To amend the Public Health Service Act to provide for cooperative governing of individual health insurance coverage offered in interstate commerce.

Summary: Health Care Choice Act - Amends the Public Health Service Act to provide that the laws of the primary State (as designated by the health insurance issuer) apply to individual health insurance coverage offered by that issuer both in the primary State and in any secondary State. Exempts health insurance issuers from any State law or regulation that would: (1) regulate the operation of the health insurance issuer in the secondary State, except for certain activities, including paying taxes and registering with the State insurance commissioner; (2) require any individual health insurance coverage issued by the issuer to be countersigned by an agent or broker residing in the secondary State; or (3) discriminate against the issuer issuing insurance in both primary and secondary States.

Allows States to require brokers to obtain a license from that State, but not to impose any requirements that discriminate against nonresident brokers.

Requires health insurance issuers offering coverage in more than one State to submit to the insurance commissioner of each State a copy of a plan of operation or a feasibility study, written notice of any change in designation of its primary State, and an annual financial statement.

Declares that this Act does not affect the authority of Federal or State courts to enjoin the sale of health insurance coverage to any person or group who is not eligible for such insurance or by a health insurance issuer that is in hazardous financial conditions.

Sets forth requirements for primary States.

Gives sole jurisdiction to primary States to enforce the covered laws in primary and secondary States. Sets forth procedures for resolving disputes.

SECTION 1. SHORT TITLE.

    This Act may be cited as ``Health Care Choice Act''.

SEC. 2. SPECIFICATION OF CONSTITUTIONAL AUTHORITY FOR ENACTMENT OF LAW.

    This Act is enacted pursuant to the power granted Congress under 
article I, section 8, clause 3, of the United States Constitution.

SEC. 3. FINDINGS.

    Congress finds the following:
            (1) The application of numerous and significant variations 
        in State law impacts the ability of insurers to offer, and 
        individuals to obtain, affordable individual health insurance 
        coverage, thereby impeding commerce in individual health 
        insurance coverage.
            (2) Individual health insurance coverage is increasingly 
        offered through the Internet, other electronic means, and by 
        mail, all of which are inherently part of interstate commerce.
            (3) In response to these issues, it is appropriate to 
        encourage increased efficiency in the offering of individual 
        health insurance coverage through a collaborative approach by 
        the States in regulating this coverage.
            (4) The establishment of risk-retention groups has provided 
        a successful model for the sale of insurance across State 
        lines, as the acts establishing those groups allow insurance to 
        be sold in multiple States but regulated by a single State.

SEC. 4. COOPERATIVE GOVERNING OF INDIVIDUAL HEALTH INSURANCE COVERAGE.

    (a) In General.--Title XXVII of the Public Health Service Act (42 
U.S.C. 300gg et seq.) is amended by adding at the end the following new 
part:

``Part D--Cooperative Governing of Individual Health Insurance Coverage

``SEC. 2795. DEFINITIONS.

    ``In this part:
            ``(1) Primary state.--The term `primary State' means, with 
        respect to individual health insurance coverage offered by a 
        health insurance issuer, the State designated by the issuer as 
        its primary State. An issuer, with respect to a particular 
        policy, may only designate one such State as its primary State 
        with respect to all such coverage it offers.
            ``(2) Secondary state.--The term `secondary State' means, 
        with respect to a health insurance issuer, any State (in the 
        United States or District of Columbia) that is not the primary 
        State.
            ``(3) Health insurance issuer.--The term `health insurance 
        issuer' has the meaning given such term in section 2791(b)(2).
            ``(4) Individual health insurance coverage.--The term 
        `individual health insurance coverage' means health insurance 
        coverage offered in the individual market, as defined in 
        section 2791(e)(1).
            ``(5) 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 this title for the State involved with respect 
        to the issuer.
            ``(6) Hazardous financial condition.--The term `hazardous 
        financial condition' means that, based on its present or 
        reasonably anticipated financial condition, a health insurance 
        issuer is unlikely to be able--
                    ``(A) to meet obligations to policyholders with 
                respect to known claims and reasonably anticipated 
                claims; or
                    ``(B) to pay other obligations in the normal course 
                of business.
            ``(7) Covered laws.--The term `covered laws' means the laws 
        governing the issuance of an individual health insurance 
        coverage pertaining to--
                    ``(A) the provision of insurance related services;
                    ``(B) management, operations, and investment 
                activities; and
                    ``(C) loss control and claims administration for a 
                health insurance issuer with respect to liability for 
                which the issuer provides insurance.

``SEC. 2796. APPLICATION OF LAW.

    ``(a) In General.--The covered laws of the primary State shall 
apply to individual health insurance coverage offered by that health 
insurance issuer in the primary State and in any secondary State.
    ``(b) Exemptions From State Laws, Rules, Regulations, Judgments, 
Agreements, or Orders in a Secondary State.--Except as provided in this 
section, a health insurance issuer with respect to its offer, sale, and 
issuance of individual health insurance coverage in any secondary State 
is exempt from any State law, rule, regulation, judgment, agreement, or 
order of the secondary State to the extent that such law, rule, 
regulation, judgment, agreement, or order would--
            ``(1) make unlawful, or regulate, directly or indirectly, 
        the operation of the health insurance issuer operating in the 
        secondary State, except that any secondary State may require 
        such an issuer--
                    ``(A) to pay, on a nondiscriminatory basis, 
                applicable premium and other taxes which are levied on 
                insurers and surplus lines insurers, brokers, or 
                policyholders under the laws of the State;
                    ``(B) to register with and designate the State 
                insurance commissioner as its agent solely for the 
                purpose of receiving service of legal documents or 
                process;
                    ``(C) to comply with a lawful order issued in a 
                voluntary dissolution proceeding;
                    ``(D) to comply with an injunction issued by a 
                court of competent jurisdiction, upon a petition by the 
                State insurance commissioner alleging that the issuer 
                is in hazardous financial condition; and
                    ``(E) to provide the following notice, in 12-point 
                bold type, in any insurance coverage issued by such a 
                health insurance issuer, with the 4 blank spaces 
                therein being appropriately filled with the name of the 
                health insurance issuer, the name of primary State, the 
                name of the secondary State, and the name of the 
                secondary State, respectively, for the coverage 
                concerned:

                                `Notice

    `This policy is issued by _____ and is governed by the laws and 
regulations of the State of _____. This policy may not be subject to 
all of the insurance laws and regulations of the State of _____, 
including coverage of some services or benefits mandated by the law of 
the State of _____. Before purchasing this policy, you should carefully 
review the policy and determine what health care services the policy 
covers and what benefits it provides, including any exclusions, 
limitations, or conditions for such services or benefits.'; or
                    ``(F) to participate, on a nondiscriminatory basis, 
                in any insurance insolvency guaranty association to 
                which a health insurance issuer in the State is 
                required to belong;
            ``(2) require any individual health insurance coverage 
        issued by the issuer to be countersigned by an insurance agent 
        or broker residing in that Secondary State; or
            ``(3) otherwise discriminate against the issuer issuing 
        insurance in both primary and secondary States.
    ``(c) Scope of Exemptions.--The exemptions specified in subsection 
(b) apply to laws, rules, regulations, judgments, agreements, and 
orders governing the insurance business pertaining to--
            ``(1) individual health insurance coverage issued by a 
        health insurance issuer;
            ``(2) the offer, sale, and issuance of individual health 
        insurance coverage to an individual; and
            ``(3) the provision to an individual in relation to 
        individual health insurance coverage of--
                    ``(A) insurance related services;
                    ``(B) management, operations, and investment 
                activities; and
                    ``(C) loss control and claims administration for a 
                health insurance issuer with respect to liability for 
                which the issuer provides insurance.
    ``(d) Licensing of Agents or Brokers for Health Insurance 
Issuers.--Any State may require that a person acting, or offering to 
act, as an agent or broker for a health insurance issuer with respect 
to the offering of individual health insurance coverage obtain a 
license from that State, except that a State many not impose any 
qualification or requirement which discriminates against a nonresident 
agent or broker.
    ``(e) Documents for Submission to State Insurance Commissioner.--
Each health insurance issuer issuing individual health insurance 
coverage in both primary and secondary States shall submit--
            ``(1) to the insurance commissioner of each State in which 
        it intends to offer such coverage, before it may offer 
        individual health insurance coverage in such State--
                    ``(A) a copy of plan of operation or feasability 
                study (which shall include the name of its primary 
                State and its principal place of business); and
                    ``(B) written notice of any change in its 
                designation of its primary State; and
            ``(2) to the insurance commissioner of each secondary State 
        in which it offers individual health insurance coverage, a copy 
        of the issuer's annual financial statement submitted to the 
        primary State, which statement shall be certified by an 
        independent public accountant and contain a statement of 
        opinion on loss and loss adjustment expense reserves made by--
                    ``(A) a member of the American Academy of 
                Actuaries; or
                    ``(B) a qualified loss reserve specialist.
    ``(f) Power of Courts to Enjoin Conduct.--Nothing in this section 
shall be construed to affect the authority of any Federal or State 
court to enjoin--
            ``(1) the solicitation or sale of individual health 
        insurance coverage by a health insurance issuer to any person 
        or group who is not eligible for such insurance; or
            ``(2) the solicitation or sale of individual health 
        insurance coverage by, or operation of, a health insurance 
        issuer that is in hazardous financial condition.
    ``(g) State Powers to Enforce State Laws.--
            ``(1) In general.--Subject to the provisions of subsection 
        (b)(1)(D) (relating to injunctions), nothing in this section 
        shall be construed to affect the authority of any State to make 
        use of any of its powers to enforce the laws of such State with 
        respect to which a health insurance issuer is not exempt under 
        this section.
            ``(2) Courts of competent jurisdiction.--If a State seeks 
        an injunction regarding the conduct described in paragraphs (1) 
        and (2) of subsection (f), such injunction must be obtained 
        from a Federal or State court of competent jurisdiction.
    ``(h) States' Authority to Sue.--Nothing in this section shall 
affect the authority of any State to bring action in any Federal or 
State court.
    ``(i) Generally Applicable Laws.--Nothing in this section shall be 
construed to affect the applicability of State laws generally 
applicable to persons or corporations.

``SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR BEFORE ISSUER MAY 
              SELL INTO SECONDARY STATES.

    ``A health insurance issuer may not offer, sell, or issue 
individual health insurance coverage in a secondary State if the 
primary State does not meet the following requirements:
            ``(1) The State insurance commissioner must use a risk-
        based capital formula for the determination of capital and 
        surplus requirements for all health insurance issuers that are 
        not health maintenance organizations (as defined in section 
        1301(a)). For such health maintenance organizations the State 
        must have legislative or regulatory capital and surplus 
        requirements.
            ``(2) The State must have legislation or regulations in 
        place establishing an independent review process for 
        individuals who are covered by individual health insurance 
        coverage unless the issuer provides an independent review 
        mechanism functionally equivalent (as determined by the primary 
        State insurance commissioner or official) to that prescribed in 
        the `Health Carrier External Review Model Act' of the National 
        Association of Insurance Commissioners for all individuals who 
        purchase insurance coverage under the terms of this part.

``SEC. 2798. ENFORCEMENT.

    ``(a) In General.--Subject to subsection (c), the primary State has 
sole jurisdiction to enforce covered laws in primary and secondary 
States.
    ``(b) Failure to Comply With Primary State Law.--In the case of 
individual health insurance coverage offered in a secondary State that 
fails to comply with covered laws of the primary State, the applicable 
State authority of the secondary State shall notify, in writing, the 
applicable State authority of the primary State of suspected violations 
of the primary State's laws.
    ``(c) Failure of a Primary State Authority to Take Action.--The 
applicable State authority of the secondary State may initiate 
regulatory proceedings to enforce the covered laws of the primary State 
if the applicable State authority of the primary State--
            ``(1) does not initiate regulatory or legal proceedings 
        within 30 days; or
            ``(2) fails to maintain an active investigation, 
        negotiation, regulatory, or judicial proceeding for any 30-day 
        period.
    ``(d) Failure to Resolve Dispute.--If upon initiating proceedings 
under subsection (c), the applicable State authority of the secondary 
State is unable to resolve concerns related to suspected violations of 
covered laws of the primary State, such applicable secondary State 
authority may bring action in a court of appropriate jurisdiction.
    ``(e) Court Interpretation.--In reviewing action initiated by the 
applicable secondary State authority, the court of appropriate 
jurisdiction shall apply the covered laws of the primary State.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to individual health insurance coverage offered, issued, or sold 
after the date of the enactment of this Act.

SEC. 5. SEVERABILITY.

    If any provision of the Act or the application of such provision to 
any person or circumstance is held to be unconstitutional, the 
remainder of this Act and the application of the provisions of such to 
any other person or circumstance shall not be affected.