I 

111TH CONGRESS 

1ST SESSION H. R. 3218 

To provide a refundable tax credit for medical costs, to expand access to 

health insurance coverage through individual membership associations 

(IMAs), and to assist in the establishment of high risk pools. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 14, 2009 

Mr. SHADEGG (for himself, Mr. GINGREY of Georgia, Mr. BISHOP of Utah, 

Mr. BOUSTANY, Mr. HOEKSTRA, Mrs. BLACKBURN, Mr. FLEMING, Mr. 

FRANKS of Arizona, Mr. BUYER, and Mr. BURGESS) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To provide a refundable tax credit for medical costs, to 

expand access to health insurance coverage through individual membership associations (IMAs), and to assist 

in the establishment of high risk pools. 

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, ETC. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Improving Health Care for All Americans Act’’. 


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

2 this Act is as follows: 

Sec. 1. Short title, etc. 

Sec. 2. Statement of constitutional authority. 

Sec. 3. Findings. 

TITLE I—REFUNDABLE AND ADVANCEABLE CREDIT FOR 

MEDICAL COSTS 

Sec. 101. Refundable and advanceable credit for medical costs. 

TITLE II—EXPANSION OF ACCESS AND CHOICE OF HEALTH INSURANCE COVERAGE THROUGH INDIVIDUAL MEMBERSHIP ASSOCIATIONS (IMAS) 

Sec. 201. Expansion of access and choice of health insurance coverage through 

individual membership associations (IMAs). 

TITLE III—FEDERAL MATCHING FUNDING FOR STATE 

INSURANCE EXPENDITURES 

Sec. 301. Federal matching funding for StatFederal matching funding for 

State insurance expenditurese insurance expenditures. 

3 SEC. 2. STATEMENT OF CONSTITUTIONAL AUTHORITY. 

4 Congress enacts this Act pursuant to its authority 

5 under article I of the Constitution to regulate commerce. 

6 SEC. 3. FINDINGS. 

7 The Congress finds the following: 

8 (1) Approximately 180 million Americans re9 ceive health care through employer-sponsored cov10 erage. 

11 (2) Surveys indicate that 8 in 10 Americans are 

12 satisfied with the current employer-sponsored health 

13 care plan. 

14 (3) Taxing employer-sponsored health care ben15 efits, creating a new government-run health care 

16 plan, and expanding existing entitlement programs 


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1 will result in the loss of private health care coverage 

2 for an estimated 120 million Americans. 

3 TITLE I—REFUNDABLE AND 

4 ADVANCEABLE CREDIT FOR 

5 MEDICAL COSTS 

6 SEC. 101. REFUNDABLE AND ADVANCEABLE CREDIT FOR 

7 MEDICAL COSTS. 

8 (a) IN GENERAL.—Subpart C of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 

10 1986 (relating to refundable credits) is amended by insert11 ing after section 36A the following new section: 

12 ‘‘SEC. 36B. MEDICAL COSTS. 

13 ‘‘(a) IN GENERAL.—In the case of an eligible indi14 vidual, there shall be allowed as a credit against the tax 

15 imposed by this subtitle an amount equal to the sum of— 

16 ‘‘(1) the amount paid by the taxpayer during 

17 the taxable year for qualified health insurance for 

18 coverage of the taxpayer, his spouse, and depend19 ents, and 

20 ‘‘(2) the amount paid by the taxpayer during 

21 the taxable year for medical care for the taxpayer, 

22 his spouse, and his dependents. 

23 ‘‘(b) LIMITATION.—The amount allowed as a credit 

24 under subsection (a) for a taxable year shall not exceed 

25 $2,500 ($5,000 in the case of a joint return). 


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1 ‘‘(c) ELIGIBLE INDIVIDUAL.—For purposes of this 

2 section, the term ‘eligible individual’ means an individual 

3 who is— 

4 ‘‘(1) a citizen or national of the United States, 

5 or 

6 ‘‘(2) lawfully present in the United States. 

7 ‘‘(d) MEDICAL CARE.—For purposes of this section, 

8 the term ‘medical care’ has the meaning given such term 

9 by section 213(d), determined without regard to subpara10 graphs (C) and (D) of paragraph (1) thereof. 

11 ‘‘(e) QUALIFIED HEALTH INSURANCE.—For pur12 poses of this section— 

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

14 insurance’ means insurance which constitutes med15 ical care. 

16 ‘‘(2) EMPLOYER SUBSIDIZED COVERAGE.—Such 

17 term shall not include amounts paid for coverage of 

18 any individual for any month for which such indi19 vidual participates in any subsidized health plan 

20 maintained by any employer of the taxpayer or of 

21 the spouse of the taxpayer. For purposes of the pre22 ceding sentence, the rule of the last sentence of sec23 tion 162(l)(2)(B) shall apply and health care flexible 

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1 rangements shall not be treated as a subsidized 

2 health plan maintained by any employer. 

3 ‘‘(3) GOVERNMENTAL COVERAGE.—Such term 

4 shall not include medical care provided through a 

5 program described in— 

6 ‘‘(A) title XVIII or XIX of the Social Se7 curity Act, 

8 ‘‘(B) chapter 55 of title 10, United States 

9 Code, 

10 ‘‘(C) chapter 17 of title 38, United States 

11 Code, 

12 ‘‘(D) chapter 89 of title 5, United States 

13 Code, or 

14 ‘‘(E) the Indian Health Care Improvement 

15 Act, and 

16 ‘‘(4) EXCLUSION OF CERTAIN PLANS.—Such 

17 term does not include insurance if substantially all 

18 of its coverage is coverage described in section 

19 223(c)(1)(B). 

20 ‘‘(f) SPECIAL RULES.— 

21 ‘‘(1) COORDINATION WITH MEDICAL DEDUC22 TION, ETC.—Any amount paid by a taxpayer for in23 surance to which subsection (a) applies shall not be 

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1 able to the taxpayer as a credit under section 35 or 

2 as a deduction under section 162(l) or 213(a). 

3 ‘‘(2) COORDINATION WITH ADVANCE PAYMENTS

4 OF CREDIT; RECAPTURE OF EXCESS ADVANCE PAY5 MENTS.—With respect to any taxable year— 

6 ‘‘(A) the amount which would (but for this 

7 subsection) be allowed as a credit to the tax8 payer under subsection (a) shall be reduced 

9 (but not below zero) by the aggregate amount 

10 paid on behalf of such taxpayer under section 

11 7529 for months beginning in such taxable 

12 year, and 

13 ‘‘(B) the tax imposed by section 1 for such 

14 taxable year shall be increased by the excess (if 

15 any) of— 

16 ‘‘(i) the aggregate amount paid on be17 half of such taxpayer under section 7529 

18 for months beginning in such taxable year, 

19 over 

20 ‘‘(ii) the amount which would (but for 

21 this subsection) be allowed as a credit to 

22 the taxpayer under subsection (a). 

23 ‘‘(3) DENIAL OF CREDIT TO DEPENDENTS.—No 

24 credit shall be allowed under this section to any indi25 vidual with respect to whom a deduction under secVerDate Nov 24 2008 05:22 Jul 15, 2009 Jkt 079200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3218.IH H3218

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1 tion 151 is allowable to another taxpayer for a tax2 able year beginning in the calendar year in which 

3 such individual’s taxable year begins. 

4 ‘‘(4) MARRIED COUPLES MUST FILE JOINT RE5 TURN.— 

6 ‘‘(A) IN GENERAL.—If the taxpayer is 

7 married at the close of the taxable year, the 

8 credit shall be allowed under subsection (a) only 

9 if the taxpayer and his spouse file a joint return 

10 for the taxable year. 

11 ‘‘(B) MARITAL STATUS; CERTAIN MARRIED

12 INDIVIDUALS LIVING APART.—Rules similar to 

13 the rules of paragraphs (3) and (4) of section 

14 21(e) shall apply for purposes of this para15 graph. 

16 ‘‘(5) VERIFICATION OF COVERAGE, ETC.—No 

17 credit shall be allowed under this section to any indi18 vidual unless such individual’s coverage under quali19 fied health insurance, and the amount paid for such 

20 coverage, are verified in such manner as the Sec21 retary may prescribe. 

22 ‘‘(6) COST-OF-LIVING ADJUSTMENT.—In the 

23 case of any taxable year beginning in a calendar 

24 year after 2010, each dollar amount contained in 


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1 subsection (b) shall be increased by an amount equal 

2 to— 

3 ‘‘(A) such dollar amount, multiplied by 

4 ‘‘(B) the cost-of-living adjustment deter5 mined under section 1(f)(3) for the calendar 

6 year in which the taxable year begins by sub7 stituting ‘calendar year 2009’ for ‘calendar year 

8 1992’ in subparagraph (B) thereof. 

9 Any increase determined under the preceding sen10 tence shall be rounded to the nearest multiple of 

11 $10.’’. 

12 (b) ADVANCE PAYMENT.— 

13 (1) IN GENERAL.—Chapter 77 of the Internal 

14 Revenue Code of 1986 (relating to miscellaneous 

15 provisions) is amended by adding at the end the fol16 lowing: 

17 ‘‘SEC. 7529. ADVANCE PAYMENT OF CREDIT FOR MEDICAL 

18 COSTS. 

19 ‘‘The Secretary shall establish a program for— 

20 ‘‘(1) making payments to providers of qualified 

21 health insurance (as defined in section 36B(e)) on 

22 behalf of taxpayers eligible for the credit under sec23 tion 36B, and 

24 ‘‘(2) making payments relating to medical care 

25 for which a credit is allowable under such section.’’. 


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1 (2) INFORMATION REPORTING.— 

2 (A) IN GENERAL.—Subpart B of part III 

3 of subchapter A of chapter 61 of such Code (re4 lating to information concerning transactions 

5 with other persons) is amended by adding at 

6 the end the following new section: 

7 ‘‘SEC. 6050X. RETURNS RELATING TO CREDIT FOR MEDICAL 

8 COSTS. 

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

10 who receives payments for any month of any calendar year 

11 under section 7529 with respect to any individual shall, 

12 at such time as the Secretary may prescribe, make the 

13 return described in subsection (b) with respect to each 

14 such individual. 

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

16 is described in this subsection if such return— 

17 ‘‘(1) is in such form as the Secretary may pre18 scribe, and 

19 ‘‘(2) contains— 

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

21 individual referred to in subsection (a), and 

22 ‘‘(B) such other information as the Sec23 retary may prescribe. 

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1 QUIRED.—Every person required to make a return under 

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

3 is required to be set forth in such return a written state4 ment showing— 

5 ‘‘(1) the name and address of the person re6 quired to make such return and the phone number 

7 of the information contact for such person, and 

8 ‘‘(2) the information required to be shown on 

9 the return with respect to such individual. 

10 The written statement required under the preceding sen11 tence shall be furnished on or before January 31 of the 

12 year following the calendar year for which the return 

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

14 (B) ASSESSABLE PENALTIES.— 

15 (i) Subparagraph (B) of section 

16 6724(d)(1) of such Code (relating to defi17 nitions) is amended by striking ‘‘or’’ at the 

18 end of clause (xxii), by striking ‘‘and’’ at 

19 the end of clause (xxiii) and inserting ‘‘or’’, 

20 and by inserting after clause (xxiii) the fol21 lowing new clause: 

22 ‘‘(xxiv) section 6050X (relating to re23 turns relating to credit for medical costs), 

24 and’’. 


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1 (ii) Paragraph (2) of section 6724(d) 

2 of such Code is amended by striking the 

3 period at the end of subparagraph (EE) 

4 and inserting a comma, by striking the pe5 riod at the end of subparagraph (FF) and 

6 inserting ‘‘, or’’, and by adding after sub7 paragraph (FF) the following new sub8 paragraph: 

9 ‘‘(GG) section 6050X (relating to returns 

10 relating to credit for medical costs).’’. 

11 (3) CLERICAL AMENDMENTS.— 

12 (A) The table of sections for chapter 77 of 

13 such Code is amended by adding at the end the 

14 following new item: 

‘‘Sec. 7529. Advance payment of credit for medical costs.’’. 

15 (B) The table of sections for subpart B of 

16 part III of subchapter A of chapter 61 of such 

17 Code is amended by adding at the end the fol18 lowing new item: 

‘‘Sec. 6050X. Returns relating to credit for medical costs.’’. 

19 (c) CONFORMING AMENDMENTS.— 

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

21 31, United States Code, is amended by inserting 

22 ‘‘36B,’’ after ‘‘35A,’’. 

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

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1 enue Code of 1986 is amended by striking the item 

2 relating to section 36 and inserting the following 

3 new items: 

‘‘Sec. 36B. Medical costs.’’. 

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

5 this section shall apply to taxable years beginning after 

6 December 31, 2009. 

7 TITLE II—EXPANSION OF AC8 CESS AND CHOICE OF 

9 HEALTH INSURANCE COV10 ERAGE THROUGH INDI11 VIDUAL MEMBERSHIP ASSO12 CIATIONS (IMAS) 

13 SEC. 201. EXPANSION OF ACCESS AND CHOICE OF HEALTH 

14 INSURANCE COVERAGE THROUGH INDI15 VIDUAL MEMBERSHIP ASSOCIATIONS (IMAS). 

16 The Public Health Service Act is amended by adding 

17 at the end the following new title: 

18 ‘‘TITLE XXXI—INDIVIDUAL 

19 MEMBERSHIP ASSOCIATIONS 

20 ‘‘SEC. 3101. DEFINITION OF INDIVIDUAL MEMBERSHIP AS21 SOCIATION (IMA). 

22 ‘‘(a) IN GENERAL.—For purposes of this title, the 

23 terms ‘individual membership association’ and ‘IMA’ 

24 mean a legal entity that meets the following requirements: 


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1 ‘‘(1) ORGANIZATION.—The IMA is an organiza2 tion operated under the direction of an association 

3 (as defined in section 3104(1)). 

4 ‘‘(2) OFFERING HEALTH BENEFITS COV5 ERAGE.— 

6 ‘‘(A) DIFFERENT GROUPS.—The IMA, in 

7 conjunction with those health insurance issuers 

8 that offer health benefits coverage through the 

9 IMA, makes available health benefits coverage 

10 in the manner described in subsection (b) to all 

11 members of the IMA and the dependents of 

12 such members in the manner described in sub13 section (c)(2) at rates that are established by 

14 the health insurance issuer on a policy or prod15 uct specific basis and that may vary only as 

16 permissible under State law. 

17 ‘‘(B) NONDISCRIMINATION IN COVERAGE

18 OFFERED.— 

19 ‘‘(i) IN GENERAL.—Subject to clause 

20 (ii), the IMA may not offer health benefits 

21 coverage to a member of an IMA unless 

22 the same coverage is offered to all such 

23 members of the IMA. 

24 ‘‘(ii) CONSTRUCTION.—Nothing in 

25 this title shall be construed as requiring or 


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1 permitting a health insurance issuer to 

2 provide coverage outside the service area of 

3 the issuer, as approved under State law, or 

4 requiring a health insurance issuer from 

5 excluding or limiting the coverage on any 

6 individual, subject to the requirement of 

7 section 2741. 

8 ‘‘(C) NO FINANCIAL UNDERWRITING.—The 

9 IMA provides health benefits coverage only 

10 through contracts with health insurance issuers 

11 and does not assume insurance risk with re12 spect to such coverage. 

13 ‘‘(3) GEOGRAPHIC AREAS.—Nothing in this title 

14 shall be construed as preventing the establishment 

15 and operation of more than one IMA in a geographic 

16 area or as limiting the number of IMAs that may 

17 operate in any area. 

18 ‘‘(4) PROVISION OF ADMINISTRATIVE SERVICES

19 TO PURCHASERS.— 

20 ‘‘(A) IN GENERAL.—The IMA may provide 

21 administrative services for members. Such serv22 ices may include accounting, billing, and enroll23 ment information. 

24 ‘‘(B) CONSTRUCTION.—Nothing in this 

25 subsection shall be construed as preventing an 


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1 IMA from serving as an administrative service 

2 organization to any entity. 

3 ‘‘(5) FILING INFORMATION.—The IMA files 

4 with the Secretary information that demonstrates 

5 the IMA’s compliance with the applicable require6 ments of this title. 

7 ‘‘(b) HEALTH BENEFITS COVERAGE REQUIRE8 MENTS.— 

9 ‘‘(1) COMPLIANCE WITH CONSUMER PROTEC10 TION REQUIREMENTS.—Any health benefits coverage 

11 offered through an IMA shall— 

12 ‘‘(A) be underwritten by a health insurance 

13 issuer that— 

14 ‘‘(i) is licensed (or otherwise regu15 lated) under State law, 

16 ‘‘(ii) meets all applicable State stand17 ards relating to consumer protection, sub18 ject to section 3002(b), and 

19 ‘‘(B) subject to paragraph (2), be approved 

20 or otherwise permitted to be offered under 

21 State law. 

22 ‘‘(2) EXAMPLES OF TYPES OF COVERAGE.—The 

23 benefits coverage made available through an IMA 

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1 lowing if it meets the other applicable requirements 

2 of this title: 

3 ‘‘(A) Coverage through a health mainte4 nance organization. 

5 ‘‘(B) Coverage in connection with a pre6 ferred provider organization. 

7 ‘‘(C) Coverage in connection with a li8 censed provider-sponsored organization. 

9 ‘‘(D) Indemnity coverage through an insur10 ance company. 

11 ‘‘(E) Coverage offered in connection with a 

12 contribution into a medical savings account, 

13 health savings account, or flexible spending ac14 count. 

15 ‘‘(F) Coverage that includes a point-of16 service option. 

17 ‘‘(G) Any combination of such types of 

18 coverage. 

19 ‘‘(3) WELLNESS BONUSES FOR HEALTH PRO20 MOTION.—Nothing in this title shall be construed as 

21 precluding a health insurance issuer offering health 

22 benefits coverage through an IMA from establishing 

23 premium discounts or rebates for members or from 

24 modifying otherwise applicable copayments or 

25 deductibles in return for adherence to programs of 


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1 health promotion and disease prevention so long as 

2 such programs are agreed to in advance by the IMA 

3 and comply with all other provisions of this title and 

4 do not discriminate among similarly situated mem5 bers. 

6 ‘‘(c) MEMBERS; HEALTH INSURANCE ISSUERS.— 

7 ‘‘(1) MEMBERS.— 

8 ‘‘(A) IN GENERAL.—Under rules estab9 lished to carry out this title, with respect to an 

10 individual who is a member of an IMA, the in11 dividual may enroll for health benefits coverage 

12 (including coverage for dependents of such indi13 vidual) offered by a health insurance issuer 

14 through the IMA. 

15 ‘‘(B) RULES FOR ENROLLMENT.—Nothing 

16 in this paragraph shall preclude an IMA from 

17 establishing rules of enrollment and reenroll18 ment of members. Such rules shall be applied 

19 consistently to all members within the IMA and 

20 shall not be based in any manner on health sta21 tus-related factors. 

22 ‘‘(2) HEALTH INSURANCE ISSUERS.—The con23 tract between an IMA and a health insurance issuer 

24 shall provide, with respect to a member enrolled with 

25 health benefits coverage offered by the issuer 


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1 through the IMA, for the payment of the premiums 

2 collected by the issuer. 

3 ‘‘SEC. 3102. APPLICATION OF CERTAIN LAWS AND REQUIRE4 MENTS. 

5 ‘‘State laws insofar as they relate to any of the fol6 lowing are superseded and shall not apply to health bene7 fits coverage made available through an IMA: 

8 ‘‘(1) Benefit requirements for health benefits 

9 coverage offered through an IMA, including (but not 

10 limited to) requirements relating to coverage of spe11 cific providers, specific services or conditions, or the 

12 amount, duration, or scope of benefits, but not in13 cluding requirements to the extent required to imple14 ment title XXVII or other Federal law and to the 

15 extent the requirement prohibits an exclusion of a 

16 specific disease from such coverage. 

17 ‘‘(2) Any other requirements (including limita18 tions on compensation arrangements) that, directly 

19 or indirectly, preclude (or have the effect of pre20 cluding) the offering of such coverage through an 

21 IMA, if the IMA meets the requirements of this 

22 title. 

23 Any State law or regulation relating to the composition 

24 or organization of an IMA is preempted to the extent the 


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1 law or regulation is inconsistent with the provisions of this 

2 title. 

3 ‘‘SEC. 3103. ADMINISTRATION. 

4 ‘‘(a) IN GENERAL.—The Secretary shall administer 

5 this title and is authorized to issue such regulations as 

6 may be required to carry out this title. Such regulations 

7 shall be subject to Congressional review under the provi8 sions of chapter 8 of title 5, United States Code. The Sec9 retary shall incorporate the process of ‘deemed file and 

10 use’ with respect to the information filed under section 

11 3001(a)(5)(A) and shall determine whether information 

12 filed by an IMA demonstrates compliance with the applica13 ble requirements of this title. The Secretary shall exercise 

14 authority under this title in a manner that fosters and 

15 promotes the development of IMAs in order to improve 

16 access to health care coverage and services. 

17 ‘‘(b) PERIODIC REPORTS.—The Secretary shall sub18 mit to Congress a report every 30 months, during the 10- 

19 year period beginning on the effective date of the rules 

20 promulgated by the Secretary to carry out this title, on 

21 the effectiveness of this title in promoting coverage of un22 insured individuals. The Secretary may provide for the 

23 production of such reports through one or more contracts 

24 with appropriate private entities. 


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1 ‘‘SEC. 3104. DEFINITIONS. 

2 ‘‘For purposes of this title: 

3 ‘‘(1) ASSOCIATION.—The term ‘association’ 

4 means, with respect to health insurance coverage of5 fered in a State, an association which— 

6 ‘‘(A) has been actively in existence for at 

7 least 5 years; 

8 ‘‘(B) has been formed and maintained in 

9 good faith for purposes other than obtaining in10 surance; 

11 ‘‘(C) does not condition membership in the 

12 association on any health status-related factor 

13 relating to an individual (including an employee 

14 of an employer or a dependent of an employee); 

15 and 

16 ‘‘(D) does not make health insurance cov17 erage offered through the association available 

18 other than in connection with a member of the 

19 association. 

20 ‘‘(2) DEPENDENT.—The term ‘dependent’, as 

21 applied to health insurance coverage offered by a 

22 health insurance issuer licensed (or otherwise regu23 lated) in a State, shall have the meaning applied to 

24 such term with respect to such coverage under the 

25 laws of the State relating to such coverage and such 


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1 an issuer. Such term may include the spouse and 

2 children of the individual involved. 

3 ‘‘(3) HEALTH BENEFITS COVERAGE.—The term 

4 ‘health benefits coverage’ has the meaning given the 

5 term health insurance coverage in section 

6 2791(b)(1). 

7 ‘‘(4) HEALTH INSURANCE ISSUER.—The term 

8 ‘health insurance issuer’ has the meaning given such 

9 term in section 2791(b)(2). 

10 ‘‘(5) HEALTH STATUS-RELATED FACTOR.—The 

11 term ‘health status-related factor’ has the meaning 

12 given such term in section 2791(d)(9). 

13 ‘‘(6) IMA; INDIVIDUAL MEMBERSHIP ASSOCIA14 TION.—The terms ‘IMA’ and ‘individual membership 

15 association’ are defined in section 3101(a). 

16 ‘‘(7) MEMBER.—The term ‘member’ means, 

17 with respect to an IMA, an individual who is a mem18 ber of the association to which the IMA is offering 

19 coverage.’’. 


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1 TITLE III—FEDERAL MATCHING 

2 FUNDING FOR STATE INSUR3 ANCE EXPENDITURES 

4 SEC. 301. FEDERAL MATCHING FUNDING FOR 

5 STATFEDERAL MATCHING FUNDING FOR 

6 STATE INSURANCE EXPENDITURESE INSUR7 ANCE EXPENDITURES. 

8 (a) IN GENERAL.—Subject to the succeeding provi9 sions of this section, each State shall receive from the Sec10 retary of Health and Human Services an amount equal 

11 to 50 percent of the funds expended by the State in pro12 viding for the use, in connection with providing health ben13 efits coverage, of a high-risk pool, a reinsurance pool, or 

14 other risk-adjustment mechanism used for the purpose of 

15 subsidizing the purchase of private health insurance. 

16 (b) FUNDING LIMITATION.—A State shall not receive 

17 under this section for a fiscal year more than a total of 

18 50 cents multiplied by the average number of residents 

19 (as estimated by the Secretary) in the State in the fiscal 

20 year. 

21 (c) ADMINISTRATION.—The Secretary of Health and 

22 Human Services shall provide for the administration of 

23 this section and may establish such terms and conditions, 

24 including the requirement of an application, as may be ap25 propriate to carry out this section. 


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1 (d) CONSTRUCTION.—Nothing in this section shall be 

2 construed as requiring a State to operate a reinsurance 

3 pool (or other risk-adjustment mechanism) under this sec4 tion or as preventing a State from operating such a pool 

5 or mechanism through one or more private entities. 

6 (e) HIGH-RISK POOL.—For purposes of this section, 

7 the term ‘‘high-risk pool’’ means any qualified high risk 

8 pool (as defined in section 2744(c)(2) of the Public Health 

9 Service Act). 

10 (f) REINSURANCE POOL OR OTHER RISK-ADJUST11 MENT MECHANISM DEFINED.—For purposes of this sec12 tion, the term ‘‘reinsurance pool or other risk-adjustment 

13 mechanism’’ means any State-based risk spreading mecha14 nism to subsidize the purchase of private health insurance 

15 for the high-risk population. 

16 (g) HIGH-RISK POPULATION.—For purposes of this 

17 section, the term ‘‘high-risk population’’ means— 

18 (1) individuals who, by reason of the existence 

19 or history of a medical condition, are able to acquire 

20 health coverage only at rates which are at least 150 

21 percent of the standard risk rates for such coverage, 

22 and 

23 (2) individuals who are provided health cov24 erage by a high-risk pool. 


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24 

•HR 3218 IH

1 (h) STATE DEFINED.—For purposes of this section, 

2 the term ‘‘State’’ includes the District of Columbia, Puer3 to Rico, the Virgin Islands, Guam, American Samoa, and 

4 the Northern Mariana Islands. 

Æ 


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