I 

115TH CONGRESS 

1ST SESSION H. R. 1319 

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 

MARCH 2, 2017 

Mr. MARCHANT (for himself, Mr. THORNBERRY, and Mr. CRAWFORD) 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 2017’’. 

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— 


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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 (h)(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— 

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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 (h)(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 


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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 

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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 


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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 

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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) DISCLOSURE REQUIREMENT.—Prior to pro9 viding group health coverage to the officers, employees, 

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

11 located in a secondary State, a local government employee 

12 health benefits pool or program shall provide notice to 

13 such individuals that the health coverage is governed by 

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

15 well as by any applicable Federal laws and regulations. 

16 ‘‘(f) STATUS OF GROUP HEALTH COVERAGE IN SEC17 ONDARY STATE.—A local government employee health 

18 benefits pool or program that is not regulated as an in19 surer in its primary State, and whose group health plans 

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

21 not be subject to the jurisdiction of a State insurance reg22 ulatory agency in any secondary State. 

23 ‘‘(g) DESIGNATION OF PRIMARY STATE.— 

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

25 local government employee health benefits pool or 


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1 program may only designate one State as its pri2 mary State with respect to all such coverage it offers 

3 under this section. 

4 ‘‘(2) INITIAL OPERATIONS IN PRIMARY

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

6 health coverage in a secondary State until it is 

7 deemed to be doing business in the primary State. 

8 ‘‘(h) DEFINITIONS.—In this section: 

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

10 term ‘applicable State authority’ means, with respect 

11 to a local government employee health benefits pool 

12 or program in a State, any official or officials des13 ignated by the State to administer the requirements 

14 of this section for the State with respect to such 

15 pool or program, including the official or officials 

16 with authority to approve interlocal agreements 

17 under applicable State law, but shall not include any 

18 State insurance regulatory agency. 

19 ‘‘(2) COVERED LAWS.— 

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

21 laws’ means the laws, rules, regulations, agree22 ments, and orders pertaining to any of the fol23 lowing: 


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1 ‘‘(i) Group health coverage issued by 

2 a local government employee health bene3 fits pool or program. 

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

5 medical underwriting), renewal, and 

6 issuance of group health coverage to local 

7 government officials, employees, and retir8 ees or their dependents. 

9 ‘‘(iii) The management, operations, 

10 and investment activities of a local govern11 ment employee health benefits pool or pro12 gram. 

13 ‘‘(iv) Loss control and claims adminis14 tration for a local government employee 

15 health benefits pool or program with re16 spect to liability for which the pool or pro17 gram provides coverage. 

18 ‘‘(v) The payment, on a nondiscrim19 inatory basis, of applicable premium and 

20 other taxes (including high risk pool as21 sessments) which are levied on health in22 surance issuers, brokers, or policyholders 

23 under the laws of the State. 

24 ‘‘(B) EXCEPTION.—Such term does not in25 clude any law, rule, regulation, agreement, or 


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1 order governing the use of care or cost manage2 ment techniques, including any requirement re3 lated to provider contracting, network access or 

4 adequacy, health care data collection, or quality 

5 assurance. 

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

7 ‘group health coverage’ means medical care expense 

8 reimbursement provided under a group health plan. 

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

10 government’ means a county, municipality, special 

11 district, school district, junior college district, hous12 ing authority, or other political subdivision or public 

13 entity defined under State law. 

14 ‘‘(5) LOCAL GOVERNMENT EMPLOYEE HEALTH

15 BENEFITS POOL OR PROGRAM.—The term ‘local gov16 ernment employee health benefits pool or program’ 

17 means a risk pool authorized or permitted by State 

18 statute or otherwise regulated by a State agency 

19 under which— 

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

21 governments, directly or through a pool, provide 

22 health care benefits primarily for local govern23 ment officials, employees, and retirees and their 

24 dependents; and 


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

2 benefits from the assets of the pool or its mem3 ber local governments through any combination 

4 of self-funded arrangements or fully insured 

5 products, 

6 and includes any other State authorized program de7 signed to provide health benefits to local government 

8 officials, employees, and retirees and their depend9 ents. 

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

11 State’ means, with respect to group health coverage 

12 offered by a local government employee health bene13 fits pool or program, the State designated by the 

14 pool or program as the State whose covered laws 

15 shall govern the pool or program in the issuance of 

16 such coverage under this part. 

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

18 State’ means, with respect to group health coverage 

19 offered by a local government employee health bene20 fits pool or program, any State that is not the pri21 mary State.’’. 

Æ 


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