SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Health Plans Act of 
2007''.

SEC. 2. SMALL BUSINESS HEALTH BENEFITS PROGRAM (SBHBP).

    Title XXVII of the Public Health Service Act is amended--
            (1) by redesignating part C as part D; and
            (2) by inserting after part B the following new part:

        ``PART C--SMALL BUSINESS HEALTH BENEFITS PROGRAM (SBHBP)

``SEC. 2771. SMALL BUSINESS HEALTH BENEFITS PROGRAM.

    ``(a) Establishment.--The Secretary shall establish a small 
business health benefits program under which small employers may offer 
health insurance coverage to employees and their dependents.
    ``(b) Program Elements.--Under the SBHBP:
            ``(1) Access to insurance.--Small employers are provided 
        access, for years beginning on or after January 1, 2007, to 
        qualified health pooling arrangements under which their 
        employees may elect self-only or family health insurance 
        coverage under at least 2 health insurance coverage policies, 
        regardless of whether premium assistance referred to in 
        paragraph (2) is available with respect to such employer.
            ``(2) Premium assistance for small employers.--Premium 
        assistance is available under subsection (c) to assist small 
        employers in the payment of premiums for the health insurance 
        coverage provided.
            ``(3) Employer share of premiums.--
                    ``(A) In general.--Small employers are provided 
                access to health insurance coverage, and may be 
                eligible for premium assistance under subsection (c), 
                only if they pay (before the application of any premium 
                assistance under subsection (c)) at least 50 percent of 
                the premiums for coverage of their employees, but such 
                employers are not required to pay for the portion of 
                the premiums for dependents of employees.
                    ``(B) Construction.--Nothing in this section shall 
                be construed as preventing an employee from applying 
                the payment described in subparagraph (A) towards the 
                payment of premiums for family health insurance 
                coverage.
            ``(4) Health insurance coverage.--
                    ``(A) In general.--Health insurance coverage 
                offered under SBHBP shall meet the following 
                requirements:
                            ``(i) The Secretary determines that the 
                        coverage is substantially similar to health 
                        benefits coverage in any of the four largest 
                        health benefit plans (determined by enrollment) 
                        offered under chapter 89 of title 5, United 
                        States Code.
                            ``(ii) The coverage complies with State 
                        laws and regulations (including applicable 
                        benefit mandates, rating requirements, and 
                        other consumer protections) for group health 
                        insurance coverage for the State in which the 
                        coverage is offered.
                            ``(iii) The Secretary determines that the 
                        coverage provided to employees is coordinated, 
                        in accordance with regulations prescribed by 
                        the Secretary, with other coverage provided 
                        under governmental health benefits programs 
                        under which health benefits coverage is 
                        available to such employees.
                    ``(B) Standards for participating health 
                insurers.--In administering the program, the Secretary 
                may consider the solvency and claims payment history of 
                health insurers and shall promote participation by 
                qualified health insurers that establish--
                            ``(i) integration of health information 
                        technology tools to promote quality;
                            ``(ii) chronic disease management;
                            ``(iii) preventive health care services; 
                        and
                            ``(iv) evidence-based medicine 
                        considerations of prescription drugs and other 
                        treatment that take into account the individual 
                        medical circumstances of individuals enrolled 
                        in the program.
            ``(5) Enrollment.--In administering the program, the 
        Secretary shall provide that employee enrollment (and changes 
        in enrollment) are limited to an annual open enrollment period, 
        except in the case of change of employment status (including 
        new a new employee) that affects eligibility for coverage and 
        in the case of qualifying events (such as change in family 
        status) specified by the Secretary and consistent with section 
        2701(f).
    ``(c) Premium Assistance.--Under the SBHBP, the Secretary shall 
establish a program of premium assistance for small employers. Such 
program shall provide for a sliding scale of assistance to such 
employers taking into account the following:
            ``(1) The number of employees of the employer.
            ``(2) The average wage level of such employees relative to 
        the average wage level for employees in the same geographic 
        area.
            ``(3) The profit margin of the employer.
    ``(d) Reinsurance for Catastrophic Costs for Certain Health 
Insurance Issuers.--
            ``(1) In general.--In the case of health insurance coverage 
        offered under the SBHBP by a health insurance issuer that 
        participates in a qualified health pooling arrangement, the 
        Secretary shall provide for reinsurance coverage for 75 percent 
        of covered claims that exceed, for an individual for a year, an 
        amount determined by the Secretary for such year which is not 
        less than the minimum amount specified in paragraph (2).
            ``(2) Minimum amount.--The minimum amount specified in this 
        paragraph is--
                    ``(A) for the first year in which this section is 
                in effect, $100,000; or
                    ``(B) for a subsequent year is the minimum amount 
                specified in this paragraph for a previous year, 
                increased by the Secretary's estimate of the average 
                annual percentage increase in health insurance coverage 
                with a median level of premiums for the previous year.
        Any amount determined under subparagraph (B) which is not a 
        multiple of $1,000 shall be rounded to the nearest multiple of 
        $1,000.
    ``(e) Qualified Health Pooling Arrangement.--For purposes of this 
section, the term `qualified health pooling arrangement' means, with 
respect to employees employed in any State for any year--
            ``(1) except as provided in subparagraph (B), an 
        arrangement established by (and operating under the oversight 
        of) such State for purposes of this section, in accordance with 
        regulations of the Secretary, which provides for pooling of 
        health insurance coverage offered for such year in such State, 
        and
            ``(2) in any case in which there is not in effect for any 
        year an arrangement described in subparagraph (A) established 
        by such State, the national health pooling arrangement 
        established under section 3.
The Secretary shall determine, within a reasonable time prior to each 
year, whether there is a qualified health pooling arrangement described 
in paragraph (1) with respect to employees employed in any State.
    ``(f) Small Employer Defined.--
            ``(1) In general.--For purposes of this part, except as 
        otherwise provided in this subsection, the term `small 
        employer' means an employer with 50 or fewer employees, as 
        determined under regulations promulgated by the Secretary.
            ``(2) Continuation of participation.--An employer whose 
        employees are provided health insurance coverage under the 
        SBHBP while the employer is a small employer as defined in 
        paragraph (1) and who thereafter has more than 50 employees 
        shall continue to be treated as a small employer.
            ``(3) Employers not in existence in preceding year.--In the 
        case of an employer which was not in existence for the full 
        year prior to the date on which the employer applies to 
        participate in SBHBP, the determination of whether such 
        employer meets the requirements of paragraph (1) shall be based 
        on the average number of employees that it is reasonably 
        expected such employer will employ on business days in the 
        employer's first full year.
            ``(4) Waiver.--The Secretary may waive the limitations 
        relating to the size of an employer which may participate under 
        SBHBP on a case by case basis if the Secretary determines that 
        such employer makes a compelling case for such a waiver. In 
        making determinations under this paragraph, the Secretary shall 
        consider the effects of the employment of temporary and 
        seasonal workers and other related factors.
    ``(g) Other Definitions.--For purposes of this part:
            ``(1) The terms `employee' and `dependent' have the 
        meanings given such terms by the Secretary in regulations and 
        shall be based upon the definitions of such terms used for 
        purposes of the Federal employee health benefits program 
        established under chapter 89 of title 5, United States Code. 
        The term `employee' includes, in the case of a partnership or 
        sole proprietorship, a partner in the partnership or the sole 
        proprietor, including an individual employer who has no 
        employees. Such may include, with respect to an employer and at 
        the employer's option, part-time and seasonal employees.
            ``(2) The term `SBHBP' means the small business health 
        benefits program established under this section.
    ``(h) Grants for State Qualified Health Pooling Arrangements.--
            ``(1) In general.--The Secretary shall provide grants to 
        States for the establishment, initial administration, and 
        operations of qualified health pooling arrangements described 
        in subsection (e)(1).
            ``(2) Authorization of appropriations.--There are 
        authorized to be appropriated such sums as may be necessary to 
        carry out this subsection.

``SEC. 2772. ESTABLISHMENT OF NATIONAL HEALTH POOLING ARRANGEMENT.

    ``(a) In General.--The Secretary and the Secretary of Labor, acting 
jointly and in consultation with the Director of the Office of 
Personnel Management, shall provide for--
            ``(1) the offering on a timely basis consistent with 
        section 2771 of a national health pooling arrangement to 
        eligible small employers; and
            ``(2) appropriate oversight over any such arrangement.
    ``(b) Specific Requirements.--In carrying out subsection (a), the 
Secretary and the Secretary of Labor shall--
            ``(1) model the national health pooling arrangement on the 
        Federal employees health benefits program under chapter 89 of 
        title 5, United States Code, to the extent practicable and 
        consistent with the other requirements of this part;
            ``(2) consistent with paragraph (1), negotiate the most 
        affordable and substantial coverage possible for small 
        employers; and
            ``(3) not offer any health plan under such arrangement 
        unless the plan meets the restrictions relating to premium 
        rates contained in the most recent `Small Employer Health 
        Insurance Availability Model Act' of the National Association 
        of Insurance Commissioners .
    ``(c) Definitions.--For purposes of this section--
            ``(1) the term `national health pooling arrangement' means 
        an arrangement which provides for pooling of health insurance 
        coverage offered for any year in all States which do not have 
        in effect for such year an arrangement for pooling of health 
        insurance coverage offered in such States; and
            ``(2) in connection with the national health pooling 
        arrangement offered pursuant to this section, an individual 
        employer shall be taken into account as an employee under this 
        section.''.
Output: Small Business Health Plans Act of 2007 - Amends the Public Health Service Act to direct the Secretary of Health and Human Services to establish a small business health benefits program (SBHBP) under which small employers may offer health insurance coverage to employees and their dependents. Outlines program elements and coverage requirements, including that small employers are provided access to qualified health pooling arrangements under which their employees may elect coverage substantially similar to the federal employees benefit program (FEHB) coverage.

Requires the Secretary to: (1) establish a program of premium assistance for small employers under SBHBP that provides a sliding scale of assistance based on the number of employees, the average wage level of such employees, and the employer profit margin; (2) provide for reinsurance coverage for an individual's claims that exceed a specified amount for a year; and (3) provide grants to states for the establishment, initial administration, and operations of qualified health pooling arrangements.

Directs the Secretary and the Secretary of Labor to provide for a national health pooling arrangement for eligible small employers modeled after FEHB.