I 

109TH CONGRESS 

1ST SESSION H. R. 1399 

To expand the number of individuals and families with health insurance 

coverage, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 17, 2005 

Ms. KAPTUR (for herself and Mr. LATOURETTE) introduced the following bill; 

which was referred to the Committee on Energy and Commerce, and in 

addition to the Committees on Ways and Means, Education and the 

Workforce, and Rules, for a period to be subsequently determined by the 

Speaker, in each case for consideration of such provisions as fall within 

the jurisdiction of the committee concerned 

A BILL 

To expand the number of individuals and families with health 

insurance coverage, and for other purposes. 

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 ‘‘Health Coverage, Affordability, Responsibility, and Eq6 uity Act of 2005’’ or the ‘‘HealthCARE Act of 2005’’. 

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

8 this Act is as follows: 
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Sec. 1. Short title; table of contents. 

TITLE I—INCREASING HEALTH CARE COVERAGE 

Subtitle A—Medicaid and SCHIP 

Sec. 101. State option to offer medicaid coverage based on need. 

Sec. 102. State option to provide coverage of children under SCHIP in excess 

of the State’s allotment. 

Subtitle B—Refundable Tax Credit for Health Insurance Costs of LowIncome Individuals and Families 

Sec. 111. Credit for health insurance costs of certain low-income individuals. 

Sec. 112. Advance payment of credit for health insurance costs of eligible lowincome individuals. 

TITLE II—IMPROVING ACCESS TO HEALTH PLANS 

Sec. 201. Definitions. 

Sec. 202. Establishment of health insurance purchasing pools. 

Sec. 203. Purchasing pools. 

Sec. 204. Purchasing pool operators. 

Sec. 205. Contracts with participating insurers. 

Sec. 206. Options for health benefits coverage. 

Sec. 207. Enrollment process for eligible individuals. 

Sec. 208. Plan premiums. 

Sec. 209. Enrollee premium share. 

Sec. 210. Payments to purchasing pool operators and payments to participating 

insurers. 

Sec. 211. State-based reinsurance programs. 

Sec. 212. Coverage under individual health insurance. 

Sec. 213. Use of premium subsidies to unify family coverage with members enrolled in medicaid and SCHIP. 

Sec. 214. Coverage through employer-sponsored health insurance. 

Sec. 215. Participation by small employers. 

Sec. 216. Report. 

Sec. 217. Authorization of appropriations. 

TITLE III—NATIONAL ADVISORY COMMISSION ON EXPANDED 

ACCESS TO HEALTH CARE 

Sec. 301. National Advisory Commission on Expanded Access to Health Care. 

Sec. 302. Congressional action. 

TITLE IV—STATE WAIVERS 

Sec. 401. State waivers. 
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1 TITLE I—INCREASING HEALTH 

2 CARE COVERAGE 

3 Subtitle A—Medicaid and SCHIP 

4 SEC. 101. STATE OPTION TO OFFER MEDICAID COVERAGE 

5 BASED ON NEED. 

6 (a) STATE OPTION.—Section 1902(a)(10)(A)(ii) of 

7 the Social Security Act (42 U.S.C. 1396a) is amended— 

8 (1) by striking ‘‘or’’ at the end of subclause 

9 (XVII); 

10 (2) by adding ‘‘or’’ at the end of subclause 

11 (XVIII); and 

12 (3) by adding at the end the following: 

13 ‘‘(XIX) who are not otherwise el14 igible for medical assistance under 

15 this title and whose income does not 

16 exceed such income level as the State 

17 may establish, expressed as a percent18 age (not to exceed 100) of the income 

19 official poverty line (as defined by the 

20 Office of Management and Budget, 

21 and revised annually in accordance 

22 with section 673(2) of the Omnibus 

23 Budget Reconciliation Act of 1981) 

24 applicable to a family of the size in25 volved;’’. 
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1 (b) INCREASED FMAP.—Section 1905 of the Social 

2 Security Act (42 U.S.C. 1396d) is amended— 

3 (1) in the first sentence of subsection (b)— 

4 (A) by striking ‘‘and (4)’’ and inserting 

5 ‘‘(4)’’; and 

6 (B) by inserting before the period the fol7 lowing: ‘‘, and (5) in the case of a State that 

8 meets the conditions described in paragraph (1) 

9 of subsection (y), the Federal medical assist10 ance percentage shall be equal to the need11 based enhanced FMAP described in paragraph 

12 (2) of subsection (y)’’; and 

13 (2) by adding at the end the following: 

14 ‘‘(y)(1) For purposes of clause (5) of the first sen15 tence of subsection (b), the conditions described in this 

16 subsection are the following: 

17 ‘‘(A) The State provides medical assistance to 

18 individuals described in subsection 

19 (a)(10)(A)(ii)(XIX). 

20 ‘‘(B) The State uses streamlined enrollment 

21 and outreach measures to all individuals described in 

22 subparagraph (A) including— 

23 ‘‘(i) the same application and retention 

24 procedures (such as 1-page enrollment forms 

25 and enrollment by mail) used by the majority of 
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1 State programs under title XXI during the pre2 ceding year; and 

3 ‘‘(ii) outreach efforts proportional in scope 

4 and reasonably expected effectiveness to those 

5 employed by the State during a comparable 

6 stage of implementation of the State’s program 

7 under title XXI. 

8 ‘‘(C) The State applies eligibility standards and 

9 methodologies under this title with respect to indi10 viduals residing in the State who have not attained 

11 age 65 that are not more restrictive (as determined 

12 under section 1902(a)(10)(C)(i)(III)) than the 

13 standards and methodologies that applied under this 

14 title with respect to such individuals as of July 1, 

15 2005. 

16 ‘‘(2)(A) For purposes of clause (5) of the first sen17 tence of subsection (b), the need-based enhanced FMAP 

18 for a State for a fiscal year, is equal to the Federal med19 ical assistance percentage (as defined in the first sentence 

20 of subsection (b)) for the State increased, subject to sub21 paragraph (B), by such percentage increase as would com22 pensate all States for the additional expenditures that 

23 would be incurred by all States if the States were to pro24 vide medical assistance to all individuals whose income 

25 does not exceed 100 percent of the income official poverty 
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1 line (as defined by the Office of Management and Budget, 

2 and revised annually in accordance with section 673(2) of 

3 the Omnibus Budget Reconciliation Act of 1981) applica4 ble to a family of the size involved and who are eligible 

5 for such assistance only on the basis of section 

6 1902(a)(10)(A)(ii)(XIX). 

7 ‘‘(B) In the case of a State that provides medical as8 sistance to individuals described in section 

9 1902(a)(10)(A)(ii)(XIX) but limits such assistance to in10 dividuals with income at or below a percentage of the in11 come official poverty line (as defined by the Office of Man12 agement and Budget, and revised annually in accordance 

13 with section 673(2) of the Omnibus Budget Reconciliation 

14 Act of 1981) applicable to a family of the size involved 

15 that is less than 100, the Secretary shall reduce the need16 based enhanced FMAP otherwise determined for the State 

17 under subparagraph (A) by a proportion based on the na18 tional income distribution of all individuals in all States 

19 who are (regardless of whether such individuals are en20 rolled under this title) eligible for medical assistance only 

21 on the basis of section 1902(a)(10)(A)(ii)(XIX).’’. 

22 (c) CONFORMING AMENDMENTS.—Section 1905(a) of 

23 the Social Security Act (42 U.S.C. 1396d(a)) is amended 

24 in the matter preceding paragraph (1)— 

25 (1) by striking ‘‘or’’ at the end of clause (xii); 
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1 (2) by adding ‘‘or’’ at the end of clause (xiii); 

2 and 

3 (3) by inserting after clause (xiii) the following: 

4 ‘‘(xiv) individuals who are eligible for medical 

5 assistance on the basis of section 

6 1902(a)(10)(A)(ii)(XIX);’’. 

7 (d) EFFECTIVE DATE.—The amendments made by 

8 this section take effect on October 1, 2006, and apply to 

9 medical assistance provided on or after that date, without 

10 regard to whether final regulations to carry out such 

11 amendments have been promulgated by such date. 

12 SEC. 102. STATE OPTION TO PROVIDE COVERAGE OF CHIL13 DREN UNDER SCHIP IN EXCESS OF THE 

14 STATE’S ALLOTMENT. 

15 (a) IN GENERAL.—Title XXI of the Social Security 

16 Act (42 U.S.C. 1397aa et seq.) is amended by adding at 

17 the end the following: 

18 ‘‘SEC. 2111. STATE OPTION TO PROVIDE COVERAGE OF 

19 CHILDREN IN EXCESS OF THE STATE’S AL20 LOTMENT. 

21 ‘‘(a) STATE OPTION.—In the case of a State that 

22 meets the condition described in subsection (b), the fol23 lowing shall apply: 

24 ‘‘(1) Notwithstanding section 2105 and without 

25 regard to the State’s allotment under section 2104, 
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1 the Secretary shall pay the State an amount for 

2 each quarter equal to the enhanced FMAP of ex3 penditures incurred in the quarter that are described 

4 in section 2105(a)(1). 

5 ‘‘(2) The Secretary shall reduce the State’s al6 lotment under section 2104, for the first fiscal year 

7 for which the State amendment described in sub8 section (b) applies, and for each fiscal year there9 after, by an amount equal to the amount that the 

10 Secretary determines the State would have expended 

11 to provide child health assistance to targeted low-in12 come children during that fiscal year if that State 

13 had not elected the State option to provide such as14 sistance in accordance with this section. 

15 ‘‘(3) Subsections (f) and (g) of section 2104 

16 shall not apply to the State’s reduced allotment 

17 (after the application of paragraph (2)). 

18 ‘‘(b) CONDITION DESCRIBED.—For purposes of sub19 section (a), the condition described in this subsection is 

20 that the State has made an irrevocable election, through 

21 a plan amendment, to provide child health assistance to 

22 all targeted low-income children residing in the State 

23 (without regard to date of application for assistance) and 

24 to cover health services listed in the State plan whenever 

25 medically necessary.’’. 
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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section takes effect on October 1, 2006, and applies 

3 to child health assistance provided on or after that date, 

4 without regard to whether final regulations to carry out 

5 such amendment have been promulgated by such date. 

6 Subtitle B—Refundable Tax Credit 

7 for Health Insurance Costs of 

8 Low-income Individuals and 

9 Families 

10 SEC. 111. CREDIT FOR HEALTH INSURANCE COSTS OF CER11 TAIN LOW-INCOME INDIVIDUALS. 

12 (a) IN GENERAL.—Subpart C of part IV of sub13 chapter A of chapter 1 of the Internal Revenue Code of 

14 1986 (relating to refundable credits) is amended by redes15 ignating section 36 as section 37 and inserting after sec16 tion 35 the following new section: 

17 ‘‘SEC. 36. HEALTH INSURANCE COSTS OF ELIGIBLE LOW-IN18 COME INDIVIDUALS. 

19 ‘‘(a) IN GENERAL.—In the case of an individual, 

20 there shall be allowed as a credit against the tax imposed 

21 by this subtitle for the taxable year an amount equal to 

22 the applicable percentage of the amount paid by the tax23 payer (or on behalf of the taxpayer) for coverage of the 

24 taxpayer or qualifying family members under qualified 
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1 health insurance for eligible coverage months beginning in 

2 such taxable year. 

3 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 

4 this section— 

5 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

6 the term ‘applicable percentage’ means the standard 

7 Government contribution (determined for full-time 

8 Federal employees enrolling in coverage for which 

9 such contribution is not limited by section 

10 8906(b)(1) of title 5, United States Code) for an 

11 employee enrolled in a health benefits plan under 

12 chapter 89 of title 5, United States Code, for the 

13 calendar year in which the taxable year begins, ex14 pressed as a percentage of the total premium for 

15 such plan. 

16 ‘‘(2) INCREASED PERCENTAGE FOR CERTAIN

17 TAXPAYERS.— 

18 ‘‘(A) IN GENERAL.—In the case of a tax19 payer whose adjusted gross income for the pre20 ceding taxable year does not exceed 150 percent 

21 of the poverty level, the applicable percentage 

22 determined under paragraph (1) shall be in23 creased by such percentage points as the Sec24 retary determines will fully compensate such an 

25 individual for the individual’s limited pur-
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1 chasing power in comparison to individuals 

2 whose adjusted gross income equals the average 

3 adjusted gross income for all Federal employ4 ees, to the extent that the amount of the result5 ing increase in the credit amount for all such 

6 eligible low-income individuals for the taxable 

7 year is not reasonably expected to exceed the 5 

8 percentage point dollar amount for that year, as 

9 determined under subparagraph (B). 

10 ‘‘(B) DETERMINATION OF 5 PERCENTAGE

11 POINT DOLLAR AMOUNT.—For purposes of sub12 paragraph (A), the 5 percentage point dollar 

13 amount for any taxable year is the product of— 

14 ‘‘(i) the total number of individuals 

15 receiving credits under this section for 

16 such year; and 

17 ‘‘(ii) the amount equal to 5 percent of 

18 the average health insurance premium 

19 amount to which such credits are applied. 

20 ‘‘(C) RULE OF CONSTRUCTION.—Nothing 

21 in this paragraph shall be construed to prevent 

22 the Secretary from establishing more than 1 

23 level of supplemental assistance that provides 

24 greater assistance to individuals with lower in25 come, determined as a percentage of poverty. 
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1 ‘‘(3) APPLICATION OF FEHBP COVERAGE CAT2 EGORIES TO DETERMINATION OF CREDIT.—The per3 centages described in paragraphs (1) and (2) shall 

4 be applied to a taxpayer consistent with the coverage 

5 categories (such as self or family coverage) applied 

6 with respect to a health benefits plan under chapter 

7 89 of title 5, United States Code. 

8 ‘‘(c) MAXIMUM PREMIUM AMOUNT.—The amount 

9 paid for qualified health insurance taken into account 

10 under subsection (a) for any taxable year shall not exceed 

11 an amount equal to the capped premium established for 

12 the applicable State under section 204(c)(10) of the 

13 Health Coverage, Affordability, Responsibility, and Equity 

14 Act of 2005 for the calendar year in which the such tax15 able year begins. 

16 ‘‘(d) ELIGIBLE COVERAGE MONTH.—For purposes of 

17 this section— 

18 ‘‘(1) IN GENERAL.—The term ‘eligible coverage 

19 month’ means any month if during such month the 

20 taxpayer or a qualifying family member— 

21 ‘‘(A) is an eligible low-income individual; 

22 ‘‘(B) is covered by qualified health insur23 ance, the premium for which is paid by the tax24 payer (or on behalf of the taxpayer); 
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1 ‘‘(C) does not have other specified cov2 erage; and 

3 ‘‘(D) is not imprisoned under Federal, 

4 State, or local authority. 

5 ‘‘(2) JOINT RETURNS.—In the case of a joint 

6 return, the requirement of paragraph (1)(A) shall be 

7 treated as met with respect to any month if at least 

8 1 spouse satisfies such requirement. 

9 ‘‘(e) ELIGIBLE LOW-INCOME INDIVIDUAL.—For pur10 poses of this section— 

11 ‘‘(1) IN GENERAL.—The term ‘eligible low-in12 come individual’ means an individual— 

13 ‘‘(A) who has not attained age 65; 

14 ‘‘(B) whose adjusted gross income does not 

15 exceed 200 percent of the poverty level; 

16 ‘‘(C) who is ineligible for the medicaid pro17 gram or the State children’s health insurance 

18 program under title XIX or XXI of the Social 

19 Security Act (other than under section 1928 of 

20 such Act); 

21 ‘‘(D) who has limited access to health in22 surance coverage through the employer of the 

23 individual or a member of the individual’s fam24 ily (either because the employer does not offer 

25 such coverage to the individual or because the 
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1 employee contribution for such coverage would 

2 exceed an amount equal to 5 percent of the 

3 household income of such individual, as deter4 mined in accordance with paragraph (2)); 

5 ‘‘(E) who applies for a credit under this 

6 section not later than 60 days after receiving 

7 notice of potential eligibility for such credit, 

8 under procedures established by the Secretary; 

9 and 

10 ‘‘(F) who resides in a State where the eli11 gibility standards and methodologies applied 

12 under the medicaid and State children’s health 

13 insurance programs with respect to individuals 

14 residing in the State who have not attained age 

15 65 are not more restrictive (as determined 

16 under section 1902(a)(10)(C)(i)(III) of the So17 cial Security Act) than the standards and meth18 odologies that applied under such programs 

19 with respect to such individuals as of July 1, 

20 2005. 

21 ‘‘(2) DETERMINATION OF ELIGIBILITY.— 

22 ‘‘(A) SCHIP AGENCY.— 

23 ‘‘(i) IN GENERAL.—The determination 

24 of whether an individual is an eligible low25 income individual for purposes of this sec-
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1 tion shall be made by the State agency 

2 with responsibility for determining the eli3 gibility of individuals for assistance under 

4 the State children’s health insurance pro5 gram under title XXI of the Social Secu6 rity Act. 

7 ‘‘(ii) APPLICATION OF SCREEN AND

8 ENROLL REQUIREMENTS.— 

9 ‘‘(I) IN GENERAL.—The State 

10 agency referred to in clause (i) shall 

11 ensure that individuals applying for a 

12 certificate of eligibility are screened 

13 for potential eligibility under the med14 icaid and State children’s health in15 surance programs and that individuals 

16 found through screening to be eligible 

17 for assistance under such a program 

18 are enrolled for assistance under the 

19 appropriate program. To the max20 imum extent possible pursuant to 

21 State options under title XIX of the 

22 Social Security Act, and notwith23 standing any otherwise applicable pro24 vision of, or State plan provision 

25 under, such title, screening and enroll-
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1 ment activities described in the pre2 vious sentence shall use the proce3 dures employed by the State chil4 dren’s health insurance program oper5 ated under title XXI of the Social Se6 curity Act, if such procedures differ 

7 from those ordinarily employed by the 

8 State program operated under title 

9 XIX of such Act. 

10 ‘‘(II) NO DELAY OF ISSUANCE OF

11 CERTIFICATE.—The application of the 

12 screen and enroll requirements of 

13 clause (i) shall not delay the issuance 

14 of a certificate of eligibility to an indi15 vidual for purposes of this section. 

16 The State agency referred to in clause 

17 (i) shall adopt procedures to ensure 

18 that an individual issued a certificate 

19 of eligibility under this paragraph who 

20 is subsequently determined to be eligi21 ble for the State medicaid program 

22 under title XIX of the Social Security 

23 Act or the State children’s health in24 surance program under XXI of such 

25 Act shall be enrolled in the appro-
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1 priate program without an interrup2 tion in the individual’s health insur3 ance coverage. 

4 ‘‘(B) STANDARDS.— 

5 ‘‘(i) IN GENERAL.—An individual is 

6 an eligible low-income individual for pur7 poses of this section if— 

8 ‘‘(I) on the basis of the individ9 ual’s tax return for the preceding tax10 able year, the individual meets the re11 quirements of paragraph (1)(B), and 

12 the individual otherwise satisfies the 

13 requirements of paragraph (1), or 

14 ‘‘(II) the individual is determined 

15 to satisfy the requirements of para16 graph (1) after the application of the 

17 same eligibility methodologies as 

18 would apply for purposes of deter19 mining the eligibility of an individual 

20 for assistance under the State chil21 dren’s health insurance program 

22 under title XXI of the Social Security 

23 Act. 

24 ‘‘(ii) APPLICATION OF SCHIP INCOME

25 DETERMINATION METHODOLOGIES.—For 
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1 purposes of clause (i)(II), determinations 

2 of income levels shall be made using the 

3 methodologies described in that clause, to 

4 the extent such methodologies for 

5 ascertaining household income differ from 

6 any otherwise applicable method for deter7 mining adjusted gross income or the defini8 tion of adjusted gross income. 

9 ‘‘(C) CERTIFICATE OF ELIGIBILITY.— 

10 ‘‘(i) IN GENERAL.—An individual who 

11 is determined to be an eligible low-income 

12 individual shall be issued a certificate of 

13 eligibility by the State agency referred to 

14 in subparagraph (A). 

15 ‘‘(ii) CERTIFICATE AMOUNT.—Such 

16 certificate shall indicate the applicable per17 centage of the amount paid for coverage 

18 under qualified health insurance that the 

19 individual is eligible for under this section 

20 (including any supplemental assistance 

21 which the individual may be eligible for 

22 under subsection (b)(2), unless the indi23 vidual elects to not receive such supple24 mental assistance). 
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1 ‘‘(iii) 12-MONTH PERIOD OF ISSUE.— 

2 The certificate of eligibility shall apply for 

3 a 12-month period from the date of issue, 

4 notwithstanding any changes in household 

5 circumstances following the individual’s ap6 plication for a credit under this section or 

7 supplemental assistance. 

8 ‘‘(D) SUPPLEMENTAL ASSISTANCE.—The 

9 State agency described in subparagraph (A) 

10 shall determine an individual’s eligibility for 

11 supplemental assistance under subsection (b)(2) 

12 based on the methodologies referred to in sub13 paragraph (B)(ii). 

14 ‘‘(f) QUALIFYING FAMILY MEMBER.—For purposes 

15 of this section— 

16 ‘‘(1) IN GENERAL.—The term ‘qualifying family 

17 member’ means the taxpayer’s spouse and any de18 pendent of the taxpayer. Such term does not include 

19 any individual who is not an eligible low-income indi20 vidual under subsection (e)(1). 

21 ‘‘(2) SPECIAL DEPENDENCY TEST IN CASE OF

22 DIVORCED PARENTS, ETC.—If paragraph (2) of sec23 tion 152(e) applies to any child with respect to any 

24 calendar year, in the case of any taxable year begin25 ning in such calendar year, such child shall be treat-
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1 ed as described in paragraph (1)(B) with respect to 

2 the custodial parent (within the meaning of section 

3 152(e)(3)) and not with respect to the noncustodial 

4 parent. 

5 ‘‘(g) QUALIFIED HEALTH INSURANCE.—For pur6 poses of this section— 

7 ‘‘(1) IN GENERAL.—The term ‘qualified health 

8 insurance’ means any of the following: 

9 ‘‘(A) Coverage under an insurance plan 

10 participating in a purchasing pool established 

11 pursuant to section 203 of the Health Cov12 erage, Affordability, Responsibility, and Equity 

13 Act of 2005. 

14 ‘‘(B) Coverage under individual health in15 surance pursuant to section 212 of such Act. 

16 ‘‘(C) Coverage, pursuant to section 213 of 

17 such Act, under the medicaid program or the 

18 State children’s health insurance program if 1 

19 or more family members qualifies for coverage 

20 under such program. 

21 ‘‘(D) Coverage, pursuant to section 214 of 

22 such Act, under an employer-sponsored insur23 ance plan, including— 
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1 ‘‘(i) coverage under a COBRA con2 tinuation provision (as defined in section 

3 9832(d)(1)); 

4 ‘‘(ii) State-based continuation cov5 erage provided under a State law that re6 quires such coverage; 

7 ‘‘(iii) coverage voluntarily offered by a 

8 former employer of the individual or family 

9 member; or 

10 ‘‘(iv) coverage under a group health 

11 plan that is available through the employ12 ment of the individual or a family member. 

13 ‘‘(2) EXCEPTION.—The term ‘qualified health 

14 insurance’ shall not include— 

15 ‘‘(A) a flexible spending or similar ar16 rangement; and 

17 ‘‘(B) any insurance if substantially all of 

18 its coverage is of excepted benefits described in 

19 section 9832(c). 

20 ‘‘(3) DEFINITIONS.—For purposes of this sub21 section— 

22 ‘‘(A) EMPLOYER-SPONSORED INSUR23 ANCE.— 

24 ‘‘(i) IN GENERAL.—The term ‘em25 ployer-sponsored insurance’ means any in-
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1 surance which covers medical care under 

2 any health plan maintained by any em3 ployer (or former employer) of the tax4 payer or the taxpayer’s spouse. 

5 ‘‘(ii) TREATMENT OF CAFETERIA

6 PLANS.—For purposes of clause (i), the 

7 cost of coverage shall be treated as paid or 

8 incurred by an employer to the extent the 

9 coverage is in lieu of a right to receive cash 

10 or other qualified benefits under a cafe11 teria plan (as defined in section 125(d)). 

12 ‘‘(B) INDIVIDUAL HEALTH INSURANCE.— 

13 The term ‘individual health insurance’ means 

14 any insurance which constitutes medical care 

15 offered to individuals other than in connection 

16 with a group health plan and does not include 

17 Federal- or State-based health insurance cov18 erage. 

19 ‘‘(h) OTHER SPECIFIED COVERAGE.—For purposes 

20 of this section, an individual has other specified coverage 

21 for any month if, as of the first day of such month— 

22 ‘‘(1) COVERAGE UNDER MEDICARE.—Such indi23 vidual is entitled to benefits under part A of title 

24 XVIII of the Social Security Act or is enrolled under 

25 part B of such title. 
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1 ‘‘(2) CERTAIN OTHER COVERAGE.—Such indi2 vidual— 

3 ‘‘(A) is enrolled in a health benefits plan 

4 under chapter 89 of title 5, United States Code; 

5 or 

6 ‘‘(B) is entitled to receive benefits under 

7 chapter 55 of title 10, United States Code. 

8 ‘‘(i) FEDERAL POVERTY LEVEL; POVERTY LEVEL; 

9 POVERTY.—For purposes of this section, the terms ‘Fed10 eral poverty level’, ‘poverty level’, and ‘poverty’ mean the 

11 income official poverty line (as defined by the Office of 

12 Management and Budget, and revised annually in accord13 ance with section 673(2) of the Omnibus Budget Rec14 onciliation Act of 1981) applicable to a family of the size 

15 involved. 

16 ‘‘(j) SPECIAL RULES.— 

17 ‘‘(1) COORDINATION WITH ADVANCE PAYMENTS

18 OF CREDIT.—With respect to any taxable year, the 

19 amount which would (but for this subsection) be al20 lowed as a credit to the taxpayer under subsection 

21 (a) shall be reduced (but not below zero) by the ag22 gregate amount paid on behalf of such taxpayer 

23 under section 7527A for months beginning in such 

24 taxable year. 
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1 ‘‘(2) COORDINATION WITH OTHER DEDUCTIONS

2 AND CREDITS.—Amounts taken into account under 

3 subsection (a) shall not be taken into account in de4 termining any deduction allowed under section 

5 162(l) or 213. The amount of any credit otherwise 

6 allowed under this section shall be reduced by the 

7 amount of any credit allowed under section 35. 

8 ‘‘(3) HEALTH SAVINGS ACCOUNT DISTRIBU9 TIONS.—Amounts distributed from a health savings 

10 account (as defined in section 223(d)) or an Archer 

11 MSA (as defined in section 220(d)) shall not be 

12 taken into account under subsection (a). 

13 ‘‘(4) DENIAL OF CREDIT TO DEPENDENTS.—No 

14 credit shall be allowed under this section to any indi15 vidual with respect to whom a deduction under sec16 tion 151 is allowable to another taxpayer for a tax17 able year beginning in the calendar year in which 

18 such individual’s taxable year begins. 

19 ‘‘(5) BOTH SPOUSES ELIGIBLE LOW-INCOME IN20 DIVIDUALS.—The spouse of the taxpayer shall not 

21 be treated as a qualifying family member for pur22 poses of subsection (a), if— 

23 ‘‘(A) the taxpayer is married at the close 

24 of the taxable year; 
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1 ‘‘(B) the taxpayer and the taxpayer’s 

2 spouse are both eligible low-income individuals 

3 during the taxable year; and 

4 ‘‘(C) the taxpayer files a separate return 

5 for the taxable year. 

6 ‘‘(6) MARITAL STATUS; CERTAIN MARRIED IN7 DIVIDUALS LIVING APART.—Rules similar to the 

8 rules of paragraphs (3) and (4) of section 21(e) 

9 shall apply for purposes of this section. 

10 ‘‘(7) INSURANCE WHICH COVERS OTHER INDI11 VIDUALS.—For purposes of this section, rules simi12 lar to the rules of section 213(d)(6) shall apply with 

13 respect to any contract for qualified health insurance 

14 under which amounts are payable for coverage of an 

15 individual other than the taxpayer and qualifying 

16 family members. 

17 ‘‘(8) TREATMENT OF PAYMENTS.—For pur18 poses of this section: 

19 ‘‘(A) PAYMENTS BY SECRETARY.—Any 

20 payment made by the Secretary on behalf of 

21 any individual under section 7527A (relating to 

22 advance payment of credit for health insurance 

23 costs of eligible low-income individuals) shall be 

24 treated as having been made by the taxpayer 

25 (or on behalf of the taxpayer) on the first day 
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1 of the month for which such payment was 

2 made. 

3 ‘‘(B) PAYMENTS BY TAXPAYER.—Any pay4 ment made by the taxpayer (or on behalf of the 

5 taxpayer) for eligible coverage months shall be 

6 treated as having been so made on the first day 

7 of the month for which such payment was 

8 made. 

9 ‘‘(9) REGULATIONS.— 

10 ‘‘(A) IN GENERAL.—The Secretary, in con11 sultation with the Secretary of Health and 

12 Human Services, shall administer the credit al13 lowed under this section and shall prescribe 

14 such regulations and other guidance as may be 

15 necessary or appropriate to carry out this sec16 tion, section 6050U, and section 7527A. 

17 ‘‘(B) ELIGIBILITY DETERMINATIONS.— 

18 Such regulations shall include such standards 

19 as the Secretary of Health and Human Services 

20 may specify with respect to the requirements 

21 for eligibility determinations under subsection 

22 (e)(2). 

23 ‘‘(C) MEASURES TO COMBAT FRAUD AND

24 ABUSE.—Such regulations shall include appro25 priate procedures to deter, detect, and penalize 
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1 fraudulent efforts to obtain a credit under this 

2 section by individuals, providers of qualified 

3 health insurance, and others.’’. 

4 (b) CONFORMING AMENDMENTS.— 

5 (1) Paragraph (2) of section 1324(b) of title 

6 31, United States Code, is amended by inserting ‘‘or 

7 section 36’’ after ‘‘section 35’’. 

8 (2) The table of sections for subpart C of part 

9 IV of chapter 1 of the Internal Revenue Code of 

10 1986 is amended by redesignating the item relating 

11 to section 36 as an item relating to section 37 and 

12 by inserting before such item the following new item: 

‘‘Sec. 36. Health insurance costs of eligible low-income individuals.’’. 

13 (c) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to taxable years beginning after 

15 December 31, 2007. 

16 (d) REIMBURSEMENT FOR ADMINISTRATIVE COSTS

17 INCURRED IN DETERMINING ELIGIBILITY FOR CREDIT.— 

18 (1) IN GENERAL.—The Secretary of Health and 

19 Human Services shall reimburse States for the rea20 sonable administrative costs incurred in making eli21 gibility determinations in accordance with section 

22 36(e) of the Internal Revenue Code of 1986 (as 

23 added by subsection (a)). Such reimbursement shall 

24 not apply to State costs required under the medicaid 

25 or State children’s health insurance programs. 
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1 (2) APPLICATION.—A State desiring reimburse2 ment under this subsection shall submit an applica3 tion to the Secretary of Health and Human Services 

4 in such manner, at such time, and containing such 

5 information as the Secretary may require. 

6 (3) APPROPRIATION.—Out of any money in the 

7 Treasury of the United States not otherwise appro8 priated, there are appropriated such sums as may be 

9 necessary to carry out this subsection. 

10 SEC. 112. ADVANCE PAYMENT OF CREDIT FOR HEALTH IN11 SURANCE COSTS OF ELIGIBLE LOW-INCOME 

12 INDIVIDUALS. 

13 (a) IN GENERAL.—Chapter 77 of the Internal Rev14 enue Code of 1986 (relating to miscellaneous provisions) 

15 is amended by inserting after section 7527 the following 

16 new section: 

17 ‘‘SEC. 7527A. ADVANCE PAYMENT OF CREDIT FOR HEALTH 

18 INSURANCE COSTS OF ELIGIBLE LOW-IN19 COME INDIVIDUALS. 

20 ‘‘(a) GENERAL RULE.—Not later than August 1, 

21 2007, the Secretary shall establish a program for making 

22 payments on behalf of certified individuals to providers of 

23 qualified health insurance (as defined in section 36(g)) for 

24 such individuals. 
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1 ‘‘(b) LIMITATION ON ADVANCE PAYMENTS DURING

2 ANY TAXABLE YEAR.—The Secretary may make pay3 ments under subsection (a) only to the extent that the 

4 total amount of such payments made on behalf of any indi5 vidual during the taxable year is not reasonably expected 

6 to exceed the applicable percentage (as defined in section 

7 36(b)) of the amount paid by the taxpayer (or on behalf 

8 of the taxpayer) for coverage of the taxpayer and quali9 fying family members under qualified health insurance for 

10 eligible coverage months beginning in the taxable year. 

11 ‘‘(c) CERTIFIED INDIVIDUAL.—For purposes of this 

12 section, the term ‘certified individual’ means any indi13 vidual for whom a health coverage eligibility certificate is 

14 in effect. 

15 ‘‘(d) HEALTH COVERAGE ELIGIBILITY CERTIFI16 CATE.—For purposes of this section, the term ‘health cov17 erage eligibility certificate’ means any written statement 

18 that an individual is an eligible low-income individual (as 

19 defined in section 36(e)) if such statement provides such 

20 information as the Secretary may require for purposes of 

21 this section and is issued by the State agency responsible 

22 for administering the State children’s health insurance 

23 program under title XXI of the Social Security Act.’’. 

24 (b) DISCLOSURE OF RETURN INFORMATION FOR

25 PURPOSES OF CARRYING OUT A PROGRAM FOR ADVANCE
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1 PAYMENT OF CREDIT FOR HEALTH INSURANCE COSTS OF

2 ELIGIBLE LOW-INCOME INDIVIDUALS.— 

3 (1) IN GENERAL.—Subsection (l) of section 

4 6103 of the Internal Revenue Code of 1986 (relating 

5 to disclosure of returns and return information for 

6 purposes other than tax administration) is amended 

7 by adding at the end the following new paragraph: 

8 ‘‘(21) DISCLOSURE OF RETURN INFORMATION

9 FOR PURPOSES OF CARRYING OUT A PROGRAM FOR

10 ADVANCE PAYMENT OF CREDIT FOR HEALTH INSUR11 ANCE COSTS OF ELIGIBLE LOW-INCOME INDIVID12 UALS.—The Secretary may disclose to providers of 

13 health insurance for any certified individual (as de14 fined in section 7527A(c)) return information with 

15 respect to such certified individual only to the extent 

16 necessary to carry out the program established by 

17 section 7527A (relating to advance payment of cred18 it for health insurance costs of eligible low-income 

19 individuals).’’. 

20 (2) PROCEDURES AND RECORDKEEPING RE21 LATED TO DISCLOSURES.—Paragraph (4) of section 

22 6103(p) of such Code is amended by striking ‘‘or 

23 (20)’’ each place it appears and inserting ‘‘(20), or 

24 (21)’’. 
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1 (3) UNAUTHORIZED INSPECTION OR DISCLO2 SURE OF RETURNS OR RETURN INFORMATION.—Sec3 tion 7213(a)(2) of such Code is amended by striking 

4 ‘‘or (20)’’ and inserting ‘‘(20), or (21)’’. 

5 (c) INFORMATION REPORTING.— 

6 (1) IN GENERAL.—Subpart B of part III of 

7 subchapter A of chapter 61 of the Internal Revenue 

8 Code of 1986 (relating to information concerning 

9 transactions with other persons) is amended by in10 serting after section 6050T the following new sec11 tion: 

12 ‘‘SEC. 6050U. RETURNS RELATING TO CREDIT FOR HEALTH 

13 INSURANCE COSTS OF ELIGIBLE LOW-IN14 COME INDIVIDUALS. 

15 ‘‘(a) REQUIREMENT OF REPORTING.—Every person 

16 who is entitled to receive payments for any month of any 

17 calendar year under section 7527A (relating to advance 

18 payment of credit for health insurance costs of eligible 

19 low-income individuals) with respect to any certified indi20 vidual (as defined in section 7527A(c)) shall, at such time 

21 as the Secretary may prescribe, make the return described 

22 in subsection (b) with respect to each such individual. 

23 ‘‘(b) FORM AND MANNER OF RETURNS.—A return 

24 is described in this subsection if such return— 
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1 ‘‘(1) is in such form as the Secretary may pre2 scribe; and 

3 ‘‘(2) contains— 

4 ‘‘(A) the name, address, and TIN of each 

5 individual referred to in subsection (a); 

6 ‘‘(B) the number of months for which 

7 amounts were entitled to be received with re8 spect to such individual under section 7527A 

9 (relating to advance payment of credit for 

10 health insurance costs of eligible low-income in11 dividuals); 

12 ‘‘(C) the amount entitled to be received for 

13 each such month; and 

14 ‘‘(D) such other information as the Sec15 retary may prescribe. 

16 ‘‘(c) STATEMENTS TO BE FURNISHED TO INDIVID17 UALS WITH RESPECT TO WHOM INFORMATION IS RE18 QUIRED.—Every person required to make a return under 

19 subsection (a) shall furnish to each individual whose name 

20 is required to be set forth in such return a written state21 ment showing— 

22 ‘‘(1) the name and address of the person re23 quired to make such return and the phone number 

24 of the information contact for such person; and 
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1 ‘‘(2) the information required to be shown on 

2 the return with respect to such individual. 

3 The written statement required under the preceding sen4 tence shall be furnished on or before January 31 of the 

5 year following the calendar year for which the return 

6 under subsection (a) is required to be made.’’. 

7 (2) ASSESSABLE PENALTIES.— 

8 (A) Subparagraph (B) of section 

9 6724(d)(1) of such Code (relating to defini10 tions) is amended by redesignating clauses (xiii) 

11 through (xviii) as clauses (xiv) through (xix), 

12 respectively, and by inserting after clause (xii) 

13 the following new clause: 

14 ‘‘(xiii) section 6050U (relating to re15 turns relating to credit for health insur16 ance costs of eligible low-income individ17 uals),’’. 

18 (B) Paragraph (2) of section 6724(d) of 

19 such Code is amended by striking ‘‘or’’ at the 

20 end of subparagraph (AA), by striking the pe21 riod at the end of subparagraph (BB) and in22 serting ‘‘, or’’, and by adding after subpara23 graph (BB) the following new subparagraph: 
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1 ‘‘(CC) section 6050U (relating to returns 

2 relating to credit for health insurance costs of 

3 eligible low-income individuals).’’. 

4 (d) CLERICAL AMENDMENTS.— 

5 (1) ADVANCE PAYMENT.—The table of sections 

6 for chapter 77 of the Internal Revenue Code of 1986 

7 is amended by inserting after the item relating to 

8 section 7527 the following new item: 

‘‘Sec. 7527A. Advance payment of credit for health insurance costs of eligible 

low-income individuals.’’. 

9 (2) INFORMATION REPORTING.—The table of 

10 sections for subpart B of part III of subchapter A 

11 of chapter 61 of such Code is amended by inserting 

12 after the item relating to section 6050T the fol13 lowing new item: 

‘‘Sec. 6050U. Returns relating to credit for health insurance costs of eligible 

low-income individuals.’’. 

14 (e) EFFECTIVE DATE.—The amendments made by 

15 this section shall take effect on January 1, 2008. 

16 TITLE II—IMPROVING ACCESS 

17 TO HEALTH PLANS 

18 SEC. 201. DEFINITIONS. 

19 In this title: 

20 (1) ELIGIBLE INDIVIDUAL.—The term ‘‘eligible 

21 individual’’ means an individual with respect to 

22 whom a tax credit is allowed under section 36 of the 
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1 Internal Revenue Code of 1986 (as added by section 

2 111). 

3 (2) PARTICIPATING INSURER.—The term ‘‘par4 ticipating insurer’’ means an entity with a contract 

5 under section 205(a). 

6 (3) PRIVATE GROUP HEALTH INSURANCE

7 PLAN.—The term ‘‘private group health insurance 

8 plan’’ means a plan offered by a participating in9 surer that provides health benefits coverage to eligi10 ble individuals and that meets the requirements of 

11 this title. 

12 (4) PURCHASING POOL OPERATOR.—The term 

13 ‘‘purchasing pool operator’’ means the entity des14 ignated by the State under section 204. 

15 (5) SECRETARY.—The term ‘‘Secretary’’ means 

16 the Secretary of Health and Human Services. 

17 (6) SMALL EMPLOYER.—The term ‘‘small em18 ployer’’ means an employer with not less than 2 and 

19 not more than 100 employees. 

20 SEC. 202. ESTABLISHMENT OF HEALTH INSURANCE PUR21 CHASING POOLS. 

22 There is established a program under which the Sec23 retary shall ensure that each eligible individual has the 

24 opportunity to enroll, through a purchasing pool operator, 
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1 in a private group health insurance plan offered by a par2 ticipating insurer under this title. 

3 SEC. 203. PURCHASING POOLS. 

4 (a) ESTABLISHMENT OF PURCHASING POOLS.—Each 

5 State participating in the program under this title shall 

6 establish a purchasing pool that is available to each eligi7 ble individual who resides in the State. 

8 (b) TYPES OF PURCHASING POOLS.— 

9 (1) IN GENERAL.—A purchasing pool estab10 lished under subsection (a) shall be 1 of the fol11 lowing: 

12 (A) A statewide purchasing pool operated 

13 by the State. 

14 (B) A statewide purchasing pool operated 

15 on behalf of the State by the Director of the 

16 Office of Personnel Management, or the des17 ignee of such Director. 

18 (2) OPM OPERATED POOL.—In the case of a 

19 statewide purchasing pool described in paragraph 

20 (1)(B), the Director of the Office of Personnel Man21 agement or the Director’s designee, may limit par22 ticipating insurers in such pool to those described in 

23 section 205(e), except that the Director or such des24 ignee shall ensure that additional private group 

25 health insurance plans participate in such a pool to 
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1 the extent necessary to meet the requirements of 

2 section 204(c)(9). 

3 (c) STATE ELECTION PROCESS.— 

4 (1) IN GENERAL.—Each State participating in 

5 the program under this title shall notify the Sec6 retary, not later than January 4, 2007, of the type 

7 of purchasing pool that applies to residents of the 

8 State. 

9 (2) DEFAULT CHOICE.—If a State participating 

10 in the program under this title fails to notify the 

11 Secretary of the type of purchasing pool elected by 

12 the State by the date described in paragraph (1), 

13 the State shall be deemed to have elected the type 

14 of purchasing pool described in subsection (b)(1)(B). 

15 (3) CHANGE OF ELECTION.—The Secretary 

16 shall establish procedures under which a State par17 ticipating in the program under this title may 

18 change the election of the type of purchasing pool 

19 applicable to residents of the State. 

20 SEC. 204. PURCHASING POOL OPERATORS. 

21 (a) DESIGNATION.—Each State shall designate a 

22 purchasing pool operator that shall be responsible for op23 erating the purchasing pool established under section 

24 203(a). A purchasing pool operator may be (or, to have 

25 1 or more of its functions performed, may contract with) 
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1 a private entity that has entered into a contract with the 

2 State if such entity meets requirements established by the 

3 Secretary for purposes of the program under this title. 

4 (b) OPERATION SIMILAR TO FEHBP.—Each pur5 chasing pool operator shall operate the purchasing pool 

6 established under section 203(a) in a manner that is simi7 lar to the manner in which the Director of the Office of 

8 Personnel Management operates the Federal employees’ 

9 health benefits program under chapter 89 of title 5, 

10 United States Code, including (but not limited to) the per11 formance of the specific functions described in subsection 

12 (c). 

13 (c) SPECIFIC FUNCTIONS DESCRIBED.—The specific 

14 functions described in this subsection include the fol15 lowing: 

16 (1) Each purchasing pool operator shall offer 

17 one-stop shopping for eligible individuals to enroll 

18 for health benefits coverage under private, group 

19 health insurance plans offered by participating in20 surers. 

21 (2) Each purchasing pool operator shall limit 

22 participating insurers to those that meet the condi23 tions for participation described in this title. 

24 (3) Each purchasing pool operator shall nego25 tiate (or, in the case of a purchasing pool described 
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1 in section 203(b)(1)(B), shall negotiate or otherwise 

2 determine) bids and terms of coverage with insurers. 

3 (4) Each purchasing pool operator shall provide 

4 eligible individuals with comparative information on 

5 private group health insurance plans offered by par6 ticipating insurers. 

7 (5) Each purchasing pool operator shall assist 

8 eligible individuals in enrolling with a private group 

9 health insurance plan offered by a participating in10 surer. 

11 (6) Each purchasing pool operator shall collect 

12 private group health insurance plan premium pay13 ments for participating insurers and process such 

14 premium payments. 

15 (7) Each purchasing pool operator shall rec16 oncile from year to year aggregate premium pay17 ments and claims costs of private group health in18 surance plans consistent with practices under the 

19 Federal employees’ health benefits program under 

20 chapter 89 of title 5, United States Code. 

21 (8) Each purchasing pool operator shall offer 

22 customer service to eligible individuals enrolled for 

23 health benefits coverage under a private group 

24 health insurance plan offered by a participating in25 surer. 
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1 (9) Each purchasing pool operator shall ensure 

2 that each eligible individual has the option of enroll3 ing in either of at least 2 benchmark or benchmark4 equivalent plans with— 

5 (A) a premium at or below a cap estab6 lished by the pool operator for purposes of this 

7 title; and 

8 (B) coverage of essential services included 

9 in the report required under section 301(e)(2), 

10 with cost-sharing consistent with such report. 

11 (10) Each purchasing pool operator shall estab12 lish a premium cap for purposes of determining the 

13 credit limitation under section 36(c) of the Internal 

14 Revenue Code of 1986, as added by section 111(a). 

15 The cap required under this paragraph may not be 

16 less than the premium charged to Federal employees 

17 by the most highly-enrolled health plan under the 

18 Federal employees’ health benefits program under 

19 chapter 89 of title 5, United States Code. If the 

20 most highly-enrolled plan in that program differs for 

21 Federal enrollees in the State and all Federal enroll22 ees nationally in such plan, the minimum permitted 

23 premium cap shall be the lower of such premiums. 
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1 SEC. 205. CONTRACTS WITH PARTICIPATING INSURERS. 

2 (a) IN GENERAL.—Each purchasing pool operator 

3 shall negotiate and enter into contracts for the provision 

4 of health benefits coverage under the program under this 

5 title with entities that meet the conditions of participation 

6 described in subsection (b) and other applicable require7 ments of this Act. 

8 (b) CONSUMER INFORMATION.—In carrying out its 

9 duty under section 204(c)(4) to inform eligible individuals 

10 about private group health plans, the purchasing pool op11 erator shall provide information that meets the require12 ments of section 212(b)(2). 

13 (c) STATE LICENSURE.— 

14 (1) IN GENERAL.—Subject to paragraph (2), a 

15 health plan shall not be a participating insurer un16 less the plan has a State license to provide State 

17 residents with the private group coverage health in18 surance plans that it offers through the pool. 

19 (2) EXCEPTION.—A pool operator may enter 

20 into a contract under subsection (a) to cover pool 

21 participants through a health plan without a State 

22 license described in paragraph (1) if such plan is of23 fered to Federal employees nationwide and, with re24 spect to such employees, is exempt from State health 

25 insurance regulation. Nothing in this paragraph 

26 shall be construed to permit coverage of pool partici-
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1 pants through such a plan except with groups, con2 tracts, and premium rates that are entirely distinct 

3 from those used for individuals covered under the 

4 Federal employee’s health benefits program under 

5 chapter 89 of title 5, United States Code. 

6 (d) ADDITIONAL STOP-LOSS COVERAGE AND REIN7 SURANCE.—Purchasing pool operators are authorized to 

8 encourage participation in the program under this title, 

9 improve covered benefits, reduce out-of-pocket cost-shar10 ing, limit premiums, or achieve other objectives of this Act 

11 by— 

12 (1) funding stop-loss coverage above levels oth13 erwise offered in the purchasing pool; or 

14 (2) providing or subsidizing reinsurance in ad15 dition to that provided under section 211. 

16 (e) PARTICIPATION OF FEHBP PLANS.— 

17 (1) IN GENERAL.—Each entity with a contract 

18 under section 8902 of title 5, United States Code, 

19 shall be a participating insurer unless such entity 

20 notifies the Secretary in writing of its intention not 

21 to participate in the program under this title prior 

22 to such time as is designated by the Secretary so as 

23 to allow such decisions to be taken into account with 

24 respect to eligible individuals’ choice of a private 

25 group health insurance plan under such program. 
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1 Such participation in the program under this title 

2 shall include at least the covered benefits and pro3 vider networks available through such an entity and 

4 shall not involve greater out-of-pocket cost-sharing 

5 than the plan offered by such entity pursuant to its 

6 contract under section 8902 of title 5, United States 

7 Code. 

8 (2) NO EFFECT ON FEHBP COVERAGE.—The 

9 Director of Office of Personnel Management shall 

10 take such steps as are necessary to ensure that each 

11 individual enrolled for health benefits coverage under 

12 the program under chapter 89 of title 5, United 

13 States Code, is not adversely affected by eligible in14 dividuals or others enrolled for coverage under the 

15 program under this title. Such steps shall include 

16 (but need not be limited to) the establishment of 

17 separate risk pools, separate contracts with partici18 pating insurers, and separately negotiated pre19 miums. 

20 SEC. 206. OPTIONS FOR HEALTH BENEFITS COVERAGE. 

21 (a) SCOPE OF HEALTH BENEFITS COVERAGE.—The 

22 health benefits coverage provided to an eligible individual 

23 under a private group health insurance plan offered by 

24 a participating insurer shall consist of any of the fol25 lowing: 
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1 (1) BENCHMARK COVERAGE.—Health benefits 

2 coverage that is equivalent to the benefits coverage 

3 in a benchmark benefit package described in sub4 section (b). 

5 (2) BENCHMARK-EQUIVALENT COVERAGE.— 

6 Health benefits coverage that meets the following re7 quirements: 

8 (A) INCLUSION OF ESSENTIAL SERV9 ICES.—The coverage includes each of the essen10 tial services identified by the National Advisory 

11 Commission on Expanded Access to Health 

12 Care and adopted by Congress under title III. 

13 (B) AGGREGATE ACTUARIAL VALUE EQUIV14 ALENT TO BENCHMARK PACKAGE.—The cov15 erage has an aggregate actuarial value that is 

16 equal to or greater than the actuarial value of 

17 one of the benchmark benefit packages. 

18 (3) ALTERNATIVE COVERAGE.—Any other 

19 health benefits coverage that the Secretary deter20 mines, upon application by a State, offers health 

21 benefits coverage equivalent to or greater than a 

22 plan described in and offered under section 8903(1) 

23 of title 5, United States Code. 

24 (b) BENCHMARK BENEFIT PACKAGES.—The bench25 mark benefit packages are as follows: 
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1 (1) FEHBP-EQUIVALENT HEALTH BENEFITS

2 COVERAGE.—The plan described in and offered 

3 under chapter 89 of title 5, United States Code with 

4 the highest number of enrollees under such section 

5 for the year preceding the year in which the private 

6 group health insurance plan is proposed to be of7 fered. 

8 (2) PUBLIC PROGRAM-EQUIVALENT HEALTH

9 BENEFITS COVERAGE.—Coverage provided under the 

10 State plan approved under the medicaid program 

11 under title XIX of the Social Security Act or the 

12 State children’s health insurance program under 

13 title XXI of such Act (42 U.S.C. 1396 et seq., 

14 1397aa et seq.) (without regard to coverage provided 

15 under a waiver of the requirements of either such 

16 program). 

17 (3) COVERAGE OFFERED THROUGH HMO.—The 

18 health insurance coverage plan that— 

19 (A) is offered by a health maintenance or20 ganization (as defined in section 2791(b)(3) of 

21 the Public Health Service Act (42 U.S.C. 33gg– 

22 91(b)(3))); and 

23 (B) has the largest insured commercial, 

24 nonmedicaid enrollment of covered lives of such 
46 

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1 coverage plans offered by such a health mainte2 nance organization in the State. 

3 (4) STATE EMPLOYEE COVERAGE.—The health 

4 insurance plan that is offered to State employees 

5 and has the largest enrollment of covered lives of 

6 any such plan. 

7 (5) APPLICATION OF BENCHMARK STAND8 ARDS.—A private group health plan offers bench9 mark benefits if, with respect to a benchmark plan 

10 described in paragraph (1), (2), (3), or (4), the pri11 vate group health plan covers all items and services 

12 offered by the benchmark plan, with out-of-pocket 

13 cost-sharing for such items and services that is not 

14 greater than under the benchmark plan. Nothing in 

15 this title shall be construed to forbid a private group 

16 health plan from offering additional items and serv17 ices not covered by such a benchmark plan or reduc18 ing out-of-pocket cost-sharing below levels applicable 

19 under such plan. 

20 SEC. 207. ENROLLMENT PROCESS FOR ELIGIBLE INDIVID21 UALS. 

22 (a) IN GENERAL.—The Secretary shall establish a 

23 process through which an eligible individual— 

24 (1) may make an annual election to enroll in 

25 any private group health insurance plan offered by 
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1 a participating insurer that has been awarded a con2 tract under section 205(a) and serves the geographic 

3 area in which the individual resides, provided that 

4 such insurer’s geographic area of service and guar5 anteed issuance under this section is conterminous 

6 with, or includes all of, a geographic area served 

7 pursuant to an entity’s contact under section 8902 

8 of title 5, United States Code; and 

9 (2) may make an annual election to change the 

10 election under this clause. 

11 (b) RULES.—In establishing the process under sub12 section (a), the Secretary shall use rules similar to the 

13 rules for enrollment, disenrollment, and termination of en14 rollment under the Federal employees health benefits pro15 gram under chapter 89 of title 5, United States Code, in16 cluding the application of the guaranteed issuance provi17 sion described in subsection (c). 

18 (c) GUARANTEED ISSUANCE.—An eligible individual 

19 who is eligible to enroll for health benefits coverage under 

20 a private group health insurance plan that has been 

21 awarded a contract under section 205(a) at a time during 

22 which elections are accepted under this title with respect 

23 to the plan shall not be denied enrollment based on any 

24 health status-related factor (described in section 
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1 2702(a)(1) of the Public Health Service Act (42 U.S.C. 

2 300gg–1(a)(1))) or any other factor. 

3 SEC. 208. PLAN PREMIUMS. 

4 (a) IN GENERAL.—Each purchasing pool operator 

5 shall negotiate (or, in the case of a purchasing pool oper6 ated pursuant to section 203(b)(1)(B), shall otherwise de7 termine) a premium for each private group health insur8 ance plan offered by a participating insurer. 

9 (b) PERMITTED PROFIT MARGINS.— 

10 (1) IN GENERAL.—Each premium negotiated 

11 under subsection (a) may not permit a profit margin 

12 that exceeds the applicable percentage (as defined in 

13 paragraph (2)). 

14 (2) APPLICABLE PERCENTAGE DEFINED.—In 

15 this subsection, the term ‘‘applicable percentage’’ 

16 means— 

17 (A) for the first 3 years that a purchasing 

18 pool is operated, 2 percent; 

19 (B) for any subsequent year, the percent20 age determined by the purchasing pool oper21 ator, which may not be— 

22 (i) less than the profit margin per23 mitted under the Federal employees health 

24 benefits program under chapter 89 of title 

25 5, United States Code; or 
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1 (ii) more than a multiple, established 

2 by the Secretary for purposes of this sub3 section, of profit margins permitted under 

4 such program. 

5 SEC. 209. ENROLLEE PREMIUM SHARE. 

6 (a) IN GENERAL.—A participating insurer offering a 

7 private group health insurance plan that has been awarded 

8 a contract under section 205(a) in which the eligible indi9 vidual is enrolled may not deny, limit, or condition the 

10 coverage (including out-of-pocket cost-sharing) or provi11 sion of health benefits coverage or vary or increase the 

12 enrollee premium share under the plan based on any 

13 health status-related factor described in section 

14 2702(a)(1) of the Public Health Service Act (42 U.S.C. 

15 300gg–1(a)(1)) or any other factor. 

16 (b) RISK-ADJUSTED PLAN PAYMENTS AND PRE17 MIUMS CHARGED TO ENROLLEES.— 

18 (1) IN GENERAL.—For each private group 

19 health insurance plan operated by a participating in20 surer, the pool operator shall adjust premium pay21 ments to compensate for the difference in health risk 

22 factors between plan enrollees and State residents as 

23 a whole (including residents who are not eligible in24 dividuals). Such adjustments shall employ risk-ad25 justment mechanisms promulgated by the Secretary. 
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1 (2) ADDITIONAL ADJUSTMENTS.—The pool op2 erator shall also provide additional adjustments to 

3 premium payments that compensate participating in4 surers for the cost of keeping out-of-pocket cost5 sharing amounts consistent with section 

6 204(c)(9)(B). 

7 (3) ENROLLEE PREMIUM COSTS.—The adjust8 ments described in this subsection shall not affect 

9 enrollee premium shares, which shall be based on the 

10 premium that would be charged for enrollees with 

11 health risk factors for State residents as a whole (as 

12 described in paragraph (1)), without taking into ac13 count cost-sharing adjustments under section 

14 204(c)(9)(B). 

15 (c) AMOUNT OF PREMIUM.—The amount of the en16 rollee premium share shall be equal to premium amounts 

17 (if any) above the applicable cap set pursuant to section 

18 204(c)(10), plus 100 percent of the remainder minus the 

19 applicable percentage (as defined in section 36(b) of the 

20 Internal Revenue Code of 1986, as added by section 111). 

21 SEC. 210. PAYMENTS TO PURCHASING POOL OPERATORS 

22 AND PAYMENTS TO PARTICIPATING INSUR23 ERS. 

24 The Secretary shall establish procedures for making 

25 payments to each purchasing pool operator as follows: 
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1 (1) RISK-ADJUSTMENT PAYMENT.—The Sec2 retary shall pay each purchasing pool operator for 

3 the net costs of risk-adjusted payments to plans 

4 under section 209(b), to the extent the sum of up5 ward adjustments exceeds the sum of downward ad6 justments for the pool operator. 

7 (2) STOP-LOSS AND REINSURANCE PAY8 MENTS.— 

9 (A) IN GENERAL.—The Secretary shall pay 

10 each purchasing pool operator for the applicable 

11 percentage (as defined in subparagraph (B)) 

12 of— 

13 (i) the costs of any stop-loss coverage 

14 funded by the purchasing pool operator 

15 under section 205(d)(1); and 

16 (ii) any reinsurance provided in ac17 cordance with section 205(d)(2). 

18 (B) APPLICABLE PERCENTAGE DE19 FINED.—In this paragraph, the term ‘‘applica20 ble percentage’’ means— 

21 (i) for the first 3 years that a pur22 chasing pool is operated, 100 percent; 

23 (ii) for the next 2 years that such 

24 purchasing pool is operated, 50 percent; 

25 and 
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1 (iii) for any subsequent year, 0 per2 cent. 

3 (3) PAYMENTS NECESSARY TO KEEP COST4 SHARING WITHIN APPLICABLE LIMITS.—The Sec5 retary shall make payments to purchasing pool oper6 ators to reimburse purchasing pool operators for the 

7 amount paid by such operators to participating in8 surers necessary to keep out-of-pocket cost-sharing 

9 for individuals with limited ability to pay within ap10 plicable limits. 

11 (4) PAYMENT FOR ADMINISTRATIVE COSTS.— 

12 The Secretary shall make payments to each pur13 chasing pool operator for necessary pool administra14 tive expenses. 

15 (5) PAYMENTS TO OPM.—In the case of a pur16 chasing pool described in section 203(b)(1)(B), pay17 ments under this section shall be made to the Direc18 tor of the Office of Personnel Management. 

19 SEC. 211. STATE-BASED REINSURANCE PROGRAMS. 

20 (a) ESTABLISHMENT.—The Secretary shall establish 

21 standards for State-based reinsurance programs for eligi22 ble individuals to guard against adverse selection and to 

23 improve the functioning of the individual health insurance 

24 market. 
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1 (b) GRANTS FOR STATEWIDE REINSURANCE PRO2 GRAMS.— 

3 (1) IN GENERAL.—The Secretary may award 

4 grants to States for the reasonable costs incurred in 

5 providing reinsurance under this section, consistent 

6 with standards developed by the Secretary, for cov7 erage offered in the individual health insurance mar8 ket and through State-based purchasing pools de9 scribed in section 203. 

10 (2) LIMITATION.—Such grants may not pay for 

11 reinsurance extending beyond individuals in the top 

12 3 percent of the national health care spending dis13 tribution, as determined by the Secretary. 

14 (3) APPLICATION.—A State desiring a grant 

15 under this section shall submit an application to the 

16 Secretary in such manner, at such time, and con17 taining such information as the Secretary may re18 quire. 

19 (4) AUTHORIZATION OF APPROPRIATIONS.— 

20 There are authorized to be appropriated to the Sec21 retary such sums as may be necessary for making 

22 grants under this section. 
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1 SEC. 212. COVERAGE UNDER INDIVIDUAL HEALTH INSUR2 ANCE. 

3 (a) IN GENERAL.—Eligible individuals may use cred4 its allowed under the Internal Revenue Code of 1986 (in5 cluding supplemental assistance provided under such 

6 Code) for the purchase of health insurance coverage to en7 roll in State-licensed individual health insurance meeting 

8 the conditions of participation described in subsection (b). 

9 (b) CONDITIONS OF PARTICIPATION.—The Secretary 

10 shall promulgate regulations that establish the terms and 

11 conditions under which an entity may participate in the 

12 program under this section and that include the following: 

13 (1) PLAN MARKETING.—Conditions of partici14 pation for plans in the individual market (as devel15 oped by the Secretary) that— 

16 (A) ensure that consumers receive the con17 sumer information described in paragraph (2) 

18 before selecting a plan; and 

19 (B) detect, deter, and penalize marketing 

20 fraud by entities offering or purporting to offer 

21 individual insurance. 

22 (2) CONSUMER INFORMATION.—Requirements 

23 for each entity offering individual insurance to pro24 vide eligible individuals with information in a uni25 form and easily comprehensible manner that allows 

26 for informed comparisons by eligible individuals and 
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1 that includes information regarding the health bene2 fits coverage, costs, provider networks, quality, the 

3 amount and proportion of health insurance premium 

4 payments that go directly to patient care, and the 

5 plan’s coverage rules (including amount, duration, 

6 and scope limits) and out-of-pocket cost-sharing 

7 (both inside and outside plan networks) for each es8 sential service recommended by the National Advi9 sory Commission on Expanded Access to Health 

10 Care and adopted by Congress under title III (which 

11 shall be prominently identified as an essential serv12 ice, including by reference to the Commission rec13 ommendation denoting the service as essential). To 

14 the maximum extent feasible, such requirements 

15 shall specify that the content and presentation of the 

16 information shall be provided in the same manner as 

17 similar information is presented to enrollees in the 

18 Federal employees health benefits program under 

19 chapter 89 of title 5, United States Code. 

20 (3) OTHER CONDITIONS, INCLUDING THE

21 ELIMINATION OF BARRIERS TO AFFORDABLE COV22 ERAGE.— 

23 (A) IN GENERAL.—Requirements for each 

24 entity offering individual insurance to abide by 

25 conditions of participation that the Secretary 
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1 believes are reasonable and appropriate meas2 ures to address barriers to affordable health in3 surance coverage. 

4 (B) SPECIFIC CONDITIONS.—The require5 ments developed by the Secretary under sub6 paragraph (A) shall include (but need not be 

7 limited to)— 

8 (i) guaranteed renewability, without 

9 premium increases based on changed indi10 vidual risk; and 

11 (ii) limits on risk rating. 

12 (4) RULE OF CONSTRUCTION.—Nothing in this 

13 section shall be construed to authorize the Secretary 

14 to impose any requirements on individual insurance, 

15 except with respect to eligible individuals purchasing 

16 individual insurance using advance payment of a tax 

17 credit provided under section 36 of the Internal Rev18 enue Code of 1986. 

19 SEC. 213. USE OF PREMIUM SUBSIDIES TO UNIFY FAMILY 

20 COVERAGE WITH MEMBERS ENROLLED IN 

21 MEDICAID AND SCHIP. 

22 Notwithstanding any other provision of law, the Sec23 retary shall establish procedures under which, in the case 

24 of a family with 1 or more members enrolled in with a 

25 managed care entity under the State medicaid program 
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1 under title XIX of the Social Security Act or the State 

2 children’s health insurance program under title XXI of 

3 such Act (42 U.S.C. 1396 et seq., 1397aa et seq.) and 

4 1 or more members who are an eligible individual under 

5 this title, the family shall have the option to enroll all fam6 ily members with the managed care entity under either 

7 or both such State programs. The procedures established 

8 by the Secretary shall provide that premiums charged to 

9 eligible individuals for enrollment with such an entity shall 

10 be based on the capitated payments established for adults 

11 or children, excluding adults and children who are known 

12 to be pregnant, blind, disabled, or (in the case of adults) 

13 elderly, under the applicable State program (except that, 

14 in the case of an eligible individual known to be pregnant, 

15 premiums shall reflect capitated payments established 

16 under such State program for individuals known to be 

17 pregnant) plus reasonable administrative costs. 

18 SEC. 214. COVERAGE THROUGH EMPLOYER-SPONSORED 

19 HEALTH INSURANCE. 

20 (a) IN GENERAL.—Eligible individuals may use cred21 its allowed under the Internal Revenue Code of 1986 and 

22 supplemental assistance to enroll in coverage offered by 

23 eligible employers. 
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1 (b) ELIGIBLE EMPLOYERS.—For purposes of this 

2 section, the term ‘‘eligible employers’’ includes the fol3 lowing: 

4 (1) The current employer of the eligible indi5 vidual or a member of such individual’s family. 

6 (2) A former employer required to offer cov7 erage of the eligible individual under a COBRA con8 tinuation provision (as defined in section 9832(d)(1) 

9 of the Internal Revenue Code) or a State law requir10 ing continuation coverage; and 

11 (3) A former employer voluntarily offering cov12 erage of the eligible individual. 

13 (c) APPLICATION OF DISREGARD OF PREEXISTING

14 CONDITIONS EXCLUSIONS.—Notwithstanding any other 

15 provision of law, in the case of an individual who experi16 ences a qualifying event (as defined in section 603 of the 

17 Employee Retirement Income Security Act of 1974 (29 

18 U.S.C. 1163) and who, not later than 6 months after such 

19 event, is determined to be an eligible individual under this 

20 title, the same rules with respect to preexisting conditions 

21 as apply to a nonelecting TAA-eligible individual under 

22 section 605(b) of the Employee Retirement Income Secu23 rity Act of 1974 (29 U.S.C. 1165(b)) shall apply with re24 spect to such individual, regardless of which type of quali25 fied coverage the individual purchases. 
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1 (d) EXTENSION OF COBRA ELECTION PERIOD.— 

2 Notwithstanding any other provision of law, in the case 

3 of an individual who experiences a qualifying event (as de4 fined in section 603 of the Employee Retirement Income 

5 Security Act of 1974 (29 U.S.C. 1163) and who, not later 

6 than 6 months after such event, is determined to be an 

7 eligible individual under this title, the same rules with re8 spect to the temporary extension of a COBRA election pe9 riod as apply to a nonelecting TAA-eligible individual 

10 under section 605(b) of the Employee Retirement Income 

11 Security Act of 1974 (29 U.S.C. 1165(b)) shall apply with 

12 respect to such individual. 

13 (e) CURRENT EMPLOYER COVERAGE.—If an eligible 

14 individual uses the credits allowed under the Internal Rev15 enue Code of 1986 and supplemental assistance to pur16 chase coverage from an employer described in subsection 

17 (b), such credits and assistance shall apply as a percent18 age, not of the total premium amount for the eligible indi19 vidual, but of the employee’s or former employee’s share 

20 of premium payments. 

21 SEC. 215. PARTICIPATION BY SMALL EMPLOYERS. 

22 (a) IN GENERAL.—Notwithstanding any other provi23 sion of this title, the Secretary shall establish procedures 

24 under which, during annual open enrollment periods, a 

25 small employer shall have the option of purchasing group 
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1 coverage for employees and dependents of employees, in2 cluding individuals who are not otherwise eligible individ3 uals under this title, through a purchasing pool established 

4 under section 203(a). 

5 (b) CONDITIONS OF PARTICIPATION.— 

6 (1) IN GENERAL.—Except as otherwise pro7 vided in this subsection, the same requirements that 

8 apply with respect to participating insurers covering 

9 eligible low-income individuals under section 203 

10 shall apply with respect to coverage offered by such 

11 insurers through a small employer. 

12 (2) RISK ADJUSTMENT.— 

13 (A) INCREASED PAYMENTS.—If employees 

14 of a small employer who are not otherwise eligi15 ble individuals under this title enroll in a pri16 vate group health insurance plan under this 

17 title and have a collective risk level that exceeds 

18 the statewide average (as determined pursuant 

19 to risk adjustment mechanisms developed by 

20 the Secretary consistent with section 

21 209(b)(1)), the Secretary (through a pool oper22 ator) shall provide participating insurers with 

23 such small employer enrollment bonus payments 

24 as are necessary to compensate the insurers for 

25 such increased risk. The premium charged to 
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1 enrollees under this section shall be the same 

2 premium that is the basis of premium charges 

3 to enrollees who are eligible low-income individ4 uals. 

5 (B) REDUCED PAYMENTS.—A pool oper6 ator shall reduce payments to any plan with a 

7 risk level that falls below the statewide average 

8 (as so determined). 

9 (3) ADMINISTRATIVE GUIDELINES.—The Sec10 retary shall develop guidelines for pool operators to 

11 use in serving small employers, which shall be mod12 eled after existing, successful, longstanding small 

13 business purchasing cooperatives, and shall include 

14 administratively simple methods for small employers 

15 and licensed insurance brokers to participate in the 

16 program established under this title. 

17 (c) INFORMATION CAMPAIGN.— 

18 (1) IN GENERAL.—The pool operator for a 

19 State shall establish and conduct, directly or 

20 through 1 or more public or private entities (which 

21 may include licensed insurance brokers), a health in22 surance information program to inform small em23 ployers about health coverage for employees. 

24 (2) REQUIREMENTS.—The program established 

25 under paragraph (1) shall educate small employers 
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1 with respect to matters that include (but are not 

2 limited to) the following: 

3 (A) The benefits of providing health insur4 ance to employees, including tax benefits to 

5 both the employer and employees, increased 

6 productivity, and decreased employee turnover. 

7 (B) The rights of small employers under 

8 Federal and State health insurance reform 

9 laws. 

10 (C) Options for purchasing coverage, in11 cluding (but not limited to) through the State’s 

12 purchasing pool operated pursuant to section 

13 203. 

14 (d) GRANTS TO HELP STATE-BASED POOLS PRO15 MOTE SMALL BUSINESS COVERAGE.— 

16 (1) IN GENERAL.—The Secretary may award 

17 grants to a pool operator for the following: 

18 (A) The net costs of risk-adjusted pay19 ments under paragraph (b)(2), to the extent the 

20 sum of upward adjustments exceeds the sum of 

21 downward adjustments for the pool operator. 

22 (B) The reasonable cost of the information 

23 campaign under subsection (c). 

24 (C) The pool operator’s reasonable admin25 istrative costs to implement this section. 
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1 (2) LIMITATION.—This section shall not apply 

2 to a State’s pool unless sufficient grant funds have 

3 been received under this subsection to implement 

4 this section on a fiscally sound basis and such re5 ceipt is certified by the pool operator. 

6 (3) APPLICATION.—A pool operator desiring a 

7 grant under this section shall submit an application 

8 to the Secretary in such manner, at such time, and 

9 containing such information as the Secretary may 

10 require. 

11 (4) AUTHORIZATION OF APPROPRIATIONS.— 

12 There are authorized to be appropriated to the Sec13 retary such sums as may be necessary for making 

14 grants under this section. 

15 SEC. 216. REPORT. 

16 Not later than 1 year after the date of enactment 

17 of this Act, the Secretary shall submit to Congress a re18 port containing recommendations for such legislative and 

19 administrative changes as the Secretary determines are 

20 appropriate to permit affinity groups related for reasons 

21 other than a common employer to participate in pur22 chasing pools established under section 203. 
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1 SEC. 217. AUTHORIZATION OF APPROPRIATIONS. 

2 (a) IN GENERAL.—There are authorized to be appro3 priated, such sums as may be necessary to carry out this 

4 title for fiscal year 2008 and each fiscal year thereafter. 

5 (b) RULE OF CONSTRUCTION.—Amounts appro6 priated in accordance with subsection (a) shall be in addi7 tion to other amounts appropriated directly under this 

8 title and nothing in subsection (a) shall be construed to 

9 relieve the Secretary of mandatory payment obligations re10 quired under this title. 

11 TITLE III—NATIONAL ADVISORY 

12 COMMISSION ON EXPANDED 

13 ACCESS TO HEALTH CARE 

14 SEC. 301. NATIONAL ADVISORY COMMISSION ON EXPANDED 

15 ACCESS TO HEALTH CARE. 

16 (a) ESTABLISHMENT.—Not later than October 1, 

17 2005, the Secretary of Health and Human Services (re18 ferred to in this section as the ‘‘Secretary’’), shall estab19 lish an entity to be known as the National Advisory Com20 mission on Expanded Access to Health Care (referred to 

21 in this section as the ‘‘Commission’’). 

22 (b) APPOINTMENT OF MEMBERS.— 

23 (1) IN GENERAL.—Not later than 45 days after 

24 the date of enactment of this Act, the House and 

25 Senate Majority and Minority Leaders shall each ap-
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1 point 4 members of the Commission and the Sec2 retary shall appoint 1 member. 

3 (2) CRITERIA.—Members of the Commission 

4 shall include representatives of the following: 

5 (A) Consumers of health insurance. 

6 (B) Health care professionals. 

7 (C) State officials. 

8 (D) Economists. 

9 (E) Health care providers. 

10 (F) Experts on health insurance. 

11 (G) Experts on expanding health care to 

12 individuals who are uninsured. 

13 (3) CHAIRPERSON.—At the first meeting of the 

14 Commission, the Commission shall select a Chair15 person from among its members. 

16 (c) MEETINGS.— 

17 (1) IN GENERAL.—After the initial meeting of 

18 the Commission which shall be called by the Sec19 retary, the Commission shall meet at the call of the 

20 Chairperson. 

21 (2) QUORUM.—A majority of the members of 

22 the Commission shall constitute a quorum, but a 

23 lesser number of members may hold hearings. 

24 (3) SUPERMAJORITY VOTING REQUIREMENT.— 

25 To approve a report required under paragraph (2) 
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1 or (3) of subsection (e), at least 60 percent of the 

2 membership of the Commission must vote in favor of 

3 such a report. 

4 (d) DUTIES.—The Commission shall— 

5 (1) assess the effectiveness of programs de6 signed to expand health care coverage or make 

7 health care coverage affordable to the otherwise un8 insured individuals through identifying the accom9 plishments and needed improvements of each pro10 gram; 

11 (2) make recommendations about benefits and 

12 cost-sharing to be included in health care coverage 

13 for various groups, taking into account— 

14 (A) the special health care needs of chil15 dren and individuals with disabilities; 

16 (B) the different ability of various popu17 lations to pay out-of-pocket costs for services; 

18 (C) incentives for efficiency and cost-con19 trol; and 

20 (D) preventative care, disease management 

21 services, and other factors; 

22 (3) recommend mechanisms to discourage indi23 viduals and employers from voluntarily opting out of 

24 health insurance coverage; 
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1 (4) recommend mechanisms to expand health 

2 care coverage to uninsured individuals with incomes 

3 above 200 percent of the official income poverty line 

4 (as defined by the Office of Management and Budg5 et, and revised annually in accordance with section 

6 673(2) of the Omnibus Budget Reconciliation Act of 

7 1981) applicable to a family of the size involved; 

8 (5) recommend automatic enrollment and reten9 tion procedures and other measures to increase 

10 health care coverage among those eligible for assist11 ance; 

12 (6) review the roles, responsibilities, and rela13 tionship between Federal and State agencies with re14 spect to health care coverage and recommend im15 provements; and 

16 (7) analyze the size, effectiveness, and efficiency 

17 of current tax and other subsidies for health care 

18 coverage and recommend improvements. 

19 (e) REPORTS.— 

20 (1) ANNUAL REPORT.—The Commission shall 

21 submit annual reports to the President and Con22 gress addressing the matters identified in subsection 

23 (d). 

24 (2) BIENNIAL REPORT.— 
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1 (A) IN GENERAL.—The Commission shall 

2 submit biennial reports to the President and 

3 Congress, which shall contain— 

4 (i) recommendations concerning essen5 tial benefits and maximum out-of-pocket 

6 cost-sharing (for the general population 

7 and for individuals with limited ability to 

8 pay, which shall not exceed the out-of9 pocket cost-sharing permitted under sec10 tion 2103(e) of the Social Security Act (42 

11 U.S.C. 1397cc(e))) for the coverage op12 tions described in title II; and 

13 (ii) proposed legislative language to 

14 implement such recommendations. 

15 (B) CONGRESSIONAL ACTION.—The legis16 lative language proposed under subparagraph 

17 (A)(ii) shall proceed to immediate consideration 

18 on the floor of the House of Representatives 

19 and the Senate and shall be approved or re20 jected, without amendment, using procedures 

21 employed for recommendations of military base 

22 closing commissions. 

23 (3) COMMISSION REPORT.—No later than Janu24 ary 15, 2009, the Commission shall submit a report 

25 to the President and Congress, which shall include— 
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1 (A) recommendations on policies to provide 

2 health care coverage to uninsured individuals 

3 with incomes above 200 percent of the official 

4 income poverty line (as defined by the Office of 

5 Management and Budget, and revised annually 

6 in accordance with section 673(2) of the Omni7 bus Budget Reconciliation Act of 1981) applica8 ble to a family of the size involved; 

9 (B) recommendations on changes to poli10 cies enacted under this Act; and 

11 (C) proposed legislative language to imple12 ment such recommendations. 

13 (f) ADMINISTRATION.— 

14 (1) POWERS.— 

15 (A) HEARINGS.—The Commission may 

16 hold such hearings, sit and act at such times 

17 and places, take such testimony, and receive 

18 such evidence as the Commission considers ad19 visable to carry out this section. 

20 (B) INFORMATION FROM FEDERAL AGEN21 CIES.—The Commission may secure directly 

22 from any Federal department or agency such 

23 information as the Commission considers nec24 essary to carry out this section. Upon request 

25 of the Chairperson of the Commission, the head 
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1 of such department or agency shall furnish such 

2 information to the Commission. 

3 (C) POSTAL SERVICES.—The Commission 

4 may use the United States mails in the same 

5 manner and under the same conditions as other 

6 departments and agencies of the Federal Gov7 ernment. 

8 (D) GIFTS.—The Commission may accept, 

9 use, and dispose of gifts or donations of serv10 ices or property. 

11 (2) COMPENSATION.—While serving on the 

12 business of the Commission (including travel time), 

13 a member of the Commission shall be entitled to 

14 compensation at the per diem equivalent of the rate 

15 provided for level IV of the Executive Schedule 

16 under section 5315 of title 5, United States Code, 

17 and while so serving away from home and the mem18 ber’s regular place of business, a member may be al19 lowed travel expenses, as authorized by the chair20 person of the Commission. All members of the Com21 mission who are officers or employees of the United 

22 States shall serve without compensation in addition 

23 to that received for their services as officers or em24 ployees of the United States. 

25 (3) STAFF.— 
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1 (A) IN GENERAL.—The Chairperson of the 

2 Commission may, without regard to the civil 

3 service laws and regulations, appoint and termi4 nate an executive director and such other addi5 tional personnel as may be necessary to enable 

6 the Commission to perform its duties. The em7 ployment of an executive director shall be sub8 ject to confirmation by the Commission. 

9 (B) STAFF COMPENSATION.—The Chair10 person of the Commission may fix the com11 pensation of the executive director and other 

12 personnel without regard to chapter 51 and 

13 subchapter III of chapter 53 of title 5, United 

14 States Code, relating to classification of posi15 tions and General Schedule pay rates, except 

16 that the rate of pay for the executive director 

17 and other personnel may not exceed the rate 

18 payable for level V of the Executive Schedule 

19 under section 5316 of such title. 

20 (C) DETAIL OF GOVERNMENT EMPLOY21 EES.—Any Federal Government employee may 

22 be detailed to the Commission without reim23 bursement, and such detail shall be without 

24 interruption or loss of civil service status or 

25 privilege. 
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1 (D) PROCUREMENT OF TEMPORARY AND

2 INTERMITTENT SERVICES.—The Chairperson of 

3 the Commission may procure temporary and 

4 intermittent services under section 3109(b) of 

5 title 5, United States Code, at rates for individ6 uals which do not exceed the daily equivalent of 

7 the annual rate of basic pay prescribed for level 

8 V of the Executive Schedule under section 5316 

9 of such title. 

10 (g) TERMINATION.—Except with respect to activities 

11 in connection with the ongoing biennial report required 

12 under subsection (e)(2), the Commission shall terminate 

13 90 days after the date on which the Commission submits 

14 the report required under subsection (e)(3). 

15 (h) AUTHORIZATION OF APPROPRIATIONS.—There 

16 are authorized to be appropriated, such sums as may be 

17 necessary to carry out this section for fiscal year 2006 

18 and each fiscal year thereafter. 

19 SEC. 302. CONGRESSIONAL ACTION. 

20 (a) BILL INTRODUCTION.— 

21 (1) IN GENERAL.—Any legislative language in22 cluded in the report required under section 

23 301(e)(3) may be introduced as a bill by request in 

24 the following manner: 
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1 (A) HOUSE OF REPRESENTATIVES.—In the 

2 House of Representatives, by the Majority 

3 Leader and the Minority Leader not later than 

4 10 days after receipt of the legislative language. 

5 (B) SENATE.—In the Senate, by the Ma6 jority Leader and the Minority Leader not later 

7 than 10 days after receipt of the legislative lan8 guage. 

9 (2) ALTERNATIVE BY ADMINISTRATION.—The 

10 President may submit legislative language based on 

11 the recommendations of the Commission and such 

12 legislative language may be introduced in the man13 ner described in paragraph (1). 

14 (b) COMMITTEE CONSIDERATION.— 

15 (1) IN GENERAL.—Any legislative language 

16 submitted pursuant to paragraph (1) or (2) of sub17 section (a) (in this section referred to as ‘‘imple18 menting legislation’’) shall be referred to the appro19 priate committees of the House of Representatives 

20 and the Senate. 

21 (2) REPORTING.— 

22 (A) COMMITTEE ACTION.—If, not later 

23 than 150 days after the date on which the im24 plementing legislation is referred to a com25 mittee under paragraph (1), the committee has 
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1 reported the implementing legislation or has re2 ported an original bill whose subject is related 

3 to reforming the health care system, or to pro4 viding access to affordable health care coverage 

5 for Americans, the regular rules of the applica6 ble House of Congress shall apply to such legis7 lation. 

8 (B) DISCHARGE FROM COMMITTEES.— 

9 (i) SENATE.— 

10 (I) IN GENERAL.—If the imple11 menting legislation or an original bill 

12 described in subparagraph (A) has not 

13 been reported by a committee of the 

14 Senate within 180 days after the date 

15 on which such legislation was referred 

16 to committee under paragraph (1), it 

17 shall be in order for any Senator to 

18 move to discharge the committee from 

19 further consideration of such imple20 menting legislation. 

21 (II) SEQUENTIAL REFERRALS.— 

22 Should a sequential referral of the im23 plementing legislation be made, the 

24 additional committee has 30 days for 

25 consideration of implementing legisla-
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1 tion before the discharge motion de2 scribed in subclause (I) would be in 

3 order. 

4 (III) PROCEDURE.—The motion 

5 described in subclause (I) shall not be 

6 in order after the implementing legis7 lation has been placed on the cal8 endar. While the motion described in 

9 subclause (I) is pending, no other mo10 tions related to the motion described 

11 in subclause (I) shall be in order. De12 bate on a motion to discharge shall be 

13 limited to not more than 10 hours, 

14 equally divided and controlled by the 

15 Majority Leader and the Minority 

16 Leader, or their designees. An amend17 ment to the motion shall not be in 

18 order, nor shall it be in order to move 

19 to reconsider the vote by which the 

20 motion is agreed or disagreed to. 

21 (IV) EXCEPTION.—If imple22 menting language is submitted on a 

23 date later than May 1 of the second 

24 session of a Congress, the committee 

25 shall have 90 days to consider the im-
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1 plementing legislation before a motion 

2 to discharge under this clause would 

3 be in order. 

4 (ii) HOUSE OF REPRESENTATIVES.— 

5 If the implementing legislation or an origi6 nal bill described in subparagraph (A) has 

7 not been reported out of a committee of 

8 the House of Representatives within 180 

9 days after the date on which such legisla10 tion was referred to committee under para11 graph (1), then on any day on which the 

12 call of the calendar for motions to dis13 charge committees is in order, any member 

14 of the House of Representatives may move 

15 that the committee be discharged from 

16 consideration of the implementing legisla17 tion, and this motion shall be considered 

18 under the same terms and conditions, and 

19 if adopted the House of Representatives 

20 shall follow the procedure described in sub21 section (c)(1). 

22 (c) FLOOR CONSIDERATION.— 

23 (1) MOTION TO PROCEED.—If a motion to dis24 charge made pursuant to subsection (b)(2)(B)(i) or 

25 (b)(2)(B)(ii) is adopted, then, not earlier than 5 leg-
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1 islative days after the date on which the motion to 

2 discharge is adopted, a motion may be made to pro3 ceed to the bill. 

4 (2) FAILURE OF MOTION.—If the motion to dis5 charge made pursuant to subsection (b)(2)(B)(i) or 

6 (b)(2)(B)(ii) fails, such motion may be made not 

7 more than 2 additional times, but in no case more 

8 frequently than within 30 days of the previous mo9 tion. Debate on each of such motions shall be limited 

10 to 5 hours, equally divided. 

11 (3) APPLICABLE RULES.—Once the Senate is 

12 debating the implementing legislation the regular 

13 rules of the Senate shall apply. 

14 TITLE IV—STATE WAIVERS 

15 SEC. 401. STATE WAIVERS. 

16 (a) IN GENERAL.—Notwithstanding any other provi17 sion of law, a State may apply to the Secretary of Health 

18 and Human Services for waivers of such provisions of law 

19 as may be necessary for the State to implement policies 

20 that make comprehensive, affordable health coverage 

21 available for all State residents, including access to essen22 tial benefits with limits on cost-sharing, as provided in the 

23 most recent report under section 301(e)(2). 

24 (b) REQUIREMENTS.—In order to ensure that waivers 

25 under this section benefit rather than harm health care 
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1 consumers, a State shall not be eligible for a waiver under 

2 this section unless— 

3 (1) the State reasonably expects to achieve a 

4 level of enrollment in coverage described in sub5 section (a) that is at least equal to the level of cov6 erage (taking into account the number of insured in7 dividuals, covered benefits, and premium and out-of8 pocket costs to the consumer for such coverage) that 

9 the State would have achieved if the State had fully 

10 implemented the coverage options available under ti11 tles I and II of this Act; 

12 (2) no individual who would have qualified for 

13 assistance under the State medicaid program under 

14 title XIX of the Social Security Act or the State 

15 children’s health insurance program under title XXI 

16 of such Act, as of either the date of the waiver re17 quest or the date of enactment of this Act, will be 

18 denied eligibility for such program, have a reduction 

19 in benefits under such program, have reduced access 

20 to geographically and linguistically appropriate care 

21 or essential community providers, or be subject to 

22 increased premiums or cost-sharing under the waiver 

23 program under this section; and 

24 (3) the State agrees to comply with such stand25 ards or guidelines as the Secretary of Health and 
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1 Human Services may require to ensure that the re2 quirements of paragraphs (1) and (2) are satisfied. 

3 (c) FEDERAL PAYMENTS.— 

4 (1) IN GENERAL.—The Secretary of Health and 

5 Human Services shall pay a State with a waiver ap6 proved under this section an amount each quarter 

7 equal to the sum of— 

8 (A) the Federal payments the State and 

9 residents of the State (including, but not lim10 ited to, through the credit allowed under section 

11 36 of the Internal Revenue Code of 1986 for 

12 health insurance costs) would have received if 

13 the State had exercised the coverage options 

14 under titles I and II of this Act with respect to 

15 residents of the State who have not attained 

16 age 65; and 

17 (B) the amount of any grants authorized 

18 by this Act that the State would have received 

19 if the State had applied for such grants. 

20 (2) ADDITIONAL PAYMENT FOR MEDICARE

21 BENEFICIARIES UNDER AGE 65.— 

22 (A) IN GENERAL.—In the case of a State 

23 that elects to enroll an individual described in 

24 subparagraph (B) in coverage described in sub25 section (a), the amount described in paragraph 
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1 (1) with respect to a quarter shall be increased 

2 by the amount described in subparagraph (C). 

3 (B) INDIVIDUAL DESCRIBED.—An indi4 vidual is described in this subparagraph if the 

5 individual— 

6 (i) has not attained age 65; 

7 (ii) is eligible for coverage under title 

8 XVIII of the Social Security Act; and 

9 (iii) voluntarily elects to enroll in cov10 erage described in subsection (a). 

11 (C) AMOUNT DESCRIBED.—The amount 

12 described in this subparagraph is the amount 

13 equal to the amount that the Federal Govern14 ment would have incurred with respect to a 

15 quarter for providing coverage to an individual 

16 described in subparagraph (B) under title 

17 XVIII of the Social Security Act (42 U.S.C. 

18 1395 et seq.). 

19 (d) IMPLEMENTATION DATE.—No State may submit 

20 a request for a waiver under this section before October 

21 1, 2009. 

Æ