I

103D CONGRESS

1ST SESSION H. R. 834

To provide for comprehensive health care access expansion and cost control

through reform and simplification of private health care insurance and

other means.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 4, 1993

Mr. GLICKMAN (for himself and Mr. MCCURDY) introduced the following bill;

which was referred jointly to the Committees on Energy and Commerce,

Ways and Means, the Judiciary, Education and Labor, and Rules

A BILL

To provide for comprehensive health care access expansion

and cost control through reform and simplification of

private health care insurance and other means.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘BasiCare Health Access and Cost Control Act’’.

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

7 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—IMMEDIATE REFORMS
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Subtitle A—Small Employer Health Insurance Market Reform

Sec. 101. General requirements.

Sec. 102. General issuance requirements.

Sec. 103. Specific contractual requirements.

Sec. 104. State compliance agreements.

Sec. 105. Definitions and other rules.

Sec. 106. Amendment to the Internal Revenue Code of 1986.

Sec. 107. Effective date.

Subtitle B—Community Health Services Expansion

Sec. 111. Establishment of grant program.

Sec. 112. Program to provide for expansion of federally qualified health centers.

Subtitle C—Expansion of Tax Incentives for Self-Employed Individuals

Sec. 121. Permanent increase in deductible health insurance costs for self-employed individuals.

Subtitle D—Expanding the Supply of Health Professionals in Rural Areas

Sec. 131. Expansion of National Health Service Corps.

Sec. 132. Tax incentives for practice in rural areas.

Subtitle E—Malpractice Reform

PART I—DEFINITIONS

Sec. 141. Definitions.

PART II—TORT REFORM OF HEALTH CARE LIABILITY ACTIONS

Sec. 142. Application to civil actions.

Sec. 143. Damages.

Sec. 144. Joint and several liability.

Sec. 145. Statute of limitations.

Sec. 146. Preemption.

Sec. 147. Effective date.

PART III—ALTERNATIVE DISPUTE RESOLUTION SYSTEMS

Sec. 148. Grants for alternative dispute resolution systems.

Sec. 149. Establishment of advisory panel.

Sec. 150. Authorization.

PART IV—DEMONSTRATION PROJECTS FOR NO-FAULT COMPENSATION

PROGRAMS

Sec. 151. Demonstration projects for no-fault compensation programs.

Subtitle F—Joint Ventures

Sec. 161. Amendment of the National Cooperative Research Act of 1984.

TITLE II—LONG-TERM REFORMS

Subtitle A—Establishment of Commission and Advisory Board

Sec. 201. The Commission on National Health Care Access and Reform.
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Sec. 202. National Advisory Board.

Sec. 203. Authorization of appropriations.

Subtitle B—Reform and Standardization of Private Insurance

Sec. 211. Defining goals and guidelines of Commission.

Sec. 212. Development and submission of legislative proposal.

Sec. 213. Continuing duties and responsibilities of the Commission.

Sec. 214. BasiCare benefits package.

Sec. 215. Insurance responsibilities under BasiCare.

Sec. 216. BasiCare base premium rate.

Sec. 217. Employer responsibilities under BasiCare.

Sec. 218. Individual responsibilities under BasiCare.

Sec. 219. Self-insured plan requirements.

Sec. 220. Provider responsibilities under BasiCare.

Sec. 221. Development of standards for managed care plans.

Sec. 222. Preemption of provisions relating to managed care.

Subtitle C—Low-Income Assistance

Sec. 231. Transfer from medicaid to BasiCare.

Sec. 232. Low-income assistance with costs of BasiCare insurance.

Subtitle D—Congressional Consideration of Commission Recommendation

Sec. 241. Rules governing congressional consideration.

Subtitle E—Enforcement Provisions

Sec. 251. Enforcement provisions for carriers, providers, and employers.

Sec. 252. Enforcement provision for individuals.

Subtitle F—Financial Provisions

Sec. 261. BasiCare Trust Fund.

Sec. 262. Tax treatment of costs of BasiCare insurance.

Subtitle G—Definitions

Sec. 271. Definitions.

1 TITLE I—IMMEDIATE REFORMS

2 Subtitle A—Small Employer Health

3 Insurance Market Reform

4 SEC. 101. GENERAL REQUIREMENTS.

5 Any person issuing an accident and health insurance

6 contract to any small employer shall meet the require7 ments of sections 102 and 103.
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1 SEC. 102. GENERAL ISSUANCE REQUIREMENTS.

2 (a) GENERAL RULE.—The requirements of this sec3 tion are met if any person issuing an accident and health

4 insurance contract to any small employer meets—

5 (1) the mandatory policy requirements of sub6 section (b), and

7 (2) the guaranteed issue requirements of sub8 section (c).

9 (b) MANDATORY POLICY REQUIREMENTS.—

10 (1) IN GENERAL.—The requirements of this

11 subsection are met if any person issuing an accident

12 and health insurance contract to any small employer

13 makes available to such small employer an accident

14 and health insurance contract which provides bene15 fits which are identical to the core benefits described

16 in subsection (d).

17 (2) PRICING AND MARKETING REQUIRE18 MENTS.—The requirements of paragraph (1) are not

19 met unless—

20 (A) the price at which the accident and

21 health insurance contract is made available is

22 not greater than the price for such contract de23 termined on the same basis as prices for other

24 accident and health insurance contracts within

25 the same class of business made available by

26 the person to small employers, and
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1 (B) the accident and health insurance con2 tract is made available to small employers using

3 substantially the same marketing methods and

4 other sales practices which are used in selling

5 such other contracts.

6 (c) GUARANTEED ISSUE.—

7 (1) IN GENERAL.—The requirements of this

8 subsection are met—

9 (A) if the person offering accident and

10 health insurance contracts to small employers

11 issues such contracts to any small employer

12 seeking to enter into such a contract, and

13 (B) if the person offers a managed care ar14 rangement in a State, or a geographic area

15 within a State, to employers that are not small

16 employers, the person offers such managed care

17 arrangement to small employers in the State or

18 geographic area.

19 (2) FINANCIAL CAPACITY EXCEPTION.—Para20 graph (1)(A) shall not require any person to issue

21 an accident and health insurance contract to the ex22 tent that the issuance of such contract would result

23 in such person violating any financial solvency

24 standards established by the State in which such

25 contract is to be issued.
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1 (3) EXCEPTIONS FOR CERTAIN EMPLOYERS.—

2 Paragraph (1)(A) shall not apply to a failure to

3 issue an accident and health insurance contract to a

4 small employer if—

5 (A) the small employer is unable to pay the

6 premium for such contract, or

7 (B) in the case of a small employer with

8 fewer than 15 employees, such employer fails to

9 enroll at least 60 percent of the employer’s eli10 gible employees for coverage under such con11 tract.

12 (4) SIZE LIMITS FOR MANAGED CARE ARRANGE13 MENTS.—Paragraph (1)(B) shall not apply to any

14 person who ceases to enroll new small employer

15 groups in a managed care arrangement if it ceases

16 to enroll any new employer groups in such arrange17 ment.

18 (d) BENEFITS.—

19 (1) CORE BENEFITS.—For purposes of this sec20 tion, the term ‘‘core benefits’’ means benefits which

21 are the same benefits provided as of the date of the

22 enactment of this Act under title XVIII of the Social

23 Security Act to individuals entitled to benefits under

24 part A, and enrolled for benefits under part B of

25 such title.
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1 (2) DEDUCTIBLES AND COPAYMENTS.—An acci2 dent and health insurance contract shall not be

3 treated as providing the core benefits described in

4 paragraph (1) unless the following requirements are

5 met:

6 (A) DEDUCTIBLE.—The accident and

7 health insurance contract does not require a de8 ductible amount for any contract year in excess

9 of $500 per individual or $1,000 per family

10 with respect to the core benefits.

11 (B) LIMIT ON OUT-OF-POCKET EX12 PENSES.—The accident and health insurance

13 contract does not require out-of-pocket expenses

14 for any contract year in excess of $2,000 per

15 individual or $3,000 per family for the core

16 benefits.

17 (C) CHILDREN.—

18 (i) NO DEDUCTIBLES OR COINSUR19 ANCE.—In the case of children, there shall

20 be no coinsurance, deductibles, or

21 copayments applicable to covered benefits

22 described in clause (ii).

23 (ii) ADDITIONAL PREVENTIVE BENE24 FITS.—Subject to the periodicity schedule

25 established under clause (iii), benefits shall
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1 be available for children under the accident

2 and health insurance contract for the fol3 lowing items and services:

4 (I) Newborn and well-baby care,

5 including normal newborn care and

6 pediatrician services for high-risk de7 liveries.

8 (II) Well-child care, including

9 routine office visits, routine immuni10 zations (including the vaccine itself),

11 routine laboratory tests, and preven12 tive dental care.

13 (iii) PERIODICITY SCHEDULE.—The

14 Secretary, in consultation with the Amer15 ican Academy of Pediatrics, shall establish

16 a schedule of periodicity which reflects the

17 general, appropriate frequency with which

18 services listed in clause (ii) should be pro19 vided to healthy children.

20 (iv) CHILD DEFINED.—For purposes

21 of this subparagraph, the term ‘‘child’’

22 means an individual who has not attained

23 age 23.

24 (D) PREGNANCY-RELATED SERVICES.—
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1 (i) NO DEDUCTIBLES OR COINSUR2 ANCE.—In the case of a pregnant woman,

3 there shall be no coinsurance, deductibles,

4 or copayments applicable to covered bene5 fits described in clause (ii).

6 (ii) ADDITIONAL BENEFITS.—Subject

7 to the periodicity schedule established

8 under clause (iii), benefits shall be avail9 able for pregnant women under the acci10 dent and health insurance contract for the

11 following items and services:

12 (I) Prenatal care, including care

13 for all complications of pregnancy.

14 (II) Inpatient labor and delivery

15 services.

16 (III) Postnatal care.

17 (IV) Postnatal family planning

18 services.

19 (iii) PERIODICITY SCHEDULE.—The

20 Secretary, in consultation with the Amer21 ican College of Obstetrics and Gynecology,

22 shall establish a schedule of periodicity

23 which reflects the general, appropriate fre24 quency with which services listed in clause
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1 (ii) should be provided to pregnant women

2 without complications of pregnancy.

3 (iv) PREGNANT WOMAN.—For pur4 poses of this subparagraph, the term

5 ‘‘pregnant woman’’ means a woman who

6 has been certified by a physician (in a

7 manner specified by the Secretary) as

8 being pregnant and such woman shall be a

9 pregnant woman for the purposes of this

10 subparagraph until the last day of the

11 month in which the 60-day period begin12 ning on the date of termination of the

13 pregnancy ends.

14 (3) PREEMPTION.—To the extent that the laws

15 of any State or local government regulate or other16 wise provide any requirement relating to the benefits

17 to be provided under an accident and health insur18 ance contract which are inconsistent with the provi19 sions of this Act, they are preempted.

20 SEC. 103. SPECIFIC CONTRACTUAL REQUIREMENTS.

21 (a) GENERAL RULE.—The requirements of this sec22 tion are met if any person issuing an accident and health

23 insurance contract to any small employer meets—

24 (1) the coverage requirements of subsection (b),

25 and
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1 (2) the rating requirements of subsection (c).

2 (b) COVERAGE REQUIREMENTS.—

3 (1) IN GENERAL.—The requirements of this

4 subsection are met with respect to any accident and

5 health contract if, under the terms and operation of

6 the contract, the following requirements are met:

7 (A) GUARANTEED ELIGIBILITY.—No eligi8 ble employee (and the spouse or any dependent

9 child (as defined in section 102(d)(2)(C)(iv)) of

10 the employee eligible for coverage) may be ex11 cluded from coverage under the contract.

12 (B) LIMITATIONS ON COVERAGE OF PRE13 EXISTING CONDITIONS.—Any limitation under

14 the contract on any preexisting condition—

15 (i) may not extend beyond the 6-

16 month period beginning with the date an

17 insured individual is first covered by the

18 contract, and

19 (ii) may only apply to preexisting con20 ditions which manifested themselves, or for

21 which medical care or advice was sought or

22 recommended, during the 3-month period

23 preceding the date an insured individual is

24 first covered by the contract.

25 (C) GUARANTEED RENEWABILITY.—
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1 (i) IN GENERAL.—The contract must

2 be renewed at the election of the small em3 ployer unless the contract is terminated for

4 cause.

5 (ii) CAUSE.—For purposes of this

6 subparagraph, the term ‘‘cause’’—

7 (I) includes nonpayment of pre8 miums, fraud or misrepresentation,

9 noncompliance with contract provi10 sions (including participation require11 ments), or misuse of network provi12 sions, but

13 (II) does not include any reason

14 related to risk characteristics.

15 (2) WAITING PERIODS.—Paragraph (1)(A) shall

16 not apply to any period an eligible employee is ex17 cluded from coverage under the contract solely by

18 reason of a requirement applicable to all employees

19 that a minimum period of service with the employer

20 is required before the employee is eligible for such

21 coverage.

22 (3) DETERMINATION OF PERIODS FOR RULES

23 RELATING TO PREEXISTING CONDITIONS.—For pur24 poses of paragraph (1)(B), the date on which an in-
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1 sured individual is first covered by an accident and

2 health insurance contract shall be the earlier of—

3 (A) the date on which coverage under such

4 contract begins, or

5 (B) the first day of any continuous pe6 riod—

7 (i) during which the insured individual

8 was covered under 1 or more other health

9 insurance arrangements, and

10 (ii) which does not end more than 120

11 days before the date employment for the

12 employer begins.

13 (4) CESSATION OF SMALL EMPLOYER HEALTH

14 INSURANCE BUSINESS.—

15 (A) IN GENERAL.—Except as otherwise

16 provided in this paragraph, a person shall not

17 be treated as failing to meet the requirements

18 of paragraph (1)(C) if such person terminates

19 the class of business which includes the acci20 dent and health insurance contract.

21 (B) NOTICE REQUIREMENT.—Subpara22 graph (A) shall apply only if the person gives

23 notice of the decision to terminate at least 90

24 days before the expiration of the contract.
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1 (C) 5-YEAR MORATORIUM.—If, within 5

2 years of the year in which a person terminates

3 a class of business under subparagraph (A),

4 such person establishes a new class of business

5 which includes contracts within the class of

6 business so terminated, the issuance of such

7 contracts in that year shall be treated as a fail8 ure to meet the requirements of paragraph

9 (1)(C).

10 (D) TRANSFERS.—If, upon a failure to

11 renew a contract to which subparagraph (A)

12 applies, a person transfers such contract to an13 other class of business, such transfer must be

14 made without regard to any risk characteristic.

15 (c) RATING REQUIREMENTS.—The requirements of

16 this subsection are met with respect to any accident and

17 health contract if the following requirements are met:

18 (1) LIMITATION ON VARIATION OF PREMIUMS

19 BETWEEN CLASSES OF BUSINESS.—

20 (A) IN GENERAL.—The base premium rate

21 for any class of business of a person issuing an

22 accident and health insurance contract to a

23 small employer may not exceed the base pre24 mium rate for any other class of business by

25 more than 20 percent.
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1 (B) EXCEPTIONS.—Subparagraph (A)

2 shall not apply to a class of business if the ap3 plicable regulatory authority determines that—

4 (i) the class is one for which the per5 son does not reject, and never has rejected,

6 small employers included within the defini7 tion of employers eligible for the class of

8 business or otherwise eligible employees

9 and dependents who enroll on a timely

10 basis, based upon their claims experience,

11 health status, industry, or occupation,

12 (ii) the person does not transfer, and

13 never has transferred, an accident and

14 health insurance contract involuntarily into

15 or out of the class of business, and

16 (iii) accident and health insurance

17 contracts offered under the class of busi18 ness are currently available for purchase

19 by small employers at the time an excep20 tion to subparagraph (A) is sought by the

21 person.

22 (2) LIMIT ON VARIATION IN PREMIUM RATES

23 WITHIN A CLASS OF BUSINESS.—For a class of busi24 ness of a person issuing an accident and health in25 surance contract to a small employer, the highest
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1 premium rates charged during a rating period to

2 small employers with similar demographic character3 istics (including age, sex, and geography and not re4 lating to claims experience, health status, industry,

5 occupation, or duration of coverage since issue) for

6 the same or similar coverage, or the highest rates

7 which could be charged to such employers under the

8 rating system for that class of business, shall not ex9 ceed an amount that is 1.5 times the base premium

10 rate for the class of business for a rating period (or

11 portion thereof) that occurs in the first 3 years in

12 which this subsection is in effect, and 1.35 times the

13 base premium rate thereafter.

14 (3) CONSISTENT APPLICATION OF RATING FAC15 TORS.—In establishing premium rates for any acci16 dent and health insurance contract offered to small

17 employers—

18 (A) the person making adjustments with

19 respect to age, sex, or geography must apply

20 such adjustments consistently across small em21 ployers, and

22 (B) no person may use a geographic area

23 that is smaller than a county or smaller than

24 an area that includes all areas in which the
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1 first three digits of the zip code are identical,

2 whichever is smaller.

3 (4) LIMIT ON TRANSFER OF EMPLOYERS

4 AMONG CLASSES OF BUSINESS.—

5 (A) IN GENERAL.—A person issuing an ac6 cident and health insurance contract to a small

7 employer may not transfer a small employer

8 from one class of business to another without

9 the consent of the employer.

10 (B) OFFERS TO TRANSFER.—The person

11 may not offer to transfer a small employer from

12 one class of business to another unless—

13 (i) the offer is made without regard to

14 age, sex, geography, claims experience,

15 health status, industry, occupation or the

16 date on which the policy was issued, and

17 (ii) the same offer is made to all other

18 small employers in the same class of busi19 ness.

20 (5) LIMITS ON VARIATION IN PREMIUM IN21 CREASES.—The percentage increase in the premium

22 rate charged to a small employer for a new rating

23 period (determined on an annual basis) may not ex24 ceed the sum of the percentage change in the base

25 premium rate plus 5 percentage points.
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1 (6) FULL DISCLOSURE OF RATING PRAC2 TICES.—

3 (A) IN GENERAL.—At the time a person

4 offers an accident and health insurance contract

5 to a small employer, the person shall fully dis6 close to the employer all of the following:

7 (i) Rating practices for small em8 ployer accident and health insurance con9 tracts, including rating practices for dif10 ferent populations and benefit designs.

11 (ii) The extent to which premium

12 rates for the small employer are based on

13 risk characteristics and on factors other

14 than risk characteristics.

15 (iii) The provisions concerning the

16 person’s right to change premium rates,

17 the extent to which premiums can be modi18 fied, and the factors which affect changes

19 in premium rates.

20 (iv) The class of business within

21 which the contract falls, including a de22 scription of the grouping of contracts with23 in a class of business.

24 (B) NOTICE ON EXPIRATION.—A person

25 issuing accident and health insurance contracts
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1 to small employers shall provide for notice, at

2 least 60 days before the date of expiration of

3 the accident and health insurance contract, of

4 the terms for renewal of the contract. Such no5 tice shall include an explanation of the extent to

6 which any increase in premiums is due to actual

7 or expected claims experience of the individuals

8 covered under the small employer’s accident

9 and health insurance contract.

10 (7) ACTUARIAL CERTIFICATION.—Each person

11 issuing an accident and health contract to a small

12 employer shall file annually with the applicable regu13 latory authority a written statement by a qualified

14 health actuary (or other individual acceptable to

15 such authority) that, based upon an examination by

16 the individual which includes a review of the appro17 priate records and of the actuarial assumptions of

18 the person and methods used by the person in estab19 lishing premium rates for small employer accident

20 and health insurance contracts—

21 (A) the person is in compliance with the

22 applicable provisions of this subsection, and

23 (B) the rating methods are actuarially

24 sound.
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1 (8) RECORDKEEPING.—Each person issuing an

2 accident and health insurance contract to a small

3 employer shall retain for examination at its principal

4 place of business a complete and detailed description

5 of its rating and renewal underwriting practices and

6 the information on which such practices are based,

7 including the statement described in paragraph (7).

8 SEC. 104. STATE COMPLIANCE AGREEMENTS.

9 (a) AGREEMENTS.—The Secretary may, in the dis10 cretion of the Secretary, enter into an agreement with any

11 State—

12 (1) to apply the standards set by the laws of

13 such State for accident and health insurance con14 tracts issued by any person to any small employer

15 in lieu of the requirements of section 102, or

16 (2) to provide for the State to make the initial

17 determination as to whether a person is in compli18 ance with the provisions of section 102.

19 (b) STANDARDS.—An agreement may be entered into

20 under subsection (a)(1) only if—

21 (1) the chief executive officer of the State re22 quests such agreement be entered into,

23 (2) the Secretary determines that the State

24 standards to be applied under the agreement will

25 apply to substantially all accident and health insur-
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1 ance contracts issued to small employers in such

2 State, and

3 (3) the Secretary determines that the applica4 tion of the State standards will carry out the pur5 poses of section 102.

6 (c) LIMITATION ON WAIVER.—Any agreement en7 tered into under subsection (a)(1) shall not waive the man8 datory policy requirements under section 102(b).

9 (d) TERMINATION.—The Secretary shall terminate

10 any agreement if the Secretary determines that the appli11 cation of State standards ceases to carry out the purposes

12 of this section.

13 SEC. 105. DEFINITIONS AND OTHER RULES.

14 For purposes of this subtitle:

15 (1) ACCIDENT AND HEALTH INSURANCE CON16 TRACT.—

17 (A) IN GENERAL.—The term ‘‘accident

18 and health insurance contract’’ means a con19 tract under which a person authorized under

20 applicable State insurance laws provides a

21 health insurance plan or arrangement to a

22 small employer. Such term does not include any

23 self-insured plan of an employer.
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1 (B) CERTAIN CONTRACTS NOT COV2 ERED.—The term ‘‘accident and health insur3 ance contract’’ does not include any contract—

4 (i) which provides for accident only,

5 dental only, or disability only coverage,

6 (ii) which provides coverage as a sup7 plement to liability insurance,

8 (iii) which provides insurance arising

9 out of a workmen’s compensation or simi10 lar law, or automobile medical-payment in11 surance, or

12 (iv) which provides insurance which is

13 required by law to be contained under any

14 self-insured plan of an employer.

15 (2) BASE PREMIUM RATE.—The term ‘‘base

16 premium rate’’ means, for each class of business for

17 each rating period, the lowest premium rate which

18 could have been charged under a rating system for

19 that class of business by the person issuing accident

20 and health insurance contracts to small employers

21 with similar demographic or other relevant charac22 teristics (including age, sex, and geography and not

23 relating to claims experience, health status, industry,

24 occupation or duration of coverage since issue) for
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1 accident and health insurance contracts with the

2 same or similar coverage.

3 (3) CLASS OF BUSINESS.—

4 (A) IN GENERAL.—Except as provided in

5 subparagraph (B), the term ‘‘class of business’’

6 means, with respect to a person, all of the small

7 employers with an accident and health insur8 ance contract issued by the person.

9 (B) DISTINCT GROUPS.—

10 (i) IN GENERAL.—Subject to clause

11 (ii), a distinct group of small employers

12 with accident and health insurance con13 tracts issued by a person may be treated

14 as a class of business by such person if all

15 of the contracts in such group—

16 (I) are marketed and sold

17 through individuals and organizations

18 that do not participate in the market19 ing or sale of other distinct groups by

20 the person,

21 (II) have been acquired from an22 other person as a distinct group, or

23 (III) are provided through an as24 sociation with membership of not less

25 than 25 small employers that has
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1 been formed for purposes other than

2 obtaining health insurance.

3 (ii) EXCEPTION ALLOWED.—Except

4 as provided in subparagraph (C), a person

5 may not establish more than one distinct

6 group of small employers for each category

7 specified in clause (i).

8 (C) SPECIAL RULE.—A person may estab9 lish up to 2 groups under each category in sub10 paragraph (A) or (B) to account for differences

11 in characteristics (other than differences in con12 tract benefits) of accident and health insurance

13 contracts that are expected to produce substan14 tial variation in health care costs.

15 (4) MANAGED HEALTH CARE ARRANGEMENT.—

16 The term ‘‘managed health care arrangement’’

17 means an arrangement which integrates the financ18 ing and delivery of health care services to covered in19 dividuals by employing the following:

20 (A) Contracts with selected health care

21 providers to furnish health care services to

22 members.

23 (B) The adoption of explicit standards for

24 the selection and recertification of providers.
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1 (C) An explicit, formal program for ongo2 ing quality assurance and utilization review.

3 (D) Significant financial incentives for

4 members to use the providers and procedures

5 associated with the arrangement.

6 (5) CHARACTERISTICS.—

7 (A) IN GENERAL.—The term ‘‘characteris8 tics’’ means, with respect to any insurance rat9 ing system, the factors used in determining

10 rates.

11 (B) RISK CHARACTERISTICS.—The term

12 ‘‘risk characteristics’’ means factors related to

13 the health risks of individuals, including health

14 status, prior claims experience, the duration

15 since the date of issue of a health insurance

16 plan or arrangement, industry, and occupation.

17 (C) GEOGRAPHIC FACTORS.—In applying

18 geographic location as a characteristic, a person

19 may not use for purposes of this subtitle areas

20 smaller than Census Bureau designations of

21 metropolitan statistical areas and

22 nonmetropolitan statistical areas.

23 (6) ELIGIBLE EMPLOYEE.—The term ‘‘eligible

24 employee’’ means, with respect to an employer, any

25 employee who normally works at least 30 hours per
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1 week for that employer. For purposes of this para2 graph, the term ‘‘employee’’ includes a self-employed

3 individual as defined in section 401(c)(1) of the In4 ternal Revenue Code of 1986.

5 (7) PERSON.—The term ‘‘person’’ includes a li6 censed insurance company, a prepaid hospital or

7 medical service plan, a health maintenance organiza8 tion, or in States which have distinct insurance li9 censure requirements, a multiple employer welfare

10 arrangement.

11 (8) QUALIFIED HEALTH ACTUARY.—The term

12 ‘‘qualified health actuary’’ means a member of the

13 American Academy of Actuaries who is qualified by

14 reason of prior and continuing education and rel15 evant experience to render the actuarial opinion.

16 (9) SECRETARY.—The term ‘‘Secretary’’ means

17 the Secretary of Health and Human Services, or the

18 delegate of the Secretary.

19 (10) SMALL EMPLOYER.—The term ‘‘small em20 ployer’’ means, with respect to a calendar year, an

21 employer who normally employs more than 1 but

22 less than 51 eligible employees on a typical business

23 day. For purposes of the preceding sentence, all em24 ployers covered under the same health insurance
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1 plan or arrangement covered by a contract shall be

2 treated as 1 employer.

3 SEC. 106. AMENDMENT TO THE INTERNAL REVENUE CODE

4 OF 1986.

5 (a) IN GENERAL.—Chapter 47 of the Internal Reve6 nue Code of 1986 (relating to excise taxes on qualified

7 pension, etc. plans) is amended by adding at the end

8 thereof the following new section:

9 ‘‘SEC. 5000A. FAILURE TO SATISFY CERTAIN STANDARDS

10 FOR HEALTH INSURANCE.

11 ‘‘(a) GENERAL RULE.—In the case of any person is12 suing an accident and health insurance contract to a small

13 employer, there is hereby imposed a tax on the failure of

14 such person to meet at any time during any taxable year

15 the applicable requirements of section 101 of the BasiCare

16 Health Access and Cost Control Act. The Secretary of

17 Health and Human Services shall determine whether any

18 person meets the requirements of such section.

19 ‘‘(b) AMOUNT OF TAX.—

20 ‘‘(1) IN GENERAL.—The amount of tax imposed

21 by subsection (a) by reason of 1 or more failures

22 during a taxable year shall be equal to 35 percent

23 of the gross premiums received during such taxable

24 year with respect to all accident and health insur-
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•HR 834 IH

1 ance contracts issued to a small employer by the

2 person on whom such tax is imposed.

3 ‘‘(2) GROSS PREMIUMS.—For purposes of para4 graph (1), gross premiums shall include any consid5 eration received with respect to any accident and

6 health insurance contract.

7 ‘‘(3) CONTROLLED GROUPS.—For purposes of

8 paragraph (1)—

9 ‘‘(A) CONTROLLED GROUP OF CORPORA10 TIONS.—All corporations which are members of

11 the same controlled group of corporations shall

12 be treated as 1 person. For purposes of the pre13 ceding sentence, the term ‘controlled group of

14 corporations’ has the meaning given to such

15 term by section 1563(a), except that—

16 ‘‘(i) ‘more than 50 percent’ shall be

17 substituted for ‘at least 80 percent’ each

18 place it appears in section 1563(a)(1), and

19 ‘‘(ii) the determination shall be made

20 without regard to subsections (a)(4) and

21 (e)(3)(C) of section 1563.

22 ‘‘(B) PARTNERSHIPS, PROPRIETORSHIPS,

23 ETC., WHICH ARE UNDER COMMON CONTROL.—

24 Under regulations prescribed by the Secretary,

25 all trades or business (whether or not incor-
29

•HR 834 IH

1 porated) which are under common control shall

2 be treated as 1 person. The regulations pre3 scribed under this subparagraph shall be based

4 on principles similar to the principles which

5 apply in the case of subparagraph (A).

6 ‘‘(c) LIMITATION ON TAX.—

7 ‘‘(1) TAX NOT TO APPLY WHERE FAILURE NOT

8 DISCOVERED EXERCISING REASONABLE DILI9 GENCE.—No tax shall be imposed by subsection (a)

10 with respect to any failure for which it is established

11 to the satisfaction of the Secretary that the person

12 on whom the tax is imposed did not know, and exer13 cising reasonable diligence would not have known,

14 that such failure existed.

15 ‘‘(2) TAX NOT TO APPLY WHERE FAILURES

16 CORRECTED WITHIN 30 DAYS.—No tax shall be im17 posed by subsection (a) with respect to any failure

18 if—

19 ‘‘(A) such failure was due to reasonable

20 cause and not to willful neglect, and

21 ‘‘(B) such failure is corrected during the

22 30-day period beginning on the first date any of

23 the persons on whom the tax is imposed knew,

24 or exercising reasonable diligence would have

25 known, that such failure existed.
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1 ‘‘(3) WAIVER BY SECRETARY.—In the case of a

2 failure which is due to reasonable cause and not to

3 willful neglect, the Secretary may waive part or all

4 of the tax imposed by subsection (a) to the extent

5 that the payment of such tax would be excessive rel6 ative to the failure involved.

7 ‘‘(d) DEFINITIONS.—For purposes of this section the

8 terms ‘accident and health insurance contract’, ‘small em9 ployer’, ‘eligible employee’, and ‘person’ shall have the

10 same meanings given such terms under section 105 of the

11 BasiCare Health Access and Cost Control Act.’’.

12 (b) NONDEDUCTIBILITY OF TAX.—Paragraph (6) of

13 section 275(a) of such Code (relating to nondeductibility

14 of certain taxes) is amended by inserting ‘‘47,’’ after

15 ‘‘46,’’.

16 (c) CLERICAL AMENDMENTS.—The table of sections

17 for such chapter 47 is amended by adding at the end

18 thereof the following new item:

‘‘Sec. 5000A. Failure to satisfy certain standards for health insurance.’’.

19 (d) EFFECTIVE DATES.—

20 (1) IN GENERAL.—The amendments made by

21 subsections (a) and (c) shall take effect on the date

22 of the enactment of this Act.
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•HR 834 IH

1 (2) NONDEDUCTIBILITY OF TAX.—The amend2 ment made by subsection (b) shall apply to taxable

3 years beginning after December 31, 1993.

4 SEC. 107. EFFECTIVE DATE.

5 (a) IN GENERAL.—Except as provided in section 106

6 and subsection (b), this subtitle shall apply to contracts

7 issued, or renewed, after the date of the enactment of this

8 Act and before the effective date of the legislation de9 scribed in section 212(a) or 213(a) of this Act.

10 (b) GUARANTEED ISSUE.—The provisions of section

11 102(c) shall apply to contracts which are issued, or re12 newed, after the date which is 12 months after the date

13 of the enactment of this Act and before the effective date

14 of the legislation described in section 212(a) or 213(a) of

15 this Act.

16 Subtitle B—Community Health

17 Services Expansion

18 SEC. 111. ESTABLISHMENT OF GRANT PROGRAM.

19 Subpart I of part D of title III of the Public Health

20 Service Act (42 U.S.C. 254b et seq.) is amended by adding

21 at the end thereof the following new section:

22 ‘‘SEC. 330A. COMMUNITY-BASED PRIMARY HEALTH CARE

23 GRANT PROGRAM.

24 ‘‘(a) ESTABLISHMENT.—The Secretary shall estab25 lish and administer a program to provide allotments to
32

•HR 834 IH

1 States to enable such States to provide grants for the cre2 ation or enhancement of community-based primary health

3 care entities that provide services to low-income or medi4 cally underserved populations.

5 ‘‘(b) ALLOTMENTS TO STATES.—

6 ‘‘(1) IN GENERAL.—From the amount available

7 for allotment under subsection (h) for a fiscal year,

8 the Secretary shall allot to each State an amount

9 equal to the product of the grant share of the State

10 (as determined under paragraph (2)) multiplied by

11 such amount available.

12 ‘‘(2) GRANT SHARE.—

13 ‘‘(A) IN GENERAL.—For purposes of para14 graph (1), the grant share of a State shall be

15 the product of the need-adjusted population of

16 the State (as determined under subparagraph

17 (B)) multiplied by the Federal matching per18 centage of the State (as determined under sub19 paragraph (C)), expressed as a percentage of

20 the sum of the products of such factors for all

21 States.

22 ‘‘(B) NEED-ADJUSTED POPULATION.—

23 ‘‘(i) IN GENERAL.—For purposes of

24 subparagraph (A), the need-adjusted popu25 lation of a State shall be the product of
33

•HR 834 IH

1 the total population of the State (as esti2 mated by the Secretary of Commerce) mul3 tiplied by the need index of the State (as

4 determined under clause (ii)).

5 ‘‘(ii) NEED INDEX.—For purposes of

6 clause (i), the need index of a State shall

7 be the ratio of—

8 ‘‘(I) the weighted sum of the geo9 graphic percentage of the State (as

10 determined under clause (iii)), the

11 poverty percentage of the State (as

12 determined under clause (iv)), and the

13 multiple grant percentage of the State

14 (as determined under clause (v)); to

15 ‘‘(II) the general population per16 centage of the State (as determined

17 under clause (vi)).

18 ‘‘(iii) GEOGRAPHIC PERCENTAGE.—

19 ‘‘(I) IN GENERAL.—For purposes

20 of clause (ii)(I), the geographic per21 centage of the State shall be the esti22 mated population of the State that is

23 residing in nonurbanized areas (as de24 termined under subclause (II)) ex-
34

•HR 834 IH

1 pressed as a percentage of the total

2 nonurbanized population of all States.

3 ‘‘(II) NONURBANIZED POPU4 LATION.—For purposes of subclause

5 (I), the estimated population of the

6 State that is residing in nonurbanized

7 areas shall be one minus the urban8 ized population of the State (as deter9 mined using the most recent decennial

10 census), expressed as a percentage of

11 the total population of the State (as

12 determined using the most recent de13 cennial census), multiplied by the cur14 rent estimated population of the

15 State.

16 ‘‘(iv) POVERTY PERCENTAGE.—For

17 purposes of clause (ii)(I), the poverty per18 centage of the State shall be the estimated

19 number of people residing in the State

20 with incomes below 200 percent of the in21 come official poverty line (as determined

22 by the Office of Management and Budget)

23 expressed as a percentage of the total

24 number of such people residing in all

25 States.
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•HR 834 IH

1 ‘‘(v) MULTIPLE GRANT PERCENT2 AGE.—For purposes of clause (ii)(I), the

3 multiple grant percentage of the State

4 shall be the amount of Federal funding re5 ceived by the State under grants awarded

6 under sections 329, 330, and 340, ex7 pressed as a percentage of the total

8 amounts received under such grants by all

9 States. With respect to a State, such per10 centage shall not exceed twice the general

11 population percentage of the State under

12 clause (vi) or be less than one-half of the

13 States general population percentage.

14 ‘‘(vi) GENERAL POPULATION PER15 CENTAGE.—For purposes of clause (ii)(II),

16 the general population percentage of the

17 State shall be the total population of the

18 State (as determined by the Secretary of

19 Commerce) expressed as a percentage of

20 the total population of all States.

21 ‘‘(C) FEDERAL MATCHING PERCENTAGE.—

22 ‘‘(i) IN GENERAL.—For purposes of

23 subparagraph (A), the Federal matching

24 percentage of the State shall be equal to
36

•HR 834 IH

1 one, less the State matching percentage (as

2 determined under clause (ii)).

3 ‘‘(ii) STATE MATCHING PERCENT4 AGE.—For purposes of clause (i), the State

5 matching percentage of the State shall be

6 0.25 multiplied by the ratio of the total

7 taxable resource percentage (as determined

8 under clause (iii)) to the need-adjusted

9 population of the State (as determined

10 under subparagraph (B)).

11 ‘‘(iii) TOTAL TAXABLE RESOURCE

12 PERCENTAGE.—For purposes of clause (ii),

13 the total taxable resources percentage of

14 the State shall be the total taxable re15 sources of a State (as determined by the

16 Secretary of the Treasury) expressed as a

17 percentage of the sum of the total taxable

18 resources of all States.

19 ‘‘(3) ANNUAL ESTIMATES.—

20 ‘‘(A) IN GENERAL.—If the Secretary of

21 Commerce does not produce the annual esti22 mates required under paragraph (2)(B)(iv),

23 such estimates shall be determined by multiply24 ing the percentage of the population of the

25 State that is below 200 percent of the income
37

•HR 834 IH

1 official poverty line as determined using the

2 most recent decennial census by the most recent

3 estimate of the total population of the State.

4 Except as provided in subparagraph (B), the

5 calculations required under this subparagraph

6 shall be made based on the most recent 3-year

7 average of the total taxable resources of individ8 uals within the State.

9 ‘‘(B) DISTRICT OF COLUMBIA.—Notwith10 standing subparagraph (A), the calculations re11 quired under such subparagraph with respect to

12 the District of Columbia shall be based on the

13 most recent 3-year average of the personal in14 come of individuals residing within the District

15 as a percentage of the personal income for all

16 individuals residing within the District, as de17 termined by the Secretary of Commerce.

18 ‘‘(4) MATCHING REQUIREMENT.—A State that

19 receives an allotment under this section shall make

20 available State resources (either directly or indi21 rectly) to carry out this section in an amount that

22 shall equal the State matching percentage for the

23 State (as determined under paragraph (2)(C)(ii)) di24 vided by the Federal matching percentage (as deter25 mined under paragraph (2)(C)).
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•HR 834 IH

1 ‘‘(c) APPLICATION.—

2 ‘‘(1) IN GENERAL.—To be eligible to receive an

3 allotment under this section, a State shall prepare

4 and submit an application to the Secretary at such

5 time, in such manner, and containing such informa6 tion as the Secretary may by regulation require.

7 ‘‘(2) ASSURANCES.—A State application sub8 mitted under paragraph (1) shall contain an assur9 ance that—

10 ‘‘(A) the State will use amounts received

11 under its allotment consistent with the require12 ments of this section; and

13 ‘‘(B) the State will provide, from non-Fed14 eral sources, the amounts required under sub15 section (b)(4).

16 ‘‘(d) USE OF FUNDS.—

17 ‘‘(1) IN GENERAL.—The State shall use

18 amounts received under this section to award grants

19 to eligible public and nonprofit private entities, or

20 consortia of such entities, within the State to enable

21 such entities or consortia to provide services of the

22 type described in paragraph (2) of section 329(h) to

23 low-income or medically underserved populations.
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•HR 834 IH

1 ‘‘(2) ELIGIBILITY.—To be eligible to receive a

2 grant under paragraph (1), an entity or consortium

3 shall—

4 ‘‘(A) prepare and submit to the admin5 istering entity of the State, an application at

6 such time, in such manner, and containing such

7 information as such administering entity may

8 require, including a plan for the provision of

9 services of the type described in paragraph (3);

10 ‘‘(B) provide assurances that services will

11 be provided under the grant at fee rates estab12 lished or determined in accordance with section

13 330(e)(3)(F); and

14 ‘‘(C) provide assurances that in the case of

15 services provided to individuals with health in16 surance, such insurance shall be used as the

17 primary source of payment for such services.

18 ‘‘(3) SERVICES.—The services to be provided

19 under a grant awarded under paragraph (1) shall in20 clude—

21 ‘‘(A) one or more of the types of primary

22 health services described in section 330(b)(1);

23 ‘‘(B) one or more of the types of supple24 mental health services described in section

25 330(b)(2); and
40

•HR 834 IH

1 ‘‘(C) any other services determined appro2 priate by the administering entity of the State.

3 ‘‘(4) TARGET POPULATIONS.—Entities or con4 sortia receiving grants under paragraph (1) shall, in

5 providing the services described in paragraph (3),

6 substantially target populations of low-income or

7 medically underserved populations within the State

8 who reside in medically underserved or health pro9 fessional shortage areas, areas certified as under10 served under the rural health clinic program, or

11 other areas determined appropriate by the admin12 istering entity of the State, within the State.

13 ‘‘(5) PRIORITY.—In awarding grants under

14 paragraph (1), the State shall—

15 ‘‘(A) give priority to entities or consortia

16 that can demonstrate through the plan submit17 ted under paragraph (2) that—

18 ‘‘(i) the services provided under the

19 grant will expand the availability of pri20 mary care services to the maximum num21 ber of low-income or medically underserved

22 populations who have no access to such

23 care on the date of the grant award; and

24 ‘‘(ii) the delivery of services under the

25 grant will be cost-effective; and
41

•HR 834 IH

1 ‘‘(B) ensure that an equitable distribution

2 of funds is achieved among urban and rural en3 tities or consortia.

4 ‘‘(e) REPORTS AND AUDITS.—Each State shall pre5 pare and submit to the Secretary annual reports concern6 ing the State’s activities under this section which shall be

7 in such form and contain such information as the Sec8 retary determines appropriate. Each such State shall es9 tablish fiscal control and fund accounting procedures as

10 may be necessary to assure that amounts received under

11 this section are being disbursed properly and are ac12 counted for, and include the results of audits conducted

13 under such procedures in the reports submitted under this

14 subsection.

15 ‘‘(f) PAYMENTS.—

16 ‘‘(1) ENTITLEMENT.—Each State for which an

17 application has been approved by the Secretary

18 under this section shall be entitled to payments

19 under this section for each fiscal year in an amount

20 not to exceed the State’s allotment under subsection

21 (b) to be expended by the State in accordance with

22 the terms of the application for the fiscal year for

23 which the allotment is to be made.

24 ‘‘(2) METHOD OF PAYMENTS.—The Secretary

25 may make payments to a State in installments, and
42

•HR 834 IH

1 in advance or by way of reimbursement, with nec2 essary adjustments on account of overpayments or

3 underpayments, as the Secretary may determine.

4 ‘‘(3) STATE SPENDING OF PAYMENTS.—Pay5 ments to a State from the allotment under sub6 section (b) for any fiscal year must be expended by

7 the State in that fiscal year or in the succeeding fis8 cal year.

9 ‘‘(g) DEFINITION.—As used in this section, the term

10 ‘administering entity of the State’ means the agency or

11 official designated by the chief executive officer of the

12 State to administer the amounts provided to the State

13 under this section.

14 ‘‘(h) FUNDING.—Notwithstanding any other provi15 sion of law, the Secretary shall use 50 percent of the

16 amounts that the Secretary is required to utilize under

17 section 330B(h) in each fiscal year to carry out this sec18 tion.’’.

19 SEC. 112. PROGRAM TO PROVIDE FOR EXPANSION OF FED20 ERALLY QUALIFIED HEALTH CENTERS.

21 (a) IN GENERAL.—Subpart I of part D of title III

22 of the Public Health Service Act (42 U.S.C. 254b et seq.)

23 (as amended by section 111) is further amended by adding

24 at the end thereof the following new section:
43

•HR 834 IH

1 ‘‘SEC. 330B. PROGRAM TO PROVIDE FOR EXPANSION OF

2 FEDERALLY QUALIFIED HEALTH CENTERS.

3 ‘‘(a) ESTABLISHMENT OF HEALTH SERVICES AC4 CESS PROGRAM.—From amounts appropriated under this

5 section, the Secretary shall, acting through the Bureau of

6 Health Care Delivery Assistance, award grants under this

7 section to federally qualified health centers (hereafter re8 ferred to in this section as ‘FQHCs’) and other entities

9 and organizations submitting applications under this sec10 tion (as described in subsection (c)) for the purpose of

11 providing access to services for medically underserved pop12 ulations (as defined in section 330(b)(3)) or in high im13 pact areas (as defined in section 329(a)(5)) not currently

14 being served by a FQHC.

15 ‘‘(b) ELIGIBILITY FOR GRANTS.—

16 ‘‘(1) IN GENERAL.—The Secretary shall award

17 grants under this section to entities or organizations

18 described in this paragraph and paragraph (2) which

19 have submitted a proposal to the Secretary to ex20 pand such entities or organizations operations (in21 cluding expansions to new sites (as determined nec22 essary by the Secretary)) to serve medically under23 served populations or high impact areas not cur24 rently served by a FQHC and which—

25 ‘‘(A) have as of the date of enactment of

26 the BasiCare Health Access and Cost Control
44

•HR 834 IH

1 Act, been certified by the Secretary as a FQHC

2 under section 1905(l)(2)(B) of the Social Secu3 rity Act;

4 ‘‘(B) have submitted applications to the

5 Secretary to qualify as FQHCs under section

6 1905(l)(2)(B) of the Social Security Act; or

7 ‘‘(C) have submitted a plan to the Sec8 retary which provides that the entity or organi9 zation will meet the requirements to qualify as

10 a FQHC when operational.

11 ‘‘(2) NON-FQHC ENTITIES.—

12 ‘‘(A) ELIGIBILITY.—The Secretary shall

13 also make grants under this section to any pub14 lic or private nonprofit agency, or any health

15 care entity or organization which—

16 ‘‘(i) meets the requirements necessary

17 to qualify as a FQHC, except the require18 ment that such agency, entity, or organiza19 tion has a consumer majority governing

20 board,

21 ‘‘(ii) has submitted a proposal to the

22 Secretary to provide those services pro23 vided by a FQHC as defined in section

24 1905(l)(2)(B) of the Social Security Act,

25 and
45

•HR 834 IH

1 ‘‘(iii) is designed to promote access to

2 primary care services or to reduce reliance

3 on hospital emergency rooms or other high

4 cost providers of primary health care serv5 ices,

6 provided that the proposal described in clause

7 (ii) is developed by the agency, entity, or orga8 nization (or such agencies, entities, or organiza9 tions acting in a consortium in a community)

10 with the review and approval of the Governor of

11 the State in which such agency, entity, or orga12 nization is located.

13 ‘‘(B) LIMITATION.—The Secretary shall

14 provide in making grants to entities or organi15 zations described in this paragraph that not

16 more than 10 percent of the funds provided for

17 grants under this section shall be made avail18 able for grants to such entities or organizations.

19 ‘‘(c) APPLICATION REQUIREMENTS.—

20 ‘‘(1) IN GENERAL.—In order to be eligible to

21 receive a grant under this section, a FQHC or other

22 entity or organization must submit an application in

23 such form and at such time as the Secretary shall

24 prescribe and which meets the requirements of this

25 subsection.
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•HR 834 IH

1 ‘‘(2) REQUIREMENTS.—An application submit2 ted under this section must provide—

3 ‘‘(A)(i) for a schedule of fees or payments

4 for the provision of the services provided by the

5 entity or organization designed to cover its rea6 sonable costs of operations; and

7 ‘‘(ii) for a corresponding schedule of dis8 counts to be applied to such fees or payments,

9 based upon the patient’s ability to pay (deter10 mined by using a sliding scale formula based on

11 the income of the patient);

12 ‘‘(B) assurances that the entity or organi13 zation provides services to persons who are eli14 gible for benefits under title XVIII of the Social

15 Security Act, for medical assistance under title

16 XIX of such Act, or for assistance for medical

17 expenses under any other public assistance pro18 gram or private health insurance program; and

19 ‘‘(C) assurances that the entity or organi20 zation has made and will continue to make

21 every reasonable effort to collect reimbursement

22 for services—

23 ‘‘(i) from persons eligible for assist24 ance under any of the programs described

25 in subparagraph (B); and
47

•HR 834 IH

1 ‘‘(ii) from patients not entitled to ben2 efits under any such programs.

3 ‘‘(d) LIMITATIONS ON USE OF FUNDS.—

4 ‘‘(1) IN GENERAL.—From the amounts award5 ed to a FQHC or other entity or organization under

6 this section, funds may be used for purposes of plan7 ning but may only be expended for the costs of—

8 ‘‘(A) assessing the needs of the populations

9 or proposed areas to be served;

10 ‘‘(B) preparing a description of how the

11 needs identified will be met; and

12 ‘‘(C) development of an implementation

13 plan that addresses—

14 ‘‘(i) recruitment and training of per15 sonnel; and

16 ‘‘(ii) activities necessary to achieve

17 operational status in order to meet FQHC

18 requirements under 1905(l)(2)(B) of the

19 Social Security Act.

20 ‘‘(2) RECRUITING, TRAINING, AND COMPENSA21 TION OF STAFF.—From the amounts awarded to an

22 entity or organization under this section, funds may

23 be used for the purposes of paying for the costs of

24 recruiting, training, and compensating staff (clinical

25 and associated administrative personnel (to the ex-
48

•HR 834 IH

1 tent such costs are not already reimbursed under

2 title XIX of the Social Security Act or any other

3 State or Federal program)) to the extent necessary

4 to allow the entity or organization to operate at new

5 or expanded existing sites.

6 ‘‘(3) FACILITIES AND EQUIPMENT.—From the

7 amounts awarded to an entity or organization under

8 this section, funds may be expended for the purposes

9 of acquiring facilities and equipment but only for the

10 costs of—

11 ‘‘(A) construction of new buildings (to the

12 extent that new construction is found to be the

13 most cost-efficient approach by the Secretary);

14 ‘‘(B) acquiring, expanding, or modernizing

15 existing facilities;

16 ‘‘(C) purchasing essential (as determined

17 by the Secretary) equipment; and

18 ‘‘(D) amortization of principal and pay19 ment of interest on loans obtained for purposes

20 of site construction, acquisition, modernization,

21 or expansion, as well as necessary equipment.

22 ‘‘(4) SERVICES.—From the amounts awarded

23 to an entity or organization under this section, funds

24 may be expended for the payment of services but

25 only for the costs of—
49

•HR 834 IH

1 ‘‘(A) providing or arranging for the provi2 sion of all services through the entity or organi3 zation necessary to qualify such entity or orga4 nization as a FQHC under section

5 1905(l)(2)(B) of the Social Security Act;

6 ‘‘(B) providing or arranging for any other

7 service that a FQHC may provide and be reim8 bursed for under title XIX of the Social Secu9 rity Act; and

10 ‘‘(C) providing any unreimbursed costs of

11 providing services as described in section 330(a)

12 to patients.

13 ‘‘(e) PRIORITIES IN THE AWARDING OF GRANTS.—

14 ‘‘(1) CERTIFIED FQHCs.—The Secretary shall

15 give priority in awarding grants under this section

16 to entities and organizations which have, as of the

17 date of enactment of the BasiCare Health Access

18 and Cost Control Act, been certified as a FQHC

19 under section 1905(l)(2)(B) of the Social Security

20 Act and which have submitted a proposal to the Sec21 retary to expand their operations (including expan22 sion to new sites) to serve medically underserved

23 populations for high impact areas not currently

24 served by a FQHC. The Secretary shall give first

25 priority in awarding grants under this section to
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•HR 834 IH

1 those FQHCs or other entities or organizations

2 which propose to serve populations with the highest

3 degree of unmet need, and which can demonstrate

4 the ability to expand their operations in the most ef5 ficient manner.

6 ‘‘(2) QUALIFIED FQHCs.—The Secretary shall

7 give second priority in awarding grants to entities

8 and organizations which have submitted applications

9 to the Secretary which demonstrate that the entities

10 or organizations will qualify as FQHCs under sec11 tion 1905(l)(2)(B) of the Social Security Act before

12 they provide or arrange for the provision of services

13 supported by funds awarded under this section, and

14 which are serving or proposing to serve medically

15 underserved populations or high impact areas which

16 are not currently served (or proposed to be served)

17 by a FQHC.

18 ‘‘(3) EXPANDED SERVICES AND PROJECTS.—

19 The Secretary shall give third priority in awarding

20 grants in subsequent years to those FQHCs or other

21 entities or organizations which have provided for ex22 panded services and projects and are able to dem23 onstrate that such entities or organizations will

24 incur significant unreimbursed costs in providing

25 such expanded services.
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•HR 834 IH

1 ‘‘(f) RETURN OF FUNDS TO SECRETARY FOR COSTS

2 REIMBURSED FROM OTHER SOURCES.—To the extent

3 that a FQHC or other entity or organization receiving

4 funds under this section is reimbursed from another

5 source for the provision of services to an individual, and

6 does not use such increased reimbursement to expand

7 services furnished, to expand areas served, to compensate

8 for costs of unreimbursed services provided to patients, or

9 to promote recruitment, training, or retention of person10 nel, such excess revenues shall be returned to the Sec11 retary.

12 ‘‘(g) TERMINATION OF GRANTS.—

13 ‘‘(1) FAILURE TO MEET FQHC REQUIRE14 MENTS.—

15 ‘‘(A) IN GENERAL.—With respect to any

16 entity or organization that is receiving funds

17 awarded under this section and which subse18 quently fails to meet the requirements to qual19 ify as a FQHC under section 1905(l)(2)(B) of

20 the Social Security Act or is an entity or orga21 nization that is not required to meet the re22 quirements to qualify as a FQHC under section

23 1905(l)(2)(B) of the Social Security Act but

24 fails to meet the requirements of this section,

25 the Secretary shall terminate the award of
52

•HR 834 IH

1 funds under this section to such entity or orga2 nization.

3 ‘‘(B) NOTICE.—Prior to any termination

4 of funds under this section to an entity or orga5 nization, the entity or organization shall be en6 titled to 60 days’ prior notice of termination

7 and, as provided by the Secretary in regula8 tions, an opportunity to correct any deficiencies

9 in order to allow the entity or organization to

10 continue to receive funds under this section.

11 ‘‘(2) REQUIREMENTS.—Upon any termination

12 of funding under this section, the Secretary may (to

13 the extent practicable)—

14 ‘‘(A) sell any property (including equip15 ment) acquired or constructed by the entity or

16 organization using funds made available under

17 this section or transfer such property to an18 other FQHC, except that the Secretary shall re19 imburse any costs which were incurred by the

20 entity or organization in acquiring or construct21 ing such property (including equipment) which

22 were not supported by grants under this sec23 tion; and
53

•HR 834 IH

1 ‘‘(B) recoup any funds provided to an en2 tity or organization terminated under this sec3 tion.

4 ‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—There

5 are authorized to be appropriated to carry out this section

6 $600,000,000 for each of the fiscal years 1994 through

7 1998.’’.

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

9 subsection (a) shall become effective with respect to serv10 ices furnished by a federally qualified health center or

11 other qualifying entity or organization described in this

12 section beginning on or after the date of enactment of this

13 Act.

14 Subtitle C—Expansion of Tax In15 centives for Self-Employed Indi16 viduals

17 SEC. 121. PERMANENT INCREASE IN DEDUCTIBLE HEALTH

18 INSURANCE COSTS FOR SELF-EMPLOYED IN19 DIVIDUALS.

20 (a) IN GENERAL.—Paragraph (1) of section 162(l)

21 of the Internal Revenue Code of 1986 (relating to special

22 rules for health insurance costs of self-employed individ23 uals) is amended by striking ‘‘25 percent’’ and inserting

24 ‘‘100 percent’’.
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1 (b) PERMANENT DEDUCTION.—Section 162(l) of

2 such Code is amended by striking paragraph (6).

3 (c) EFFECTIVE DATE.—The amendment made by

4 this subsection shall apply to taxable years beginning after

5 the date of enactment of this Act.

6 Subtitle D—Expanding the Supply

7 of Health Professionals in Rural

8 Areas

9 SEC. 131. EXPANSION OF NATIONAL HEALTH SERVICE

10 CORPS.

11 Section 338H(b) of the Public Health Service Act (42

12 U.S.C. 254q(b)) is amended—

13 (1) in paragraph (1), by striking ‘‘and such

14 sums’’ and all that follows through the end thereof

15 and inserting ‘‘$120,000,000 for each of the fiscal

16 years 1992 through 1997.’’; and

17 (2) in paragraph (2)—

18 (A) by redesignating subparagraphs (A)

19 and (B) as subparagraphs (B) and (C), respec20 tively; and

21 (B) by inserting before subparagraph (B)

22 (as so redesignated) the following new subpara23 graph:

24 ‘‘(A) IN GENERAL.—Of the amount appro25 priated under paragraph (1) for each fiscal
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1 year, the Secretary shall utilize 25 percent of

2 such amount to carry out section 338A and 75

3 percent of such amount to carry out section

4 338B.’’.

5 SEC. 132. TAX INCENTIVES FOR PRACTICE IN RURAL

6 AREAS.

7 (a) NONREFUNDABLE CREDIT FOR CERTAIN PRI8 MARY HEALTH SERVICES PROVIDERS.—

9 (1) IN GENERAL.—Subpart A of part IV of sub10 chapter A of chapter 1 of the Internal Revenue Code

11 of 1986 (relating to nonrefundable personal credits)

12 is amended by inserting after section 25 the follow13 ing new section:

14 ‘‘SEC. 25A. PRIMARY HEALTH SERVICES PROVIDERS.

15 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a

16 qualified primary health services provider, there is allowed

17 as a credit against the tax imposed by this chapter for

18 any taxable year in a mandatory service period an amount

19 equal to the product of—

20 ‘‘(1) the lesser of—

21 ‘‘(A) the number of months of such period

22 occurring in such taxable year, or

23 ‘‘(B) 36 months, reduced by the number of

24 months taken into account under this para25 graph with respect to such provider for all pre-
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1 ceding taxable years (whether or not in the

2 same mandatory service period), multiplied by

3 ‘‘(2) $1,000 ($500 in the case of a qualified

4 primary health services provider who is a physician

5 assistant or a nurse practitioner).

6 ‘‘(b) QUALIFIED PRIMARY HEALTH SERVICES PRO7 VIDER.—For purposes of this section, the term ‘qualified

8 primary health services provider’ means any physician,

9 physician assistant, or nurse practitioner who for any

10 month during a mandatory service period is certified by

11 the Bureau to be a primary health services provider who—

12 ‘‘(1) is providing primary health services—

13 ‘‘(A) full time, and

14 ‘‘(B) to individuals at least 80 percent of

15 whom reside in a rural health professional

16 shortage area,

17 ‘‘(2) is not receiving during such year a scholar18 ship under the National Health Service Corps Schol19 arship Program or a loan repayment under the Na20 tional Health Service Corps Loan Repayment Pro21 gram,

22 ‘‘(3) is not fulfilling service obligations under

23 such Programs, and

24 ‘‘(4) has not defaulted on such obligations.
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1 ‘‘(c) MANDATORY SERVICE PERIOD.—For purposes

2 of this section, the term ‘mandatory service period’ means

3 the period of 60 consecutive calendar months beginning

4 with the first month the taxpayer is a qualified primary

5 health services provider.

6 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur7 poses of this section—

8 ‘‘(1) BUREAU.—The term ‘Bureau’ means the

9 Bureau of Health Care Delivery and Assistance,

10 Health Resources and Services Administration of the

11 United States Public Health Service.

12 ‘‘(2) PHYSICIAN.—The term ‘physician’ has the

13 meaning given to such term by section 1861(r) of

14 the Social Security Act.

15 ‘‘(3) PHYSICIAN ASSISTANT; NURSE PRACTI16 TIONER.—The terms ‘physician assistant’ and ‘nurse

17 practitioner’ have the meanings given to such terms

18 by section 1861(aa)(3) of the Social Security Act.

19 ‘‘(4) PRIMARY HEALTH SERVICES PROVIDER.—

20 The term ‘primary health services provider’ means a

21 provider of primary health services (as defined in

22 section 330(b)(1) of the Public Health Service Act).

23 ‘‘(5) RURAL HEALTH PROFESSIONAL SHORTAGE

24 AREA.—The term ‘rural health professional shortage

25 area’ means—
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1 ‘‘(A) a class 1 or class 2 rural health pro2 fessional shortage area (as defined in section

3 332(a)(1)(A) of the Public Health Service Act)

4 in a rural area (as determined under section

5 1886(d)(2)(D) of the Social Security Act), or

6 ‘‘(B) an area which is determined by the

7 Secretary of Health and Human Services as

8 equivalent to an area described in subparagraph

9 (A) and which is designated by the Bureau of

10 the Census as not urbanized.

11 ‘‘(C) a community that is certified as un12 derserved by the Secretary for purposes of par13 ticipation in the rural health clinic program

14 under title XVIII of the Social Security Act.

15 ‘‘(e) RECAPTURE OF CREDIT.—

16 ‘‘(1) IN GENERAL.—If, during any taxable year,

17 there is a recapture event, then the tax of the tax18 payer under this chapter for such taxable year shall

19 be increased by an amount equal to the product of—

20 ‘‘(A) the applicable percentage, and

21 ‘‘(B) the aggregate unrecaptured credits

22 allowed to such taxpayer under this section for

23 all prior taxable years.

24 ‘‘(2) APPLICABLE RECAPTURE PERCENTAGE.—
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1 ‘‘(A) IN GENERAL.—For purposes of this

2 subsection, the applicable recapture percentage

3 shall be determined from the following table:

‘‘If the recapture The applicable recapevent occurs during: ture percentage is:

Months 1–24 .............................................. 100

Months 25–36 ............................................ 75

Months 37–48 ............................................ 50

Months 49–60 ............................................ 25

Months 61 and thereafter .......................... 0.

4 ‘‘(B) TIMING.—For purposes of subpara5 graph (A), month 1 shall begin on the first day

6 of the mandatory service period.

7 ‘‘(3) RECAPTURE EVENT DEFINED.—

8 ‘‘(A) IN GENERAL.—For purposes of this

9 subsection, the term ‘recapture event’ means

10 the failure of the taxpayer to be a qualified pri11 mary health services provider for any month

12 during any mandatory service period.

13 ‘‘(B) CESSATION OF DESIGNATION.—The

14 cessation of the designation of any area as a

15 rural health professional shortage area after the

16 beginning of the mandatory service period for

17 any taxpayer shall not constitute a recapture

18 event.

19 ‘‘(C) SECRETARIAL WAIVER.—The Sec20 retary may waive any recapture event caused by

21 extraordinary circumstances.
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1 ‘‘(4) NO CREDITS AGAINST TAX.—Any increase

2 in tax under this subsection shall not be treated as

3 a tax imposed by this chapter for purposes of deter4 mining the amount of any credit under subpart A,

5 B, or D of this part.’’.

6 (2) CLERICAL AMENDMENT.—The table of sec7 tions for subpart A of part IV of subchapter A of

8 chapter 1 of such Code is amended by inserting

9 after the item relating to section 25 the following

10 new item:

‘‘Sec. 25A. Primary health services providers.’’.

11 (3) EFFECTIVE DATE.—The amendments made

12 by this subsection shall apply to taxable years begin13 ning after the date of the enactment of this Act.

14 (b) NATIONAL HEALTH SERVICE CORPS LOAN RE15 PAYMENTS EXCLUDED FROM GROSS INCOME.—

16 (1) IN GENERAL.—Part III of subchapter B of

17 chapter 1 of the Internal Revenue Code of 1986 (re18 lating to items specifically excluded from gross in19 come) is amended by redesignating section 136 as

20 section 137 and by inserting after section 135 the

21 following new section:

22 ‘‘SEC. 136. NATIONAL HEALTH SERVICE CORPS LOAN RE23 PAYMENTS.

24 ‘‘(a) GENERAL RULE.—Gross income shall not in25 clude any qualified loan repayment.
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1 ‘‘(b) QUALIFIED LOAN REPAYMENT.—For purposes

2 of this section, the term ‘qualified loan repayment’ means

3 any payment made on behalf of the taxpayer by the Na4 tional Health Service Corps Loan Repayment Program

5 under section 338B(g) of the Public Health Service Act.’’.

6 (2) CONFORMING AMENDMENT.—Paragraph (3)

7 of section 338B(g) of the Public Health Service Act

8 is amended by striking ‘‘Federal, State, or local’’

9 and inserting ‘‘State or local’’.

10 (3) CLERICAL AMENDMENT.—The table of sec11 tions for part III of subchapter B of chapter 1 of

12 the Internal Revenue Code of 1986 is amended by

13 striking the item relating to section 136 and insert14 ing the following:

‘‘Sec. 136. National Health Service Corps loan repayments.

‘‘Sec. 137. Cross references to other Acts.’’.

15 (4) EFFECTIVE DATE.—The amendments made

16 by this subsection shall apply to payments made

17 under section 338B(g) of the Public Health Service

18 Act after the date of the enactment of this Act.

19 (c) EXPENSING OF MEDICAL EQUIPMENT.—

20 (1) IN GENERAL.—Section 179 of the Internal

21 Revenue Code of 1986 (relating to election to ex22 pense certain depreciable business assets) is amend23 ed—
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1 (A) by striking paragraph (1) of subsection

2 (b) and inserting the following:

3 ‘‘(1) DOLLAR LIMITATION.—

4 ‘‘(A) GENERAL RULE.—The aggregate cost

5 which may be taken into account under sub6 section (a) for any taxable year shall not exceed

7 $10,000.

8 ‘‘(B) RURAL HEALTH CARE PROPERTY.—

9 In the case of rural health care property, the

10 aggregate cost which may be taken into account

11 under subsection (a) for any taxable year shall

12 not exceed $25,000, reduced by the amount

13 otherwise taken into account under subsection

14 (a) for such year.’’; and

15 (B) by adding at the end of subsection (d)

16 the following new paragraph:

17 ‘‘(11) RURAL HEALTH CARE PROPERTY.—For

18 purposes of this section, the term ‘rural health care

19 property’ means section 179 property used by a phy20 sician (as defined in section 1861(r) of the Social

21 Security Act) in the active conduct of such physi22 cian’s full-time trade or business of providing pri23 mary health services (as defined in section 330(b)(1)

24 of the Public Health Service Act) in a rural health
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1 professional shortage area (as defined in section

2 25A(d)(5)).’’.

3 (2) EFFECTIVE DATE.—The amendments made

4 by this subsection shall apply to property placed in

5 service in taxable years beginning after the date of

6 enactment of this Act.

7 (d) DEDUCTION FOR STUDENT LOAN PAYMENTS BY

8 MEDICAL PROFESSIONALS PRACTICING IN RURAL

9 AREAS.—

10 (1) INTEREST ON STUDENT LOANS NOT TREAT11 ED AS PERSONAL INTEREST.—Section 163(h)(2) of

12 the Internal Revenue Code of 1986 (defining per13 sonal interest) is amended by striking ‘‘and’’ at the

14 end of subparagraph (D), by striking the period at

15 the end of subparagraph (E) and inserting ‘‘, and’’,

16 and by adding at the end thereof the following new

17 subparagraph:

18 ‘‘(F) any qualified medical education interest

19 (within the meaning of subsection (k)).’’.

20 (2) QUALIFIED MEDICAL EDUCATION INTEREST

21 DEFINED.—Section 163 of such Code (relating to in22 terest expenses) is amended by redesignating sub23 section (k) as subsection (l) and by inserting after

24 subsection (j) the following new subsection:
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1 ‘‘(k) QUALIFIED MEDICAL EDUCATION INTEREST OF

2 MEDICAL PROFESSIONALS PRACTICING IN RURAL

3 AREAS.—

4 ‘‘(1) IN GENERAL.—For purposes of subsection

5 (h)(2)(F), the term ‘qualified medical education in6 terest’ means an amount which bears the same ratio

7 to the interest paid on qualified educational loans

8 during the taxable year by an individual performing

9 services under a qualified rural medical practice

10 agreement as—

11 ‘‘(A) the number of months during the tax12 able year during which such services were per13 formed, bears to

14 ‘‘(B) the number of months in the taxable

15 year.

16 ‘‘(2) DOLLAR LIMITATION.—The aggregate

17 amount which may be treated as qualified medical

18 education interest for any taxable year with respect

19 to any individual shall not exceed $5,000.

20 ‘‘(3) QUALIFIED RURAL MEDICAL PRACTICE

21 AGREEMENT.—For purposes of this subsection—

22 ‘‘(A) IN GENERAL.—The term ‘qualified

23 rural medical practice agreement’ means a writ24 ten agreement between an individual and an ap-
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1 plicable rural community under which the indi2 vidual agrees—

3 ‘‘(i) in the case of a medical doctor,

4 upon completion of the individual’s resi5 dency (or internship if no residency is re6 quired), or

7 ‘‘(ii) in the case of a registered nurse,

8 nurse practitioner, or physician’s assistant,

9 upon completion of the education to which

10 the qualified education loan relates,

11 to perform full-time services as such a medical

12 professional in the applicable rural community

13 for a period of 24 consecutive months. An indi14 vidual and an applicable rural community may

15 elect to have the agreement apply for 36 con16 secutive months rather than 24 months.

17 ‘‘(B) SPECIAL RULE FOR COMPUTING PE18 RIODS.—An individual shall be treated as meet19 ing the 24 or 36 consecutive month requirement

20 under subparagraph (A) if, during each 12-con21 secutive month period within either such period,

22 the individual performs full-time services as a

23 medical doctor, registered nurse, nurse practi24 tioner, or physician’s assistant, whichever ap25 plies, in the applicable rural community during
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1 9 of the months in such 12-consecutive month

2 period. For purposes of this subsection, an indi3 vidual meeting the requirements of the preced4 ing sentence shall be treated as performing

5 services during the entire 12-month period.

6 ‘‘(C) APPLICABLE RURAL COMMUNITY.—

7 The term ‘applicable rural community’ means—

8 ‘‘(i) any political subdivision of a

9 State which—

10 ‘‘(I) has a population of 5,000 or

11 less, and

12 ‘‘(II) has a per capita income of

13 $15,000 or less, or

14 ‘‘(ii) an Indian reservation which has

15 a per capita income of $15,000 or less.

16 ‘‘(4) QUALIFIED EDUCATIONAL LOAN.—The

17 term ‘qualified educational loan’ means any indebt18 edness to pay qualified tuition and related expenses

19 (within the meaning of section 117(b)) and reason20 able living expenses—

21 ‘‘(A) which are paid or incurred—

22 ‘‘(i) as a candidate for a degree as a

23 medical doctor at an educational institu24 tion described in section 170(b)(1)(A)(ii),

25 or
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1 ‘‘(ii) in connection with courses of in2 struction at such an institution necessary

3 for certification as a registered nurse,

4 nurse practitioner, or physician’s assistant,

5 and

6 ‘‘(B) which are paid or incurred within a

7 reasonable time before or after such indebted8 ness is incurred.

9 ‘‘(5) RECAPTURE.—If an individual fails to

10 carry out a qualified rural medical practice agree11 ment during any taxable year, then—

12 ‘‘(A) no deduction with respect to such

13 agreement shall be allowable by reason of sub14 section (h)(2)(F) for such taxable year and any

15 subsequent taxable year, and

16 ‘‘(B) there shall be included in gross in17 come for such taxable year the aggregate

18 amount of the deductions allowable under this

19 section (by reason of subsection (h)(2)(F)) for

20 all preceding taxable years.

21 ‘‘(6) DEFINITIONS.—For purposes of this sub22 section, the terms ‘registered nurse’, ‘nurse practi23 tioner’, and ‘physician’s assistant’ have the meaning

24 given such terms by section 1861 of the Social Secu25 rity Act.’’.
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1 (3) DEDUCTION ALLOWED IN COMPUTING AD2 JUSTED GROSS INCOME.—Section 62(a) of such

3 Code is amended by inserting after paragraph (13)

4 the following new paragraph:

5 ‘‘(14) INTEREST ON STUDENT LOANS OF RURAL

6 HEALTH PROFESSIONALS.—The deduction allowable

7 by reason of section 163(h)(2)(F) (relating to stu8 dent loan payments of medical professionals practic9 ing in rural areas).’’.

10 (4) EFFECTIVE DATE.—The amendments made

11 by this subsection shall apply to taxable years begin12 ning after the date of the enactment of this Act.

13 Subtitle E—Malpractice Reform

14 PART I—DEFINITIONS

15 SEC. 141. DEFINITIONS.

16 For purposes of this subtitle:

17 (1) ALTERNATIVE DISPUTE RESOLUTION SYS18 TEM.—The term ‘‘alternative dispute resolution sys19 tem’’ means a system that is enacted or adopted by

20 a State to resolve health care liability actions as an

21 alternative to a judicial proceeding in a Federal or

22 State court.

23 (2) CONCERTED ACTION AND ACTING IN CON24 CERT.—The terms ‘‘concerted action’’ and ‘‘acting

25 in concert’’ mean the participation in joint conduct
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1 by two or more persons who agree to jointly partici2 pate in such conduct with actual knowledge of the

3 wrongfulness of the conduct.

4 (3) ECONOMIC LOSSES.—The term ‘‘economic

5 losses’’ means losses for health care provider and

6 medical expenses, lost wages, lost employment, and

7 other pecuniary losses.

8 (4) HEALTH CARE LIABILITY ACTION.—The

9 term ‘‘health care liability action’’ means any civil

10 action or proceeding in any judicial tribunal brought

11 pursuant to Federal or State law against a health

12 care provider alleging that injury was suffered by

13 the claimant as a result of any act or omission by

14 such provider, without regard to the theory of liabil15 ity asserted in the action. Such term includes a

16 claim, third-party claim, cross-claim, counter-claim,

17 or contribution-claim.

18 (5) HEALTH CARE PROVIDER.—The term

19 ‘‘health care provider’’ means—

20 (A) any individual who provides health

21 care services in a State and who is required by

22 State law or regulation to be licensed or cer23 tified by the State to provide such services in

24 the State; and
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1 (B) any organization or institution that is

2 engaged in the delivery of health care services

3 in a State and that is required by State law or

4 regulation to be licensed or certified by the

5 State to engage in the delivery of such services

6 in the State.

7 (6) INJURY.—The term ‘‘injury’’ means any in8 jury, illness, disease, or other harm suffered by an

9 individual as a result of the provision of health care

10 services by a health care provider.

11 (7) NONECONOMIC LOSSES.—The term ‘‘non12 economic losses’’ means losses for physical and emo13 tional pain, suffering, physical impairment, mental

14 anguish, disfigurement, loss of enjoyment of life, loss

15 of companionship, consortium, and other

16 nonpecuniary losses.

17 (8) SECRETARY.—The term ‘‘Secretary’’ means

18 the Secretary of Health and Human Services.

19 (9) STATE.—The term ‘‘State’’ means each of

20 the several States, the District of Columbia, the

21 Commonwealth of Puerto Rico, the Virgin Islands,

22 and Guam.
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1 PART II—TORT REFORM OF HEALTH CARE

2 LIABILITY ACTIONS

3 SEC. 142. APPLICATION TO CIVIL ACTIONS.

4 This part shall apply to any health care liability ac5 tion brought in any Federal or State court. This part shall

6 not be construed to create or effect any cause of action

7 or theory of liability recognized in any Federal or State

8 proceeding.

9 SEC. 143. DAMAGES.

10 (a) LIMITATION ON NONECONOMIC DAMAGES.—The

11 total amount of damages which may be awarded to an in12 dividual and the family members of such individual for

13 noneconomic losses resulting from an injury which is the

14 subject of a health care liability action may not exceed

15 $250,000, regardless of the number of health care provid16 ers against whom such action is brought or the number

17 of such actions brought with respect to the injury.

18 (b) PAYMENTS.—With respect to a health care liabil19 ity action, no person may be required to pay more than

20 $100,000 in a single payment for an award of damages

21 for economic or noneconomic losses, but such person shall

22 be permitted to make such payments on a periodic basis.

23 The periods for such payments shall be determined by the

24 court.

25 (c) MANDATORY OFFSETS FOR DAMAGES PAID BY A

26 COLLATERAL SOURCE.—
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1 (1) IN GENERAL.—The total amount of dam2 ages received by an individual in connection with a

3 health care liability action shall be reduced, in ac4 cordance with paragraph (2), by any other payment

5 which has been made or which will be made to such

6 individual to compensate such individual for an in7 jury, including payments under—

8 (A) Federal or State disability or sickness

9 programs;

10 (B) Federal, State, or private health insur11 ance programs;

12 (C) private disability insurance programs;

13 (D) employer wage continuation programs;

14 and

15 (E) any other source of payment intended

16 to compensate such individual for such injury.

17 (2) AMOUNT OF REDUCTION.—The amount by

18 which an award of damages to an individual for an

19 injury shall be reduced under paragraph (1) shall

20 be—

21 (A) the total amount of any payments

22 (other than such award) which have been made

23 or which will be made to such individual to

24 compensate such individual for such injury;

25 minus
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1 (B) the amount paid by such individual (or

2 by the spouse, parent, or legal guardian of such

3 individual) to secure the payments described in

4 subparagraph (A).

5 (d) PUNITIVE DAMAGES.—

6 (1) LIMITATION.—With respect to a health care

7 liability action, punitive damages may not exceed the

8 sum of damages awarded for economic and non9 economic losses.

10 (2) DETERMINATION OF AMOUNT.—In deter11 mining the amount of punitive damages in a health

12 care liability action, the trier of fact shall consider

13 all relevant evidence, including—

14 (A) the severity of the harm caused by the

15 conduct of the defendant;

16 (B) the duration of the conduct or any

17 concealment of the conduct by the defendant;

18 (C) awards of punitive or exemplary dam19 ages to persons similarly situated to the claim20 ant; and

21 (D) prospective awards of economic and

22 noneconomic losses to persons similarly situated

23 to the claimant.

24 (e) ATTORNEYS’ FEES.—Compensation for reason25 able attorneys’ fees to be paid by each party in connection
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1 with a health care liability action shall be determined by

2 the court after an evidentiary hearing and prior to final

3 disposition of the action. Attorneys’ fees shall be cal4 culated on the basis of an hourly rate or as a percentage

5 of the total damages awarded for economic and non6 economic losses and shall not exceed an amount that

7 would be considered reasonable based on the following:

8 (1) The time, labor, and skill necessary to prop9 erly perform the legal services required by the ac10 tion.

11 (2) The novelty and difficulty of the questions

12 involved in the action.

13 (3) The likelihood, if apparent to the client,

14 that the acceptance of employment with respect to

15 the client’s action will preclude other employment by

16 the attorney.

17 (4) The fee customarily charged in the locality

18 for similar legal services.

19 (5) The amount involved in the action and the

20 results obtained.

21 (6) The time limitations imposed by the client

22 or by the circumstances of the action.

23 (7) The nature and length of the professional

24 relationship between the attorney or attorneys and

25 the client.
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1 (8) The experience, reputation, and ability of

2 the attorney or attorneys performing the services in

3 connection with the action.

4 (9) Whether the fee for services in connection

5 with the action is fixed or contingent.

6 SEC. 144. JOINT AND SEVERAL LIABILITY.

7 (a) IN GENERAL.—With respect to a health care li8 ability action, joint and several liability shall apply—

9 (1) to the liability of each defendant for dam10 ages for economic losses; and

11 (2) as between persons acting in concert where

12 the concerted action proximately caused the injury

13 for which one or more persons are found liable for

14 damages.

15 (b) NONECONOMIC DAMAGES.—With respect to a

16 health care liability action, joint and several liability shall

17 not apply to the liability of each defendant for damages

18 for noneconomic losses. A person found liable for damages

19 for noneconomic losses in any such action may—

20 (1) be found liable, if at all, only for those dam21 ages directly attributable to the pro rata share of

22 fault or responsibility of such person for the injury;

23 and

24 (2) not be found liable for damages attributable

25 to the pro rata share of fault or responsibility of any
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1 other person (without regard to whether that person

2 is a party to the action) for the injury, including any

3 person bringing the action.

4 SEC. 145. STATUTE OF LIMITATIONS.

5 (a) IN GENERAL.—Except as provided in subsection

6 (b), no health care liability action may be initiated after

7 the expiration of the 2-year period that begins on the date

8 on which the alleged injury should reasonably have been

9 discovered, but in no event later than 4 years after the

10 date of the alleged occurrence of the injury.

11 (b) EXCEPTION FOR MINORS.—In the case of an al12 leged injury suffered by a minor who has not attained 6

13 years of age, no health care liability action may be initi14 ated after the expiration of the 2-year period that begins

15 on the date on which the alleged injury should reasonably

16 have been discovered, but in no event later than 4 years

17 after the date of the alleged occurrence of the injury or

18 the date on which the minor attains 8 years of age, which19 ever is later.

20 SEC. 146. PREEMPTION.

21 (a) IN GENERAL.—This part supersedes any State

22 law only to the extent that State law establishes higher

23 payment limits, permits the recovery of a greater amount

24 of damages or the awarding of a greater amount of attor-
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1 neys’ fees, or establishes a longer period during which a

2 health care liability action may be initiated.

3 (b) EFFECT ON SOVEREIGN IMMUNITY AND CHOICE

4 OF LAW OR VENUE.—Nothing in this part shall be con5 strued to—

6 (1) waive or affect any defense of sovereign im7 munity asserted by any State under any provision of

8 law;

9 (2) waive or affect any defense of sovereign im10 munity asserted by the United States;

11 (3) affect the applicability of any provision of

12 the Foreign Sovereign Immunities Act of 1976 (28

13 U.S.C. 1602 et seq.);

14 (4) preempt State choice-of-law rules with re15 spect to actions brought by a foreign nation or a cit16 izen of a foreign nation; or

17 (5) affect the right of any court to transfer

18 venue or to apply the law of a foreign nation or to

19 dismiss an action of a foreign nation or of a citizen

20 of a foreign nation on the ground of inconvenient

21 forum.

22 SEC. 147. EFFECTIVE DATE.

23 This part shall apply to any health care liability ac24 tion initiated after the expiration of the 2-year period that

25 begins on the date of the enactment of this Act.
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1 PART III—ALTERNATIVE DISPUTE RESOLUTION

2 SYSTEMS

3 SEC. 148. GRANTS FOR ALTERNATIVE DISPUTE RESOLU4 TION SYSTEMS.

5 (a) IN GENERAL.—The Secretary shall make grants

6 to States from amounts appropriated under section 150

7 for the development and implementation of alternative dis8 pute resolution systems, under such terms as the Sec9 retary may require.

10 (b) APPLICATION.—

11 (1) IN GENERAL.—No grant may be made

12 under this section unless an application is submitted

13 to the Secretary. Any such application shall—

14 (A) be submitted to the Secretary within 1

15 year after the notification of availability of

16 funds by the Secretary; and

17 (B) either—

18 (i) contain a certification by the chief

19 executive officer of the State that, on the

20 date the application is submitted, the State

21 has enacted, adopted, or otherwise has in

22 effect an alternative dispute resolution sys23 tem; or

24 (ii) contain a certification by the chief

25 executive officer of the State that, on the

26 date the application is submitted, the State
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1 plans to develop an alternative dispute res2 olution system.

3 (2) SUPPORTING DOCUMENTATION.—The cer4 tification required—

5 (A) under paragraph (1)(B)(i) shall be ac6 companied by supporting documentation, in7 cluding copies of relevant State statutes, rules,

8 procedures, regulations, judicial decisions, and

9 opinions of the State attorney general; and

10 (B) under paragraph (1)(B)(ii) shall be ac11 companied by supporting documentation, in12 cluding a detailed plan of the alternative dis13 pute resolution system to be developed by the

14 State.

15 (c) REVIEW OF APPLICATIONS.—Within 90 days

16 after receiving an application under subsection (b), the

17 Secretary shall review and approve the application if, in

18 the determination of the Secretary, the application dem19 onstrates that—

20 (1) the State has enacted, adopted, or otherwise

21 has in effect an alternative dispute resolution sys22 tem; or

23 (2) the State has a plan to develop an alter24 native dispute resolution system.

25 (d) AMOUNT OF GRANT.—
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1 (1) IN GENERAL.—The amount of a grant

2 under this section shall be an amount that the Sec3 retary finds reasonable and necessary for the devel4 opment and implementation of the alternative dis5 pute resolution system of the State.

6 (2) REDUCTIONS FOR EXPENSES OF SUPPLIES,

7 EQUIPMENT, AND EMPLOYEE DETAIL.—The Sec8 retary may reduce the amount of a grant by—

9 (A) the fair market value of any supplies

10 or equipment furnished to the recipient by the

11 Secretary;

12 (B) the amount of pay, allowances, and

13 travel expenses incurred by any officer or em14 ployee of the Federal Government when such

15 officer or employee has been detailed to the re16 cipient; and

17 (C) the amount of any other costs incurred

18 in connection with the detail of an officer or

19 employee as described in subparagraph (B),

20 when the furnishing of such supplies or equipment

21 or the detail of such an officer or employee is for the

22 convenience, and at the request, of such recipient

23 and for the purpose of carrying out activities under

24 the grant.
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1 (3) OPTION TO REFUSE GRANT.—Not later

2 than 90 days after the Secretary makes a grant

3 under this section to a State, that State may send

4 notice to the Secretary that it refuses the grant. At

5 the time the State sends such notice, the State shall

6 return any amounts paid to it under such grant to

7 the Secretary.

8 (e) SUPPLEMENTAL GRANTS.—If amounts appro9 priated for grants under this section remain available be10 cause—

11 (1) a State has notified the Secretary that it re12 fuses the grant made to the State;

13 (2) a State has notified the Secretary that it

14 does not intend to use the full amount of a grant

15 awarded to the State; or

16 (3) the amount paid to a State under a grant

17 is reduced, offset, or repaid under subsection (d)(2),

18 the Secretary shall have the discretion to make supple19 mental grants to States, to the extent such amounts are

20 available, for the implementation of alternative dispute

21 resolution systems. A grant received by a State under this

22 subsection shall be used by the State to further implement

23 and evaluate the effectiveness of such a system.

24 (f) RECORDS.—
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1 (1) IN GENERAL.—Each recipient of a grant

2 under this section shall keep such records as the

3 Secretary determines appropriate.

4 (2) AUDIT AND EXAMINATION OF RECORDS.—

5 The Secretary and the Comptroller General of the

6 United States shall have access to any books, docu7 ments, papers, and records of the recipient of a

8 grant under this section, for the purpose of conduct9 ing audits and examinations of such recipient that

10 are pertinent to such grant.

11 (g) REPORTS.—

12 (1) REPORTS ON COMPLIANCE.—

13 (A) SUBMISSION OF REPORTS.—Each

14 State shall annually submit a report to the Sec15 retary containing such information as the Sec16 retary may require to determine whether the

17 State is in compliance with the terms of the

18 grant made under this section.

19 (B) DETERMINATION OF NONCOMPLI20 ANCE.—If, after reviewing the report submitted

21 under subparagraph (A), the Secretary deter22 mines that a State receiving a grant under this

23 section is not in compliance with the terms of

24 the grant, the Secretary shall provide the State
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1 with written notice of such determination. Such

2 notice shall specify—

3 (i) the reasons for the determination

4 of the Secretary;

5 (ii) that the Secretary will require the

6 State, not later than 60 days after receipt

7 of such notice, to return all funds provided

8 to the State under the grant, unless the

9 State—

10 (I) takes such corrective action

11 as may be necessary to ensure that

12 the State is in compliance with the

13 terms of the grant; or

14 (II) requests a hearing under

15 clause (iii); and

16 (iii) that the State may request a

17 hearing on the record before an adminis18 trative law judge under section 554 of title

19 5, United States Code, concerning the alle20 gations set forth in the notice.

21 (2) ADDITIONAL REPORTS.—Each State receiv22 ing a grant under this section shall, not later than

23 2 years after the approval of its application for such

24 grant and every 2 years thereafter, prepare and sub25 mit to the Commission on National Health Care Ac-
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1 cess and Reform established under section 201

2 (hereafter in this subtitle referred to as the ‘‘Com3 mission’’), the Secretary, and the appropriate com4 mittees of Congress, a report and evaluation con5 cerning the alternative dispute resolution systems

6 implemented by the State, including information—

7 (A) on the effect of such systems on the

8 cost of health care within the State;

9 (B) on the impact of such systems on the

10 access of individuals to health care within the

11 State; and

12 (C) on the effect of such systems on the

13 quality of health care provided within the State;

14 SEC. 149. ESTABLISHMENT OF ADVISORY PANEL.

15 (a) IN GENERAL.—The Commission shall make rec16 ommendations to the Secretary concerning the eligibility,

17 approval, and review requirements for alternative dispute

18 resolution systems described in applications submitted

19 under section 148(b).

20 (b) ADVISORS.—The Commission shall—

21 (1) direct the National Advisory Board estab22 lished under section 202 to assist in carrying out the

23 Commission’s activities under this section; or
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1 (2) establish a panel of advisors to assist in car2 rying out the Commission’s activities under this sec3 tion.

4 (c) MEMBERS OF THE ADVISORY PANEL.—If the

5 Commission establishes an advisory panel under sub6 section (b)(2), the members of the advisory panel shall in7 clude representatives from each of the following:

8 (1) Patient advocacy groups.

9 (2) Groups representing State governments.

10 (3) Health care provider groups, including orga11 nized medicine.

12 (4) Health care insurers.

13 (5) Health care employers.

14 (6) Academic researchers from disciplines such

15 as medicine, economics, law or health services, with

16 expertise in alternative dispute resolution models.

17 (d) DUTIES OF ADVISORS.—The advisors appointed

18 under paragraph (1) or (2) of subsection (b) shall—

19 (1) assist in the development of criteria for al20 ternative dispute resolution systems that States

21 must meet to be eligible to receive grants under sec22 tion 148 and make information on such criteria

23 available to the States to assist such States in pre24 paring applications for grants;
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1 (2) as part of the criteria developed under para2 graph (1), require that the alternative dispute reso3 lution systems for which States receive grants under

4 section 148—

5 (A) support access to health care;

6 (B) encourage improvements in the quality

7 of care;

8 (C) enhance the patient-provider relation9 ship;

10 (D) encourage innovation in health care

11 delivery systems;

12 (E) provide prompt resolution and fair

13 compensation;

14 (F) provide predictable outcomes; and

15 (G) operate efficiently in terms of costs

16 and processes;

17 (3) provide advice and assistance to representa18 tives from State governments concerning the estab19 lishment of alternative dispute resolution systems;

20 (4) not later than 7 years after the date of en21 actment of this Act, submit to the Commission, the

22 Secretary, and to the appropriate committees of

23 Congress, a recommendation on the feasibility of a

24 national alternative dispute resolution system; and

25 (5) perform the duties set forth in part IV.
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1 (e) COMPENSATION.—All members of the advisory

2 panel established under subsection (b)(2) shall be reim3 bursed by the Commission for travel and per diem ex4 penses in lieu of subsistence expenses during the perform5 ance of duties of the Panel in accordance with subchapter

6 I of chapter 57 of title 5, United States Code.

7 (f) FACA NOT APPLICABLE.—The provisions of the

8 Federal Advisory Committee Act shall not apply to an ad9 visory panel established under subsection (b)(2).

10 (g) PROVISION OF INFORMATION BY THE SEC11 RETARY.—The Secretary shall make available to the advi12 sors appointed under paragraph (1) or (2) of subsection

13 (b) any information concerning the grants made under

14 section 148 that is necessary for such advisors to complete

15 the duties set forth in subsection (d).

16 SEC. 150. AUTHORIZATION.

17 (a) IN GENERAL.—There are authorized to be appro18 priated $250,000,000 for each of the fiscal years 1994,

19 1995, and 1996, for grants under section 148.

20 (b) AVAILABILITY OF FUNDS.—Amounts appro21 priated for grants under section 148 shall remain available

22 until expended.
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1 PART IV—DEMONSTRATION PROJECTS FOR NO2 FAULT COMPENSATION PROGRAMS

3 SEC. 151. DEMONSTRATION PROJECTS FOR NO-FAULT COM4 PENSATION PROGRAMS.

5 (a) ESTABLISHMENT.—The Secretary shall establish

6 a program to award grants to private entities for the de7 velopment and implementation of demonstration no-fault

8 compensation programs in the private sector.

9 (b) APPLICATION.—To be eligible to receive a grant

10 under this section a private entity shall prepare and sub11 mit to the Secretary an application at such time, in such

12 form, and containing such information as the Secretary

13 may require including a description of the no-fault com14 pensation program that the private entity intends to de15 velop or implement.

16 (c) REVIEW AND APPROVAL OF APPLICATIONS.—The

17 Secretary shall review and approve applications received

18 under subsection (b) in accordance with recommendations

19 made by the Commission with the advice of the advisors

20 appointed under section 149(b).

21 (d) AMOUNT OF GRANT.—The amount of a grant to

22 a private entity under this section shall be an amount that

23 the Secretary finds reasonable and necessary for the devel24 opment and implementation of the no-fault compensation

25 program.

26 (e) DUTIES OF ADVISORS.—
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1 (1) IN GENERAL.—The advisors appointed

2 under section 149(b) shall—

3 (A) develop criteria for no-fault compensa4 tion programs in the private sector that private

5 entities must meet to be eligible to receive

6 grants under this section; and

7 (B) make information on such criteria

8 available to the private entities to assist such

9 entities in preparing applications for grants.

10 (2) CRITERIA.—As part of the criteria devel11 oped under paragraph (1), the advisors shall require

12 that the no-fault compensation programs for which

13 States receive grants under this section—

14 (A) provide that health care providers offer

15 their patients a no-fault compensation scheme

16 in exchange for a waiver of common law tort li17 ability for all injuries;

18 (B) provide that patients are fully in19 formed of the common law tort rights they are

20 surrendering and the no-fault benefits they are

21 eligible to receive; and

22 (C) provide that the health care facility op23 erate an effective quality assurance program,

24 including measures for reporting and account-
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1 ability for all adverse events identified through

2 this claims process.

3 (f) REPORTS AND RECOMMENDATIONS.—

4 (1) REPORTS BY RECIPIENTS OF GRANTS.—Not

5 later than 2 years after the approval of its applica6 tion, each private entity that is a grant recipient

7 shall prepare and submit a report to the Commis8 sion, the Secretary, and the appropriate committees

9 of Congress, which contains—

10 (A) an analysis of the feasibility and desir11 ability of developing and implementing no-fault

12 compensation programs; and

13 (B) a recommendation for legislation on

14 the development and implementation of no-fault

15 compensation programs.

16 (2) RECOMMENDATIONS.—The Commission

17 shall review the reports made by grant recipients

18 pursuant to paragraph (1) and make recommenda19 tions to the Secretary regarding proposals for legis20 lation to develop and implement national no-fault

21 compensation programs.

22 (g) AUTHORIZATION OF APPROPRIATIONS.—

23 (1) IN GENERAL.—There are authorized to be

24 appropriated for grants under this section
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1 $20,000,000 for each of the fiscal years 1994, 1995,

2 and 1996.

3 (2) AVAILABILITY OF FUNDS.—Amounts appro4 priated for grants under this section shall remain

5 available until expended.

6 Subtitle F—Joint Ventures

7 SEC. 161. AMENDMENT OF THE NATIONAL COOPERATIVE

8 RESEARCH ACT OF 1984.

9 (a) DEFINITIONS.—Section 2(a) of the National Co10 operative Research Act of 1984 (15 U.S.C. 4301(a)) is

11 amended by adding at the end the following new para12 graph:

13 ‘‘(7) The term ‘joint health care provider ven14 ture’ means a group of activities, as determined by

15 the Commission on National Health Care Access and

16 Reform (established under section 201 of the

17 BasiCare Health Access and Cost Control Act), by

18 2 or more hospitals for the provision or delivery of

19 health care services.’’.

20 (b) EXCLUSIONS.—Section 2(b) of such Act (15

21 U.S.C. 4301(b)) is amended—

22 (1) in the matter preceding paragraph (1) by

23 striking ‘‘excludes’’ and inserting ‘‘and the term

24 ‘joint health care provider venture’ exclude’’; and
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1 (2) in paragraph (1) by striking ‘‘conduct the

2 research and development that is’’ and inserting

3 ‘‘carry out’’.

4 (c) TECHNICAL AMENDMENTS.—(1) Section 3 of

5 such Act (15 U.S.C. 4302) is amended by inserting ‘‘or

6 joint health care provider venture’’ after ‘‘joint research

7 and development venture’’.

8 (2) Section 4 of such Act (15 U.S.C. 4303) is amend9 ed in subsections (a)(1), (b)(1), (c)(1), and (e) by insert10 ing ‘‘or joint health care provider venture’’ after ‘‘joint

11 research and development venture’’ each place it appears.

12 (3) Section 5(a) of such Act (15 U.S.C. 4304(a)) is

13 amended in the matter preceding paragraph (1) by insert14 ing ‘‘or joint health care provider venture’’ after ‘‘joint

15 research and development venture’’.

16 (4) Section 6 of such Act (15 U.S.C. 4305) is

17 amended—

18 (A) in the heading by striking ‘‘RESEARCH AND

19 DEVELOPMENT’’;

20 (B) in subsections (a), (d)(2), and (e) by insert21 ing ‘‘or joint health care provider venture’’ after

22 ‘‘joint research and development venture’’ each place

23 it appears; and

24 (C) in the first sentence of subsection (a) by in25 serting ‘‘(or in the case of a joint health care pro-
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1 vider venture, the date of enactment of the BasiCare

2 Health Access and Cost Control Act)’’ after ‘‘this

3 Act’’.

4 TITLE II—LONG-TERM REFORMS

5 Subtitle A—Establishment of

6 Commission and Advisory Board

7 SEC. 201. THE COMMISSION ON NATIONAL HEALTH CARE

8 ACCESS AND REFORM.

9 (a) ESTABLISHMENT.—There is established an inde10 pendent commission to be known as the Commission on

11 National Health Care Access and Reform (hereinafter re12 ferred to as the ‘‘Commission’’).

13 (b) DUTIES.—The Commission shall carry out the

14 duties specified for it in this title.

15 (c) APPOINTMENT.—

16 (1) COMPOSITION.—

17 (A) SIZE AND MANNER OF APPOINT18 MENT.—The Commission shall consist of—

19 (i) five members to be appointed by

20 the President, by and with the advice and

21 consent of the Senate, one of whom shall,

22 at the time of appointment, be designated

23 as Chairperson of the Commission;

24 (ii) two members to be appointed by

25 the Speaker of the House of Representa-
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1 tives upon the recommendations of the Ma2 jority Leader and Minority Leader of the

3 House of Representatives; and

4 (iii) two members to be appointed by

5 the President pro tempore of the Senate

6 upon the recommendations of the Majority

7 Leader and Minority Leader of the Senate.

8 (B) POLITICAL AFFILIATION.—At no time

9 shall more than three of the members appointed

10 by the President, one of the members appointed

11 by the Speaker of the House of Representatives,

12 or one of the members appointed by the Presi13 dent pro tempore of the Senate be members of

14 the same political party.

15 (C) MEMBERSHIP QUALIFICATIONS.—The

16 membership of the Commission shall consist of

17 individuals who are of recognized standing and

18 distinction and who possess the demonstrated

19 capacity to discharge the duties imposed on the

20 Commission, and shall include persons possess21 ing substantial knowledge or expertise in health

22 care delivery, health care insurance, or health

23 care economics. No individual who is otherwise

24 an officer or full-time employee of the United

25 States shall serve as a member of the Commis-
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1 sion. No member while serving on the Commis2 sion may receive financial gain from direct in3 vestments, employment or associations from

4 any entity with demonstrable financial interest

5 in matters over which the Commission has ju6 risdiction.

7 (D) CHAIRPERSON.—The Chairperson of

8 the Commission shall designate a member of

9 the Commission to act as Vice Chairperson of

10 the Commission.

11 (E) QUORUM.—A majority of the members

12 of the Commission shall constitute a quorum,

13 but a lesser number may conduct hearings.

14 (F) TERM.—Members of the Commission

15 shall be appointed for a term of 5 years, except

16 that with respect to the members first ap17 pointed—

18 (i) the Chairperson and 2 members, 1

19 each appointed under clauses (ii) and (iii)

20 of paragraph (1)(A), respectively, shall be

21 appointed for a term of 5 years;

22 (ii) 3 members, 1 each appointed

23 under clauses (i), (ii) and (iii) of para24 graph (1)(A), respectively, shall be ap25 pointed for a term of 4 years; and
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1 (iii) the remaining members shall be

2 appointed for a term of 3 years.

3 (G) VACANCY.—A vacancy in the Commis4 sion shall not affect its powers, but shall be

5 filled in the same manner as the original ap6 pointment, but the individual appointed shall

7 serve only for the unexpired portion of the term

8 for which the individual’s predecessor was ap9 pointed.

10 (2) EFFECTIVE DATE.—Appointments to the

11 Commission shall be made no later than 90 days

12 after the date of enactment of this Act.

13 (d) MEETINGS.—The Commission shall meet at the

14 call of the Chairperson, or at the call of a majority of the

15 members of the Commission; but meetings shall not be

16 held less frequently than once in each calendar month

17 which begins after a majority of the membership of the

18 Commission has been appointed.

19 (e) HEARINGS.—In carrying out its duties under this

20 section, the Commission, or any duly authorized commit21 tee thereof, is authorized to hold such hearings, sit and

22 act at such times and places, and take such testimony,

23 with respect to matters with respect to which it has a re24 sponsibility under this title, as the Commission or such

25 committee may deem advisable. The Chairperson of the
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1 Commission or any member authorized by the Chairperson

2 may administer oaths or affirmations to witnesses appear3 ing before the Commission or before any committee there4 of.

5 (f) PAY AND TRAVEL EXPENSES.—

6 (1) PAY.—

7 (A) MEMBERS.—Each member, other than

8 the Chairperson, shall be paid at a rate equal

9 to the daily equivalent of the minimum annual

10 rate of basic pay payable for level IV of the Ex11 ecutive Schedule under section 5315 of title 5,

12 United States Code, for each day (including

13 travel time) during which the member is en14 gaged in the actual performance of duties vest15 ed in the Commission.

16 (B) CHAIRPERSON.—The Chairperson

17 shall be paid for each day referred to in sub18 paragraph (A) at a rate equal to the daily

19 equivalent of the minimum annual rate of basic

20 pay payable for level III of the Executive

21 Schedule under section 5314 of title 5, United

22 States Code.

23 (2) TRAVEL EXPENSES.—Members shall receive

24 travel expenses, including per diem in lieu of subsist-
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1 ence, in accordance with sections 5702 and 5703 of

2 title 5, United States Code.

3 (g) STAFF.—

4 (1) APPOINTMENT.—Subject to paragraphs (2)

5 and (3), the Chairperson, with the approval of the

6 Commission, may appoint and fix the pay of addi7 tional personnel.

8 (2) INAPPLICABILITY OF CIVIL SERVICE

9 LAWS.—The Chairperson may make such appoint10 ments without regard to the provisions of title 5,

11 United States Code, governing appointments in the

12 competitive service, and any personnel so appointed

13 may be paid without regard to the provisions of

14 chapter 51 and subchapter III of chapter 53 of that

15 title relating to classification and General Schedule

16 pay rates, except that an individual so appointed

17 shall receive pay—

18 (A) not less than 120 percent of the mini19 mum rate of basic pay payable for GS–15 of

20 the General Schedule, and

21 (B) no greater than the rate of basic pay

22 payable for level IV of the executive schedule.

23 (3) DETAIL OF PERSONNEL FROM FEDERAL

24 AGENCIES.—Upon request of the Chairperson, the

25 head of any Federal department or agency may de-
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1 tail any of the personnel of that department or agen2 cy to the Commission to assist the Commission in

3 carrying out its duties under this title.

4 (4) FEDERAL AGENCY ASSISTANCE.—The

5 Comptroller General of the United States, the Sec6 retary of Health and Human Services, and the Ad7 ministrator of General Services shall provide assist8 ance on a reimbursable basis, including the detailing

9 of employees, to the Commission in accordance with

10 an agreement entered into with the Commission.

11 (h) OTHER AUTHORITY.—

12 (1) CONSULTANT SERVICES.—The Commission

13 may procure by contract, to the extent funds are

14 available, the temporary or intermittent services of

15 experts or consultants pursuant to section 3109 of

16 title 5, United States Code.

17 (2) PROPERTY MATTERS.—The Commission

18 may lease space and acquire personal property to the

19 extent funds are available.

20 SEC. 202. NATIONAL ADVISORY BOARD.

21 (a) APPOINTMENT.—The Commission shall provide

22 for appointment of a National Advisory Board (hereinafter

23 referred to as the ‘‘Board’’) to advise the Commission on

24 its activities.
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1 (b) MEMBERSHIP.—The Board shall consist of 15

2 members who are representatives of employers, unions,

3 health care providers, health care carriers, consumer orga4 nizations, State health programs, and public health profes5 sionals, as well as the general public. Such members shall

6 serve for terms of 3 years, except that, in the initial ap7 pointment, 5 members shall be each appointed for terms

8 of 1 year, 2 years, and 3 years.

9 (c) VACANCIES.—

10 (1) IN GENERAL.—The Commission shall fill

11 any vacancy in the membership of the Board in the

12 same manner as the original appointment. The va13 cancy shall not affect the power of the remaining

14 members to execute the duties of the Board.

15 (2) VACANCY APPOINTMENTS.—Any member

16 appointed to fill a vacancy shall serve for the re17 mainder of the term for which the predecessor of the

18 member was appointed.

19 (3) REAPPOINTMENT.—The Commission may

20 reappoint an appointed member of the Board for a

21 second term in the same manner as the original ap22 pointment.

23 (d) CHAIRPERSON AND VICE CHAIRPERSON.—The

24 Board shall select a Chairperson and a Vice Chairperson

25 from among the members of the Board.
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1 (e) COMPENSATION.—All members of the Board and

2 the committees established under subsection (h) shall be

3 reimbursed by the Commission for travel and per diem in

4 lieu of subsistence expenses during the performance of du5 ties of the Board in accordance with subchapter I of chap6 ter 57 of title 5, United States Code.

7 (f) FACA NOT APPLICABLE.—The provisions of the

8 Federal Advisory Committee Act shall not apply to the

9 Board.

10 (g) DUTIES.—As directed by the Commission, the

11 Board shall undertake such projects as the Commission

12 may deem necessary. Such projects may include site visits

13 and studies that are concerned with issues of access to

14 health care services, utilization of health care services,

15 consumer participation and satisfaction in the provision

16 of health care services, education of health personnel, med17 ical practice, medical technology, quality of insurance

18 plans and health care delivery, and malpractice liability.

19 The Board shall not undertake studies, visits, or projects,

20 nor shall it issue recommendations, except at the request

21 of the Commission.

22 (h) COMMITTEES.—The Board shall create such com23 mittees (composed of Commission members and others as

24 appointed by the Chairperson) as necessary to enable the

25 Board to meet its responsibilities and functions.
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1 SEC. 203. AUTHORIZATION OF APPROPRIATIONS.

2 There are authorized to be appropriated to the Com3 mission such funds as are necessary to carry out its duties

4 under this title. Such funds shall remain available until

5 expended.

6 Subtitle B—Reform and Standard7 ization of Private Insurance

8 SEC. 211. DEFINING GOALS AND GUIDELINES OF COMMIS9 SION.

10 (a) DEFINING GOALS.—In carrying out the respon11 sibilities assigned to it under this Act, the Commission

12 shall at all times seek to—

13 (1) improve access to basic health coverage and

14 services;

15 (2) control the cost of health care coverage and

16 services;

17 (3) safeguard the quality of health care serv18 ices;

19 (4) assure equity in the availability and cost of

20 health care coverage and services; and

21 (5) minimize administrative complexity and du22 plication in the health care system.

23 (b) GUIDELINES.—In carrying out the responsibil24 ities assigned to it under this Act, the Commission shall

25 in developing or evaluating any health care proposal or

26 modification be guided by the anticipated effect on—
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1 (1) the cost of health care to medical consum2 ers;

3 (2) the quality of health care services;

4 (3) access to health care services;

5 (4) the financial viability of health care provid6 ers;

7 (5) the financial viability of health care carriers;

8 (6) the provision of health benefits to employees

9 by employers; and

10 (7) the administrative complexity of the health

11 care system.

12 (c) CONSULTATIONS.—In carrying out the respon13 sibilities assigned to it under this Act, the Commission

14 shall seek out and consider recommendations from a broad

15 range of interested individuals and organizations, includ16 ing organizations representing health care consumers,

17 health care providers, health care carriers, representatives

18 of State health programs, public health professionals, and

19 the general public.

20 SEC. 212. DEVELOPMENT AND SUBMISSION OF LEGISLA21 TIVE PROPOSAL.

22 (a) IN GENERAL.—By not later than January 1, of

23 the 2nd year following the date of enactment of this Act,

24 the Commission shall develop and submit to Congress a

25 legislative proposal which provides for the following:
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1 (1) BASICARE BENEFITS PACKAGE.—A uniform

2 national health benefits package (hereinafter re3 ferred to as the ‘‘BasiCare benefits package’’) speci4 fying minimum benefits applicable to all carriers

5 which meets the requirements of section 214.

6 (2) INSURANCE RESPONSIBILITIES UNDER

7 BASICARE.—A national health care insurance reform

8 plan which meets the requirements of section 215

9 and which shall apply to all carriers selling health

10 insurance in the United States.

11 (3) ESTABLISHMENT OF BASICARE BASE PRE12 MIUM RATE.—A base premium rate (hereinafter re13 ferred to as the ‘‘BasiCare base premium rate’’) to

14 apply to the BasiCare benefits package, which meets

15 the requirements of section 216.

16 (4) EMPLOYER RESPONSIBILITIES UNDER

17 BASICARE.—Employer responsibilities to offer the

18 BasiCare health benefit plan as described in section

19 217.

20 (5) INDIVIDUAL RESPONSIBILITIES UNDER

21 BASICARE.—Individual responsibilities to obtain the

22 BasiCare health benefit plan coverage as described

23 in section 218.
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1 (6) SELF-INSURED REQUIREMENTS.—Self-in2 sured plan requirements with respect to certification

3 as described in section 219.

4 (7) PROVIDER RESPONSIBILITIES UNDER

5 BASICARE.—Provider responsibilities under the

6 BasiCare health benefit plan as described in section

7 220.

8 (8) TREATMENT OF MANAGED CARE PLANS.—

9 Federal standards for managed care plans as de10 scribed in section 221 and preemption of State pro11 visions relating to such plans, as described in section

12 222.

13 (9) LOW-INCOME ASSISTANCE.—A program to

14 provide low-income individuals and families—

15 (A) an orderly transfer from medicaid pro16 gram coverage under title XIX of the Social Se17 curity Act to BasiCare health benefit plan cov18 erage, and

19 (B) financial assistance in obtaining

20 BasiCare health benefit plan coverage,

21 as specified in subtitle C.

22 (b) CONSIDERATION.—The legislative proposal de23 scribed in subsection (a) shall be considered by the Con24 gress under the procedures for consideration of an ‘‘ap25 proval resolution’’ as described in subtitle D.
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1 (c) EFFECTIVE DATE OF IMPLEMENTATION.—The

2 provisions of the recommendation shall become effective

3 on January 1 of the year following the year of the date

4 of approval of the Commission’s recommendation (unless

5 such period of time is less than 9 months, in which case

6 such provisions shall become effective on January 1 of the

7 second year following the date of approval of the Commis8 sion’s recommendation).

9 SEC. 213. CONTINUING DUTIES AND RESPONSIBILITIES OF

10 THE COMMISSION.

11 (a) PERIOD FOR RESUBMISSION OF BASICARE PACK12 AGE AND BASE RATE IN CASE OF NONAPPROVAL.—If the

13 recommendation of the Commission submitted under sec14 tion 212 is not approved by Congress in a year, the Com15 mission shall by not later than January 1 of each year

16 thereafter, for a period not to exceed 2 years (unless such

17 recommendation is approved in a year) submit a new rec18 ommendation to Congress subject to the guidelines and

19 requirements of this title.

20 (b) CONTINUING REVIEW OF BASICARE BENEFITS

21 PACKAGE AND BASICARE BASE PREMIUM RATE.—

22 (1) MODIFICATIONS IN BASICARE BENEFITS

23 PACKAGE.—The Commission may by not later than

24 September 30 of any year following the effective

25 date of implementation of the Commission’s rec-
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1 ommendation under section 212, subject to the

2 guidelines and goals applicable to its initial rec3 ommendation, publish in the Federal Register revi4 sions to the BasiCare benefits package, which revi5 sions shall become effective on January 1 of the im6 mediately following calendar year unless rescinded

7 by Congress.

8 (2) MODIFICATIONS TO VARIATIONS IN

9 BASICARE BASE PREMIUM RATE.—The Commission

10 may by not later than September 30 of any year fol11 lowing the effective date of implementation of the

12 Commission’s recommendation under section 212,

13 subject to the guidelines and goals applicable to its

14 initial recommendation, publish in the Federal Reg15 ister revisions to any variations provided in the

16 BasiCare base premium rate, which revisions shall

17 become effective on January 1 of the immediately

18 following calendar year unless rescinded by Con19 gress.

20 (c) ESTABLISHMENT OF ANNUAL ALLOWABLE

21 RATES OF INCREASE IN BASICARE PREMIUM RATES.—

22 The Commission shall by not later than September 30 of

23 each year following the effective date of implementation

24 of the Commission’s recommendation under section 212,

25 subject to the guidelines and goals applicable to its initial
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1 recommendation, publish in the Federal Register a per2 centage figure for a single allowable rate of increase in

3 BasiCare premiums to become effective on January 1 of

4 the immediately following calendar year unless such per5 centage figure is modified or rescinded by Congress. Such

6 rate of increase shall be binding on all carriers offering

7 benefits covered under the BasiCare benefits package, as

8 provided in section 215.

9 (d) OVERSIGHT OF PROVIDER PARTICIPATION.—

10 (1) IN GENERAL.—The Commission shall con11 duct ongoing oversight of provider response to the

12 imposition of annual limits in the allowable rate of

13 increase in BasiCare premiums, as provided in this

14 Act. The findings of such oversight shall be ex15 pressed in annual reports to Congress.

16 (2) CONSIDERATIONS.—Matters to be examined

17 in such oversight shall include, but are not limited

18 to, the following:

19 (A) The incidence of participation (or

20 nonparticipation) of health care providers in

21 BasiCare health benefit plans.

22 (B) The effect of such participation (or

23 nonparticipation) on the availability and afford24 ability of health care services to health care

25 consumers.
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1 (C) The extent to which the incidence of

2 nonparticipation in BasiCare health benefit

3 plans may vary according to professional spe4 cialty or region.

5 (3) OPTION FOR PARTICIPATION REQUIRE6 MENTS.—At any time following the standardization

7 of the BasiCare health benefit plan under this Act,

8 the Commission may submit to Congress a legisla9 tive proposal providing for such participation re10 quirements as the Commission may deem necessary

11 to assure a level of provider participation in

12 BasiCare health benefit plans sufficient to assure af13 fordable access to quality health care services by

14 BasiCare enrollees.

15 (4) CONGRESSIONAL CONSIDERATION.—Any

16 proposal made to Congress under this subsection

17 shall be considered by Congress under the proce18 dures for consideration of an ‘‘approval resolution’’

19 as described in subtitle D.

20 (e) OVERSIGHT OF SUPPLEMENTAL HEALTH INSUR21 ANCE MARKET.—

22 (1) IN GENERAL.—The Commission shall, upon

23 implementation of the Commission’s recommenda24 tions under section 212, commence an ongoing as25 sessment of the condition of the supplemental health
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1 insurance market for insurance benefits which are

2 beyond the scope of the BasiCare benefits package.

3 The findings of such assessment shall be transmitted

4 in annual reports to the appropriate committees of

5 Congress.

6 (2) CONSIDERATIONS.—Matters to be ad7 dressed in such assessment shall include, but not be

8 limited to—

9 (A) the rate of cost growth in the supple10 mental market, and the extent to which such

11 growth may be contributing to growth in na12 tional health care expenditures;

13 (B) the affordability and availability of

14 supplemental policies to employers, families,

15 and individuals;

16 (C) the extent to which the terms and cost

17 of coverage vary among beneficiaries based on

18 health and claims status;

19 (D) the value of supplemental policies to

20 beneficiaries, as measured by loss ratios;

21 (E) the extent of questionable marketing

22 practices, such as misrepresentation of policy

23 benefits or provisions, or the selling of policies

24 that duplicate existing coverage; and
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1 (F) the extent to which State insurance

2 regulation is addressing perceived problems in

3 the supplemental market.

4 (3) RECOMMENDATION TO CONGRESS.—No

5 later than January 1 of the second year following

6 the effective date of implementation of the Commis7 sion’s recommendations under this title, the Com8 mission shall include in its annual report to Con9 gress (under this subsection) a recommendation re10 garding the advisability of Federal regulation of the

11 supplemental health insurance market. If the Com12 mission’s recommendation is that such regulation is

13 needed, the Commission shall prepare and submit to

14 Congress draft legislation to carry out the terms of

15 such regulation as it may deem necessary.

16 (4) SUBSEQUENT RECOMMENDATIONS.—At any

17 time following submission of its recommendation to

18 Congress under paragraph (3), the Commission may,

19 based on the findings of its continuing assessment

20 under paragraphs (1) and (2), submit additional rec21 ommendations or draft legislation to Congress re22 garding action it may consider advisable relative to

23 the supplemental market.

24 (5) CONGRESSIONAL CONSIDERATION.—Propos25 als made to Congress under this subsection shall be
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1 considered by Congress under the procedures for

2 consideration of an ‘‘approval resolution’’ as de3 scribed in subtitle D.

4 (f) SAFEGUARDING QUALITY OF HEALTH CARE.—

5 (1) ANNUAL REPORT.—The Commission shall

6 by no later than January 1 of each year following

7 the date of enactment of this Act, submit an annual

8 report to Congress assessing the quality of health

9 care in the United States, and outlining areas of sig10 nificant progress or decline in the delivery of or ac11 cessibility to health care. In preparing such reports,

12 the Commission shall conduct such studies, hearings,

13 or other evaluations as it deems necessary to accom14 plish a comprehensive and continuing evaluation of

15 health care quality in the United States.

16 (2) CONTRACTS FOR PROVISION OF INFORMA17 TION TO CONSUMERS REGARDING QUALITY OF

18 HEALTH CARE SERVICES AND INSURANCE.—The

19 Commission shall enter into contracts with the appli20 cable regulatory authority in each State, or such

21 public or private nonprofit entities as the Commis22 sion deems necessary, for the collection and dissemi23 nation to consumers of information regarding the

24 quality and cost-effectiveness of services provided by

25 health care providers and carriers of BasiCare
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1 health benefit plans in the State. Such information

2 shall include—

3 (A) the degree to which a plan’s practice

4 patterns agree with what is known about appro5 priate and inappropriate approaches to health

6 care,

7 (B) outcome rates for patients with par8 ticular conditions, and

9 (C) patient satisfaction with various as10 pects of a plan’s performance.

11 (3) REQUIREMENT TO CONSIDER HEALTH CARE

12 QUALITY DATA.—Information regarding health care

13 quality obtained through the activities described in

14 this subsection shall be considered and incorporated

15 by the Commission in carrying out the other con16 tinuing duties and responsibilities assigned to it

17 under this section including setting annual premium

18 limits and other rates as provided in this title.

19 (g) UNIFORM CLAIMS FORMS AND ELECTRONIC

20 PROCESSING.—

21 (1) IN GENERAL.—The Commission shall de22 velop in consultation with entities offering health in23 surance, health care providers, and the Secretary, a

24 uniform claims form to be used by both private
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1 health plans and by the medicare program under

2 title XVIII of the Social Security Act.

3 (2) APPLICATION AND REVISION.—The Com4 mission shall by no later than 1 year after the effec5 tive date of implementation of the Commission’s rec6 ommendation under section 212, require that the

7 uniform claims form developed under paragraph (1),

8 be utilized by all carriers offering benefits covered

9 under the BasiCare benefits package and under title

10 XVIII of the Social Security Act. The Commission

11 shall revise such form, as necessary, to reflect

12 changes in the health care insurance market.

13 (3) UNIFORM REPORTING STANDARDS.—In de14 veloping the claims form under paragraph (1), the

15 Commission in consultation with the entities de16 scribed in such paragraph, shall develop standards

17 for uniform reporting (while preserving individual

18 patient identity) concerning—

19 (A) the types and amounts of required

20 health services provided; and

21 (B) the costs of such facilities providing

22 such services.

23 The Commission shall periodically collect, analyze,

24 and disseminate information received under this

25 paragraph.
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1 (4) UNIVERSAL ELECTRONIC PAYMENT AND

2 BILLING CARD.—In conjunction with development of

3 the standard claims form under paragraph (1), the

4 Commission shall develop, and all private and public

5 health insurance programs shall be required to par6 ticipate in, a program to provide a universal health

7 insurance card to every individual or family which

8 shall be accepted by all health care providers for

9 purposes of payment and billing. Such cards shall be

10 imprinted electronically with necessary and appro11 priate information concerning coverage and billing,

12 and to the maximum extent practicable, with infor13 mation to assist in the management of a uniform

14 system of computerized patient records.

15 (h) LONG-TERM DISPOSITION OF MEDICAID BENE16 FITS AND PROGRAM.—

17 (1) IN GENERAL.—At any time following the ef18 fective date of implementation of the Commission’s

19 recommendation under section 212, the Commission

20 may submit to Congress a proposed plan for long21 term disposition of any benefits of the medicaid pro22 gram not covered under or subsumed by the

23 BasiCare benefits package.

24 (2) PROPOSED PLAN.—In preparing a proposed

25 plan described in paragraph (1), the Commission
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1 shall consult with representatives of State medicaid

2 programs, and shall follow the goals and guidelines

3 described in section 211.

4 (3) CONGRESSIONAL CONSIDERATION.—Propos5 als made to Congress under this subsection shall be

6 considered by the Congress under the procedures for

7 consideration of an ‘‘approval resolution’’ as de8 scribed in subtitle D.

9 (4) PERIOD FOR RESUBMISSION OF PRO10 POSAL.—If the recommendation of the Commission

11 submitted under this subsection is not approved by

12 Congress in a year, the Commission shall by not

13 later than January 1 of each year thereafter, for a

14 period not to exceed 2 years (unless such rec15 ommendation is approved in a year) submit a new

16 recommendation to Congress subject to the guide17 lines and requirements of this title.

18 (i) ASSIMILATION OF MEDICARE INTO BASICARE

19 SYSTEM.—

20 (1) IN GENERAL.—The Commission shall by no

21 later than January 1 of the fifth year following the

22 effective date of implementation of the Commission’s

23 recommendation under section 212, submit to the

24 Congress draft legislation providing for the assimila25 tion of the medicare program under title XVIII of
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1 the Social Security Act into the BasiCare system.

2 The Commission shall include with such draft legis3 lation, an accompanying report detailing and ex4 plaining the provisions of such draft legislation.

5 (2) CONGRESSIONAL CONSIDERATION.—Propos6 als made to Congress under this subsection shall be

7 considered by Congress under the procedures for

8 consideration of an ‘‘approval resolution’’ as de9 scribed in subtitle D.

10 (3) PERIOD FOR RESUBMISSION OF PRO11 POSAL.—If the proposal of the Commission submit12 ted under this subsection is not approved by Con13 gress in a year, the Commission shall by not later

14 than January 1 of each year thereafter, for a period

15 not to exceed 2 years (unless such recommendation

16 is approved in a year) submit a new proposal to

17 Congress subject to the guidelines and requirements

18 of this title.

19 (j) ASSIMILATION OF OTHER PROGRAMS INTO

20 BASICARE SYSTEM.—

21 (1) IN GENERAL.—The Commission shall by no

22 later than January 1 of the fifth year following the

23 effective date of implementation of the Commission’s

24 recommendation under section 212, submit to the
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1 Congress draft legislation providing for the assimila2 tion into the BasiCare system of—

3 (A) the veterans health care program

4 under chapter 17 of title 38, United States

5 Code,

6 (B) the Civilian Health and Medical Pro7 gram of the Uniformed Services (CHAMPUS),

8 as defined in section 1073(4) of title 10, United

9 States Code,

10 (C) the Indian health service program

11 under the Indian Health Care Improvement Act

12 (25 U.S.C. 1601 et seq.), and

13 (D) the Federal employees program under

14 chapter 89 of title 5, United States Code.

15 The Commission shall include with such draft legis16 lation, an accompanying report detailing and ex17 plaining the provisions of such draft legislation.

18 (2) CONGRESSIONAL CONSIDERATION.—Propos19 als made to Congress under this subsection shall be

20 considered by Congress under the procedures for

21 consideration of an ‘‘approval resolution’’ as de22 scribed in subtitle D.

23 (3) PERIOD FOR RESUBMISSION OF PRO24 POSAL.—If the proposal of the Commission submit25 ted under this subsection is not approved by Con-
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1 gress in a year, the Commission shall by not later

2 than January 1 of each year thereafter, for a period

3 not to exceed 2 years (unless such recommendation

4 is approved in a year) submit a new proposal to

5 Congress subject to the guidelines and requirements

6 of this title.

7 (k) OVERSIGHT OF SUCH UNCOMPENSATED CARE AS

8 MAY REMAIN.—To the extent it deems necessary, and to

9 the extent practicable, the Commission may provide to

10 Congress recommendations for the establishment of na11 tional or regional compensation pools, or other mecha12 nisms, for the payment of providers who furnish BasiCare13 covered services to individuals who, through choice or in14 advertence, fail to secure BasiCare coverage as provided

15 in this Act.

16 (l) MEDICAL EDUCATION ASSISTANCE.—In conjunc17 tion with the duties assigned to it under section 212 of

18 this Act, and in conjunction with its proposal to assimilate

19 the medicare program under title XVIII of the Social Se20 curity Act into BasiCare under subsection (i) of this sec21 tion, the Commission shall consider and develop methods

22 to assure support for academic health centers and the pro23 vision of quality training to health professionals.

24 (m) CERTIFICATION.—
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1 (1) IN GENERAL.—The Commission shall re2 quire that no health benefit plan may be offered by

3 a carrier under section 215 or by an employer under

4 section 217 or 219 on or after the effective date of

5 implementation of the Commission’s recommenda6 tion under this title, unless the plan has been cer7 tified by the Commission (in accordance with such

8 procedures as the Commission establishes) as quali9 fying as a BasiCare health benefit plan. The Com10 mission shall enter into an agreement with the appli11 cable regulatory authority of each State, or such

12 public or private nonprofit entities as the Commis13 sion deems necessary, to provide for the administra14 tion of such certification under this subsection.

15 (2) LOOK-BEHIND AUTHORITY.—If the Com16 mission determines that a health benefit plan does

17 not qualify on or after the effective date specified in

18 paragraph (1), no coverage may be provided under

19 the plan to individuals not enrolled as of the date of

20 the determination, and the plan may not be contin21 ued for plan years beginning after the date of such

22 determination until the Commission determines that

23 such plan so qualifies.

24 (3) NONAPPLICATION TO SUPPLEMENTAL IN25 SURANCE.—The provisions described in this sub-
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1 section shall apply only to coverage for benefits

2 equivalent to the BasiCare health benefit plan and

3 do not apply to other health benefits.

4 (n) OVERSIGHT OF PRESCRIPTION DRUGS.—

5 (1) IN GENERAL.—No later than January 1 of

6 the second year following the effective date of imple7 mentation of the Commission’s recommendations

8 under this title, the Commission shall submit to

9 Congress a report regarding the advisability of Fed10 eral regulation of the costs of prescription drugs in

11 order to maintain the affordability of the BasiCare

12 benefits package. If the Commission’s recommenda13 tion is that such regulation is needed, the Commis14 sion shall prepare and submit to Congress draft leg15 islation to carry out the terms of such regulation as

16 it may deem necessary.

17 (2) CONGRESSIONAL CONSIDERATION.—Propos18 als made to Congress under this subsection shall be

19 considered by Congress under the procedures for

20 consideration of an ‘‘approval resolution’’ as de21 scribed in subtitle D.

22 SEC. 214. BASICARE BENEFITS PACKAGE.

23 (a) CRITERIA.—In preparing the BasiCare benefits

24 package described in section 212(a)(1), the Commission

25 shall, subject to the requirements of this title, develop and
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1 recommend the BasiCare benefits package as it deems ap2 propriate, adhering to the goals and guidelines described

3 in this subtitle. The BasiCare benefits package developed

4 and recommended by the Commission shall at a minimum

5 provide for—

6 (1) basic hospitalization coverage;

7 (2) basic outpatient services;

8 (3) prescription drugs (subject to reasonable

9 cost-sharing);

10 (4) protection against catastrophic out-of-pock11 et costs;

12 (5) coverage against extraordinary long-term

13 care costs; and

14 (6) coverage for preventive care services of sig15 nificant proven and recognized value in averting se16 rious and costly medical conditions.

17 (b) UNIFORMITY.—

18 (1) IN GENERAL.—Subject to the exceptions de19 scribed in paragraph (2), the BasiCare benefits

20 package recommended by the Commission shall pro21 vide for uniform national deductibles, copayments,

22 and benefit applications and standards.

23 (2) LIMITED VARIATION ALLOWED.—In order

24 to accommodate systems for providing health care in

25 a managed system, the Commission may provide for
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1 variations in the structure of BasiCare cost-sharing

2 requirements for such systems, but only to the ex3 tent such variations do not significantly compromise

4 the national uniformity of a single BasiCare benefits

5 package.

6 (c) FLEXIBILITY REGARDING LONG-TERM CARE.—

7 (1) MODIFIED BENEFIT PLAN FOR MEDICARE

8 BENEFICIARIES.—The Commission may include in

9 its proposal under section 212 provisions for the es10 tablishment of a modified BasiCare long-term care

11 benefits plan for persons currently enrolled in the

12 medicare program under title XVIII of the Social

13 Security Act. If the Commission includes such a

14 plan, the plan shall—

15 (A) consist only of long-term care benefits

16 included in the BasiCare benefits package, and

17 (B) be subject to the rules and require18 ments applicable to the BasiCare health benefit

19 plan under this title, except as may be modified

20 by the Commission in its proposal to Congress

21 under section 212.

22 (2) CONTINUITY OF LONG-TERM CARE COV23 ERAGE.—The Commission may include in its pro24 posal under section 212 such special provisions as it
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1 may deem necessary to assure portability of coverage

2 consistent with the requirements of section 215.

3 (3) INTERACTION WITH OTHER PROGRAMS.—

4 The Commission may include such provisions as it

5 deems necessary to coordinate BasiCare long-term

6 care coverage with coverage provided under the med7 icare program under title XVIII of the Social Secu8 rity Act, and with coverage provided by the medicaid

9 program under title XIX of the Social Security Act,

10 as modified by the terms of this Act.

11 (d) PREFERENCE FOR COPAYMENTS IN COST-SHAR12 ING.—To the extent practicable, the Commission shall em13 ploy copayments rather than deductibles in providing for

14 such cost-sharing requirements as may be included in the

15 BasiCare benefits package under this section.

16 SEC. 215. INSURANCE RESPONSIBILITIES UNDER

17 BASICARE.

18 (a) IN GENERAL.—In developing the legislative pro19 posal described in section 212(a)(2), the Commission shall

20 provide that the requirements of this section are incor21 porated as part of its recommendation for national health

22 care insurance reform.

23 (b) GENERAL REQUIREMENT.—Each carrier shall

24 offer the BasiCare health benefit plan as specified in this

25 section.
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1 (c) PREEMPTION OF STATE MANDATED BENEFIT

2 LAWS.—To the extent that laws of any State or local gov3 ernment regulate or otherwise provide any requirement re4 lating to the benefits to be provided under contracts or

5 policies of insurance issued to, or under, a BasiCare health

6 benefit plan, such laws are preempted.

7 (d) NONDUPLICATION OF BASICARE.—Health bene8 fit plans may be issued for benefits other than those cov9 ered by the BasiCare benefits package described in section

10 214, but no health benefit plans may be offered by any

11 carrier in any State which duplicate, either in whole or

12 in part, the benefits described in the BasiCare benefits

13 package.

14 (e) NONDISCRIMINATION BASED ON HEALTH STA15 TUS.—

16 (1) IN GENERAL.—BasiCare health benefit

17 plans offered by carriers may not deny, limit, or con18 dition the coverage under (or benefits of) the plan

19 based on the health status, claims experience, receipt

20 of health care, medical history, or lack of evidence

21 of insurability, of an individual.

22 (2) TREATMENT OF PREEXISTING CONDITION

23 EXCLUSIONS FOR ALL SERVICES.—BasiCare health

24 benefit plans provided by carriers may not exclude

25 or otherwise discourage coverage with respect to
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1 services related to treatment of a preexisting condi2 tion.

3 (f) REGISTRATION WITH APPLICABLE REGULATORY

4 AUTHORITY.—

5 (1) IN GENERAL.—Each carrier shall register

6 with the applicable regulatory authority for each

7 State in which it issues or offers health benefit

8 plans.

9 (2) NO PREEMPTION OF STATE INFORMATION

10 REQUIREMENTS.—Nothing in paragraph (1) shall be

11 construed as preventing the applicable regulatory

12 authority from requiring, in the case of BasiCare

13 carriers that are not self-insurance carriers, such ad14 ditional information in conjunction with, or apart

15 from, the registration required under paragraph (1)

16 as the applicable regulatory authority may be au17 thorized to require under State law.

18 (g) GUARANTEED ISSUE.—

19 (1) IN GENERAL.—Subject to the succeeding

20 provisions of this subsection, a carrier that offers a

21 BasiCare health benefit plan (including a reinsur22 ance plan) to groups or individuals located in a com23 munity must offer the same plan to any other group

24 or individual located in the community, and shall

25 participate in a program developed by the Commis-
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1 sion for assigning high-risk groups or individuals

2 among all such carriers.

3 (2) TREATMENT OF HEALTH MAINTENANCE OR4 GANIZATIONS.—

5 (A) GEOGRAPHIC LIMITATIONS.—A health

6 maintenance organization may deny coverage

7 under a BasiCare health benefit plan to an in8 dividual or group whose members are located

9 outside the service area of the organization, but

10 only if such denial is applied uniformly without

11 regard to health status or insurability.

12 (B) SIZE LIMITS.—A health maintenance

13 organization may apply to the applicable regu14 latory authority to cease enrolling new groups

15 or individuals in its BasiCare health benefit

16 plan (or in a geographic area served by the

17 plan) if it can demonstrate that its financial or

18 administrative capacity to serve previously en19 rolled groups and individuals (and additional in20 dividuals who will be expected to enroll because

21 of affiliation with such previously enrolled

22 groups) will be impaired if it is required to en23 roll new groups or individuals.

24 (3) GROUNDS FOR REFUSAL TO ISSUE OR

25 RENEW.—
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1 (A) IN GENERAL.—A carrier may refuse to

2 issue or renew or terminate a BasiCare health

3 benefit plan under this part only for—

4 (i) nonpayment of premiums,

5 (ii) fraud or misrepresentation, and

6 (iii) failure to meet minimum partici7 pation rates (consistent with subparagraph

8 (B)).

9 (B) MINIMUM PARTICIPATION RATES.—A

10 carrier may require, with respect to an employ11 ment-related group BasiCare health benefit

12 plan, that a minimum percentage of full-time

13 employees eligible to enroll under the plan be

14 enrolled, so long as such percentage is enforced

15 uniformly for all employment groups of com16 parable size.

17 (h) MINIMUM PLAN PERIOD.—A carrier may not

18 offer, or issue a BasiCare health benefit plan with a term

19 of less than 12 months.

20 (i) GUARANTEED RENEWABILITY.—

21 (1) IN GENERAL.—

22 (A) GENERAL RULE.—Subject to the suc23 ceeding provisions of this subsection, a carrier

24 shall ensure that a BasiCare health benefit plan

25 issued to a group or individual be renewed, at
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1 the option of the policyholder, unless the plan

2 is terminated for the reasons specified in sub3 section (h)(3) (A) or under subparagraph (B).

4 (B) TERMINATION OF BUSINESS.—A car5 rier need not renew a BasiCare health benefit

6 plan with respect to such a policyholder if the

7 carrier—

8 (i) is terminating provision of all

9 health insurance in the community; and

10 (ii) provides notice to the policyholder

11 covered under the plan of such termination

12 at least 90 days before the date of expira13 tion of the plan.

14 In the case of such a termination, the carrier

15 may not provide for issuance of any health ben16 efit plan in such community during the 5-year

17 period beginning on the date of termination of

18 such block of business.

19 (C) CONSTRUCTION RESPECTING ADDI20 TIONAL STATE DISCLOSURE REQUIREMENTS.—

21 Subparagraph (B)(ii) shall not be construed as

22 preventing the applicable regulatory authority

23 from specifying the information to be included

24 in the notice under such subparagraph or in re-
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1 quiring such notice to be provided at an earlier

2 date.

3 (2) NOTICE AND SPECIFICATION OF RATES AND

4 ADMINISTRATIVE CHANGES.—

5 (A) NOTICE.—A carrier offering BasiCare

6 health benefit plans shall provide for notice, at

7 least 30 days before the date of expiration of

8 the health benefit plan, of the terms for renewal

9 of the plan. Except with respect to rates and

10 administrative changes, the terms of renewal

11 (including benefits) shall be the same as the

12 terms of issuance.

13 (B) RENEWAL RATES SAME AS ISSUANCE

14 RATES.—The carrier may change the terms for

15 such renewal, but the premium rates charged

16 with respect to such renewal shall be the same

17 as that for a new issue.

18 (C) RATES CANNOT CHANGE MORE OFTEN

19 THAN MONTHLY.—

20 (i) IN GENERAL.—A carrier may not

21 change the premium rates established with

22 respect to BasiCare health benefit plans

23 offered in a community more often than

24 monthly.
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1 (ii) APPLICATION OF NEW RATES TO

2 SPECIFIC PLANS.—With respect to a

3 BasiCare health benefit plan which be4 comes effective in a month, the carrier

5 shall ensure that the premium rate estab6 lished under clause (i) for that month shall

7 apply to such plan for all months during

8 the 12-month period beginning with that

9 month. In the case of a plan renewal which

10 is effective for a 12-month period begin11 ning with a month, the premium rate es12 tablished under clause (i) with respect to

13 that month shall apply to all months dur14 ing 12-month renewal period.

15 (3) PERIOD OF RENEWAL.—The period of re16 newal of each health benefit plan offered by a carrier

17 shall be for a period of not less than 12 months.

18 (j) COMMUNITY RATING.—

19 (1) IN GENERAL.—A carrier may not charge

20 premium rates for BasiCare health benefit plans in

21 excess of the average per capita cost of providing

22 such coverage to all individuals covered under

23 BasiCare policies issued by that carrier in a commu24 nity. A BasiCare health benefit plan meeting such
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1 criteria will be considered ‘‘actuarially certified’’ for

2 purposes of this subsection.

3 (2) ACTUARIALLY CERTIFIED DEFINED.—A

4 BasiCare health benefit plan is considered to be ‘‘ac5 tuarially certified’’ if there is a written statement by

6 a member of the American Academy of Actuaries or

7 other individual acceptable to the applicable regu8 latory authority that a carrier is in compliance with

9 this section, based upon the individual’s examina10 tion, including a review of the appropriate records

11 and of the actuarial assumptions and methods uti12 lized by the carrier in establishing premium rates for

13 applicable health benefit plans.

14 (k) ADJUSTMENTS TO COMMUNITY RATING.—

15 (1) IN GENERAL.—A BasiCare health benefit

16 plan offered by a carrier to a group or individual

17 may provide for an adjustment to the average com18 munity rate based on the age of covered individuals.

19 Any such adjustment shall be applied by the carrier

20 consistently to all policyholders, and no other adjust21 ments shall be permitted.

22 (2) LIMITATION ON ADJUSTMENT.—

23 (A) IN GENERAL.—The adjustment under

24 paragraph (1) may not result, with respect to

25 BasiCare health benefit plans offered by car-
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1 riers to groups and individuals in the same

2 community, in a premium rate for the most ex3 pensive age group exceeding the average com4 munity rate by more than the applicable per5 cent (as defined in subparagraph (B)).

6 (B) APPLICABLE PERCENT DEFINED.—In

7 subparagraph (A), the term ‘‘applicable per8 cent’’ means—

9 (i) for the first effective year, 50 per10 cent,

11 (ii) for the second effective year, 40

12 percent,

13 (iii) for the third effective year, 30

14 percent, and

15 (iv) for any subsequent year, 20 per16 cent.

17 (l) APPLICATION OF STANDARDS TO REINSURANCE

18 POLICIES.—The requirements of this section shall apply

19 to all reinsurance policies sold by an entity to a carrier

20 offering BasiCare health benefit plans through self-in21 sured employment-related health benefit plans.

22 (m) APPLICATION OF BASICARE BASE PREMIUM

23 RATE.—For the first year of standardization of the

24 BasiCare health benefit plan under this Act, premiums

25 charged for BasiCare health benefit plans may not exceed
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1 the BasiCare base premium rate, as provided in section

2 216.

3 (n) APPLICATION OF ALLOWED RATE OF IN4 CREASE.—

5 (1) IN GENERAL.—A carrier may not charge

6 premiums with respect to BasiCare health benefit

7 plans in any calendar year which exceed the greater

8 of—

9 (A) the previous year’s rate plus the an10 nual allowable percentage rate of increase for

11 the year as provided in section 213; or

12 (B) the applicable base premium rate, as

13 provided in section 216, plus amounts cor14 responding to the cumulative total of annual al15 lowable percentage rates of increase up to the

16 current year.

17 (2) EXCEPTION.—Notwithstanding paragraph

18 (1)(B), in any single calendar year a carrier may not

19 increase its premium with respect to a BasiCare

20 health benefit plan by an amount exceeding 120 per21 cent of the national annual allowable percentage rate

22 of increase for that year, as provided in section 213.

23 (o) RISK-ADJUSTMENT STRUCTURE.—In preparing

24 its recommendation to Congress under section 212 of this

25 Act, the Commission shall provide guidelines for a risk-
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1 adjustment structure under which all BasiCare health

2 benefit plans in a State are assigned a numerical risk

3 index based on risk-adjustment factors developed by the

4 Commission and based on such index low-risk carriers are

5 required to pay an assessment and high-risk carriers are

6 designated to receive a subsidy in order to balance the risk

7 of doing business in such State. The Commission shall ad8 minister such a risk-adjustment structure in any State in

9 which the applicable regulatory authority fails to do so.

10 SEC. 216. BASICARE BASE PREMIUM RATE.

11 (a) CRITERIA.—In developing the legislative proposal

12 described in section 212(a)(3), the BasiCare base pre13 mium rate established and recommended by the Commis14 sion shall be based on the anticipated average cost of pro15 viding the BasiCare benefits package to an average group

16 of beneficiaries (as determined by the Commission in con17 sultation with the Board).

18 (b) LIMITED VARIATION ALLOWED.—In establishing

19 the BasiCare base premium rate, the Commission may

20 propose limited variations in such rate to accommodate

21 geographic variables, or other variables as described in

22 paragraphs (1) and (2).

23 (1) GEOGRAPHIC VARIABLES.—In order to ac24 commodate differences in costs in delivering health

25 care in different geographical areas, the Commission
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1 may provide for limited geographical variations in

2 the BasiCare base premium rate to the extent such

3 variations are—

4 (A) based on statistically verifiable dif5 ferences in the cost of providing the BasiCare

6 benefits package, and

7 (B) not provided for geographic areas

8 smaller than areas that encompass at least—

9 (i) one or more adjacent metropolitan

10 statistical areas (as defined by the Com11 mission, in consultation with the Bureau of

12 the Census); or

13 (ii) the total remaining area within a

14 State not otherwise included in a geo15 graphic area described under clause (i).

16 (2) OTHER VARIABLES.—If the Commission has

17 provided for variation in the BasiCare benefits pack18 age under paragraph (2) of section 214(b), the Com19 mission may provide for variations in the BasiCare

20 base premium rate to reflect such variations in the

21 benefit package, to the extent such variations meet

22 the criteria for allowing variations under paragraph

23 (2) of such section. Also, to the extent that adjust24 ments to community rating of BasiCare health bene25 fit plans are permitted under section 215(k), the
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1 Commission may provide for corresponding variation

2 in the BasiCare base premium rate to reflect such

3 permitted adjustments. If variations are provided for

4 in the BasiCare base premium rate, such variations

5 shall be expressed in terms of percentage variation

6 from a single standard national rate.

7 SEC. 217. EMPLOYER RESPONSIBILITIES UNDER BASICARE.

8 In developing the legislative proposal described in sec9 tion 212(a)(4), the Commission shall require the following:

10 (1) NO DISCRIMINATION BASED ON HEALTH

11 STATUS FOR CERTAIN SERVICES.—An employment12 related BasiCare health benefit plan may not deny,

13 limit, or condition coverage based on the health sta14 tus, claims experience, receipt of health care, medi15 cal history, or lack of evidence of insurability, of an

16 individual.

17 (2) TREATMENT OF PREEXISTING CONDITION

18 EXCLUSIONS.—An employment-related BasiCare

19 health benefit plan may not exclude or otherwise dis20 courage coverage with respect to services related to

21 treatment of a preexisting condition.

22 (3) TREATMENT OF WAITING PERIODS.—An

23 employment-related BasiCare health benefit plan

24 may not impose waiting periods of any length.
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1 (4) NO DISCRIMINATION BASED ON INCOME

2 LEVEL.—An employment-related BasiCare health

3 benefit plan shall apply equally to employees of all

4 income levels.

5 (5) EQUAL CONTRIBUTION LEVELS.—The total

6 amount of an employer’s contribution to the cost of

7 coverage under an employment-related BasiCare

8 health benefit plan for employees with incomes less

9 than 200 percent of the income official poverty line

10 (as described in section 232(g)(1)) shall equal or ex11 ceed such total amount for employees with incomes

12 greater than 200 percent of such income official pov13 erty line.

14 SEC. 218. INDIVIDUAL RESPONSIBILITIES UNDER

15 BASICARE.

16 Subject to the provisions of subsections (h) and (i)

17 of section 213, in developing the legislative proposal de18 scribed in section 212(a)(5), the Commission shall require

19 that to be eligible for benefits under a Federal program,

20 an individual seeking benefits under such program shall

21 certify to the administrator of such program that such in22 dividual and the dependents of such individual possess

23 BasiCare health insurance coverage that meets the appli24 cable minimum standards under this title. Except as may

25 be provided by the Commission under section 214(c)(1),
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1 this section shall not apply to persons eligible for enroll2 ment in—

3 (1) the medicare program under title XVIII of

4 the Social Security Act,

5 (2) the veterans health care program under

6 chapter 17 of title 38, United States Code,

7 (3) the Civilian Health and Medical Program of

8 the Uniformed Services (CHAMPUS), as defined in

9 section 1073(4) of title 10, United States Code,

10 (4) the Indian health service program under the

11 Indian Health Care Improvement Act (25 U.S.C.

12 1601 et seq.), and

13 (5) the Federal employees program under chap14 ter 89 of title 5, United States Code.

15 SEC. 219. SELF-INSURED PLAN REQUIREMENTS.

16 (a) IN GENERAL.—In developing the legislative pro17 posal described in section 212(a)(6), the Commission shall

18 require that in order to obtain certification as a BasiCare

19 health benefit plan as provided in section 213(m), a self20 insured health benefit plan must demonstrate to the satis21 faction of the Commission that—

22 (1) the benefits and conditions of such plan (in23 cluding copayments and deductibles) are substan24 tially equivalent to those of a BasiCare health bene25 fit plan as provided under this Act;
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1 (2) the self-insuring entity is adhering to non2 discrimination standards substantially equivalent to

3 those provided for carriers in section 215 (insurance

4 reform requirements) and described in subsection

5 (b);

6 (3) the average per capita cost of providing

7 BasiCare equivalent benefits to enrollees in the self8 insured plan differs no more than 10 percent (either

9 above or below) from the average per capita cost of

10 providing BasiCare benefits package to non-self-in11 sured beneficiaries in the community (or commu12 nities) in which the self-insured group is located

13 (without taking into account any reductions in costs

14 due to health promotion activities of the employer);

15 and

16 (4) the self-insuring entity possesses adequate

17 financial reserves, as determined by the Commission,

18 to assure the immediate and long-term solvency of

19 the entity and the benefits of individuals receiving

20 coverage through such entity.

21 (b) STANDARDS DESCRIBED.—Standards described

22 in this subsection shall include (but are not limited to)

23 the following:

24 (1) NO DISCRIMINATION BASED ON HEALTH

25 STATUS.—No self-insured BasiCare health benefit
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1 plan may deny, limit, or condition the coverage

2 under (or benefits of) the plan with respect to health

3 status, claims experience, receipt of health care,

4 medical history, or lack of evidence of insurability,

5 of an individual or group.

6 (2) TREATMENT OF PREEXISTING CONDI7 TIONS.—No self-insured BasiCare health benefit

8 plan may exclude or otherwise discourage coverage

9 with respect to services related to treatment of a

10 preexisting condition.

11 (3) WAITING PERIODS.—No self-insured

12 BasiCare health benefit plan may impose waiting pe13 riods of any length.

14 SEC. 220. PROVIDER RESPONSIBILITIES UNDER BASICARE.

15 In developing the legislative proposal described in sec16 tion 212(a)(7), the Commission shall require as a condi17 tion of participation in the BasiCare health benefit plan

18 by any health care provider the acceptance by such pro19 vider of any payment by BasiCare as full payment for the

20 service performed.

21 SEC. 221. DEVELOPMENT OF STANDARDS FOR MANAGED

22 CARE PLANS.

23 (a) IN GENERAL.—In preparing the legislative pro24 posal described in section 212(a)(8), the Commission, tak25 ing into account recommendations of the Managed Care
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1 Advisory Committee (as described in subsection (b)), shall

2 develop recommended standards that carriers offering

3 managed care plans should meet with respect to the bene4 fits, coverage, and delivery systems provided under such

5 plans. Such standards shall encompass the standards by

6 which managed care entities operate.

7 (b) MANAGED CARE ADVISORY COMMITTEE.—

8 (1) ESTABLISHMENT.—There shall be estab9 lished a Managed Care Advisory Committee (herein10 after referred to as the ‘‘Committee’’).

11 (2) MEMBERSHIP.—The Committee shall be

12 composed of 5 members appointed by the Chair13 person of the Commission, each member represent14 ing 1 of the following areas:

15 (A) Health care professionals.

16 (B) Managed care industry.

17 (C) Academia (with specific expertise in

18 managed care plans).

19 (D) Business management.

20 (E) Organized labor.

21 (3) COMPENSATION.—

22 (A) IN GENERAL.—Members of the Com23 mittee shall serve without compensation.

24 (B) EXPENSES, ETC., REIMBURSED.—

25 While away from their homes or regular places
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1 of business on the business of the Committee,

2 the members may be allowed travel expenses,

3 including per diem in lieu of subsistence, as au4 thorized by section 5703 of title 5, United

5 States Code, for persons employed intermit6 tently in Government service.

7 (C) APPLICATION OF ACT.—The provisions

8 of the Federal Advisory Committee Act (5

9 U.S.C. App.) shall not apply with respect to the

10 Committee.

11 (D) SUPPORT.—The Commission shall

12 supply such necessary office facilities, office

13 supplies, support services, and related expenses

14 as necessary to carry out the functions of the

15 Committee.

16 SEC. 222. PREEMPTION OF PROVISIONS RELATING TO MAN17 AGED CARE.

18 In developing the legislative proposal described in sec19 tion 212(a)(8), the Commission shall provide that in the

20 case of a managed care plan meeting the recommended

21 standards under section 221 that is offered by a carrier,

22 the following provisions of law are preempted and may not

23 be enforced against the managed care plan with respect

24 to a carrier offering such plan:
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1 (1) RESTRICTIONS ON REIMBURSEMENT RATES

2 OR SELECTIVE CONTRACTING.—Any law that re3 stricts the ability of the carrier to negotiate reim4 bursement rates with health care providers or to

5 contract selectively with one provider or a limited

6 number of providers.

7 (2) RESTRICTIONS ON DIFFERENTIAL FINAN8 CIAL INCENTIVES.—Any law that limits the financial

9 incentives that the managed care plan may require

10 a beneficiary to pay when a non-plan provider is

11 used on a non-emergency basis.

12 (3) RESTRICTIONS ON UTILIZATION REVIEW

13 METHODS.—

14 (A) IN GENERAL.—Any law that—

15 (i) prohibits utilization review of any

16 or all treatments and conditions;

17 (ii) requires that such review be made

18 by a resident of the State in which the

19 treatment is to be offered or by an individ20 ual licensed in such State, or by a physi21 cian in any particular specialty or with any

22 board certified specialty of the same medi23 cal specialty as the provider whose services

24 are being rendered;
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1 (iii) requires the use of specified

2 standards of health care practice in such

3 review or requires the disclosure of the

4 specific criteria used in such review;

5 (iv) requires payments to providers for

6 the expenses of responding to utilization

7 review requests; or

8 (v) imposes liability for delays in per9 forming such review.

10 (B) CONSTRUCTION.—Nothing in subpara11 graph (A)(ii) shall be construed as prohibiting

12 a State from requiring that utilization review be

13 conducted by a licensed health care profes14 sional, or requiring that any appeal from such

15 a review be made by a licensed physician or by

16 a licensed physician in any particular specialty

17 or with any board certified specialty of the

18 same medical specialty as the provider whose

19 services are being rendered.

20 (4) RESTRICTIONS ON BENEFITS.—Any law

21 that mandates benefits under the managed care plan

22 that are greater than the benefits recommended

23 under the standards developed under section 221.
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1 (5) ERISA.—Any provision of the Employee

2 Retirement Income Security Act to the extent incon3 sistent with the managed care plan.

4 Subtitle C—Low-Income Assistance

5 SEC. 231. TRANSFER FROM MEDICAID TO BASICARE.

6 (a) IN GENERAL.—In developing the legislative pro7 posal described in section 212(a)(9)(A), the Commission

8 shall provide for the orderly termination of medicaid pro9 gram coverage under title XIX of the Social Security Act,

10 to the extent that such coverage duplicates the BasiCare

11 benefits package.

12 (b) TRANSFER OF COVERED INDIVIDUALS FROM

13 MEDICAID TO BASICARE.—Such proposal shall require

14 each State—

15 (1) to notify medicaid beneficiaries of the im16 pending transfer of coverage of such beneficiaries to

17 the BasiCare program not later than 1 year prior to

18 the date of transfer from medicaid to the BasiCare

19 program; and

20 (2) to provide such information and assistance

21 as may be necessary to assure the enrollment of all

22 medicaid beneficiaries in BasiCare health benefit

23 plans upon the establishment of such plans.
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1 (c) PROVISIONAL TREATMENT OF MEDICAID BENE2 FITS NOT COVERED BY BASICARE.—Such proposal shall

3 require—

4 (1) that for a period of 5 years following the

5 termination of medicaid benefits that duplicate the

6 BasiCare benefits package, the medicaid program

7 shall continue to operate with respect to the provi8 sion of any existing benefits which are not covered

9 under the BasiCare benefits package; and

10 (2) Federal rules and regulations regarding the

11 medicaid program shall remain in effect during a

12 transition period subject to such adjustments

13 deemed necessary by the Commission to carry out

14 the medicaid-to-BasiCare transfer described in this

15 section.

16 (d) FINAL DISPOSITION OF MEDICAID BENEFITS.—

17 Upon expiration of the 5-year transition period described

18 in subsection (c)(1), Federal funding for any existing med19 icaid benefits which are not covered under the BasiCare

20 benefits package shall be discontinued, unless Congress

21 has approved a plan for alternate disposition of such bene22 fits, as provided in section 213.
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1 SEC. 232. LOW-INCOME ASSISTANCE WITH COSTS OF

2 BASICARE INSURANCE.

3 (a) IN GENERAL.—In developing the legislative pro4 posal described in section 212(a)(9)(B), the Commission

5 shall provide for a BasiCare public assistance program

6 (hereafter in this section referred to as ‘‘BasiCare Assist’’)

7 which, at a minimum, meets the requirements of the fol8 lowing subsections of this section.

9 (b) ASSISTANCE FOR UNDER-POVERTY FAMILIES.—

10 In the case of an individual who is a member of an under11 poverty family, BasiCare Assist shall provide for payment

12 of—

13 (1) premiums charged the individual for cov14 erage under a BasiCare health benefit plan in which

15 the individual is enrolled; and

16 (2) deductibles and other cost-sharing imposed

17 on the individual under such plan, other than a per

18 service copayment, not to exceed $5 per service, as

19 determined by the Commission.

20 (c) ASSISTANCE FOR NEAR-POVERTY FAMILIES.—

21 (1) IN GENERAL.—In the case of an individual

22 who is a member of a near-poverty family, BasiCare

23 Assist shall provide for payment of the applicable

24 percentage of any premiums, deductibles, and other

25 cost-sharing charged the individual for coverage
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1 under a BasiCare health benefit plan in which the

2 individual is enrolled.

3 (2) APPLICABLE PERCENTAGE.—For purposes

4 of paragraph (1), the term ‘‘applicable percentage’’

5 means 100 percent reduced (but not below zero per6 cent) by 10 percentage points for each 10 percent7 age point bracket (or portion thereof) such family’s

8 income equals or exceeds 100 percent of the income

9 official poverty line (as defined by the Office of Man10 agement and Budget, and revised annually in ac11 cordance with section 673(2) of the Omnibus Budget

12 Reconciliation Act of 1981) applicable to a family of

13 the size involved.

14 (d) ADJUSTMENT OF ASSISTANCE.—The Commission

15 shall provide for appropriate adjustments to any assist16 ance under this section to reflect partial family coverage

17 under an employment-related BasiCare health benefit

18 plan.

19 (e) APPLICATION FOR ASSISTANCE.—BasiCare Assist

20 shall use a standard Federal application which shall be

21 as simple in form as possible and understandable to the

22 average individual, and shall require attachment of such

23 documentation as deemed necessary by the Commission in

24 order to ensure eligibility for assistance. Such application

25 shall be available to any individual or family, may be filed
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1 at any time, and as provided in subsection (f), may initiate

2 coverage under a BasiCare health benefit plan. The Com3 mission shall use, as deemed practicable by the Commis4 sion, any existing forms employed for Federal income tax

5 filings as an application for BasiCare Assist.

6 (f) ENROLLMENT AT POINT OF APPLICATION.—To

7 the extent practicable, the Commission shall provide for

8 the option of enrollment in a BasiCare health benefit plan

9 as part of the application and approval process for assist10 ance under this section. In providing for such an option,

11 the Commission may require carriers of BasiCare health

12 benefit plans to provide such information and assistance

13 as may be necessary.

14 (g) PAYMENT OF PREMIUMS, DEDUCTIBLES, AND

15 OTHER COST-SHARING.—BasiCare Assist shall provide to

16 an individual a voucher for the applicable percentage of

17 BasiCare premiums, deductibles, and other cost-sharing

18 for which such individual qualifies under subsection (b)

19 or (c). Such voucher shall be remitted by the individual

20 to the carrier of BasiCare health benefit plans (or, in the

21 case of an employment-related BasiCare health benefit

22 plan, to the individual’s employer) for payment by

23 BasiCare Assist. Such carrier shall make proper adjust24 ments in billing statements to reflect such individual’s re-
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1 maining premium obligations, deductibles, and other cost2 sharing (if any).

3 (h) DOCUMENTATION OF ELIGIBILITY.—

4 (1) REQUIREMENT FOR FILING OF INCOME

5 STATEMENT.—In the case of a family which is re6 ceiving assistance under BasiCare Assist for any

7 month in a year, a member of the family shall file

8 a statement with the Commission, at such intervals

9 during such year as the Commission deems nec10 essary, and by not later than April 15 of the follow11 ing year. Such a statement shall provide information

12 necessary to determine the family income and the

13 number of family members in the family during the

14 year.

15 (2) RECONCILIATION OF ASSISTANCE BASED ON

16 ACTUAL INCOME.—Based on and using the income

17 reported in the statement filed under paragraph (1)

18 with respect to a family, the Commission shall com19 pute the amount of assistance that should have been

20 provided under BasiCare Assist with respect to the

21 family in the year involved and make proper adjust22 ments in future assistance. If the amount of such

23 assistance computed is—

24 (A) greater than the amount of assistance

25 provided, the Commission shall provide for pay-
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1 ment to the family involved of an amount equal

2 to the amount of the deficit, or

3 (B) less than the amount of assistance

4 provided, the Commission shall require the fam5 ily to pay to the Federal Government (to the

6 credit of BasiCare Assist) an amount equal to

7 the amount of the excess payment.

8 (3) DISQUALIFICATION FOR FAILURE TO

9 FILE.—In the case of any family that is required to

10 file an information statement under paragraph (1)

11 for a year and that fails to file such a statement by

12 the deadline specified by the Commission, no mem13 ber of the family shall be eligible for assistance

14 under this section after such deadline. The Commis15 sion shall waive the application of this paragraph if

16 the family establishes, to the satisfaction of the

17 Commission, good cause for the failure to file the

18 statement on a timely basis.

19 (4) PENALTIES FOR FALSE INFORMATION.—

20 (A) INTEREST FOR UNDERSTATEMENTS.—

21 Each individual who knowingly understates in22 come reported in an application for assistance

23 under BasiCare Assist or any statement de24 scribed in paragraph (1), or otherwise makes a

25 material misrepresentation of information in
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1 such an application or statement shall be liable

2 to the Federal Government for excess payments

3 made based on such understatement or mis4 representation, and for interest on such excess

5 payments at a rate specified by the Commis6 sion.

7 (B) PENALTIES FOR MISREPRESEN8 TATION.—Each individual who knowingly mis9 represents material information in an applica10 tion for assistance under BasiCare Assist or

11 any statement described in paragraph (1) shall

12 be liable to the Federal Government for $1,000

13 or, if greater, 3 times the excess payments

14 made based on such misrepresentation.

15 (5) NOTICE OF REQUIREMENT.—The Commis16 sion shall provide for written notice, in March of

17 each year, of the requirement of paragraph (1) to

18 each family which received assistance under

19 BasiCare Assist in any month during the preceding

20 year and to which such requirement applies.

21 (6) TRANSMITTAL OF INFORMATION.—The Sec22 retary of the Treasury shall transmit annually to the

23 Commission such information relating to the total

24 income of individuals and families for the taxable

25 year ending in the previous year as may be nec-
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1 essary to verify the reconciliation of assistance under

2 BasiCare Assist.

3 (i) DEFINITIONS AND SPECIAL RULES.—For pur4 poses of this section—

5 (1) UNDER-POVERTY FAMILY.—The term

6 ‘‘under-poverty family’’ means a family whose in7 come is less than 100 percent of the income official

8 poverty line (as defined by the Office of Manage9 ment and Budget, and revised annually in accord10 ance with section 673(2) of the Omnibus Budget

11 Reconciliation Act of 1981) applicable to a family of

12 the size involved.

13 (2) NEAR-POVERTY FAMILY.—The term ‘‘near14 poverty family’’ means a family whose income equals

15 or exceeds 100 percent of the income official poverty

16 line (as described in paragraph (1)), but is less than

17 200 percent of such income official poverty line.

18 (3) DETERMINATIONS OF INCOME.—

19 (A) IN GENERAL.—The term ‘‘income’’

20 means—

21 (i) adjusted gross income (as defined

22 in section 62(a) of the Internal Revenue

23 Code of 1986), determined without the ap24 plication of paragraphs (6) and (7) of such
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1 section and without the application of sec2 tion 162(l) of such Code, plus

3 (ii) the amount of social security ben4 efits (described in section 86(d) of such

5 Code) which is not includable in gross in6 come under section 86 of such Code.

7 (B) FAMILY INCOME.—The term ‘‘family

8 income’’ means, with respect to an individual,

9 the sum of the income for the individual and all

10 the other family members.

11 (C) FAMILY SIZE.—The family size to be

12 applied under this section, with respect to fam13 ily income, is the number of individuals in14 cluded in the family for purposes of coverage of

15 a BasiCare health benefit plan.

16 (D) TIMING OF DETERMINATION.—Income

17 shall be determined in accordance with one of

18 the following methods, at the option of the ap19 plicant, for coverage under this section:

20 (i) Multiplying by a factor of 4 the

21 family income of the applicant for the 3-

22 month period immediately preceding the

23 month in which the application for assist24 ance under BasiCare is made.
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1 (ii) Determining the family income of

2 the applicant for the month in which the

3 application for such assistance is made.

4 (j) EFFECTIVE DATE.—The provisions of this section

5 shall take effect on the effective date of the legislation de6 scribed in section 212(a) or 213(a) of this Act.

7 Subtitle D—Congressional Consid8 eration of Commission Rec9 ommendation

10 SEC. 241. RULES GOVERNING CONGRESSIONAL CONSIDER11 ATION.

12 (a) RULES OF HOUSE OF REPRESENTATIVES AND

13 SENATE.—This section is enacted by the Congress—

14 (1) as an exercise of the rulemaking power of

15 the House of Representatives and the Senate, re16 spectively, and as such is deemed a part of the rules

17 of each House, respectively, but applicable only with

18 respect to the procedure to be followed in that

19 House in the case of approval resolutions described

20 in subsection (b), and supersedes other rules only to

21 the extent that such rules are inconsistent therewith;

22 and

23 (2) with full recognition of the constitutional

24 right of either House to change the rules (so far as

25 relating to the procedure of that House) at any time,
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1 in the same manner and to the same extent as in

2 the case of any other rule of that House.

3 (b) TERMS OF THE RESOLUTION.—For purposes of

4 section 212(b), the term ‘‘approval resolution’’ means only

5 a joint resolution of the two Houses of the Congress, pro6 viding in—

7 (1) the matter after the resolving clause of

8 which is as follows: ‘‘That the Congress approves the

9 recommendations of the Commission on National

10 Health Care Access and Reform as submitted by the

11 Commission on llllllllllllll’’,

12 the blank space being filled in with the appropriate

13 date; and

14 (2) the title of which is as follows: ‘‘Joint Reso15 lution approving the recommendation of the Com16 mission on National Health Care Access and Re17 form’’.

18 (c) INTRODUCTION AND REFERRAL.—On the day on

19 which the recommendation of the Commission is transmit20 ted to the House of Representatives and the Senate, an

21 approval resolution with respect to such recommendation

22 shall be introduced (by request) in the House of Rep23 resentatives by the Majority Leader of the House, for him24 self and the Minority Leader of the House, or by Members

25 of the House designated by the Majority Leader of the
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1 House, for himself and the Minority Leader of the House,

2 or by Members of the House designated by the Majority

3 Leader and Minority Leader of the House; and shall be

4 introduced (by request) in the Senate by the Majority

5 Leader of the Senate, for himself and the Minority Leader

6 of the Senate, or by Members of the Senate designated

7 by the Majority Leader and Minority Leader of the Sen8 ate. If either House is not in session on the day on which

9 such recommendation is transmitted, the approval resolu10 tion with respect to such recommendation shall be intro11 duced in the House, as provided in the preceding sentence,

12 on the first day thereafter on which the House is in ses13 sion. The approval resolution introduced in the House of

14 Representatives and the Senate shall be referred to the

15 appropriate committees of each House.

16 (d) AMENDMENTS PROHIBITED.—No amendment to

17 an approval resolution shall be in order in either the

18 House of Representatives or the Senate; and no motion

19 to suspend the application of this subsection shall be in

20 order in either House, nor shall it be in order in either

21 House for the Presiding Officer to entertain a request to

22 suspend the application of this subsection by unanimous

23 consent.

24 (e) PERIOD FOR COMMITTEE AND FLOOR CONSIDER25 ATION.—
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1 (1) IN GENERAL.—Except as provided in para2 graph (2), if the committee or committees of either

3 House to which an approval resolution has been re4 ferred have not reported it at the close of the 45th

5 day after its introduction, such committee or com6 mittees shall be automatically discharged from fur7 ther consideration of the approval resolution and it

8 shall be placed on the appropriation calendar. A vote

9 on final passage of the approval resolution shall be

10 taken in each House on or before the close of the

11 45th day after the approval resolution is reported by

12 the committees or committee of that House to which

13 it was referred, or after such committee or commit14 tees have been discharged from further consideration

15 of the approval resolution. If prior to the passage by

16 one House of an approval resolution of that House,

17 that House receives the same approval resolution

18 from the other House then—

19 (A) the procedure in that House shall be

20 the same as if no approval resolution had been

21 received from the other House; but

22 (B) the vote on final passage shall be on

23 the approval resolution of the other House.

24 (2) COMPUTATION OF DAYS.—For purposes of

25 paragraph (1), in computing a number of days in ei-
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1 ther House, there shall be excluded any day on

2 which the House is not in session.

3 (f) FLOOR CONSIDERATION IN THE HOUSE OF REP4 RESENTATIVES.—

5 (1) MOTION TO PROCEED.—A motion in the

6 House of Representatives to proceed to the consider7 ation of an approval resolution shall be highly privi8 leged and not debatable. An amendment to the mo9 tion shall not be in order, nor shall it be in order

10 to move to reconsider the vote by which the motion

11 is agreed to or disagreed to.

12 (2) DEBATE.—Debate in the House of Rep13 resentatives on an approval resolution shall be lim14 ited to not more than 20 hours, which shall be di15 vided equally between those favoring and those op16 posing the bill or resolution. A motion further to

17 limit debate shall not be debatable. It shall not be

18 in order to move to recommit an approval resolution

19 or to move to reconsider the vote by which an ap20 proval resolution is agreed to or disagreed to.

21 (3) MOTION TO POSTPONE.—Motions to post22 pone, made in the House of Representatives with re23 spect to the consideration of an approval resolution,

24 and motions to proceed to the consideration of other

25 business, shall be decided without debate.
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1 (4) APPEALS.—All appeals from the decisions

2 of the Chair relating to the application of the Rules

3 of the House of Representatives to the procedure re4 lating to an approval resolution shall be decided

5 without debate.

6 (5) GENERAL RULES APPLY.—Except to the ex7 tent specifically provided in the preceding provisions

8 of this subsection, consideration of an approval reso9 lution shall be governed by the Rules of the House

10 of Representatives applicable to other bills and reso11 lutions in similar circumstances.

12 (g) FLOOR CONSIDERATION IN THE SENATE.—

13 (1) MOTION TO PROCEED.—A motion in the

14 Senate to proceed to the consideration of an ap15 proval resolution shall be privileged and not debat16 able. An amendment to the motion shall not be in

17 order, nor shall it be in order to move to reconsider

18 the vote by which the motion is agreed to or dis19 agreed to.

20 (2) GENERAL DEBATE.—Debate in the Senate

21 on an approval resolution, and all debatable motions

22 and appeals in connection therewith, shall be limited

23 to not more than 20 hours. The time shall be equally

24 divided between, and controlled by, the Majority

25 Leader and the Minority Leader or their designees.
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1 (3) DEBATE OF MOTIONS AND APPEALS.—De2 bate in the Senate on any debatable motion or ap3 peal in connection with an approval resolution shall

4 be limited to not more than 1 hour, to be equally di5 vided between, and controlled by, the mover and the

6 manager of the approval resolution, except that in

7 the event the manager of the approval resolution is

8 in favor of any such motion or appeal, the time in

9 opposition thereto, shall be controlled by the Minor10 ity Leader or his designee. Such leaders, or either of

11 them, may, from time under their control on the

12 passage of an approval resolution, allot additional

13 time to any Senator during the consideration of any

14 debatable motion or appeal.

15 (4) OTHER MOTIONS.—A motion in the Senate

16 to further limit debate is not debatable. A motion to

17 recommit an approval resolution is not in order.

18 (h) POINT OF ORDER REQUIRING SUPERMAJORITY

19 FOR MODIFICATIONS TO RECOMMENDATION ONCE AP20 PROVED.—

21 (1) IN GENERAL.—It shall not be in order in

22 the House of Representatives or the Senate to con23 sider any amendment to the provisions of the

24 BasiCare Health Access and Reform Act except as

25 provided in paragraph (2).
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1 (2) WAIVER.—The point of order described in

2 paragraph (1) may be waived or suspended in the

3 House of Representatives or the Senate only, by the

4 affirmative vote of three-fifths of the Members duly

5 chosen and sworn.

6 Subtitle E—Enforcement

7 Provisions

8 SEC. 251. ENFORCEMENT PROVISIONS FOR CARRIERS, PRO9 VIDERS, AND EMPLOYERS.

10 (a) IN GENERAL.—Chapter 47 of the Internal Reve11 nue Code of 1986 (relating to excise taxes on qualified

12 pension, etc. plans) is amended by striking section 5000

13 and section 5000A (as added by section 106) and inserting

14 the following new sections:

15 ‘‘SEC. 5000. FAILURE OF CARRIERS WITH RESPECT TO

16 BASICARE INSURANCE.

17 ‘‘(a) GENERAL RULE.—In the case of any carrier of18 fering any health benefit plan, there is hereby imposed a

19 tax on such carrier if such plan fails to qualify as a

20 Basicare health benefit plan.

21 ‘‘(b) AMOUNT OF TAX.—

22 ‘‘(1) IN GENERAL.—The amount of tax imposed

23 by subsection (a) by reason of 1 or more failures

24 during a taxable year shall be equal to 50 percent

25 of the gross premiums received during such taxable
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1 year with respect to all health benefit plans issued

2 by the carrier on whom such tax is imposed.

3 ‘‘(2) GROSS PREMIUMS.—For purposes of para4 graph (1), gross premiums shall include any consid5 eration received with respect to any health benefit

6 contract.

7 ‘‘(3) CONTROLLED GROUPS.—For purposes of

8 paragraph (1)—

9 ‘‘(A) CONTROLLED GROUP OF CORPORA10 TIONS.—All corporations which are members of

11 the same controlled group of corporations shall

12 be treated as 1 carrier. For purposes of the pre13 ceding sentence, the term ‘controlled group of

14 corporations’ has the meaning given to such

15 term by section 1563(a), except that—

16 ‘‘(i) ‘more than 50 percent’ shall be

17 substituted for ‘at least 80 percent’ each

18 place it appears in section 1563(a)(1), and

19 ‘‘(ii) the determination shall be made

20 without regard to subsections (a)(4) and

21 (e)(3)(C) of section 1563.

22 ‘‘(B) PARTNERSHIPS, PROPRIETORSHIPS,

23 ETC., WHICH ARE UNDER COMMON CONTROL.—

24 Under regulations prescribed by the Secretary,

25 all trades or businesses (whether or not incor-
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1 porated) which are under common control shall

2 be treated as 1 carrier. The regulations pre3 scribed under this subparagraph shall be based

4 on principles similar to the principles which

5 apply in the case of subparagraph (A).

6 ‘‘(c) LIMITATION ON TAX.—

7 ‘‘(1) TAX NOT TO APPLY WHERE FAILURE NOT

8 DISCOVERED EXERCISING REASONABLE DILI9 GENCE.—No tax shall be imposed by subsection (a)

10 with respect to any failure for which it is established

11 to the satisfaction of the Secretary that the carrier

12 on whom the tax is imposed did not know, and exer13 cising reasonable diligence would not have known,

14 that such failure existed.

15 ‘‘(2) TAX NOT TO APPLY WHERE FAILURES

16 CORRECTED WITHIN 30 DAYS.—No tax shall be im17 posed by subsection (a) with respect to any failure

18 if—

19 ‘‘(A) such failure was due to reasonable

20 cause and not to willful neglect, and

21 ‘‘(B) such failure is corrected during the

22 30-day period beginning on the 1st date any of

23 the carriers on whom the tax is imposed knew,

24 or exercising reasonable diligence would have

25 known, that such failure existed.
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1 ‘‘(3) WAIVER BY SECRETARY.—In the case of a

2 failure which is due to reasonable cause and not to

3 willful neglect, the Secretary may waive part or all

4 of the tax imposed by subsection (a) to the extent

5 that the payment of such tax would be excessive rel6 ative to the failure involved.

7 ‘‘(d) COMPLIANCE DETERMINATION.—

8 ‘‘(1) IN GENERAL.—The Commission on Na9 tional Health Care Access and Reform (hereafter in

10 this subsection referred to as the ‘Commission’ shall

11 determine whether any health benefit plan qualifies

12 as a BasiCare health benefit plan.

13 ‘‘(2) STATE AGREEMENTS.—

14 ‘‘(A) IN GENERAL.—The Commission may,

15 in its discretion, enter into an agreement with

16 any State to provide for the State to make the

17 initial determination described in paragraph

18 (1).

19 ‘‘(B) STANDARDS.—An agreement may be

20 entered into under subparagraph (A) only if—

21 ‘‘(i) the chief executive officer of the

22 State requests such agreement be entered

23 into,

24 ‘‘(ii) the Commission determines that

25 the State agreement will apply to substan-
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1 tially all health benefit plans issued in such

2 State, and

3 ‘‘(iii) the Commission determines that

4 the application of the State agreement will

5 carry out the purposes of this section.

6 ‘‘(3) TERMINATION.—The Commission shall

7 terminate any agreement if the Commission deter8 mines that the application of the State agreement

9 ceases to carry out the purposes of this section.

10 ‘‘(e) DEFINITIONS.—For purposes of this section the

11 terms ‘health benefit plan’, ‘BasiCare health benefit plan’,

12 and ‘carrier’ shall have the same meanings given such

13 terms under section 271 of the BasiCare Health Access

14 and Cost Control Act.

15 ‘‘SEC. 5000A. FAILURE OF PROVIDERS WITH RESPECT TO

16 BASICARE INSURANCE.

17 ‘‘(a) GENERAL RULE.—There is hereby imposed a

18 tax on the failure of any person who provides any service

19 under a BasiCare health benefit plan to comply with the

20 requirements of section 220 of the BasiCare Health Ac21 cess and Cost Control Act.

22 ‘‘(b) AMOUNT OF TAX.—

23 ‘‘(1) IN GENERAL.—The amount of tax imposed

24 by subsection (a) by reason of 1 or more failures

25 during a taxable year shall be equal to 50 percent
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1 of the gross income received during such taxable

2 year with respect to all services provided by the per3 son on whom such tax is imposed.

4 ‘‘(2) CONTROLLED GROUPS.—For purposes of

5 paragraph (1)—

6 ‘‘(A) CONTROLLED GROUP OF CORPORA7 TIONS.—All corporations which are members of

8 the same controlled group of corporations shall

9 be treated as 1 person. For purposes of the pre10 ceding sentence, the term ‘controlled group of

11 corporations’ has the meaning given to such

12 term by section 1563(a), except that—

13 ‘‘(i) ‘more than 50 percent’ shall be

14 substituted for ‘at least 80 percent’ each

15 place it appears in section 1563(a)(1), and

16 ‘‘(ii) the determination shall be made

17 without regard to subsections (a)(4) and

18 (e)(3)(C) of section 1563.

19 ‘‘(B) PARTNERSHIPS, PROPRIETORSHIPS,

20 ETC., WHICH ARE UNDER COMMON CONTROL.—

21 Under regulations prescribed by the Secretary,

22 all trades or business (whether or not incor23 porated) which are under common control shall

24 be treated as 1 person. The regulations pre25 scribed under this subparagraph shall be based
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1 on principles similar to the principles which

2 apply in the case of subparagraph (A).

3 ‘‘(c) LIMITATION ON TAX.—

4 ‘‘(1) TAX NOT TO APPLY WHERE FAILURE NOT

5 DISCOVERED EXERCISING REASONABLE DILI6 GENCE.—No tax shall be imposed by subsection (a)

7 with respect to any failure for which it is established

8 to the satisfaction of the Secretary that the person

9 on whom the tax is imposed did not know, and exer10 cising reasonable diligence would not have known,

11 that such failure existed.

12 ‘‘(2) TAX NOT TO APPLY WHERE FAILURES

13 CORRECTED WITHIN 30 DAYS.—No tax shall be im14 posed by subsection (a) with respect to any failure

15 if—

16 ‘‘(A) such failure was due to reasonable

17 cause and not to willful neglect, and

18 ‘‘(B) such failure is corrected during the

19 30-day period beginning on the 1st date any of

20 the persons on whom the tax is imposed knew,

21 or exercising reasonable diligence would have

22 known, that such failure existed.

23 ‘‘(3) WAIVER BY SECRETARY.—In the case of a

24 failure which is due to reasonable cause and not to

25 willful neglect, the Secretary may waive part or all
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1 of the tax imposed by subsection (a) to the extent

2 that the payment of such tax would be excessive rel3 ative to the failure involved.

4 ‘‘(d) COMPLIANCE DETERMINATION.—

5 ‘‘(1) IN GENERAL.—The Commission on Na6 tional Health Care Access and Reform (hereafter in

7 this subsection referred to as the ‘Commission’ shall

8 determine compliance with the requirements of sec9 tion 220 of the BasiCare Health Access and Cost

10 Control Act.

11 ‘‘(2) STATE AGREEMENTS.—

12 ‘‘(A) IN GENERAL.—The Commission may,

13 in its discretion, enter into an agreement with

14 any State to provide for the State to make the

15 initial determination described in paragraph

16 (1).

17 ‘‘(B) STANDARDS.—An agreement may be

18 entered into under subparagraph (A) only if—

19 ‘‘(i) the chief executive officer of the

20 State requests such agreement be entered

21 into,

22 ‘‘(ii) the Commission determines that

23 the State agreement will apply to substan24 tially all providers of services under health

25 benefit plans issued in such State, and
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1 ‘‘(iii) the Commission determines that

2 the application of the State agreement will

3 carry out the purposes of this section.

4 ‘‘(3) TERMINATION.—The Commission shall

5 terminate any agreement if the Commission deter6 mines that the application of the State agreement

7 ceases to carry out the purposes of this section.

8 ‘‘(e) DEFINITIONS.—For purposes of this section the

9 terms ‘health benefit plan’ and ‘BasiCare health benefit

10 plan’ shall have the same meanings given such terms

11 under section 271 of the BasiCare Health Access and Cost

12 Control Act.

13 ‘‘SEC. 5000B. FAILURE OF EMPLOYERS WITH RESPECT TO

14 BASICARE INSURANCE.

15 ‘‘(a) GENERAL RULE.—There is hereby imposed a

16 tax on the failure of any person to comply with the re17 quirements of sections 217 and 219 of the BasiCare

18 Health Access and Cost Control Act with respect to any

19 full-time employee of the person.

20 ‘‘(b) AMOUNT OF TAX.—

21 ‘‘(1) IN GENERAL.—The amount of the tax im22 posed by subsection (a) on any failure with respect

23 to a full-time employee shall be $50 for each day in

24 the noncompliance period with respect to such fail25 ure.
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1 ‘‘(2) NONCOMPLIANCE PERIOD.—For purposes

2 of this section, the term ‘noncompliance period’

3 means, with respect to any failure, the period—

4 ‘‘(A) beginning on the date such failure

5 first occurs, and

6 ‘‘(B) ending on the date such failure is

7 corrected.

8 ‘‘(3) CORRECTION.—A failure of a person to

9 comply with the requirements of sections 217 and

10 219 of the BasiCare Health Access and Cost Control

11 Act with respect to any full-time employee of the

12 person shall be treated as corrected if—

13 ‘‘(A) such failure is retroactively undone to

14 the extent possible, and

15 ‘‘(B) the employee is placed in a financial

16 position which is as good as such employee

17 would have been in had such failure not oc18 curred.

19 For purposes of applying subparagraph (B), the em20 ployee shall be treated as if the employee had elected

21 the most favorable coverage in light of the expenses

22 incurred since the failure first occurred.

23 ‘‘(c) LIMITATIONS ON AMOUNT OF TAX.—

24 ‘‘(1) TAX NOT TO APPLY WHERE FAILURE NOT

25 DISCOVERED EXERCISING REASONABLE DILI-
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1 GENCE.—No tax shall be imposed by subsection (a)

2 on any failure during any period for which it is es3 tablished to the satisfaction of the Secretary that

4 none of the persons referred to in subsection (d)

5 knew, or exercising reasonable diligence would have

6 known, that such failure existed.

7 ‘‘(2) TAX NOT TO APPLY TO FAILURES COR8 RECTED WITHIN 30 DAYS.—No tax shall be imposed

9 by subsection (a) on any failure if—

10 ‘‘(A) such failure was due to reasonable

11 cause and not to willful neglect, and

12 ‘‘(B) such failure is corrected during the

13 30-day period beginning on the first date any of

14 the persons referred to in subsection (d) knew,

15 or exercising reasonable diligence would have

16 known, that such failure existed.

17 ‘‘(3) WAIVER BY SECRETARY.—In the case of a

18 failure which is due to reasonable cause and not to

19 willful neglect, the Secretary may waive part or all

20 of the tax imposed by subsection (a) to the extent

21 that the payment of such tax would be excessive rel22 ative to the failure involved.

23 ‘‘(d) LIABILITY FOR TAX.—
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1 ‘‘(1) IN GENERAL.—Except as otherwise pro2 vided in this subsection, the following shall be liable

3 for the tax imposed by subsection (a) on a failure:

4 ‘‘(A) In the case of a BasiCare health ben5 efit plan other than a multiemployer plan, the

6 employer.

7 ‘‘(B) In the case of a multiemployer plan,

8 the plan.

9 ‘‘(C) Each person who is responsible (other

10 than in a capacity as an employee) for admin11 istering or providing benefits under the

12 BasiCare health benefit plan and whose act or

13 failure to act caused (in whole or in part) the

14 failure.

15 ‘‘(2) SPECIAL RULES FOR PERSONS DESCRIBED

16 IN PARAGRAPH (1)(C).—A person described in sub17 paragraph (C) (and not in subparagraphs (A) and

18 (B)) of paragraph (1) shall be liable for the tax im19 posed by subsection (a) on any failure only if such

20 person assumed (under a legally enforceable written

21 agreement) responsibility for the performance of the

22 act to which the failure relates.

23 ‘‘(e) DEFINITIONS.—For purposes of this section, the

24 terms ‘BasiCare health benefit plan’ and ‘full-time em25 ployee’ shall have the same meanings given such terms
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1 under section 271 of the BasiCare Health Access and Cost

2 Control Act.’’.

3 (b) CLERICAL AMENDMENTS.—The table of sections

4 for such chapter 47 is amended by adding at the end

5 thereof the following new items:

‘‘Sec. 5000. Failure of carriers with respect to BasiCare insurance.

‘‘Sec. 5000A. Failure of providers with respect to BasiCare insurance.

‘‘Sec. 5000B. Failure of employers with respect to BasiCare insurance.’’.

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

7 this section shall take effect on the effective date of the

8 legislation described in section 212(a) or 213(a) of this

9 Act.

10 SEC. 252. ENFORCEMENT PROVISION FOR INDIVIDUALS.

11 (a) IN GENERAL.—Subsection (d) of section 151 of

12 the Internal Revenue Code of 1986 (relating to allowance

13 of deductions for personal exemptions) is amended by add14 ing at the end thereof the following new paragraph:

15 ‘‘(5) EXEMPTION AMOUNT DISALLOWED FOR

16 UNINSURED INDIVIDUALS.—The exemption amount

17 for any individual for such individual’s taxable year

18 shall be zero, unless the policy number of the

19 BasiCare health benefit plan (as defined in section

20 271 of the BasiCare Health Access and Cost Control

21 Act) for such individual is included in the return
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1 claiming such exemption amount for such individ2 ual.’’.

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

4 this section shall take effect on the effective date of the

5 legislation described in section 212(a) or 213(a) of this

6 Act.

7 Subtitle F—Financial Provisions

8 SEC. 261. BASICARE TRUST FUND.

9 (a) TRUST FUND ESTABLISHED.—There is hereby

10 created on the books of the Treasury of the United States

11 a trust fund to be known as the BasiCare Trust Fund

12 (hereafter in this section referred to as the ‘‘Trust

13 Fund’’). The Trust Fund shall consist of such gifts and

14 bequests as may be made and such amounts as may be

15 deposited in, appropriated to, or credited to such Trust

16 Fund as provided in this section.

17 (b) TRANSFER OF AMOUNTS EQUIVALENT TO CER18 TAIN TAXES.—

19 (1) IN GENERAL.—There are hereby appro20 priated to the Trust Fund amounts equivalent to

21 100 percent of—

22 (A) 1 percent of the wages (as defined in

23 section 3121 of the Internal Revenue Code of

24 1986) paid on or after the first day of the cal25 endar year following the date of the enactment
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1 of this Act, and reported to the Secretary of the

2 Treasury or the Secretary’s delegate pursuant

3 to subtitle F of the Internal Revenue Code of

4 1986, and

5 (B) 1 percent of the amount of self-em6 ployment income (as defined in section 1402 of

7 the Internal Revenue Code of 1986) reported to

8 the Secretary of the Treasury or the Secretary’s

9 delegate on tax returns under subtitle F of the

10 Internal Revenue Code of 1986 for any taxable

11 year beginning on or after the first day of the

12 calendar year following the date of the enact13 ment of this Act.

14 (2) PENALTIES.—There are hereby appro15 priated to the Trust Fund amounts equivalent to

16 100 percent of the taxes imposed under sections

17 5000, 5000A, and 5000B of the Internal Revenue

18 Code of 1986.

19 (3) ADDITIONAL REVENUES.—There are hereby

20 appropriated to the Trust Fund amounts equivalent

21 to the additional revenues received in the Treasury

22 as the result of the amendments made by section

23 262 of this Act.

24 (4) TRANSFERS BASED ON ESTIMATES.—The

25 amounts appropriated by paragraphs (1), (2), and
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1 (3) shall be transferred from time to time (not less

2 frequently than monthly) from the general fund in

3 the Treasury to the Trust Fund, such amounts to be

4 determined on the basis of estimates by the Sec5 retary of the Treasury of the taxes, specified in such

6 subparagraphs, paid to or deposited into the Treas7 ury; and proper adjustments shall be made in

8 amounts subsequently transferred to the extent prior

9 estimates were in excess of or were less than the

10 taxes specified in such subparagraphs.

11 (c) TRANSFER OF ADDITIONAL FUNDS.—

12 (1) STATE SHARE OF MEDICAID FUNDING.—

13 (A) IN GENERAL.—On a fiscal year basis,

14 each State shall remit to the Trust Fund the

15 State’s medicaid share for that fiscal year.

16 (B) STATE’S MEDICAID SHARE.—

17 (i) IN GENERAL.—With respect to any

18 fiscal year beginning after the applicable

19 effective date of the legislation described in

20 section 212(a) or 213(a) of this Act, a

21 State’s medicaid share shall equal the

22 amount such State expended under title

23 XIX of the Social Security Act for the fis24 cal year preceding such applicable effective

25 date for benefits equal to the BasiCare
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1 benefits package, as determined by the

2 Commission, in consultation with the Sec3 retary of Health and Human Services and

4 State medicaid authorities. Such amount

5 shall be adjusted each fiscal year by the in6 crease in the Consumer Price Index (as de7 termined by the Department of Labor) for

8 the previous fiscal year.

9 (ii) AMOUNT UPON COMPLETE ASSIMI10 LATION OF MEDICAID.—The amount other11 wise determined under clause (i) for the

12 fiscal year beginning after the applicable

13 effective date of the legislation described in

14 section 213(h) of this Act shall be in15 creased by the amount such State ex16 pended under title XIX of the Social Secu17 rity Act for the fiscal year preceding such

18 applicable effective date.

19 (C) COMPLIANCE.—The requirements of

20 this paragraph shall be subject to the provisions

21 of section 1904 of the Social Security Act.

22 (2) FEDERAL SHARE OF MEDICAID FUNDING.—

23 There are hereby appropriated for each fiscal year

24 described in paragraph (1) the comparable Federal

25 share expended under title XIX of the Social Secu-
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1 rity Act for such fiscal year, as adjusted under para2 graph (1)(B)(i).

3 (3) MEDICARE FUNDS.—All amounts, not oth4 erwise obligated, that remain in the Federal Hos5 pital Insurance Trust Fund and the Federal Supple6 mental Medical Insurance Trust Fund on the appli7 cable effective date of the legislation described in

8 section 213(i) of this Act shall be transferred to the

9 Trust Fund.

10 (4) ADDITIONAL FEDERAL FUNDS.—There are

11 hereby appropriated to the Trust Fund for each fis12 cal year beginning after the applicable effective date

13 of the legislation described in 213(j) of this Act,

14 amounts equal to the amounts appropriated with re15 spect to—

16 (A) the veterans health care program

17 under chapter 17 of title 38, United States

18 Code,

19 (B) the Civilian Health and Medical Pro20 gram of the Uniformed Services (CHAMPUS),

21 as defined in section 1073(4) of title 10, United

22 States Code,

23 (C) the Indian health service program

24 under the Indian Health Care Improvement Act

25 (25 U.S.C. 1601 et seq.), and
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1 (D) the Federal employees program under

2 chapter 89 of title 5, United States Code,

3 as in effect on the day before such applicable effec4 tive date, as adjusted under paragraph (1)(B)(i).

5 (5) APPROPRIATION OF ADDITIONAL SUMS.—

6 There are hereby authorized to be appropriated to

7 the Trust Fund such additional sums as may be re8 quired to make expenditures referred to in sub9 section (e).

10 (e) EXPENDITURES.—

11 (1) LOW-INCOME ASSISTANCE.—There are here12 by authorized and appropriated such sums as are

13 necessary in each fiscal year for the expenses of the

14 program described in section 241.

15 (2) ADMINISTRATIVE EXPENSES.—There are

16 hereby appropriated such sums as are authorized

17 under section 203 for the administrative and other

18 expenses of the Commission for each fiscal year.

19 (3) TITLE I EXPENDITURES.—Amounts in the

20 Trust Fund shall be available, as provided in appro21 priation Acts, for authorized expenditures described

22 in—

23 (A) sections 330A(h) and 330B(h) of the

24 Public Health Service Act, as added by sections

25 111 and 112 of this Act, and
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1 (B) sections 150 and 151(g) of this Act.

2 (e) INVESTMENT OF TRUST FUND.—

3 (1) IN GENERAL.—It shall be the duty of the

4 Secretary of the Treasury to invest such portion of

5 the Trust Fund as is not, in the Secretary’s judg6 ment, required to meet current withdrawals. Such

7 investments may be made only in interest-bearing

8 obligations of the United States or in obligations

9 guaranteed as to both principal and interest by the

10 United States. For such purpose, such obligations

11 may be acquired—

12 (A) on original issue at the issue price, or

13 (B) by purchase of outstanding obligations

14 at the market price.

15 The purposes for which obligations of the United

16 States may be issued under chapter 31 of title 31,

17 of the United States Code, are hereby extended to

18 authorize the issuance at par of special obligations

19 exclusively to the Trust Fund. Such special obliga20 tions shall bear interest at a rate equal to the aver21 age rate of interest, computed as to the end of the

22 calendar month next preceding the date of such

23 issue, borne by all marketable interest-bearing obli24 gations of the United States then forming a part of

25 the Public Debt; except that where such average rate
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1 is not a multiple of one-eighth of 1 percent, the rate

2 of interest of such special obligations shall be the

3 multiple of one-eighth of 1 percent next lower than

4 such average rate. Such special obligations shall be

5 issued only if the Secretary of the Treasury deter6 mines that the purchase of other interest-bearing ob7 ligations of the United States, or of obligations

8 guaranteed as to both principal and interest by the

9 United States on original issue or at the market

10 price, is not in the public interest.

11 (2) SALE OF OBLIGATION.—Any obligation ac12 quired by the Trust Fund (except special obligations

13 issued exclusively to the Trust Fund) may be sold by

14 the Secretary of the Treasury at the market price,

15 and such special obligations may be redeemed at par

16 plus accrued interest.

17 (3) CREDITS TO TRUST FUND.—The interest

18 on, and the proceeds from the sale or redemption of,

19 any obligations held in the Trust Fund shall be

20 credited to and form a part of the Trust Fund.

21 (f) REPORT TO CONGRESS.—It shall be the duty of

22 the Secretary of the Treasury to hold the Trust Fund,

23 and (after consultation with the Commission) to report to

24 the Congress each year on the financial condition and the

25 results of the operations of the Trust Fund during the
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1 preceding fiscal year and on its expected condition and op2 erations during the next fiscal year. Such report shall be

3 printed as both a House and Senate document of the ses4 sion of the Congress to which the report is made.

5 (g) CONFORMING AMENDMENT.—Paragraph (4) of

6 section 201(a) of the Social Security Act (42 U.S.C.

7 401(a)) is amended by inserting ‘‘and section 261(1)(1)

8 of the BasiCare Health Access and Cost Control Act’’ be9 fore the end period.

10 SEC. 262. TAX TREATMENT OF COSTS OF BASICARE INSUR11 ANCE.

12 (a) TAX EXCLUSIONS FOR EMPLOYER-PROVIDED

13 HEALTH INSURANCE.—Section 106 of the Internal Reve14 nue Code of 1986 (relating to contributions by employer

15 to accident and health plans) is amended by striking ‘‘an

16 accident or health plan’’ and inserting ‘‘a BasiCare health

17 benefit plan (as defined in section 271(1) of the BasiCare

18 Health Access and Cost Control Act)’’.

19 (b) BUSINESS EXPENSE DEDUCTION FOR HEALTH

20 INSURANCE.—Section 162 of the Internal Revenue Code

21 of 1986 (relating to trade or business expenses) is amend22 ed by redesignating subsection (m) as subsection (n) and

23 by inserting after subsection (l) the following new sub24 section:
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1 ‘‘(m) GROUP HEALTH PLANS.—The expenses paid or

2 incurred by an employer for a group health plan shall not

3 be allowed as a deduction under this section unless the

4 plan qualifies as a BasiCare health benefit plan (as de5 fined in section 271(1) of the BasiCare Health Access and

6 Cost Control Act).’’.

7 (c) RULES RELATING TO DEDUCTIONS FOR INDIVID8 UALS.—

9 (1) DEDUCTION LIMITED TO BASICARE.—Sub10 paragraph (C) of section 213(d)(1) of such Code

11 (defining medical care) is amended by striking ‘‘for

12 insurance’’ and inserting ‘‘for a BasiCare health

13 benefit plan (as defined in section 271(1) of the

14 BasiCare Health Access and Cost Control Act).’’.

15 (2) FULL DEDUCTION ALLOWED.—Section 213

16 of such Code (relating to medical, dental, etc., ex17 penses) is amended by adding at the end the follow18 ing new subsection:

19 ‘‘(g) SPECIAL RULES FOR BASICARE PREMIUM EX20 PENSES.—

21 ‘‘(1) IN GENERAL.—The deduction under sub22 section (a) shall be determined without regard to the

23 limitation based on adjusted gross income with re24 spect to amounts paid for premiums for coverage

25 under a Basicare health benefit plan (as defined in
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1 section 271(1) of the BasiCare Health Access and

2 Cost Control Act).

3 ‘‘(2) LIMIT.—The amount allowed as a deduc4 tion under paragraph (1) with respect to the cost of

5 providing coverage for any individual shall be re6 duced by the aggregate amount of payments to, or

7 on behalf of, such individual by—

8 ‘‘(A) BasiCare Assist under section 232 of

9 the BasiCare Health Access and Cost Control

10 Act, and

11 ‘‘(B) all other entities (including any em12 ployer or governmental agency),

13 for coverage of such individual under a BasiCare

14 health benefit plan (as so defined).’’

15 (3) DEDUCTION ALLOWED AGAINST GROSS IN16 COME.—Section 62(a) of such Code (defining ad17 justed gross income) is amended by inserting after

18 paragraph (14) the following new paragraph:

19 ‘‘(15) DEDUCTION FOR BASICARE PREMIUMS.—

20 The deduction allowed under section 213(g).’’

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

22 this section shall apply with respect to any taxable year

23 beginning after the applicable effective date of the legisla24 tion described in section 212(a) or 213(a) of this Act.
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1 Subtitle G—Definitions

2 SEC. 271. DEFINITIONS.

3 For purposes of this title:

4 (1) BASICARE HEALTH BENEFIT PLAN.—The

5 term ‘‘BasiCare health benefit plan’’ means a health

6 benefit plan which—

7 (A) offers the BasiCare benefits package

8 described in section 214;

9 (B) applies the BasiCare base premium

10 rate described in section 216; and

11 (C) meets the requirements of this title.

12 (2) HEALTH BENEFIT PLAN AND OTHER DEFI13 NITIONS RELATING TO HEALTH PLANS.—For pur14 poses of this section:

15 (A) HEALTH BENEFIT PLAN.—

16 (i) IN GENERAL.—The term ‘‘health

17 benefit plan’’ means any hospital or medi18 cal expense incurred policy or certificate,

19 hospital or medical service plan contract,

20 health maintenance subscriber contract,

21 other employee welfare plan (as defined in

22 the Employee Retirement Income Security

23 Act of 1964), or any other health insur24 ance arrangement, and includes an employ-
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1 ment-related reinsurance plan (as defined

2 in paragraph (3)).

3 (ii) EXCLUSIONS.—The term ‘health

4 benefit plan’ does not include—

5 (I) accident-only, credit, dental,

6 or disability income insurance,

7 (II) coverage issued as a supple8 ment to liability insurance,

9 (III) worker’s compensation or

10 similar insurance, or

11 (IV) automobile medical-payment

12 insurance;

13 that is offered by a carrier.

14 (B) REINSURANCE PLAN.—The term ‘‘re15 insurance plan’’ means any reinsurance or simi16 lar mechanism that underwrites a portion of the

17 risk for a health benefit plan.

18 (C) SELF-INSURED HEALTH BENEFIT

19 PLAN.—The term ‘‘self-insured health benefit

20 plan’’ means a health benefit plan in which an

21 employment-related group assumes the under22 writing risk for the plan (whether or not there

23 is any reinsurance or similar mechanism to un24 derwrite a portion of that risk).
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1 (3) CARRIER; HEALTH MAINTENANCE ORGANI2 ZATION; AND OTHER DEFINITIONS RELATING TO

3 CARRIERS.—For purposes of this title:

4 (A) CARRIER.—The term ‘‘carrier’’ means

5 any person that offers a health benefit plan,

6 whether through insurance or otherwise, includ7 ing a licensed insurance company, a prepaid

8 hospital or medical service plan, a health main9 tenance organization, a self-insurer carrier, a

10 reinsurance carrier, and a multiple small em11 ployer welfare arrangement (a combination of

12 small employers associated for the purpose of

13 providing health benefit plan coverage for their

14 employees).

15 (B) HEALTH MAINTENANCE ORGANIZA16 TION.—The term ‘‘health maintenance organi17 zation’’ has the meaning given the term ‘eligible

18 organization’ in section 1876(b) of the Social

19 Security Act, as in effect on the date of enact20 ment of this Act.

21 (C) REINSURANCE CARRIER.—The term

22 ‘‘reinsurance carrier’’ means the entity assum23 ing responsibility for underwriting under an

24 employment-related reinsurance plan, but does
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1 not include a carrier insofar as it directly offers

2 a health benefit plan.

3 (D) SELF-INSURER CARRIER.—The term

4 ‘‘self-insurer carrier’’ means a carrier that is

5 not a licensed insurance company, a prepaid

6 hospital or medical service plan, or a health

7 maintenance organization, that offers a health

8 benefit plan directly with respect to an employ9 ment-related group.

10 (4) GENERAL DEFINITIONS.—For purposes of

11 this title:

12 (A) APPLICABLE REGULATORY AUTHOR13 ITY.—The term ‘‘applicable regulatory author14 ity’’ means, with respect to a health benefit

15 plan offered in a State, the State commissioner

16 or superintendent of insurance or other State

17 authority responsible for regulation of health in18 surance.

19 (B) COMMUNITY.—The term ‘‘community’’

20 means a geographic area that encompasses at

21 least—

22 (i) one or more adjacent metropolitan

23 statistical areas (as defined by the Com24 mission, in consultation with the Bureau of

25 the Census); or
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1 (ii) the total remaining area within a

2 State not otherwise included in a geo3 graphic area described under clause (i).

4 (C) FULL-TIME EMPLOYEE.—The term

5 ‘‘full-time employee’’ means, with respect to an

6 employer, an employee who normally performs

7 on a monthly basis at least 30 hours of service

8 per week for such employer.

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