102 
services available to such employees under the Josephine 
Butler United States Health Service Act.’’. 
(c) DENIAL OF DEDUCTION OF HEALTH CARE EX-
PENSES AS TRADE OR BUSINESS EXPENSES.—Section 
162 of such Code (relating to trade or business expenses) 
is amended by redesignating subsection (p) as subsection 
(q) and by adding after subsection (o) the following new 
subsection: 
‘‘(p) PAYMENTS FOR HEALTH CARE.—No deduction 
shall be allowed under subsection (a) for any amount paid 
for health care services (other than any amount of tax im-
posed by section 59B and paid by the employer on behalf 
of his employees) which an individual was eligible to re-
ceive under title II of the Josephine Butler United States 
Health Service Act.’’. 
(d) DENIAL OF DEDUCTION FOR CONTRIBUTIONS TO 
CERTAIN MEDICAL AND HOSPITAL FACILITIES.— 
(1) Paragraph (2) of section 170(c) of such 
Code (relating to charitable, etc., contributions and 
gifts) is amended by inserting ‘‘(other than an orga-
nization described in subsection (b)(1)(A)(iii))’’ after 
‘‘(2) A corporation, trust, or community chest, fund, 
or foundation’’.
103 
(2) Subsection (e) of section 501 of such Code 
(relating to cooperative hospital service organiza-
tions) is amended by striking the last sentence. 
(e) DENIAL OF DEDUCTION FOR MEDICAL, DENTAL, 
ETC., EXPENSES.— 
(1) Section 213 of such Code (relating to med-
ical, dental, etc., expenses) is repealed. 
(2) The table of sections of part VII of sub-
chapter B of chapter 1 of such Code is amended by 
striking the item relating to section 213. 
(f) HOSPITAL INSURANCE TAX.— 
(1) Subsection (b) of section 1401 of such Code 
(relating to rate of tax on self-employment income) 
is repealed. 
(2) Subsection (b) of section 3101 of such Code 
(relating to rate of tax on employees under the Fed-
eral Insurance Contributions Act) is repealed. 
(3) Section 3201(a) of such Code (relating to 
rate of tax imposed on employees under the Railroad 
Retirement Tax Act) is amended by striking ‘‘the 
sum of the rates of tax in effect under subsections 
(a) and (b) of section 3101’’ and inserting ‘‘the rate 
of tax in effect under section 3101(a)’’. 
(4) Section 3211(a)(1) of such Code (relating 
to rate of tax on employee representatives under the
104 
Railroad Retirement Tax Act) is amended by strik-
ing ‘‘subsections (a) and (b)’’ the first place it ap-
pears and inserting ‘‘subsection (a)’’. 
(5) Subsection (e) of section 6051 of such Code 
(relating to railroad employees) is repealed. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning on or 
after the effective date of health services. 
SEC. 503. EXISTING EMPLOYER-EMPLOYEE HEALTH BEN-
EFIT PLANS. 
No contractual or other nonstatutory obligation of 
any employer to pay for or provide any health care and 
supplemental service to his present and former employees 
and their dependents and survivors, or to any of such per-
sons, shall apply on and after the effective date of health 
services to the extent such individuals are eligible to re-
ceive such health care and supplemental services under 
this Act. 
SEC. 504. WORKERS COMPENSATION PROGRAMS. 
No workers compensation program, whether estab-
lished pursuant to Federal or State law or private initia-
tive, shall pay for or provide any health care and supple-
mental services on and after the effective date of health 
services, to the extent such health care and supplemental 
services are available under this Act.
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Subtitle B—Health Service Trust 
Fund 
SEC. 511. ESTABLISHMENT OF HEALTH SERVICE TRUST 
FUND. 
(a) ESTABLISHMENT.—There is hereby created on 
the books of the Treasury of the United States a trust 
fund to be known as the Health Service Trust Fund (in 
this title referred to as the ‘‘Trust Fund’’). The Trust 
Fund shall consist of such gifts and bequests as may be 
made to the Service and such amounts as may be depos-
ited in, or appropriated to, such fund as provided in this 
subtitle. 
(b) APPROPRIATION.—There is hereby appropriated 
to the Trust Fund for each fiscal year beginning in the 
fiscal year in which the effective date of health services 
(as defined in title VI) falls, and for each fiscal year there-
after, out of any moneys in the Treasury not otherwise 
appropriated, an amount equal to 100 percent of expected 
net receipts from the taxes imposed by sections 59B and 
3111(b) of the Internal Revenue Code of 1986 (as esti-
mated by the Secretary of the Treasury). The amount ap-
propriated by the preceding sentence shall be transferred 
from time to time from the general fund in the Treasury 
to the Trust Fund in such smaller amounts to be deter-
mined on the basis of estimates by the Secretary of the
106 
Treasury of the receipts specified in the preceding sen-
tence; and proper adjustments shall be made in the 
amounts subsequently transferred to the extent prior esti-
mates were in excess of or were less than the receipts spec-
ified in such sentence. 
SEC. 512. TRANSFER OF FUNDS TO THE HEALTH SERVICE 
TRUST FUND. 
(a) OF MEDICARE TRUST FUNDS.—On the effective 
date of health services, there are transferred to the Trust 
Fund all of the assets and liabilities of the Federal Hos-
pital Insurance Trust Fund and the Federal Supple-
mentary Medical Insurance Trust Fund. 
(b) ADDITIONAL AMOUNTS.—In addition to the sums 
appropriated by section 511(b), there is appropriated to 
the Trust Fund for each fiscal year, out of any moneys 
in the Treasury not otherwise appropriated, a govern-
mental contribution equal to 40 percent of the sums ap-
propriated by section 511(b) for such fiscal year. There 
shall be deposited in the Trust Fund all recoveries of over-
payments, and all receipts under loans or other agree-
ments entered into, under this Act. 
SEC. 513. ADMINISTRATION OF HEALTH SERVICE TRUST 
FUND. 
(a) BOARD
OF TRUSTEES.—With respect to the 
Trust Fund, there is hereby created a body to be known
107 
as the Board of Trustees of the Trust Fund (in this sec-
tion referred to as the ‘‘Board of Trustees’’) composed of 
the Secretary of the Treasury, the Secretary of Health and 
Human Services, and the Chairperson of the National 
Health Board, all ex officio. The Secretary of the Treasury 
shall be the Managing Trustee of the Board of Trustees 
(in this section referred to as the ‘‘Managing Trustee’’). 
The Chairperson of the National Health Board shall serve 
as the Secretary of the Board of Trustees. The Board of 
Trustees shall meet not less frequently than once each cal-
endar year. It shall be the duty of the Board of Trustees 
to— 
(1) hold the Trust Fund; 
(2) report to the Congress not later than the 
first day of April of each year on the operation and 
status of the Trust Fund during the preceding fiscal 
year and on its expected operation and status during 
the current fiscal year and the next 2 fiscal years; 
(3) report immediately to the Congress when-
ever the Board is of the opinion that the amount of 
the Trust Fund is unduly small; and 
(4) review the general policies followed in man-
aging the Trust Fund, and recommend changes in 
such policies, including necessary changes in the