I 

108TH CONGRESS 

1ST SESSION H. R. 2402

To expand the number of individuals and families with health insurance 

coverage, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 10, 2003

Ms. KAPTUR (for herself, Mr. LATOURETTE, Mr. CLAY, Mr. MORAN of Virginia, Mrs. CHRISTENSEN, and Mr. DAVIS of Illinois) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, Education 

and the Workforce, and Rules, for a period to be subsequently determined 

by the Speaker, in each case for consideration of such provisions as fall 

within the jurisdiction of the committee concerned 

A BILL

To expand the number of individuals and families with health 

insurance coverage, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Health Coverage, Affordability, Responsibility, and Eq6 uity Act of 2003’’ or the ‘‘HealthCARE Act of 2003’’. 

7 (b) TABLE OF CONTENTS.—The table of contents of 

8 this Act is as follows:
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Sec. 1. Short title; table of contents. 

TITLE I—INCREASING HEALTH CARE COVERAGE 

Subtitle A—Medicaid and SCHIP 

Sec. 101. State option to offer medicaid coverage based on need. 

Sec. 102. State option to provide coverage of children under SCHIP in excess 

of the State’s allotment. 

Subtitle B—Refundable Tax Credit for Health Insurance Costs of LowIncome Individuals and Families 

Sec. 111. Credit for health insurance costs of certain low-income individuals. 

Sec. 112. Advance payment of credit for health insurance costs of eligible lowincome individuals. 

TITLE II—IMPROVING ACCESS TO HEALTH PLANS 

Sec. 201. Definitions. 

Sec. 202. Establishment of health insurance purchasing pools. 

Sec. 203. Purchasing pools. 

Sec. 204. Purchasing pool operators. 

Sec. 205. Contracts with participating insurers. 

Sec. 206. Options for health benefits coverage. 

Sec. 207. Enrollment process for eligible individuals. 

Sec. 208. Plan premiums. 

Sec. 209. Enrollee premium share. 

Sec. 210. Payments to purchasing pool operators and payments to participating 

insurers. 

Sec. 211. State-based reinsurance programs. 

Sec. 212. Coverage under individual health insurance. 

Sec. 213. Use of premium subsidies to unify family coverage with members enrolled in medicaid and SCHIP. 

Sec. 214. Coverage through employer-sponsored health insurance. 

Sec. 215. Participation by small employers. 

Sec. 216. Report. 

Sec. 217. Authorization of appropriations. 

TITLE III—NATIONAL ADVISORY COMMISSION ON EXPANDED 

ACCESS TO HEALTH CARE 

Sec. 301. National Advisory Commission on Expanded Access to Health Care. 

Sec. 302. Congressional action. 

TITLE IV—STATE WAIVERS 

Sec. 401. State waivers.
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1 TITLE I—INCREASING HEALTH 

2 CARE COVERAGE 

3 Subtitle A—Medicaid and SCHIP 

4 SEC. 101. STATE OPTION TO OFFER MEDICAID COVERAGE 

5 BASED ON NEED. 

6 (a) STATE OPTION.—Section 1902(a)(10)(A)(ii) of 

7 the Social Security Act (42 U.S.C. 1396a) is amended—

8 (1) by striking ‘‘or’’ at the end of subclause 

9 (XVII); 

10 (2) by adding ‘‘or’’ at the end of subclause 

11 (XVIII); and 

12 (3) by adding at the end the following: 

13 ‘‘(XIX) who are not otherwise el14 igible for medical assistance under 

15 this title and whose income does not 

16 exceed such income level as the State 

17 may establish, expressed as a percent18 age (not to exceed 100) of the income 

19 official poverty line (as defined by the 

20 Office of Management and Budget, 

21 and revised annually in accordance 

22 with section 673(2) of the Omnibus 

23 Budget Reconciliation Act of 1981) 

24 applicable to a family of the size in25 volved;’’. 
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1 (b) INCREASED FMAP.—Section 1905 of the Social 

2 Security Act (42 U.S.C. 1396d) is amended—

3 (1) in the first sentence of subsection (b)—

4 (A) by striking ‘‘and (4)’’ and inserting 

5 ‘‘(4)’’; and 

6 (B) by inserting before the period the fol7 lowing: ‘‘, and (5) in the case of a State that 

8 meets the conditions described in paragraph (1) 

9 of subsection (x), the Federal medical assist10 ance percentage shall be equal to the need11 based enhanced FMAP described in paragraph 

12 (2) of subsection (x)’’; and 

13 (2) by adding at the end the following: 

14 ‘‘(x)(1) For purposes of clause (5) of the first sen15 tence of subsection (b), the conditions described in this 

16 subsection are the following: 

17 ‘‘(A) The State provides medical assistance to 

18 individuals described in subsection 

19 (a)(10)(A)(ii)(XIX). 

20 ‘‘(B) The State uses streamlined enrollment 

21 and outreach measures to all individuals described in 

22 subparagraph (A) including—

23 ‘‘(i) the same application and retention 

24 procedures (such as 1-page enrollment forms 

25 and enrollment by mail) used by the majority of
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1 State programs under title XXI during the pre2 ceding year; and 

3 ‘‘(ii) outreach efforts proportional in scope 

4 and reasonably expected effectiveness to those 

5 employed by the State during a comparable 

6 stage of implementation of the State’s program 

7 under title XXI. 

8 ‘‘(C) The State applies eligibility standards and 

9 methodologies under this title with respect to indi10 viduals residing in the State who have not attained 

11 age 65 that are not more restrictive (as determined 

12 under section 1902(a)(10)(C)(i)(III)) than the 

13 standards and methodologies that applied under this 

14 title with respect to such individuals as of July 1, 

15 2003. 

16 ‘‘(2)(A) For purposes of clause (5) of the first sen17 tence of subsection (b), the need-based enhanced FMAP 

18 for a State for a fiscal year, is equal to the Federal med19 ical assistance percentage (as defined in the first sentence 

20 of subsection (b)) for the State increased, subject to sub21 paragraph (B), by such percentage increase as would com22 pensate all States for the additional expenditures that 

23 would be incurred by all States if the States were to pro24 vide medical assistance to all individuals whose income 

25 does not exceed 100 percent of the income official poverty 
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1 line (as defined by the Office of Management and Budget, 

2 and revised annually in accordance with section 673(2) of 

3 the Omnibus Budget Reconciliation Act of 1981) applica4 ble to a family of the size involved and who are eligible 

5 for such assistance only on the basis of section 

6 1902(a)(10)(A)(ii)(XIX).

7 ‘‘(B) In the case of a State that provides medical as8 sistance to individuals described in section 

9 1902(a)(10)(A)(ii)(XIX) but limits such assistance to in10 dividuals with income at or below a percentage of the in11 come official poverty line (as defined by the Office of Man12 agement and Budget, and revised annually in accordance 

13 with section 673(2) of the Omnibus Budget Reconciliation 

14 Act of 1981) applicable to a family of the size involved 

15 that is less than 100, the Secretary shall reduce the need16 based enhanced FMAP otherwise determined for the State 

17 under subparagraph (A) by a proportion based on the na18 tional income distribution of all individuals in all States 

19 who are (regardless of whether such individuals are en20 rolled under this title) eligible for medical assistance only 

21 on the basis of section 1902(a)(10)(A)(ii)(XIX).’’. 

22 (c) CONFORMING AMENDMENTS.—Section 1905(a) of 

23 the Social Security Act (42 U.S.C. 1396d(a)) is amended 

24 in the matter preceding paragraph (1)—

25 (1) by striking ‘‘or’’ at the end of clause (xii); 
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1 (2) by adding ‘‘or’’ at the end of clause (xiii); 

2 and 

3 (3) by inserting after clause (xiii) the following: 

4 ‘‘(xiv) individuals who are eligible for medical 

5 assistance on the basis of section 

6 1902(a)(10)(A)(ii)(XIX);’’. 

7 (d) EFFECTIVE DATE.—The amendments made by 

8 this section take effect on October 1, 2004, and apply to 

9 medical assistance provided on or after that date, without 

10 regard to whether final regulations to carry out such 

11 amendments have been promulgated by such date. 

12 SEC. 102. STATE OPTION TO PROVIDE COVERAGE OF CHIL13 DREN UNDER SCHIP IN EXCESS OF THE 

14 STATE’S ALLOTMENT. 

15 (a) IN GENERAL.—Title XXI of the Social Security 

16 Act (42 U.S.C. 1397aa et seq.) is amended by adding at 

17 the end the following: 

18 ‘‘SEC. 2111. STATE OPTION TO PROVIDE COVERAGE OF 

19 CHILDREN IN EXCESS OF THE STATE’S AL20 LOTMENT. 

21 ‘‘(a) STATE OPTION.—In the case of a State that 

22 meets the condition described in subsection (b), the fol23 lowing shall apply: 

24 ‘‘(1) Notwithstanding section 2105 and without 

25 regard to the State’s allotment under section 2104, 
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1 the Secretary shall pay the State an amount for 

2 each quarter equal to the enhanced FMAP of ex3 penditures incurred in the quarter that are described 

4 in section 2105(a)(1). 

5 ‘‘(2) The Secretary shall reduce the State’s al6 lotment under section 2104, for the first fiscal year 

7 for which the State amendment described in sub8 section (b) applies, and for each fiscal year there9 after, by an amount equal to the amount that the 

10 Secretary determines the State would have expended 

11 to provide child health assistance to targeted low-in12 come children during that fiscal year if that State 

13 had not elected the State option to provide such as14 sistance in accordance with this section. 

15 ‘‘(3) Subsections (f) and (g) of section 2104 

16 shall not apply to the State’s reduced allotment 

17 (after the application of paragraph (2)). 

18 ‘‘(b) CONDITION DESCRIBED.—For purposes of sub19 section (a), the condition described in this subsection is 

20 that the State has made an irrevocable election, through 

21 a plan amendment, to provide child health assistance to 

22 all targeted low-income children residing in the State 

23 (without regard to date of application for assistance) and 

24 to cover health services listed in the State plan whenever 

25 medically necessary.’’. 
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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section takes effect on October 1, 2004, and applies 

3 to child health assistance provided on or after that date, 

4 without regard to whether final regulations to carry out 

5 such amendment have been promulgated by such date. 

6 Subtitle B—Refundable Tax Credit 

7 for Health Insurance Costs of 

8 Low-Income Individuals and 

9 Families 

10 SEC. 111. CREDIT FOR HEALTH INSURANCE COSTS OF CER11 TAIN LOW-INCOME INDIVIDUALS. 

12 (a) IN GENERAL.—Subpart C of part IV of sub13 chapter A of chapter 1 of the Internal Revenue Code of 

14 1986 (relating to refundable credits) is amended by redes15 ignating section 36 as section 37 and inserting after sec16 tion 35 the following new section: 

17 ‘‘SEC. 36. HEALTH INSURANCE COSTS OF ELIGIBLE LOW-IN18 COME INDIVIDUALS.

19 ‘‘(a) IN GENERAL.—In the case of an individual, 

20 there shall be allowed as a credit against the tax imposed 

21 by this subtitle for the taxable year an amount equal to 

22 the applicable percentage of the amount paid by the tax23 payer (or on behalf of the taxpayer) for coverage of the 

24 taxpayer or qualifying family members under qualified
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1 health insurance for eligible coverage months beginning in 

2 such taxable year. 

3 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 

4 this section—

5 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

6 the term ‘applicable percentage’ means the standard 

7 Government contribution (determined for full-time 

8 Federal employees enrolling in coverage for which 

9 such contribution is not limited by section 

10 8906(b)(1) of title 5, United States Code) for an 

11 employee enrolled in a health benefits plan under 

12 chapter 89 of title 5, United States Code, for the 

13 calendar year in which the taxable year begins, ex14 pressed as a percentage of the total premium for 

15 such plan. 

16 ‘‘(2) INCREASED PERCENTAGE FOR CERTAIN

17 TAXPAYERS.—

18 ‘‘(A) IN GENERAL.—In the case of a tax19 payer whose adjusted gross income for the pre20 ceding taxable year does not exceed 150 percent 

21 of the poverty level, the applicable percentage 

22 determined under paragraph (1) shall be in23 creased by such percentage points as the Sec24 retary determines will fully compensate such an 

25 individual for the individual’s limited pur-
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1 chasing power in comparison to individuals 

2 whose adjusted gross income equals the average 

3 adjusted gross income for all Federal employ4 ees, to the extent that the amount of the result5 ing increase in the credit amount for all such 

6 eligible low-income individuals for the taxable 

7 year is not reasonably expected to exceed the 5 

8 percentage point dollar amount for that year, as 

9 determined under subparagraph (B). 

10 ‘‘(B) DETERMINATION OF 5 PERCENTAGE

11 POINT DOLLAR AMOUNT.—For purposes of sub12 paragraph (A), the 5 percentage point dollar 

13 amount for any taxable year is the product of—

14 ‘‘(i) the total number of individuals 

15 receiving credits under this section for 

16 such year; and 

17 ‘‘(ii) the amount equal to 5 percent of 

18 the average health insurance premium 

19 amount to which such credits are applied. 

20 ‘‘(C) RULE OF CONSTRUCTION.—Nothing 

21 in this paragraph shall be construed to prevent 

22 the Secretary from establishing more than 1 

23 level of supplemental assistance that provides 

24 greater assistance to individuals with lower in25 come, determined as a percentage of poverty. 
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1 ‘‘(3) APPLICATION OF FEHBP COVERAGE CAT2 EGORIES TO DETERMINATION OF CREDIT.—The per3 centages described in paragraphs (1) and (2) shall 

4 be applied to a taxpayer consistent with the coverage 

5 categories (such as self or family coverage) applied 

6 with respect to a health benefits plan under chapter 

7 89 of title 5, United States Code. 

8 ‘‘(c) MAXIMUM PREMIUM AMOUNT.—The amount 

9 paid for qualified health insurance taken into account 

10 under subsection (a) for any taxable year shall not exceed 

11 an amount equal to the capped premium established for 

12 the applicable State under section 204(c)(10) of the 

13 Health Coverage, Affordability, Responsibility, and Equity 

14 Act of 2003 for the calendar year in which the such tax15 able year begins. 

16 ‘‘(d) ELIGIBLE COVERAGE MONTH.—For purposes of 

17 this section—

18 ‘‘(1) IN GENERAL.—The term ‘eligible coverage 

19 month’ means any month if during such month the 

20 taxpayer or a qualifying family member—

21 ‘‘(A) is an eligible low-income individual; 

22 ‘‘(B) is covered by qualified health insur23 ance, the premium for which is paid by the tax24 payer (or on behalf of the taxpayer); 
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1 ‘‘(C) does not have other specified cov2 erage; and 

3 ‘‘(D) is not imprisoned under Federal, 

4 State, or local authority. 

5 ‘‘(2) JOINT RETURNS.—In the case of a joint 

6 return, the requirement of paragraph (1)(A) shall be 

7 treated as met with respect to any month if at least 

8 1 spouse satisfies such requirement. 

9 ‘‘(e) ELIGIBLE LOW-INCOME INDIVIDUAL.—For pur10 poses of this section—

11 ‘‘(1) IN GENERAL.—The term ‘eligible low-in12 come individual’ means an individual—

13 ‘‘(A) who has not attained age 65; 

14 ‘‘(B) whose adjusted gross income does not 

15 exceed 200 percent of the poverty level; 

16 ‘‘(C) who is ineligible for the medicaid pro17 gram or the State children’s health insurance 

18 program under title XIX or XXI of the Social 

19 Security Act (other than under section 1928 of 

20 such Act); 

21 ‘‘(D) who has limited access to health in22 surance coverage through the employer of the 

23 individual or a member of the individual’s fam24 ily (either because the employer does not offer 

25 such coverage to the individual or because the
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1 employee contribution for such coverage would 

2 exceed an amount equal to 5 percent of the 

3 household income of such individual, as deter4 mined in accordance with paragraph (2)); 

5 ‘‘(E) who applies for a credit under this 

6 section not later than 60 days after receiving 

7 notice of potential eligibility for such credit, 

8 under procedures established by the Secretary; 

9 and 

10 ‘‘(F) who resides in a State where the eli11 gibility standards and methodologies applied 

12 under the medicaid and State children’s health 

13 insurance programs with respect to individuals 

14 residing in the State who have not attained age 

15 65 are not more restrictive (as determined 

16 under section 1902(a)(10)(C)(i)(III) of the So17 cial Security Act) than the standards and meth18 odologies that applied under such programs 

19 with respect to such individuals as of July 1, 

20 2003. 

21 ‘‘(2) DETERMINATION OF ELIGIBILITY.—

22 ‘‘(A) SCHIP AGENCY.—

23 ‘‘(i) IN GENERAL.—The determination 

24 of whether an individual is an eligible low25 income individual for purposes of this sec-
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1 tion shall be made by the State agency 

2 with responsibility for determining the eli3 gibility of individuals for assistance under 

4 the State children’s health insurance pro5 gram under title XXI of the Social Secu6 rity Act. 

7 ‘‘(ii) APPLICATION OF SCREEN AND

8 ENROLL REQUIREMENTS.—

9 ‘‘(I) IN GENERAL.—The State 

10 agency referred to in clause (i) shall 

11 ensure that individuals applying for a 

12 certificate of eligibility are screened 

13 for potential eligibility under the med14 icaid and State children’s health in15 surance programs and that individuals 

16 found through screening to be eligible 

17 for assistance under such a program 

18 are enrolled for assistance under the 

19 appropriate program. To the max20 imum extent possible pursuant to 

21 State options under title XIX of the 

22 Social Security Act, and notwith23 standing any otherwise applicable pro24 vision of, or State plan provision 

25 under, such title, screening and enroll-
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1 ment activities described in the pre2 vious sentence shall use the proce3 dures employed by the State chil4 dren’s health insurance program oper5 ated under title XXI of the Social Se6 curity Act, if such procedures differ 

7 from those ordinarily employed by the 

8 State program operated under title 

9 XIX of such Act. 

10 ‘‘(II) NO DELAY OF ISSUANCE OF

11 CERTIFICATE.—The application of the 

12 screen and enroll requirements of 

13 clause (i) shall not delay the issuance 

14 of a certificate of eligibility to an indi15 vidual for purposes of this section. 

16 The State agency referred to in clause 

17 (i) shall adopt procedures to ensure 

18 that an individual issued a certificate 

19 of eligibility under this paragraph who 

20 is subsequently determined to be eligi21 ble for the State medicaid program 

22 under title XIX of the Social Security 

23 Act or the State children’s health in24 surance program under XXI of such 

25 Act shall be enrolled in the appro-
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1 priate program without an interrup2 tion in the individual’s health insur3 ance coverage. 

4 ‘‘(B) STANDARDS.—

5 ‘‘(i) IN GENERAL.—An individual is 

6 an eligible low-income individual for pur7 poses of this section if—

8 ‘‘(I) on the basis of the individ9 ual’s tax return for the preceding tax10 able year, the individual meets the re11 quirements of paragraph (1)(B), and 

12 the individual otherwise satisfies the 

13 requirements of paragraph (1), or 

14 ‘‘(II) the individual is determined 

15 to satisfy the requirements of para16 graph (1) after the application of the 

17 same eligibility methodologies as 

18 would apply for purposes of deter19 mining the eligibility of an individual 

20 for assistance under the State chil21 dren’s health insurance program 

22 under title XXI of the Social Security 

23 Act. 

24 ‘‘(ii) APPLICATION OF SCHIP INCOME

25 DETERMINATION METHODOLOGIES.—For 
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1 purposes of clause (i)(II), determinations 

2 of income levels shall be made using the 

3 methodologies described in that clause, to 

4 the extent such methodologies for 

5 ascertaining household income differ from 

6 any otherwise applicable method for deter7 mining adjusted gross income or the defini8 tion of adjusted gross income. 

9 ‘‘(C) CERTIFICATE OF ELIGIBILITY.—

10 ‘‘(i) IN GENERAL.—An individual who 

11 is determined to be an eligible low-income 

12 individual shall be issued a certificate of 

13 eligibility by the State agency referred to 

14 in subparagraph (A). 

15 ‘‘(ii) CERTIFICATE AMOUNT.—Such 

16 certificate shall indicate the applicable per17 centage of the amount paid for coverage 

18 under qualified health insurance that the 

19 individual is eligible for under this section 

20 (including any supplemental assistance 

21 which the individual may be eligible for 

22 under subsection (b)(2), unless the indi23 vidual elects to not receive such supple24 mental assistance).
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1 ‘‘(iii) 12-MONTH PERIOD OF ISSUE.—

2 The certificate of eligibility shall apply for 

3 a 12-month period from the date of issue, 

4 notwithstanding any changes in household 

5 circumstances following the individual’s ap6 plication for a credit under this section or 

7 supplemental assistance. 

8 ‘‘(D) SUPPLEMENTAL ASSISTANCE.—The 

9 State agency described in subparagraph (A) 

10 shall determine an individual’s eligibility for 

11 supplemental assistance under subsection (b)(2) 

12 based on the methodologies referred to in sub13 paragraph (B)(ii). 

14 ‘‘(f) QUALIFYING FAMILY MEMBER.—For purposes 

15 of this section—

16 ‘‘(1) IN GENERAL.—The term ‘qualifying family 

17 member’ means—

18 ‘‘(A) the taxpayer’s spouse; and 

19 ‘‘(B) any dependent of the taxpayer with 

20 respect to whom the taxpayer is entitled to a 

21 deduction under section 151(c). 

22 Such term does not include any individual who is 

23 not an eligible low-income individual under sub24 section (e)(1). 
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1 ‘‘(2) SPECIAL DEPENDENCY TEST IN CASE OF

2 DIVORCED PARENTS, ETC.—If paragraph (2) or (4) 

3 of section 152(e) applies to any child with respect to 

4 any calendar year, in the case of any taxable year 

5 beginning in such calendar year, such child shall be 

6 treated as described in paragraph (1)(B) with re7 spect to the custodial parent (within the meaning of 

8 section 152(e)(1)) and not with respect to the non9 custodial parent. 

10 ‘‘(g) QUALIFIED HEALTH INSURANCE.—For pur11 poses of this section—

12 ‘‘(1) IN GENERAL.—The term ‘qualified health 

13 insurance’ means any of the following: 

14 ‘‘(A) Coverage under an insurance plan 

15 participating in a purchasing pool established 

16 pursuant to section 203 of the Health Cov17 erage, Affordability, Responsibility, and Equity 

18 Act of 2003. 

19 ‘‘(B) Coverage under individual health in20 surance pursuant to section 212 of such Act. 

21 ‘‘(C) Coverage, pursuant to section 213 of 

22 such Act, under the medicaid program or the 

23 State children’s health insurance program if 1 

24 or more family members qualifies for coverage 

25 under such program. 
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1 ‘‘(D) Coverage, pursuant to section 214 of 

2 such Act, under an employer-sponsored insur3 ance plan, including— 

4 ‘‘(i) coverage under a COBRA con5 tinuation provision (as defined in section 

6 9832(d)(1));

7 ‘‘(ii) State-based continuation cov8 erage provided under a State law that re9 quires such coverage; 

10 ‘‘(iii) coverage voluntarily offered by a 

11 former employer of the individual or family 

12 member; or 

13 ‘‘(iv) coverage under a group health 

14 plan that is available through the employ15 ment of the individual or a family member. 

16 ‘‘(2) EXCEPTION.—The term ‘qualified health 

17 insurance’ shall not include—

18 ‘‘(A) a flexible spending or similar ar19 rangement; and 

20 ‘‘(B) any insurance if substantially all of 

21 its coverage is of excepted benefits described in 

22 section 9832(c). 

23 ‘‘(3) DEFINITIONS.—For purposes of this sub24 section—
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1 ‘‘(A) EMPLOYER-SPONSORED INSUR2 ANCE.—

3 ‘‘(i) IN GENERAL.—The term ‘em4 ployer-sponsored insurance’ means any in5 surance which covers medical care under 

6 any health plan maintained by any em7 ployer (or former employer) of the tax8 payer or the taxpayer’s spouse. 

9 ‘‘(ii) TREATMENT OF CAFETERIA

10 PLANS.—For purposes of clause (i), the 

11 cost of coverage shall be treated as paid or 

12 incurred by an employer to the extent the 

13 coverage is in lieu of a right to receive cash 

14 or other qualified benefits under a cafe15 teria plan (as defined in section 125(d)). 

16 ‘‘(B) INDIVIDUAL HEALTH INSURANCE.—

17 The term ‘individual health insurance’ means 

18 any insurance which constitutes medical care 

19 offered to individuals other than in connection 

20 with a group health plan and does not include 

21 Federal- or State-based health insurance cov22 erage. 

23 ‘‘(h) OTHER SPECIFIED COVERAGE.—For purposes 

24 of this section, an individual has other specified coverage 

25 for any month if, as of the first day of such month—
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1 ‘‘(1) COVERAGE UNDER MEDICARE.—Such indi2 vidual is entitled to benefits under part A of title 

3 XVIII of the Social Security Act or is enrolled under 

4 part B of such title. 

5 ‘‘(2) CERTAIN OTHER COVERAGE.—Such indi6 vidual—

7 ‘‘(A) is enrolled in a health benefits plan 

8 under chapter 89 of title 5, United States Code; 

9 or 

10 ‘‘(B) is entitled to receive benefits under 

11 chapter 55 of title 10, United States Code. 

12 ‘‘(i) FEDERAL POVERTY LEVEL; POVERTY LEVEL; 

13 POVERTY.—For purposes of this section, the terms ‘Fed14 eral poverty level’, ‘poverty level’, and ‘poverty’ mean the 

15 income official poverty line (as defined by the Office of 

16 Management and Budget, and revised annually in accord17 ance with section 673(2) of the Omnibus Budget Rec18 onciliation Act of 1981) applicable to a family of the size 

19 involved. 

20 ‘‘(j) SPECIAL RULES.—

21 ‘‘(1) COORDINATION WITH ADVANCE PAYMENTS

22 OF CREDIT.—With respect to any taxable year, the 

23 amount which would (but for this subsection) be al24 lowed as a credit to the taxpayer under subsection 

25 (a) shall be reduced (but not below zero) by the ag-
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1 gregate amount paid on behalf of such taxpayer 

2 under section 7528 for months beginning in such 

3 taxable year. 

4 ‘‘(2) COORDINATION WITH OTHER DEDUC5 TIONS.—Amounts taken into account under sub6 section (a) shall not be taken into account in deter7 mining any deduction allowed under section 162(l) 

8 or 213. 

9 ‘‘(3) MSA DISTRIBUTIONS.—Amounts distrib10 uted from an Archer MSA (as defined in section 

11 220(d)) shall not be taken into account under sub12 section (a). 

13 ‘‘(4) DENIAL OF CREDIT TO DEPENDENTS.—No 

14 credit shall be allowed under this section to any indi15 vidual with respect to whom a deduction under sec16 tion 151 is allowable to another taxpayer for a tax17 able year beginning in the calendar year in which 

18 such individual’s taxable year begins. 

19 ‘‘(5) BOTH SPOUSES ELIGIBLE LOW-INCOME IN20 DIVIDUALS.—The spouse of the taxpayer shall not 

21 be treated as a qualifying family member for pur22 poses of subsection (a), if—

23 ‘‘(A) the taxpayer is married at the close 

24 of the taxable year; 
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1 ‘‘(B) the taxpayer and the taxpayer’s 

2 spouse are both eligible low-income individuals 

3 during the taxable year; and 

4 ‘‘(C) the taxpayer files a separate return 

5 for the taxable year. 

6 ‘‘(6) MARITAL STATUS; CERTAIN MARRIED IN7 DIVIDUALS LIVING APART.—Rules similar to the 

8 rules of paragraphs (3) and (4) of section 21(e) 

9 shall apply for purposes of this section. 

10 ‘‘(7) INSURANCE WHICH COVERS OTHER INDI11 VIDUALS.—For purposes of this section, rules simi12 lar to the rules of section 213(d)(6) shall apply with 

13 respect to any contract for qualified health insurance 

14 under which amounts are payable for coverage of an 

15 individual other than the taxpayer and qualifying 

16 family members. 

17 ‘‘(8) TREATMENT OF PAYMENTS.—For pur18 poses of this section: 

19 ‘‘(A) PAYMENTS BY SECRETARY.—Any 

20 payment made by the Secretary on behalf of 

21 any individual under section 7528 (relating to 

22 advance payment of credit for health insurance 

23 costs of eligible low-income individuals) shall be 

24 treated as having been made by the taxpayer 

25 (or on behalf of the taxpayer) on the first day 
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1 of the month for which such payment was 

2 made. 

3 ‘‘(B) PAYMENTS BY TAXPAYER.—Any pay4 ment made by the taxpayer (or on behalf of the 

5 taxpayer) for eligible coverage months shall be 

6 treated as having been so made on the first day 

7 of the month for which such payment was 

8 made. 

9 ‘‘(9) REGULATIONS.—

10 ‘‘(A) IN GENERAL.—The Secretary, in con11 sultation with the Secretary of Health and 

12 Human Services, shall administer the credit al13 lowed under this section and shall prescribe 

14 such regulations and other guidance as may be 

15 necessary or appropriate to carry out this sec16 tion, section 6050U, and section 7528. 

17 ‘‘(B) ELIGIBILITY DETERMINATIONS.—

18 Such regulations shall include such standards 

19 as the Secretary of Health and Human Services 

20 may specify with respect to the requirements 

21 for eligibility determinations under subsection 

22 (e)(2). 

23 ‘‘(C) MEASURES TO COMBAT FRAUD AND

24 ABUSE.—Such regulations shall include appro25 priate procedures to deter, detect, and penalize 
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1 fraudulent efforts to obtain a credit under this 

2 section by individuals, providers of qualified 

3 health insurance, and others.’’. 

4 (b) CONFORMING AMENDMENTS.—

5 (1) Paragraph (2) of section 1324(b) of title 

6 31, United States Code, is amended by inserting be7 fore the period ‘‘, or from section 36 of such Code’’. 

8 (2) The table of sections for subpart C of part 

9 IV of chapter 1 of the Internal Revenue Code of 

10 1986 is amended by striking the last item and in11 serting the following new items:

‘‘Sec. 36. Health insurance costs of eligible low-income individuals. 

‘‘Sec. 37. Overpayments of tax.’’.

12 (c) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to taxable years beginning after 

14 December 31, 2005. 

15 (d) REIMBURSEMENT FOR ADMINISTRATIVE COSTS

16 INCURRED IN DETERMINING ELIGIBILITY FOR CREDIT.—

17 (1) IN GENERAL.—The Secretary of Health 

18 and Human Services shall reimburse States for the 

19 reasonable administrative costs incurred in making 

20 eligibility determinations in accordance with section 

21 36(e) of the Internal Revenue Code of 1986 (as 

22 added by subsection (a)). Such reimbursement shall
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1 not apply to State costs required under the medicaid 

2 or State children’s health insurance programs. 

3 (2) APPLICATION.—A State desiring reimburse4 ment under this subsection shall submit an applica5 tion to the Secretary of Health and Human Services 

6 in such manner, at such time, and containing such 

7 information as the Secretary may require. 

8 (3) APPROPRIATION.—Out of any money in the 

9 Treasury of the United States not otherwise appro10 priated, there are appropriated such sums as may be 

11 necessary to carry out this subsection. 

12 SEC. 112. ADVANCE PAYMENT OF CREDIT FOR HEALTH IN13 SURANCE COSTS OF ELIGIBLE LOW-INCOME 

14 INDIVIDUALS. 

15 (a) IN GENERAL.—Chapter 77 of the Internal Rev16 enue Code of 1986 (relating to miscellaneous provisions) 

17 is amended by adding at the end the following new section: 

18 ‘‘SEC. 7528. ADVANCE PAYMENT OF CREDIT FOR HEALTH 

19 INSURANCE COSTS OF ELIGIBLE LOW-IN20 COME INDIVIDUALS. 

21 ‘‘(a) GENERAL RULE.—Not later than August 1, 

22 2005, the Secretary shall establish a program for making 

23 payments on behalf of certified individuals to providers of 

24 qualified health insurance (as defined in section 36(g)) for 

25 such individuals. 
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1 ‘‘(b) LIMITATION ON ADVANCE PAYMENTS DURING

2 ANY TAXABLE YEAR.—The Secretary may make pay3 ments under subsection (a) only to the extent that the 

4 total amount of such payments made on behalf of any indi5 vidual during the taxable year is not reasonably expected 

6 to exceed the applicable percentage (as defined in section 

7 36(b)) of the amount paid by the taxpayer (or on behalf 

8 of the taxpayer) for coverage of the taxpayer and quali9 fying family members under qualified health insurance for 

10 eligible coverage months beginning in the taxable year. 

11 ‘‘(c) CERTIFIED INDIVIDUAL.—For purposes of this 

12 section, the term ‘certified individual’ means any indi13 vidual for whom a health coverage eligibility certificate is 

14 in effect. 

15 ‘‘(d) HEALTH COVERAGE ELIGIBILITY CERTIFI16 CATE.—For purposes of this section, the term ‘health cov17 erage eligibility certificate’ means any written statement 

18 that an individual is an eligible low-income individual (as 

19 defined in section 36(e)) if such statement provides such 

20 information as the Secretary may require for purposes of 

21 this section and is issued by the State agency responsible 

22 for administering the State children’s health insurance 

23 program under title XXI of the Social Security Act.’’. 

24 (b) DISCLOSURE OF RETURN INFORMATION FOR

25 PURPOSES OF CARRYING OUT A PROGRAM FOR ADVANCE
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1 PAYMENT OF CREDIT FOR HEALTH INSURANCE COSTS OF

2 ELIGIBLE LOW-INCOME INDIVIDUALS.—

3 (1) IN GENERAL.—Subsection (l) of section 

4 6103 of the Internal Revenue Code of 1986 (relating 

5 to disclosure of returns and return information for 

6 purposes other than tax administration) is amended 

7 by adding at the end the following new paragraph: 

8 ‘‘(19) DISCLOSURE OF RETURN INFORMATION

9 FOR PURPOSES OF CARRYING OUT A PROGRAM FOR

10 ADVANCE PAYMENT OF CREDIT FOR HEALTH INSUR11 ANCE COSTS OF ELIGIBLE LOW-INCOME INDIVID12 UALS.—The Secretary may disclose to providers of 

13 health insurance for any certified individual (as de14 fined in section 7528(c)) return information with re15 spect to such certified individual only to the extent 

16 necessary to carry out the program established by 

17 section 7528 (relating to advance payment of credit 

18 for health insurance costs of eligible low-income indi19 viduals).’’. 

20 (2) PROCEDURES AND RECORDKEEPING RE21 LATED TO DISCLOSURES.—Subsection (p) of such 

22 section is amended—

23 (A) in paragraph (3)(A) by striking ‘‘or 

24 (18)’’ and inserting ‘‘(18), or (19)’’; and 
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1 (B) in paragraph (4), as amended by sec2 tion 202(b)(2)(B) of the Trade Act of 2002 

3 (Public Law 107–210; 116 Stat. 961), by strik4 ing ‘‘or (17)’’ after ‘‘any other person described 

5 in subsection (l)(16)’’ each place it appears and 

6 inserting ‘‘(18), or (19)’’.

7 (3) UNAUTHORIZED INSPECTION OF RETURNS

8 OR RETURN INFORMATION.—Section 

9 7213A(a)(1)(B) of such Code is amended by striking 

10 ‘‘section 6103(n)’’ and inserting ‘‘subsection (l)(18) 

11 or (19) or (n) of section 6103’’. 

12 (c) INFORMATION REPORTING.—

13 (1) IN GENERAL.—Subpart B of part III of 

14 subchapter A of chapter 61 of the Internal Revenue 

15 Code of 1986 (relating to information concerning 

16 transactions with other persons) is amended by in17 serting after section 6050T the following new sec18 tion: 

19 ‘‘SEC. 6050U. RETURNS RELATING TO CREDIT FOR HEALTH 

20 INSURANCE COSTS OF ELIGIBLE LOW-IN21 COME INDIVIDUALS. 

22 ‘‘(a) REQUIREMENT OF REPORTING.—Every person 

23 who is entitled to receive payments for any month of any 

24 calendar year under section 7528 (relating to advance pay25 ment of credit for health insurance costs of eligible low-
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1 income individuals) with respect to any certified individual 

2 (as defined in section 7528(c)) shall, at such time as the 

3 Secretary may prescribe, make the return described in 

4 subsection (b) with respect to each such individual. 

5 ‘‘(b) FORM AND MANNER OF RETURNS.—A return 

6 is described in this subsection if such return—

7 ‘‘(1) is in such form as the Secretary may pre8 scribe; and 

9 ‘‘(2) contains—

10 ‘‘(A) the name, address, and TIN of each 

11 individual referred to in subsection (a); 

12 ‘‘(B) the number of months for which 

13 amounts were entitled to be received with re14 spect to such individual under section 7528 (re15 lating to advance payment of credit for health 

16 insurance costs of eligible low-income individ17 uals); 

18 ‘‘(C) the amount entitled to be received for 

19 each such month; and 

20 ‘‘(D) such other information as the Sec21 retary may prescribe. 

22 ‘‘(c) STATEMENTS TO BE FURNISHED TO INDIVID23 UALS WITH RESPECT TO WHOM INFORMATION IS RE24 QUIRED.—Every person required to make a return under 

25 subsection (a) shall furnish to each individual whose name
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1 is required to be set forth in such return a written state2 ment showing—

3 ‘‘(1) the name and address of the person re4 quired to make such return and the phone number 

5 of the information contact for such person; and 

6 ‘‘(2) the information required to be shown on 

7 the return with respect to such individual. 

8 The written statement required under the preceding sen9 tence shall be furnished on or before January 31 of the 

10 year following the calendar year for which the return 

11 under subsection (a) is required to be made.’’. 

12 (2) ASSESSABLE PENALTIES.—

13 (A) Subparagraph (B) of section 

14 6724(d)(1) of such Code (relating to defini15 tions) is amended by redesignating clauses (xii) 

16 through (xviii) as clauses (xiii) through (xix), 

17 respectively, and by inserting after clause (xi) 

18 the following new clause: 

19 ‘‘(xii) section 6050U (relating to re20 turns relating to credit for health insur21 ance costs of eligible low-income individ22 uals),’’. 

23 (B) Paragraph (2) of section 6724(d) of 

24 such Code is amended by striking ‘‘or’’ at the 

25 end of subparagraph (AA), by striking the pe-
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•HR 2402 IH 

1 riod at the end of subparagraph (BB) and in2 serting ‘‘, or’’, and by adding after subpara3 graph (BB) the following new subparagraph: 

4 ‘‘(CC) section 6050U (relating to returns 

5 relating to credit for health insurance costs of 

6 eligible low-income individuals).’’. 

7 (d) CLERICAL AMENDMENTS.—

8 (1) ADVANCE PAYMENT.—The table of sections 

9 for chapter 77 of the Internal Revenue Code of 1986 

10 is amended by adding at the end the following new 

11 item:

‘‘Sec. 7528. Advance payment of credit for health insurance costs 

of eligible low-income individuals.’’.

12 (2) INFORMATION REPORTING.—The table of 

13 sections for subpart B of part III of subchapter A 

14 of chapter 61 of such Code is amended by inserting 

15 after the item relating to section 6050T the fol16 lowing new item:

‘‘Sec. 6050U. Returns relating to credit for health insurance costs 

of eligible low-income individuals.’’.

17 (e) EFFECTIVE DATE.—The amendments made by 

18 this section shall take effect on January 1, 2006. 

19 TITLE II—IMPROVING ACCESS 

20 TO HEALTH PLANS 

21 SEC. 201. DEFINITIONS. 

22 In this title: 
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1 (1) ELIGIBLE INDIVIDUAL.—The term ‘‘eligible 

2 individual’’ means an individual with respect to 

3 whom a tax credit is allowed under section 36 of the 

4 Internal Revenue Code of 1986 (as added by section 

5 111). 

6 (2) PARTICIPATING INSURER.—The term ‘‘par7 ticipating insurer’’ means an entity with a contract 

8 under section 205(a). 

9 (3) PRIVATE GROUP HEALTH INSURANCE

10 PLAN.—The term ‘‘private group health insurance 

11 plan’’ means a plan offered by a participating in12 surer that provides health benefits coverage to eligi13 ble individuals and that meets the requirements of 

14 this title. 

15 (4) PURCHASING POOL OPERATOR.—The term 

16 ‘‘purchasing pool operator’’ means the entity des17 ignated by the State under section 204. 

18 (5) SECRETARY.—The term ‘‘Secretary’’ means 

19 the Secretary of Health and Human Services. 

20 (6) SMALL EMPLOYER.—The term ‘‘small em21 ployer’’ means an employer with not less than 2 and 

22 not more than 100 employees. 
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1 SEC. 202. ESTABLISHMENT OF HEALTH INSURANCE PUR2 CHASING POOLS. 

3 There is established a program under which the Sec4 retary shall ensure that each eligible individual has the 

5 opportunity to enroll, through a purchasing pool operator, 

6 in a private group health insurance plan offered by a par7 ticipating insurer under this title. 

8 SEC. 203. PURCHASING POOLS. 

9 (a) ESTABLISHMENT OF PURCHASING POOLS.—Each 

10 State participating in the program under this title shall 

11 establish a purchasing pool that is available to each eligi12 ble individual who resides in the State. 

13 (b) TYPES OF PURCHASING POOLS.—

14 (1) IN GENERAL.—A purchasing pool estab15 lished under subsection (a) shall be 1 of the fol16 lowing: 

17 (A) A statewide purchasing pool operated 

18 by the State. 

19 (B) A statewide purchasing pool operated 

20 on behalf of the State by the Director of the 

21 Office of Personnel Management, or the des22 ignee of such Director. 

23 (2) OPM OPERATED POOL.—In the case of a 

24 statewide purchasing pool described in paragraph 

25 (1)(B), the Director of the Office of Personnel Man26 agement or the Director’s designee, may limit par-
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1 ticipating insurers in such pool to those described in 

2 section 205(e), except that the Director or such des3 ignee shall ensure that additional private group 

4 health insurance plans participate in such a pool to 

5 the extent necessary to meet the requirements of 

6 section 204(c)(9). 

7 (c) STATE ELECTION PROCESS.—

8 (1) IN GENERAL.—Each State participating in 

9 the program under this title shall notify the Sec10 retary, not later than January 4, 2005, of the type 

11 of purchasing pool that applies to residents of the 

12 State. 

13 (2) DEFAULT CHOICE.—If a State participating 

14 in the program under this title fails to notify the 

15 Secretary of the type of purchasing pool elected by 

16 the State by the date described in paragraph (1), 

17 the State shall be deemed to have elected the type 

18 of purchasing pool described in subsection (b)(1)(B). 

19 (3) CHANGE OF ELECTION.—The Secretary 

20 shall establish procedures under which a State par21 ticipating in the program under this title may 

22 change the election of the type of purchasing pool 

23 applicable to residents of the State.
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•HR 2402 IH 

1 SEC. 204. PURCHASING POOL OPERATORS. 

2 (a) DESIGNATION.—Each State shall designate a 

3 purchasing pool operator that shall be responsible for op4 erating the purchasing pool established under section 

5 203(a). A purchasing pool operator may be (or, to have 

6 1 or more of its functions performed, may contract with) 

7 a private entity that has entered into a contract with the 

8 State if such entity meets requirements established by the 

9 Secretary for purposes of the program under this title. 

10 (b) OPERATION SIMILAR TO FEHBP.—Each pur11 chasing pool operator shall operate the purchasing pool 

12 established under section 203(a) in a manner that is simi13 lar to the manner in which the Director of the Office of 

14 Personnel Management operates the Federal employees’ 

15 health benefits program under chapter 89 of title 5, 

16 United States Code, including (but not limited to) the per17 formance of the specific functions described in subsection 

18 (c). 

19 (c) SPECIFIC FUNCTIONS DESCRIBED.—The specific 

20 functions described in this subsection include the fol21 lowing: 

22 (1) Each purchasing pool operator shall offer 

23 one-stop shopping for eligible individuals to enroll 

24 for health benefits coverage under private, group 

25 health insurance plans offered by participating in26 surers. 
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•HR 2402 IH 

1 (2) Each purchasing pool operator shall limit 

2 participating insurers to those that meet the condi3 tions for participation described in this title. 

4 (3) Each purchasing pool operator shall nego5 tiate (or, in the case of a purchasing pool described 

6 in section 203(b)(1)(B), shall negotiate or otherwise 

7 determine) bids and terms of coverage with insurers. 

8 (4) Each purchasing pool operator shall provide 

9 eligible individuals with comparative information on 

10 private group health insurance plans offered by par11 ticipating insurers. 

12 (5) Each purchasing pool operator shall assist 

13 eligible individuals in enrolling with a private group 

14 health insurance plan offered by a participating in15 surer. 

16 (6) Each purchasing pool operator shall collect 

17 private group health insurance plan premium pay18 ments for participating insurers and process such 

19 premium payments. 

20 (7) Each purchasing pool operator shall rec21 oncile from year to year aggregate premium pay22 ments and claims costs of private group health in23 surance plans consistent with practices under the 

24 Federal employees’ health benefits program under 

25 chapter 89 of title 5, United States Code. 
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1 (8) Each purchasing pool operator shall offer 

2 customer service to eligible individuals enrolled for 

3 health benefits coverage under a private group 

4 health insurance plan offered by a participating in5 surer. 

6 (9) Each purchasing pool operator shall ensure 

7 that each eligible individual has the option of enroll8 ing in either of at least 2 benchmark or benchmark9 equivalent plans with—

10 (A) a premium at or below a cap estab11 lished by the pool operator for purposes of this 

12 title; and 

13 (B) coverage of essential services included 

14 in the report required under section 301(e)(2), 

15 with cost-sharing consistent with such report. 

16 (10) Each purchasing pool operator shall estab17 lish a premium cap for purposes of determining the 

18 credit limitation under section 36(c) of the Internal 

19 Revenue Code of 1986, as added by section 111(a). 

20 The cap required under this paragraph may not be 

21 less than the premium charged to Federal employees 

22 by the most highly-enrolled health plan under the 

23 Federal employees’ health benefits program under 

24 chapter 89 of title 5, United States Code. If the 

25 most highly-enrolled plan in that program differs for 
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1 Federal enrollees in the State and all Federal enroll2 ees nationally in such plan, the minimum permitted 

3 premium cap shall be the lower of such premiums.

4 SEC. 205. CONTRACTS WITH PARTICIPATING INSURERS. 

5 (a) IN GENERAL.—Each purchasing pool operator 

6 shall negotiate and enter into contracts for the provision 

7 of health benefits coverage under the program under this 

8 title with entities that meet the conditions of participation 

9 described in subsection (b) and other applicable require10 ments of this Act. 

11 (b) CONSUMER INFORMATION.—In carrying out its 

12 duty under section 204(c)(4) to inform eligible individuals 

13 about private group health plans, the purchasing pool op14 erator shall provide information that meets the require15 ments of section 212(b)(2). 

16 (c) STATE LICENSURE.—

17 (1) IN GENERAL.—Subject to paragraph (2), a 

18 health plan shall not be a participating insurer un19 less the plan has a State license to provide State 

20 residents with the private group coverage health in21 surance plans that it offers through the pool. 

22 (2) EXCEPTION.—A pool operator may enter 

23 into a contract under subsection (a) to cover pool 

24 participants through a health plan without a State 

25 license described in paragraph (1) if such plan is of-
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•HR 2402 IH 

1 fered to Federal employees nationwide and, with re2 spect to such employees, is exempt from State health 

3 insurance regulation. Nothing in this paragraph 

4 shall be construed to permit coverage of pool partici5 pants through such a plan except with groups, con6 tracts, and premium rates that are entirely distinct 

7 from those used for individuals covered under the 

8 Federal employee’s health benefits program under 

9 chapter 89 of title 5, United States Code. 

10 (d) ADDITIONAL STOP-LOSS COVERAGE AND REIN11 SURANCE.—Purchasing pool operators are authorized to 

12 encourage participation in the program under this title, 

13 improve covered benefits, reduce out-of-pocket cost-shar14 ing, limit premiums, or achieve other objectives of this Act 

15 by—

16 (1) funding stop-loss coverage above levels oth17 erwise offered in the purchasing pool; or 

18 (2) providing or subsidizing reinsurance in ad19 dition to that provided under section 211. 

20 (e) PARTICIPATION OF FEHBP PLANS.—

21 (1) IN GENERAL.—Each entity with a contract 

22 under section 8902 of title 5, United States Code, 

23 shall be a participating insurer unless such entity 

24 notifies the Secretary in writing of its intention not 

25 to participate in the program under this title prior
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1 to such time as is designated by the Secretary so 

2 as to allow such decisions to be taken into account 

3 with respect to eligible individuals’ choice of a pri4 vate group health insurance plan under such pro5 gram. Such participation in the program under this 

6 title shall include at least the covered benefits and 

7 provider networks available through such an entity 

8 and shall not involve greater out-of-pocket cost-shar9 ing than the plan offered by such entity pursuant 

10 to its contract under section 8902 of title 5, United 

11 States Code. 

12 (2) NO EFFECT ON FEHBP COVERAGE.—The 

13 Director of Office of Personnel Management shall 

14 take such steps as are necessary to ensure that each 

15 individual enrolled for health benefits coverage under 

16 the program under chapter 89 of title 5, United 

17 States Code, is not adversely affected by eligible in18 dividuals or others enrolled for coverage under the 

19 program under this title. Such steps shall include 

20 (but need not be limited to) the establishment of 

21 separate risk pools, separate contracts with partici22 pating insurers, and separately negotiated pre23 miums. 
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1 SEC. 206. OPTIONS FOR HEALTH BENEFITS COVERAGE. 

2 (a) SCOPE OF HEALTH BENEFITS COVERAGE.—The 

3 health benefits coverage provided to an eligible individual 

4 under a private group health insurance plan offered by 

5 a participating insurer shall consist of any of the fol6 lowing: 

7 (1) BENCHMARK COVERAGE.—Health benefits 

8 coverage that is equivalent to the benefits coverage 

9 in a benchmark benefit package described in sub10 section (b). 

11 (2) BENCHMARK-EQUIVALENT COVERAGE.—

12 Health benefits coverage that meets the following re13 quirements: 

14 (A) INCLUSION OF ESSENTIAL SERV15 ICES.—The coverage includes each of the essen16 tial services identified by the National Advisory 

17 Commission on Expanded Access to Health 

18 Care and adopted by Congress under title III. 

19 (B) AGGREGATE ACTUARIAL VALUE EQUIV20 ALENT TO BENCHMARK PACKAGE.—The cov21 erage has an aggregate actuarial value that is 

22 equal to or greater than the actuarial value of 

23 one of the benchmark benefit packages. 

24 (3) ALTERNATIVE COVERAGE.—Any other 

25 health benefits coverage that the Secretary deter26 mines, upon application by a State, offers health 
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1 benefits coverage equivalent to or greater than a 

2 plan described in and offered under section 8903(1) 

3 of title 5, United States Code. 

4 (b) BENCHMARK BENEFIT PACKAGES.—The bench5 mark benefit packages are as follows: 

6 (1) FEHBP-EQUIVALENT HEALTH BENEFITS

7 COVERAGE.—The plan described in and offered 

8 under chapter 89 of title 5, United States Code with 

9 the highest number of enrollees under such section 

10 for the year preceding the year in which the private 

11 group health insurance plan is proposed to be of12 fered. 

13 (2) PUBLIC PROGRAM-EQUIVALENT HEALTH

14 BENEFITS COVERAGE.—Coverage provided under the 

15 State plan approved under the medicaid program 

16 under title XIX of the Social Security Act or the 

17 State children’s health insurance program under 

18 title XXI of such Act (42 U.S.C. 1396 et seq., 

19 1397aa et seq.) (without regard to coverage provided 

20 under a waiver of the requirements of either such 

21 program). 

22 (3) COVERAGE OFFERED THROUGH HMO.—The 

23 health insurance coverage plan that—

24 (A) is offered by a health maintenance or25 ganization (as defined in section 2791(b)(3) of 
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1 the Public Health Service Act (42 U.S.C. 33gg–

2 91(b)(3))); and 

3 (B) has the largest insured commercial, 

4 nonmedicaid enrollment of covered lives of such 

5 coverage plans offered by such a health mainte6 nance organization in the State. 

7 (4) STATE EMPLOYEE COVERAGE.—The health 

8 insurance plan that is offered to State employees 

9 and has the largest enrollment of covered lives of 

10 any such plan. 

11 (5) APPLICATION OF BENCHMARK STAND12 ARDS.—A private group health plan offers bench13 mark benefits if, with respect to a benchmark plan 

14 described in paragraph (1), (2), (3), or (4), the pri15 vate group health plan covers all items and services 

16 offered by the benchmark plan, with out-of-pocket 

17 cost-sharing for such items and services that is not 

18 greater than under the benchmark plan. Nothing in 

19 this title shall be construed to forbid a private group 

20 health plan from offering additional items and serv21 ices not covered by such a benchmark plan or reduc22 ing out-of-pocket cost-sharing below levels applicable 

23 under such plan. 
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1 SEC. 207. ENROLLMENT PROCESS FOR ELIGIBLE INDIVID2 UALS. 

3 (a) IN GENERAL.—The Secretary shall establish a 

4 process through which an eligible individual—

5 (1) may make an annual election to enroll in 

6 any private group health insurance plan offered by 

7 a participating insurer that has been awarded a con8 tract under section 205(a) and serves the geographic 

9 area in which the individual resides, provided that 

10 such insurer’s geographic area of service and guar11 anteed issuance under this section is conterminous 

12 with, or includes all of, a geographic area served 

13 pursuant to an entity’s contact under section 8902 

14 of title 5, United States Code; and 

15 (2) may make an annual election to change the 

16 election under this clause. 

17 (b) RULES.—In establishing the process under sub18 section (a), the Secretary shall use rules similar to the 

19 rules for enrollment, disenrollment, and termination of en20 rollment under the Federal employees health benefits pro21 gram under chapter 89 of title 5, United States Code, in22 cluding the application of the guaranteed issuance provi23 sion described in subsection (c). 

24 (c) GUARANTEED ISSUANCE.—An eligible individual 

25 who is eligible to enroll for health benefits coverage under 

26 a private group health insurance plan that has been
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1 awarded a contract under section 205(a) at a time during 

2 which elections are accepted under this title with respect 

3 to the plan shall not be denied enrollment based on any 

4 health status-related factor (described in section 

5 2702(a)(1) of the Public Health Service Act (42 U.S.C. 

6 300gg–1(a)(1))) or any other factor. 

7 SEC. 208. PLAN PREMIUMS. 

8 (a) IN GENERAL.—Each purchasing pool operator 

9 shall negotiate (or, in the case of a purchasing pool oper10 ated pursuant to section 203(b)(1)(B), shall otherwise de11 termine) a premium for each private group health insur12 ance plan offered by a participating insurer. 

13 (b) PERMITTED PROFIT MARGINS.—

14 (1) IN GENERAL.—Each premium negotiated 

15 under subsection (a) may not permit a profit margin 

16 that exceeds the applicable percentage (as defined in 

17 paragraph (2)). 

18 (2) APPLICABLE PERCENTAGE DEFINED.—In 

19 this subsection, the term ‘‘applicable percentage’’ 

20 means—

21 (A) for the first 3 years that a purchasing 

22 pool is operated, 2 percent; 

23 (B) for any subsequent year, the percent24 age determined by the purchasing pool oper25 ator, which may not be—
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1 (i) less than the profit margin per2 mitted under the Federal employees health 

3 benefits program under chapter 89 of title 

4 5, United States Code; or 

5 (ii) more than a multiple, established 

6 by the Secretary for purposes of this sub7 section, of profit margins permitted under 

8 such program. 

9 SEC. 209. ENROLLEE PREMIUM SHARE. 

10 (a) IN GENERAL.—A participating insurer offering a 

11 private group health insurance plan that has been awarded 

12 a contract under section 205(a) in which the eligible indi13 vidual is enrolled may not deny, limit, or condition the 

14 coverage (including out-of-pocket cost-sharing) or provi15 sion of health benefits coverage or vary or increase the 

16 enrollee premium share under the plan based on any 

17 health status-related factor described in section 

18 2702(a)(1) of the Public Health Service Act (42 U.S.C. 

19 300gg–1(a)(1)) or any other factor. 

20 (b) RISK-ADJUSTED PLAN PAYMENTS AND PRE21 MIUMS CHARGED TO ENROLLEES.—

22 (1) IN GENERAL.—For each private group 

23 health insurance plan operated by a participating in24 surer, the pool operator shall adjust premium pay25 ments to compensate for the difference in health risk 
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1 factors between plan enrollees and State residents as 

2 a whole (including residents who are not eligible in3 dividuals). Such adjustments shall employ risk-ad4 justment mechanisms promulgated by the Secretary. 

5 (2) ADDITIONAL ADJUSTMENTS.—The pool op6 erator shall also provide additional adjustments to 

7 premium payments that compensate participating in8 surers for the cost of keeping out-of-pocket cost9 sharing amounts consistent with section 

10 204(c)(9)(B). 

11 (3) ENROLLEE PREMIUM COSTS.—The adjust12 ments described in this subsection shall not affect 

13 enrollee premium shares, which shall be based on the 

14 premium that would be charged for enrollees with 

15 health risk factors for State residents as a whole (as 

16 described in paragraph (1)), without taking into ac17 count cost-sharing adjustments under section 

18 204(c)(9)(B). 

19 (c) AMOUNT OF PREMIUM.—The amount of the en20 rollee premium share shall be equal to premium amounts 

21 (if any) above the applicable cap set pursuant to section 

22 204(c)(10), plus 100 percent of the remainder minus the 

23 applicable percentage (as defined in section 36(b) of the 

24 Internal Revenue Code of 1986, as added by section 111). 
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1 SEC. 210. PAYMENTS TO PURCHASING POOL OPERATORS 

2 AND PAYMENTS TO PARTICIPATING INSUR3 ERS. 

4 The Secretary shall establish procedures for making 

5 payments to each purchasing pool operator as follows:

6 (1) RISK-ADJUSTMENT PAYMENT.—The Sec7 retary shall pay each purchasing pool operator for 

8 the net costs of risk-adjusted payments to plans 

9 under section 209(b), to the extent the sum of up10 ward adjustments exceeds the sum of downward ad11 justments for the pool operator. 

12 (2) STOP-LOSS AND REINSURANCE PAY13 MENTS.—

14 (A) IN GENERAL.—The Secretary shall pay 

15 each purchasing pool operator for the applicable 

16 percentage (as defined in subparagraph (B)) 

17 of—

18 (i) the costs of any stop-loss coverage 

19 funded by the purchasing pool operator 

20 under section 205(d)(1); and 

21 (ii) any reinsurance provided in ac22 cordance with section 205(d)(2). 

23 (B) APPLICABLE PERCENTAGE DE24 FINED.—In this paragraph, the term ‘‘applica25 ble percentage’’ means—
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1 (i) for the first 3 years that a pur2 chasing pool is operated, 100 percent; 

3 (ii) for the next 2 years that such 

4 purchasing pool is operated, 50 percent; 

5 and 

6 (iii) for any subsequent year, 0 per7 cent. 

8 (3) PAYMENTS NECESSARY TO KEEP COST9 SHARING WITHIN APPLICABLE LIMITS.—The Sec10 retary shall make payments to purchasing pool oper11 ators to reimburse purchasing pool operators for the 

12 amount paid by such operators to participating in13 surers necessary to keep out-of-pocket cost-sharing 

14 for individuals with limited ability to pay within ap15 plicable limits. 

16 (4) PAYMENT FOR ADMINISTRATIVE COSTS.—

17 The Secretary shall make payments to each pur18 chasing pool operator for necessary pool administra19 tive expenses. 

20 (5) PAYMENTS TO OPM.—In the case of a pur21 chasing pool described in section 203(b)(1)(B), pay22 ments under this section shall be made to the Direc23 tor of the Office of Personnel Management.
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1 SEC. 211. STATE-BASED REINSURANCE PROGRAMS. 

2 (a) ESTABLISHMENT.—The Secretary shall establish 

3 standards for State-based reinsurance programs for eligi4 ble individuals to guard against adverse selection and to 

5 improve the functioning of the individual health insurance 

6 market. 

7 (b) GRANTS FOR STATEWIDE REINSURANCE PRO8 GRAMS.—

9 (1) IN GENERAL.—The Secretary may award 

10 grants to States for the reasonable costs incurred in 

11 providing reinsurance under this section, consistent 

12 with standards developed by the Secretary, for cov13 erage offered in the individual health insurance mar14 ket and through State-based purchasing pools de15 scribed in section 203. 

16 (2) LIMITATION.—Such grants may not pay for 

17 reinsurance extending beyond individuals in the top 

18 3 percent of the national health care spending dis19 tribution, as determined by the Secretary. 

20 (3) APPLICATION.—A State desiring a grant 

21 under this section shall submit an application to the 

22 Secretary in such manner, at such time, and con23 taining such information as the Secretary may re24 quire. 

25 (4) AUTHORIZATION OF APPROPRIATIONS.—

26 There are authorized to be appropriated to the Sec-
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•HR 2402 IH 

1 retary such sums as may be necessary for making 

2 grants under this section. 

3 SEC. 212. COVERAGE UNDER INDIVIDUAL HEALTH INSUR4 ANCE. 

5 (a) IN GENERAL.—Eligible individuals may use cred6 its allowed under the Internal Revenue Code of 1986 (in7 cluding supplemental assistance provided under such 

8 Code) for the purchase of health insurance coverage to en9 roll in State-licensed individual health insurance meeting 

10 the conditions of participation described in subsection (b). 

11 (b) CONDITIONS OF PARTICIPATION.—The Secretary 

12 shall promulgate regulations that establish the terms and 

13 conditions under which an entity may participate in the 

14 program under this section and that include the following: 

15 (1) PLAN MARKETING.—Conditions of partici16 pation for plans in the individual market (as devel17 oped by the Secretary) that—

18 (A) ensure that consumers receive the con19 sumer information described in paragraph (2) 

20 before selecting a plan; and 

21 (B) detect, deter, and penalize marketing 

22 fraud by entities offering or purporting to offer 

23 individual insurance. 

24 (2) CONSUMER INFORMATION.—Requirements 

25 for each entity offering individual insurance to pro-
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•HR 2402 IH 

1 vide eligible individuals with information in a uni2 form and easily comprehensible manner that allows 

3 for informed comparisons by eligible individuals and 

4 that includes information regarding the health bene5 fits coverage, costs, provider networks, quality, the 

6 amount and proportion of health insurance premium 

7 payments that go directly to patient care, and the 

8 plan’s coverage rules (including amount, duration, 

9 and scope limits) and out-of-pocket cost-sharing 

10 (both inside and outside plan networks) for each es11 sential service recommended by the National Advi12 sory Commission on Expanded Access to Health 

13 Care and adopted by Congress under title III (which 

14 shall be prominently identified as an essential serv15 ice, including by reference to the Commission rec16 ommendation denoting the service as essential). To 

17 the maximum extent feasible, such requirements 

18 shall specify that the content and presentation of the 

19 information shall be provided in the same manner as 

20 similar information is presented to enrollees in the 

21 Federal employees health benefits program under 

22 chapter 89 of title 5, United States Code. 

23 (3) OTHER CONDITIONS, INCLUDING THE

24 ELIMINATION OF BARRIERS TO AFFORDABLE COV25 ERAGE.—
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•HR 2402 IH 

1 (A) IN GENERAL.—Requirements for each 

2 entity offering individual insurance to abide by 

3 conditions of participation that the Secretary 

4 believes are reasonable and appropriate meas5 ures to address barriers to affordable health in6 surance coverage. 

7 (B) SPECIFIC CONDITIONS.—The require8 ments developed by the Secretary under sub9 paragraph (A) shall include (but need not be 

10 limited to)—

11 (i) guaranteed renewability, without 

12 premium increases based on changed indi13 vidual risk; and 

14 (ii) limits on risk rating. 

15 (4) RULE OF CONSTRUCTION.—Nothing in this 

16 section shall be construed to authorize the Secretary 

17 to impose any requirements on individual insurance, 

18 except with respect to eligible individuals purchasing 

19 individual insurance using advance payment of a tax 

20 credit provided under section 36 of the Internal Rev21 enue Code of 1986. 
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1 SEC. 213. USE OF PREMIUM SUBSIDIES TO UNIFY FAMILY 

2 COVERAGE WITH MEMBERS ENROLLED IN 

3 MEDICAID AND SCHIP. 

4 Notwithstanding any other provision of law, the Sec5 retary shall establish procedures under which, in the case 

6 of a family with 1 or more members enrolled in with a 

7 managed care entity under the State medicaid program 

8 under title XIX of the Social Security Act or the State 

9 children’s health insurance program under title XXI of 

10 such Act (42 U.S.C. 1396 et seq., 1397aa et seq.) and 

11 1 or more members who are an eligible individual under 

12 this title, the family shall have the option to enroll all fam13 ily members with the managed care entity under either 

14 or both such State programs. The procedures established 

15 by the Secretary shall provide that premiums charged to 

16 eligible individuals for enrollment with such an entity shall 

17 be based on the capitated payments established for adults 

18 or children, excluding adults and children who are known 

19 to be pregnant, blind, disabled, or (in the case of adults) 

20 elderly, under the applicable State program (except that, 

21 in the case of an eligible individual known to be pregnant, 

22 premiums shall reflect capitated payments established 

23 under such State program for individuals known to be 

24 pregnant) plus reasonable administrative costs.
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1 SEC. 214. COVERAGE THROUGH EMPLOYER-SPONSORED 

2 HEALTH INSURANCE. 

3 (a) IN GENERAL.—Eligible individuals may use cred4 its allowed under the Internal Revenue Code of 1986 and 

5 supplemental assistance to enroll in coverage offered by 

6 eligible employers. 

7 (b) ELIGIBLE EMPLOYERS.—For purposes of this 

8 section, the term ‘‘eligible employers’’ includes the fol9 lowing: 

10 (1) The current employer of the eligible indi11 vidual or a member of such individual’s family. 

12 (2) A former employer required to offer cov13 erage of the eligible individual under a COBRA con14 tinuation provision (as defined in section 9832(d)(1) 

15 of the Internal Revenue Code) or a State law requir16 ing continuation coverage; and 

17 (3) A former employer voluntarily offering cov18 erage of the eligible individual. 

19 (c) APPLICATION OF DISREGARD OF PREEXISTING

20 CONDITIONS EXCLUSIONS.—Notwithstanding any other 

21 provision of law, in the case of an individual who experi22 ences a qualifying event (as defined in section 603 of the 

23 Employee Retirement Income Security Act of 1974 (29 

24 U.S.C. 1163) and who, not later than 6 months after such 

25 event, is determined to be an eligible individual under this 

26 title, the same rules with respect to preexisting conditions 
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1 as apply to a nonelecting TAA-eligible individual under 

2 section 605(b) of the Employee Retirement Income Secu3 rity Act of 1974 (29 U.S.C. 1165(b)) shall apply with re4 spect to such individual, regardless of which type of quali5 fied coverage the individual purchases. 

6 (d) EXTENSION OF COBRA ELECTION PERIOD.—

7 Notwithstanding any other provision of law, in the case 

8 of an individual who experiences a qualifying event (as de9 fined in section 603 of the Employee Retirement Income 

10 Security Act of 1974 (29 U.S.C. 1163) and who, not later 

11 than 6 months after such event, is determined to be an 

12 eligible individual under this title, the same rules with re13 spect to the temporary extension of a COBRA election pe14 riod as apply to a nonelecting TAA-eligible individual 

15 under section 605(b) of the Employee Retirement Income 

16 Security Act of 1974 (29 U.S.C. 1165(b)) shall apply with 

17 respect to such individual. 

18 (e) CURRENT EMPLOYER COVERAGE.—If an eligible 

19 individual uses the credits allowed under the Internal Rev20 enue Code of 1986 and supplemental assistance to pur21 chase coverage from an employer described in subsection 

22 (b), such credits and assistance shall apply as a percent23 age, not of the total premium amount for the eligible indi24 vidual, but of the employee’s or former employee’s share 

25 of premium payments. 
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1 SEC. 215. PARTICIPATION BY SMALL EMPLOYERS. 

2 (a) IN GENERAL.—Notwithstanding any other provi3 sion of this title, the Secretary shall establish procedures 

4 under which, during annual open enrollment periods, a 

5 small employer shall have the option of purchasing group 

6 coverage for employees and dependents of employees, in7 cluding individuals who are not otherwise eligible individ8 uals under this title, through a purchasing pool established 

9 under section 203(a). 

10 (b) CONDITIONS OF PARTICIPATION.—

11 (1) IN GENERAL.—Except as otherwise pro12 vided in this subsection, the same requirements that 

13 apply with respect to participating insurers covering 

14 eligible low-income individuals under section 203 

15 shall apply with respect to coverage offered by such 

16 insurers through a small employer. 

17 (2) RISK ADJUSTMENT.—

18 (A) INCREASED PAYMENTS.—If employees 

19 of a small employer who are not otherwise eligi20 ble individuals under this title enroll in a pri21 vate group health insurance plan under this 

22 title and have a collective risk level that exceeds 

23 the statewide average (as determined pursuant 

24 to risk adjustment mechanisms developed by 

25 the Secretary consistent with section 

26 209(b)(1)), the Secretary (through a pool oper-
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1 ator) shall provide participating insurers with 

2 such small employer enrollment bonus payments 

3 as are necessary to compensate the insurers for 

4 such increased risk. The premium charged to 

5 enrollees under this section shall be the same 

6 premium that is the basis of premium charges 

7 to enrollees who are eligible low-income individ8 uals. 

9 (B) REDUCED PAYMENTS.—A pool oper10 ator shall reduce payments to any plan with a 

11 risk level that falls below the statewide average 

12 (as so determined). 

13 (3) ADMINISTRATIVE GUIDELINES.—The Sec14 retary shall develop guidelines for pool operators to 

15 use in serving small employers, which shall be mod16 eled after existing, successful, longstanding small 

17 business purchasing cooperatives, and shall include 

18 administratively simple methods for small employers 

19 and licensed insurance brokers to participate in the 

20 program established under this title. 

21 (c) INFORMATION CAMPAIGN.—

22 (1) IN GENERAL.—The pool operator for a 

23 State shall establish and conduct, directly or 

24 through 1 or more public or private entities (which 

25 may include licensed insurance brokers), a health in-
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1 surance information program to inform small em2 ployers about health coverage for employees. 

3 (2) REQUIREMENTS.—The program established 

4 under paragraph (1) shall educate small employers 

5 with respect to matters that include (but are not 

6 limited to) the following: 

7 (A) The benefits of providing health insur8 ance to employees, including tax benefits to 

9 both the employer and employees, increased 

10 productivity, and decreased employee turnover. 

11 (B) The rights of small employers under 

12 Federal and State health insurance reform 

13 laws. 

14 (C) Options for purchasing coverage, in15 cluding (but not limited to) through the State’s 

16 purchasing pool operated pursuant to section 

17 203. 

18 (d) GRANTS TO HELP STATE-BASED POOLS PRO19 MOTE SMALL BUSINESS COVERAGE.—

20 (1) IN GENERAL.—The Secretary may award 

21 grants to a pool operator for the following: 

22 (A) The net costs of risk-adjusted pay23 ments under paragraph (b)(2), to the extent the 

24 sum of upward adjustments exceeds the sum of 

25 downward adjustments for the pool operator.
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1 (B) The reasonable cost of the information 

2 campaign under subsection (c). 

3 (C) The pool operator’s reasonable admin4 istrative costs to implement this section. 

5 (2) LIMITATION.—This section shall not apply 

6 to a State’s pool unless sufficient grant funds have 

7 been received under this subsection to implement 

8 this section on a fiscally sound basis and such re9 ceipt is certified by the pool operator. 

10 (3) APPLICATION.—A pool operator desiring a 

11 grant under this section shall submit an application 

12 to the Secretary in such manner, at such time, and 

13 containing such information as the Secretary may 

14 require. 

15 (4) AUTHORIZATION OF APPROPRIATIONS.—

16 There are authorized to be appropriated to the Sec17 retary such sums as may be necessary for making 

18 grants under this section. 

19 SEC. 216. REPORT. 

20 Not later than 1 year after the date of enactment 

21 of this Act, the Secretary shall submit to Congress a re22 port containing recommendations for such legislative and 

23 administrative changes as the Secretary determines are 

24 appropriate to permit affinity groups related for reasons 
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1 other than a common employer to participate in pur2 chasing pools established under section 203. 

3 SEC. 217. AUTHORIZATION OF APPROPRIATIONS. 

4 (a) IN GENERAL.—There are authorized to be appro5 priated, such sums as may be necessary to carry out this 

6 title for fiscal year 2006 and each fiscal year thereafter. 

7 (b) RULE OF CONSTRUCTION.—Amounts appro8 priated in accordance with subsection (a) shall be in addi9 tion to other amounts appropriated directly under this 

10 title and nothing in subsection (a) shall be construed to 

11 relieve the Secretary of mandatory payment obligations re12 quired under this title. 

13 TITLE III—NATIONAL ADVISORY 

14 COMMISSION ON EXPANDED 

15 ACCESS TO HEALTH CARE 

16 SEC. 301. NATIONAL ADVISORY COMMISSION ON EXPANDED 

17 ACCESS TO HEALTH CARE. 

18 (a) ESTABLISHMENT.—Not later than October 1, 

19 2003, the Secretary of Health and Human Services (re20 ferred to in this section as the ‘‘Secretary’’), shall estab21 lish an entity to be known as the National Advisory Com22 mission on Expanded Access to Health Care (referred to 

23 in this section as the ‘‘Commission’’). 

24 (b) APPOINTMENT OF MEMBERS.—
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1 (1) IN GENERAL.—Not later than 45 days after 

2 the date of enactment of this Act, the House and 

3 Senate Majority and Minority Leaders shall each ap4 point 4 members of the Commission and the Sec5 retary shall appoint 1 member. 

6 (2) CRITERIA.—Members of the Commission 

7 shall include representatives of the following: 

8 (A) Consumers of health insurance. 

9 (B) Health care professionals. 

10 (C) State officials. 

11 (D) Economists. 

12 (E) Health care providers. 

13 (F) Experts on health insurance. 

14 (G) Experts on expanding health care to 

15 individuals who are uninsured. 

16 (3) CHAIRPERSON.—At the first meeting of the 

17 Commission, the Commission shall select a Chair18 person from among its members. 

19 (c) MEETINGS.—

20 (1) IN GENERAL.—After the initial meeting of 

21 the Commission which shall be called by the Sec22 retary, the Commission shall meet at the call of the 

23 Chairperson. 
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1 (2) QUORUM.—A majority of the members of 

2 the Commission shall constitute a quorum, but a 

3 lesser number of members may hold hearings. 

4 (3) SUPERMAJORITY VOTING REQUIREMENT.—

5 To approve a report required under paragraph (2) 

6 or (3) of subsection (e), at least 60 percent of the 

7 membership of the Commission must vote in favor of 

8 such a report. 

9 (d) DUTIES.—The Commission shall—

10 (1) assess the effectiveness of programs de11 signed to expand health care coverage or make 

12 health care coverage affordable to the otherwise un13 insured individuals through identifying the accom14 plishments and needed improvements of each pro15 gram; 

16 (2) make recommendations about benefits and 

17 cost-sharing to be included in health care coverage 

18 for various groups, taking into account—

19 (A) the special health care needs of chil20 dren and individuals with disabilities; 

21 (B) the different ability of various popu22 lations to pay out-of-pocket costs for services; 

23 (C) incentives for efficiency and cost-con24 trol; and 
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1 (D) preventative care, disease management 

2 services, and other factors; 

3 (3) recommend mechanisms to discourage indi4 viduals and employers from voluntarily opting out of 

5 health insurance coverage; 

6 (4) recommend mechanisms to expand health 

7 care coverage to uninsured individuals with incomes 

8 above 200 percent of the official income poverty line 

9 (as defined by the Office of Management and Budg10 et, and revised annually in accordance with section 

11 673(2) of the Omnibus Budget Reconciliation Act of 

12 1981) applicable to a family of the size involved; 

13 (5) recommend automatic enrollment and reten14 tion procedures and other measures to increase 

15 health care coverage among those eligible for assist16 ance; 

17 (6) review the roles, responsibilities, and rela18 tionship between Federal and State agencies with re19 spect to health care coverage and recommend im20 provements; and 

21 (7) analyze the size, effectiveness, and efficiency 

22 of current tax and other subsidies for health care 

23 coverage and recommend improvements. 

24 (e) REPORTS.—
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1 (1) ANNUAL REPORT.—The Commission shall 

2 submit annual reports to the President and Con3 gress addressing the matters identified in subsection 

4 (d). 

5 (2) BIENNIAL REPORT.—

6 (A) IN GENERAL.—The Commission shall 

7 submit biennial reports to the President and 

8 Congress, which shall contain—

9 (i) recommendations concerning essen10 tial benefits and maximum out-of-pocket 

11 cost-sharing (for the general population 

12 and for individuals with limited ability to 

13 pay, which shall not exceed the out-of14 pocket cost-sharing permitted under sec15 tion 2103(e) of the Social Security Act (42 

16 U.S.C. 1397cc(e))) for the coverage op17 tions described in title II; and 

18 (ii) proposed legislative language to 

19 implement such recommendations. 

20 (B) CONGRESSIONAL ACTION.—The legis21 lative language proposed under subparagraph 

22 (A)(ii) shall proceed to immediate consideration 

23 on the floor of the House of Representatives 

24 and the Senate and shall be approved or re25 jected, without amendment, using procedures 
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1 employed for recommendations of military base 

2 closing commissions. 

3 (3) COMMISSION REPORT.—No later than Janu4 ary 15, 2007, the Commission shall submit a report 

5 to the President and Congress, which shall include—

6 (A) recommendations on policies to provide 

7 health care coverage to uninsured individuals 

8 with incomes above 200 percent of the official 

9 income poverty line (as defined by the Office of 

10 Management and Budget, and revised annually 

11 in accordance with section 673(2) of the Omni12 bus Budget Reconciliation Act of 1981) applica13 ble to a family of the size involved; 

14 (B) recommendations on changes to poli15 cies enacted under this Act; and 

16 (C) proposed legislative language to imple17 ment such recommendations. 

18 (f) ADMINISTRATION.—

19 (1) POWERS.—

20 (A) HEARINGS.—The Commission may 

21 hold such hearings, sit and act at such times 

22 and places, take such testimony, and receive 

23 such evidence as the Commission considers ad24 visable to carry out this section. 
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1 (B) INFORMATION FROM FEDERAL AGEN2 CIES.—The Commission may secure directly 

3 from any Federal department or agency such 

4 information as the Commission considers nec5 essary to carry out this section. Upon request 

6 of the Chairperson of the Commission, the head 

7 of such department or agency shall furnish such 

8 information to the Commission. 

9 (C) POSTAL SERVICES.—The Commission 

10 may use the United States mails in the same 

11 manner and under the same conditions as other 

12 departments and agencies of the Federal Gov13 ernment. 

14 (D) GIFTS.—The Commission may accept, 

15 use, and dispose of gifts or donations of serv16 ices or property. 

17 (2) COMPENSATION.—While serving on the 

18 business of the Commission (including travel time), 

19 a member of the Commission shall be entitled to 

20 compensation at the per diem equivalent of the rate 

21 provided for level IV of the Executive Schedule 

22 under section 5315 of title 5, United States Code, 

23 and while so serving away from home and the mem24 ber’s regular place of business, a member may be al25 lowed travel expenses, as authorized by the chair-
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1 person of the Commission. All members of the Com2 mission who are officers or employees of the United 

3 States shall serve without compensation in addition 

4 to that received for their services as officers or em5 ployees of the United States. 

6 (3) STAFF.—

7 (A) IN GENERAL.—The Chairperson of the 

8 Commission may, without regard to the civil 

9 service laws and regulations, appoint and termi10 nate an executive director and such other addi11 tional personnel as may be necessary to enable 

12 the Commission to perform its duties. The em13 ployment of an executive director shall be sub14 ject to confirmation by the Commission. 

15 (B) STAFF COMPENSATION.—The Chair16 person of the Commission may fix the com17 pensation of the executive director and other 

18 personnel without regard to chapter 51 and 

19 subchapter III of chapter 53 of title 5, United 

20 States Code, relating to classification of posi21 tions and General Schedule pay rates, except 

22 that the rate of pay for the executive director 

23 and other personnel may not exceed the rate 

24 payable for level V of the Executive Schedule 

25 under section 5316 of such title. 
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1 (C) DETAIL OF GOVERNMENT EMPLOY2 EES.—Any Federal Government employee may 

3 be detailed to the Commission without reim4 bursement, and such detail shall be without 

5 interruption or loss of civil service status or 

6 privilege. 

7 (D) PROCUREMENT OF TEMPORARY AND

8 INTERMITTENT SERVICES.—The Chairperson of 

9 the Commission may procure temporary and 

10 intermittent services under section 3109(b) of 

11 title 5, United States Code, at rates for individ12 uals which do not exceed the daily equivalent of 

13 the annual rate of basic pay prescribed for level 

14 V of the Executive Schedule under section 5316 

15 of such title. 

16 (g) TERMINATION.—Except with respect to activities 

17 in connection with the ongoing biennial report required 

18 under subsection (e)(2), the Commission shall terminate 

19 90 days after the date on which the Commission submits 

20 the report required under subsection (e)(3). 

21 (h) AUTHORIZATION OF APPROPRIATIONS.—There 

22 are authorized to be appropriated, such sums as may be 

23 necessary to carry out this section for fiscal year 2004 

24 and each fiscal year thereafter.
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1 SEC. 302. CONGRESSIONAL ACTION. 

2 (a) BILL INTRODUCTION.—

3 (1) IN GENERAL.—Any legislative language in4 cluded in the report required under section 

5 301(e)(3) may be introduced as a bill by request in 

6 the following manner: 

7 (A) HOUSE OF REPRESENTATIVES.—In the 

8 House of Representatives, by the Majority 

9 Leader and the Minority Leader not later than 

10 10 days after receipt of the legislative language. 

11 (B) SENATE.—In the Senate, by the Ma12 jority Leader and the Minority Leader not later 

13 than 10 days after receipt of the legislative lan14 guage.

15 (2) ALTERNATIVE BY ADMINISTRATION.—The 

16 President may submit legislative language based on 

17 the recommendations of the Commission and such 

18 legislative language may be introduced in the man19 ner described in paragraph (1). 

20 (b) COMMITTEE CONSIDERATION.—

21 (1) IN GENERAL.—Any legislative language 

22 submitted pursuant to paragraph (1) or (2) of sub23 section (a) (in this section referred to as ‘‘imple24 menting legislation’’) shall be referred to the appro25 priate committees of the House of Representatives 

26 and the Senate. 
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1 (2) REPORTING.—

2 (A) COMMITTEE ACTION.—If, not later 

3 than 150 days after the date on which the im4 plementing legislation is referred to a com5 mittee under paragraph (1), the committee has 

6 reported the implementing legislation or has re7 ported an original bill whose subject is related 

8 to reforming the health care system, or to pro9 viding access to affordable health care coverage 

10 for Americans, the regular rules of the applica11 ble House of Congress shall apply to such legis12 lation. 

13 (B) DISCHARGE FROM COMMITTEES.—

14 (i) SENATE.—

15 (I) IN GENERAL.—If the imple16 menting legislation or an original bill 

17 described in subparagraph (A) has not 

18 been reported by a committee of the 

19 Senate within 180 days after the date 

20 on which such legislation was referred 

21 to committee under paragraph (1), it 

22 shall be in order for any Senator to 

23 move to discharge the committee from 

24 further consideration of such imple25 menting legislation. 
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1 (II) SEQUENTIAL REFERRALS.—

2 Should a sequential referral of the im3 plementing legislation be made, the 

4 additional committee has 30 days for 

5 consideration of implementing legisla6 tion before the discharge motion de7 scribed in subclause (I) would be in 

8 order. 

9 (III) PROCEDURE.—The motion 

10 described in subclause (I) shall not be 

11 in order after the implementing legis12 lation has been placed on the cal13 endar. While the motion described in 

14 subclause (I) is pending, no other mo15 tions related to the motion described 

16 in subclause (I) shall be in order. De17 bate on a motion to discharge shall be 

18 limited to not more than 10 hours, 

19 equally divided and controlled by the 

20 Majority Leader and the Minority 

21 Leader, or their designees. An amend22 ment to the motion shall not be in 

23 order, nor shall it be in order to move 

24 to reconsider the vote by which the 

25 motion is agreed or disagreed to. 
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1 (IV) EXCEPTION.—If imple2 menting language is submitted on a 

3 date later than May 1 of the second 

4 session of a Congress, the committee 

5 shall have 90 days to consider the im6 plementing legislation before a motion 

7 to discharge under this clause would 

8 be in order. 

9 (ii) HOUSE OF REPRESENTATIVES.—

10 If the implementing legislation or an origi11 nal bill described in subparagraph (A) has 

12 not been reported out of a committee of 

13 the House of Representatives within 180 

14 days after the date on which such legisla15 tion was referred to committee under para16 graph (1), then on any day on which the 

17 call of the calendar for motions to dis18 charge committees is in order, any member 

19 of the House of Representatives may move 

20 that the committee be discharged from 

21 consideration of the implementing legisla22 tion, and this motion shall be considered 

23 under the same terms and conditions, and 

24 if adopted the House of Representatives 
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1 shall follow the procedure described in sub2 section (c)(1). 

3 (c) FLOOR CONSIDERATION.— 

4 (1) MOTION TO PROCEED.—If a motion to dis5 charge made pursuant to subsection (b)(2)(B)(i) or 

6 (b)(2)(B)(ii) is adopted, then, not earlier than 5 leg7 islative days after the date on which the motion to 

8 discharge is adopted, a motion may be made to pro9 ceed to the bill. 

10 (2) FAILURE OF MOTION.—If the motion to dis11 charge made pursuant to subsection (b)(2)(B)(i) or 

12 (b)(2)(B)(ii) fails, such motion may be made not 

13 more than 2 additional times, but in no case more 

14 frequently than within 30 days of the previous mo15 tion. Debate on each of such motions shall be limited 

16 to 5 hours, equally divided. 

17 (3) APPLICABLE RULES.—Once the Senate is 

18 debating the implementing legislation the regular 

19 rules of the Senate shall apply. 

20 TITLE IV—STATE WAIVERS 

21 SEC. 401. STATE WAIVERS. 

22 (a) IN GENERAL.—Notwithstanding any other provi23 sion of law, a State may apply to the Secretary of Health 

24 and Human Services for waivers of such provisions of law 

25 as may be necessary for the State to implement policies
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1 that make comprehensive, affordable health coverage 

2 available for all State residents, including access to essen3 tial benefits with limits on cost-sharing, as provided in the 

4 most recent report under section 301(e)(2). 

5 (b) REQUIREMENTS.—In order to ensure that waivers 

6 under this section benefit rather than harm health care 

7 consumers, a State shall not be eligible for a waiver under 

8 this section unless—

9 (1) the State reasonably expects to achieve a 

10 level of enrollment in coverage described in sub11 section (a) that is at least equal to the level of cov12 erage (taking into account the number of insured in13 dividuals, covered benefits, and premium and out-of14 pocket costs to the consumer for such coverage) that 

15 the State would have achieved if the State had fully 

16 implemented the coverage options available under ti17 tles I and II of this Act; 

18 (2) no individual who would have qualified for 

19 assistance under the State medicaid program under 

20 title XIX of the Social Security Act or the State 

21 children’s health insurance program under title XXI 

22 of such Act, as of either the date of the waiver re23 quest or the date of enactment of this Act, will be 

24 denied eligibility for such program, have a reduction 

25 in benefits under such program, have reduced access 
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1 to geographically and linguistically appropriate care 

2 or essential community providers, or be subject to 

3 increased premiums or cost-sharing under the waiver 

4 program under this section; and 

5 (3) the State agrees to comply with such stand6 ards or guidelines as the Secretary of Health and 

7 Human Services may require to ensure that the re8 quirements of paragraphs (1) and (2) are satisfied. 

9 (c) FEDERAL PAYMENTS.—

10 (1) IN GENERAL.—The Secretary of Health and 

11 Human Services shall pay a State with a waiver ap12 proved under this section an amount each quarter 

13 equal to the sum of—

14 (A) the Federal payments the State and 

15 residents of the State (including, but not lim16 ited to, through the credit allowed under section 

17 36 of the Internal Revenue Code of 1986 for 

18 health insurance costs) would have received if 

19 the State had exercised the coverage options 

20 under titles I and II of this Act with respect to 

21 residents of the State who have not attained 

22 age 65; and 

23 (B) the amount of any grants authorized 

24 by this Act that the State would have received 

25 if the State had applied for such grants. 
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1 (2) ADDITIONAL PAYMENT FOR MEDICARE

2 BENEFICIARIES UNDER AGE 65.—

3 (A) IN GENERAL.—In the case of a State 

4 that elects to enroll an individual described in 

5 subparagraph (B) in coverage described in sub6 section (a), the amount described in paragraph 

7 (1) with respect to a quarter shall be increased 

8 by the amount described in subparagraph (C). 

9 (B) INDIVIDUAL DESCRIBED.—An indi10 vidual is described in this subparagraph if the 

11 individual—

12 (i) has not attained age 65; 

13 (ii) is eligible for coverage under title 

14 XVIII of the Social Security Act; and 

15 (iii) voluntarily elects to enroll in cov16 erage described in subsection (a). 

17 (C) AMOUNT DESCRIBED.—The amount 

18 described in this subparagraph is the amount 

19 equal to the amount that the Federal Govern20 ment would have incurred with respect to a 

21 quarter for providing coverage to an individual 

22 described in subparagraph (B) under title 

23 XVIII of the Social Security Act (42 U.S.C. 

24 1395 et seq.). 
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1 (d) IMPLEMENTATION DATE.—No State may submit 

2 a request for a waiver under this section before October 

3 1, 2007.

Æ