I
103D CONGRESS
2D SESSION
H. R. 3080
To improve access to health insurance and contain health care costs, and
for other purposes.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 15, 1993
Mr. MICHEL (for himself, Mr. GINGRICH, Mr. ALLARD, Mr. ARCHER, Mr.
ARMEY, Mr. BACHUS of Alabama, Mr. BAKER of Louisiana, Mr.
BALLENGER, Mr. BARRETT of Nebraska, Mr. BARTLETT of Maryland,
Mr. BARTON of Texas, Mrs. BENTLEY, Mr. BILIRAKIS, Mr. BLILEY, Mr.
BOEHLERT, Mr. BOEHNER, Mr. BONILLA, Mr. BUNNING, Mr. BURTON
of Indiana, Mr. BUYER, Mr. CAMP, Mr. CASTLE, Mr. CLINGER, Mr. COL-
LINS of Georgia, Mr. CRANE, Mr. CUNNINGHAM, Mr. DELAY, Mr. EMER-
SON, Mr. EWING, Mr. FAWELL, Mrs. FOWLER, Mr. FRANKS of Connecti-
cut, Mr. GALLEGLY, Mr. GALLO, Mr. GEKAS, Mr. GILCHREST, Mr. GIL-
MAN, Mr. GILLMOR, Mr. GOODLING, Mr. GOSS, Mr. GRANDY, Mr. GUN-
DERSON, Mr. HANCOCK, Mr. HASTERT, Mr. HEFLEY, Mr. HERGER, Mr.
HOBSON, Mr. HOKE, Mr. HUNTER, Mr. HUTCHINSON, Mr. HYDE, Mr.
INGLIS of South Carolina, Mr. INHOFE, Mrs. JOHNSON of Connecticut,
Mr. KASICH, Mr. KINGSTON, Mr. KNOLLENBERG, Mr. KOLBE, Mr. KYL,
Mr. LEVY, Mr. LEWIS of California, Mr. LEWIS of Florida, Mr. LIGHT-
FOOT, Mr. LINDER, Mr. MCDADE, Mr. MCHUGH, Mr. MCCOLLUM, Mr.
MCKEON, Mr. MCMILLAN, Mr. MANZULLO, Mrs. MEYERS of Kansas, Mr.
MILLER of Florida, Mr. MOORHEAD, Mr. MYERS of Indiana, Mr.
NUSSLE, Mr. OXLEY, Mr. PACKARD, Mr. PAXON, Mr. PETRI, Mr.
PORTMAN, Ms. PRYCE of Ohio, Mr. QUINN, Mr. REGULA, Mr. ROBERTS,
Mrs. ROUKEMA, Mr. SANTORUM, Mr. SCHAEFER, Mr. SENSENBRENNER,
Mr. SHAW, Mr. SHAYS, Mr. SKEEN, Mr. SMITH of New Jersey, Mr.
SMITH of Michigan, Ms. SNOWE, Mr. SOLOMON, Mr. STUMP, Mr. TAL-
ENT, Mr. THOMAS of California, Mr. THOMAS of Wyoming, Mr. UPTON,
Mrs. VUCANOVICH, Mr. WALKER, Mr. WALSH, Mr. WOLF, Mr. YOUNG
of Alaska, and Mr. ZELIFF) introduced the following bill; which was re-
ferred jointly to the Committees on Energy and Commerce, Ways and
Means, Education and Labor, and the Judiciary
NOVEMBER 17, 1993
Additional sponsors: Mr. TAYLOR of North Carolina, Mr. COBLE, Mr. CAL-
VERT, Mr. SMITH
of Texas, Mr. SUNDQUIST, Mr. DICKEY, Mr.
HOEKSTRA, Mr. HOUGHTON, Mr. DUNCAN, Mr. MICA, Mr. DREIER, Mr.
•HR 3080 SC2
BLUTE, Mr. FISH, Mr. KLUG, Mr. BATEMAN, Mr. LIVINGSTON, Mr.
YOUNG of Florida, Mr. HANSEN, Mr. CALLAHAN, Mr. GOODLATTE, Mr.
PORTER, Mr. QUILLEN, Mr. KING, Mr. FIELDS of Texas, Ms. DUNN, and
Mr. SCHIFF
FEBRUARY 4, 1994
Additional sponsors: Mr. CRAPO, Mr. MCCANDLESS, Mr. SMITH of Oregon,
Mr. SAXTON, Mr. STEARNS, Mr. ZIMMER, Mr. ROGERS, Mr. SAM JOHN-
SON of Texas, and Mr. DORNAN
Deleted sponsor: Mr. BURTON of Indiana (added September 15, 1993; deleted
November 21, 1993)
A BILL
To improve access to health insurance and contain health
care costs, 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
‘‘Affordable Health Care Now Act of 1993’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—IMPROVED ACCESS TO AFFORDABLE HEALTH
CARE
Subtitle A—Increased Availability and Continuity of Health
Coverage for Employees and Their Families
PART 1—REQUIRED COVERAGE OPTIONS FOR ELIGIBLE EMPLOYEES,
SPOUSES, AND DEPENDENTS
Sec. 1001. Requiring employers to offer option of coverage for eligible individ-
uals.
Sec. 1002. Compliance with applicable requirements through multiple employer
health arrangements.
Sec. 1003. Coverage option under State Medical Health Allowance Program.
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PART 2—PREEXISTING CONDITIONS AND CONTINUITY OF COVERAGE;
RENEWABILITY
Sec. 1011. Limitation on pre-existing condition clauses.
Sec. 1012. Assurance of continuity of coverage through previous satisfaction of
pre-existing condition requirement.
Sec. 1013. Requirements relating to renewability generally.
PART 3—ENFORCEMENT; EFFECTIVE DATES; DEFINITIONS
Sec. 1021. Enforcement.
Sec. 1022. Effective dates.
Sec. 1023. Definitions and special rules.
Subtitle B—Reform of Health Insurance Marketplace for
Small Business
Sec. 1101. Requirement for insurers to offer MedAccess plans.
Sec. 1102. MedAccess plan defined.
Sec. 1103. Establishment of other MedAccess standards.
Sec. 1104. Limits on premiums and miscellaneous consumer protections.
Sec. 1105. Limitation on annual premium increases.
Sec. 1106. Establishment of reinsurance or allocation of risk mechanisms for
high risk individuals in marketplace for small business.
Sec. 1107. Definitions.
Sec. 1108. Office of Private Health Care Coverage; annual reports on evalua-
tion of health care coverage reform.
Sec. 1109. Research and demonstration projects; development of a health risk
pooling model.
Subtitle C—Preemption
PART 1—SCOPE OF STATE REGULATION
Sec. 1201. Prohibition of State benefit mandates for group health plans.
Sec. 1202. Prohibition of provisions prohibiting employer groups from purchas-
ing health insurance.
Sec. 1203. Restrictions on managed care.
Sec. 1204. Definitions.
PART 2—MULTIPLE EMPLOYER HEALTH BENEFITS PROTECTIONS
Sec. 1211. Limited exemption under preemption rules for multiple employer
plans providing health benefits subject to certain Federal
standards.
‘‘Part 7—Multiple Employer Health Plans
‘‘Sec. 701. Definitions.
‘‘Sec. 702. Exempted multiple employer plans providing benefits in the
form of medical care relieved of certain restrictions on
preemption of State law and treated as employee welfare
benefit plans.
‘‘Sec. 703. Exemption procedure.
‘‘Sec. 704. Eligibility requirements.
‘‘Sec. 705. Additional requirements applicable to exempted arrangements.
‘‘Sec. 706. Disclosure to participating employers by arrangements provid-
ing medical care.
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‘‘Sec. 707. Maintenance of reserves.
‘‘Sec. 708. Corrective actions.
‘‘Sec. 709. Expiration, suspension, or revocation of exemption.
‘‘Sec. 710. Review of actions of the Secretary.
Sec. 1212. Clarification of scope of preemption rules.
Sec. 1213. Clarification of treatment of single employer arrangements.
Sec. 1214. Clarification of treatment of certain collectively bargained arrange-
ments.
Sec. 1215. Employee leasing healthcare arrangements.
Sec. 1216. Enforcement provisions relating to multiple employer welfare ar-
rangements and employee leasing healthcare arrangements.
Sec. 1217. Filing requirements for health benefit multiple employer welfare ar-
rangements.
Sec. 1218. Cooperation between Federal and State authorities.
Sec. 1219. Effective date; transitional rules.
PART 3—ENCOURAGEMENT OF MULTIPLE EMPLOYER ARRANGEMENTS
PROVIDING BASIC HEALTH BENEFITS
Sec. 1221. Eliminating commonality of interest or geographic location require-
ment for tax exempt trust status.
PART 4—SIMPLIFYING FILING OF REPORTS FOR EMPLOYERS COVERED
UNDER INSURED MULTIPLE EMPLOYER HEALTH PLANS
Sec. 1231. Single annual filing for all employers covered under an insured mul-
tiple employer health plan.
PART 5—COMPLIANCE WITH COVERAGE OPTION REQUIREMENTS
Sec. 1241. Compliance with coverage requirements through multiple employer
health arrangements.
Subtitle D—Health Deduction Fairness
Sec. 1301. Permanent extension and increase in health insurance tax deduction
for self-employed individuals.
Sec. 1302. Deduction of health insurance premiums for certain previously unin-
sured individuals.
Subtitle E—Improved Access to Community Health Services
PART 1—INCREASED AUTHORIZATION FOR COMMUNITY AND MIGRANT
HEALTH CENTERS
Sec. 1401. Grant program to promote primary health care services for under-
served populations.
PART 2—GRANTS FOR PROJECTS FOR COORDINATING DELIVERY OF
SERVICES
Sec. 1411. Projects for coordinating delivery of outpatient primary health serv-
ices.
Subtitle F—Improved Access to Rural Health Services
PART 1— ESTABLISHMENT OF RURAL EMERGENCY ACCESS CARE
HOSPITALS UNDER MEDICARE
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Sec. 1501. Rural emergency access care hospitals described.
Sec. 1502. Coverage of and payment for services.
Sec. 1503. Effective date.
PART 2—RURAL MEDICAL EMERGENCIES AIR TRANSPORT
Sec. 1511. Grants to States regarding aircraft for transporting rural victims of
medical emergencies.
PART 3—EMERGENCY MEDICAL SERVICES AMENDMENTS
Sec. 1521. Establishment of Office of Emergency Medical Services.
Sec. 1522. State offices of emergency medical services.
Sec. 1523. Programs for rural areas.
Sec. 1524. Funding.
Sec. 1525. Conforming amendments.
Sec. 1526. Effective date.
Subtitle G—State Flexibility in the Medicaid Program: The
Medical Health Allowance Program
Sec. 1601. Establishment of program.
Sec. 1602. Optional use of program to offer coverage to some or all State resi-
dents.
Subtitle H—Medicaid Program Flexibility
Sec. 1701. Modification of Federal requirements to allow States more flexibility
in contracting for coordinated care services under medicaid.
Sec. 1702. Period of certain waivers.
TITLE II—HEALTH CARE COST CONTAINMENT AND
QUALITY ENHANCEMENT
Subtitle A—Medical Malpractice Liability Reform
PART 1—GENERAL PROVISIONS
Sec. 2001. Federal reform of medical malpractice liability actions.
Sec. 2002. Definitions.
Sec. 2003. Effective date.
PART 2—MEDICAL MALPRACTICE AND PRODUCT LIABILITY REFORM
Sec. 2011. Requirement for initial resolution of action through alternative dis-
pute resolution.
Sec. 2012. Calculation and payment of damages.
Sec. 2013. Treatment of attorney’s fees and other costs.
Sec. 2014. Joint and several liability.
Sec. 2015. Statute of limitations.
Sec. 2016. Uniform standard for determining negligence.
Sec. 2017. Special provision for certain obstetric services.
PART 3—REQUIREMENTS FOR STATE ALTERNATIVE DISPUTE RESOLUTION
SYSTEMS (ADR)
Sec. 2031. Basic requirements.
Sec. 2032. Certification of State systems; applicability of alternative Federal
system.
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Sec. 2033. Reports on implementation and effectiveness of alternative dispute
resolution systems.
PART 4—OTHER PROVISIONS RELATING TO MEDICAL MALPRACTICE
LIABILITY
Sec. 2041. Permitting State professional societies to participate in disciplinary
activities.
Sec. 2042. Study of incentives to encourage voluntary service by physicians.
Sec. 2043. Requirements for risk management programs.
Sec. 2044. Grants for medical safety promotion.
Subtitle B—Administrative Cost Savings
PART 1—STANDARDIZATION OF CLAIMS PROCESSING
Sec. 2101. Adoption of data elements, uniform claims, and uniform electronic
transmission standards.
Sec. 2102. Application of standards.
Sec. 2103. Periodic review and revision of standards.
Sec. 2104. Health benefit plan defined.
PART 2—ELECTRONIC MEDICAL DATA STANDARDS
Sec. 2111. Medical data standards for hospitals and other providers.
Sec. 2112. Application of electronic data standards to certain hospitals.
Sec. 2113. Electronic transmission to Federal agencies.
Sec. 2114. Limitation on data requirements where standards in effect.
Sec. 2115. Advisory commission.
PART 3—DEVELOPMENT AND DISTRIBUTION OF COMPARATIVE VALUE
INFORMATION
Sec. 2121. State comparative value information programs for health care pur-
chasing.
Sec. 2122. Federal implementation.
Sec. 2123. Comparative value information concerning Federal programs.
Sec. 2124. Development of model systems.
PART 4—ADDITIONAL STANDARDS AND REQUIREMENTS; RESEARCH AND
DEMONSTRATIONS
Sec. 2131. Standards relating to use of medicare and medicaid magnetized
health benefit cards; secondary payor data bank.
Sec. 2132. Preemption of State quill pen laws.
Sec. 2133. Use of standard identification numbers.
Sec. 2134. Coordination of benefit standards.
Sec. 2135. Research and demonstrations.
Subtitle C—Deduction for Cost of Catastrophic Health Plan;
Medical Savings Accounts
Sec. 2201. Individuals allowed deduction from gross income for cost of cata-
strophic health plan.
Sec. 2202. Medical savings accounts.
Subtitle D—Anti-Fraud
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PART 1—CRIMINAL PROSECUTION OF HEALTH CARE FRAUD
Sec. 2301. Penalties for health care fraud.
Sec. 2302. Broadening application of mail fraud statute.
Sec. 2303. Authorization of appropriations.
Sec. 2304. Rewards for information leading to prosecution and conviction.
PART 2—COORDINATION OF HEALTH CARE ANTI-FRAUD AND ABUSE
ACTIVITIES
Sec. 2311. Establishment of all-payer anti-fraud and abuse program.
Sec. 2312. Authorization of additional appropriations for investigators and
other personnel.
Sec. 2313. Establishment of anti-fraud and abuse trust fund.
Sec. 2314. Application of Federal health anti-fraud and abuse sanctions to all
fraud and abuse against any health benefit plan.
Subtitle E—Medicare Payment Changes; Part B Premium Tax
for High-Income Individuals
PART 1—MEDICARE PAYMENT CHANGES
Sec. 2401. Elimination of membership limitation for medicare hmos.
Sec. 2402. Expansion and revision of medicare select policies.
Sec. 2403. Improved efficiency through consolidation of administration of parts
A and B.
PART 2—PART B PREMIUM TAX FOR HIGH-INCOME INDIVIDUALS
Sec. 2411. Increase in medicare part B premium for individuals with high in-
come.
Subtitle F—Removing Anti-Trust Impediments
Sec. 2501. Establishment of limited exemption program for health care joint
ventures.
Sec. 2502. Issuance of health care certificates of public advantage.
Sec. 2503. Interagency Advisory Committee on Competition, Antitrust Policy,
and Health Care.
Sec. 2504. Definitions.
Subtitle G—Encouraging Enforcement Activities of Medical
Self-Regulatory Entities
PART 1—APPLICATION OF THE CLAYTON ACT TO MEDICAL SELF-
REGULATORY ENTITIES
Sec. 2601. Antitrust exemption for medical self-regulatory entities.
Sec. 2602. Definitions.
PART 2—CONSULTATION BY FEDERAL AGENCIES
Sec. 2611. Consultation with medical self-regulatory entities respecting medical
professional guidelines and standards.
Subtitle H—Prefunding Government Health Benefits for
Certain Annuitants
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Sec. 2701. Requirement that certain agencies prefund government health bene-
fits contributions for their annuitants.
Subtitle I—Miscellaneous Provisions
Sec. 2801. Increase in minimum age required in order to be eligible for an im-
mediate civil service annuity.
TITLE III—LONG-TERM CARE
Subtitle A—Tax Treatment of Long-term Care Insurance
Sec. 3001. Treatment of long-term care insurance or plans.
Sec. 3002. Exclusion for benefits provided under long-term care insurance; in-
clusion of employer-provided coverage.
Sec. 3003. Qualified long-term services treated as medical care.
Sec. 3004. Certain exchanges of life insurance contracts for long-term care in-
surance contracts not taxable.
Sec. 3005. Exclusion from gross income for amounts withdrawn from individual
retirement plans or 401(k) plans for long-term care insurance.
Sec. 3006. Tax treatment of accelerated death benefits under life insurance
contracts.
Sec. 3007. Effective date.
Subtitle B—Protection of Assets under Medicaid Through Use
of Qualified Long-term Care Insurance
Sec. 3101. Protection of assets through use of qualified long-term care insur-
ance.
Subtitle C—Studies
Sec. 3201. Feasibility of encouraging health care providers to donate services
to homebound patients.
Sec. 3202. Feasibility of tax credit for heads of households who care for elderly
family members in their homes.
Sec. 3203. Case management of current long-term care benefits.
Subtitle D—Volunteer Service Credit Demonstration Projects
Sec. 3301. Amendment to the Older Americans Act of 1965.
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TITLE I—IMPROVED ACCESS TO
AFFORDABLE HEALTH CARE
Subtitle A—Increased Availability
and Continuity of Health Cov-
erage for Employees and Their
Families
PART 1—REQUIRED COVERAGE OPTIONS
FOR ELIGIBLE EMPLOYEES, SPOUSES,
AND DEPENDENTS
SEC. 1001. REQUIRING EMPLOYERS TO OFFER OPTION OF
COVERAGE FOR ELIGIBLE INDIVIDUALS.
(a) IN GENERAL.—Each employer shall make avail-
able with respect to each eligible employee a group health
plan under which—
(1) coverage of each eligible individual with re-
spect to such an eligible employee may be elected on
an annual basis for each plan year,
(2) subject to subsection (d), coverage is pro-
vided for at least the required coverage specified in
subsection (c), and
(3) each eligible employee electing such cov-
erage may elect to have any premiums owed by the
employee collected through payroll deduction.
An employer is not required under this subsection to make
any contribution to the cost of coverage under such a plan.
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(b) SPECIAL RULES.—
(1) EXCLUSION OF NEW EMPLOYERS AND CER-
TAIN SMALL EMPLOYERS.—Subsection (a) shall not
apply to any employer for any plan year if, as of the
beginning of such plan year—
(A) such employer (including any prede-
cessor thereof) has been an employer for less
than 2 years,
(B) such employer has no more than 2 eli-
gible employees, or
(C) no more than 2 eligible employees are
not covered under any group health plan.
(2) EXCLUSION OF FAMILY MEMBERS.—Under
such procedures as the Secretary may prescribe, any
relative of an employer may be, at the election of the
employer, excluded from consideration as an eligible
employee for purposes of applying the requirements
of subsection (a). In the case of an employer that is
not an individual, an employee who is a relative of
a key employee (as defined in section 416(i)(1) of
the Internal Revenue Code of 1986) of the employer
may, at the election of the key employee, be consid-
ered a relative excludible under this paragraph.
(3) OPTIONAL APPLICATION OF WAITING PE-
RIOD.—A group health plan shall not be treated as
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failing to meet the requirements of subsection (a)
solely because a period of service by an eligible em-
ployee of not more than 60 days is required under
the plan for coverage under the plan of eligible indi-
viduals with respect to such employee.
(c) REQUIRED COVERAGE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the required coverage specified in this
subsection is standard coverage (consistent with sec-
tion 1102(c)).
(2) SPECIAL TREATMENT OF SMALL EMPLOY-
ERS
NOT
CONTRIBUTING
TO
EMPLOYEE
COV-
ERAGE.—In the case of a small employer (as defined
in section 1107(9)) that has not contributed during
the previous plan year to the cost of coverage for
any eligible employee under any group health plan,
the required coverage specified in this subsection for
the plan year (with respect to each eligible employee)
is—
(A) coverage under a MedAccess standard
plan,
(B) coverage under a MedAccess cata-
strophic plan, and
(C) coverage under a MedAccess medisave
plan,
•HR 3080 SC2
as such terms are defined in section 1102(a)(2).
(3) CONSTRUCTION.—Nothing in this section
shall be construed as limiting the group health
plans, or types of coverage under such a plan, that
an employer may offer to an employee.
(d) 5-YEAR TRANSITION
FOR EXISTING GROUP
HEALTH PLANS.—
(1) IN
GENERAL.—The requirement of sub-
section (a)(2), and section 1002(c)(2), shall not
apply to a group health plan for a plan year if—
(A) the group health plan is in effect in
the plan year in which September 1, 1993, oc-
curs, and
(B) the employer makes (or offers to
make), in such plan year and the plan year in-
volved, a contribution to the plan on behalf of
each employee who is eligible to participate in
the plan.
(2) SUNSET.—Paragraph (1) shall only apply to
a group health plan for each of the 5 plan years be-
ginning with the first plan year to which the require-
ment of subsection (a) applies.
•HR 3080 SC2
SEC. 1002. COMPLIANCE WITH APPLICABLE REQUIRE-
MENTS 
THROUGH 
MULTIPLE 
EMPLOYER
HEALTH ARRANGEMENTS.
For provision easing compliance with applicable re-
quirements through multiemployer plans and through
other multiple employer health arrangements, see section
1241.
SEC. 1003. COVERAGE OPTION UNDER STATE MEDICAL
HEALTH ALLOWANCE PROGRAM.
For a provision permitting a State medical health al-
lowance program under the medicaid program or other
State program to offer health insurance coverage to resi-
dents of the State without regard to income, see the
amendment made by section 1602.
PART 2—PREEXISTING CONDITIONS AND
CONTINUITY OF COVERAGE; RENEW-
ABILITY
SEC. 
1011. 
LIMITATION 
ON 
PREEXISTING 
CONDITION
CLAUSES.
A group health plan may not impose (and an insurer
may not require an employer under a group health plan
to impose through a waiting period for coverage under a
plan or similar requirement) a limitation or exclusion of
benefits relating to treatment of a condition based on the
fact that the condition preexisted the effective date of the
plan with respect to an individual if—
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(1) the condition relates to a condition that was
not diagnosed or treated within 3 months before the
date of coverage under the plan;
(2) the limitation or exclusion extends over
more than 6 months after the date of coverage
under the plan;
(3) the limitation or exclusion applies to an in-
dividual who, as of the date of birth, was covered
under the plan; or
(4) the limitation or exclusion relates to preg-
nancy.
In the case of an individual who is eligible for coverage
under a plan but for a waiting period imposed by the em-
ployer, in applying paragraphs (1) and (2), the individual
shall be treated as having been covered under the plan
as of the earliest date of the beginning of the waiting pe-
riod.
SEC. 1012. ASSURANCE OF CONTINUITY OF COVERAGE
THROUGH PREVIOUS SATISFACTION OF PRE-
EXISTING CONDITION REQUIREMENT.
(a) IN GENERAL.—Each group health plan shall
waive any period applicable to a preexisting condition for
similar benefits with respect to an individual to the extent
that the individual, prior to the date of such individual’s
enrollment in such plan, was covered for the condition
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under any other health plan that was in effect before such
date.
(b) CONTINUOUS COVERAGE REQUIRED.—
(1) IN
GENERAL.—Subsection (a) shall no
longer apply if there is a continuous period of more
than 60 days (or, in the case of an individual de-
scribed in paragraph (3), 6 months) on which the in-
dividual was not covered under a group health plan.
(2) TREATMENT OF WAITING PERIODS.—In ap-
plying paragraph (1), any waiting period imposed by
an employer before an employee is eligible to be cov-
ered under a plan shall be treated as a period in
which the employee was covered under a group
health plan.
(3) JOB TERMINATION.—An individual is de-
scribed in this paragraph if the individual loses cov-
erage under a group health plan due to termination
of employment.
(4) EXCLUSION
OF
CASH-ONLY
AND
DREAD
DISEASE
PLANS.—In this subsection, the term
‘‘group health plan’’ does not include any group
health plan which is offered primarily to provide—
(A) coverage for a specified disease or ill-
ness, or
•HR 3080 SC2
(B) a hospital or fixed indemnity policy,
unless the Secretary determines that such a
plan provides sufficiently comprehensive cov-
erage of a benefit so that it should be treated
as a group health plan under this subsection.
SEC. 1013. REQUIREMENTS RELATING TO RENEWABILITY
GENERALLY.
(a) MULTIEMPLOYER PLANS AND EXEMPTED MUL-
TIPLE EMPLOYER HEALTH PLANS.—A multiemployer
plan and an exempted multiple employer health plan may
not cancel coverage or deny renewal of coverage under
such a plan with respect to an employer other than—
(1) for nonpayment of contributions,
(2) for fraud or other misrepresentation by the
employer,
(3) for noncompliance with plan provisions,
(4) for misuse of a provider network provision,
or
(5) because the plan is ceasing to provide any
coverage in a geographic area.
(b) INSURERS.—
(1) IN GENERAL.—An insurer may not cancel a
health insurance plan or deny renewal of coverage
under such a plan other than—
(A) for nonpayment of premiums,
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(B) for fraud or other misrepresentation
by the insured,
(C) for noncompliance with plan provi-
sions,
(D) for misuse of a provider network provi-
sion, or
(E) because the insurer is ceasing to pro-
vide any health insurance plan in a State, or,
in the case of a health maintenance organiza-
tion, in a geographic area.
(2) LIMITATION ON MARKET REENTRY.—If an
insurer terminates the offering of health insurance
plans in an area, the insurer may not offer such a
health insurance plan to any employer in the area
until 5 years after the date of the termination.
PART 3—ENFORCEMENT; EFFECTIVE
DATES; DEFINITIONS
SEC. 1021. ENFORCEMENT.
(a) ENFORCEMENT BY DEPARTMENT OF LABOR FOR
EMPLOYERS AND GROUP HEALTH PLANS.—
(1) IN GENERAL.—For purposes of part 5 of
subtitle B of title I of the Employee Retirement In-
come Security Act of 1974, the provisions of parts
1 and 2 of this subtitle shall be deemed to be provi-
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sions of title I of such Act irrespective of exclusions
under section 4(b) of such Act.
(2) REGULATORY AUTHORITY.—With respect to
the regulatory authority of the Secretary of Labor
under this subtitle pursuant to subsection (a), sec-
tion 505 of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1135) shall apply.
(b) ENFORCEMENT
BY EXCISE TAX
FOR INSUR-
ERS.—
(1) IN GENERAL.—Chapter 43 of the Internal
Revenue Code of 1986 (relating to qualified pension,
etc., plans) is amended by adding at the end thereof
the following new section:
‘‘SEC. 4980C. FAILURE OF INSURER TO COMPLY WITH
HEALTH INSURANCE STANDARDS.
‘‘(a) IMPOSITION OF TAX.—
‘‘(1) IN GENERAL.—There is hereby imposed a
tax on the failure of an insurer to comply with the
requirements applicable to the insurer under part 2
of subtitle A of title I of the Affordable Health Care
Now Act of 1993.
‘‘(2) EXCEPTION.—Paragraph (1) shall not
apply to a failure by an insurer in a State if the Sec-
retary of Health and Human Services determines
that the State has in effect a regulatory enforcement
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mechanism that provides adequate sanctions with re-
spect to such a failure by such an insurer.
‘‘(b) AMOUNT OF TAX.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
the amount of the tax imposed by subsection (a)
shall be $100 for each day during which such failure
persists for each individual to which such failure re-
lates. A rule similar to the rule of section
4980B(b)(3) shall apply for purposes of this section.
‘‘(2) LIMITATION.—The amount of the tax im-
posed by subsection (a) for an insurer with respect
to a health insurance plan shall not exceed 25 per-
cent of the amounts received under the plan for cov-
erage during the period such failure persists.
‘‘(c) LIABILITY FOR TAX.—The tax imposed by this
section shall be paid by the insurer.
‘‘(d) EXCEPTIONS.—
‘‘(1) CORRECTIONS WITHIN 30 DAYS.—No tax
shall be imposed by subsection (a) by reason of any
failure if—
‘‘(A) such failure was due to reasonable
cause and not to willful neglect, and
‘‘(B) such failure is corrected within the
30-day period beginning on the earliest date the
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insurer knew, or exercising reasonable diligence
would have known, that such failure existed.
‘‘(2) WAIVER BY SECRETARY.—In the case of a
failure which is due to reasonable cause and not to
willful neglect, the Secretary may waive part or all
of the tax imposed by subsection (a) to the extent
that payment of such tax would be excessive relative
to the failure involved.
‘‘(e) DEFINITIONS.—For purposes of this section, the
terms ‘health insurance plan’ and ‘insurer’ have the re-
spective meanings given such terms in section 1023 of the
Affordable Health Care Now Act of 1993.’’
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 43 of such Code is amended by
adding at the end thereof the following new items:
‘‘Sec. 4980C. Failure of insurer to comply with health insurance
standards.’’
SEC. 1022. EFFECTIVE DATES.
(a) PART 1.—The requirements of part 1 shall apply
to plans years beginning after December 31, 1996.
(b) PART 2.—The requirements of part 2 with re-
spect to—
(1) group health plans and employers shall
apply to plans years beginning after December 31,
1996, and
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(2) insurers shall take effect on January 1,
1997.
SEC. 1023. DEFINITIONS AND SPECIAL RULES.
(a) IN GENERAL.—For purposes of this subtitle:
(1) 
DEPENDENT.—The 
term 
‘‘dependent’’
means, with respect to any individual, any person
who is—
(A) the spouse or surviving spouse of the
individual, or
(B) under regulations of the Secretary, a
child (including an adopted child) of such indi-
vidual and—
(i) under 19 years of age, or
(ii) under 25 years of age and a full-
time student.
(2) ELIGIBLE EMPLOYEE.—The term ‘‘eligible
employee’’ means, with respect to an employer, an
employee who normally performs on a monthly basis
at least 30 hours of service per week for that em-
ployer.
(3) ELIGIBLE INDIVIDUAL.—The term ‘‘eligible
individual’’ means, with respect to an eligible em-
ployee, such employee, and any dependent of such
employee.
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(4) EMPLOYER.—The term ‘‘employer’’ shall
have the meaning applicable under section 3(5) of
the Employee Retirement Income Security Act of
1974.
(5) EXEMPTED MULTIPLE EMPLOYER HEALTH
PLAN.—The term ‘‘exempted multiple employer
health plan’’ means a multiple employer welfare ar-
rangement treated as an employee welfare benefit
plan by reason of an exemption under part 7 of sub-
title B of title I of the Employee Retirement Income
Security Act of 1974 (as added by part 2 of subtitle
C of this title).
(6) GROUP
HEALTH
PLAN; PLAN.—(A) The
term ‘‘group health plan’’ means an employee wel-
fare benefit plan providing medical care (as defined
in section 213(d) of the Internal Revenue Code of
1986) to participants or beneficiaries directly or
through insurance, reimbursement, or otherwise, but
does not include any type of coverage excluded from
the definition of a health insurance plan under sec-
tion 1107(4)(B).
(B) The term ‘‘plan’’ means, unless used with
a modifying term or the context specifically indicates
otherwise, a group health plan (including any such
plan which is a multiemployer plan), an exempted
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multiple employer health plan, or an insured mul-
tiple employer health plan.
(7) HEALTH
INSURANCE
PLAN.—The term
‘‘health insurance plan’’ has the meaning given such
term in section 1107(4).
(8) INSURED
MULTIPLE
EMPLOYER
HEALTH
PLAN.—The term ‘‘insured multiple employer health
plan’’ has the meaning given such term in section
701(11) of Employee Retirement Income Security
Act of 1974 (as added by section 1211 of this title).
(9) INSURER.—The term ‘‘insurer’’ has the
meaning given such term in section 1107(6).
(b) SPECIAL RULES.—
(1) GENERAL RULE.—Except as otherwise pro-
vided in this subtitle, for definitions of terms used
in this subtitle, see section 3 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C.
1002).
(2) SECRETARY.—Except with respect to ref-
erences specifically to the Secretary of Labor, the
term ‘‘Secretary’’ means the Secretary of Health
and Human Services.
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Subtitle B—Reform of Health In-
surance Marketplace for Small
Business
SEC. 1101. REQUIREMENT FOR INSURERS TO OFFER
MEDACCESS PLANS.
(a) REQUIREMENT.—
(1) IN GENERAL.—Each insurer (as defined in
section 1107(6)) that makes available any health in-
surance plan (as defined in section 1107(4)) to a
small employer (as defined in section 1107(9)) in a
State shall make available to each small employer in
the State—
(A) a MedAccess standard plan (as defined
in section 1102(a)(2)),
(B) a MedAccess catastrophic plan (as de-
fined in section 1102(a)(2)), and
(C) a MedAccess medisave plan (as defined
in section 1102(a)(2)).
(2) SPECIAL RULE FOR HEALTH MAINTENANCE
ORGANIZATIONS.—The requirements of paragraphs
(1)(B) and (1)(C) shall not apply with respect to a
health insurance plan that—
(A) is a Federally qualified health mainte-
nance organization (as defined in section
1301(a) of the Public Health Service Act), or
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(B) is not such an organization but is rec-
ognized under State law as a health mainte-
nance organization or managed care organiza-
tion or a similar organization regulated under
State law for solvency.
(3) EXCEPTION IF STATE PROVIDES FOR GUAR-
ANTEED AVAILABILITY (RATHER THAN GUARANTEED
ISSUE).—Paragraph (1) shall not apply to an insurer
in a State if the State is providing—
(A) access to each small employer in the
State to a MedAccess standard plan, to a
MedAccess 
catastrophic 
plan, 
and 
to 
a
MedAccess medisave plan, and
(B) a risk allocation mechanism described
in subsection (c).
(b) GUARANTEED ISSUE OF MEDACCESS PLANS.—
Subject to subsection (c)—
(1) IN GENERAL.—Subject to paragraph (2),
each insurer that offers a MedAccess plan to a small
employer in a State—
(A) must accept every small employer in
the State that applies for coverage under the
plan; and
(B) must accept for enrollment under the
plan every eligible individual (as defined in
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paragraph (4)) who applies for enrollment on a
timely basis (consistent with paragraph (3))
and may not place any restriction on the eligi-
bility of an individual to enroll so long as such
individual is an eligible individual.
(2) SPECIAL
RULES
FOR
HEALTH
MAINTE-
NANCE ORGANIZATIONS.—In the case of a plan of-
fered by a health maintenance organization, the plan
may—
(A) limit the employers that may apply for
coverage to those with eligible individuals resid-
ing in the service area of the plan;
(B) limit the individuals who may be en-
rolled under the plan to those who reside in the
service area of the plan; and
(C) within the service area of the plan,
deny coverage to such employers if the plan
demonstrates that—
(i) it will not have the capacity to de-
liver services adequately to enrollees of any
additional groups because of its obligations
to existing group contract holders and en-
rollees, and
(ii) it is applying this subparagraph
uniformly to all employers without regard
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to the health status, claims experience, or
duration of coverage of those employers
and their employees.
In this paragraph, the term ‘‘health maintenance or-
ganization’’ includes an organization recognized
under State law as a health maintenance organiza-
tion or managed care organization or a similar orga-
nization regulated under State law for solvency.
(3) 
CLARIFICATION
OF
TIMELY
ENROLL-
MENT.—
(A) GENERAL INITIAL ENROLLMENT RE-
QUIREMENT.—Except as provided in this para-
graph, a MedAccess plan may consider enroll-
ment of an eligible individual not to be timely
if the eligible employee or dependent fails to en-
roll in the plan during an initial enrollment pe-
riod, if such period is at least 30 days long.
(B) ENROLLMENT DUE TO LOSS OF PRE-
VIOUS EMPLOYER COVERAGE.—Enrollment in a
MedAccess plan is considered to be timely in
the case of an eligible individual who—
(i) was covered under another health
insurance plan or group health plan at the
time of the individual’s initial enrollment
period,
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(ii) stated at the time of the initial en-
rollment period that coverage under a
health insurance plan or a group health
plan was the reason for declining enroll-
ment,
(iii) lost coverage under another
health insurance plan or group health plan
(as a result of the termination of the other
plan’s coverage, termination or reduction
of employment, or other reason), and
(iv) requests enrollment within 30
days after termination of such coverage.
(C) REQUIREMENT APPLIES DURING OPEN
ENROLLMENT PERIODS.—Each MedAccess plan
shall provide for at least one period (of not less
than 30 days) each year during which enroll-
ment under the plan shall be considered to be
timely.
(D) EXCEPTION
FOR
COURT
ORDERS.—
Enrollment of a spouse or minor child of an
employee shall be considered to be timely if—
(i) a court has ordered that coverage
be provided for the spouse or child under
a covered employee’s group health plan,
and
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(ii) a request for enrollment is made
within 30 days after the date the court is-
sues the order.
(E) ENROLLMENT OF SPOUSES AND DE-
PENDENTS.—
(i) IN GENERAL.—Enrollment of the
spouse (including a child of the spouse)
and any dependent child of an eligible em-
ployee shall be considered to be timely if a
request for enrollment is made either—
(I) within 30 days of the date of
the marriage or of the date of the
birth or adoption of a child, if family
coverage is available as of such date,
or
(II) within 30 days of the date
family coverage is first made avail-
able.
(ii) COVERAGE.—If a plan makes
family coverage available and enrollment is
made under the plan on a timely basis
under clause (i)(I), the coverage shall be-
come effective not later than the first day
of the first month beginning after the date
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of the marriage or the date of birth or
adoption of the child (as the case may be).
(4) DEFINITIONS.—In this subsection, the
terms ‘‘eligible individual’’ and ‘‘group health plan’’
have the meanings given such terms in section
1023(a).
(c) STATE OPTION OF GUARANTEED AVAILABILITY
THROUGH
ALLOCATION
OF
RISK
(RATHER
THAN
THROUGH GUARANTEED ISSUE).—The requirements of
subsection (b) shall not apply in a State if the State has
provided (in accordance with standards established under
this subtitle) a mechanism under which—
(1) each insurer offering a health insurance
plan to a small employer in the State must partici-
pate in a program for assigning high-risk small em-
ployer groups (or individuals within such a group)
among some or all such insurers, and
(2) the insurers to which such high-risk small
employer groups or individuals are so assigned com-
ply with the requirements of subsection (b).
SEC. 1102. MEDACCESS PLAN DEFINED.
(a) MEDACCESS PLAN DEFINED.—In this subtitle:
(1) IN GENERAL.—The term ‘‘MedAccess plan’’
means a health insurance plan (whether a managed-
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care plan, indemnity plan, or other plan) that meets
the following requirements:
(A) The plan—
(i) is designed to provide standard
coverage (consistent with subsection (c))
with substantial cost-sharing,
(ii) is designed to provide only cata-
strophic coverage (consistent with sub-
section (d)), or
(iii) is designed to provide medisave
coverage (consistent with subsection (e)).
(B) The plan includes only essential and
medically necessary services, including medical,
surgical, hospital, and preventive services; ex-
cept that no specific procedure or treatment, or
classes thereof, is required to be covered in such
a plan, by this Act or through regulations.
(C) The plan meets the applicable require-
ments of section 1101(b) (relating to guaran-
teed issue).
(D) The plan meets the consumer protec-
tion 
standards 
established 
under 
section
1103(a)(1)(B).
(2) MEDACCESS
STANDARD, CATASTROPHIC,
AND
MEDISAVE
PLANS.—The terms ‘‘MedAccess
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standard plan’’, ‘‘MedAccess catastrophic plan’’,
‘‘MedAccess medisave plan’’ mean a MedAccess plan
that provides for at least standard coverage (re-
ferred to in paragraph (1)(A)(i)), for only cata-
strophic 
coverage 
(referred 
to 
in 
paragraph
(1)(A)(ii)), or medisave coverage (referred to in
paragraph (1)(A)(iii)), respectively.
(b) SET OF RULES OF ACTUARIAL EQUIVALENCE.—
(1) INITIAL
DETERMINATION.—The NAIC is
requested to submit to the Secretary, within 6
months after the date of the enactment of this Act,
a set of rules which the NAIC determines is suffi-
cient for determining, in the case of any health in-
surance plan and for purposes of this section, the
actuarial value of the coverage offered by the plan.
(2) CERTIFICATION.—If the Secretary deter-
mines that the NAIC has submitted a set of rules
that comply with the requirements of paragraph (1),
the Secretary shall certify such set of rules for use
under this subtitle. If the Secretary determines that
such a set of rules has not been submitted or does
not comply with such requirements, the Secretary
shall promptly establish a set of rules that meets
such requirements.
(c) STANDARD COVERAGE.—
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(1) IN GENERAL.—For purposes of this Act, a
health insurance plan is considered to provide stand-
ard coverage consistent with this subsection if the
benefits are determined, in accordance with the set
of actuarial equivalence rules certified under sub-
section (b), to have a value that is within 5 percent-
age points of the target actuarial value for standard
coverage established under paragraph (2).
(2) INITIAL DETERMINATION OF TARGET ACTU-
ARIAL VALUE FOR STANDARD COVERAGE.—
(A) INITIAL DETERMINATION.—The NAIC
is requested to submit to the Secretary, within
6 months after the date of the enactment of
this Act, a target actuarial value for standard
coverage equal to the average actuarial value of
a representative range of the different types of
health benefits provisions (which include cost-
sharing) typically offered as standard coverage
in the small employer health coverage market.
In determining the actuarial value, the plan
benefits considered should be sufficient to cover
only essential and medically necessary services,
including medical, surgical, hospital, and pre-
ventive services. However, no specific procedure
or treatment, or classes thereof, is required to
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be considered in such determination by this Act
or through regulations. The determination of
such value shall be based on a representative
distribution of the population of eligible employ-
ees offered such coverage and a single set of
standardized utilization and cost factors.
(B) CERTIFICATION.—If the Secretary de-
termines that the NAIC has submitted a target
actuarial value for standard coverage that com-
ply with the requirements of subparagraph (A),
the Secretary shall certify such value for use
under this subtitle. If the Secretary determines
that such a value has not been submitted or
does not comply with such requirements, the
Secretary shall promptly determine such a tar-
get actuarial value that meets such require-
ments.
(d) CATASTROPHIC COVERAGE.—
(1) IN GENERAL.—For purposes of subsection
(a)(1)(B), a health insurance plan is considered to
provide catastrophic coverage consistent with this
subsection if—
(A) benefits are available under the plan
for a year only to the extent that expenses for
covered services in a year exceed a deductible
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amount that is consistent with the requirement
for a catastrophic health plan under section
220(c)(2)(A) of the Internal Revenue Code of
1986, as added by section 2202, and
(B) the benefits are determined, in accord-
ance with the set of actuarial equivalence rules
certified under subsection (b), to have a value
that is within 5 percentage points of the target
actuarial value for catastrophic coverage estab-
lished under paragraph (2).
(2) INITIAL DETERMINATION OF TARGET ACTU-
ARIAL VALUE FOR CATASTROPHIC COVERAGE.—
(A) INITIAL DETERMINATION.—The NAIC
is requested to submit to the Secretary, within
6 months after the date of the enactment of
this Act, a target actuarial value for cata-
strophic coverage equal to the actuarial value
that would have been computed under sub-
section (c)(2)(A) if a deductible that represents
the midpoint of the range of deductibles per-
mitted consistent with subsections (b)(2) and
(c)(2)(A) of section 220 of the Internal Reve-
nue Code of 1986 were used in place of any de-
ductible that otherwise would be applicable.