I
105TH CONGRESS
2D SESSION
H. R. 3538
To amend title XXVII of the Public Health Service Act to limit the amount
of any increase in the payments required by health insurance issuers
for health insurance coverage provided to individuals who are guaranteed
an offer of enrollment under individual health insurance coverage relative
to other individuals who purchase health insurance coverage.
IN THE HOUSE OF REPRESENTATIVES
MARCH 24, 1998
Mr. PALLONE (for himself and Mr. GREEN) introduced the following bill;
which was referred to the Committee on Commerce
A BILL
To amend title XXVII of the Public Health Service Act
to limit the amount of any increase in the payments
required by health insurance issuers for health insurance
coverage provided to individuals who are guaranteed an
offer of enrollment under individual health insurance cov-
erage relative to other individuals who purchase health
insurance coverage.
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 ‘‘Affordable Health In-
surance Act of 1998’’.
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SEC. 2. AMENDMENTS TO THE PUBLIC HEALTH SERVICE
ACT.
(a) PREMIUM LIMITATIONS WITH RESPECT TO INDI-
VIDUAL COVERAGE.—Section 2741 of the Public Health
Service Act (42 U.S.C. 300gg–41) is amended—
(1) by redesignating the second subsection (e)
and subsection (f) as subsections (f) and (g), respec-
tively; and
(2) by adding at the end thereof the following:
‘‘(h) PREMIUM LIMITATIONS.—
‘‘(1) IN GENERAL.—With respect to an eligible
individual desiring to enroll in, or renew, individual
health insurance coverage under this section, the
health insurance issuer that offers such coverage
shall not charge such individual a premium rate for
such coverage that is higher than a rate equal to
150 percent of the average standard risk rate (as
determined under paragraph (2)) of the issuer for
individual health insurance offered in the State or
applicable marketing or service area (as determined
pursuant to regulations).
‘‘(2) AVERAGE STANDARD RISK RATE.—As used
in paragraph (1), the term ‘average standard risk
rate’ means the following:
‘‘(A) GUARANTEED
ISSUE
OF
ALL
POLI-
CIES.—In the case of a health insurance issuer
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that meets the requirements of this section with
respect to individual health insurance coverage
by meeting the requirements of subsection
(a)(1), the standard risk rate for the policy in
which the eligible individual is enrolled or de-
sires to enroll.
‘‘(B) GUARANTEED ISSUE OF TWO MOST
POPULAR POLICIES.—In the case of a health in-
surance issuer that meets the requirements of
this section with respect to individual health in-
surance coverage through a mechanism de-
scribed in subsection (c)(2), the standard risk
rate for the policy in which the eligible individ-
ual is enrolled or desires to enroll.
‘‘(C) GUARANTEED ISSUE OF TWO POLICY
FORMS WITH REPRESENTATIVE COVERAGE.—In
the case of a health insurance issuer that meets
the requirements of this section with respect to
individual health insurance coverage through a
mechanism described in subsection (c)(3), the
average of the standard risk rates for the most
common policy forms offered by the issuer in
the State or applicable marketing or service
area (as determined pursuant to regulations),
established using reasonable actuarial tech-
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niques to adjust for the difference in actuarial
values among such policy forms, subject to re-
view and approval or disapproval of the applica-
ble regulatory authority.
(b) STATE FLEXIBILITY.—Section 2744(c) of the
Public Health Service Act (42 U.S.C. 300gg–44(c)) is
amended—
(1) in paragraph (1), by inserting before the pe-
riod the following: ‘‘, except that in applying any
such model act, an eligible individual shall not be
charged a premium rate that is higher than a rate
equal to 150 percent of the standard risk rate of the
issuer’’;
(2) in paragraph (2)(B), by inserting before the
period the following: ‘‘, except that an eligible indi-
vidual shall not be charged a premium rate that is
higher than a rate equal to 150 percent of the
standard risk rate as determined under the Model
Plan’’; and
(3) by adding at the end the following:
‘‘(4) LIMITATION.—
‘‘(A) IN GENERAL.—In the case of a mech-
anism described in subparagraph (A) or (B) of
paragraph (3), a State shall not be considered
to be implementing an acceptable alternative
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mechanism unless the mechanism limits the
amount of premium rates that may be charged
to eligible individuals to not more than 150 per-
cent of the standard risk rate.
‘‘(B) STANDARD
RISK
RATE.—For pur-
poses of subparagraph (A), the term ‘standard
risk rate’ means—
‘‘(i) in the case of a mechanism under
paragraph (3)(A), and as determined by
the Secretary to be appropriate with re-
spect to the State mechanism involved—
‘‘(I) the rate determined under
section 2741(h)(2)(A);
‘‘(II) the rate determined pursu-
ant to the standards included in the
Model Plan described in paragraph
(2)(B); or
‘‘(III) the rate determined pursu-
ant to such other method of calcula-
tion as determined by the State and
approved by the Secretary as appro-
priate to achieve the goal of this sub-
section; and
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‘‘(ii) in the case of a mechanism
under paragraph (3)(B), the rate deter-
mined under section 2741(h)(2)(A).’’.
SEC. 3. EFFECTIVE DATE.
The amendments made by—
(1) section 2(a) shall apply to health insurance
coverage offered, sold, issued, renewed, in effect, or
operated in the individual market on the date that
is 6 months after the date of enactment of this Act;
and
(2) section 2(b) shall apply with respect to a
State that adopted an alternative mechanism under
section 2744 of the Public Health Service at (42
U.S.C. 300gg–44) on the date that is 1 year after
the date of enactment of this Act.
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