I
104TH CONGRESS
1ST SESSION
H. R. 439
To promote portability of health insurance by limiting discrimination in health
coverage based on health status or past claims experience.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 9, 1995
Mr. HAYES (for himself and Mr. MCCRERY) introduced the following bill;
which was referred to the Committee on Commerce and, in addition, to
the Committee on Economic and Educational Opportunities, for a period
to be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee
concerned
A BILL
To promote portability of health insurance by limiting dis-
crimination in health coverage based on health status
or past claims experience.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Health Insurance Eq-
uity Act of 1995’’.
SEC. 2. HEALTH INSURANCE STANDARDS.
The Social Security Act is amended by adding at the
end the following new title:
‘‘TITLE XXI—STANDARDS FOR HEALTH
COVERAGE
‘‘SEC. 2101. PROHIBITION OF DISCRIMINATION BASED ON
HEALTH STATUS FOR COVERAGE, BENEFITS,
AND PREMIUMS.
‘‘(a) IN GENERAL.—Except as provided under sub-
section (b), an insurer or group health plan providing
health coverage may not deny, limit, or condition the
health coverage or benefits with respect to health services,
or vary the premiums charged for such coverage, based
on the health status, claims experience, receipt of health
care, medical history, or lack of evidence of insurability,
of an individual.
‘‘(b) EXCEPTION FOR CERTAIN PREEXISTING CONDI-
TIONS.—
‘‘(1) IN GENERAL.—Subject to the succeeding
provisions of this subsection, an insurer or group
health plan providing health coverage may exclude
coverage of services related to treatment of a pre-
existing condition, but the period of such exclusion
may not exceed 6 months. The exclusion of coverage
shall not apply to services furnished to newborns
who are covered at the time of birth or to treatment
of conditions relating to pregnancy.
‘‘(2) CREDITING OF PREVIOUS COVERAGE.—
not be considered as failing to meet the requirements of
section 1301 of the Public Health Service Act notwith-
standing that it provides for an exclusion of the coverage
based on a preexisting condition consistent with the provi-
sions of this section so long as such exclusion is applied
consistent with the provisions of this section. Nothing in
this section shall be construed as requiring such an organi-
zation to impose such an exclusion.
‘‘SEC. 2102. ENROLLMENT AND RENEWAL PRACTICES FOR
HEALTH INSURANCE COVERAGE.
‘‘(a) CONSTRUCTION INVOLVING APPLICATION
OF
CAPACITY
LIMITS
FOR
HEALTH
INSURANCE
COV-
ERAGE.—
‘‘(1) IN GENERAL.—Subject to paragraph (2)
and subsection (b), nothing in this title shall be con-
strued as preventing an insurer providing health in-
surance coverage to individuals or small employers
in an area from ceasing to enroll individuals or small
employers under such coverage if—
‘‘(A) the insurer ceases to enroll any new
individuals or small employers; and
‘‘(B) the insurer can demonstrate to the
State insurance commissioner that the insurer’s
financial or provider capacity to serve pre-
viously covered individuals or small employers
(and additional individuals who will be expected
to enroll because of affiliation with such pre-
viously covered individuals or small employers)
will be impaired if it is required to enroll addi-
tional individuals or small employers.
‘‘(2) FIRST-COME-FIRST-SERVED.—An insurer
is only eligible to exercise the limitations provided
for in paragraph (1) if such insurer provides for en-
rollment of individuals or small employers on a first-
come-first-served basis (except in the case of addi-
tional individuals or small employers described in
paragraph (1)(B)).
‘‘(b) REQUIREMENTS RELATING TO RENEWAL OF
HEALTH INSURANCE COVERAGE.—
‘‘(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), an insurer that provides health
insurance coverage to an individual or small em-
ployer shall not deny, cancel, or refuse to renew such
coverage of the individual or small employer.
‘‘(2) GROUNDS FOR REFUSAL TO RENEW.—An
insurer may deny, cancel, refuse to renew, or termi-
nate health insurance coverage within a type of cov-
erage option described in paragraph (4) in an area
described in paragraph (6) only—
‘‘(A) for nonpayment of premiums;
‘‘(B) for fraud on the part of the individ-
ual or small employer;
‘‘(C) with respect to an individual, for mis-
representation of material facts on the part of
the individual relating to an application for cov-
erage or claim for benefits;
‘‘(D) in the case of coverage provided
through a geographically limited managed care
arrangement, the individual or employer leaves
the geographic service area in which the cov-
erage is provided; or
‘‘(E) subject to paragraph (3), because the
insurer elects not to renew any health insurance
coverage for individuals or small employers in
the area within such type of coverage option
and provides notice of such election to the State
insurance commissioner and to each such em-
ployer and individual covered in the area at
least 180 days before the effective date of such
nonrenewal.
‘‘(3) PROHIBITION ON MARKET REENTRY.—In
the case of an election described in paragraph (2)(E)
by an insurer for an area for a type of coverage op-
tion, the insurer may not provide for any health in-
surance coverage to an individual or small employer
in the area within the type of coverage option during
the 5-year period beginning on the effective date of
the nonrenewal for the area and for the type of cov-
erage option.
‘‘(4) OPTIONS.—For purposes of this sub-
section, each of the following is a ‘type of coverage
option’:
‘‘(A) FEE-FOR-SERVICE
OPTION.—Health
insurance coverage is considered to provide a
‘fee-for-service option’ if, regardless of whether
covered individuals may receive benefits through
a provider network, benefits with respect to the
covered items and services in the coverage are
made available for such items and services pro-
vided through any lawful provider of such cov-
ered items and services and payment is made to
such a provider whether or not there is a con-
tractual arrangement between the provider and
the carrier or plan.
‘‘(B) MANAGED CARE OPTION.—Health in-
surance coverage is considered to provide a
‘managed care option’ if benefits with respect to
the covered items and services in the coverage
are made available exclusively through a pro-
vider network, except in the case of emergency
services and as otherwise required under law.
‘‘(C) POINT-OF-SERVICE OPTION.—Health
insurance coverage is considered to provide a
‘point-of-service option’ if the benefits with re-
spect to covered items and services in the cov-
erage are made available principally through a
managed care arrangement, with the choice of
the enrollee to obtain such benefits for items
and services provided through any lawful pro-
vider of such covered items and services. The
coverage may provide for different cost sharing
schedules based on whether the items and serv-
ices are provided through such an arrangement
or outside such an arrangement.
‘‘(5) MANAGED CARE ARRANGEMENTS.—In this
subsection:
‘‘(A) MANAGED
CARE
ARRANGEMENT.—
The term ‘managed care arrangement’ means,
with respect to health insurance coverage, an
arrangement under such coverage under which
providers agree to provide items and services
covered under the arrangement to individuals
who have such coverage.
‘‘(B) PROVIDER
NETWORK.—The term
‘provider network’ means, with respect to health
insurance coverage, providers who have entered
into an agreement described in subparagraph
(A).
‘‘(6) LIMITATIONS
ON
AREA.—An area de-
scribed in this paragraph is an area in which there
is no division of any of the following:
‘‘(A) A 3-digit zip code.
‘‘(B) Any county, parish, or borough.
‘‘(C) All portions of a metropolitan statis-
tical area.
‘‘SEC. 2103. ENFORCEMENT.
‘‘(a) HEALTH INSURANCE COVERAGE.—
‘‘(1) ENFORCEMENT THROUGH STATE INSUR-
ANCE COMMISSIONER.—
‘‘(A) ESTABLISHMENT OF ENFORCEMENT
PROGRAMS.—Each State, through its State in-
surance commissioner, is responsible for estab-
lishing a program to enforce requirements of
this title with respect to insurers (and health
coverage offered by insurers) in the State. The
State shall provide the Secretary of Health and
Human Services annually (for years beginning
with 1996) with such description of the pro-
gram established to enforce adequately such re-
quirements as the Secretary specifies.
‘‘(B) MORE STRINGENT STATE STANDARDS
PERMITTED.—A State may implement stand-
ards that are more stringent than the standards
established under this title.
‘‘(C) AUTHORIZATION OF APPROPRIATIONS
FOR STATE ENFORCEMENT PROGRAMS.—There
are authorized to be appropriated to the Sec-
retary of Health and Human Services (for each
fiscal year beginning with fiscal year 1996)
such sums as may be necessary to provide for
grants to States to provide for enforcement pro-
grams described in subparagraph (A). Such
grants shall be made available in such amounts
and subject to such reasonable terms and condi-
tions as the Secretary shall provide.
‘‘(2) FEDERAL FALLBACK ENFORCEMENT.—
‘‘(A) REVIEW
AND
CONTINGENCY.—The
Secretary annually shall review State enforce-
ment programs under paragraph (1)(A) to de-
termine if they provide for adequate enforce-
ment of the requirements of this title. If the
Secretary initially determines that such a pro-
gram does not provide for such enforcement,
the Secretary shall notify the State and provide
the State an opportunity to adopt such a plan
of correction that would provide for adequate
enforcement. If the Secretary makes a final de-
termination that the State program fails to pro-
vide for an adequate enforcement program after
such an opportunity, the succeeding provisions
of this paragraph shall apply with respect to in-
surers and health insurance coverage in the
State until the Secretary has been provided a
description of an adequate enforcement pro-
gram.
‘‘(B) CIVIL MONEY PENALTIES.—
‘‘(i) IN GENERAL.—If this paragraph
applies in a State in a year, subject to
clause (ii), an insurer in that State that
fails to comply with a requirement applica-
ble to the insurer or health insurance cov-
erage under this title is subject to a civil
money penalty of $150 for each day during
which such failure persists for each indi-
vidual to which such failure relates.
‘‘(ii) LIMITATION.—The amount of
the penalty imposed by this subparagraph
for an insurer with respect to health insur-
ance coverage shall not exceed 25 percent
of the amounts received under the plan for
coverage during the period such failure
persists.
‘‘(C) EXCEPTIONS.—
‘‘(i) CORRECTIONS WITHIN 30 DAYS.—
No civil money penalty shall be imposed
under this paragraph by reason of any fail-
ure if—
‘‘(I) such failure was due to rea-
sonable cause and not to willful ne-
glect, and
‘‘(II) such failure is corrected
within the 30-day period beginning on
the earliest date the insurer knew, or
exercising reasonable diligence would
have known, that such failure existed.
‘‘(ii) WAIVER BY SECRETARY.—In the
case of a failure which is due to reasonable
cause and not to willful neglect, the Sec-
retary may waive part or all of the penalty
imposed by this paragraph to the extent
that payment of such penalty would be ex-
cessive relative to the failure involved.
‘‘(D) PROCEDURES.—The Secretary by
regulation shall provide for procedures for the
imposition of civil money penalties under this
paragraph. Such procedures shall assure writ-
ten notice and opportunity for a determination
to be made on the record after a hearing at
which the insurer is entitled to be represented
by counsel, to present witnesses, and to cross-
examine witnesses against the insurer. The pro-
visions of subsections (e), (f), (j), and (k) of
section 1128A shall apply to determinations
and civil money penalties under this paragraph
in the same manner as they apply to determina-
tions and civil money penalties under such sec-
tion.
‘‘(b) ENFORCEMENT
BY DEPARTMENT
OF LABOR
FOR GROUP HEALTH PLANS.—
‘‘(1) IN GENERAL.—For purposes of part 5 of
subtitle B of title I of the Employee Retirement In-
come Security Act of 1974, the provisions of sections
2101 and 2102 shall be deemed to be provisions of
title I of such Act irrespective of exclusions under
section 4(b) of such Act.
‘‘(2) REGULATORY AUTHORITY.—With respect
to the regulatory authority of the Secretary of Labor
under this title pursuant to paragraph (1), section
505 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1135) shall apply.
‘‘SEC. 2104. DEFINITIONS.
‘‘For purposes of this title:
‘‘(1) GROUP HEALTH PLAN.—The term ‘group
health plan’ means an employee welfare benefit plan
providing medical care (as defined in section 213(d)
of the Internal Revenue Code of 1986) to partici-
pants or beneficiaries directly or through insurance,
reimbursement, or otherwise, but does not include
any type of coverage excluded from the definition of
an health insurance coverage under paragraph
(3)(B).
‘‘(2) HEALTH
COVERAGE.—The term ‘health
coverage’ means health insurance coverage provided
by an insurer or medical care provided under a
group health plan.
‘‘(3) HEALTH INSURANCE COVERAGE.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘health insurance
coverage’ means any hospital or medical service
policy or certificate, hospital or medical service
plan contract, or health maintenance organiza-
tion group contract offered by an insurer.
‘‘(B) EXCEPTION.—Such term does not in-
clude any of the following (or any combination
of the following):
‘‘(i) Coverage only for accident, den-
tal, vision, disability income, or long-term
care insurance, or any combination thereof.
‘‘(ii) Medicare supplemental health in-
surance.
‘‘(iii) Coverage issued as a supplement
to liability insurance.
‘‘(iv) Liability insurance, including
general liability insurance and automobile
liability insurance.
‘‘(v) Workers’ compensation or similar
insurance.
‘‘(vi) Automobile medical-payment in-
surance.
‘‘(vii) Coverage for a specified disease
or illness.
‘‘(viii) A hospital or fixed indemnity
policy.
‘‘(4) INSURER.—The term ‘insurer’ means a li-
censed insurance company, an entity offering pre-
paid hospital or medical services, and a health main-
tenance organization, and includes a similar organi-
zation regulated under State law for solvency.
‘‘(5) SMALL EMPLOYER.—The term ‘small em-
ployer’ means, with respect to a calendar year, an
employer (as defined in section 3(5) of the Employee
Retirement Income Security Act of 1974) that nor-
mally employs on a typical business day more than
1 but less than 50 employees who normally perform
on a monthly basis at least 30 hours of service per
week for that employer. For the purposes of this
paragraph, the term ‘employee’ includes a self-em-
ployed individual. For purposes of determining if an
employer is a small employer, rules similar to the
rules of subsections (b) and (c) of section 414 of the
Internal Revenue Code of 1986 shall apply.
‘‘(6) STATE INSURANCE COMMISSIONER.—The
term ‘State insurance commissioner’ includes a State
superintendent of insurance or other State authority
responsible for regulation of health insurance.’’.
SEC. 3. EFFECTIVE DATE.
The requirements of title XXI of the Social Security
Act, as added by section 2, shall apply with respect to—
(1) group health plans for plan years beginning
after December 31, 1995, and
(2) insurers as of January 1, 1996, for health
insurance coverage issued or renewed on or after
such date.
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HR 439 IH——2