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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 16 Introduced in House (IH)]

104th CONGRESS
  1st Session
                                 H. R. 16

   To provide a program of national health insurance, and for other 
                               purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            January 4, 1995

 Mr. Dingell introduced the following bill; which was referred to the 
  Committee on Commerce, and in addition to the Committee on Ways and 
 Means, 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 provide a program of national health insurance, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, That this Act, with the 
following table of contents, may be cited as the ``National Health 
Insurance Act''.

                           TABLE OF CONTENTS

Secs. 2-5. Declaration of purpose.
                   TITLE I--BENEFITS AND ELIGIBILITY

Sec. 101. Classes of personal health services.
Sec. 102. Availability of benefits.
Sec. 103. How benefits obtained; free choice by patient.
Sec. 104. Eligibility for benefits.
Sec. 105. Provision of benefits for noninsured needy and other 
                            individuals.
TITLE II--PARTICIPATION OF PHYSICIANS, DENTISTS, NURSES, HOSPITALS, AND 
                                 OTHERS

Sec. 201. Physicians and dentists; specialists.
Sec. 202. Nurses.
Sec. 203. Hospitals.
Sec. 204. Auxiliary services.
Sec. 205. Agreements with individual practitioners, hospitals, and 
                            others.
Sec. 206. Agreements with voluntary health insurance and other 
                            organizations.
Sec. 207. Provisions common to all agreements.
Sec. 208. Methods of payments for services.
Sec. 209. Amount of payments for services.
Sec. 210. Professional rights and responsibilities.
                    TITLE III--LOCAL ADMINISTRATION

Sec. 301. Decentralization of administration.
Sec. 302. Local administrative committee or officer.
Sec. 303. Local area committees.
Sec. 304. Local professional committees.
Sec. 305. Methods of administration.
                     TITLE IV--STATE ADMINISTRATION

Sec. 401. Declaration of policy.
Sec. 402. State plan of operations.
  TITLE V--NATIONAL HEALTH INSURANCE BOARD; NATIONAL ADVISORY MEDICAL 
           POLICY COUNCIL; GENERAL ADMINISTRATIVE PROVISIONS

Sec. 501. National Health Insurance Board.
Sec. 502. Advisory Council.
Sec. 503. Studies, recommendations, and reports.
Sec. 504. Nondisclosure of information.
Sec. 505. Prohibition against discrimination.
    TITLE VI--ELIGIBILITY DETERMINATIONS, COMPLAINTS, HEARINGS, AND 
                            JUDICIAL REVIEW

Sec. 601. Determinations as to eligibility for benefits.
Sec. 602. Complaints of eligible individuals and of persons furnishing 
                            benefits.
  TITLE VII--APPLICATION OF ACT TO INDIVIDUALS COVERED UNDER MEDICARE 
                                PROGRAM

Sec. 701. Eligibility; benefits available.
Sec. 702. Study and report.
                     TITLE VIII--FISCAL PROVISIONS

Sec. 801. Personal health services account.
Sec. 802. Allotment of funds.
Sec. 803. Grants-in-aid for training and education.
                   TITLE IX--MISCELLANEOUS PROVISIONS

Sec. 901. Definitions.
Sec. 902. Effective date.
      TITLE X--VALUE ADDED TAX AND NATIONAL HEALTH CARE TRUST FUND

Sec. 1001. Imposition of value added tax.
Sec. 1002. Revenue from value added tax to fund National Health Care 
                            Trust Fund.
       TITLE XI--STUDY AND DEVELOPMENT OF COST CONTROL MECHANISMS

Sec. 1101. Development of cost control mechanisms.

                  findings and declaration of purpose

    Sec. 2. (a) The Congress finds that--
            (1) the health of the Nation's people is the foundation of 
        our Nation's strength, productivity, and wealth;
            (2) the assurance of adequate medical care to all of our 
        people is essential to the general welfare and to the Nation's 
        security;
            (3) since the tremendous advances in medical science in 
        recent years have necessarily meant great advances in the cost 
        of health services, our archaic system of paying for medical 
        care--based on public and private charity for the poor, on 
        unpredictable and often unbearable costs to the otherwise self-
        supporting, and on disproportionate charges for the well-to-
        do--has resulted in the following conditions:
                    (A) the inability of the vast majority of our 
                people to meet the shattering cost of serious or 
                chronic illness;
                    (B) the inability of most of our people to benefit 
                from modern preventive medicine; and
                    (C) wholly inadequate provision for the health 
                needs of our farm families and agricultural workers;
            (4) the conditions described in the preceding paragraph 
        cannot effectively be remedied under the present system of 
        payment for medical care, or under any voluntary insurance 
        system; and
            (5) a medical dole as an answer to this problem is 
        repugnant to the American people and would certainly result in 
        a system of state medicine, paid for from tax funds and 
        rendered by regimented doctors.
    (b) The Congress declares the purposes of this Act to be to provide 
a sound economic foundation for our free system of medicine and to 
correct the maldistribution of health personnel and facilities by 
establishing a system of prepaid personal health insurance on the 
principle of social insurance.
    Sec. 3. In establishing a system of national health insurance, it 
is the policy of this Act that those persons and their dependents who 
are insured under the provisions of the Act shall be assured full 
freedom to choose their physicians and to change their choice as they 
may desire; that physicians and other professions furnishing services 
in accordance with the provisions of this Act shall be assured full 
freedom in the practice of their professions, including the right to 
accept or reject patients except as this right may be restricted by 
their own professional ethics or by the laws of the several States; and 
that the administration of this Act shall be based upon the American 
principle of decentralization.
    Sec. 4. In carrying out these policies, it is the intention of 
Congress that the major administrative responsibilities be placed in 
the hands of local bodies representing both those who pay for and 
receive services and those who render services, and operating within 
the framework of plans made by the several States, and approved by the 
Federal agency; that the National Health Care Trust Fund created by 
this Act shall be allotted equitably among the several States and by 
the States to their local areas; that voluntary as well as governmental 
organizations shall be recognized and utilized; and that all eligible 
individuals and their dependents as specified in this Act shall be 
entitled to its benefits without discrimination because of race, color, 
or creed.

                   TITLE I--BENEFITS AND ELIGIBILITY

                  classes of personal health services

    Sec. 101. (a) The personal health services to be made available as 
benefits to eligible individuals as provided in this title are medical 
services, dental services, podiatric services, home-nursing services, 
hospital services, and auxiliary services. Each class of services shall 
be provided by persons (including individuals, partnerships, 
corporations, associations, consumer cooperatives, and other 
organizations) who are authorized by applicable State law, and who are 
qualified under title II of this Act, to do so.
    (b) Medical services consist of (1) general medical services such 
as can be rendered by a physician engaged in the general or family 
practice of medicine, including preventive, diagnostic, and therapeutic 
care and periodic medical examinations; and (2) specialist services 
rendered by a physician who is a specialist in the class of services 
rendered, as defined in section 201 of this Act. Such services may be 
rendered at the office, home, hospital, or elsewhere, as necessary.
    (c) Dental services consist of (1) general dental services rendered 
by a dentist engaged in the general practice of dentistry, including 
preventive, diagnostic, and therapeutic care, and periodic dental 
examinations; and (2) specialist services rendered by a dentist who is 
a specialist in the class of services rendered, as defined in section 
201 of this Act. Such services may be rendered at the office, home, 
hospital, or elsewhere, as necessary.
    (d) Podiatric services consist of those professional services of a 
podiatrist who is legally authorized to perform such services in the 
State in which he practices.
    (e) Home-nursing services consist of nursing care of the sick 
rendered in the home by a registered professional nurse or a qualified 
practical nurse.
    (f) Hospital services consist of hospitalization, including 
necessary nursing services, and such physician, laboratory, ambulance, 
and other services in connection with hospitalization as the National 
Health Insurance Board (hereinafter in this Act referred to as the 
``Board''), after consultation with the National Advisory Medical 
Policy Council (hereinafter in this Act referred to as the ``Advisory 
Council''), by regulation designates as essential to good hospital 
care, for a maximum of sixty days in any benefit year; but hospital 
services shall not include hospitalization in a mental disease hospital 
or institution, or hospitalization for any day more than thirty days 
following the diagnosis of a psychosis. Whenever the Board, after 
consultation with the Advisory Council, finds that moneys in the 
account (established by section 701) are adequate and that facilities 
are available, it may by regulation increase the maximum days of 
hospitalization in any benefit year.
    (g) Auxiliary services consist of such chemical, bacteriological, 
pathological, diagnostic X-ray and related laboratory services; X-ray, 
radium, and related therapy; physiotherapy; services of optometrists; 
and prescribed drugs which are unusually expensive, special appliances, 
and eyeglasses; as the Board, after consultation with the Advisory 
Council, by regulation designates as auxiliary services on the basis of 
its finding that their provision under this Act is practicable and is 
essential to good health care.

                        availability of benefits

    Sec. 102. (a) Medical services, hospital services, and, except as 
otherwise provided in subsection (b) of this section, all other 
personal health services specified in section 101 shall be made 
available (subject to section 701) as benefits to eligible individuals 
in all health-service areas within the United States as rapidly and as 
completely as possible having regard for the availability of the 
professional and technical personnel and the hospital and other 
facilities needed to provide such services. To this end the resources 
and needs of each State shall be surveyed and a program developed in 
each State to assure the maximum participation and use of health 
personnel and facilities in the provision of benefits, and to encourage 
improvement in the number and distribution of such personnel and 
facilities throughout the State. Additional surveys shall be undertaken 
as required, and the program in the State from time to time modified on 
the basis thereof.
    (b) If the Board, after consultation with the Advisory Council, 
finds that the personnel or facilities or funds that are or can be made 
available are inadequate to insure the provision of all services 
included as dental, home-nursing, or auxiliary services under section 
101 of this Act, it may by regulation limit for a specified period the 
services which may be provided as benefits, or modify the extent to 
which, or the circumstances under which, they will be provided to 
eligible individuals. Any such restriction or limitation shall be 
reduced or withdrawn as rapidly as may be practicable; and, in the case 
of dental services, priority in the reduction or withdrawal of any such 
restriction or limitation shall be given to children.
    (c) The Board shall have the duty of studying and making 
recommendations as to needed services and facilities for the care of 
the chronic sick afflicted with physical ailments, and for the care of 
individuals afflicted with mental or nervous diseases, and as to needed 
provisions for the prevention of chronic physical diseases and of 
mental or nervous diseases; and of making reports from time to time, 
with recommendations as to legislation, but the first such report shall 
be made not later than two years after benefits under this Act first 
become available.

             how benefits obtained: free choice by patient

    Sec. 103. Every individual eligible for personal health services 
available under this Act may freely select the physician, dentist, 
podiatrist, nurse, medical group, hospital, or other person of his 
choice to render such services, and may change such selection if the 
practitioner, medical group, hospital, or other person has agreed under 
title II of this Act to furnish the class of services required and 
consents to furnish such services to the individual. General medical, 
dental, and podiatric services may be obtained by request made by the 
individual directly to the practitioner of the individual's choice. 
Specialist, home-nursing, hospital, and auxiliary services shall be 
obtained from the specialist, nurse, hospital, or other person of the 
individual's choice, whenever the practitioner from whom he is 
receiving medical or dental services as benefits under this Act refers 
him for specialist, home-nursing, hospital, or auxiliary services upon 
determining that such services are required in the proper care of his 
particular case; or whenever, upon request of the individual, an 
administrative medical officer, upon a like determination, refers him 
for such services. The Board, by regulation, shall dispense with the 
necessity of referral in cases of emergency, and may dispense with the 
necessity of referral under specified circumstances or as respects 
specified classes of services, or both, if it finds, after consultation 
with the Advisory Council, that such action will be conducive to the 
provision of a more adequate amount and quality of health care and will 
not unreasonably increase the expenditures from the account for such 
services.

                        eligibility for benefits

    Sec. 104. (a) Subject to section 701, every individual shall be 
eligible for benefits under this Act throughout any benefit year if--
            (1) he has received (or, in the case of income from self-
        employment, has accrued)--
                    (A) not less than $2,000 in wages during the first 
                four of the last six calendar quarters preceding the 
                beginning of the benefit year; or
                    (B) not less than $1,500 in wages in each of six 
                calendar quarters during the first twelve of the last 
                fourteen calendar quarters preceding the beginning of 
                the benefit year (not counting as one of such fourteen 
                calendar quarters any quarter in any part of which the 
                individual was under a total disability which continued 
                for six months or more);
            (2) he is entitled, for the first month in the benefit 
        year, to a benefit under title II of the Social Security Act or 
        to an annuity under subchapter III (relating to civil service 
        retirement) of chapter 83 of title 5, United States Code; or
            (3) he is on the first day of the benefit year a dependent 
        of an individual who is eligible under paragraph (1) or 
        paragraph (2).
    (b) Subject to section 701, every individual, not eligible therefor 
under subsection (a), shall be eligible for benefits under this Act 
during the remainder of a benefit year, beginning with--
            (1) the first day of any calendar quarter in such benefit 
        year, if he has received (or, in the case of income from self-
        employment, has accrued) not less than $150 in wages during the 
        first four of the last six calendar quarters preceding the 
        beginning of such calendar quarter;
            (2) the first day of the first month in such benefit year 
        for which he is entitled to a benefit or annuity referred to in 
        subsection (a)(2); or
            (3) the first day in such benefit year on which he is or 
        becomes a dependent of an individual who is eligible for 
        benefits under subsection (a) (1) or (2) under paragraph (1) or 
        (2) of this subsection.
    (c) No individual shall be deemed eligible for any personal health 
services as a benefit under this Act which are required by reason of 
any injury, disease, or disability on account of which any medical, 
dental, home-nursing, hospital, or auxiliary service is being received, 
or upon application therefor would be received, under a workmen's 
compensation law of the United States or of any State, unless equitable 
reimbursements to the fund for the provision of such services as 
benefits have been made or assured under section 105 of this Act. In 
any case in which an individual receives any personal health service as 
a benefit under this Act with respect to any such injury, disease, or 
disability, for which no reimbursement to the fund has been made or 
assured, the United States shall to the extent permitted by State law 
be subrogated to all rights of such individual, or of the person who 
furnished such service, to be paid or reimbursed, pursuant to such 
workmen's compensation law, for the cost of furnishing such service.

    provision of benefits for noninsured needy and other individuals

    Sec. 105. (a) Subject to section 701, any or all benefits provided 
under this Act to individuals eligible for such benefits may be 
furnished to individuals (including the needy) not otherwise eligible 
therefor, for any period for which equitable reimbursements to the 
account on behalf of such needy or other individuals have been made, or 
for which reasonable assurance of such reimbursements have been given, 
by public agencies of the United States, the several States, or any of 
them or of their political subdivisions, such reimbursements to be in 
accordance with agreements and working arrangements negotiated with 
such public agencies. Services furnished to such needy or other 
individuals as benefits shall be of the same quality, be furnished by 
the same methods, and be paid for through the same arrangements, as 
services furnished to individuals eligible for benefits under this Act.
    (b) Federal grants to States under title XIX, and part A of title 
IV, of the Social Security Act, and Federal grants to States for aid or 
assistance under other provisions of such Act, shall be available to 
the States for provision of personal-health services for noninsured 
needy individuals in accordance with the provisions of subsection (a) 
of this section.

TITLE II--PARTICIPATION OF PHYSICIANS, DENTISTS, NURSES, HOSPITALS, AND 
                                 OTHERS

                  physicians and dentists; specialists

    Sec. 201. Any individual who is a physician, dentist, or podiatrist 
legally authorized in a State to render any services included as 
general medical, dental, or podiatric services shall be deemed 
qualified to render such services in that State as benefits under this 
Act. Any such individual who is found to possess skill and experience 
of a degree and kind sufficient to meet standards established for a 
class of specialist services shall be deemed qualified to receive 
compensation for specialist services of such class as benefits under 
this Act. The Board, after consultation with the Advisory Council, 
shall establish standards as to the special skills and experience 
required to qualify an individual to render each such class of 
specialist services as benefits under this Act, and to receive 
compensation for such specialist services. In establishing such 
standards and in determining whether individuals qualify thereunder, 
standards and certifications developed by professional agencies shall 
be utilized as far as is consistent with the purposes of this Act, and 
regard shall be had for the varying needs and the available resources 
in professional personnel of the States and of local health-service 
areas.

                                 nurses

    Sec. 202. Any individual shall be deemed qualified to render home-
nursing services in a State as benefits under this title if such 
individual is (a) a professional nurse registered in such State, or (b) 
a practical nurse (1) who is qualified as such under State standards or 
requirements, or, in the absence of State standards or requirements, is 
found to be qualified under standards established by the Board after 
consultation with the Advisory Council and with nursing agencies, and 
(2) who furnishes nursing care under the direction or supervision of 
the State health agency, the health agency of a political subdivision 
of the State, or an organization supplying and supervising the services 
of registered professional nurses in the State.

                               hospitals

    Sec. 203. Any hospital or other institution shall be deemed 
qualified to furnish all or particular classes of hospital services as 
benefits under this Act if it is qualified to furnish such services 
under State standards or requirements for the maintenance and operation 
of hospitals which apply to the class or classes of services to be 
furnished, or if, in the absence of such State standards or 
requirements, it is found to afford professional services, personnel, 
and equipment adequate to promote the health and safety of individuals 
requiring the class or classes of hospital services to be furnished, 
according to standards which the Board shall establish after 
consultation with the Advisory Council.

                           auxiliary services

    Sec. 204. Any person (as defined in section 901(1)) who is 
qualified under State standards or requirements to furnish a class of 
services included as auxiliary services, or, in the absence of State 
standards or requirements, is found to be qualified to furnish a class 
of such services under standards established for such class by the 
Board after consultation with the Advisory Council, shall be deemed 
qualified to furnish such class of auxiliary services in that State as 
benefits under this Act.

    agreements with individual practitioners, hospitals, and others

    Sec. 205. Any individual (or, in the case of hospital or auxiliary 
services, any person) qualified under this title to furnish any class 
or classes of personal health services as benefits may enter into an 
agreement with the State agency which in accordance with title IV has 
assumed responsibility for the administration in the State of benefits 
under this Act (hereinafter in this Act referred to as the ``State 
agency''), to furnish such class or classes of services as benefits to 
individuals eligible therefor under this Act.

   agreements with voluntary health insurance and other organizations

    Sec. 206. (a) In the provision of personal health services, it 
shall be the policy to utilize individuals or organizations qualified 
under this title to render such services, including (1) any organized 
group of individuals, (2) any partnership, association, or consumer 
cooperative, (3) any hospital or any hospital and its staff, or (4) any 
organization operating a voluntary health-service insurance plan or 
other voluntary health-service plan.
    (b) The State agency is authorized to enter into an agreement with 
any organization referred to in subsection (a) for the provision of 
personal health services under this Act. Any such organization, whether 
or not it enters into an agreement with the State agency on its own 
behalf, shall be permitted to act as agent for individuals or other 
persons in negotiating or in carrying out agreements with the State 
agency for rendering personal health services under this Act.
    (c) Any agreement under this section shall provide that each class 
of personal health services will be furnished only by individuals (or, 
in the case of hospital or auxiliary benefits, by persons, as defined 
in section 901(1)) who are qualified under this title to render such 
class of services and each of whom has agreed or has authorized an 
agreement to be made on his behalf with the State agency that he will 
furnish such services in accordance with this Act and with regulations 
prescribed thereunder. Each such individual or person shall be 
responsible, both to the State agency and (in accordance with 
applicable State law) to individuals eligible for personal health 
services as benefits, for carrying out such agreement made by him or on 
his behalf.

                  provisions common to all agreements

    Sec. 207. (a) Each agreement made under this title shall specify 
the class or classes of services to be furnished or provided pursuant 
to its terms, shall contain an undertaking to comply with this Act and 
with regulations prescribed thereunder, shall be made upon terms and 
conditions consistent with the efficient and economical administration 
of this Act, and shall continue in force for such period and be 
terminable upon such notice as may be agreed upon.
    (b) No agreement under section 206, and no designation of an agent, 
shall for more than one year preclude any individual or person 
qualified to furnish personal health services from exercising such 
rights as he would otherwise have under this title (1) to negotiate and 
enter into an agreement directly with the State agency, or (2) to 
designate another agent for such negotiation, or (3) to participate in 
another agreement under section 206.
    (c) No agreement made under this title shall confer upon any 
individual or other person, or any group or other organization, the 
right of furnishing or providing personal health services as benefits, 
to the exclusion in whole or in part of other individuals, persons, 
groups, or organizations qualified to furnish or provide such services.
    (d) If the State agency after investigation finds that an 
individual or other person under agreement to furnish or provide 
personal health services as benefits is no longer qualified to furnish 
or provide such services, or has committed a substantial breach of the 
agreement, it shall notify such person of its findings, together with 
the reasons therefor, and in the absence of a request for a hearing by 
such person under title VI, or in the event of a final decision 
sustaining its findings after any hearing and further review provided 
under title VI, may terminate the agreement and withdraw the person's 
name from the list published pursuant to title III. After an agreement 
has been so terminated, no new agreement shall be entered into with 
such person under this Act unless and until such person gives 
reasonable assurances to the State agency of his or its ability and 
willingness to discharge all obligations and responsibilities under a 
new agreement satisfactorily in accordance with its provisions.

                    methods of payments for services

    Sec. 208. (a) Agreements for the furnishing of medical, dental, or 
podiatric services (other than specialist services) as benefits under 
this Act shall provide for payment--
            (1) on the basis of fees for services rendered as benefits, 
        according to a fee schedule;
            (2) on a per capita basis, the amount being according to 
        the number of individuals eligible for benefits who are on the 
        practitioner's list;
            (3) on a salary basis, whole time or part time; or
            (4) on such combinations or modifications of these bases, 
        including separate provision for travel and related expenses, 
        as may be approved by the State agency;
according in each health-service area as the majority of the medical 
practitioners or of the dental practitioners, respectively, under 
agreement to furnish such services shall elect. Provision shall be made 
for another method or methods of payment (from among the methods listed 
in this subsection) to those medical practitioners or to those dental 
practitioners who do not elect the method of such majority, when it is 
found that such alternative method of making payments contributes to 
carrying out the provisions of section 305 of this Act or otherwise 
promotes the efficient and economical provision of medical or dental 
services in the area.
    (b) Agreements for the furnishing of specialist services as 
benefits under this Act may provide for payments on the basis of fee 
for service, per case, per session, per capita, on salary (whole time 
or part time), or other basis, or combination thereof.
    (c) Any of the methods of making payments from among the methods 
listed in subsection (a) or subsection (b) may be used in making 
payments to groups or practitioners or organizations or other agencies 
which undertake to provide specialist services as well as general 
medical or general dental services.
    (d) Agreements for the furnishing of hospital services as benefits 
under this Act shall provide for payment on the basis of the reasonable 
costs of hospitalization furnished as benefits. The Board, after 
consultation with the Advisory Council and with representatives of 
interested hospital organizations, may by regulation prescribe maximum 
rates for hospitalization furnished as benefits under this Act, and 
such maximum rates may be varied according to classes of localities or 
types of service. Payments to hospitals shall be based on the least 
expensive multiple-bed accommodations available in the hospital unless 
the patient's condition makes the use of private accommodations 
essential for his proper medical care. An agreement made for furnishing 
such services shall not affect the right of the hospital or other 
person with whom the agreement is made to require payments from 
patients with respect to the additional cost of more expensive 
facilities occupied at the request of the patient, or with respect to 
services not included as benefits under this Act.
    (e) Agreements for the furnishing of home-nursing services or 
auxiliary services as benefits under this Act shall provide for payment 
in accordance with such methods as the State agency may approve from 
among those set forth in regulations prescribed pursuant to this Act.
    (f) In any health-service area where agreements for the furnishing 
of general medical or general dental services provide for payment only 
on a per capita basis, the per capita payments with respect to those 
individuals residing in the area who have failed to select a 
practitioner or other person to furnish such services to them shall be 
made on a pro rata basis among the practitioners and other persons 
under agreement to furnish such services in the area.

                    amount of payments for services

    Sec. 209. (a) Rates or amounts of payment for particular services 
or classes of services furnished as benefits under this Act shall be 
adapted to take account of relevant regional, State, or local 
conditions and practices. In arriving at the payments to be made for 
services of general medical and dental practitioners, specialists, 
professional and practical nurses, or other practitioners, regard shall 
be had for the annual income or its equivalent which the payments will 
provide, and consideration shall be given to degree of specialization, 
and to the skill, experience, and responsibility involved in rendering 
the services. Such payments, together with the other terms and 
conditions of the agreements made under this title, shall be adequate 
to provide professional and financial incentives to practitioners to 
advance in their professions and to practice in localities where their 
services are most needed, to encourage high standards in the quality of 
services furnished, to give assistance in their use of opportunities 
for postgraduate study, and to allow for adequate vacation.
    (b) The rates and amounts of payments fixed under the different 
methods of payments specified in subsections (a), (b), (c), and (e) of 
section 208, and the methods of making payments, shall assure 
reasonably equivalent awards for practitioners selecting different 
methods of payment, in consideration of the value of the services they 
render.
    (c) Maximum limits upon the number of eligible individuals with 
respect to whom any person may undertake to render services in any 
local health-service area may be fixed by the local administrative 
committee or local administrative officer of that health-service area 
only on the basis of a recommendation of the professional committee in 
that area that such limitation is necessary to maintain high standards 
in the quality of medical, dental, or other services furnished as 
benefits. Any such limits shall take account of professional needs and 
practices and shall provide suitable exceptions for emergency and 
temporary situations.
    (d) The making of an agreement under section 206 with a group or 
other organization shall not operate to increase the payments to be 
made pursuant to any such agreement over the amounts which, in the 
absence of such group or organization would be payable for the same 
services pursuant to agreements made under section 205 directly with 
the person or persons who furnish the services.

                professional rights and responsibilities

    Sec. 210. (a) Any person who enters into an agreement under this 
title may terminate such agreement after reasonable notice and after 
suitable arrangements are made to fulfill professional obligations to 
eligible individuals.
    (b) Every physician, dentist, or nurse agreeing to render services 
as benefits under this Act shall be free to practice his profession in 
the locality of his own choosing, consistent with the requirements of 
the laws of the States.
    (c) Every physician, dentist, nurse, hospital, or other person 
entering into an agreement under this title shall be free to the extent 
consistent with applicable State law and customary professional ethics 
to accept or reject as a patient any individual requesting his 
services.
    (d) No supervision or control over the details of administration or 
operation, or over the selection, tenure, or compensation of personnel, 
shall be exercised under the authority of this Act over any hospital 
which has agreed to furnish personal health services as benefits.

                    TITLE III--LOCAL ADMINISTRATION

                   decentralization of administration

    Sec. 301. In order that personal health-service benefits may be 
made available promptly and in a manner best adapted to local 
practices, conditions, and needs, responsibility for administration of 
the benefits provided under this Act in the several local health-
service areas shall be decentralized as fully as practicable to local 
administrative committees or local administrative officers, acting with 
the advice and assistance, as provided in this title, of local 
professional committees and, in the case of local administrative 
officers, the advice and assistance of local area committees. The 
health-service areas of a State shall be those so designated in the 
State plan of operations.

               local administrative committee or officer

    Sec. 302. The local administrative agency for each local health-
service area may, as determined by the State, be either--
            (1) a local administrative committee established in 
        accordance with section 303, which shall act through a local 
        executive officer; or
            (2) a local administrative officer, who shall act with the 
        advice and assistance of a local advisory committee established 
        in accordance with section 303.
The local administrative committee or officer, with the advice and 
assistance of such local professional committees as may from time to 
time be established, shall arrange for the furnishing of personal 
health-service benefits to eligible individuals in the area and to that 
end shall--
            (a) publish, and make readily available to eligible 
        individuals in the area, lists of the names of all persons who 
        have agreed to furnish personal health services in the area, 
        together with the class or classes of services which each has 
        undertaken to furnish;
            (b) disseminate pertinent information concerning the rights 
        and privileges under this Act of eligible individuals and of 
        persons qualified to furnish personal health services as 
        benefits;
            (c) maintain effective relationships with physicians, 
        dentists, nurses, hospitals, and other persons who have entered 
        into agreements to furnish personal health services in the 
        area, in order to facilitate the furnishing of such services in 
        accordance with such agreements, to assure full and prompt 
        payment to such persons for services so furnished, and to 
        enlist their full cooperation in the administration of benefits 
        under this Act in the area;
            (d) receive and, to the extent possible in the local area, 
        adjust any complaints which may be made concerning the 
        administration of benefits under this Act in the area;
            (e) perform such other duties (including the making of 
        payments to persons furnishing personal health services in the 
        area) as may be assigned by the State agency; and
            (f) take or initiate such other administrative action as he 
        finds will best carry out, within the area, the provisions of 
        this Act, and best effectuate its purposes.

                         local area committees

    Sec. 303. (a) A local area committee shall be established in each 
health-service area. If designated by the State as a local 
administrative committee, the local area committee shall perform the 
functions specified in section 302 and shall formulate policies for the 
administration of benefits under this Act in the area. If designated as 
an advisory committee, it shall advise and assist in the performance of 
such functions and the formulation of such policies. The committee, 
whether administrative or advisory, shall participate in the solution 
of problems affecting the administration of such benefits, shall 
promote impartiality and freedom from political influence in such 
administration, and shall perform related functions to the end that 
administration in the area may be responsive to the wishes and needs of 
persons furnishing and receiving benefits in the area, be adapted to 
local practices and resources, and provide adequate and high quality 
personal health services to all eligible individuals.
    (b) Each local area committee shall consist of not less than eight 
nor more than sixteen members. The members shall be so selected that a 
majority of the committee shall be representative of the interests of 
individuals in the area who are eligible for benefits, and the 
remaining members shall be chosen from the several professions, 
hospitals, and other organizations in the area by whom such benefits 
will be provided.
    (c) The local area committee shall meet as often as may be 
necessary, and whenever one-third or more of the members request a 
meeting; in the case of a local administrative committee, not less 
frequently than once each month, and in the case of a local advisory 
committee, not less frequently than once in each quarter of the year. 
At least one meeting of the committee each year shall be open to the 
public, notice of which shall be published and at which any person in 
the area may participate. At least once each year there shall be a 
statewide meeting of local administrative officers and representatives 
of local administrative committees. At least once in each year there 
shall be a statewide meeting of representatives of all local advisory 
committees in the State, and any reports or recommendations made at 
such meeting shall on the request of such meeting be transmitted 
through the State agency to the Board.

                     local professional committees

    Sec. 304. Local committees representative of the persons furnishing 
personal health services in the area shall be established in each 
health-service area to assist the local administrative committee and 
its executive officer, or the local administrative officer and the 
local advisory committee, as the case may be, in the preservation of 
the customary freedom and responsibility (under applicable State law) 
of practitioners in the exercise of professional judgment as to the 
care of patients, and in the solution of technical problems concerning 
the participation of professional personnel, hospitals, and other 
qualified persons in the provision of personal health services as 
benefits, and to advise the local administrative or executive officer 
and the local area committee regarding matters of professional practice 
or conduct arising in connection with the performance of agreements for 
the provision of such services. Such local committees shall meet on 
call of the local administrative committee or officer, as the case may 
be, or upon their own motion. The members of any such local 
professional committee may be professional members of the local area 
committee or other professional persons or both.

                       methods of administration

    Sec. 305. (a) In each health-service area the methods of 
administration shall be such as to--
            (1) insure the prompt and efficient care of individuals 
        entitled to personal health services as benefits;
            (2) promote personal relationships between physician and 
        patients;
            (3) promote coordination among and between general 
        practitioners, specialists, those who furnish auxiliary 
        services, nurses, and hospitals, in the furnishing of services 
        under this Act, between them and public-health centers and 
        agencies, and educational service, research, and other related 
        agencies or institutions, and between preventive, diagnostic, 
        and curative services, public and private;
            (4) aid in the prevention of disease, disability, and 
        premature death;
            (5) encourage improvement in the number and distribution of 
        professional personnel and facilities; and
            (6) insure the provision of adequate service with the 
        greatest economy consistent with high standards of quality.
    (b) Local administrative officers shall be appointed by the State 
agency or the head thereof, in accordance with the merit system 
provided for in the State plan of operations; local administrative 
committees shall be appointed by such agency or the head thereof, from 
individuals residing in the respective health-service areas, and the 
executive officers of such committees shall be appointed by the 
committees in accordance with the merit system; the local health-
service areas shall be those so designated in such plan; and members of 
local advisory committees and of local professional committees shall be 
selected in accordance with methods set forth in such plan.
    (c) In exercising their functions and discharging their 
responsibilities under this Act, local administrative officers and 
communities, local advisory committees, and local professional 
committees shall observe the provisions of this Act, and of regulations 
prescribed thereunder, and of any regulations, standards, and 
procedures prescribed by the State agency.

                     TITLE IV--STATE ADMINISTRATION

                         declaration of policy

    Sec. 401. It is the intent of Congress that the benefits provided 
under this Act be administered wherever possible by the several States, 
in accordance with plans of operations submitted and approved as 
provided in this title, and in each State insofar as feasible by the 
same State agency which administers, or supervises the administration 
of, the State's general public health and maternal and child health 
programs.

                        state plan of operations

    Sec. 402. (a) Any State desiring to assume responsibility for the 
administration in the State of the personal health-service benefits 
provided under this Act to all individuals in the State who are 
eligible for such benefits, may do so for the period beginning October 
1, 1996 (when benefits first become available under this Act), or for 
the period beginning October 1 of any succeeding year, if it has 
undertaken, through its legislature, to administer such benefits in 
accordance with the provisions of this Act and with the provisions of 
regulations and standards prescribed thereunder, and, at least twelve 
months in advance, has submitted and had approved a State plan of 
operations which--
            (1) designates as the sole agency for the statewide 
        administration of benefits under this Act a single State agency 
        duly authorized under the law of the State to administer such 
        benefits within the State in accordance with the provisions of 
        this Act, the provisions of regulations and standards 
        prescribed thereunder, and the provisions of the State plan;
            (2) provides for the designation of a State advisory 
        committee which shall include members who are familiar with the 
        needs for personal health services in urban and rural areas, 
        and who are representative of the interests of individuals in 
        the State who are eligible for benefits, such members to 
        constitute a majority, and members chosen from the several 
        professions, hospitals, and other organizations in the State by 
        whom such benefits will be provided, to advise the State agency 
        in carrying out the administration of such benefits in the 
        State;
            (3) provides for the decentralized administration of this 
        Act in the State in accordance with title III for the 
        designation of local health-service areas, and for such methods 
        of selecting the members of local advisory committees and of 
        local professional committees as are calculated to insure 
        representation of the nature set forth in sections 303 and 304, 
        respectively;
            (4) provides such methods of administration, including 
        methods relating to the establishment and maintenance of 
        personnel standards on a merit basis (except that the Board 
        shall exercise no authority with respect to the selection, 
        tenure of office, or compensation of any individual employed in 
        accordance with such methods), as are found by the Board to be 
        necessary for the proper and efficient administration of such 
        benefits in the State;
            (5) provides for the making of surveys of the resources and 
        needs of the State, in accordance with section 102(a), and sets 
        forth a program for the administration of such benefits in the 
        State which gives reasonable assurance (A) that maximum use 
        will be made of all available health personnel and facilities 
        desiring to participate in the provision of benefits to 
        eligible individuals, (B) that funds allotted to the State for 
        the several classes of benefits will be allocated in such 
        manner as to give reasonable assurance of the availability of 
        services in all health-service areas in the State, and (C) that 
        any maldistribution or other inadequacies in the health 
        personnel or facilities available for such purpose, or in the 
        quality of the services rendered, will be progressively 
        improved as rapidly as may be practicable;
            (6) provides that the State agency will make such reports 
        in such form and containing such information as the Board may 
        from time to time reasonably require, and give the Board, upon 
        demand, access to the records upon which such information is 
        based;
            (7) provides that all Federal funds paid to the State 
        agency for purposes of carrying out this Act in the State shall 
        be properly safeguarded and expended solely for the purposes 
        for which paid, and provides for the repayment by the State to 
        the United States of any such funds lost by the State agency or 
        diverted from the purposes for which paid; and
            (8) provides for cooperation, including where necessary 
        entering into working agreements (with any appropriate transfer 
        of funds), with other public agencies of the State or of its 
        political subdivisions concerned with programs related to the 
        purposes of this Act, and with appropriate agencies of other 
        States or of the United States administering this Act, or 
        benefits under this Act, in other States.
    (b) The Board shall approve any State plan and any modification 
thereof submitted by the State which it finds complies with the 
provisions of subsection (a). No change in a State plan shall be 
required within one year after initial approval thereof, or within one 
year after any change thereafter required therein, by reason of any 
change in the regulations or standards prescribed pursuant to this Act, 
except with the consent of the State or in accordance with further 
action by Congress.
    (c) In the event of its disapproval of any plan or any modification 
therein submitted by a State pursuant to this title, the Board shall 
notify the State of such disapproval and shall, upon request of the 
State, afford it reasonable notice and opportunity for a hearing on 
such disapproval.
    (d) If a State has not prior to October 1, 1996, submitted and had 
approved a plan of operations, the Board shall notify the Governor of 
the State that the Board will be required to administer this Act in the 
State, commencing October 1, 1996. The Board shall provide for the 
publication of such notice in at least two newspapers of general 
circulation in the State. If within sixty days after such notification 
to the Governor the State has not submitted an approvable plan, the 
Board shall continue such administration until one year after the 
submission and approval of a plan of operations in accordance with this 
section. The Board may waive the requirement that a State plan must be 
submitted and approved one year prior to commencement of State 
administration if it is satisfied in a particular case that the 
substitution of a shorter preparatory period will not prejudice the 
interests of eligible individuals in the State.
    (e) Whenever the Board, after reasonable notice and opportunity for 
hearing to the State, finds that the State, having submitted and had 
approved a plan of operations under this title--
            (1) is not complying substantially with the provisions of 
        such plan, or with the provisions of this Act or any 
        regulations or standards prescribed thereunder, or
            (2) has withdrawn its plan or failed to change it when and 
        as required by a change in this Act or in regulations 
        prescribed thereunder,
the Board shall notify the Governor of the State of such findings, 
together with its reasons therefor and a statement concerning the 
effect of such findings under this Act, and shall provide for the 
publication of such notice in at least two newspapers of general 
circulation in the State. If within sixty days following such a notice 
the State has not taken appropriate action to bring its plan or its 
administration thereof into conformity with this Act and regulations 
and standards thereunder, the Board shall immediately assume 
responsibility for the administration of this Act in the State and 
shall administer the same in such State for so long thereafter as the 
State fails to give reasonable assurances of substantial compliance or 
fails to submit an approvable plan, as the case may be.
    (f) In any State in which the Board has assumed responsibility for 
the administration of benefits under this Act as provided in 
subsections (d) and (e) of this section, the Board shall have and 
discharge all authority and duties, in accordance with the provisions 
of this Act, which it finds necessary for that purpose, and the term 
``State agency'' wherever used in title II or title III of this Act 
shall be deemed to refer to the Board.
    (g) Nothing in this Act shall preclude any State or any political 
subdivision thereof, whether or not the State has assumed 
responsibility for the administration of benefits under this Act, from 
furnishing, with funds available from sources other than the account, 
any additional health services to individuals who are eligible for 
benefits under this Act or any or all health services to individuals 
who are not so eligible.

  TITLE V--NATIONAL HEALTH INSURANCE BOARD; NATIONAL ADVISORY MEDICAL 
           POLICY COUNCIL; GENERAL ADMINISTRATIVE PROVISIONS

                    national health insurance board

    Sec. 501. (a) There is hereby established in the Department of 
Health and Human Services a National Health Insurance Board, to be 
composed of five members, three of whom shall be appointed by the 
President by and with the advice and consent of the Senate, and the 
other two of whom shall be the Surgeon General of the Public Health 
Service and the Commissioner of Social Security. During his term of 
membership on the Board, no appointed member shall engage in any other 
business, vocation, or employment. At least one of the appointed 
members shall be a doctor of medicine licensed to practice medicine or 
surgery in one of the States. Each appointed member shall receive a 
salary at an annual rate of basic pay, established by the President, 
which is not less than the annual rate of basic pay for positions at 
level V of the Executive Schedule and which is not greater than the 
annual rate of basic pay for positions at level IV of the Executive 
Schedule, and shall hold office for a term of six years, except that 
(1) any member appointed to fill a vacancy occurring prior to the 
expiration of the term for which his predecessor was appointed shall be 
appointed for the remainder of such term; and (2) the terms of office 
of the members first taking office after the date of the enactment of 
this Act shall expire, as designated by the President at the time of 
appointment, one at the end of two years, one at the end of four years, 
and one at the end of six years, after the date of the enactment of 
this Act. The President shall designate one of the appointed members as 
the Chairman of the Board.
    (b) All functions of the Board shall be administered by the Board 
under the direction and supervision of the Secretary of Health and 
Human Services. The board shall perform such functions as it finds 
necessary to carry out the provisions of this Act, and shall make all 
regulations and standards specifically authorized to be made in this 
Act and such other regulations not inconsistent with this Act as may be 
necessary. The Board may delegate to any of its members, officers, or 
employees, or with the approval of the Secretary to any other officer 
or employee of the Department of Health and Human Services, such of its 
powers or duties, except that of making regulations, as it may consider 
necessary and proper to carry out the provisions of this Act. The Board 
may also enter into agreements for the furnishing or provision of 
personal health services under this Act without regard to the 
provisions of title 5, United States Code, pertaining to the 
appointment, status, or compensation of Federal employees, or 
pertaining to contracts for personal services, and without regard to 
section 3709 of the Revised Statutes (41 U.S.C. 5), and any person 
rendering services pursuant to an agreement so made shall not by reason 
thereof be deemed to be an employee of the United States.
    (c) In administering the provisions of this Act, the Board is 
authorized to utilize the services and facilities of any executive 
department or other agency of the United States in accordance with an 
agreement with the head thereof. Payment for such services and 
facilities shall be made in advance or by way of reimbursement, as may 
be agreed upon with the head of the executive department or other 
agency furnishing them.
   (d) Personnel of the Board shall be appointed by the Secretary upon 
recommendation of the Board. The Secretary is authorized to detail to 
the Board, upon its request, any officer or employee of the Department 
of Health and Human Services, and in his discretion to reimburse, from 
funds available for the administration of this Act, the appropriation 
from which the salary or, in the case of commissioned officers of the 
Public Health Service, the pay and allowances of such officer or 
employee are paid.
    (e) Upon the request of any State agency administering a State plan 
of operations pursuant to title IV of this Act, or upon the request of 
any State desiring to prepare and submit a plan of operations, any 
officer or employee of the Board (including any officer or employee 
detailed to the Board pursuant to subsection (d)) may be detailed by 
the Board to assist in the administration, or in the preparation, of 
such State plan of operations. The funds available for the Federal 
administration of this Act may, in the discretion of the Secretary, be 
reimbursed from funds allotted to the State pursuant to section 802 and 
available for State administration, for the salary (or for the pay and 
allowances) of any officer or employee so detailed.

                            advisory council

    Sec. 502. (a) There is hereby established a National Advisory 
Medical Policy Council to consist of the Chairman of the Board, who 
shall serve as Chairman of the Advisory Council ex officio, and sixteen 
members appointed by the Secretary of Health and Human Services. At 
least eight of the sixteen appointed members shall be individuals who 
are familiar with the need for personal health services in urban or 
rural areas and who are representative of the interests of individuals 
eligible for benefits under this Act, and at least six of the members 
shall be individuals who are outstanding in the medical or other 
professions concerned with the provision of services provided as 
benefits under this Act and who are representative of the individuals, 
organizations, and other persons by whom personal health services will 
be provided. Each appointed member shall hold office for a term of four 
years, except that any member appointed to fill a vacancy occurring 
prior to the expiration of the term for which his predecessor was 
appointed shall be appointed for the remainder of that term, and the 
terms of the members first taking office shall expire, as designated by 
the Secretary at the time of appointment, four at the end of the first 
year, four at the end of the second year, four at the end of the third 
year, and four at the end of the fourth year after the date of 
appointment. The Advisory Council is authorized to appoint such special 
advisory technical or professional committees as may be useful in 
carrying out its functions, and the members of such committees may be 
members of the Advisory Council, or other persons, or both. Appointed 
Advisory Council members and members of technical or professional 
committees, while serving on business of the Council (inclusive of 
traveltime), shall receive compensation at rates fixed by the 
Secretary, but not exceeding $200 per day, and shall be entitled to 
receive actual and necessary traveling expenses and per diem in lieu of 
subsistence while so serving away from their places of residence. The 
Advisory Council, its appointed members, and its committees, shall be 
provided with such secretarial, clerical, or other assistance as may be 
provided by the Congress for carrying out their respective functions. 
The Advisory Council shall meet as frequently as the Board deems 
necessary, but not less than twice each year. Upon request by six or 
more members, it shall be the duty of the Chairman to call a meeting of 
the Council.
    (b) The Advisory Council shall advise the Board with reference to 
matters of general policy and administration arising in connection with 
the making of regulations, the establishment of professional standards, 
and the performance of its other duties under this Act.
    (c) Section 14 of the Federal Advisory Committee Act shall not 
apply to the Advisory Council.

                 studies, recommendations, and reports

    Sec. 503. The Board shall have the duty of studying and making 
recommendations as to the most effective methods of providing health 
services, and as to legislation and matters of administrative policy 
concerning health and related subjects. At the beginning of each 
regular session of Congress, it shall make a full report to Congress of 
the administration of this Act, including a report with regard to the 
adequacy of its financial provisions contained in this Act and of 
appropriations made pursuant thereto, the methods of allotment of funds 
among the States, and related matters. Such report shall include a 
record of consultations with the Advisory Council, recommendations of 
the Advisory Council, and comments thereon.

                      nondisclosure of information

    Sec. 504. Information concerning an individual, obtained from him 
or from any physician, dentist, nurse, or hospital, or from any other 
person pursuant to or as a result of the administration of this Act, 
shall be held confidential (except for statistical purposes) and shall 
not be disclosed or be open to public inspection in any manner 
revealing the identity of the individual or other person from whom the 
information was obtained or to whom the information pertains, except as 
may be necessary for the proper administration of this Act or of other 
laws, State or Federal. Any person who shall violate any provision of 
this section shall be deemed guilty of a misdemeanor and, upon 
conviction thereof, shall be punished by a fine not exceeding $50,000 
or by imprisonment not exceeding one year, or both.

                   prohibition against discrimination

    Sec. 505. In carrying out the provisions of this Act there shall be 
no discrimination on account of race, creed, or color. Personal health 
services shall be made available as benefits to all eligible 
individuals, and all persons qualified under title II to enter into 
agreements to furnish or provide such services shall be permitted to do 
so.

    TITLE VI--ELIGIBILITY DETERMINATIONS, COMPLAINTS, HEARINGS, AND 
                            JUDICIAL REVIEW

             determinations as to eligibility for benefits

    Sec. 601. (a) The Secretary of Health and Human Services through 
such units of the Department of Health and Human Services as he may 
determine, shall upon his own initiative or upon application of any 
individual make determinations as to the eligibility of individuals for 
benefits under this Act. Whenever requested by any individual 
determined by the Secretary not to be eligible for benefits for any 
period, or by a dependent of any such individual, the Secretary shall 
give such individual or such dependent reasonable notice and 
opportunity for a hearing with respect to such determination and on the 
basis of the evidence adduced at the hearing shall affirm, modify, or 
reverse his determination.
    (b) In carrying out his responsibility under this section, the 
Secretary shall have all the powers and duties conferred upon him under 
sections 205 and 206 of the Social Security Act. Such powers and duties 
shall be subject to the same limitations and rights of judicial review 
as are contained in section 205 of such Act. Eligibility for benefits 
under this title based on entitlement to an annuity under subchapter 
III (relating to civil service retirement) of chapter 83 of title 5, 
United States Code, shall be determined on the basis of certification 
by the Office of Personnel Management.
    (c) Nothing in title IV of this Act shall be deemed to require or 
authorize any assumption by the State agency, designated in accordance 
with an approved State plan of operations approved under such title, of 
any of the Secretary's responsibilities under this section, but the 
Secretary may utilize existing facilities and services of any such 
agency on the basis of mutual agreements with such agency.

 complaints of eligible individuals and of persons furnishing benefits

    Sec. 602. (a) Any eligible individual aggrieved by reason of his 
failure to receive any personal health-service benefits to which he 
believes himself entitled, or dissatisfied with any service rendered 
him as a personal health-service benefit, and any person who has 
entered into an agreement to furnish services as personal health-
service benefits and who is aggrieved by the failure or alleged failure 
of a local or other administrative officer or a local administrative 
committee to carry out the agreement in accordance with its terms, may 
make a complaint to the local administrative officer or local executive 
officer in the area in which the action or inaction complained of 
occurred, or to such other officer as may be provided in regulations. 
If the officer to whom such complaint is made finds, after 
investigation, that the complaint is well founded, he shall promptly 
take such steps as may be necessary and appropriate to correct the 
action or inaction complained of; and he shall notify the individual or 
other person making the complaint of his disposition thereof. Any such 
individual or other person dissatisfied with the action taken may in 
writing request a hearing thereon and shall be afforded opportunity for 
the same pursuant to subsection (b) of this section.
    (b) Provision shall be made for the establishment of necessary and 
sufficient impartial tribunals to afford hearings to individuals and 
other persons entitled thereto under subsection (a) of this section, or 
section 207(d) of this Act, and for further review of the findings, 
conclusions, and recommendations of such tribunals, in accordance with 
regulations made by the Board, after consultation with the Advisory 
Council. With respect to any complaint involving matters or questions 
of professional practice or conduct, the hearing body shall contain 
competent and disinterested professional representation; and with 
respect to any complaint involving only matters or questions of 
professional practice or conduct the hearing body shall consist 
exclusively of such professional persons.
    (c) In administering this section in any State which has not 
assumed responsibility for the administration of benefits under this 
Act as provided in title IV, the Board (subject to the provisions of 
section 501(b)) shall, insofar as they are applicable to its functions 
under this Act, have all the powers and duties conferred upon the 
Secretary by sections 205 and 206 of the Social Security Act. Such 
powers and duties shall be subject to the limitations and rights of 
judicial review contained in section 205 of such Act.
    (d) In any State which has assumed responsibility for the 
administration of benefits under this Act as provided in title IV the 
powers and duties of the State agency shall be subject to such rights 
of judicial review in the courts of the State as the law of the State 
may provide; subject, however, to review by the Supreme Court of the 
United States in such cases and in such manner as is provided in 
section 1257 of title 28 of the United States Code.

  TITLE VII--APPLICATION OF ACT TO INDIVIDUALS COVERED UNDER MEDICARE 
                                PROGRAM

                    eligibility; benefits available

    Sec. 701. (a) In the case of any individual who is entitled to 
hospital insurance benefits under part A of title XVIII of the Social 
Security Act, or to supplementary medical insurance benefits under the 
insurance program established by part B of such title, during any 
benefit year or part thereof in which he is otherwise eligible for 
benefits under this Act in accordance with section 104 or would 
otherwise be furnished such benefits in accordance with section 105, 
the personal health services (specified in section 101) which may be 
made available to him as benefits under this Act shall be limited to 
those services (otherwise available to him in accordance with section 
102) for which he is ineligible under part A or B of such title XVIII. 
For purposes of the preceding sentence, an individual shall be 
considered ineligible under part A or B of such title XVIII if no 
payment is or can be made to him or on his behalf thereunder with 
respect to the item or service involved, whether because he is not 
entitled to benefits under whichever such part is applicable, because 
no payment is provided under either such part for the item or service 
involved, or because he has exhausted his entitlement to have payment 
made thereunder for items or services of the type involved; and shall 
also be considered ineligible under part A or B of such title XVIII 
with respect to any item or service (for which he is otherwise entitled 
to have payment made thereunder) to the extent that payment is not made 
with respect to such item or service because of the application of the 
deductible and coinsurance provisions of sections 1813 and 1833 of the 
Social Security Act.
    (b) The Board, after consultation with the Advisory Council, shall 
prescribe such regulations as may be necessary or appropriate to 
insure, in the case of individuals whose benefits under this Act are 
limited under subsection (a), that the combination of benefits under 
this Act and title XVIII of the Social Security Act will effectively 
carry out (without duplication of benefits) the purpose of this Act.
    (c) The limitation under subsection (a) of an individual's benefits 
under this Act shall not be construed as affecting the eligibility of 
his dependents for such benefits in accordance with subsection (a)(3) 
or (b)(3) of section 104.

                            study and report

    Sec. 702. As soon as practicable after the enactment of this Act 
the Secretary of Health and Human Services shall undertake and carry 
out a full and complete study of the interrelationship of the program 
of national health insurance under this Act and the program of health 
insurance for the aged under title XVIII of the Social Security Act, in 
order to determine the way in which the latter program may be most 
effectively and equitably transferred to and incorporated in the 
program under this Act. In conducting such study, the Secretary shall 
give particular attention to the transitional problems which would 
result from such a transfer, and shall consider in detail (with respect 
to each such program) the benefits provided, the standards of 
eligibility therefor, the standards and qualifications for 
participation by providers of services of various types, the methods of 
administration, the costs and methods of financing, and any other 
matters which might assist in making such determination and in insuring 
that all desirable features of the program under title XVIII of the 
Social Security Act will to the maximum extent feasible be preserved 
with respect to the individuals covered by that program (and, in 
appropriate cases, included in the program under this Act for all 
individuals who are eligible thereunder, without regard to any 
transfer). The Secretary shall submit to the President and the 
Congress, no later than one year after the date of the enactment of 
this Act, a complete report of the study conducted under this section 
together with his findings as to the most effective and equitable way 
in which the transfer under consideration could be effected and his 
detailed recommendations for legislative, administrative, and other 
actions to accomplish it.

                     TITLE VIII--FISCAL PROVISIONS

                           use of trust fund

    Sec. 801. (a) Funds in the National Health Care Trust Fund shall be 
available for all expenditures necessary or appropriate to carry out 
this Act; except that (subject to the provisions of section 802(g)) 
only so much of such funds shall be available for salaries or other 
administrative expenses of any department or agency of the United 
States as may be authorized in annual or other appropriation Acts.
    (b) Sums received as reimbursements to the account pursuant to 
section 104(c) or section 105, or by virtue of subrogation pursuant to 
section 104(c), shall be deposited in the account and shall be 
available in accordance with the provisions of subsection (a) of this 
section.

                           allotment of funds

    Sec. 802. (a) The Board, after consultation with the Advisory 
Council, shall determine, as far in advance of the beginning of each 
fiscal year as is possible, the sums which shall be available from the 
Trust Fund for provision during the fiscal year of all classes, and of 
each of the five classes, of personal health-service benefits specified 
in section 101(a). Such sums shall be determined, after taking into 
consideration the estimated amount which will be in the Trust Fund at 
the beginning of the fiscal year and the anticipated income of the 
account thereafter, with a view (1) to maintaining as nearly as 
practicable a uniform rate of expenditure for personal health-service 
benefits in successive fiscal years, except for appropriated allowance 
on account of anticipated increase in the personnel and facilities 
available to furnish personal health-service benefits and on account of 
reduction or withdrawal of restrictions or limitations pursuant to 
section 102(b), and (2) to establishing and maintaining a reserve in 
the Trust Fund adequate to meet emergency demands in accordance with 
subsection (d) of this section and adequate to maintain the rate of 
expenditure or to permit its gradual reduction if the income of the 
Trust Fund should fall below the income which had been anticipated.
    (b) In accordance with regulations prescribed after consultation 
with the State agencies, the Board, prior to the beginning of each 
fiscal year shall allot to the several States, for the fiscal years 
1996, 1997, and 1998, 90 percent, and for each fiscal year thereafter 
95 percent of each sum determined pursuant to subsection (a). Such 
regulations shall provide for allotments on the basis of--
            (1) the population in the several States eligible for 
        benefits under this Act;
            (2) professional and other personnel, hospitals, and other 
        facilities, and supplies and commodities, to be available in 
        the several States in the provision of such benefits; and
            (3) the cost of reasonable and equitable compensation to 
        such personnel and facilities and for such supplies and 
        commodities.
Such allotments shall operate, to the maximum extent possible, both to 
assure provision to eligible individuals of adequate personal health-
service benefits in all States and all local health-service areas, and 
also to increase the adequacy of services where personnel and 
facilities are below the national average.
    (c) From time to time during each fiscal year, the Board shall 
allot to the several States the remaining 10 percent or the remaining 5 
percent, as the case may be, of each sum determined pursuant to 
subsection (a). In making allotments under this subsection, the Board 
shall take into consideration the factors specified in subsection (b), 
but shall, in addition, give special consideration to the extent of 
which allotments under subsection (b) have proved to be insufficient to 
permit provision of reasonably adequate benefits under this Act.
    (d) In addition to the sums determined pursuant to subsection (a) 
to be available for the provision of personal health-service benefits, 
the Board, after consultation with the Advisory Council, is authorized 
to make emergency allotments from the account if it finds that a 
disaster, epidemic, or other cause has substantially increased the 
volume of personal health-service benefits required in any part of the 
United States over the volume anticipated when the determinations 
pursuant to subsection (a) were made. Allotments pursuant to this 
subsection shall be made to such State or States, for such class or 
classes of personal health-service benefits, and in such amounts, as 
the Board may find necessary to meet the emergency.
    (e) The Board shall from time to time determine the amounts to be 
paid to each State from its allotments under this section, and shall 
certify to the Secretary of the Treasury the amounts so determined. The 
Secretary shall thereupon, and prior to audit or settlement by the 
General Accounting Office, pay to the State the amounts so certified.
    (f) Funds paid to a State for any class of personal health-service 
benefits shall be used exclusively for the provision of benefits of 
that class, except that the administrative costs of the State in 
administering personal health-service benefits under this Act may be 
met from the allotments to the State. Such administrative costs, which 
in any fiscal year shall not exceed 5 percent of the aggregate 
allotments to the State for such fiscal year, shall be apportioned as 
between the several allotments in accordance with the costs of 
administering the respective classes of benefits; and such 
apportionment may be made in such manner, and by such sampling, 
statistical, or other methods, as may be agreed upon between the Board 
and the State agency.
    (g) In any case in which the Board has assumed responsibility for 
the administration in a State of benefits under this Act in accordance 
with section 402 (d) or (e), all allotments or balances of allotments 
to such State shall be available for expenditure by the Board for the 
provision of personal health-service benefits in that State, and (until 
the Congress shall make funds available therefor pursuant to section 
801(a)) for the costs of administration of such benefits in such State. 
Expenditures authorized pursuant to section 801(a) for such costs of 
administration shall be charged against allotments to such State.

                grants-in-aid for training and education

    Sec. 803. (a) For the purpose of increasing the availability of 
training and education for professional and technical personnel engaged 
or undertaking to engage in the provision or administration of personal 
health services as benefits under this Act, and to carry out the 
policies of section 209(a), the Board is authorized to make grants--
            (1) to public or nonprofit institutions or agencies 
        engaging in undergraduate or postgraduate professional, 
        technical, or administration education or training, for the 
        cost (in whole or in part) of courses or projects which the 
        Board finds, after consultation with the Advisory Council and 
        appropriate Federal departments and agencies, (A) cannot be 
        carried out without financial assistance under this section, 
        and (B) show promise of making valuable contributions to the 
        education, training, or retraining of professional or technical 
        personnel engaged or undertaking to engage in the provision or 
        administration of benefits, or
            (2) to individuals who are professional or technical 
        persons engaged or who undertake to engage in the provision of 
        personal health-service benefits, or who are engaged or 
        undertake to engage in the administration of such benefits, for 
        maintenance (in whole or in part) while in attendance at 
        courses or projects assisted under paragraph (1) or approved by 
        the Board for similar training or education, and for costs of 
        necessary travel.
    (b) Such grants, in such amounts and for payment at such times as 
are approved by the Board, shall be certified for payment to the 
Secretary of the Treasury, who shall pay them from the account to the 
designated individuals, institutions, or agencies.
    (c) For the purposes of this section there shall be available for 
the fiscal year 1996 the sum of $5,000,000, for the fiscal year 1997 
the sum of $5,000,000, and for each fiscal year thereafter an amount 
not to exceed one-half of 1 percent of the amount expended for benefits 
under this Act in the last preceding calendar year.

                  TITLE IX-- MISCELLANEOUS PROVISIONS

                               definition

    Sec. 901. As used in this Act:
    (1) The term ``wages'' means the sum of the following items, 
excluding any amount in excess of the applicable contribution and 
benefit base (as determined under section 230 of the Social Security 
Act with respect to the hospital insurance tax) which is received (or, 
in the case of income from self-employment, accrued) by any individual 
during any calendar year--
            (A) all remuneration for employment, including the cash 
        value of all remuneration paid in any medium other than cash; 
        except that such term does not include--
                    (i) the amount of any payment made to, or on behalf 
                of, an employee under a plan or system established by 
                an employer which makes provision for his employees 
                generally or for a class or classes of his employees 
                (including any amount paid by an employer for insurance 
                or annuities, or into a fund to provide for any such 
                payment), on account of retirement, or sickness or 
                accident disability, or medical and hospitalization 
                expenses in connection with sickness or accident 
                disability, or death; provided, in the case of a death 
                benefit, that the employee (I) has not the option to 
                receive, instead of provision for such death benefit, 
                any part of such payment or, if such death benefit is 
                insured, any part of the premiums (or contributions to 
                premiums) paid by his employer, and (II) has not the 
                right, under the provisions of the plan or system or 
                policy of insurance providing for such death benefit, 
                to assign such benefit, or to receive a cash 
                consideration in lieu of such benefit either upon his 
                withdrawal from the plan or system providing for such 
                benefit or upon termination of such plan or system or 
                policy of insurance or of his employment with such 
                employer;
                    (ii) the payment by an employer (without deductions 
                from the remuneration of the employee) of any social-
                insurance taxes or contributions imposed upon an 
                employee; or
                    (iii) the value of services exchanged for other 
                services for which there is no payment other than the 
                exchange; and
            (B) all net income from farm, business, professional, or 
        other self-employment.
    (2) The term ``employment'' means any service of whatever nature 
performed by an employee for the person employing him, irrespective of 
the citizenship or residence of either, within United States, or on or 
in connection with an American vessel or an American civil aircraft 
under a contract of service which is entered into within the United 
States or during the performance of which the vessel or aircraft 
touches at a port or airport in the United States, if the employee is 
employed on and in connection with such vessel or aircraft when outside 
the United States, except--
            (A) service on active duty in the Armed Forces of the 
        United States;
            (B) service performed in the employ of a State or any 
        political subdivision thereof, or any instrumentality of any 
        one or more of the foregoing which is wholly owned by one or 
        more States or political subdivisions;
            (C) casual labor not in the course of the employer's trade 
        or business;
            (D) service performed by an employee on or in connection 
        with a vessel not an American vessel, or an aircraft not an 
        American aircraft, if the employee is employed on and in 
        connection with such vessel or aircraft when outside the United 
        States;
            (E) service performed by a duly ordained or duly 
        commissioned or licensed minister of any church in the regular 
        exercise of his ministry and service performed by a regular 
        member of a religious order in the exercise of duties required 
        by such order;
            (F) service performed by an individual as an employee or 
        employee representative as defined in section 1 of the Railroad 
        Retirement Act of 1937 or section 1 of the Railroad Retirement 
        Act of 1974;
            (G) service performance in any calendar quarter in the 
        employ of any organization exempt from income tax under section 
        501 of the Internal Revenue Code of 1986 if--
                    (i) the renumeration for such services does not 
                exceed $150; or
                    (ii) such service is in connection with the 
                collection of dues or premiums for a fraternal 
                beneficiary society, order, or association, and is 
                performed away from the home office or is ritualistic 
                service in connection with any such society, order, or 
                association; or
                    (iii) such service is performed by a student who is 
                enrolled and is regularly attending classes at a 
                school, college, or university;
            (H) service performed in the employ of a foreign government 
        (including service as a consular or other officer or employee 
        or a nondiplomatic representative);
            (I) service performed in the employ of an instrumentality 
        wholly owned by a foreign government, if--
                    (i) the service is of a character similar to that 
                performed in foreign countries by employees of the 
                United States Government or of an instrumentality 
                thereof; and
                    (ii) the Secretary of State shall certify to the 
                Secretary of Health and Human Services that the foreign 
                government, with respect to whose instrumentality and 
                employees thereof exemption is claimed, grants an 
                equivalent exemption with respect to similar service 
                performed in the foreign country by employees of the 
                United States Government and of instrumentalities 
                thereof; and
            (J) service performed in the employ of an international 
        organization entitled to enjoy privileges, exemptions, and 
        immunities as an international organization under the 
        International Organizations Immunities Act.
    (3) In any case in which an individual has received wages equal to 
the applicable contribution and benefit base (as determined under 
section 230 of the Social Security Act), in a calendar year, not less 
than $500 of such wages shall be deemed, for the purpose of section 
104(a), to have been received by him in the quarter during which the 
first of such wages were in fact received by him and in each quarter of 
such calendar year thereafter.
    (4) The term ``benefit year'' means a period commencing on July 1 
of any year and ending on June 30 of the succeeding year.
    (5) The term ``quarter'' and the term ``calendar quarter'' mean a 
period of three calendar months ending on March 31, June 30, September 
30, or December 31.
    (6) The term ``employee'' includes (in addition to any individual 
who is a servant under the law of master and servant) any individual 
who performs service, of whatever nature, for a person, unless the 
service is performed by the individual in pursuit of his own 
independently established business. The term ``employee'' also includes 
an officer of a corporation.
    (7) The term ``American vessel'' means any vessel documented or 
numbered under the laws of the United States; and includes any vessel 
which is neither documented nor numbered under the laws of any foreign 
country, if its crew is employed solely by one or more citizens or 
residents of the United States or corporations organized under the laws 
of the United States or of any State.
    (8) The term ``American aircraft'' means an aircraft registered 
under the laws of the United States.
    (9) The term ``State'' includes the District of Columbia.
    (10) The term ``United States'', when used in a geographic sense, 
means the several States, as defined in paragraph (9).
    (11) The term ``dependent'' means an unmarried child (including a 
stepchild, adopted, or foster child) of an individual, who is under the 
age of eighteen, or who is under a total disability which has continued 
for a period of not less than six consecutive calendar months and is 
living with such individual or receiving regular support from him; a 
wife of an individual living with such individual or receiving regular 
support from him; a husband who is under a total disability which has 
continued for a period of not less than six consecutive calendar 
months, and is living with or receiving regular and substantial support 
from such individual; and a parent who is living with or receiving 
regular and substantial support from such individual.
    (12) The term ``person'' means an individual, a trust or estate, a 
partnership, a corporation, an association, a consumer cooperative, or 
other organization.

                             effective date

    Sec. 902. The effective date of this Act shall be the date of its 
enactment, but personal health services shall first become available as 
benefits in accordance with this Act on October 1, 1996.

      TITLE X--VALUE ADDED TAX AND NATIONAL HEALTH CARE TRUST FUND

SEC. 1001. IMPOSITION OF VALUE ADDED TAX.

    (a) In General.--Subtitle D of the Internal Revenue Code of 1986 
(relating to miscellaneous excise taxes) is amended by inserting before 
chapter 31 the following new chapter:

                     ``CHAPTER 30--VALUE ADDED TAX

                              ``Subchapter A. Imposition of tax.
                              ``Subchapter B. Taxable transaction.
                              ``Subchapter C. Taxable amount; rate of 
                                        tax for certain transactions; 
                                        credit against tax.
                              ``Subchapter D. Administration.
                              ``Subchapter E. Definitions and special 
                                        rules; treatment of certain 
                                        transactions.

                   ``Subchapter A--Imposition of Tax

                              ``Sec. 3901. Imposition of tax.

``SEC. 3901. IMPOSITION OF TAX.

    ``(a) General Rule.--A tax is hereby imposed on each taxable 
transaction.
    ``(b) Amount of Tax.--Except as otherwise provided in this chapter, 
the amount of the tax shall be 5 percent of the taxable amount.

                  ``Subchapter B--Taxable Transaction

                              ``Sec. 3903. Taxable transaction.
                              ``Sec. 3904. Commercial-type transaction.
                              ``Sec. 3905. Taxable person.
                              ``Sec. 3906. Transactions in the United 
                                        States.
                              ``Sec. 3907. Rules relating to other 
                                        terms used in section 3903.

``SEC. 3903. TAXABLE TRANSACTION.

    ``For purposes of this chapter, the term `taxable transaction' 
means--
            ``(1) the sale of property in the United States,
            ``(2) the performance of services in the United States, and
            ``(3) the importing of property into the United States,
by a taxable person in a commercial-type transaction.

``SEC. 3904. COMMERCIAL-TYPE TRANSACTION.

    ``(a) General Rule.--For purposes of this chapter, the term 
`commercial-type transaction' means a transaction engaged in by--
            ``(1) a corporation, or
            ``(2) any person (other than a corporation) in connection 
        with a business.
    ``(b) Sales and Leases of Real Property; Imports.--For purposes of 
this chapter--
            ``(1) In general.--The term `commercial-type transaction' 
        includes--
                    ``(A) any sale or leasing of real property, and
                    ``(B) any importing of property,
        whether or not such transaction is described in subsection (a).
            ``(2) Certain imported articles.--Notwithstanding paragraph 
        (1)(B), the importing of an article which is free of duty under 
        part 2 of schedule 8 of the Tariff Schedules of the United 
        States shall not be treated as a commercial-type transaction 
        unless such transaction is described in subsection (a).

``SEC. 3905. TAXABLE PERSON.

    ``(a) General Rule.--Except as otherwise provided in this chapter, 
for purposes of this chapter, the term `taxable person' means a person 
who engages in a business or in a commercial-type transaction.
    ``(b) Treatment of Employees, Etc.--For purposes of this chapter, 
an employee shall not be treated as a taxable person with respect to 
activities engaged in as an employee.

``SEC. 3906. TRANSACTIONS IN THE UNITED STATES.

    ``(a) Sales of Property.--For purposes of this chapter--
            ``(1) In general.--Except as provided in paragraph (2), the 
        sale of property shall be treated as occurring where delivery 
        takes place.
            ``(2) Real property.--The sale of real property shall be 
        treated as occurring where the real property is located.
    ``(b) Performance of Service.--For purposes of this chapter--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, a service shall be treated as occurring where it is 
        performed.
            ``(2) Services performed inside and outside the united 
        states.--If a service is performed both inside and outside the 
        United States, such service shall be treated as performed--
                    ``(A) inside the United States, if 50 percent or 
                more of such service is performed inside the United 
                States, and
                    ``(B) outside the United States, if less than 50 
                percent of such service is performed inside the United 
                States.

``SEC. 3907. RULES RELATING TO OTHER TERMS USED IN SECTION 3903.

    ``(a) Exchanges Treated as Sales.--For purposes of this chapter--
            ``(1) an exchange of property for property or services 
        shall be treated as a sale of property, and
            ``(2) an exchange of services for property or services 
        shall be treated as the performance of services.
    ``(b) Certain Transfers to Employees Treated as Sales.--For 
purposes of this chapter, the transfer of property to an employee as 
compensation (other than a transfer of a type for which no amount is 
includible in the gross income of employees for purposes of chapter 1) 
shall be treated as the sale of property.
    ``(c) Performance of Services.--For purposes of this chapter--
            ``(1) Certain activities treated as performance of 
        services.--Activities treated as included in the performance of 
        services shall include (but shall not be limited to)--
                    ``(A) permitting the use of property,
                    ``(B) the granting of a right to the performance of 
                services or to reimbursement (including the granting of 
                warranties, insurance, and similar items), and
                    ``(C) the making of a covenant not to compete (or 
                similar agreement to refrain from doing something).
            ``(2) Employers and employees.--
                    ``(A) Services for employer.--An employee's 
                services for his employer shall not be treated as the 
                performance of services.
                    ``(B) Services for employee.--An employer's 
                services for his employee shall not be treated as the 
                performance of services unless such services are of a 
                type which constitute gross income to the employee for 
                purposes of chapter 1.
            ``(3) Performance of services treated as sale of 
        services.--The performance of services shall be treated as the 
        sale of services.

 ``Subchapter C--Taxable Amount; Rate of Tax for Certain Transactions; 
                           Credit Against Tax

                              ``Sec. 3911. Taxable amount.
                              ``Sec. 3912. Zero rating for food, 
                                        housing, and medical care.
                              ``Sec. 3913. Zero rating for exports and 
                                        interest.
                              ``Sec. 3914. Governmental entities.
                              ``Sec. 3915. Exempt organizations.
                              ``Sec. 3916. Credit against tax.

``SEC. 3911. TAXABLE AMOUNT.

    ``(a) Amount Charged Customer.--For purposes of this chapter, the 
taxable amount for any transaction for which money is the only 
consideration shall be the price charged the purchaser of the property 
or services by the seller thereof--
            ``(1) including all invoiced charges for transportation, 
        and other items payable to the seller with respect to this 
        transaction, but
            ``(2) excluding the tax imposed by section 3901 with 
        respect to this transaction and excluding any State and local 
        sales and use taxes with respect to this transaction.
    ``(b) Exchanges.--For purposes of this chapter, the taxable amount 
in any exchange of property or services shall be the fair market value 
of the property or services transferred by the person liable for the 
tax (determined as if such person had sold the property or services to 
the other party to the exchange).
    ``(c) Imports.--For purposes of this chapter, the taxable amount in 
the case of any import shall be--
            ``(1) the customs value plus customs duties and any other 
        duties which may be imposed, or
            ``(2) if there is no such customs value, the fair market 
        value (determined as if the importer had sold the property).
    ``(d) Special Rule in the Case of Sales of Certain Used Consumer 
Goods.--For purposes of this chapter, if--
            ``(1) a taxable person acquires any tangible personal 
        property in a transaction which was not a taxable transaction, 
        and
            ``(2) such property had been used by an ultimate consumer 
        before such acquisition,
the taxable amount in the case of any sale of such property by such 
taxable person (determined without regard to this subsection) shall be 
reduced by the amount paid for such property by such taxable person.

``SEC. 3912. ZERO RATING FOR FOOD, HOUSING, AND MEDICAL CARE.

    ``(a) Zero Rating for Food, Housing, and Medical Care.--The rate of 
the tax imposed by section 3901 shall be zero with respect to the 
following:
            ``(1) Food.--The retail sale of food and nonalcoholic 
        beverages for human consumption (other than consumption on the 
        premises).
            ``(2) Housing.--The sale and renting of residential real 
        property for use by the purchaser or tenant as a principal 
        residence.
            ``(3) Medical care.--Medical care.
    ``(b) Definitions.--For purposes of subsection (a)--
            ``(1) Nonalcoholic beverages.--The term `nonalcoholic 
        beverages' does not include any article which is taxable under 
        chapter 51.
            ``(2) Medical care.--The term `medical care' means the 
        performance of any service, and the retail sale of any 
        property, payment for which by the purchaser would constitute 
        medical care within the meaning of section 213.
            ``(3) Mobile homes, etc., treated as real property.--A 
        mobile or floating home shall be treated as real property.
    ``(c) Advance Zero Rating.--The Secretary shall prescribe 
regulations under which any item which becomes clearly identifiable as 
an item to which subsection (a) will apply when it reaches the retail 
stage shall be zero rated for all transactions after it becomes so 
clearly identifiable.

``SEC. 3913. ZERO RATING FOR EXPORTS AND INTEREST.

    ``The rate of the tax imposed by section 3901 shall be zero with 
respect to the following:
            ``(1) Exports.--Exports of property.
            ``(2) Interest.--Interest.

``SEC. 3914. GOVERNMENTAL ENTITIES.

    ``(a) Zero Rating for Sales to Governmental Entities and 
Educational Activities of Governmental Entities.--The rate of the tax 
imposed by section 3901 shall be zero with respect to the following:
            ``(1) Sales to governmental entities.--Any sale of property 
        or services to a governmental entity.
            ``(2) Educational activities.--The providing by a 
        governmental entity of property and services in connection with 
        the education of students.
    ``(b) Sales, Etc., by Governmental Entities Taxable Only Where 
Separate Charge Is Made.--For purposes of this chapter, the sale of 
property and the performance of services by a governmental entity shall 
be a taxable transaction if (and only if) a separate charge of fee is 
made therefor.
    ``(c) Governmental Entity Defined.--For purposes of this chapter, 
the term `governmental entity' means the United States, any State or 
political subdivision thereof, the District of Columbia, a Commonwealth 
or possession of the United States, or any agency or instrumentality of 
any of the foregoing.

``SEC. 3915. EXEMPT ORGANIZATIONS.

    ``(a) Zero Rating for Section 501(c)(3) Organizations; Credit 
Allowed for All Purchases.--
            ``(1) Zero rating.--The rate of the tax imposed by section 
        3901 shall be zero with respect to any taxable transaction 
        engaged in by a section 501(c)(3) organization other than as 
        part of an unrelated business.
            ``(2) Credit allowed for all purchases.--For purposes of 
        this chapter, a section 501(c)(3) organization shall be treated 
        as engaged in a business with respect to all of its activities.
    ``(b) Taxable Transactions in Case of Other Exempt Organizations.--
For purposes of this chapter, the sale of property and the performance 
of services by any exempt organization other than a section 501(c)(3) 
organization shall be a taxable transaction if (and only if) a charge 
or fee is made for such services.
    ``(c) Definitions.--For purposes of this chapter--
            ``(1) Section 501(c)(3) organizations.--The term `section 
        501(c)(3) organization' means an organization described in 
        section 501(c)(3) which is exempt from tax under section 
        501(a).
            ``(2) Other exempt organization.--The term `other exempt 
        organization' means any organization (other than a section 
        501(c)(3) organization) which is exempt from tax under chapter 
        1.

``SEC. 3916. CREDIT AGAINST TAX.

    ``(a) General Rule.--There shall be allowed as a credit against the 
tax imposed by section 3901 the aggregate amount of tax imposed by 
section 3901 which has been paid by sellers to the taxpayer of property 
and services which the taxpayer uses in the business to which the 
transaction relates.
    ``(b) Exempt Transactions, Etc.--If--
            ``(1) property or services are used partly in the business 
        and partly for other purposes, or
            ``(2) property or services are used partly for taxable 
        transactions and partly for other transactions,
the credit shall be allowable only with respect to the property and 
services used for taxable transactions in the business. No credit shall 
be allowable for any transaction occurring when the taxpayer was a 
nontaxable person.
    ``(c) Excess Credit Treated as Overpayment.--
            ``(1) In general.--If for any taxable period the aggregate 
        amount of the credits allowable by subsection (a) exceeds the 
        aggregate amount of the tax imposed by section 3901 for such 
        period, such excess shall be treated as an overpayment of the 
        tax imposed by section 3901.
            ``(2) Time when overpayment arises.--Any overpayment under 
        paragraph (1) for any taxable period shall be treated as 
        arising on the later of--
                    ``(A) the due date for the return for such period, 
                or
                    ``(B) the date on which the return is filed.

                     ``Subchapter D--Administration

                              ``Sec. 3921. Seller liable for tax.
                              ``Sec. 3922. Tax invoices.
                              ``Sec. 3923. De minimis exemption.
                              ``Sec. 3924. Time for filing return and 
                                        claiming credit; deposits of 
                                        tax.
                              ``Sec. 3925. Treatment of related 
                                        businesses, etc.
                              ``Sec. 3926. Secretary to be notified of 
                                        certain events.
                              ``Sec. 3927. Regulations.

``SEC. 3921. SELLER LIABLE FOR TAX.

    ``The person selling the property or services shall be liable for 
the tax imposed by section 3901.

``SEC. 3922. TAX INVOICES.

    ``(a) Seller Must Give Purchaser Tax Invoice.--Any taxable person 
engaging in a taxable transaction shall give the purchaser a tax 
invoice with respect to such transaction if the seller has reason to 
believe that the purchaser is a taxable person.
    ``(b) Content of Invoice.--The tax invoice required by subsection 
(a) with respect to any transaction shall set forth--
            ``(1) the name and identification number of the seller,
            ``(2) the name of the purchaser,
            ``(3) the amount of the tax imposed by section 3901, and
            ``(4) such other information as may be prescribed by 
        regulations.
    ``(c) No Credit Without Invoice.--
            ``(1) In general.--Except as provided in paragraphs (2) and 
        (3), a purchaser may claim a credit with respect to a 
        transaction only if the purchaser--
                    ``(A) has received from the seller and has in his 
                possession a tax invoice which meets the requirements 
                of subsection (b), and
                    ``(B) is named as the purchaser in such invoice.
            ``(2) Employees or other agents named in invoices.--To the 
        extent provided in regulations, the naming of an employee or 
        other agent of the purchaser shall be treated as the naming of 
        the purchaser.
            ``(3) Waiver of invoice requirement in certain cases.--To 
        the extent provided in regulations, paragraph (1) shall not 
        apply--
                    ``(A) where the purchaser without fault on his part 
                fails to receive or fails to have in his possession a 
                tax invoice,
                    ``(B) to a taxable transaction (or category of 
                transactions) where--
                            ``(i) the amount involved is de minimis, or
                            ``(ii) the information required by 
                        subsection (b) can be reliably established by 
                        sampling or by another method and can be 
                        adequately documented.
    ``(d) Time for Furnishing Invoice.--Any invoice required to be 
furnished by subsection (a) with respect to any transaction shall be 
furnished not later than 15 business days after the tax point for such 
transaction.

``SEC. 3923. DE MINIMIS EXEMPTION.

    ``(a) In General.--Under regulations, a person--
            ``(1) whose aggregate taxable transactions for the calendar 
        year do not exceed $20,000, and
            ``(2) whose aggregate taxable transactions for the next 
        calendar year can reasonably be expected not to exceed $20,000,
may elect to be treated as a person who is not a taxable person for the 
next calendar year.
    ``(b) Exceptions.--Subsection (a) shall not apply--
            ``(1) to any sale or leasing of real property, and
            ``(2) to any importing of property.
    ``(c) Termination of Election.--Any election under subsection (a) 
for a calendar year shall terminate if the aggregate taxable 
transactions--
            ``(1) for the first calendar quarter in such year exceed 
        $7,000,
            ``(2) for the first 2 calendar quarters in such year exceed 
        $12,000, or
            ``(3) for the first 3 calendar quarters in such year exceed 
        $17,000.
Such termination shall take effect on the first day of the second month 
following the close of the first period in which the requirements of 
paragraph (1), (2), or (3) are met.
    ``(d) Taxable Amount Treated as Zero for Zero-Rated Transactions.--
For purposes of this section, the taxable amount of any zero-rated 
transaction shall be treated as zero.
    ``(e) Condition of Election.--In the case of a person who is a 
taxable person for any period, an election under subsection (a) may be 
made for succeeding periods only with the consent of the Secretary. 
Such consent shall be conditioned on placing such person, for all 
succeeding periods, in the same position with respect to the tax 
imposed by section 3901 (and the credit allowed by section 3916) he 
would have been in if all property and services he holds at the time he 
becomes a nontaxable person had been acquired as a nontaxable person.
    ``(f) Casual Sales and Leases of Real Property Excluded.--For 
purposes of this section, the term `taxable transaction' does not 
include a transaction which is treated as a commercial-type transaction 
solely by reason of section 3904(b)(1)(A).

``SEC. 3924. TIME FOR FILING RETURN AND CLAIMING CREDIT; DEPOSITS OF 
              TAX.

    ``(a) Filing Return.--Before the first day of the second calendar 
month beginning after the close of each taxable period, each taxable 
person shall file a return of the tax imposed by section 3901 on 
taxable transactions having a tax point within such taxable period.
    ``(b) Credit Allowed for Taxable Period in Which Purchaser Receives 
Invoice.--
            ``(1) In general.--Except as provided in paragraph (2), a 
        credit allowable by section 3916 with respect to a transaction 
        may be allowed only for the first taxable period by the close 
        of which the taxpayer--
                    ``(A) has paid or accrued amounts properly 
                allocable to the tax imposed by section 3901 with 
                respect to such transaction, and
                    ``(B) has a tax invoice (or equivalent) with 
                respect to such transaction.
            ``(2) Use for later period.--Under regulations, a credit 
        allowable by section 3916 may be allowed for a period after the 
        period set forth in paragraph (1).
    ``(c) Taxable Period.--For purposes of this chapter--
            ``(1) In general.--The term `taxable period' means a 
        calendar quarter.
            ``(2) Exception.--
                    ``(A) Election of 1-month period.--If the taxpayer 
                so elects, the term `taxable period' means a calendar 
                month.
                    ``(B) Other periods.--To the extent provided in 
                regulations, the term `taxable period' includes a 
                period, other than a calendar quarter or month, 
                selected by the taxpayer.
    ``(d) Tax Point.--For purposes of this chapter--
            ``(1) Chapter 1 rules with respect to seller govern.--
        Except as provided in paragraph (2), the tax point for any sale 
        of property or services is the earlier of--
                    ``(A) the time (or times) when any income from the 
                sale should be treated by the seller as received or 
                accrued (or any loss should be taken into account by 
                the seller) for purposes of chapter 1, or
                    ``(B) the time (or times) when the seller receives 
                payment for the sale.
            ``(2) Imports.--In the case of the importing of property, 
        the tax point is when the property is entered, or withdrawn 
        from warehouse, for consumption in the United States.
    ``(e) Monthly Deposits Required.--To the extent provided in 
regulations, monthly deposits may be required of the estimated 
liability for any taxable period for the tax imposed by section 3901.

``SEC. 3925. TREATMENT OF RELATED BUSINESSES, ETC.

    ``(a) General Rule.--For purposes of this chapter (other than 
section 3923), to the extent provided in regulations, the taxpayer may 
elect--
            ``(1) to treat as 1 taxable person 2 or more businesses 
        which may be treated under section 52(b) as 1 employer, and
            ``(2) to treat as separate taxable persons separate 
        divisions of the same business.
    ``(b) De Minimus Exemption.--For purposes of section 3923, all 
businesses which are under common control (within the meaning of 
section 52(b)) shall be treated as 1 business.

``SEC. 3926. SECRETARY TO BE NOTIFIED OF CERTAIN EVENTS.

    ``To the extent provided in regulations, each person engaged in a 
business shall notify the Secretary (at such time or times as may be 
prescribed by such regulations) of any change in the form in which a 
business is conducted or any other change which might affect the 
liability for the tax imposed by section 3901 or the amount of such tax 
or any credit against such tax, or otherwise affect the administration 
of such tax in the case of such person.

``SEC. 3927. REGULATIONS.

    ``The Secretary shall prescribe such regulations as may be 
necessary to carry out the purposes of this chapter.

  ``Subchapter E--Definitions and Special Rules; Treatment of Certain 
                              Transactions

                              ``Sec. 3931. Definitions.
                              ``Sec. 3932. Special rules.
                              ``Sec. 3933. Personal use by owner of 
                                        business property or services.
                              ``Sec. 3934. Gift of business property or 
                                        services.
                              ``Sec. 3935. Special rules for 
                                        dispositions of nonbusiness 
                                        real property.
                              ``Sec. 3936. Special rule for insurance 
                                        contracts.

``SEC. 3931. DEFINITIONS.

    ``(a) Property.--For purposes of this chapter, the term `property' 
means any tangible property.
    ``(b) Business.--For purposes of this chapter, the term `business' 
includes--
            ``(1) a trade, and
            ``(2) an activity regularly carried on for profit.
    ``(c) Employee.--For purposes of this chapter, the term `employee' 
has the meaning such term has for purposes of chapter 24 (relating to 
withholding).
    ``(d) Person.--For purposes of this chapter, the term `person' 
includes any governmental entity.
    ``(e) Business Day.--For purposes of this chapter, the term 
`business day' means any day other than Saturday and Sunday and other 
than a legal holiday (within the meaning of section 7503).
    ``(f) United States.--For purposes of this chapter, the term 
`United States', when used in a geographical sense, includes a 
Commonwealth and any possession of the United States.

``SEC. 3932. SPECIAL RULES.

    ``(a) Coordination With Subtitle A.--For purposes of subtitle A--
            ``(1) Treatment of credit.--Any credit allowable to a 
        taxpayer under section 3916 which is attributable to any 
        property or services shall be treated as a reduction in the 
        amount paid or incurred by the taxpayer for such property or 
        services.
            ``(2) Amount of deduction for tax.--The amount allowable as 
        a deduction for the tax imposed by section 3901 shall be 
        determined without regard to any credit allowable under section 
        3916.
            ``(3) Computation of percentage depletion.--For purposes of 
        sections 613 and 613A--
                    ``(A) gross income shall be reduced by the amount 
                of the tax imposed by section 3901, and
                    ``(B) taxable income shall be determined without 
                regard to any deduction allowed for such tax.
``(b) Special Rule Sale of Property Includes Incidental Performance of 
Services.--For purposes of this chapter, if in connection with the sale 
of any property there is an incidental performance of services, such 
performance of services shall be treated as part of the sale of such 
property.
    ``(c) Special Rule Where Performance of Services Includes 
Incidental Transfer of Property.--For purposes of this chapter, if in 
connection with the performance of any services there is an incidental 
transfer of property, such transfer shall be treated as part of the 
performance of such services.
    ``(d) Authority to Zero Rate De Minimis Transactions, Etc.--The 
Secretary may prescribe regulations providing that the rate of tax 
shall be zero for a taxable transaction (or category of such 
transactions) where--
            ``(1) the amount involved is de minimis, or
            ``(2) the revenue raised by taxing the transaction is not 
        sufficient to justify the administrative and other costs 
        involved in the payment and collection of the tax.
    ``(e) Importing Treated as Sale and Purchase.--For purposes of this 
chapter, the importing of any property into the United States shall be 
treated as both a sale and purchase of such property by the person 
importing such property.
    ``(f) Subchapter S Corporation Treated as Not a Corporation.--For 
purposes of this chapter, an S corporation (as defined in section 
1361(a)) shall be treated as a person which is not a corporation.
    ``(g) Use Includes Held for Use.--For purposes of this chapter, 
property and services held for use by any person shall be treated as 
used by the person.

``SEC. 3933. PERSONAL USE BY OWNER OF BUSINESS PROPERTY OR SERVICES.

    ``(a) General Rule.--If any business property or services are used 
by an owner of the taxpayer for personal purposes, for purposes of this 
chapter such use shall be treated as a taxable transaction.
    ``(b) Taxable Amount.--In the case of a use described in subsection 
(a), for purposes of this chapter, the taxable amount shall be--
            ``(1) except as provided in paragraph (2), the fair market 
        value of the property or the services, or
            ``(2) if such use is only the temporary use of property, 
        the fair rental value of such use.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Business property or services.--The term `business 
        property or services' means any property or services if a sale 
        of such property, or the performance of such services, by the 
        taxpayer would be a taxable transaction.
            ``(2) Owner.--The term `owner' means--
                    ``(A) in the case of a sole proprietorship, the 
                proprietor,
                    ``(B) in the case of any other business enterprise, 
                any holder of a beneficial interest in the corporation, 
                partnership, or other entity, and
                    ``(C) any member of the family (within the meaning 
                of section 267(c)(4)) of an individual described in 
                subparagraph (A) or (B).

``SEC. 3934. GIFT OF BUSINESS PROPERTY OR SERVICES.

    ``(a) General Rule.--In the case of any gift of business property 
or services, for purposes of this chapter--
            ``(1) such gift shall be treated as a taxable transaction, 
        and
            ``(2) the taxable amount shall be the amount determined 
        under section 3933(b).
    ``(b) Gifts Related to Business Promotion Activities.--For purposes 
of subsection (a), the term `gift' includes any gift of property or 
services transferred in connection with business promotion activities.

``SEC. 3935. SPECIAL RULES FOR DISPOSITIONS OF NONBUSINESS REAL 
              PROPERTY.

    ``(a) In General.--In the case of any sale of real property which 
is treated as a commercial-type transaction solely by reason of section 
3904(b)(1)(A), for purposes of this chapter, the taxable amount shall 
be the excess (if any) of--
            ``(1) the amount realized on such sale, over
            ``(2) the adjusted cost to the taxpayer of such real 
        property.
    ``(b) Adjusted Cost.--For purposes of subsection (a)--
            ``(1) In general.--Except as provided in paragraph (2), the 
        term `adjusted cost' means, with respect to any property, the 
        basis of such property increased by expenditures properly 
        chargeable to capital account (other than taxes or other 
        carrying charges described in section 266) for periods during 
        the holding period for such property.
            ``(2) Transitional rule.--The adjusted cost of any property 
        shall include only amounts incurred during periods after 
        December 31, 1993.
    ``(c) Value Added Tax Not Taken Into Account.--For purposes of this 
section, the amount realized on any sale of real property shall not 
include any amount attributable to the tax imposed by this chapter.

``SEC. 3936. SPECIAL RULE FOR INSURANCE CONTRACTS.

    ``In the case of any contract of insurance, for purposes of this 
chapter, the taxable amount is the excess of--
            ``(1) the portion of the premium attributable to insurance 
        coverage, over
            ``(2) the actuarial cost to the insurer of providing such 
        insurance coverage.''
    (b) Clerical Amendment.--The table of chapters for subtitle D of 
the Internal Revenue Code of 1986 is amended by inserting before the 
item relating to chapter 31 the following:

                              ``Chapter 30. Value added tax.''
    (c) Effective Date.--The amendments made by this section shall 
apply to transactions occurring after December 31, 1995.

SEC. 1002. REVENUE FROM VALUE ADDED TAX TO FUND NATIONAL HEALTH CARE 
              TRUST FUND.

    (a) In General.--Subchapter A of chapter 98 of the Internal Revenue 
Code of 1986 (relating to trust fund code) is amended by adding at the 
end the following new section:

``SEC. 9511. NATIONAL HEALTH CARE TRUST FUND.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `National Health 
Care Trust Fund', consisting of such amounts as may be appropriated or 
credited to the Trust Fund as provided in this section or section 
9602(b).
    ``(b) Transfers to Trust Fund.--There are hereby appropriated to 
the National Health Care Trust Fund amounts equivalent to amounts 
received in the Treasury from the tax imposed under section 3901 of the 
Internal Revenue Code of 1986 (relating to the value added tax).
    ``(c) Expenditures From Trust Fund.--Amounts in the National Health 
Care Trust Fund shall be available only for purposes of making 
expenditures to carry out the program of health benefits under the 
National Health Insurance Act.''
    (b) Clerical Amendment.--The table of sections for such subchapter 
A is amended by adding at the end the following new item:

                              ``Sec. 9511. National Health Care Trust 
                                        Fund.''
    (c) Effective Date.--The amendments made by this section shall take 
effect on January 1, 1996.

       TITLE XI--STUDY AND DEVELOPMENT OF COST CONTROL MECHANISMS

SEC. 1101. DEVELOPMENT OF COST CONTROL MECHANISMS.

    (a) Study.--The Secretary of Health and Human Services shall 
conduct a study analyzing various methods to control the costs of 
providing personal health benefits under this Act, and shall include in 
such study an analysis of the effects on such costs of medical 
malpractice claims and the purchase of medical malpractice liability 
insurance by providers of the benefits.
    (b) Reports to Congress.--Not later than October 1, 1997, the 
Secretary shall submit a report to Congress describing the study 
conducted under subsection (a), and shall include in the report 
recommendations on methods to control costs under this Act, including 
recommendations on the development of a system under which medical 
malpractice claims brought against providers of benefits under this Act 
may be resolved in an equitable and cost-effective manner. Not later 
than April 1, 1998, the Secretary shall promulgate regulations to 
implement the recommendations made in the report.
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