I
106TH CONGRESS
1ST SESSION
H. R. 2990
To amend the Internal Revenue Code of 1986 to allow individuals greater
access to health insurance through a health care tax deduction, a long-
term care deduction, and other health-related tax incentives, to amend
the Employee Retirement Income Security Act of 1974 to provide access
to and choice in health care through association health plans, to amend
the Public Health Service Act to create new pooling opportunities for
small employers to obtain greater access to health coverage through
HealthMarts, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 30, 1999
Mr. TALENT (for himself, Mr. SHADEGG, Mr. HASTERT, Mr. ARMEY, and Mr.
ARCHER) introduced the following bill; which was referred to the Com-
mittee on Commerce, and in addition to the Committees on Ways and
Means, and Education and the Workforce, for a period to be subsequently
determined by the Speaker, in each case for consideration of such provi-
sions as fall within the jurisdiction of the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 to allow indi-
viduals greater access to health insurance through a
health care tax deduction, a long-term care deduction,
and other health-related tax incentives, to amend the
Employee Retirement Income Security Act of 1974 to
provide access to and choice in health care through asso-
ciation health plans, to amend the Public Health Service
Act to create new pooling opportunities for small employ-
ers to obtain greater access to health coverage through
HealthMarts, 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
‘‘Quality Care for the Uninsured Act of 1999’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Purposes.
Sec. 3. Findings relating to health care choice.
TITLE I—TAX-RELATED HEALTH CARE PROVISIONS
Sec. 101. Deduction for health and long-term care insurance costs of individ-
uals not participating in employer-subsidized health plans.
Sec. 102. Deduction for 100 percent of health insurance costs of self-employed
individuals.
Sec. 103. Expansion of availability of medical savings accounts.
Sec. 104. Long-term care insurance permitted to be offered under cafeteria
plans and flexible spending arrangements.
Sec. 105. Additional personal exemption for taxpayer caring for elderly family
member in taxpayer’s home.
Sec. 106. Expanded human clinical trials qualifying for orphan drug credit.
Sec. 107. Inclusion of certain vaccines against streptococcus pneumoniae to list
of taxable vaccines; reduction in per dose tax rate.
Sec. 108. Credit for clinical testing research expenses attributable to certain
qualified academic institutions including teaching hospitals.
TITLE II—GREATER ACCESS AND CHOICE THROUGH
ASSOCIATION HEALTH PLANS
Sec. 201. Rules.
‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH PLANS
‘‘Sec. 801. Association health plans.
‘‘Sec. 802. Certification of association health plans.
‘‘Sec. 803. Requirements relating to sponsors and boards of trustees.
‘‘Sec. 804. Participation and coverage requirements.
‘‘Sec. 805. Other requirements relating to plan documents, contribution
rates, and benefit options.
‘‘Sec. 806. Maintenance of reserves and provisions for solvency for plans
providing health benefits in addition to health insurance
coverage.
‘‘Sec. 807. Requirements for application and related requirements.
‘‘Sec. 808. Notice requirements for voluntary termination.
‘‘Sec. 809. Corrective actions and mandatory termination.
‘‘Sec. 810. Trusteeship by the Secretary of insolvent association health
plans providing health benefits in addition to health insur-
ance coverage.
‘‘Sec. 811. State assessment authority.
‘‘Sec. 812. Special rules for church plans.
‘‘Sec. 813. Definitions and rules of construction.
Sec. 202. Clarification of treatment of single employer arrangements.
Sec. 203. Clarification of treatment of certain collectively bargained arrange-
ments.
Sec. 204. Enforcement provisions.
Sec. 205. Cooperation between Federal and State authorities.
Sec. 206. Effective date and transitional and other rules.
TITLE III—GREATER ACCESS AND CHOICE THROUGH
HEALTHMARTS
Sec. 301. Expansion of consumer choice through HealthMarts.
‘‘TITLE XXVIII—HEALTHMARTS
‘‘Sec. 2801. Definition of HealthMart.
‘‘Sec. 2802. Application of certain laws and requirements.
‘‘Sec. 2803. Administration.
‘‘Sec. 2804. Definitions.
TITLE IV—COMMUNITY HEALTH ORGANIZATIONS
Sec. 401. Promotion of provision of insurance by community health organiza-
tions.
(c) CONSTITUTIONAL AUTHORITY TO ENACT THIS
LEGISLATION.—The constitutional authority upon which
this Act rests is the power of Congress to regulate com-
merce with foreign nations and among the several States,
set forth in article I, section 8 of the United States Con-
stitution.
SEC. 2. PURPOSES.
The purposes of this Act are—
(1) to make it possible for individuals, employ-
ees, and the self-employed to purchase and own their
own health insurance without suffering any negative
tax consequences;
(2) to assist individuals in obtaining and in
paying for basic health care services;
(3) to render patients and deliverers sensitive to
the cost of health care, giving them both the incen-
tive and the ability to restrain undesired increases in
health care costs;
(4) to foster the development of numerous, var-
ied, and innovative systems of providing health care
which will compete against each other in terms of
price, service, and quality, and thus allow the Amer-
ican people to benefit from competitive forces which
will reward efficient and effective deliverers and
eliminate those which provide unsatisfactory quality
of care or are inefficient; and
(5) to encourage the development of systems of
delivering health care which are capable of supplying
a broad range of health care services in a com-
prehensive and systematic manner.
SEC. 3. FINDINGS RELATING TO HEALTH CARE CHOICE.
(a) Congress finds that the majority of Americans are
receiving health care of a quality unmatched elsewhere in
the world but that 43 million Americans remain without
private health insurance. Congress further finds that small
their employer’s group health plan and obtain individual
health insurance coverage, and some employers may wish
to give employees the opportunity to do so. Congress fur-
ther finds that the Internal Revenue Service has ruled that
this tax treatment for the employer and employee for em-
ployer-provided health care applies even if the employer
pays for individual health insurance polices for its employ-
ees. Therefore, the Tax Code makes it possible for employ-
ers to provide employees choice among health insurance
coverage while retaining favorable tax treatment. Congress
further finds that the present-law exclusion for employer-
provided health care, together with the tax provisions in
the bill, will provide more equitable tax treatment for
health insurance expenses, encourage uninsured individ-
uals to purchase insurance, expand health care options,
and encourage individuals to better manage their health
care needs and expenses.
(d) Congress finds that continually increasing and
complex government regulation of the health care delivery
system has proven ineffective in restraining costs and is
itself expensive and counterproductive in fulfilling its pur-
poses and detrimental to the care of patients.
TITLE I—TAX-RELATED HEALTH
CARE PROVISIONS
SEC. 101. DEDUCTION FOR HEALTH AND LONG-TERM CARE
INSURANCE COSTS OF INDIVIDUALS NOT
PARTICIPATING IN EMPLOYER-SUBSIDIZED
HEALTH PLANS.
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended
by redesignating section 222 as section 223 and by insert-
ing after section 221 the following new section:
‘‘SEC. 222. HEALTH AND LONG-TERM CARE INSURANCE
COSTS.
‘‘(a) IN GENERAL.—In the case of an individual,
there shall be allowed as a deduction an amount equal to
the applicable percentage of the amount paid during the
taxable year for insurance which constitutes medical care
for the taxpayer and the taxpayer’s spouse and depend-
ents.
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of
subsection (a), the applicable percentage shall be deter-
mined in accordance with the following table:
‘‘For taxable years beginning
The applicable
in calendar year—
percentage is—
2002, 2003, and 2004 .................................................................
2005 .............................................................................................
2006 .............................................................................................
2007 and thereafter .....................................................................
100.
‘‘(c) LIMITATION BASED ON OTHER COVERAGE.—
‘‘(1) COVERAGE UNDER CERTAIN SUBSIDIZED
EMPLOYER PLANS.—
‘‘(A) IN
GENERAL.—Subsection (a) shall
not apply to any taxpayer for any calendar
month for which the taxpayer participates in
any health plan maintained by any employer of
the taxpayer or of the spouse of the taxpayer if
50 percent or more of the cost of coverage
under such plan (determined under section
4980B and without regard to payments made
with respect to any coverage described in sub-
section (e)) is paid or incurred by the employer.
‘‘(B) EMPLOYER CONTRIBUTIONS TO CAF-
ETERIA PLANS, FLEXIBLE SPENDING ARRANGE-
MENTS, AND
MEDICAL
SAVINGS
ACCOUNTS.—
Employer contributions to a cafeteria plan, a
flexible spending or similar arrangement, or a
medical savings account which are excluded
from gross income under section 106 shall be
treated for purposes of subparagraph (A) as
paid by the employer.
‘‘(C) AGGREGATION
OF
PLANS
OF
EM-
PLOYER.—A health plan which is not otherwise
described in subparagraph (A) shall be treated
as described in such subparagraph if such plan
would be so described if all health plans of per-
sons treated as a single employer under sub-
section (b), (c), (m), or (o) of section 414 were
treated as one health plan.
‘‘(D) SEPARATE APPLICATION TO HEALTH
INSURANCE
AND
LONG-TERM
CARE
INSUR-
ANCE.—Subparagraphs (A) and (C) shall be
applied separately with respect to—
‘‘(i) plans which include primarily cov-
erage for qualified long-term care services
or are qualified long-term care insurance
contracts, and
‘‘(ii) plans which do not include such
coverage and are not such contracts.
‘‘(2) COVERAGE
UNDER
CERTAIN
FEDERAL
PROGRAMS.—
‘‘(A) IN
GENERAL.—Subsection (a) shall
not apply to any amount paid for any coverage
for an individual for any calendar month if, as
of the first day of such month, the individual is
covered under any medical care program de-
scribed in—
‘‘(i) title XVIII, XIX, or XXI of the
Social Security Act,
‘‘(ii) chapter 55 of title 10, United
States Code,
‘‘(iii) chapter 17 of title 38, United
States Code,
‘‘(iv) chapter 89 of title 5, United
States Code, or
‘‘(v) the Indian Health Care Improve-
ment Act.
‘‘(B) EXCEPTIONS.—
‘‘(i) QUALIFIED LONG-TERM CARE.—
Subparagraph (A) shall not apply to
amounts paid for coverage under a quali-
fied long-term care insurance contract.
‘‘(ii) CONTINUATION
COVERAGE
OF
FEHBP.—Subparagraph (A)(iv) shall not
apply to coverage which is comparable to
continuation 
coverage 
under 
section
4980B.
‘‘(d) LONG-TERM CARE DEDUCTION LIMITED
TO
QUALIFIED
LONG-TERM
CARE
INSURANCE
CON-
TRACTS.—In the case of a qualified long-term care insur-
ance contract, only eligible long-term care premiums (as
defined in section 213(d)(10)) may be taken into account
under subsection (a).
‘‘(e) DEDUCTION NOT AVAILABLE FOR PAYMENT OF
ANCILLARY COVERAGE PREMIUMS.—Any amount paid as
a premium for insurance which provides for—
‘‘(1) coverage for accidents, disability, dental
care, vision care, or a specified illness, or
‘‘(2) making payments of a fixed amount per
day (or other period) by reason of being hospitalized,
shall not be taken into account under subsection (a).
‘‘(f) SPECIAL RULES.—
‘‘(1) COORDINATION
WITH
DEDUCTION
FOR
HEALTH INSURANCE COSTS OF SELF-EMPLOYED IN-
DIVIDUALS.—The amount taken into account by the
taxpayer in computing the deduction under section
162(l) shall not be taken into account under this
section.
‘‘(2) COORDINATION WITH MEDICAL EXPENSE
DEDUCTION.—The amount taken into account by
the taxpayer in computing the deduction under this
section shall not be taken into account under section
213.
‘‘(g) REGULATIONS.—The Secretary shall prescribe
such regulations as may be appropriate to carry out this
section, including regulations requiring employers to re-
port to their employees and the Secretary such informa-
tion as the Secretary determines to be appropriate.’’.
(b) DEDUCTION ALLOWED WHETHER OR NOT TAX-
PAYER ITEMIZES OTHER DEDUCTIONS.—Subsection (a)
of section 62 of such Code is amended by inserting after
paragraph (17) the following new item:
‘‘(18) HEALTH AND LONG-TERM CARE INSUR-
ANCE
COSTS.—The deduction allowed by section
222.’’.
(c) CLERICAL AMENDMENT.—The table of sections
for part VII of subchapter B of chapter 1 of such Code
is amended by striking the last item and inserting the fol-
lowing new items:
‘‘Sec. 222. Health and long-term care insurance costs.
‘‘Sec. 223. Cross reference.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 102. DEDUCTION FOR 100 PERCENT OF HEALTH IN-
SURANCE COSTS OF SELF-EMPLOYED INDI-
VIDUALS.
(a) IN GENERAL.—Paragraph (1) of section 162(l)
of the Internal Revenue Code of 1986 is amended to read
as follows:
‘‘(1) ALLOWANCE OF DEDUCTION.—In the case
of an individual who is an employee within the
meaning of section 401(c)(1), there shall be allowed
as a deduction under this section an amount equal
to 100 percent of the amount paid during the tax-
able year for insurance which constitutes medical
care for the taxpayer and the taxpayer’s spouse and
dependents.’’.
(b) CLARIFICATION OF LIMITATIONS ON OTHER COV-
ERAGE.—The first sentence of section 162(l)(2)(B) of
such Code is amended to read as follows: ‘‘Paragraph (1)
shall not apply to any taxpayer for any calendar month
for which the taxpayer participates in any subsidized
health plan maintained by any employer (other than an
employer described in section 401(c)(4)) of the taxpayer
or the spouse of the taxpayer.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2000.
SEC. 103. EXPANSION OF AVAILABILITY OF MEDICAL SAV-
INGS ACCOUNTS.
(a) REPEAL OF LIMITATIONS ON NUMBER OF MED-
ICAL SAVINGS ACCOUNTS.—
(1) IN GENERAL.—Subsections (i) and (j) of
section 220 of the Internal Revenue Code of 1986
are hereby repealed.
(2) CONFORMING AMENDMENTS.—
(A) Paragraph (1) of section 220(c) of
such Code is amended by striking subparagraph
(D).
(B) Section 138 of such Code is amended
by striking subsection (f).
(b) AVAILABILITY NOT LIMITED TO ACCOUNTS FOR
EMPLOYEES
OF
SMALL
EMPLOYERS
AND
SELF-EM-
PLOYED INDIVIDUALS.—
(1) IN GENERAL.—Section 220(c)(1)(A) of such
Code (relating to eligible individual) is amended to
read as follows:
‘‘(A) IN GENERAL.—The term ‘eligible in-
dividual’ means, with respect to any month, any
individual if—
‘‘(i) such individual is covered under a
high deductible health plan as of the 1st
day of such month, and
‘‘(ii) such individual is not, while cov-
ered under a high deductible health plan,
covered under any health plan—
‘‘(I) which is not a high deduct-
ible health plan, and
‘‘(II) which provides coverage for
any benefit which is covered under the
high deductible health plan.’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 220(c)(1) of such Code is
amended by striking subparagraph (C).
(B) Section 220(c) of such Code is amend-
ed by striking paragraph (4) (defining small
employer) and by redesignating paragraph (5)
as paragraph (4).
(C) Section 220(b) of such Code is amend-
ed by striking paragraph (4) (relating to deduc-
tion limited by compensation) and by redesig-
nating paragraphs (5), (6), and (7) as para-
graphs (4), (5), and (6), respectively.
(c) INCREASE IN AMOUNT OF DEDUCTION ALLOWED
FOR CONTRIBUTIONS TO MEDICAL SAVINGS ACCOUNTS.—
(1) IN
GENERAL.—Paragraph (2) of section
220(b) of such Code is amended to read as follows:
‘‘(2) MONTHLY LIMITATION.—The monthly lim-
itation for any month is the amount equal to 1⁄12 of
the annual deductible (as of the first day of such
month) of the individual’s coverage under the high
deductible health plan.’’.
(2) CONFORMING AMENDMENT.—Clause (ii) of
section 220(d)(1)(A) of such Code is amended by
striking ‘‘75 percent of’’.
(d) BOTH EMPLOYERS AND EMPLOYEES MAY CON-
TRIBUTE TO MEDICAL SAVINGS ACCOUNTS.—Paragraph
(5) of section 220(b) of such Code is amended to read
as follows:
‘‘(5) COORDINATION WITH EXCLUSION FOR EM-
PLOYER
CONTRIBUTIONS.—The limitation which
would (but for this paragraph) apply under this sub-
section to the taxpayer for any taxable year shall be
reduced (but not below zero) by the amount which
would (but for section 106(b)) be includible in the
taxpayer’s gross income for such taxable year.’’.
(e) REDUCTION
OF
PERMITTED
DEDUCTIBLES
UNDER HIGH DEDUCTIBLE HEALTH PLANS.—
(1) IN GENERAL.—Subparagraph (A) of section
220(c)(2) of such Code (defining high deductible
health plan) is amended—
(A) by striking ‘‘$1,500’’ in clause (i) and
inserting ‘‘$1,000’’, and
(B) by striking ‘‘$3,000’’ in clause (ii) and
inserting ‘‘$2,000’’.
(2) CONFORMING AMENDMENT.—Subsection (g)
of section 220 of such Code is amended to read as
follows:
‘‘(g) COST-OF-LIVING ADJUSTMENT.—
‘‘(1) IN GENERAL.—In the case of any taxable
year beginning in a calendar year after 1998, each
dollar amount in subsection (c)(2) shall be increased
by an amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar
year in which such taxable year begins by sub-
stituting ‘calendar year 1997’ for ‘calendar year
1992’ in subparagraph (B) thereof.
‘‘(2) SPECIAL
RULES.—In the case of the
$1,000 amount in subsection (c)(2)(A)(i) and the
$2,000 amount in subsection (c)(2)(A)(ii), para-
graph (1)(B) shall be applied by substituting ‘cal-
endar year 1999’ for ‘calendar year 1997’.
‘‘(3) ROUNDING.—If any increase under para-
graph (1) or (2) is not a multiple of $50, such in-
crease shall be rounded to the nearest multiple of
$50.
(f) MEDICAL SAVINGS ACCOUNTS MAY BE OFFERED
UNDER CAFETERIA PLANS.—Subsection (f) of section
125 of such Code is amended by striking ‘‘106(b),’’.
(g) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2000.
SEC. 104. LONG-TERM CARE INSURANCE PERMITTED TO BE
OFFERED UNDER CAFETERIA PLANS AND
FLEXIBLE SPENDING ARRANGEMENTS.
(a) CAFETERIA PLANS.—
(1) IN
GENERAL.—Subsection (f ) of section
125 of the Internal Revenue Code of 1986 (defining
qualified benefits) is amended by inserting before
the period at the end ‘‘; except that such term shall
include the payment of premiums for any qualified
long-term care insurance contract (as defined in sec-
tion 7702B) to the extent the amount of such pay-
ment does not exceed the eligible long-term care pre-
miums (as defined in section 213(d)(10)) for such
contract’’.
(b) FLEXIBLE SPENDING ARRANGEMENTS.—Section
106 of such Code (relating to contributions by employer
to accident and health plans) is amended by striking sub-
section (c).
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 105. ADDITIONAL PERSONAL EXEMPTION FOR TAX-
PAYER CARING FOR ELDERLY FAMILY MEM-
BER IN TAXPAYER’S HOME.
(a) IN GENERAL.—Section 151 of the Internal Rev-
enue Code of 1986 (relating to allowance of deductions
for personal exemptions) is amended by redesignating sub-
section (e) as subsection (f ) and by inserting after sub-
section (d) the following new subsection:
‘‘(e) ADDITIONAL EXEMPTION FOR CERTAIN ELDER-
LY FAMILY MEMBERS RESIDING WITH TAXPAYER.—
‘‘(1) IN GENERAL.—An exemption of the ex-
emption amount for each qualified family member of
the taxpayer.
‘‘(2) QUALIFIED FAMILY MEMBER.—For pur-
poses of this subsection, the term ‘qualified family
member’ means, with respect to any taxable year,
any individual—
‘‘(A) who is an ancestor of the taxpayer or
of the taxpayer’s spouse or who is the spouse
of any such ancestor,
‘‘(B) who is a member for the entire tax-
able year of a household maintained by the tax-
payer, and
‘‘(C) who has been certified, before the due
date for filing the return of tax for the taxable
year (without extensions), by a physician (as
defined in section 1861(r)(1) of the Social Se-
curity Act) as being an individual with long-
term care needs described in paragraph (3) for
a period—
‘‘(i) which is at least 180 consecutive
days, and
‘‘(ii) a portion of which occurs within
the taxable year.
Such term shall not include any individual otherwise
meeting the requirements of the preceding sentence
unless within the 391⁄2 month period ending on such
due date (or such other period as the Secretary pre-
scribes) a physician (as so defined) has certified that
such individual meets such requirements.
‘‘(3) INDIVIDUALS
WITH
LONG-TERM
CARE
NEEDS.—An individual is described in this para-
graph if the individual—
‘‘(A) is unable to perform (without sub-
stantial assistance from another individual) at
least two activities of daily living (as defined in
section 7702B(c)(2)(B)) due to a loss of func-
tional capacity, or
‘‘(B) requires substantial supervision to
protect such individual from threats to health
and safety due to severe cognitive impairment
and is unable to perform, without reminding or
cuing assistance, at least one activity of daily
living (as so defined) or to the extent provided
in regulations prescribed by the Secretary (in
consultation with the Secretary of Health and
Human Services), is unable to engage in age
appropriate activities.
‘‘(4) SPECIAL
RULES.—Rules similar to the
rules of paragraphs (1), (2), (3), (4), and (5) of sec-
tion 21(e) shall apply for purposes of this sub-
section.’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2000.
SEC. 106. EXPANDED HUMAN CLINICAL TRIALS QUALI-
FYING FOR ORPHAN DRUG CREDIT.
(a) 
IN
GENERAL.—Subclause 
(I) 
of 
section
45C(b)(2)(A)(ii) of the Internal Revenue Code of 1986 is
amended to read as follows:
‘‘(I) after the date that the appli-
cation is filed for designation under
such section 526, and’’.
(b) CONFORMING AMENDMENT.—Clause (i) of sec-
tion 45C(b)(2)(A) of such Code is amended by inserting
‘‘which is’’ before ‘‘being’’ and by inserting before the
comma at the end ‘‘and which is designated under section
526 of such Act’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts paid or incurred after
December 31, 2000.
SEC. 107. INCLUSION OF CERTAIN VACCINES AGAINST
STREPTOCOCCUS PNEUMONIAE TO LIST OF
TAXABLE VACCINES; REDUCTION IN PER
DOSE TAX RATE.
(a) INCLUSION OF VACCINES.—
(1) IN GENERAL.—Section 4132(a)(1) of the
Internal Revenue Code of 1986 (defining taxable
vaccine) is amended by adding at the end the fol-
lowing new subparagraph:
‘‘(L) Any conjugate vaccine against strep-
tococcus pneumoniae.’’.
(2) EFFECTIVE DATE.—
(A) SALES.—The amendment made by this
subsection shall apply to vaccine sales beginning
on the day after the date on which the Centers
for Disease Control makes a final recommenda-
tion for routine administration to children of
any conjugate vaccine against streptococcus
pneumoniae, but shall not take effect if sub-
section (c) does not take effect.
(B) DELIVERIES.—For purposes of sub-
paragraph (A), in the case of sales on or before
the date described in such subparagraph for
which delivery is made after such date, the de-
livery date shall be considered the sale date.
(b) REDUCTION IN PER DOSE TAX RATE.—
(1) IN GENERAL.—Section 4131(b)(1) of such
Code (relating to amount of tax) is amended by
striking ‘‘75 cents’’ and inserting ‘‘50 cents’’.
(2) EFFECTIVE DATE.—
(A) SALES.—The amendment made by this
subsection shall apply to vaccine sales after De-
cember 31, 2004, but shall not take effect if
subsection (c) does not take effect.
(B) DELIVERIES.—For purposes of sub-
paragraph (A), in the case of sales on or before
the date described in such subparagraph for
which delivery is made after such date, the de-
livery date shall be considered the sale date.
(3) LIMITATION ON CERTAIN CREDITS OR RE-
FUNDS.—For purposes of applying section 4132(b)
of the Internal Revenue Code of 1986 with respect
to any claim for credit or refund filed after August
31, 2004, the amount of tax taken into account shall
not exceed the tax computed under the rate in effect
on January 1, 2005.
(c) VACCINE
TAX
AND
TRUST
FUND
AMEND-
MENTS.—
(1) Sections 1503 and 1504 of the Vaccine In-
jury Compensation Program Modification Act (and
the amendments made by such sections) are hereby
repealed.
(2) Subparagraph (A) of section 9510(c)(1) of
such Code is amended by striking ‘‘August 5, 1997’’
and inserting ‘‘October 21, 1998’’.
(3) The amendments made by this subsection
shall take effect as if included in the provisions of
the Tax and Trade Relief Extension Act of 1998 to
which they relate.
(d) REPORT.—Not later than December 31, 1999,
the Comptroller General of the United States shall prepare
and submit a report to the Committee on Ways and Means
of the House of Representatives and the Committee on
Finance of the Senate on the operation of the Vaccine In-
jury Compensation Trust Fund and on the adequacy of
such Fund to meet future claims made under the Vaccine
Injury Compensation Program.
SEC. 108. CREDIT FOR CLINICAL TESTING RESEARCH EX-
PENSES ATTRIBUTABLE TO CERTAIN QUALI-
FIED ACADEMIC INSTITUTIONS INCLUDING
TEACHING HOSPITALS.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to business related credits) is amended by
inserting after section 41 the following:
‘‘SEC. 41A. CREDIT FOR MEDICAL INNOVATION EXPENSES.
‘‘(a) GENERAL RULE.—For purposes of section 38,
the medical innovation credit determined under this sec-
tion for the taxable year shall be an amount equal to 40
percent of the excess (if any) of—
‘‘(1) the qualified medical innovation expenses
for the taxable year, over
‘‘(2) the medical innovation base period
amount.
‘‘(b) 
QUALIFIED
MEDICAL
INNOVATION
EX-
PENSES.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified medical
innovation expenses’ means the amounts which are
paid or incurred by the taxpayer during the taxable
year directly or indirectly to any qualified academic
institution for clinical testing research activities.
‘‘(2) CLINICAL
TESTING
RESEARCH
ACTIVI-
TIES.—
‘‘(A) IN
GENERAL.—The term ‘clinical
testing research activities’ means human clinical
testing conducted at any qualified academic in-
stitution in the development of any product,
which occurs before—
‘‘(i) the date on which an application
with respect to such product is approved
under section 505(b), 506, or 507 of the
Federal Food, Drug, and Cosmetic Act (as
in effect on the date of the enactment of
this section),
‘‘(ii) the date on which a license for
such product is issued under section 351 of
the Public Health Service Act (as so in ef-
fect), or
‘‘(iii) the date classification or ap-
proval of such product which is a device in-
tended for human use is given under sec-
tion 513, 514, or 515 of the Federal Food,
Drug, and Cosmetic Act (as so in effect).
‘‘(B) 
PRODUCT.—The 
term 
‘product’
means any drug, biologic, or medical device.
‘‘(3) QUALIFIED ACADEMIC INSTITUTION.—The
term ‘qualified academic institution’ means any of
the following institutions:
‘‘(A) 
EDUCATIONAL
INSTITUTION.—A
qualified organization described in section
170(b)(1)(A)(iii) which is owned by, or affili-
ated with, an institution of higher education (as
defined in section 3304(f )).
‘‘(B) TEACHING
HOSPITAL.—A teaching
hospital which—
‘‘(i) is publicly supported or owned by
an 
organization 
described 
in 
section
501(c)(3), and
‘‘(ii) is affiliated with an organization
meeting the requirements of subparagraph
(A).
‘‘(C) FOUNDATION.—A medical research
organization described in section 501(c)(3)
(other than a private foundation) which is affili-
ated with, or owned by—
‘‘(i) an organization meeting the re-
quirements of subparagraph (A), or
‘‘(ii) a teaching hospital meeting the
requirements of subparagraph (B).
‘‘(D) 
CHARITABLE
RESEARCH
HOS-
PITAL.—A hospital that is designated as a can-
cer center by the National Cancer Institute.
‘‘(4) EXCLUSION
FOR
AMOUNTS
FUNDED
BY
GRANTS, ETC.—The term ‘qualified medical innova-
tion expenses’ shall not include any amount to the
extent such amount is funded by any grant, con-
tract, or otherwise by another person (or any gov-
ernmental entity).
‘‘(c) 
MEDICAL
INNOVATION
BASE
PERIOD
AMOUNT.—For purposes of this section, the term ‘medical
innovation base period amount’ means the average annual
qualified medical innovation expenses paid by the taxpayer
during the 3-taxable year period ending with the taxable
year immediately preceding the first taxable year of the
taxpayer beginning after December 31, 2000.
‘‘(d) SPECIAL RULES.—
‘‘(1) LIMITATION ON FOREIGN TESTING.—No
credit shall be allowed under this section with re-
spect to any clinical testing research activities con-
ducted outside the United States.
‘‘(2) CERTAIN
RULES
MADE
APPLICABLE.—
Rules similar to the rules of subsections (f ) and (g)
of section 41 shall apply for purposes of this section.
‘‘(3) ELECTION.—This section shall apply to
any taxpayer for any taxable year only if such tax-
payer elects to have this section apply for such tax-
able year.
‘‘(4) COORDINATION
WITH
CREDIT
FOR
IN-
CREASING
RESEARCH
EXPENDITURES
AND
WITH
CREDIT FOR CLINICAL TESTING EXPENSES FOR CER-
TAIN DRUGS FOR RARE DISEASES.—Any qualified
medical innovation expense for a taxable year to
which an election under this section applies shall not
be taken into account for purposes of determining
the credit allowable under section 41 or 45C for
such taxable year.’’.
(b) CREDIT TO BE PART OF GENERAL BUSINESS
CREDIT.—
(1) IN GENERAL.—Section 38(b) of such Code
(relating to current year business credits) is amend-
ed by striking ‘‘plus’’ at the end of paragraph (11),
by striking the period at the end of paragraph (12)
and inserting ‘‘, plus’’, and by adding at the end the
following:
‘‘(13) the medical innovation expenses credit
determined under section 41A(a).’’.
(2) TRANSITION RULE.—Section 39(d) of such
Code is amended by adding at the end the following
new paragraph:
‘‘(9) NO CARRYBACK OF SECTION 41A CREDIT
BEFORE
ENACTMENT.—No portion of the unused
business credit for any taxable year which is attrib-
utable to the medical innovation credit determined
under section 41A may be carried back to a taxable
year beginning before January 1, 2001.’’.
(c) DENIAL OF DOUBLE BENEFIT.—Section 280C of
such Code is amended by adding at the end the following
new subsection:
‘‘(d) CREDIT FOR INCREASING MEDICAL INNOVA-
TION EXPENSES.—
‘‘(1) IN GENERAL.—No deduction shall be al-
lowed for that portion of the qualified medical inno-
vation expenses (as defined in section 41A(b)) other-
wise allowable as a deduction for the taxable year
which is equal to the amount of the credit deter-
mined for such taxable year under section 41A(a).
‘‘(2) CERTAIN RULES TO APPLY.—Rules similar
to the rules of paragraphs (2), (3), and (4) of sub-
section (c) shall apply for purposes of this sub-
section.’’.
(d) DEDUCTION FOR UNUSED PORTION OF CRED-
IT.—Section 196(c) of such Code (defining qualified busi-
ness credits) is amended by redesignating paragraphs (5)
through (8) as paragraphs (6) through (9), respectively,
and by inserting after paragraph (4) the following new
paragraph:
‘‘(5) the medical innovation expenses credit de-
termined under section 41A(a) (other than such
credit determined under the rules of section
280C(d)(2)),’’.
(e) CLERICAL AMENDMENT.—The table of sections
for subpart D of part IV of subchapter A of chapter 1
of such Code is amended by adding after the item relating
to section 41 the following:
‘‘Sec. 41A. Credit for medical innovation expenses.’’.
(f) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2000.
TITLE II—GREATER ACCESS AND
CHOICE THROUGH ASSOCIA-
TION HEALTH PLANS
SEC. 201. RULES.
(a) IN GENERAL.—Subtitle B of title I of the Em-
ployee Retirement Income Security Act of 1974 is amend-
ed by adding after part 7 the following new part:
‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH
PLANS
‘‘SEC. 801. ASSOCIATION HEALTH PLANS.
‘‘(a) IN GENERAL.—For purposes of this part, the
term ‘association health plan’ means a group health
plan—
‘‘(1) whose sponsor is (or is deemed under this
part to be) described in subsection (b); and
‘‘(2) under which at least one option of health
insurance coverage offered by a health insurance
issuer (which may include, among other options,
managed care options, point of service options, and
preferred provider options) is provided to partici-
pants and beneficiaries, unless, for any plan year,
such coverage remains unavailable to the plan de-
spite good faith efforts exercised by the plan to se-
cure such coverage.
‘‘(b) SPONSORSHIP.—The sponsor of a group health
plan is described in this subsection if such sponsor—
‘‘(1) is organized and maintained in good faith,
with a constitution and bylaws specifically stating its
purpose and providing for periodic meetings on at
least an annual basis, as a bona fide trade associa-
tion, a bona fide industry association (including a
rural electric cooperative association or a rural tele-
phone cooperative association), a bona fide profes-
sional association, or a bona fide chamber of com-
merce (or similar bona fide business association, in-
cluding a corporation or similar organization that
operates on a cooperative basis (within the meaning
of section 1381 of the Internal Revenue Code of
1986)), for substantial purposes other than that of
obtaining or providing medical care;
‘‘(2) is established as a permanent entity which
receives the active support of its members and col-
lects from its members on a periodic basis dues or
payments necessary to maintain eligibility for mem-
bership in the sponsor; and
‘‘(3) does not condition membership, such dues
or payments, or coverage under the plan on the
basis of health status-related factors with respect to
the employees of its members (or affiliated mem-
bers), or the dependents of such employees, and does
not condition such dues or payments on the basis of
group health plan participation.
Any sponsor consisting of an association of entities which
meet the requirements of paragraphs (1), (2), and (3)
shall be deemed to be a sponsor described in this sub-
section.
‘‘SEC. 
802. 
CERTIFICATION 
OF 
ASSOCIATION 
HEALTH
PLANS.
‘‘(a) IN GENERAL.—The applicable authority shall
prescribe by regulation, through negotiated rulemaking, a
procedure under which, subject to subsection (b), the ap-
plicable authority shall certify association health plans
which apply for certification as meeting the requirements
of this part.
‘‘(b) STANDARDS.—Under the procedure prescribed
pursuant to subsection (a), in the case of an association
health plan that provides at least one benefit option which
does not consist of health insurance coverage, the applica-
ble authority shall certify such plan as meeting the re-
quirements of this part only if the applicable authority is
satisfied that—
‘‘(1) such certification—
‘‘(A) is administratively feasible;
‘‘(B) is not adverse to the interests of the
individuals covered under the plan; and
‘‘(C) is protective of the rights and benefits
of the individuals covered under the plan; and
‘‘(2) the applicable requirements of this part
are met (or, upon the date on which the plan is to
commence operations, will be met) with respect to
the plan.
‘‘(c) REQUIREMENTS APPLICABLE
TO CERTIFIED
PLANS.—An association health plan with respect to which
certification under this part is in effect shall meet the ap-
plicable requirements of this part, effective on the date
of certification (or, if later, on the date on which the plan
is to commence operations).
‘‘(d) REQUIREMENTS
FOR
CONTINUED
CERTIFI-
CATION.—The applicable authority may provide by regula-
tion, through negotiated rulemaking, for continued certifi-
cation of association health plans under this part.
‘‘(e) CLASS CERTIFICATION FOR FULLY INSURED
PLANS.—The applicable authority shall establish a class
certification procedure for association health plans under
which all benefits consist of health insurance coverage.
Under such procedure, the applicable authority shall pro-
vide for the granting of certification under this part to
the plans in each class of such association health plans
upon appropriate filing under such procedure in connec-
tion with plans in such class and payment of the pre-
scribed fee under section 807(a).
‘‘(f) CERTIFICATION OF SELF-INSURED ASSOCIATION
HEALTH PLANS.—An association health plan which offers
one or more benefit options which do not consist of health
insurance coverage may be certified under this part only
if such plan consists of any of the following:
‘‘(1) a plan which offered such coverage on the
date of the enactment of the Quality Care for the
Uninsured Act of 1999,
‘‘(2) a plan under which the sponsor does not
restrict membership to one or more trades and busi-
nesses or industries and whose eligible participating