I

104TH CONGRESS

1ST SESSION H. R. 2756

To direct the Secretary of Health and Human Services to make payments

to each State for the operation of a comprehensive health insurance

plan ensuring health insurance coverage for individuals and families

in the State, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

DECEMBER 11, 1995

Mr. OBEY (for himself, Mr. HINCHEY, Mr. OWENS, Ms. PELOSI, and Mr.

OBERSTAR) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Commerce and Economic and Educational Opportunities, 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 direct the Secretary of Health and Human Services to

make payments to each State for the operation of a

comprehensive health insurance plan ensuring health insurance coverage for individuals and families in the

State, 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.

4 This Act may be cited as the ‘‘American Health Secu5 rity Partnership Act of 1995.’’
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1 SEC. 2. FINDINGS; PURPOSE.

2 (a) FINDINGS.—Congress finds as follows:

3 (1) 40 million Americans do not have health in4 surance coverage.

5 (2) Cost shifting among payers and providers

6 contributes to the increasing cost of health care in

7 the United States.

8 (3) The only means of ending this cost shifting

9 is to ensure that each individual in the United

10 States has health insurance coverage.

11 (b) PURPOSE.—It is the purpose of this Act to pro12 vide assistance to each State to enable the State to ensure,

13 in the manner the State itself considers most appropriate,

14 that each individual has health insurance coverage at least

15 equivalent to the coverage provided to employees of the

16 Federal Government.

17 SEC. 3. STATE DEFINED.

18 In this Act, the term ‘‘State’’ means each of the 50

19 States and the District of Columbia.

20 TITLE I—FEDERAL PAYMENTS

21 TO STATES

22 SEC. 101. PAYMENTS TO STATES WITH CERTIFIED PLANS.

23 For purposes of assisting States in carrying out plans

24 approved under title II, the Secretary of Health and

25 Human Services (hereafter in this Act referred to as the

26 ‘‘Secretary’’) shall make payments to States with com-
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1 prehensive health insurance plans certified under title II

2 for a fiscal year in an amount determined under section

3 102.

4 SEC. 102. AMOUNT OF STATE PAYMENT.

5 The amount of payment made to a State for a fiscal

6 year under section 101 shall be equal to the State’s alloca7 tion of the total amount available for payments under this

8 title for the fiscal year under section 103, as determined

9 in accordance with the following formula:

10 (1) 50 percent of the total amount available

11 shall be allocated among the States on the basis of

12 the ratio of the population of each State to the pop13 ulation of all States.

14 (2) 50 percent of the total amount available

15 shall be allocated among the States in amounts de16 termined in accordance with the representative reve17 nue system established by the Advisory Commission

18 on Intergovernmental Relations.

19 SEC. 103. TOTAL AMOUNT AVAILABLE FOR PAYMENTS.

20 The total amount available for payments to States

21 for a fiscal year under this title is equal to the following:

22 (1) For fiscal year 1998, $1,000,000,000.

23 (2) For fiscal year 1999, $2,000,000,000.

24 (3) For fiscal year 2000, $28,000,000,000.

25 (4) For fiscal year 2001, $29,000,000,000.
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1 (5) For fiscal year 2002, $30,000,000,000.

2 (6) For fiscal year 2003, $31,000,000,000.

3 TITLE II—REQUIREMENTS FOR

4 COMPREHENSIVE HEALTH

5 PLANS

6 SEC. 201. IMPLEMENTATION OF CERTIFIED HEALTH INSUR7 ANCE PLANS BY STATES.

8 (a) IN GENERAL.—Not later than July 1, 1999, each

9 State shall submit to the Secretary a comprehensive health

10 insurance plan designed to be administered by the State

11 and containing the provisions required under this title,

12 and shall have such plan in place and operating not later

13 than January 1, 2000.

14 (b) CERTIFICATION OF PLANS BY SECRETARY.—The

15 Secretary shall certify for a fiscal year those State plans

16 developed and implemented under this title which meet the

17 applicable requirements of this title for the fiscal year.

18 SEC. 202. REQUIRED PROVISIONS OF HEALTH INSURANCE

19 PLAN.

20 Each State shall have maximum flexibility in develop21 ing and implementing its comprehensive health insurance

22 plan under this title, except that the plan shall include

23 at least the following provisions:

24 (1) COVERAGE.—Health insurance coverage

25 meeting the requirements of this title for all individ-
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1 uals in the State without regard to employment sta2 tus, income, or pre-existing condition or other health

3 status.

4 (2) PORTABILITY AND GUARANTEED RE5 NEWAL.—A prohibition against the denial, cancella6 tion, or refusal to renew the coverage of an individ7 ual or employer except—

8 (A) on the basis of nonpayment of pre9 miums,

10 (B) on the basis of fraud or misrepresenta11 tion, or

12 (C) because the plan is ceasing to provide

13 any coverage in a geographic area.

14 (3) BENEFITS.—

15 (A) COMPARABLE TO FEHBP.—Coverage

16 comparable to the coverage available to employ17 ees of the Federal Government under the Fed18 eral Employees Health Benefits Program

19 (FEHBP) (as determined by the Secretary).

20 Coverage under title XVIII of the Social Secu21 rity Act or coverage under a State plan under

22 title XIX of such Act shall be deemed to meet

23 the requirement of the previous sentence.

24 (B) AVAILABILITY OF HOME- AND COMMU25 NITY-BASED CARE.—The offering of home- and
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1 community-based care as an alternative to insti2 tutional care if medically appropriate.

3 (4) COMMUNITY RATING OF PREMIUMS.—A re4 quirement that the premium charged shall be equiv5 alent for all individuals within any community, ex6 cept that the premium may vary with respect to an

7 individual on the basis of the individual’s age or the

8 number of members of the individual’s family cov9 ered.

10 (5) STATE SUPPLEMENTAL PREMIUM PAY11 MENTS.—The payment by the State of supplemental

12 amounts to ensure that all individuals may obtain

13 coverage at reasonable rates.

14 (6) QUALITY OF CARE.—The creation of ade15 quate mechanisms designed to assure, monitor, and

16 maintain the provision of high quality health care to

17 individuals in the State.

18 (7) COST CONTAINMENT.—The creation of ade19 quate mechanisms designed to control premiums and

20 the costs of providing high quality health care to in21 dividuals in the State.
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1 SEC. 203. WAIVER OF ERISA LIMITATION ON STATE REGU2 LATION OF SELF-INSURED PLANS.

3 Section 514(b) of the Employee Retirement Income

4 Security Act of 1974 (29 U.S.C. 1144(b)) is amended by

5 adding at the end the following paragraph:

6 ‘‘(9) Subsection (a) shall not apply to any State

7 law to the extent such law conforms to or reflects

8 the provisions of a comprehensive health insurance

9 plan developed and implemented by the State and

10 certified by the Secretary of Health and Human

11 Services under title II of the American Health Secu12 rity Partnership Act of 1995.’’.

13 SEC. 204. REQUIRING OPERATION OF CERTIFIED PLAN TO

14 RECEIVE MEDICAID PAYMENTS.

15 Section 1903 of the Social Security Act (42 U.S.C.

16 1396b) is amended by adding at the end the following new

17 subsection:

18 ‘‘(x)(1) In order to receive payments under this title

19 for any quarter beginning on or after January 1, 2000,

20 a State must have in effect a comprehensive health insur21 ance plan certified for the fiscal year in which the quarter

22 occurs by the Secretary under section 201(b) of the Amer23 ican Health Security Partnership Act of 1995.

24 ‘‘(2)(A) The provisions of this subsection shall not

25 apply to a State for any quarter—
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1 ‘‘(i) that follows the quarter during which the

2 State meets the requirements of this subsection; or

3 ‘‘(ii) with respect to which the Secretary deter4 mines that the State is unable to comply with the

5 relevant requirements of this subsection—

6 ‘‘(I) for good cause (but such a waiver may

7 not be for a period in excess of 4 quarters), or

8 ‘‘(II) due to circumstances beyond the con9 trol of such State.

10 ‘‘(B) For purposes of determining deadlines imposed

11 under this subsection, any time period during which a

12 State was found under subparagraph (A)(ii)(II) to be un13 able to comply with the requirements of this subsection

14 shall not be taken into account, and the Secretary shall

15 modify all such deadlines with respect to such State ac16 cordingly.’’.

17 SEC. 205. INCREASE IN MINIMUM COMMUNITY SPOUSE RE18 SOURCE ALLOWANCE UNDER MEDICAID.

19 (a) IN GENERAL.—Section 1924(f)(2)(A)(i) of the

20 Social Security Act (42 U.S.C. 1396r-5(f)(2)(A)(i)) is

21 amended by striking ‘‘$12,000’’ and inserting ‘‘$50,000’’.

22 (b) EFFECTIVE DATE.—The amendment made by

23 subsection (a) shall apply to quarters beginning on or

24 after October 1, 1995.
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1 TITLE III—FINANCING

2 MECHANISMS

3 SEC. 301. INCREASE IN TOP INCOME TAX RATE APPLICA4 BLE TO CORPORATIONS.

5 (a) IN GENERAL.—Subsection (b) of section 11 of the

6 Internal Revenue Code of 1986 is amended by striking

7 ‘‘35 percent’’ each place it appears and inserting ‘‘36 per8 cent’’.

9 (b) CONFORMING AMENDMENTS.—

10 (1) The last sentence of section 11(b) of such

11 Code is amended by striking ‘‘$100,000’’ and insert12 ing ‘‘$200,000’’.

13 (2) Clause (iii) of section 852(b)(3)(D) of such

14 Code is amended by striking ‘‘65 percent’’ and in15 serting ‘‘64 percent’’.

16 (3) Subsection (a) of section 1201 of such Code

17 is amended by striking ‘‘35 percent’’ each place it

18 appears and inserting ‘‘36 percent’’.

19 (4) Paragraphs (1) and (2) of section 1445(e)

20 of such Code are each amended by striking ‘‘35 per21 cent’’ and inserting ‘‘36 percent’’.

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

23 this section shall apply to taxable years beginning after

24 December 31, 1995.
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1 SEC. 302. REVISION OF FEDERAL MEDICAL ASSISTANCE

2 PERCENTAGE UNDER MEDICAID.

3 Section 1905(b) of the Social Security Act (42 U.S.C.

4 1396d(b)) is amended—

5 (1) in the first sentence, by striking ‘‘83 per

6 centum’’ and inserting ‘‘the applicable maximum

7 percentage described in the second sentence’’; and

8 (2) by inserting after the first sentence the fol9 lowing new sentence: ‘‘In the previous sentence, the

10 ‘applicable maximum percentage’ is 83 per centum

11 for quarters occurring during fiscal years prior to

12 fiscal year 1998 and 60 per centum for quarters oc13 curring during fiscal year 1998 and each succeeding

14 fiscal year.’’.

15 SEC. 303. INCREASE IN EXCISE TAXES ON TOBACCO PROD16 UCTS.

17 (a) CIGARETTES.—Subsection (b) of section 5701 of

18 the Internal Revenue Code of 1986 is amended—

19 (1) by striking ‘‘$12 per thousand ($10 per

20 thousand on cigarettes removed during 1991 or

21 1992)’’ in paragraph (1) and inserting ‘‘$49.50 per

22 thousand’’, and

23 (2) by striking ‘‘$25.20 per thousand ($21 per

24 thousand on cigarettes removed during 1991 or

25 1992)’’ in paragraph (2) and inserting ‘‘$103.95 per

26 thousand’’.
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1 (b) CIGARS.—Subsection (a) of section 5701 of such

2 Code is amended—

3 (1) by striking ‘‘$1.125 cents per thousand

4 (93.75 cents per thousand on cigars removed during

5 1991 or 1992)’’ in paragraph (1) and inserting

‘‘$38.621 6 ⁄2 per thousand’’, and

7 (2) by striking ‘‘equal to’’ and all that follows

8 in paragraph (2) and inserting ‘‘equal to 52.594 per9 cent of the price for which sold but not more than

10 $123.75 per thousand.’’.

11 (c) CIGARETTE PAPERS.—Subsection (c) of section

12 5701 of such Code is amended by striking ‘‘0.75 cent

13 (0.625 cent on cigarette papers removed during 1991 or

14 1992)’’ and inserting ‘‘3.09 cents’’.

15 (d) CIGARETTE TUBES.—Subsection (d) of section

16 5701 of such Code is amended by striking ‘‘1.5 cents (1.25

17 cents on cigarette tubes removed during 1991 or 1992)’’

18 and inserting ‘‘6.19 cents’’.

19 (e) SMOKELESS TOBACCO.—Subsection (e) of section

20 5701 of such Code is amended—

21 (1) by striking ‘‘36 cents (30 cents on snuff re22 moved during 1991 or 1992)’’ in paragraph (1) and

23 inserting ‘‘$12.86’’, and
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1 (2) by striking ‘‘12 cents (10 cents on chewing

2 tobacco removed during 1991 or 1992)’’ in para3 graph (2) and inserting ‘‘$12.62’’.

4 (f) PIPE TOBACCO.—Subsection (f) of section 5701

5 of such Code is amended by striking ‘‘67.5 cents (56.25

6 cents on pipe tobacco removed during 1991 or 1992)’’ and

inserting ‘‘$13.171 7 ⁄2’’.

8 (g) EFFECTIVE DATE.—The amendments made by

9 this section shall apply to articles removed (as defined in

10 section 5702(k) of the Internal Revenue Code of 1986)

11 after December 31, 1996.

12 TITLE IV—TAX DEDUCTIBILITY

13 OF HEALTH INSURANCE

14 SEC. 401. TAX DEDUCTIBILITY OF HEALTH INSURANCE.

15 (a) IN GENERAL.—Part VII of subchapter B of chap16 ter 1 of the Internal Revenue Code of 1986 (relating to

17 additional itemized deductions) is amended by redesignat18 ing section 220 as section 221 and by inserting after sec19 tion 219 the following new section:

20 ‘‘SEC. 220. HEALTH INSURANCE COSTS.

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

22 there shall be allowed as a deduction an amount equal to

23 80 percent (or 100 percent, in the case of an individual

24 who is a self-employed individual within the meaning of

25 section 401(c)) of the amount paid during the taxable year
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1 for insurance which constitutes medical care for the tax2 payer, his spouse, and dependents.

3 ‘‘(b) LIMITATION BASED ON EARNED INCOME.—No

4 deduction shall be allowed under subsection (a) to the ex5 tent that the amount of such deduction exceeds the sum

6 of—

7 ‘‘(1) the taxpayer’s wages, salaries, tips, and

8 other employee compensation includible in gross in9 come, plus

10 ‘‘(2) the taxpayer’s earned income (as defined

11 in section 401(c)(2)).

12 ‘‘(c) OTHER COVERAGE.—Subsection (a) shall not

13 apply to any taxpayer for any calendar month for which

14 the taxpayer is eligible to participate in any subsidized

15 health plan maintained by any employer of the taxpayer

16 or of the spouse of the taxpayer.

17 ‘‘(d) SPECIAL RULES.—

18 ‘‘(1) COORDINATION WITH MEDICAL DEDUC19 TION, ETC.—Any amount paid by a taxpayer for in20 surance to which subsection (a) applies shall not be

21 taken into account in computing the amount allow22 able to the taxpayer as a deduction under section

23 213(a).

24 ‘‘(2) DEDUCTION NOT ALLOWED FOR SELF-EM25 PLOYMENT TAX PURPOSES.—The deduction allow-
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1 able by reason of this section shall not be taken into

2 account in determining an individual’s net earnings

3 from self-employment (within the meaning of section

4 1402(a)) for purposes of chapter 2.’’

5 (b) CONFORMING AMENDMENTS.—

6 (1) Subsection (l) of section 162 of such Code

7 is hereby repealed.

8 (2) Subsection (a) of section 62 of such Code

9 is amended by inserting after paragraph (15) the

10 following new item:

11 ‘‘(16) HEALTH INSURANCE COSTS.—The deduc12 tion allowed by section 220.’’

13 (3) The table of sections for part VII of sub14 chapter B of chapter 1 of such Code is amended by

15 striking the last item and inserting the following

16 new items:

‘‘Sec. 220. Health insurance costs.

‘‘Sec. 221. Cross reference.’’

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

18 this section shall apply to taxable years beginning after

19 December 31, 1995.

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