 2921. DEFINITIONS.

       ``In this part:
       ``(1) Adopting state.--The term `adopting State' means a 
     State that has enacted the Benefit Choice Standards in their 
     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) Benefit choice standards.--The term `Benefit Choice 
     Standards' means the Standards issued under section 2922.
       ``(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 Benefit Choice 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 health insurance coverage in 
     that State consistent with the Benefit Choice Standards, 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 pursuant to subparagraph (B), a 
     description in the insurer's contract of the Benefit Choice 
     Standards and that adherence to such Standards is included as 
     a term of such contract.
       ``(4) Health insurance coverage.--The term `health 
     insurance coverage' means any coverage issued in the group or 
     individual health insurance markets, except that such term 
     shall not include excepted benefits (as defined in section 
     2791(c)).
       ``(5) Nonadopting state.--The term `nonadopting State' 
     means a State that is not an adopting State.
       ``(6) Small group insurance market.--The term `small group 
     insurance market' shall

[[Page S4283]]

     have the meaning given the term `small group market' in 
     section 2791(e)(5).
       ``(7) 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 AFFORDABLE PLANS.

       ``(a) Benefit Choice Options.--
       ``(1) Development.--Not later than 6 months after the date 
     of enactment of this title, the Secretary shall issue, by 
     interim final rule, Benefit Choice Standards that implement 
     the standards provided for in this part.
       ``(2) Basic options.--The Benefit Choice Standards shall 
     provide that a health insurance issuer in a State, may offer 
     a coverage plan or plan in the small group market, individual 
     market, large group market, or through a small business 
     health plan, that does not comply with one or more mandates 
     regarding covered benefits, services, or category of provider 
     as may be in effect in such State with respect to such market 
     or markets (either prior to or following the date of 
     enactment of this title), if such issuer also offers in such 
     market or markets an enhanced option as provided for in 
     paragraph (3).
       ``(3) Enhanced option.--A health insurance issuer issuing a 
     basic option as provided for in paragraph (2) shall also 
     offer to purchasers (including, with respect to a small 
     business health plan, the participating employers of such 
     plan) an enhanced option, which shall at a minimum include 
     such covered benefits, services, and categories of providers 
     as are covered by a State employee coverage plan in one of 
     the 5 most populous States as are in effect in the calendar 
     year in which such enhanced option is offered.
       ``(4) Publication of benefits.--Not later than 3 months 
     after the date of enactment of this title, and on the first 
     day of every calendar year thereafter, the Secretary shall 
     publish in the Federal Register such covered benefits, 
     services, and categories of providers covered in that 
     calendar year by the State employee coverage plans in the 5 
     most populous States.
       ``(b) Effective Dates.--
       ``(1) Small business health plans.--With respect to health 
     insurance provided to participating employers of small 
     business health plans, the requirements of this part 
     (concerning lower cost plans) shall apply beginning on the 
     date that is 12 months after the date of enactment of this 
     title.
       ``(2) Non-association coverage.--With respect to health 
     insurance provided to groups or individuals other than 
     participating employers of small business health plans, the 
     requirements of this part shall apply beginning on the date 
     that is 15 months after the date of enactment of this title.

     ``SEC. 2923. APPLICATION AND PREEMPTION.

       ``(a) Superceding of State Law.--
       ``(1) In general.--This part shall supersede any and all 
     State laws insofar as such laws relate to mandates relating 
     to covered benefits, services, or categories of provider in 
     the health insurance market as applied to an eligible 
     insurer, or health insurance coverage issued by an eligible 
     insurer, including with respect to coverage issued to a small 
     business health plan, 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, 
     marketing, or implementing health insurance coverage 
     consistent with the Benefit Choice Standards, as provided for 
     in section 2922(a); or
       ``(B) have the effect of retaliating against or otherwise 
     punishing in any respect an eligible insurer for offering, 
     marketing, or implementing health insurance coverage 
     consistent with the Benefit Choice Standards.
       ``(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 supercede 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 Benefit Choice 
     Standards.
       ``(4) No effect on preemption.--In no case shall this part 
     be construed to limit or affect in any manner the preemptive 
     scope of sections 502 and 514 of the Employee Retirement 
     Income Security Act of 1974. In no case shall this part be 
     construed to create any cause of action under Federal or 
     State law or enlarge or affect any remedy available under the 
     Employee Retirement Income Security Act of 1974.
       ``(5) Preemption limited to benefits.--Subsection (a) shall 
     not preempt any State law that does not have a reference to 
     or a connection with State mandates regarding covered 
     benefits, services, or categories of providers that would 
     otherwise apply to eligible insurers.

     ``SEC. 2924. CIVIL ACTIONS AND JURISDICTION.

       ``(a) In General.--The courts of the United States shall 
     have exclusive jurisdiction over civil actions involving the 
     interpretation of this part.
       ``(b) Actions.--An eligible insurer may bring an action in 
     the district courts of the United States for injunctive or 
     other equitable relief against any officials or agents of a 
     nonadopting State in connection with any conduct or action, 
     or proposed conduct or action, by such officials or agents 
     which violates, or which would if undertaken violate, section 
     2923.
       ``(c) Direct Filing in Court of Appeals.--At the election 
     of the eligible insurer, an action may be brought under 
     subsection (b) directly in the United States Court of Appeals 
     for the circuit in which the nonadopting State is located by 
     the filing of a petition for review in such Court.
       ``(d) Expedited Review.--
       ``(1) District court.--In the case of an action brought in 
     a district court of the United States under subsection (b), 
     such court shall complete such action, including the issuance 
     of a judgment, prior to the end of the 120-day period 
     beginning on the date on which such action is filed, unless 
     all parties to such proceeding agree to an extension of such 
     period.
       ``(2) Court of appeals.--In the case of an action brought 
     directly in a United States Court of Appeal under subsection 
     (c), or in the case of an appeal of an action brought in a 
     district court under subsection (b), such Court shall 
     complete all action on the petition, including the issuance 
     of a judgment, prior to the end of the 60-day period 
     beginning on the date on which such petition is filed with 
     the Court, unless all parties to such proceeding agree to an 
     extension of such period.
       ``(e) Standard of Review.--A court in an action filed under 
     this section, shall render a judgment based on a review of 
     the merits of all questions presented in such action and 
     shall not defer to any conduct or action, or proposed conduct 
     or action, of a nonadopting State.

     ``SEC. 2925. RULES OF CONSTRUCTION.

       ``(a) In General.--Notwithstanding any other provision of 
     Federal or State law, a health insurance issuer in an 
     adopting State or an eligible insurer in a non-adopting State 
     may amend its existing policies to be consistent with the 
     terms of this subtitle (concerning rating and benefits).
       ``(b) Health Savings Accounts.--Nothing in this subtitle 
     shall be construed to create any mandates for coverage of 
     benefits for HSA-qualified health plans that would require 
     reimbursements in violation of section 223(c)(2) of the 
     Internal Revenue Code of 1986.''.

         TITLE III--HARMONIZATION OF HEALTH INSURANCE STANDARDS

     SEC. 301. HEALTH INSURANCE STANDARDS 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--Standards Harmonization

     ``SEC. 2931. DEFINITIONS.

       ``In this subtitle:
       ``(1) 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.
       ``(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 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 health insurance coverage in 
     that State consistent with the harmonized standards published 
     pursuant to section 2932(d), 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 health coverage) and 
     filed with the State 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.
       ``(3) Harmonized standards.--The term `harmonized 
     standards' means the standards certified by the Secretary 
     under section 2932(d).
       ``(4) Health insurance coverage.--The term `health 
     insurance coverage' means any coverage issued in the health 
     insurance market, except that such term shall not include 
     excepted benefits (as defined in section 2791(c).
       ``(5) Nonadopting state.--The term `nonadopting State' 
     means a State that fails to enact, within 18 months of the 
     date on which the Secretary certifies 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.

[[Page S4284]]

       ``(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. 2932. HARMONIZED STANDARDS.

       ``(a) Board.--
       ``(1) Establishment.--Not later than 3 months after the 
     date of enactment of this title, the Secretary, in 
     consultation with the NAIC, shall establish the Health 
     Insurance Consensus Standards Board (referred to in this 
     subtitle as the `Board') to develop recommendations that 
     harmonize inconsistent State health insurance laws in 
     accordance with the procedures described in subsection (b).
       ``(2) Composition.--
       ``(A) In general.--The Board shall be composed of the 
     following voting members to be appointed by the Secretary 
     after considering the recommendations of professional 
     organizations representing the entities and constituencies 
     described in this paragraph:
       ``(i) Four State insurance commissioners as recommended by 
     the National Association of Insurance Commissioners, of which 
     2 shall be Democrats and 2 shall be Republicans, and of which 
     one shall be designated as the chairperson and one shall be 
     designated as the vice chairperson.
       ``(ii) Four representatives of State government, two of 
     which shall be governors of States and two of which shall be 
     State legislators, and two of which shall be Democrats and 
     two of which shall be Republicans.
       ``(iii) Four representatives of health insurers, of which 
     one shall represent insurers that offer coverage in the small 
     group market, one shall represent insurers that offer 
     coverage in the large group market, one shall represent 
     insurers that offer coverage in the individual market, and 
     one shall represent carriers operating in a regional market.
       ``(iv) Two representatives of insurance agents and brokers.
       ``(v) Two independent representatives of the American 
     Academy of Actuaries who have familiarity with the actuarial 
     methods applicable to health insurance.
       ``(B) Ex officio member.--A representative of the Secretary 
     shall serve as an ex officio member of the Board.
       ``(3) Advisory panel.--The Secretary shall establish an 
     advisory panel to provide advice to the Board, and shall 
     appoint its members after considering the recommendations of 
     professional organizations representing the entities and 
     constituencies identified in this paragraph:
       ``(A) Two representatives of small business health plans.
       ``(B) Two representatives of employers, of which one shall 
     represent small employers and one shall represent large 
     employers.
       ``(C) Two representatives of consumer organizations.
       ``(D) Two representatives of health care providers.
       ``(4) Qualifications.--The membership of the Board shall 
     include individuals with national recognition for their 
     expertise in health finance and economics, actuarial science, 
     health plans, providers of health services, and other related 
     fields, who provide a mix of different professionals, broad 
     geographic representation, and a balance between urban and 
     rural representatives.
       ``(5) Ethical disclosure.--The Secretary shall establish a 
     system for public disclosure by members of the Board of 
     financial and other potential conflicts of interest relating 
     to such members. Members of the Board shall be treated as 
     employees of Congress for purposes of applying title I of the 
     Ethics in Government Act of 1978 (Public Law 95-521).
       ``(6) Director and staff.--Subject to such review as the 
     Secretary deems necessary to assure the efficient 
     administration of the Board, the chair and vice-chair of the 
     Board may--
       ``(A) employ and fix the compensation of an Executive 
     Director (subject to the approval of the Comptroller General) 
     and such other personnel as may be necessary to carry out its 
     duties (without regard to the provisions of title 5, United 
     States Code, governing appointments in the competitive 
     service);
       ``(B) seek such assistance and support as may be required 
     in the performance of its duties from appropriate Federal 
     departments and agencies;
       ``(C) enter into contracts or make other arrangements, as 
     may be necessary for the conduct of the work of the Board 
     (without regard to section 3709 of the Revised Statutes (41 
     U.S.C. 5));
       ``(D) make advance, progress, and other payments which 
     relate to the work of the Board;
       ``(E) provide transportation and subsistence for persons 
     serving without compensation; and
       ``(F) prescribe such rules as it deems necessary with 
     respect to the internal organization and operation of the 
     Board.
       ``(7) Terms.--The members of the Board shall serve for the 
     duration of the Board. Vacancies in the Board shall be filled 
     as needed 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 Board shall identify and recommend 
     nationally harmonized standards for each of the following 
     process categories:
       ``(A) Form filing and rate filing.--Form and rate filing 
     standards shall be established which promote speed to market 
     and include the following defined areas for States that 
     require such filings:
       ``(i) Procedures for form and rate filing pursuant to a 
     streamlined administrative filing process.
       ``(ii) Timeframes for filings to be reviewed by a State if 
     review is required before they are deemed approved.
       ``(iii) Timeframes for an eligible insurer to respond to 
     State requests following its review.
       ``(iv) A process for an eligible insurer to self-certify.
       ``(v) State development of form and rate filing templates 
     that include only non-preempted State law and Federal law 
     requirements for eligible insurers with timely updates.
       ``(vi) Procedures for the resubmission of forms and rates.
       ``(vii) Disapproval rationale of a form or rate filing 
     based on material omissions or violations of non-preempted 
     State law or Federal law with violations cited and explained.
       ``(viii) For States that may require a hearing, a rationale 
     for hearings based on violations of non-preempted State law 
     or insurer requests.
       ``(B) Market conduct review.--Market conduct review 
     standards shall be developed which provide for the following:
       ``(i) Mandatory participation in national databases.
       ``(ii) The confidentiality of examination materials.
       ``(iii) The identification of the State agency with primary 
     responsibility for examinations.
       ``(iv) Consultation and verification of complaint data with 
     the eligible insurer prior to State actions.
       ``(v) Consistency of reporting requirements with the 
     recordkeeping and administrative practices of the eligible 
     insurer.
       ``(vi) Examinations that seek to correct material errors 
     and harmful business practices rather than infrequent errors.
       ``(vii) Transparency and publishing of the State's 
     examination standards.
       ``(viii) Coordination of market conduct analysis.
       ``(ix) Coordination and nonduplication between State 
     examinations of the same eligible insurer.
       ``(x) Rationale and protocols to be met before a full 
     examination is conducted.
       ``(xi) Requirements on examiners prior to beginning 
     examinations such as budget planning and work plans.
       ``(xii) Consideration of methods to limit examiners' fees 
     such as caps, competitive bidding, or other alternatives.
       ``(xiii) Reasonable fines and penalties for material errors 
     and harmful business practices.
       ``(C) Prompt payment of claims.--The Board shall establish 
     prompt payment standards for eligible insurers based on 
     standards similar to those applicable to the Social Security 
     Act as set forth in section 1842(c)(2) of such Act (42 U.S.C. 
     1395u(c)(2)). Such prompt payment standards shall be 
     consistent with the timing and notice requirements of the 
     claims procedure rules to be specified under subparagraph 
     (D), and shall include appropriate exceptions such as for 
     fraud, nonpayment of premiums, or late submission of claims.
       ``(D) Internal review.--The Board shall establish standards 
     for claims procedures for eligible insurers that are 
     consistent with the requirements relating to initial claims 
     for benefits and appeals of claims for benefits under the 
     Employee Retirement Income Security Act of 1974 as set forth 
     in section 503 of such Act (29 U.S.C. 1133) and the 
     regulations thereunder.
       ``(2) Recommendations.--The Board shall recommend 
     harmonized standards for each element of the categories 
     described in subparagraph (A) through (D) of paragraph (1) 
     within each such market. Notwithstanding the previous 
     sentence, the Board shall not recommend any harmonized 
     standards that disrupt, expand, or duplicate the covered 
     benefit, service, or category of provider mandate standards 
     provided for in section 2922.
       ``(c) Process for Identifying Harmonized Standards.--
       ``(1) In general.--The Board shall develop recommendations 
     to harmonize inconsistent State insurance laws with respect 
     to each of the process categories described in subparagraphs 
     (A) through (D) of subsection (b)(1).
       ``(2) Requirements.--In adopting standards under this 
     section, the Board shall consider the following:
       ``(A) Any model acts or regulations of the National 
     Association of Insurance Commissioners in each of the process 
     categories described in subparagraphs (A) through (D) of 
     subsection (b)(1).
       ``(B) Substantially similar standards followed by a 
     plurality of States, as reflected in existing State laws, 
     relating to the specific process categories described in 
     subparagraphs (A) through (D) of subsection (b)(1).
       ``(C) Any Federal law requirement related to specific 
     process categories described in subparagraphs (A) through (D) 
     of subsection (b)(1).
       ``(D) In the case of the adoption of any standard that 
     differs substantially from those referred to in subparagraphs 
     (A), (B), or (C), the Board shall provide evidence to the 
     Secretary that such standard is necessary to protect health 
     insurance consumers or promote speed to market or 
     administrative efficiency.

[[Page S4285]]

       ``(E) The criteria specified in clauses (i) through (iii) 
     of subsection (d)(2)(B).
       ``(d) Recommendations and Certification by Secretary.--
       ``(1) Recommendations.--Not later than 18 months after the 
     date on which all members of the Board are selected under 
     subsection (a), the Board shall recommend to the Secretary 
     the certification of the harmonized standards identified 
     pursuant to subsection (c).
       ``(2) Certification.--
       ``(A) In general.--Not later than 120 days after receipt of 
     the Board's recommendations under paragraph (1), the 
     Secretary shall certify the recommended harmonized standards 
     as provided for in subparagraph (B), and issue such standards 
     in the form of an interim final regulation.
       ``(B) Certification process.--The Secretary shall establish 
     a process for certifying the recommended harmonized standard, 
     by category, as recommended by the Board under this section. 
     Such process shall--
       ``(i) ensure that the certified standards for a particular 
     process area achieve regulatory harmonization with respect to 
     health plans on a national basis;
       ``(ii) ensure that the approved standards are the minimum 
     necessary, with regard to substance and quantity of 
     requirements, to protect health insurance consumers and 
     maintain a competitive regulatory environment; and
       ``(iii) ensure that the approved standards will not limit 
     the range of group health plan designs and insurance 
     products, such as catastrophic coverage only plans, health 
     savings accounts, and health maintenance organizations, that 
     might otherwise be available to consumers.
       ``(3) Effective date.--The standards certified by the 
     Secretary under paragraph (2) shall be effective on the date 
     that is 18 months after the date on which the Secretary 
     certifies the harmonized standards.
       ``(e) Termination.--The Board shall terminate and be 
     dissolved after making the recommendations to the Secretary 
     pursuant to subsection (d)(1).
       ``(f) Ongoing Review.--Not earlier than 3 years after the 
     termination of the Board under subsection (e), and not 
     earlier than every 3 years thereafter, the Secretary, in 
     consultation with the National Association of Insurance 
     Commissioners and the entities and constituencies represented 
     on the Board and the Advisory Panel, shall prepare and submit 
     to the appropriate committees of Congress a report that 
     assesses the effect of the harmonized standards on access, 
     cost, and health insurance market functioning. The Secretary 
     may, based on such report and applying the process 
     established for certification under subsection (d)(2)(B), in 
     consultation with the National Association of Insurance 
     Commissioners and the entities and constituencies represented 
     on the Board and the Advisory Panel, update the harmonized 
     standards through notice and comment rulemaking.
       ``(g) Publication.--
       ``(1) Listing.--The Secretary shall maintain an up to date 
     listing of all harmonized standards certified 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 certified under this section, which 
     may be 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 18 
     months after the certification by the Secretary of 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 certified under 
     this subtitle shall supersede any and all State laws of a 
     non-adopting State 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, including with respect to coverage issued to a small 
     business health plan, 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, 
     marketing, or implementing health insurance coverage 
     consistent with the harmonized standards; or
       ``(B) have the effect of retaliating against or otherwise 
     punishing in any respect an eligible insurer for offering, 
     marketing, or implementing health insurance coverage 
     consistent with the harmonized standards under this subtitle.
       ``(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 supersede 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 harmonized 
     standards under this subtitle.
       ``(4) Non-application where consistent with market conduct 
     examination harmonized standard.--Subsection (a)(1) shall not 
     supersede any State law of a nonadopting State that relates 
     to the harmonized standards issued under section 
     2932(b)(1)(B) to the extent that the State agency responsible 
     for regulating insurance (or other applicable State agency) 
     exercises its authority under State law consistent with the 
     harmonized standards issued under section 2932(b)(1)(B).
       ``(5) No effect on preemption.--In no case shall this 
     subtitle be construed to limit or affect in any manner the 
     preemptive scope of sections 502 and 514 of the Employee 
     Retirement Income Security Act of 1974. In no case shall this 
     subtitle be construed to create any cause of action under 
     Federal or State law or enlarge or affect any remedy 
     available under the Employee Retirement Income Security Act 
     of 1974.
       ``(6) Preemption limited to harmonized standards.--
     Subsection (a) shall not preempt any State law that does not 
     have a reference to or a connection with State requirements 
     for form and rate filing, market conduct reviews, prompt 
     payment of claims, or internal reviews that would otherwise 
     apply to eligible insurers.
       ``(c) Effective Date.--This section shall apply beginning 
     on the date that is 18 months after the date on harmonized 
     standards are certified by the Secretary under this subtitle.

     ``SEC. 2934. CIVIL ACTIONS AND JURISDICTION.

       ``(a) In General.--The courts of the United States shall 
     have exclusive jurisdiction over civil actions involving the 
     interpretation of this subtitle.
       ``(b) Actions.--An eligible insurer may bring an action in 
     the district courts of the United States for injunctive or 
     other equitable relief against any officials or agents of a 
     nonadopting State in connection with any conduct or action, 
     or proposed conduct or action, by such officials or agents 
     which violates, or which would if undertaken violate, section 
     2933.
       ``(c) Direct Filing in Court of Appeals.--At the election 
     of the eligible insurer, an action may be brought under 
     subsection (b) directly in the United States Court of Appeals 
     for the circuit in which the nonadopting State is located by 
     the filing of a petition for review in such Court.
       ``(d) Expedited Review.--
       ``(1) District court.--In the case of an action brought in 
     a district court of the United States under subsection (b), 
     such court shall complete such action, including the issuance 
     of a judgment, prior to the end of the 120-day period 
     beginning on the date on which such action is filed, unless 
     all parties to such proceeding agree to an extension of such 
     period.
       ``(2) Court of appeals.--In the case of an action brought 
     directly in a United States Court of Appeal under subsection 
     (c), or in the case of an appeal of an action brought in a 
     district court under subsection (b), such Court shall 
     complete all action on the petition, including the issuance 
     of a judgment, prior to the end of the 60-day period 
     beginning on the date on which such petition is filed with 
     the Court, unless all parties to such proceeding agree to an 
     extension of such period.
       ``(e) Standard of Review.--A court in an action filed under 
     this section, shall render a judgment based on a review of 
     the merits of all questions presented in such action and 
     shall not defer to any conduct or action, or proposed conduct 
     or action, of a nonadopting State.

     ``SEC. 2935. AUTHORIZATION OF APPROPRIATIONS; RULE OF 
                   CONSTRUCTION.

       ``(a) Authorization of Appropriations.--There are 
     authorized to be appropriated such sums as may be necessary 
     to carry out this subtitle.
       ``(b) Health Savings Accounts.--Nothing in this subtitle 
     shall be construed to create any mandates for coverage of 
     benefits for HSA-qualified health plans that would require 
     reimbursements in violation of section 223(c)(2) of the 
     Internal Revenue Code of 1986.''.


                           Amendment No. 3886

  Mr. FRIST. I send a first-degree amendment to the desk and ask for 
its consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Tennessee [Mr. Frist] proposes an 
     amendment No. 3886 to S. 1955, as modified.

  Mr. FRIST. I ask unanimous consent that reading of the amendment be 
with dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       At the end of the modified amendment add the following:
       ``This act shall become effective 1 day after enactment.''

  Mr. FRIST. I ask for the yeas and nays.

[[Page S4286]]

  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The yeas and nays were ordered.


                Amendment No. 3887 to Amendment No. 3886

  Mr. FRIST. I send a second-degree amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Tennessee [Mr. Frist] proposes an 
     amendment numbered 3887 to amendment No. 3886.

  Mr. FRIST. I ask unanimous consent that reading of the amendment be 
dispensed with.
  The PRESIDING OFFICER. Is there objection?
  Mr. KENNEDY. Mr. President, I haven't had an opportunity to see the 
amendment. I want to cooperate, but I would like to have reading of the 
amendment.
  The PRESIDING OFFICER. The clerk will read the amendment.
  The assistant legislative clerk read as follows:

       In the amendment strike ``1'' day and insert ``2'' days.

  Mr. KENNEDY. I have no objection to waiving the reading.
  Mr. FRIST. Was that the second-degree amendment?
  The PRESIDING OFFICER. The second-degree amendment has been read.


                Amendment No. 3888 to motion to recommit

  Mr. FRIST. I now move to recommit the bill to the HELP Committee, and 
I send that motion to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Tennessee [Mr. Frist] moves to recommit 
     the bill to the Committee on Health, Education, Labor, and 
     Pensions with instructions to report back forthwith with the 
     following:

                (Purpose: In the nature of a substitute)

       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS; PURPOSE.

       (a) Short Title.--This Act may be cited as the ``Health 
     Insurance Marketplace Modernization and Affordability Act of 
     2006''.
       (b) Table of Contents.--The table of contents is as 
     follows:

Sec. 1. Short title; table of contents; purposes.

                  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--MARKET RELIEF

Sec. 201. Market relief.

         TITLE III--HARMONIZATION OF HEALTH INSURANCE STANDARDS

Sec. 301. Health Insurance Standards Harmonization.

       (c) Purposes.--It is the purpose of this Act to--
       (1) make more affordable health insurance options available 
     to small businesses, working families, and all Americans;
       (2) assure effective State regulatory protection of the 
     interests of health insurance consumers; and
       (3) create a more efficient and affordable health insurance 
     marketplace through collaborative development of uniform 
     regulatory standards.

                  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 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;
       ``(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; and
       ``(4) does not condition membership on the basis of a 
     minimum group size.
     Any sponsor consisting of an association of entities which 
     meet the requirements of paragraphs (1), (2), (3), and (4) 
     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 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 business health plan involved is failing to comply with 
     the requirements of this part.
       ``(d) Expedited and Deemed Certification.--
       ``(1) In general.--If the Secretary fails to act on an 
     application for certification under this section within 90 
     days of receipt of such application, the applying small 
     business health plan shall be deemed certified until such 
     time as the Secretary may deny for cause the application for 
     certification.
       ``(2) Civil penalty.--The Secretary may assess a civil 
     penalty against the board of trustees and plan sponsor 
     (jointly and severally) of a small business health plan that 
     is deemed certified under paragraph (1) of up to $500,000 in 
     the event the Secretary determines that the application for 
     certification of such small business health plan was 
     willfully or with gross negligence incomplete or inaccurate.

     ``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.

[[Page S4287]]

       ``(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 2006.
       ``(B) Sole authority.--The board has sole authority under 
     the plan to approve applications for participation in the 
     plan and to contract with insurers.
       ``(c) Treatment of Franchises.--In the case of a group 
     health plan which is established and maintained by a 
     franchiser for a franchisor or for 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 franchisor were deemed to be the sponsor referred 
     to in section 801(b) and each franchisee were deemed to be a 
     member (of the sponsor) referred to in section 801(b); and
       ``(2) the requirements of section 804(a)(1) shall be deemed 
     met.
     For purposes of this subsection the terms `franchisor' and 
     `franchisee' shall have the meanings given such terms for 
     purposes of sections 436.2(a) through 436.2(c) of title 16, 
     Code of Federal Regulations (including any such amendments to 
     such regulation after the date of enactment of this part).

     ``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, 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 dependents of individuals described in 
     subparagraph (A).
       ``(b) 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.
       ``(c) 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) information regarding all coverage options available 
     under the plan is made readily available to any employer 
     eligible to participate; 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 trustees serves as the 
     named fiduciary required for plans under section 402(a)(1) 
     and serves in the capacity of a plan administrator (referred 
     to in section 3(16)(A)); 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, subject to subparagraph (B) and the 
     terms of this title.
       ``(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 that meets the 
     requirements of this part, 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 small 
     business health plan so long as any variation in such rates 
     for participating small employers complies with the 
     requirements of clause (ii), except that small business 
     health plans shall not be subject, in non-adopting states, to 
     subparagraphs (A)(ii) and (C) of section 2912(a)(2) of the 
     Public Health Service Act, and in adopting states, to any 
     State law that would have the effect of imposing requirements 
     as outlined in such subparagraphs (A)(ii) and (C); or
       ``(ii) varying contribution rates for participating small 
     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 small group 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 2006.
       ``(3) Exceptions regarding self-employed and large 
     employers.--
       ``(A) Self employed.--
       ``(i) In general.--Small business health plans with 
     participating employers who are self-employed individuals 
     (and their dependents) shall enroll such self-employed 
     participating employers in accordance with rating rules that 
     do not violate the rating rules for self-employed individuals 
     in the State in which such self-employed participating 
     employers are located.
       ``(ii) Guarantee issue.--Small business health plans with 
     participating employers who are self-employed individuals 
     (and their dependents) may decline to guarantee issue to such 
     participating employers in States in which guarantee issue is 
     not otherwise required for the self-employed in that State.
       ``(B) Large employers.--Small business health plans with 
     participating employers that are larger than small employers 
     (as defined in section 808(a)(10)) shall enroll such large 
     participating employers in accordance with rating rules that 
     do not violate the rating rules for large employers in the 
     State in which such large participating employers are 
     located.
       ``(4) 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 2006.
       ``(c) Domicile and Non-Domicile States.--
       ``(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 but in which the 
     insurer of the small business health plan in the domicile 
     State is not yet licensed, the following shall apply:
       ``(A) Temporary preemption.--If, upon the expiration of the 
     90-day period following the submission of a licensure 
     application by such insurer (that includes a certified copy 
     of an approved licensure application as submitted by such 
     insurer in the domicile State) to such State, such State has 
     not approved or denied such application, such State's health 
     insurance licensure laws shall be temporarily preempted and 
     the insurer shall be permitted to operate in such State, 
     subject to the following terms:
       ``(i) Application of non-domicile state law.--Except with 
     respect to licensure and with respect to the terms of 
     subtitle A of title XXIX of the Public Health Service Act 
     (relating to rating and benefits as added by the Health 
     Insurance Marketplace Modernization and Affordability Act of 
     2006), the laws and authority of the non-domicile State shall 
     remain in full force and effect.
       ``(ii) Revocation of preemption.--The preemption of a non-
     domicile State's health insurance licensure laws pursuant to 
     this subparagraph, shall be terminated upon the occurrence of 
     either of the following:

[[Page S4288]]

       ``(I) Approval or denial of application.--The approval of 
     denial of an insurer's licensure application, following the 
     laws and regulations of the non-domicile State with respect 
     to licensure.
       ``(II) Determination of material violation.--A 
     determination by a non-domicile State that an insurer 
     operating in a non-domicile State pursuant to the preemption 
     provided for in this subparagraph is in material violation of 
     the insurance laws (other than licensure and with respect to 
     the terms of subtitle A of title XXIX of the Public Health 
     Service Act (relating to rating and benefits added by the 
     Health Insurance Marketplace Modernization and Affordability 
     Act of 2006)) of such State.

       ``(B) No prohibition on promotion.--Nothing in this 
     paragraph shall be construed to prohibit a small business 
     health plan or an insurer from promoting coverage prior to 
     the expiration of the 90-day period provided for in 
     subparagraph (A), except that no enrollment or collection of 
     contributions shall occur before the expiration of such 90-
     day period.
       ``(C) Licensure.--Except with respect to the application of 
     the temporary preemption provision of this paragraph, nothing 
     in this part shall be construed to limit the requirement that 
     insurers issuing coverage to small business health plans 
     shall be licensed in each State in which the small business 
     health plans operate.
       ``(D) Servicing by licensed insurers.--Notwithstanding 
     subparagraph (C), the requirements of this subsection may 
     also be satisfied if the participating employers of a small 
     business health plan are serviced by a licensed insurer in 
     that State, even where such insurer is not the insurer of 
     such small business health plan in the State in which such 
     small business health plan is domiciled.

     ``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 the small business health 
     plans operate.
       ``(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, or
       ``(B) in the case of a sponsor with members which consist 
     of associations, a person who is a member or employee of any 
     such association and elects an affiliated status with the 
     sponsor.
       ``(2) Applicable authority.--The term `applicable 
     authority' means the Secretary of Labor, 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), except that such term shall not include excepted 
     benefits (as defined in section 733(c)).
       ``(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).
       ``(11) Trade association and professional association.--The 
     terms `trade association' and `professional association' mean 
     an entity that meets the requirements of section 1.501(c)(6)-
     1 of title 26, Code of Federal Regulations (as in effect on 
     the date of enactment of this Act).
       ``(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 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.
       ``(c) Renewal.--Notwithstanding any provision of law to the 
     contrary, a participating employer in a small business health 
     plan shall not be deemed to be a plan sponsor in applying 
     requirements relating to coverage renewal.
       ``(d) Health Savings Accounts.--Nothing in this part shall 
     be construed to create any mandates for coverage of benefits 
     for HSA-qualified health plans that would require 
     reimbursements in violation of section 223(c)(2) of the 
     Internal Revenue Code of 1986.''.
       (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

[[Page S4289]]

     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 subtitle A of 
     title XXIX of the Public Health Service Act (as added by 
     title II of the Health Insurance Marketplace Modernization 
     and Affordability Act of 2006) (concerning health plan rating 
     and benefits) are met.''.
       (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 12 months 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 6 months 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 has control over 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--MARKET RELIEF

     SEC. 201. 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 MODERNIZATION

     ``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--Market Relief

                     ``PART I--RATING REQUIREMENTS

     ``SEC. 2911. DEFINITIONS.

       ``In this part:
       ``(1) Adopting state.--The term `adopting State' means a 
     State that, with respect to the small group market, has 
     enacted small group rating rules that meet the minimum 
     standards set forth in section 2912(a)(1) or, as applicable, 
     transitional small group rating rules set forth in section 
     2912(b).
       ``(2) 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 
     insurance laws of such State.
       ``(3) Base premium rate.--The term `base premium rate' 
     means, for each class of business with respect to a rating 
     period, the lowest premium rate charged or that could have 
     been charged under a rating system for that class of business 
     by the small employer carrier to small employers with similar 
     case characteristics for health benefit plans with the same 
     or similar coverage
       ``(4) Eligible insurer.--The term `eligible insurer' means 
     a health insurance issuer that is licensed in a 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 Model Small Group Rating Rules or, as 
     applicable, transitional small group rating rules in a 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 Model Small Group 
     Rating Rules, 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); 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 Model Small 
     Group Rating Rules and an affirmation that such Rules are 
     included in the terms of such contract.
       ``(5) Health insurance coverage.--The term `health 
     insurance coverage' means any coverage issued in the small 
     group health insurance market, except that such term shall 
     not include excepted benefits (as defined in section 
     2791(c)).
       ``(6) Index rate.--The term `index rate' means for each 
     class of business with respect to the rating period for small 
     employers with similar case characteristics, the arithmetic 
     average of the applicable base premium rate and the 
     corresponding highest premium rate.

[[Page S4290]]

       ``(7)  Model small group rating rules.--The term ` Model 
     Small Group Rating Rules' means the rules set forth in 
     section 2912(a)(2).
       ``(8) Nonadopting state.--The term `nonadopting State' 
     means a State that is not an adopting State.
       ``(9) 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).
       ``(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) Variation limits.--
       ``(A) Composite variation limit.--
       ``(i) In general.--The term `composite variation limit' 
     means the total variation in premium rates charged by a 
     health insurance issuer in the small group market as 
     permitted under applicable State law based on the following 
     factors or case characteristics:

       ``(I) Age.
       ``(II) Duration of coverage.
       ``(III) Claims experience.
       ``(IV) Health status.

       ``(ii) Use of factors.--With respect to the use of the 
     factors described in clause (i) in setting premium rates, a 
     health insurance issuer shall use one or both of the factors 
     described in subclauses (I) or (IV) of such clause and may 
     use the factors described in subclauses (II) or (III) of such 
     clause.
       ``(B) Total variation limit.--The term `total variation 
     limit' means the total variation in premium rates charged by 
     a health insurance issuer in the small group market as 
     permitted under applicable State law based on all factors and 
     case characteristics (as described in section 2912(a)(1)).

     ``SEC. 2912. RATING RULES.

       ``(a) Establishment of Minimum Standards for Premium 
     Variations and Model Small Group Rating Rules.--Not later 
     than 6 months after the date of enactment of this title, the 
     Secretary shall promulgate regulations establishing the 
     following Minimum Standards and Model Small Group Rating 
     Rules:
       ``(1) Minimum standards for premium variations.--
       ``(A) Composite variation limit.--The composite variation 
     limit shall not be less than 3:1.
       ``(B) Total variation limit.--The total variation limit 
     shall not be less than 5:1.
       ``(C) Prohibition on use of certain case characteristics.--
     For purposes of this paragraph, in calculating the total 
     variation limit, the State shall not use case characteristics 
     other than those used in calculating the composite variation 
     limit and industry, geographic area, group size, 
     participation rate, class of business, and participation in 
     wellness programs.
       ``(2) Model small group rating rules.--The following apply 
     to an eligible insurer in a non-adopting State:
       ``(A) Premium rates.--Premium rates for small group health 
     benefit plans to which this title applies shall comply with 
     the following provisions relating to premiums, except as 
     provided for under subsection (b):
       ``(i) Variation in premium rates.--The plan may not vary 
     premium rates by more than the minimum standards provided for 
     under paragraph (1).
       ``(ii) Index rate.--The index rate for a rating period for 
     any class of business shall not exceed the index rate for any 
     other class of business by more than 20 percent, excluding 
     those classes of business related to association groups under 
     this title.
       ``(iii) Class of businesses.--With respect to a class of 
     business, the premium rates charged during a rating period to 
     small employers with similar case characteristics for the 
     same or similar coverage or the rates that could be charged 
     to such employers under the rating system for that class of 
     business, shall not vary from the index rate by more than 25 
     percent of the index rate under clause (ii).
       ``(iv) Increases for new rating periods.--The percentage 
     increase in the premium rate charged to a small employer for 
     a new rating period may not exceed the sum of the following:

       ``(I) The percentage change in the new business premium 
     rate measured from the first day of the prior rating period 
     to the first day of the new rating period. In the case of a 
     health benefit plan into which the small employer carrier is 
     no longer enrolling new small employers, the small employer 
     carrier shall use the percentage change in the base premium 
     rate, except that such change shall not exceed, on a 
     percentage basis, the change in the new business premium rate 
     for the most similar health benefit plan into which the small 
     employer carrier is actively enrolling new small employers.
       ``(II) Any adjustment, not to exceed 15 percent annually 
     and adjusted pro rata for rating periods of less then 1 year, 
     due to the claim experience, health status or duration of 
     coverage of the employees or dependents of the small employer 
     as determined from the small employer carrier's rate manual 
     for the class of business involved.
       ``(III) Any adjustment due to change in coverage or change 
     in the case characteristics of the small employer as 
     determined from the small employer carrier's rate manual for 
     the class of business.

       ``(v) Uniform application of adjustments.--Adjustments in 
     premium rates for claim experience, health status, or 
     duration of coverage shall not be charged to individual 
     employees or dependents. Any such adjustment shall be applied 
     uniformly to the rates charged for all employees and 
     dependents of the small employer.
       ``(vi) Prohibition on use of certain case characteristic.--
     A small employer carrier shall not utilize case 
     characteristics, other than those permitted under paragraph 
     (1)(C), without the prior approval of the applicable State 
     authority.
       ``(vii) Consistent application of factors.--Small employer 
     carriers shall apply rating factors, including case 
     characteristics, consistently with respect to all small 
     employers in a class of business. Rating factors shall 
     produce premiums for identical groups which differ only by 
     the amounts attributable to plan design and do not reflect 
     differences due to the nature of the groups assumed to select 
     particular health benefit plans.
       ``(viii) Treatment of plans as having same rating period.--
     A small employer carrier shall treat all health benefit plans 
     issued or renewed in the same calendar month as having the 
     same rating period.
       ``(ix) Require compliance.--Premium rates for small 
     business health benefit plans shall comply with the 
     requirements of this subsection notwithstanding any 
     assessments paid or payable by a small employer carrier as 
     required by a State's small employer carrier reinsurance 
     program.
       ``(B) Establishment of separate class of business.--Subject 
     to subparagraph (C), a small employer carrier may establish a 
     separate class of business only to reflect substantial 
     differences in expected claims experience or administrative 
     costs related to the following:
       ``(i) The small employer carrier uses more than one type of 
     system for the marketing and sale of health benefit plans to 
     small employers.
       ``(ii) The small employer carrier has acquired a class of 
     business from another small employer carrier.
       ``(iii) The small employer carrier provides coverage to one 
     or more association groups that meet the requirements of this 
     title.
       ``(C) Limitation.--A small employer carrier may establish 
     up to 9 separate classes of business under subparagraph (B), 
     excluding those classes of business related to association 
     groups under this title.
       ``(D) Limitation on transfers.--A small employer carrier 
     shall not transfer a small employer involuntarily into or out 
     of a class of business. A small employer carrier shall not 
     offer to transfer a small employer into or out of a class of 
     business unless such offer is made to transfer all small 
     employers in the class of business without regard to case 
     characteristics, claim experience, health status or duration 
     of coverage since issue.
       ``(b) Transitional Model Small Group Rating Rules.--
       ``(1) In general.--Not later than 6 months after the date 
     of enactment of this title and to the extent necessary to 
     provide for a graduated transition to the minimum standards 
     for premium variation as provided for in subsection (a)(1), 
     the Secretary, in consultation with the National Association 
     of Insurance Commissioners (NAIC), shall promulgate State-
     specific transitional small group rating rules in accordance 
     with this subsection, which shall be applicable with respect 
     to non-adopting States and eligible insurers operating in 
     such States for a period of not to exceed 3 years from the 
     date of the promulgation of the minimum standards for premium 
     variation pursuant to subsection (a).
       ``(2) Compliance with transitional model small group rating 
     rules.--During the transition period described in paragraph 
     (1), a State that, on the date of enactment of this title, 
     has in effect a small group rating rules methodology that 
     allows for a variation that is less than the variation 
     provided for under subsection (a)(1) (concerning minimum 
     standards for premium variation), shall be deemed to be an 
     adopting State if the State complies with the transitional 
     small group rating rules as promulgated by the Secretary 
     pursuant to paragraph (1).
       ``(3) Transitioning of old business.--
       ``(A) In general.--In developing the transitional small 
     group rating rules under paragraph (1), the Secretary shall, 
     after consultation with the National Association of Insurance 
     Commissioners and representatives of insurers operating in 
     the small group health insurance market in non-adopting 
     States, promulgate special transition standards with respect 
     to independent rating classes for old and new business, to 
     the extent reasonably necessary to protect health insurance 
     consumers and to ensure a stable and fair transition for old 
     and new market entrants.
       ``(B) Period for operation of independent rating classes.--
     In developing the special transition standards pursuant to 
     subparagraph (A), the Secretary shall permit a carrier in a 
     non-adopting State, at its option, to maintain independent 
     rating classes for old and new business for a period of up to 
     5 years, with the commencement of such 5-year period to begin 
     at such time, but not later than the date that is 3 years 
     after the date of enactment of this title, as the carrier 
     offers a book of business meeting the minimum standards for 
     premium variation provided for in subsection (a)(1) or the 
     transitional small group rating rules under paragraph (1).
       ``(4) Other transitional authority.--In developing the 
     transitional small group rating rules under paragraph (1), 
     the Secretary

[[Page S4291]]

     shall provide for the application of the transitional small 
     group rating rules in transition States as the Secretary may 
     determine necessary for a an effective transition.
       ``(c) Market Re-Entry.--
       ``(1) In general.--Notwithstanding any other provision of 
     law, a health insurance issuer that has voluntarily withdrawn 
     from providing coverage in the small group market prior to 
     the date of enactment of the Health Insurance Marketplace 
     Modernization and Affordability Act of 2006 shall not be 
     excluded from re-entering such market on a date that is more 
     than 180 days after such date of enactment.
       ``(2) Termination.--The provision of this subsection shall 
     terminate on the date that is 24 months after the date of 
     enactment of the Health Insurance Marketplace Modernization 
     and Affordability Act of 2006.

     ``SEC. 2913. APPLICATION AND PREEMPTION.

       ``(a) Superseding of State Law.--
       ``(1) In general.--This part shall supersede any and all 
     State laws of a non-adopting State 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, 
     including with respect to coverage issued to a small employer 
     through a small business health plan, in a 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, 
     marketing, or implementing small group health insurance 
     coverage consistent with the Model Small Group Rating Rules 
     or transitional model small group rating rules; or
       ``(B) have the effect of retaliating against or otherwise 
     punishing in any respect an eligible insurer for offering, 
     marketing, or implementing small group health insurance 
     coverage consistent with the Model Small Group Rating Rules 
     or transitional model small group rating rules.
       ``(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 supercede 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 Model Small 
     Group Rating Rules or transitional model small group rating 
     rules.
       ``(4) No effect on preemption.--In no case shall this part 
     be construed to limit or affect in any manner the preemptive 
     scope of sections 502 and 514 of the Employee Retirement 
     Income Security Act of 1974. In no case shall this part be 
     construed to create any cause of action under Federal or 
     State law or enlarge or affect any remedy available under the 
     Employee Retirement Income Security Act of 1974.
       ``(5) Preemption limited to rating.--Subsection (a) shall 
     not preempt any State law that does not have a reference to 
     or a connection with State rating rules that would otherwise 
     apply to eligible insurers.
       ``(c) Effective Date.--This section shall apply, at the 
     election of the eligible insurer, beginning in the first plan 
     year or the first calendar year following the issuance of the 
     final rules by the Secretary under the Model Small Group 
     Rating Rules or, as applicable, the Transitional Model Small 
     Group Rating Rules, but in no event earlier than the date 
     that is 12 months after the date of enactment of this title.

     ``SEC. 2914. CIVIL ACTIONS AND JURISDICTION.

       ``(a) In General.--The courts of the United States shall 
     have exclusive jurisdiction over civil actions involving the 
     interpretation of this part.
       ``(b) Actions.--An eligible insurer may bring an action in 
     the district courts of the United States for injunctive or 
     other equitable relief against any officials or agents of a 
     nonadopting State in connection with any conduct or action, 
     or proposed conduct or action, by such officials or agents 
     which violates, or which would if undertaken violate, section 
     2913.
       ``(c) Direct Filing in Court of Appeals.--At the election 
     of the eligible insurer, an action may be brought under 
     subsection (b) directly in the United States Court of Appeals 
     for the circuit in which the nonadopting State is located by 
     the filing of a petition for review in such Court.
       ``(d) Expedited Review.--
       ``(1) District court.--In the case of an action brought in 
     a district court of the United States under subsection (b), 
     such court shall complete such action, including the issuance 
     of a judgment, prior to the end of the 120-day period 
     beginning on the date on which such action is filed, unless 
     all parties to such proceeding agree to an extension of such 
     period.
       ``(2) Court of appeals.--In the case of an action brought 
     directly in a United States Court of Appeal under subsection 
     (c), or in the case of an appeal of an action brought in a 
     district court under subsection (b), such Court shall 
     complete all action on the petition, including the issuance 
     of a judgment, prior to the end of the 60-day period 
     beginning on the date on which such petition is filed with 
     the Court, unless all parties to such proceeding agree to an 
     extension of such period.
       ``(e) Standard of Review.--A court in an action filed under 
     this section, shall render a judgment based on a review of 
     the merits of all questions presented in such action and 
     shall not defer to any conduct or action, or proposed conduct 
     or action, of a nonadopting State.

     ``SEC. 2915. ONGOING REVIEW.

       ``Not later than 5 years after the date on which the Model 
     Small Group Rating Rules are issued under this part, and 
     every 5 years thereafter, the Secretary, in consultation with 
     the National Association of Insurance Commissioners, shall 
     prepare and submit to the appropriate committees of Congress 
     a report that assesses the effect of the Model Small Group 
     Rating Rules on access, cost, and market functioning in the 
     small group market. Such report may, if the Secretary, in 
     consultation with the National Association of Insurance 
     Commissioners, determines such is appropriate for improving 
     access, costs, and market functioning, contain legislative 
     proposals for recommended modification to such Model Small 
     Group Rating Rules.

                      ``PART II--AFFORDABLE PLANS

     ``SEC. 2921. DEFINITIONS.

       ``In this part:
       ``(1) Adopting state.--The term `adopting State' means a 
     State that has enacted the Benefit Choice Standards in their 
     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) Benefit choice standards.--The term `Benefit Choice 
     Standards' means the Standards issued under section 2922.
       ``(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 Benefit Choice 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 health insurance coverage in 
     that State consistent with the Benefit Choice Standards, 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 pursuant to subparagraph (B), a 
     description in the insurer's contract of the Benefit Choice 
     Standards and that adherence to such Standards is included as 
     a term of such contract.
       ``(4) Health insurance coverage.--The term `health 
     insurance coverage' means any coverage issued in the group or 
     individual health insurance markets, except that such term 
     shall not include excepted benefits (as defined in section 
     2791(c)).
       ``(5) Nonadopting state.--The term `nonadopting State' 
     means a State that is not an adopting State.
       ``(6) 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).
       ``(7) 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 AFFORDABLE PLANS.

       ``(a) Benefit Choice Options.--
       ``(1) Development.--Not later than 6 months after the date 
     of enactment of this title, the Secretary shall issue, by 
     interim final rule, Benefit Choice Standards that implement 
     the standards provided for in this part.
       ``(2) Basic options.--The Benefit Choice Standards shall 
     provide that a health insurance issuer in a State, may offer 
     a coverage plan or plan in the small group market, individual 
     market, large group market, or through a small business 
     health plan, that does not comply with one or more mandates 
     regarding covered benefits, services, or category of provider 
     as may be in effect in such State with respect to such market 
     or markets (either prior to or following the date of 
     enactment of this title), if such issuer also offers in such 
     market or markets an enhanced option as provided for in 
     paragraph (3).
       ``(3) Enhanced option.--A health insurance issuer issuing a 
     basic option as provided for in paragraph (2) shall also 
     offer to purchasers (including, with respect to a small 
     business health plan, the participating employers of such 
     plan) an enhanced option, which shall at a minimum include 
     such covered benefits, services, and categories of providers 
     as are

[[Page S4292]]

     covered by a State employee coverage plan in one of the 5 
     most populous States as are in effect in the calendar year in 
     which such enhanced option is offered.
       ``(4) Publication of benefits.--Not later than 3 months 
     after the date of enactment of this title, and on the first 
     day of every calendar year thereafter, the Secretary shall 
     publish in the Federal Register such covered benefits, 
     services, and categories of providers covered in that 
     calendar year by the State employee coverage plans in the 5 
     most populous States.
       ``(b) Effective Dates.--
       ``(1) Small business health plans.--With respect to health 
     insurance provided to participating employers of small 
     business health plans, the requirements of this part 
     (concerning lower cost plans) shall apply beginning on the 
     date that is 12 months after the date of enactment of this 
     title.
       ``(2) Non-association coverage.--With respect to health 
     insurance provided to groups or individuals other than 
     participating employers of small business health plans, the 
     requirements of this part shall apply beginning on the date 
     that is 15 months after the date of enactment of this title.

     ``SEC. 2923. APPLICATION AND PREEMPTION.

       ``(a) Superceding of State Law.--
       ``(1) In general.--This part shall supersede any and all 
     State laws insofar as such laws relate to mandates relating 
     to covered benefits, services, or categories of provider in 
     the health insurance market as applied to an eligible 
     insurer, or health insurance coverage issued by an eligible 
     insurer, including with respect to coverage issued to a small 
     business health plan, 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, 
     marketing, or implementing health insurance coverage 
     consistent with the Benefit Choice Standards, as provided for 
     in section 2922(a); or
       ``(B) have the effect of retaliating against or otherwise 
     punishing in any respect an eligible insurer for offering, 
     marketing, or implementing health insurance coverage 
     consistent with the Benefit Choice Standards.
       ``(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 supercede 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 Benefit Choice 
     Standards.
       ``(4) No effect on preemption.--In no case shall this part 
     be construed to limit or affect in any manner the preemptive 
     scope of sections 502 and 514 of the Employee Retirement 
     Income Security Act of 1974. In no case shall this part be 
     construed to create any cause of action under Federal or 
     State law or enlarge or affect any remedy available under the 
     Employee Retirement Income Security Act of 1974.
       ``(5) Preemption limited to benefits.--Subsection (a) shall 
     not preempt any State law that does not have a reference to 
     or a connection with State mandates regarding covered 
     benefits, services, or categories of providers that would 
     otherwise apply to eligible insurers.

     ``SEC. 2924. CIVIL ACTIONS AND JURISDICTION.

       ``(a) In General.--The courts of the United States shall 
     have exclusive jurisdiction over civil actions involving the 
     interpretation of this part.
       ``(b) Actions.--An eligible insurer may bring an action in 
     the district courts of the United States for injunctive or 
     other equitable relief against any officials or agents of a 
     nonadopting State in connection with any conduct or action, 
     or proposed conduct or action, by such officials or agents 
     which violates, or which would if undertaken violate, section 
     2923.
       ``(c) Direct Filing in Court of Appeals.--At the election 
     of the eligible insurer, an action may be brought under 
     subsection (b) directly in the United States Court of Appeals 
     for the circuit in which the nonadopting State is located by 
     the filing of a petition for review in such Court.
       ``(d) Expedited Review.--
       ``(1) District court.--In the case of an action brought in 
     a district court of the United States under subsection (b), 
     such court shall complete such action, including the issuance 
     of a judgment, prior to the end of the 120-day period 
     beginning on the date on which such action is filed, unless 
     all parties to such proceeding agree to an extension of such 
     period.
       ``(2) Court of appeals.--In the case of an action brought 
     directly in a United States Court of Appeal under subsection 
     (c), or in the case of an appeal of an action brought in a 
     district court under subsection (b), such Court shall 
     complete all action on the petition, including the issuance 
     of a judgment, prior to the end of the 60-day period 
     beginning on the date on which such petition is filed with 
     the Court, unless all parties to such proceeding agree to an 
     extension of such period.
       ``(e) Standard of Review.--A court in an action filed under 
     this section, shall render a judgment based on a review of 
     the merits of all questions presented in such action and 
     shall not defer to any conduct or action, or proposed conduct 
     or action, of a nonadopting State.

     ``SEC. 2925. RULES OF CONSTRUCTION.

       ``(a) In General.--Notwithstanding any other provision of 
     Federal or State law, a health insurance issuer in an 
     adopting State or an eligible insurer in a non-adopting State 
     may amend its existing policies to be consistent with the 
     terms of this subtitle (concerning rating and benefits).
       ``(b) Health Savings Accounts.--Nothing in this subtitle 
     shall be construed to create any mandates for coverage of 
     benefits for HSA-qualified health plans that would require 
     reimbursements in violation of section 223(c)(2) of the 
     Internal Revenue Code of 1986.''.

         TITLE III--HARMONIZATION OF HEALTH INSURANCE STANDARDS

     SEC. 301. HEALTH INSURANCE STANDARDS 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--Standards Harmonization

     ``SEC. 2931. DEFINITIONS.

       ``In this subtitle:
       ``(1) 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.
       ``(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 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 health insurance coverage in 
     that State consistent with the harmonized standards published 
     pursuant to section 2932(d), 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 health coverage) and 
     filed with the State 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.
       ``(3) Harmonized standards.--The term `harmonized 
     standards' means the standards certified by the Secretary 
     under section 2932(d).
       ``(4) Health insurance coverage.--The term `health 
     insurance coverage' means any coverage issued in the health 
     insurance market, except that such term shall not include 
     excepted benefits (as defined in section 2791(c).
       ``(5) Nonadopting state.--The term `nonadopting State' 
     means a State that fails to enact, within 18 months of the 
     date on which the Secretary certifies 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.
       ``(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. 2932. HARMONIZED STANDARDS.

       ``(a) Board.--
       ``(1) Establishment.--Not later than 3 months after the 
     date of enactment of this title, the Secretary, in 
     consultation with the NAIC, shall establish the Health 
     Insurance Consensus Standards Board (referred to in this 
     subtitle as the `Board') to develop recommendations that 
     harmonize inconsistent State health insurance laws in 
     accordance with the procedures described in subsection (b).
       ``(2) Composition.--
       ``(A) In general.--The Board shall be composed of the 
     following voting members to be appointed by the Secretary 
     after considering the recommendations of professional 
     organizations representing the entities and constituencies 
     described in this paragraph:
       ``(i) Four State insurance commissioners as recommended by 
     the National Association of Insurance Commissioners, of which 
     2 shall be Democrats and 2 shall be Republicans, and of which 
     one shall be designated as the chairperson and one shall be 
     designated as the vice chairperson.
       ``(ii) Four representatives of State government, two of 
     which shall be governors of States and two of which shall be 
     State legislators, and two of which shall be Democrats and 
     two of which shall be Republicans.
       ``(iii) Four representatives of health insurers, of which 
     one shall represent insurers

[[Page S4293]]

     that offer coverage in the small group market, one shall 
     represent insurers that offer coverage in the large group 
     market, one shall represent insurers that offer coverage in 
     the individual market, and one shall represent carriers 
     operating in a regional market.
       ``(iv) Two representatives of insurance agents and brokers.
       ``(v) Two independent representatives of the American 
     Academy of Actuaries who have familiarity with the actuarial 
     methods applicable to health insurance.
       ``(B) Ex officio member.--A representative of the Secretary 
     shall serve as an ex officio member of the Board.
       ``(3) Advisory panel.--The Secretary shall establish an 
     advisory panel to provide advice to the Board, and shall 
     appoint its members after considering the recommendations of 
     professional organizations representing the entities and 
     constituencies identified in this paragraph:
       ``(A) Two representatives of small business health plans.
       ``(B) Two representatives of employers, of which one shall 
     represent small employers and one shall represent large 
     employers.
       ``(C) Two representatives of consumer organizations.
       ``(D) Two representatives of health care providers.
       ``(4) Qualifications.--The membership of the Board shall 
     include individuals with national recognition for their 
     expertise in health finance and economics, actuarial science, 
     health plans, providers of health services, and other related 
     fields, who provide a mix of different professionals, broad 
     geographic representation, and a balance between urban and 
     rural representatives.
       ``(5) Ethical disclosure.--The Secretary shall establish a 
     system for public disclosure by members of the Board of 
     financial and other potential conflicts of interest relating 
     to such members. Members of the Board shall be treated as 
     employees of Congress for purposes of applying title I of the 
     Ethics in Government Act of 1978 (Public Law 95-521).
       ``(6) Director and staff.--Subject to such review as the 
     Secretary deems necessary to assure the efficient 
     administration of the Board, the chair and vice-chair of the 
     Board may--
       ``(A) employ and fix the compensation of an Executive 
     Director (subject to the approval of the Comptroller General) 
     and such other personnel as may be necessary to carry out its 
     duties (without regard to the provisions of title 5, United 
     States Code, governing appointments in the competitive 
     service);
       ``(B) seek such assistance and support as may be required 
     in the performance of its duties from appropriate Federal 
     departments and agencies;
       ``(C) enter into contracts or make other arrangements, as 
     may be necessary for the conduct of the work of the Board 
     (without regard to section 3709 of the Revised Statutes (41 
     U.S.C. 5));
       ``(D) make advance, progress, and other payments which 
     relate to the work of the Board;
       ``(E) provide transportation and subsistence for persons 
     serving without compensation; and
       ``(F) prescribe such rules as it deems necessary with 
     respect to the internal organization and operation of the 
     Board.
       ``(7) Terms.--The members of the Board shall serve for the 
     duration of the Board. Vacancies in the Board shall be filled 
     as needed 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 Board shall identify and recommend 
     nationally harmonized standards for each of the following 
     process categories:
       ``(A) Form filing and rate filing.--Form and rate filing 
     standards shall be established which promote speed to market 
     and include the following defined areas for States that 
     require such filings:
       ``(i) Procedures for form and rate filing pursuant to a 
     streamlined administrative filing process.
       ``(ii) Timeframes for filings to be reviewed by a State if 
     review is required before they are deemed approved.
       ``(iii) Timeframes for an eligible insurer to respond to 
     State requests following its review.
       ``(iv) A process for an eligible insurer to self-certify.
       ``(v) State development of form and rate filing templates 
     that include only non-preempted State law and Federal law 
     requirements for eligible insurers with timely updates.
       ``(vi) Procedures for the resubmission of forms and rates.
       ``(vii) Disapproval rationale of a form or rate filing 
     based on material omissions or violations of non-preempted 
     State law or Federal law with violations cited and explained.
       ``(viii) For States that may require a hearing, a rationale 
     for hearings based on violations of non-preempted State law 
     or insurer requests.
       ``(B) Market conduct review.--Market conduct review 
     standards shall be developed which provide for the following:
       ``(i) Mandatory participation in national databases.
       ``(ii) The confidentiality of examination materials.
       ``(iii) The identification of the State agency with primary 
     responsibility for examinations.
       ``(iv) Consultation and verification of complaint data with 
     the eligible insurer prior to State actions.
       ``(v) Consistency of reporting requirements with the 
     recordkeeping and administrative practices of the eligible 
     insurer.
       ``(vi) Examinations that seek to correct material errors 
     and harmful business practices rather than infrequent errors.
       ``(vii) Transparency and publishing of the State's 
     examination standards.
       ``(viii) Coordination of market conduct analysis.
       ``(ix) Coordination and nonduplication between State 
     examinations of the same eligible insurer.
       ``(x) Rationale and protocols to be met before a full 
     examination is conducted.
       ``(xi) Requirements on examiners prior to beginning 
     examinations such as budget planning and work plans.
       ``(xii) Consideration of methods to limit examiners' fees 
     such as caps, competitive bidding, or other alternatives.
       ``(xiii) Reasonable fines and penalties for material errors 
     and harmful business practices.
       ``(C) Prompt payment of claims.--The Board shall establish 
     prompt payment standards for eligible insurers based on 
     standards similar to those applicable to the Social Security 
     Act as set forth in section 1842(c)(2) of such Act (42 U.S.C. 
     1395u(c)(2)). Such prompt payment standards shall be 
     consistent with the timing and notice requirements of the 
     claims procedure rules to be specified under subparagraph 
     (D), and shall include appropriate exceptions such as for 
     fraud, nonpayment of premiums, or late submission of claims.
       ``(D) Internal review.--The Board shall establish standards 
     for claims procedures for eligible insurers that are 
     consistent with the requirements relating to initial claims 
     for benefits and appeals of claims for benefits under the 
     Employee Retirement Income Security Act of 1974 as set forth 
     in section 503 of such Act (29 U.S.C. 1133) and the 
     regulations thereunder.
       ``(2) Recommendations.--The Board shall recommend 
     harmonized standards for each element of the categories 
     described in subparagraph (A) through (D) of paragraph (1) 
     within each such market. Notwithstanding the previous 
     sentence, the Board shall not recommend any harmonized 
     standards that disrupt, expand, or duplicate the covered 
     benefit, service, or category of provider mandate standards 
     provided for in section 2922.
       ``(c) Process for Identifying Harmonized Standards.--
       ``(1) In general.--The Board shall develop recommendations 
     to harmonize inconsistent State insurance laws with respect 
     to each of the process categories described in subparagraphs 
     (A) through (D) of subsection (b)(1).
       ``(2) Requirements.--In adopting standards under this 
     section, the Board shall consider the following:
       ``(A) Any model acts or regulations of the National 
     Association of Insurance Commissioners in each of the process 
     categories described in subparagraphs (A) through (D) of 
     subsection (b)(1).
       ``(B) Substantially similar standards followed by a 
     plurality of States, as reflected in existing State laws, 
     relating to the specific process categories described in 
     subparagraphs (A) through (D) of subsection (b)(1).
       ``(C) Any Federal law requirement related to specific 
     process categories described in subparagraphs (A) through (D) 
     of subsection (b)(1).
       ``(D) In the case of the adoption of any standard that 
     differs substantially from those referred to in subparagraphs 
     (A), (B), or (C), the Board shall provide evidence to the 
     Secretary that such standard is necessary to protect health 
     insurance consumers or promote speed to market or 
     administrative efficiency.
       ``(E) The criteria specified in clauses (i) through (iii) 
     of subsection (d)(2)(B).
       ``(d) Recommendations and Certification by Secretary.--
       ``(1) Recommendations.--Not later than 18 months after the 
     date on which all members of the Board are selected under 
     subsection (a), the Board shall recommend to the Secretary 
     the certification of the harmonized standards identified 
     pursuant to subsection (c).
       ``(2) Certification.--
       ``(A) In general.--Not later than 120 days after receipt of 
     the Board's recommendations under paragraph (1), the 
     Secretary shall certify the recommended harmonized standards 
     as provided for in subparagraph (B), and issue such standards 
     in the form of an interim final regulation.
       ``(B) Certification process.--The Secretary shall establish 
     a process for certifying the recommended harmonized standard, 
     by category, as recommended by the Board under this section. 
     Such process shall--
       ``(i) ensure that the certified standards for a particular 
     process area achieve regulatory harmonization with respect to 
     health plans on a national basis;
       ``(ii) ensure that the approved standards are the minimum 
     necessary, with regard to substance and quantity of 
     requirements, to protect health insurance consumers and 
     maintain a competitive regulatory environment; and
       ``(iii) ensure that the approved standards will not limit 
     the range of group health plan

[[Page S4294]]

     designs and insurance products, such as catastrophic coverage 
     only plans, health savings accounts, and health maintenance 
     organizations, that might otherwise be available to 
     consumers.
       ``(3) Effective date.--The standards certified by the 
     Secretary under paragraph (2) shall be effective on the date 
     that is 18 months after the date on which the Secretary 
     certifies the harmonized standards.
       ``(e) Termination.--The Board shall terminate and be 
     dissolved after making the recommendations to the Secretary 
     pursuant to subsection (d)(1).
       ``(f) Ongoing Review.--Not earlier than 3 years after the 
     termination of the Board under subsection (e), and not 
     earlier than every 3 years thereafter, the Secretary, in 
     consultation with the National Association of Insurance 
     Commissioners and the entities and constituencies represented 
     on the Board and the Advisory Panel, shall prepare and submit 
     to the appropriate committees of Congress a report that 
     assesses the effect of the harmonized standards on access, 
     cost, and health insurance market functioning. The Secretary 
     may, based on such report and applying the process 
     established for certification under subsection (d)(2)(B), in 
     consultation with the National Association of Insurance 
     Commissioners and the entities and constituencies represented 
     on the Board and the Advisory Panel, update the harmonized 
     standards through notice and comment rulemaking.
       ``(g) Publication.--
       ``(1) Listing.--The Secretary shall maintain an up to date 
     listing of all harmonized standards certified 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 certified under this section, which 
     may be 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 18 
     months after the certification by the Secretary of 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 certified under 
     this subtitle shall supersede any and all State laws of a 
     non-adopting State 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, including with respect to coverage issued to a small 
     business health plan, 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, 
     marketing, or implementing health insurance coverage 
     consistent with the harmonized standards; or
       ``(B) have the effect of retaliating against or otherwise 
     punishing in any respect an eligible insurer for offering, 
     marketing, or implementing health insurance coverage 
     consistent with the harmonized standards under this subtitle.
       ``(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 supersede 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 harmonized 
     standards under this subtitle.
       ``(4) Non-application where consistent with market conduct 
     examination harmonized standard.--Subsection (a)(1) shall not 
     supersede any State law of a nonadopting State that relates 
     to the harmonized standards issued under section 
     2932(b)(1)(B) to the extent that the State agency responsible 
     for regulating insurance (or other applicable State agency) 
     exercises its authority under State law consistent with the 
     harmonized standards issued under section 2932(b)(1)(B).
       ``(5) No effect on preemption.--In no case shall this 
     subtitle be construed to limit or affect in any manner the 
     preemptive scope of sections 502 and 514 of the Employee 
     Retirement Income Security Act of 1974. In no case shall this 
     subtitle be construed to create any cause of action under 
     Federal or State law or enlarge or affect any remedy 
     available under the Employee Retirement Income Security Act 
     of 1974.
       ``(6) Preemption limited to harmonized standards.--
     Subsection (a) shall not preempt any State law that does not 
     have a reference to or a connection with State requirements 
     for form and rate filing, market conduct reviews, prompt 
     payment of claims, or internal reviews that would otherwise 
     apply to eligible insurers.
       ``(c) Effective Date.--This section shall apply beginning 
     on the date that is 18 months and one day after the date on 
     harmonized standards are certified by the Secretary under 
     this subtitle.

     ``SEC. 2934. CIVIL ACTIONS AND JURISDICTION.

       ``(a) In General.--The courts of the United States shall 
     have exclusive jurisdiction over civil actions involving the 
     interpretation of this subtitle.
       ``(b) Actions.--An eligible insurer may bring an action in 
     the district courts of the United States for injunctive or 
     other equitable relief against any officials or agents of a 
     nonadopting State in connection with any conduct or action, 
     or proposed conduct or action, by such officials or agents 
     which violates, or which would if undertaken violate, section 
     2933.
       ``(c) Direct Filing in Court of Appeals.--At the election 
     of the eligible insurer, an action may be brought under 
     subsection (b) directly in the United States Court of Appeals 
     for the circuit in which the nonadopting State is located by 
     the filing of a petition for review in such Court.
       ``(d) Expedited Review.--
       ``(1) District court.--In the case of an action brought in 
     a district court of the United States under subsection (b), 
     such court shall complete such action, including the issuance 
     of a judgment, prior to the end of the 120-day period 
     beginning on the date on which such action is filed, unless 
     all parties to such proceeding agree to an extension of such 
     period.
       ``(2) Court of appeals.--In the case of an action brought 
     directly in a United States Court of Appeal under subsection 
     (c), or in the case of an appeal of an action brought in a 
     district court under subsection (b), such Court shall 
     complete all action on the petition, including the issuance 
     of a judgment, prior to the end of the 60-day period 
     beginning on the date on which such petition is filed with 
     the Court, unless all parties to such proceeding agree to an 
     extension of such period.
       ``(e) Standard of Review.--A court in an action filed under 
     this section, shall render a judgment based on a review of 
     the merits of all questions presented in such action and 
     shall not defer to any conduct or action, or proposed conduct 
     or action, of a nonadopting State.

     ``SEC. 2935. AUTHORIZATION OF APPROPRIATIONS; RULE OF 
                   CONSTRUCTION.

       ``(a) Authorization of Appropriations.--There are 
     authorized to be appropriated such sums as may be necessary 
     to carry out this subtitle.
       ``(b) Health Savings Accounts.--Nothing in this subtitle 
     shall be construed to create any mandates for coverage of 
     benefits for HSA-qualified health plans that would require 
     reimbursements in violation of section 223(c)(2) of the 
     Internal Revenue Code of 1986.''.

  Mr. FRIST. I ask for the yeas and nays on the motion.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The yeas and nays were ordered.


                           Amendment No. 3889

  Mr. FRIST. I send a first-degree amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Tennessee [Mr. Frist] proposes an 
     amendment numbered 3889 to the instructions to the motion to 
     recommit.

  Mr. FRIST. I ask unanimous consent that reading of the amendment be 
dispensed with.
  Mr. KENNEDY. Mr. President, until I have a chance to see the 
amendment, I will have to object.
  The PRESIDING OFFICER. The clerk will read the amendment.
  The assistant legislative clerk read as follows:

       In the amendment strike the number ``3'' and insert the 
     number ``4''

  Mr. KENNEDY. I withdraw my objection.
  The PRESIDING OFFICER. The majority leader.
  Mr. FRIST. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The yeas and nays were ordered.


                Amendment No. 3890 to Amendment No. 3889

  Mr. FRIST. I now send a second-degree amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Tennessee [Mr. Frist] proposes an 
     amendment numbered 3890 to amendment No. 3889.

  Mr. FRIST. I ask unanimous consent that reading of amendment be 
dispensed with.

[[Page S4295]]

  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       At the end of the amendment add the following;
       ``This act shall become effective 3 days after enactment.''

  Mr. FRIST. Mr. President, let me summarize or attempt to summarize 
where we are in terms of what we just did and where we have been. After 
a 96-to-2 vote on invoking cloture on the motion to proceed, we have 
now finally proceeded to the small business health plans bill. We are 
now at a point that we can begin debating the substance of this bill.
  Chairman Enzi is here and is ready for relevant amendments to come 
forward and be debated. He will have more to say on that shortly.
  What is clear is that there have been attempts or suggestions that we 
use this bill as a Christmas tree for all sorts of amendments, as well 
intended as they might be, but amendments that don't relate to the 
underlying bill.
  Earlier this week, we began to address and tried to address issues 
surrounding medical liability. We were unable to do so. We have now 
proceeded to the small business bill, and it is my intention to stay on 
that bill, with amendments related to the bill. This bill should have 
strong, bipartisan support. As it plays out, we will see how strong 
that bipartisan support may be.
  Mr. DURBIN. Will the majority leader yield for a question?
  Mr. FRIST. Yes.
  Mr. DURBIN. I ask the majority leader to clarify something in his 
remarks. He referred to amendments as ``Christmas tree amendments.'' 
There is one amendment on this side of the aisle that he supports on 
stem cell research. If this is Health Care Week, it would seem that 
this is a related issue. Does the majority leader characterize that 
amendment as a ``Christmas tree amendment''?
  Mr. FRIST. Mr. President, the issue of stem cells is a very important 
issue. As my colleague knows, I am very committed to addressing that 
particular issue.
  What is very clear to me, as we started discussing health care on 
Friday of last week--and it is now Wednesday--is that we need to 
systematically take an issue, one by one, that is important to the 
American people, that I have clearly laid out, starting with medical 
liability, and then proceed to another medical liability bill and 
proceed to small business, without jumping to other important issues. 
There is a whole range of issues that affect cost, quality, research, 
and affect people's lives and affect access to health care. But the 
only way we are going to be able to address those in an intelligent, 
effective, step-wise way is to take them one at a time, like medical 
liability. We were unsuccessful there. We are now moving to small 
business and focusing on that. There will be amendments, and we welcome 
them. The chairman is here and ready to talk substance on those 
amendments. Let's dispose of those and stay on small business. Then we 
will go and look at a whole range of other issues on health care at an 
appropriate time.
  My intention is to go step-wise through this, with relevant 
amendments. The chairman is willing to address that and address the 
issue of small business health plans. We have 46 million people out 
there who are uninsured today. This doesn't solve the problem, but it 
fits very nicely with allowing the people out there who don't have 
access to health care today, who work in small businesses, to have for 
the first time the opportunity to get the reasonable, affordable health 
care they simply don't have today. There are a million people--if we 
pass this bill and it is signed by the President--who are uninsured who 
will have the opportunity to have insurance.
  Let me yield to our chairman because I do encourage our Members on 
both sides of the aisle to come forward so that we can have substantive 
debate on the small business health insurance issues out there, without 
trying--because I know the other side wants to address many other 
issues, as has been expressed over the last several days, which are 
their priorities that they want to put before small business health 
reform plans. But we are simply not going to do that.
  Mr. KENNEDY. Well, Mr. President, I say with the greatest respect 
that it is kind of interesting that the majority leader presents a 
proposal to the Chamber on behalf of the human resources committee--and 
as we know, under the Senate rules, that is entirely appropriate--and 
then in the same breath he asks us to recommit the legislation back to 
the committee, after he has just spoken for the committee, which 
suggests that there is a parliamentary maneuver, which is now quite 
apparent to all of us, that we are not going to have the opportunity to 
even get a debate on small business assistance, because we have on this 
side of the aisle the Durbin legislation dealing with relief for small 
business which effectively we are precluded from having an opportunity 
to offer.
  If I understand the last sentence of the leader, he said we are going 
to have to dispose of this and go this route before we consider any 
other amendments. As I understand it from our Democratic leader, we 
could have reduced those to four or five different amendments that deal 
with the emergency penalties that some 8 million seniors are going to 
pay on the prescription drug program, the issue of the ability of 
Medicare to be able to negotiate lower prices, and the stem cell issue, 
which my friend has commented on, and Senator Harkin and Senator 
Feinstein, and I know the Senator from Tennessee understands the full 
potential of this. But effectively, as I understand it, this is 
Wednesday at 3 o'clock; we were here Wednesday morning. I have been 
effectively here since 10 o'clock in the morning, and we have Wednesday 
and Thursday and a full week where we can deal with these issues.
  It just is troubling to many of us, when we went through this whole 
argument a week or 10 days ago on the immigration issue, where we were 
listening to those on that side of the aisle say: Let's have some 
amendments. Now we hear from them that, no, we cannot. We want lots of 
amendments on that, but we refuse to have amendments on this.
  I daresay that the Senate rules permit debate on different 
amendments. We have a set of rules out there. You can have an amendment 
in the first or second degree, and you can have ultimate judgments and 
decisions. I just want to mention at this time that the action that has 
been taken now by the leader is effectively going to foreclose an 
opportunity at this time, when we are having our health care debate, to 
debate either stem cell research or relief for our senior citizens, who 
will be paying the penalty because of the requirements of the 
prescription drug program. We will be denied an opportunity to consider 
reimportation or negotiation for lower prices. Those are effectively 
issues that I think most Americans can understand. Certainly these are 
issues which Members of this body are familiar with and not new issues. 
We have not been able to get an opportunity.
  I certainly regret that is the case because I think, with all 
respect, as the CBO talks about, there are 48 million Americans without 
health insurance. According to CBO, this is going to help solve it for 
600,000, where we have the option with the Durbin proposal to solve it 
for millions in small business. But we are denied that opportunity. It 
is difficult for me to follow that kind of rationale, but we are where 
we are. I regret that judgment and decision, but that is where we are.
  The PRESIDING OFFICER. The Senator from Wyoming is recognized.
  Mr. ENZI. Mr. President, I wish to comment a little bit on that. I 
think there is plenty of blame to go around for any delays that are 
happening around here. When we are talking about incorporating in this 
bill, which deals with small business health plans, an opportunity to 
give small businessmen a chance at negotiating in the market to bring 
down costs, with an alternative being proposed--when we are being asked 
to incorporate into this and put all the weight of the stem cell debate 
or drug reimportation or Medicare Part D on top of this as a full-blown 
debate, everybody in this body knows that any one of those would easily 
take up not just a full week but probably 3 weeks because there would 
be other kinds of motions and parliamentary objections and processes 
that would drag any one of those out for that time.
  The difficulty with being able to debate anything around here is the

[[Page S4296]]

length of time as a result of the right to offer any amendments that 
anybody wants on any topic. So we do make some efforts to try to keep 
them relevant. If we do cloture, then they are germane. Germane is a 
much tougher test, but relevant is not any health care idea in the 
whole world that could be amended and amended and amended and debated 
and have processes put in against it that would keep us from ever 
getting to a decision on small business health plans.
  So we are trying to stay with small business health plans. I know 
Senators Durbin and Lincoln have an alternate approach. The alternate 
approach ought to be voted on, but the alternate approach should not be 
voted on to the exclusion of ever getting to a vote on this. So we 
don't want to have just one of them vote and one side feel very good 
because they got a vote for that one and the other side never gets to 
their vote. We are trying to find a way to make sure there are votes on 
both sides on the issues and that not just one side is taking the tough 
votes but that we do something so we can get to a conclusion for small 
business. Yes, we are trying to focus this on the problems of small 
business.
  I would like to speak a little bit on the managers' amendment that is 
before us because there are some changes to the bill that I think the 
other side of the aisle will like. In most respects, this amendment 
corresponds very closely to the underlying bill reported out of the 
HELP Committee in March. It enables small businesses to pool together 
to save costs and increase access. It allows small business health 
plans and other plans to offer more affordable coverage options. It 
will also help streamline the current hodgepodge of health insurance 
regulation. However, the managers' amendment does make a number of new 
and important changes to the bill, most importantly in the area of 
premium rating.
  Before I address the managers' amendment, I want to first emphasize, 
as I have throughout this debate, that I am eager to start sorting the 
amendments my colleagues might want to offer. As we start the amendment 
process, I look forward to debating all amendments from my colleagues 
on both sides of the aisle that are relevant--I mean relevant to the 
goal of more affordable health insurance for small business owners and 
their employees and their families.
  I have reviewed some of the amendments Members have filed and want to 
offer. There are many that don't have any place on this bill and only 
serve to obstruct or delay passage of the bill--amendments addressing 
the energy efficiency of hybrid cars, Medicare benefits, hate crimes, 
and environmental air standards. They don't have any place on this 
bill. This bill is about health insurance for small business owners and 
their families and their employees and their families. I stand ready 
and willing to debate all relevant amendments to this bill.
  For instance, Senator Snowe will file an amendment on the issue of 
benefit mandates. Her amendment would ensure that benefits and services 
which have been mandated by a majority of States would continue to 
apply to small business health plans and other insurers. I know there 
is a lot of strong feeling on all sides of this issue, and I look 
forward to a lively and serious debate on it. I will have more to say 
about the Snowe amendment later.
  For now, I will focus on what we have done in the managers' amendment 
to address the concerns raised by many Members of this Chamber. The 
main change we have made is related to how health insurance premiums 
are priced for small business. Most States do have rating laws. Those 
laws limit the amount of variation between premiums charged to 
different small businesses. Some States allow a great variation; some 
States allow very little variation.
  During debate on this bill yesterday, I heard my Democratic 
colleagues make a number of speeches on this issue. They expressed 
their concern about how the bill, as reported from our committee, would 
affect the health insurance market in their States. They expressed 
concerns about how the rating rules in our bill might affect businesses 
with older workers or workers who have serious or chronic illnesses. I 
also heard these concerns in private conversations with a number of my 
colleagues over the past few weeks. I don't believe everybody should 
have to pay exactly the same amount for health insurance. Rules like 
that hurt young families and lower income workers. They get hurt 
because they get priced out of the affordable health insurance market.
  But I have listened to my colleagues. I have also consulted with some 
of my colleagues on our committee and with Senator Nelson of Nebraska, 
who coauthored this bill with me. I value his perspective as a former 
State insurance commissioner. I also reviewed the bill Senators Durbin 
and Lincoln have offered. I have talked with experts in the insurance 
markets and insurance regulation, and they don't think the bill 
Senators Durbin and Lincoln have offered would create new and 
affordable options. In fact, some of those experts think that bill 
would make things worse, not better.
  I will speak some other time in more detail on that. I prefer to go 
in the direction that we know can work. We know small business health 
plans will work because they worked in the past before the thicket of 
conflicting State laws made it too cumbersome to offer such plans.
  Our committee heard testimony on this last year, but Senator Nelson 
and I looked at the Durbin-Lincoln bill anyway to see if there were 
some ideas we could harvest, some ideas we could incorporate.
  After talking with Senator Nelson and my colleagues on the committee, 
we have developed an amendment that should address the concerns of most 
of my colleagues on the issue of rating.
  The managers' amendment would do two things: First, it would permit 
States to limit the allowable variation in premiums to a much narrower 
ratio between the highest and the lowest rates as compared to the bill 
my committee originally reported.
  Second, it would allow States to continue to require community rating 
of the health insurance policies. What that means is that the bill 
would allow States to prohibit small business health plans or insurance 
companies from using the health status of a group of workers as a 
factor in determining the group's premium.
  If States want to allow health status as a factor, they can allow it; 
if they don't, they can disallow it. This means two things: First of 
all, most States would be unaffected by the new rating threshold of the 
managers' amendment. As a matter of fact, we estimate the rating 
provisions would have no impact on approximately 40 States. The vast 
majority of those States have reasonably competitive markets, although 
those markets would be even more competitive if we allow for the 
creation of small business health plans, allowing small business to 
band together across State lines to increase their leverage and to cut 
administrative costs. That is a huge factor.
  Second, the managers' amendment preserves much of our original intent 
to create greater affordability for low-wage workers and for younger 
workers and their families, but it also allows States to retain 
reasonable limits on what high-risk groups can be charged. The 
managers' amendment sets a different threshold for allowable variation 
in premiums.
  The new threshold is similar to the model act published by the 
National Association of Insurance Commissioners and updated in 2000, 
its most recent model, and it is what Senators Durbin and Lincoln used 
as the basis of their bill.
  So under the managers' amendment, the States use community rating and 
could continue to use community rating. That means these States could 
still prohibit the use of health status as a rating factor as long as 
their system is adjusted to the point that it maintains affordability 
for low-wage workers and young people and families.
  Under the managers' amendment, States would also be permitted to 
limit small business health plans and other insurers from setting rates 
that vary by more than a 5-to-1 ratio. In other words, the highest rate 
for a group in a particular insurance pool could not be more than five 
times the lowest rate. That would ensure that the insurance pool has a 
better and more stable balance of risks in the pool while ensuring 
meaningful limits on premiums for higher risk groups. This is an 
adjusted community rating standard used in the bill authored by 
Senators Durbin and Lincoln.

[[Page S4297]]

  Again, just like the Durbin-Lincoln bill, the managers' amendment 
follows the most recent model from the National Association of 
Insurance Commissioners. The Durbin-Lincoln standard works out to the 
same 5-to-1 ratio between lowest and highest rating. So I hope my 
colleagues understand that here is an area where we have tried to 
strike a compromise, where we tried to work with them.
  I should point out that most States don't use community rating. They 
use what is known as rating bands. These bands allow for a variety of 
factors to be used in setting premiums, including health status. We 
will allow States that use rating bands to continue to use rating 
bands. None of these States would be required to use community rating 
if they don't want to. They can continue to allow greater premium 
variation than the 5-to-1 ratio if they choose. It is a very important 
point.
  The managers' amendment allows States to continue the use of two 
systems for rating health insurance policies. They can use either the 
community rating or what is known as rating bands. All the managers' 
amendment asks is that community-rated States follow the model set 
forth in the Durbin-Lincoln bill. At least if some reasonable variation 
in premiums is allowed, young families and lower wage workers may be 
able to find affordable policies. Of course, affordability would be 
enhanced if their State markets became competitive enough to attract 
small business health plans. So we are saying in 10 States it may not 
attract small business health plans.
  I know the rating is extremely complex. This is a very difficult 
issue to talk about. I kind of enjoy it as an accountant. But the 
bottom line is very simple. First, we need to maintain a minimum level 
of affordability in how premiums are set across the country. Young 
families and lower wage workers in certain States deserve access to 
affordable health insurance and, therefore, affordable health care, and 
they deserve the ability to join together with other employees as part 
of a pool of small business workers through the association in their 
industries.
  Ensuring that all the States have competitive health insurance 
markets will enable small business health plans to create truly 
national pools so they can maximize the full size of their membership 
as they negotiate for better benefits and for better prices.
  This is a major area of compromise, and I hope my colleagues 
recognize it. We have taken a major concept from the bill authored by 
Senators Durbin and Lincoln and we have incorporated it in the 
managers' amendment. We have done this because Senator Nelson and I and 
the other cosponsors of the bill are working in good faith to find 
common ground.
  While rating is the most significant issue that we revised in the 
managers' amendment, it is not the only one. For example, the managers' 
amendment includes several provisions to make it clear that the scope 
of the bill's preemption of State law is very narrowly tailored to only 
three areas. Those three areas are rating, as I have already discussed, 
benefits, to enable small business health plans to offer national 
benefit packages, and administrative functions, to reduce some 
unnecessary costs of health insurance regulation.
  It has been a key priority for my Democratic cosponsor, Senator Ben 
Nelson, that State oversight authority be retained to the maximum 
extent possible. We have a few former State insurance commissioners in 
the Senate, and I know they share Senator Nelson's opinion on that. 
There are also a few former attorneys general in the Senate, and I have 
listened to them. I have also listened to some of our current attorneys 
general who have voiced their concerns recently.

  I mention that some of their concerns refer more to the House-
associated health plans bill, and it is important for people to know 
this is different from that bill.
  We have listened and done these appropriate changes. We have added 
new provisions that make it very clear that this bill does not preempt, 
affect, or even disrupt traditional State authority regarding consumer 
protection, plan solvency, and insurance oversight. That stays with the 
State.
  Most importantly, it would be crystal clear that the bill does not 
limit in any way a consumer's right to petition their State insurance 
commissioner or the State courts. That is a very important point. I 
want to repeat that. It should be crystal clear that it does not limit 
in any way a consumer's right to petition the State insurance 
commissioner or their State courts.
  The managers' amendment before the Senate represents a significant 
effort to find common ground. It addresses the issue of rating, which 
is one of the two major concerns that Senator Nelson and I have heard 
from colleagues. Senator Snowe's amendment with respect to State-
mandated benefits is an attempt to address the other major concern.
  So Members who have raised concerns about these two issues ought to 
see we are willing to work toward a compromise. There should be no 
reason we can't arrive at a solution over the next couple of days. 
Small business owners and working families I don't think are going to 
accept excuses.
  The matter at hand is small business health plans. It is not stem 
cell research, it is not drug importation, and it is not Medicare. The 
matter at hand is about creating more affordable health insurance 
options for small business, and it is an issue that I think can be 
covered this week or a very small part of next week.
  As a manager of this bill, I am willing to entertain any germane 
amendments. With the consent of my colleagues, I will even go further 
than that. I will consider relevant amendments. But stem cell research 
is not relevant to this bill. Drug importation is not relevant to this 
bill. Medicare is not relevant to this bill. What is relevant to this 
bill is amendments that address the 27 million Americans without health 
insurance who work for or depend on small businesses.
  If my colleagues have amendments like that, Senator Nelson and I are 
more than willing to discuss them. Let's focus on the matter at hand. 
Let's take a meaningful step forward to give America's small business 
owners and working families more affordable health care.
  In regard to some of the comments that have been made, as an 
accountant, I do remind my colleagues that this is not a case of 
subtraction. This insurance plan is addition. It will be bringing in 
newly insured people. When you go to the dry cleaners tonight to pick 
up your laundry, can you look that person in the eye and say: I don't 
think you deserve health insurance because you might not demand enough 
for yourself, so I saved you from yourself? Can you look them in the 
eye and say to the mom and pop running the business down the street 
from your home: You don't deserve health insurance either; you don't 
have it now, we're not going to make it more affordable for you; too 
bad, we had other things we wanted to discuss?
  As you go home today, after you leave the Hill, think about the 
people around you, the regular people--the cab driver, the worker at 
the dry cleaner, the person in your neighborhood restaurant, all those 
people you may not notice who really make the world operate. Many of 
them don't have any insurance. Some may even own a little business just 
around the corner, be the owners of it, and still not be able to have 
insurance.
  I am not talking about deluxe insurance, I am talking about any 
insurance. We are not talking about the employees at the big hotel 
chains or the big chain restaurants. We are not talking about the 
employees at Wal-Mart. We already said to them: You can form whatever 
benefits package you want. You don't have to answer to any State. You 
don't even have to have review or oversight by insurance commissioners. 
You don't have to meet any State requirements. We already said that to 
big business, and big business has done that. They haven't left out 
critical things. They said: Let's see, this is a competitive market. We 
have to be competitive. We want to have employees. And you know what. I 
think they included almost everything that has been talked about here. 
They did it because they wanted to compete.
  Small business isn't any different. They need good employees. They 
want good employees. They know that if they are going to have good 
employees they have to do as much as they can afford.

[[Page S4298]]

  Oh, yes, and when they are doing that, they can also pick up some 
insurance for themselves, and what they do for themselves, they do for 
their employees. We hear the estimates of how much this will or will 
not save. I would like to make a couple of comments on that. We have 
already seen that the big businesses, instead of paying 35 percent in 
administrative costs--35 percent--remember, each 1 percent of insurance 
costs drives 200,000 to 300,000 people out of the market. We are 
talking about 35 percent administrative costs. But those big businesses 
that we gave permission to do whatever they wanted to, theirs runs 
about 8 percent. Do you think they would be more competitive than the 
small businesses? What keeps the small businesses in business is their 
flexibility and how much less they make.

  So I am not talking about deluxe insurance; I am talking about any 
insurance. Did you know that in several States there is only deluxe 
insurance? Did you know that in some States there may only be one 
insurance provider? Others have been driven out of the market. No, it 
hasn't been the competition that has driven them out; it could be well-
meaning legislators wanting to make sure that everybody has everything 
they need.
  There is a lot with our bodies that we ought to be doing on a regular 
basis. We ought to be taking care of our body like we take care of our 
car--well, maybe not like we take care of our car. But the way we 
usually take care of our body is similar to a rental car. We drive it 
until something goes wrong and then we take it into the shop. But there 
are regular services that we ought to provide for our own bodies, and 
we can do that.
  The big companies get to do that tax deductible. It would be nice if 
the small businesses were able to do that tax deductible as well, and 
we can get into several of those issues later. We do have a plan here. 
We are willing to make modifications to it. We are willing to take 
relevant amendments. We do want to be sure that we get a vote on this 
bill, if we vote on an alternative measure. I think that is fair.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois is recognized.
  Mr. DURBIN. Mr. President, let me say at the outset that I salute 
Senator Enzi from Wyoming. He has shown extraordinary leadership and 
political courage to bring this issue to the floor. The last time we 
had a serious conversation about health care for American families and 
businesses was in that one brief shining moment when the Democrats were 
in control and brought the Patients' Bill of Rights to the floor; 
otherwise, during the time that I have served in the Senate, we have 
run away from this issue. I salute Senator Enzi. Although I disagree 
with his bill, and I will explain why, I admire his political courage 
and vision to report a bill from his committee and bring the issue to 
the floor. I have said that before the press, I have said it at home, 
and I want to say it on the floor on the Record. Although we may 
disagree on approach, I respect him very much for being willing to 
bring this complex and politically controversial issue to the floor.
  I think if you put it up for a vote as to when a week ends in 
America, we might not reach a consensus. There are some people who 
would argue: Why, a week ends on Friday night. That is the end of the 
week. Others say: No, a week ends on Sunday night. But what we have 
found is that Health Care Week in the Senate ends at 2:30 on Wednesday 
afternoon because that is when the Republican majority leader came to 
the floor and filled the tree, which means closed down amendments on 
the health care debate.
  The Republican majority leader felt there were only two issues 
relevant to health care in America. The first was the issue of medical 
malpractice and preempting the States that traditionally regulate 
medical malpractice. For I believe the fourth time, Senator Frist 
offered the medical malpractice bills at the beginning of the week, and 
they failed again, this time failing to even attract a majority of the 
Senators supporting either bill that he brought. Then the Senator moved 
to the health care issue before us: small business health insurance. 
Then the majority leader came today, having given us all of about a day 
and a half to consider this issue, and said that is the end of the 
story. No more amendments. We are not going to consider any other 
health care amendments in the bill before us. We are closing down the 
Senate when it comes to health care issues.
  That is interesting because what the Republicans have done is to 
close down debate on stem cell research. Senator Frist came to the 
floor and said: We don't want Christmas tree amendments. Christmas tree 
amendments--stem cell research. I don't know if Senator Frist has been 
back in his State. I have. They have roundtable discussions about stem 
cell research. They sit at a table surrounded by men and women who have 
their hopes pinned on medical research, those who are suffering from 
juvenile diabetes and the serious problems that come with it--a mother 
who gets up several times during the course of the night to wake her 
young daughter and to test her blood to see if she needs insulin, if 
she needs to eat something; another family with a young man with Lou 
Gehrig's disease who has reached the point now where he cannot 
communicate. All he can do is sit in his wheelchair, this young man in 
his 20s, with tears rolling down his face, as his mother says: Senator, 
please, please do something about stem cell research. It may not save 
him, but it may save someone else. Parkinson's disease--to have my 
colleague and closest friend in Congress, Lane Evans, a young man 
stricken with Parkinson's, forced to end his congressional career, who 
had the strength to come to the floor last year in the House and beg 
for stem cell research and others suffering from Parkinson's and spinal 
cord injuries. Think of those people whose lives have been compromised 
and slowed down because of these injuries. All they want is a chance 
for a vote on stem cell research.
  This President has prohibited stem cell research beyond a single line 
of available stem cells and has virtually closed it down as a Federal 
undertaking. We have decided, as a matter of Federal policy, that we 
will not do this research. We have been asking for over a year for a 
vote on the floor of the Senate on stem cell research. We were 
heartened when the Senate majority leader, Senator Frist, came to the 
floor in July of last year and said: I may be switching my position, he 
said, but I am going to support stem cell research. It meant so much 
because we respect him, a heart transplant surgeon, a man with his 
medical credentials, to break from the President on this issue, on stem 
cell research and say he would join us in the fight. But how 
disheartening to hear today as the Senator from Wyoming and the Senator 
from Tennessee refer to debate on stem cell research as not relevant to 
health care. Not relevant. It may not be relevant to their lives, but 
it is relevant to the lives of thousands of Americans.
  We in the Senate know what is at stake. If we don't bring this matter 
up for a vote this week on stem cell research, the chances of seeing 
the bill before the end of the year are slim to none. When we think of 
all of the families counting on us to step up for stem cell research, 
I want to ask you, Mr. President, isn't this worth a fight? Isn't this 
worth a fight on the floor of the Senate, to make sure that we get a 
vote this week on stem cell research, for the people who are counting 
on us, whose lives are compromised and broken because of disease and 
illness? Isn't this worth a fight in Health Care Week? Obviously, not 
on the other side of the aisle. They have declared stem cell research 
not relevant to Health Care Week.

  And what else? They have decided that Medicare prescription Part D is 
not an important part of Health Care Week. Medicare prescription Part 
D, where some 9 million Americans in 5 days, if they don't sign up for 
this program, will face a lifetime penalty. Medicare prescription Part 
D is a program written by pharmaceutical companies and insurance 
companies, a program which has been one of the worst that has ever been 
dreamed up on Capitol Hill. When we want to take a few moments to fix 
some basics and take the penalty off seniors, the Republican leadership 
says, now, wait a minute. That is not relevant to a Health Care Week 
debate. Prescription drugs for 9 million seniors, that is not relevant 
to a health care debate.
  Of course, we have heard Senator Dorgan of North Dakota repeatedly

[[Page S4299]]

asking for the opportunity to reimport drugs into the United States so 
that people have a fighting chance to pay for the drugs that keep them 
alive. He has been stopped by the Bush administration. He has fought 
for this opportunity to bring this issue to the floor time and again 
and insists on it this week in Health Care Week, and the Republican 
leadership has said, affordable prescription drugs coming in from 
foreign countries is not relevant to Health Care Week.
  So, Mr. President, I think you can understand why many of us come to 
the floor at this point disappointed. First, we were encouraged by 
Senator Enzi's decision to bring this matter forward, and then when 
Senator Frist said we are going to make it not just the Enzi bill, it 
will be Health Care Week, we finally said: Here is our chance, a chance 
for all of the people who have been waiting on us and who have been 
counting on us. Well, that chance was snuffed out at 2:30 this 
afternoon with Senator Frist's procedural motion. Health Care Week 
turned out to be too good to be true.
  It is interesting as well when we consider the basic underlying issue 
of health insurance. Do you know what the two competing issues are on 
health insurance? It is very basic. I don't have to explain it to my 
colleagues in the Senate, and I will tell you why. The proposal that I 
and Senator Blanche Lincoln have brought to the floor of the Senate to 
make available to every business across America is exactly the same 
health insurance that Members of Congress have. If it is good enough 
for Members of Congress, we think it is good enough for American 
families. But I listen as Senator Enzi and Republicans stand up and 
talk about what a terrible idea this would be, to offer to every 
American the same kind of health insurance that Members of Congress and 
Federal employees have. Well, if it is so bad, I wonder how many of 
them have decided not to sign up for it themselves. My guess is they 
have all signed up for it.
  Do you know why it is so good? It is not a government plan. It is a 
plan administered by the Government at less than 1 percent 
administrative cost that offers private insurance plans to Federal 
employees and their families, retirees, and Members of Congress. 
Private insurance offered by the Government. It is so good that it has 
worked for 40 years.
  Now we have the Republicans coming to the floor, Senator Enzi and 
others, saying what a terrible idea this is, the same health insurance 
that protects the Senator arguing against it. You have to ask yourself 
why, if it is so good for us, can't we offer it to American families? 
Instead, Senator Enzi has come forward with a plan which makes dramatic 
changes, not to the health insurance we might offer to the uninsured 
but in reducing protection, reducing coverage, and increasing costs for 
people who are already insured. If you thought to yourself for a 
moment, that is an interesting debate on health insurance, but I am not 
worried about it, I already have my plan, think twice, because the Enzi 
bill which he brings before us is going to make your health care less 
valuable, less protection, and more cost. That is the Enzi plan. That 
is unnecessary and unfair.
  Let me tell you what two organizations have to say about Senator 
Enzi's proposal, his health insurance plan. You might expect I am going 
to read something that has some political ring to it. Who is this 
organization that Senator Durbin is quoting? They must have some 
political agenda. I would like to quote from a letter, dated May 10--
today--from the American Cancer Society. The American Cancer Society is 
hardly a political organization. How do they describe the Enzi bill 
before us?

       It is our view that the basic construct of this legislation 
     is fatally flawed and therefore, we ask you to oppose it, 
     regardless of the amendment process on the Senate floor. 
     Consumers will be at the risk of losing important cancer-
     related protections such as guaranteed insurance coverage of 
     colorectal cancer screening and clinical trial participation.

  They go on to say:

       It is our view that the Enzi bill will not result in 
     increased access to quality care for most people.

  That is from the American Cancer Society.
  Now let me go to another letter, and you decide whether this is a 
political organization. It is the American Diabetes Association. The 
American Diabetes Association believes that:

       The proposed approach in the Enzi bill is fundamentally 
     flawed and must be opposed in all forms in order to protect 
     your constituents with diabetes. Any preemption or weakening 
     of State laws is a major threat to the well-being and lives 
     of people with diabetes and should not be acceptable to the 
     Senate.

  And listen to these statistics: Every 24 hours, 4,100 people in 
America are diagnosed with diabetes--4,100 every 24 hours. There are 
230 amputations from diabetes every day in America. There are 120 
people entering end-stage kidney disease programs, and 55 people go 
blind every day from diabetes. We lose 613 Americans daily and 225,000 
annually due to this epidemic. Diabetes continues to grow by more than 
8 percent each year. And listen to this: One in three of our children 
will be diagnosed with diabetes in their lifetime--one in three of our 
children will be diagnosed with diabetes in their lifetime.
  They go on to say:

        . . . we cannot allow for any loss of ground in this 
     battle.

  Signed by the chairman of the board and the chief executive officer. 
They say:

       Accordingly, we ask you to stand with us in full opposition 
     to [the Enzi legislation], no matter which cosmetic changes 
     may be proposed on the floor.

  This is a stark and clear choice for the Members of the Senate, what 
we offer to small businesses and Americans presently uninsured: the 
same quality health insurance that protects our families as Members of 
Congress have or we offered them a watered down health insurance 
program that has been rejected by the American Cancer Society, the 
American Diabetes Association, the American Association of Retired 
Persons, the AFL/CIO, AMA, the American Nurses Association--I could go 
on for three pages of health groups in America that reject the Enzi 
approach because it will reduce coverage.
  We know what the problem is. It has been a long time since we have 
even taken up this issue. During that period of time, we have seen the 
number of uninsured Americans grow from 37 million in 1993 to 46 
million today--46 million uninsured Americans. But this is the wrong 
medicine. This Enzi bill will put the insurance companies, not the 
doctors, in charge of health care. People will be worse off, with less 
protection.
  Yesterday, Senator Kennedy and I went down to a press conference a 
few blocks from here. A beautiful young lady came up. She was from 
Cleveland, OH. She brought her guide dog with her and she told the 
story about how her diabetes, untreated, resulted in her blindness--
young, beautiful lady. She said: I didn't have coverage for it in my 
health insurance, and as a result my life is much different. She said: 
I almost died. I am lucky to be alive and thankful to be alive. But 
when you talk about diabetes protection, you are talking about that 
young woman and others who could be just like her.
  Another young woman came to speak to us and told us how she was a 
young mother, healthy as could be, but tired from raising those three 
little kids. Somebody suggested to her to get a mammogram. She thought 
about it because she had a history of breast cancer in her family, but 
she said to herself: How much is it going to cost?
  They said: $250.
  She said: We don't have that. I need $250 for my kids.
  She said to her husband: Check the health insurance and see if it 
covers mammograms.
  Her husband called her the next day and said: You can get the test 
the next day for free.
  This beautiful young woman went to get a mammogram and learned within 
24 hours that she had the earliest stage of breast cancer. They did a 
lumpectomy. She went through months of chemotherapy.
  She said: I lost my hair, but I got through it all and I am here and 
I am alive and I am safe and I am going to be a mother for these kids 
for a long time to come.
  So when we talk about cancer screening in health insurance, I don't 
think that is deluxe care. I don't think that is luxury care. I don't 
think that is going overboard. Whether it is prostate screening, 
colorectal screening, or

[[Page S4300]]

mammograms, that is basic preventive medicine that saves lives and 
spares suffering and cuts the cost of health care.
  Unfortunately, many of those benefits are casualties in the Enzi 
approach. As I travel around Illinois, health insurance is the No. 1 
issue and has been for years for businesses large and small, labor 
unions, individuals, families, parents whose kids reach the age of 23 
and they finally realize: They are not going to be under my policy. How 
are they going to be covered?
  Between 1993 and 2003, annual premiums Americans paid for health 
insurance in that 10-year period increased by 79 percent. Employer 
contributions to their employee insurance increased by 90 percent. 
These premium increases make it tough for businesses to survive and 
offer health care protection.
  Let be me give an example of one family I know, Jim and Carole 
Britton. They own the Express Personnel Services in my home town of 
Springfield, IL. They are good folks, good hard-working businesspeople. 
They have 24 employees. They pay 85 percent of their employees' 
premiums. They want to keep doing it. They really believe it is the 
right thing to do.
  Like many small business owners they shop for a small business policy 
every year because premium costs keep going through the roof. They have 
been forced to raise the deductible to keep premiums manageable. Last 
year, the deductible doubled from $500 to $1,000. To save money, Jim 
and Carole offered a health savings account, which many on the other 
side of the aisle think is the salvation, a health savings account. I 
won't go into it in detail, but it is a perfect health insurance plan 
if you are wealthy and never expect to get sick. They offered it. One 
of their employees decided they would sign up for a health savings 
account. That employee now regrets the choice because his wife is 
pregnant and he wishes he had better, real health insurance coverage.
  To those who say solving the health insurance problem is too 
complicated or too expensive, look beyond the obvious. We already have 
the Federal Employees Health Benefit Program. It has worked for 40 
years for every Member of Congress and 8 million Federal workers. Small 
business owners and their employees deserve nothing less.
  I, along with my colleague from Arkansas, Senator Blanche Lincoln, 
have introduced legislation to give small businesses affordable choices 
among private health insurance plans and expanded access to coverage. 
We call it the Small Employers Health Benefits Plan. We presented it to 
Senator Enzi. It has been a while now, a few months ago, that we said 
to him: Take a look at it. You know what this plan is all about. You 
live with it. We all live with it. We love it. It is a wonderful plan 
that has competition and real choice from private insurance.
  We didn't convince him. I am sorry we didn't. Maybe someday we will. 
We will keep working on it. But let me tell you why we think it is 
important, why there are many advantages to the Federal employees 
program model. This chart spells them out.
  Nationwide availability. It covers Federal employees from one coast 
to the other. Young and old, rich and poor, black, white, and brown, 
healthy and sick, every Federal employee is covered by it.
  Consumer choice. There are more than 278 private insurance companies 
that bid for this Federal employee coverage. For these private 
insurance companies, they believe this is a good deal, to get in a pool 
of people this large.

  Group purchasing discounts for small employers: In our bill, we 
create one nationwide purchasing pool of small employers and self-
employed people, which means they can fight for premium discounts just 
like the Federal Government.
  Low administrative costs: Do you know what it costs the Government to 
run the health insurance program for 8 million Federal employees? Less 
than 1 percent a year. Some of these plans we are talking about that 
private businesses have to turn to charge 25 to 30 percent 
administrative costs each year. You wonder why the costs go up? They 
are making more money, charging for administration. We don't have the 
administrative overhead. We use private insurance plans already there.
  There is strict oversight and regulation in the Federal Employees 
Health Benefit Program. We know it works. We like it so much that every 
single one of us is protected by it.
  Two economists have examined our proposal, Dr. Len Nichols of the 
nonpartisan New America Foundation, and Dr. John Gruber, Ph.D, from 
MIT. They estimate that our bill could save small businesses between 27 
percent and 37 percent on health care premium costs every year, just 
offering to these small businesses the same health insurance deal that 
Members of Congress and Federal employees currently receive.
  That means Jim and Carole, whom I mentioned earlier, currently 
offering a policy for a family of four that costs $10,000 a year and 
paying $8,500 of the premium, could save anywhere from $3,000 to $3,100 
as employers and $400 to $500 for each employee. That is before any tax 
credit, which we propose in our bill, for low-wage workers.
  Under our plan, premiums would not be government subsidized, but 
employers will receive an annual tax credit for contributions made on 
behalf of workers making $25,000 or less per year.
  There is a big debate in this town about tax cuts. If you read the 
morning paper, you may have noticed the chart on the front page of the 
Washington Post. The new tax cut proposal from the Bush administration, 
when it comes to capital gains and dividend incomes, is a very generous 
proposal to a very small group of Americans. Let me tell you what I 
mean.
  If you are making less than $75,000 a year, the Bush tax cut 
proposal, warmly embraced by the Republican majority in the House and 
Senate, means about $100 a year in tax breaks. There is that old $100 
check they wanted to give you last week for your gas bill. Here it 
comes again. That is your tax cut if you are making less than $75,000.
  But the same Bush Republican tax cut proposal which will come through 
Congress now gives to those who are making $1 million a year in income 
almost $42,000 in tax cuts. I don't recall receiving a single letter 
from a millionaire saying: Would you please give me a tax cut?
  They are insistent on it. We must do this. We have to give them a 
break. But when Senator Lincoln and I suggest giving a tax cut to a 
business that offers health insurance to low-income employees: Oh, that 
is a terrible Federal subsidy. How could you consider doing that?
  Senator Thune from South Dakota came to the floor yesterday and said 
it was going to cost us $78 billion over 10 years. Today he came and 
said it would cost $73 billion. We are gaining some ground. But the 
bottom line is there is no estimate in that range, anywhere near that 
range. My challenge to my colleagues on both sides of the aisle, if you 
believe in tax cuts, why wouldn't you believe in tax cuts for small 
businesses that provide health insurance for their employees? Isn't 
that closer to the American dream than a $42,000 tax cut for somebody 
making $1 million a year? I think it is fairly clear. Obviously they 
don't.
  There are more than 26 million Americans making less than $25,000 a 
year working in small businesses; 12 million, 40 percent of them, have 
no health insurance. Is it valuable for America that these people who 
get up and go to work every day in the small shops and small businesses 
across our country have health insurance.
  I go around Illionis and talk to all kinds of different groups--
downstate in my home area, small towns, rural areas, the big city of 
Chicago. Whenever I say to people: Wouldn't it be part of the American 
dream that every American had health insurance, it never fails to get a 
round of applause. That is really an aspiration and a dream which many 
of us share. We can't reach that dream if we insist on giving tax cuts 
to millionaires who aren't asking for them and don't provide a helping 
hand to businesses that are doing the right thing, providing health 
insurance to low-wage employees.
  The tax credit we propose would equal 25 percent of the cost to that 
business for self-only policies, 30 percent for employees who are 
either married or single with a child, and 25 percent for family 
policies. So if a family of four working for Jim and Carole in 
Springfield make less than $25,000 a

[[Page S4301]]

year, there would be an additional savings of $1,874 to $2,172.
  Under the Durbin-Lincoln bill, private insurance plans would compete 
to offer insurance to small businesses, just like they do in the 
Federal employees program. This chart shows the potential savings that 
come from the current system and what might occur under the Small 
Employers Health Benefit Program that Senator Lincoln and I will offer. 
Currently, many of these businesses, like the one I described, pay 85 
percent of insurance costs, so on a $10,000 policy they are paying 
$8,500.
  Look at how it drops for family coverage under the plan we are 
proposing--to $3,230 for family coverage. It shows the dramatic savings 
for each business and the opportunity for them to offer real health 
care.
  A lot of people say: Are you talking about a government insurance 
plan? Let me show you the choices that my wife, Loretta, and I had when 
it came to health insurance this year as Federal employees and Members 
of Congress. Look at these plans: There are 13 plans that we had to 
choose from as Federal employees.
  I will tell you what happened to one of my employees. She chose a 
plan 1 year, didn't like the way they treated her, and when open 
enrollment came the following September she dropped them and picked up 
another plan. What a luxury, real competition. You don't treat me 
right, you don't get my business next year. It is like shopping for a 
car and having some real choices.
  Most small businesses and most Americans have no real choices, so 
when we come up with this plan, the Federal employees model plan, and 
those on the other side of the aisle dismiss it as unrealistic, unfair, 
deluxe, it is exactly the same health insurance coverage they are 
living with right now.
  If it is good enough for us, why isn't it good enough for the rest of 
America? That is the bottom line.
  All Federal employees receive a booklet every year about the choices 
that are available for coverage. If you want to take an expensive plan, 
they will take more out of your paycheck. For the basic plan they take 
less.
  I have a lot of young people on my staff. Krista Donahue, my staffer 
on this issue, gets up and swims every morning. She picks her health 
plan. She signed up for a very cheap HMO. My wife and I, maybe not in 
the same physical condition, sign up for more coverage. That is our 
choice.
  That is everyone's choice in the Senate and the House of 
Representatives and throughout the Federal Government.
  What is wrong with giving that choice to America? Senator Enzi's plan 
does not give that choice to America. This bill we are proposing has 
been supported by many groups. It isn't just a matter of Senator 
Lincoln and I coming together.
  Look at some of the groups that have endorsed the Lincoln-Durbin 
plan, or the Durbin-Lincoln plan, depending on whether you are from 
Arkansas or Illinois: The American Academy of Family Physicians, the 
American Academy of Pediatricians, the American Cancer Society, the 
American Medical Association, the American Osteopathic Association, the 
American Psychological Association, Consumers Union, Families USA, 
Federation of American Hospitals, International Chiropractors, March of 
Dimes, the National Association of Community Health Centers--the list 
goes on and on.
  And the indication is that these men and women and groups that focus 
their professional lives on health care reject the Enzi approach which 
offers less coverage and less protection and believe, as I do, that the 
plan being offered to Federal employees should be offered to businesses 
across America.
  Sadly, the Enzi plan will wipe out benefit requirements.
  I will concede that what I am about to say may have changed somewhat 
in the managers' amendment. To his credit, as Senator Enzi has realized 
the weaknesses of his legislation, he has added more protection. If I 
am going to cite something that has been changed in the managers' 
amendment, I apologize and will stand corrected on the Record. But what 
I am about to read is based on our best knowledge of what was in the 
Enzi bill. Maybe it has been changed. I want to give the Senator a 
chance to correct me, if I misread it.
  The Enzi bill will wipe out benefit requirements, including diabetes 
supplies, mental health coverage, cancer screening, maternity coverage, 
and child immunizations for 84 million Americans. That includes almost 
4 million people in the State of Illinois. The number of Americans who 
will lose benefit protection under the Enzi plan, S. 1955, each one of 
these ``stick'' pictures represents 1 million Americans who will lose 
benefit protection. These are not people who currently have no health 
insurance. These are people who are gathered here and watching this and 
have health insurance who think they are part of this debate. Surprise. 
The Enzi bill has brought you into this debate. Your health insurance 
is about to be reduced in coverage. The things that you thought you had 
signed up for, the things that you had bargained for as part of your 
union that you believe were covered in your plan will be reduced. The 
coverage will be reduced by the Enzi bill.
  His belief is, if we can just lower basic health insurance coverage 
to a lower level, we can say everybody has it. But what good is it to 
have health insurance if it isn't there when you need it?
  That is the point he missed. If we miss the most basic things in 
terms of protecting Americans and then sit back and fold our arms and 
say: Well, we took care of that uninsured problem, sure, we took care 
of it until someone desperately needs health care and can't afford it 
because their health insurance plan doesn't cover it.
  The idea behind Senator Enzi's bill is if you provide less benefits 
and less coverage and less protection, it should cost less. That is 
right. It is reasonable. But if the insurance doesn't cover your 
illness, if you are left exposed to paying for it out of your own 
packet, what are you going to do?
  One of the ladies who came to our press conference yesterday is a 
perfect illustration. Her husband had bought a health insurance plan 
that he thought was a good one, one through an association. He even 
signed up for a chemotherapy rider on the plan because there had been a 
history of cancer in his family. Guess what happened. Sadly, he 
developed virulent lung cancer which required a lot of treatment. They 
went to their health insurance plan, and they said: We are glad we 
bought that rider.
  Then, in the fine print, there was a limitation on how much they 
would pay. The poor man lived for years and died an agonizing death. 
His beautiful young wife from California was there yesterday. When he 
died, she was left with medical bills of $480,000.

  Is that deluxe coverage--what we heard earlier--luxury coverage of 
health insurance? Would you want to find yourself and your family in a 
situation where you needed cancer therapy to survive and your plan 
didn't cover it?
  Unfortunately, the Enzi bill moves in that direction, and it doesn't 
have it. All of the benefit cuts result in about 3 percent to 4 percent 
savings on premium costs. These are not expensive when they are spread 
across large populations. They are expensive when they are borne by one 
family. But if there are millions of people being covered, and a small 
percentage need it, you spread out the cost. That is what insurance is 
all about. It is a point that is missed in the Enzi legislation. That 
is not much of a savings--3 or 4 percent--when you are talking about 
diabetes, maternity coverage.
  Maternity coverage. I know a little bit about that, being the father 
of three. I can tell you that one of the toughest moments in my life 
was as a law student--I got married in law school. Yes. We used to do 
that back in the old days. Loretta was pregnant. The baby came along 
and she had a serious health problem. We had no health insurance. We 
went to Children's Hospital in Washington. God bless them. They 
couldn't have treated us better. They finally said after a while: You 
are not going to be able to afford to pay this, Durbin. You either sign 
up for welfare, which you can do because you don't have any income, but 
get ready to go bankrupt. You won't be able to pay these bills. There 
is one choice. There is another choice you can consider. You can go to 
a clinic for people who are uninsured.
  Sure enough. I had to leave my law school and cut a class, drive out 
to

[[Page S4302]]

Maryland, pick up my wife and our little baby girl and sit in a clinic 
for hours to get a doctor in rotation--never knowing who you would see 
and sure you would never see them again. They would ask you all the 
same questions. Let's go through the history again. You tell them over 
and over--you want to give them everything.
  That is what life is like when you don't have health insurance.
  When it comes to maternity care, you have to be careful. I will tell 
you why.
  Twenty-five years ago when I was an attorney working in the Illinois 
State Senate, it came to our attention that there was a company selling 
health insurance in Illinois with maternity benefits, but when you read 
closely, the maternity benefits did not cover the newborn infant for 
the first 30 days of life. Do you know what that means? In our case, in 
my family's situation, a situation just like it, that sick baby 
dramatically in need of expensive care for the first 30 days wasn't 
covered. We put a provision in the Illinois State law which said you 
cannot offer maternity benefits saying you will pay for the delivery of 
a baby unless you cover that baby from the moment it is born. That is a 
requirement in law.
  It makes sense, doesn't it? It would be wiped out as one of the State 
requirements under Senator Enzi's approach. You can buy maternity care. 
You may be on your own the first 30 days. Heaven forbid you are in a 
situation with a sick child--and I have been there. It is no fun at 
all. It took us years to pay those medical bills. We were glad to pay 
them, and they couldn't have been nicer waiting to be paid, but there 
were a lot of anxious moments when this father sat in that waiting room 
wondering if he would ever get to see a doctor for his little girl.
  There was a study in the New England Journal of Medicine in the years 
after President Clinton required that the Federal Employees Health 
Benefits Program cover mental health benefits. I can't go to a town 
meeting in my State and mention mental health clinic benefits where I 
don't have the following occur. I can guarantee you that in any large 
group this will happen: I will say that health insurance ought to cover 
mental health benefits--and I think it should. Senator Paul Wellstone, 
that great champion, used to sit in that back row and stand and beg for 
health care to cover mental health benefits.
  If you mention that at a town meeting in my State or any other State, 
do you know what happens when the meeting ends? Two or three people are 
going to wait for you. They will want to talk to you privately. It has 
happened time and again. They say: Senator, we have a teenage son with 
a serious mental health problem. We don't know where to turn. We can't 
get health insurance. There is no coverage for him.
  Every time you mention mental health, you find that across America 
there are people in need of mental health benefits.
  When it came to mental health benefits, it was one of the first 
casualties in the Enzi bill. About 42 States currently offer mental 
health benefits as part of their health insurance. And that State 
requirement would be wiped away in the Enzi bill.
  Is that deluxe coverage? If you have a bipolar teenage son, a 
schizophrenic daughter, someone suffering from grave depression in your 
own household, is that deluxe and luxury coverage? I think it is basic. 
I think it is what we should be about in America: taking away the 
stigma of mental disease and offer mental health coverage.
  We received letters from organizations such as the American Nurses 
Association--God bless them--the American Cancer Society, AARP, and the 
American Diabetes Association. They are all opposed to the Enzi 
watered-down approach.
  In a letter to Congress, 41 attorneys general, including my own 
attorney general, Lisa Madigan, in Illinois, have publicly opposed this 
bill.
  Another way the Bush-Enzi bill would make people worse off is that it 
sets Federal rules of how insurers can charge people. I will try to 
explain what I understand Senator Enzi just did.
  Right now in America you can charge health insurance premiums based 
on a number of factors: Are you well? Are you sick? Are you young? Are 
you old? Where did you live? What is your injury?
  You can be charged different health premiums depending on how you 
answer those questions. The disparity in health insurance premiums 
between well people and sick people can be 26 times as expensive for 
sick people as it is for well people.
  There are nine States--most of them in New England, except for North 
Dakota and Oregon--that have community ratings, which means that 
everybody in the State of Massachusetts represented by my friend, 
Senator Kerry, is in the same pool, everybody just like the Federal 
employees pool. So everyone is charged the same premium, young and old, 
regardless of their medical history. Senator Enzi comes and says: We 
just want to change this slightly. We want to be able to say that you 
can charge five times as much for someone who is sick than someone who 
is well, even in States with community ratings--five times as much.
  They tried that in New Hampshire a few years ago, increasing the 
premiums for sick people. They dropped their coverage, and 21,000 
people were dropped. In a year New Hampshire dropped the plan, saying 
it is not a good idea. It wasn't a good idea in New Hampshire, and it 
is not a good idea in the Enzi bill.
  That is what is being proposed. Let me show you a study. The Lewin 
Group, a nonpartisan actuarial firm, shows rates would rise 
dramatically for businesses with a higher number of older Americans or 
women of childbearing years.
  This shows the average premiums for community-rated States, the 
average cost per contract. You can see this yellow line. What is 
happening because Senator Enzi is allowing this divergence and 
differing amounts of premiums to be charged, you can see a dramatic 
range of increase that could occur in any given State.
  So there is no protection on the upside below 5 to 1. There could be 
a 5-to-1 difference in premiums charged the lowest rated person in the 
State to the highest rated person. It is a significant difference.
  The Lewin study found that small businesses in strictly regulated 
States are currently paying the average of $7,738 per month for health 
insurance for their employees. Under the Enzi bill, businesses with a 
high number of older people or women of childbearing years would see 
their premiums increase to more than $20,000 a month, while companies 
that have a disproportionately high number of healthy, young people 
would see a decrease in their premiums to $3,096 a month.
  Finally, the Bush-Enzi bill will not help the self-employed. Self-
employed people are the worst off. They are forced to purchase 
insurance in the individual market which has the least amount of State 
oversight. The Enzi bill will take away what little protection self-
employed people already have in benefit mandates, which means if you 
are on your own--you own your little business and looking for health 
insurance, and you at least know when you are offered a policy it has 
to provide the basic coverage that your State requires--Senator Enzi 
wipes that away. It will not give self-employed people a way to pool 
with larger businesses.
  The Enzi bill prohibits self-employed people from being pooled with 
larger businesses, so they miss out on the discounts of the larger 
groups. Right now, we believe the realtors who are pushing the Enzi 
bill ought to step back and take a close look at that provision and ask 
themselves what percentage of the membership of realtors across America 
is self-employed. The coverage and protection is not there for you. 
This may sound good for their members until they take a look at the 
policy and there is no protection.
  Individuals would be pooled with other individuals, so they may save 
on marketing costs, but they will be priced the same way they are 
today: individually. Under the Enzi bill, self-employed people can 
still be denied coverage if their State law permits it, and they can be 
charged exorbitant rates based on their health status, gender, age, or 
industry.
  Diane Ladley of Aurora, IL, is self-employed and has a chronic 
condition called fibromyalgia, which causes

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chronic pain and fatigue. She has been denied insurance in the 
individual market. She is currently cutting her pills in half because 
she cannot afford them.
  The Bush-Enzi bill will do nothing to help Diane. Even if she joins 
an association health plan, an insurer could deny her coverage. If she 
is offered coverage, insurers will still be able to exclude her current 
condition or charge an amount so high she could not afford it.
  The Lincoln-Durbin bill would allow Diane to be pooled with other 
small businesses in one national pool. She would have access to the 
same negotiated discounts as all other small businesses in the pool.
  We can make health insurance for small businesses more affordable 
without slashing benefits or charging people who need insurance even 
higher prices. My bill, with Senator Lincoln, is an example of how it 
can be done. It is a reasonable approach.
  I will come back to my starting point as I close my remarks because I 
know there are other Senators in the Senate waiting to speak. This is a 
matter of simple justice. If Members of the Senate and the House of 
Representatives take advantage of the Federal Employees Health Benefit 
Program because they believe it is fair and right for their families, 
why won't they offer that same opportunity to other Americans who need 
health insurance? Why should we give ourselves the status of a 
privileged class when it comes to health insurance? Why should we say 
that people across America shouldn't have the same protection our wives 
and our families have? We ought to offer them in good faith an approach 
that is the same as our own. If this health insurance we use is good 
enough for Members of Congress, it is good enough for American 
families.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Coburn). The Senator from Wyoming.
  Mr. ENZI. Mr. President, I would like a chance to answer the 45 
minutes of accusations that were made about my bill and also bring up a 
few things about the Durbin-Lincoln bill that I have not had a chance 
to talk about yet, but could I inquire how long the Senator from 
Massachusetts will speak?
  Mr. KERRY. Not that long, maybe 15 minutes, something like that. Hard 
to say entirely.
  Mr. ENZI. I almost hate to break the continuity of the debate when we 
are talking about some very specific things.
  Mr. KERRY. I welcome it. It is not often a debate breaks out in the 
Senate anymore, so I am happy to welcome it. I ask, through the 
Presiding Officer, how long the Senator from Wyoming might think he 
would engage in debate?
  Mr. ENZI. Probably about as long as it took Senator Durbin to cover 
the fallacies and to boost his bill. I ask that I be the next to 
speaker after the Senator.
  Mr. KERRY. I appreciate that. Maybe that will work because I will 
just add to some of the things the Senator will probably want to 
answer, and he can take it all in one bundle.
  The PRESIDING OFFICER. The Senator from Massachusetts is recognized.
  A unanimous consent has been requested that Senator Enzi speak after 
the Senator. Without objection, it is so ordered.
  Mr. KERRY. I thank the Chair, and I thank my colleague from Wyoming.
  I listened carefully, and I hope a lot of other folks did, to the 
comments of the Senator from Illinois and from other colleagues in the 
Senate over the course of the last days.
  I wish the Senate were engaging in this issue in a serious way that 
allows Members to debate the merits of individual approaches to small 
businesses being covered. Regrettably, that is not the choice of our 
friends on the other side of the aisle. What they have done is come in 
with a series of amendments, with second-degree amendments, and, in the 
language of the Senate, filled the legislative tree, which basically 
means blocked out the ability of Democrats to bring amendments, to have 
a real choice between plans as to how we approach small businesses. 
That is point No. 1. That is irrefutable and damaging to the prospects 
of trying to deal with the health care crisis we face.
  Two years ago, when I was traveling the country as a candidate, no 
matter what State I went to, no matter what town or what size community 
or what the political definition of that community was, you always felt 
a profound sense of responsibility was thrown at you by the people you 
met from all walks of life.
  I met people in town meeting halls, in VFW halls, in rope lines at 
rallies, in visits to factories, in visits to medium-sized businesses, 
large businesses. A whole bunch of folks would come up and tug at my 
sleeve, often with tears in their eyes, look at me, and say: Senator, 
you have to help us on health care. You have to do something to help us 
be able to afford health care. They would show me a photograph and say: 
Look, this is my sister, or this is my mom, and they would tell you 
about a loved one who could not afford the medicine they needed or who 
lost their health care when a factory shut down or when a business 
closed or moved overseas. The faces of those people stay with you 
forever. Their names do, too.

  People--many of them Republicans, many of them conservative small 
businesspeople--were pleading not for a dumbing down of the system, not 
for an automatic reduction in coverage, but for a way to expand the 
ability to have the level of coverage they have today and be able to 
pay for it. They were looking wearily to this city for help.
  I met an awful lot of poor folks who obviously do not have any health 
care, and the numbers are climbing. More importantly, there is a change 
in the fabric of our society. I met an awful lot of working Americans 
who are increasingly watching health care costs go up, education costs 
go up, energy costs go up, and their wages either stay the same or go 
down. That is not a sustainable equation in our country.
  Increasingly, those workers are being pushed out of the middle class 
into the working poor or downward within the middle class itself. There 
isn't one of us who has not met a mother of a child who would describe 
situations in which she would make life choices for that child, about 
whether to let her kid play football or some other sport--hockey--
because she was afraid she could not afford the medical care if her 
child broke a leg or somehow were injured.
  I heard again and again stories from teachers who would tell me about 
kids who get no preventive care, they do not get routine exams. Schools 
have cut nurses, so you do not have a nurse in the school now to take 
care of someone.
  I heard instance after instance of kids who had some form of acting-
out in the classroom as a consequence of either an earache or some 
other chronic disorder. Some of them went to the doctor for the first 
time when they were 9, 10, 12 years old, and it was too late; they 
discovered they had a permanent hearing impairment as a consequence. I 
met the head of pediatrics in the State of Washington at an event we 
did in Seattle for children's health insurance who told me specifically 
of kids she had examined who had permanent hearing impairment, and now 
they will be in special needs education because we did not care enough 
to give them early intervention.
  I met a lot of small business owners who would like to be able to 
provide their employees with health care but cannot afford it and who 
know the health care costs are so high that they are standing in the 
way of being able to hire more workers because they do not have the 
flexibility and the ability to be able to expand the business and try 
to cover people or pay even a portion of the health care.
  In New Hampshire, I met a woman who had breast cancer. I got to know 
her pretty well. She told me how she had to keep working day after day 
right through her chemotherapy no matter how sick she felt because she 
was absolutely terrified of losing her family's health insurance if she 
did not show up for a day or two.
  In Erie, PA, I met a man named Albert Barker who wonders how he is 
going to pay literally thousands of dollars in medical bills that he 
cannot afford. And after he suffered a heart attack and he underwent 
surgery, guess what. His employer just stopped his health coverage 
because it was too expensive because he had gotten sick. So they cut 
him off at the moment of need, and he was basically at that time facing 
bankruptcy as a consequence. His wife said at the time that she was

[[Page S4304]]

reduced to hoping and praying that nothing else happened.
  In Council Bluffs, IA, I met a woman named Myrtle Walck who at the 
time did not know what she would do if the price of medicine rose any 
higher--which it has--and she paid a huge chunk of her Social Security, 
which was not very big and was her only source of income, her Social 
Security check, to the drugstore every month just to cover the cost of 
her two daily prescriptions.
  In Jacksonville, FL, Renee Harris, who owns a schoolbus company that 
was in her family for over 50 years, was forced to sell the company 
because she could no longer afford to insure her workers and felt 
compelled to want to be able to do so.
  I heard daily about workers' fears of losing coverage because they 
either could not afford the higher premiums, the deductibles, the 
copays, or they thought their employers would drop the coverage 
altogether.
  I talked to people who told me what it was like to live knowing they 
were one medicine bill, one hospital visit away from bankruptcy. That 
is the real world we are living in today. That is the real world the 
Senate ought to be debating. All of these problems are in our health 
care system today. Yet there is so little time devoted in this Congress 
to finding the common ground, to finding solutions to get something 
done for those people who want to believe we will do something to help 
them.
  Instead, what do we have? We have a so-called Health Week in the 
Senate. This is Health Week so that Senators can come to the Senate and 
give speeches--not legislate but give speeches. We have speech after 
speech in a stalemate where the whole week is going to go by, and 
everyone knows what will happen at the end because we are not really 
legislating because we are not really here to solve problems. The 
people I have met deserve to have a Congress that insists on a real 
debate, really getting the job done.
  In all the 22 years I have been here, this is one of those 
peculiarities of a moment in American history where the Senate is about 
as dysfunctional as it has been in that whole period of time. Serious 
efforts to try to deal with problems are just not on the table.
  What are we going to have? We are going to have one up-or-down vote 
on a flawed bill with no chance for Democratic amendments. I know the 
Senator from Wyoming is going to argue it is a good bill--and we will 
go through some of those details in a minute, et cetera--but what we 
have been reduced to doing here is spending an awful lot of time trying 
to stop bad things from happening instead of putting the competent 
energy of a lot of people who think a lot about these issues, some of 
whom have extraordinary expertise, into trying to fix them and move 
toward a positive health care agenda for our Nation.
  Right now, we are fighting to fix the devastating changes that have 
been forced on the Medicaid Program. We need to overturn the rules 
allowing increased cost sharing that has been imposed on families who 
cannot afford it. And we need to prevent new rules from tossing out the 
early periodic screening diagnosis and treatment protections for 
children on Medicaid.
  Who wrote to the Congress and said: ``Kids in America have enough 
coverage. We ought to cut out early periodic screening''? Every doctor 
you talk to worth their salt in this country will tell you what we need 
is more preventive care, wellness. We need to teach wellness in 
America. We need to be doing preventive care instead of treating people 
when they finally get sick, at a time when it is far more expensive 
than if we intervened early.
  On diabetes alone, if we had diabetes screening for every person in 
America, you could probably save $50 billion. You would avoid a lot of 
amputations. You would avoid a lot of dialysis. And you could treat it 
in a far less expensive, more easy way. Are we talking about that here?
  We also have to fix the Medicare prescription drug debacle and extend 
that May 15 deadline for signing up without penalties. Why? Because it 
has been confusing to seniors all across this country. Because the 
implementation has been exactly what a lot of people predicted. The 
result is a whole bunch of things that ought to be happening to reduce 
the cost for seniors are not happening.
  A simple thing would be bulk purchasing to negotiate lower prices on 
prescription drugs. We ought to be simplifying the enrollment 
procedures. We ought to be making the benefit more comprehensive, by 
closing the gaps in coverage.
  But the bottom line is, it would be a tragedy if all we did was try 
to stop these bad things from happening, when everybody knows we have a 
health care system that is increasingly in extremis, a health care 
system that is in crisis and imploding on itself in many ways.
  This bill, I regret to say, because it deregulates in a selective way 
all of the insurance delivered in the States, is going to create chaos 
for people as States choose different offerings and the rules go out 
the window.
  I might add, for a group of people who traditionally have come to the 
floor to defend States rights, they have, in the last years, proven 
themselves remarkably selective in where and when they want to protect 
those States rights because State after State across the country has 
passed a certain standard of health care. Why? Because they know it 
works. Because they know it reduces costs. Because they know it helps 
people have greater quality of care and a better quality of life. 
Instead, this bill is going to open up the opportunity for people to 
reduce the level of coverage for people.
  There are a whole series of real health care initiatives that the 
Senate ought to be dealing with. I am convinced we can find an ethical 
way of dealing with the thorny issue--I recognize there are ethical 
considerations--but we could find, if we wanted to, an ethical way to 
deal with a host of in vitro embryos who, regrettably, are going to be 
discarded altogether, thrown out into the garbage and lost, rather than 
applied to the possibility of saving life. It seems to me there is a 
way to fully fund, in a limited way, the appropriate research of 
initiatives at the National Institutes of Health.
  We also need to take up real legislation to get at the heart of 
racial and ethnic health disparities. We need to make it legal to 
import prescription drugs from Canada. We need to put medical decisions 
back in the hands of doctors and nurses and patients, not insurance 
company bureaucrats. We need to address the nursing shortage by fully 
funding all the programs under the Nurse Reinvestment Act that we 
fought so hard to enact.
  We need mental health parity, which I heard the Senator from Illinois 
talk about. We need to address our growing childhood obesity problem 
which is going to increase the cost of health care all across the 
country. And we definitely need to reauthorize the State Child Health 
Insurance Program.
  But this is Health Week, and we are going to have a Health Week on 
the floor of the Senate. It is not going to deal with any of those 
issues. It also avoids giving families and small businesses access to 
the same private health insurance that Members of Congress give 
themselves. I heard the Senator from Illinois talk about this.
  I raised this all across the country in 2004. What is it about being 
a representative of the people, elected by the people to come here to 
represent the interests of the people, that empowers us to abuse that 
privilege by giving ourselves the best health care in the world, at 
less expense, with a nice Government match, bigger than what most 
businesses can afford, and we are not willing to allow that to happen 
all across the country? What kind of values does that represent for 
those who run around talking about values?
  It seems to me we ought to stand up and make it clear that every 
single family's health care is as important as any Member's of 
Congress. We ought to be offering every single person the opportunity 
to at least buy into it. Why shouldn't they be able to buy into it and 
get the coverage? Why shouldn't we open up Medicare and let people who 
are 55 or older buy into Medicare early? That could happen, and a whole 
bunch of people would get coverage and we would reduce costs to 
America.
  All you have to do is talk to any hospital administrator in America. 
First of all, they are dipping into their reserves. A lot of them are 
on the brink of bankruptcy. Many of them get refunded so late and with 
such difficulty,

[[Page S4305]]

it is hard to plan and come up with a business plan for the hospital. 
Most importantly, none of them can afford the massive investments in 
technology that would, in and of themselves, reduce the cost of health 
care and raise the quality of life.
  Something like 45,000 to 50,000 to 90,000 people a year die in 
hospitals because of medical error. And often, that medical error is 
the result of pain management or pain mismanagement. The VA has a 
terrific system. I have been in the VA hospitals. I have seen it. Why 
do they have the system? Because it is the VA. It is a Government 
health care plan, and the Government made certain they could invest in 
these pain management computerized systems. The result is, they have 
reduced the incidence of mistaken pharmaceuticals being taken, people 
getting the wrong medicine, getting too much, getting it at the wrong 
time, getting it even when they took it already--all of these kinds of 
things that happen.

  This week, unfortunately, instead of bringing up a bill that would 
grant real relief to our small businesses, we are considering a bill 
that 41 attorneys general of the United States have written to say is 
bad policy and will only exacerbate the problems in States today. Why 
are we doing that? Attorneys general are looking at the regulatory 
process. They are looking at the overall ability of a State without 
regard, in many cases, to the politics of it but to the law and to the 
implementation of what happens. And 41 attorneys general have written 
to say this bill is going to exacerbate current troubles. I hope the 
Senator from Wyoming will address all of the concerns expressed in the 
letter of the attorneys general of the United States.
  We have also seen the numbers. The Kaiser Family Foundation reports 
that the number of firms offering health benefits has declined from 69 
percent in the year 2000 to 60 percent in 2005. Forty-seven percent of 
firms with fewer than 10 employees offer health insurance, compared to 
90 percent of firms with 50 employees or more.
  So everybody agrees something ought to be done. The problem is, the 
plan offered by the Republican leadership today is not going to help 
the small businesses to be able to gain coverage for their employees, 
unless, of course, they give up a whole set of things that currently 
they are covered for and then without regard to what the pricing is 
going to be for that. It is a wholesale deregulation of insurance 
markets. And a wholesale deregulation of insurance markets is, in fact, 
going to put consumers at risk. The studies show the approach we are 
being offered will, in fact, have a better chance of increasing the 
numbers of uninsured, rather than offering small businesses a lot of 
the relief they so desperately need.
  The proponents argue prices are going to drop once we get rid of the 
benefit mandates created and enacted by State legislatures. Well, first 
of all, that claim, frankly, does not stand up. There are two separate 
studies that show benefit mandates are estimated to increase health 
premiums by a small total of about 3 to 5 percent. Juxtaposed against 
the annual double-digit premium increases that we have been seeing, it 
is clear a benefit mandate is not at the heart of the problem. If the 
benefit mandate is only a 3- to 5-percent increase, but we have been 
seeing double-digit increases over a period of time, something else has 
happened.
  More importantly, why do we have mandates? What happened to the right 
of a State to make a decision, as Massachusetts has in the last weeks, 
that they want to make certain every person is going to be covered and 
to mandate a system by which businesses have agreed and the legislature 
has agreed they are going to fund it and people are going to be 
covered?
  Now, the people who have often argued about the heavy unfunded 
mandate hand of the Government--the people who have most objected to 
the Federal solution for individual States--are now going to come in 
and literally give this great gift to some small businesses to be able 
to go out and do whatever they want and take away from States the 
ability to guarantee a quality of care for their citizens.
  Forty-nine States have passed laws mandating that insurers cover 
mammography services because they are proven to save lives. Twenty-
seven States have passed laws requiring cervical cancer screenings 
because too many women are dying as a result of poor detection. Forty-
six States have passed laws requiring diabetes supplies to be covered 
because 20.8 million Americans are living with this disease and they 
have a basic need for care.
  So the Senate is going to come in and say: Those mandates are not 
important. You do not have to do that anymore. And companies are going 
to be able to create this unbelievable morass of different offerings 
which are going to confuse and, I predict, infuriate the consumers of 
this country, just the way the prescription drug medicine Part D 
program has infuriated seniors across the country.
  Now, the numbers I cited about cervical cancer and mammograms and 
screening, those are not just numbers in a report. We have seen, every 
day in Massachusetts, how those things make a difference.
  Kirsten Paragona of Ipswich discovered, in a routine pap test, that 
she had developed stage 3 cervical cancer. She was 23 years old. And 
because that pap test was included as a mandatory benefit in her health 
plan, Kirsten is alive today, with a 2-year-old daughter, instead of 
living without a reproductive system.
  For all those in the Senate who want to talk about a culture of life, 
that is a culture of life. And that is a culture of life worth fighting 
for.
  And then there is Gracie Bieda Javier of Jamaica Plain. She lost her 
mother to breast cancer in 1987. Without mandated coverage for 
treatment, Gracie's mother was unable to afford the service. And now 
Gracie is dedicated to helping other women avoid her mother's fate. And 
because Massachusetts now requires mammography and treatment services, 
Gracie screens and treats more than 800 low-income women a year. That 
is because it is mandated.
  What is going to happen when you open this up to so-called market 
forces? People who cannot afford it are really going to get hurt. In 
her own words: ``[Gracie] could not think of a better way to honor 
[her] mother on Mother's Day than to make sure we maintain these 
lifesaving mammogram services.''
  I think she has it right. It saves lives.
  Under this bill, 2.3 million people in Massachusetts alone will lose 
guaranteed health benefits. So what are we going to do? We are going to 
go back and tell them: Gee, the Senate, in all of its wisdom, deemed 
that these things that the State thought were important for you--they 
are not important for you. And the State does not have to provide them.
  Typically, the great thing about a democracy is that if there is a 
better idea, people get to hear it and they get to perhaps choose it. 
They get to debate that kind of alternative on the Senate floor and 
engage in a debate on the merits of each of these approaches. What is 
so fundamentally frustrating about this week's discussion is that 
differing approaches are not really allowed to see the light of day 
except in speeches.
  Frankly, there are a lot of ways we could approach the small business 
issue. Senator Snowe and I have had hearings in the Small Business 
Committee. We have worked for a number of years to try to narrow down 
options on AHPs. A lot of people don't like them because of the mandate 
issue. We have tried to wrestle with how do you deal with the mandates 
and still lower costs. There actually is a way to open regional pooling 
for States and allow a State that doesn't want to lose its mandates to 
opt out. Why can't we have that discussion on the floor of the Senate? 
You could create pooling. You could create a regional effort to reduce 
costs. But you could allow people the right to also choose to hold onto 
the benefits they want, if they want, and not deprive the States of 
that option. There were a host of other ideas that we have been working 
on.
  I regret enormously that all of the effort that went into those 
negotiations and discussions is not going to see the effort of real 
legislation by voting on those different amendments. We also had 
hearings which suggested a whole bunch of different ways which we could 
provide and help small businesses without doing harm to the system. 
None of that has been incorporated or is going to be incorporated here.

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  In 2004, I offered America a plan that would provide every single 
American the same health insurance enjoyed by Members of Congress. 
Since that time, Senator Durbin and Senator Lincoln have taken that 
idea and turned it into a bill that creates the Small Employers Health 
Benefits Program which he discussed. I am a sponsor of that. Under that 
bill, small businesses could join a national pool and could take 
advantage of the same Federal administrative functions and bargaining 
power that is enjoyed by 8 million Federal employees across the Nation. 
Why should we discriminate against them? Those small businesses could 
have the ability to pool, to come in and negotiate less expensive 
health care and provide better benefits to their people and do it with 
the same leverage that the 8 million Federal employees do. Most 
importantly, it would protect the State mandates that individual States 
have decided they want to put in.
  Republicans argue that that alternative does not provide the savings 
that small business owners desperately need. The facts tell a different 
story. We all want savings. We have to reduce the burden of health care 
on small business. I understand that. That is why Senator Snowe and I 
have been working to arrive at a way to do so. But experts predict that 
premium savings for participating small businesses could reach as high 
as 50 percent higher in the first 2 years, if it passes. It seems to me 
there is a way to approach this. If you go with the idea of Senator 
Durbin and Senator Lincoln, we would actually be able to reduce those 
costs by almost 50 percent.
  If this week was actually an effort to provide relief to small 
businesses, we would be discussing all of the options to provide that 
relief. I don't think that coming up with a precooked, one-size-fits-
all, one-ideology, one-approach, one-party plan is the way to help 
businesses. It seems to me that what is going to happen is, a lot of 
our small business owners and about 25 million uninsured Americans who 
work for them are going to get caught up in this political show of the 
week. It is obvious there is a partisan disagreement in what is keeping 
the Senate as divided and as incapable of doing real legislative 
effort. And that is a shame. It doesn't have to be that way, if we 
mapped out enough time and actually worked across the aisle to try to 
find the common ground. This is one of those issues where you have to 
put the politics aside. That is how you are going to win one for 
struggling entrepreneurs.
  There are a couple of places we ought to be able to find that common 
ground pretty quickly. First, how about for children in America? The 
example I gave earlier of a mother who makes a decision about a child 
not playing a sport or a child who comes up with a permanent impairment 
is replicated tens of thousands of times over across the country. We 
have 11 million children who have no health insurance at all. Sure, if 
they get extremely sick, they will wind up being taken care of in a 
hospital and somebody will ultimately see them, if it isn't too late. 
But the fact is, by that early screening and by involving ourselves 
early in their lives, educators and medical experts tell us that kids 
who are properly fed, who have good nutritional practices as a 
consequence of their meeting with doctors and mothers, learning about 
those kinds of things, do 68 percent better in school and, in fact, 
reduces the cost in the long run because they begin to learn good 
health practices as a consequence of that exposure.
  Why couldn't we be using Health Week to talk about the most 
fundamental value of all, which is caring for our children and 
providing every child in America with health insurance? You would 
reduce unnecessary hospitalizations by 22 percent, and you would 
replace expensive critical care and inexpensive preventative care. 
Obviously, we would do much better in the classroom and much better in 
families if that were the case. We are the richest Nation on the 
planet. Yet one in four kids in America goes without immunizations. One 
in three children with asthma don't get the medicine they need. It is 
unbelievable to me that there is as much talk about family values as we 
hear in the political dialog, such as it is in the country, but then 
you have 11 million children who don't have any health care, and the 
country is content to let it stand.
  You could insure every single child in America for less than it costs 
to roll back the Bush tax cut for the wealthiest people. That is the 
choice. Every child in America could be covered with health insurance 
if people earning more than $1 million a year didn't have to get 
another tax cut. But Washington chooses the tax break for the few who 
don't need it instead of health care for the 11 million who need it 
desperately.
  A 2005 Mason-Dixon poll found the following: 82 percent of 
respondents think that every child in America should be covered by a 
Federal health program, if their parents can't afford it; 90 percent of 
voters believe that 11 million uninsured children in America is a 
serious problem and Congress ought to address it and resolve it; 79 
percent agree that it is our moral responsibility to ensure health care 
for every child and for the Federal Government to invest in such 
programs.
  In addition, the poll found that when voters are presented with a 
description of Kids First, the specifics of the bill that would provide 
kids with health care, 75 percent of voters support it and support its 
passage by a margin of three to one. They have said overwhelmingly that 
providing health care to kids is more important than providing the next 
round of the tax cuts and making them permanent.

  So Americans know what we need to do. There is no more pressing need 
than improving health care for our children. That is why nearly 25 
national organizations representing over 20 million Americans have 
endorsed the Kids First proposal. When I first sent an e-mail telling 
people about the Kids First, within 2 days, over 20,000 parents phoned 
in with recordings of why the Kids First Health Program is important to 
their families. Let me share one or two of those with you.
  Jennifer from Central Islip, NY, called in and said:

       I have a child who is on medication . . . that costs me 
     $250 or more a month. I have children who can't go to the 
     dentist. You know, it's the worst feeling in the world, as a 
     mother, to know that in order to afford health care, you're 
     not going to be able to afford the home you live in.

  Jordan from Reading, PA, called in and said:

       Nalani . . . my 3-year-old . . . was born with cataracts . 
     . . Eventually chances are she will be blind. Unfortunately, 
     times are really hard in my house and we don't have health 
     insurance and I can't afford to give her the surgery that 
     will fix the problem that she has. I just can't imagine 
     growing up knowing that there was a way that you could have 
     helped. But because nobody thought you were important enough 
     and because your parents didn't have enough money for health 
     insurance . . . you went blind.

  With calls like this, it is extraordinary to me that Congress 
continues to offer a blind eye to these cries for help. This program 
that is being offered, I regret to say, is only going to confound and 
confuse and make worse the current delivery of health care in America.
  I yield the floor.
  The PRESIDING OFFICER. Under the previous unanimous consent 
agreement, the Senator from Wyoming is recognized.
  Mr. ENZI. That went a little longer than I anticipated. I have now 
listened for an hour and 25 minutes to the other side. I ask unanimous 
consent that our side have that kind of an opportunity.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ENZI. I have an office that is kind of interesting. It is Phil 
Gramm's old office. He retired from the Senate after several years of 
mentoring a number of us and was a real force around here. 
Occasionally, when I am sitting in my office, some phrases will come by 
that he used. I grab them and I put them in a jar. I figure I will 
never have an opportunity to use them. But I think today I will pick 
out of the jar again. He said: When the Democrats talk about health 
care, they want national health care. The ship of health, they do not 
care who steers it, as long as it wrecks, and we can have national 
health care. That is a little bit about what we are talking about 
today, that plus a combination of saying we are not going to let 
anybody out there have anything unless they can have everything. That 
would be nice. I would like for the people of this country to have 
better insurance than we in the Senate have. That would be my dream.

[[Page S4307]]

I wish we could give them better insurance than we have.
  Before I came to the Senate, I had better insurance than I have now. 
When the Democrats say that they want to open up the Federal employee 
health plans to everybody, they want everybody to have the same thing 
we have, they don't really mean that. They can't really mean that. I am 
willing to bet that if we were actually opening up that same pool and 
letting the Federal employee insurance be used by everybody in the 
country, the Federal employees would say: Whoa, not on my shift. The 
Federal unions would say: No, not on my shift. That is a closed pool. 
That isn't open to everybody. If it was open to everybody, it would be 
a whole different range of costs. And it is subsidized.
  The Democratic alternative, S. 2382, is an open, voluntary pool 
purchasing agreement. That kind of an arrangement has failed nearly 
everywhere they have been tried. There is no evidence that they would 
succeed if they tried it now and would succeed where others have not. 
Many States have tried this. It is with very little success.
  It may look like the Federal Employees Health Benefit Plan, but the 
Federal employees plan is a closed pool that provides premium support 
to all eligible individuals. The Democratic alternative is an open pool 
that would provide a tax subsidy to some of the eligible employers. In 
other words, it would be apples versus oranges.
  A tax subsidy? Let's see, would everybody be able to get a tax 
subsidy for their health? No, you only get a tax subsidy if you buy the 
Durbin-Lincoln health plan, a one plan fits all for the United States.
  Now, there was some discussion about whether it was $78 billion or 
$73 billion over 10 years. Let me tell you, they have never scored it, 
so they have no idea what it would cost. That is what some of the 
separate actuaries have looked at and said it would score. The Enzi-
Nelson-Burns bill would reduce costs and increase coverage, and that is 
according to respected actuaries. No one can say for sure what that 
Democratic alternative would do--whether it is tens or hundreds of 
billions over 10 years.
  The Durbin-Lincoln proposal eliminates the ability for national plans 
in that bill to offer uniform benefit packages. Why is that important? 
The plan I have put forth--the plan that has come out of committee--
allows small businesses to work across State lines to form bigger pools 
so that they can negotiate effectively against the insurance companies. 
That is where the savings are. We talk about mandates a lot in here, 
but the savings come from the ability to have a uniform package so that 
people in adjoining States can all be bargaining for the same package 
and have a big enough pool to go up against the insurance companies to 
be sure they get a better price.
  The national plan--the Durbin-Lincoln plan--would still have to meet 
the requirements of each and every State, even down to the specific 
particulars of each mandate. Did you know that there are currently 
1,700 mandates in the United States? Did you know that those mandates 
are seldom the same from State to State? They may have the same title, 
but they are not the same. So how do you put together a package where 
you say you have to do all of them and be able to go across State 
boundaries to form bigger pools? You cannot. You would have to do 1,700 
mandates if you wanted it to be uniform across the United States.
  I need to tell you, too, that some of these mandates we are talking 
about are screenings. We heard about mammography over there. That is 
very 
important. I hope women get mammographies. But did you know that in 
Wyoming, we really emphasize at this time of year--and I will mention 
it because Mother's Day is coming up, and this is a huge program in 
Wyoming to encourage people to buy that for their mother for Mother's 
Day. It works well. People know exactly what they are buying and 
exactly how much it costs. It isn't one of many mandates that are in 
the package that they pay for even though they don't use it.
  Somebody said that mandates only add 3 to 4 percent to the bill. No. 
In the State with the minimum amount in mandates, it adds 5 percent, up 
to Massachusetts, which adds 22 percent in mandates. Now, I am not 
suggesting that any of those mandates should not be done. The bill I 
worked on does set up the ability to have a basic plan. Would people 
necessarily do the basic plan? They can do the basic plan up to 
whatever they think is responsible coverage for the people in their 
association. That doesn't mean nothing; it means they can pick.
  You get the impression here that if you allow a basic package, 
everybody in the country is going to jump on the basic package and say: 
I can really sock it to my employees; I don't have to provide them with 
anything anymore. That is not America, and that is particularly not 
small business America. In small business America, they know they need 
their employees. Of course, as somebody pointed out, sometimes the only 
employees are mom and pop. They would like to be insured if they could 
possibly afford it. So we have to find some way for them to be able to 
afford it. But this notion that just because there is a mandate out 
there, everybody will use it, and this notion that just because there 
is a mandate out there, if we don't require it, it will be dropped--you 
know, we allow big business in this country to do whatever they want. 
And do you know what. They provide those basic things.
  Now, one of the things which has been mentioned is colorectal cancer 
screening. Again, the facts suggest that health plans cover important 
tests like this regardless of State mandate, so it is likely that small 
business health plans would cover them as well.
  In 2004, the Government Accountability Office found that 20 States 
had laws mandating coverage of colorectal cancer screening tests, which 
are strongly recommended by the U.S. Preventive Services Task Force for 
people 50 years or older. Now, the GAO then surveyed 19 small employer 
plans in 10 of the States without laws mandating this coverage--without 
laws mandating that. This is an opportunity for those small 
businessmen, if they are the way they are accused of being here, to 
just drop it for everybody. Now, despite the absence of State mandates 
to cover colorectal cancer screening, all 19 small employer plans in 
those 10 States provided the benefit. Can you believe that? If you have 
been listening to the discussion this week, you would think they would 
just drop it. They didn't drop it. They said: Our employees are 
valuable, and we need to do whatever we can afford to to help them.
  Now, how do we help them to afford it better? Let's see. If we could 
join up with all of the other realtors in the United States--
incidentally, the realtors are coming to town next week to their 
regular annual meeting. As I understand it, 9,000 of them will be here 
next week, coming to a national convention. Oh, how I wish they would 
have come 1 week earlier. They could have explained their case. But we 
have a whole bunch of small businesses out there that really think it 
is important to be able to band together and get a better deal. It 
works.
  Part of the discussion we have heard today has gone off on some other 
tangents. That is one of the reasons we are talking about relevant 
amendments. One of them that we went off on is prescription drug Part D 
and how, by Monday, people need to sign up for a plan. I really 
appreciate the coverage we have gotten to get that word out to people 
across America to make that decision this week. Make it this week. 
Don't have a penalty because you missed the deadline.
  Now, for months I have listened to the Democrats say: This is 
terrible; this is confusing; this doesn't work; we need to do something 
different; we have to make it simpler for our seniors. Let's see. Let's 
just have one Federal plan for them to pick from. It sounds like Phil 
Gramm again, doesn't it? Ship of state wreck so we can have a national 
opportunity.
  Let me tell you what happened. I was really worried about this 
prescription drug plan. Wyoming has such a small population--less than 
500,000--and we keep hoping we will get off that mark. So far, we have 
never gotten a city big enough to kind of feed on itself and grow. I 
said that Wyoming just doesn't have any luck attracting businesses for 
competition, and we probably won't have any luck on prescription drugs, 
so I wanted to make sure there was an underlying thing that says if 
nobody is interested in Wyoming, the Federal Government will take care 
of it. Do you know what. Wyoming got 41 plans--41 of them. Competition 
works.

[[Page S4308]]

  Now, that is what causes the confusion the Democrats keep talking 
about on prescription drugs. They say that there are too many plans out 
there for people to make a logical choice. That makes it confusing for 
seniors. If we infuriate them, we can really get them storming. They 
have done a pretty good job of that.
  You know, I did town meetings, and I tried to help them out. Not only 
were they appreciative, but a whole bunch of people already signed up 
and were getting far more benefits than they ever dreamed of. I said: 
How were you able to make such a critical decision all by yourself? 
They said: There is this 800 number, and all I needed was to know my 
prescriptions and the dose and whether I want to buy them locally or do 
them by mail order, and I got a list of four plans that line up, line 
by line, that I can make a comparison on. So I know exactly what I am 
buying, what it is going to cost, and I know what it will be in the 
long run. How difficult is that?
  Oh, but the telephone isn't your only opportunity. You can also go 
online. There is an online spot that will do the math for you, provide 
this same kind of list for you to make the comparison. I did it for my 
mom. Quite frankly, a lot of seniors are going to need help from their 
kids--kids who are young like me--and they will go through the process 
and find out how it works. There were things I had questions about, and 
I got ahold of Health and Human Services and got some changes to make 
it easier. At first, it looked as if you were signing up before you 
knew what you were buying, but they changed that so you could get the 
evaluation first.
  Did you know that competition brought down the price by 25 percent 
even before the first person signed up? That is what those 41 companies 
who were competing did. Yes, the Democrats say: Wait a minute, there is 
this penalty and there are a whole bunch of people who don't need any 
drugs now, so they should not have to sign up now. That is not how 
insurance works. You buy insurance in case something happens to you. 
This is a Federal program, so we built in a benefit so that if you had 
something already happen to you, you can still get low-cost insurance.
  In Wyoming, there is a package you can buy for $1.87 a month and 
avoid all penalties. It gives you assurance that you have coverage in a 
number of areas. And this is something that would only happen on the 
Federal level, too. If you come up with something that changes your 
whole drug prescription thing and it goes up dramatically, every 
November 15 to December 30 you can change plans. You can go to somebody 
who will provide all of the benefits you need--the cheapest possible 
plan. Again, you can have Medicare do the math for you.
  So one-size-fits-all doesn't bring prices down. Competition brings 
prices down. I know that the dream of every person is not to have to 
sit down with every insurance agent and try to work out something or 
even understand what their package is. That is where the confusion in 
the Medicare prescription plan comes in--that possibility of having to 
sit down with 41 different insurance agents. How many evenings will 
that take you? There has to be simplification. The simplification we 
provide in the bill I have been talking about is the ability for your 
association to work across State lines, build a big pool that is 
competitive, and to be able to sit down and talk to all of those 
insurance agents so you can come up with the best possible plan for 
your association and to save administrative costs.
  I am not talking about eliminating the mandate to save the 5 percent 
to 22 percent--although when they are doing those, they don't only use 
25 percent of them, so maybe there is some consideration there. I am 
not worried about that part. That is not where the savings come in. The 
savings come in being able to negotiate in a competitive way and reduce 
administrative costs. Right now, a small businessman pays 35 percent in 
administrative costs. Big companies that do their own plans pay 8 
percent. That is a pretty nice savings, especially if every 1 percent 
in costs brings 200,000 to 300,000 more people into the market. Let's 
find a way to bring them into the market. So 35 percent minus 8 percent 
is a 27-percent savings. Multiply that by 200,000 and see how many 
people it brings into the market.
  We have small businessmen out there--22 million of them--who work in 
small businesses who are uninsured. That is counting the owners and the 
employees in the small businesses. We have another 5 million who are 
self-employed who are uninsured. That is 27 million people in whose 
lives we can make a difference because they can work through their 
associations to get better prices--not by eliminating mandates. They 
want those for their employees. They need those for their employees, to 
keep their employees; otherwise, they move on to bigger companies. 
Employees are the heart of the business, and small businessmen realize 
that more than big businessmen.
  But there is another reason the Durbin bill won't work. He has taken 
away the ability of plans to form these uniform benefits on a national 
basis, like the national Federal employees plans can do.

  So there is not going to be this national pooling because they are 
not going to be allowed to do what our Federal Employees Health 
Benefits Plan does because there would not be any insurers who would 
want to offer a national plan without the same freedom from State 
mandates that exists for national plans under--get this--the national 
plans under FEHBP, what we are proposing and what is referred to as the 
Enzi bill. I like to think about it as the small working peoples bill.
  This bill would just create 50 State pools, no true national pools, 
and all of the 50 State pools will have all the other problems we 
cited. The Enzi-Nelson-Burns bill trusts small business owners to band 
together to negotiate for good benefits, while the Democratic 
alternative gives small business no say in the matter.
  They say: The Federal Government is right again; we are going to do 
what the Federal Government does; oh, but we can't do what the Federal 
Government does or anything like what the Federal Government does, but 
that is what you have to settle for.
  The Democratic alternative will create a new insurance pool that will 
operate under a different set of rules which creates the same 
opportunity for cherry-picking which is adverse selection that 
Democrats claim the House bill creates. You have to look because the 
Enzi-Nelson-Burns bill solves that. It solves that cherry-picking. It 
levels the playing field. It doesn't just grab the best customers from 
the insurance companies and move them over into the health plans. It 
allows the insurance companies to compete and also to reinsure, but 
they have to work with a bigger group.
  The Democratic alternative sets up a dual Federal-State regulatory 
structure that would create confusion for consumers and participating 
insurers. I will probably cover that a little bit more later. I made a 
lot of notes on points I ought to cover.
  There is one very important one. We were talking about childcare a 
while ago, and everybody considers childcare to be extremely important. 
We talked about newborn care. I think everybody considers newborn care 
to be extremely important. When they talk about eliminating mandates, 
they like to expand that well beyond what the bill ever allows.
  There are requirements in States for who are covered persons. This 
doesn't change that one bit. Newborns who are covered are not touched--
not now, not ever, no intention to do that. So if they are covered now, 
they will be covered then. It is the law.
  I have several other people who would like to use a portion of this 
time that I just reserved a while ago. I yield time to Senator Burns 
who has been very patient. I yield Senator Burns 15 minutes.
  The PRESIDING OFFICER. The Senator from Montana is recognized.
  Mr. BURNS. Mr. President, I thank my friend from Wyoming, a man who 
lives south of the 45th parallel from our State, for the work he has 
done on this legislation.
  We have been asked a lot of times what drives us on this legislation. 
I have been on the Small Business Committee now for three terms. We 
tried to pass an association health plan for the last 12 to 15 years. 
Even Senator Bumpers, the senior Senator from Arkansas back in those 
days, worked on a bill, and his own side wouldn't let him complete that 
exercise.
  The landscape has changed a little bit, and the numbers we are 
getting

[[Page S4309]]

now are much larger than they were, say, 10 years ago: 27 million 
working Americans are uninsured; 63 percent are either self-employed or 
work for a small business. For small businesses with 10 or fewer 
employees, 34 percent of those are uninsured. And for firms with 10 to 
24 workers, 27 percent of them are uninsured.
  Then I looked at my own State and looked at those numbers, and they 
are compelling numbers. In Montana, 60 percent of small businesses with 
fewer than 10 employees do not offer health insurance. That is a big 
number, 60 percent. Incidentally, most employers in Montana are small 
businesses. They make up the vast majority of our working force. They 
are people who run small firms that we typically think of as small 
business, but there is another small business--and some are a little 
bit bigger and can be defined as a big business--that we tend to 
overlook, and they are the people who live on farms and ranches across 
this country. They have the same desire and same needs for insurance 
coverage.
  As I talk to my folks who live in rural Montana, ranch families 
simply cannot afford health insurance. Those who can, typically carry a 
high deductible catastrophic policy and then hope they will be able to 
weather the health care costs should tragedy strike. Consequently, many 
ranch families must work second jobs, and do, simply to get health 
insurance benefits.
  Furthermore, very few farm and ranch owners provide their farm 
workers with health insurance. This isn't because they don't wish to 
provide that coverage. It is because providing such coverage is 
unaffordable. One ranch family my staff spoke with currently spends 
$2,000 a month for coverage of their family of four. As expensive as it 
is, they can't afford to go without the coverage as one of the members 
was in a ranch accident which confined him to a wheelchair for the rest 
of his life.

  Consequently, these hard-working Americans are forced to rely on 
already burdened emergency rooms and health clinics. These small 
hospitals in rural Montana, some of which we define as critical access 
hospitals, could not have kept their doors open had it not been for a 
redefinition of critical access hospitals, telemedicine, and the 
ability for people to afford health insurance. I fear if we do not 
begin to seriously address this issue of the uninsured, particularly in 
rural areas, many of these small critical access facilities cannot 
survive.
  I have heard their argument on the other side. Why would they put at 
peril health care facilities in rural America? And that is what they 
would be doing should we continue to do nothing. Therefore, the choice 
we must make this week could not be clearer. Do we prefer to give small 
business and individual proprietors the ability to offer their 
employees health benefits, or do we prefer to continue to limit their 
ability to offer benefits by Government regulations--mandates?
  People like to have a choice. They don't want to go to the store and 
just buy one brand. It is an easy question for me to answer. The 
farmers and ranchers and small businesses of Montana--and Senator Enzi 
has almost the same makeup in his State as we have in our State. 
Agriculture plays a huge role in Wyoming and Montana. In fact, it 
contributes more to the GDP than any other industry. So it is not fair 
to those hard-working folks in rural areas to deny them the benefits 
that large corporations enjoy or unions and, yes, those of us who serve 
in this Senate. It is incumbent on us to get these business health 
plans in place, and now.
  As we have no doubt heard, one of the major criticisms of the bill is 
it allows small business health plans to avoid State-enacted insurance 
mandates. I don't think that is quite accurate. Specifically, some of 
the loudest critics allege this bill will cut off coverage for 
mammograms, childhood immunizations, supplies, colorectal cancer 
screening, and many other procedures. It is not true. It just isn't 
true. To use a scare tactic does not do much to further the debate on 
how we should approach this particular problem.
  Studies have shown that health care plans cover these and other 
services regardless of State mandates. Members of the Senate need look 
no further than their own health benefits package to know this is the 
case. Federal employee health benefits plans are not subject to State 
mandates. Yet these plans provide comprehensive coverage for these 
services and often provide better coverage than would be covered under 
most State mandates.
  I don't like to see small business characterized as this is a way to 
save money at the expense of their employees. Small businesspeople are 
closer to their employees. They understand their responsibilities 
better than anybody in the world of commerce because they are small, 
they are a family. That is why the owner has to take the same policy as 
the employee. You wouldn't even have to mandate that.
  I can remember I started a small business and it stayed that way. It 
wasn't planned, but it did. We insured our employees, and yet my wife 
and I carried no insurance, and we had a growing family at that time. 
We did it for economic reasons. But we had the responsibility to 
protect the folks who worked there.
  Most plans cover essential services required by State mandates 
regardless of whether they are mandated. So why? Because it is not only 
good policy, but it is good business. For instance, plans generally 
cover breast cancer screenings regardless of State mandates because it 
is far cheaper than having to pay for a mastectomy. Plans generally 
cover screenings for colorectal cancer regardless of State mandates 
because it is far cheaper to catch it early. Plans cover diabetes 
treatment regardless of State mandates because it is far less expensive 
than having to pay for all the maladies that can come about if you are 
not treated, such as blindness and, yes, amputations.
  It is far better to have childhood immunizations in your plan than 
pay for the more serious diseases that may develop if you are not 
immunized.
  It just makes good sense if you want to keep the employee around and 
their family that you have grown to know because when you run a small 
business, it is a personal thing.
  We have crafted this approach--and it is not a panacea to cure 
everything, but at least it is a step in the right direction to cover 
people who have no insurance today.
  It is impossible for small business associations to offer uniform 
health insurance benefits packages affordably on a regional or national 
basis. It is hard. If we try to do anything around here, we try to pass 
legislation that is one size fits all. That is pretty tough to do. 
Circumstances in Maryland or Virginia are probably a little bit 
different than they are when you get west of the Mississippi River, 
especially in my State of Montana.
  For instance, what is required for diabetes coverage in Montana is 
not the same as is required in the States of my friends from Idaho, 
North Dakota, South Dakota, and Wyoming. Thus, the association that 
offers benefits to small businesses in this region must adhere to the 
different mandates in each State. Having to fashion a plan to meet the 
mandates for each State drives up the cost. What we are trying to do is 
get our arms around the cost of it. It is impossible to offer a plan 
without first addressing cost. According to the nonpartisan 
Congressional Budget Office and the Government Accountability Office, 
these State-imposed benefit mandates raise the cost of insurance and 
cause countless Americans to go with no coverage at all.

  Moreover, some of those mandates in certain States are for coverage 
procedures that the vast majority of Americans would not want and 
probably do not even know are offered. Acupuncture, for example, is a 
mandated benefit in some States. Some people may benefit from this 
service, but the vast majority of Americans do not. This is but one 
example of the hundreds and hundreds of mandates throughout this 
country for services many do not realize they are covered for and would 
not avail themselves of if they did. Yet the cost of covering this and 
other procedures is paid by everyone in that State due to those 
mandates.
  It is a simple thing, insurance. I don't think I have heard it used 
on the floor since this debate got started. Simply put, when costs go 
up, coverages go down. It is a simple fact in the underwriting 
business.
  So by allowing the businesses to band together and pool their 
resources, thereby giving them the same bargaining power large 
corporations enjoy, this bill, S. 1955, will lower cost

[[Page S4310]]

and improve access for millions and millions of Americans who do not 
have it today. This bill will not create a perfect health plan for all 
Americans, but that is not what we are talking about. This bill will 
increase the number of Americans with health insurance. This body can 
debate endlessly on what the perfect health plan is, but that does 
little good for the employees of small businesses who currently have 
none at all. So the choice is clear: Do we increase the amount of 
working American families with health insurance or do we let 
partisanship rule the day, as it has for too many years? The American 
people need better and they deserve better, and this bill will give 
them better as we move it along.
  S. 1955 will lower health costs. All the figures we see tell us that. 
More importantly, it will give many working Americans affordable health 
benefits, something they don't have today. My farmers, my ranchers, and 
the small businesses in small towns across America, which are the 
backbone of our economy, deserve the same rights as the Fortune 500 
companies, unions, and yes, even us, the Government.
  It is time to act, even though it may not be perfect. Perfection 
should never get in the way of doing something for small businesses and 
their employees.
  I thank my friend from Wyoming for allowing me this time.
  Mr. CORNYN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Wyoming controls the time.
  Mr. ENZI. Mr. President, I thank the Senator from Montana. I thank 
him for all of the work he went through during the past year as we 
talked with the insurance companies sitting down with us and the 
insurance commissioners sitting down with us, trying to work out a 
plan. I appreciate the efforts of those two groups and all of the 
associations, and I will talk about those a little bit later.
  At this time I yield 15 minutes to the Senator from Texas, Mr. 
Cornyn.
  The PRESIDING OFFICER. The Senator from Texas is recognized for 15 
minutes.
  Mr. CORNYN. Mr. President, I wish to express my wholehearted support 
for the bill that the chairman of the HELP Committee, the Health, 
Education, Labor and Pensions Committee, the Senator from Wyoming, 
Senator Enzi, has shepherded so far through this process, this small 
business health plan bill. I think it presents an outstanding 
opportunity for the Senate to do what my constituents tell me they want 
every time I go back home and I talk to them, and that is to have 
access to good quality health care.
  The fact is this bill will allow small businesses to band together on 
a national basis and give them the leverage they need to negotiate good 
terms with insurance companies for their small businesses and for their 
employees. This bill would let these insurers bypass some of the 
mandates that are well-intentioned but which have the impact of driving 
up the cost of health insurance for employers to the point where many 
people can't afford it.
  In my State we have the unfortunate distinction of having one-quarter 
of the population without health insurance. What that means is that 
people end up going to the emergency room for their health care, which 
has a couple of unintended consequences: No. 1, it costs a whole lot 
more than it should to treat those conditions in places like a clinic 
or somewhere else where they could be treated on a nonemergency basis. 
No. 2, it has the consequence of causing emergency rooms to have to go 
on divert status, and that is when people come with true emergencies to 
those emergency rooms and they can't be seen because the emergency 
rooms are full of people who are going there for nonemergency care. It 
literally endangers the life and certainly the well-being of that 
individual who needs to be seen in an emergency room. So we have a 
broken health care system that can be so inefficient and not serve the 
best interests of the American people.
  What this bill does is provides a means for, as I said, small 
businesses to band together to increase their negotiating leverage. It 
is anticipated to be able to bring down the price of health insurance 
by about 12 percent, which will allow more and more people to gain 
access to health insurance so they don't have to go to the emergency 
room, so they have more choices, and so they have the peace of mind 
that comes with having that coverage in a way that allows them to enjoy 
the benefits that many of us have but which we take for granted.
  We have an alternative that has been offered by Senator Durbin and 
Senator Lincoln, and I think it serves a useful purpose, not because I 
agree with the alternative proposed, but what it does is it 
demonstrates the competing approaches or visions or principles between 
this side of the aisle and that side of the aisle when it comes to 
providing access to health care.
  It has become increasingly apparent to me that while we share the 
goal of access to good quality health care on both sides of the aisle, 
we approach it in fundamentally different ways. For example, our side 
of the aisle--and this bill, I think, reflects the fact that we believe 
there ought to be something other than a government-run health care 
system; that private insurance companies offering competitive plans to 
individuals create consumer choice. It creates competition. And we know 
that competition creates better service and better prices for American 
consumers.
  The alternative being offered is a command-and-control health care 
system operated by the Federal Government that is neither efficient nor 
does it offer the sort of choice and competition, lower price and 
better service that would be offered through private health insurance 
options. Indeed, I think our friends on the other side of the aisle 
have, if nothing else, been consistent in their approach to health 
care. They believe the Government ought to dictate health care choices 
for the American people, whether it has to do with CHIPS, the 
Children's Health Insurance Program, the Medicaid Program, the Medicare 
Program, or whether it is veterans health care. They believe the 
Federal Government knows best and that bureaucrats in Washington, DC 
ought to make the choices that I believe ought to be reserved for me 
and my family when it comes to what is best for us.

  As I said, this is an issue I hear about all the time when I talk to 
my constituents. It is, in fact, the growing cost of health care and 
the unavailability of health care that is one of the greatest concerns 
of my constituents in Texas. Rising costs, systemic inefficiencies, 
barriers to access, and the increasing costs of coverage represent the 
challenge we have to confront and which this bill directly addresses.
  I understand the difficulties that small businesses have in Texas 
when trying to obtain quality health care coverage for their employees 
at reasonable prices. One employee of a small business in Addison, TX, 
for example, had this to say about the disparity in coverage available 
to small versus big businesses:

       Our February 2006 renewal premium increased by nearly 40 
     percent. For a group of 4 insured with no major medical 
     issues and no increases in plan benefits, this was difficult 
     to understand. Our course of action was to look for 
     affordable plans with fewer benefits, but that proved to be 
     difficult and the results undesirable. Fortunately, one of 
     our employees decided to waive coverage and join the policy 
     offered by a large corporation that employs her husband. Her 
     premium under our policy would have been $4,740 a year. The 
     price to carry her on her husband's policy was only $700 a 
     year. Now, that is a disparity. If adequate health coverage 
     is to be provided to employees of small businesses, it is 
     going to be vital that small businesses be allowed to pool 
     their employees in order to maximize their leverage and in 
     order to minimize the premiums to which they are now being 
     subjected.

  That is exactly why I support this legislation. Because it would 
allow associations such as trade, industry, professional, chambers of 
commerce, for other small business associations to offer fully insured 
health plans to small businesses. I am a proud cosponsor of this 
legislation, and I believe this bill is an important step toward making 
health insurance more available and affordable to more Americans.
  I thank Chairman Enzi and his committee for their hard work in 
bringing this bill to the floor.
  The goal of this bill is to reduce health care costs and expand 
access by creating small business plans. As I mentioned, a recent study 
indicated that the price of health insurance could literally be brought 
down as much as 12 percent and as many as an additional 1 million 
working Americans insured who currently are not insured and have no 
alternative but to go

[[Page S4311]]

to the emergency room for their health care.
  Recently, the Small Business Health Plan Coalition sent a letter 
signed by organizations that represent more than 12 million employers 
and 80 million workers. They wrote in support of this bill, saying it 
will:

       Provide workers employed in small businesses and the self-
     employed with access to Fortune 500-style health benefits now 
     enjoyed by workers in corporate and labor union health plans.

  This is a principle that resonates with the American people, and I 
must say that the American people have every right to be frustrated at 
Congress's unwillingness to step up and deal with this problem. And woe 
be it to those politicians who stand between the American people and 
their desire to see health coverage expanded and access increased. 
Almost 90 percent of voters, including 93 percent of Republicans and 86 
percent of Democrats, in recent polls state that they favor allowing 
self-employed workers and small business employees to band together to 
negotiate lower insurance costs.
  It is time for the Senate to act. In 2005 alone, health care costs 
rose three times faster than inflation--and even faster than that for 
many small businesses. Many small firms had to simply cut benefits or 
eliminate health care coverage entirely. Only 41 percent of firms with 
9 or less employees offer health benefits, compared with 99 percent of 
larger firms.
  We all know that small businesses are our Nation's chief job 
generator, our No. 1 job creator. They deserve to be treated fairly. 
But by themselves, these small firms and self-employed people have 
almost no leverage against insurance companies to try to negotiate fair 
prices and fair plans.
  As it stands now, if they want to join other small employers and 
purchase insurance through national associations, they have to deal 
with an enormous array of State-level health insurance regulations and 
benefit mandates. It goes without saying that many of the mandates that 
are ordered by State legislators to be included in insurance policies 
in their States are passed with the best of intentions, but they have 
the unfortunate effect of raising the price of the insurance to the 
point where many people simply cannot afford it.
  It makes no sense to say that everyone must have a Cadillac with all 
the bells and whistles when all some people want or can afford is a 
basic model of a similar vehicle. Big businesses, for the most part, do 
not have to deal with these regulations. The Congressional Budget 
Office and Government Accountability Office and others have found that 
State-imposed benefit mandates raise the cost of health insurance and, 
in effect, represent an unfunded mandate on employers.
  Small business health plans will have a strong incentive to offer the 
best policies possible for their members. After all, that is what the 
competitive market is all about. Small businesses will have to compete 
with large businesses for employees. And when employees decide where 
they want to go to work, they will look at not only the salary they 
will be offered but the benefits that will be offered, including the 
health coverage that is available. This is simply a case of the market 
working and allowing individuals the maximum freedom to choose what is 
best for themselves and their families.
  In order to remain competitive and attract a talented workforce, I 
believe small businesses would want to have the ability to offer high-
quality health benefits, the same opportunity that large companies 
currently enjoy. Right now, small businesses effectively have the 
choice of offering expensive plans with all the required mandates, 
whether employees will actually even use those services or simply not 
offering insurance at all. That policy in my State is part of what has 
been responsible for 25 percent of the people of Texas not having 
health insurance. It must change.
  This is not a complete panacea, but it will provide dramatically 
better and expanded coverage to the people of my State and the people 
across this country.
  Under the Enzi bill, every small business owner will have the 
opportunity to choose a comprehensive plan, but they will also have 
other, more affordable, high-quality choices, too. This will improve 
access for millions of Americans who currently do not have any 
insurance at all. I believe this legislation is a good step in the 
right direction toward increasing the affordability and access to 
health care that all Americans deserve.
  More can certainly be done, and I certainly believe that while this 
is an important step, we should not stop here. We should continue to 
increase the number of choices available to the American people--things 
like consumer-oriented health care, which provides greater transparency 
and provides information to consumers so they can determine where to go 
for their health care services based not only on price but based on 
outcomes--things like health savings plans, which would give people 
greater access and greater control over their health care decisions and 
allow them to determine how their health care dollars will be utilized 
rather than having to buy high-priced plans that contain attributes 
that they frankly don't need or don't want and which cost them 
additional money.
  Certainly, more could be done, but I urge my colleagues today to 
support this important legislation because I think it represents a 
dramatic and long overdue improvement over the status quo.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Wyoming.
  (Disturbance in the Visitors' Galleries)
  The PRESIDING OFFICER. The Sergeant at Arms will restore order in the 
gallery.
  The Senator from Wyoming is recognized.
  Mr. ENZI. Mr. President, I do have several things I need to cover. I 
think I have another speaker or two on their way down. People are 
talking about being able to offer amendments. They can offer 
amendments. We want to have discussion, debate; we want to cover 
objections, answers, proposals on this bill, and we are willing to do 
anything that is relevant.
  There has been a lot of talk about needing to talk about drug 
reimportation. That is important--at least a 3-week topic. Prescription 
drugs, that one best wait until after Monday until we see what the 
exact problem is before we do it. And stem cells, that is probably 
another 3-week debate.
  It took us a year to be able to get this one to the floor so we could 
talk about small business health plans.
  I need to make some comments in regard to a couple of the letters 
that were read earlier because I am aghast at what was in the letter. 
The American Cancer Society, as part of that, said: No matter what is 
done to the Enzi bill, don't vote for it.
  That means that should we have an amendment that does everything that 
is done across the United States for cancer at the present time, they 
are still urging people to vote against it? It is a little early to say 
that. It is a little early to say there are not going to be any changes 
because we will have votes. It may require cloture in order to stay 
with germane ones instead of the ones that I mentioned and also to make 
sure--I want to have a vote on the Durbin-Lincoln bill. But I want to 
have a vote on my bill as well. I think we both ought to have them.
  If we release the Durbin-Lincoln one for a vote now, then they can 
put all kinds of blockages on there so I can't ever get to a vote. And 
the only vote that we will have had will have been theirs.
  We are trying to have some fairness, and so far we have not been able 
to get to that point.
  Another one was the diabetes letter. Again, it said: No matter what 
you do to the Enzi bill, vote against it. That means, if we instituted 
every single thing that is being done for diabetes in any State in the 
Nation, they are still suggesting that they will vote against the bill? 
Wow. I mean, I have never run into anything such as that.
  We looked at the diabetes thing and we said: How do we do this? 
Because out of the States that do it, there are no two that do it 
alike, so how do we get these agreements across State lines so they can 
pool into bigger pools and be able to negotiate against the insurance 
company so they can bring down rates through negotiation and they can 
bring down rates by eliminating administrative costs? We are not 
talking about bringing down rates by eliminating mandates. We are 
allowing

[[Page S4312]]

them to have some flexibility in the mandates so they can come up with 
a common package, and I am sure that it would include that, just as I 
did the thing on colorectal cancer. All 19 places that they have been 
allowed to do that, they included that, even though it wasn't a 
mandate. They were excluded from that.
  I also wanted to put into the Record an editorial from the Arkansas 
Democrat Gazette. It was in the ``Opinion'' section. It says:

       Ever face a really tough decision like where to attend 
     college, or whether to take that new job, or should you go 
     with the lasagna or the meatloaf for lunch? So you get out 
     the yellow legal pad and make a list of the pros and cons, 
     right? Well, maybe not for the meatloaf vs. lasagna bit. Some 
     things are a simple gut decision.
       But it helps to compare and contrast. And it sure helped to 
     compare and contrast the two bills now floating around the 
     U.S. Senate to make it easier for small businesses to offer 
     health-insurance to their employees. One bill is co-sponsored 
     by Arkansas' senior Senator, Blanche Lincoln.
       You could find the comparison on page 2A of Wednesday's 
     paper. There was Senate Bill 1955 (sponsored by Mike Enzi of 
     Wyoming) on one side, and Senate Bill 2510 (Blanche's bill) 
     on the other.
       Both sounded fairly similar.
       Both promised to make it simpler for businesses to band 
     together and buy cheaper health insurance.
       Both promised to save businesses money and cover more 
     folks.
       Then we got down to the bottom, to the very latest, biggest 
     question, and, boyohboy, talk about a pro and a con.
       The question: What would it cost the Federal Government?
       The answers: Nothing for the Enzi Bill.
       For the Blanche bill, oh, somewhere in the ritzy 
     neighborhood of between $50 billion and $73 billion over 10 
     years.
       When an estimate for new government spending has a margin 
     of error of some twenty-three billion dollars, you know that 
     new program is just gonna bleed money.
       What's worse, or at least as bad, is that Senator Lincoln's 
     bill creates a national health program that'll be under the 
     administration of the federal Office of Personnel Management.
       Translation: We the American Taxpayers will be in charge of 
     the care and feeding of yet another bloated bureaucracy.
       Why? Why do we need another federal program under federal 
     so-called management adhering not just to federal rules and 
     regs but all the state rules and regs, too? (It gives us a 
     headache just thinking about filling out those insurance 
     forms.)
       We suppose it's because some politicians, who may have the 
     best intentions in the world, can't imagine a health plan 
     that doesn't have the government deciding what should and 
     should not be offered at every single bureaucratic level. 
     Thank goodness that isn't required of private employer plans. 
     Can you imagine the red tape? Perish the pencil-pushing 
     thought.
       Senator Enzi's proposal, unfortunately entitled the Health 
     Insurance Marketplace Modernization and Affordability Act, 
     takes a freer-market approach. His bill would let small 
     businesses band together and get better deals on health 
     insurance through trade associations.
       Now for the devilish detail: Senator Enzi's bill would be 
     regulated by the feds but largely exempt from individual 
     state mandates. The better to offer these plans nationwide 
     and keep costs down.
       Remember, the idea is to help small business, not burden 
     them with more state regulations.
       Besides, it's nothing new. Major companies like General 
     Motors long have been granted exemptions from state laws 
     regulating insurance--it's called an ERISA exemption, because 
     they have employees all over the country. They couldn't very 
     well insure their employees from sea to shining sea while 
     abiding by every queer detail of every law in every state. 
     Especially when employees move or get transferred and want to 
     keep their insurance.
       But won't the absence of state regulations lower standards? 
     Not if the small businesses offering the insurance want to 
     keep their employees. It's in businesses' interest to have 
     good health insurance for their workers, or their workers 
     will go somewhere else. It's how the free market works.
       Think of these small-biz health plans like charter schools. 
     They'd be free of, to quote Senator Enzi, ``the current 
     hodgepodge of varying state regulation.'' That way, small 
     businesses across the country can band together and negotiate 
     group health insurance on their terms. Which would be more 
     affordable for the businesses, the employees and, unlike the 
     Blanche bill, the taxpayers.
       If we gotta have a federally regulated Small Business 
     Health Plan, we sure don't need one as costly as Blanche 
     Lincoln's. And, yes, we gotta have a Small Business, etc. 
     Because what we've got now isn't working.
       Look at the numbers: Of the more than 45 million uninsured 
     Americans, 60 percent are employed by small businesses or are 
     in some way dependent on those businesses. But it's getting 
     harder for a small business to offer health plans because 
     insurance premiums cost so much these days. Since 2000, the 
     cost of health-care premiums for employers has gone up almost 
     60 percent, including some 11 percent in 2004 alone.
       Pass the Enzi Bill and, according to a study by a Milwaukee 
     consulting firm, small businesses would save 12 percent on 
     health insurance premiums. Even more important, some 900,000 
     uninsured folks would finally get coverage.
       Hey, sounds like a plan. Blanche Lincoln's bill, meanwhile, 
     sounds like an expensive, bureaucratic pain in the 
     pocketbook.

  Mr. ENZI. I would like to have you see the small business 
organizations that are supporting the Enzi-Nelson bill. There are a 
couple of hundred of them here--12 million employers, 80 million 
workers.
  I would like for you to see the small business organizations that are 
supporting the Durbin-Lincoln bill. Oh, there are two. OK.
  I want to share a letter from the National Association of Insurance 
Commissioners as well. They are writing in response to our May 2 
request for a review of S. 2510 Small Employers Health Benefits Program 
sponsored by Senators Durbin and Lincoln.
  I ask unanimous consent the letter be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                      May 9, 2006.
     Hon. Michael B. Enzi,
     Chair, Committee on Health, Education, Labor and Pensions, 
         Washington, DC.
       Dear Chairman Enzi: We are writing in response to your May 
     2, 2006, request for our review of S. 2510, the Small 
     Employers Health Benefits Program Act, sponsored by Senators 
     Durbin and Lincoln.
       The authors of S. 2510 sought the input of the NAIC when 
     drafting their bill and we appreciate their willingness to 
     work with and consider the views of insurance regulators. 
     Like your bill, S. 1955, the Durbin/Lincoln bill does not 
     include the option of self-funded association plans, instead 
     requiring coverage to be purchased from carriers that are 
     licensed in and regulated by the states. This is a 
     significant improvement over association health plan 
     legislation, such as S. 406. The bill would also preserve 
     state rating rules and benefit mandates, thus maintaining 
     state authority over health insurance regulatory policy.
       We are concerned, however, about the practical impact this 
     legislation would have. S. 2510 creates an unlevel playing 
     field by requiring plans sold through the Small Employer 
     Health Benefit Plan (SEHBP) to meet different rating 
     standards than those required of plans not sold through the 
     SEHBP. By setting different rules for different carriers, S. 
     2510 could create an unworkable market in some states.
       For example, if state law allows carriers in the general 
     market to charge small employers with healthier, younger 
     workers significantly less, and the federal law requires 
     carriers in the SEHBP to have only a modest variation in 
     rates, the SEHBP carriers will be selected against. In fact, 
     few carriers would want to participate in this program in 
     states with such rating disparity.
       S. 2510 does attempt to ameliorate this problem by 
     providing subsidies for those that participate in the SEHBP. 
     We agree that these subsidies will help, but they are not 
     sufficient. We believe that states are best suited to 
     establish rating rules for all carriers--creating two sets of 
     rules would be harmful to the workings of the small group 
     markets. This could also limit the ability of states to 
     develop innovative programs to address the growing health 
     care crisis.
       Finally, both S. 2510 and S. 1955 will not affect the 
     underlying and primary causes of skyrocketing health care 
     costs that are making health insurance increasingly 
     unaffordable for millions of Americans. However, we do 
     applaud you and Senators Durbin and Lincoln for your efforts 
     and we hope our dialogue will continue and yield real 
     solutions.
           Sincerely,
     Catherine J. Weatherford,
       Executive Vice President and CEO;
     Alessandro Iuppa,
       Superintendent of Insurance, State of Maine, NAIC 
     President;
     Walter Bell,
       Commissioner of Insurance, State of Alabama, NAIC 
     President-Elect.

  Mr. ENZI. The experts on S. 2510, the Durbin bill, from the National 
Association of Insurance Commissioners, write:

       S. 2510 creates an unlevel playing field . . . could create 
     an unworkable market in some states. . . . Few carriers would 
     want to participate in this program. . . .

  Again, people can read the entire letter, and I am sure they will 
find that very enlightening. There is a lot more detail there.
  Last, I ask unanimous consent to have a letter from the National 
Association of Health Underwriters printed in the Record.

[[Page S4313]]

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

                                                     May 10, 2006.
     Hon. Michael B. Enzi,
     Chairman, Senate Health, Education, Labor and Pensions 
         Committee, U.S. Senate, Washington, DC.
       Dear Chairman Enzi: We're very pleased that the Senate will 
     spend this week working on important health issues. The 
     issues to be addressed are critical to the health of America.
       One of the most important issues to be addressed this week 
     is health insurance market reform under S. 1955. Our members 
     work on a daily basis out in the real health insurance 
     markets of America. We are in a unique position to be able to 
     observe which markets work better than others and would like 
     to commend everyone who has worked so hard on this 
     legislation to produce an end product that will make health 
     insurance more affordable for small employers. S. 1955. has 
     been modeled to produce a competitive market and a level 
     playing field. Markets with these characteristics are always 
     the strongest and produce the most affordable products.
       We are in particular pleased that reform did not go in the 
     direction of S. 2510, Small Employers Health Benefits Program 
     Act of 2006. Under the auspices of creating a more 
     competitive environment, S. 2510 creates the worst kind of 
     unlevel playing field by providing subsidies in the form of 
     reinsurance and a risk corridor only to health plans offered 
     in one purchasing vehicle within the small employer market. 
     It is very important that all plans operating within a 
     special market segment play by the same rules. This ensures 
     the financial integrity of all market players and results in 
     more product availability within that market. S. 2510 does 
     just the opposite. The subsidies it provides are not 
     available to plans that offer coverage in the small employer 
     market outside the purchasing pool and it would provide a 
     significant competitive advantage to carriers operating in 
     the pool, versus those that offer coverage outside the pool. 
     Under this anticompetition model, there would soon be very 
     little choice outside the pool as carriers would be forced to 
     exit a marketing environment where they could not possible 
     operate competitively. This would force more and more people 
     to purchase coverage within the pool, and the cost to 
     government for the subsidies would increase even more.
       There is, of course, a reason for the subsidies. Rating 
     rules inside the pool would be considerably more restrictive 
     than they are in the majority of states today, so the pool 
     could not be competitive in many areas without the subsidies. 
     And although the subsidies are for a limited period of time, 
     the unlevel playing field created under this scenario would 
     likely result in no other coverage being available outside 
     the pool for consumers to select once the subsidies to plans 
     operating inside the pool stopped and costs returned to a 
     higher level. And although the subsidies would at that point 
     stop, the rating structure and other mandate provisions 
     inside the pool would continue and the cost of coverage would 
     be predictably high. The ultimate result would be an 
     increased number of people being priced out of coverage and 
     ultimately, more, rather than fewer people would be 
     uninsured.
       We do appreciate the positive direction you've taken with 
     S. 1955, and the extreme efforts you've taken to listen to 
     everyone's concerns and respond in a reasonable way. My staff 
     and I look forward to working with you toward achieving 
     enactment of your bill. Please let us know how we can help.
           Sincerely,
                                                  Janet Trautwein,
                                 Executive Vice President and CEO.

  Mr. ENZI. Again, it is a much more extensive letter. I hope people 
will take the time to read the Record, but it is from the National 
Association of Health Underwriters. These are the experts on health 
insurance. They look at this stuff all the time.
  It says:

       ``2510 creates the worst kind of unlevel playing field;'' 
     ``the cost of coverage would be predictably high;'' ``an 
     increased number of people being priced out of coverage;'' 
     and, ``Bottom line: More rather than fewer people would be 
     uninsured.''

  That is the National Association of Health Underwriters.
  I wish to have some time to go over the good comments, too. But I 
have been joined on the floor by the majority whip. I will relinquish a 
few minutes for him to say a few words.
  The PRESIDING OFFICER. The Senator from Kentucky.
  Mr. McCONNELL. Mr. President, I thank my colleague from Wyoming. I 
congratulate him for a superb job in crafting this important measure to 
deal with what many of us think is one of the most pressing problems 
confronting our country. I have talked to a lot of people in my State, 
and right up there with gas prices today, they raise the issue of 
affordability of health insurance.
  I have heard from workers who fear that their employer may have to 
cut back on their coverage. I have met with employers who are concerned 
that high health care costs prevent them from investing in their 
businesses and creating new jobs. It would be safe to say I am 
confident that most if not all of our colleagues have had similar 
experiences in their own States.
  These are real concerns. In every sort of noon-time civic club 
engagement I have, this is the first thing people bring up. Health 
premiums have increased nearly three times the rate of inflation, and 
the percentage of employers offering health care benefits continues to 
decline.
  This is a particular problem for our small employers and 
entrepreneurs. These are the people who create the majority of the new 
jobs in our country. Sixty percent of the working uninsured--those 
Americans who have jobs but don't have health insurance--are either 
self-employed or they are employed by small businesses.
  The sad truth is, it is too darn expensive for many small businesses 
to provide health coverage to their employees in our country today.
  There are a lot of reasons for this.
  First, small businesses don't have as much negotiating clout with 
insurers when they are negotiating premiums as large businesses do. It 
makes sense. That leaves them stuck, of course, with higher costs.
  Also, employees in small firms must absorb a larger share of their 
plan's administrative costs because there are fewer employees to share 
those costs.
  Third, small businesses must typically purchase care in the 
uncompetitive, expensive, small group market.
  Add all of these factors up and small business health care costs 
become too expensive for many small businesses to afford.
  Small business, as we all know, is the engine that drives the 
American economy. We must allow them to band together so they can buy 
health insurance at lower costs so that our people and our economy can 
keep moving full speed ahead. I commend the HELP Committee for 
reporting a bill that will do just that.
  Finally, I commend Chairman Enzi who has done a magnificent job in 
moving this legislation forward.
  It addresses the unique challenges facing small businesses by 
allowing them to join together across State lines to offer insurance to 
their employees. This will give them the needed purchasing power to get 
a better deal on insurance policies.
  Enacting the Health Insurance Marketplace Modernization and 
Affordability Act will address many of these problems all at once. It 
will reduce health care premiums. It will increase the number of 
Americans with insurance. It will reduce the Medicaid rolls. And, most 
importantly, while doing all of this, the bill will not increase the 
burden on the taxpayers.
  That is not just my opinion; these are the findings of the 
nonpartisan experts at the Congressional Budget Office. Their cost 
estimate for S. 1955 shows that the bill will reduce health care 
premiums in the small group market by 2 to 3 percent. That is important 
because we know that with every 1-percent change in premiums, 200,000 
to 300,000 Americans are able to afford insurance.
  So do the math. According to the Congressional Budget Office 
estimates, 700,000 Americans who would be uninsured under current law--
who are currently uninsured--would be covered under the Enzi proposal; 
700,000 Americans who would be uninsured under current law, would be 
insured under Chairman Enzi's proposal.
  By helping small businesses expand coverage for their employees, CBO 
estimates that 135,000 Americans, who without the Enzi bill would be on 
Medicaid, would now receive private insurance under the Enzi bill. 
Clearly, this is the way to go.
  Most importantly, and unlike the Democrats' alternative, the bill 
accomplishes this without increasing the burden on the Federal 
taxpayers. In fact, the Enzi-Nelson bill will save the taxpayers $3 
billion over the next 10 years. Nearly 1 million Americans get better 
health coverage, and the taxpayers will save the $3 billion I referred 
to over the next 10 years. This legislation is good, strong medicine.
  My colleagues across the aisle have called the plight of small 
business a ``distraction.'' But this situation that affects the 
economic engine of our country--the small businesses--is a real 
problem, not a distraction, and the problem is not getting better on 
its own. It ought to be addressed.

[[Page S4314]]

  In 4 of the past 5 years, small businesses paid double-digit 
increases each year in health insurance premiums. At that rate, more 
and more employers will be forced to scale back or drop coverage 
altogether for their employees. The Enzi bill is the first step in 
righting that crisis.
  Again, I commend the HELP Committee for reporting the bill that 
addresses the challenges facing small businesses.
  I also note the tremendous contribution made throughout this process 
by Senator Talent, who has been a tireless advocate for small business 
health plans during his tenure in the House and during his 4 years here 
in the Senate.
  This is an important piece of legislation that will address a very 
significant problem facing many of our small businesses--the high cost 
of health insurance.
  I urge our colleagues to vote to invoke cloture and to support the 
Enzi bill. It would be an important step in the right direction for 
Americans.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Wyoming is recognized.
  Mr. ENZI. Mr. President, I thank Senator McConnell. I appreciate all 
of his effort and help. I appreciate the Senator bringing up Senator 
Talent. I need to mention Senator Snowe as well. They were the original 
sponsors of associated health plans on this side. They asked for a 
hearing. We held a hearing. After the hearing, people on my committee 
were saying, Golly, this is a problem for small business. What can we 
do to solve it?
  It was also obvious from the discussion that there were some 
difficulties with the true AHP approach which we modified in the 
meantime. That is how we got to the position we are now in.
  Mr. McCONNELL. Mr. President, if the Senator will yield for one 
question, I have heard the Senator talk about the process by which he 
developed this legislation. Does he have any idea how many hours he 
spent consulting with the various entities across America that care 
about this and trying to move this legislation to this point?
  Mr. ENZI. Mr. President, I don't have any idea. I spent a lot of 
hours and my staff people spent a lot more hours. Senator Nelson's 
staff and Senator Burns' staff worked on this for so long that I 
actually thought maybe their staff people worked for me, too.
  I was pleased spending days on end and sitting down, understanding 
all of the parts of this and getting it to work.
  Another important part of this, Senator Durbin asked me to talk to 
him about his plan. I made an appointment that same day and met with 
Senator Durbin and Senator Lincoln. We tried to work some of the 
principles which they had into this format. Eventually, we were kind of 
invited to leave by staff. We need to resolve more of that.
  Mr. McCONNELL. Mr. President, I say to the chairman that this has 
been a laborious and meticulous effort on his part. He has headed this 
up, and he has led us in an extraordinary way, and I, on behalf of all 
Members of the Senate, commend him for this accomplishment.
  Mr. ENZI. I thank the Senator.
  Mr. President, as an accountant I have to remind people that this 
bill is not a case of subtraction. This insurance plan is an addition. 
It will bring additional insurance to people. There are 27 million 
people out there who are uninsured. This will bring a number of them 
into the market. It will also allow people who are already insured to 
increase the amount of insurance which they have because they will be 
able to save some dollars. I am sure they will put that back into 
insurance and into more benefits for people. So it is an addition, not 
a subtraction, and it will bring in newly insured people.
  One of the things I ask people is, when you go to the dry cleaners 
tonight to pick up your laundry, can you look that person in the eye 
and say, I don't think you deserve health insurance because you might 
not demand enough for yourself? So I am going to save you from 
yourself. Can you say to the mom and pop who are running the business 
down the street from your home, You don't deserve health insurance?
  As you go home today, as you leave the Hill, think about the people 
around you, the regular people, the cab driver, the worker at the dry 
cleaner, the person at the neighborhood restaurant, all of those people 
who often you may not notice, the real people who make the world 
operate. Many of them do not have any insurance. Some may even own the 
little business around the corner and still are not able to have 
insurance. We always assume that if people own a business, they make a 
lot of money. There are times that the employees make a lot more than 
the owner of the business. They always have to pay themselves last.
  As Senator Burns said, when he was in business he provided health 
care to his employees, but he couldn't afford it for himself and his 
wife. But you do that to keep employees. I am not talking about deluxe 
insurance, I am talking about any insurance.
  When people get the kinds of screenings that they would like to have, 
or even get the screenings they would like to have, and then find out 
there is a problem, if they don't have any insurance, they can't get 
anything done unless they pay for it.
  We are not talking about the employees at the big chain hotels or the 
big chain restaurants. We are not even talking about the employees at 
Wal-Mart. We already said to them you can form whatever kind of benefit 
package you want. You do not have to answer to any State. You don't 
have to have review or oversight by the insurance commissioners.
  Those are all things we provide for in our bill. You don't have to 
meet any State requirement. So instead of 35-percent administrative 
costs, you only pay 8-percent administrative costs. I am not talking 
about deluxe insurance, I am talking about any insurance.
  Right now in several States, there is only deluxe insurance. Did you 
know that in some States there may be only one insurance provider 
because others have been driven out of the market?
  I hope people will take a close look at this bill. I hope the other 
side will offer some amendments which are relevant to this bill and let 
us work through the bill. I hope, if the only way we can maintain 
germaneness is through cloture, that they will join in cloture because 
there are thousands of businesses out there that need insurance. They 
need hope. They want to ensure their employees. Think about that--27 
million uninsured.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. CARPER. Mr. President, while he is still on the floor, I say to 
my colleague from Wyoming, I think from all of us, I thank him for 
taking an earlier position on the health plan bill that passed the 
House. In my view, and I think in the view of lot of us, it was badly 
flawed. Thanks for the Senator's efforts over an extended period of 
time, along with our colleague, Senator Nelson of Nebraska, to take 
that product and make it better, and for your willingness to work I 
think in conjunction with Senator Snowe to improve on it further, to be 
responsive to the concerns that a lot of us are raising, I wanted to go 
on the record.
  As I said yesterday--and I will say it in front of my colleague--I 
find that he and Senator Nelson of Nebraska are two of the most 
thoughtful Members we have in the Senate. It is a pleasure working with 
you.
  One of the disappointments that I find around here is sometimes even 
when we appear to agree on things, it is hard to get anything done. In 
this case, there appears to be pretty good agreement that if we could 
somehow find a way to harness market forces, we could bring down health 
care costs for small business and their employees and find a way to 
pool the purchasing power of those small businesses and our employees 
could maybe bring down health care costs and get a better selection of 
options from which to choose.
  There has been a fair amount of discussion today and the days leading 
up to this debate over mandated coverage that certain States offer. I 
will give an example of one State in our experience with respect to 
mandates.
  Before I came here, in my last job I was Governor of Delaware for 8 
years. Roughly 10 or 12 years ago we learned, to our alarm and dismay, 
that Delaware had the highest rate of cancer mortality in the country. 
We also learned at the same time that while we had the highest rate of 
cancer mortality in the country, we did not have

[[Page S4315]]

the highest rate of cancer incidence. In fact, we were at number 20 or 
so.
  We looked at those numbers and sort of scratched our head about them 
to figure out why we were No. 1 in cancer mortality--which is the last 
place you want to be--and number 20 or so with respect to the incidence 
of cancer.
  We pulled in some people a lot smarter than me to look over those 
results and asked: What is going on here? Why the high cancer mortality 
number, particularly in light of the fact that cancer incidence is more 
like the middle of the pack?
  After assessing the situation for a while, they said: We conclude--
and we are fairly sure of this--the problem is, in your State, in 
Delaware, you do not do a very good job of early detection and 
treatment of cancer. If you want to bring down your cancer mortality 
number to be closer to your cancer incidence number, you have to do a 
better job of early detection and treatment.
  We took that charge seriously. We went to work in three areas: The 
first of those, Delaware at the time, was one of the higher ranking 
States in terms of incidence of smoking, tobacco usage. We said one of 
the things we want to do is reduce the use of tobacco products. We 
decided to start with young people to reduce the likelihood young 
people will start smoking and continue to smoke. We made it more 
difficult for them to have access to tobacco products. We also reduced 
the opportunities for people to smoke indoors, an effort that continued 
under my successor.
  The second thing we did was, with respect to expanding the 
opportunity for people to find a health care home by expanding 
opportunities for people to participate in Medicaid and the SCHIP 
Program for young children, partnership between the State of Delaware 
and the Federal Government as other States participated, too.
  The third thing we decided to do was to say maybe we ought to have 
health insurance plans in our State offer as part of their package 
screening for certain kinds of cancer. For example, mammography 
screening for breast cancer, colorectal screening, cervical cancer 
screening, and a couple of others. We did all those things roughly 10 
years or so ago. Every year we have had an opportunity to find out how 
we are doing with respect to cancer mortality and cancer incidence.
  I have a chart. Delaware is small, so rather than use 1 year's 
numbers we look at 5 years. We have a 5-year rolling average. We went 
back to 1989 to 1993, when Delaware was No. 1 in cancer mortality. In 
the next 5-year period, 1990 to 1994, we were No. 1. In 1992 to 1996 we 
were No. 1, and so on. During the 1990s and into the decade we start 
out No. 1. We were the first State to ratify the constitution and our 
State slogan, which is ``We are the first State.'' We like to think it 
is good to be first. This is one thing we do not want to be first in.

  The State that was No. 1 in cancer mortality for too many years 
started to drop by 1997 when we fell down to No. 2, and we continued to 
drop so that by the year 2000 we were down to No. 5.
  I am happy to report standing before the Senate today that in the 
most recent numbers which I think run up through 2003, we dropped out 
of the top 5. We might still be in the top 10, but we know we are not 
in the top 5, and certainly not No. 1. We are heading in the right 
direction. I will not be happy until we are No. 50.
  I would like my colleagues to consider that all of our States are 
different. Delaware is different. Wyoming is different from Oklahoma. 
We all have different priorities. We had a real problem in Delaware. We 
still have a significant concern with respect to cancer mortality. We 
developed a good game plan and we implemented that game plan. And lo 
and behold, it is working. It is actually working. We want to make sure 
it continues to work.
  Reducing cancer mortality is like the Navy guys changing the course 
of an aircraft carrier, turning an aircraft carrier. The same is true 
as we try to reduce cancer mortality. It is a slow process. It is not 
an easy process. It takes time. If you stick with it, you can turn 
aircraft carriers. You also can bring down cancer mortality numbers.
  How does this relate to the debate today? It relates because an 
earlier version of the association health plan legislation passed by 
the House any number of times does not let us do in Delaware what has 
proven to be successful in reducing cancer mortality. Even with the 
efforts of Senator Enzi and Senator Nelson, as this bill came to the 
floor, it did not let us continue in Delaware requiring the screenings 
for mammography, screenings in colorectal, prostate, and cervical 
cancer. It does not help us do those things.
  With the amendment that may be offered or suggested by Senator Snowe, 
we can do some of this stuff, not all of it but we can do some of it. 
Particularly the breast cancer screenings would be allowed to continue, 
maybe one of the others.
  The reason I bring this up, I want to keep in mind that States are 
different. What we have focused on in Delaware is what works--what 
works to reduce unemployment, what works to improve student outcomes, 
what works to get people off of welfare roles, what works in a variety 
of things. This is a multipronged approach that worked in reducing 
cancer mortality.
  Let me talk more about the Enzi-Nelson preliminarily with respect to 
the Lincoln-Durbin proposal. They actually share some things in common, 
as I said earlier. They both say: Health care costs are a major problem 
in this country. They are a problem for little businesses; they are a 
problem for big businesses.
  As we watch my generation aging and look to the future, when the 
boomers are in full retirement--and I might add, the generation of the 
Presiding Officer is in full retirement--we will see Medicare, 
Medicaid, and Social Security which today account for roughly 8 percent 
of gross domestic production, by the time our generation is in full 
retirement, 25 or 30 years, I am told that Medicare, Medicaid, and 
Social Security may well consume something like 16 percent of gross 
domestic production. The amount of spending for those three programs 
alone is roughly equal to 16 percent of our gross domestic production 
as a country.
  If you look back over the history of our country, in the last 50 
years or so we spend as a percentage of gross domestic product 
something like 18 or 19 percent of gross domestic production to run the 
whole Government. If we are looking at 25 years or 30 years down the 
line where we are spending 16 percent of gross domestic production just 
to run three programs, with nothing for the environment, nothing for 
housing, nothing for defense, nothing for homeland security, nothing 
for education, that is a scary prospect.
  So the concerns we have about finding a way to constrain the growth 
of health care costs are not just a concern of small or large business 
but a great concern for those in the public sector who worry about how 
to continue to fund and offer benefits through Medicare and Medicaid.
  Senator Enzi took a few minutes to talk about the Durbin-Lincoln 
proposal. The proposals are similar in a couple of respects: One, they 
say rising health care costs are a major concern. They are a concern 
not just for government, for big business, but a concern to small 
businesses.
  Wouldn't it be great if we could find a way to somehow combine the 
purchasing power of a lot of small employers across the country and 
their employees, much as we do for Federal employees? All Federal 
employees do not work for one employer. We work for hundreds of 
agencies. The Senate is an agency. The House is an agency. We have the 
courts around here that are separate courts and agencies.

  Throughout the country we are, in a way, sort of like small 
businesses. We talk about being three branches of Government, but we 
actually are, in a sense, small employers. There are big employers 
among us, bigger agencies, such as Defense, but there are a lot of 
small agencies that are much like a small employer.
  What we have done to be able to constrain the growth of health care 
costs for Federal employees is to find a way, working with the Office 
of Personnel Management, to pool our purchasing power, to get a whole 
lot of health insurance products available to be offered to us, to give 
us the opportunity to shop among them and figure out what works for 
each of us best, what we can afford, the kind of benefits we are 
looking for, and then we can pick

[[Page S4316]]

and choose. We end up with a great cross section of product to choose 
from. Given the kind of purchasing power we have, we are able to 
constrain the cost of coverage. We have to pay something, I think it is 
about 25 percent of the cost of our coverage. But it is, frankly, a lot 
lower premium than otherwise it would be if we did not have the 
purchasing power pool.
  When you add active Federal employees and Federal retirees, you add 
in all the families, we are talking about a lot of people, maybe as 
many as 6, 7, 8 million people, and it gives us a chance to have a real 
impact on what is available in terms of coverage and how much that 
coverage is going to cost.
  Senator Enzi raised a question about the cost of the Lincoln-Durbin 
plan. The Lincoln-Durbin plan is different from where it was initially 
introduced, as I understood it. There is a tax break in their plan from 
which the cost arises.
  He mentioned the cost over 10 years as much as $50 or $60 billion. It 
is a tax cut for smaller businesses that offer coverage for their 
employees. The reason there is a cost associated with the Durbin-
Lincoln plan is because of that tax cut. Ironically, some of my 
colleagues have suggested that is one of the few times they recall our 
Republican friends being opposed to a tax cut. I know there are tax 
cuts they are opposed to, but that is the reason there is this cost. It 
is considerable.
  In the conversation we had earlier this afternoon, I was sharing with 
my friend, Senator Enzi, it involves Senator Lincoln, myself, Senator 
Salazar of Colorado, and a number of folks from the business community 
who were gathered around just to have a good discussion about the 
problems we face in trying to look for some common ground.
  I said to Senator Enzi when I came to the Senate a bit ago, we had a 
side bar conversation while another colleague was speaking. It is too 
bad that conversation we had with the business community in Senator 
Lincoln's conference, too bad we did not have that 12 months ago or 12 
weeks ago. He shared with me a conversation that occurred maybe 9 
months or so ago that involved him and some of my colleagues on this 
subject.
  Senator Enzi is good, as are Senators Durbin and Lincoln, in reaching 
out to the other side and trying to find common ground. We need to find 
common ground. I remain convinced I am one of the people who, like 
Senator Enzi, sees the glass half full even when it is almost dry. As 
to this issue today, I think the glass is at least half full.
  I cannot help but think, given the good will on both sides, that if 
guys like me and gals like Senator Lincoln and guys like Senators 
Nelson and Enzi and Durbin put it in their minds, we could find a way 
to further reduce the differences between our respective proposals.
  I do not know what is going to happen when we vote. I guess we are 
going to vote on cloture tomorrow, I am told. I am not sure what is 
going to happen. I don't know if the debate will basically continue or, 
because of that, sort of end for now. If it does, I hope the discussion 
actually will begin in earnest, and discussion, certainly, with the 
principals on both sides who have interests in this issue, and that out 
of that discussion we come to a more satisfactory resolution.
  One of the problems we have on our side--and I think Senator Enzi has 
heard this before--is sometimes, even when we pass what we think is a 
pretty good bill in the Senate, and we go to conference with a much 
different bill from our friends in the House, when the conference is 
created between the House and the Senate, we, as Democrats, are not 
always full participants in those conferences, and what comes out at 
the end of the day does not look a whole lot like what we passed in the 
Senate, or at least not enough. That is going to be a concern. And I 
just need to say that.
  But having said that, we will cast our votes tomorrow and see what 
happens with respect to them. But I would say to my friend Senator 
Enzi, my hope is that if we do not come to resolution and this is an 
issue that continues to be outstanding. It is too important just to let 
it die. I hope we will have an opportunity--whether it is tomorrow or 
next week or the weeks after that--to find a common ground and get 
something done.
  Mr. President, I brought these charts. We might as well use them. 
Actually, I think for a guy from Delaware they are actually pretty 
interesting. I do not know what these numbers look like in Wyoming. But 
when you look at the leading causes of death in my State--this chart 
goes back to about, oh, Lord, a dozen years or so. In the early part of 
the 1990s, about 32 percent of the folks who died in our State died 
from heart disease, about 26 percent died from cancer, 6 percent died 
from strokes, 4 percent died from chronic lower respiratory disease, 4 
percent died from accidents, and 3 percent died from diabetes, and 25 
percent died from ``all others.''
  Keep in mind, in the early 1990s, cancer was right around 26 percent, 
heart disease was 32 percent.
  Let's see what it looked like a decade later. Heart disease was at 32 
percent, now it is down to 29 percent; and cancer, which was at 26 
percent, is now down to 24 percent. The rest are pretty much the same, 
although ``all other'' is gaining. In fact, ``all other'' is in first 
place now, whatever ``all other'' is.
  We are real pleased to see the drop in the number of cancer deaths. 
Does that sound like a lot over a 10-year period of time, to drop from 
26 percent down to 24 percent? It is not. But as I said earlier, it is 
a little bit like changing that aircraft carrier. The numbers have 
dropped. We are convinced we are doing something right, and we want to 
continue what seems to be working.
  I have a couple of other charts, and then I will close. This is a 
chart that goes back to the beginning of the 1980s--1980 to 1984--and 
up to 2002. The red numbers are the cancer mortality rates for the 
country, and the numbers above are cancer mortality rates for Delaware, 
starting in the early 1980s and going to the early part of this decade.
  As you can see, the gap by around 1990--the early 1990s--the gap 
right here, was pretty large, back here, but it is even larger here. 
That is when we started doing something different, changing up our game 
plan in Delaware. And we are still above the national average here, but 
it is about half of what it was a decade or so ago. So we are convinced 
we are on the right path.
  One more chart. My staff thinks this is not a very good chart, and 
maybe it is not. I kind of like it. Let's see if I can get it straight. 
We look here at the percentage of the reduction in cancers. It dropped 
between the early 1990s and the early part of this decade. The 
mortality rate of all cancers in Delaware went down by about 13 
percent--a drop in all cancers.
  The cancer mortality rate in the United States during the same period 
went down about 7 or 8 percent. The drop in the lung cancer mortality 
rate in Delaware, over the last decade, was, again, by about 13 
percent. In the country, it went down by about 5 percent, in this same 
period of time. Colorectal deaths went down in our State by over 15 
percent over that 10-year period of time, and down about 12 percent in 
the country. Breast cancer deaths in Delaware went down, in the last 
decade or so, by about almost 20 percent. In the country, it went down 
by about 12 or 13 percent.
  And for guys like us--Senator Enzi and my colleague, the Presiding 
Officer--this is a real attention getter. For prostate cancer, the 
mortality rate in our State, in the last decade, went down by almost 50 
percent, in Delaware, as compared to the rest of the country, which was 
about half that, roughly 25 percent.
  I think that is a pretty good chart, and I am glad it was made up for 
us to look at.
  The point I want to make is, actually sometimes we have these 
mandates, along with other things I mentioned earlier, and some 
positive things do happen in our respective States.
  We are pleased with the progress we have made, and we have a long way 
to go in Delaware. We want to make sure we have the tools to be able to 
continue in that vein.
  I have said my piece. I look forward to seeing how the smoke clears 
and what things will look like after tomorrow. We will just take it 
from there.
  I yield back my time. Thank you, Mr. President.
  The PRESIDING OFFICER (Mr. Enzi). The Senator from Nevada.
  Mr. ENSIGN. Mr. President, I will not be very long. I will be very 
brief. I

[[Page S4317]]

want to speak about the bill that the Presiding Officer, the Senator 
from Wyoming, has brought forth from the HELP Committee.
  I have the honor of serving with the chairman on the HELP Committee. 
I think he has done a great job crafting this bill, which will offer 
more people the ability to afford health insurance in America.
  We have heard reports about how many uninsured Americans are in our 
country today. The fundamental point is that a lot of Americans simply 
cannot afford to buy health insurance. And, many uninsured Americans 
are employed by small businesses. I have built, owned, and operated two 
animal hospitals, veterinary hospitals. As a small business owner, it 
is very difficult to afford to buy health insurance, not only for 
yourself, but, obviously, for your employees. One of the reasons it is 
difficult to buy health insurance relates to purchasing power. When you 
have a small number of people, it is difficult to go to insurance 
companies and negotiate effectively for good prices. If you have 20 
employees versus a company that has 20,000 employees, the company with 
20,000 employees has a lot more buying power and, therefore, can 
negotiate prices down more effectively than the smaller company.
  The bill before us today establishes small business health plans, 
which will allow small businesses, such as the veterinarians, the 
restaurant owners, and the physical therapists to band together through 
their associations, and negotiate for health care coverage at prices 
they can afford. What this means is that a lot of people who are 
currently uninsured can become part of the insurance market. There is 
also a side benefit for the people who already have health insurance. A 
lot of people who are currently uninsured are young, healthy people who 
happen to want some type of health insurance coverage. If we bring 
these individuals into the health insurance market, they will help 
spread out the risk, which lowers costs for everyone else.
  Now, we have heard criticism from the other side of the aisle saying 
that we are not maintaining the mandates that a lot of States have put 
forward. Opponents say that some people are going to be without 
coverage for mammograms, cancer treatments, and other services.
  These same people today have no health insurance coverage 
whatsoever--isn't basic coverage better than no coverage at all? We 
would love to offer and be able to afford to offer everyone every type 
of service possible. But the reality is that a lot of people cannot 
afford health insurance plans today because insurance coverage has 
become too expensive. One of the reasons for this is that small 
businesses cannot pool together across state lines. Another reason has 
to do with mandates.
  We talk about a lot of different proposals that can lower the cost of 
health care for hard-working Americans. Everybody campaigns and tells 
their constituents: We have to do something about the high cost of 
health care. We must do something. Let's act.
  We have an opportunity to act now in the Senate. There is a good bill 
before us. We need to act on this bill so that uninsured Americans can 
come into the insurance market.
  This bill is estimated, by an actuarial firm, to lower the cost of 
health insurance for small employers by as much as 12 percent. This is 
a significant number. Every dollar you lower the cost of health 
insurance makes more and more people able to afford it.
  It is time for us to enact legislation that is actually going to be 
good for the American people, a proposal that will allow more people to 
be able to afford health care coverage.
  Mr. President, the bill before us today goes a long way toward making 
health insurance more affordable for small business owners and 
employees. I encourage this Senate to get behind this legislation. 
Let's move it forward, work out the legislative differences with the 
House, and send a bill to the President that will help Americans afford 
health care insurance today.
  Thank you, Mr. President. I yield the floor.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. COBURN. Mr. President, first of all, thank you for taking my 
stead in the Chair this evening so I could participate in this debate. 
I have been in the Chair 2 hours and 30 minutes and have heard quite a 
range of things.
  Health care is a problem that affects the whole country today. We are 
going to spend in our Nation $2.3 trillion this year. The largest 
amount of money we are going to spend on anything in our country, we 
are going to spend on health care, and one out of every three dollars 
we spend does not help anybody get well.
  We ought to ask ourselves--with 45 million people truly not covered 
in an insurance product, with the cost of health care rising double 
digits every year, with the cost of drugs skyrocketing, with the cost 
of hospitalization, emergency care skyrocketing--how is it we are 
spending all this money, with $1 out of every $3 not helping somebody 
get well, and costs are going through the roof?
  It is because we have some real structural problems. This bill is 
meant to address a small portion of that. It is not the end-all, 
answer-all to our problems in health care. We all realize that. But 
this is something we can do in the short term that will make available 
an opportunity for costs to be controlled in a small area of our 
economy that will have impact and will create accessibility.
  I would say we all in this body want everybody to have access to 
health care. The question is, Who pays for it? Right now, in terms of 
Medicare, our grandchildren are paying for it because it ran a $120 
billion deficit last year. In other words, we borrowed $120 billion to 
run Medicare last year because that is the amount of money we did not 
have coming in from Medicare premiums.
  The whole question on how we address health care is going to be: How 
do we get a better system that will give more people access, that does 
not waste that $1 out of $3? That is what we have to be concerned with. 
We have the brains, we have the science, we have the facilities, but 
something is wrong. What is wrong is there is not a competitive system 
out there where we allocate scarce resources based on quality and value 
and price.
  This bill will move a little bit in that direction. There are going 
to be a lot of areas where we move. The one thing I have heard from the 
other side that I agree with today is, we ought to be emphasizing 
prevention. I agree with that 100 percent.
  We have 19 different agencies in the Federal Government that have 
something to do with prevention. We are going to be introducing a bill 
that pulls all those together into one and has a leader who is 
emphasizing prevention and what we can teach the American people about 
saving money, preventive health care. As grandma used to say: An ounce 
of prevention is worth a pound of cure. And it works every time.
  We know we can prevent diabetes. We can stop 50 percent of diabetes 
just with education, but we don't have it. We are wasting resources and 
duplicating resources. We have opportunity costs from programs that are 
designed to do it and don't do it well. Others do it much better, but 
we are still funding the ones that don't do it well. There are lots of 
problems we have.
  I want the American people to understand that the choice that has 
been outlined by those who oppose this bill today isn't a choice of 
whether we have to have mandates. It is a choice of somebody who has no 
care now, no mandate, versus getting some care. If we do our job on 
prevention, then we will be educating the American people. But the 
ultimate health care responsibility in this country isn't the Congress. 
It isn't the States. It is the individuals who make choices about what 
is going to impact their lives and what value they want on their health 
care. That is why HSAs, although they have been blocked, need to be 
expanded vastly. They need to be funded better. They need to have an 
application for chronic care, and they need to have a tax deductibility 
to bring you up to the level of that so that we put everybody's skin in 
the game, so you know you are going to make a choice based on what is 
valuable to you.
  Everywhere else in this country, we have trusted markets to allocate 
scarce resources. We are a little timid about how they are doing it in 
oil, but the fact is, the market is scarce, and the price is up. As 
soon as either demand decreases or supply increases,

[[Page S4318]]

the price will come back down, or some other form of energy is going to 
be there to supply it, such as agrifuels.
  We have to trust the market to help us because we can't afford what 
we have promised. We can't afford what we promised in Medicaid, in 
Medicare. The money is not going to be there in 10 years. It is going 
to start winnowing away. So what are we to do? Continue to create a 
charade for the American people that says yes, we can, or start with 
one small step with this bill which offers availability through group 
purchasing, expanded purchasing power, lowering the overall risk to a 
million people? Why would we not want to do that?
  Is it perfect? No. There isn't a bill we pass that is perfect. But 
this is a step in the right direction, although it does walk over some 
State mandates, I agree. But the problem is, Medicaid walks over State 
mandates every day. Medicare walks over State mandates every day. They 
set a mandate.
  We have two choices in health care: the Government is going to run it 
all, or we go to the private sector where we really trust the market to 
allocate and protect those who need the help, those who can't help 
themselves. Those are the only two choices we have on health care. If 
you think we have problems now, wait until the Government runs it all.
  I am a physician. I have practiced since 1983. That is 23 years. I 
have delivered 4,000 babies. I have done every kind of operation you 
can think of. I have seen a system decline based on how insurance has 
been applied to it and copying the mandates of the Federal Government. 
So we are in a mess on health care. Let's get out of the mess. Let's 
start with this, but let's don't stop there. Let's start with 
prevention. Let's make sure there is competition in the pharmaceutical 
industry. We don't have it.
  As a practicing physician, there is no competition in the 
pharmaceutical industry. Drugs that do exactly the same thing and are 
priced the same way, nobody wants an increased market share. The 
Federal Trade Commission ought to be asking why. Why don't they want 
increased market share? I believe there is collusion on sharing of 
markets in the pharmaceutical industry so that they can keep the prices 
high. We need worldwide competition on pharmaceuticals. If we will do 
that, we will get a lot of bang for our buck.
  There is even collusion when it comes to the generics. The FDA has 
created this wonderful system which enhances no competition for 6 
months to 18 months for the first person who comes out with a generic. 
What is that all about? That is taking away from the market.
  There are lots of problems, but this is a good start. It is not 
perfect. Is it as good as we can get? It probably is right now. But it 
starts us down the path on what we need to do to fix health care in 
this country. That is competition.
  We need transparency. We have seen recently hospitals not wanting to 
give their rates, doctors not wanting to give rates, Medicare not 
wanting to publish rates. Why not? Let people know what they are 
supposed to be getting charged. Let's have a little open sunshine on 
the health care industry.
  Let's talk about the 19 percent of every dollar that goes into the 
health insurance industry that never goes to help anybody get well. 
Let's talk about that. Let's create real competition in the health 
insurance industry. The more people get into it, the more competition 
we will have.
  I thank the Senator for filling in for me so I could take the time to 
address the Senate. Our goal is making sure everybody has access to 
care and doing it in a way that our children can afford to pay for it 
because we are not paying for it today. We need to be mindful of that 
as we make those decisions. This bill starts with that.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. BURR. I ask unanimous consent that the order for the quorum call 
be rescinded.
  The PRESIDING OFFICER (Mr. Coburn). Without objection, it is so 
ordered.
  Mr. BURR. Mr. President, as you spoke on this bill, you inspired me 
to come back over for another opportunity to talk. To put in context 
why we are here, you have to talk about where we have been this week. 
We started this week focused on exactly what you raised, and that was 
the inflation factors that go into health care.
  On Monday, we were slated to consider two different proposals. One 
was a proposal that limited the liability that all medical 
professionals have, and we have seen liability premiums rise at a rate 
that is unsustainable for doctors across the country. That bill was 
quickly questioned as to whether we would bring it to the floor. Some 
argued that there was no need to; it is not a problem. We were forced 
to have a vote on whether we could proceed to consider the bill. We 
didn't vote on the bill. We didn't offer amendments on the bill. We had 
a vote on whether we could proceed, which requires 60 Members of the 
Senate to support. We didn't get 60 votes. The American people didn't 
get cost reductions because some in this body chose not to extend the 
privilege of debate and the voice of the American people in the 
amendment process into that bill.
  We turned around and we introduced another bill. The bill's coverage 
applied to those specialists who are OB/GYNs; in other words, 
individuals who deliver babies, something that is vital in this 
country.
  I know the Presiding Officer is, in fact, an OB/GYN. He delivers 
babies. He delivered babies throughout his career in the House of 
Representatives. He would leave the House, he would go home and deliver 
babies on the weekends so that he could keep his practice alive. He 
doesn't have the luxury now in the Senate. That is a shame because he 
was good.
  There are communities all across this country that have lost their 
OB/GYNs, not because they became U.S. Senators but because they can't 
afford liability insurance anymore. They have been forced to leave 
rural America and go to urban America where they are under the umbrella 
of coverage of a large medical institution, in all likelihood 
affiliated with an academic institution.
  What happened on Monday night when we took up liability limitations 
for those across this country who deliver babies? We didn't get the 
opportunity to debate it. We didn't get the opportunity to amend it. We 
had a motion we had to vote on to proceed. Because 60 Senators didn't 
agree to move forward, that died a quick death. Two bills that 
addressed substantive ways to cut the cost of health care died in a 
matter of 1 hour on the Senate floor because people didn't think it was 
important enough to address things that are inflationary to the cost of 
health care.
  I said shortly after that I was going to come back to the floor 
because I thought it was important for my colleagues on the Senate 
floor and people in the gallery and across the country to hear real 
stories from real Americans.
  In North Carolina, we have a lot of people who are suffering today 
because they lack insurance. So the third part of Health Care Week is 
to take up a bill that allows small businesses--really the heart and 
soul of America--to purchase as associations, as groups, to negotiate 
en masse because they don't get the luxury of the benefits of large 
corporations to leverage the cost of health insurance. For that reason, 
many small businesses today can't afford to provide health care and to 
keep the doors open of their businesses. So they choose to hire folks 
and to employ them and to pay them but not to extend health care 
benefits. Those are numbers that are counted in the national uninsured 
population.
  In North Carolina, we have 671,000 small businesses. Small businesses 
make up 98 percent of the firms in North Carolina. Women-owned small 
businesses have increased 24 percent since 1997. Hispanic-owned small 
businesses have increased 24 percent since 1997; Black-owned small 
businesses, 31 percent; Asian small businesses, 74 percent. Are they 
any better off because of the categories they are in to provide health 
insurance for their employees? No, because they are caught in the same 
problem. They don't employ enough people to negotiate like the larger 
corporations.
  In North Carolina, there are 1.3 million uninsured individuals, and 
900,000

[[Page S4319]]

of those uninsured individuals are in families or on their own with one 
full-time worker. One full-time worker is in that house either with a 
family or is the individual in the house. The opportunity with this one 
bill is that we will have 900,000 people who potentially have the 
opportunity for the first time to be covered by health insurance.
  Many run to this floor, and they talk about what we need to do as a 
Congress. They don't really mean we need to pass legislation that 
creates an affordable health care bill. What they mean is they would 
like for the Federal Government, through taxpayer funding, to produce a 
benefit we pay for for anybody who is without health care.
  I think we have the right approach. The right approach is to make 
sure that small businesses can band together, that they can negotiate 
with the private insurance market, that they can offer a benefit, for 
the first time for many of them, to their employees, and the retention 
of their employees is better because that benefit is now extended.
  Do you realize that the most expensive benefit that is offered by a 
business today is health care? It is not retirement, not any of the 
things that historically we have looked at. The health care benefit is 
the single most important thing.
  I heard the Presiding Officer talk about the future and the fact that 
our children are the ones paying for Medicare today.
  That is, in fact, right. Three things control our competitiveness in 
the world, and they are health care, energy, and labor. But I guarantee 
you, when we bring up energy, we are going to be blocked from 
proceeding because we will try to bring down gas prices and try to come 
up with things that bring stability in energy. Some would rather see 
nothing happen on the Senate floor.
  I have an individual who is in the appraisal business in North 
Carolina who wrote to me and said that small businesses need help with 
insurance. That is in big letters. He says he is now paying $986 per 
month for his wife and himself. This is for only 60 percent coverage 
and a $2,500 deductible. He says he knows people with group insurance 
paying $600 for 80 percent coverage and a $250 deductible, and many of 
those have dental insurance as well. He said his policy provides none. 
``Please help me out.''
  This came from a store owner, and it says that as a small business 
owner, it is important to enable some economy of scale in allowing 
franchises to obtain more affordable health insurance.
  The economies of scale is exactly what we are on the Senate floor to 
debate. I might add at this time that this debate really didn't start 
until several hours ago because on the third bill--this bill--we had to 
vote on a motion to proceed, which we won this time, and we had to 
delay some 30 hours before we could engage in the amendment process and 
general debate.
  This comes from an individual from Hickory, NC. She said that as a 
parent and an employer, she knows the importance of having affordable 
insurance and the financial devastation that occurs when you have no 
coverage. Unfortunately, there has to be a tradeoff. She says she has 
only one of two options to keep her doors open: either her employees 
have no insurance or they receive a livable wage. When there are no 
viable alternatives for employers to purchase reasonably priced 
insurance, the losers are her employees.
  What are we here debating? We are debating a change from today's 
policy. What is the choice employees of small business have today? It 
is a choice between nothing and nothing. That is unacceptable. That is 
why the chairman, Chairman Enzi, has worked so hard to carefully craft 
a bill that doesn't bypass those who are charged today with regulating 
insurance, every State insurance commissioner. But it incorporates them 
fully and allows products that can be created that, for once, are 
affordable. Sure, they don't have all the bells and whistles. They 
don't cover the full scope of coverage that every insurance product has 
today. But when your options are nothing and nothing, isn't it 
reasonable to believe that we can have a debate about creating 
something and nothing? Isn't that, in fact, why we are here?
  In South Carolina, there is a textile company, a small business owner 
in Greenville who says that providing health insurance is becoming an 
unbearable hardship for small businesses such as hers. She is a widow, 
self-employed, and her health insurance is an expense she can hardly 
afford. Like many of her employees, she has a $5,000 deductible, and 
her monthly premium constantly increases 35 to 40 percent every 6 
months. Most would say that is impossible, but I have her name and her 
address, I have the city in which she lives, and I have her company 
name. She wrote to me.
  It is individuals who are turning to the U.S. Senate now. The House 
passed it. They are saying: Please produce something for us.
  Here is one from Alabama. It is not all North Carolina. This is an 
owner of a nursing services company who said that the cost to cover one 
employee is $225 a month, and it is $617 for full family coverage, 
which is up 6 percent over last year. She recently lost a long-term 
employee to a larger company because that company could afford to pay 
100 percent of the employee's health care costs. She thinks it is 
simply unfair that we don't do anything.
  Janice is from Kentucky. She is the owner of an elevator company. She 
was hit with an astonishing 60-percent increase in health care premiums 
in 2002. There are a lot of similarities in the last letter. Some might 
have thought that is impossible. It is not.
  Here is another one. Some of this increase in cost was passed down to 
employees because her company simply could not absorb all of the costs. 
If this trend continues, which she fully expects, they will have to 
drop the coverage she has provided for employees for years.
  The writing is on the wall. We need to do something to relieve the 
pressure for small business in America or the uninsured rolls will 
increase. The rolls will not decrease because these small business 
owners cannot afford to continue to supply health care as a benefit.
  Here is one from Mississippi. As a new small business owner in 
Mississippi, he finds it harder every day to make sense of why he pays 
three times as much for family health insurance as he paid when he 
worked in the same industry for a large company. He says there needs to 
be a way for his company to offer his employees similar high-value 
health insurance that he was offered when working with the big guys at 
a reasonable rate. Small businesses are at an immediate disadvantage 
simply because they are small, he said.
  I talked earlier today about my election to the House of 
Representatives, when the Presiding Officer and I came in. I came from 
what I considered to be a small business, but it was over 50 people. We 
had adequate health care. I paid 25 percent, and the company paid 75 
percent. I got to Washington as a Member of Congress. I found that my 
choices for health care increased in number, but I thought it was 
probably most prudent to choose, in fact, the same plan I had in the 
private sector, the same company, the same plan. I paid the same 25 
percent, the Government paid the same 75 percent. What was the one 
difference? The one difference, now that I was part of 2 million people 
who worked for the Federal Government, was that my premium went up $50.

  You see, there are some that will argue that the only way to solve 
the health care crisis in America is to have the Government take it 
over. If you want to solve small businesses' problems, let the 
Government negotiate a health care plan for them. Well, my experience 
with the Government negotiating health care is that it costs me more 
money. I would be willing to bet that most will find that to be the 
case. Incredibly, nobody is calling my office saying: I wish you guys 
would negotiate for me, or I wish the Government would take this over. 
Don't provide me choices, just give me one. I don't want to choose.
  This is from Larry in Mississippi, who owns a small company. He has 
little buying power and few affordable options for health care. It is 
similar to what has happened in so many States, where one insurer 
controls more than 75 percent of the small-group market. This lack of 
competition resulted in an 80-percent increase in the last 2 years for 
his John Deere dealership.
  I will tell you what, if there is anybody I would work hard for to 
find him

[[Page S4320]]

a deal on health insurance, it is a John Deere dealership. He increased 
the deductible from $250 to $2,500. He says that if he doesn't receive 
relief soon, he will be forced to drop all insurance coverage or lose 
his business. So he has an option: He can close the door, and everybody 
who works for him would be out of business.
  You see, we are here because today the choice that small businesses 
and their employees have is a choice between nothing and nothing. All 
we are here to do is to suggest that we engage in this bill and that we 
have an up-or-down vote about something. Nobody will see this as a 
silver bullet that solves the health care crisis, as the Presiding 
Officer said earlier. That will take a much more in-depth engagement, a 
much more difficult debate on the Senate floor. We really will bring in 
the experts as we try to provide the changes that are needed so our 
children have the same benefits we have. But it doesn't make me too 
optimistic if we cannot solve this simple thing that so many small 
businesses are experiencing today.
  Here is one from Virginia, not too far from us. The owner of a small 
industrial service firm is facing a crisis trying to provide health 
insurance for employees. His small business, with 20 employees, has 
struggled for the past 10 years to provide a health benefit plan. He 
has been able to continue to provide this insurance only by reducing 
coverage, raising individual office fees, and asking his employees to 
pay a higher share of the monthly premium. Underwriting penalties for 
small groups and rising medical costs and increasing mandates from 
government are collectively squeezing his small business to the point 
where meaningful health coverage will simply not be affordable.
  I thought our job was to try to bring more people under the umbrella 
of coverage. I thought that was the objective, to try to create new 
products, create more affordable products, make sure that health care 
is not just more affordable but more accessible.
  Here we are on the Senate floor with one of the most carefully 
crafted bills I have ever seen--a bill that a group of actuaries from a 
well-respected firm found would reduce health insurance costs for small 
business by 12 percent in today's dollars. That is $1,000 per employee. 
Is somebody in this institution telling me that small business 
employees across the country don't want to save $1,000 or that they 
don't want to have the opportunity to have less of their out-of-pocket 
money go to health care coverage or that we should ignore a well-
respected actuary?
  By the way, the actuary also found that S. 1955 would reduce the 
number of workers who are uninsured by about 8 percent, or 1 million 
people. This would automatically bring a million people under the 
umbrella of coverage. That hits home to me because I have 1.3 million 
uninsured in North Carolina. I have 1.3 million uninsured individuals, 
and 17 percent of North Carolina's population is uninsured today; 16 
percent are uninsured nationally in this country.
  Do you realize that only 205,000 of those 1.3 million uninsured are 
part-time workers? There is this belief that that number includes all 
part-time workers. If we could just make sure Wal-Mart supplied health 
insurance, this would all be over. No. The majority of mine--1.1 
million--in all likelihood work for small businesses. They are 
uninsured. And 900,000 of them certainly are in a family where they 
could have a chance at health care coverage if, in fact, we pass this 
bill.
  The Congressional Budget Office has also looked at the bill, and they 
found similar numbers of newly uninsured Americans. If S. 1955 were 
signed into law, CBO estimates that nearly 750,000 more people would 
have private health insurance than under current law. I guess that is 
the key. I guess some don't want there to be private health insurance. 
When we leave the marketplace alone, when we set it up so it is fair, 
it is amazing what competition does.
  As a gentleman from Mississippi said, when one company controls 75 
percent, where is my negotiation point? We are talking about letting 
national associations band together. We are talking about potentially 
shopping for national coverage, with national firms, but letting the 
State insurance commissioner regulate the product. I am not sure there 
is a downside to that, unless the downside is that we have now brought 
more individuals under the umbrella of coverage and this issue begins 
to diminish from a standpoint of the politics that comes along with 
health care.
  Mr. President, I am going to end for the evening. I will not end for 
the debate, though. I still continue to get letters into my office that 
are real stories about real people. I think many times real people are 
forgotten on the floor. We get so wrapped up in the debate of issues 
that we forget that everything we do here affects somebody in this 
country or in the world.
  Each time we stop long enough--maybe this weekend; I am not sure we 
will finish this bill this week; I hope we do--we figure out who these 
uninsured are. Maybe everybody will take an opportunity to go to a 
small business if they haven't visited one in their State, and they can 
ask those small business owners: What is the health care market like 
for your employees? I have a feeling what they are going to hear is 
what I have shared with you from real businesses, real owners about 
real people who can't afford what is available to them today.
  There are in North Carolina 671,000 small businesses that desperately 
want a choice of something. Today all they have is nothing versus 
nothing. Their employees have nothing or nothing. Not a very good 
choice.
  I am glad we are on this bill. I am glad the 30 hours is over. I 
commend Chairman Enzi for legislation that is incredibly well crafted. 
It is focused exactly where it needs to be, and that is to make sure 
plans are not cherry-picking, to make sure that regardless of the money 
that is available, there is a health care option so an employer and 
their employees can decide whether it is, in fact, affordable.
  At the end of the day, it is my hope that Members of this very 
historic institution will remember the folks back home who sent them 
here, that they will remember the next generation we are obligated to 
represent, that we have an obligation today to make sure individuals 
who want to be covered have an affordable option to be covered, to make 
sure we fix some of the problems so the next generation, our kids, 
don't fight the same challenges we fight today.
  I am convinced this debate will continue, and at the end of the day, 
I am convinced the American people will win regardless of what the 
intent is of some in this institution.
  Mr. President, I yield the floor, and I suggest the absence of a 
quorum.
  The PRESIDING OFFICER (Mr. DeMint.) The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  The PRESIDING OFFICER. The Senator from Iowa is recognized.
  Mr. HARKIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HARKIN. Mr. President, something is wrong when 45 million 
Americans, 8 out of 10 of them in working families, cannot afford 
access to quality health insurance. This past weekend I met a woman in 
Des Moines who has been without health insurance for herself and her 
daughter since her husband died several years ago. She works hard as an 
administrative assistant in a small law office. She lives, like many 
Iowans, from paycheck to paycheck. She cannot afford private health 
insurance and she makes too much money to qualify for the State's 
Children's Health Insurance Program or Medicaid. This has consequences. 
She has not had any screenings or preventive care in years. Her 
daughter does not go to the doctor regularly, despite the fact that 
their family has a long history of diabetes and cancer. She knows she 
is at risk but cannot do anything about it. What happens to her if she 
gets sick?
  Many people believe the United States has the best health care system 
in the world--the best treatments, the best medical technology, the 
best pharmaceuticals. But this is a cruel joke to the uninsured, 
including more than 8 million children, because they are forced to make 
do with substandard care or none at all. The result is a paradox. The 
United States has a world-class health care system, but we fall behind 
most industrialized countries when our general health outcomes are

[[Page S4321]]

measured. In 2000, the World Health Organization ranked our health care 
system 37th in outcomes that our health system provides. Just this 
week, CNN reported a new study which found that the U.S. ranked next to 
last in infant mortality among industrialized countries.
  Bear in mind again that health insurance is not just about seeing a 
doctor when you are sick; it is about prevention as well. If you have 
insurance, you are more likely to have a relationship with a doctor or 
health care specialist who knows you and your health history. You are 
more likely to have access to preventive care so that chronic disease 
can be prevented in the first place. Without health care coverage, 
minor illnesses turn into major ones and small incidents turn into 
chronic conditions. Once this happens, it becomes almost impossible to 
afford quality health insurance without restrictions on benefits.
  That is why this debate is so important. This week we are considering 
a major overhaul of the insurance system in an effort to help provide 
health care coverage to small business owners and their employees. I 
applaud the goal, but this particular legislation before us now is 
sorely lacking and will not provide access to quality health care at 
affordable prices.
  I oppose the bill before us for the following reasons:
  First, the bill eliminates consumer protections found in current 
State regulations, including in Iowa. In Iowa, under the bill, 840,000 
consumers would lose coverage for diabetes testing supplies and 
education, emergency services, mammography screenings, State mental 
health parity, and well child care. They would also lose guaranteed 
access to dentists, nurses, nurse practitioners, and other providers. 
Iowa does not have a laundry list of coverage services. Iowa State 
regulations guarantee quality insurance. But S. 1955 would do away with 
the compromises that were worked out at the State level to guarantee 
quality.
  Secondly, the supporters of this bill argue that the bill would lower 
insurance premiums for small businesses. What they don't tell you is 
that it comes at a cost. Many people, especially those who are older 
and sicker, would see their insurance premiums increase under the 
legislation, even with the changes found in the managers' amendment. 
CBO found that insurers will charge significantly higher premiums to 
those who are sicker, older, and otherwise less favorable to insurance 
companies. They will do this in order to reduce health insurance 
premiums for small firms with workers who have relatively low expected 
costs for health care. Imagine the shock of business owners all across 
America, including many I have met with recently in Iowa, when they are 
billed for the first insurance premiums under the new bill.
  So keep in mind, of course, you can always get cheaper insurance, but 
what does it cover, at what cost, and what are the premiums going to be 
for the person who is covered?
  Third, and importantly, this bill would undermine State efforts to 
guarantee coverage for preventive services. As I have often said many 
times, we don't have a health care system in America, we have a sick 
care system. If you are sick, you get care. But we spend precious 
little money and we have very few incentives for keeping people out of 
the hospital, keeping them out of the doctors' offices, and keeping 
them healthy in the first place. This bill would make it worse. In 
short order, insurers would offer stripped-down policies that do not 
cover preventive services. The result would be the elimination, as I 
said, of cancer screenings, well child care, mental health services, 
access to certain physicians or nurses or other providers such as 
chiropractors, for example, who might give you good care and keep you 
from getting a chronic condition, something that might cause you to 
have an operation in the first place. So importantly, this would mean 
elimination of benefits for everyone, not just small business.
  Americans should have access to quality, affordable health care 
coverage. Coverage that is stripped down is not sufficient, and we 
shouldn't settle for it. People's lives, their livelihoods, their 
ability to contribute to society will all be undermined if they are not 
healthy.
  I met with small business leaders in Iowa. Of course they want relief 
from high insurance premiums or from not even being able to get 
policies at all for their workers. We all do. Small business is the 
backbone of my State. And they need--they need--to have some kind of 
insurance coverage for their workers. With regard to this bill, what I 
have said to them is, don't think it is this bill or nothing. I also 
ask them: Are you willing to lose access to quality health insurance? 
Just check with the American Cancer Society. We have cancer societies 
in our small towns and communities all over America. People who run 
small businesses contribute heavily to our local cancer societies. But 
here is what the American Cancer Society said:

       In one stroke, this bill would erase all that state 
     legislatures have done to prevent and more effectively treat 
     cancer by ensuring access to life-saving screenings for 
     breast, colon, and prostate cancer, cancer specialists 
     coverage for evidence based off label drug use, clinical 
     trials, and proven smoking cessation services.

  That is from the American Cancer Society about this bill.
  I ask all my friends; I ask anyone who has had a history of cancer in 
their families: Would you want insurance that doesn't cover screenings 
for breast cancer or colon cancer or prostate cancer?
  How about the American Diabetes Association. We know that diabetes is 
hitting people younger and younger all the time. We have to do 
something to prevent diabetes. But here is what the American Diabetes 
Association said about this bill:

       We must ask ourselves how people with diabetes will be able 
     to pay for a disease that costs an average of $13,243 per 
     person to manage. Unfortunately, it will be our emergency 
     rooms and Medicaid system that are forced to pay.

  I ask my friends who are diabetic or who have family members with 
diabetes: Would you want insurance that doesn't cover diabetes-related 
services?
  Those are just two examples, but there are many others. So, again, it 
is not this bill or nothing. There is a better option out there that 
will guarantee coverage for these services and at the same time provide 
small business access to quality insurance.
  One realistic solution that I support would be to give small 
businesses the option of joining a program modeled after the Federal 
Employees Health Benefits Program. That is the program that covers us 
here and we love it, believe me. All Senators, all Congressmen, Supreme 
Court Justices, all our Post Office people--anybody who has anything to 
do with the Federal Government belongs to the Federal Employees Health 
Benefit Program. It is great coverage. Why shouldn't small businesses 
have access to the same kind of program we have?
  That is why I have joined with Senators Durbin and Lincoln to 
introduce S. 2510, the Small Business Health Benefits Plan. Here is why 
this bill is superior to the bill we have before us:
  First, it would create a larger purchasing pool, a nationwide pool, 
rather than the fragmented pools that will be created under S. 1955. A 
national pool would reduce insurance rates for everyone.
  A few years ago, before I came to this place, I sold insurance. There 
is a principle in insurance that we all know: The more people in the 
pool, the cheaper it is for everybody. It is one of the fundamental 
principles of insurance. The more people in the pool, cheaper it is for 
everyone. So you want a big pool when you are dealing with health care.
  S. 1955, the bill before us, sets up thousands and thousands of small 
pools. But the Federal Employees Health Benefit Plan is one big pool. 
So if you have that national pool, insurers will be able to offer a 
range of plans such as we have now. Every year we have open season and 
I can choose from--I don't know, I didn't count last time--maybe about 
18 different plans. But the Office of Personnel Management would 
negotiate the rates and benefits offered under the plans.
  Should they do that? OPM has been negotiating with private plans for 
decades. They have consistently negotiated better rates for Federal 
employees than have been achieved in the non-Federal market.
  All the Senators here, all those who love the free market system--you 
will hear speech after speech praising the

[[Page S4322]]

free market system, but everyone here belongs to the Federal Employees 
Health Benefit Plan, and OPM is the one that manages the rates and 
negotiates the rates in these plans. As I said, they are better than 
anything that has ever been achieved in the non-Federal market.
  Second, our bill offers a tax credit to small employers that would 
help offset the cost of premiums for employees if they make $25,000 a 
year or less. S. 1955 doesn't do this. There are no tax breaks for 
small businesses in S. 1955. There are more than 26 million Americans 
making $25,000 or less working in small businesses. Of those, 12 
million, or 40 percent, are totally uninsured. That is what we want to 
get at.
  I will be glad to go to any small business with those who are 
advocating S. 1955. We will take S. 2510 and we will take S. 1955, we 
will lay it out there and let the small business owner decide which one 
they would want to have. I would love to see that happen. I tell you I 
know what would happen: They would pick S. 2510, the one I am talking 
about, the one that would give them a tax break for covering and would 
provide quality insurance.
  Third, our bill does not preempt State consumer protection laws. S. 
1955, the bill before us, would do away with the guarantees I 
discussed, the guarantees of preventive services such as breast cancer 
screening, mammography, cancer, prostate screening, things such as 
that. By contrast, our bill would keep State insurance laws where they 
are. The insurance would cover mammograms, cervical cancer screening, 
diabetes testing supplies, immunizations, and on and on.
  If you are a small businessperson and you happen to be watching this 
session and you are listening to my remarks, you are probably saying: 
Senator Harkin, that all sounds good. Why don't you get S. 2510, the 
bill you are talking about, up for a vote?
  Welcome to the unreal world of the Senate, when we are not allowed to 
do things such as that. We have S. 1955. The majority leader has, if 
you will pardon the expression, filled the tree. That is sort of 
gobbledygook around this place which means they have blocked us from 
offering any amendments, and then we are supposed to vote on cloture on 
the bill, which means debate comes to an end on the bill and you can't 
file anything that is not germane.
  Tomorrow night we are going to be asked to vote for cloture on it? I 
am not going to vote for cloture on that. If you want to have an open 
Health Week here and you want to bring out S. 1955, leave it wide open 
so we can offer S. 2510 and we can have a debate on it and have up-or-
down votes. I am all for that. I think the small business community in 
America ought to know that we are not being allowed to bring up our 
bill for amendment and discussion. I think our bill would pass. I think 
the small business community would support it.

  But as I have understood, being out in Iowa last weekend and as I 
talked with small business owners, they have sort of been led to 
believe it is S. 1955 or nothing. And of course they will take S. 1955. 
If I thought that was all there was, I would probably take it, too. But 
that is not the option before us. We have better options than S. 1955. 
We have the option of S. 2510, the bill I spoke about, introduced by 
Senator Durbin and Senator Lincoln.
  Again, it is unfortunate--not for us. It is not unfortunate for us. 
We have great health care coverage. We have great health care coverage. 
It is not unfortunate for us but unfortunate for the small business 
owners and the 25 million Americans who work for small businesses--12 
million who do not have any insurance at all. This is what is 
unfortunate. It is unfortunate that this bill has been brought up in a 
way that makes it impossible for our side to amend it.
  Besides getting a vote on our bill, I was prepared to offer a series 
of amendments that focused on preventive care. I think if we are going 
to have a Health Week and we are going to have a bill, I want to start 
focusing on preventive care. We know it saves money. But we can't do 
that, either.
  Count me as one who will not vote for cloture on this bill tomorrow, 
but count me as one who wants to have an open debate and amendment on a 
health insurance program that will be beneficial to our small 
businesses. I am sorry we are not going to be able to do it now.
  Again, we are supposed to have a Health Week. Yet tomorrow I guess we 
will take all day tomorrow talking about the tax reconciliation bill, 
and then we are not going to be here Friday. What kind of Health Week 
is this? What kind of Health Week is it when we are not allowed to 
offer amendments and debate preventive health care, offer a different 
bill for the one before us?
  I think the small business owners of America now know what is going 
on. I have heard from some who basically have been supportive of S. 
1955 and they are backing off of it. They are saying no, we would 
rather have your bill, we would rather have the one that provides us 
with some tax credits so we can go out and join a bigger pool like the 
Federal Employees Health Benefit Program; so we can join a big pool and 
we can have preventive services; we can have the State mandates that 
are there now that cover quality. They would rather have that bill.
  But I am sorry we probably will not be able to get it done this year 
and I think, as I said, that is not just unfortunate for us--heck, we 
have the best health care coverage. We have great health care coverage. 
The health coverage we have ought to be available to every American out 
there.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. ENZI. Mr. President, one of the difficulties around here is the 
process we have to use. Another one is that nobody listens to anybody's 
debate. We have covered this in some detail earlier today, that 
relevant amendments would be accepted. The Durbin-Lincoln bill ought to 
be voted on. But it should not be voted on and then S. 1955 precluded 
from getting a vote. That is one of the possibilities in the 
organization and the rules that we have around here, that we could wind 
up voting on that one and skipping the vote on S. 1955 and saying: 
Look, all these people voted against that; that means they don't like 
health care for small business. But they wouldn't have gotten to vote 
for the one that they might have liked.
  I went through a number of the reasons why S. 2510 has some problems. 
I object to people saying we ought to give everybody the same health 
care the Senators have. We ought to give them better health care than 
the Senators have. The only problem is we can't do either of those 
things. The bill that is on the floor by Durbin-Lincoln doesn't do 
either of those things. It is a different plan that uses kind of the 
same structure so we build the same kind of bureaucracy, except a lot 
bigger bureaucracy to handle all the people in America, and it limits 
all of the pools to each State because they will have to meet all of 
the mandates of each of those States instead of what we have in the 
Federal plan which is a national level of mandates.
  We have our own level of mandates. We don't go by what the States do. 
But that is not what is in that bill. In that bill they would still 
have to go State by State, and if you go State by State, you can't form 
the kinds of pools that we need to be able to have the clout to 
negotiate a better price and to bring around the administration.
  People say you want to get rid of mandates so that will save money. 
No. Every experiment, every minilab that has happened out there where 
small business people have been given the opportunity to band together 
and to do something, they have covered those mandates. They didn't give 
those mandates up.
  How do you save money with this thing? Small businesses pay 35 
percent for their administration. Big business, which we already 
excluded from all mandates, we excluded them from Federal control, we 
excluded them from State oversight and consumer protection, which is in 
my bill--it still has the State oversight and consumer protection in 
there--we gave the big businesses the wave on all of those things. They 
still kept the mandates. But where they saved the money is in 
administration. It costs them 8 percent to administer their plans. So 
35 percent minus 8 percent means they save 27 percent over what a small 
businessman will do. And every 1 percent we can save on insurance 
brings 200,000 to 300,00 people back into the market.

[[Page S4323]]

That is why we want to have associations to be able to offer plans 
under State consumer protection, under the insurance commissioner's 
oversight.
  But with some kind of a blended plan, they can cross State lines and 
have a uniform package, and they can have a big enough group so they 
can negotiate. That is what 1955 is about. We need to have a vote on 
that as well.
  As far as mandates, Senator Snowe is putting in a bill that will 
cover those basic things people are talking about.
  The letter that the Senator read from--the American Diabetes 
Association--I talked about that a little bit earlier today. One of the 
difficulties we had in trying to do something with diabetes is that 42 
States--it may even be 47 States--are doing something with diabetes, 
but no two do it alike.
  Again, how do you blend across State boundaries unless you can get 
some kind of basic package? I know they will cover diabetes. Under the 
Snowe amendment, they will for sure.
  The distressing part of their letter was, no matter what changes are 
made to the Enzi bill, defeat it. That is not a very reasonable 
approach by any disease group. That means that if I have an amendment 
that said find out everything that is done for diabetes and do 
everything for diabetes that is done anywhere, they would still be 
suggesting voting against my bill. I don't think that is a reasonable 
approach by any group.
  The American Cancer Society wrote pretty much the same letter and 
said pretty much the same thing.
  We are not trying to subtract, we are trying to add. We want people 
who are uninsured to come into the market, and we want people who 
already have insurance to be able to get more and better insurance for 
the same dollar. That is what employers are able to afford. We are 
trying to come up with a system such as that.
  The only thing about filling the tree--which I agree with the Senator 
is gobbledygook--the only thing with that is to stick to small business 
health insurance.
  There are another dozen things on insurance and health care that we 
ought to be debating. Each of them would take about 3 weeks to debate. 
At this point in the season, we are not going to get 3 weeks to debate 
anything. I am lucky to put together a few days to be able to talk 
about this. I hope to make more progress on that.
  I have been working hard with everybody to try to come up with some 
kind of mechanism that will work. That is where we are on the bill. If 
we could do the things that are relevant to this, or also germane after 
cloture, then we could stay on the bill a little longer and keep 
working on it. If we don't get cloture, we are probably done with this 
discussion for the whole year. That will probably be the end of health 
care for the year. People have to keep that in mind when they are 
voting on cloture.
  Even individual mandates can be brought up one at a time and put into 
the thing, or at least be voted on. The desire is not to keep votes 
from happening but to stick to small business health plans.
  These folks have been asking us for 15 years for a change and some 
way to handle it. They have been encouraged several times because eight 
times the House has passed the association health plan. That was very 
exciting for them. They said I think we can get it. It never made it 
out of committee on the Senate side because there are some problems 
with the basic plan that the House passed.
  When I got this chairmanship, I said we are going to do something to 
change this. We are going to find out what the objections are and see 
if there isn't a way to get something done that will get relief for the 
small businessman. The insurance companies were convinced that we were 
going to do something, so they sat down with me. The insurance 
commissioners had concerns, and they have always been one of the 
stakeholders. They sat down with me, and they had their representatives 
sit down with us days on end to work on some kind of a compromise. This 
is one.
  Nobody is raving about it except the small businesses because they 
see it as an answer--not the final answer, not the total answer, but an 
answer--that moves closer to what they can afford to do. Again, it 
isn't by cutting mandates.
  Mr. HARKIN. Mr. President, will the Senator yield?
  Mr. ENZI. Yes.
  Mr. HARKIN. He is a gentleman, and a good friend. I know he is 
serious about this because he is a small business owner himself.
  As I said earlier--and I want to make sure we are clear--that under 
this gobbledygook, the filling of the tree--no one understands what we 
are talking about out there--because of the way the bill is laid down, 
the majority leader, under the rules of the Senate, today offered 
amendments to the bill so that we can't offer amendments. There is no 
way we can now offer amendments. If cloture is invoked tomorrow, then 
we have 30 hours on the bill, and that tree could stay filled. So we 
can never offer an amendment to this bill. We would then have a final 
vote on S. 1955 without being able to offer any amendments. Is that not 
so?
  Mr. ENZI. Not quite.
  Mr. HARKIN. Inform me.
  Mr. ENZI. Even during the course of today and any other debate we 
have on this bill, we have said if there is a relevant amendment, we 
would consider taking that up and voting on it. One exception we have 
on that is the difficulty with Durbin-Lincoln. If we vote on that, that 
might be the only vote we ever get because the other side can block any 
further votes from happening because you would have to have unanimous 
consent to have a vote. So we would be blocked from ever having a vote 
on our bill.
  Mr. HARKIN. That is the problem with this whole cloture process. Why 
didn't we try to reach a time agreement and an agreement on how many 
amendments would be offered? As I understand it, our side was willing 
to do that. Then we would not have this problem of cloture where we are 
precluded then from offering amendments.

  As the Senator pointed out, if S. 2510 is offered, I don't know what 
would happen after that. The Senator said it wouldn't be offered. This 
whole thing with the cloture has screwed up everything.
  Mr. ENZI. No, I wasn't suggesting that S. 2510 would pass. I was 
saying that a lot of Democrats would vote for it and it would fail. 
Then there will be no further votes on it. You folks could all say we 
voted for small business and the Republicans didn't vote for small 
business. It would be because the Republicans wanted S. 1955 with a few 
amendments which can be offered by both sides. That would happen 
postcloture. The only thing that happens postcloture is amendments have 
to be germane. That means they actually would have to apply to the 
bill. The Durbin-Lincoln bill is germane. Many of the things people 
talked about would be germane. What wouldn't be germane are some of the 
long-term debates and things people would like to do, namely the stem 
cell debate which we are going to have a debate on. They promised a 
vote on it. We don't know how much debate there would be with that; 
prescription drugs, Part D, and those would not be germane to the bill. 
Each of those would take about 3 weeks to debate.
  Mr. HARKIN. I say to my friend, I think if agreements were made with 
this side and the other side, we could agree on time limits and 
structures without having this on us.
  I also say to my friend, I think we should take 3 weeks to debate 
health care. We have been wasting so much time around here doing 
nothing. Now tomorrow we have tax reconciliation. So my friend from 
Wyoming is getting a day cut out of his deal. I think we ought to take 
3 weeks to debate health care around here. It wouldn't bother me any.
  Mr. ENZI. The Senator certainly is not the only one. I would love to 
have a lot of time. We have had a lot of bills that came out of 
committee already that could be brought up. We have some more that are 
going to come out next Tuesday. A lot of those I think would pass here 
by unanimous consent. I would love to have some agreement. The Senator 
knows how hard it is to get 1 week around here. We spent 3 days getting 
cloture to proceed. That is to proceed; that wasn't to actually do any 
votes on the bill. So we were offered the moment, but between the two 
sides we didn't get the moment.
  Mr. HARKIN. I ask my friend, what was the vote on the motion to 
proceed?
  Mr. ENZI. It was 98 to 2.
  Mr. HARKIN. Then there was no problem with that.

[[Page S4324]]

  Mr. ENZI. If there was no problem with it, why did we have to wait 3 
days to get the vote?
  Mr. HARKIN. We didn't have to wait 3 days to get the vote.
  Mr. ENZI. I am talking about time limits and that sort of thing. 
Those requests were made between leaders to come up with some tight 
time agreements. It is beyond my pay grade.
  Mr. HARKIN. It is beyond my pay grade, too. I wasn't involved in 
that.
  Mr. ENZI. There were a lot negotiations to try to stick to small 
business and have some kind of a mechanism where the votes from both 
sides could be done. But there was not any agreement on that, so we are 
stuck in this kind of a situation where small business may be penalized 
once again.
  Mr. HARKIN. That is a shame.
  Mr. ENZI. If we get cloture, we could have a lot of debate on the 
small business stuff, not all of other ones. If we could get in a 
situation where we started doing these things a little quicker, with 
more time agreements, some of the more difficult ones could probably 
get some floor time. I am for that.
  Mr. HARKIN. If we get cloture, we have 30 hours. Every Senator gets 
one 1 to speak. That is putting handcuffs on people; 30 hours, run the 
clock out. One person can get up and offer an amendment and that could 
be the only amendment we would have for that 30 hours. That is the way 
things work under cloture. It is not a good way to proceed. I think 
that is why some of us are upset. We want to help small business. I 
think there is a fair debate to be had between S. 1955 and S. 2510, 
with amendments. But somehow we are told that we are going to do this 
in 1 week. Monday is shot. We didn't do anything Monday. We had two 
votes Monday night. Tuesday, Wednesday, and then Thursday, tomorrow, is 
tax reconciliation. Health Week is 2 days. I don't think that is fair 
to small business, either. I think it is worth taking a couple of weeks 
around here to do it, and to do it right.
  I thank the Senator for yielding.
  Mr. ENZI. I am with the Senator.
  Yes, it would be nice if we could wrap up something for small 
business. I think there is a plan there. I think there is a way to get 
there. I don't think it is going to happen without the cooperation of 
both sides in either coming to some time agreements or passing cloture.
  We will have to wait and see what happens. I would wait until the end 
of next week to have a vote on either of them as long as we can do 
amendments. And I am excited about doing amendments. There are always 
perfecting things. No bill is perfect when we finish it. Even after 
conference it is never perfect. But it is usually much better than when 
we started. We need to have that process.
  I thank everyone for their participation today.
  Mr. FEINGOLD. Mr. President, I wish to speak today about the Medicare 
Prescription Drug Program. I opposed the final version of the 
legislation that created the Part D drug benefit, the Medicare 
Modernization Act, because I believed that it would not provide 
adequate relief for Medicare beneficiaries. I was concerned about the 
structure of the program, and worried that it would negatively affect 
Wisconsinites and other Americans who must quickly and affordably 
access prescription drugs. I have been trying to fix some of these 
problems since the program was enacted, but supporters of the program 
have been unwilling to consider these reforms. Instead, they have 
allowed these problems to remain, and the results, since the benefit 
was implemented in January, have been disastrous.
  I have heard from a number of Wisconsinites who found the 
prescription drug plan enrollment process exceedingly confusing. Many 
people had difficulty finding a plan that would cover their 
prescriptions, while others could not get through to Medicare 
representatives to ask questions about the enrollment process. There 
have been breakdowns in the entire information process, and these 
failures by the insurance companies and the Centers for Medicare and 
Medicaid Services have sometimes completely blocked beneficiaries from 
accessing essential medications such as insulin, antipsychotics, and 
even immunosuppressants.
  We can't afford to wait any longer in improving the Part D program so 
that it can better serve its beneficiaries. We need to minimize the 
negative effects of Part D's implementation problems and high costs. As 
part of this effort, I strongly support S. 1841, Senator Bill Nelson's, 
Medicare Informed Choice Act. This plan would allow beneficiaries extra 
time to navigate this confusing system by extending the enrollment 
period through the end of 2006. In addition, it would allow a one-time 
penalty-free change of programs for beneficiaries who have made a 
mistake in choosing their prescription drug plan.
  Supporters of the Medicare prescription drug benefit have touted it 
as the vehicle that would supply affordable, easily accessible 
prescription drugs for seniors. The program has so far fallen far short 
of that goal. The outcry that I have heard from pharmacists, 
beneficiaries, and health care providers over the past couple months 
makes clear that the implementation of the program has been a disaster. 
This program has not provided either affordable or easily accessed 
drugs to many Medicare beneficiaries. Instead it has presented 
providers and beneficiaries with frustration, confusion, expensive 
medications, and sometimes no medications at all. It is unacceptable 
for individuals to go without life saving medications. Yet this is what 
has been happening in Wisconsin and across the country since this 
program commenced.
  Since the beginning of January, I have received panicked phone calls 
from people in my State saying they were unable to receive drugs that 
they had been routinely getting at their pharmacy every other month. At 
the same time as I was hearing from people suffering from pain because 
they did not receive their pain medications, I read press releases from 
the Centers for Medicare and Medicaid that expressed satisfaction with 
the launch of the program, and boasted of the millions of participants 
in the program. There may be millions participating in the program, but 
too many of them cannot receive their drugs and too many pharmacists 
are unable to comply with the complicated regulations in the program. 
CMS should be focusing its efforts on addressing this emergency rather 
than disseminating public relations messages.
  I have written Secretary Leavitt and Dr. McClellan repeatedly to 
express my concerns about Medicare Part D, including the approaching 
deadline. I hope that the administration will soon realize that it 
cannot continue to ignore these problems or hope they go away on their 
own, and that significant changes in the program are needed to better 
serve beneficiaries. I think it is time that CMS remember who this plan 
is supposed to serve: the people, not the drug and insurance companies.
  We cannot sustain a great nation if we do not care for our elderly, 
sick, disabled, and home-bound. These are the people this drug plan is 
supposed to be serving, but they have been dismally let down. Let us 
make a simple change to the drug plan that will provide immense help to 
this group--extend the May 15 deadline. I urge the majority leader to 
bring up S. 1841 for a vote before the deadline passes.
  Mr. OBAMA. Mr. President, over the past year and a half, I have spent 
a few days every month holding townhall meetings around my home State 
of Illinois. I have now done almost 50 of these in cities and towns all 
over the State.
  After I give a short presentation, I open the floor to questions from 
the audience. And without fail, one of the first questions asked at 
every townhall is about health care. Too many hard-working Americans 
can't afford their medical bills or health insurance premiums. Too many 
employers are finding it difficult to offer the coverage their 
employees need. And sadly, too many people in the world's wealthiest 
country have no insurance at all.
  When Senator Frist declared the second week in May as ``Health 
Week,'' I naively assumed that maybe, just maybe, we would actually 
begin a real discussion about health care in the United States. I 
thought we would talk about serious and meaningful ways to address the 
health care problems faced by average Americans--important problems 
like: the 45 million Americans without health insurance; the worsening 
epidemic of chronic diseases, including asthma, obesity, and diabetes; 
the persistent and pervasive problems with patient safety and health

[[Page S4325]]

care quality; or the status of emergency and pandemic avian flu 
preparedness.
  I know that I am not the only Senator who has been disappointed. A 
number of my Democratic colleagues have mentioned other pressing, 
critical issues on the floor this week, including stem cells, the 
looming enrollment deadline for Medicare Part D, and drug importation.
  Yet so far we have had only a sham discussion on medical malpractice, 
revisiting the same old bills that have been rejected in the past that 
do not represent any real attempt to compromise and find solutions to 
the problems that many of our doctors and patients face.
  And now, the Senate has turned its attention to the Enzi small 
business health plan. I know that small businesses need help in 
providing health care coverage to their employees. Small businesses are 
paying the price for this Congress's refusal to seriously embrace 
comprehensive health care reform, to expand coverage and contain costs.
  Yet this bill is not the solution, and it is not part of a solution. 
In fact, some have described it as the antisolution.
  In my opinion, any health coverage reform bill that passes the 
Congress should meet, at a minimum, three criteria: First, it may sound 
crazy, but I think a health coverage bill should actually expand 
coverage. The Enzi bill has been estimated to expand coverage to less 
than 1 million of the 45 million uninsured Americans. This is 
laughable.
  In fact, some States will actually see an increase in the number of 
uninsured. In New York, for instance, 28,000 people could lose their 
health insurance coverage because of this bill.
  Second, a good health reform bill should ensure comprehensive, 
quality health care. Over 200 health professional and patient advocacy 
groups have expressed their opposition to this bill, because it will 
promote health plans that won't offer the basic health care services 
that we all depend upon and take for granted, such as maternity care, 
mental health services, diabetes care, dental care, and so forth.
  I have rarely seen such a large number of groups come together as 
swiftly, as vociferously, and as united as these groups have been 
against this bill.
  Third, a good health reform bill should have a positive effect on the 
health insurance market. Will the market be stabilized and 
strengthened, or will it be weakened and fragmented? Again, the Enzi 
bill does not pass muster. Over 40 attorneys general have expressed 
serious concerns about this bill's preemption of State protections and 
laws and its restrictions on State oversight and regulation.
  This so-called health week makes a mockery of the efforts of those 
who are working to achieve real health care reform. While we in 
Congress are squandering precious time on this bill, our States are 
moving ahead, exerting leadership because Congress has failed to act.
  Illinois is in the process of implementing a program called All Kids, 
which will ensure that every child in the State is covered by health 
insurance. And we all know that Massachusetts just passed a sweeping, 
universal health coverage bill, negotiated and passed in bipartisan 
fashion.
  In contrast, the last major health insurance reform passed by 
Congress was in 1997, when the SCHIP program was created. Even though 
the number of uninsured has continued to rise, almost 10 years have 
gone by without a serious congressional effort to address this crisis.
  This is wrong. The Durbin-Lincoln amendment, which I have 
cosponsored, is a good example of how we can meaningfully expand health 
coverage without sacrificing the quality of care received.
  The central tenet of the amendment is that small business employees 
should have access to the same health insurance coverage that members 
of Congress and other Federal employees receive themselves.
  The health care problems facing our country are serious ones, and the 
solutions will not be easy. But we need to have a serious debate about 
this issue--a debate that addresses the whole problem and isn't just 
about scoring political points in an election year.
  The American people expect as much, and I hope this failed attempt at 
a ``health week'' is not the last chance we will have to talk about an 
issue that is the chief financial concern of millions upon millions of 
people in this country.
  Mr. LEAHY. Mr. President, for all of the recent talk from the 
majority about up-or-down votes, and allegations of Democratic 
obstruction on amendments, I find it astounding that the Republican 
majority has locked up Senator Enzi's bill and will not allow 
amendments to be offered. We now face exactly the type of obstruction 
the majority has decried so loudly. On a bill for which Senator Enzi 
has urged full debate, the Republican majority has now decided the 
Senate and the American people we represent should not get the benefit 
of the full legislative process. For example, I am being prohibited 
from offering an amendment to help prevent medical malpractice insurers 
from bid rigging, price fixing, and other anticompetitive behavior that 
hurts doctors and patients. For another, we are prohibited from 
offering an amendment to extend the arbitrary deadline for seniors to 
sign up for prescription drug benefits without a penalty. Why not 
provide our seniors more time and assistance in examining the 
prescription drug provisions that have frustrated so many? Seniors did 
not grow up in the computer age and many are not trained accountants 
who can sift through the confusion. They should not be penalized by an 
arbitrary cutoff date which could easily be extended.
  This week, the Senate has already refused to proceed to legislation 
that would have abridged our citizens' access to justice when they are 
injured by medical errors. Those bills purported to lower medical 
malpractice insurance costs when, in fact, it is not payouts that have 
led to rising insurance premiums. The Senate has done the right thing 
by rejecting these bills once again.
  The debate that preceded the votes demonstrated that capping medical 
malpractice awards is not the way to lower insurance premiums, which we 
all agree are unfair to the men and women who devote their lives to the 
care of others. There can be no disagreement that exorbitant insurance 
costs make it harder for medical professionals to do their jobs. Health 
care providers, like all Americans, deserve fair treatment in the 
marketplace. We also know that the insurance marketplace is unique, 
because unlike other business interests, insurers are not subject to 
some of the most important Federal antitrust laws.
  High malpractice insurance premiums are not the result of malpractice 
lawsuit verdicts. This myth has been repeatedly discredited. They are 
the result of investment decisions by the insurance companies and of 
business models geared toward ever-increasing profits. But an insurer 
that has made a bad investment, or that has experienced the same 
disappointments from Wall Street that so many Americans have, should 
not be able to recoup its losses from the doctors it insures. The 
insurance industry should have to bear the burdens of its own business 
model, just as the other businesses in the economy do.
  High malpractice premiums for doctors can occur because there is 
nothing stopping insurers in a soft market from collectively raising 
rates and stifling competition. Any other business would be prohibited 
from this activity, and I have heard no arguments as to why the 
insurance industry should be treated differently. The insurance 
industry is special because it is exempt from most Federal antitrust 
laws. The McCarran-Ferguson Act permits insurance companies to operate 
without being subject to those laws, and our Nation's physicians and 
their patients have been the worse off for it. Using their exemption, 
insurers can collude to set rates, resulting in higher premiums than 
true competition would achieve--and because of this exemption, 
enforcement officials cannot investigate any such collusion. If 
Congress is serious about controlling rising premiums, we must 
objectively limit this broad exemption in the McCarran-Ferguson Act.
  The amendment I wanted to propose modifies the McCarran-Ferguson Act 
with respect to medical malpractice insurance, and only for the most 
pernicious antitrust offenses: Price fixing, bid rigging, and market 
allocations.

[[Page S4326]]

Only those anticompetitive practices that most certainly will affect 
premiums are addressed. I am hard pressed to imagine how anyone could 
object to a prohibition on insurance carriers' fixing prices or 
dividing territories.
  After all, the rest of our Nation's industries manage either to abide 
by these laws or suffer the consequences. If medical malpractice 
insurers are certain that malpractice lawsuits drive their rates, then 
there should be no reason to object to bringing their business within 
the reach of the same Federal laws that apply to all others.
  Many State insurance commissioners police the industry well within 
the power they are accorded in their own laws, and some States have 
antitrust laws of their own that could cover some anticompetitive 
activities in the insurance industry. My proposal, which I wanted to 
offer, is a scalpel, not a saw. It would not affect regulation of 
insurance by State insurance commissioners and other State regulators.
  But there is no reason to perpetuate a system in which Federal 
enforcers are precluded from prosecuting the most harmful antitrust 
violations just because they are committed by insurance companies.
  This amendment is a carefully tailored solution to one critical 
aspect of the problem of excessive medical malpractice insurance rates. 
I am sorry that I was stopped by the Republican leadership and could 
not offer this narrowly drawn legislation as a positive step towards 
improving the American health care system, which would help ensure that 
doctors and patients are treated fairly.
  Mr. KENNEDY. Mr. President, the Senate is currently considering 
legislation proposed by Senator Enzi that would profoundly change 
health care coverage. The proposal has been modified from the version 
approved by our committee.
  It is important for the Senate to understand fully the impact that 
this legislation would have on millions of Americans. I have requested 
an analysis of this modified proposal from Professor Mila Kofman of the 
Georgetown University Health Policy Institute.
  I ask unanimous consent to have this analysis printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                        Georgetown University,

                                                     May 10, 2006.
     Senator Edward Kennedy,
     Hart Senate Office Building,
     Washington, DC.
       Dear Senator Kennedy: This is a response to your request 
     for an analysis of the proposed rating structure in the 
     Manager's Amendment to S. 1955. This also addresses your 
     question on how the proposed amendment compares with the 
     current NAIC model law on small group rating:.
       In general, the proposed Manager's Amendment would not 
     improve the bill. Under the new proposed rating structure 
     there would be no new protections for consumers and a 
     significant loss of existing state-based protections in the 
     area of premiums. This loss of protections will adversely 
     impact people with medical needs, older workers, and women of 
     child-bearing years. This will also have a negative impact on 
     ``micro'' groups (employers with fewer than 10 employees) 
     because insurers will be allowed to charge these groups 
     higher rates solely on the basis of the employer's size.
       Here is a brief summary of how the proposed amendment would 
     work:
       Associations: The amendment clarifies that associations 
     certified as small business health plans (by the U.S. 
     Department of Labor under Title I of the bill) would enjoy a 
     complete carve-out from small group rating state pools in 
     both adopting and non-adopting states. Each certified 
     association would be allowed to have their own premium rate 
     not tied to the rest of the small group market. This would 
     segment the small group market. Assuming associations attract 
     healthy businesses (there are many ways that the bill would 
     allow associations to ``cherry-pick'' healthy people), any 
     restrictions on rates in the rest of the small group market 
     would be undermined. Rates between association coverage and 
     coverage outside the association could vary broadly. For a 
     discussion of this, please see attached paper ``Health 
     Insurance Regulation by States and the Federal Government: A 
     Review of Current Approaches and Proposals for Change.''
       In adopting states, the bill clarifies that premiums within 
     an association may vary using the same standards that would 
     apply in small group market (see discussion below). This 
     would be at least 500 percent variation in rates for 
     businesses covered by the association or if the state allows, 
     variations in rates could be even greater.
       In non-adopting states, it is unclear whether the rating 
     standards in the bill would even apply. If they apply. then a 
     variation in premiums of 500 percent would be allowed for 
     businesses covered by an association (so some employers would 
     pay 5 times more than others for the same coverage within an 
     association).
       Small group market: In adopting states, insurers are 
     required to vary rates by at least 500 percent (called 
     ``total variation limit''). This means that states can allow 
     insurers to have greater variations in rates. Using age. 
     health, claims. and duration factors. variations of at least 
     300% are required. Note that insurers must use age, health, 
     or both and may use duration and claims experience. The 
     option is given to insurers. If a state wants to adopt this 
     approach and become an ``adopting state.'' it must allow 
     insurers to use age and health. This requirement essentially 
     eliminates community rating and adjusted community rating by 
     allowing insurers to adjust rates based on health. Allowable 
     factors included in the 500 percent minimum required 
     variation are: industry. geography. group size, participation 
     rate, class of business. and wellness programs. Note that 
     gender is not listed. The bill is unclear whether gender 
     rating is prohibited or is added to the 500 percent 
     variation.
       At renewal, the same rules would apply. This means that 
     premiums may increase at least by 500 percent if a smaIl 
     business has high claims the year before.
       In non-adopting states (generally states with greater 
     protections for consumers). the language in the bill is 
     ambiguous. The proposal says ``The plan may not vary premium 
     rates by more than 500 percent].'' The term ``plan'' is not 
     defined. If the term ``plan'' means an ``insurer,'' then one 
     possible interpretation is that premium variations are 
     limited to 500 percent (if insurers chose to follow this new 
     tederal standard). What is clear. however, is that adjusted 
     community rating and pure community rating would be 
     preempted.
       Renewal rates would limited to trend plus 15 percent to 
     reflect claims of small business.
       Importantly, in non-adopting states insurers would have a 
     choice of whether to follow a state's existing laws or the 
     new federal one. As a way of example, in DC, which has no 
     rating laws, assuming DC chooses not to adopt the bill's 
     rating structure and is therefore a non-adopting state. 
     Insurers are not likely to use the rating restrictions in the 
     bill.
       The proposed rating structure varies significantly from the 
     NAIC model law for small business health insurance premiums. 
     By way of background. the National Association of Insurance 
     Commissioners (NAIC) in the early 1990's adopted and since 
     replaced a model law that provided for rate bands that permit 
     premium variation up to 200 percent based on health status. 
     The old model, which is the basis for the original bill, 
     allowed further premium variation based on age, gender, 
     industry, small business group size, geography, and family 
     composition. Rates based on adjustments for these factors had 
     to be actuarially justified but were not limited except for 
     industry, which was limited to a 15 percent variation. The 
     old NAIC model act permitted a wide variation in rates, 
     allowing for a price difference of 26 to 1, or more. This 
     means that for the same policy an insurer could charge a 
     business or a person $100 per month or $2600 per month 
     depending on risk and other factors. Higher rates under the 
     model would be permitted as long as there was actuarial 
     evidence to support wider variations.
       Shortly after adopting its original model with rate bands, 
     the NAIC replaced it with a model law for small groups that 
     requires adjusted community rating, prohibiting premium 
     surcharges based on health or other risk characteristics 
     (like claims experience and durational rating). The current 
     NAlC model act limits premium surcharges based on age to 200 
     percent; it prohihits insurers from varying small group 
     premiums based on gender of people in the group or an 
     employer's size. Today 12 states follow the current NAlC 
     model act. Ten states require all insurers to use community 
     rating or adjusted community rating for all small group 
     policies. Two others, Michigan and Pennsylvania, require Blue 
     Cross Blue Shield plans (their largest insurers) and HMOs to 
     use adjusted community rating. The proposed amendment would 
     preempt these state rating protections.
       Please let me know if you need additional information. 
     Thank you for the opportunity to address your questions.
           Very truly yours,
                                                Mila Kofman, J.D.,
                                     Associate Research Professor.

                             Cloture Motion

  Mr. FRIST. Mr. President, I send a cloture motion to the desk.
  The PRESIDING OFFICER. The cloture motion having been presented under 
rule XXII, the Chair directs the clerk to read the motion.
  The assistant legislative clerk read as follows:

                             Cloture Motion

       We the undersigned Senators, in accordance with the 
     provisions of rule XXII of the Standing Rules of the Senate, 
     do hereby move to bring to a close debate on the pending 
     modified substitute amendment to Calendar No. 417, S. 1955, 
     Health Insurance Marketplace Modernization and Affordability 
     Act of 2005.
         Bill Frist, Johnny Isakson, Sam Brownback, John Thune, 
           Thad Cochran, Wayne Allard, John Ensign, Richard 
           Shelby, Larry Craig, Ted Stevens,

[[Page S4327]]

           John McCain, Lamar Alexander, Norm Coleman, Judd Gregg, 
           John E. Sununu, Pat Roberts, Craig Thomas.

                          ____________________