[Congressional Record Volume 153, Number 72 (Thursday, May 3, 2007)]
[Senate]
[Pages S5593-S5596]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KERRY (for himself and Mr. Reed):
  S. 1298. A bill to amend the Social Security Act to establish a 
Federal Reinsurance Program for Catastrophic Health Care Costs; to the 
Committee on Finance.
  Mr. KERRY. Mr. President, States like my home state of Massachusetts 
are setting an example for the rest of the country by taking bold steps 
to provide quality health coverage for everyone. Now it is time for 
Washington to do the same by bringing meaningful, affordable healthcare 
to the uninsured, in Massachusetts and across America.
  In Massachusetts there is still a major obstacle in the overall goal 
of universal coverage: cost. The fact is the problem of the uninsured 
can't be solved unless the issue of skyrocketing health costs to 
families and businesses is also tackled. And fully reforming the 
healthcare system will require that the Federal Government begin 
shouldering some of the burden to help alleviate costs.
  Healthcare costs are highly concentrated in this country. The very 
few who suffer from catastrophic illness or injury drive costs up for 
everyone. One percent of patients account for 25 percent of healthcare 
costs, and 20 percent of patients account for 80 percent of costs. To 
make healthcare more affordable, we must find a better way to share the 
immense burden of insuring the chronically ill and seriously injured.
  Part of the reason that businesses and health plans today fail to 
cover

[[Page S5594]]

their workers is an aversion to risk, a fear that they will be saddled 
with a sick employee whose high premiums will bankrupt them. And 
patients who are catastrophically ill or injured often face the tragic 
combination of failing health and financial peril. But there's a way to 
combat these costs.
  Congress should make employers and healthcare plans an offer they 
can't refuse. It's called ``reinsurance.'' Reinsurance provides a 
backstop for the high costs of healthcare. The Federal Government will 
reimburse a percentage of the highest cost cases if employers agree to 
offer a substantive insurance benefit to all full time employees, 
including preventative care and health promotion benefits that are 
proven to make care affordable. This means lower costs and lower 
premiums for both employers and employees. If the Federal Government 
can help small and large businesses bear the burden of cost in the most 
expensive cases, we'll dramatically improve the health of everyone.
  Today I am introducing the Healthy Businesses, Healthy Workers 
Reinsurance Act, a bill that will make Government a partner in helping 
businesses with the heavy financial burden of those catastrophic cases: 
those that use over $50,000 in a single year in healthcare costs. 
Healthy Businesses, Healthy Workers will protect business owners from 
skyrocketing premiums, and provide more working families affordable, 
quality healthcare. With reinsurance, health insurance premiums for all 
of us will go down, by up to 10 percent under this plan. This plan does 
have a cost associated with it, but the benefits will outweigh the 
costs. We spend hundreds of billions of dollars each year on 
inefficient and wasteful health expenditures. We need to make sure that 
these funds are being spent wisely to ensure that we can lower health 
care costs and improve coverage.
  I believe that even in today's sharply divided Washington, this plan 
is feasible. There is a growing bipartisan consensus that the Federal 
Government has a responsibility to help the catastrophically ill. 
Consider the Medicare prescription drug program: Despite its flaws, the 
bill did cover 95 percent of the cost of prescription drugs once 
seniors passed through the disastrous ``doughnut hole'' in their 
coverage. The same approach has been used to protect the insurance 
market from going under in case of another catastrophic act of 
terrorism.
  As we take the next steps toward alleviating our Nation's healthcare 
crisis, a commonsense partnership between employers, families, and the 
government to share the costs of the sickest among us will lay the 
groundwork for achieving our ultimate goal: healthcare coverage for 
every single American.
  I ask for unanimous consent that the text of the bill be printed in 
the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1298

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Healthy Businesses, Healthy 
     Workers Reinsurance Act of 2007''.

     SEC. 2. FINDINGS.

       Congress finds the following:
       (1) The cost of health insurance premiums for families has 
     risen 87 percent since 2000, nearly 4 times the growth in 
     overall inflation and workers earnings.
       (2) Health insurance premium increases have resulted in a 
     nearly 10 percentage point drop in the number of firms 
     choosing to offer coverage to their workers over that time 
     period.
       (3) Today, just 48 percent of firms with between 3 and 9 
     employees offer health insurance benefits, down from 58 
     percent in 2001.
       (4) The decline in employer-sponsored coverage has added to 
     the growing problem of the uninsured. An additional 4 million 
     Americans have been added to the ranks of the uninsured since 
     2001.
       (5) Health care costs are highly concentrated. Twenty 
     percent of the population that is catastrophically or 
     chronically ill accounts for 80 percent of the health care 
     spending, with just 1 percent driving a full 22 percent of 
     health care costs.

     SEC. 3. FEDERAL REINSURANCE PROGRAM FOR CATASTROPHIC HEALTH 
                   CARE COSTS.

       (a) Program.--The Social Security Act (42 U.S.C. 301 et 
     seq.) is amended by adding at the end the following new 
     title:

``TITLE XXII--FEDERAL REINSURANCE PROGRAM FOR CATASTROPHIC HEALTH CARE 
                                 COSTS

     ``SEC. 2201. OFFICE OF FEDERAL REINSURANCE.

       ``(a) In General.--There is established within the 
     Department of Health and Human Services an office to be known 
     as the `Office of Federal Reinsurance'.
       ``(b) Duty.--The Office of Federal Reinsurance shall 
     establish and administer the Federal Reinsurance Program for 
     Catastrophic Health Care Costs in accordance with the 
     provisions of this title.

     ``SEC. 2202. PROGRAM.

       ``(a) Establishment.--
       ``(1) In general.--The Office shall establish and 
     administer a Federal Reinsurance Program for Catastrophic 
     Health Care Costs under which reinsurance payments are 
     provided to eligible health plans that experience 
     catastrophic health care costs during a year with respect to 
     an individual covered under the plan. For purposes of this 
     title, the term `individual covered under the plan' includes 
     employees, retirees, spouses, and dependants.
       ``(2) Program to begin in 2009.--The Office shall establish 
     the Program in a manner so that reinsurance payments are made 
     with respect to catastrophic health care costs occurring on 
     or after January 1, 2009.
       ``(3) Eligible health plan.--
       ``(A) In general.--In this title, the term `eligible health 
     plan' means any of the following:
       ``(i) A group health plan that meets the requirements 
     described in subparagraph (B).
       ``(ii) A governmental plan (as defined in section 3(32) of 
     the Employee Retirement Income Security Act of 1974) that 
     meets the requirements described in subparagraph (B).
       ``(iii) A multiemployer plan (as defined in section 3(37) 
     of the Employee Retirement Income Security Act of 1974) that 
     meets the requirements described in subparagraph (B).
       ``(iv) A plan that offers coverage through health 
     purchasing cooperatives in conjunction with a State health 
     program that makes available health insurance coverage to the 
     small group market and the individual market on the same 
     terms and that meets the requirements described in 
     subparagraph (B).
       ``(B) Requirements.--The requirements described in this 
     subparagraph are that--
       ``(i) the plan involved--

       ``(I) provides eligibility for health insurance coverage 
     (after any waiting period (as defined in section 9801(b)(4))) 
     to all full-time employees of the employer maintaining or 
     contributing to the plan;
       ``(II) ensures that if there is a deductible under the 
     plan, such deductible does not exceed $1,000 for an 
     individual and $2,000 for a family;
       ``(III) ensures that the plan offers preventative benefits; 
     and
       ``(IV) ensures that the plan employs effective high-cost 
     case management tools (in accordance with the definition of 
     disease management by the Disease Management Association of 
     America) in order to reduce costs over time; and

       ``(ii) the employer maintaining or contributing to the plan 
     involved pays at least 50 percent of the costs of health 
     insurance coverage for each employee covered under the plan 
     (regardless of whether the employee is a full-time or part-
     time employee).
       ``(C) Cost-of-living adjustment.--
       ``(i) In general.--In the case of any calendar year after 
     2009. each dollar amount in subparagraph (B)(ii) shall be 
     increased by an amount equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) of the Internal Revenue Code of 1986 for such 
     calendar year determined by substituting `calendar year 2008' 
     for `calendar year 1992' in subparagraph (B) thereof.

       ``(ii) Date for determination.--For purposes of clause (i), 
     section 1(f)(4) of such Code shall be applied by substituting 
     `March 31' for `August 31', and the Secretary of the Treasury 
     shall publish the adjusted amounts under subparagraph (B)(ii) 
     for the calendar year not later than June 1 of the preceding 
     calendar year.
       ``(iii) Rounding.--If any increase under clause (i) is not 
     a multiple of $50, such increase shall be rounded to the 
     nearest multiple of $50.
       ``(D) Employer.--For purposes of this title, the term 
     `employer' includes the Federal government and any other 
     governmental entity (within the meaning of section 5000(d) of 
     Internal Revenue Code of 1986).
       ``(b) Enrollment.--
       ``(1) Procedures.--The Office shall establish procedures 
     for the enrollment of eligible health plans in the Program.
       ``(2) Application and annual recertification.--
       ``(A) In general.--The procedures established under 
     paragraph (1) shall include a process for an eligible health 
     plan--
       ``(i) to submit an application to the Office for enrollment 
     in the Program; and
       ``(ii) to be annually recertified for enrollment in the 
     Program.
       ``(B) Requirement.--The application and recertification 
     process under subparagraph (A) shall require that an eligible 
     health plan submit to the Office--
       ``(i) a detailed description of the projected and actual 
     reduction in total costs under the plan that are a result of 
     the Program, including both individual and employer portions; 
     and
       ``(ii) such other information determined appropriate by the 
     Office.
       ``(3) Approval.--

[[Page S5595]]

       ``(A) In general.--The procedures established under 
     paragraph (1) shall provide for the approval or disapproval 
     of applications and requests for recertification submitted by 
     eligible health plans under paragraph (2).
       ``(B) Specific requirement.--The Office shall not approve 
     an application or a request for recertification unless the 
     Office finds that the eligible health plan is reducing total 
     costs under the plan, based on the information submitted 
     under paragraph (2)(B) and audits conducted under paragraph 
     (4).
       ``(4) Audits.--The Office shall conduct audits of claims 
     data of eligible health plans in order to ensure that the 
     eligible health plan is in compliance with the requirements 
     under the Program, including the requirement under paragraph 
     (3)(B). An eligible health plan shall not be eligible for 
     reinsurance payments unless it provides the Office with 
     access to such data.
       ``(c) Cost-Sharing in Costs of Program.--
       ``(1) In general.--An eligible health plan that 
     participates in the Program shall pay the fee established by 
     the Office under paragraph (2).
       ``(2) Authorization.--The Office is authorized to charge a 
     fee to each eligible health plan that participates in the 
     Program. Any amounts collected shall be deposited into the 
     Trust Fund.
       ``(3) Requirements.--In establishing the fee under 
     paragraph (2)--
       ``(A) the Office shall consult with interested parties; and
       ``(B) shall ensure that the amount of such fee is not 
     excessive so as to unduly discourage eligible health plans 
     from enrolling in the Program.
       ``(d) Appeals Process.--The Office shall establish an 
     appeals process under the Program.
       ``(e) Procedures to Protect Against Fraud, Waste, and 
     Abuse.--The Office shall establish procedures to protect 
     against fraud, waste, and abuse under the Program.

     ``SEC. 2203. REINSURANCE PAYMENTS.

       ``(a) Amount.--
       ``(1) In general.--The amount of a reinsurance payment 
     under the Program to an eligible health plan that experiences 
     catastrophic health care costs in a year with respect to an 
     individual covered under the plan shall be an amount equal to 
     75 percent of such costs.
       ``(2) Catastrophic health care costs.--
       ``(A) In general.--In this title, the term `catastrophic 
     health care costs' means, with respect to a year, costs for 
     medical care (as defined in section 9832(d)(3) of the 
     Internal Revenue Code of 1986) provided under an eligible 
     health plan to an individual covered under the plan, but only 
     with respect to such costs which exceed $50,000.
       ``(B) Negotiated prices.--In determining the amount of 
     catastrophic health care costs under the Program, the 
     eligible health care plan shall take into account any 
     negotiated price concessions, such as discounts, direct or 
     indirect subsidies, rebates, and direct or indirect 
     remunerations, obtained by the plan.
       ``(C) Inflation adjustment.--
       ``(i) In general.--In the case of a calendar year after 
     2009, the $50,000 amount in subparagraph (A) shall be 
     increased by an amount equal to--

       ``(I) such dollar amount; multiplied by
       ``(II) the percentage (if any) by which the average of the 
     medical care component of the Consumer Price Index for all 
     urban consumers (United States city average) for the 12-month 
     period ending with August of the preceding calendar year 
     exceeds such average for the 12-month period ending with 
     August 2008.

       ``(ii) Rounding.--If any dollar amount after being 
     increased under clause (i) is not a multiple of $1,000, such 
     dollar amount shall be rounded to the nearest multiple of 
     $1,000.
       ``(b) Requests for Payment.--To be eligible for a 
     reinsurance payment with respect to an individual for a year, 
     an eligible health plan shall submit to the Office, at a time 
     and in a manner determined appropriate by the Office, a 
     request for payment that contains--
       ``(1) a certification--
       ``(A) that the plan paid or incurred catastrophic health 
     care costs during the year with respect to the individual; 
     and
       ``(B) of the amount of such costs; and
       ``(2) such other information determined appropriate by the 
     Office.
       ``(c) Payments From Trust Fund.--
       ``(1) In general.--Payments to eligible health plans under 
     the Program shall be made from the Trust Fund.
       ``(2) Tax treatment.--For purposes of the Internal Revenue 
     Code of 1986--
       ``(A) payments from the Trust Fund to the eligible health 
     plan shall not be included in gross income; and
       ``(B) no deduction shall be allowed to the eligible health 
     plan with respect to the payment of any catastrophic health 
     care costs for the portion of such costs which was reimbursed 
     from the Trust Fund.

     ``SEC. 2204. FEDERAL REINSURANCE FOR CATASTROPHIC HEALTH CARE 
                   COSTS TRUST FUND.

       ``(a) Creation of Trust Fund.--There is established in the 
     Treasury of the United States a trust fund to be known as the 
     `Federal Reinsurance for Catastrophic Health Care Costs Trust 
     Fund', consisting of such amounts as may be appropriated or 
     credited to the Trust Fund (including any fees deposited 
     under section 2202(c)).
       ``(b) Mandatory Appropriations.--There are appropriated to 
     the Trust Fund such sums as may be necessary in order to make 
     the reinsurance payments required under section 2203.
       ``(c) Rules Regarding Transfers to and Management of Trust 
     Fund.--For purposes of this section, rules similar to the 
     rules of sections 9601 and 9602 of the Internal Revenue Code 
     of 1986 shall apply.
       ``(d) Distribution of Amounts in Trust Fund.--Amounts in 
     the Trust Fund shall be available for making payments under 
     section 2203.

     ``SEC. 2205. REPORTS.

       ``(a) Secretary.--
       ``(1) In general.--Not later than March 1, 2011, and 
     biennially thereafter, the Secretary shall submit to Congress 
     a report on the Program.
       ``(2) Requirements.--
       ``(A) In general.--Each report submitted under paragraph 
     (1) shall contain--
       ``(i) a detailed description of the Program, including a 
     detailed description of the impact the Program has had on 
     reducing premiums for health insurance coverage and 
     increasing the number of individuals with health insurance 
     coverage; and
       ``(ii) any other information or recommendations determined 
     appropriate by the Secretary.
       ``(B) Individual market.--The first report submitted under 
     paragraph (1) shall also contain recommendations regarding 
     expanding the Program to the individual market.
       ``(C) Consultation.--The Secretary shall consult with the 
     National Association of Insurance Commissioners in preparing 
     each report under paragraph (1).
       ``(b) GAO.--
       ``(1) In general.--Not later than March 1, 2011, and 
     biennially thereafter, the Comptroller General of the United 
     States shall submit to Congress and the Secretary a report on 
     the Program.
       ``(2) Requirements.--
       ``(A) In general.--Each report submitted under paragraph 
     (1) shall contain--
       ``(i) a detailed description of the Program, including a 
     detailed description of the impact the Program has had on 
     reducing premiums for health insurance coverage and 
     increasing the number of individuals with health insurance 
     coverage; and
       ``(ii) any other information or recommendations determined 
     appropriate by the Comptroller General.
       ``(B) Individual market.--The first report submitted under 
     paragraph (1) shall also contain recommendations regarding 
     expanding the Program to the individual market.

     ``SEC. 2206. DEFINITIONS.

       ``In this title:
       ``(1) Group health plan.--The term `group health plan' has 
     the meaning given such term by section 5000(b)(1) of the 
     Internal Revenue Code of 1986.
       ``(2) Individual market; small group market.--The terms 
     `individual market' and `small group market' have the 
     meanings given such terms by section 2791 of the Public 
     Health Service Act.
       ``(3) Office.--The term `Office' means the Office of 
     Federal Reinsurance established under section 2201.
       ``(4) Program.--The term `Program' means the Federal 
     Reinsurance Program for Catastrophic Health Care Costs under 
     this title.
       ``(5) Trust fund.--The term `Trust Fund' means the Federal 
     Reinsurance for Catastrophic Health Care Costs Trust Fund 
     established under section 2204.''.
       (b) Funding Start-up Administrative Costs for Program.--
       (1) In general.--There are appropriated to the Secretary of 
     Health and Human Services $200,000,000 to carry out the 
     provisions of, and amendments made by, this Act.
       (2) Availability.--Amounts appropriated under paragraph (1) 
     shall remain available until September 30, 2009.

  Mr. REED. Mr. President, I join my colleague, Senator Kerry, in 
introducing the Reinsure America's Businesses Act of 2007. This 
legislation represents a critical step forward in bringing affordable 
health care to the uninsured and lowering the ever increasing costs of 
health care for families and businesses.
  The bill that we are introducing today proposes that the Federal 
Government assume responsibility for the most burdensome risk for 
employers, and in doing so helps to provide greater access to lower 
priced health care. Under our legislation, the Federal Government will 
reimburse employers for a significant portion of the costs of their 
most ill employees--75 percent of medical bills in excess of $50,000. 
In exchange, employers agree to offer all of their workers preventative 
care and quality coverage.
  At the heart of this bill lies the fact that 1 percent of patients 
account for 25 percent of health care costs, and 20 percent of the 
population that is catastrophically ill accounts for 80 percent of the 
costs. Planning for the unfortunate chance that one falls into one of 
these categories is precisely why individuals have health insurance. 
Yet it is also the primary reason why many employers, particularly 
small businesses where one critically ill individual can have a 
tremendous influence on the

[[Page S5596]]

overall cost, do not offer their employees health insurance. Through 
reinsurance, the Federal Government has an opportunity to absorb a 
large portion of this risk and encourage more affordable and meaningful 
employer sponsored health coverage. This legislation also eases the 
burden on health insurance companies by making rate determinations more 
predictable.
  Federal reinsurance is an efficient use of Federal dollars because it 
spreads the burden across employers, the Federal Government, and 
employees, thereby lowering costs and increasing access to quality 
health care. Reinsurance reduces health insurance premiums for 
everyone; some estimates suggest as much as 10 percent. Actions to 
decrease the cost of health care and improve access to care are crucial 
if we are to combat ever-rising health care costs in this country. In 
Rhode Island, from 2000 to 2006, premiums increased 75 percent while 
median earnings went up only 23 percent. Uninsured rates have also 
grown in Rhode Island with more than 13 percent of residents under age 
65 with no health insurance, up from 8.1 percent in 1999. Rhode Island 
is not unique; the entire country bears the burden of high health care 
costs and increasingly declining access. This legislation lays the 
groundwork for achieving our goal of making health care more affordable 
and more accessible to every American.
  I am pleased to join with my colleague in introducing this important 
initiative and hope the Senate will give it prompt consideration.
                                 ______