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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1955 Introduced in Senate (IS)]

109th CONGRESS
  1st Session
                                S. 1955

 To amend title I of the Employee Retirement Security Act of 1974 and 
 the Public Health Service Act to expand health care access and reduce 
 costs through the creation of small business health plans and through 
           modernization of the health insurance marketplace.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            November 2, 2005

     Mr. Enzi (for himself, Mr. Nelson of Nebraska, and Mr. Burns) 
introduced the following bill; which was read twice and referred to the 
          Committee on Health, Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL

 
 To amend title I of the Employee Retirement Security Act of 1974 and 
 the Public Health Service Act to expand health care access and reduce 
 costs through the creation of small business health plans and through 
           modernization of the health insurance marketplace.

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Health Insurance 
Marketplace Modernization and Affordability Act of 2005''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title and table of contents.
                  TITLE I--SMALL BUSINESS HEALTH PLANS

Sec. 101. Rules governing small business health plans.
Sec. 102. Cooperation between Federal and State authorities.
Sec. 103. Effective date and transitional and other rules.
                   TITLE II--NEAR-TERM MARKET RELIEF

Sec. 201. Near-term market relief.
           TITLE III--HARMONIZATION OF HEALTH INSURANCE LAWS

Sec. 301. Health Insurance Regulatory Harmonization.

                  TITLE I--SMALL BUSINESS HEALTH PLANS

SEC. 101. RULES GOVERNING SMALL BUSINESS HEALTH PLANS.

    (a) In General.--Subtitle B of title I of the Employee Retirement 
Income Security Act of 1974 is amended by adding after part 7 the 
following new part:

         ``PART 8--RULES GOVERNING SMALL BUSINESS HEALTH PLANS

``SEC. 801. SMALL BUSINESS HEALTH PLANS.

    ``(a) In General.--For purposes of this part, the term `small 
business health plan' means a fully insured group health plan whose 
sponsor is (or is deemed under this part to be) described in subsection 
(b).
    ``(b) Sponsorship.--The sponsor of a group health plan is described 
in this subsection if such sponsor--
            ``(1) is organized and maintained in good faith, with a 
        constitution and bylaws specifically stating its purpose and 
        providing for periodic meetings on at least an annual basis, as 
        a bona fide trade association, a bona fide industry association 
        (including a rural electric cooperative association or a rural 
        telephone cooperative association), a bona fide professional 
        association, or a bona fide chamber of commerce (or similar 
        bona fide business association, including a corporation or 
        similar organization that operates on a cooperative basis 
        (within the meaning of section 1381 of the Internal Revenue 
        Code of 1986)), for substantial purposes other than that of 
        obtaining or providing medical care;
            ``(2) is established as a permanent entity which receives 
        the active support of its members and requires for membership 
        payment on a periodic basis of dues or payments necessary to 
        maintain eligibility for membership in the sponsor; and
            ``(3) does not condition membership, such dues or payments, 
        or coverage under the plan on the basis of health status-
        related factors with respect to the employees of its members 
        (or affiliated members), or the dependents of such employees, 
        and does not condition such dues or payments on the basis of 
        group health plan participation.
Any sponsor consisting of an association of entities which meet the 
requirements of paragraphs (1), (2), and (3) shall be deemed to be a 
sponsor described in this subsection.

``SEC. 802. CERTIFICATION OF SMALL BUSINESS HEALTH PLANS.

    ``(a) In General.--Not later than 6 months after the date of 
enactment of this part, the applicable authority shall prescribe by 
interim final rule a procedure under which the applicable authority 
shall certify small business health plans which apply for certification 
as meeting the requirements of this part.
    ``(b) Requirements Applicable to Certified Plans.--a small business 
health plan with respect to which certification under this part is in 
effect shall meet the applicable requirements of this part, effective 
on the date of certification (or, if later, on the date on which the 
plan is to commence operations).
    ``(c) Requirements for Continued Certification.--The applicable 
authority may provide by regulation for continued certification of 
small business health plans under this part. Such regulation shall 
provide for the revocation of a certification if the applicable 
authority finds that the small employer health plan involved is failing 
to comply with the requirements of this part.
    ``(d) Class Certification for Fully Insured Plans.--The applicable 
authority shall establish a class certification procedure for small 
business health plans under which all benefits consist of health 
insurance coverage. Under such procedure, the applicable authority 
shall provide for the granting of certification under this part to the 
plans in each class of such small business health plans upon 
appropriate filing under such procedure in connection with plans in 
such class and payment of the prescribed fee under section 806(a).

``SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF TRUSTEES.

    ``(a) Sponsor.--The requirements of this subsection are met with 
respect to a small business health plan if the sponsor has met (or is 
deemed under this part to have met) the requirements of section 801(b) 
for a continuous period of not less than 3 years ending with the date 
of the application for certification under this part.
    ``(b) Board of Trustees.--The requirements of this subsection are 
met with respect to a small business health plan if the following 
requirements are met:
            ``(1) Fiscal control.--The plan is operated, pursuant to a 
        plan document, by a board of trustees which pursuant to a trust 
        agreement has complete fiscal control over the plan and which 
        is responsible for all operations of the plan.
            ``(2) Rules of operation and financial controls.--The board 
        of trustees has in effect rules of operation and financial 
        controls, based on a 3-year plan of operation, adequate to 
        carry out the terms of the plan and to meet all requirements of 
        this title applicable to the plan.
            ``(3) Rules governing relationship to participating 
        employers and to contractors.--
                    ``(A) Board membership.--
                            ``(i) In general.--Except as provided in 
                        clauses (ii) and (iii), the members of the 
                        board of trustees are individuals selected from 
                        individuals who are the owners, officers, 
                        directors, or employees of the participating 
                        employers or who are partners in the 
                        participating employers and actively 
                        participate in the business.
                            ``(ii) Limitation.--
                                    ``(I) General rule.--Except as 
                                provided in subclauses (II) and (III), 
                                no such member is an owner, officer, 
                                director, or employee of, or partner 
                                in, a contract administrator or other 
                                service provider to the plan.
                                    ``(II) Limited exception for 
                                providers of services solely on behalf 
                                of the sponsor.--Officers or employees 
                                of a sponsor which is a service 
                                provider (other than a contract 
                                administrator) to the plan may be 
                                members of the board if they constitute 
                                not more than 25 percent of the 
                                membership of the board and they do not 
                                provide services to the plan other than 
                                on behalf of the sponsor.
                                    ``(III) Treatment of providers of 
                                medical care.--In the case of a sponsor 
                                which is an association whose 
                                membership consists primarily of 
                                providers of medical care, subclause 
                                (I) shall not apply in the case of any 
                                service provider described in subclause 
                                (I) who is a provider of medical care 
                                under the plan.
                            ``(iii) Certain plans excluded.--Clause (i) 
                        shall not apply to a small business health plan 
                        which is in existence on the date of the 
                        enactment of the Health Insurance Marketplace 
                        Modernization and Affordability Act of 2005.
                    ``(B) Sole authority.--The board has sole authority 
                under the plan to approve applications for 
                participation in the plan and to contract with insurers 
                and service providers.
    ``(c) Treatment of Franchise Networks.--In the case of a group 
health plan which is established and maintained by a franchiser for a 
franchise network consisting of its franchisees--
            ``(1) the requirements of subsection (a) and section 801(a) 
        shall be deemed met if such requirements would otherwise be met 
        if the franchiser were deemed to be the sponsor referred to in 
        section 801(b), such network were deemed to be an association 
        described in section 801(b), and each franchisee were deemed to 
        be a member (of the association and the sponsor) referred to in 
        section 801(b); and
            ``(2) the requirements of section 804(a)(1) shall be deemed 
        met.
The Secretary may by regulation define for purposes of this subsection 
the terms `franchiser', `franchise network', and `franchisee'.

``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.

    ``(a) Covered Employers and Individuals.--The requirements of this 
subsection are met with respect to a small business health plan if, 
under the terms of the plan--
            ``(1) each participating employer must be--
                    ``(A) a member of the sponsor;
                    ``(B) the sponsor; or
                    ``(C) an affiliated member of the sponsor with 
                respect to which the requirements of subsection (b) are 
                met, except that, in the case of a sponsor which is a 
                professional association or other individual-based 
                association, if at least one of the officers, 
                directors, or employees of an employer, or at least one 
                of the individuals who are partners in an employer and 
                who actively participates in the business, is a member 
                or such an affiliated member of the sponsor, 
                participating employers may also include such employer; 
                and
            ``(2) all individuals commencing coverage under the plan 
        after certification under this part must be--
                    ``(A) active or retired owners (including self-
                employed individuals), officers, directors, or 
                employees of, or partners in, participating employers; 
                or
                    ``(B) the beneficiaries of individuals described in 
                subparagraph (A).
    ``(b) Coverage of Previously Uninsured Employees.--In the case of a 
small business health plan in existence on the date of the enactment of 
the Health Insurance Marketplace Modernization and Affordability Act of 
2005, an affiliated member of the sponsor of the plan may be offered 
coverage under the plan as a participating employer only if--
            ``(1) the affiliated member was an affiliated member on the 
        date of certification under this part; or
            ``(2) during the 12-month period preceding the date of the 
        offering of such coverage, the affiliated member has not 
        maintained or contributed to a group health plan with respect 
        to any of its employees who would otherwise be eligible to 
        participate in such small business health plan.
    ``(c) Individual Market Unaffected.--The requirements of this 
subsection are met with respect to a small business health plan if, 
under the terms of the plan, no participating employer may provide 
health insurance coverage in the individual market for any employee not 
covered under the plan which is similar to the coverage 
contemporaneously provided to employees of the employer under the plan, 
if such exclusion of the employee from coverage under the plan is based 
on a health status-related factor with respect to the employee and such 
employee would, but for such exclusion on such basis, be eligible for 
coverage under the plan.
    ``(d) Prohibition of Discrimination Against Employers and Employees 
Eligible to Participate.--The requirements of this subsection are met 
with respect to a small business health plan if--
            ``(1) under the terms of the plan, all employers meeting 
        the preceding requirements of this section are eligible to 
        qualify as participating employers for all geographically 
        available coverage options, unless, in the case of any such 
        employer, participation or contribution requirements of the 
        type referred to in section 2711 of the Public Health Service 
        Act are not met;
            ``(2) upon request, any employer eligible to participate is 
        furnished information regarding all coverage options available 
        under the plan; and
            ``(3) the applicable requirements of sections 701, 702, and 
        703 are met with respect to the plan.

``SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, CONTRIBUTION 
              RATES, AND BENEFIT OPTIONS.

    ``(a) In General.--The requirements of this section are met with 
respect to a small business health plan if the following requirements 
are met:
            ``(1) Contents of governing instruments.--
                    ``(A) In general.--The instruments governing the 
                plan include a written instrument, meeting the 
                requirements of an instrument required under section 
                402(a)(1), which--
                            ``(i) provides that the board of directors 
                        serves as the named fiduciary required for 
                        plans under section 402(a)(1) and serves in the 
                        capacity of a plan administrator (referred to 
                        in section 3(16)(A)); and
                            ``(ii) provides that the sponsor of the 
                        plan is to serve as plan sponsor (referred to 
                        in section 3(16)(B)).
                    ``(B) Description of material provisions.--The 
                terms of the health insurance coverage (including the 
                terms of any individual certificates that may be 
                offered to individuals in connection with such 
                coverage) describe the material benefit and rating, and 
                other provisions set forth in this section and such 
                material provisions are included in the summary plan 
                description.
            ``(2) Contribution rates must be nondiscriminatory.--
                    ``(A) In general.--The contribution rates for any 
                participating small employer shall not vary on the 
                basis of any health status-related factor in relation 
                to employees of such employer or their beneficiaries 
                and shall not vary on the basis of the type of business 
                or industry in which such employer is engaged.
                    ``(B) Effect of title.--Nothing in this title or 
                any other provision of law shall be construed to 
                preclude a health insurance issuer offering health 
                insurance coverage in connection with a small business 
                health plan, and at the request of such small business 
                health plan, from--
                            ``(i) setting contribution rates for the 
                        small business health plan based on the claims 
                        experience of the plan so long as any variation 
                        in such rates complies with the requirements of 
                        clause (ii); or
                            ``(ii) varying contribution rates for 
                        participating employers in a small business 
                        health plan in a State to the extent that such 
                        rates could vary using the same methodology 
                        employed in such State for regulating premium 
                        rates, subject to the terms of part I of 
                        subtitle A of title XXIX of the Public Health 
                        Service Act (relating to rating requirements), 
                        as added by title II of the Health Insurance 
                        Marketplace Modernization and Affordability Act 
                        of 2005.
            ``(3) Regulatory requirements.--Such other requirements as 
        the applicable authority determines are necessary to carry out 
        the purposes of this part, which shall be prescribed by the 
        applicable authority by regulation.
    ``(b) Ability of Small Business Health Plans to Design Benefit 
Options.--Nothing in this part or any provision of State law (as 
defined in section 514(c)(1)) shall be construed to preclude a small 
business health plan or a health insurance issuer offering health 
insurance coverage in connection with a small business health plan, 
from exercising its sole discretion in selecting the specific benefits 
and services consisting of medical care to be included as benefits 
under such plan or coverage, except that such benefits and services 
must meet the terms and specifications of part II of subtitle A of 
title XXIX of the Public Health Service Act (relating to lower cost 
plans), as added by title II of the Health Insurance Marketplace 
Modernization and Affordability Act of 2005, provided that, upon 
issuance by the Secretary of Health and Human Services of the List of 
Required Benefits as provided for in section 2922(a) of the Public 
Health Service Act, the required scope and application for each benefit 
or service listed in the List of Required Benefits shall be--
            ``(1) if the domicile State mandates such benefit or 
        service, the scope and application required by the domicile 
        State; or
            ``(2) if the domicile State does not mandate such benefit 
        or service, the scope and application required by the non-
        domicile State that does require such benefit or service in 
        which the greatest number of the small business health plan's 
        participating employers are located.
    ``(c) State Licensure and Informational Filing.--
            ``(1) Domicile state.--Coverage shall be issued to a small 
        business health plan in the State in which the sponsor's 
        principal place of business is located.
            ``(2) Non-domicile states.--With respect to a State (other 
        than the domicile State) in which participating employers of a 
        small business health plan are located, an insurer issuing 
        coverage to such small business health plan shall not be 
        required to obtain full licensure in such State, except that 
        the insurer shall provide each State insurance commissioner (or 
        applicable State authority) with an informational filing 
        describing policies sold and other relevant information as may 
        be requested by the applicable State authority.

``SEC. 806. REQUIREMENTS FOR APPLICATION AND RELATED REQUIREMENTS.

    ``(a) Filing Fee.--Under the procedure prescribed pursuant to 
section 802(a), a small business health plan shall pay to the 
applicable authority at the time of filing an application for 
certification under this part a filing fee in the amount of $5,000, 
which shall be available in the case of the Secretary, to the extent 
provided in appropriation Acts, for the sole purpose of administering 
the certification procedures applicable with respect to small business 
health plans.
    ``(b) Information to Be Included in Application for 
Certification.--An application for certification under this part meets 
the requirements of this section only if it includes, in a manner and 
form which shall be prescribed by the applicable authority by 
regulation, at least the following information:
            ``(1) Identifying information.--The names and addresses 
        of--
                    ``(A) the sponsor; and
                    ``(B) the members of the board of trustees of the 
                plan.
            ``(2) States in which plan intends to do business.--The 
        States in which participants and beneficiaries under the plan 
        are to be located and the number of them expected to be located 
        in each such State.
            ``(3) Bonding requirements.--Evidence provided by the board 
        of trustees that the bonding requirements of section 412 will 
        be met as of the date of the application or (if later) 
        commencement of operations.
            ``(4) Plan documents.--A copy of the documents governing 
        the plan (including any bylaws and trust agreements), the 
        summary plan description, and other material describing the 
        benefits that will be provided to participants and 
        beneficiaries under the plan.
            ``(5) Agreements with service providers.--A copy of any 
        agreements between the plan, health insurance issuer, and 
        contract administrators and other service providers.
    ``(c) Filing Notice of Certification With States.--A certification 
granted under this part to a small business health plan shall not be 
effective unless written notice of such certification is filed with the 
applicable State authority of each State in which at least 25 percent 
of the participants and beneficiaries under the plan are located. For 
purposes of this subsection, an individual shall be considered to be 
located in the State in which a known address of such individual is 
located or in which such individual is employed.
    ``(d) Notice of Material Changes.--In the case of any small 
business health plan certified under this part, descriptions of 
material changes in any information which was required to be submitted 
with the application for the certification under this part shall be 
filed in such form and manner as shall be prescribed by the applicable 
authority by regulation. The applicable authority may require by 
regulation prior notice of material changes with respect to specified 
matters which might serve as the basis for suspension or revocation of 
the certification.

``SEC. 807. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.

    ``A small business health plan which is or has been certified under 
this part may terminate (upon or at any time after cessation of 
accruals in benefit liabilities) only if the board of trustees, not 
less than 60 days before the proposed termination date--
            ``(1) provides to the participants and beneficiaries a 
        written notice of intent to terminate stating that such 
        termination is intended and the proposed termination date;
            ``(2) develops a plan for winding up the affairs of the 
        plan in connection with such termination in a manner which will 
        result in timely payment of all benefits for which the plan is 
        obligated; and
            ``(3) submits such plan in writing to the applicable 
        authority.
Actions required under this section shall be taken in such form and 
manner as may be prescribed by the applicable authority by regulation.

``SEC. 808. DEFINITIONS AND RULES OF CONSTRUCTION.

    ``(a) Definitions.--For purposes of this part--
            ``(1) Affiliated member.--The term `affiliated member' 
        means, in connection with a sponsor--
                    ``(A) a person who is otherwise eligible to be a 
                member of the sponsor but who elects an affiliated 
                status with the sponsor,
                    ``(B) in the case of a sponsor with members which 
                consist of associations, a person who is a member of 
                any such association and elects an affiliated status 
                with the sponsor, or
                    ``(C) in the case of a small business health plan 
                in existence on the date of the enactment of the Health 
                Insurance Marketplace Modernization and Affordability 
                Act of 2005, a person eligible to be a member of the 
                sponsor or one of its member associations.
            ``(2) Applicable authority.--The term `applicable 
        authority' means the Secretary, except that, in connection with 
        any exercise of the Secretary's authority with respect to which 
        the Secretary is required under section 506(d) to consult with 
        a State, such term means the Secretary, in consultation with 
        such State.
            ``(3) Applicable state authority.--The term `applicable 
        State authority' means, with respect to a health insurance 
        issuer in a State, the State insurance commissioner or official 
        or officials designated by the State to enforce the 
        requirements of title XXVII of the Public Health Service Act 
        for the State involved with respect to such issuer.
            ``(4) Group health plan.--The term `group health plan' has 
        the meaning provided in section 733(a)(1) (after applying 
        subsection (b) of this section).
            ``(5) Health insurance coverage.--The term `health 
        insurance coverage' has the meaning provided in section 
        733(b)(1).
            ``(6) Health insurance issuer.--The term `health insurance 
        issuer' has the meaning provided in section 733(b)(2).
            ``(7) Individual market.--
                    ``(A) In general.--The term `individual market' 
                means the market for health insurance coverage offered 
                to individuals other than in connection with a group 
                health plan.
                    ``(B) Treatment of very small groups.--
                            ``(i) In general.--Subject to clause (ii), 
                        such term includes coverage offered in 
                        connection with a group health plan that has 
                        fewer than 2 participants as current employees 
                        or participants described in section 732(d)(3) 
                        on the first day of the plan year.
                            ``(ii) State exception.--Clause (i) shall 
                        not apply in the case of health insurance 
                        coverage offered in a State if such State 
                        regulates the coverage described in such clause 
                        in the same manner and to the same extent as 
                        coverage in the small group market (as defined 
                        in section 2791(e)(5) of the Public Health 
                        Service Act) is regulated by such State.
            ``(8) Medical care.--The term `medical care' has the 
        meaning provided in section 733(a)(2).
            ``(9) Participating employer.--The term `participating 
        employer' means, in connection with a small business health 
        plan, any employer, if any individual who is an employee of 
        such employer, a partner in such employer, or a self-employed 
        individual who is such employer (or any dependent, as defined 
        under the terms of the plan, of such individual) is or was 
        covered under such plan in connection with the status of such 
        individual as such an employee, partner, or self-employed 
        individual in relation to the plan.
            ``(10) Small employer.--The term `small employer' means, in 
        connection with a group health plan with respect to a plan 
        year, a small employer as defined in section 2791(e)(4).
    ``(b) Rule of Construction.--For purposes of determining whether a 
plan, fund, or program is an employee welfare benefit plan which is a 
small business health plan, and for purposes of applying this title in 
connection with such plan, fund, or program so determined to be such an 
employee welfare benefit plan--
            ``(1) in the case of a partnership, the term `employer' (as 
        defined in section 3(5)) includes the partnership in relation 
        to the partners, and the term `employee' (as defined in section 
        3(6)) includes any partner in relation to the partnership; and
            ``(2) in the case of a self-employed individual, the term 
        `employer' (as defined in section 3(5)) and the term `employee' 
        (as defined in section 3(6)) shall include such individual.''.
    (b) Conforming Amendments to Preemption Rules.--
            (1) Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) is 
        amended by adding at the end the following new subparagraph:
    ``(E) The preceding subparagraphs of this paragraph do not apply 
with respect to any State law in the case of a small business health 
plan which is certified under part 8.''.
            (2) Section 514 of such Act (29 U.S.C. 1144) is amended--
                    (A) in subsection (b)(4), by striking ``Subsection 
                (a)'' and inserting ``Subsections (a) and (d)'';
                    (B) in subsection (b)(5), by striking ``subsection 
                (a)'' in subparagraph (A) and inserting ``subsection 
                (a) of this section and subsections (a)(2)(B) and (b) 
                of section 805'', and by striking ``subsection (a)'' in 
                subparagraph (B) and inserting ``subsection (a) of this 
                section or subsection (a)(2)(B) or (b) of section 
                805'';
                    (C) by redesignating subsection (d) as subsection 
                (e); and
                    (D) by inserting after subsection (c) the following 
                new subsection:
    ``(d)(1) Except as provided in subsection (b)(4), the provisions of 
this title shall supersede any and all State laws insofar as they may 
now or hereafter preclude a health insurance issuer from offering 
health insurance coverage in connection with a small business health 
plan which is certified under part 8.
    ``(2) In any case in which health insurance coverage of any policy 
type is offered under a small business health plan certified under part 
8 to a participating employer operating in such State, the provisions 
of this title shall supersede any and all laws of such State insofar as 
they may establish rating and benefit requirements that would otherwise 
apply to such coverage, provided the requirements of section 
805(a)(2)(B) and (b) (concerning small business health plan rating and 
benefits) are met.''.
            (3) Section 514(b)(6)(A) of such Act (29 U.S.C. 
        1144(b)(6)(A)) is amended--
                    (A) in clause (i)(II), by striking ``and'' at the 
                end;
                    (B) in clause (ii), by inserting ``and which does 
                not provide medical care (within the meaning of section 
                733(a)(2)),'' after ``arrangement,'', and by striking 
                ``title.'' and inserting ``title, and''; and
                    (C) by adding at the end the following new clause:
            ``(iii) subject to subparagraph (E), in the case of any 
        other employee welfare benefit plan which is a multiple 
        employer welfare arrangement and which provides medical care 
        (within the meaning of section 733(a)(2)), any law of any State 
        which regulates insurance may apply.''.
            (4) Section 514(e) of such Act (as redesignated by 
        paragraph (2)(C)) is amended by striking ``Nothing'' and 
        inserting ``(1) Except as provided in paragraph (2), nothing''.
    (c) Plan Sponsor.--Section 3(16)(B) of such Act (29 U.S.C. 
102(16)(B)) is amended by adding at the end the following new sentence: 
``Such term also includes a person serving as the sponsor of a small 
business health plan under part 8.''.
    (d) Savings Clause.--Section 731(c) of such Act is amended by 
inserting ``or part 8'' after ``this part''.
    (e) Clerical Amendment.--The table of contents in section 1 of the 
Employee Retirement Income Security Act of 1974 is amended by inserting 
after the item relating to section 734 the following new items:

         ``Part 8--Rules Governing Small Business Health Plans

``801. Small business health plans.
``802. Certification of small business health plans.
``803. Requirements relating to sponsors and boards of trustees.
``804. Participation and coverage requirements.
``805. Other requirements relating to plan documents, contribution 
                            rates, and benefit options.
``806. Requirements for application and related requirements.
``807. Notice requirements for voluntary termination.
``808. Definitions and rules of construction.''.

SEC. 102. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

    Section 506 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1136) is amended by adding at the end the following new 
subsection:
    ``(d) Consultation With States With Respect to Small Business 
Health Plans.--
            ``(1) Agreements with states.--The Secretary shall consult 
        with the State recognized under paragraph (2) with respect to a 
        small business health plan regarding the exercise of--
                    ``(A) the Secretary's authority under sections 502 
                and 504 to enforce the requirements for certification 
                under part 8; and
                    ``(B) the Secretary's authority to certify small 
                business health plans under part 8 in accordance with 
                regulations of the Secretary applicable to 
                certification under part 8.
            ``(2) Recognition of domicile state.--In carrying out 
        paragraph (1), the Secretary shall ensure that only one State 
        will be recognized, with respect to any particular small 
        business health plan, as the State with which consultation is 
        required. In carrying out this paragraph such State shall be 
        the domicile State, as defined in section 805(c).''.

SEC. 103. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

    (a) Effective Date.--The amendments made by this title shall take 
effect 1 year after the date of the enactment of this Act. The 
Secretary of Labor shall first issue all regulations necessary to carry 
out the amendments made by this title within 1 year after the date of 
the enactment of this Act.
    (b) Treatment of Certain Existing Health Benefits Programs.--
            (1) In general.--In any case in which, as of the date of 
        the enactment of this Act, an arrangement is maintained in a 
        State for the purpose of providing benefits consisting of 
        medical care for the employees and beneficiaries of its 
        participating employers, at least 200 participating employers 
        make contributions to such arrangement, such arrangement has 
        been in existence for at least 10 years, and such arrangement 
        is licensed under the laws of one or more States to provide 
        such benefits to its participating employers, upon the filing 
        with the applicable authority (as defined in section 808(a)(2) 
        of the Employee Retirement Income Security Act of 1974 (as 
        amended by this subtitle)) by the arrangement of an application 
        for certification of the arrangement under part 8 of subtitle B 
        of title I of such Act--
                    (A) such arrangement shall be deemed to be a group 
                health plan for purposes of title I of such Act;
                    (B) the requirements of sections 801(a) and 803(a) 
                of the Employee Retirement Income Security Act of 1974 
                shall be deemed met with respect to such arrangement;
                    (C) the requirements of section 803(b) of such Act 
                shall be deemed met, if the arrangement is operated by 
                a board of trustees which--
                            (i) is elected by the participating 
                        employers, with each employer having one vote; 
                        and
                            (ii) has complete fiscal control over the 
                        arrangement and which is responsible for all 
                        operations of the arrangement;
                    (D) the requirements of section 804(a) of such Act 
                shall be deemed met with respect to such arrangement; 
                and
                    (E) the arrangement may be certified by any 
                applicable authority with respect to its operations in 
                any State only if it operates in such State on the date 
                of certification.
        The provisions of this subsection shall cease to apply with 
        respect to any such arrangement at such time after the date of 
        the enactment of this Act as the applicable requirements of 
        this subsection are not met with respect to such arrangement or 
        at such time that the arrangement provides coverage to 
        participants and beneficiaries in any State other than the 
        States in which coverage is provided on such date of enactment.
            (2) Definitions.--For purposes of this subsection, the 
        terms ``group health plan'', ``medical care'', and 
        ``participating employer'' shall have the meanings provided in 
        section 808 of the Employee Retirement Income Security Act of 
        1974, except that the reference in paragraph (7) of such 
        section to an ``small business health plan'' shall be deemed a 
        reference to an arrangement referred to in this subsection.

                   TITLE II--NEAR-TERM MARKET RELIEF

SEC. 201. NEAR-TERM MARKET RELIEF.

    The Public Health Service Act (42 U.S.C. 201 et seq.) is amended by 
adding at the end the following:

         ``TITLE XXIX--HEALTH CARE INSURANCE MARKETPLACE REFORM

``SEC. 2901. GENERAL INSURANCE DEFINITIONS.

    ``In this title, the terms `health insurance coverage', `health 
insurance issuer', `group health plan', and `individual health 
insurance' shall have the meanings given such terms in section 2791.

                 ``Subtitle A--Near-Term Market Relief

                     ``PART I--RATING REQUIREMENTS

``SEC. 2911. DEFINITIONS.

    ``In this part:
            ``(1) Adopting state.--The term `adopting State' means a 
        State that has enacted either the NAIC model rules or the 
        National Interim Model Rating Rules in their entirety and as 
        the exclusive laws of the State that relate to rating in the 
        small group insurance market.
            ``(2) Commission.--The term `Commission' means the 
        Harmonized Standards Commission established under section 2921.
            ``(3) Eligible insurer.--The term `eligible insurer' means 
        a health insurance issuer that is licensed in a nonadopting 
        State and that--
                    ``(A) notifies the Secretary, not later than 30 
                days prior to the offering of coverage described in 
                this subparagraph, that the issuer intends to offer 
                small group health insurance coverage consistent with 
                the National Interim Model Rating Rules in a 
                nonadopting State;
                    ``(B) notifies the insurance department of a 
                nonadopting State (or other State agency), not later 
                than 30 days prior to the offering of coverage 
                described in this subparagraph, that the issuer intends 
                to offer small group health insurance coverage in that 
                State consistent with the National Interim Model Rating 
                Rules, and provides with such notice a copy of any 
                insurance policy that it intends to offer in the State, 
                its most recent annual and quarterly financial reports, 
                and any other information required to be filed with the 
                insurance department of the State (or other State 
                agency) by the Secretary in regulations; and
                    ``(C) includes in the terms of the health insurance 
                coverage offered in nonadopting States (including in 
                the terms of any individual certificates that may be 
                offered to individuals in connection with such group 
                health coverage) and filed with the State pursuant to 
                subparagraph (B), a description in the insurer's 
                contract of the National Interim Model Rating Rules and 
                an affirmation that such Rules are included in the 
                terms of such contract.
            ``(4) Health insurance coverage.--The term `health 
        insurance coverage' means any coverage issued in small group 
        health insurance market.
            ``(5) NAIC model rules.--The term `NAIC model rules' means 
        the rating rules provided for in the 1992 Adopted Small 
        Employer Health Insurance Availability Model Act of the 
        National Association of Insurance Commissioners.
            ``(6) National interim model rating rules.--The term 
        `National Interim Model Rating Rules' means the rules 
        promulgated under section 2912(a).
            ``(7) Nonadopting state.--The term `nonadopting State' 
        means a State that is not an adopting State.
            ``(8) Small group insurance market.--The term `small group 
        insurance market' shall have the meaning given the term `small 
        group market' in section 2791(e)(5).
            ``(9) State law.--The term `State law' means all laws, 
        decisions, rules, regulations, or other State actions 
        (including actions by a State agency) having the effect of law, 
        of any State.

``SEC. 2912. RATING RULES.

    ``(a) National Interim Model Rating Rules.--Not later than 6 months 
after the date of enactment of this title, the Secretary, in 
consultation with the National Association of Insurance Commissioners, 
shall, through expedited rulemaking procedures, promulgate National 
Interim Model Rating Rules that shall be applicable to the small group 
insurance market in certain States until such time as the provisions of 
subtitle B become effective. Such Model Rules shall apply in States as 
provided for in this section beginning with the first plan year after 
the such Rules are promulgated.
    ``(b) Utilization of NAIC Model Rules.--In promulgating the 
National Interim Model Rating Rules under subsection (a), the 
Secretary, except as otherwise provided in this subtitle, shall utilize 
the NAIC model rules regarding premium rating and premium variation.
    ``(c) Transition in Certain States.--
            ``(1) In general.--In promulgating the National Interim 
        Model Rating Rules under subsection (a), the Secretary shall 
        have discretion to modify the NAIC model rules in accordance 
        with this subsection to the extent necessary to provide for a 
        graduated transition, of not to exceed 3 years following the 
        promulgation of such National Interim Rules, with respect to 
        the application of such Rules to States.
            ``(2) Initial premium variation.--
                    ``(A) In general.--Under the modified National 
                Interim Model Rating Rules as provided for in paragraph 
                (1), the premium variation provision of subparagraph 
                (C) shall be applicable only with respect to small 
                group policies issued in States which, on the date of 
                enactment of this title, have in place premium rating 
                band requirements that vary by less than 50 percent 
                from the premium variation standards contained in 
                subparagraph (C) with respect to the standards provided 
                for under the NAIC model rules.
                    ``(B) Other states.--Health insurance coverage 
                offered in a State that, on the date of enactment of 
                this title, has in place premium rating band 
                requirements that vary by more than 50 percent from the 
                premium variation standards contained in subparagraph 
                (C) shall be subject to such graduated transition 
                schedules as may be provided by the Secretary pursuant 
                to paragraph (1).
                    ``(C) Amount of variation.--The amount of a premium 
                rating variation from the base premium rate due to 
                health conditions of covered individuals under this 
                subparagraph shall not exceed a factor of--
                            ``(i) +/- 25 percent upon the issuance of 
                        the policy involved; and
                            ``(ii) +/- 15 percent upon the renewal of 
                        the policy.
            ``(3) Other transitional authority.--In developing the 
        National Interim Model Rating Rules, the Secretary may also 
        provide for the application of transitional standards in 
        certain States with respect to the following:
                    ``(A) Independent rating classes for old and new 
                business.
                    ``(B) Such additional transition standards as the 
                Secretary may determine necessary for an effective 
                transition.

``SEC. 2913. APPLICATION AND PREEMPTION.

    ``(a) Superceding of State Law.--
            ``(1) In general.--This part shall supersede any and all 
        State laws insofar as such State laws (whether enacted prior to 
        or after the date of enactment of this subtitle) relate to 
        rating in the small group insurance market as applied to an 
        eligible insurer, or small group health insurance coverage 
        issued by an eligible insurer, in a nonadopting State.
            ``(2) Nonadopting states.--This part shall supersede any 
        and all State laws of a nonadopting State insofar as such State 
        laws (whether enacted prior to or after the date of enactment 
        of this subtitle)--
                    ``(A) prohibit an eligible insurer from offering 
                coverage consistent with the National Interim Model 
                Rating Rules in a nonadopting State; or
                    ``(B) discriminate against or among eligible 
                insurers offering health insurance coverage consistent 
                with the National Interim Model Rating Rules in a 
                nonadopting state.
    ``(b) Savings Clause and Construction.--
            ``(1) Nonapplication to adopting states.--Subsection (a) 
        shall not apply with respect to adopting states.
            ``(2) Nonapplication to certain insurers.--Subsection (a) 
        shall not apply with respect to insurers that do not qualify as 
        eligible insurers that offer small group health insurance 
        coverage in a nonadopting State.
            ``(3) Nonapplication where obtaining relief under state 
        law.--Subsection (a)(1) shall not apply to any State law in a 
        nonadopting State to the extent necessary to permit individuals 
        or the insurance department of the State (or other State 
        agency) to obtain relief under State law to require an eligible 
        insurer to comply with the terms of the small group health 
        insurance coverage issued in the nonadopting State. In no case 
        shall this paragraph, or any other provision of this title, be 
        construed to create a cause of action on behalf of an 
        individual or any other person under State law in connection 
        with a group health plan that is subject to the Employee 
        Retirement Income Security Act of 1974 or health insurance 
        coverage issued in connection with such a plan.
            ``(4) Nonapplication to enforce requirements relating to 
        the national rule.--Subsection (a)(1) shall not apply to any 
        State law in a nonadopting State to the extent necessary to 
        provide the insurance department of the State (or other State 
        agency) with the authority to enforce State law requirements 
        relating to the National Interim Model Rating Rules that are 
        not set forth in the terms of the small group health insurance 
        coverage issued in a nonadopting State, in a manner that is 
        consistent with the National Interim Model Rating Rules and 
        that imposes no greater duties or obligations on health 
        insurance issuers than the National Interim Model Rating Rules.
            ``(5) Nonapplication to subsection (a)(2).--Paragraphs (3) 
        and (4) shall not apply with respect to subsection (a)(2).
            ``(6) No affect on preemption.--In no case shall this 
        subsection be construed to affect the scope of the preemption 
        provided for under the Employee Retirement Income Security Act 
        of 1974.
    ``(c) Effective Date.--This section shall apply beginning in the 
first plan year following the issuance of the final rules by the 
Secretary under the National Interim Model Rating Rules.

``SEC. 2914. CIVIL ACTIONS AND JURISDICTION.

    ``(a) In General.--The district courts of the United States shall 
have exclusive jurisdiction over civil actions involving the 
interpretation of this part.
    ``(b) Actions.--A health insurance issuer may bring an action in 
the district courts of the United States for injunctive or other 
equitable relief against a nonadopting State in connection with the 
application of a state law that violates this part.
    ``(c) Violations of Section 2913.--In the case of a nonadopting 
State that is in violation of section 2913(a)(2), a health insurance 
issuer may bring an action in the district courts of the United States 
for damages against the nonadopting State and, if the health insurance 
issuer prevails in such action, the district court shall award the 
health insurance issuer its reasonable attorneys fees and costs.

``SEC. 2915. SUNSET.

    ``The National Interim Model Rating Rules shall remain in effect in 
a non-adopting State until such time as the harmonized national rating 
rules are promulgated and effective pursuant to part II. Upon such 
effective date, such harmonized rules shall supersede the National 
Rules.

                      ``PART II--LOWER COST PLANS

``SEC. 2921. DEFINITIONS.

    ``In this part:
            ``(1) Adopting state.--The term `adopting State' means a 
        State that has enacted the State Benefit Compendium in its 
        entirety and as the exclusive laws of the State that relate to 
        benefit, service, and provider mandates in the group and 
        individual insurance markets.
            ``(2) Eligible insurer.--The term `eligible insurer' means 
        a health insurance issuer that is licensed in a nonadopting 
        State and that--
                    ``(A) notifies the Secretary, not later than 30 
                days prior to the offering of coverage described in 
                this subparagraph, that the issuer intends to offer 
                group health insurance coverage consistent with the 
                State Benefit Compendium in a nonadopting State;
                    ``(B) notifies the insurance department of a 
                nonadopting State (or other State agency), not later 
                than 30 days prior to the offering of coverage 
                described in this subparagraph, that the issuer intends 
                to offer group health insurance coverage in that State 
                consistent with the State Benefit Compendium, and 
                provides with such notice a copy of any insurance 
                policy that it intends to offer in the State, its most 
                recent annual and quarterly financial reports, and any 
                other information required to be filed with the 
                insurance department of the State (or other State 
                agency) by the Secretary in regulations; and
                    ``(C) includes in the terms of the health insurance 
                coverage offered in nonadopting States (including in 
                the terms of any individual certificates that may be 
                offered to individuals in connection with such group 
                health coverage) and filed with the State pursuant to 
                subparagraph (B), a description in the insurer's 
                contract of the State Benefit Compendium and that 
                adherence to the Compendium is included as a term of 
                such contract.
            ``(3) Health insurance coverage.--The term `health 
        insurance coverage' means any coverage issued in the group or 
        individual health insurance markets.
            ``(4) Nonadopting state.--The term `nonadopting State' 
        means a State that is not an adopting State.
            ``(5) State benefit compendium.--The term `State Benefit 
        Compendium' means the Compendium issued under section 2922.
            ``(6) State law.--The term `State law' means all laws, 
        decisions, rules, regulations, or other State actions 
        (including actions by a State agency) having the effect of law, 
        of any State.

``SEC. 2922. OFFERING LOWER COST PLANS.

    ``(a) List of Required Benefits.--Not later than 3 months after the 
date of enactment of this title, the Secretary shall issue by interim 
final rule a list (to be known as the `List of Required Benefits') of 
the benefit, service, and provider mandates that are required to be 
provided by health insurance issuers in at least 45 States as a result 
of the application of State benefit, service, and provider mandate 
laws.
    ``(b) State Benefit Compendium.--
            ``(1) Variance.--Not later than 12 months after the date of 
        enactment of this title, the Secretary shall issue by interim 
        final rule a compendium (to be known as the `State Benefit 
        Compendium') of harmonized descriptions of the benefit, 
        service, and provider mandates identified under subsection (a). 
        In developing the Compendium, with respect to differences in 
        State mandate laws identified under subsection (a) relating to 
        similar benefits, services, or providers, the Secretary shall 
        review and define the scope and application of such State laws 
        so that a common approach shall be applicable under such 
        Compendium in a uniform manner. In making such determination, 
        the Secretary shall adopt an approach reflective of the 
        approach used by a plurality of the States requiring such 
        benefit, service, or provider mandate.
            ``(2) Effect.--The State Benefit Compendium shall provide 
        that any State benefit, service, and provider mandate law 
        (enacted prior to or after the date of enactment of this title) 
        other than those described in the Compendium shall not be 
        binding on health insurance issuers in an adopting State.
            ``(3) Implementation.--The effective date of the State 
        Benefit Compendium shall be the later of--
                    ``(A) the date that is 12 months from the date of 
                enactment of this title; or
                    ``(B) such subsequent date on which the interim 
                final rule for the State Benefit Compendium shall be 
                issued.
    ``(c) Non-Association Coverage.--With respect to health insurers 
selling insurance to small employers (as defined in section 808(a)(10) 
of the Employee Retirement Income Security Act of 1974), in the event 
the Secretary fails to issue the State Benefit Compendium within 12 
months of the date of enactment of this title, the required scope and 
application for each benefit or service listed in the List of Required 
Benefits shall, other than with respect to insurance issued to a Small 
Business Health Plan, be--
            ``(1) if the State in which the insurer issues a policy 
        mandates such benefit or service, the scope and application 
        required by such State; or
            ``(2) if the State in which the insurer issues a policy 
        does not mandate such benefit or service, the scope and 
        application required by such other State that does require such 
        benefit or service in which the greatest number of the 
        insurer's small employer policyholders are located.
    ``(d) Updating of State Benefit Compendium.--Not later than 2 years 
after the date on which the Compendium is issued under subsection 
(b)(1), and every 2 years thereafter, the Secretary, applying the same 
methodology provided for in subsections (a) and (b)(1), in consultation 
with the National Association of Insurance Commissioners, shall update 
the Compendium. The Secretary shall issue the updated Compendium by 
regulation, and such updated Compendium shall be effective upon the 
first plan year following the issuance of such regulation.

``SEC. 2923. APPLICATION AND PREEMPTION.

    ``(a) Superceding of State Law.--
            ``(1) In general.--This part shall supersede any and all 
        State laws (whether enacted prior to or after the date of 
        enactment of this title) insofar as such laws relate to 
        benefit, service, or provider mandates in the health insurance 
        market as applied to an eligible insurer, or health insurance 
        coverage issued by an eligible insurer, in a nonadopting State.
            ``(2) Nonadopting states.--This part shall supersede any 
        and all State laws of a nonadopting State (whether enacted 
        prior to or after the date of enactment of this title) insofar 
        as such laws--
                    ``(A) prohibit an eligible insurer from offering 
                coverage consistent with the State Benefit Compendium, 
                as provided for in section 2922(a), in a nonadopting 
                State; or
                    ``(B) discriminate against or among eligible 
                insurers offering or seeking to offer health insurance 
                coverage consistent with the State Benefit Compendium 
                in a nonadopting State.
    ``(b) Savings Clause and Construction.--
            ``(1) Nonapplication to adopting states.--Subsection (a) 
        shall not apply with respect to adopting States.
            ``(2) Nonapplication to certain insurers.--Subsection (a) 
        shall not apply with respect to insurers that do not qualify as 
        eligible insurers who offer health insurance coverage in a 
        nonadopting State.
            ``(3) Nonapplication where obtaining relief under state 
        law.--Subsection (a)(1) shall not apply to any State law of a 
        nonadopting State to the extent necessary to permit individuals 
        or the insurance department of the State (or other State 
        agency) to obtain relief under State law to require an eligible 
        insurer to comply with the terms of the group health insurance 
        coverage issued in a nonadopting State. In no case shall this 
        paragraph, or any other provision of this title, be construed 
        to create a cause of action on behalf of an individual or any 
        other person under State law in connection with a group health 
        plan that is subject to the Employee Retirement Income Security 
        Act of 1974 or health insurance coverage issued in connection 
        with such plan.
            ``(4) Nonapplication to enforce requirements relating to 
        the compendium.--Subsection (a)(1) shall not apply to any State 
        law in a nonadopting State to the extent necessary to provide 
        the insurance department of the State (or other state agency) 
        authority to enforce State law requirements relating to the 
        State Benefit Compendium that are not set forth in the terms of 
        the group health insurance coverage issued in a nonadopting 
        State, in a manner that is consistent with the State Benefit 
        Compendium and imposes no greater duties or obligations on 
        health insurance issuers than the State Benefit Compendium.
            ``(5) Nonapplication to subsection (a)(2).--Paragraphs (3) 
        and (4) shall not apply with respect to subsection (a)(2).
            ``(6) No affect on preemption.--In no case shall this 
        subsection be construed to affect the scope of the preemption 
        provided for under the Employee Retirement Income Security Act 
        of 1974.
    ``(c) Effective Date.--This section shall apply upon the first plan 
year following final issuance by the Secretary of the State Benefit 
Compendium.

``SEC. 2924. CIVIL ACTIONS AND JURISDICTION.

    ``(a) In General.--The district courts of the United States shall 
have exclusive jurisdiction over civil actions involving the 
interpretation of this part.
    ``(b) Actions.--A health insurance issuer may bring an action in 
the district courts of the United States for injunctive or other 
equitable relief against a nonadopting State in connection with the 
application of a State law that violates this part.
    ``(c) Violations of Section 2923.--In the case of a nonadopting 
State that is in violation of section 2923(a)(2), a health insurance 
issuer may bring an action in the district courts of the United States 
for damages against the nonadopting State and, if the health insurance 
issuer prevails in such action, the district court shall award the 
health insurance issuer its reasonable attorneys fees and costs.''.

           TITLE III--HARMONIZATION OF HEALTH INSURANCE LAWS

SEC. 301. HEALTH INSURANCE REGULATORY HARMONIZATION.

    Title XXIX of the Public Health Service Act (as added by section 
201) is amended by adding at the end the following:

                 ``Subtitle B--Regulatory Harmonization

``SEC. 2931. DEFINITIONS.

    ``In this subtitle:
            ``(1) Access.--The term `access' means any requirements of 
        State law that regulate the following elements of access:
                    ``(A) Renewability of coverage.
                    ``(B) Guaranteed issuance as provided for in title 
                XXVII.
                    ``(C) Guaranteed issue for individuals not eligible 
                under subparagraph (B).
                    ``(D) High risk pools.
                    ``(E) Pre-existing conditions limitations.
            ``(2) Adopting state.--The term `adopting State' means a 
        State that has enacted the harmonized standards adopted under 
        this subtitle in their entirety and as the exclusive laws of 
        the State that relate to the harmonized standards.
            ``(3) Eligible insurer.--The term `eligible insurer' means 
        a health insurance issuer that is licensed in a nonadopting 
        State and that--
                    ``(A) notifies the Secretary, not later than 30 
                days prior to the offering of coverage described in 
                this subparagraph, that the issuer intends to offer 
                health insurance coverage consistent with the 
                harmonized standards in a nonadopting State;
                    ``(B) notifies the insurance department of a 
                nonadopting State (or other State agency), not later 
                than 30 days prior to the offering of coverage 
                described in this subparagraph, that the issuer intends 
                to offer group health insurance coverage in that State 
                consistent with the State Benefit Compendium, and 
                provides with such notice a copy of any insurance 
                policy that it intends to offer in the State, its most 
                recent annual and quarterly financial reports, and any 
                other information required to be filed with the 
                insurance department of the State (or other State 
                agency) by the Secretary in regulations; and
                    ``(C) includes in the terms of the health insurance 
                coverage offered in nonadopting States (including in 
                the terms of any individual certificates that may be 
                offered to individuals in connection with such group 
                health coverage) and filed with the State pursuant to 
                subparagraph (B), a description of the harmonized 
                standards published pursuant to section 2932(g)(2) and 
                an affirmation that such standards are a term of the 
                contract.
            ``(4) Harmonized standards.--The term `harmonized 
        standards' means the standards adopted by the Secretary under 
        section 2932(d).
            ``(5) Health insurance coverage.--The term `health 
        insurance coverage' means any coverage issued in the health 
        insurance market.
            ``(6) Nonadopting state.--The term `nonadopting State' 
        means a State that fails to enact, within 2 years of the date 
        in which final regulations are issued by the Secretary adopting 
        the harmonized standards under this subtitle, the harmonized 
        standards in their entirety and as the exclusive laws of the 
        State that relate to the harmonized standards.
            ``(7) Patient protections.--The term `patient protections' 
        means any requirement of State law that regulate the following 
        elements of patient protections:
                    ``(A) Internal appeals.
                    ``(B) External appeals.
                    ``(C) Direct access to providers.
                    ``(D) Prompt payment of claims.
                    ``(E) Utilization review.
                    ``(F) Marketing standards.
            ``(8) Plurality requirement.--The term `plurality 
        requirement' means the most common substantially similar 
        requirements for elements within each area described in section 
        2932(b)(1).
            ``(9) Rating.--The term `rating' means, at the time of 
        issuance or renewal, requirements of State law the regulate the 
        following elements of rating:
                    ``(A) Limits on the types of variations in rates 
                based on health status.
                    ``(B) Limits on the types of variations in rates 
                based on age and gender.
                    ``(C) Limits on the types of variations in rates 
                based on geography, industry and group size.
                    ``(D) Periods of time during which rates are 
                guaranteed.
                    ``(E) The review and approval of rates.
                    ``(F) The establishment of classes or blocks of 
                business.
                    ``(G) The use of actuarial justifications for rate 
                variations.
            ``(10) State law.--The term `State law' means all laws, 
        decisions, rules, regulations, or other State actions 
        (including actions by a State agency) having the effect of law, 
        of any State.
            ``(11) Substantially similar.--The term `substantially 
        similar' means a requirement of State law applicable to an 
        element of an area identified in section 2932 that is similar 
        in most material respects. Where the most common State action 
        with respect to an element is to adopt no requirement for an 
        element of an area identified in such section 2932, the 
        plurality requirement shall be deemed to impose no requirements 
        for such element.

``SEC. 2932. HARMONIZED STANDARDS.

    ``(a) Commission.--
            ``(1) Establishment.--The Secretary, in consultation with 
        the NAIC, shall establish the Commission on Health Insurance 
        Standards Harmonization (referred to in this subtitle as the 
        `Commission') to develop recommendations that harmonize 
        inconsistent State health insurance laws in accordance with the 
        laws adopted in a plurality of the States.
            ``(2) Composition.--The Commission shall be composed of the 
        following individuals to be appointed by the Secretary:
                    ``(A) Two State insurance commissioners, of which 
                one shall be a Democrat and one shall be a Republican, 
                and of which one shall be designated as the chairperson 
                and one shall be designated as the vice chairperson.
                    ``(B) Two representatives of State government, one 
                of which shall be a governor of a State and one of 
                which shall be a State legislator, and one of which 
                shall be a Democrat and one of which shall be a 
                Republican.
                    ``(C) Two representatives of employers, of which 
                one shall represent small employers and one shall 
                represent large employers.
                    ``(D) Two representatives of health insurers, of 
                which one shall represent insurers that offer coverage 
                in all markets (including individual, small, and large 
                markets), and one shall represent insurers that offer 
                coverage in the small market.
                    ``(E) Two representatives of consumer 
                organizations.
                    ``(F) Two representatives of insurance agents and 
                brokers.
                    ``(G) Two representatives of healthcare providers.
                    ``(H) Two independent representatives of the 
                American Academy of Actuaries who have familiarity with 
                the actuarial methods applicable to health insurance.
                    ``(I) One administrator of a qualified high risk 
                pool.
            ``(3) Terms.--The members of the Commission shall serve for 
        the duration of the Commission. The Secretary shall fill 
        vacancies in the Commission as needed and in a manner 
        consistent with the composition described in paragraph (2).
    ``(b) Development of Harmonized Standards.--
            ``(1) In general.--In accordance with the process described 
        in subsection (c), the Commission shall identify and recommend 
        nationally harmonized standards for the small group health 
        insurance market, the individual health insurance market, and 
        the large group health insurance market that relate to the 
        following areas:
                    ``(A) Rating.
                    ``(B) Access to coverage.
                    ``(C) Patient protections.
            ``(2) Recommendations.--The Commission shall recommend 
        separate harmonized standards with respect to each of the three 
        insurance markets described in paragraph (1) and separate 
        standards for each element of the areas described in 
        subparagraph (A) through (C) of such paragraph within each such 
        market. Notwithstanding the previous sentence, the Commission 
        shall not recommend any harmonized standards that disrupt, 
        expand, or duplicate the benefit, service, or provider mandate 
        standards provided in the State Benefit Compendium pursuant to 
        section 2922(a).
    ``(c) Process for Identifying Harmonized Standards.--
            ``(1) In general.--The Commission shall develop 
        recommendations to harmonize inconsistent State insurance laws 
        with the laws adopted in a plurality of the States. In carrying 
        out the previous sentence, the Commission shall review all 
        State laws that regulate insurance in each of the insurance 
        markets and areas described in subsection (b)(1) and identify 
        the plurality requirement within each element of such areas. 
        Such plurality requirement shall be the harmonized standard for 
        such area in each such market.
            ``(2) Consultation.--The Commission shall consult with the 
        National Association of Insurance Commissioners in identifying 
        the plurality requirements for each element within the area and 
        in recommending the harmonized standards.
            ``(3) Review of federal laws.--The Commission shall review 
        whether any Federal law imposes a requirement relating to the 
        markets and areas described in subsection (b)(1). In such case, 
        such Federal requirement shall be deemed the plurality 
        requirement and the Commission shall recommend the Federal 
        requirement as the harmonized standard for such elements.
    ``(d) Recommendations and Adoption by Secretary.--
            ``(1) Recommendations.--Not later than 1 year after the 
        date of enactment of this title, the Commission shall recommend 
        to the Secretary the adoption of the harmonized standards 
        identified pursuant to subsection (c).
            ``(2) Regulations.--Not later than 120 days after receipt 
        of the Commission's recommendations under paragraph (1), the 
        Secretary shall issue final regulations adopting the 
        recommended harmonized standards. If the Secretary finds the 
        recommended standards for an element of an area to be arbitrary 
        and inconsistent with the plurality requirements of this 
        section, the Secretary may issue a unique harmonized standard 
        only for such element through the application of a process 
        similar to the process set forth in subsection (c) and through 
        the issuance of proposed and final regulations.
            ``(3) Effective date.--The regulations issued by the 
        Secretary under paragraph (2) shall be effective on the date 
        that is 2 years after the date on which such regulations were 
        issued.
    ``(e) Termination.--The Commission shall terminate and be dissolved 
after making the recommendations to the Secretary pursuant to 
subsection (d)(1).
    ``(f) Updated Harmonized Standards.--
            ``(1) In general.--Not later than 2 years after the 
        termination of the Commission under subsection (e), and every 2 
        years thereafter, the Secretary shall update the harmonized 
        standards. Such updated standards shall be adopted in 
        accordance with paragraph (2).
            ``(2) Updating of standards.--
                    ``(A) In general.--The Secretary shall review all 
                State laws that regulate insurance in each of the 
                markets and elements of areas set forth in subsection 
                (b)(1) and identify whether a plurality of States have 
                adopted substantially similar requirements that differ 
                from the harmonized standards adopted by the Secretary 
                pursuant to subsection (d). In such case, the Secretary 
                shall consider State laws that have been enacted with 
                effective dates that are contingent upon adoption as a 
                harmonized standard by the Secretary. Substantially 
                similar requirements for each element within such area 
                shall be considered to be an updated harmonized 
                standard for such an area.
                    ``(B) Report.--The Secretary shall request the 
                National Association of Insurance Commissioners to 
                issue a report to the Secretary every 2 years to assist 
                the Secretary in identifying the updated harmonized 
                standards under this paragraph. Nothing in this 
                subparagraph shall be construed to prohibit the 
                Secretary from issuing updated harmonized standards in 
                the absence of such a report.
                    ``(C) Regulations.--The Secretary shall issue 
                regulations adopting updated harmonized standards under 
                this paragraph within 90 days of identifying such 
                standards. Such regulations shall be effective 
                beginning on the date that is 2 years after the date on 
                which such regulations are issued.
    ``(g) Publication.--
            ``(1) Listing.--The Secretary shall maintain an up to date 
        listing of all harmonized standards adopted under this section 
        on the Internet website of the Department of Health and Human 
        Services.
            ``(2) Sample contract language.--The Secretary shall 
        publish on the Internet website of the Department of Health and 
        Human Services sample contract language that incorporates the 
        harmonized standards adopted under this section, which may be 
        used by insurers seeking to qualify as an eligible insurer. The 
        types of harmonized standards that shall be included in sample 
        contract language are the standards that are relevant to the 
        contractual bargain between the insurer and insured.
    ``(h) State Adoption and Enforcement.--Not later than 2 years after 
the issuance by the Secretary of final regulations adopting harmonized 
standards under this section, the States may adopt such harmonized 
standards (and become an adopting State) and, in which case, shall 
enforce the harmonized standards pursuant to State law.

``SEC. 2933. APPLICATION AND PREEMPTION.

    ``(a) Superceding of State Law.--
            ``(1) In general.--The harmonized standards adopted under 
        this subtitle shall supersede any and all State laws (whether 
        enacted prior to or after the date of enactment of this title) 
        insofar as such State laws relate to the areas of harmonized 
        standards as applied to an eligible insurer, or health 
        insurance coverage issued by a eligible insurer, in a 
        nonadopting State.
            ``(2) Nonadopting states.--This subtitle shall supersede 
        any and all State laws of a nonadopting State (whether enacted 
        prior to or after the date of enactment of this title) insofar 
        as they may--
                    ``(A) prohibit an eligible insurer from offering 
                coverage consistent with the harmonized standards in 
                the nonadopting State; or
                    ``(B) discriminate against or among eligible 
                insurers offering or seeking to offer health insurance 
                coverage consistent with the harmonized standards in 
                the nonadopting State.
    ``(b) Savings Clause and Construction.--
            ``(1) Nonapplication to adopting states.--Subsection (a) 
        shall not apply with respect to adopting States.
            ``(2) Nonapplication to certain insurers.--Subsection (a) 
        shall not apply with respect to insurers that do not qualify as 
        eligible insurers who offer health insurance coverage in a 
        nonadopting State.
            ``(3) Nonapplication where obtaining relief under state 
        law.--Subsection (a)(1) shall not apply to any State law of a 
        nonadopting State to the extent necessary to permit individuals 
        or the insurance department of the State (or other State 
        agency) to obtain relief under State law to require an eligible 
        insurer to comply with the terms of the health insurance 
        coverage issued in a nonadopting State. In no case shall this 
        paragraph, or any other provision of this subtitle, be 
        construed to permit a cause of action on behalf of an 
        individual or any other person under State law in connection 
        with a group health plan that is subject to the Employee 
        Retirement Income Security Act of 1974 or health insurance 
        coverage issued in connection with such plan.
            ``(4) Nonapplication to enforce requirements relating to 
        the compendium.--Subsection (a)(1) shall not apply to any State 
        law in a nonadopting State to the extent necessary to provide 
        the insurance department of the State (or other state agency) 
        authority to enforce State law requirements relating to the 
        harmonized standards that are not set forth in the terms of the 
        health insurance coverage issued in a nonadopting State, in a 
        manner that is consistent with the harmonized standards and 
        imposes no greater duties or obligations on health insurance 
        issuers than the harmonized standards.
            ``(5) Nonapplication to subsection (a)(2).--Paragraphs (3) 
        and (4) shall not apply with respect to subsection (a)(2).
            ``(6) No affect on preemption.--In no case shall this 
        subsection be construed to affect the scope of the preemption 
        provided for under the Employee Retirement Income Security Act 
        of 1974.
    ``(c) Effective Date.--This section shall apply beginning on the 
date that is 2 years after the date on which final regulations are 
issued by the Secretary under this subtitle adopting the harmonized 
standards.

``SEC. 2934. CIVIL ACTIONS AND JURISDICTION.

    ``(a) In General.--The district courts of the United States shall 
have exclusive jurisdiction over civil actions involving the 
interpretation of this subtitle.
    ``(b) Actions.--A health insurance issuer may bring an action in 
the district courts of the United States for injunctive or other 
equitable relief against a nonadopting State in connection with the 
application of a State law that violates this subtitle.
    ``(c) Violations of Section 2933.--In the case of a nonadopting 
State that is in violation of section 2933(a)(2), a health insurance 
issuer may bring an action in the district courts of the United States 
for damages against the nonadopting State and, if the health insurance 
issuer prevails in such action, the district court shall award the 
health insurance issuer its reasonable attorneys fees and costs.

``SEC. 2935. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated such sums as may be 
necessary to carry out this subtitle.''.
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