I 

114TH CONGRESS 

1ST SESSION H. R. 2869 

To amend title XXVII of the Public Health Service Act to permit cooperative 

governing of public entity health benefits through local governments 

in secondary States. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 24, 2015 

Mr. MARCHANT (for himself, Mr. THORNBERRY, and Mr. OLSON) introduced 

the following bill; which was referred to the Committee on Energy and 

Commerce 

A BILL 

To amend title XXVII of the Public Health Service Act 

to permit cooperative governing of public entity health 

benefits through local governments in secondary States. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Local and Municipal 

5 Health Care Choice Act of 2015’’. 

6 SEC. 2. COOPERATIVE GOVERNING OF PUBLIC ENTITY 

7 GROUP HEALTH COVERAGE. 

8 Title XXVII of the Public Health Service Act (42 

9 U.S.C. 300gg et seq.) is amended— 


SSpencer on DSK4SPTVN1PROD with BILLS
2 

•HR 2869 IH

1 (1) by redesignating the section 2794 (42 

2 U.S.C. 300gg–95) relating to uniform fraud and 

3 abuse referral format as section 2795; and 

4 (2) by adding at the end the following new sec5 tion: 

6 ‘‘SEC. 2796. AUTHORITY TO OFFER PUBLIC ENTITY GROUP 

7 HEALTH COVERAGE TO LOCAL GOVERN8 MENTS IN A SECONDARY STATE. 

9 ‘‘(a) IN GENERAL.—A local government in a sec10 ondary State (as defined in subsection (i)(7)) may provide 

11 group health coverage to its officers, employees, or retirees 

12 (and their dependents) through a local government em13 ployee health benefits pool or program authorized under 

14 the laws of a primary State, subject to the provisions of 

15 this section. 

16 ‘‘(b) ELIGIBILITY FOR MULTISTATE ACTIVITY.—A 

17 local government employee health benefits pool or program 

18 shall be eligible to offer group health coverage to officials, 

19 employees, and retirees (and their dependents) of a local 

20 government located in a secondary State through an 

21 interlocal agreement with such local government, or as ap22 proved by an applicable State authority in such secondary 

23 State, unless— 

24 ‘‘(1) in the case of a pool or program that pri25 marily serves municipal officers, employees, or retirVerDate Sep 11 2014 00:42 Jun 30, 2015 Jkt 049200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2869.IH H2869

SSpencer on DSK4SPTVN1PROD with BILLS
3 

•HR 2869 IH

1 ees (and their dependents), an objection is made to 

2 the offering of such coverage by the municipal 

3 league or association located in the secondary State 

4 within 90 days of the date on which the authority 

5 is granted or an interlocal agreement is executed; or 

6 ‘‘(2) in the case of a pool or program that pri7 marily serves county officers, employees, retirees 

8 (and their dependents), an objection is made to the 

9 offering of such coverage by the county association 

10 located in the secondary State within 90 days of the 

11 date on which the authority is granted or an 

12 interlocal agreement is executed. 

13 ‘‘(c) APPLICATION OF COVERED LAWS OF PRIMARY

14 STATE.—The covered laws (as defined in subsection 

15 (i)(2)) of the primary State shall apply to group health 

16 coverage offered by a local government employee health 

17 benefits pool or program in the primary State and in any 

18 secondary State, but only if the coverage and the pool or 

19 program comply with the conditions of this section with 

20 respect to the offering of coverage in any secondary State. 

21 ‘‘(d) LIMITED APPLICATION OF SECONDARY STATE

22 LAWS.— 

23 ‘‘(1) IN GENERAL.—Except as provided in this 

24 section, a local government employee health benefits 

25 pool or program that offers group health coverage in 


SSpencer on DSK4SPTVN1PROD with BILLS
4 

•HR 2869 IH

1 a secondary State to the officers, employees, or retir2 ees (and their dependents) of a local government lo3 cated in such secondary State, is exempt from any 

4 covered laws of the secondary State (and any rules, 

5 regulations, agreements, or orders sought or issued 

6 by such State under or related to such covered 

7 laws). 

8 ‘‘(2) SECONDARY STATE AUTHORITY.—A sec9 ondary State may require a local government em10 ployee health benefits pool or program to do any or 

11 all of the following: 

12 ‘‘(A) REGISTRATION.—To register with an 

13 applicable State authority in such State with 

14 jurisdiction over local government employee 

15 health benefits pools or programs and designate 

16 such authority as its agent solely for the pur17 pose of receiving service of legal documents or 

18 process. 

19 ‘‘(B) DOCUMENTATION.—To file with an 

20 applicable state authority in such State— 

21 ‘‘(i) a written intent to do business in 

22 that State; 

23 ‘‘(ii) copies of the membership or 

24 interlocal agreements entered into between 

25 the local government employee health beneVerDate Sep 11 2014 00:42 Jun 30, 2015 Jkt 049200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2869.IH H2869

SSpencer on DSK4SPTVN1PROD with BILLS
5 

•HR 2869 IH

1 fits pool or program and a local govern2 ment of that State; and 

3 ‘‘(iii) copies of annual audited finan4 cial statements of the local government 

5 employee health benefits pool or program 

6 filed with the primary State. 

7 ‘‘(C) COMPLIANCE WITH INJUNCTIONS.— 

8 To comply with an injunction issued by a court 

9 of competent jurisdiction, upon a petition by an 

10 applicable State authority in such State alleging 

11 that the pool or program is in hazardous finan12 cial condition. 

13 ‘‘(D) COMPLIANCE WITH STATE FRAUD

14 AND ABUSE LAWS.—To comply with any State 

15 law regarding fraud and abuse, except that if 

16 the State seeks an injunction regarding the con17 duct described in this subparagraph, such in18 junction must be obtained from a court of com19 petent jurisdiction. 

20 ‘‘(E) COMPLIANCE WITH STATE UNFAIR

21 CLAIMS SETTLEMENT PRACTICES LAWS.—To 

22 comply with any State law regarding unfair 

23 claims settlement practices. 

24 ‘‘(3) LIMITATIONS ON SECONDARY STATE AU25 THORITY.—If a local government employee health 


SSpencer on DSK4SPTVN1PROD with BILLS
6 

•HR 2869 IH

1 benefits pool or program offers group health insur2 ance coverage to officials, employees, and retirees 

3 (and their dependents) of a local government located 

4 in a secondary State pursuant to subsection (b), 

5 such secondary State may not do any of the fol6 lowing: 

7 ‘‘(A) COUNTERSIGNED BY LOCAL AGENT

8 OR BROKER.—Require any group health cov9 erage issued by the pool or program to be 

10 countersigned by an insurance agent or broker 

11 residing in that secondary State. 

12 ‘‘(B) SUBMIT TO DUPLICATIVE FINANCIAL

13 EXAMINATIONS.—Require the pool or program 

14 to submit to an examination of its financial 

15 condition by an applicable State authority in 

16 such State, unless— 

17 ‘‘(i) an applicable State authority of 

18 the primary State has not done an exam19 ination within the period recommended by 

20 the National Association of Insurance 

21 Commissioners; and 

22 ‘‘(ii) any such examination by the sec23 ondary State is conducted in accordance 

24 with the examiners’ handbook of the Na25 tional Association of Insurance CommisVerDate Sep 11 2014 00:42 Jun 30, 2015 Jkt 049200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2869.IH H2869

SSpencer on DSK4SPTVN1PROD with BILLS
7 

•HR 2869 IH

1 sioners and is coordinated to avoid unjusti2 fied duplication and unjustified repetition. 

3 ‘‘(C) DISCRIMINATE AGAINST POOL OR

4 PROGRAM.—Otherwise discriminate against the 

5 pool or program issuing group health coverage 

6 in both the primary State and in any secondary 

7 State. 

8 ‘‘(e) BENEFIT REQUIREMENTS.—Group health cov9 erage offered by a local government employee health bene10 fits pool or program shall be at least as comprehensive 

11 as the coverage of the essential health benefits under sec12 tion 1302(b) of the Patient Protection and Affordable 

13 Care Act (42 U.S.C. 18022(b)). 

14 ‘‘(f) DISCLOSURE REQUIREMENT.—Prior to pro15 viding group health coverage to the officers, employees, 

16 or retirees (and their dependents) of a local government 

17 located in a secondary State, a local government employee 

18 health benefits pool or program shall provide notice to 

19 such individuals that the health coverage is governed by 

20 the covered laws and regulations of the primary State, as 

21 well as by any applicable Federal laws and regulations. 

22 ‘‘(g) STATUS OF GROUP HEALTH COVERAGE IN SEC23 ONDARY STATE.—A local government employee health 

24 benefits pool or program that is not regulated as an in25 surer in its primary State, and whose group health plans 


SSpencer on DSK4SPTVN1PROD with BILLS
8 

•HR 2869 IH

1 are not regulated as insurance in its primary State, shall 

2 not be subject to the jurisdiction of a State insurance reg3 ulatory agency in any secondary State. 

4 ‘‘(h) DESIGNATION OF PRIMARY STATE.— 

5 ‘‘(1) DESIGNATION OF A SINGLE STATE.—A 

6 local government employee health benefits pool or 

7 program may only designate one State as its pri8 mary State with respect to all such coverage it offers 

9 under this section. 

10 ‘‘(2) INITIAL OPERATIONS IN PRIMARY

11 STATE.—Such pool or program may not offer group 

12 health coverage in a secondary State until it is 

13 deemed to be doing business in the primary State. 

14 ‘‘(i) DEFINITIONS.—In this section: 

15 ‘‘(1) APPLICABLE STATE AUTHORITY.—The 

16 term ‘applicable State authority’ means, with respect 

17 to a local government employee health benefits pool 

18 or program in a State, any official or officials des19 ignated by the State to administer the requirements 

20 of this section for the State with respect to such 

21 pool or program, including the official or officials 

22 with authority to approve interlocal agreements 

23 under applicable State law, but shall not include any 

24 State insurance regulatory agency. 

25 ‘‘(2) COVERED LAWS.— 


SSpencer on DSK4SPTVN1PROD with BILLS
9 

•HR 2869 IH

1 ‘‘(A) IN GENERAL.—The term ‘covered 

2 laws’ means the laws, rules, regulations, agree3 ments, and orders pertaining to any of the fol4 lowing: 

5 ‘‘(i) Group health coverage issued by 

6 a local government employee health bene7 fits pool or program. 

8 ‘‘(ii) The offer, sale, rating (including 

9 medical underwriting), renewal, and 

10 issuance of group health coverage to local 

11 government officials, employees, and retir12 ees or their dependents. 

13 ‘‘(iii) The management, operations, 

14 and investment activities of a local govern15 ment employee health benefits pool or pro16 gram. 

17 ‘‘(iv) Loss control and claims adminis18 tration for a local government employee 

19 health benefits pool or program with re20 spect to liability for which the pool or pro21 gram provides coverage. 

22 ‘‘(v) The payment, on a nondiscrim23 inatory basis, of applicable premium and 

24 other taxes (including high risk pool as25 sessments) which are levied on health inVerDate Sep 11 2014 00:42 Jun 30, 2015 Jkt 049200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2869.IH H2869

SSpencer on DSK4SPTVN1PROD with BILLS
10 

•HR 2869 IH

1 surance issuers, brokers, or policyholders 

2 under the laws of the State. 

3 ‘‘(B) EXCEPTION.—Such term does not in4 clude any law, rule, regulation, agreement, or 

5 order governing the use of care or cost manage6 ment techniques, including any requirement re7 lated to provider contracting, network access or 

8 adequacy, health care data collection, or quality 

9 assurance. 

10 ‘‘(3) GROUP HEALTH COVERAGE.—The term 

11 ‘group health coverage’ means medical care expense 

12 reimbursement provided under a group health plan. 

13 ‘‘(4) LOCAL GOVERNMENT.—The term ‘local 

14 government’ means a county, municipality, special 

15 district, school district, junior college district, hous16 ing authority, or other political subdivision or public 

17 entity defined under State law. 

18 ‘‘(5) LOCAL GOVERNMENT EMPLOYEE HEALTH

19 BENEFITS POOL OR PROGRAM.—The term ‘local gov20 ernment employee health benefits pool or program’ 

21 means a risk pool authorized or permitted by State 

22 statute or otherwise regulated by a State agency 

23 under which— 

24 ‘‘(A) a local government or group of local 

25 governments, directly or through a pool, provide 


SSpencer on DSK4SPTVN1PROD with BILLS
11 

•HR 2869 IH

1 health care benefits primarily for local govern2 ment officials, employees, and retirees and their 

3 dependents; and 

4 ‘‘(B) such pool may provide health care 

5 benefits from the assets of the pool or its mem6 ber local governments through any combination 

7 of self-funded arrangements or fully insured 

8 products; 

9 and includes any other State authorized program de10 signed to provide health benefits to local government 

11 officials, employees, and retirees and their depend12 ents. 

13 ‘‘(6) PRIMARY STATE.—The term ‘primary 

14 State’ means, with respect to group health coverage 

15 offered by a local government employee health bene16 fits pool or program, the State designated by the 

17 pool or program as the State whose covered laws 

18 shall govern the pool or program in the issuance of 

19 such coverage under this part. 

20 ‘‘(7) SECONDARY STATE.—The term ‘secondary 

21 State’ means, with respect to group health coverage 

22 offered by a local government employee health bene23 fits pool or program, any State that is not the pri24 mary State.’’. 

Æ 


SSpencer on DSK4SPTVN1PROD with BILLS