S.Amdt. 2889

SA 2889. Mr. CARPER submitted an amendment intended to be proposed to
amendment SA 2786 proposed by Mr. Reid (for himself, Mr. Baucus, Mr.
Dodd, and Mr. Harkin) to the bill H.R. 3590, to amend the Internal
Revenue Code of 1986 to modify the first-time homebuyers credit in the
case of members of the Armed Forces and certain other Federal
employees, and for other purposes; which was ordered to lie on the
table; as follows:

Beginning on page 1979, strike line 20 and all that follows
through page 1996, line 3, and insert the following:

SEC. 9001. CAP ON EXCESS MEDICAL INFLATION.

(a) In General.--Chapter 43 of the Internal Revenue Code of
1986, as amended by this Act, is amended by adding at the end
the following new section:

``SEC. 4980I. EXCESS MEDICAL COSTS OF HEALTH BENEFITS PLANS.

``(a) General Rule.--In the case of any health benefits
plan which has excess health plan costs in any plan year,
there is hereby imposed a penalty equal to 40 percent of such
excess health plan costs.
``(b) Excess Health Plan Costs.--For purposes of this
section--
``(1) Excess health plan costs.--The term `excess health
plan costs' means, with respect to any health benefits plan
which has an excess medical inflation rate in excess of zero
for any year, the product of--
``(A) the applicable premium of such health benefits plan
for such year, and
``(B) the excess medical inflation rate for such plan for
such year.
``(2) Excess medical inflation rate.--The term `excess
medical inflation rate' means, with respect to any health
benefits plan for any year, the amount equal to the excess
of--
``(A) the core medical inflation trend rate of such health
benefits plan for such year, over
``(B) the medical inflation cap for such year.
``(3) Core medical trend rate.--The term `core medical
trend rate' means, with respect to any health benefits plan
for any year, the amount (expressed as a percentage), if any,
by which--
``(A) the actuarially adjusted premium of such plan for
such plan for such year, exceeds
``(B) the applicable premium of such plan for the preceding
plan year.
``(4) Medical inflation cap.--
``(A) Years 2013 to 2019.--
``(i) In general.--In the case of any plan year beginning
in a calendar year after 2012 and before 2020, the medical
inflation cap shall be the sum of--

``(I) the annualized rate of growth of the gross domestic
product for the preceding calendar year (as calculated in the
third quarter of the preceding year), plus
``(II) the applicable amount.

``(ii) Applicable amount.--For purposes of clause (i)(II),
the applicable amount shall be determined as follows:

------------------------------------------------------------------------
``In the case of a plan year beginning in
calendar year--                The applicable amount is--
------------------------------------------------------------------------
2013......................................  1.1 percentage points
2014......................................  0.8 percentage points
2015, 2016, 2017, 2018, or 2019...........  0.5 percentage points
------------------------------------------------------------------------

``(B) Years after 2019.--
``(i) In general.--In the case of any plan year beginning
in a calendar year after 2019, the medical inflation cap
shall be equal to the amount (expressed as a percentage), if
any, by which--

``(I) the average applicable premium for a low-cost plan
for such calendar year, exceeds
``(II) the average applicable premium for a low-cost plan
for the preceding calendar year.

``(ii) Average applicable premium for a low-cost plan.--For
purposes of this subparagraph, the term `average applicable
premium for a low-cost plan' means the average of the
applicable premiums for health benefits plans with applicable
premiums below the 33rd percentile, determined by weighting
such health benefits plans by the number of individuals
enrolled in the plan.
``(c) Applicable Premium; Actuarially Adjusted Premium.--
For purposes of this section--
``(1) Applicable premium.--The term `applicable premium'
has the meaning given such term under section 4980B(f)(4).
``(2) Actuarially adjusted premium.--
``(A) In general.--The term `actuarially adjusted premium'
means, for any health benefits plan for any year, the
applicable premium for such year adjusted, according to
actuarial standards and the method prescribed by the
Secretary under subparagraph (B), by excluding any cost
attributable to--
``(i) the attributes of individuals (such as age, gender,
and health risk measures) covered under the plan,
``(ii) the different categories of family structure covered
under the plan (such as the policies with self-only coverage,
family coverage, or other categories of coverage), and
``(iii) changes in benefits or cost-sharing that result in
changes the actuarial value of the plan.
``(B) Methodology.--The Secretary, in consultation with the
Secretary of Health and Human Services, shall issue
regulations establishing a standard methodology for adjusting
a health benefits plan's applicable premiums under
subparagraph (A). In the case of any change described in
subparagraph (A)(iii), premiums shall be adjusted so that the
calculation of the core medical trend rate is made as a
comparison between two actuarially equivalent plans.
``(d) Liability for Penalties.--
``(1) In general.--Each coverage provider shall pay the
penalty imposed by subsection (a).
``(2) Coverage provider.--For purposes of this subsection,
the term `coverage provider' means each of the following:
``(A) Health insurance coverage.--In the case of a health
benefits plan provided under a group health plan which
provides health insurance coverage, the health insurance
issuer.
``(B) Other coverage.--In the case of any other health
benefits plan, the person that administers the plan benefits.
``(e) Exemptions.--
``(1) New insurers and new employers.--This section shall
not apply to any health benefits plan which has provided
coverage for less than 12 months.
``(2) Fixed indemnity health coverage purchased with after-
tax dollars.--This section shall not apply to any coverage
described in section 9832(c)(3) the payment for which is not
excludable from gross income and for which a deduction under
section 162(l) is not allowable.
``(3) Certain government plans.--This section shall not
apply to the following:
``(A) Medicare.--Coverage under part A, part B, part C, or
part D of title XVIII of the Social Security Act.
``(B) Medicaid.--Coverage for medical assistance under
title XIX of the Social Security Act.
``(C) Members of the armed forces and dependents (including
tricare).--Coverage under chapter 55 of title 10, United
States Code, including similar coverage furnished under
section 1781 of title 38 of such Code.
``(D) VA.--Coverage under the veteran's health care program
under chapter 17 of title 38, United States Code, but only if
the coverage for the individual involved is determined by the
Secretary of Health and Human Services in coordination with
the Secretary to be not less than a level specified by the
Secretary of Health and Human Services, based on the
individual's priority for services as provided under section
1705(a) of such title.
``(4) Low-cost plans.--
``(A) In general.--This section shall not apply to any
health benefits plan for which the actuarial value for the
plan year is not more than the applicable threshold.
``(B) Applicable threshold.--For purposes of this
paragraph, the applicable threshold means the dollar amount
which is equal to the actuarial value of the health benefits
plan which is at the 10th percentile of actuarial value for
all health benefits plans.
``(f) Other Definitions and Special Rules.--
``(1) Health benefits plan.--
``(A) In general.--The term `health benefits plan' means
health insurance coverage and a group health plan.
``(B) Government plans included.--Such term shall include a
plan established and maintained for its civilian employees by
the Government of the United States or the government of any
State or political subdivision thereof, or by any agency or
instrumentality of any such government.
``(2) Health insurance coverage and issuer.--The terms
`health insurance coverage' and `health insurance issuer'
have the meanings given such terms by section 9832(b).
``(3) Group health plan.--The term `group health plan' has
the meaning given such term under section 5000(b).
``(4) Regulations for health benefits plans with different
product lines.--The Secretary, in consultation with the
Secretary of Health and Human Services, shall prescribe by
regulations a uniform method for the combination of product
lines of health benefits plans of any health insurance issuer
for the purpose of calculating the core medical trend rate
provided that the combined core medical trend rate for such
plans would not reduce the sum of the excess health plan
costs determined separately with respect to each product
line.
``(5) Special rule in the event of a merger, acquisition or
sell-offs among employers and insurers.--In the event of any
merger, acquisition, or sell-off of a health benefit plan,
the core medical trend rate for such plan shall be calculated
by attributing the applicable premium for the preceding plan
year to the coverage of health plan members in their previous
group.
``(6) Administration and procedure.--Any penalty under this
section shall be paid upon notice and demand by the
Secretary, and shall be assessed and collected in the same
manner as an assessable penalty under subchapter B of chapter
68.''.
(b) Clerical Amendment.--The table of sections for chapter
43 of such Code, as amended by this Act, is amended by adding
at the end the following new item:

``Sec. 4980I. Excess medical inflation cap.''.

(c) Effective Date.--The amendments made by this section
shall apply to plan years beginning after December 31, 2012.
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