II

105TH CONGRESS

2D SESSION S. 1804

To amend title XXVII of the Public Health Service Act to limit the amount

of any increase in the payments required by health insurance issuers

for health insurance coverage provided to individuals who are guaranteed

an offer of enrollment under individual health insurance coverage relative

to other individuals who purchase health insurance coverage.

IN THE SENATE OF THE UNITED STATES

MARCH 19, 1998

Mr. KENNEDY introduced the following bill; which was read twice and referred

to the Committee on Labor and Human Resources

A BILL

To amend title XXVII of the Public Health Service Act

to limit the amount of any increase in the payments

required by health insurance issuers for health insurance

coverage provided to individuals who are guaranteed an

offer of enrollment under individual health insurance coverage relative to other individuals who purchase health

insurance coverage.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Affordable Health In5 surance Act of 1998’’.
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S 1804 IS

1 SEC. 2. AMENDMENTS TO THE PUBLIC HEALTH SERVICE

2 ACT.

3 (a) PREMIUM LIMITATIONS WITH RESPECT TO INDI4 VIDUAL COVERAGE.—Section 2741 of the Public Health

5 Service Act (42 U.S.C. 300gg–41) is amended—

6 (1) by redesignating the second subsection (e)

7 and subsection (f) as subsections (f) and (g), respec8 tively; and

9 (2) by adding at the end thereof the following:

10 ‘‘(h) PREMIUM LIMITATIONS.—

11 ‘‘(1) IN GENERAL.—With respect to an eligible

12 individual desiring to enroll in, or renew, individual

13 health insurance coverage under this section, the

14 health insurance issuer that offers such coverage

15 shall not charge such individual a premium rate for

16 such coverage that is higher than a rate equal to

17 150 percent of the average standard risk rate (as

18 determined under paragraph (2)) of the issuer for

19 individual health insurance offered in the State or

20 applicable marketing or service area (as determined

21 pursuant to regulations).

22 ‘‘(2) AVERAGE STANDARD RISK RATE.—As used

23 in paragraph (1), the term ‘average standard risk

24 rate’ means the following:

25 ‘‘(A) GUARANTEED ISSUE OF ALL POLI26 CIES.—In the case of a health insurance issuer
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1 that meets the requirements of this section with

2 respect to individual health insurance coverage

3 by meeting the requirements of subsection

4 (a)(1), the standard risk rate for the policy in

5 which the eligible individual is enrolled or de6 sires to enroll.

7 ‘‘(B) GUARANTEED ISSUE OF TWO MOST

8 POPULAR POLICIES.—In the case of a health in9 surance issuer that meets the requirements of

10 this section with respect to individual health in11 surance coverage through a mechanism de12 scribed in subsection (c)(2), the standard risk

13 rate for the policy in which the eligible individ14 ual is enrolled or desires to enroll.

15 ‘‘(C) GUARANTEED ISSUE OF TWO POLICY

16 FORMS WITH REPRESENTATIVE COVERAGE.—In

17 the case of a health insurance issuer that meets

18 the requirements of this section with respect to

19 individual health insurance coverage through a

20 mechanism described in subsection (c)(3), the

21 average of the standard risk rates for the most

22 common policy forms offered by the issuer in

23 the State or applicable marketing or service

24 area (as determined pursuant to regulations),

25 established using reasonable actuarial tech-
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S 1804 IS

1 niques to adjust for the difference in actuarial

2 values among such policy forms, subject to re3 view and approval or disapproval of the applica4 ble regulatory authority.

5 (b) STATE FLEXIBILITY.—Section 2744(c) of the

6 Public Health Service Act (42 U.S.C. 300gg–44(c)) is

7 amended—

8 (1) in paragraph (1), by inserting before the pe9 riod the following: ‘‘, except that in applying any

10 such model act, an eligible individual shall not be

11 charged a premium rate that is higher than a rate

12 equal to 150 percent of the standard risk rate of the

13 issuer’’;

14 (2) in paragraph (2)(B), by inserting before the

15 period the following: ‘‘, except that an eligible indi16 vidual shall not be charged a premium rate that is

17 higher than a rate equal to 150 percent of the

18 standard risk rate as determined under the Model

19 Plan’’; and

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

21 ‘‘(4) LIMITATION.—

22 ‘‘(A) IN GENERAL.—In the case of a mech23 anism described in subparagraph (A) or (B) of

24 paragraph (3), a State shall not be considered

25 to be implementing an acceptable alternative
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1 mechanism unless the mechanism limits the

2 amount of premium rates that may be charged

3 to eligible individuals to not more than 150 per4 cent of the standard risk rate.

5 ‘‘(B) STANDARD RISK RATE.—For pur6 poses of subparagraph (A), the term ‘standard

7 risk rate’ means—

8 ‘‘(i) in the case of a mechanism under

9 paragraph (3)(A), and as determined by

10 the Secretary to be appropriate with re11 spect to the State mechanism involved—

12 ‘‘(I) the rate determined under

13 section 2741(h)(2)(A);

14 ‘‘(II) the rate determined pursu15 ant to the standards included in the

16 Model Plan described in paragraph

17 (2)(B); or

18 ‘‘(III) the rate determined pursu19 ant to such other method of calcula20 tion as is determined by the State and

21 approved by the Secretary as appro22 priate to achieve the goal of this sub23 section; and
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1 ‘‘(ii) in the case of a mechanism

2 under paragraph (3)(B), the rate deter3 mined under section 2741(h)(2)(A).’’.

4 SEC. 3. EFFECTIVE DATE.

5 The amendments made by—

6 (1) section 2(a) shall apply to health insurance

7 coverage offered, sold, issued, renewed, in effect, or

8 operated in the individual market on the date that

9 is 6 months after the date of enactment of the Act;

10 and

11 (2) section 2(b) shall apply with respect to a

12 State that adopted an alternative mechanism under

13 section 2744 of the Public Health Service Act (42

14 U.S.C. 300gg–44) on the date that is 1 year after

15 the date of enactment of this Act.

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