II 

109TH CONGRESS 

1ST SESSION S. 820 

To promote the development of health care cooperatives that will help businesses to pool the health care purchasing power of employers, and for 

other purposes. 

IN THE SENATE OF THE UNITED STATES 

APRIL 15, 2005 

Mr. FEINGOLD (for himself and Ms. COLLINS) introduced the following bill; 

which was read twice and referred to the Committee on Health, Education, Labor, and Pensions 

A BILL

To promote the development of health care cooperatives that 

will help businesses to pool the health care purchasing 

power of employers, and for other purposes.

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Promoting Health 

5 Care Purchasing Cooperatives Act’’. 

6 SEC. 2. FINDINGS AND PURPOSE. 

7 (a) FINDINGS.—Congress makes the following find8 ings: 
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1 (1) Health care spending in the United States 

2 has reached 15 percent of the Gross Domestic Prod3 uct of the United States, yet 45,000,000 people, or 

4 15.6 percent of the population, remains uninsured. 

5 (2) After nearly a decade of manageable in6 creases in commercial insurance premiums, many 

7 employers are now faced with consecutive years of 

8 double digit premium increases. 

9 (3) Purchasing cooperatives owned by partici10 pating businesses are a proven method of achieving 

11 the bargaining power necessary to manage the cost 

12 and quality of employer-sponsored health plans and 

13 other employee benefits. 

14 (4) The Employer Health Care Alliance Cooper15 ative has provided its members with health care pur16 chasing power through provider contracting, data 

17 collection, activities to enhance quality improvements 

18 in the health care community, and activities to pro19 mote employee health care consumerism. 

20 (5) According to the National Business Coali21 tion on Health, there are nearly 80 employer-led 

22 coalitions across the United States that collectively 

23 purchase health care, proactively challenge high 

24 costs and the inefficient delivery of health care, and 
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1 share information on quality. These coalitions rep2 resent more than 10,000 employers. 

3 (b) PURPOSE.—It is the purpose of this Act to build 

4 off of successful local employer-led health insurance initia5 tives by improving the value of their employees’ health 

6 care. 

7 SEC. 3. GRANTS TO SELF INSURED BUSINESSES TO FORM 

8 HEALTH CARE COOPERATIVES. 

9 (a) AUTHORIZATION.—The Secretary of Health and 

10 Human Services (in this Act referred to as the ‘‘Sec11 retary’’), acting through the Director of the Agency for 

12 Healthcare Research and Quality, is authorized to award 

13 grants to eligible groups that meet the criteria described 

14 in subsection (d), for the development of health care pur15 chasing cooperatives. Such grants may be used to provide 

16 support for the professional staff of such cooperatives, and 

17 to obtain contracted services for planning, development, 

18 and implementation activities for establishing such health 

19 care purchasing cooperatives. 

20 (b) ELIGIBLE GROUP DEFINED.— 

21 (1) IN GENERAL.—In this section, the term ‘‘el22 igible group’’ means a consortium of 2 or more self23 insured employers, including agricultural producers, 

24 each of which are responsible for their own health 

25 insurance risk pool with respect to their employees. 
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1 (2) NO TRANSFER OF RISK.—Individual em2 ployers who are members of an eligible group may 

3 not transfer insurance risk to such group. 

4 (c) APPLICATION.—An eligible group desiring a grant 

5 under this section shall submit to the Secretary an appli6 cation at such time, in such manner, and accompanied by 

7 such information as the Secretary may require. 

8 (d) CRITERIA.— 

9 (1) FEASIBILITY STUDY GRANTS.— 

10 (A) IN GENERAL.—An eligible group may 

11 submit an application under subsection (c) for 

12 a grant to conduct a feasibility study con13 cerning the establishment of a health insurance 

14 purchasing cooperative. The Secretary shall ap15 prove applications submitted under the pre16 ceding sentence if the study will consider the 

17 criteria described in paragraph (2). 

18 (B) REPORT.—After completion of a feasi19 bility study under a grant under this section, an 

20 eligible group shall submit to the Secretary a 

21 report describing the results of such study. 

22 (2) GRANT CRITERIA.—The criteria described 

23 in this paragraph include the following with respect 

24 to the eligible group: 
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1 (A) The ability of the group to effectively 

2 pool the health care purchasing power of em3 ployers. 

4 (B) The ability of the group to provide 

5 data to employers to enable such employers to 

6 make data-based decisions regarding their 

7 health plans. 

8 (C) The ability of the group to drive qual9 ity improvement in the health care community. 

10 (D) The ability of the group to promote 

11 health care consumerism through employee edu12 cation, self-care, and comparative provider per13 formance information. 

14 (E) The ability of the group to meet any 

15 other criteria determined appropriate by the 

16 Secretary. 

17 (e) COOPERATIVE GRANTS.—After the submission of 

18 a report by an eligible group under subsection (d)(1)(B), 

19 the Secretary shall determine whether to award the group 

20 a grant for the establishment of a cooperative under sub21 section (a). In making a determination under the pre22 ceding sentence, the Secretary shall consider the criteria 

23 described in subsection (d)(2) with respect to the group. 

24 (f) COOPERATIVES.— 
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1 (1) IN GENERAL.—An eligible group awarded a 

2 grant under subsection (a) shall establish or expand 

3 a health insurance purchasing cooperative that 

4 shall— 

5 (A) be a nonprofit organization; 

6 (B) be wholly owned, and democratically 

7 governed by its member-employers; 

8 (C) exist solely to serve the membership 

9 base; 

10 (D) be governed by a board of directors 

11 that is democratically elected by the cooperative 

12 membership using a 1-member, 1-vote standard; 

13 and 

14 (E) accept any new member in accordance 

15 with specific criteria, including a limitation on 

16 the number of members, determined by the Sec17 retary. 

18 (2) AUTHORIZED COOPERATIVE ACTIVITIES.—A 

19 cooperative established under paragraph (1) shall— 

20 (A) assist the members of the cooperative 

21 in pooling their health care insurance pur22 chasing power; 

23 (B) provide data to improve the ability of 

24 the members of the cooperative to make data25 based decisions regarding their health plans; 
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1 (C) conduct activities to enhance quality 

2 improvement in the health care community; 

3 (D) work to promote health care con4 sumerism through employee education, self5 care, and comparative provider performance in6 formation; and 

7 (E) conduct any other activities deter8 mined appropriate by the Secretary. 

9 (g) REVIEW.— 

10 (1) IN GENERAL.—Not later than 1 year after 

11 the date on which grants are awarded under this 

12 section, and every 2 years thereafter, the Secretary 

13 shall study programs funded by grants under this 

14 section and provide to the appropriate committees of 

15 Congress a report on the progress of such programs 

16 in improving the access of employees to quality, af17 fordable health insurance. 

18 (2) SLIDING SCALE FUNDING.—The Secretary 

19 shall use the information included in the report 

20 under paragraph (1) to establish a schedule for scal21 ing back payments under this section with the goal 

22 of ensuring that programs funded with grants under 

23 this section are self sufficient within 10 years. 
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1 SEC. 4. GRANTS TO SMALL BUSINESSES TO FORM HEALTH 

2 CARE COOPERATIVES. 

3 The Secretary shall carry out a grant program that 

4 is identical to the grant program provided in section 3, 

5 except that an eligible group for a grant under this section 

6 shall be a consortium of 2 or more employers, including 

7 agricultural producers, each of which— 

8 (1) have 99 employees or less; and 

9 (2) are purchasers of health insurance (are not 

10 self-insured) for their employees. 

11 SEC. 5. AUTHORIZATION OF APPROPRIATIONS. 

12 From the administrative funds provided to the Sec13 retary, the Secretary may use not more than a total of 

14 $60,000,000 for fiscal years 2006 through 2015 to carry 

15 out this Act.

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