I 
108TH CONGRESS 
2D SESSION 
H. R. 4662 
To amend the Public Health Service Act to provide for cooperative governing 
of individual health insurance coverage offered in interstate commerce. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 23, 2004 
Mr. SHADEGG (for himself, Mr. BARTLETT of Maryland, Mr. CANNON, Mr. 
TOM DAVIS of Virginia, Mr. DEAL of Georgia, Mr. FEENEY, Mr. FLAKE, 
Mr. FRANKS of Arizona, Mr. GARRETT of New Jersey, Mr. GINGREY, Mr. 
HOEKSTRA, Mr. JONES of North Carolina, Mr. KING of Iowa, Mr. 
OTTER, Mr. PENCE, Mr. RYAN of Wisconsin, Mr. SENSENBRENNER, Mr. 
SESSIONS, Mr. SMITH of New Jersey, Mr. TOOMEY, and Mr. WILSON of 
South Carolina) introduced the following bill; which was referred to the 
Committee on Energy and Commerce 
A BILL 
To amend the Public Health Service Act to provide for 
cooperative governing of individual health insurance cov-
erage offered in interstate commerce. 
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 ‘‘Health Care Choice Act’’.
SEC. 2. SPECIFICATION OF CONSTITUTIONAL AUTHORITY 
FOR ENACTMENT OF LAW. 
This Act is enacted pursuant to the power granted 
Congress under article I, section 8, clause 3, of the United 
States Constitution. 
SEC. 3. FINDINGS. 
Congress finds the following: 
(1) The application of numerous and significant 
variations in State law impacts the ability of insur-
ers to offer, and individuals to obtain, affordable in-
dividual health insurance coverage, thereby impeding 
commerce in individual health insurance coverage. 
(2) Individual health insurance coverage is in-
creasingly offered through the Internet, other elec-
tronic means, and by mail, all of which are inher-
ently part of interstate commerce. 
(3) In response to these issues, it is appropriate 
to encourage increased efficiency in the offering of 
individual health insurance coverage through a col-
laborative approach by the States in regulating this 
coverage. 
(4) The establishment of risk-retention groups 
has provided a successful model for the sale of insur-
ance across State lines, as the acts establishing 
those groups allow insurance to be sold in multiple 
States but regulated by a single State.
SEC. 
4. 
COOPERATIVE 
GOVERNING 
OF 
INDIVIDUAL 
HEALTH INSURANCE COVERAGE. 
(a) IN GENERAL.—Title XXVII of the Public Health 
Service Act (42 U.S.C. 300gg et seq.) is amended by add-
ing at the end the following new part: 
‘‘PART D—COOPERATIVE GOVERNING OF INDIVIDUAL 
HEALTH INSURANCE COVERAGE 
‘‘SEC. 2795. DEFINITIONS. 
‘‘In this part: 
‘‘(1) PRIMARY
STATE.—The term ‘primary 
State’ means, with respect to individual health insur-
ance coverage offered by a health insurance issuer, 
the State designated by the issuer as its primary 
State. An issuer, with respect to a particular policy, 
may only designate one such State as its primary 
State with respect to all such coverage it offers. 
‘‘(2) SECONDARY STATE.—The term ‘secondary 
State’ means, with respect to a health insurance 
issuer, any State (in the United States or District 
of Columbia) that is not the primary State. 
‘‘(3) HEALTH INSURANCE ISSUER.—The term 
‘health insurance issuer’ has the meaning given such 
term in section 2791(b)(2). 
‘‘(4) INDIVIDUAL
HEALTH
INSURANCE
COV-
ERAGE.—The term ‘individual health insurance cov-
erage’ means health insurance coverage offered in
the individual market, as defined in section 
2791(e)(1). 
‘‘(5) APPLICABLE
STATE
AUTHORITY.—The 
term ‘applicable State authority’ means, with respect 
to a health insurance issuer in a State, the State in-
surance commissioner or official or officials des-
ignated by the State to enforce the requirements of 
this title for the State involved with respect to the 
issuer. 
‘‘(6) HAZARDOUS FINANCIAL CONDITION.—The 
term ‘hazardous financial condition’ means that, 
based on its present or reasonably anticipated finan-
cial condition, a health insurance issuer is unlikely 
to be able— 
‘‘(A) to meet obligations to policyholders 
with respect to known claims and reasonably 
anticipated claims; or 
‘‘(B) to pay other obligations in the normal 
course of business. 
‘‘(7) COVERED LAWS.—The term ‘covered laws’ 
means the laws governing the issuance of an indi-
vidual health insurance coverage pertaining to— 
‘‘(A) the provision of insurance related 
services;
‘‘(B) management, operations, and invest-
ment activities; and 
‘‘(C) loss control and claims administration 
for a health insurance issuer with respect to li-
ability for which the issuer provides insurance. 
‘‘SEC. 2796. APPLICATION OF LAW. 
‘‘(a) IN GENERAL.—The covered laws of the primary 
State shall apply to individual health insurance coverage 
offered by that health insurance issuer in the primary 
State and in any secondary State. 
‘‘(b) EXEMPTIONS FROM STATE LAWS, RULES, REG-
ULATIONS, JUDGMENTS, AGREEMENTS, OR ORDERS IN A 
SECONDARY STATE.—Except as provided in this section, 
a health insurance issuer with respect to its offer, sale, 
and issuance of individual health insurance coverage in 
any secondary State is exempt from any State law, rule, 
regulation, judgment, agreement, or order of the sec-
ondary State to the extent that such law, rule, regulation, 
judgment, agreement, or order would— 
‘‘(1) make unlawful, or regulate, directly or in-
directly, the operation of the health insurance issuer 
operating in the secondary State, except that any 
secondary State may require such an issuer— 
‘‘(A) to pay, on a nondiscriminatory basis, 
applicable premium and other taxes which are
levied on insurers and surplus lines insurers, 
brokers, or policyholders under the laws of the 
State; 
‘‘(B) to register with and designate the 
State insurance commissioner as its agent solely 
for the purpose of receiving service of legal doc-
uments or process; 
‘‘(C) to comply with a lawful order issued 
in a voluntary dissolution proceeding; 
‘‘(D) to comply with an injunction issued 
by a court of competent jurisdiction, upon a pe-
tition by the State insurance commissioner al-
leging that the issuer is in hazardous financial 
condition; and 
‘‘(E) to provide the following notice, in 12- 
point bold type, in any insurance coverage 
issued by such a health insurance issuer, with 
the 4 blank spaces therein being appropriately 
filled with the name of the health insurance 
issuer, the name of primary State, the name of 
the secondary State, and the name of the sec-
ondary State, respectively, for the coverage con-
cerned:
‘Notice 
‘This policy is issued by lllll and is 
governed by the laws and regulations of the 
State of lllll. This policy may not be sub-
ject to all of the insurance laws and regula-
tions of the State of lllll, including cov-
erage of some services or benefits mandated 
by the law of the State of lllll. Before 
purchasing this policy, you should carefully 
review the policy and determine what health 
care services the policy covers and what bene-
fits it provides, including any exclusions, limi-
tations, or conditions for such services or ben-
efits.’; or 
‘‘(F) to participate, on a nondiscriminatory 
basis, in any insurance insolvency guaranty as-
sociation to which a health insurance issuer in 
the State is required to belong; 
‘‘(2) require any individual health insurance 
coverage issued by the issuer to be countersigned by 
an insurance agent or broker residing in that Sec-
ondary State; or 
‘‘(3) otherwise discriminate against the issuer 
issuing insurance in both primary and secondary 
States.
‘‘(c) SCOPE OF EXEMPTIONS.—The exemptions spec-
ified in subsection (b) apply to laws, rules, regulations, 
judgments, agreements, and orders governing the insur-
ance business pertaining to— 
‘‘(1) individual health insurance coverage issued 
by a health insurance issuer; 
‘‘(2) the offer, sale, and issuance of individual 
health insurance coverage to an individual; and 
‘‘(3) the provision to an individual in relation to 
individual health insurance coverage of— 
‘‘(A) insurance related services; 
‘‘(B) management, operations, and invest-
ment activities; and 
‘‘(C) loss control and claims administration 
for a health insurance issuer with respect to li-
ability for which the issuer provides insurance. 
‘‘(d) LICENSING
OF AGENTS
OR BROKERS
FOR 
HEALTH INSURANCE ISSUERS.—Any State may require 
that a person acting, or offering to act, as an agent or 
broker for a health insurance issuer with respect to the 
offering of individual health insurance coverage obtain a 
license from that State, except that a State many not im-
pose any qualification or requirement which discriminates 
against a nonresident agent or broker.
‘‘(e) DOCUMENTS FOR SUBMISSION TO STATE INSUR-
ANCE
COMMISSIONER.—Each health insurance issuer 
issuing individual health insurance coverage in both pri-
mary and secondary States shall submit— 
‘‘(1) to the insurance commissioner of each 
State in which it intends to offer such coverage, be-
fore it may offer individual health insurance cov-
erage in such State— 
‘‘(A) a copy of plan of operation or 
feasability study (which shall include the name 
of its primary State and its principal place of 
business); and 
‘‘(B) written notice of any change in its 
designation of its primary State; and 
‘‘(2) to the insurance commissioner of each sec-
ondary State in which it offers individual health in-
surance coverage, a copy of the issuer’s annual fi-
nancial statement submitted to the primary State, 
which statement shall be certified by an independent 
public accountant and contain a statement of opin-
ion on loss and loss adjustment expense reserves 
made by— 
‘‘(A) a member of the American Academy 
of Actuaries; or 
‘‘(B) a qualified loss reserve specialist.
‘‘(f) POWER OF COURTS TO ENJOIN CONDUCT.— 
Nothing in this section shall be construed to affect the 
authority of any Federal or State court to enjoin— 
‘‘(1) the solicitation or sale of individual health 
insurance coverage by a health insurance issuer to 
any person or group who is not eligible for such in-
surance; or 
‘‘(2) the solicitation or sale of individual health 
insurance coverage by, or operation of, a health in-
surance issuer that is in hazardous financial condi-
tion. 
‘‘(g) STATE POWERS TO ENFORCE STATE LAWS.— 
‘‘(1) IN GENERAL.—Subject to the provisions of 
subsection (b)(1)(D) (relating to injunctions), noth-
ing in this section shall be construed to affect the 
authority of any State to make use of any of its 
powers to enforce the laws of such State with re-
spect to which a health insurance issuer is not ex-
empt under this section. 
‘‘(2) COURTS OF COMPETENT JURISDICTION.— 
If a State seeks an injunction regarding the conduct 
described in paragraphs (1) and (2) of subsection 
(f), such injunction must be obtained from a Federal 
or State court of competent jurisdiction.