SEC. 4. ESTABLISHMENT OF NATIONAL HEALTH POOLING 
ARRANGEMENT. 
(a) IN GENERAL.—The Secretaries of Health and 
Human Services and Labor, jointly in consultation with 
the Director of the Office of Personnel Management, shall 
provide for the offering and oversight of a national health 
pooling arrangement to eligible small employers. 
(b) NATIONAL HEALTH POOLING ARRANGEMENT 
DEFINED.—For purposes of this section, the term ‘‘na-
tional health pooling arrangement’’ means an arrange-
ment under which health plans are offered under terms 
and conditions that meet the requirements of section 3(a). 
(c) USE OF FEHBP MODEL.—The Secretaries of 
Health and Human Services and Labor shall jointly pro-
vide for the national health pooling arrangement using the 
model of the Federal employees health benefits program 
under chapter 89 of title 5, United States Code, to the 
extent practicable and consistent with the provisions of 
this Act. In carrying out such model, the Secretaries shall, 
to the maximum extent practicable, negotiate the most af-
fordable and substantial coverage possible for small em-
ployers. 
SEC. 5. FUNDING OF POOLING ARRANGEMENTS. 
(a) FUNDING OF STATES TO ESTABLISH AND OPER-
ATE QUALIFIED STATE HEALTH POOLING ARRANGE-
MENTS.—There are authorized to be appropriated to the
Secretaries of Health and Human Services and Labor 
such sums as may be necessary to provide grants to States 
to establish and operate qualified State health pooling ar-
rangements described in section 3. 
(b) FUNDING OF NATIONAL HEALTH POOLING AR-
RANGEMENT.—There are authorized to be appropriated to 
the Secretaries of Health and Human Services and Labor 
such sums as may be necessary to provide for the offering 
and operation of the national health pooling arrangement 
under section 4. 
SEC. 6. INSTITUTE OF MEDICINE STUDY AND REPORT. 
(a) STUDY.—The Secretaries of Health and Human 
Services and Labor shall jointly enter into an arrangement 
under which the Institute of Medicine of the National 
Academy of Sciences shall conduct a study on the oper-
ation of qualified State health pooling arrangements under 
section 3 and the national health pooling arrangement 
under section 4. 
(b) MATTERS STUDIED.—The study conducted under 
subsection (a) shall include the following: 
(1) An assessment of the success of the ar-
rangements. 
(2) A determination of the affordability of 
health benefits coverage under the arrangements for 
employers and employees.
(3) A determination of the access of small em-
ployers to health benefits coverage. 
(4) A determination of the extent to which the 
tax credit under section 45J of the Internal Revenue 
Code of 1986 provides a subsidy for eligible small 
employers that provided (or would have provided) 
health benefits coverage in the absence of such cred-
it. 
(5) Recommendations with respect to— 
(A) extension of the period for which the 
tax credit under section 45J of the Internal 
Revenue Code of 1986 is available to employers 
or an appropriate phase-out of such credit over 
time; 
(B) expansion of categories of persons eli-
gible for such tax credit; 
(C) expansion of persons eligible for health 
benefits coverage under the arrangements; and 
(D) such other matters as the Institute de-
termines appropriate. 
(c) REPORT.—Not later than January 1, 2010, the 
Comptroller General shall submit to Congress a report on 
the study conducted under subsection (a). 
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