SEC. 207. ENROLLMENT PROCESS FOR ELIGIBLE INDIVID-
UALS. 
(a) IN GENERAL.—The Secretary shall establish a 
process through which an eligible individual—
(1) may make an annual election to enroll in 
any private group health insurance plan offered by 
a participating insurer that has been awarded a con-
tract under section 205(a) and serves the geographic 
area in which the individual resides, provided that 
such insurer’s geographic area of service and guar-
anteed issuance under this section is conterminous 
with, or includes all of, a geographic area served 
pursuant to an entity’s contact under section 8902 
of title 5, United States Code; and 
(2) may make an annual election to change the 
election under this clause. 
(b) RULES.—In establishing the process under sub-
section (a), the Secretary shall use rules similar to the 
rules for enrollment, disenrollment, and termination of en-
rollment under the Federal employees health benefits pro-
gram under chapter 89 of title 5, United States Code, in-
cluding the application of the guaranteed issuance provi-
sion described in subsection (c). 
(c) GUARANTEED ISSUANCE.—An eligible individual 
who is eligible to enroll for health benefits coverage under 
a private group health insurance plan that has been
awarded a contract under section 205(a) at a time during 
which elections are accepted under this title with respect 
to the plan shall not be denied enrollment based on any 
health 
status-related 
factor 
(described 
in 
section 
2702(a)(1) of the Public Health Service Act (42 U.S.C. 
300gg–1(a)(1))) or any other factor. 
SEC. 208. PLAN PREMIUMS. 
(a) IN GENERAL.—Each purchasing pool operator 
shall negotiate (or, in the case of a purchasing pool oper-
ated pursuant to section 203(b)(1)(B), shall otherwise de-
termine) a premium for each private group health insur-
ance plan offered by a participating insurer. 
(b) PERMITTED PROFIT MARGINS.—
(1) IN
GENERAL.—Each premium negotiated 
under subsection (a) may not permit a profit margin 
that exceeds the applicable percentage (as defined in 
paragraph (2)). 
(2) APPLICABLE
PERCENTAGE
DEFINED.—In 
this subsection, the term ‘‘applicable percentage’’ 
means—
(A) for the first 3 years that a purchasing 
pool is operated, 2 percent; 
(B) for any subsequent year, the percent-
age determined by the purchasing pool oper-
ator, which may not be—
(i) less than the profit margin per-
mitted under the Federal employees health 
benefits program under chapter 89 of title 
5, United States Code; or 
(ii) more than a multiple, established 
by the Secretary for purposes of this sub-
section, of profit margins permitted under 
such program. 
SEC. 209. ENROLLEE PREMIUM SHARE. 
(a) IN GENERAL.—A participating insurer offering a 
private group health insurance plan that has been awarded 
a contract under section 205(a) in which the eligible indi-
vidual is enrolled may not deny, limit, or condition the 
coverage (including out-of-pocket cost-sharing) or provi-
sion of health benefits coverage or vary or increase the 
enrollee premium share under the plan based on any 
health 
status-related 
factor 
described 
in 
section 
2702(a)(1) of the Public Health Service Act (42 U.S.C. 
300gg–1(a)(1)) or any other factor. 
(b) RISK-ADJUSTED PLAN PAYMENTS
AND PRE-
MIUMS CHARGED TO ENROLLEES.—
(1) IN
GENERAL.—For each private group 
health insurance plan operated by a participating in-
surer, the pool operator shall adjust premium pay-
ments to compensate for the difference in health risk
factors between plan enrollees and State residents as 
a whole (including residents who are not eligible in-
dividuals). Such adjustments shall employ risk-ad-
justment mechanisms promulgated by the Secretary. 
(2) ADDITIONAL ADJUSTMENTS.—The pool op-
erator shall also provide additional adjustments to 
premium payments that compensate participating in-
surers for the cost of keeping out-of-pocket cost-
sharing 
amounts 
consistent 
with 
section 
204(c)(9)(B). 
(3) ENROLLEE PREMIUM COSTS.—The adjust-
ments described in this subsection shall not affect 
enrollee premium shares, which shall be based on the 
premium that would be charged for enrollees with 
health risk factors for State residents as a whole (as 
described in paragraph (1)), without taking into ac-
count 
cost-sharing 
adjustments 
under 
section 
204(c)(9)(B). 
(c) AMOUNT OF PREMIUM.—The amount of the en-
rollee premium share shall be equal to premium amounts 
(if any) above the applicable cap set pursuant to section 
204(c)(10), plus 100 percent of the remainder minus the 
applicable percentage (as defined in section 36(b) of the 
Internal Revenue Code of 1986, as added by section 111).
SEC. 210. PAYMENTS TO PURCHASING POOL OPERATORS 
AND PAYMENTS TO PARTICIPATING INSUR-
ERS. 
The Secretary shall establish procedures for making 
payments to each purchasing pool operator as follows:
(1) RISK-ADJUSTMENT
PAYMENT.—The Sec-
retary shall pay each purchasing pool operator for 
the net costs of risk-adjusted payments to plans 
under section 209(b), to the extent the sum of up-
ward adjustments exceeds the sum of downward ad-
justments for the pool operator. 
(2) 
STOP-LOSS
AND
REINSURANCE
PAY-
MENTS.—
(A) IN GENERAL.—The Secretary shall pay 
each purchasing pool operator for the applicable 
percentage (as defined in subparagraph (B)) 
of—
(i) the costs of any stop-loss coverage 
funded by the purchasing pool operator 
under section 205(d)(1); and 
(ii) any reinsurance provided in ac-
cordance with section 205(d)(2). 
(B) 
APPLICABLE
PERCENTAGE
DE-
FINED.—In this paragraph, the term ‘‘applica-
ble percentage’’ means—
(i) for the first 3 years that a pur-
chasing pool is operated, 100 percent; 
(ii) for the next 2 years that such 
purchasing pool is operated, 50 percent; 
and 
(iii) for any subsequent year, 0 per-
cent. 
(3) PAYMENTS
NECESSARY
TO
KEEP
COST-
SHARING
WITHIN
APPLICABLE
LIMITS.—The Sec-
retary shall make payments to purchasing pool oper-
ators to reimburse purchasing pool operators for the 
amount paid by such operators to participating in-
surers necessary to keep out-of-pocket cost-sharing 
for individuals with limited ability to pay within ap-
plicable limits. 
(4) PAYMENT FOR ADMINISTRATIVE COSTS.—
The Secretary shall make payments to each pur-
chasing pool operator for necessary pool administra-
tive expenses. 
(5) PAYMENTS TO OPM.—In the case of a pur-
chasing pool described in section 203(b)(1)(B), pay-
ments under this section shall be made to the Direc-
tor of the Office of Personnel Management.
SEC. 211. STATE-BASED REINSURANCE PROGRAMS. 
(a) ESTABLISHMENT.—The Secretary shall establish 
standards for State-based reinsurance programs for eligi-
ble individuals to guard against adverse selection and to 
improve the functioning of the individual health insurance 
market. 
(b) GRANTS FOR STATEWIDE REINSURANCE PRO-
GRAMS.—
(1) IN GENERAL.—The Secretary may award 
grants to States for the reasonable costs incurred in 
providing reinsurance under this section, consistent 
with standards developed by the Secretary, for cov-
erage offered in the individual health insurance mar-
ket and through State-based purchasing pools de-
scribed in section 203. 
(2) LIMITATION.—Such grants may not pay for 
reinsurance extending beyond individuals in the top 
3 percent of the national health care spending dis-
tribution, as determined by the Secretary. 
(3) APPLICATION.—A State desiring a grant 
under this section shall submit an application to the 
Secretary in such manner, at such time, and con-
taining such information as the Secretary may re-
quire. 
(4) AUTHORIZATION
OF
APPROPRIATIONS.—
There are authorized to be appropriated to the Sec-
retary such sums as may be necessary for making 
grants under this section. 
SEC. 212. COVERAGE UNDER INDIVIDUAL HEALTH INSUR-
ANCE. 
(a) IN GENERAL.—Eligible individuals may use cred-
its allowed under the Internal Revenue Code of 1986 (in-
cluding supplemental assistance provided under such 
Code) for the purchase of health insurance coverage to en-
roll in State-licensed individual health insurance meeting 
the conditions of participation described in subsection (b). 
(b) CONDITIONS OF PARTICIPATION.—The Secretary 
shall promulgate regulations that establish the terms and 
conditions under which an entity may participate in the 
program under this section and that include the following: 
(1) PLAN MARKETING.—Conditions of partici-
pation for plans in the individual market (as devel-
oped by the Secretary) that—
(A) ensure that consumers receive the con-
sumer information described in paragraph (2) 
before selecting a plan; and 
(B) detect, deter, and penalize marketing 
fraud by entities offering or purporting to offer 
individual insurance. 
(2) CONSUMER
INFORMATION.—Requirements 
for each entity offering individual insurance to pro-
vide eligible individuals with information in a uni-
form and easily comprehensible manner that allows 
for informed comparisons by eligible individuals and 
that includes information regarding the health bene-
fits coverage, costs, provider networks, quality, the 
amount and proportion of health insurance premium 
payments that go directly to patient care, and the 
plan’s coverage rules (including amount, duration, 
and scope limits) and out-of-pocket cost-sharing 
(both inside and outside plan networks) for each es-
sential service recommended by the National Advi-
sory Commission on Expanded Access to Health 
Care and adopted by Congress under title III (which 
shall be prominently identified as an essential serv-
ice, including by reference to the Commission rec-
ommendation denoting the service as essential). To 
the maximum extent feasible, such requirements 
shall specify that the content and presentation of the 
information shall be provided in the same manner as 
similar information is presented to enrollees in the 
Federal employees health benefits program under 
chapter 89 of title 5, United States Code. 
(3) OTHER
CONDITIONS, 
INCLUDING
THE 
ELIMINATION OF BARRIERS TO AFFORDABLE COV-
ERAGE.—
(A) IN GENERAL.—Requirements for each 
entity offering individual insurance to abide by 
conditions of participation that the Secretary 
believes are reasonable and appropriate meas-
ures to address barriers to affordable health in-
surance coverage. 
(B) SPECIFIC CONDITIONS.—The require-
ments developed by the Secretary under sub-
paragraph (A) shall include (but need not be 
limited to)—
(i) guaranteed renewability, without 
premium increases based on changed indi-
vidual risk; and 
(ii) limits on risk rating. 
(4) RULE OF CONSTRUCTION.—Nothing in this 
section shall be construed to authorize the Secretary 
to impose any requirements on individual insurance, 
except with respect to eligible individuals purchasing 
individual insurance using advance payment of a tax 
credit provided under section 36 of the Internal Rev-
enue Code of 1986.
SEC. 213. USE OF PREMIUM SUBSIDIES TO UNIFY FAMILY 
COVERAGE WITH MEMBERS ENROLLED IN 
MEDICAID AND SCHIP. 
Notwithstanding any other provision of law, the Sec-
retary shall establish procedures under which, in the case 
of a family with 1 or more members enrolled in with a 
managed care entity under the State medicaid program 
under title XIX of the Social Security Act or the State 
children’s health insurance program under title XXI of 
such Act (42 U.S.C. 1396 et seq., 1397aa et seq.) and 
1 or more members who are an eligible individual under 
this title, the family shall have the option to enroll all fam-
ily members with the managed care entity under either 
or both such State programs. The procedures established 
by the Secretary shall provide that premiums charged to 
eligible individuals for enrollment with such an entity shall 
be based on the capitated payments established for adults 
or children, excluding adults and children who are known 
to be pregnant, blind, disabled, or (in the case of adults) 
elderly, under the applicable State program (except that, 
in the case of an eligible individual known to be pregnant, 
premiums shall reflect capitated payments established 
under such State program for individuals known to be 
pregnant) plus reasonable administrative costs.
SEC. 214. COVERAGE THROUGH EMPLOYER-SPONSORED 
HEALTH INSURANCE. 
(a) IN GENERAL.—Eligible individuals may use cred-
its allowed under the Internal Revenue Code of 1986 and 
supplemental assistance to enroll in coverage offered by 
eligible employers. 
(b) ELIGIBLE EMPLOYERS.—For purposes of this 
section, the term ‘‘eligible employers’’ includes the fol-
lowing: 
(1) The current employer of the eligible indi-
vidual or a member of such individual’s family. 
(2) A former employer required to offer cov-
erage of the eligible individual under a COBRA con-
tinuation provision (as defined in section 9832(d)(1) 
of the Internal Revenue Code) or a State law requir-
ing continuation coverage; and 
(3) A former employer voluntarily offering cov-
erage of the eligible individual. 
(c) APPLICATION OF DISREGARD OF PREEXISTING 
CONDITIONS EXCLUSIONS.—Notwithstanding any other 
provision of law, in the case of an individual who experi-
ences a qualifying event (as defined in section 603 of the 
Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1163) and who, not later than 6 months after such 
event, is determined to be an eligible individual under this 
title, the same rules with respect to preexisting conditions
as apply to a nonelecting TAA-eligible individual under 
section 605(b) of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1165(b)) shall apply with re-
spect to such individual, regardless of which type of quali-
fied coverage the individual purchases. 
(d) EXTENSION OF COBRA ELECTION PERIOD.—
Notwithstanding any other provision of law, in the case 
of an individual who experiences a qualifying event (as de-
fined in section 603 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1163) and who, not later 
than 6 months after such event, is determined to be an 
eligible individual under this title, the same rules with re-
spect to the temporary extension of a COBRA election pe-
riod as apply to a nonelecting TAA-eligible individual 
under section 605(b) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1165(b)) shall apply with 
respect to such individual. 
(e) CURRENT EMPLOYER COVERAGE.—If an eligible 
individual uses the credits allowed under the Internal Rev-
enue Code of 1986 and supplemental assistance to pur-
chase coverage from an employer described in subsection 
(b), such credits and assistance shall apply as a percent-
age, not of the total premium amount for the eligible indi-
vidual, but of the employee’s or former employee’s share 
of premium payments.
SEC. 215. PARTICIPATION BY SMALL EMPLOYERS. 
(a) IN GENERAL.—Notwithstanding any other provi-
sion of this title, the Secretary shall establish procedures 
under which, during annual open enrollment periods, a 
small employer shall have the option of purchasing group 
coverage for employees and dependents of employees, in-
cluding individuals who are not otherwise eligible individ-
uals under this title, through a purchasing pool established 
under section 203(a). 
(b) CONDITIONS OF PARTICIPATION.—
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the same requirements that 
apply with respect to participating insurers covering 
eligible low-income individuals under section 203 
shall apply with respect to coverage offered by such 
insurers through a small employer. 
(2) RISK ADJUSTMENT.—
(A) INCREASED PAYMENTS.—If employees 
of a small employer who are not otherwise eligi-
ble individuals under this title enroll in a pri-
vate group health insurance plan under this 
title and have a collective risk level that exceeds 
the statewide average (as determined pursuant 
to risk adjustment mechanisms developed by 
the 
Secretary 
consistent 
with 
section 
209(b)(1)), the Secretary (through a pool oper-
ator) shall provide participating insurers with 
such small employer enrollment bonus payments 
as are necessary to compensate the insurers for 
such increased risk. The premium charged to 
enrollees under this section shall be the same 
premium that is the basis of premium charges 
to enrollees who are eligible low-income individ-
uals. 
(B) REDUCED PAYMENTS.—A pool oper-
ator shall reduce payments to any plan with a 
risk level that falls below the statewide average 
(as so determined). 
(3) ADMINISTRATIVE
GUIDELINES.—The Sec-
retary shall develop guidelines for pool operators to 
use in serving small employers, which shall be mod-
eled after existing, successful, longstanding small 
business purchasing cooperatives, and shall include 
administratively simple methods for small employers 
and licensed insurance brokers to participate in the 
program established under this title. 
(c) INFORMATION CAMPAIGN.—
(1) IN
GENERAL.—The pool operator for a 
State shall establish and conduct, directly or 
through 1 or more public or private entities (which 
may include licensed insurance brokers), a health in-
surance information program to inform small em-
ployers about health coverage for employees. 
(2) REQUIREMENTS.—The program established 
under paragraph (1) shall educate small employers 
with respect to matters that include (but are not 
limited to) the following: 
(A) The benefits of providing health insur-
ance to employees, including tax benefits to 
both the employer and employees, increased 
productivity, and decreased employee turnover. 
(B) The rights of small employers under 
Federal and State health insurance reform 
laws. 
(C) Options for purchasing coverage, in-
cluding (but not limited to) through the State’s 
purchasing pool operated pursuant to section 
203. 
(d) GRANTS TO HELP STATE-BASED POOLS PRO-
MOTE SMALL BUSINESS COVERAGE.—
(1) IN GENERAL.—The Secretary may award 
grants to a pool operator for the following: 
(A) The net costs of risk-adjusted pay-
ments under paragraph (b)(2), to the extent the 
sum of upward adjustments exceeds the sum of 
downward adjustments for the pool operator.
(B) The reasonable cost of the information 
campaign under subsection (c). 
(C) The pool operator’s reasonable admin-
istrative costs to implement this section. 
(2) LIMITATION.—This section shall not apply 
to a State’s pool unless sufficient grant funds have 
been received under this subsection to implement 
this section on a fiscally sound basis and such re-
ceipt is certified by the pool operator. 
(3) APPLICATION.—A pool operator desiring a 
grant under this section shall submit an application 
to the Secretary in such manner, at such time, and 
containing such information as the Secretary may 
require. 
(4) AUTHORIZATION
OF
APPROPRIATIONS.—
There are authorized to be appropriated to the Sec-
retary such sums as may be necessary for making 
grants under this section. 
SEC. 216. REPORT. 
Not later than 1 year after the date of enactment 
of this Act, the Secretary shall submit to Congress a re-
port containing recommendations for such legislative and 
administrative changes as the Secretary determines are 
appropriate to permit affinity groups related for reasons
other than a common employer to participate in pur-
chasing pools established under section 203. 
SEC. 217. AUTHORIZATION OF APPROPRIATIONS. 
(a) IN GENERAL.—There are authorized to be appro-
priated, such sums as may be necessary to carry out this 
title for fiscal year 2006 and each fiscal year thereafter. 
(b) RULE
OF
CONSTRUCTION.—Amounts appro-
priated in accordance with subsection (a) shall be in addi-
tion to other amounts appropriated directly under this 
title and nothing in subsection (a) shall be construed to 
relieve the Secretary of mandatory payment obligations re-
quired under this title. 
TITLE III—NATIONAL ADVISORY 
COMMISSION ON EXPANDED 
ACCESS TO HEALTH CARE 
SEC. 301. NATIONAL ADVISORY COMMISSION ON EXPANDED 
ACCESS TO HEALTH CARE. 
(a) ESTABLISHMENT.—Not later than October 1, 
2003, the Secretary of Health and Human Services (re-
ferred to in this section as the ‘‘Secretary’’), shall estab-
lish an entity to be known as the National Advisory Com-
mission on Expanded Access to Health Care (referred to 
in this section as the ‘‘Commission’’). 
(b) APPOINTMENT OF MEMBERS.—