I
105TH CONGRESS
2D SESSION
H. R. 3998
To direct the Secretary of Health and Human Services to make payments
to each State for the operation of a comprehensive health insurance
plan ensuring health insurance coverage for individuals and families
in the State, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JUNE 5, 1998
Mr. OBEY (for himself and Mr. MATSUI) introduced the following bill; which
was referred to the Committee on Commerce, and in addition to the Com-
mittees on Ways and Means, and Education and the Workforce, for a pe-
riod to be subsequently determined by the Speaker, in each case for con-
sideration of such provisions as fall within the jurisdiction of the commit-
tee concerned
A BILL
To direct the Secretary of Health and Human Services to
make payments to each State for the operation of a
comprehensive health insurance plan ensuring health in-
surance coverage for individuals and families in the
State, 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
‘‘American Health Security Partnership Act of 1998’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings; purpose.
Sec. 3. Definitions.
TITLE I—FEDERAL PAYMENTS TO STATES
Sec. 101. Payments to States with certified plans.
Sec. 102. Amount of State payment.
Sec. 103. Total amount available for payments.
TITLE II—REQUIREMENTS FOR COMPREHENSIVE HEALTH PLANS
Sec. 201. Implementation of certified health insurance plans by States.
Sec. 202. Required provisions of health insurance plan.
Sec. 203. Requiring operation of certified plan to receive medicaid payments.
TITLE III—TAX DEDUCTIBILITY OF HEALTH INSURANCE
Sec. 301. Tax deductibility of health insurance.
TITLE IV—HEALTH CARE FOR WORKING FAMILIES
Sec. 401. Health benefits for employees and their families.
Sec. 402. Amendment to Public Health Service Act.
TITLE V—FINANCING MECHANISMS
Sec. 501. Increase in top income tax rate applicable to corporations.
Sec. 502. Establishment of tobacco settlement trust fund.
SEC. 2. FINDINGS; PURPOSE.
(a) FINDINGS.—Congress finds as follows:
(1) 41 million Americans do not have health in-
surance coverage.
(2) Cost shifting among payers and providers
contributes to the increasing cost of health care in
the United States.
(3) The only means of ending this cost shifting
is to ensure that each individual in the United
States has health insurance coverage.
(b) PURPOSE.—It is the purpose of this Act to pro-
vide assistance to each State to enable the State to ensure,
in the manner the State itself considers most appropriate,
that each individual has access to health insurance cov-
erage at least equivalent to the coverage provided to Mem-
bers of Congress and employees of the Federal Govern-
ment.
SEC. 3. DEFINITIONS.
In this Act:
(1) The term ‘‘Secretary’’ means the Secretary
of Health and Human Services.
(2) The term ‘‘State’’ means each of the 50
States and the District of Columbia.
TITLE I—FEDERAL PAYMENTS
TO STATES
SEC. 101. PAYMENTS TO STATES WITH CERTIFIED PLANS.
For purposes of assisting States in carrying out plans
approved under title II, the Secretary of Health and
Human Services shall make payments to States with com-
prehensive health insurance plans certified under title II
for a fiscal year in an amount determined under section
102.
SEC. 102. AMOUNT OF STATE PAYMENT.
(a) IN GENERAL.—Subject to the succeeding provi-
sions of this section, the amount of payment made to a
State for a fiscal year under section 101 shall be equal
to 50 percent of the State’s expenditures in carrying out
health insurance plans certified under title II.
(b) STATE ALLOCATION.—The amount of payments
under section 101 to a State in a fiscal year may not ex-
ceed the State’s allocation of the total amount available
for payments under this title for the fiscal year under sec-
tion 103, as determined in accordance with the following
formula:
(1) FISCAL YEARS 1999 THROUGH 2001.—For
fiscal years 1999 through 2001:
(A) 30 percent of the total amount avail-
able shall be allocated among the States on the
basis of the ratio of the uninsured population of
each State to the uninsured population of all
States.
(B) 30 percent of the total amount avail-
able shall be allocated among the States on the
basis of the ratio of the low-income population
of each State to the low-income population of
all States.
(C) 40 percent of the total amount avail-
able shall be allocated among the States on the
basis of the ratio of the total population of each
State to the total population of all States.
(2) FISCAL YEAR 2002.—For fiscal year 2002:
(A) 20 percent of the total amount avail-
able shall be allocated among the States on the
basis of the ratio of the uninsured population of
each State to the uninsured population of all
States.
(B) 40 percent of the total amount avail-
able shall be allocated among the States on the
basis of the ratio of the low-income population
of each State to the low-income population of
all States.
(C) 40 percent of the total amount avail-
able shall be allocated among the States on the
basis of the ratio of the total population of each
State to the total population of all States.
(3) FISCAL YEAR 2003 AND SUCCEEDING FISCAL
YEARS.—For a fiscal year after fiscal year 2002:
(A) 50 percent of the total amount avail-
able shall be allocated among the States on the
basis of the ratio of the low-income population
of each State to the low-income population of
all States.
(B) 50 percent of the total amount avail-
able shall be allocated among the States on the
basis of the ratio of the total population of each
State to the total population of all States.
(c) USE
OF NON-FEDERAL FUNDS
FOR STATE
MATCHING REQUIREMENT.—Amounts provided by the
Federal Government, or services assisted or subsidized to
any significant extent by the Federal Government, may
not be included in determining the amount of non-Federal
contributions required under subsection (a). In applying
this subsection, the Secretary shall provide for the applica-
tion of rules similar to the rules described in section
1903(w) of the Social Security Act (relating to treatment
of certain provider taxes and donations).
(d) OFFSET OF RECEIPTS ATTRIBUTABLE TO PRE-
MIUMS
AND OTHER COST-SHARING.—For purposes of
subsection (a), the amount of the expenditures under the
plan shall be reduced by the amount of any premiums and
other cost-sharing received by the State.
(e) MAINTENANCE OF EFFORT.—
(1) IN MEDICAID ELIGIBILITY STANDARDS.—No
payment may be made under this title to a State if
the State adopts income and resource standards and
methodologies for purposes of determining eligibility
for medical assistance under the State plan under
title XIX that are more restrictive than those ap-
plied as of June 1, 1997.
(2) IN AMOUNTS OF PAYMENT EXPENDED FOR
CERTAIN STATE-FUNDED HEALTH INSURANCE PRO-
GRAMS.—
(A) IN GENERAL.—The amount of the allo-
cation under subsection (b) for a State in a fis-
cal year shall be reduced by the amount by
which—
(i) the total of the State health insur-
ance program expenditures in the preced-
ing fiscal year, is less than
(ii) the total of such expenditures in
fiscal year 1998.
(B) STATE HEALTH INSURANCE PROGRAM
EXPENDITURES.—For purposes of subpara-
graph (A), the term ‘‘State health insurance
program expenditures’’ means the following:
(i) The State share of expenditures
under title XXI of the Social Security Act.
(ii) The State share of expenditures
under title XIX of such Act.
(iii) State expenditures under health
benefits coverage under an existing com-
prehensive State-based program, described
in section 2103(d) of such Act.
(f) 3-YEAR
AVAILABILITY
OF
AMOUNTS
ALLO-
CATED.—Amounts allocated to a State pursuant to this
section for a fiscal year shall remain available for expendi-
ture by the State through the end of the second succeeding
fiscal year; except that amounts reallocated to a State
under subsection (g) shall be available for expenditure by
the State through the end of the fiscal year in which they
are reallotted.
(g) PROCEDURE FOR REDISTRIBUTION OF UNUSED
ALLOCATIONS.—The Secretary shall determine an appro-
priate procedure for redistribution of allocations from
States that were provided allocations under this section
for a fiscal year but that do not expend all of the amount
of such allocations during the period in which such alloca-
tions are available for expenditure under subsection (f),
to States that have fully expended the amount of their
allocations under this section. Such procedure shall pro-
vide priority consideration to States facing economic reces-
sion or natural disasters.
SEC. 103. TOTAL AMOUNT AVAILABLE FOR PAYMENTS.
For the purpose of providing for payments to States
under this title for fiscal years, there are hereby appro-
priated out of the tobacco settlement trust fund estab-
lished in section 502 the following:
(1) For fiscal year 1999, $7,000,000,000.
(2) For fiscal year 2000, $9,000,000,000.
(3) For fiscal year 2001, $13,000,000,000.
(4) For fiscal year 2002, $16,000,000,000.
(5) For fiscal year 2003 and for each succeed-
ing fiscal year, $19,000,000,000.
TITLE II—REQUIREMENTS FOR
COMPREHENSIVE 
HEALTH
PLANS
SEC. 201. IMPLEMENTATION OF CERTIFIED HEALTH INSUR-
ANCE PLANS BY STATES.
(a) IN GENERAL.—Not later than July 1, 2001, each
State shall submit to the Secretary a comprehensive health
insurance plan designed to be administered by the State
and containing the provisions required under this title,
and shall have such plan in place and operating not later
than January 1, 2002.
(b) CERTIFICATION OF PLANS BY SECRETARY.—The
Secretary shall certify for a fiscal year those State plans
developed and implemented under this title which meet the
applicable requirements of this title for the fiscal year.
SEC. 202. REQUIRED PROVISIONS OF HEALTH INSURANCE
PLAN.
(a) IN GENERAL.—Each State shall have maximum
flexibility in developing and implementing its comprehen-
sive health insurance plan under this title, except that the
plan shall include at least the following provisions:
(1) COVERAGE.—Health insurance coverage
meeting the requirements of this title for all individ-
uals in the State without regard to employment sta-
tus, income, or pre-existing condition or other health
status.
(2) 
PORTABILITY
AND
GUARANTEED
RE-
NEWAL.—A prohibition against the denial, cancella-
tion, or refusal to renew the coverage of an individ-
ual or employer except—
(A) on the basis of nonpayment of pre-
miums,
(B) on the basis of fraud or misrepresenta-
tion, or
(C) because the plan is ceasing to provide
any coverage in a geographic area.
(3) BENEFITS.—
(A) COMPARABLE TO FEHBP.—Subject to
the succeeding provisions of this paragraph,
benefits at least comparable to the benefits
(and deductibles, copayments, and other cost-
sharing not exceeding the comparable cost-shar-
ing) for coverage available to Members of Con-
gress and employees of the Federal government
under the Federal Employees Health Benefits
Program (FEHBP) (as determined by the Sec-
retary).
(B) LIMITATION
ON
COST-SHARING
FOR
LOW-INCOME INDIVIDUALS.—In the case of in-
dividuals with income below 300 percent of the
poverty line for a family of the size involved,
the coverage shall not require the payment of
any coinsurance, copayments, or other cost-
sharing (other than premiums).
(C) LIMITATION ON PREMIUMS FOR LOW-
INCOME INDIVIDUALS.—In the case of individ-
uals with income below 300 percent of such
poverty line, the amount of premiums shall not
exceed—
(i) 1 percent of income, in the case of
individuals with income below 200 percent
of such poverty line;
(ii) 2 percent of income, in the case of
individuals with income at or above 200
percent, but below 250 percent, of such
poverty line; and
(iii) 3 percent of income, in the case
of individuals with income at or above 250
percent, but below 300 percent, of such
poverty line.
(D) 
SATISFACTION
OF
REQUIREMENT
THROUGH COVERAGE UNDER MEDICARE, MED-
ICAID, OR STATE CHILDREN’S HEALTH INSUR-
ANCE PROGRAM.—Coverage under title XVIII
of the Social Security Act or coverage under a
State plan under title XIX or XXI of such Act
shall be deemed to meet the requirements of
subparagraphs (A), (B), and (C).
(E) AVAILABILITY OF HOME- AND COMMU-
NITY-BASED CARE.—The offering of home- and
community-based care as an alternative to insti-
tutional care if medically appropriate.
(4) COMMUNITY RATING OF PREMIUMS.—A re-
quirement that the premium charged shall be equiv-
alent for all individuals within any community, ex-
cept that the premium may vary with respect to an
individual on the basis of the individual’s age or the
number of members of the individual’s family cov-
ered.
(5) QUALITY OF CARE.—The creation of ade-
quate mechanisms designed to assure, monitor, and
maintain the provision of high quality health care to
individuals in the State.
(6) COST CONTAINMENT.—The creation of ade-
quate mechanisms designed to control premiums and
the costs of providing high quality health care to in-
dividuals in the State.
(7) AVOIDING CROWD OUT.—Procedures to be
used to ensure that the coverage provided under this
title does not substitute for coverage under group
health plans.
(8) DATA
COLLECTION, RECORDS, AND
RE-
PORTS.—Assurances that the State will collect the
data, maintain the records, and furnish the reports
to the Secretary, at the times and in the standard-
ized format the Secretary may require in order to
enable the Secretary to monitor State program ad-
ministration and compliance and to evaluate and
compare the effectiveness of State plans under this
title.
(9) AUDITS.—Assurances that the State will af-
ford the Secretary access to any records or informa-
tion relating to the plan for the purposes of review
or audit.
(10) PROGRAM
BUDGET.—A budget for the
plan, which is updated periodically as necessary and
includes details on the planned use of funds and the
sources of the non-Federal share of plan expendi-
tures.
(11) EVALUATIONS.—Submission to the Sec-
retary, by January 1, 2004, of an evaluation that in-
cludes an assessment of the effectiveness of the plan
in increasing the number of residents with health in-
surance coverage, recommendations for improving
the program under this title, and any other matters
the State and the Secretary consider appropriate.
(b) REPORT OF THE SECRETARY.—The Secretary
shall submit to Congress and make available to the public
by December 31, 2004, a report based on the evaluations
submitted by States under subsection (a)(11) containing
any conclusions and recommendations the Secretary con-
siders appropriate.
(c) WAIVER
OF CERTAIN PREEMPTION REQUIRE-
MENTS.—
(1) IN GENERAL.—Subject to paragraph (2),
the provisions of section 514 of the Employee Re-
tirement Income Security Act of 1974 are waived to
the extent the Secretary, in consultation with the
Secretary of Labor, determines that such waiver is
reasonable and necessary to carry out a comprehen-
sive health insurance plan under this title.