I

103D CONGRESS

1ST SESSION H. R. 2624

To provide for comprehensive health care and health care cost containment.

IN THE HOUSE OF REPRESENTATIVES

JULY 13, 1993

Mr. PETERSON of Minnesota introduced the following bill; which was referred

jointly to the Committees on Energy and Commerce, Ways and Means,

Education and Labor, the Judiciary, Armed Services, and Post Office

and Civil Service

A BILL

To provide for comprehensive health care and health care

cost containment.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Comprehensive Health Care and Cost Containment Act

6 of 1993’’.

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

8 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings and program goals.

Sec. 3. Definitions.
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TITLE I—FEDERAL AND STATE ADMINISTRATION

Subtitle A—Federal Administration

Sec. 101. Federal Health Board.

Sec. 102. Federal Health Education Commission.

Subtitle B—State Administration

Sec. 111. State Health Boards.

Sec. 112. Health care districts and boards.

Sec. 113. State Health Care Education Commissions.

TITLE II—HEALTH CARE SERVICES

Subtitle A—National Health Insurance Program

Sec. 201. National standards for health insurance; requirement of enrollment.

Sec. 202. Coverage of all necessary and appropriate health care practitioner

services.

Sec. 203. Premiums; reduction in premiums for low income individuals.

Sec. 204. Use of standardized forms.

Sec. 205. Payments to practitioners.

Subtitle B—Payment Amounts for Health Care Practitioner Services and for

Covered District Health Care Services

PART 1—HEALTH CARE PRACTITIONER SERVICES

Sec. 211. State-chartered practitioners associations.

Sec. 212. Establishment of fee schedules.

PART 2—PAYMENTS FOR COVERED DISTRICT HEALTH CARE SERVICES

Sec. 221. Establishment of annual per capita rates.

Sec. 222. State budgets for covered district health care services.

Sec. 223. District budgets for covered district health care services.

Sec. 224. Payments from Federal government to States for covered district

health care services.

Sec. 225. State program budgets.

TITLE III—MALPRACTICE INSURANCE REFORM

Sec. 301. Eligibility requirements for Federal payments for State plans.

Sec. 302. State-chartered practitioners association assumption of responsibility

for malpractice insurance coverage and payment of damages.

Sec. 303. Prohibition against punitive damages.

Sec. 304. Medical malpractice claim defined.

TITLE IV—PROVISIONS RELATING TO ERISA AND FEDERAL AND

STATE ANTITRUST LAWS

Sec. 401. Relation to ERISA.

Sec. 402. Relation to Federal and State Antitrust laws.

TITLE V—HEALTH CARE EDUCATION TRUST FUND

Sec. 501. Health Care Education Trust Fund.

Sec. 502. Increase in taxes on cigarettes and distilled spirits.
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TITLE VI—TAX TREATMENT OF HEALTH INSURANCE PREMIUMS

Sec. 601. Deduction for health insurance premiums.

TITLE VII—PRIVATE OPTIONS

Sec. 701. Additional insurance.

TITLE VIII—PRESCRIPTION DRUG REVIEW BOARD

Sec. 801. Establishment of Board.

Sec. 802. Powers of Board.

Sec. 803. Functions of the Board.

Sec. 804. Sanctions and remedies.

Sec. 805. Manufacturers.

Sec. 806. Study.

TITLE IX—TERMINATION OF PROGRAMS

Sec. 901. Termination of certain Federal health care programs.

Sec. 902. Transition.

1 SEC. 2. FINDINGS AND PROGRAM GOALS.

2 (a) FINDINGS.—Congress finds the following:

3 (1) RISING COSTS OF HEALTH CARE.—(A)

4 Health care spending in the United States has

5 grown at a rate that substantially exceeds the rise

6 in the gross national product.

7 (B) Between 1965 and 1989, national health

8 care spending doubled, increasing from 5.9 percent

9 to 11.6 percent of the gross national product.

10 (C) National spending on health care has been

11 increasing at a greater rate than the general cost12 of-living index and the growth in the gross national

13 product for a number of years.

14 (D) In 1989, spending on health care was $604

15 billion, an amount which exceeds the proportion of
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1 the gross national product spent on health care by

2 every other industrialized nation.

3 (E) The high relative expenditure of the United

4 States on health care diminishes American incomes,

5 productivity, and competitiveness in global trade.

6 (F) Administrative, marketing, and liability

7 costs are among those components of health care

8 costs that have grown the fastest.

9 (G) Cost-shifting, the rising cost of insurance

10 premiums, and declining coverage are leaving Ameri11 cans without access (or without adequate access) to

12 important health services.

13 (2) LIMITED ACCESS TO HEALTH CARE.—(A) A

14 growing number of Americans are uninsured or in15 adequately insured to meet their health care needs.

16 (B) All Americans have a right to at least a

17 basic level of health care services that are continu18 ously available and determined to be cost-effective.

19 (C) At least 33 million Americans currently

20 lack access to basic health services at any point in

21 time.

22 (D) It is estimated that during any 2-year pe23 riod, approximately 25 percent of the non-elderly

24 population of the United States has neither health

25 insurance nor public health care coverage for some
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1 period of time, and that an additional 13 percent of

2 the population are underinsured for health care.

3 (3) NATIONAL PROBLEM.—(A) The growing

4 costs of health care, coupled with declining access to

5 services, represent a growing national problem.

6 (B) Despite growing expenditures on health

7 care, health status indicators in the United States

8 lag well behind those of other industrialized nations.

9 (C) Studies indicate that person who are unin10 sured or underinsured are less likely to receive ade11 quate health care services.

12 (D) Studies also find that insufficient access to

13 health care services has a negative impact on health

14 status and also increased health care expenditures in

15 the longer term.

16 (E) The current system of financing health care

17 in the United States is complex, confusing, and frus18 trating to many Americans, including physicians and

19 other providers of health care.

20 (F) National expenditures on health care can21 not continue to expand faster than inflation and the

22 rate of national economic growth without endanger23 ing the domestic standard of living and international

24 economic competitiveness.
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1 (b) PROGRAM GOALS.—The goals of the program of

2 comprehensive health care and cost containment contained

3 in this Act are as follows:

4 (1) To provide universal access to health care

5 services for all Americans regardless of their finan6 cial and medical conditions.

7 (2) To establish the institutional and political

8 capacity to control the escalating health care costs

9 in the United States and to eliminate administrative

10 waste.

11 (3) To ensure the portability of health care cov12 erage to all regions of the United States.

13 (4) To build on the strengths of the Federal

14 system, with the Federal Government contributing

15 progressive financing while State government and

16 units of local government supply additional funding

17 and administer the program with the flexibility to

18 address the specific concerns of each region.

19 (5) To utilize community care networks and

20 local control to maximize our ability to expand ac21 cess while containing costs.

22 (6) To maintain the proven advantages of the

23 American health care delivery system, including pri24 vate practice, the freedom to choose among practi25 tioners, and superiority in biomedical technology.
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1 (7) To encourage the effective use of preventive

2 and primary care.

3 (8) To enhance the autonomy of practitioners

4 by limiting the intrusiveness of government interven5 tion in the actual delivery of care.

6 (9) To promote the role of competition and col7 laboration among practitioners and insurers to en8 courage innovation that results in higher quality and

9 more efficient care.

10 (10) To reduce the incentives providers face to

11 perform medically unnecessary or inappropriate serv12 ices.

13 (11) To reinforce the public accountability of

14 the health care system, permitting explicit and open

15 deliberation about the allocation of resources to

16 health care.

17 (12) To provide that all Americans share in the

18 responsibility of maintaining an efficient health care

19 system.

20 SEC. 3. DEFINITIONS.

21 In this Act:

22 (1) The term ‘‘approved health insurance pol23 icy’’ means a health insurance policy which has been

24 approved by the Federal Health Board under section

25 201(a).
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1 (2) The term ‘‘covered district health care serv2 ices’’ means the following services:

3 (A) Ambulance services.

4 (B) Dialysis.

5 (C) Hospice care.

6 (D) Inpatient and outpatient hospital serv7 ices (including such services provided for treat8 ment of mental illness), including—

9 (i) accommodation and meals at the

10 standard level (and preferred accommoda11 tion if medically required),

12 (ii) nursing services,

13 (iii) laboratory, radiological, and other

14 diagnostic procedures (together with nec15 essary interpretations),

16 (iv) drugs, biologicals, and related

17 preparations when administered in the hos18 pital,

19 (v) use of operating room, case room,

20 and anesthetic facilities, including nec21 essary equipment and supplies,

22 (vi) medical and surgical equipment

23 and supplies,

24 (vii) emergency room services,

25 (viii) use of radiotherapy facilities,
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1 (ix) use of physiotherapy facilities,

2 (x) services of hospital-based health

3 care practitioners (such as anesthesiol4 ogists, certified registered nurse anes5 thetists, pathologists, and radiologists), as

6 specified by the Federal Health Board, and

7 (xi) services provided by other persons

8 who receive remuneration therefore from

9 the hospital;

10 but excluding health care practitioner services

11 furnished on an outpatient basis and for which

12 remuneration is not paid by the hospital.

13 (E) Inhalation services.

14 (F) Partial hospitalization or day treat15 ment services for treatment of mental illness,

16 excluding health care practitioner services fur17 nished on an outpatient basis and for which re18 muneration is not paid by the hospital.

19 (G) Nuclear medicine.

20 (H) Nursing care in an individual’s place

21 of residence.

22 (I) Inpatient, outpatient, and residential

23 substance abuse treatment services.

24 (J) Home care services (other than health

25 care practitioner services)—
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1 (i) for treatment of a diagnosed medi2 cal condition or rehabilitation,

3 (ii) for treatment of a long-term dis4 ability, or

5 (iii) for frail individuals at risk of in6 stitutionalization in the absence of such

7 services.

8 (K) Nursing facility services, including

9 long-term residential care.

10 (L) Respite care.

11 (3) The term ‘‘district board’’ refers to a

12 Health Care District Board appointed under section

13 202.

14 (4) The term ‘‘Federal Health Board’’ refers to

15 the Federal Health Board established under section

16 101.

17 (5) The term ‘‘Federal Health Education Com18 mission’’ refers to the Federal Health Education

19 Commission established under section 102.

20 (6) The term ‘‘global budget’’ means, with re21 spect to a district for a 12-month period, a com22 prehensive annual budget established by the district

23 board for the district and setting forth, in advance

24 of the period—
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1 (A) aggregate receipts anticipated by the

2 board from the Federal and State governments

3 for the provision of health care services in the

4 year, and

5 (B) aggregate expenditures for the provi6 sion of such services in the period, broken down

7 by (i) capital expenditures, and (ii) other ex8 penditures.

9 (7) The term ‘‘health care practitioner’’ means

10 an individual lawfully entitled under the law of the

11 State to provide health services in the place in which

12 the services are provided by the individual.

13 (8) The term ‘‘health care practitioner services’’

14 means medical, chiropractic, dental, mental health,

15 and vision services provided by a health care practi16 tioner, other than services described in paragraph

17 (2)(D)(x) (except for such services furnished on an

18 outpatient basis and for which remuneration is not

19 paid by a hospital).

20 (9) The term ‘‘State Health Board’’ refers to a

21 State Health Board established under section 111.

22 (10) The term ‘‘State-chartered practitioners

23 association’’ means an organization of health care

24 practitioners that is chartered by the State in ac25 cordance with section 211.
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1 TITLE I—FEDERAL AND STATE

2 ADMINISTRATION

3 Subtitle A—Federal Administration

4 SEC. 101. FEDERAL HEALTH BOARD.

5 (a) ESTABLISHMENT.—

6 (1) IN GENERAL.—There is established within

7 the Department of Health and Human Services a

8 Federal Health Board.

9 (2) MEMBERSHIP; APPOINTMENT.—The Board

10 shall consist of 5 individuals, appointed by the

11 President by and with the advice and consent of the

12 Senate.

13 (3) TERMS.—Members of the Board shall serve

14 for terms of 5 years, except that the terms of the

15 members initially appointed shall be for terms of 1,

16 2, 3, 4, and 5 years, as specified by the President

17 at the time of appointment.

18 (4) COMPENSATION.—Members of the Board

19 are entitled, subject to amounts provided in advance

20 in appropriations Acts, to compensation at the rate

21 provided for level V of the Executive Schedule.

22 (b) DUTIES.—The Board is responsible for the fol23 lowing:

24 (1) DETERMINATION OF NATIONAL PER CAPITA

25 SPENDING RATES.—
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1 (A) COVERED DISTRICT HEALTH CARE

2 SERVICES.—The Board shall determine, in ac3 cordance with section 221(a), national per cap4 ita spending rates for covered district health

5 care services. In determining such rates, the

6 Board shall use data provided by the State.

7 (B) PRACTITIONER SERVICES.—The Board

8 shall determine national per capita spending

9 rates for health care practitioner services. In

10 determining such rates, the Board shall use

11 data provided by the insurance companies.

12 (2) ESTABLISHMENT OF SINGLE NATIONAL IN13 SURANCE PREMIUMS.—The Board shall establish a

14 single national insurance premium for each of the

15 following categories of enrollment:

16 (A) Individuals.

17 (B) Married couples without children and

18 an unmarried individual with a child.

19 (C) Married couples with one child and an

20 unmarried individual with two children.

21 (D) Married couples with two children and

22 an unmarried individual with three or more

23 children.

24 (E) Married couples with three or more

25 children.
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1 (3) PAYMENT.—The Board shall make Federal

2 payments to States and insurers under this Act.

3 (4) CERTIFICATION.—The Board shall deter4 mine whether States comply with the goals and

5 guidelines for implementing provisions under this

6 Act.

7 (5) RECIPROCITY.—The Board shall enter into

8 reciprocity agreements with foreign countries which

9 agree to provide health care services to United

10 States citizens in a manner similar to the provision

11 of services under this Act.

12 (6) REVIEW OF DUPLICATIVE PROGRAMS.—

13 Within 1 year after the date of the enactment of this

14 Act, the Board shall submit to Congress a report

15 that identifies Federal health care programs (other

16 than provided in this Act) which duplicate the serv17 ices provided in this Act. The Board may include in

18 the report such recommendations for the revision or

19 elimination of such programs as may be appropriate.

20 (7) ANNUAL REPORT.—The Board shall submit

21 to Congress an annual report on the status of the

22 health care system in the United States.

23 SEC. 102. FEDERAL HEALTH EDUCATION COMMISSION.

24 (a) ESTABLISHMENT.—
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1 (1) IN GENERAL.—There is established within

2 the Department of Education a Federal Health Edu3 cation Commission.

4 (2) MEMBERSHIP; APPOINTMENT.—The Com5 mission shall consist of 5 individuals, appointed by

6 the President by and with the advise and consent of

7 the Senate.

8 (3) TERMS.—Members of the Board shall serve

9 for terms of 5 years, except that the terms of the

10 members initially appointed shall be for terms of 1,

11 2, 3, 4, and 5 years, as specified by the President

12 at the time of appointment.

13 (4) COMPENSATION.—Members of the Board

14 are entitled, subject to amounts provided in advance

15 in appropriations Acts, to compensation at the rate

16 provided for level V of the Executive Schedule.

17 (b) DUTIES.—The Commission is responsible for the

18 following:

19 (1) CONSUMER EDUCATION GRANTS.—The

20 Commission shall manage the program of Federal

21 grants to States for consumer education programs,

22 under section 113 and title V.

23 (2) PRIMARY CARE PRACTITIONER TRAINING

24 GRANTS.—The Commission shall manage the pro-
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1 gram of Federal grants to States for primary care

2 practitioner training, under section 113 and title V.

3 (3) ANNUAL REPORT.—The Commission shall

4 submit to Congress an annual report on its activities

5 under this Act.

6 Subtitle B—State Administration

7 SEC. 111. STATE HEALTH BOARDS.

8 (a) ESTABLISHMENT.—Each State shall provide for

9 the establishment of a State Health Board that meets the

10 requirements of this section.

11 (b) MEMBERSHIP.—

12 (1) IN GENERAL.—Each State Health Board

13 shall—

14 (A) include representatives of the organiza15 tions described in paragraph (2),

16 (B) include representatives of the interests

17 described in paragraph (3), and

18 (C) assure that at least 60 percent of the

19 membership represents the interests described

20 in paragraph (3).

21 (2) HEALTH PROVIDER ORGANIZATIONS.—The

22 organizations described in this paragraph are as fol23 lows:

24 (A) The State-chartered medical associa25 tion.
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1 (B) The State-chartered nurses associa2 tion.

3 (C) The State-chartered chiropractic physi4 cians association.

5 (D) The State-chartered mental health

6 providers association.

7 (E) The State hospital association.

8 (F) The State nursing home association.

9 (3) NON-PROVIDER INTERESTS.—The interests

10 described in this paragraph are the interests of—

11 (A) consumers,

12 (B) the State legislature, and

13 (C) the insurance industry.

14 (c) DUTIES.—Each State Health Board shall have re15 sponsibility for the following:

16 (1) To establish health districts in the State

17 and to appoint a district health care board for each

18 such district, in accordance with section 112.

19 (2) To set the global budget (as defined in sec20 tion 3(6)) for each health care district in the State.

21 (3) To establish fee schedules for each practi22 tioner group in the State.

23 (4) To develop a long-range plan for future

24 health care infrastructure in the State.
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1 (d) SUBMISSION OF PROGRAMS.—Not later than Oc2 tober 1, 1995, each State shall submit to the Board the

3 State program in the State.

4 (e) REVIEW AND APPROVAL OF PROGRAMS.—The

5 Board shall review programs submitted under subsection

6 (d) and determine whether such programs meet the re7 quirements for approval, not later than October 1, 1996.

8 The Board shall not approve such a program unless it

9 finds that the program provides, consistent with the provi10 sions of this Act, for—

11 (1) adequate financing of covered district health

12 care services, including the annual submission of the

13 State program budget to the Board,

14 (2) adequate administration and sufficient pro15 visions to ensure against fraud and abuse,

16 (3) an organized grievance procedure available

17 to consumers through which complaints about the

18 organization and administration of the State pro19 gram may be filed, heard, and resolved, and

20 (4) the modification of State law as it relates

21 to medical malpractice, consistent with title III.

22 (f) OPERATIONAL STATUS.—A State program in a

23 State shall not be considered operational unless it is ap24 proved and remains approved under subsection (e).
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1 (g) FAILURE TO COMPLY WITH THIS ACT.—When2 ever the Board, after reasonable notice and opportunity

3 for hearing to the designated State agency finds that in

4 the administration of the State program there is a failure

5 to comply with any provision of this Act, the Board may—

6 (1) withhold further payments to the State

7 under this Act, or

8 (2) place the State program, or specific portions

9 of such program, in receivership under the jurisdic10 tion of the Board,

11 until such failure has been corrected.

12 (h) JUDICIAL REVIEW.—

13 (1) IN GENERAL.—If any State is dissatisfied

14 with the Board’s action in denying approval of such

15 State’s program or finding a failure under sub16 section (g) with respect to such program, such State

17 may, within 60 days after notice of such action, file

18 with the United States court of appeals for the cir19 cuit in which such State is located a petition for re20 view of that action. A copy of the petition shall be

21 forthwith transmitted by the clerk of the court to

22 the Board. The Board thereupon shall file in the

23 court the record of the proceedings upon which the

24 Board’s action was based, as provided in section

25 2112 of title 28, United States Code.
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1 (2) FINDINGS OF FACT.—The findings of fact

2 by the Board, if supported by substantial evidence,

3 shall be conclusive; but the court, for good cause

4 shown, may remand the case to the Board to take

5 further evidence, and the Board may thereupon

6 make new or modified findings of fact and may mod7 ify the Board’s previous action, and shall file in the

8 court the record of the further proceedings. Such

9 new or modified findings of fact shall likewise be

10 conclusive if supported by substantial evidence.

11 (3) JURISDICTION OF COURT.—Upon the filing

12 of such petition, the court shall have jurisdiction to

13 affirm the action of the Board or to set it aside, in

14 whole or in part. The judgment of the court shall be

15 subject to review by the Supreme Court of the Unit16 ed States upon certiorari or certification as provided

17 in section 1254 of title 28, United States Code.

18 SEC. 112. HEALTH CARE DISTRICTS AND BOARDS.

19 (a) ESTABLISHMENT OF DISTRICTS.—

20 (1) IN GENERAL.—Subject to paragraph (3),

21 each State Health Board shall establish health care

22 districts in the State of such number and size as

23 such Board deems appropriate area for the effective

24 planning, development, and delivery of covered dis25 trict health care services in the State under this Act.
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1 (2) STATEWIDE DISTRICT.—A State Health

2 Board may treat the entire State as a single district

3 in the case of a State with a population under

4 1,000,000.

5 (3) TREATMENT OF INDIAN RESERVATIONS.—

6 Each State Health Board shall provide the designa7 tion of each Indian reservation as a separate dis8 trict.

9 (b) APPOINTMENT OF BOARDS.—

10 (1) IN GENERAL.—Each State Health Board

11 shall provide for the appointment of a Health Care

12 District Board for each district established under

13 subsection (a). Subject to paragraphs (2) and (3),

14 each such board shall consist of 7 members ap15 pointed by the State Board, of whom at least 3 shall

16 represent providers of covered district health care

17 services.

18 (2) STATEWIDE DISTRICTS.—If the State has

19 elected to treat the entire State as a single district

20 under subsection (a)(2), the State Health Board

21 shall serve as the Health Care District Board for the

22 entire State.

23 (3) INDIAN RESERVATIONS.—The Health Care

24 District Board for an Indian reservation designated

25 under subsection (a)(3) shall consist of 7 members
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1 appointed by the Chairman of the reservation, at

2 least 3 of whom shall represent providers of covered

3 district health care services in the area of the res4 ervation.

5 (c) RESPONSIBILITIES OF DISTRICT BOARDS.—Each

6 Health Care District Board is responsible—

7 (1) through contracts with health care facilities

8 and service providers, for ensuring that covered dis9 trict health care services are provided to residents of

10 the district; and

11 (2) for developing, and submitting to the State

12 Board, a global budget for the district.

13 SEC. 113. STATE HEALTH CARE EDUCATION COMMISSIONS.

14 (a) IN GENERAL.—Each State Health Board shall

15 establish a State Health Care Education Commission.

16 (b) COMPOSITION AND APPOINTMENT.—The Com17 mission shall consist of 5 members, appointed by the State

18 Health Board, of whom 2 shall be professional educators.

19 (c) DUTIES.—Each State Health Care Education

20 Commission shall be responsible for the following activi21 ties:

22 (1) Receipt of transfers from the Health Edu23 cation Trust Fund.

24 (2) Providing grants to local school districts to

25 conduct health education and preventive care pro-
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1 grams, in accordance with guidelines developed by

2 the National Health Care Education Commission.

3 (3) Providing grants to other organizations to

4 promote health education, in accordance with guide5 lines developed by the National Health Care Edu6 cation Commission.

7 (4) Providing grants to individuals for training

8 as primary care practitioners, in accordance with

9 guidelines developed by the National Health Care

10 Education Commission.

11 TITLE II—HEALTH CARE

12 SERVICES

13 Subtitle A—National Health

14 Insurance Program

15 SEC. 201. NATIONAL STANDARDS FOR HEALTH INSURANCE;

16 REQUIREMENT OF ENROLLMENT.

17 (a) IN GENERAL.—No health insurance policy which

18 provides for coverage of either covered district health care

19 services or health care practitioner services may be in ef20 fect on or after January 1, 1995, unless the Federal

21 Health Board has determined that the policy meets the

22 requirements of sections 202 through 205.

23 (b) ENROLLMENT REQUIREMENT.—
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1 (1) IN GENERAL.—Each legal resident of the

2 United States shall be enrolled in an approved insur3 ance policy.

4 (2) ASSIGNMENT OF UNENROLLED INDIVID5 UALS.—If a State determines that an individual who

6 is a resident of the State is not enrolled in an ap7 proved health insurance policy in accordance with

8 paragraph (1), the State shall provide for the enroll9 ment of the individual in such a policy. In providing

10 for such enrollment, the State shall assign such indi11 viduals to such a policy in an appropriate random

12 manner.

13 SEC. 202. COVERAGE OF ALL NECESSARY AND APPRO14 PRIATE HEALTH CARE PRACTITIONER SERV15 ICES.

16 (a) IN GENERAL.—Each approved health insurance

17 policy shall cover all health care practitioner services that

18 are necessary and appropriate for the maintenance of

19 health or for the diagnosis or treatment of, or rehabilita20 tion following, injury, disability, or disease, if furnished

21 anywhere in the United States (or in any country with

22 which the Federal Health Board has a reciprocity agree23 ment under section 101(b)(5)).

24 (b) LIMITATION ON SERVICES COVERED.—
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1 (1) IN GENERAL.—An approved health insur2 ance policy shall not cover services other than serv3 ices described in paragraph (1).

4 (2) REFERENCE TO ADDITIONAL INSURANCE.—

5 For provision permitting separate insurance cov6 erage for certain other health care services, see sec7 tion 701.

8 SEC. 203. PREMIUMS; REDUCTION IN PREMIUMS FOR LOW

9 INCOME INDIVIDUALS.

10 (a) IN GENERAL.—The premium rates that may be

11 charged by an approved health insurance policy shall be

12 such rates as are approved by the Federal Health Board.

13 (b) PREMIUM ASSISTANCE.—

14 (1) IN GENERAL.—In the case of an individual

15 or family who is a legal resident of the United

16 States who is enrolled under an approved health in17 surance policy and who is determined by the issuer

18 of the policy (in accordance with guidelines specified

19 by the Federal Health Board) to have total adjusted

20 gross income (as determined for purposes of the In21 ternal Revenue Code of 1986 for the individual and

22 all members of the family) below maximum income

23 level specified under paragraph (3)—

24 (A) the individual or family is entitled to

25 a percentage reduction specified under para-
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1 graph (2) in the premium rates charged under

2 subsection (a), and

3 (B) the issuer of the policy is entitled to

4 payment by the Federal Health Board of an

5 amount equal to the amount of such reduction.

6 (2) PERCENTAGE REDUCTION.—In the case of

7 an individual or family the total adjusted gross in8 come of whose members—

9 (A) does not exceed the Federal poverty

10 line (applicable to a family of the size involved),

11 the percentage reduction is 100 percent, or

12 (B) exceeds such line, the percentage re13 duction is 100 percent less 10 percent for each

14 dollar unit (specified in paragraph (4)) by

15 which such total adjusted gross income exceeds

16 the applicable Federal poverty line.

17 (3) MAXIMUM INCOME LEVEL.—The maximum

18 income level specified in this subparagraph for a

19 family is the sum of—

20 (A) the Federal poverty line, and

21 (B) 10 times the dollar unit specified in

22 paragraph (4),

23 applicable to a family of the size involved.

24 (4) DOLLAR UNIT.—The dollar unit specified in

25 this paragraph is—
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1 (A) for a family of four, $1,000, and

2 (B) for a family of other size (including a

3 family consisting only of an individual), such

4 amount as bears the same ratio to the amount

5 specified in subparagraph (A) as the ratio of

6 the Federal poverty line applicable to a family

7 of the size involves bears to the Federal poverty

8 line applicable to a family of four.

9 The amounts determined under subparagraph (B)

10 may be rounded by the Federal Health Board to an

11 appropriate multiple of $10.

12 (5) FEDERAL POVERTY LINE.—In this sub13 section, the term ‘‘Federal poverty line’’ means the

14 official poverty line as defined by the Office of Man15 agement and Budget and revised annually in accord16 ance with section 673(2) of the Omnibus Budget

17 Reconciliation Act of 1981.

18 (c) EMPLOYER CONTRIBUTIONS.—Nothing in this

19 section shall be construed as preventing an employer of

20 an individual from paying some or all of the premiums

21 for coverage of employees and family members under

22 health insurance policies.

23 (d) SPECIAL PROVISIONS RELATING TO NATIVE

24 AMERICANS.—In the case of an individual who is a Native

25 American and who is an enrolled member of a Federally-
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1 recognized Indian tribe or otherwise qualifies under regu2 lations promulgated by the Federal Health Board (in con3 sultation with the Secretary of the Interior)—

4 (1) the individual is entitled to a 100 percent

5 reduction in the premium rates charged under sub6 section (a), and

7 (2) the issuer of the policy is entitled to pay8 ment by the Federal Health Board of an amount

9 equal to the amount of such reduction.

10 A reduction and payment under this subsection for such

11 an individual shall be instead of any reduction or payment

12 otherwise provided under subsection (b).

13 (e) EXPANSION OF TAX DEDUCTIBILITY OF PRE14 MIUMS.—For provision making payment of premiums

15 under this section fully tax deductible, see title VI of this

16 Act.

17 SEC. 204. USE OF STANDARDIZED FORMS.

18 Each approved health insurance policy shall provide

19 for the use of such standardized claims forms as the Fed20 eral Health Board specifies, after consultation with State

21 Health Boards and other interested parties.

22 SEC. 205. PAYMENTS TO PRACTITIONERS.

23 (a) IN GENERAL.—Each approved health insurance

24 policy shall provide for payment for health care practi-
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1 tioner services based on the fee schedules established

2 under part 1 of subtitle B.

3 (b) MANDATORY ASSIGNMENT.—Payment for health

4 care practitioner services may only be made to the practi5 tioner furnishing the services and only if the practitioner

6 agrees to accept payment of such fee schedule amounts

7 as payment in full for the services.

8 Subtitle B—Payment Amounts for

9 Health Care Practitioner Serv10 ices and for Covered District

11 Health Care Services

12 PART 1—HEALTH CARE PRACTITIONER SERVICES

13 SEC. 211. STATE-CHARTERED PRACTITIONERS ASSOCIA14 TIONS.

15 Each State shall provide for the chartering of practi16 tioner associations—

17 (1) to represent licensed members of the dis18 cipline in the establishment of fee schedules in the

19 State under this part, and

20 (2) to provide medical malpractice insurance

21 under section 302.

22 SEC. 212. ESTABLISHMENT OF FEE SCHEDULES.

23 (a) IN GENERAL.—Each State Health Board, in con24 junction with State-chartered practitioners associations

25 provided for under section 211, shall develop fee schedules
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1 of amounts that may be paid for health care practitioner

2 services by approved health insurance policies under sub3 title A. The Board shall provide for the review and revision

4 (if appropriate) of the structure of such schedules not less

5 often than once every 10 years.

6 (b) BASIS.—Such schedules may take into consider7 ation regional cost variations, practitioner expertise, out8 come-based measures, and any other factors deemed rel9 evant by the Board.

10 (c) NEGOTIATIONS.—Each State Health Board shall

11 provide for annual negotiations with State-chartered prac12 titioners associations regarding the changes in the

13 amounts specified in fee schedules developed under this

14 section. Such negotiations shall consider changes in the

15 cost of living, the cost of supplies, and other elements

16 which affect the costs of delivering health care services by

17 the practitioners.

18 (d) SPECIAL NONPHYSICIAN PRACTITIONER PROVI19 SIONS.—In the establishment of fee schedule amounts for

20 nonphysician practitioners, in the case of health care prac21 titioner services which may be provided by nonphysician

22 practitioners and physicians, basic reimbursement rates

23 for those same services shall be the same regardless of

24 the type of practitioner providing such services.
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1 PART 2—PAYMENTS FOR COVERED DISTRICT HEALTH

2 CARE SERVICES

3 SEC. 221. ESTABLISHMENT OF ANNUAL PER CAPITA RATES.

4 (a) IN GENERAL.—The Federal Health Board, using

5 data from State Health Boards and Health Care District

6 Boards, shall determine an annual per capita rate for

7 costs of covered district health care services provided by

8 such Boards.

9 (b) DIVISION OF RATE.—The Federal Health Board

10 shall specify the portion of the annual per capita rate

11 under subsection (a) that is attributable to nursing facility

12 services and the portion not attributable to such services.

13 Such portions shall reflect the average of approved State

14 budgets under section 222 which are attributable to the

15 different services.

16 SEC. 222. STATE BUDGETS FOR COVERED DISTRICT

17 HEALTH CARE SERVICES.

18 (a) DEVELOPMENT.—

19 (1) IN GENERAL.—Each State Health Board

20 shall develop and approve a State budget for covered

21 district health care services for all districts in the

22 State. Such budget shall be the sum of the district

23 budgets submitted to and approved by the Board

24 under section 223.
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1 (2) DEVELOPMENT OF SEPARATE OPERATING

2 AND CAPITAL BUDGETS.—The State budget under

3 this subsection may consist of separate components

4 for operating and capital expenditures under guide5 lines established by the Federal Health Board.

6 (b) PAYMENTS TO DISTRICT BOARDS.—

7 (1) IN GENERAL.—Each State Health Board

8 shall establish procedures for payment of each dis9 trict board of amounts under its approved budget in

10 a manner that provides for an adequate cash flow to

11 allow the timely payment of obligations for the pro12 vision of covered district health care services.

13 (2) TREATMENT OF NATIVE AMERICANS.—

14 Under guidelines established by the Federal Health

15 Board, State Health Boards shall establish such pro16 cedures as assure full payment of amounts due to

17 Native American districts established under section

18 112(a)(4).

19 SEC. 223. DISTRICT BUDGETS FOR COVERED DISTRICT

20 HEALTH CARE SERVICES.

21 (a) DEVELOPMENT AND SUBMISSION.—

22 (1) GLOBAL BUDGETS.—Each health care dis23 trict board shall develop and submit to the State

24 Health Board, in a manner and at a time consistent

25 with guidelines developed by the appropriate State
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1 Health Board, a global budget for the district that

2 reflects the funding levels necessary to provide for

3 adequate covered district health care services in the

4 district for a fiscal year.

5 (2) TREATMENT OF CAPITAL.—Such a budget

6 shall provide for separate components for operating

7 and capital expenditures if the State has elected to

8 provide for such separate components under its

9 State budget under section 222.

10 (b) NEGOTIATIONS.—After the receipts of all district

11 budgets submitted under subsection (a), each State

12 Health Board shall provide an opportunity for district

13 boards to negotiate over the final district budgets to be

14 approved by the State Health Board and submitted by

15 such Board to the Federal Health Board.

16 (c) LIMITATION ON PAYMENTS.—

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

18 each district board shall not make total payments

19 for covered district health care services in a fiscal

20 year that exceed the amount of the district budget

21 approved under subsection (b).

22 (2) EMERGENCIES.—Under guidelines estab23 lished by the Federal Health Board or the State

24 Health Board, a district board may provide in the

25 case of unforeseen emergencies for payment of
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1 amounts in excess of the amounts provided under

2 the approved budget.

3 SEC. 224. PAYMENTS FROM FEDERAL GOVERNMENT TO

4 STATES FOR COVERED DISTRICT HEALTH

5 CARE SERVICES.

6 (a) IN GENERAL.—The Federal Health Board shall

7 provide for payment each fiscal year to each State Health

8 Board of an amount, on an annualized basis, equal to the

9 sum of the following:

10 (1) 25 percent of the product of (A) the portion

11 of the national per capita health care facilities rate

12 not attributable to nursing facility services (deter13 mined under section 221) and (B) the total number

14 of eligible State residents (other than native Ameri15 cans) in the State.

16 (2) 10 percent of the product of (A) the portion

17 of the national per capita health care facilities rate

18 attributable to nursing facility services (as deter19 mined under section 221) and (B) the total number

20 of eligible State residents (other than native Ameri21 cans) in the State.

22 (3) Subject to subsection (b), 100 percent of

23 the product of (A) the national per capita health

24 care facilities rate (as determined under section 221)
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1 and (B) the total number of native Americans who

2 are eligible State residents in the State.

3 (b) TREATMENT OF NATIVE AMERICANS.—Instead of

4 the payment amounts provided under subsection (a)(3),

5 the Federal Health Board may pay to a State such

6 amounts as may be required in order to provide for full

7 payment of the amounts of the global budgets for district

8 boards established pursuant to section 112(b)(3).

9 (c) PERIODIC PAYMENTS.—Payments under this sec10 tion shall be made on a periodic base (not less often than

11 monthly).

12 (d) PAYMENTS FOR HEALTH EDUCATION AND PRI13 MARY HEALTH CARE PRACTITIONER TRAINING.—For

14 provisions relating to payments to State Health Education

15 Commissions for grants for health education and training

16 of primary health care practitioners, see section 501 of

17 this Act.

18 (e) ADDITIONAL EXPENDITURES.—Nothing in this

19 section shall be construed as preventing a district board

20 from providing for payments for health care services in

21 addition to the amounts provided under this section.

22 SEC. 225. STATE PROGRAM BUDGETS.

23 (a) IN GENERAL.—Each State program shall estab24 lish an annual fiscal year State program budget which pro25 vides for—
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1 (1) the total expenditures to be made under the

2 State program in such fiscal year for covered district

3 health care services (including administrative and

4 associated costs), and

5 (2) the revenues to meet such expenditures.

6 (b) STATE SHARE.—

7 (1) IN GENERAL.—Each State program shall

8 cover the State share of program costs through the

9 use of tax revenues and other financing methods.

10 (2) ADDITIONS TO STATE SHARE.—Each State

11 shall raise the revenues necessary to cover at least

12 the State share of the State health budget estab13 lished by the State Health Board.

14 (c) ESTABLISHMENT OF ANNUAL BUDGETS UNDER

15 STATE PLANS.—

16 (1) SUBMISSION OF ESTIMATED PLAN EXPENDI17 TURES.—Not later than 3 months before the begin18 ning of each calendar year, each district board in

19 each State shall submit to the State Health Care

20 Board the estimated plan expenditures for the dis21 trict for that year.

22 (2) STATE PLAN BUDGET.—

23 (A) IN GENERAL.—The State plan budget

24 for a year shall be equal to the sum of the esti25 mated negotiated expenditures for all district
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1 boards in the State submitted under paragraph

2 (1).

3 (B) PERMITTING RETROACTIVE ADJUST4 MENT.—The State Health Care Board may

5 make a retroactive adjustment to the State plan

6 budget for a year under subparagraph (A) to

7 take into account differences between the budg8 et and total amount of expenditures under the

9 State plan during the year.

10 TITLE III—MALPRACTICE

11 INSURANCE REFORM

12 SEC. 301. ELIGIBILITY REQUIREMENTS FOR FEDERAL PAY13 MENTS FOR STATE PLANS.

14 For purposes of section 111(e)(4), a State has en15 acted and is enforcing laws, rules, or regulations relating

16 to physician medical malpractice liability that meet the re17 quirements of this title if State law meets the require18 ments of sections 302 through 304.

19 SEC. 302. STATE-CHARTERED PRACTITIONERS ASSOCIA20 TION ASSUMPTION OF RESPONSIBILITY FOR

21 MALPRACTICE INSURANCE COVERAGE AND

22 PAYMENT OF DAMAGES.

23 (a) STATE-CHARTERED PRACTITIONERS ASSOCIA24 TION RESPONSIBLE FOR OBTAINING INSURANCE.—With

25 respect to each class of health care practitioners in a
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1 State, the State-chartered practitioners association in the

2 State shall provide (either directly or through contracts

3 with insurance companies) medical malpractice insurance

4 for each practitioner member of the association.

5 (b) STATE-CHARTERED PRACTITIONERS ASSOCIA6 TION RESPONSIBLE FOR PAYING DAMAGES ARISING

7 FROM MEDICAL MALPRACTICE CLAIMS.—Any damages

8 assessed with respect to any medical malpractice claim

9 filed in the State against a health care practitioner who

10 is a member of a State-chartered practitioners association

11 shall be assessed against the association or other entity

12 providing the medical malpractice insurance under sub13 section (a), and the individual or entity to whom the dam14 ages are awarded may not collect the damages from the

15 practitioner.

16 SEC. 303. PROHIBITION AGAINST PUNITIVE DAMAGES.

17 No punitive damages may be assessed with respect

18 to any medical malpractice claim filed in the State against

19 any provider of health care services.

20 SEC. 304. MEDICAL MALPRACTICE CLAIM DEFINED.

21 (a) IN GENERAL.—In this title, the term ‘‘medical

22 malpractice claim’’ means (subject to subsection (b)) any

23 claim relating to the provision of (or the failure to provide)

24 health care services without regard to the theory of liabil25 ity asserted.
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1 (b) MEDICAL PRODUCT LIABILITY CLAIMS NOT IN2 CLUDED.—The term ‘‘medical malpractice claim’’ does not

3 include any claim in which the claimant alleges an injury

4 arising from or relating to the use of a device (as defined

5 in section 201(h) of the Federal Food, Drug, and Cos6 metic Act) or a drug (as defined in section 201(g)(1) of

7 such Act) that is filed against any entity that is the de8 signer, manufacturer, producer, or seller of the device or

9 drug.

10 TITLE IV—PROVISIONS RELAT11 ING TO ERISA AND FEDERAL

12 AND STATE ANTITRUST LAWS

13 SEC. 401. RELATION TO ERISA.

14 The provisions of the Employee Retirement Income

15 Security Act are superseded to the extent inconsistent

16 with the requirements of this Act.

17 SEC. 402. RELATION TO FEDERAL AND STATE ANTITRUST

18 LAWS.

19 (a) IN GENERAL.—The Antitrust laws, or any State

20 law similar to the Antitrust laws, shall not apply to any

21 hospital, nursing home, long-term care facility, or other

22 entity with the potential to deliver health services provided

23 under this Act, entering or attempting to enter into con24 tracts with any State, unit of local government or Board
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•HR 2624 IH

1 or entity established by a State or unit of local government

2 under this Act.

3 (b) ANTITRUST LAWS DEFINED.—The term ‘‘Anti4 trust laws’’ has the meaning given such term in section

5 1(a) of the Clayton Act (15 U.S.C. 12(a)), except that

6 such term includes section 5 of the Federal Trade Com7 mission Act (15 U.S.C. 45), to the extent that such section

8 applies to unfair methods of competition.

9 TITLE V—HEALTH CARE

10 EDUCATION TRUST FUND

11 SEC. 501. HEALTH CARE EDUCATION TRUST FUND.

12 (a) ESTABLISHMENT.—There is hereby created on

13 the books of the Treasury of the United States a trust

14 fund to be known as the ‘‘Health Care Education Trust

15 Fund’’ (in this section referred to as the ‘‘Fund’’). The

16 Fund shall consist of such gifts and bequests as are hereby

17 authorized to be received and such amounts as may be

18 deposited in, or appropriated to, such Fund as provided

19 in this section.

20 (b) OPERATION.—The Federal Health Care Edu21 cation Commission shall administer the Fund and shall

22 provide for grants under subsection (c) from the amounts

23 in the Fund.

24 (c) USE OF FUNDS.—

25 (1) STATE HEALTH CARE EDUCATION.—
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1 (A) IN GENERAL.—The Federal Health

2 Care Education Commission shall make annual

3 grants to State Health Care Education Com4 missions to provide for health care consumer

5 education and health care education in a man6 ner consistent with guidelines issued by the

7 Commission.

8 (B) PER CAPITA FORMULA.—The amounts

9 of the grants made to the States under this

10 paragraph shall be in proportion to the popu11 lation of each of the States.

12 (2) PRIMARY CARE HEALTH CARE PRACTI13 TIONER TRAINING.—The Federal Health Care Edu14 cation Commission shall provide for grants to States

15 to provide for payment for primary health care prac16 titioner training.

17 (3) LIMITATION.—In no case shall the total

18 amount of grants made under this subsection in any

19 fiscal year exceed the amount available in the Fund

20 to make such grants in such year.

21 (d) APPROPRIATION.—There are hereby appropriated

22 to the Fund for each fiscal year, out of any moneys in

23 the Treasury not otherwise appropriated, amounts equiva24 lent to 100 percent of the increase in taxes resulting from

25 the amendments made by section 502. The amounts ap-
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1 propriated by the preceding sentence shall be transferred

2 from time to time from the general fund in the Treasury

3 to the Fund, such amounts to be determined on the basis

4 of estimates by the Secretary of the Treasury of the addi5 tional taxes, specified in the preceding sentence, paid to

6 or deposited into the Treasury; and proper adjustments

7 shall be made in amounts subsequently transferred to the

8 extent prior estimates were in excess of or were less than

9 the additional taxes specified in such sentence.

10 SEC. 502. INCREASE IN TAXES ON CIGARETTES AND DIS11 TILLED SPIRITS.

12 (a) INCREASE IN TAX ON CIGARETTES.—

13 (1) RATE OF TAX.—Subsection (b) of section

14 5701 of the Internal Revenue Code of 1986 (relating

15 to rate of tax on cigarettes) is amended—

16 (A) by striking ‘‘$12 per thousand ($10

17 per thousand on cigarettes removed during

18 1991 or 1992)’’ in paragraph (1) and inserting

19 ‘‘$30.50 per thousand’’; and

20 (B) by striking ‘‘$25.20 per thousand ($21

21 per thousand on cigarettes removed during

22 1991 or 1992)’’ in paragraph (2) and inserting

23 ‘‘$64.05 per thousand’’.
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1 (2) EFFECTIVE DATE.—The amendments made

2 by this subsection shall apply with respect to articles

3 removed after December 31, 1994.

4 (3) FLOOR STOCKS.—

5 (A) IMPOSITION OF TAX.—On cigarettes

6 manufactured in or imported into the United

7 States which are removed before January 1,

8 1995, and held on such date for sale by any

9 person, there shall be imposed the following

10 taxes:

11 (i) SMALL CIGARETTES.—On ciga12 rettes, weighing not more than 3 pounds

13 per thousand, $20.50 per thousand;

14 (ii) LARGE CIGARETTES.—On ciga15 rettes, weighing more than 3 pounds per

16 thousand, $43.05 per thousand; except

that, if more than 61 17 ⁄2 inches in length,

18 they shall be taxable at the rate prescribed

19 for cigarettes weighing not more than 3

pounds per thousand, counting each 23 20 ⁄4

21 inches, or fraction thereof, of the length of

22 each as one cigarette.

23 (B) LIABILITY FOR TAX AND METHOD OF

24 PAYMENT.—
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1 (i) LIABILITY FOR TAX.—A person

2 holding cigarettes on January 1, 1995, to

3 which any tax imposed by subparagraph

4 (A) applies shall be liable for such tax.

5 (ii) METHOD OF PAYMENT.—The tax

6 imposed by subparagraph (A) shall be

7 treated as a tax imposed under section

8 5701 of the Internal Revenue Code of

9 1986 and shall be due and payable on Feb10 ruary 15, 1995, in the same manner as the

11 tax imposed under such section is payable

12 with respect to cigarettes removed on Jan13 uary 1, 1995.

14 (C) CIGARETTE.—For purposes of this

15 paragraph, the term ‘‘cigarette’’ shall have the

16 meaning given to such term by subsection (b)

17 of section 5702 of the Internal Revenue Code of

18 1986.

19 (D) EXCEPTION FOR RETAIL STOCKS.—

20 The taxes imposed by subparagraph (A) shall

21 not apply to cigarettes in retail stocks held on

22 January 1, 1995, at the place where intended

23 to be sold at retail.
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1 (E) FOREIGN TRADE ZONES.—Notwith2 standing the Act of June 18, 1934 (19 U.S.C.

3 81a et seq.) or any other provision of law—

4 (i) cigarettes—

5 (I) on which taxes imposed by

6 Federal law are determined, or cus7 toms duties are liquidated, by a cus8 toms officer pursuant to a request

9 made under the first proviso of sec10 tion 3(a) of the Act of June 18, 1934

11 (19 U.S.C. 81c(a)) before January 1,

12 1995, and

13 (II) which are entered into the

14 customs territory of the United States

15 on or after January 1, 1995, from a

16 foreign trade zone, and

17 (ii) cigarettes which—

18 (I) are placed under the super19 vision of a customs officer pursuant to

20 the provisions of the second proviso of

21 section 3(a) of the Act of June 18,

22 1934 (19 U.S.C. 81c(a)) before Janu23 ary 1, 1995, and

24 (II) are entered into the customs

25 territory of the United States on or
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1 after January 1, 1995, from a foreign

2 trade zone,

3 shall be subject to the tax imposed by subpara4 graph (A) and such cigarettes shall, for pur5 poses of subparagraph (A), be treated as being

6 held on January 1, 1995, for sale.

7 (b) INCREASE IN TAX ON DISTILLED SPIRITS.—

8 (1) IN GENERAL.—Section 5001(a) of the In9 ternal Revenue Code of 1986 (relating to rate of tax

10 on distilled spirits) is amended by striking ‘‘$13.50’’

11 each place it appears in paragraphs (1) and (3) and

12 inserting ‘‘$50.00’’.

13 (2) TECHNICAL AMENDMENT.—Section 5010 of

14 such Code (relating to credit for wine and flavors

15 content) is amended by striking ‘‘$13.50’’ each place

16 it appears in paragraphs (1)(A) and (2) and insert17 ing ‘‘$50.00’’.

18 (3) FLOOR STOCKS.—

19 (A) IMPOSITION OF TAX.—On any item

20 subject to tax under section 5001 of the Inter21 nal Revenue Code of 1986 that is removed be22 fore January 1, 1995, and held after such date

23 for sale by any person, there shall be imposed

24 a tax equal to $36.50.
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1 (B) LIABILITY FOR TAX AND METHOD OF

2 PAYMENT.—

3 (i) LIABILITY FOR TAX.—A person

4 holding an item to which any tax imposed

5 by subparagraph (A) applies shall be liable

6 for such tax.

7 (ii) METHOD OF PAYMENT.—The tax

8 imposed on any item by subparagraph (A)

9 shall be treated as a tax imposed under

10 section 5001 of the Internal Revenue Code

11 of 1986 and shall be due and payable on

12 February 13, 1995, in the same manner as

13 the tax imposed under such section is pay14 able with respect to such items removed on

15 January 1, 1995.

16 (C) EXCEPTION FOR RETAILERS.—To the

17 extent provided in regulations prescribed by the

18 Secretary of the Treasury or the Secretary’s

19 delegate, the tax imposed by subparagraph (A)

20 shall not apply to items in retail stocks held

21 after December 31, 1994, on the premises of a

22 retail establishment where alcoholic beverages

23 are sold for consumption on the premises only.

24 (D) TREATMENT OF ITEMS IN FOREIGN

25 TRADE ZONES.—Notwithstanding the Act of
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1 June 18, 1934 (48 Stat. 998, 19 U.S.C. 81a),

2 or any other provision of law, any item which

3 is located in a foreign trade zone on January 1,

4 1995, shall be subject to the tax imposed by

5 subparagraph (A) and shall be treated for pur6 poses of this paragraph as held on such date

7 for sale if—

8 (i) internal revenue taxes have been

9 determined, or customs duties liquidated,

10 with respect to such item before such date

11 pursuant to a request made under the first

12 proviso of section 3(a) of such Act, or

13 (ii) such item is held on such date

14 under the supervision of a customs officer

15 pursuant to the second proviso of such sec16 tion 3(a).

17 Under regulations prescribed by the Secretary

18 of the Treasury or the Secretary’s delegate,

19 provisions similar to sections 5062 and 5064 of

20 such Code shall apply to any item with respect

21 to which tax is imposed by subparagraph (A) by

22 reason of this subparagraph.

23 (E) OTHER LAWS APPLICABLE.—All provi24 sions of law, including penalties, applicable with

25 respect to the excise taxes imposed under sec-
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1 tion 5001 of the Internal Revenue Code of 1986

2 shall, insofar as applicable and not inconsistent

3 with the provisions of this paragraph, apply in

4 respect of the taxes imposed by subparagraph

5 (A).

6 (4) EFFECTIVE DATE.—The amendments made

7 by this subsection shall apply to items removed after

8 December 31, 1994.

9 TITLE VI—TAX TREATMENT OF

10 HEALTH INSURANCE PREMIUMS

11 SEC. 601. DEDUCTION FOR HEALTH INSURANCE PRE12 MIUMS.

13 (a) IN GENERAL.—Subsection (a) of section 213 of

14 the Internal Revenue Code of 1986 (relating to medical,

15 dental, etc., expenses) is amended to read as follows:

16 ‘‘(a) ALLOWANCE OF DEDUCTION.—There shall be

17 allowed as a deduction the following amounts, not com18 pensated for by insurance or otherwise—

19 ‘‘(1) the amount by which the amount of the

20 expenses paid during the taxable year (reduced by

21 any amount deductible under paragraph (2)) for

22 medical care of the taxpayer, his spouse, or a de23 pendent (as defined in section 152) exceeds 7.5 per24 cent of adjusted gross income, and
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1 ‘‘(2) the amount of the expenses paid during

2 the taxable year for insurance which constitutes

3 medical care for the taxpayer, his spouse, and de4 pendents.’’

5 (b) DEDUCTION FOR INSURANCE ALLOWED WHETH6 ER OR NOT TAXPAYER ITEMIZES OTHER DEDUCTIONS.—

7 Subsection (a) of section 62 of such Code (defining ad8 justed gross income) is amended by adding at the end

9 thereof the following new paragraph:

10 ‘‘(14) EXPENSES FOR HEALTH INSURANCE.—

11 The deduction allowed by section 213(a)(2).’’.

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

13 this section shall apply to taxable years beginning after

14 December 31, 1994.

15 TITLE VII—PRIVATE OPTIONS

16 SEC. 701. ADDITIONAL INSURANCE.

17 Nothing in this Act shall be construed as preventing

18 individuals from obtaining insurance for services that are

19 not covered by health care services.

20 TITLE VIII—PRESCRIPTION

21 DRUG REVIEW BOARD

22 SEC. 801. ESTABLISHMENT OF BOARD.

23 (a) ESTABLISHMENT.—There is established in the ex24 ecutive branch the Prescription Drug Price Review Board

25 (in this title referred to as the ‘‘Board’’).
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1 (b) MEMBERSHIP.—

2 (1) NUMBER AND APPOINTMENT.—The Board

3 shall be composed of 5 members appointed by the

4 President, by and with the advice and consent of the

5 Senate, from among individuals—

6 (A) who are recognized experts in the

7 fields of consumer advocacy, medicine, phar8 macology, pharmacy, and prescription drug re9 imbursement; and

10 (B) who have not worked in the pharma11 ceutical manufacturing industry during the 3-

12 year period ending on the date of appointment.

13 (2) INITIAL APPOINTMENTS.—Initial appoint14 ments under paragraph (1) shall be made not later

15 than 90 days after the date of the enactment of this

16 Act.

17 (3) TERMS.—

18 (A) IN GENERAL.—Except as provided in

19 subparagraphs (B) and (C), each member shall

20 be appointed for a term of 5 years.

21 (B) TERMS OF INITIAL APPOINTEES.—As

22 designated by the President at the time of ap23 pointment, of the members first appointed—

24 (i) 1 member shall be appointed for a

25 term of 1 year;
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1 (ii) 1 member shall be appointed for a

2 term of 2 years;

3 (iii) 1 member shall be appointed for

4 a term of 3 years;

5 (iv) 1 member shall be appointed for

6 a term of 4 years; and

7 (v) 1 member shall be appointed for a

8 term of 5 years.

9 (C) VACANCIES.—A vacancy in the Board

10 shall be filled in the manner in which the origi11 nal appointment was made. Any member ap12 pointed to fill a vacancy occurring before the

13 expiration of the term for which the member’s

14 predecessor was appointed shall be appointed

15 only for the remainder of that term. A member

16 may serve after the expiration of the member’s

17 term until a successor has taken office.

18 (4) INITIAL MEETING.—The initial meeting of

19 the Board shall be held not later than 90 days after

20 the date on which the first appointments of the

21 members have been completed.

22 (5) CHAIRPERSON.—The President shall des23 ignate 1 member of the Board to serve as the chair24 person.

25 (6) BASIC PAY.—
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1 (A) IN GENERAL.—Members shall be paid

2 at a rate not to exceed the daily equivalent of

3 the maximum annual rate of basic pay payable

4 under section 5376 of title 5, United States

5 Code, for each day during which the members

6 are engaged in the actual performance of the

7 duties of the Board.

8 (B) TRAVEL EXPENSES.—Members shall

9 receive travel expenses, including per diem in

10 lieu of subsistence, in accordance with sections

11 5702 and 5703 of title 5, United States Code.

12 (c) DIRECTOR AND STAFF.—

13 (1) DIRECTOR.—The Board shall have a direc14 tor who shall be appointed by the chairperson, sub15 ject to rules prescribed by the Board.

16 (2) STAFF.—The chairperson may appoint and

17 fix the pay of such additional personnel as the chair18 person considers appropriate, subject to rules pre19 scribed by the Board.

20 (3) APPLICABILITY OF CERTAIN CIVIL SERVICE

21 LAWS.—The director and staff of the Board shall be

22 appointed subject to the provisions of title 5, United

23 States Code, governing appointments in the competi24 tive service, and shall be paid in accordance with the

25 requirements of chapter 51 and subchapter III of
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1 chapter 53 of such title relating to classification and

2 General Schedule pay rates; except that an individ3 ual so appointed may not receive pay in excess of

4 the maximum annual rate of basic pay payable for

5 grade GS–15 of the General Schedule.

6 SEC. 802. POWERS OF BOARD.

7 (a) OBTAINING OFFICIAL DATA.—The chairperson of

8 the Board may secure directly from any Federal agency

9 information necessary to enable the Board to carry out

10 its duties. Upon request of the chairperson, the head of

11 the agency shall furnish such information to the Board

12 to the extent such information is not prohibited from dis13 closure by law.

14 (b) MAILS.—The Board may use the United States

15 mails in the same manner and under the same conditions

16 as other Federal agencies.

17 (c) ADMINISTRATIVE SUPPORT SERVICES.—Upon the

18 request of the chairperson, the Administrator of General

19 Services shall provide to the Board on a reimbursable

20 basis the administrative support services necessary for the

21 Board to carry out its duties.

22 (d) CONTRACT AUTHORITY.—The chairperson may

23 contract with and compensate government and private

24 agencies or persons for the purpose of conducting re-
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1 search, surveys, and other services necessary to enable the

2 Board to carry out its duties.

3 (e) INVESTIGATIONS.—The Board may make such in4 vestigations as it considers necessary to determine whether

5 there is or may be a violation of any regulation promul6 gated under this title and may require or permit any per7 son to file with it a statement in writing, under oath or

8 otherwise as the Board shall determine, as to all the facts

9 and circumstances concerning the matter to be inves10 tigated.

11 (f) SUBPOENA POWER.—

12 (1) IN GENERAL.—The Board may issue sub13 poenas requiring the attendance and testimony of

14 witnesses and the production of any evidence relat15 ing to any matter under investigation by the Board.

16 The attendance of witnesses and the production of

17 evidence may be required from any place within the

18 United States at any designated place of hearing

19 within the United States.

20 (2) FAILURE TO OBEY A SUBPOENA.—If a per21 son refuses to obey a subpoena issued under para22 graph (1), the Board may apply to a United States

23 district court for an order requiring that person to

24 appear before the Board to give testimony, produce

25 evidence, or both, relating to the matter under inves-
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1 tigation. The application may be made within the ju2 dicial district where the hearing is conducted or

3 where that person is found, resides, or transacts

4 business. Any failure to obey the order of the court

5 may be punished by the court as civil contempt.

6 (3) SERVICE OF SUBPOENAS.—The subpoenas

7 of the Board shall be served in the manner provided

8 for subpoenas issued by a United States district

9 court under the Federal Rules of Civil Procedure for

10 the United States district courts.

11 (4) SERVICE OF PROCESS.—All process of any

12 court to which application is made under paragraph

13 (2) may be served in the judicial district in which

14 the person required to be served resides or may be

15 found.

16 SEC. 803. FUNCTIONS OF THE BOARD.

17 (a) GUIDELINES.—The Board shall—

18 (1) develop and publish within 9 months of the

19 date of the establishment of the Board the initial

20 guidelines that the Board will use in determining

21 whether an existing price or an increase in the price

22 of any prescription drug is excessive,

23 (2) develop and publish within 12 months of the

24 date of the establishment of the Board the initial

25 guidelines that the Board will use in determining
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1 whether the initial price at which a prescription drug

2 is first sold is excessive, and

3 (3) periodically review the guidelines developed

4 under paragraphs (1) and (2) and make appropriate

5 revisions.

6 (b) DETERMINATIONS AND REVIEWS.—The Board

7 shall—

8 (1) within 24 months of the date of the estab9 lishment of the Board, make an initial determination

10 of whether the price of each prescription drug ap11 proved for sale on the date of the enactment of this

12 Act is excessive,

13 (2) promptly make an initial determination of

14 whether the price of each prescription drug first ap15 proved for sale after the date of the enactment of

16 this Act is excessive,

17 (3) review, on an ongoing basis, each increase

18 in the price of a drug reviewed under paragraphs (1)

19 and (2) to determine if the price increase is exces20 sive, and

21 (4) consider whether determinations and re22 views similar to the ones carried out under para23 graphs (1), (2), and (3) should be made for non-pre24 scription drugs and make such determinations and

25 reviews if appropriate.
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1 (c) FACTORS.—In making determinations under sub2 section (b) as to whether the price of a prescription drug

3 is excessive, the Board shall take into consideration—

4 (1) changes in the producer price index (pub5 lished by the Bureau of Labor Statistics of the De6 partment of Labor),

7 (2) changes in the prescription drug component

8 of such producer price index,

9 (3) the price at which such drug was sold to

10 wholesalers in the United States during the preced11 ing 10 years,

12 (4) the price at which such drug was sold to

13 wholesalers in other countries during the preceding

14 10 years,

15 (5) the price at which other drugs in the same

16 therapeutic class were sold to wholesalers in the

17 United States during the preceding 10 years,

18 (6) the therapeutic potential rating of such

19 drug by the Food and Drug Administration,

20 (7) the percentage of such drug’s research and

21 development costs paid by the United States,

22 (8) the cost of manufacturing and marketing

23 such drug, and

24 (9) such other factors as the Board considers

25 relevant.
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1 (d) REPORTING.—The Board shall—

2 (1) promptly provide to consumers and health

3 care providers the results of the Board’s determina4 tions under subsection (b) and the method used in

5 each such determination,

6 (2) provide information to consumers and

7 health care providers regarding prescription drug

8 pricing and price increases by therapeutic class and

9 manufacturer,

10 (3) provide to consumers and health care pro11 viders information regarding the Food and Drug Ad12 ministration therapeutic potential rating of each pre13 scription drug and the percentage of the research

14 and development of each such drug paid by the

15 United States,

16 (4) provide to consumers such other informa17 tion as the Board determines will assist consumers

18 in reducing their expenses for prescription drugs,

19 (5) publish an easy to understand consumer’s

20 guide to prescription drug prices, including the in21 formation described in paragraphs (1), (2), (3), and

22 (4), within 24 months of the date of the establish23 ment of the Board and update and publish such

24 guide annually thereafter, and
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1 (6) provide to the President and the Congress

2 a report of its determinations under subsection (b)

3 within 24 months of the date of the establishment

4 of the Board and update and report such determina5 tions annually thereafter.

6 SEC. 804. SANCTIONS AND REMEDIES.

7 (a) HEARINGS.—After making a determination under

8 section 803(b) that the price of a prescription drug or an

9 increase in the price of such a drug is excessive, the Board

10 shall—

11 (1) notify, in writing, the manufacturer of such

12 drug of such determination,

13 (2) fix a date on which a public hearing before

14 the Board respecting such determination shall be

15 held and hold such hearing,

16 (3) request from such manufacturer such addi17 tional information as the Board deems necessary for

18 such public hearing, and

19 (4) notify such manufacturer of the Board’s

20 recommendation as to the pricing of the drug at a

21 rate which is not excessive.

22 (b) SETTLEMENT.—If, after a public hearing under

23 subsection (a), the Board finds that the price or an in24 crease in the price of a prescription drug is not excessive,

25 the Board shall—
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1 (1) notify the manufacturer of such drug of the

2 Board’s finding, and

3 (2) remove from all publications and reports of

4 the Board after the date of such finding any state5 ment that the price or increase in the price of such

6 drug is excessive.

7 (c) PATENT REVOCATION.—If, after a public hearing

8 under subsection (a), the Board finds that the price or

9 an increase in the price of a prescription drug is excessive,

10 the Board shall—

11 (1) notify the manufacturer of such drug of the

12 Board’s finding,

13 (2) notify the manufacturer of such drug of the

14 Board’s intent to revoke the patent for such drug if

15 the drug is patented or to revoke the patent of an16 other drug of such manufacturer if such drug is not

17 patented, and

18 (3) take such action as may be necessary to re19 voke a drug patent under paragraph (2) if the man20 ufacturer of such drug does not reduce the price of

21 the drug to a level that is not excessive.

22 SEC. 805. MANUFACTURERS.

23 Each manufacturer of a prescription drug subject to

24 review under section 803 shall—
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1 (1) provide to the Board such information as

2 the Board may require to make the determinations

3 under section 803, including—

4 (A) information identifying such drug,

5 (B) the price at which such drug is being

6 sold or has been sold in any market,

7 (C) the cost of manufacturing and market8 ing such drug, and

9 (D) such other information as the Board

10 considers necessary to be provided in such form

11 and manner and at such time as the Board pre12 scribes by regulation, and

13 (2) notify the Board immediately of any in14 crease in the wholesale price of any prescription

15 drug marketed by the manufacturer.

16 SEC. 806. STUDY.

17 The Board shall engage the Institute of Medicine of

18 the National Academy of Sciences to conduct a study of

19 prescription drug research and development and pricing

20 practices, the difficulties many Americans have in afford21 ing prescription drugs, and options for making prescrip22 tion drugs available to all that need them. Such study

23 shall—

24 (1) examine Federal incentives for research and

25 development and determine which incentives are
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1 most effective and what changes would better en2 courage the development of low cost, effective drugs,

3 (2) examine the Federal regulatory process and

4 identify ways it might be streamlined without jeop5 ardizing consumer safety,

6 (3) consider whether the authority of the Food

7 and Drug Administration should be enhanced and

8 whether the funding for such agency should be in9 creased to improve Federal regulation of drugs,

10 (4) consider steps the United States might take

11 (including possible trade sanctions) to protect manu12 facturers of drugs in the United States from product

13 pirating and other unfair trade practices by foreign

14 competitors,

15 (5) consider changes in the patent laws (includ16 ing delaying the start of a product’s 17 years patent

17 protection until after the product has been approved

18 under the Federal Food, Drug, and Cosmetic Act) to

19 allow manufacturers to charge lower prices and still

20 recoup their research and development costs,

21 (6) consider whether a Board review of non-pre22 scription drug prices would have a positive effect on

23 consumer costs of such drugs,

24 (7) consider mechanisms to assist consumers

25 with the high cost of prescription drugs (including
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1 providing reimbursement under title XVIII of the

2 Social Security Act for prescription drugs at lower

3 prices negotiated with manufacturers of drugs),

4 (8) examine Federal policies regarding the li5 censing of drugs discovered and developed by feder6 ally funded researchers and recommend actions that

7 would allow the United States to recoup its costs or

8 to influence the pricing of such drugs, and

9 (9) examine the effects on retail pharmacies of

10 disparities in drug prices wherein the drug manufac11 turers charge hospitals, mail order pharmacies, and

12 health maintenance organizations significantly lower

13 prices than those charged wholesalers for such

14 drugs.

15 TITLE IX—TERMINATION OF

16 PROGRAMS

17 SEC. 901. TERMINATION OF CERTAIN FEDERAL HEALTH

18 CARE PROGRAMS.

19 (a) MEDICARE AND MEDICAID.—Titles XVIII and

20 XIX of the Social Security Act are repealed.

21 (b) REPEAL OF CHAMPUS PROVISIONS.—

22 (1) AMENDMENTS TO CHAPTER 55 OF TITLE

23 10.—Sections 1079 through 1083, 1086, and 1097

24 through 1100 of title 10, United States Code, are

25 repealed.
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1 (2) TABLE OF SECTIONS.—The table of sections

2 at the beginning of chapter 55 of title 10, United

3 States Code, is amended by striking out the items

4 relating to the sections referred to in paragraph (1).

5 (3) CONFORMING AMENDMENTS.—Chapter 55

6 of title 10, United States Code, is amended as fol7 lows:

8 (A) DEFINITION.—Section 1072 is amend9 ed by striking out paragraph (4).

10 (B) REIMBURSEMENT OF THE DEPART11 MENT OF VETERANS AFFAIRS.—Section

12 1104(b) is amended—

13 (i) in the subsection heading, by strik14 ing out ‘‘FROM CHAMPUS FUNDS’’;

15 and

16 (ii) by striking out ‘‘from funds’’ and

17 all that follows and inserting in lieu thereof

18 ‘‘for medical care provided by the Depart19 ment of Veterans Affairs pursuant to such

20 agreement.’’.

21 (c) REPEAL OF FEDERAL EMPLOYEES HEALTH

22 BENEFITS PROGRAM.—Chapter 89 of title 5, United

23 States Code, is repealed.
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1 (d) EFFECTIVE DATE.—The repeals and amend2 ments made by this section shall take effect on October

3 1, 1998.

4 SEC. 902. TRANSITION.

5 (a) IN GENERAL.—The Federal Health Board shall

6 issue such regulations as are necessary to provide for a

7 transition to this Act from the programs repealed under

8 section 901.

9 (b) RELATION TO OTHER PROGRAMS.—The Federal

10 Health Board shall recommend to the Congress appro11 priate legislative proposals for the amendment or repeal

12 of any other Federal program inconsistent with, or dupli13 cative of, the principles of this Act.

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