payment to such persons for services so furnished, 
and to enlist their full cooperation in the administra-
tion of benefits under this Act in the area; 
(4) receive and, to the extent possible in the 
local area, adjust any complaints which may be 
made concerning the administration of benefits 
under this Act in the area; 
(5) perform such other duties (including the 
making of payments to persons furnishing personal 
health services in the area) as may be assigned by 
the State agency; and 
(6) take or initiate such other administrative 
action as the committee or officer finds will best 
carry out, within the area, the provisions of this Act, 
and best effectuate its purposes. 
SEC. 303. LOCAL AREA COMMITTEES. 
(a) ESTABLISHMENT.— 
(1) IN GENERAL.—A local area committee shall 
be established in each health-service area. 
(2) FUNCTIONS.—If designated by the State as 
a local administrative committee, the local area com-
mittee shall perform the functions specified in sec-
tion 302 and shall formulate policies for the admin-
istration of benefits under this Act in the area. If 
designated as an advisory committee, it shall advise 
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and assist in the performance of such functions and 
the formulation of such policies. The committee, 
whether administrative or advisory, shall— 
(A) participate in the solution of problems 
affecting the administration of such benefits; 
(B) promote impartiality and freedom from 
political influence in such administration; 
(C) perform related functions to the end 
that administration in the area may be respon-
sive to the wishes and needs of persons fur-
nishing and receiving benefits in the area, be 
adapted to local practices and resources; and 
(D) provide adequate and high quality per-
sonal health services to all eligible individuals. 
(b) COMPOSITION.—Each local area committee shall 
consist of not less than 8 nor more than 16 members. The 
members shall be so selected that— 
(1) a majority of the committee shall be rep-
resentative of the interests of individuals in the area 
who are eligible for benefits; and 
(2) the remaining members shall be chosen 
from the several professions, hospitals, and other or-
ganizations in the area by whom such benefits will 
be provided. 
(c) MEETINGS.— 
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(1) IN
GENERAL.—The local area committee 
shall meet— 
(A) as often as may be necessary, and 
whenever one-third or more of the members re-
quest a meeting; and 
(B) in the case of a local administrative 
committee, not less frequently than once each 
month, and, in the case of a local advisory com-
mittee, not less frequently than once in each 
quarter of the year. 
(2) ANNUAL PUBLIC MEETING.—At least one 
meeting of the committee each year shall be open to 
the public, notice of which shall be published and at 
which any person in the area may participate. 
(3) ANNUAL STATEWIDE MEETINGS.— 
(A) ADMINISTRATIVE OFFICERS.—At least 
once each year there shall be a statewide meet-
ing of local administrative officers and rep-
resentatives of local administrative committees. 
(B) LOCAL
ADVISORY
COMMITTEES.—At 
least once in each year there shall be a state-
wide meeting of representatives of all local advi-
sory committees in the State, and any reports 
or recommendations made at such meeting shall 
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on the request of such meeting be transmitted 
through the State agency to the Board. 
SEC. 304. LOCAL PROFESSIONAL COMMITTEES. 
(a) ESTABLISHMENT.—Local committees representa-
tive of the persons furnishing personal health services in 
the area shall be established in each health-service area. 
(b) FUNCTIONS.—Each local professional committee 
shall assist the local administrative committee and its ex-
ecutive officer, or the local administrative officer and the 
local advisory committee, as the case may be, in— 
(1) the preservation of the customary freedom 
and responsibility (under applicable State law) of 
practitioners in the exercise of professional judgment 
as to the care of patients; and 
(2) in the solution of technical problems con-
cerning the participation of professional personnel, 
hospitals, and other qualified persons in the provi-
sion of personal health services as benefits, and to 
advise the local administrative or executive officer 
and the local area committee regarding matters of 
professional practice or conduct arising in connec-
tion with the performance of agreements for the pro-
vision of such services. 
(c) MEETINGS.—Such local committees shall meet on 
call of the local administrative committee or officer, as the 
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case may be, or upon their own motion. The members of 
any such local professional committee may be professional 
members of the local area committee or other professional 
persons or both. 
SEC. 305. METHODS OF ADMINISTRATION. 
(a) IN GENERAL.—In each health-service area the 
methods of administration shall be such as to— 
(1) insure the prompt and efficient care of indi-
viduals entitled to personal health services as bene-
fits; 
(2) promote personal relationships between phy-
sician and patients; 
(3) promote coordination among and between 
general practitioners, specialists, those who furnish 
auxiliary services, nurses, and hospitals, in the fur-
nishing of services under this Act, between them and 
public-health centers and agencies, and educational 
service, research, and other related agencies or insti-
tutions, and between preventive, diagnostic, and cu-
rative services, public and private; 
(4) aid in the prevention of disease, disability, 
and premature death; 
(5) encourage improvement in the number and 
distribution of professional personnel and facilities; 
and 
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(6) insure the provision of adequate service with 
the greatest economy consistent with high standards 
of quality. 
(b) APPOINTMENT.—Local administrative officers 
shall be appointed by the State agency or the head thereof, 
in accordance with the merit system provided for in the 
State plan of operations. Local administrative committees 
shall be appointed by such agency or the head thereof, 
from individuals residing in the respective health-service 
areas, and the executive officers of such committees shall 
be appointed by the committees in accordance with the 
merit system. The local health-service areas shall be those 
so designated in such plan. Members of local advisory 
committees and of local professional committees shall be 
selected in accordance with methods set forth in such plan. 
(c) COMPLIANCE WITH PROVISIONS.—In exercising 
their functions and discharging their responsibilities under 
this Act, local administrative officers and communities, 
local advisory committees, and local professional commit-
tees shall observe the provisions of this Act, and of regula-
tions prescribed thereunder, and of any regulations, stand-
ards, and procedures prescribed by the State agency. 
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TITLE IV—STATE 
ADMINISTRATION 
SEC. 401. DECLARATION OF POLICY. 
It is the intent of Congress that the benefits provided 
under this Act be administered wherever possible by the 
several States, in accordance with plans of operations sub-
mitted and approved as provided in this title, and in each 
State insofar as feasible by the same State agency which 
administers, or supervises the administration of, the 
State’s general public health and maternal and child 
health programs. 
SEC. 402. STATE PLAN OF OPERATIONS. 
(a) IN GENERAL.—Any State desiring to assume re-
sponsibility for the administration in the State of the per-
sonal health-service benefits provided under this Act to all 
individuals in the State who are eligible for such benefits, 
may do so for the period beginning October 1, 2008 (when 
benefits first become available under this Act), or for the 
period beginning October 1 of any succeeding year, if it 
has undertaken, through its legislature, to administer such 
benefits in accordance with the provisions of this Act and 
with the provisions of regulations and standards pre-
scribed thereunder, and, at least 12 months in advance, 
has submitted and had approved a State plan of oper-
ations which provides for the following: 
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(1) The plan must designate as the sole agency 
for the statewide administration of benefits under 
this Act a single State agency duly authorized under 
the law of the State to administer such benefits 
within the State in accordance with the provisions of 
this Act, the provisions of regulations and standards 
prescribed thereunder, and the provisions of the 
State plan. 
(2) The plan must provide for the designation 
of a State advisory committee which shall include 
members who are familiar with the needs for per-
sonal health services in urban and rural areas, and 
who are representative of the interests of individuals 
in the State who are eligible for benefits, such mem-
bers to constitute a majority, and members chosen 
from the several professions, hospitals, and other or-
ganizations in the State by whom such benefits will 
be provided, to advise the State agency in carrying 
out the administration of such benefits in the State. 
(3) The plan must provide for the decentralized 
administration of this Act in the State in accordance 
with title III for the designation of local health-serv-
ice areas, and for such methods of selecting the 
members of local advisory committees and of local 
professional committees as are calculated to insure 
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representation of the nature set forth in sections 
303 and 304, respectively. 
(4) The plan must provide for such methods of 
administration, including methods relating to the es-
tablishment and maintenance of personnel standards 
on a merit basis (except that the Board shall exer-
cise no authority with respect to the selection, tenure 
of office, or compensation of any individual employed 
in accordance with such methods), as are found by 
the Board to be necessary for the proper and effi-
cient administration of such benefits in the State. 
(5) The plan must provide for the making of 
surveys of the resources and needs of the State, in 
accordance with section 102(a), and sets forth a pro-
gram for the administration of such benefits in the 
State which gives reasonable assurance (A) that 
maximum use will be made of all available health 
personnel and facilities desiring to participate in the 
provision of benefits to eligible individuals, (B) that 
funds allotted to the State for the several classes of 
benefits will be allocated in such manner as to give 
reasonable assurance of the availability of services in 
all health-service areas in the State, and (C) that 
any maldistribution or other inadequacies in the 
health personnel or facilities available for such pur-
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pose, or in the quality of the services rendered, will 
be progressively improved as rapidly as may be prac-
ticable. 
(6) The plan must provide that the State agen-
cy will make such reports in such form and con-
taining such information as the Board may from 
time to time reasonably require, and give the Board, 
upon demand, access to the records upon which such 
information is based. 
(7) The plan must provide that all Federal 
funds paid to the State agency for purposes of car-
rying out this Act in the State shall be properly 
safeguarded and expended solely for the purposes for 
which paid, and must provide for the repayment by 
the State to the United States of any such funds 
lost by the State agency or diverted from the pur-
poses for which paid. 
(8) The plan must provide for cooperation, in-
cluding where necessary entering into working agree-
ments (with any appropriate transfer of funds), with 
other public agencies of the State or of its political 
subdivisions concerned with programs related to the 
purposes of this Act, and with appropriate agencies 
of other States or of the United States admin-
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ccoleman on PRODPC75 with BILLS
istering this Act, or benefits under this Act, in other 
States. 
(b) APPROVAL.—The Board shall approve any State 
plan and any modification thereof submitted by the State 
which it finds complies with the provisions of subsection 
(a). No change in a State plan shall be required within 
one year after initial approval thereof, or within one year 
after any change thereafter required therein, by reason of 
any change in the regulations or standards prescribed pur-
suant to this Act, except with the consent of the State 
or in accordance with further action by Congress. 
(c) NOTICE OF DISAPPROVAL.—In the event of its 
disapproval of any plan or any modification therein sub-
mitted by a State pursuant to this title, the Board shall 
notify the State of such disapproval and shall, upon re-
quest of the State, afford it reasonable notice and oppor-
tunity for a hearing on such disapproval. 
(d) FALLBACK ADMINISTRATION.— 
(1) NOTICE TO GOVERNOR.—If a State has not 
prior to October 1, 2008, submitted and had ap-
proved a plan of operations, the Board shall notify 
the Governor of the State that the Board will be re-
quired to administer this Act in the State, com-
mencing October 1, 2008. 
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(2) PUBLICATION OF NOTICE.—The Board shall 
provide for the publication of such notice in at least 
two newspapers of general circulation in the State. 
(3) CONTINUED
ADMINISTRATION.—If within 
60 days after such notification to the Governor the 
State has not submitted an approvable plan, the 
Board shall continue such administration until one 
year after the submission and approval of a plan of 
operations in accordance with this section. 
(4) WAIVER.—The Board may waive the re-
quirement that a State plan must be submitted and 
approved one year prior to commencement of State 
administration if it is satisfied in a particular case 
that the substitution of a shorter preparatory period 
will not prejudice the interests of eligible individuals 
in the State. 
(e) NONCOMPLIANCE.— 
(1) NOTICE.—Whenever the Board, after rea-
sonable notice and opportunity for hearing to the 
State, finds that the State, having submitted and 
had approved a plan of operations under this title— 
(A) is not complying substantially with the 
provisions of such plan, or with the provisions 
of this Act or any regulations or standards pre-
scribed thereunder, or 
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(B) has withdrawn its plan or failed to 
change it when and as required by a change in 
this Act or in regulations prescribed thereunder, 
the Board shall notify the Governor of the State of 
such findings, together with its reasons therefor and 
a statement concerning the effect of such findings 
under this Act, and shall provide for the publication 
of such notice in at least two newspapers of general 
circulation in the State. 
(2) BOARD ASSUMPTION OF RESPONSIBILITY.— 
If within 60 days following such a notice the State 
has not taken appropriate action to bring its plan or 
its administration thereof into conformity with this 
Act and regulations and standards thereunder, the 
Board shall immediately assume responsibility for 
the administration of this Act in the State and shall 
administer the same in such State for so long there-
after as the State fails to give reasonable assurances 
of substantial compliance or fails to submit an ap-
provable plan, as the case may be. 
(f) BOARD AUTHORITY.—In any State in which the 
Board has assumed responsibility for the administration 
of benefits under this Act as provided in subsections (d) 
and (e), the Board shall have and discharge all authority 
and duties, in accordance with the provisions of this Act, 
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ccoleman on PRODPC75 with BILLS
which it finds necessary for that purpose, and the term 
‘‘State agency’’ wherever used in title II or title III shall 
be deemed to refer to the Board. 
(g) ADDITIONAL STATE-FUNDED SERVICES.—Noth-
ing in this Act shall preclude any State or any political 
subdivision thereof, whether or not the State has assumed 
responsibility for the administration of benefits under this 
Act, from furnishing, with funds available from sources 
other than the National Health Care Trust Fund, any ad-
ditional health services to individuals who are eligible for 
benefits under this Act or any or all health services to 
individuals who are not so eligible. 
TITLE V—NATIONAL HEALTH IN-
SURANCE BOARD; NATIONAL 
ADVISORY MEDICAL POLICY 
COUNCIL; GENERAL ADMINIS-
TRATIVE PROVISIONS 
SEC. 501. NATIONAL HEALTH INSURANCE BOARD. 
(a) ESTABLISHMENT.— 
(1) IN GENERAL.—There is hereby established 
in the Department of Health and Human Services a 
National Health Insurance Board. 
(2) COMPOSITION.—The Board shall be com-
posed of 5 members, three of whom shall be ap-
pointed by the President by and with the advice and 
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consent of the Senate, and the other two of whom 
shall be the Surgeon General of the Public Health 
Service and the Administrator of Social Security. At 
least one of the appointed members shall be a doctor 
of medicine licensed to practice medicine or surgery 
in one of the States. 
(3) NO OTHER EMPLOYMENT.—During an ap-
pointment member’s term of membership on the 
Board, the member shall not shall engage in any 
other business, vocation, or employment. 
(4) COMPENSATION.—Each appointed member 
shall receive a salary at an annual rate of basic pay, 
established by the President, which is not less than 
the annual rate of basic pay for positions at level V 
of the Executive Schedule and which is not greater 
than the annual rate of basic pay for positions at 
level IV of the Executive Schedule. 
(5) TERM.—Each appointed member shall hold 
office for a term of six years, except that— 
(A) any member appointed to fill a vacancy 
occurring prior to the expiration of the term for 
which the member’s predecessor was appointed 
shall be appointed for the remainder of such 
term; and 
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(B) the terms of office of the members 
first taking office after the date of the enact-
ment of this Act shall expire, as designated by 
the President at the time of appointment, one 
at the end of two years, one at the end of four 
years, and one at the end of six years, after the 
date of the enactment of this Act. 
(6) DESIGNATION OF CHAIRMAN.—The Presi-
dent shall designate one of the appointed members 
as the Chairman of the Board. 
(b) FUNCTIONS.— 
(1) SUPERVISION.—All functions of the Board 
shall be administered by the Board under the direc-
tion and supervision of the Secretary of Health and 
Human Services. The board shall perform such 
functions as it finds necessary to carry out the pro-
visions of this Act, and shall make all regulations 
and standards specifically authorized to be made in 
this Act and such other regulations not inconsistent 
with this Act as may be necessary. 
(2) DELEGATION.—The Board may delegate to 
any of its members, officers, or employees, or with 
the approval of the Secretary to any other officer or 
employee of the Department of Health and Human 
Services, such of its powers or duties, except that of 
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making regulations, as it may consider necessary 
and proper to carry out the provisions of this Act. 
(3) CONTRACT AUTHORITY.—The Board may 
also enter into agreements for the furnishing or pro-
vision of personal health services under this Act 
without regard to the provisions of title 5, United 
States Code, pertaining to the appointment, status, 
or compensation of Federal employees, or pertaining 
to contracts for personal services, and without re-
gard to section 3709 of the Revised Statutes (41 
U.S.C. 5), and any person rendering services pursu-
ant to an agreement so made shall not by reason 
thereof be deemed to be an employee of the United 
States. 
(c) USE
OF EXECUTIVE AGENCIES.—In admin-
istering the provisions of this Act, the Board is authorized 
to utilize the services and facilities of any executive depart-
ment or other agency of the United States in accordance 
with an agreement with the head thereof. Payment for 
such services and facilities shall be made in advance or 
by way of reimbursement, as may be agreed upon with 
the head of the executive department or other agency fur-
nishing them. 
(d) PERSONNEL.— 
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(1) IN GENERAL.—Personnel of the Board shall 
be appointed by the Secretary upon recommendation 
of the Board. 
(2) DETAILING OF EMPLOYEES TO BOARD.— 
The Secretary is authorized to detail to the Board, 
upon its request, any officer or employee of the De-
partment of Health and Human Services, and in the 
Secretary’s discretion to reimburse, from funds 
available for the administration of this Act, the ap-
propriation from which the salary or, in the case of 
commissioned officers of the Public Health Service, 
the pay and allowances of such officer or employee 
are paid. 
(e) DETAILING OF BOARD EMPLOYEES.—Upon the 
request of any State agency administering a State plan 
of operations pursuant to title IV, or upon the request 
of any State desiring to prepare and submit a plan of op-
erations, any officer or employee of the Board (including 
any officer or employee detailed to the Board pursuant 
to subsection (d)) may be detailed by the Board to assist 
in the administration, or in the preparation, of such State 
plan of operations. The funds available for the Federal 
administration of this Act may, in the discretion of the 
Secretary, be reimbursed from funds allotted to the State 
pursuant to section 802 and available for State adminis-
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