I
107TH CONGRESS
2D SESSION
H. R. 4170
To amend the Public Health Service Act to provide for cooperative governing
of health insurance policies by primary and secondary States and to
provide assistance to States to promote the establishment of qualified
high risk pools, to provide financial incentives to encourage health cov-
erage for employees and individuals, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 11, 2002
Mr. FLETCHER introduced the following bill; which was referred to the Com-
mittee 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 amend the Public Health Service Act to provide for
cooperative governing of health insurance policies by pri-
mary and secondary States and to provide assistance
to States to promote the establishment of qualified high
risk pools, to provide financial incentives to encourage
health coverage for employees and individuals, and for
other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘State Cooperative Health Care Access Plan Act of
2002’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—COOPERATIVE GOVERNING
Sec. 101. Cooperative governing of health insurance policies.
‘‘TITLE XXVIII—COOPERATIVE GOVERNING OF HEALTH
INSURANCE POLICIES
‘‘Sec. 2801. Primary State.
‘‘Sec. 2802. Secondary States.
‘‘Sec. 2803. Enforcement.
‘‘Sec. 2804. Definitions.
Sec. 102. Development of process to assist cooperative governing of States.
Sec. 103. Findings; severability.
TITLE II—ASSISTANCE TO STATES TO PROMOTE THE
ESTABLISHMENT OF QUALIFIED HIGH RISK POOLS
Sec. 201. Funding States to promote qualified high risk pools.
TITLE III—CLARIFICATION OF DEFINITION OF GROUP HEALTH
PLAN UNDER HIPAA
Sec. 301. Clarification of definition of group health plan under HIPAA.
TITLE IV—TAX PROVISIONS
Sec. 401. Refundable credit for health coverage.
Sec. 402. Deduction for qualified health coverage costs of employees and other
individuals ineligible for health coverage refundable tax credit.
Sec. 403. Carryover of unused benefits from cafeteria plans, flexible spending
arrangements, and health flexible spending accounts.
Sec. 404. Exclusion of premium payments for qualified health coverage under
flexible spending arrangements.
TITLE I—COOPERATIVE
GOVERNING
SEC. 101. COOPERATIVE GOVERNING OF HEALTH INSUR-
ANCE POLICIES.
(a) IN GENERAL.—The Public Health Service Act is
amended by adding at the end the following new title:
‘‘TITLE 
XXVIII—COOPERATIVE
GOVERNING OF HEALTH IN-
SURANCE POLICIES
‘‘SEC. 2801. PRIMARY STATE.
‘‘(a) IN GENERAL.—A health insurance issuer offer-
ing a health insurance policy in the individual or group
market shall abide by the product, rate, and form filing
laws of the primary State.
‘‘(b) PRIMARY STATE DEFINED.—For purposes of
this title, the term ‘primary State’ means, with respect
to a health insurance policy offered by a health insurance
issuer, the State which includes the primary location for
the issuer’s health insurance business but only if the policy
is filed and approved with the applicable primary State
authority for that State.
‘‘SEC. 2802. SECONDARY STATES.
‘‘(a) IN GENERAL.—A health insurance issuer offer-
ing a health insurance policy that is approved by the appli-
cable primary State authority for the primary State—
‘‘(1) may offer such policy type in a secondary
State;
‘‘(2) is bound by the laws of the primary State
for such policy; and
‘‘(3) must comply with the applicable provisions
of the mechanism developed by the National Associa-
tion of Insurance Commissioners under section
102(a)(2) of the State Cooperative Health Care Ac-
cess Plan Act of 2002.
‘‘(b) APPLICATION OF LAWS OF PRIMARY STATE TO
SECONDARY STATE.—For purposes of subsection (a), the
product, rate, and form filing laws of the primary State
shall apply to the health insurance policy offered by health
insurance issuer in a secondary State. The product, rate,
and form filing laws of the secondary State shall not apply
to the health insurance issuer for such a policy that com-
plies with the product, rate, and form filing laws of the
primary State.
‘‘(c) DEFINITION.—For purposes of this title, the
term ‘secondary State’ means any State that is not the
primary State.
‘‘(d) CONSUMER FRAUD.—For purposes of enforce-
ment of an action consisting of consumer fraud in the case
of a policy that complies with the laws of the primary
State, the State insurance commission of a secondary
State shall treat the policy as if the policy was primarily
licensed in the secondary State.
‘‘SEC. 2803. ENFORCEMENT.
‘‘(a) ENFORCEMENT.—In the case of a health insur-
ance policy that is approved by the applicable primary
State authority for the primary State, a secondary State
may enforce the product, rate, and form filing laws of the
primary State.
‘‘(b) GRANTS TO STATES.—
‘‘(1) IN GENERAL.—The Secretary shall award
grants to the States for the purpose of carrying out
the provisions of this section.
‘‘(2) AUTHORIZATION
OF
APPROPRIATIONS.—
There are authorized to be appropriated to the Sec-
retary for grants under paragraph (1), $50,000,000
for each of fiscal years 2004 and 2005.
‘‘SEC. 2804. DEFINITIONS.
‘‘(a) IN GENERAL.—For purposes of this title, the
terms ‘State’, ‘health insurance coverage’, ‘health insur-
ance issuer’, ‘individual market’, and ‘group market’ have
the meanings given such terms in section 2791.
‘‘(b) APPLICABLE PRIMARY STATE AUTHORITY.—
The term ‘applicable primary State authority’ means, with
respect to a health insurance issuer in a State, the State
insurance commissioner or official or officials designated
by the State to enforce requirements of this title for the
State involved with respect to such issuer.
‘‘(c) HEALTH
INSURANCE
POLICY.—The term
‘health insurance policy’ means a policy, certificate, or
contract that constitutes health insurance coverage.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect 24 months after the date
of the enactment of this Act, except that the authorization
of appropriations provided in such amendment is effective
on the date of the enactment of this Act.
SEC. 102. DEVELOPMENT OF PROCESS TO ASSIST COOPER-
ATIVE GOVERNING OF STATES.
(a) NAIC DEVELOPMENT OF COOPERATIVE GOV-
ERNING PROCESS.—
(1) IN GENERAL.—The Secretary of Health and
Human Services shall provide the funds necessary to
enable the National Association of Insurance Com-
missioners to develop a mechanism to assist States
in meeting the requirements of title XXVIII of the
Public Health Service Act (as added by section
101(a)).
(2) STATE ENFORCEMENT AND INFORMATION
EXCHANGE
ASSISTANCE.—Such mechanism shall
include—
(A) implementation of an enforcement
process;
(B) information exchange of applicability
of the laws of a primary State to a policy of-
fered in a secondary State; and
(C) establishment of a process for purposes
of consumer fraud enforcement, pursuant to
section 2802(e) of the Public Health Service
Act, for an individual who purchases a health
insurance policy in a State other than the State
of residence of such individual.
(3) INTERIM
REPORT.—Not later than 6
months after the date of the enactment of this Act,
the National Association of Insurance Commis-
sioners shall provide an interim report to the States
and Congress on such mechanism.
(4) FINAL REPORT.—Not later than 18 months
after the date of the enactment of this Act, the Na-
tional Association of Insurance Commissioners shall
provide a final report to the States and Congress on
such mechanism to assist the States in meeting the
requirements of title XXVIII of the Public Health
Service Act.
(b) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated $10,000,000 to carry