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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 334 Introduced in Senate (IS)]

110th CONGRESS
  1st Session
                                 S. 334

  To provide affordable, guaranteed private health coverage that will 
         make Americans healthier and can never be taken away.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            January 18, 2007

   Mr. Wyden introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
  To provide affordable, guaranteed private health coverage that will 
         make Americans healthier and can never be taken away.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Healthy Americans 
Act''.
    (b) Table of Contents.--

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Definitions.
           TITLE I--HEALTHY AMERICANS PRIVATE INSURANCE PLANS

                Subtitle A--Guaranteed Private Coverage

Sec. 101. Guarantee of Healthy Americans Private Insurance coverage.
Sec. 102. Individual responsibility to enroll in a Healthy Americans 
                            Private Insurance plan.
 Subtitle B--Standards for Healthy Americans Private Insurance Coverage

Sec. 111. Healthy Americans Private Insurance plans.
Sec. 112. Specific coverage requirements.
Sec. 113. Updating Healthy Americans Private Insurance plan 
                            requirements.
    Subtitle C--Eligibility for Premium and Personal Responsibility 
                         Contribution Subsidies

Sec. 121. Eligibility for premium subsidies.
Sec. 122. Eligibility for personal responsibility contribution 
                            subsidies.
Sec. 123. Definitions and special rules.
                     Subtitle D--Wellness Programs

Sec. 131. Requirements for wellness programs.
                  TITLE II--HEALTHY START FOR CHILDREN

                  Subtitle A--Benefits and Eligibility

Sec. 201. General goal and authorization of appropriations for HAPI 
                            plan coverage for children.
Sec. 202. Coordination of supplemental coverage under the Medicaid 
                            program to HAPI plan coverage for children.
                     Subtitle B--Service Providers

Sec. 211. Inclusion of providers under HAPI plans.
Sec. 212. Use of, and grants for, school-based health centers.
       TITLE III--BETTER HEALTH FOR OLDER AND DISABLED AMERICANS

        Subtitle A--Assurance of Supplemental Medicaid Coverage

Sec. 301. Coordination of supplemental coverage under the Medicaid 
                            program for elderly and disabled 
                            individuals.
Subtitle B--Empowering Individuals and States To Improve Long-Term Care 
                                Choices

Sec. 311. New, automatic Medicaid option for State choices for long-
                            term care program.
Sec. 312. Simpler and more affordable long-term care insurance 
                            coverage.
                      TITLE IV--HEALTHIER MEDICARE

  Subtitle A--Authority To Adjust Amount of Part B Premium To Reward 
                        Positive Health Behavior

Sec. 401. Authority to adjust amount of Medicare part B premium to 
                            reward positive health behavior.
     Subtitle B--Promoting Primary Care for Medicare Beneficiaries

Sec. 411. Primary care services management payment.
              Subtitle C--Chronic Care Disease Management

Sec. 421. Chronic care disease management.
Sec. 422. Chronic Care Education Centers.
                    Subtitle D--Part D Improvements

Sec. 431. Negotiating fair prices for Medicare prescription drugs.
Sec. 432. Process for individuals entering the Medicare coverage gap to 
                            switch to a plan that provides coverage in 
                            the gap.
      Subtitle E--Improving Quality in Hospitals for All Patients

Sec. 441. Improving quality in hospitals for all patients.
               Subtitle F--End-of-Life Care Improvements

Sec. 451. Patient empowerment and following a patient's health care 
                            wishes.
Sec. 452. Permitting hospice beneficiaries to receive curative care.
Sec. 453. Providing beneficiaries with information regarding end-of-
                            life care clearinghouse.
Sec. 454. Clearinghouse.
                   Subtitle G--Additional Provisions

Sec. 461. Additional cost information.
Sec. 462. Reducing Medicare paperwork and regulatory burdens.
                  TITLE V--STATE HEALTH HELP AGENCIES

Sec. 501. Establishment.
Sec. 502. Responsibilities and authorities.
Sec. 503. Appropriations for transition to State Health Help Agencies.
                   TITLE VI--SHARED RESPONSIBILITIES

                Subtitle A--Individual Responsibilities

Sec. 601. Individual responsibility to ensure HAPI plan coverage.
                 Subtitle B--Employer Responsibilities

Sec. 611. Health care responsibility payments.
Sec. 612. Distribution of individual responsibility payments to HHAs.
                  Subtitle C--Insurer Responsibilities

Sec. 621. Insurer responsibilities.
                   Subtitle D--State Responsibilities

Sec. 631. State responsibilities.
Sec. 632. Empowering States to innovate through waivers.
         Subtitle E--Federal Fallback Guarantee Responsibility

Sec. 641. Federal guarantee of access to coverage.
             Subtitle F--Federal Financing Responsibilities

Sec. 651. Appropriation for subsidy payments.
Sec. 652. Recapture of Medicare and 90 percent of Medicaid Federal DSH 
                            funds to strengthen Medicare and ensure 
                            continued support for public health 
                            programs.
    Subtitle G--Tax Treatment of Health Care Coverage Under Healthy 
  Americans Program; Termination of Coverage Under Other Governmental 
          Programs and Transition Rules for Medicaid and SCHIP

 Part I--Tax Treatment of Health Care Coverage Under Healthy Americans 
                                Program

Sec. 661. Limited employee income and payroll tax exclusion for 
                            employer shared responsibility payments, 
                            historic retiree health contributions, and 
                            transitional coverage contributions.
Sec. 662. Exclusion for limited employer-provided health care fringe 
                            benefits.
Sec. 663. Limited employer deduction for employer shared responsibility 
                            payments, historic retiree health 
                            contributions, and other health care 
                            expenses.
Sec. 664. Health care standard deduction.
Sec. 665. Modification of other tax incentives to complement Healthy 
                            Americans program.
Sec. 666. Termination of certain employer incentives when replaced by 
                            lower health care costs.
Part II--Termination of Coverage Under Other Governmental Programs and 
                Transition Rules for Medicaid and SCHIP

Sec. 671. Group and individual health plan requirements not applicable 
                            to HAPI plans.
Sec. 672. Federal Employees Health Benefits Plan.
Sec. 673. Medicaid and SCHIP.
   TITLE VII--PURCHASING HEALTH SERVICES AND PRODUCTS THAT ARE MOST 
                               EFFECTIVE

           Subtitle A--Effective Health Services and Products

Sec. 701. One time disallowance of deduction for advertising and 
                            promotional expenses for certain 
                            prescription pharmaceuticals.
Sec. 702. Enhanced new drug and device approval.
Sec. 703. Medical schools and finding what works in health care.
Sec. 704. Finding affordable health care providers nearby.
   Subtitle B--Other Provisions to Improve Health Care Services and 
                                Quality

Sec. 711. Individual medical records.
Sec. 712. Bonus payment for medical malpractice reform.
  TITLE VIII--CONTAINING MEDICAL COSTS AND GETTING MORE VALUE FOR THE 
                           HEALTH CARE DOLLAR

Sec. 801. Cost-containment results of the Healthy Americans Act.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) Americans want affordable, guaranteed private health 
        coverage that makes them healthier and can never be taken away.
            (2) American health care provides primarily ``sick care'' 
        and does not do enough to prevent chronic illnesses like heart 
        disease, stroke, and diabetes. This results in significantly 
        higher health costs for all Americans.
            (3) Staying as healthy as possible often requires an 
        individual to change behavior and assume more personal 
        responsibility for his or her health.
            (4) Personal responsibility for one's health should include 
        purchasing one's own private health care coverage.
            (5) To accompany this new focus on staying healthy and 
        personal responsibility, our government must guarantee that all 
        Americans receive private affordable health coverage that can 
        never be taken away.
            (6) Financing this guarantee should be a shared 
        responsibility between individuals, the Government, and 
        employers.
            (7) The $2,200,000,000,000 spent annually on American 
        health care must be spent more effectively in order to meet 
        this guarantee.
            (8) This guarantee must include easier access to 
        understandable information about the quality, cost, and 
        effectiveness of health care providers, products, and services.
            (9) The fact that businesses in the United States compete 
        globally against businesses whose governments pay for health 
        care, coupled with the aging of the American population and the 
        explosive growth of preventable health problems, makes the 
        status quo in American health care unacceptable.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Adult individual.--The term ``adult individual'' means 
        an individual who--
                    (A) is--
                            (i) age 19 or older;
                            (ii) a resident of a State;
                            (iii)(I) a United States citizen; or
                            (II) an alien with permanent residence;
                            (iv) not a dependent child; and
                            (v) not an alien unlawfully present in the 
                        United States; and
                    (B) in the case of an incarcerated individual, such 
                an individual who is incarcerated for less than 1 
                month.
            (2) Alien with permanent residence.--The term ``alien with 
        permanent residence'' has the meaning given the term 
        ``qualified alien'' in section 431 of the Personal 
        Responsibility and Work Opportunity Reconciliation Act of 1996 
        (8 U.S.C. 1641).
            (3) Covered individual.--The term ``covered individual'' 
        means an individual who is enrolled in a HAPI plan.
            (4) Dependent child.--The term ``dependent child'' has the 
        meaning given the term ``qualifying child'' in section 152(c) 
        of the Internal Revenue Code of 1986.
            (5) HAPI plan.--The term ``HAPI plan'' means a Healthy 
        Americans Private Insurance plan described under subtitle B of 
        title I.
            (6) HHA.--The term ``HHA'' means the Health Help Agency of 
        a State as described under title V.
            (7) Health insurance issuer.--The term ``health insurance 
        issuer'' means an insurance company, insurance service, or 
        insurance organization (including a health maintenance 
        organization, as defined in paragraph (7)) which is licensed to 
        engage in the business of insurance in a State and which is 
        subject to State law which regulates insurance (within the 
        meaning of section 514(b)(2) of the Employee Retirement Income 
        Security Act of 1974). Such term does not include a group 
        health plan.
            (8) Health maintenance organization.--The term ``health 
        maintenance organization'' means--
                    (A) a federally qualified health maintenance 
                organization (as defined in section 1301(a)),
                    (B) an organization recognized under State law as a 
                health maintenance organization, or
                    (C) a similar organization regulated under State 
                law for solvency in the same manner and to the same 
                extent as such a health maintenance organization.
            (9) Personal responsibility contribution.--The term 
        ``personal responsibility contribution'' means a payment made 
        by a covered individual to a health care provider or a health 
        insurance issuer with respect to the provision of health care 
        services under a HAPI plan, not including any health insurance 
        premium payment.
            (10) Qualified collective bargaining agreement.--
                    (A) In general.--The term ``qualified collective 
                bargaining agreement'' means an agreement between a 
                qualified collective bargaining employer and an 
                employee organization that represents the employees of 
                such employer that is in effect until the date that is 
                the earlier of--
                            (i) January 1 of the first year which is 
                        more than 7 years after the date of enactment 
                        of this Act, or
                            (ii) the date the collective bargaining 
                        agreement expires.
                    (B) Qualified collective bargaining employer.--The 
                term ``qualified collective bargaining employer'' means 
                an employer who provides health insurance to employees 
                under the terms of a collective bargaining agreement 
                which is entered into before the date of the enactment 
                of this Act.
            (11) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (12) State.--The term ``State'' means each of the several 
        States of the United States, the District of Columbia, the 
        Commonwealth of Puerto Rico, the Virgin Islands, American 
        Samoa, Guam, the Commonwealth of the Northern Mariana Islands, 
        and other territories of the United States.
            (13) State of residence.--The term ``State of residence'', 
        with respect to an individual, means the State in which the 
        individual has primary residence.

           TITLE I--HEALTHY AMERICANS PRIVATE INSURANCE PLANS

                Subtitle A--Guaranteed Private Coverage

SEC. 101. GUARANTEE OF HEALTHY AMERICANS PRIVATE INSURANCE COVERAGE.

    Not later than the date that is 2 years after the date of enactment 
of this Act, each adult individual shall have the opportunity to 
purchase a Healthy Americans Private Insurance plan that meets the 
requirements of subtitle B, (referred to in this Act as ``HAPI plan'') 
for such individual and the dependent children of such individual.

SEC. 102. INDIVIDUAL RESPONSIBILITY TO ENROLL IN A HEALTHY AMERICANS 
              PRIVATE INSURANCE PLAN.

    (a) Individual Responsibility.--
            (1) Adult individuals.--Each adult individual shall have 
        the responsibility to enroll in a HAPI plan offered through the 
        HHA of the adult individual's State of residence, unless the 
        adult individual--
                    (A) provides evidence of receipt of coverage under, 
                or enrollment in a health plan offered through--
                            (i) the Medicare program under title XVIII 
                        of the Social Security Act;
                            (ii) a health insurance plan offered by the 
                        Department of Defense;
                            (iii) an employee benefit plan through a 
                        former employer;
                            (iv) a qualified collective bargaining 
                        agreement;
                            (v) the Department of Veterans Affairs; or
                            (vi) the Indian Health Service; or
                    (B) is opposed to health plan coverage for 
                religious reasons, including an individual who declines 
                health plan coverage due to a reliance on healing using 
                spiritual means through prayer alone.
            (2) Dependent children.--Each adult individual shall have 
        the responsibility to enroll each dependent child of the adult 
        individual in a HAPI plan offered through the HHA of the adult 
        individual's State of residence, unless the adult individual--
                    (A) provides evidence that the dependent child is 
                enrolled in a health plan offered through a program 
                described in paragraph (1)(A); or
                    (B) is described in paragraph (1)(B).
            (3) Verification of religious exception.--Each State shall 
        develop guidelines for determining and verifying the 
        individuals who qualify for the exception under paragraph 
        (1)(B).
    (b) Penalty for Failure To Purchase Coverage.--
            (1) Penalty.--
                    (A) In general.--In the case of an individual 
                described in subparagraph (B), such individual shall be 
                subject to a late enrollment penalty in an amount 
                determined under subparagraph (C).
                    (B) Individuals subject to penalty.--An individual 
                described in this subparagraph is an adult individual 
                for whom there is a continuous period of 63 days or 
                longer, beginning on the applicable date (as defined in 
                subparagraph (E)) and ending on the date of enrollment 
                in a HAPI plan, during all of which the individual--
                            (i) was not covered under a HAPI plan or a 
                        health plan offered through a program described 
                        in paragraph (1)(A) of section 102(a); and
                            (ii) was not described in paragraph (1)(B) 
                        of such section.
                    (C) Amount of penalty.--
                            (i) In general.--The amount determined 
                        under this subparagraph for an individual is an 
                        amount equal to the sum of--
                                    (I) the number of uncovered months 
                                multiplied by the weighted average of 
                                the monthly premium for HAPI plans of 
                                the same class of coverage as the 
                                individual's in the applicable coverage 
                                area (determined without regard to any 
                                subsidy under section 121); and
                                    (II) 15 percent of the amount 
                                determined under subclause (I).
                            (ii) Uncovered month defined.--For purposes 
                        of this subsection, the term ``uncovered 
                        month'' means, with respect to an individual, 
                        any month beginning on or after the applicable 
                        date (as defined in subparagraph (E)) unless 
                        the individual can demonstrate that the 
                        individual--
                                    (I) was covered under a HAPI plan 
                                or a health plan offered through a 
                                program described in paragraph (1)(A) 
                                of section 102(a) for any portion of 
                                such month; or
                                    (II) was described in paragraph 
                                (1)(B) of such section for any portion 
                                of such month.
                        A month shall not be treated as an uncovered 
                        month if the individual has already paid a late 
                        enrollment penalty under this subsection for 
                        such month or if the individual was 
                        incarcerated for the entire month.
                    (D) Payment.--Payment of any late enrollment 
                penalty by an individual under this subsection shall be 
                made to the HHA of the individual's State of residence 
                under procedures established by the State.
                    (E) Applicable date.--In this paragraph, the term 
                ``applicable date'' means the earlier of--
                            (i) the day after the end of the State's 
                        first open enrollment period for HAPI plans 
                        (during which all adult individuals are 
                        eligible to enroll); and
                            (ii) the day after the end of the first 
                        enrollment period for a fallback HAPI plan in 
                        the State.
            (2) Waiver.--An HHA of a State may reduce or waive the 
        amount of any late enrollment penalty applicable to an 
        individual under this subsection if payment of such penalty 
        would constitute a hardship (determined under procedures 
        established by the State).
            (3) Enforcement.--Each State shall determine appropriate 
        mechanisms, which may not include revocation or ineligibility 
        for coverage under a HAPI plan, to enforce the responsibility 
        of each adult individual to purchase HAPI plan coverage for 
        such individual and any dependent children of such individual 
        under subsection (a).
    (c) Other Insurance Coverage.--Nothing in this Act shall be 
construed to prohibit an individual from enrolling in a health 
insurance plan that is not a HAPI plan.

 Subtitle B--Standards for Healthy Americans Private Insurance Coverage

SEC. 111. HEALTHY AMERICANS PRIVATE INSURANCE PLANS.

    (a) Options.--A State HHA--
            (1) shall require that at least 2 HAPI plans that comply 
        with the requirements of subsection (b), be offered through the 
        HHA to each individual in the State;
            (2) may require the offering of 1 or more HAPI plans that 
        include coverage for benefits, items, or services required by 
        the State in addition to the standardized benefits, items, or 
        services required under subsection (b) for HAPI plans if--
                    (A) such additional benefits, items, and services 
                build upon the standardized benefits package;
                    (B) a list of such additional benefits, items, or 
                services, and the prices applicable to such additional 
                benefits, items, and services, is displayed in a manner 
                that is separate from the description of the 
                standardized benefits, items, or services required 
                under the plan under this section (and consistent with 
                the manner in which such items are displayed by medigap 
                policies) and that enables a consumer to identify such 
                additional benefits, items, and services and the cost 
                associated with such; and
                    (C) no premium subsidies are available under 
                subtitle C for any portion of the premiums for a HAPI 
                plan that are attributable to such additional benefits, 
                items, or services; and
            (3) may permit the offering of 1 or more actuarially 
        equivalent HAPI plans through the HHA as provided for in 
        subsection (c).
    (b) Standardized Coverage Requirements for HAPI Plans.--
            (1) In general.--Each HAPI plan offered through an HHA 
        shall--
                    (A) provide benefits for health care items and 
                services that are actuarially equivalent or greater in 
                value than the benefits offered as of January 1, 2007, 
                under the Blue Cross/Blue Shield Standard Plan provided 
                under the Federal Employees Health Benefit Program 
                under chapter 89 of title 5, United States Code, 
                including coverage of an initial primary care 
                assessment and annual physical examinations;
                    (B) provide benefits for wellness programs and 
                incentives to promote the use of such programs;
                    (C) provide coverage for catastrophic medical 
                events that result in out-of-pocket costs for an 
                individual or family if lifetime limits are exhausted;
                    (D) designate a health care provider, such as a 
                primary care physician, nurse practitioner, or other 
                qualified health provider, to monitor the health and 
                health care of a covered individuals (such provider 
                shall be known as the ``health home'' of the covered 
                individual);
                    (E) ensure that, as part of the first visit with a 
                primary care physician or the health home of a covered 
                individual, such provider and individual determine a 
                care plan to maximize the health of the individual 
                through wellness and prevention activities;
                    (F) provide benefits for comprehensive disease 
                prevention, early detection, disease management, and 
                chronic condition management that meets minimum 
                standards developed by the Secretary;
                    (G) provide for the application of personal 
                responsibility contribution requirements with respect 
                to covered benefits in a manner that may be similar to 
                the cost sharing requirements applied as of January 1, 
                2007, under the Blue Cross/Blue Shield Standard Plan 
                provided under the Federal Employees Health Benefit 
                Program under chapter 89 of title 5, United States 
                Code, except that no contributions shall be required 
                for--
                            (i) preventive items or services; and
                            (ii) early detection, disease management, 
                        or chronic pain treatment items or services; 
                        and
                    (H) comply with the requirements of section 112.
            (2) Determination of benefits by secretary.--Not later than 
        1 year after the date of enactment of this Act, the Secretary 
        shall promulgate guidelines concerning the benefits, items, and 
        services that are covered under paragraph (1).
            (3) Coverage for family planning.--
                    (A) In general.--Except as provided in subparagraph 
                (B), a health insurance issuer shall make available 
                supplemental coverage for abortion services that may be 
                purchased in conjunction with enrollment in a HAPI plan 
                or an actuarially equivalent healthy American plan.
                    (B) Religious and moral exception.--Nothing in this 
                paragraph shall be construed to require a health 
                insurance issuer affiliated with a religious 
                institution to provide the coverage described in 
                subparagraph (A).
            (4) Rule of construction.--Nothing in this subsection shall 
        be construed to prohibit a HAPI plan from providing coverage 
        for benefits, items, and services in addition to the coverage 
        required under this subsection. No premium subsidies shall be 
        available under subtitle C for any portion of the premiums for 
        a HAPI plan that are attributable to such additional benefits, 
        items, or services.
    (c) Actuarially Equivalent Healthy American Plans.--Each 
actuarially equivalent healthy American plan offered through an HHA 
shall--
            (1) cover all treatments, items, services, and providers at 
        least to the same extent as those covered under a HAPI plan 
        that--
                    (A) shall include coverage for--
                            (i) preventive items and services 
                        (including well baby care and well child care 
                        and appropriate immunizations) and disease 
                        management services;
                            (ii) inpatient and outpatient hospital 
                        services;
                            (iii) physicians' surgical and medical 
                        services; and
                            (iv) laboratory and x-ray services; and
                    (B) may include additional supplemental benefits to 
                the extent approved by the State and provided for in 
                advance in the plan contract; and
            (2) ensure that no personal responsibility contribution 
        requirements are applied for prevention and chronic disease 
        management benefits, items, or services.
    (d) Premiums and Rating Requirements.--
            (1) Classes of coverage.--With respect to a HAPI plan, a 
        health insurance issuer shall provide for the following classes 
        of coverage:
                    (A) Coverage of an individual.
                    (B) Coverage of a married couple or domestic 
                partnership (as determined by a State) without 
                dependent children.
                    (C) Coverage of an adult individual with 1 or more 
                dependent children.
                    (D) Coverage of a married couple or domestic 
                partnership (as determined by a State) with 1 or more 
                dependent children.
            (2) Determinations of premiums.--With respect to each class 
        of coverage described in paragraph (1), a health insurance 
        issuer shall determine the premium amount for a HAPI plan using 
        adjusted community rating principals, as described in 
        paragraphs (3) and (4) established by the State. States may 
        permit premium variations based only on geography, tobacco use, 
        and family size. A State may determine to have no variation.
            (3) Rewards.--A State shall permit a health insurance 
        issuer to provide premium discounts and other incentives to 
        enrollees based on the participation of such enrollees in 
        wellness, chronic disease management, and other programs 
        designed to improve the health of the enrollees.
            (4) Limitation.--A health insurance issuer shall not 
        consider age, gender, industry, health status, or claims 
        experience in determining premiums under this subsection.
    (e) Application of State Mandate Laws.--State benefit mandate laws 
that would otherwise be applicable to HAPI plans shall be preempted.

SEC. 112. SPECIFIC COVERAGE REQUIREMENTS.

    (a) In General.--Each HAPI plan offered through a HHA shall--
            (1) provide for increased portability through limitations 
        on the application of preexisting condition exclusions, in a 
        manner similar to that provided for under section 2701 of the 
        Public Health Service Act (42 U.S.C. 300gg), as such section 
        existed on the day before the date of enactment of this Act, 
        except that the State shall develop procedures to ensure that 
        preexisting exclusion limitations do not apply to new enrollees 
        who had no applicable creditable coverage immediately prior to 
        the first enrollment period;
            (2) provide for the guaranteed availability of coverage to 
        prospective enrollees in a manner similar to that provided for 
        under section 2711 of the Public Health Service Act (42 U.S.C. 
        300gg-11), as such section existed on the day before the date 
        of enactment of this Act;
            (3) provide for the guaranteed renewability of coverage in 
        a manner similar to that provided for under section 2712 of the 
        Public Health Service Act (42 U.S.C. 300gg-12), as such section 
        existed on the day before the date of enactment of this Act, 
        except that the prohibition on market reentry provided for 
        under such section shall be deemed to be 2 years;
            (4) prohibit discrimination against individual enrollees 
        and prospective enrollees based on health status in a manner 
        similar to that provided for under section 2702 of the Public 
        Health Service Act (42 U.S.C. 300gg-1), as such section existed 
        on the day before the date of enactment of this Act;
            (5) provide coverage protections for enrollees who are 
        mothers and newborns in a manner similar to that provided for 
        under section 2704 of the Public Health Service Act (42 U.S.C. 
        300gg-3), as such section existed on the day before the date of 
        enactment of this Act;
            (6) provide for full parity in the application of certain 
        limits to mental health benefits in a manner similar to that 
        provided for under section 2705 of the Public Health Service 
        Act (42 U.S.C. 300gg-4), as such section existed on the day 
        before the date of enactment of this Act;
            (7) provide coverage for reconstructive surgery following a 
        mastectomy in a manner similar to that provided for under 
        section 2706 of the Public Health Service Act (42 U.S.C. 300gg-
        5), as such section existed on the day before the date of 
        enactment of this Act; and
            (8) prohibit discrimination on the basis of genetic 
        information, as provided for under subsection (b).
    (b) Genetic Nondiscrimination.--
            (1) Prohibition on genetic information as a condition of 
        eligibility.--A HAPI plan shall not establish rules for the 
        eligibility (including continued eligibility) of any individual 
        to enroll in coverage under the plan based on genetic 
        information (including information about a request for or 
        receipt of genetic services by an individual or family member 
        of such individual).
            (2) Prohibition on genetic information in setting premium 
        rates.--A HAPI plan shall not adjust premium or personal 
        responsibility contribution amounts for an individual on the 
        basis of genetic information concerning the individual or a 
        family member of the individual (including information about a 
        request for or receipt of genetic services by an individual or 
        family member of such individual).
            (3) Genetic testing.--
                    (A) Limitation on requesting or requiring genetic 
                testing.--A HAPI plan shall not request or require an 
                individual or a family member of such individual to 
                undergo a genetic test.
                    (B) Rule of construction.--Nothing in this 
                subsection shall be construed to--
                            (i) limit the authority of a health care 
                        professional who is providing health care 
                        services with respect to an individual to 
                        request that such individual or a family member 
                        of such individual undergo a genetic test;
                            (ii) limit the authority of a health care 
                        professional who is employed by or affiliated 
                        with a HAPI plan and who is providing health 
                        care services to an individual as part of a 
                        bona fide wellness program to notify such 
                        individual of the availability of a genetic 
                        test or to provide information to such 
                        individual regarding such genetic test; or
                            (iii) authorize or permit a health care 
                        professional to require that an individual 
                        undergo a genetic test.
    (c) Guidelines.--Not later than 1 year after the date of enactment 
of this Act, the Secretary shall develop guidelines for the application 
of the requirements of this section.

SEC. 113. UPDATING HEALTHY AMERICANS PRIVATE INSURANCE PLAN 
              REQUIREMENTS.

    (a) In General.--The Secretary shall establish the Healthy America 
Advisory Committee (referred to in this section as the ``Advisory 
Committee'') to provide annual recommendations to the Secretary and 
Congress concerning modifications to the benefits, items, and services 
required under section 111(a)(1).
    (b) Composition.--
            (1) In general.--The Advisory Committee shall be composed 
        of 15 members to be appointed by the Comptroller General, of 
        which--
                    (A) at least 1 such member shall be a health 
                economist;
                    (B) at least 1 such member shall be an ethicist;
                    (C) at least 1 such member shall be a 
                representative of health care providers, including 
                nurses and other nonphysician providers;
                    (D) at least 1 such member shall be a 
                representative of health insurance issuers;
                    (E) at least 1 such member shall be a health care 
                consumer;
                    (F) at least 1 such member shall be a 
                representative of the United States Preventive Services 
                Task Force; and
                    (G) at least 1 such member shall be an actuary.
            (2) Geographic balance.--The Comptroller General shall 
        ensure the geographic diversity of the members appointed under 
        paragraph (1).
    (c) Terms, Vacancies.--Members of the Advisory Committee shall be 
appointed for a term of 3 years and may be reappointed for 1 additional 
term. In appointing members, the Comptroller General shall stagger the 
terms of the initial members so that the terms of one-third of the 
members expire each year. Vacancies in the membership of the Advisory 
Committee shall not affect the Committee's ability to carry out its 
functions. The Comptroller General shall appoint an individual to fill 
the remaining term of a vacant member within 2 months of being notified 
of such vacancy.
    (d) Compensation and Expenses.--Each member of the Advisory 
Committee who is not otherwise employed by the United States Government 
shall receive compensation at a rate equal to the daily rate prescribed 
for GS-18 under the General Schedule under section 5332 of title 5, 
United States Code, for each day, including travel time, such member is 
engaged in the actual performance of duties as a member of the 
Committee. A member of the Advisory Committee who is an officer or 
employee of the United States Government shall serve without additional 
compensation. All members of the Advisory Committee shall be reimbursed 
for travel, subsistence, and other necessary expenses incurred by them 
in the performance of their duties.
    (e) Action by Secretary.--Not later than December 31 of the second 
full calendar year following the date of enactment of this Act, and 
each December 31 thereafter, the Advisory Committee shall provide to 
Congress and the Secretary a report that--
            (1) describes any recommendations for modifications to the 
        benefits, items, and services that are required to be covered 
        under a HAPI plan; and
            (2) includes any recommendations to modify HAPI plans to 
        improve the quality of life for United States citizens and to 
        ensure that benefits in such plans are medically- and cost-
        effective.
    (f) Application of FACA.--The Federal Advisory Committee Act (5 
U.S.C. App.) shall apply to the Advisory Committee, except that section 
14 of such Act shall not apply.

    Subtitle C--Eligibility for Premium and Personal Responsibility 
                         Contribution Subsidies

SEC. 121. ELIGIBILITY FOR PREMIUM SUBSIDIES.

    (a) Individuals and Families At or Below the Poverty Line.--For any 
calendar year, in the case of a covered individual who is determined to 
have a modified adjusted gross income that is at or below 100 percent 
of the poverty line, as applicable to a family of the size involved, 
the covered individual is entitled under this section to an income-
related premium subsidy equal to the basic premium subsidy amount.
    (b) Partial Subsidy for Other Individuals and Families.--
            (1) In general.--For any calendar year, in the case of a 
        covered individual who is determined to have a modified 
        adjusted gross income that is greater than 100 percent of the 
        poverty line, as applicable to a family of the size involved, 
        but below the applicable percentage of the poverty line, as 
        applicable to a family of the size involved, the covered 
        individual is entitled under this section to an income-related 
        premium subsidy equal to the basic premium subsidy amount 
        reduced by the amount determined under paragraph (2).
            (2) Amount of reduction.--The amount of the reduction 
        determined under this paragraph is the amount that bears the 
        same ratio to the basic premium subsidy amount as--
                    (A) the excess of--
                            (i) such individual's modified adjusted 
                        gross income, over
                            (ii) an amount equal to 100 percent of the 
                        poverty line as applicable to a family of the 
                        size involved, bears to
                    (B) the excess of--
                            (i) an amount equal to the applicable 
                        percentage of the poverty line as applicable to 
                        a family of the size involved, over
                            (ii) an amount equal to 100 percent of the 
                        poverty line as applicable to a family of the 
                        size involved.
            (3) Applicable percentage.--For purposes of this 
        subsection, the applicable percentage is 400 percent.
    (c) Basic Premium Subsidy Amount.--For purposes of this section, 
the term ``basic premium subsidy amount'' means, with respect to any 
individual, the lesser of--
            (1) the annual premium for the HAPI plan under which the 
        individual is a covered individual; or
            (2) the weighted average of the premium for HAPI plans of 
        the same class of coverage (as described in section 111(d)(1)) 
        as the individual's in the applicable coverage area.
    (d) Change in Status Notification.--
            (1) In general.--If an individual's modified adjusted 
        income changes such that the individual becomes eligible or 
        ineligible for a subsidy under this section, the individual 
        shall report that change to the HHA of the individual's State 
        of residence not more than 60 days after the change takes 
        effect. If an individual reports the change within 60 days 
        under the preceding sentence, the individual's HAPI plan 
        coverage shall be deemed credible coverage for the purposes of 
        maintaining coverage for preexisting conditions.
            (2) Adjustment.--The HHA shall adjust the premium subsidy 
        of such individual to take effect on the first month after the 
        date of the notification under paragraph (1) for which the next 
        premium payment would be due from the individual.
    (e) Catastrophic Event.--A State may develop mechanisms to ensure 
that covered individuals do not have a break in coverage due to a 
catastrophic financial event.

SEC. 122. ELIGIBILITY FOR PERSONAL RESPONSIBILITY CONTRIBUTION 
              SUBSIDIES.

    (a) Full Subsidy.--To meet the eligibility requirements under 
subtitle B for an HHA, for any taxable year, in the case of a covered 
individual who is determined to have a modified adjusted gross income 
that is below 100 percent of the poverty line as applicable to a family 
of the size involved, an HHA shall provide to such an individual a 
subsidy equal to the full amount of any personal responsibility 
contributions applicable to such individual.
    (b) Partial Subsidy.--To meet the eligibility requirements under 
subtitle B for an HHA, for any taxable year, in the case of a covered 
individual who is determined to have a modified adjusted gross income 
that is at or above 100 percent of the poverty line as applicable to a 
family of the size involved, an HHA may provide to such an individual a 
subsidy equal to the part of the amount of any personal responsibility 
contributions applicable to such individual.

SEC. 123. DEFINITIONS AND SPECIAL RULES.

    (a) Determination of Modified Adjusted Gross Income.--
            (1) In general.--In this subtitle, the term ``modified 
        adjusted gross income'' means adjusted gross income (as defined 
        in section 62 of the Internal Revenue Code of 1986)--
                    (A) determined without regard to sections 86, 135, 
                137, 199, 221, 222, 911, 931, and 933 of such Code; and
                    (B) increased by--
                            (i) the amount of interest received or 
                        accrued during the taxable year which is exempt 
                        from tax under such Code; and
                            (ii) the amount of any social security 
                        benefits (as defined in section 86(d) of such 
                        Code) received or accrued during the taxable 
                        year.
            (2) Taxable year to be used to determine modified adjusted 
        gross income.--In applying this subtitle to determine an 
        individual's annual premiums, the covered individual's modified 
        adjusted gross income shall be such income determined using the 
        individual's most recent income tax return or other information 
        furnished to the Secretary by such individual, as the Secretary 
        may require.
    (b) Poverty Line.--In this subtitle, the term ``poverty line'' has 
the meaning given such term in section 673(2) of the Community Health 
Services Block Grant Act (42 U.S.C. 9902(2)), including any revision 
required by such section.
    (c) Other Procedures To Determine Subsidies.--The Secretary shall 
promulgate regulations to be used by HHAs to calculate the premium 
subsidies under section 121 and personal responsibility subsidies under 
section 122 for individuals whose modified adjusted gross income 
described in subsection (a)(2) is significantly lower than the modified 
adjusted gross income of the year involved.
    (d) Special Rule for Unlawfully Present Aliens.--A health insurance 
issuer shall remit to the Federal Government any funding, including any 
subsidy payments, received by such issuer from the Federal Government 
on behalf of any adult alien who is unlawfully present in the United 
States.
    (e) Special Rule for Aliens.--The Secretary of Homeland Security 
may not extend or renew an alien's eligibility for status in the United 
States or adjust the status of an alien in the United States if the 
alien owes--
            (1) a premium payment for a HAPI plan that is past due; or
            (2) a penalty incurred for failing to pay such a premium.
    (f) No Discharge in Bankruptcy.--In the case of any bankruptcy 
filed by or on behalf of any person after the date that is 2 years 
after the date of enactment of this Act, under title 11, United States 
Code, any penalty imposed with respect to such person for failure to 
pay a HAPI plan premium shall not be subject to discharge under such 
title.

                     Subtitle D--Wellness Programs

SEC. 131. REQUIREMENTS FOR WELLNESS PROGRAMS.

    (a) Definition.--In this Act, the term ``wellness program'' means a 
program that consists of a combination of activities that are designed 
to increase awareness, assess risks, educate, and promote voluntary 
behavior change to improve the health of an individual, modify his or 
her consumer health behavior, enhance his or her personal well-being 
and productivity, and prevent illness and injury.
    (b) Discounts.--
            (1) Eligibility.--With respect to a HAPI plan that is 
        offered in a State that permits premium discounts for enrollees 
        who participate in a wellness program, to be eligible to 
        receive such a discount, the administrator of the wellness 
        program, on behalf of the enrollee, shall certify in writing to 
        the plan that--
                    (A)(i) the enrollee is participating in an approved 
                wellness program; or
                    (ii) the dependent child of the enrollee is 
                participating in an approved wellness program; and
                    (B) the wellness program meets the requirements of 
                this subsection.
            (2) Requirements.--A wellness program meets the 
        requirements of this paragraph if such program--
                    (A) is reasonably designed (as determined by the 
                HAPI plan) to promote good health and prevent disease 
                for program participants;
                    (B) has been approved by the HAPI plan for purposes 
                of applying participation discounts;
                    (C) is offered to all enrollees in a HAPI plan 
                regardless of health status;
                    (D) permits any enrollee for whom it is 
                unreasonably difficult to meet the initial program 
                standard for participation due to a medical condition 
                (or for whom it is medically inadvisable to attempt) an 
                opportunity to meet a reasonable alternative 
                participation standard--
                            (i)(I) that is developed prior to 
                        enrollment of the enrollee; or
                            (II) that is developed in consultation with 
                        the enrollee after enrollment of the enrollee, 
                        after a determination has been made that the 
                        enrollee cannot safely meet the program 
                        participation standard; and
                            (ii) the availability of which is disclosed 
                        in the original documents relating to 
                        participation in the program;
                    (E) applies procedures for determining whether an 
                enrollee is participating in a meaningful manner in the 
                program, including procedures to determine if such 
                participation is resulting in lifestyle changes that 
                are indicative of an improved health outcome or 
                outcomes; and
                    (F) meets any other requirements imposed by the 
                HAPI plan.
            (3) Relation to health status.--Participation in a wellness 
        program may not be used by a HAPI plan to make rate or discount 
        determinations with respect to the health status of an 
        enrollee.
            (4) Availability of discounts.--
                    (A) Offering of enrollment.--A HAPI plan shall 
                provide enrollees with the opportunity to participate 
                in a wellness program (for purposes of qualifying for 
                premium discounts) at least once each year.
                    (B) Determinations.--Determinations with respect to 
                the successful participation by an enrollee in a 
                wellness program for purposes of qualifying for 
                discounts shall be made by the HAPI plan based on a 
                retrospective review of the scope of activities of the 
                enrollee under the program. The HAPI plan may require a 
                minimum level of successful participation in such a 
                program prior to applying any premium discount.
                    (C) Participation in multiple programs.--An 
                enrollee may participate in multiple wellness programs 
                to reach the maximum premium discount permitted by the 
                HAPI plan under applicable State law.
            (5) Personal responsibility contribution discount.--A HAPI 
        plan may elect to provide discounts in the amount of the 
        personal responsibility contribution that is required of an 
        enrollee if the enrollee participates in an approved wellness 
        program.
    (c) Employer Incentive for Wellness Programs.--For provisions 
relating to employers deducting the costs of offering wellness programs 
or worksite health centers see section 162(l) of the Internal Revenue 
Code of 1986.

                  TITLE II--HEALTHY START FOR CHILDREN

                  Subtitle A--Benefits and Eligibility

SEC. 201. GENERAL GOAL AND AUTHORIZATION OF APPROPRIATIONS FOR HAPI 
              PLAN COVERAGE FOR CHILDREN.

    (a) General Goal.--It is the general goal of this Act to provide 
essential, good quality, affordable, and prevention-oriented health 
care coverage for all children in the United States.
    (b) Authorization of Appropriations.--There is authorized to be 
appropriated, such sums as may be necessary for each fiscal year to 
enable the Secretary to provide assistance to States to enable such 
States to ensure that each child who is a member of a family with a 
modified adjusted gross income that is below 300 percent of the poverty 
line as applicable to a family of the size involved, who is not 
otherwise eligible for coverage as a dependent under a HAPI plan 
maintained by his or her parents, is covered under a HAPI plan provided 
through the State HHA.
    (c) Policies and Procedures.--The Secretary shall develop policies 
and procedures to be applied by the States to identify children 
described in subsection (a) and to provide such children with coverage 
under a HAPI plan. States shall determine, in consultation with health 
insurance issuers, a separate class of coverage to assure affordable 
child coverage.
    (d) Definition.--In this title, the term ``child'' means an 
individual who is under the age of 19 years or, in the case of an 
individual in foster care, under the age of 21 years.

SEC. 202. COORDINATION OF SUPPLEMENTAL COVERAGE UNDER THE MEDICAID 
              PROGRAM TO HAPI PLAN COVERAGE FOR CHILDREN.

    (a) Assurance of Supplemental Coverage.--The Secretary shall 
provide guidance to States and health insurance issuers that ensures 
that, after December 31 of the last calendar year ending before the 
first calendar year in which coverage under a HAPI plan begins, any 
child covered under a HAPI plan provided through the State HHA 
continues to receive medical assistance under State Medicaid plans in a 
manner that--
            (1) is provided in coordination with, and as a supplement 
        to, the coverage provided the child under the HAPI plan in 
        which the child is enrolled;
            (2) does not supplant the child's coverage under a HAPI 
        plan; and
            (3) ensures that the child receives any items or services 
        that are not available under the HAPI plan in which they are 
        enrolled but that the child would have received under the 
        Medicaid program of the State in which the child resides if the 
        Healthy Americans Act had not been enacted, including items and 
        services described in section 1905(a)(4)(B) (relating to early 
        and periodic screening, diagnostic, and treatment services 
        defined in section 1905(r) and provided in accordance with the 
        requirements of section 1902(a)(43)).
    (b) Definition.--In this section, the term ``child'', in addition 
to the meaning given that term under section 201(d), includes any 
individual who would be considered a child under the Medicaid program 
of the State in which the individual resides.

                     Subtitle B--Service Providers

SEC. 211. INCLUSION OF PROVIDERS UNDER HAPI PLANS.

    (a) In General.--To ensure that children have access to health care 
in their communities, and that such care is provided to such children 
for no cost or on a reimbursable basis, a HAPI plan shall ensure that 
health care items and services may be obtained by such children from, 
at a minimum, the providers described in subsection (b) if available in 
the area involved.
    (b) Providers Described.--The providers described in this 
subsection include the following:
            (1) A school-based health center (in accordance with 
        section 212).
            (2) A health center funded under section 330 of the Public 
        Health Service Act (42 U.S.C. 254b).
            (3) A federally qualified health center.
            (4) A rural health clinic under title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.).
            (5) An Indian health service facility.

SEC. 212. USE OF, AND GRANTS FOR, SCHOOL-BASED HEALTH CENTERS.

    (a) Definition.--In this section, the term ``school-based health 
center'' means a health center that--
            (1) is located within an elementary or secondary school 
        facility;
            (2) is operated in collaboration with the school in which 
        such center is located;
            (3) is administered by a community-based organization 
        including a hospital, public health department, community 
        health center, or nonprofit health care agency;
            (4) at a minimum, provides to school-aged children--
                    (A) primary health care services, including 
                comprehensive health assessments, and diagnosis and 
                treatment of minor, acute, and chronic medical 
                conditions and Healthy Start benefits;
                    (B) mental health services, including crisis 
                intervention, counseling, and emergency psychiatric 
                care at the school or by referral;
                    (C) the availability of services at the school when 
                the school is open and 24-hour coverage through an on-
                call system with other providers to ensure access when 
                the school or health center is closed;
                    (D) services through the use of a qualified and 
                appropriately credentialed individual, including a 
                nurse practitioner or physician assistant, a mental 
                health professional, a physician, and a health 
                assistant; and
                    (E) by not later than January 1, 2010, an 
                electronic medical record relating to the individual; 
                and
            (5) may provide optional preventive dental services, 
        consistent with State licensure law, through the use of dental 
        hygienists or dental assistants that provide preventive 
        services such as basic oral exams, cleanings, and sealants.
    (b) Access to School-Based Health Centers.--
            (1) In general.--A school-based health center may provide 
        services to students in more than 1 school if the school 
        district or other supervising State entity determined that 
        capacity and geographic location make such provision of 
        services appropriate.
            (2) Enrollment.--Upon the enrollment of a student in a 
        school with a school-based health center, the center will 
        provide the student with the opportunity to enroll, after 
        parental consent, to receive health care from the center.
            (3) Reimbursement for services.--
                    (A) In general.--A school-based health center may 
                seek reimbursement from a third party payer if 
                available, including a HAPI plan, if a child receives 
                health care items or services through the center.
                    (B) Use of funds.--Amounts received from a third 
                party payer under subparagraph (A) shall be allocated 
                to the school-based health center that provided the 
                care for which the reimbursement was provided for use 
                by that center for providing additional health care 
                items and services.
    (c) Developmental Grants.--
            (1) In general.--The Secretary shall award grants to local 
        school districts and communities for the establishment and 
        operation of school-based health centers.
            (2) Eligibility.--To be eligible for a grant under 
        paragraph (1), a local school district or local community shall 
        submit to the Secretary an application at such time, in such 
        manner, and containing such information as the Secretary may 
        require.
            (3) Selection criteria.--In awarding grants under this 
        subsection, the Secretary shall give priority to--
                    (A) an applicant that will use amounts under the 
                grant to establish a school-based health center in a 
                medically underserved area, or an area for which there 
                are extended distances between the school involved and 
                appropriate providers of care for school-aged children 
                in the geographic area involved;
                    (B) an applicant that will use amounts under the 
                grant to establish a school-based health center in a 
                school that serves students with the highest incidence 
                of unmet medical and psycho-social needs; and
                    (C) an applicant that can demonstrate that State, 
                local, or community partners, or any combination of 
                such entities, have provided at least 50 percent of the 
                funding for the school-based health center involved to 
                ensure the ongoing operation of the center.
            (4) Use of funds.--A grantee shall use amounts received 
        under a grant under this subsection to establish and operate a 
        school-based health center. Not less than 50 percent of the 
        amounts received under the grant shall be used for the ongoing 
        operations of the center.
    (d) Coverage by Federal Tort Claims Act.--In providing health care 
items and services to students through a school-based health care 
center, a health care provider shall be deemed to be an employee of the 
government for purposes of the application of chapter 171 of title 28, 
United States Code (the Federal Tort Claims Act) if such provider was 
acting within the scope of his or her license.
    (e) Authorization of Appropriations.--There is authorized to be 
appropriated, such sums as may be necessary for each fiscal year to 
carry out this section.

       TITLE III--BETTER HEALTH FOR OLDER AND DISABLED AMERICANS

        Subtitle A--Assurance of Supplemental Medicaid Coverage

SEC. 301. COORDINATION OF SUPPLEMENTAL COVERAGE UNDER THE MEDICAID 
              PROGRAM FOR ELDERLY AND DISABLED INDIVIDUALS.

    (a) Coordination of Care.--The Secretary shall provide guidance to 
States and insurers that--
            (1) takes into account the special health care needs of 
        elderly and disabled individuals who are eligible for medical 
        assistance under State Medicaid programs, particularly with 
        respect to institutionalized care or home and community-based 
        services; and
            (2) ensures that, after December 31 of the last calendar 
        year ending before the first calendar year in which coverage 
        under a HAPI plan begins, each such individual continues to 
        receive medical assistance under State Medicaid programs in a 
        manner that--
                    (A) is provided in coordination with, and as a 
                supplement to, the coverage provided the individual 
                under the HAPI plans in which the individual is 
                enrolled;
                    (B) does not supplant the individual's coverage 
                under a HAPI plan; and
                    (C) ensures that the individual receives any items 
                or services that are not available under the HAPI plan 
                in which the individual is enrolled but that the 
                individual would have received under the Medicaid 
                program of the State in which the individual resides if 
                the Healthy Americans Act had not been enacted.
    (b) Definitions.--In this section--
            (1) the term ``institutionalized care'' means the health 
        care provided under the Medicaid plan of the State of residence 
        of an elderly or disabled individual who is a patient in a 
        hospital, nursing facility, intermediate care facility for the 
        mentally retarded, or an institution for mental diseases (as 
        such terms are defined for purposes of such plan); and
            (2) the term ``home and community-based services'' means 
        any services which may be offered under the Medicaid plan of 
        the State of residence of an elderly or disabled individual 
        under a home and community-based waiver authorized for a State 
        under section 1115 of the Social Security Act (42 U.S.C. 1315) 
        or under subsection (c), (d), or (i) of section 1915 of such 
        Act (42 U.S.C. 1396n).

Subtitle B--Empowering Individuals and States To Improve Long-Term Care 
                                Choices

SEC. 311. NEW, AUTOMATIC MEDICAID OPTION FOR STATE CHOICES FOR LONG-
              TERM CARE PROGRAM.

    (a) In General.--Title XIX of the Social Security Act is amended by 
adding at the end the following new section:

               ``state choices for long-term care program

    ``Sec. 1940.  (a) In General.--Notwithstanding any other provision 
of this title, the Secretary shall permit a State to establish and 
operate under the State plan under this title (including such a plan 
operating under a statewide waiver under section 1115) a State Choices 
for Long-Term Care Program in accordance with this section.
    ``(b) Program Requirements.--A program established under the 
authority of this section shall satisfy the following requirements:
            ``(1) Individualized benefit package.--Each individual 
        enrolled in the program shall be provided with long-term care 
        coverage consisting of medical assistance for long-term care 
        services that are provided according to the specific needs of 
        the individual and that best reflect the individual's needs and 
        preferences, based on a clinical assessment of the individual.
            ``(2) Personal case managers.--Each individual enrolled in 
        the program shall be provided with a personal case manager who 
        shall assist the individual in--
                    ``(A) determining the individual's needs and 
                preferences for the long-term care services that are 
                contained within the individual's benefit package, 
                including the selection of the service providers for 
                such services;
                    ``(B) identifying community resources that are 
                available to provide support for the individual; and
                    ``(C) addressing issues related to ensuring the 
                safety and quality of the long-term care services 
                provided to the individual.
            ``(3) Informed choice.--The program shall have procedures 
        to ensure that each individual that is likely to satisfy the 
        eligibility criteria established for the program under 
        paragraph (6) who is discharged from a hospital or who resides 
        in a nursing facility, intermediate care facility for the 
        mentally retarded, or institution for mental diseases and who 
        requires long-term care services is informed of the options 
        available to the individual under the program for obtaining 
        such services.
            ``(4) Self-directed option.--The program shall provide an 
        individual enrolled in the program with the option to elect to 
        plan and purchase the long-term care services that are 
        contained in the individual's benefit package under the 
        direction and control of the individual (or the individual's 
        authorized representative), subject to an individualized budget 
        developed for, and with the involvement of, the individual (or 
        the individual's authorized representative).
            ``(5) Equal access to institutional care and home and 
        community-based services.--The program shall provide an 
        individual enrolled in the program who, because of the 
        individual's mental or physical condition, requires a level of 
        care for long term care services that is above a level of care 
        for such services that can appropriately be provided solely 
        through home and community-based providers (as defined by the 
        State and approved by the Secretary), with equal access to 
        long-term care services provided through institutional 
        facilities and long-term care services provided through home 
        and community-based providers.
            ``(6) Eligibility; prioritization of need.--The program 
        shall apply eligibility criteria for individuals desiring to 
        enroll in the program that is established by the State and 
        approved by the Secretary. The eligibility criteria established 
        by the State shall--
                    ``(A) require that an individual enrolled in the 
                program--
                            ``(i) be eligible for medical assistance 
                        under the State plan (or under a statewide 
                        waiver of such plan) for nursing facility 
                        services, services in an intermediate care 
                        facility for the mentally retarded, services in 
                        an institution for mental diseases, or services 
                        provided under a home and community-based 
                        waiver approved for the State; and
                            ``(ii) satisfy such other criteria as the 
                        State shall establish; and
                    ``(B) be based on a strategy for prioritizing and 
                allocating expenditures so that those individuals with 
                the highest level of need for long-term care services 
                are assured of receiving such services through an 
                institutional facility or through a home and community-
                based provider, based on the individual's needs and 
                preferences.
    ``(c) Additional Requirements.--A State may not establish and 
operate a program under this section unless it satisfies the following 
requirements:
            ``(1) Agreement to limit federal expenditures.--
                    ``(A) In general.--The State agrees to an aggregate 
                limit for a 5-year period for Federal payments under 
                section 1903(a) for expenditures for medical assistance 
                for long-term care services under the State plan and 
                administrative expenditures related to the provision of 
                such assistance.
                    ``(B) Calculation of aggregate limit.--The 5-year 
                aggregate limit applicable to a State under 
                subparagraph (A) shall be determined by the State and 
                the Secretary based on the following:
                            ``(i) Historical and projected caseloads.--
                        The historical and projected State caseloads 
                        (determined for a 5-year period, respectively) 
                        of individuals receiving nursing facility 
                        services, services in an intermediate care 
                        facility for the mentally retarded, services in 
                        an institution for mental diseases, or services 
                        provided under a home and community-based 
                        waiver approved for the State under the State 
                        plan, based on data from the Secretary, the 
                        Bureau of the Census, the Commissioner of 
                        Social Security, and such other sources as the 
                        Secretary may approve.
                            ``(ii) Historical and projected 
                        expenditures.--The historical and projected 
                        expenditures (determined for a 5-year period, 
                        respectively) for the services identified in 
                        clause (i). Projected expenditures shall be 
                        determined without regard to the program 
                        established under this section and shall take 
                        into account the percentage change (if any) in 
                        the medical care component of the consumer 
                        price index for all urban consumers (U.S. city 
                        average) for each year of the period.
                    ``(C) Rule of construction.--Nothing in this 
                paragraph shall be construed as affecting the 
                requirement for a State to incur State expenditures for 
                medical assistance for long-term care services in order 
                to be paid the Federal medical assistance percentage 
                determined for the State for such expenditures (not to 
                exceed the aggregate 5-year limit on Federal payments 
                for such expenditures applicable under subparagraph 
                (A)).
            ``(2) Plan for capacity building and skills enhancement.--
        The State establishes a plan for building the capacity of the 
        long-term care services system within the State, particularly 
        with respect to the delivery of home and community-based 
        services, and for enhancing the skill levels of the caregivers 
        for individuals eligible for medical assistance for such 
        services under the State plan.
            ``(3) Dedication of program savings for prevention or early 
        intervention services.--The State agrees that for each fiscal 
        year in which the program is operated, the State will expend an 
        amount equal to the State share of the expenditures that the 
        State would have made under the State plan for providing 
        medical assistance for long-term care services for individuals 
        enrolled in the program but for the operation of such program, 
        for the provision of prevention or early intervention services 
        for nonenrolled individuals residing in the State who require a 
        level of long-term care services that is below the level that 
        individuals enrolled in the program require (regardless of 
        whether such nonenrolled individuals are eligible for medical 
        assistance under the State plan).
    ``(d) Option To Operate Program Through a Managed Care Plan.--A 
State may operate a program under this section through an arrangement 
on a capitated basis with a medicaid managed care organization (as 
defined in section 1903(m)(1)(A)).
    ``(e) Independent Evaluation and Report.--
            ``(1) In general.--The Secretary shall contract with a 
        nongovernmental organization or academic institution to conduct 
        an ongoing independent evaluation of the program that 
        assesses--
                    ``(A) the quality of the long-term care services 
                provided under the program;
                    ``(B) the cost-effectiveness of such services;
                    ``(C) consumer satisfaction; and
                    ``(D) the consistency and accuracy with which the 
                prioritization of need criteria required under 
                subsection (b)(6)(B) is applied.
            ``(2) Biennial reports.--The organization or institution 
        conducting the evaluation required under this subsection shall 
        submit biennial reports to the Secretary regarding the results 
        of the evaluation.
    ``(f) Definition of Long-Term Care Services.--For purposes of this 
section, the term `long-term care services' has the meaning given such 
term by a State establishing and operating a program under this 
section, subject to approval by the Secretary.''.
    (b) Effective Date.--The amendment made by subsection (a) takes 
effect on the date of enactment of this Act.

SEC. 312. SIMPLER AND MORE AFFORDABLE LONG-TERM CARE INSURANCE 
              COVERAGE.

    (a) Qualified Long-Term Care Insurance Contract Must Satisfy 
Qualified Long-Term Care Plan Requirements.--Section 7702B(b)(1)(A) 
(defining qualified long-term care insurance contract) is amended by 
inserting ``through a qualified long-term care plan'' after ``qualified 
long-term care services''.
    (b) Qualified Long-Term Care Plan.--Section 7702B is amended by 
adding at the end the following new subsection:
    ``(h) Qualified Long-Term Care Plan.--For purposes of this 
section--
            ``(1) In general.--The term `qualified long-term care plan' 
        means an insurance plan that meets the standards and 
        requirements set forth in paragraph (2) (including the 2009 
        NAIC Model Regulation or 2009 Federal Regulation (as the case 
        may be)) on or after the date specified in paragraph (5).
            ``(2) Development of standards and requirements for 
        qualified long-term care plans.--
                    ``(A) In general.--If, within 9 months after the 
                date of the enactment of this subsection, the National 
                Association of Insurance Commissioners (in this 
                subsection referred to as the `Association') adopts a 
                model regulation (in this section referred to as the 
                `2009 NAIC Model Regulation') to incorporate--
                            ``(i) limitations on the groups or packages 
                        of benefits that may be offered under a long-
                        term care insurance policy consistent with 
                        paragraphs (3) and (4),
                            ``(ii) uniform language and definitions to 
                        be used with respect to such benefits,
                            ``(iii) uniform format to be used in the 
                        policy with respect to such benefits, and
                            ``(iv) other standards required by the 
                        Secretary of Health and Human Services
                paragraph (1) shall be applied in each State, effective 
                for policies issued to policyholders on and after the 
                date specified in paragraph (5).
                    ``(B) Secretarial responsibility.--If the 
                Association does not adopt the 2009 NAIC Model 
                Regulation within the 9-month period specified in 
                subparagraph (A), the Secretary shall promulgate, not 
                later than 9 months after the end of such period, a 
                regulation (in this section referred to as the `2009 
                Federal Regulation') and paragraph (1) shall be applied 
                in each State, effective for policies issued to 
                policyholders on and after the date specified in 
                paragraph (5).
                    ``(C) Consultation.--In promulgating standards and 
                requirements under this paragraph, the Association or 
                Secretary shall consult with a working group composed 
                of representatives of issuers of long-term care 
                insurance policies, consumer groups, long-term care 
                insurance beneficiaries, and other qualified 
                individuals. Such representatives shall be selected in 
                a manner so as to insure balanced representation among 
                the interested groups.
            ``(3) Limitations of groups or packages of benefits.--The 
        benefits under the 2009 NAIC Model Regulation or 2009 Federal 
        Regulation shall provide--
                    ``(A) for such groups or packages of benefits as 
                may be appropriate taking into account the 
                considerations specified in paragraph (4) and the 
                requirements of the succeeding subparagraphs,
                    ``(B) for identification of a core group of basic 
                benefits common to all policies, and
                    ``(C) that the total number of different benefit 
                packages (counting the core group of basic benefits 
                described in subparagraph (B) and each other 
                combination of benefits that may be offered as a 
                separate benefit package) that may be established in 
                all the States and by all issuers shall not exceed 10.
            ``(4) Specific considerations.--The benefits under 
        paragraph (3) shall, to the extent possible--
                    ``(A) provide for benefits that offer consumers the 
                ability to purchase the benefits that are available in 
                the market as of November 5, 2008, and
                    ``(B) balance the objectives of--
                            ``(i) simplifying the market to facilitate 
                        comparisons among policies,
                            ``(ii) avoiding adverse selection,
                            ``(iii) providing consumer choice,
                            ``(iv) providing market stability, and
                            ``(v) promoting competition.
            ``(5) Effective date.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                date specified in this paragraph shall be the date the 
                State adopts the 2009 NAIC Model Regulation or 2009 
                Federal Regulation or 1 year after the date the 
                Association or the Secretary first adopts such 
                standards, whichever is earlier.
                    ``(B) Required state legislation.--In the case of a 
                State which the Secretary identifies, in consultation 
                with the Association, as--
                            ``(i) requiring State legislation (other 
                        than legislation appropriating funds) in order 
                        for long-term care insurance policies to meet 
                        the 2009 NAIC Model Regulation or 2009 Federal 
                        Regulation, but
                            ``(ii) having a legislature which is not 
                        scheduled to meet in 2009 in a legislative 
                        session in which such legislation may be 
                        considered,
                the date specified in this paragraph is the first day 
                of the first calendar quarter beginning after the close 
                of the first legislative session of the State 
                legislature that begins on or after January 1, 2010. 
                For purposes of the preceding sentence, in the case of 
                a State that has a 2-year legislative session, each 
                year of such session shall be deemed to be a separate 
                regular session of the State legislature.''.
    (c) Additional Consumer Protections.--
            (1) In general.--Section 7702B(g)(1) (relating to consumer 
        protection provisions) is amended--
                    (A) by striking subparagraph (A) and inserting the 
                following new paragraph:
            ``(1) the requirements of the 1993 NAIC model regulation 
        and model Act described in paragraph (2) and the 2000 NAIC 
        model regulation and model Act described in paragraph (5),'',
                    (B) by striking ``and'' at the end of subparagraph 
                (B),
                    (C) by striking the period at the end of 
                subparagraph (C) and inserting ``, and'', and
                    (D) by adding at the end the following new 
                subparagraph:
                    ``(D) the requirements relating to mandatory offer 
                and information under paragraph (6).''.
            (2) NAIC model regulation and act.--Section 7702B(g) is 
        amended--
                    (A) by inserting ``1993 naic'' after ``Requirements 
                of'' in the heading for paragraph (2),
                    (B) by redesignating paragraph (5) as paragraph 
                (7), and
                    (C) by inserting after paragraph (4) the following 
                new paragraph:
            ``(5) Requirements of 2000 naic model regulation and act.--
                    ``(A) In general.--The requirements of this 
                paragraph are met with respect to any contract if such 
                contract meets--
                            ``(i) Model regulation.--The following 
                        requirements of the model regulation:
                                    ``(I) Section 6A (other than 
                                paragraph (5) thereof) and the 
                                requirements of section 6B of the model 
                                Act relating to such section 6A.
                                    ``(II) Section 6B (other than 
                                paragraph (7) thereof).
                                    ``(III) Sections 6C, 6D, 6E, and 7.
                                    ``(IV) Section 8 (other than 
                                sections 8F, 8G, 8H, and 8I thereof).
                                    ``(V) Sections 9, 11, 12, 14, 15, 
                                and 22.
                                    ``(VI) Section 23, including 
                                inaccurate completion of medical 
                                histories (other than paragraphs (1), 
                                (6), and (9) of section 23C).
                                    ``(VII) Sections 24 and 25.
                                    ``(VIII) The provisions of section 
                                26 relating to contingent nonforfeiture 
                                benefits, if the policyholder declines 
                                the offer of a nonforfeiture provision 
                                described in paragraph (4).
                                    ``(IX) Sections 29 and 30.
                            ``(ii) Model act.--The following 
                        requirements of the model Act:
                                    ``(I) Sections 6C and 6D.
                                    ``(II) The provisions of section 8 
                                relating to contingent nonforfeiture 
                                benefits.
                                    ``(III) Sections 6F, 6G, 6H, 6J, 
                                6K, and 7.
                    ``(B) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Model provisions.--The terms `model 
                        regulation' and `model Act' mean the long-term 
                        care insurance model regulation, and the long-
                        term care insurance model Act, respectively, 
                        promulgated by the National Association of 
                        Insurance Commissioners (as adopted as of 
                        October 2000).
                            ``(ii) Coordination.--Any provision of the 
                        model regulation or model Act listed under 
                        clause (i) or (ii) of subparagraph (A) shall be 
                        treated as including any other provision of 
                        such regulation or Act necessary to implement 
                        the provision.
                            ``(iii) Determination.--For purposes of 
                        this section and section 4980C, the 
                        determination of whether any requirement of a 
                        model regulation or the model Act has been met 
                        shall be made by the Secretary.''.
    (d) Mandatory Offer and Information.--Section 7702B(g), as amended 
by subsection (c), is amended by inserting after paragraph (5) the 
following new paragraph:
            ``(6) Mandatory offer and information.--The requirements of 
        this paragraph are met if--
                    ``(A) Mandatory offer.--Any person who sells a 
                long-term care insurance policy to an individual shall 
                make available for sale to the individual a long-term 
                care insurance policy with only the core group of basic 
                benefits (described in subsection (h)(3)(B)).
                    ``(B) Information.--Any person who sells a long-
                term care insurance policy to an individual shall 
                provide the individual, before the sale of the policy, 
                an outline of coverage which describes the benefits 
                under the policy. Such outline shall be on a standard 
                form approved by the State regulatory program or the 
                Secretary (as the case may be) consistent with the 2009 
                NAIC Model Regulation or 2009 Federal Regulation.''.
    (e) State Regulation of Out-of-State Contracts.--Section 7702B is 
amended by adding at the end the following new subsection:
    ``(i) State Regulation of Out-of-State Contracts.--Nothing in this 
section shall be construed so as to affect the right of any State to 
regulate long-term care insurance policies which, under the provisions 
of this section, are considered to be issued in another State.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to contracts issued after December 31, 2008.

                      TITLE IV--HEALTHIER MEDICARE

  Subtitle A--Authority To Adjust Amount of Part B Premium To Reward 
                        Positive Health Behavior

SEC. 401. AUTHORITY TO ADJUST AMOUNT OF MEDICARE PART B PREMIUM TO 
              REWARD POSITIVE HEALTH BEHAVIOR.

    Section 1839 of the Social Security Act (42 U.S.C. 1395r) is 
amended--
            (1) in subsection (a)(2), by striking ``and (i)'' and 
        inserting ``(i), and (j)''; and
            (2) by adding at the end the following new subsection:
    ``(j)(1) With respect to the monthly premium amount for months 
after December 2008, the Secretary may adjust (under procedures 
established by the Secretary) the amount of such premium for an 
individual based on whether or not the individual participates in 
certain healthy behaviors, such as weight management, exercise, 
nutrition counseling, refraining from tobacco use, designating a health 
home, and other behaviors determined appropriate by the Secretary.
    ``(2) In making the adjustments under paragraph (1) for a month, 
the Secretary shall ensure that the total amount of premiums to be paid 
under this part for the month is equal to the total amount of premiums 
that would have been paid under this part for the month if no such 
adjustments had been made, as estimated by the Secretary.''.

     Subtitle B--Promoting Primary Care for Medicare Beneficiaries

SEC. 411. PRIMARY CARE SERVICES MANAGEMENT PAYMENT.

    Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) is 
amended by inserting after section 1807 the following new section:

``SEC. 1807A. PRIMARY CARE MANAGEMENT PAYMENT FOR COORDINATING CARE.

    ``(a) Payment.--
            ``(1) In general.--Not later than January 1, 2008, the 
        Secretary, subject to paragraph (2), shall establish procedures 
        for providing primary care and participating providers with a 
        management fee (as determined appropriate by the Secretary, in 
        consultation with the Medicare Payment Advisory Commission 
        established under section 1805) that reflects the amount of 
        time spent with a Medicare beneficiary, and the family of such 
        beneficiary, providing chronic care disease management services 
        or other services in assisting in coordinating care.
            ``(2) Requirement for designation as health home.--The 
        management fee under paragraph (1) shall not be provided to a 
        primary care provider with respect to a Medicare beneficiary 
        unless the provider has been designated (under procedures 
        established by the Secretary) as the health home by the 
        beneficiary.
    ``(b) Definitions.--In this section:
            ``(1) Health home.--The term `health home' means a health 
        care provider that a Medicare beneficiary has designated to 
        monitor the health and health care of the beneficiary.
            ``(2) Medicare beneficiary.--The term `Medicare 
        beneficiary' means an individual who is entitled to, or 
        enrolled for, benefits under part A, enrolled under part B, or 
        both.
            ``(3) Primary care provider.--
                    ``(A) In general.--The term `primary care provider' 
                means a primary care physician (as defined in 
                subparagraph (B), a nurse practitioner (as defined in 
                section 1861aa(5)(A)), or a physician assistant (as so 
                defined).
                    ``(B) Primary care physician.--In subparagraph (A), 
                the term `primary care physician' means a physician, 
                such as a family practitioner or internist, who is 
                chosen by an individual to provide continuous medical 
                care, who is able to give a wide range of care, 
                including prevention and treatment, and who can refer 
                the individual to a specialist.''.

              Subtitle C--Chronic Care Disease Management

SEC. 421. CHRONIC CARE DISEASE MANAGEMENT.

    Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.), as 
amended by section 411, is amended by inserting after section 1807A the 
following new section:

``SEC. 1807B. CHRONIC CARE DISEASE MANAGEMENT PROGRAM.

    ``(a) Establishment.--
            ``(1) In general.--Not later than January 1, 2008, the 
        Secretary shall develop and implement a chronic care disease 
        management program (in this section referred to as the 
        `program'). The program shall be designed to provide chronic 
        care disease management to all Medicare beneficiaries with 
        respect to at least the 5 most prevalent diseases within the 
        population of such beneficiaries (as determined by the 
        Secretary).
            ``(2) Development.--In developing and implementing the 
        program under paragraph (1), the Secretary shall--
                    ``(A) take into consideration--
                            ``(i) the results of chronic care 
                        improvement programs conducted under section 
                        1807, including the independent evaluations of 
                        such programs conducted under section 
                        1807(b)(5) and any outcomes reports submitted 
                        under section 1807(e)(4)(A); and
                            ``(ii) the results of the payments to 
                        primary care providers under section 1807A; and
                    ``(B) consult individuals with expertise in chronic 
                care disease management.
    ``(b) Identification and Enrollment.--The Secretary shall establish 
procedures for identifying and enrolling Medicare beneficiaries who may 
benefit from participation in the program.
    ``(c) Chronic Care Disease Management Payment for Non-Primary Care 
Physicians.--
            ``(1) In general.--Under the program, a non-primary care 
        physician shall receive a chronic care disease management 
        payment if the physician serves the Medicare beneficiary by 
        assuring the beneficiary receives appropriate and comprehensive 
        care, including referral of the individual to specialists, and 
        assuring the beneficiary receives preventive services.
            ``(2) Amount of payment.--The amount of the management 
        payment under the program shall be an amount determined 
        appropriate by the Secretary, in consultation with the Medicare 
        Payment Advisory Commission established under section 1805. 
        Such amount shall reflect the amount of time spent with a 
        Medicare beneficiary, and the family of such beneficiary, 
        providing chronic care disease management services.
    ``(d) Definitions.--In this section:
            ``(1) Medicare beneficiary.--The term `Medicare 
        beneficiary' means an individual who is entitled to, or 
        enrolled for, benefits under part A, enrolled under part B, or 
        both.
            ``(2) Non-primary care physician.--The term `non-primary 
        care physician' means a physician who--
                    ``(A) is not a primary care physician (as defined 
                in section 1807A (b)(3)(B)); and
                    ``(B) provides chronic care disease management 
                services to a Medicare beneficiary under the 
                program.''.

SEC. 422. CHRONIC CARE EDUCATION CENTERS.

    (a) Establishment.--The Secretary shall establish Chronic Care 
Education Centers.
    (b) Purpose.--The Chronic Care Education Centers established under 
subsection (a) shall serve as clearinghouses for information on health 
care providers who have expertise in the management of chronic disease.
    (c) Use of Certain Information.--In developing the information 
described in subsection (b), the Secretary shall utilize--
            (1) information on the performance of providers in chronic 
        disease demonstration projects and pay for performance efforts; 
        and
            (2) additional information determined appropriate by the 
        Secretary.

                    Subtitle D--Part D Improvements

SEC. 431. NEGOTIATING FAIR PRICES FOR MEDICARE PRESCRIPTION DRUGS.

    (a) In General.--Section 1860D-11 of the Social Security Act (42 
U.S.C. 1395w-111) is amended by striking subsection (i) (relating to 
noninterference) and by inserting the following:
    ``(i) Authority To Negotiate Prices With Manufacturers.--
            ``(1) In general.--Subject to paragraph (4), in order to 
        ensure that beneficiaries enrolled under prescription drug 
        plans and MA-PD plans pay the lowest possible price, the 
        Secretary shall have authority similar to that of other Federal 
        entities that purchase prescription drugs in bulk to negotiate 
        contracts with manufacturers of covered part D drugs, 
        consistent with the requirements and in furtherance of the 
        goals of providing quality care and containing costs under this 
        part.
            ``(2) Mandatory responsibilities.--The Secretary shall be 
        required to--
                    ``(A) negotiate contracts with manufacturers of 
                covered part D drugs for each fallback prescription 
                drug plan under subsection (g); and
                    ``(B) participate in negotiation of contracts of 
                any covered part D drug upon request of an approved 
                prescription drug plan or MA-PD plan.
            ``(3) Rule of construction.--Nothing in paragraph (2) shall 
        be construed to limit the authority of the Secretary under 
        paragraph (1) to the mandatory responsibilities under paragraph 
        (2).
            ``(4) No particular formulary or price structure.--In order 
        to promote competition under this part and in carrying out this 
        part, the Secretary may not require a particular formulary or 
        institute a price structure for the reimbursement of covered 
        part D drugs.
            ``(5) Use of savings to reduce coverage gap.--The Secretary 
        shall establish a process for using the savings to the Medicare 
        Prescription Drug Account through the use of the authority 
        provided under this subsection (including the mandatory 
        responsibilities under paragraph (2)) to reduce the coverage 
        gap under section 1860D-2.''.
    (b) Conforming Amendment.--Section 1860D-2(b) of the Social 
Security Act (42 U.S.C. 1395w-102(b)) is amended in the matter 
preceding paragraph (1) by striking ``For purposes'' and inserting 
``Subject to section 1860D-11(i)(5), for purposes''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of enactment of this Act.

SEC. 432. PROCESS FOR INDIVIDUALS ENTERING THE MEDICARE COVERAGE GAP TO 
              SWITCH TO A PLAN THAT PROVIDES COVERAGE IN THE GAP.

    (a) Process.--Notwithstanding any other provision of law, by not 
later than 30 days after the date of enactment of this Act, the 
Secretary of Health and Human Services (in this section referred to as 
the ``Secretary'') shall establish a process under which an applicable 
individual may terminate enrollment in the prescription drug plan or 
the MA-PD plan in which they are enrolled and enroll in any 
prescription drug plan or MA-PD plan--
            (1) that provides some coverage of covered part D drugs (as 
        defined in subsection (e) of section 1860D-2 of the Social 
        Security Act (42 U.S.C. 1395w-102)) after the individual has 
        reached the initial coverage limit under the plan but has not 
        reached the annual out-of-pocket threshold under subsection 
        (b)(4)(B) of such section; and
            (2) subject to subsection (b), that serves the area in 
        which the individual resides.
    (b) Special Rule Permitting Applicable Individuals To Enroll in a 
Prescription Drug Plan Outside of the Region in Which the Individual 
Resides.--In the case of an applicable individual who resides in a PDP 
region under section 1860D-11(a)(2) of the Social Security Act (42 
U.S.C. 1395w-111(a)(2)) in which there is no prescription drug plan 
available that provides some coverage of brand name covered part D 
drugs (as so defined) after the individual has reached the initial 
coverage limit under the plan but before the individual has reached 
such annual out-of-pocket threshold, the Secretary shall ensure that 
the process established under subsection (a) permits the individual to 
enroll in a prescription drug plan that provides such coverage but is 
in another PDP region. The Secretary shall determine the PDP region in 
which the individual may enroll in such a prescription drug plan.
    (c) Notification of Applicable Individuals.--Under the process 
established under subsection (a), the Secretary shall notify, or 
require sponsors of prescription drug plans and organizations offering 
MA-PD plans to notify, applicable individuals of the option to change 
plans under such process. Such notice shall be provided to an 
applicable individual within 30 days of meeting the definition of such 
an individual.
    (d) Process in Effect Through 2012.--The process established under 
subsection (a) shall remain in effect through December 31, 2012.
    (e) Definitions.--In this section:
            (1) Applicable individual.--The term ``applicable 
        individual'' means a part D eligible individual (as defined in 
        section 1860D-1(a)(3)(A) of the Social Security Act (42 U.S.C. 
        1395w-101(a)(3)(A)) who, with respect to a year--
                    (A) is enrolled in a prescription drug plan or an 
                MA-PD plan that does not provide any coverage of 
                covered part D drugs (as so defined) after the 
                individual has reached the initial coverage limit under 
                the plan but has not reached such annual out-of-pocket 
                threshold; and
                    (B) has reached such initial coverage limit or is 
                within $750 of reaching such limit.
            (2) Prescription drug plan; ma-pd plan.--The terms 
        ``prescription drug plan'' and ``MA-PD plan'' have the meanings 
        given those terms in section 1860D-41(a)(14) of the Social 
        Security Act (42 U.S.C. 1395w-151(a)(14)) and section 1860D-
        1(a)(3)(C) of such Act (42 U.S.C. 1395w-101(a)(3)(C)), 
        respectively.

      Subtitle E--Improving Quality in Hospitals for All Patients

SEC. 441. IMPROVING QUALITY IN HOSPITALS FOR ALL PATIENTS.

    (a) Improving Healthcare Quality for All Patients.--
            (1) In general.--Section 1866(a)(1) of the Social Security 
        Act (42 U.S.C. 1395cc(a)(1)) is amended--
                    (A) in subparagraph (U), by striking ``and'' at the 
                end;
                    (B) in subparagraph (V), by striking the period at 
                the end and inserting ``, and''; and
                    (C) by inserting after subparagraph (V) the 
                following new subparagraph:
            ``(W) in the case of hospitals, to demonstrate to 
        accrediting bodies measurable improvement in quality control 
        with respect to all patients and to have in place quality 
        control programs that are directed at care for all patients and 
        that include--
                    ``(i) rapid response teams that can assist patients 
                with unstable vital signs;
                    ``(ii) heart attack treatments with proven 
                reliability;
                    ``(iii) procedures that reduce medication errors;
                    ``(iv) aggressive infection prevention, with 
                special focus on surgeries and infections with the 
                highest death rates;
                    ``(v) procedures that reduce the threat of 
                pneumonia, with special focus on the incidence of 
                ventilator-related illness; and
                    ``(vi) such other elements as the Secretary 
                determines appropriate.''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to hospitals as of the date that is 2 years after 
        the date of enactment of this Act.
    (b) Panel of Independent Experts.--Beginning not later than the 
date that is 2 years after the date of enactment of this Act, in order 
to ensure that hospitals practice state-of-the-art quality control, the 
Secretary shall convene a panel of independent experts to update the 
measures of quality control and the types of quality control programs, 
including the elements of such programs, required under section 
1866(a)(1)(W) of the Social Security Act, as added by subsection (a), 
not less frequently than on an annual basis.

               Subtitle F--End-of-Life Care Improvements

SEC. 451. PATIENT EMPOWERMENT AND FOLLOWING A PATIENT'S HEALTH CARE 
              WISHES.

    (a) In General.--Section 1866(a)(1) of the Social Security Act (42 
U.S.C. 1395cc(a)(1)), as amended by section 441(a), is amended--
            (1) in subparagraph (V), by striking ``and'' at the end;
            (2) in subparagraph (W), by striking the period at the end 
        and inserting ``, and''; and
            (3) by inserting after subparagraph (W) the following new 
        subparagraph:
            ``(X) to provide each patient with a document designed to 
        promote patient autonomy by documenting the patient's treatment 
        preferences (and coordinating these preferences with physician 
        orders) that at a minimum--
                    ``(i) transfers with the patient from one setting 
                to another;
                    ``(ii) provides a summary of treatment preferences 
                in multiple scenarios by the patient or the patient's 
                guardian and a physician or other practitioner's order 
                for care;
                    ``(iii) is easy to read in an emergency situation;
                    ``(iv) reduces repetitive activities in complying 
                with the Patient Self Determination Act;
                    ``(v) ensures that the use of the document is 
                voluntary by the patient or the patient's guardian;
                    ``(vi) is easily accessible in a patient's medical 
                chart; and
                    ``(vii) does not supplant State health care proxy, 
                living wills, or other end-of-life care forms.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to entities as of the date that is 2 years after the date of 
enactment of this Act.

SEC. 452. PERMITTING HOSPICE BENEFICIARIES TO RECEIVE CURATIVE CARE.

    (a) In General.--Section 1812 of the Social Security Act (42 U.S.C. 
1395d) is amended--
            (1) in subsection (a)(4), by striking ``in lieu of certain 
        other benefits,''; and
            (2) in subsection (d)--
                    (A) in paragraph (1), by striking ``instead of 
                certain other benefits under this title''; and
                    (B) in paragraph (2)(A), by striking ``to be--'' 
                and all that follows before the period and inserting 
                ``to be equivalent to (or duplicative of) hospice 
                care''.
    (b) Conforming Amendment.--Section 1862(a)(1) of the Social 
Security Act (42 U.S.C. 1395y(a)(1)) is amended by striking 
subparagraph (C).
    (c) Effective Date.--The amendment made by this section shall apply 
to services furnished on or after the date of enactment of this Act.

SEC. 453. PROVIDING BENEFICIARIES WITH INFORMATION REGARDING END-OF-
              LIFE CARE CLEARINGHOUSE.

    Section 1804 of the Social Security Act (42 U.S.C. 1395b-2) is 
amended--
            (1) in the heading, by inserting ``; end-of-life care 
        information'' after ``information''; and
            (2) by adding at the end the following new subsection:
    ``(d) Not later than 1 year after the date of enactment of the 
Healthy Americans Act, the Secretary shall establish procedures to 
ensure that each individual, at the time the individual applies for 
benefits under part A or enrolls under part B, is provided with contact 
information for the clearinghouse described in section 454 of such 
Act.''.

SEC. 454. CLEARINGHOUSE.

    (a) In General.--Not later than 1 year after the date of enactment 
of this Act, the Secretary shall provide for the establishment of a 
national, toll-free, information clearinghouse that the public may 
access to find out about State-specific information regarding advance 
directive and end-of-life care decisions. If the Secretary determines 
that such a clearinghouse exists and is administered by a not-for-
profit organization and meets standards developed by the Secretary to 
assure the easy access of the public to State-specific information and 
forms concerning advance directives and end-of-life care decisions 
through the Internet and a national toll free information line, the 
Secretary shall support such clearinghouse.
    (b) Authorization of Appropriations.--There are authorized to be 
appropriated $1,000,000 for fiscal year 2007 and each subsequent fiscal 
year to carry out this section.

                   Subtitle G--Additional Provisions

SEC. 461. ADDITIONAL COST INFORMATION.

    (a) In General.--Section 1857(e) of the Social Security Act (42 
U.S.C. 1395w-27(e)) is amended by adding at the end the following new 
paragraph:
            ``(4) Additional cost information.--A contract under this 
        section shall require a Medicare Advantage Organization to 
        aggregate claims information into episodes of care and to 
        provide such information to the Secretary so that costs for 
        specific hospitals and physicians may be measured and compared. 
        The Secretary shall make such information public on an annual 
        basis.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to contracts entered into on or after the date of enactment of 
this Act.

SEC. 462. REDUCING MEDICARE PAPERWORK AND REGULATORY BURDENS.

    Not later than 18 months after the date of enactment of this Act, 
the Secretary shall provide to Congress a plan for reducing regulations 
and paperwork in the Medicare program under title XVIII of the Social 
Security Act (42 U.S.C. 1395 et seq.). Such plan shall focus initially 
on regulations that do not directly enhance the quality of patient care 
provided under such program.

                  TITLE V--STATE HEALTH HELP AGENCIES

SEC. 501. ESTABLISHMENT.

    As a condition of receiving payment under section 503, a State 
shall, not later than the date that is 2 years after the date of 
enactment of this Act, establish or designate a State agency, to be 
known as the State ``Health Help Agency'' (referred to in this Act as a 
``HHA'') to--
            (1) carry out the administration of HAPI plans to 
        individuals in such State; and
            (2) carry out the functions described in section 502.

SEC. 502. RESPONSIBILITIES AND AUTHORITIES.

    (a) Promotion of Prevention and Wellness.--Each HHA shall promote 
prevention and wellness for all State residents, including through the 
implementation of programs that--
            (1) educate residents about responsibility for individual 
        health and the health of children;
            (2) upon request, distribute information to covered 
        individuals regarding the availability of wellness programs;
            (3) make available to the public, with respect to each 
        health insurance issuer and each HAPI plan, the number of 
        covered individuals who have designated a health home described 
        in section 111(b); and
            (4) promote the use and understanding of health information 
        technology.
    (b) Enrollment Oversight.--Each HHA shall oversee enrollment in 
HAPI plans by--
            (1) providing standardized, unbiased information on HAPI 
        plans and supplemental health insurance options;
            (2) not less than once per year, administering open 
        enrollment periods for individuals;
            (3) allowing a covered individual to make enrollment 
        changes during a 30-day period following marriage, divorce, 
        birth, adoption or placement for adoption, and other 
        circumstances;
            (4) establish procedures for health insurance issuers to 
        report to the HHA of each State in which the issuer offers a 
        HAPI plan, the health insurance status of State residents in 
        order for the HHA to report annual on the number of uninsured 
        and other relevant data;
            (5) establish procedures for default enrollment of 
        uninsured individuals into low-cost HAPI plans for individuals 
        or families who do not enroll, are not covered under a health 
        plan offered through a program described in paragraphs (1)(A) 
        of section 102(a), and are not described in paragraph (1)(B) of 
        such section;
            (6) establish procedures for hospitals and other providers 
        to report to the HHA if an individual seeks care and is 
        uninsured or does not know his or her health insurance status;
            (7) ensure that the enrollment of all individuals into HAPI 
        plans, including those individuals assisted by an employer, 
        insurance agent, or other person, is administered by the HHA;
            (8) develop standardized language for HAPI plan terms and 
        conditions and require participating health insurance issuers 
        to use such language in plan information documents;
            (9) provide prospective enrollees with a comparative 
        document that describes all the HAPI plans in which the 
        individual may enroll; and
            (10) to assist consumers in choosing a HAPI plan, publish 
        information that includes loss ratios, outcome data regarding 
        wellness programs, disease detection and chronic care 
        management programs categorized by health insurance issuer, and 
        other data as the HHA determines appropriate.
    (c) Determination and Administration of HAPI Plan Subsidies.--Each 
HHA shall oversee the determination and administration of HAPI plan 
subsidies by--
            (1) informing State residents about how subsidy eligibility 
        determinations are made;
            (2) obtaining necessary information about income from 
        individuals and Federal and State agencies;
            (3) making eligibility determinations on an individual 
        basis and informing individuals of such determinations;
            (4) establishing a process by which an individual may 
        appeal an eligibility determination;
            (5) collecting from health insurance issuers an 
        administrative fee for joining the HHA system and offering a 
        HAPI plan in a State;
            (6) collecting premium payments made by, or on behalf of, 
        covered individuals, and remitting such payments to the HAPI 
        plans; and
            (7) collecting Federal premium subsidies for covered 
        individuals and remitting such subsidies to HAPI plans.
    (d) Premium Rating Rules.--Each HHA shall ensure that the premium 
payments for each HAPI plan are determined in accordance with the 
rating rules described in section 111(d).
    (e) Empowerment of Individuals To Make Health Care Decisions.--Each 
HHA shall, upon enrollment of an individual in a HAPI plan, provide 
such individual with information regarding--
            (1) the right of individuals to refuse treatment and to 
        make end-of-life care decisions;
            (2) State laws relating to end-of-life care, including 
        applicable State law with respect to health care proxies, 
        advanced directives, living wills, and other documentation by 
        which individuals may make their care decisions known;
            (3) contact information for any State end-of-life care 
        advocates; and
            (4) applicable State forms on health proxies, advanced 
        directives, living wills, and other such documentation.
    (f) Determination of Plan Coverage Areas.--Each HHA shall 
establish, and may revise, HAPI plan coverage areas for the State in 
which the HHA is located. The service area of a HAPI plan shall consist 
of an entire coverage area established under the preceding sentence.
    (g) Cooperation Among States.--States that share 1 or more 
metropolitan statistical area may enter into agreements to share 
administrative responsibilities described under this section.
    (h) Transition From Medicaid and SCHIP; Coordination of 
Supplemental Medical Assistance for Elderly and Disabled Medicaid 
Eligibles.--Each HHA shall work with the Secretary to ensure that the 
requirements of section 301 of this Act, section 1941 of the Social 
Security Act (as added by section 673(a) of this Act), and subsections 
(a) and (b) of section 1940 of the Social Security Act (as added by 
section 311 of this Act) are met.

SEC. 503. APPROPRIATIONS FOR TRANSITION TO STATE HEALTH HELP AGENCIES.

    (a) Appropriation.--There is authorized to be appropriated and 
there is appropriated, for each of the 2 full fiscal years immediately 
following the date of enactment of this Act, such sums as may be 
necessary for the purpose of enabling each State to carry out the 
purposes of this title. The sums made available under this section 
shall be used for making payments to States that have submitted, and 
had approved by the Secretary, an HHA plan under this section.
    (b) Submission of State HHA Plan.--Each HHA plan submitted by a 
State shall provide for--
            (1) the establishment of an HHA within such State by the 
        date that is 2 years after the date of enactment of this Act;
            (2) the administration by with State of such HHA in 
        accordance with the requirements described under this Act; and
            (3) the compliance by the State of the requirements 
        described under section 631.
    (c) Payment to States.--From the sums appropriated under subsection 
(a), the Secretary shall pay to each State that has an HHA plan 
approved under this section, an amount necessary for the State to 
implement such plan for the applicable fiscal year.

                   TITLE VI--SHARED RESPONSIBILITIES

                Subtitle A--Individual Responsibilities

SEC. 601. INDIVIDUAL RESPONSIBILITY TO ENSURE HAPI PLAN COVERAGE.

    (a) Open Season.--An adult individual, on behalf of such individual 
and the dependent children of such individual, shall--
            (1) enroll in a HAPI plan through the HHA of the 
        individual's State of residence during an open enrollment 
        period; and
            (2) submit necessary documentation to the applicable HHA so 
        that such HHA may determine individual eligibility for premium 
        and personal responsibility contribution subsidies.
An adult individual may carry out the activities described under 
paragraphs (1) and (2) on behalf of the spouse of such adult 
individual.
    (b) During Plan Year.--A covered individual shall--
            (1) submit any required monthly premium payments;
            (2) submit any personal responsibility contributions as 
        required; and
            (3) inform such HHA of any changes in the family status or 
        residence of such individual.

                 Subtitle B--Employer Responsibilities

SEC. 611. HEALTH CARE RESPONSIBILITY PAYMENTS.

    (a) Payment Requirements.--
            (1) In general.--Subtitle C of the Internal Revenue Code of 
        1986 is amended by inserting after chapter 24 the following new 
        chapter:

           ``CHAPTER 24A--HEALTH CARE RESPONSIBILITY PAYMENTS

        ``subchapter a--employer shared responsibility payments

       ``subchapter b--individual shared responsibility payments

                   ``subchapter c--general provisions

        ``Subchapter A--Employer Shared Responsibility Payments

``Sec. 3411. Payment requirement.
``Sec. 3412. Instrumentalities of the United States.

``SEC. 3411. PAYMENT REQUIREMENT.

    ``(a) Employer Shared Responsibility Payments.--Every employer 
shall pay an employer shared responsibility payment for each calendar 
year in an amount equal to the product of--
            ``(1) the number of full-time equivalent employees employed 
        by the employer during the preceding calendar year, multiplied 
        by
            ``(2) the applicable percentage of the average HAPI plan 
        premium amount for such calendar year.
    ``(b) Applicable Percentage.--For purposes of subsection (a)(2)--
            ``(1) In general.--The applicable percentage shall be 
        determined as follows:

------------------------------------------------------------------------
  Revenue per employee national percentile of      Large        Small
 the taxpayer for the preceding calendar year:   employer:    employer:
------------------------------------------------------------------------
0-20th percentile.............................          17%           2%
21st-40th percentile..........................          19%           4%
41st-60th percentile..........................          21%           6%
61st-80th percentile..........................          23%           8%
81st-99th percentile..........................          25%         10%.
------------------------------------------------------------------------

            ``(2) Applicable percentage for certain non-revenue 
        producing entities.--In the case of an employer which is a 
        nonprofit entity, a State or local government, or any other 
        type of entity for which the Secretary determines that 
        calculating revenue per employee is not appropriate, the 
        applicable percentage shall be--
                    ``(A) in the case of a large employer, 17 percent, 
                and
                    ``(B) in the case of a small employer, 2 percent.
            ``(3) Additional rate for certain small employers.--
                    ``(A) In general.--In the case of a small employer, 
                the applicable percentage determined under paragraph 
                (1) shall be increased by 0.1 percent for each full-
                time equivalent employee employed by the employer 
                during the preceding calendar year in excess of 50.
                    ``(B) Maximum additional rate.--The increase in the 
                applicable percentage determined under this paragraph 
                shall not exceed 15 percent.
            ``(4) Revenue per employee national percentile rank.--At 
        the beginning of each calendar year, the Secretary, in 
        consultation with the Secretary of Labor, shall publish a 
        table, based on sampling of employers, to be used in 
        determining the national percentile for revenue per employee 
        amounts for the preceding calendar year.
    ``(c) Transition Rates.--
            ``(1) Transition rate for employers previously providing 
        health insurance.--
                    ``(A) In general.--In the case of the first and 
                second calendar years to which this section applies, in 
                the case of any employer who provided health insurance 
                coverage for employees on the day before the date of 
                enactment of the Healthy Americans Act, the employer 
                shared responsibility payment shall be, in lieu of the 
                amount determined under subsection (a), an amount equal 
                to--
                            ``(i) 100 percent of the designated 
                        employee health insurance premium amount of 
                        such employer, minus
                            ``(ii) the employee salary investment 
                        amount.
                    ``(B) Employee salary investment amount.--For 
                purposes of this paragraph--
                            ``(i) In general.--The term `employee 
                        salary investment amount' means the lesser of--
                                    ``(I) the excess of the amount of 
                                average yearly wages paid to all 
                                employees for such year over the amount 
                                of average yearly wages paid to such 
                                employee for the year before the first 
                                year this section applies, or
                                    ``(II) the designated employee 
                                health insurance premium amount of such 
                                employer.
                            ``(ii) Nondiscrimination rules.--No amount 
                        paid by an employer shall be treated as an 
                        employee salary investment amount unless such 
                        amount is distributed to all employees on a 
                        basis that is proportional to the amount of 
                        wages paid to such employee before such 
                        distribution.
                            ``(iii) Notice requirement.--No amount paid 
                        by an employer shall be treated as an employee 
                        salary investment amount unless the employer 
                        gives each employee notice of the amount of the 
                        designated employee health insurance premium 
                        amount paid by the employer with respect to the 
                        employee.
                    ``(C) Employer shared responsibility credit.--The 
                Secretary may provide a credit to private employers who 
                provided health insurance benefits greater than the 
                80th percentile of the national average in the 2 years 
                prior to enactment of this Act, can demonstrate the 
                benefits provided encouraged prevention and wellness 
                activities as defined in this Act, and continue to 
                provide wellness programs
                    ``(D) Special rule for self-insured employers.--In 
                the case of any employer who provided health care 
                coverage for employees through self-insurance, `average 
                HAPI plan premium amount for the first year this 
                section applies' shall be substituted for `designated 
                employee health insurance premium amount of such 
                employer' in subparagraphs (A)(i) and (B)(i)(II).
                    ``(E) Regulations.--The Secretary may establish 
                such rules and regulations as necessary to carry out 
                the purposes of this paragraph.
            ``(2) Transition rate for other employers.--In the case of 
        any employer who did not provide health insurance to employees 
        on the day before the date of enactment of the Healthy 
        Americans Act--
                    ``(A) the employer shared responsibility payment 
                for the first year this section applies shall be an 
                amount equal \1/3\ of the amount otherwise required 
                under this section (determined without regard to this 
                subsection), and
                    ``(B) the employer shared responsibility payment 
                for the second year this section applies shall be an 
                amount equal \2/3\ of the amount otherwise required 
                under this section (determined without regard to this 
                subsection).

``SEC. 3412. INSTRUMENTALITIES OF THE UNITED STATES.

    ``Notwithstanding any other provision of law (whether enacted 
before or after the enactment of this section) which grants to any 
instrumentality of the United States an exemption from taxation, such 
instrumentality shall not be exempt from the payment required by 
section 3411 unless such provision of law grants a specific exemption, 
by reference to section 3111 from the payment required by such section.

       ``Subchapter B--Individual Shared Responsibility Payments

``Sec. 3421. Amount of payment.
``Sec. 3422. Deduction of tax from wages.

``SEC. 3421. AMOUNT OF PAYMENT.

    ``(a) In General.--Every individual shall pay an individual shared 
responsibility payment in an amount equal to the HAPI plan premium 
amount of such individual.
    ``(b) Exception.--This section shall not apply to any individual--
            ``(1) who is covered under a HAPI plan of another 
        individual, or
            ``(2) who provides such documentation as required by the 
        Secretary demonstrating that such individual has paid such HAPI 
        plan premium amount, but only for the period with respect to 
        which such amount is shown to be paid.

``SEC. 3422. DEDUCTION OF INDIVIDUAL SHARED RESPONSIBILITY PAYMENT FROM 
              WAGES.

    ``(a) In General.--The individual shared responsibility payment 
imposed by section 3421 shall be collected by the employer by deducting 
the amount of the payment from the wages as and when paid.
    ``(b) Nondeductibility by Employer.--The individual shared 
responsibility payment deducted and withheld by the employer under 
subsection (a) shall not be allowed as a deduction to the employer in 
computing taxable income under subtitle A.
    ``(c) Indemnification of Employer; Special Rule for Tips.--Rules 
similar to the rules of subsections (b) and (c) of section 3102 shall 
apply for purposes of this section.

                   ``Subchapter C--General Provisions

``Sec. 3431. Definitions and special rules.
``Sec. 3432. Labor contracts.

``SEC. 3431. DEFINITIONS AND SPECIAL RULES.

    ``(a) Definitions.--For purposes of this chapter--
            ``(1) Average hapi plan premium amount.--The term `average 
        HAPI plan premium amount' means the national average yearly 
        premium for HAPI plans with standard coverage (as determined 
        under section 103(b) of the Healthy Americans Act), determined 
        without regard to differing classes of coverage.
            ``(2) Designated employee health insurance premium 
        amount.--The term `designated employee health insurance premium 
        amount' means the greater of--
                    ``(A) the yearly premium paid by an employer for 
                health insurance coverage for employees for the most 
                recent calendar year ending before the date of 
                enactment of the Healthy Americans Act, or
                    ``(B) the yearly premium paid by an employer for 
                health insurance coverage for employees for the year 
                before the first year this section applies.
            ``(3) Employer.--
                    ``(A) In general.--The term `employer' has the 
                meaning given such term under section 3401(d).
                    ``(B) Aggregation rules.--For purposes of this 
                chapter, all persons treated as a single employer under 
                subsection (a) or (b) of section 52 shall be treated as 
                1 person.
            ``(4) Employment.--The term `employment' has the meaning 
        given such term under section 3121(b).
            ``(5) Full-time equivalent employee.--The term `full-time 
        equivalent employee' means the equivalent number of full-time 
        employees of an employer determined for any year under the 
        following formula:
                    ``(A) The sum of the number of full-time employees 
                employed by the employer for more than 3 months during 
                such year, plus
                    ``(B) The quotient of--
                            ``(i) the sum of the average weekly hours 
                        worked during such year for each employee of 
                        the employer (including common law employees) 
                        who--
                                    ``(I) was employed by such employer 
                                during such year for more than 3 
                                months, and
                                    ``(II) is not a full-time employee, 
                                divided by
                            ``(ii) 40.
            ``(6) Full-time employee.--The term `full-time employee' 
        means an employee (including a common law employee) who during 
        an average workweek performs, or can reasonably be expected to 
        perform, at least 40 hours of work. The Secretary may prescribe 
        alternative rules for determining full-time equivalent 
        employees in occupations or industries not using a standard 
        workweek.
            ``(7) HAPI plan.--The term `HAPI plan' has the meaning 
        given such term under section 3 of the Healthy Americans Act.
            ``(8) HAPI plan premium amount.--The term `HAPI plan 
        premium amount' means, with respect to any individual, the 
        monthly premium for the HAPI plan under which such individual 
        is enrolled, determined after taking into account any subsidy 
        provided to such individual under section 131 of the Healthy 
        Americans Act.
            ``(9) Large employer.--The term `large employer' means, 
        with respect to any year, an employer who employs an average of 
        over 200 full-time equivalent employees during such year.
            ``(10)  Revenue per employee.--The term `revenue per 
        employee' means, with respect to any employer for any year, the 
        gross receipts of the employer for such year divided by the 
        number of full-time equivalent employees employed by such 
        employer for such year.
            ``(11) Small employer.--The term `small employer' means, 
        with respect to any year, an employer who employs an average of 
        200 or fewer full-time equivalent employees during such year.
            ``(12) Wages.--The term `wages' has the meaning given such 
        term under section 3401(a).
    ``(b) Special Rules.--
            ``(1) Special rule for self-employed individuals.--For 
        purposes of this chapter, a self-employed individual (as 
        defined by section 401(c)(1)(B)) shall be treated as both a 
        full-time equivalent employee and as an employer.
            ``(2) Treatment of payments.--For purposes of this title, 
        the payments required by sections 3411 and 3421 shall be 
        treated as a tax imposed by such sections, respectively.
            ``(3) Other special rules.--For purposes of this chapter, 
        rules similar to rules under the following provisions shall 
        apply:
                    ``(A) Section 3122 (relating to Federal service).
                    ``(B) Section 3123 (relating to deductions as 
                constructive payments).
                    ``(C) Section 3125 (relating to returns in the case 
                of governmental employees in States, Guam, American 
                Samoa, and the District of Columbia).
                    ``(D) Section 3126 (relating to return and payment 
                by government employer).
                    ``(E) Section 3127 (relating to exemption for 
                employers and their employees where both are members of 
                religious faiths opposed to participation in social 
                security act programs).

``SEC. 3432. LABOR CONTRACTS.

    ``(a) In General.--This chapter shall not apply with respect to any 
qualified collective bargaining employee of any qualified collective 
bargaining employer before the earlier of--
            ``(1) January 1 of the first year which is more than 7 
        years after the date of the enactment of this chapter, or
            ``(2) the date the collective bargaining agreement expires.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Qualified collective bargaining employer.--The term 
        `qualified collective bargaining employer' means an employer 
        who provides health insurance to employees under the terms of a 
        collective bargaining agreement which is entered into before 
        the date of the enactment of this chapter.
            ``(2) Qualified collective bargaining employee.--The term 
        `qualified collective bargaining employee' means an employee of 
        a qualified collective bargaining employer who is covered by a 
        collective bargaining agreement governing the employee's health 
        insurance.''.
            (2) Conforming amendment.--The table of chapters of the 
        Internal Revenue Code of 1986 is amended by inserting after the 
        item relating to chapter 24 the following new item:

         ``CHAPTER 24A--Health Care Responsibility Payments''.

    (b) Collection of Individual Shared Responsibility Payments Through 
Estimated Taxes.--Section 6654 of the Internal Revenue Code of 1986 
(relating to failure by individual to pay estimated tax) is amended--
            (1) in subsection (a), by striking ``and the tax under 
        chapter 2'' and inserting ``, the tax under chapter 2, and the 
        individual shared responsibility payment required under 
        subchapter B of chapter 24A'', and
            (2) in subsection (f)--
                    (A) by striking ``minus'' at the end of paragraph 
                (2) and inserting ``plus'',
                    (B) by redesignating paragraph (3) as paragraph 
                (5), and
                    (C) by inserting after paragraph (2) the following 
                new paragraphs:
            ``(3) the individual shared responsibility payment required 
        under subchapter B of chapter 24A, minus
            ``(4) the amount withheld as an individual shared 
        responsibility payment under section 3422, minus''.
    (c) Effective Date.--The amendments made by this section shall 
apply to calendar years beginning at least 2 years after the date of 
the enactment of this Act.

SEC. 612. DISTRIBUTION OF INDIVIDUAL RESPONSIBILITY PAYMENTS TO HHAS.

    (a) In General.--The Secretary of the Treasury shall pay to the HHA 
in each State an amount equal to the amount of individual shared 
responsibility payments received under section 3421 of the Internal 
Revenue Code of 1986 with respect to each individual residing in such 
State.
    (b) Treatment of Payments.--Any amount paid to a State under 
subsection (a) shall be treated as an amount paid by the individual as 
a premium for the HAPI plan in which such individual is enrolled.

                  Subtitle C--Insurer Responsibilities

SEC. 621. INSURER RESPONSIBILITIES.

    (a) In General.--To offer a HAPI plan through an HHA, a State shall 
require that a health insurance issuer meet the requirements of this 
section.
    (b) Requirements.--A health insurance issuer offering a HAPI plan 
in a State shall--
            (1) implement and emphasize prevention, early detection and 
        chronic disease management;
            (2) ensure that a wellness program as described in section 
        131 is available to all covered individuals so long as such a 
        wellness program meets the requirements of the health insurance 
        issuers and other relevant requirements;
            (3) demonstrate how the provider reimbursement methodology 
        used by such an issuer has been adjusted to reward providers 
        for achieving quality and cost efficiency in prevention, early 
        detection of disease, and chronic care management;
            (4) ensure enrollees have the opportunity to designate a 
        health home as described in section 111(b) and make public how 
        many enrollees per policy have designated a health home;
            (5) upon enrollment, make available to each covered 
        individual an initial physical and a care plan;
            (6) create and implement an electronic medical record for 
        each covered individual, unless the individual submits a 
        notification to the issuer that the individual declines to have 
        such a record;
            (7) contribute to the financing of the HHAs by 
        incorporating into the administration component of premiums an 
        additional amount to reimburse HHAs for administrative costs;
            (8) comply with loss ratios as established by the Secretary 
        under subsection (e);
            (9) use standardized common claims forms and uniform 
        billing practices as provided for under subsection (c);
            (10) require that hospitals, as a condition of receiving 
        payment, send bills that are in an amount more than $5,000 to 
        the covered individual (without regard to whether the covered 
        individual is responsible for full or partial payment of the 
        bill) and provide the individual the contact information of a 
        person who can discuss the bill with the individual;
            (11) provide incentives such as premium discounts--
                    (A) for parents, if a covered child participates in 
                wellness activities and the health of such child 
                improves; and
                    (B) for adults covered by a plan to participate in 
                prevention, wellness and chronic disease management 
                programs;
            (12) report to the HHA of the State in which the issuer 
        offers HAPI plans, outcome data regarding wellness program, 
        disease detection and chronic care management, and loss ratio 
        information, so that the HHAs may make such data available to 
        the public in a consumer-friendly format;
            (13) work with the Agency for Healthcare Research and 
        Quality, medical experts, and patient groups to make 
        information on high quality affordable health providers 
        available to all Americans within 2 years of the date of 
        enactment of this Act through a website searchable by zip code;
            (14) provide to the HHA of each State in which the issuer 
        offers a HAPI plan, detailed information on the HAPI plans 
        offered by such issuer, using standardized language as required 
        by the HHA, so that the HHA may compile a document that 
        compares the HAPI plans for use by prospective enrollees; and
            (15) paying to the HHA of each State in which the issuer 
        seeks to offer a HAPI plan the amount of the administrative fee 
        assessed by the HHA under section 502(c)(5) to enter the HHA 
        system of that State.
    (c) Uniform Billing Practices.--
            (1) In general.--A health insurance issuer offering a HAPI 
        plan in a State shall not receive subsidy payments from the 
        applicable State HHA unless such issuer agrees to use 
        standardized common claim forms prescribed by the applicable 
        State HHA.
            (2) Exception.--Paragraph (1) shall not apply to any State 
        worker's compensation system.
    (d) Chronic Care Programs Offered by Issuers.--
            (1) In general.--A health insurance issuer offering a HAPI 
        plan in a State shall provide a chronic care program to provide 
        early identification and management of chronic diseases.
            (2) Determination of chronic care program.--Each State HHA 
        shall determine what constitutes a chronic care program under 
        this subsection and whether to collect and report financial 
        information related to chronic care programs.
            (3) Uniform clinical performance standards.--Each chronic 
        care program offered by a health insurance issuer shall use a 
        uniform set of clinical performance standards prescribed by the 
        HHA of the State in which the issuer offers a HAPI plan (in 
        consultation with the State Medicare quality improvement 
        organizations and patient and physician organizations) which 
        should include encouragement that the issuers not require 
        personal responsibility contributions for clinically-needed 
        services to treat or manage a covered individual's chronic 
        disease, particularly if the individual is taking an active 
        management role in working with their provider to manage any 
        such disease.
            (4) Reporting by issuers.--Five years after the date of 
        enactment of this Act and on an annual basis thereafter, each 
        health insurance issuer shall report to the applicable State 
        Insurance Commissioner, State Secretary of Health or other 
        state entity selected by the State HHA, the chronic care 
        management performance of the issuer as measured by the uniform 
        clinical performance standards described in paragraph (3). The 
        issuer shall make such performance public in a manner 
        accessible to the public.
    (e) Private Insurance Company Loss Ratio.--
            (1) In general.--The Secretary, in consultation with 
        consumer and patient organizations, the National Association of 
        Insurance Commissioners, and health insurance issuers 
        (including health maintenance organizations) shall establish a 
        loss ratio for issuers of HAPI plans.
            (2) Determination of loss ratio.--In determining the loss 
        ratio, administrative costs shall be defined as expenses 
        consisting of all actual, allowable, allocable, and reasonable 
        expenses incurred in the adjudication of subscriber benefit 
        claims or incurred in the health insurance issuer's overall 
        operation of the business.
            (3) Administrative expenses.--
                    (A) In general.--Unless otherwise determined by an 
                agreement between a State HHA and a health insurance 
                issuer, the administrative expenses of an issuer 
                shall--
                            (i) include all taxes (excluding premium 
                        taxes) reinsurance premiums, medical and dental 
                        consultants used in the adjudication process, 
                        concurrent or managed care review when not 
                        billed by a health care provider and other 
                        forms of utilization review, the cost of 
                        maintaining eligibility files, legal expenses 
                        incurred in the litigation of benefit payments, 
                        and bank charges for letters of credit; and
                            (ii) not include the cost of personnel, 
                        equipment, and facilities directly used in the 
                        delivery of health care services (benefit 
                        costs), payments to HHAs for establishment and 
                        administration of HHAs, and the cost of 
                        overseeing chronic disease management programs 
                        and wellness programs.

                   Subtitle D--State Responsibilities

SEC. 631. STATE RESPONSIBILITIES.

    (a) General Requirements.--As a condition of receiving payment 
under section 503, each State shall--
            (1) designate or create a Health Help Agency as described 
        in title V;
            (2) ensure that the HAPI plans offered in the State--
                    (A) are sold only through the State HHA; and
                    (B) comply with the requirements of this Act;
            (3) ensure that health insurance issuers offering a HAPI 
        plan in such State comply with the requirements described in 
        section 621;
            (4) ensure that HAPI plans offer premium discounts and 
        incentives for participation in wellness programs;
            (5) implement mechanisms to collect premium payments not 
        otherwise collected under chapter 24A of the Internal Revenue 
        Code of 1986 (as added by this Act);
            (6) continue to apply State law with respect to--
                    (A) solvency and financial standards for health 
                insurance issuers;
                    (B) fair marketing practices for health insurance 
                issuers;
                    (C) grievances and appeals for covered individuals; 
                and
                    (D) patient protection;
            (7) eliminate fictitious group prohibitions; and
            (8) comply with subsections (b) and (c).
    (b) Ensuring Maximum Enrollment.--Each State shall--
            (1) collect and exchange data with Federal and other public 
        agencies as necessary to maintain a database containing 
        information on the health insurance enrollment status of all 
        State residents;
            (2) implement methods to check enrollment status and enroll 
        individuals in HAPI plans, such as through the Department of 
        Motor Vehicles of the State, the enrollment of children in 
        elementary and secondary schools, the voter registration 
        authority of the State, and other checkpoints determined 
        appropriate by the State;
            (3) implement mechanisms, which may not include revocation 
        or ineligibility for coverage under a HAPI plan, to enforce the 
        responsibility of each adult individual to purchase HAPI plan 
        coverage for such individual and any dependent children of such 
        individual; and
            (4) implement a mechanism to automatically enroll 
        individuals in a HAPI plan who present in emergency departments 
        without health insurance.
    (c) Maintenance of Effort.--Each State shall submit an annual 
report to the Secretary that demonstrates that, for each State fiscal 
year that begins on or after January 1 of the first calendar year in 
which HAPI coverage begins under this Act, State expenditures for 
health services (as defined by the Secretary) are not less than the 
amount equal to--
            (1) in the case of the first State fiscal year for which 
        such a report is submitted, 100 percent of the total amount of 
        the State share of expenditures for such services under all 
        public health programs operated in the State that are funded in 
        whole or in part with State expenditures (including the 
        Medicaid program) for the most recent State fiscal year ending 
        before January 1 of the first calendar year in which HAPI 
        coverage begins under this Act ; and
            (2) in the case of any subsequent State fiscal year for 
        which such a report is submitted, the amount applicable under 
        this subsection for the preceding State fiscal year increased 
        by the percentage change, if any, in the consumer price index 
        for all urban consumers over the previous Federal fiscal year.

SEC. 632. EMPOWERING STATES TO INNOVATE THROUGH WAIVERS.

    (a) In General.--A State that meets the requirements of subsection 
(b) shall be eligible for a waiver of applicable Federal health-related 
program requirements.
    (b) Eligibility Requirements.--A State shall be eligible to receive 
a waiver under this section if--
            (1) the legislature of such State enacts legislation, or 
        the State through a publically approved ballot measure approves 
        a plan, to provide health care coverage to it's residents that 
        is at least as comprehensive as the coverage required under a 
        HAPI plan; and
            (2) the State submits to the Secretary an application at 
        such time, in such manner, and containing such information as 
        the Secretary may require, including a comprehensive 
        description of the State legislation or plan for implementing 
        the State-based health plan.
    (c) Determinations by Secretary.--
            (1) In general.--Not later than 180 days after the receipt 
        of an application from a State under subsection (b)(2), the 
        Secretary shall make a determination with respect to the 
        granting of a waiver under this section to such State.
            (2) Granting of waiver.--If the Secretary determines that a 
        waiver should be granted under this section, the Secretary 
        shall notify the State involved of such determination and the 
        terms and effectiveness of such waiver.
            (3) Refusal to grant waiver.--If the Secretary refuses to 
        grant a waiver under this section, the Secretary shall--
                    (A) notify the State involved of such 
                determination, and the reasons therefore; and
                    (B) notify the appropriate committees of Congress 
                of such determination and the reasons therefore.
    (d) Scope of Waivers.--The Secretary shall determine the scope of a 
waiver granted to a State under this section, including which Federal 
laws and requirements will not apply to the State under the waiver.

         Subtitle E--Federal Fallback Guarantee Responsibility

SEC. 641. FEDERAL GUARANTEE OF ACCESS TO COVERAGE.

    (a) Federal Guarantee.--
            (1) In general.--If a State does not establish an HHA in 
        compliance with title V by the date that is 2 years after the 
        date of enactment of this Act, the Secretary shall ensure that 
        each individual has available, consistent with paragraph (2), a 
        choice of enrollment in at least 2 HAPI plans in the coverage 
        area in which the individual resides. In any such case in which 
        such plans are not available, the individual shall be given the 
        opportunity to enroll in a fallback HAPI plan.
            (2) Requirement for different plan sponsors.--The 
        requirement in paragraph (1) is not satisfied with respect to a 
        coverage area if only 1 entity offers all the HAPI plans in the 
        area.
    (b) Contracts.--
            (1) In general.--The Secretary shall enter into contracts 
        under this subsection with entities for the offering of 
        fallback HAPI plans in coverage areas in which the guarantee 
        under subsection (a) is not met.
            (2) Competitive procedures.--Competitive procedures (as 
        defined in section 4(5) of the Office of Federal Procurement 
        Policy Act (41 U.S.C. 403(5))) shall be used to enter into a 
        contract under this subsection.
    (c) Fallback HAPI Plan.--For purposes of this section, the term 
``fallback HAPI plan'' means a HAPI plan that--
            (1) meets the requirements described in section 111(b) and 
        does not provide actuarially equivalent coverage described in 
        section 111(c); and
            (2) meets such other requirements as the Secretary may 
        specify.

             Subtitle F--Federal Financing Responsibilities

SEC. 651. APPROPRIATION FOR SUBSIDY PAYMENTS.

    There is authorized to be appropriated and there is appropriated 
for each fiscal year such sums as may be necessary to fund the 
insurance premium subsidies under section 121.

SEC. 652. RECAPTURE OF MEDICARE AND 90 PERCENT OF MEDICAID FEDERAL DSH 
              FUNDS TO STRENGTHEN MEDICARE AND ENSURE CONTINUED SUPPORT 
              FOR PUBLIC HEALTH PROGRAMS.

    (a) Recapture of Medicare DSH Funds.--
            (1) In general.--Section 1886(d)(5)(F)(i) of the Social 
        Security Act (42 U.S.C. 1395ww(d)(5)(F)(i)) is amended by 
        inserting ``and before January 1 of the first calendar year in 
        which coverage under a HAPI plan begins under the Healthy 
        Americans Act,'' after ``May 1, 1986,''.
            (2) Savings to part a trust fund.--The savings to the 
        Federal Hospital Insurance Trust Fund by reason of the 
        amendment made by paragraph (1) shall be used to strengthen the 
        financial solvency of such Trust Fund.
    (b) Recapture of 90 Percent of Medicaid DSH Funds.--
            (1) Healthy americans public health trust fund.--Subchapter 
        A of chapter 98 of the Internal Revenue Code of 1986 (relating 
        to trust fund code) is amended by adding at the end the 
        following new section:

``SEC. 9511. HEALTHY AMERICANS PUBLIC HEALTH TRUST FUND.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `Healthy Americans 
Public Health Trust Fund', consisting of any amount appropriated or 
credited to the Trust Fund as provided in this section or section 
9602(b).
    ``(b) Transfer to Trust Fund of 90 Percent of Medicaid DSH Funds.--
There are hereby appropriated to the Healthy Americans Public Health 
Trust Fund the following amounts:
            ``(1) In the case of the second, third, and fourth quarters 
        of the first fiscal year in which coverage under a HAPI plan 
        begins under the Healthy Americans Act, an amount equal to 90 
        percent of the amount that would otherwise have been 
        appropriated for the purpose of making payments to States under 
        section 1903(a) of the Social Security Act for the Federal 
        share of disproportionate share hospital payments made under 
        section 1923 of such Act for such quarters of that fiscal year 
        but for subsections (c)(2) and (d)(2)(D) of section 1941 of the 
        such Act, as determined by the Secretary of Health and Human 
        Services.
            ``(2) In the case of each succeeding fiscal year, an amount 
        equal to 90 percent of the amount that would otherwise have 
        been appropriated for the purpose of making payments to States 
        under section 1903(a) of the Social Security Act for the 
        Federal share of disproportionate share hospital payments made 
        under section 1923 of such Act for that fiscal year but for 
        subsections (c)(1) and (d)(2)(D) of section 1941 of such Act, 
        as determined by the Secretary of Health and Human Services, 
        taking into account the percentage change, if any, in the 
        consumer price index for all urban consumers (U.S. city 
        average) for the preceding fiscal year.
    ``(c) Expenditures From Trust Fund.--With respect to each fiscal 
year for which transfers are made under subsection (b), amounts in the 
Healthy Americans Public Health Trust Fund shall be available for that 
fiscal year for the following purposes:
            ``(1) Providing premium and personal responsibility 
        contribution subsidies.--For making appropriations authorized 
        under section 651 of the Healthy Americans Act for providing 
        premium and personal responsibility contribution subsidies in 
        accordance with section 122 of such Act.
            ``(2) Making bonus payments to states for implementing 
        medical malpractice reform.--For making appropriations for 
        bonus payments to States in accordance with section 802 of such 
        Act for implementing a State medical malpractice reform law 
        that complies with subsection (b) of such section.
            ``(3) Reducing the federal budget deficit.--The Secretary 
        shall transfer any amounts in the Trust Fund that are not 
        expended as of September 30 of a fiscal year for a purpose 
        described in paragraph (1), (2), or (3) to the general revenues 
        account of the Treasury.''.
            (2) Clerical amendment.--The table of sections for such 
        subchapter is amended by adding at the end the following new 
        item:

``Sec. 9511. Healthy Americans Public Health Trust Fund.''.

    Subtitle G--Tax Treatment of Health Care Coverage Under Healthy 
  Americans Program; Termination of Coverage Under Other Governmental 
          Programs and Transition Rules for Medicaid and SCHIP

 PART I--TAX TREATMENT OF HEALTH CARE COVERAGE UNDER HEALTHY AMERICANS 
                                PROGRAM

SEC. 661. LIMITED EMPLOYEE INCOME AND PAYROLL TAX EXCLUSION FOR 
              EMPLOYER SHARED RESPONSIBILITY PAYMENTS, HISTORIC RETIREE 
              HEALTH CONTRIBUTIONS, AND TRANSITIONAL COVERAGE 
              CONTRIBUTIONS.

    (a) Income Tax Exclusion.--
            (1) In general.--Subsection (a) of section 106 of the 
        Internal Revenue Code of 1986 (relating to contributions by 
        employer to accident and health plans) is amended to read as 
        follows:
    ``(a) General Rule.--Gross income of an individual does not 
include--
            ``(1) if such individual is an employee, shared 
        responsibility payments made by an employer under section 3411,
            ``(2) if such individual is a former employee before the 
        first calendar year beginning 2 years after the date of the 
        enactment of the Healthy Americans Act, employer-provided 
        coverage under an accident or health plan,
            ``(3) if such individual is a qualified collective 
        bargaining employee under an accident or health plan in effect 
        on January 1 of the first calendar year beginning 2 years after 
        the date of the enactment of the Healthy Americans Act, 
        employer-provided coverage under such plan during any 
        transition period described in section 3432, and
            ``(4) employer-provided coverage for qualified long-term 
        care services (as defined in section 7702B(c)).''.
            (2) Conforming amendments.--Section 106 of such Code is 
        amended--
                    (A) by adding at the end of subsection (b) the 
                following new paragraph:
            ``(8) Termination.--This subsection shall not apply to 
        contributions made in any calendar year beginning at least 2 
        years after the date of the enactment of the Healthy Americans 
        Act.'',
                    (B) by inserting ``and before the first calendar 
                year beginning 2 years after the date of the enactment 
                of the Healthy Americans Act,'' after ``January 1, 
                1997,'' in subsection (c)(1), and
                    (C) by striking ``shall be treated as employer-
                provided coverage for medical expenses under an 
                accident or health plan'' in subsection (d)(1) and 
                inserting ``shall not be included in such employee's 
                gross income''.
    (b) Payroll Taxes.--
            (1) In general.--Section 3121(a) (defining wages) is 
        amended by adding at the end the following new sentence: ``In 
        the case of any calendar year beginning at least 2 years after 
        the date of the enactment of the Healthy Americans Act, 
        paragraphs (2) and (3) shall apply to payments on account of 
        sickness only if such payments are described in section 
        106(a).''.
            (2) Railroad retirement.--Section 3231(e)(1) (defining 
        wages) is amended by adding at the end the following new 
        sentence: ``In the case of any calendar year beginning at least 
        2 years after the date of the enactment of the Healthy 
        Americans Act, this paragraph shall apply to payments on 
        account of sickness only if such payments are described in 
        section 106(a).''.
            (3) Unemployment.--Section 3306(b) (defining wages) is 
        amended by adding at the end the following new sentence: ``In 
        the case of any calendar year beginning at least 2 years after 
        the date of the enactment of the Healthy Americans Act, 
        paragraphs (2) and (4) shall apply to payments on account of 
        sickness only if such payments are described in section 
        106(a).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to calendar years beginning at least 2 years after the date of 
the enactment of the Healthy Americans Act.

SEC. 662. EXCLUSION FOR LIMITED EMPLOYER-PROVIDED HEALTH CARE FRINGE 
              BENEFITS.

    (a) In General.--Section 132(a) of the Internal Revenue Code of 
1986 (relating to certain fringe benefits) is amended by striking 
``or'' at the end of paragraph (7), by striking the period at the end 
of paragraph (8) and inserting ``, or'', and by adding at the end the 
following new paragraph:
            ``(9) qualified health care fringe.''.
    (b) Qualified Health Care Fringe.--
            (1) In general.--Section 132 of the Internal Revenue Code 
        of 1986 is amended by redesignating subsection (o) as 
        subsection (p) and by inserting after subsection (n) the 
        following new subsection:
    ``(o) Qualified Health Care Fringe.--For purposes of this section, 
the term `qualified health care fringe' means--
            ``(1) any wellness program described in section 131 of the 
        Healthy Americans Act, and
            ``(2) any on-site first aid coverage for employees.''.
            (2) Nondiscriminatory treatment.--Section 132(j)(1) of such 
        Code (relating to exclusions under subsection (a)(1) and (2) 
        apply to highly compensated employees only if no 
        discrimination) is amended--
                    (A) by striking ``Paragraphs (1) and (2) of 
                subsection (a)'' and inserting ``Paragraphs (1), (2), 
                and (9) of subsection (a)'', and
                    (B) by striking ``subsection (a)(1) and (2)'' in 
                the heading and inserting ``subsections (a)(1), (2), 
                and (9)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to calendar years beginning at least 2 years after the date of 
the enactment of the Healthy Americans Act.

SEC. 663. LIMITED EMPLOYER DEDUCTION FOR EMPLOYER SHARED RESPONSIBILITY 
              PAYMENTS, HISTORIC RETIREE HEALTH CONTRIBUTIONS, AND 
              OTHER HEALTH CARE EXPENSES.

    (a) In General.--Subsection (l) of section 162 of the Internal 
Revenue Code of 1986 (relating to trade or business expenses) is 
amended to read as follows:
    ``(l) Limitation on Deductible Employer Health Care Expenditures.--
No deduction shall be allowed under this chapter for any employer 
contribution to an accident or health plan other than--
            ``(1) any shared responsibility payment made under section 
        3411,
            ``(2) any accident or health plan coverage for individuals 
        who are former employees before the first calendar year 
        beginning 2 years after the date of the enactment of the 
        Healthy Americans Act,
            ``(3) any accident or health plan in effect on January 1 of 
        the first calendar year beginning 2 years after the date of the 
        enactment of the Healthy Americans Act with respect to coverage 
        for qualified collective bargaining employees during a 
        transition period described in section 3432,
            ``(4) any accident or health plan which qualifies as a 
        wellness program described in section 131 of such Act,
            ``(5) any accident or health plan which constitutes on-site 
        first aid coverage for employees, and
            ``(6) any accident or health plan which is a qualified 
        long-term care insurance contract.''.
    (b) Conforming Amendment.--Section 162 of the Internal Revenue Code 
of 1986 is amended by striking subsection (n).
    (c) Effective Date.--The amendments made by this section shall 
apply to calendar years beginning at least 2 years after the date of 
the enactment of the Healthy Americans Act.

SEC. 664. HEALTH CARE STANDARD DEDUCTION.

    (a) In General.--Section 62(a) of the Internal Revenue Code of 1986 
(defining adjusted gross income) is amended by inserting after 
paragraph (20) the following new paragraph:
            ``(21) Individual shared responsibility payments.--
                    ``(A) In general.--In the case of a taxpayer with 
                gross income for the taxable year exceeding 100 percent 
                of the poverty line (adjusted for the size of the 
                family involved) for the calendar year in which such 
                taxable year begins and who is enrolled in a HAPI plan 
                under the Healthy Americans Act, the deduction 
                allowable under section 213 by reason of subsection 
                (d)(1)(D) thereof (determined without regard to any 
                income limitation under subsection (a) thereof) in an 
                amount equal to the lesser of--
                            ``(i) the amount paid under section 3421 
                        with respect to such plan by such taxpayer for 
                        such taxable year, or
                            ``(ii) the applicable fraction times, in 
                        the case of--
                                    ``(I) coverage of an individual, 
                                $6,025,
                                    ``(II) coverage of a married couple 
                                or domestic partnership (as determined 
                                by a State) without dependent children, 
                                $12,050,
                                    ``(III) coverage of an unmarried 
                                individual with 1 or more dependent 
                                children, $8,610, plus $2,000 for each 
                                dependent child, and
                                    ``(IV) coverage of a married couple 
                                or domestic partnership (as determined 
                                by a State) with 1 or more dependent 
                                children, $15,210, plus $2,000 for each 
                                dependent child.
                    ``(B) Applicable fraction.--For purposes of 
                subparagraph (A)(ii), the applicable fraction is the 
                fraction (not to exceed 1)--
                            ``(i) the numerator of which is the gross 
                        income of the taxpayer for the taxable year 
                        expressed as a percentage of the poverty line 
                        (adjusted for the size of the family involved) 
                        minus such poverty line for the calendar year 
                        in which such taxable year begins, and
                            ``(ii) the denominator of which is 400 
                        percent of the poverty line (adjusted for the 
                        size of the family involved) minus such poverty 
                        line.
                    ``(C) Phaseout of deduction amount.--
                            ``(i) In general.--The amount otherwise 
                        determined under subparagraph (A) for any 
                        taxable year shall be reduced by the amount 
                        determined under clause (ii).
                            ``(ii) Amount of reduction.--The amount 
                        determined under this clause shall be the 
                        amount which bears the same ratio to the amount 
                        determined under subparagraph (A) as--
                                    ``(I) the excess of the taxpayer's 
                                modified adjusted gross income for such 
                                taxable year, over $62,500 ($125,000 in 
                                the case of a joint return), bears to
                                    ``(II) $62,500 ($125,000 in the 
                                case of a joint return).
                        Any amount determined under this clause which 
                        is not a multiple of $1,000 shall be rounded to 
                        the next lowest $1,000.
                    ``(D) Inflation adjustment.--In the case of any 
                taxable year beginning in a calendar year after 2009, 
                each dollar amount contained in subparagraph (A)(ii) 
                and subparagraph (C)(ii)(I) shall be increased by an 
                amount equal to such dollar amount, multiplied by the 
                cost-of-living adjustment determined under section 
                1(f)(3) for the calendar year in which the taxable year 
                begins, determined by substituting `calendar year 2008' 
                for `calendar year 1992' in subparagraph (B) thereof. 
                Any increase determined under the preceding sentence 
                shall be rounded to the nearest multiple of $50 ($1,000 
                in the case of the dollar amount contained in 
                subparagraph (C)(ii)(I)).
                    ``(E) Determination of modified adjusted gross 
                income.--
                            ``(i) In general.--For purposes of this 
                        paragraph, the term `modified adjusted gross 
                        income' means adjusted gross income--
                            ``(ii) determined without regard to this 
                        section and sections 86, 135, 137, 199, 221, 
                        222, 911, 931, and 933, and
                            ``(iii) increased by--
                                    ``(I) the amount of interest 
                                received or accrued during the taxable 
                                year which is exempt from tax under 
                                this title, and
                                    ``(II) the amount of any social 
                                security benefits (as defined in 
                                section 86(d)) received or accrued 
                                during the taxable year.
                    ``(F) Poverty line.--For purposes of this 
                paragraph, the term `poverty line' has the meaning 
                given such term in section 673(2) of the Community 
                Health Services Block Grant Act (42 U.S.C. 9902(2)), 
                including any revision required by such section.''.
    (b) Conforming Amendment.--Section 213(d)(1)(D) of the Internal 
Revenue Code of 1986 is amended by inserting ``amounts paid under 
section 3421 and'' after ``including''.
    (c) Effective Date.--The amendments made by this section shall 
apply to payments made in calendar years beginning at least 2 years 
after the date of the enactment of this Act.

SEC. 665. MODIFICATION OF OTHER TAX INCENTIVES TO COMPLEMENT HEALTHY 
              AMERICANS PROGRAM.

    (a) Termination of Credit for Health Insurance Costs of Eligible 
Individuals.--Section 35 of the Internal Revenue Code of 1986 (relating 
to health insurance costs of eligible individuals) is amended by adding 
at the end the following new subsection:
    ``(h) Termination.--This section shall not apply to payments made 
in any calendar year beginning at least 2 years after the date of the 
enactment of the Healthy Americans Act.''.
    (b) Termination of Health Care Expense Reimbursement Under 
Cafeteria Plans.--
            (1) In general.--Section 125 of the Internal Revenue Code 
        of 1986 (relating to cafeteria plans) is amended by 
        redesignating subsection (h) as subsection (i) and by inserting 
        after subsection (g) the following new subsection:
    ``(h) Termination.--This section shall not apply to health benefits 
coverage in any calendar year beginning at least 2 years after the date 
of the enactment of the Healthy Americans Act.''.
            (2) Long-term care allowed under cafeteria plans.--
                    (A) In general.--Section 125(f) of such Code 
                (defining qualified benefits) is amended by striking 
                the last sentence.
                    (B) Effective date.--The amendment made by this 
                paragraph shall apply to contracts issued with respect 
                to any calendar year beginning at least 2 years after 
                the date of the enactment of this Act.
    (c) Termination of Archer MSA Contributions.--Section 220 of the 
Internal Revenue Code of 1986 (relating to Archer MSAs) is amended--
            (1) by inserting ``and made before the first calendar year 
        beginning 2 years after the date of the enactment of the 
        Healthy Americans Act'' after ``in cash'' in subsection 
        (d)(1)(A)(i), and
            (2) by adding at the end the following new subsection:
    ``(k) Termination.--This section shall not apply to contributions 
made in any calendar year beginning at least 2 years after the date of 
the enactment of the Healthy Americans Act.''.
    (d) Health Savings Accounts Allowed in Conjunction With High 
Deductible HAPI Plans.--
            (1) In general.--Section 223 of the Internal Revenue Code 
        of 1986 (relating to health savings accounts) is amended--
                    (A) by inserting ``qualified'' before ``high 
                deductible health plan'' each place it appears in the 
                text (other than subsection (c)(2)(A)),
                    (B) by striking ``The term `high deductible health 
                plan' means a health plan'' in subsection (c)(2)(A) and 
                inserting ``The term `qualified high deductible health 
                plan' means a HAPI plan under the Healthy Americans 
                Act'',
                    (C) by striking subparagraphs (B) and (C) of 
                subsection (c)(2) and by redesignating subparagraph (D) 
                of subsection (c)(2) as subparagraph (B), and
                    (D) by striking ``High'' in the heading for 
                paragraph (2) of subsection (c) and inserting 
                ``Qualified high''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to payments made in calendar years beginning at 
        least 2 years after the date of the enactment of this Act.

SEC. 666. TERMINATION OF CERTAIN EMPLOYER INCENTIVES WHEN REPLACED BY 
              LOWER HEALTH CARE COSTS.

    (a) In General.--Subchapter C of chapter 90 of the Internal Revenue 
Code of 1986 (relating to provisions affecting more than one subtitle) 
is amended by adding at the end the following new section:

``SEC. 7875. TERMINATION OF CERTAIN PROVISIONS.

    ``The following provisions shall not apply to taxable years 
beginning (or transactions in the case of sections referred to in 
paragraph (3)) in any calendar year beginning at least 2 years after 
the date of the enactment of the Healthy Americans Act:
            ``(1) Section 199 (relating to income attributable to 
        domestic production activities).
            ``(2) Section 501(c)(9) (relating to tax-exempt status of 
        voluntary employees' beneficiary associations).
            ``(3) Sections 861(a)(6), 862(a)(6), 863(b)(2), 863(b)(3), 
        and 865(b) (relating to inventory property sales source rule 
        exception).''.
    (b) Deferral of Active Income of Controlled Foreign Corporations.--
Section 952 of the Internal Revenue Code of 1986 (relating to subpart F 
income defined) is amended by adding at the end the following new 
subsection:
    ``(e) Special Application of Subpart.--
            ``(1) In general.--For taxable years beginning in any 
        calendar year beginning at least 2 years after the date of the 
        enactment of the Healthy Americans Act, notwithstanding any 
        other provision of this subpart, the term `subpart F income' 
        means, in the case of any controlled foreign corporation, the 
        income of such corporation derived from any foreign country.
            ``(2) Applicable rules.--Rules similar to the rules under 
        the last sentence of subsection (a) and subsection (d) shall 
        apply to this subsection.''.
    (c) Conforming Amendment.--The table of sections for subchapter C 
of chapter 90 of the Internal Revenue Code of 1986 is amended by adding 
at the end the following new item:

``Sec. 7875. Termination of certain provisions.''.

PART II--TERMINATION OF COVERAGE UNDER OTHER GOVERNMENTAL PROGRAMS AND 
                TRANSITION RULES FOR MEDICAID AND SCHIP

SEC. 671. GROUP AND INDIVIDUAL HEALTH PLAN REQUIREMENTS NOT APPLICABLE 
              TO HAPI PLANS.

    (a) ERISA.--Section 3(1) of Employee Retirement Income Security Act 
of 1974 (29 U.S.C. 1002(1)) is amended by adding at the end the 
following new sentence: ``Such terms shall not include the provision of 
medical, surgical, or hospital care or benefits through HAPI plans 
under the Healthy Americans Act.''.
    (b) Internal Revenue Code of 1986.--Section 5000 of the Internal 
Revenue Code of 1986 (relating to certain group health plans) is 
amended by adding at the end the following new subsection:
    ``(e) HAPI Plans.--For purposes of this section, the terms `group 
health plan' and `large group health plan' shall not include any HAPI 
plan under the Healthy Americans Act.''.
    (c) Public Health Service Act.--Section 2791(b)(5) of the Public 
Health Service Act (42 U.S.C. 300gg-91(b)(5)) is amended by adding at 
the end the following new sentence: ``Such term shall not include 
health insurance coverage offered to individuals through a HAPI plan 
under the Healthy Americans Act.''.

SEC. 672. FEDERAL EMPLOYEES HEALTH BENEFITS PLAN.

    (a) In General.--Chapter 89 of title 5, United States Code, is 
amended by adding at the end the following new section:
``Sec. 8915. Termination
    ``No contract shall be entered into under this chapter or chapters 
89A and 89B with respect to any coverage period occurring in any 
calendar year beginning at least 2 years after the date of the 
enactment of the Healthy Americans Act.''.
    (b) Conforming Amendment.--The table of sections for such chapter 
89 is amended by adding at the end the following new item:

``8915. Termination.''.

SEC. 673. MEDICAID AND SCHIP.

    (a) In General.--Title XIX of the Social Security Act, as amended 
by section 311, is amended by adding at the end the following new 
section:

   ``transition to coverage under hapi plans; requirement to provide 
      supplemental coverage; termination of unnecessary provisions

    ``Sec. 1941.  (a) Transition and Supplemental Coverage 
Requirements.--The Secretary shall provide technical assistance to 
States and health insurance issuers of HAPI plans to ensure that 
individuals receiving medical assistance under State Medicaid plans 
under this title or child health assistance under child health plans 
under title XXI are--
            ``(1) informed of--
                    ``(A) the guarantee of private coverage for 
                essential services for all Americans established by the 
                Healthy Americans Act; and
                    ``(B) each individual's personal responsibility--
                            ``(i) for health care prevention;
                            ``(ii) to enroll (or to be enrolled on 
                        their behalf) in a HAPI plan through the 
                        applicable State HHA during an open enrollment 
                        period; and
                            ``(iii) to submit necessary documentation 
                        to their State HHA so that the HHA may 
                        determine the individual's eligibility for 
                        premium and personal responsibility 
                        contribution subsidies;
            ``(2) provided with appropriate assistance in transitioning 
        from receiving medical assistance under State Medicaid plans or 
        child health assistance under child health plans for their 
        primary health coverage to obtaining such coverage through 
        enrollment in HAPI plans in a manner that ensures continuation 
        of coverage for such individuals;
            ``(3) notwithstanding any other provision of this title, 
        after December 31 of the last calendar year ending before the 
        first calendar year in which coverage under a HAPI plan begins 
        in accordance with the Healthy Americans Act, provided with 
        medical assistance that consists of supplemental coverage that 
        meets the requirements of sections 202 and 301 of such Act; and
            ``(4) if the State elects to establish a State Choices for 
        Long-Term Care Program under section 1940 and the individual is 
        likely to be eligible for the program, informed of the coverage 
        available under the program and how to enroll.
    ``(b) Maintenance of Medicare Cost-Sharing.--For each month 
beginning after the last month of the last calendar year ending before 
the first calendar year in which coverage under a HAPI plan begins in 
accordance with the Healthy Americans Act--
            ``(1) a State shall continue to provide medical assistance 
        for medicare cost-sharing to individuals described in section 
        1902(a)(10)(E) as if the Healthy Americans Act had not been 
        enacted; and
            ``(2) the Secretary shall continue to reimburse the State 
        for the provision of such medical assistance.
    ``(c) Continued Support for DSH Expenditures.--
            ``(1) In general.--Notwithstanding any other provision of 
        this title, with respect to each fiscal year that begins after 
        the first calendar year in which coverage under a HAPI plan 
        begins in accordance with the Healthy Americans Act, the DSH 
        allotment for each State otherwise applicable under section 
        1923(f) for that fiscal year shall be reduced by 90 percent and 
        no payment shall be made under section 1903(a) to a State with 
        respect to any payment adjustment made under section 1923 for 
        hospitals in the State for quarters in the fiscal year in 
        excess of the reduced DSH allotment for the State applicable 
        for such year.
            ``(2) Special rule for last 3 quarters of first fiscal year 
        in which coverage under a hapi plan begins.--With respect to 
        the first fiscal year in which coverage under a HAPI plan 
        begins in accordance with the Healthy Americans Act, the 
        Secretary shall reduce the DSH allotment for each State that is 
        otherwise applicable under section 1923(f) for that fiscal year 
        so that each such DSH allotment reflects a 90 percent reduction 
        in the allotment for the second, third, and fourth quarters of 
        that fiscal year.
    ``(d) Termination of All Federal Payments Under This Title Other 
Than for Medicare Cost-Sharing, Supplemental Medical Assistance, or a 
State Choices for Long-Term Care Program.--Notwithstanding any other 
provision of this title:
            ``(1) no individual other than an individual to which 
        section 202, 301, or 311 of the Healthy Americans Act applies 
        is entitled to medical assistance under a State plan approved 
        under this title for any item or service furnished after 
        December 31 of the last calendar year ending before the first 
        calendar year in which coverage under a HAPI plan begins in 
        accordance with such Act;
            ``(2) no payment shall be made to a State under section 
        1903(a) for any item or service furnished after that date or 
        for any other sums expended by a State for which a payment 
        would have been made under such section, other than for the 
        Federal medical assistance percentage of the total amount 
        expended by a State for each fiscal year quarter beginning 
        after that date for providing--
                    ``(A) medical assistance for the maintenance of 
                medicare cost-sharing in accordance with subsection 
                (b);
                    ``(B) medical assistance for individuals who are 
                eligible for supplemental medical assistance under this 
                title after such date in accordance with section 202 or 
                301 of the Healthy Americans Act;
                    ``(C) payments for expenditures for establishing 
                and operating a State Choices for Long-Term Care 
                Program under section 1940 (subject to the aggregate 5-
                year limit established under subsection (c)(1) of such 
                section); and
                    ``(D) payment adjustments under section 1923 for 
                hospitals in the State that do not exceed the reduced 
                DSH allotment for the State determined under subsection 
                (c)''.
    (b) Application to SCHIP.--
            (1) Application of transition requirements.--Section 
        2107(e)(1) of the Social Security Act (42 U.S.C. 1397gg(e)(1)) 
        is amended by adding at the end the following:
                    ``(E) Section 1941(a) (relating to transition to 
                coverage under HAPI plans and, in the case of paragraph 
                (3) of such section, the requirement to provide 
                supplemental medical assistance for targeted low-income 
                children who are provided child health assistance as 
                optional targeted low-income children under title 
                XIX).''.
            (2) Termination.--Title XXI of the Social Security Act is 
        amended by adding at the end the following new section:

                             ``termination

    ``Sec. 2111.  Notwithstanding any other provision of this title, no 
payment shall be made to a State under section 2105(a) with respect to 
child health assistance for any item or service furnished after 
December 31 of the last calendar year ending before the first calendar 
year in which coverage under a HAPI plan begins in accordance with the 
Healthy Americans Act.''.

   TITLE VII--PURCHASING HEALTH SERVICES AND PRODUCTS THAT ARE MOST 
                               EFFECTIVE

           Subtitle A--Effective Health Services and Products

SEC. 701. ONE TIME DISALLOWANCE OF DEDUCTION FOR ADVERTISING AND 
              PROMOTIONAL EXPENSES FOR CERTAIN PRESCRIPTION 
              PHARMACEUTICALS.

    (a) In General.--Part IX of subchapter B of chapter 1 of subtitle A 
of the Internal Revenue Code of 1986 (relating to items not deductible) 
is amended by adding at the end the following new section:

``SEC. 280I. ONE TIME DISALLOWANCE OF DEDUCTION FOR CERTAIN 
              PRESCRIPTION PHARMACEUTICALS ADVERTISING AND PROMOTIONAL 
              EXPENSES.

    ``(a) In General.--No deduction shall be allowed under this chapter 
for expenses relating to advertising or promoting the sale and use of 
prescription pharmaceuticals other than drugs for rare diseases or 
conditions (within the meaning of section 45C) for any taxable year 
which includes any portion of--
            ``(1) the 3-year period which begins on the date of a new 
        drug application approval with respect to such a 
        pharmaceutical, unless the manufacturer of such pharmaceutical 
        demonstrates to the satisfaction of the Secretary that such 
        pharmaceutical is subject to a comparison effectiveness study, 
        including over-the-counter medication (if appropriate), or
            ``(2) the 1-year period which ends with the availability of 
        a generic drug substitute, unless such advertising or promotion 
        includes a statement that a lower cost alternative may soon be 
        available and includes the chemical name of such alternative.
    ``(b) Advertising or Promoting.--For purposes of this section, the 
term `advertising or promoting' includes direct-to-consumer advertising 
and any activity designed to promote the use of a prescription 
pharmaceutical directed to providers or others who may make decisions 
about the use of prescription pharmaceuticals (including the provision 
of product samples, free trials, and starter kits).''.
    (b) Conforming Amendment.--The table of sections for such part IX 
is amended by adding after the item relating to section 280H the 
following new item:

``Sec. 280I. One time disallowance of deduction for certain 
                            prescription pharmaceuticals advertising 
                            and promotional expenses.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning with or within calendar years 
beginning at least 2 years after the date of the enactment of this Act.

SEC. 702. ENHANCED NEW DRUG AND DEVICE APPROVAL.

    (a) In General.--
            (1) New drugs.--Section 505 of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 355) is amended by adding at the end 
        the following:
    ``(o)(1) The sponsor of a new drug application under subsection (b) 
may include as part of such application a full report of an 
investigation which has been made to show, with respect to the new drug 
that is the subject of the application--
            ``(A) the population for whom the drug is appropriate; and
            ``(B) the effectiveness of the drug when compared to the 
        effectiveness of drugs on the market as of the date that the 
        application is submitted.
    ``(2) If a sponsor of a new drug application under subsection (b) 
includes in such application the report described under paragraph (1) 
then, notwithstanding any other provision of law, the Secretary shall 
apply section 505A(b) to the drug that is the subject of such 
application in the same manner as the Secretary applies such section to 
a new drug in the pediatric population that is the subject of a study 
described in such section.
    ``(3) If a sponsor of a new drug application under subsection (b) 
does not include in such application the report described under 
paragraph (1) then, notwithstanding any other provision of law, the 
Secretary shall require that--
            ``(A) all promotional material with respect to such drug 
        include the following disclosure: `This drug has not been 
        proven to be more effective than other drugs on the market for 
        any condition or illness mentioned in this advertisement.'; and
            ``(B) such disclosure--
                    ``(i) appears at the beginning and end of any audio 
                and visual promotional material;
                    ``(ii) constitutes not less than 20 percent of the 
                time of any audio and visual promotional material; and
                    ``(iii)(I) in any promotional material, includes a 
                clear and conspicuous printed statement that is larger 
                than other print used in such promotional material; and
                    ``(II) in any audio and visual promotional 
                material, includes such statement in audio as well as 
                visual format.''.
            (2) New devices.--Section 515(c) of the Federal Food, Drug, 
        and Cosmetic Act (21 U.S.C. 360e) is amended by adding at the 
        end the following:
    ``(5)(A) A person that files a report seeking premarket approval 
under this subsection may include as part of such report a full 
description of an investigation which has been made to show, with 
respect to the device that is the subject of the report--
            ``(i) the population for whom the device is appropriate; 
        and
            ``(ii) the effectiveness of the device when compared to the 
        effectiveness of devices on the market as of the date that the 
        report is submitted.
    ``(B) If a person that files a report seeking premarket approval 
under this subsection includes in such report the description referred 
to under subparagraph (A), then the Secretary shall certify to the 
Director of the United States Patent and Trademark Office that such 
person included such description in such report so that the Director 
may extend the patent with respect to such device under section 702(b) 
of the Healthy Americans Act.
    ``(C) If a person that files a report seeking premarket approval 
under this subsection does not include in such report the description 
referred to under subparagraph (A) then, notwithstanding any other 
provision of law, the Secretary shall require that--
            ``(i) all promotional material with respect to such device 
        include the following disclosure: `This device has not been 
        proven to be more effective than other devices on the market 
        for any condition or illness mentioned in this advertisement.'; 
        and
            ``(ii) such disclosure--
                    ``(I) appears at the beginning and end of any audio 
                and visual promotional material;
                    ``(II) constitutes not less than 20 percent of the 
                time of any audio and visual promotional material; and
                    ``(III)(aa) in any promotional material, includes a 
                clear and conspicuous printed statement that is larger 
                than other print used in such promotional material; and
                    ``(bb) in any audio and visual promotional 
                material, includes such statement in audio as well as 
                visual format.''.
    (b) Extension of Device Patents.--If the Director of the United 
States Patent and Trademark Office receives a certification from the 
Secretary pursuant to section 515(c)(5) of the Federal Food, Drug, and 
Cosmetic Act (as added under subsection (a)), the Director shall 
extend, for a period of 2 years, the patent in effect with respect to 
such device under title 35 of the United States Code.
    (c) Effective Date.--This section shall apply to new drug 
applications filed under section 505(b) of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 355(b) and to applications for premarket 
approval of devices under section 515 of such Act (21 U.S.C. 350e) 180 
days after the date of enactment of this Act.

SEC. 703. MEDICAL SCHOOLS AND FINDING WHAT WORKS IN HEALTH CARE.

    Part B of title IX of the Public Health Service Act (42 U.S.C. 299b 
et seq.) is amended by adding at the end the following:

``SEC. 918. MEDICAL SCHOOLS AND FINDING WHAT WORKS IN HEALTH CARE.

    ``(a) Establishment of Website.--Not later than 1 year after the 
date of enactment of the Healthy Americans Act, the Agency shall 
establish an Internet website--
            ``(1) on which researchers at medical schools and other 
        institutions may post the results of their research concerning 
        evidence-informed best practices for improving the quality and 
        efficiency of care; and
            ``(2) that--
                    ``(A) includes a description on how to implement 
                such best practices; and
                    ``(B) clearly identifies the funding source for the 
                research.
    ``(b) Pilot Program.--
            ``(1) Establishment.--Using the information about evidence-
        informed best practices from the website under subsection (a) 
        and other sources, the Agency, through the National Research 
        Training Program and in consultation with medical schools, 
        shall develop a pilot program to establish methods by which 
        medical school curricula and training may be updated regularly 
        to reflect best practices to improve quality and efficiency in 
        medical practice.
            ``(2) Application to participate.--To participate in the 
        pilot program, an entity shall--
                    ``(A) be an accredited medical school; and
                    ``(B) submit an application at such time, in such 
                manner, and containing such information as the 
                Secretary may require.
            ``(3) Participants.--The Secretary shall ensure that not 
        less than 28 medical schools shall be included in the pilot 
        program.
            ``(4) Duration; publication of results.--The Agency shall--
                    ``(A) operate the pilot program for 3 years; and
                    ``(B) not later than 180 days after the date of the 
                completion of the pilot program, publish and make 
                public the results of the pilot program; and
                    ``(C) include, as part of the published results 
                under subparagraph (B), recommendations on how to 
                assure that all medical school curricula is updated on 
                a regular basis to reflect best practices to improve 
                quality and efficiency in medical practice.''.

SEC. 704. FINDING AFFORDABLE HEALTH CARE PROVIDERS NEARBY.

    (a) In General.--Not later than 2 years after the date of enactment 
of this Act, the Secretary, in consultation with each HHA and health 
insurance issuers that offer a HAPI plan, shall establish an Internet 
website to assist covered individuals with locating health care 
providers in their State of residence who provide affordable, high-
quality health care services.
    (b) Quality of Care Standard.--To develop the information displayed 
on the website with respect to the quality of care of a health care 
provider, the Secretary shall--
            (1) on the date of establishment of the website, use 
        information on the performance of providers in quality 
        initiatives under the Medicare program, including demonstration 
        projects, reporting initiatives, and pay for performance 
        efforts; and
            (2) not later than 3 years after the date of establishment 
        of the website, in addition to the information used under 
        paragraph (1), use quality of care standards developed in 
        consultation with, and similar to standards used by, Medicare 
        quality improvement organizations of each State.
    (c) Affordability Standard.--Not later than 2 years after the date 
of enactment of this Act, the Secretary shall, in consultation with 
health insurance issuers that offer a HAPI plan, develop guidelines by 
which each health care provider reports to the Secretary with respect 
to the affordability of services by such provider. The Secretary shall 
ensure that such guidelines--
            (1) on the date of establishment of such guidelines, 
        provide for the reporting of affordability of primary care 
        services; and
            (2) by a date that is no later than 3 years after the date 
        of enactment of this Act, provide for the reporting of other 
        services.

   Subtitle B--Other Provisions to Improve Health Care Services and 
                                Quality

SEC. 711. INDIVIDUAL MEDICAL RECORDS.

    The Secretary shall establish procedures to ensure that an 
individual's medical record is considered the property of such 
individual.

SEC. 712. BONUS PAYMENT FOR MEDICAL MALPRACTICE REFORM.

    (a) In General.--Effective 3 years after the date of enactment of 
this Act, a State shall be eligible for bonus payments under this Act 
if the State has enacted and is implementing a State medical 
malpractice reform law that complies with subsection (b).
    (b) Requirements for State Reform Law.--A State medical malpractice 
reform law complies with this subsection if such law--
            (1) requires that an individual who files a medical 
        malpractice action in State court have the facts of such 
        individual's case reviewed prior to such filing by a panel that 
        consists of--
                    (A) not less than 1 qualified medical expert, 
                chosen in consultation with the State Medicare quality 
                improvement organizations or physician speciality 
                society, whose expertise is appropriate for case;
                    (B) not less than 1 legal expert; and
                    (C) not less than 1 community representative to 
                verify that there is reasonable cause to believe that a 
                malpractice claim exists;
            (2) permits an individual to engage in voluntary non-
        binding mediation with respect to the malpractice claim 
        involved prior to filing an action in State court;
            (3) imposes sanctions against plaintiffs and attorneys who 
        file frivolous medical malpractice claims in State courts;
            (4) prohibits attorneys who file 3 frivolous medical 
        malpractice actions in State courts from filing any another 
        medical malpractice action in such courts for a period of 10 
        years; and
            (5) provides for the application of a presumption of 
        reasonableness with respect to a medical malpractice action if 
        the defendant establishes that the defendant provided the items 
        or services involved in accordance with accepted clinical 
        practice guidelines established by the specialty of which the 
        defendant is board certified or listed in the National 
        Guideline Clearinghouse, unless such presumption is rebutted by 
        a preponderance of the evidence.
    (c) Use of Bonus Payments.--A State shall use bonus payments 
received under this section to carry out activities related to disease 
and illness prevention and for the provision of enhanced health care 
services for children.
    (d) Procedures.--The Secretary, in consultation with the Attorney 
General, shall by regulation establish guidelines for the 
implementation of this section.

  TITLE VIII--CONTAINING MEDICAL COSTS AND GETTING MORE VALUE FOR THE 
                           HEALTH CARE DOLLAR

SEC. 801. COST-CONTAINMENT RESULTS OF THE HEALTHY AMERICANS ACT.

    Congress finds that the Healthy Americans Act will result in the 
following:
            (1) Private insurance companies will be forced to hold down 
        costs and will slow the rate of growth because they are 
        required to offer standardized Healthy American Private 
        Insurance plans.
            (2) Administrative savings will be derived from decoupling 
        employers from the health care infrastructure and reducing 
        employers' and insurers' administrative costs.
            (3) Private insurance companies will implement uniform 
        billing and common claims forms.
            (4) Congress will reclaim Medicare and Medicaid 
        disproportionate share hospital (DSH) payments because 
        previously uninsured persons will go to providers on an 
        outpatient basis instead of an emergency department.
            (5) State and local governments will save money on programs 
        they operated for the uninsured before enactment of this Act.
            (6) The Federal Government will save money on Federal tax 
        subsidies that reward inefficient care and are regressive.
            (7) The Federal Government and the private sector will save 
        money if the Food and Drug Administration determines whether 
        products provide new value.
            (8) Reducing medical errors will save the government and 
        the private sector money.
            (9) Requiring hospitals to send large bills to patients for 
        their review will reduce errors in medical billing and force 
        major providers to be more cost conscious.
            (10) Requiring insurers to reimburse for quality and cost 
        effective services will hold down private sector costs.
            (11) Reduction of Medicare's restriction on bargaining 
        power for prescription drugs will reduce costs for sole source 
        drugs and other medications.
            (12) Establishment of electronic medical records by 
        insurers will create savings.
            (13) Publication of cost and quality data will enable 
        people to look up by zip code affordable high-quality 
        providers.
                                 <all>
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