HealthCARE Act of 2003

        [Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2402 Introduced in House (IH)]

108th CONGRESS
1st Session
H. R. 2402

To expand the number of individuals and families with health insurance
coverage, and for other purposes.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

June 10, 2003

Ms. Kaptur (for herself, Mr. LaTourette, Mr. Clay, Mr. Moran of
Virginia, Mrs. Christensen, and Mr. Davis of Illinois) introduced the
following bill; which was referred to the Committee on Energy and
Commerce, and in addition to the Committees on Ways and Means,
Education and the Workforce, and Rules, for a period to be subsequently
determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

A BILL

To expand the number of individuals and families with health insurance
coverage, and for other purposes.

Be it enacted by the Senate and House of Representatives 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 ``Health Coverage,
Affordability, Responsibility, and Equity Act of 2003'' or the
``HealthCARE Act of 2003''.
(b) Table of Contents.--The table of contents of this Act is as
follows:

Sec. 1. Short title; table of contents.
TITLE I--INCREASING HEALTH CARE COVERAGE

Subtitle A--Medicaid and SCHIP

Sec. 101. State option to offer medicaid coverage based on need.
Sec. 102. State option to provide coverage of children under SCHIP in
excess of the State's allotment.
Subtitle B--Refundable Tax Credit for Health Insurance Costs of Low-
Income Individuals and Families

Sec. 111. Credit for health insurance costs of certain low-income
individuals.
Sec. 112. Advance payment of credit for health insurance costs of
eligible low-income individuals.
TITLE II--IMPROVING ACCESS TO HEALTH PLANS

Sec. 201. Definitions.
Sec. 202. Establishment of health insurance purchasing pools.
Sec. 203. Purchasing pools.
Sec. 204. Purchasing pool operators.
Sec. 205. Contracts with participating insurers.
Sec. 206. Options for health benefits coverage.
Sec. 207. Enrollment process for eligible individuals.
Sec. 208. Plan premiums.
Sec. 209. Enrollee premium share.
Sec. 210. Payments to purchasing pool operators and payments to
participating insurers.
Sec. 211. State-based reinsurance programs.
Sec. 212. Coverage under individual health insurance.
Sec. 213. Use of premium subsidies to unify family coverage with
members enrolled in medicaid and SCHIP.
Sec. 214. Coverage through employer-sponsored health insurance.
Sec. 215. Participation by small employers.
Sec. 216. Report.
Sec. 217. Authorization of appropriations.
TITLE III--NATIONAL ADVISORY COMMISSION ON EXPANDED ACCESS TO HEALTH
CARE

Sec. 301. National Advisory Commission on Expanded Access to Health
Care.
Sec. 302. Congressional action.
TITLE IV--STATE WAIVERS

Sec. 401. State waivers.

TITLE I--INCREASING HEALTH CARE COVERAGE

Subtitle A--Medicaid and SCHIP

SEC. 101. STATE OPTION TO OFFER MEDICAID COVERAGE BASED ON NEED.

(a) State Option.--Section 1902(a)(10)(A)(ii) of the Social
Security Act (42 U.S.C. 1396a) is amended--
(1) by striking ``or'' at the end of subclause (XVII);
(2) by adding ``or'' at the end of subclause (XVIII); and
(3) by adding at the end the following:
``(XIX) who are not otherwise
eligible for medical assistance under
this title and whose income does not
exceed such income level as the State
may establish, expressed as a
percentage (not to exceed 100) of the
income official poverty line (as
defined by the Office of Management and
Budget, and revised annually in
accordance with section 673(2) of the
Omnibus Budget Reconciliation Act of
1981) applicable to a family of the
size involved;''.
(b) Increased FMAP.--Section 1905 of the Social Security Act (42
U.S.C. 1396d) is amended--
(1) in the first sentence of subsection (b)--
(A) by striking ``and (4)'' and inserting ``(4)'';
and
(B) by inserting before the period the following:
``, and (5) in the case of a State that meets the
conditions described in paragraph (1) of subsection
(x), the Federal medical assistance percentage shall be
equal to the need-based enhanced FMAP described in
paragraph (2) of subsection (x)''; and
(2) by adding at the end the following:
``(x)(1) For purposes of clause (5) of the first sentence of
subsection (b), the conditions described in this subsection are the
following:
``(A) The State provides medical assistance to individuals
described in subsection (a)(10)(A)(ii)(XIX).
``(B) The State uses streamlined enrollment and outreach
measures to all individuals described in subparagraph (A)
including--
``(i) the same application and retention procedures
(such as 1-page enrollment forms and enrollment by
mail) used by the majority of State programs under
title XXI during the preceding year; and
``(ii) outreach efforts proportional in scope and
reasonably expected effectiveness to those employed by
the State during a comparable stage of implementation
of the State's program under title XXI.
``(C) The State applies eligibility standards and
methodologies under this title with respect to individuals
residing in the State who have not attained age 65 that are not
more restrictive (as determined under section
1902(a)(10)(C)(i)(III)) than the standards and methodologies
that applied under this title with respect to such individuals
as of July 1, 2003.
``(2)(A) For purposes of clause (5) of the first sentence of
subsection (b), the need-based enhanced FMAP for a State for a fiscal
year, is equal to the Federal medical assistance percentage (as defined
in the first sentence of subsection (b)) for the State increased,
subject to subparagraph (B), by such percentage increase as would
compensate all States for the additional expenditures that would be
incurred by all States if the States were to provide medical assistance
to all individuals whose income does not exceed 100 percent of the
income official poverty line (as defined by the Office of Management
and Budget, and revised annually in accordance with section 673(2) of
the Omnibus Budget Reconciliation Act of 1981) applicable to a family
of the size involved and who are eligible for such assistance only on
the basis of section 1902(a)(10)(A)(ii)(XIX).
``(B) In the case of a State that provides medical assistance to
individuals described in section 1902(a)(10)(A)(ii)(XIX) but limits
such assistance to individuals with income at or below a percentage of
the income official poverty line (as defined by the Office of
Management and Budget, and revised annually in accordance with section
673(2) of the Omnibus Budget Reconciliation Act of 1981) applicable to
a family of the size involved that is less than 100, the Secretary
shall reduce the need-based enhanced FMAP otherwise determined for the
State under subparagraph (A) by a proportion based on the national
income distribution of all individuals in all States who are
(regardless of whether such individuals are enrolled under this title)
eligible for medical assistance only on the basis of section
1902(a)(10)(A)(ii)(XIX).''.
(c) Conforming Amendments.--Section 1905(a) of the Social Security
Act (42 U.S.C. 1396d(a)) is amended in the matter preceding paragraph
(1)--
(1) by striking ``or'' at the end of clause (xii);
(2) by adding ``or'' at the end of clause (xiii); and
(3) by inserting after clause (xiii) the following:
``(xiv) individuals who are eligible for medical assistance
on the basis of section 1902(a)(10)(A)(ii)(XIX);''.
(d) Effective Date.--The amendments made by this section take
effect on October 1, 2004, and apply to medical assistance provided on
or after that date, without regard to whether final regulations to
carry out such amendments have been promulgated by such date.

SEC. 102. STATE OPTION TO PROVIDE COVERAGE OF CHILDREN UNDER SCHIP IN
EXCESS OF THE STATE'S ALLOTMENT.

(a) In General.--Title XXI of the Social Security Act (42 U.S.C.
1397aa et seq.) is amended by adding at the end the following:

``SEC. 2111. STATE OPTION TO PROVIDE COVERAGE OF CHILDREN IN EXCESS OF
THE STATE'S ALLOTMENT.

``(a) State Option.--In the case of a State that meets the
condition described in subsection (b), the following shall apply:
``(1) Notwithstanding section 2105 and without regard to
the State's allotment under section 2104, the Secretary shall
pay the State an amount for each quarter equal to the enhanced
FMAP of expenditures incurred in the quarter that are described
in section 2105(a)(1).
``(2) The Secretary shall reduce the State's allotment
under section 2104, for the first fiscal year for which the
State amendment described in subsection (b) applies, and for
each fiscal year thereafter, by an amount equal to the amount
that the Secretary determines the State would have expended to
provide child health assistance to targeted low-income children
during that fiscal year if that State had not elected the State
option to provide such assistance in accordance with this
section.
``(3) Subsections (f) and (g) of section 2104 shall not
apply to the State's reduced allotment (after the application
of paragraph (2)).
``(b) Condition Described.--For purposes of subsection (a), the
condition described in this subsection is that the State has made an
irrevocable election, through a plan amendment, to provide child health
assistance to all targeted low-income children residing in the State
(without regard to date of application for assistance) and to cover
health services listed in the State plan whenever medically
necessary.''.
(b) Effective Date.--The amendment made by this section takes
effect on October 1, 2004, and applies to child health assistance
provided on or after that date, without regard to whether final
regulations to carry out such amendment have been promulgated by such
date.

Subtitle B--Refundable Tax Credit for Health Insurance Costs of Low-
Income Individuals and Families

SEC. 111. CREDIT FOR HEALTH INSURANCE COSTS OF CERTAIN LOW-INCOME
INDIVIDUALS.

(a) In General.--Subpart C of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to refundable credits)
is amended by redesignating section 36 as section 37 and inserting
after section 35 the following new section:

``SEC. 36. HEALTH INSURANCE COSTS OF ELIGIBLE LOW-INCOME INDIVIDUALS.

``(a) In General.--In the case of an individual, there shall be
allowed as a credit against the tax imposed by this subtitle for the
taxable year an amount equal to the applicable percentage of the amount
paid by the taxpayer (or on behalf of the taxpayer) for coverage of the
taxpayer or qualifying family members under qualified health insurance
for eligible coverage months beginning in such taxable year.
``(b) Applicable Percentage.--For purposes of this section--
``(1) In general.--Subject to paragraph (2), the term
`applicable percentage' means the standard Government
contribution (determined for full-time Federal employees
enrolling in coverage for which such contribution is not
limited by section 8906(b)(1) of title 5, United States Code)
for an employee enrolled in a health benefits plan under
chapter 89 of title 5, United States Code, for the calendar
year in which the taxable year begins, expressed as a
percentage of the total premium for such plan.
``(2) Increased percentage for certain taxpayers.--
``(A) In general.--In the case of a taxpayer whose
adjusted gross income for the preceding taxable year
does not exceed 150 percent of the poverty level, the
applicable percentage determined under paragraph (1)
shall be increased by such percentage points as the
Secretary determines will fully compensate such an
individual for the individual's limited purchasing
power in comparison to individuals whose adjusted gross
income equals the average adjusted gross income for all
Federal employees, to the extent that the amount of the
resulting increase in the credit amount for all such
eligible low-income individuals for the taxable year is
not reasonably expected to exceed the 5 percentage
point dollar amount for that year, as determined under
subparagraph (B).
``(B) Determination of 5 percentage point dollar
amount.--For purposes of subparagraph (A), the 5
percentage point dollar amount for any taxable year is
the product of--
``(i) the total number of individuals
receiving credits under this section for such
year; and
``(ii) the amount equal to 5 percent of the
average health insurance premium amount to
which such credits are applied.
``(C) Rule of construction.--Nothing in this
paragraph shall be construed to prevent the Secretary
from establishing more than 1 level of supplemental
assistance that provides greater assistance to
individuals with lower income, determined as a
percentage of poverty.
``(3) Application of fehbp coverage categories to
determination of credit.--The percentages described in
paragraphs (1) and (2) shall be applied to a taxpayer
consistent with the coverage categories (such as self or family
coverage) applied with respect to a health benefits plan under
chapter 89 of title 5, United States Code.
``(c) Maximum Premium Amount.--The amount paid for qualified health
insurance taken into account under subsection (a) for any taxable year
shall not exceed an amount equal to the capped premium established for
the applicable State under section 204(c)(10) of the Health Coverage,
Affordability, Responsibility, and Equity Act of 2003 for the calendar
year in which the such taxable year begins.
``(d) Eligible Coverage Month.--For purposes of this section--
``(1) In general.--The term `eligible coverage month' means
any month if during such month the taxpayer or a qualifying
family member--
``(A) is an eligible low-income individual;
``(B) is covered by qualified health insurance, the
premium for which is paid by the taxpayer (or on behalf
of the taxpayer);
``(C) does not have other specified coverage; and
``(D) is not imprisoned under Federal, State, or
local authority.
``(2) Joint returns.--In the case of a joint return, the
requirement of paragraph (1)(A) shall be treated as met with
respect to any month if at least 1 spouse satisfies such
requirement.
``(e) Eligible Low-Income Individual.--For purposes of this
section--
``(1) In general.--The term `eligible low-income
individual' means an individual--
``(A) who has not attained age 65;
``(B) whose adjusted gross income does not exceed
200 percent of the poverty level;
``(C) who is ineligible for the medicaid program or
the State children's health insurance program under
title XIX or XXI of the Social Security Act (other than
under section 1928 of such Act);
``(D) who has limited access to health insurance
coverage through the employer of the individual or a
member of the individual's family (either because the
employer does not offer such coverage to the individual
or because the employee contribution for such coverage
would exceed an amount equal to 5 percent of the household income of
such individual, as determined in accordance with paragraph (2));
``(E) who applies for a credit under this section
not later than 60 days after receiving notice of
potential eligibility for such credit, under procedures
established by the Secretary; and
``(F) who resides in a State where the eligibility
standards and methodologies applied under the medicaid
and State children's health insurance programs with
respect to individuals residing in the State who have
not attained age 65 are not more restrictive (as
determined under section 1902(a)(10)(C)(i)(III) of the
Social Security Act) than the standards and
methodologies that applied under such programs with
respect to such individuals as of July 1, 2003.
``(2) Determination of eligibility.--
``(A) SCHIP agency.--
``(i) In general.--The determination of
whether an individual is an eligible low-income
individual for purposes of this section shall
be made by the State agency with responsibility
for determining the eligibility of individuals
for assistance under the State children's
health insurance program under title XXI of the
Social Security Act.
``(ii) Application of screen and enroll
requirements.--
``(I) In general.--The State agency
referred to in clause (i) shall ensure
that individuals applying for a
certificate of eligibility are screened
for potential eligibility under the
medicaid and State children's health
insurance programs and that individuals
found through screening to be eligible
for assistance under such a program are
enrolled for assistance under the
appropriate program. To the maximum
extent possible pursuant to State
options under title XIX of the Social
Security Act, and notwithstanding any
otherwise applicable provision of, or
State plan provision under, such title,
screening and enrollment activities
described in the previous sentence
shall use the procedures employed by
the State children's health insurance
program operated under title XXI of the
Social Security Act, if such procedures
differ from those ordinarily employed
by the State program operated under
title XIX of such Act.
``(II) No delay of issuance of
certificate.--The application of the
screen and enroll requirements of
clause (i) shall not delay the issuance
of a certificate of eligibility to an
individual for purposes of this
section. The State agency referred to
in clause (i) shall adopt procedures to
ensure that an individual issued a
certificate of eligibility under this
paragraph who is subsequently
determined to be eligible for the State
medicaid program under title XIX of the
Social Security Act or the State
children's health insurance program
under XXI of such Act shall be enrolled
in the appropriate program without an
interruption in the individual's health
insurance coverage.
``(B) Standards.--
``(i) In general.--An individual is an
eligible low-income individual for purposes of
this section if--
``(I) on the basis of the
individual's tax return for the
preceding taxable year, the individual
meets the requirements of paragraph
(1)(B), and the individual otherwise
satisfies the requirements of paragraph
(1), or
``(II) the individual is determined
to satisfy the requirements of
paragraph (1) after the application of
the same eligibility methodologies as
would apply for purposes of determining
the eligibility of an individual for
assistance under the State children's
health insurance program under title
XXI of the Social Security Act.
``(ii) Application of schip income
determination methodologies.--For purposes of
clause (i)(II), determinations of income levels
shall be made using the methodologies described
in that clause, to the extent such
methodologies for ascertaining household income
differ from any otherwise applicable method for
determining adjusted gross income or the
definition of adjusted gross income.
``(C) Certificate of eligibility.--
``(i) In general.--An individual who is
determined to be an eligible low-income
individual shall be issued a certificate of
eligibility by the State agency referred to in
subparagraph (A).
``(ii) Certificate amount.--Such
certificate shall indicate the applicable
percentage of the amount paid for coverage
under qualified health insurance that the
individual is eligible for under this section
(including any supplemental assistance which
the individual may be eligible for under
subsection (b)(2), unless the individual elects
to not receive such supplemental assistance).
``(iii) 12-month period of issue.--The
certificate of eligibility shall apply for a
12-month period from the date of issue,
notwithstanding any changes in household
circumstances following the individual's
application for a credit under this section or
supplemental assistance.
``(D) Supplemental assistance.--The State agency
described in subparagraph (A) shall determine an
individual's eligibility for supplemental assistance
under subsection (b)(2) based on the methodologies
referred to in subparagraph (B)(ii).
``(f) Qualifying Family Member.--For purposes of this section--
``(1) In general.--The term `qualifying family member'
means--
``(A) the taxpayer's spouse; and
``(B) any dependent of the taxpayer with respect to
whom the taxpayer is entitled to a deduction under
section 151(c).
Such term does not include any individual who is not an
eligible low-income individual under subsection (e)(1).
``(2) Special dependency test in case of divorced parents,
etc.--If paragraph (2) or (4) of section 152(e) applies to any
child with respect to any calendar year, in the case of any
taxable year beginning in such calendar year, such child shall
be treated as described in paragraph (1)(B) with respect to the
custodial parent (within the meaning of section 152(e)(1)) and
not with respect to the noncustodial parent.
``(g) Qualified Health Insurance.--For purposes of this section--
``(1) In general.--The term `qualified health insurance'
means any of the following:
``(A) Coverage under an insurance plan
participating in a purchasing pool established pursuant
to section 203 of the Health Coverage, Affordability,
Responsibility, and Equity Act of 2003.
``(B) Coverage under individual health insurance
pursuant to section 212 of such Act.
``(C) Coverage, pursuant to section 213 of such
Act, under the medicaid program or the State children's
health insurance program if 1 or more family members
qualifies for coverage under such program.
``(D) Coverage, pursuant to section 214 of such
Act, under an employer-sponsored insurance plan,
including--
``(i) coverage under a COBRA continuation
provision (as defined in section 9832(d)(1));
``(ii) State-based continuation coverage
provided under a State law that requires such
coverage;
``(iii) coverage voluntarily offered by a
former employer of the individual or family
member; or
``(iv) coverage under a group health plan
that is available through the employment of the
individual or a family member.
``(2) Exception.--The term `qualified health insurance'
shall not include--
``(A) a flexible spending or similar arrangement;
and
``(B) any insurance if substantially all of its
coverage is of excepted benefits described in section
9832(c).
``(3) Definitions.--For purposes of this subsection--
``(A) Employer-sponsored insurance.--
``(i) In general.--The term `employer-
sponsored insurance' means any insurance which
covers medical care under any health plan
maintained by any employer (or former employer)
of the taxpayer or the taxpayer's spouse.
``(ii) Treatment of cafeteria plans.--For
purposes of clause (i), the cost of coverage
shall be treated as paid or incurred by an
employer to the extent the coverage is in lieu
of a right to receive cash or other qualified
benefits under a cafeteria plan (as defined in
section 125(d)).
``(B) Individual health insurance.--The term
`individual health insurance' means any insurance which
constitutes medical care offered to individuals other
than in connection with a group health plan and does
not include Federal- or State-based health insurance
coverage.
``(h) Other Specified Coverage.--For purposes of this section, an
individual has other specified coverage for any month if, as of the
first day of such month--
``(1) Coverage under medicare.--Such individual is entitled
to benefits under part A of title XVIII of the Social Security
Act or is enrolled under part B of such title.
``(2) Certain other coverage.--Such individual--
``(A) is enrolled in a health benefits plan under
chapter 89 of title 5, United States Code; or
``(B) is entitled to receive benefits under chapter
55 of title 10, United States Code.
``(i) Federal Poverty Level; Poverty Level; Poverty.--For purposes
of this section, the terms `Federal poverty level', `poverty level',
and `poverty' mean the income official poverty line (as defined by the
Office of Management and Budget, and revised annually in accordance
with section 673(2) of the Omnibus Budget Reconciliation Act of 1981)
applicable to a family of the size involved.
``(j) Special Rules.--
``(1) Coordination with advance payments of credit.--With
respect to any taxable year, the amount which would (but for
this subsection) be allowed as a credit to the taxpayer under
subsection (a) shall be reduced (but not below zero) by the
aggregate amount paid on behalf of such taxpayer under section
7528 for months beginning in such taxable year.
``(2) Coordination with other deductions.--Amounts taken
into account under subsection (a) shall not be taken into
account in determining any deduction allowed under section
162(l) or 213.
``(3) MSA distributions.--Amounts distributed from an
Archer MSA (as defined in section 220(d)) shall not be taken
into account under subsection (a).
``(4) Denial of credit to dependents.--No credit shall be
allowed under this section to any individual with respect to
whom a deduction under section 151 is allowable to another
taxpayer for a taxable year beginning in the calendar year in
which such individual's taxable year begins.
``(5) Both spouses eligible low-income individuals.--The
spouse of the taxpayer shall not be treated as a qualifying
family member for purposes of subsection (a), if--
``(A) the taxpayer is married at the close of the
taxable year;
``(B) the taxpayer and the taxpayer's spouse are
both eligible low-income individuals during the taxable
year; and
``(C) the taxpayer files a separate return for the
taxable year.
``(6) Marital status; certain married individuals living
apart.--Rules similar to the rules of paragraphs (3) and (4) of
section 21(e) shall apply for purposes of this section.
``(7) Insurance which covers other individuals.--For
purposes of this section, rules similar to the rules of section
213(d)(6) shall apply with respect to any contract for
qualified health insurance under which amounts are payable for
coverage of an individual other than the taxpayer and
qualifying family members.
``(8) Treatment of payments.--For purposes of this section:
``(A) Payments by secretary.--Any payment made by
the Secretary on behalf of any individual under section
7528 (relating to advance payment of credit for health
insurance costs of eligible low-income individuals)
shall be treated as having been made by the taxpayer
(or on behalf of the taxpayer) on the first day of the
month for which such payment was made.
``(B) Payments by taxpayer.--Any payment made by
the taxpayer (or on behalf of the taxpayer) for
eligible coverage months shall be treated as having
been so made on the first day of the month for which
such payment was made.
``(9) Regulations.--
``(A) In general.--The Secretary, in consultation
with the Secretary of Health and Human Services, shall
administer the credit allowed under this section and
shall prescribe such regulations and other guidance as
may be necessary or appropriate to carry out this
section, section 6050U, and section 7528.
``(B) Eligibility determinations.--Such regulations
shall include such standards as the Secretary of Health
and Human Services may specify with respect to the
requirements for eligibility determinations under
subsection (e)(2).
``(C) Measures to combat fraud and abuse.--Such
regulations shall include appropriate procedures to
deter, detect, and penalize fraudulent efforts to
obtain a credit under this section by individuals,
providers of qualified health insurance, and others.''.
(b) Conforming Amendments.--
(1) Paragraph (2) of section 1324(b) of title 31, United
States Code, is amended by inserting before the period ``, or
from section 36 of such Code''.
(2) The table of sections for subpart C of part IV of
chapter 1 of the Internal Revenue Code of 1986 is amended by
striking the last item and inserting the following new items:

``Sec. 36. Health insurance costs of
eligible low-income
individuals.
``Sec. 37. Overpayments of tax.''.

(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2005.
(d) Reimbursement for Administrative Costs Incurred in Determining
Eligibility for Credit.--
(1) In General.--The Secretary of Health and Human Services
shall reimburse States for the reasonable administrative costs
incurred in making eligibility determinations in accordance
with section 36(e) of the Internal Revenue Code of 1986 (as
added by subsection (a)). Such reimbursement shall not apply to
State costs required under the medicaid or State children's health
insurance programs.
(2) Application.--A State desiring reimbursement under this
subsection shall submit an application to the Secretary of
Health and Human Services in such manner, at such time, and
containing such information as the Secretary may require.
(3) Appropriation.--Out of any money in the Treasury of the
United States not otherwise appropriated, there are
appropriated such sums as may be necessary to carry out this
subsection.

SEC. 112. ADVANCE PAYMENT OF CREDIT FOR HEALTH INSURANCE COSTS OF
ELIGIBLE LOW-INCOME INDIVIDUALS.

(a) In General.--Chapter 77 of the Internal Revenue Code of 1986
(relating to miscellaneous provisions) is amended by adding at the end
the following new section:

``SEC. 7528. ADVANCE PAYMENT OF CREDIT FOR HEALTH INSURANCE COSTS OF
ELIGIBLE LOW-INCOME INDIVIDUALS.

``(a) General Rule.--Not later than August 1, 2005, the Secretary
shall establish a program for making payments on behalf of certified
individuals to providers of qualified health insurance (as defined in
section 36(g)) for such individuals.
``(b) Limitation on Advance Payments During Any Taxable Year.--The
Secretary may make payments under subsection (a) only to the extent
that the total amount of such payments made on behalf of any individual
during the taxable year is not reasonably expected to exceed the
applicable percentage (as defined in section 36(b)) of the amount paid
by the taxpayer (or on behalf of the taxpayer) for coverage of the
taxpayer and qualifying family members under qualified health insurance
for eligible coverage months beginning in the taxable year.
``(c) Certified Individual.--For purposes of this section, the term
`certified individual' means any individual for whom a health coverage
eligibility certificate is in effect.
``(d) Health Coverage Eligibility Certificate.--For purposes of
this section, the term `health coverage eligibility certificate' means
any written statement that an individual is an eligible low-income
individual (as defined in section 36(e)) if such statement provides
such information as the Secretary may require for purposes of this
section and is issued by the State agency responsible for administering
the State children's health insurance program under title XXI of the
Social Security Act.''.
(b) Disclosure of Return Information for Purposes of Carrying Out a
Program for Advance Payment of Credit for Health Insurance Costs of
Eligible Low-Income Individuals.--
(1) In general.--Subsection (l) of section 6103 of the
Internal Revenue Code of 1986 (relating to disclosure of
returns and return information for purposes other than tax
administration) is amended by adding at the end the following
new paragraph:
``(19) Disclosure of return information for purposes of
carrying out a program for advance payment of credit for health
insurance costs of eligible low-income individuals.--The
Secretary may disclose to providers of health insurance for any
certified individual (as defined in section 7528(c)) return
information with respect to such certified individual only to
the extent necessary to carry out the program established by
section 7528 (relating to advance payment of credit for health
insurance costs of eligible low-income individuals).''.
(2) Procedures and recordkeeping related to disclosures.--
Subsection (p) of such section is amended--
(A) in paragraph (3)(A) by striking ``or (18)'' and
inserting ``(18), or (19)''; and
(B) in paragraph (4), as amended by section
202(b)(2)(B) of the Trade Act of 2002 (Public Law 107-
210; 116 Stat. 961), by striking ``or (17)'' after
``any other person described in subsection (l)(16)''
each place it appears and inserting ``(18), or (19)''.
(3) Unauthorized inspection of returns or return
information.--Section 7213A(a)(1)(B) of such Code is amended by
striking ``section 6103(n)'' and inserting ``subsection (l)(18)
or (19) or (n) of section 6103''.
(c) Information Reporting.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61 of the Internal Revenue Code of 1986 (relating to
information concerning transactions with other persons) is
amended by inserting after section 6050T the following new
section:

``SEC. 6050U. RETURNS RELATING TO CREDIT FOR HEALTH INSURANCE COSTS OF
ELIGIBLE LOW-INCOME INDIVIDUALS.

``(a) Requirement of Reporting.--Every person who is entitled to
receive payments for any month of any calendar year under section 7528
(relating to advance payment of credit for health insurance costs of
eligible low-income individuals) with respect to any certified
individual (as defined in section 7528(c)) shall, at such time as the
Secretary may prescribe, make the return described in subsection (b)
with respect to each such individual.
``(b) Form and Manner of Returns.--A return is described in this
subsection if such return--
``(1) is in such form as the Secretary may prescribe; and
``(2) contains--
``(A) the name, address, and TIN of each individual
referred to in subsection (a);
``(B) the number of months for which amounts were
entitled to be received with respect to such individual
under section 7528 (relating to advance payment of
credit for health insurance costs of eligible low-
income individuals);
``(C) the amount entitled to be received for each
such month; and
``(D) such other information as the Secretary may
prescribe.
``(c) Statements To Be Furnished to Individuals With Respect to
Whom Information Is Required.--Every person required to make a return
under subsection (a) shall furnish to each individual whose name is
required to be set forth in such return a written statement showing--
``(1) the name and address of the person required to make
such return and the phone number of the information contact for
such person; and
``(2) the information required to be shown on the return
with respect to such individual.
The written statement required under the preceding sentence shall be
furnished on or before January 31 of the year following the calendar
year for which the return under subsection (a) is required to be
made.''.
(2) Assessable penalties.--
(A) Subparagraph (B) of section 6724(d)(1) of such
Code (relating to definitions) is amended by
redesignating clauses (xii) through (xviii) as clauses
(xiii) through (xix), respectively, and by inserting
after clause (xi) the following new clause:
``(xii) section 6050U (relating to returns
relating to credit for health insurance costs
of eligible low-income individuals),''.
(B) Paragraph (2) of section 6724(d) of such Code
is amended by striking ``or'' at the end of
subparagraph (AA), by striking the period at the end of
subparagraph (BB) and inserting ``, or'', and by adding
after subparagraph (BB) the following new subparagraph:
``(CC) section 6050U (relating to returns relating
to credit for health insurance costs of eligible low-
income individuals).''.
(d) Clerical Amendments.--
(1) Advance payment.--The table of sections for chapter 77
of the Internal Revenue Code of 1986 is amended by adding at
the end the following new item:

``Sec. 7528. Advance payment of credit
for health insurance costs of
eligible low-income
individuals.''.

(2) Information reporting.--The table of sections for
subpart B of part III of subchapter A of chapter 61 of such
Code is amended by inserting after the item relating to section
6050T the following new item:

``Sec. 6050U. Returns relating to credit
for health insurance costs of
eligible low-income
individuals.''.

(e) Effective Date.--The amendments made by this section shall take
effect on January 1, 2006.

TITLE II--IMPROVING ACCESS TO HEALTH PLANS

SEC. 201. DEFINITIONS.

In this title:
(1) Eligible individual.--The term ``eligible individual''
means an individual with respect to whom a tax credit is
allowed under section 36 of the Internal Revenue Code of 1986
(as added by section 111).
(2) Participating insurer.--The term ``participating
insurer'' means an entity with a contract under section 205(a).
(3) Private group health insurance plan.--The term
``private group health insurance plan'' means a plan offered by
a participating insurer that provides health benefits coverage
to eligible individuals and that meets the requirements of this
title.
(4) Purchasing pool operator.--The term ``purchasing pool
operator'' means the entity designated by the State under
section 204.
(5) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(6) Small employer.--The term ``small employer'' means an
employer with not less than 2 and not more than 100 employees.

SEC. 202. ESTABLISHMENT OF HEALTH INSURANCE PURCHASING POOLS.

There is established a program under which the Secretary shall
ensure that each eligible individual has the opportunity to enroll,
through a purchasing pool operator, in a private group health insurance
plan offered by a participating insurer under this title.

SEC. 203. PURCHASING POOLS.

(a) Establishment of Purchasing Pools.--Each State participating in
the program under this title shall establish a purchasing pool that is
available to each eligible individual who resides in the State.
(b) Types of Purchasing Pools.--
(1) In general.--A purchasing pool established under
subsection (a) shall be 1 of the following:
(A) A statewide purchasing pool operated by the
State.
(B) A statewide purchasing pool operated on behalf
of the State by the Director of the Office of Personnel
Management, or the designee of such Director.
(2) OPM operated pool.--In the case of a statewide
purchasing pool described in paragraph (1)(B), the Director of
the Office of Personnel Management or the Director's designee,
may limit participating insurers in such pool to those
described in section 205(e), except that the Director or such
designee shall ensure that additional private group health
insurance plans participate in such a pool to the extent
necessary to meet the requirements of section 204(c)(9).
(c) State Election Process.--
(1) In general.--Each State participating in the program
under this title shall notify the Secretary, not later than
January 4, 2005, of the type of purchasing pool that applies to
residents of the State.
(2) Default choice.--If a State participating in the
program under this title fails to notify the Secretary of the
type of purchasing pool elected by the State by the date
described in paragraph (1), the State shall be deemed to have
elected the type of purchasing pool described in subsection
(b)(1)(B).
(3) Change of election.--The Secretary shall establish
procedures under which a State participating in the program
under this title may change the election of the type of
purchasing pool applicable to residents of the State.

SEC. 204. PURCHASING POOL OPERATORS.

(a) Designation.--Each State shall designate a purchasing pool
operator that shall be responsible for operating the purchasing pool
established under section 203(a). A purchasing pool operator may be
(or, to have 1 or more of its functions performed, may contract with) a
private entity that has entered into a contract with the State if such
entity meets requirements established by the Secretary for purposes of
the program under this title.
(b) Operation Similar to FEHBP.--Each purchasing pool operator
shall operate the purchasing pool established under section 203(a) in a
manner that is similar to the manner in which the Director of the
Office of Personnel Management operates the Federal employees' health
benefits program under chapter 89 of title 5, United States Code,
including (but not limited to) the performance of the specific
functions described in subsection (c).
(c) Specific Functions Described.--The specific functions described
in this subsection include the following:
(1) Each purchasing pool operator shall offer one-stop
shopping for eligible individuals to enroll for health benefits
coverage under private, group health insurance plans offered by
participating insurers.
(2) Each purchasing pool operator shall limit participating
insurers to those that meet the conditions for participation
described in this title.
(3) Each purchasing pool operator shall negotiate (or, in
the case of a purchasing pool described in section
203(b)(1)(B), shall negotiate or otherwise determine) bids and
terms of coverage with insurers.
(4) Each purchasing pool operator shall provide eligible
individuals with comparative information on private group
health insurance plans offered by participating insurers.
(5) Each purchasing pool operator shall assist eligible
individuals in enrolling with a private group health insurance
plan offered by a participating insurer.
(6) Each purchasing pool operator shall collect private
group health insurance plan premium payments for participating
insurers and process such premium payments.
(7) Each purchasing pool operator shall reconcile from year
to year aggregate premium payments and claims costs of private
group health insurance plans consistent with practices under
the Federal employees' health benefits program under chapter 89
of title 5, United States Code.
(8) Each purchasing pool operator shall offer customer
service to eligible individuals enrolled for health benefits
coverage under a private group health insurance plan offered by
a participating insurer.
(9) Each purchasing pool operator shall ensure that each
eligible individual has the option of enrolling in either of at
least 2 benchmark or benchmark-equivalent plans with--
(A) a premium at or below a cap established by the
pool operator for purposes of this title; and
(B) coverage of essential services included in the
report required under section 301(e)(2), with cost-
sharing consistent with such report.
(10) Each purchasing pool operator shall establish a
premium cap for purposes of determining the credit limitation
under section 36(c) of the Internal Revenue Code of 1986, as
added by section 111(a). The cap required under this paragraph
may not be less than the premium charged to Federal employees
by the most highly-enrolled health plan under the Federal
employees' health benefits program under chapter 89 of title 5,
United States Code. If the most highly-enrolled plan in that
program differs for Federal enrollees in the State and all
Federal enrollees nationally in such plan, the minimum
permitted premium cap shall be the lower of such premiums.

SEC. 205. CONTRACTS WITH PARTICIPATING INSURERS.

(a) In General.--Each purchasing pool operator shall negotiate and
enter into contracts for the provision of health benefits coverage
under the program under this title with entities that meet the
conditions of participation described in subsection (b) and other
applicable requirements of this Act.
(b) Consumer Information.--In carrying out its duty under section
204(c)(4) to inform eligible individuals about private group health
plans, the purchasing pool operator shall provide information that
meets the requirements of section 212(b)(2).
(c) State Licensure.--
(1) In general.--Subject to paragraph (2), a health plan
shall not be a participating insurer unless the plan has a
State license to provide State residents with the private group
coverage health insurance plans that it offers through the
pool.
(2) Exception.--A pool operator may enter into a contract
under subsection (a) to cover pool participants through a
health plan without a State license described in paragraph (1)
if such plan is offered to Federal employees nationwide and,
with respect to such employees, is exempt from State health
insurance regulation. Nothing in this paragraph shall be
construed to permit coverage of pool participants through such
a plan except with groups, contracts, and premium rates that
are entirely distinct from those used for individuals covered
under the Federal employee's health benefits program under
chapter 89 of title 5, United States Code.
(d) Additional Stop-Loss Coverage and Reinsurance.--Purchasing pool
operators are authorized to encourage participation in the program
under this title, improve covered benefits, reduce out-of-pocket cost-
sharing, limit premiums, or achieve other objectives of this Act by--
(1) funding stop-loss coverage above levels otherwise
offered in the purchasing pool; or
(2) providing or subsidizing reinsurance in addition to
that provided under section 211.
(e) Participation of FEHBP Plans.--
(1) In general.--Each entity with a contract under section
8902 of title 5, United States Code, shall be a participating
insurer unless such entity notifies the Secretary in writing of
its intention not to participate in the program under this
title prior to such time as is designated by the Secretary so
as to allow such decisions to be taken into account with respect to
eligible individuals' choice of a private group health insurance plan
under such program. Such participation in the program under this title
shall include at least the covered benefits and provider networks
available through such an entity and shall not involve greater out-of-
pocket cost-sharing than the plan offered by such entity pursuant to
its contract under section 8902 of title 5, United States Code.
(2) No effect on fehbp coverage.--The Director of Office of
Personnel Management shall take such steps as are necessary to
ensure that each individual enrolled for health benefits
coverage under the program under chapter 89 of title 5, United
States Code, is not adversely affected by eligible individuals
or others enrolled for coverage under the program under this
title. Such steps shall include (but need not be limited to)
the establishment of separate risk pools, separate contracts
with participating insurers, and separately negotiated
premiums.

SEC. 206. OPTIONS FOR HEALTH BENEFITS COVERAGE.

(a) Scope of Health Benefits Coverage.--The health benefits
coverage provided to an eligible individual under a private group
health insurance plan offered by a participating insurer shall consist
of any of the following:
(1) Benchmark coverage.--Health benefits coverage that is
equivalent to the benefits coverage in a benchmark benefit
package described in subsection (b).
(2) Benchmark-equivalent coverage.--Health benefits
coverage that meets the following requirements:
(A) Inclusion of essential services.--The coverage
includes each of the essential services identified by
the National Advisory Commission on Expanded Access to
Health Care and adopted by Congress under title III.
(B) Aggregate actuarial value equivalent to
benchmark package.--The coverage has an aggregate
actuarial value that is equal to or greater than the
actuarial value of one of the benchmark benefit
packages.
(3) Alternative coverage.--Any other health benefits
coverage that the Secretary determines, upon application by a
State, offers health benefits coverage equivalent to or greater
than a plan described in and offered under section 8903(1) of
title 5, United States Code.
(b) Benchmark Benefit Packages.--The benchmark benefit packages are
as follows:
(1) FEHBP-equivalent health benefits coverage.--The plan
described in and offered under chapter 89 of title 5, United
States Code with the highest number of enrollees under such
section for the year preceding the year in which the private
group health insurance plan is proposed to be offered.
(2) Public program-equivalent health benefits coverage.--
Coverage provided under the State plan approved under the
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.) (without
regard to coverage provided under a waiver of the requirements
of either such program).
(3) Coverage offered through hmo.--The health insurance
coverage plan that--
(A) is offered by a health maintenance organization
(as defined in section 2791(b)(3) of the Public Health
Service Act (42 U.S.C. 33gg-91(b)(3))); and
(B) has the largest insured commercial, nonmedicaid
enrollment of covered lives of such coverage plans
offered by such a health maintenance organization in
the State.
(4) State employee coverage.--The health insurance plan
that is offered to State employees and has the largest
enrollment of covered lives of any such plan.
(5) Application of benchmark standards.--A private group
health plan offers benchmark benefits if, with respect to a
benchmark plan described in paragraph (1), (2), (3), or (4),
the private group health plan covers all items and services
offered by the benchmark plan, with out-of-pocket cost-sharing
for such items and services that is not greater than under the
benchmark plan. Nothing in this title shall be construed to
forbid a private group health plan from offering additional
items and services not covered by such a benchmark plan or
reducing out-of-pocket cost-sharing below levels applicable
under such plan.

SEC. 207. ENROLLMENT PROCESS FOR ELIGIBLE INDIVIDUALS.

(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 contract under section 205(a) and
serves the geographic area in which the individual resides,
provided that such insurer's geographic area of service and
guaranteed 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 subsection (a), the
Secretary shall use rules similar to the rules for enrollment,
disenrollment, and termination of enrollment under the Federal
employees health benefits program under chapter 89 of title 5, United
States Code, including the application of the guaranteed issuance
provision 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 operated pursuant to section
203(b)(1)(B), shall otherwise determine) a premium for each private
group health insurance 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 percentage
determined by the purchasing pool operator, which may
not be--
(i) less than the profit margin permitted
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 subsection,
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 individual is enrolled may not deny,
limit, or condition the coverage (including out-of-pocket cost-sharing)
or provision 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 Premiums Charged to
Enrollees.--
(1) In general.--For each private group health insurance
plan operated by a participating insurer, the pool operator
shall adjust premium payments to compensate for the difference
in health risk factors between plan enrollees and State
residents as a whole (including residents who are not eligible
individuals). Such adjustments shall employ risk-adjustment
mechanisms promulgated by the Secretary.
(2) Additional adjustments.--The pool operator shall also
provide additional adjustments to premium payments that
compensate participating insurers for the cost of keeping out-
of-pocket cost-sharing amounts consistent with section
204(c)(9)(B).
(3) Enrollee premium costs.--The adjustments 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
account cost-sharing adjustments under section 204(c)(9)(B).
(c) Amount of Premium.--The amount of the enrollee 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 INSURERS.

The Secretary shall establish procedures for making payments to
each purchasing pool operator as follows:
(1) Risk-adjustment payment.--The Secretary 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 upward adjustments exceeds the sum of downward adjustments
for the pool operator.
(2) Stop-loss and reinsurance payments.--
(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 accordance
with section 205(d)(2).
(B) Applicable percentage defined.--In this
paragraph, the term ``applicable percentage'' means--
(i) for the first 3 years that a purchasing
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 percent.
(3) Payments necessary to keep cost-sharing within
applicable limits.--The Secretary shall make payments to
purchasing pool operators to reimburse purchasing pool
operators for the amount paid by such operators to
participating insurers necessary to keep out-of-pocket cost-
sharing for individuals with limited ability to pay within
applicable limits.
(4) Payment for administrative costs.--The Secretary shall
make payments to each purchasing pool operator for necessary
pool administrative expenses.
(5) Payments to opm.--In the case of a purchasing pool
described in section 203(b)(1)(B), payments under this section
shall be made to the Director 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 eligible individuals to guard
against adverse selection and to improve the functioning of the
individual health insurance market.
(b) Grants for Statewide Reinsurance Programs.--
(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 coverage offered in the individual health
insurance market and through State-based purchasing pools
described 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 distribution, 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 containing such information as the
Secretary may require.
(4) Authorization of appropriations.--There are authorized
to be appropriated to the Secretary such sums as may be
necessary for making grants under this section.

SEC. 212. COVERAGE UNDER INDIVIDUAL HEALTH INSURANCE.

(a) In General.--Eligible individuals may use credits allowed under
the Internal Revenue Code of 1986 (including supplemental assistance
provided under such Code) for the purchase of health insurance coverage
to enroll 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 participation for plans
in the individual market (as developed by the Secretary) that--
(A) ensure that consumers receive the consumer
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 provide eligible individuals
with information in a uniform and easily comprehensible manner
that allows for informed comparisons by eligible individuals
and that includes information regarding the health benefits
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 essential service recommended by the National Advisory
Commission on Expanded Access to Health Care and adopted by
Congress under title III (which shall be prominently identified
as an essential service, including by reference to the
Commission recommendation 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 coverage.--
(A) In general.--Requirements for each entity
offering individual insurance to abide by conditions of
participation that the Secretary believes are
reasonable and appropriate measures to address barriers
to affordable health insurance coverage.
(B) Specific conditions.--The requirements
developed by the Secretary under subparagraph (A) shall
include (but need not be limited to)--
(i) guaranteed renewability, without
premium increases based on changed individual
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 Revenue 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 Secretary 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 family 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 credits 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 following:
(1) The current employer of the eligible individual or a
member of such individual's family.
(2) A former employer required to offer coverage of the
eligible individual under a COBRA continuation provision (as
defined in section 9832(d)(1) of the Internal Revenue Code) or
a State law requiring continuation coverage; and
(3) A former employer voluntarily offering coverage 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 experiences 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 Security Act of 1974 (29 U.S.C. 1165(b)) shall apply with
respect to such individual, regardless of which type of qualified
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 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 the temporary
extension of a COBRA election period 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 Revenue Code of 1986 and
supplemental assistance to purchase coverage from an employer described
in subsection (b), such credits and assistance shall apply as a
percentage, not of the total premium amount for the eligible
individual, 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 provision 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,
including individuals who are not otherwise eligible individuals under
this title, through a purchasing pool established under section 203(a).
(b) Conditions of Participation.--
(1) In general.--Except as otherwise provided 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 eligible individuals
under this title enroll in a private 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 operator)
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
individuals.
(B) Reduced payments.--A pool operator shall reduce
payments to any plan with a risk level that falls below
the statewide average (as so determined).
(3) Administrative guidelines.--The Secretary shall develop
guidelines for pool operators to use in serving small
employers, which shall be modeled 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 insurance information program to inform
small employers 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 insurance 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, including (but
not limited to) through the State's purchasing pool
operated pursuant to section 203.
(d) Grants To Help State-Based Pools Promote 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 payments 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 administrative
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 receipt 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 Secretary 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 report 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 purchasing pools
established under section 203.

SEC. 217. AUTHORIZATION OF APPROPRIATIONS.

(a) In General.--There are authorized to be appropriated, 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 appropriated in accordance with
subsection (a) shall be in addition to other amounts appropriated
directly under this title and nothing in subsection (a) shall be
construed to relieve the Secretary of mandatory payment obligations
required 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 (referred to in this section as the
``Secretary''), shall establish an entity to be known as the National
Advisory Commission on Expanded Access to Health Care (referred to in
this section as the ``Commission'').
(b) Appointment of Members.--
(1) In general.--Not later than 45 days after the date of
enactment of this Act, the House and Senate Majority and
Minority Leaders shall each appoint 4 members of the Commission
and the Secretary shall appoint 1 member.
(2) Criteria.--Members of the Commission shall include
representatives of the following:
(A) Consumers of health insurance.
(B) Health care professionals.
(C) State officials.
(D) Economists.
(E) Health care providers.
(F) Experts on health insurance.
(G) Experts on expanding health care to individuals
who are uninsured.
(3) Chairperson.--At the first meeting of the Commission,
the Commission shall select a Chairperson from among its
members.
(c) Meetings.--
(1) In general.--After the initial meeting of the
Commission which shall be called by the Secretary, the
Commission shall meet at the call of the Chairperson.
(2)  Quorum.--A majority of the members of the Commission
shall constitute a quorum, but a lesser number of members may
hold hearings.
(3) Supermajority voting requirement.--To approve a report
required under paragraph (2) or (3) of subsection (e), at least
60 percent of the membership of the Commission must vote in
favor of such a report.
(d) Duties.--The Commission shall--
(1) assess the effectiveness of programs designed to expand
health care coverage or make health care coverage affordable to
the otherwise uninsured individuals through identifying the
accomplishments and needed improvements of each program;
(2) make recommendations about benefits and cost-sharing to
be included in health care coverage for various groups, taking
into account--
(A) the special health care needs of children and
individuals with disabilities;
(B) the different ability of various populations to
pay out-of-pocket costs for services;
(C) incentives for efficiency and cost-control; and
(D) preventative care, disease management services,
and other factors;
(3) recommend mechanisms to discourage individuals and
employers from voluntarily opting out of health insurance
coverage;
(4) recommend mechanisms to expand health care coverage to
uninsured individuals with incomes above 200 percent of the
official income poverty line (as defined by the Office of
Management and Budget, and revised annually in accordance with
section 673(2) of the Omnibus Budget Reconciliation Act of
1981) applicable to a family of the size involved;
(5) recommend automatic enrollment and retention procedures
and other measures to increase health care coverage among those
eligible for assistance;
(6) review the roles, responsibilities, and relationship
between Federal and State agencies with respect to health care
coverage and recommend improvements; and
(7) analyze the size, effectiveness, and efficiency of
current tax and other subsidies for health care coverage and
recommend improvements.
(e) Reports.--
(1) Annual report.--The Commission shall submit annual
reports to the President and Congress addressing the matters
identified in subsection (d).
(2) Biennial report.--
(A) In general.--The Commission shall submit
biennial reports to the President and Congress, which
shall contain--
(i) recommendations concerning essential
benefits and maximum out-of-pocket cost-sharing
(for the general population and for individuals
with limited ability to pay, which shall not
exceed the out-of-pocket cost-sharing permitted
under section 2103(e) of the Social Security
Act (42 U.S.C. 1397cc(e))) for the coverage
options described in title II; and
(ii) proposed legislative language to
implement such recommendations.
(B) Congressional action.--The legislative language
proposed under subparagraph (A)(ii) shall proceed to
immediate consideration on the floor of the House of
Representatives and the Senate and shall be approved or
rejected, without amendment, using procedures employed
for recommendations of military base closing
commissions.
(3) Commission report.--No later than January 15, 2007, the
Commission shall submit a report to the President and Congress,
which shall include--
(A) recommendations on policies to provide health
care coverage to uninsured individuals with incomes
above 200 percent of the official income poverty line
(as defined by the Office of Management and Budget, and
revised annually in accordance with section 673(2) of
the Omnibus Budget Reconciliation Act of 1981)
applicable to a family of the size involved;
(B) recommendations on changes to policies enacted
under this Act; and
(C) proposed legislative language to implement such
recommendations.
(f) Administration.--
(1) Powers.--
(A) Hearings.--The Commission may hold such
hearings, sit and act at such times and places, take
such testimony, and receive such evidence as the
Commission considers advisable to carry out this
section.
(B) Information from federal agencies.--The
Commission may secure directly from any Federal
department or agency such information as the Commission
considers necessary to carry out this section. Upon
request of the Chairperson of the Commission, the head
of such department or agency shall furnish such
information to the Commission.
(C) Postal services.--The Commission may use the
United States mails in the same manner and under the
same conditions as other departments and agencies of
the Federal Government.
(D)  Gifts.--The Commission may accept, use, and
dispose of gifts or donations of services or property.
(2) Compensation.--While serving on the business of the
Commission (including travel time), a member of the Commission
shall be entitled to compensation at the per diem equivalent of
the rate provided for level IV of the Executive Schedule under
section 5315 of title 5, United States Code, and while so
serving away from home and the member's regular place of
business, a member may be allowed travel expenses, as
authorized by the chairperson of the Commission. All members of
the Commission who are officers or employees of the United
States shall serve without compensation in addition to that
received for their services as officers or employees of the
United States.
(3) Staff.--
(A) In general.--The Chairperson of the Commission
may, without regard to the civil service laws and
regulations, appoint and terminate an executive
director and such other additional personnel as may be
necessary to enable the Commission to perform its
duties. The employment of an executive director shall
be subject to confirmation by the Commission.
(B) Staff compensation.--The Chairperson of the
Commission may fix the compensation of the executive
director and other personnel without regard to chapter
51 and subchapter III of chapter 53 of title 5, United
States Code, relating to classification of positions
and General Schedule pay rates, except that the rate of
pay for the executive director and other personnel may
not exceed the rate payable for level V of the
Executive Schedule under section 5316 of such title.
(C) Detail of government employees.--Any Federal
Government employee may be detailed to the Commission
without reimbursement, and such detail shall be without
interruption or loss of civil service status or
privilege.
(D) Procurement of temporary and intermittent
services.--The Chairperson of the Commission may
procure temporary and intermittent services under
section 3109(b) of title 5, United States Code, at
rates for individuals which do not exceed the daily
equivalent of the annual rate of basic pay prescribed
for level V of the Executive Schedule under section
5316 of such title.
(g) Termination.--Except with respect to activities in connection
with the ongoing biennial report required under subsection (e)(2), the
Commission shall terminate 90 days after the date on which the
Commission submits the report required under subsection (e)(3).
(h) Authorization of Appropriations.--There are authorized to be
appropriated, such sums as may be necessary to carry out this section
for fiscal year 2004 and each fiscal year thereafter.

SEC. 302. CONGRESSIONAL ACTION.

(a) Bill Introduction.--
(1) In general.--Any legislative language included in the
report required under section 301(e)(3) may be introduced as a
bill by request in the following manner:
(A) House of representatives.--In the House of
Representatives, by the Majority Leader and the
Minority Leader not later than 10 days after receipt of
the legislative language.
(B) Senate.--In the Senate, by the Majority Leader
and the Minority Leader not later than 10 days after
receipt of the legislative language.
(2) Alternative by administration.--The President may
submit legislative language based on the recommendations of the
Commission and such legislative language may be introduced in
the manner described in paragraph (1).
(b) Committee Consideration.--
(1) In general.--Any legislative language submitted
pursuant to paragraph (1) or (2) of subsection (a) (in this
section referred to as ``implementing legislation'') shall be
referred to the appropriate committees of the House of
Representatives and the Senate.
(2) Reporting.--
(A) Committee action.--If, not later than 150 days
after the date on which the implementing legislation is
referred to a committee under paragraph (1), the
committee has reported the implementing legislation or
has reported an original bill whose subject is related
to reforming the health care system, or to providing
access to affordable health care coverage for
Americans, the regular rules of the applicable House of
Congress shall apply to such legislation.
(B) Discharge from committees.--
(i) Senate.--
(I) In general.--If the
implementing legislation or an original
bill described in subparagraph (A) has
not been reported by a committee of the
Senate within 180 days after the date
on which such legislation was referred
to committee under paragraph (1), it
shall be in order for any Senator to
move to discharge the committee from
further consideration of such
implementing legislation.
(II) Sequential referrals.--Should
a sequential referral of the
implementing legislation be made, the
additional committee has 30 days for
consideration of implementing
legislation before the discharge motion
described in subclause (I) would be in
order.
(III) Procedure.--The motion
described in subclause (I) shall not be
in order after the implementing
legislation has been placed on the
calendar. While the motion described in
subclause (I) is pending, no other
motions related to the motion described
in subclause (I) shall be in order.
Debate on a motion to discharge shall
be limited to not more than 10 hours,
equally divided and controlled by the
Majority Leader and the Minority
Leader, or their designees. An
amendment to the motion shall not be in
order, nor shall it be in order to move
to reconsider the vote by which the
motion is agreed or disagreed to.
(IV) Exception.--If implementing
language is submitted on a date later
than May 1 of the second session of a
Congress, the committee shall have 90
days to consider the implementing
legislation before a motion to
discharge under this clause would be in
order.
(ii) House of representatives.--If the
implementing legislation or an original bill
described in subparagraph (A) has not been
reported out of a committee of the House of
Representatives within 180 days after the date
on which such legislation was referred to
committee under paragraph (1), then on any day
on which the call of the calendar for motions
to discharge committees is in order, any member
of the House of Representatives may move that
the committee be discharged from consideration
of the implementing legislation, and this
motion shall be considered under the same terms
and conditions, and if adopted the House of
Representatives shall follow the procedure
described in subsection (c)(1).
(c) Floor Consideration.--
(1) Motion to proceed.--If a motion to discharge made
pursuant to subsection (b)(2)(B)(i) or (b)(2)(B)(ii) is
adopted, then, not earlier than 5 legislative days after the
date on which the motion to discharge is adopted, a motion may
be made to proceed to the bill.
(2) Failure of motion.--If the motion to discharge made
pursuant to subsection (b)(2)(B)(i) or (b)(2)(B)(ii) fails,
such motion may be made not more than 2 additional times, but
in no case more frequently than within 30 days of the previous
motion. Debate on each of such motions shall be limited to 5
hours, equally divided.
(3) Applicable rules.--Once the Senate is debating the
implementing legislation the regular rules of the Senate shall
apply.

TITLE IV--STATE WAIVERS

SEC. 401. STATE WAIVERS.

(a) In General.--Notwithstanding any other provision of law, a
State may apply to the Secretary of Health and Human Services for
waivers of such provisions of law as may be necessary for the State to
implement policies that make comprehensive, affordable health coverage
available for all State residents, including access to essential
benefits with limits on cost-sharing, as provided in the most recent
report under section 301(e)(2).
(b) Requirements.--In order to ensure that waivers under this
section benefit rather than harm health care consumers, a State shall
not be eligible for a waiver under this section unless--
(1) the State reasonably expects to achieve a level of
enrollment in coverage described in subsection (a) that is at
least equal to the level of coverage (taking into account the
number of insured individuals, covered benefits, and premium
and out-of-pocket costs to the consumer for such coverage) that
the State would have achieved if the State had fully
implemented the coverage options available under titles I and
II of this Act;
(2) no individual who would have qualified for assistance
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, as of either the date of the
waiver request or the date of enactment of this Act, will be
denied eligibility for such program, have a reduction in
benefits under such program, have reduced access to
geographically and linguistically appropriate care or essential
community providers, or be subject to increased premiums or
cost-sharing under the waiver program under this section; and
(3) the State agrees to comply with such standards or
guidelines as the Secretary of Health and Human Services may
require to ensure that the requirements of paragraphs (1) and
(2) are satisfied.
(c) Federal Payments.--
(1) In general.--The Secretary of Health and Human Services
shall pay a State with a waiver approved under this section an
amount each quarter equal to the sum of--
(A) the Federal payments the State and residents of
the State (including, but not limited to, through the
credit allowed under section 36 of the Internal Revenue
Code of 1986 for health insurance costs) would have
received if the State had exercised the coverage
options under titles I and II of this Act with respect
to residents of the State who have not attained age 65;
and
(B) the amount of any grants authorized by this Act
that the State would have received if the State had
applied for such grants.
(2) Additional payment for medicare beneficiaries under age
65.--
(A) In general.--In the case of a State that elects
to enroll an individual described in subparagraph (B)
in coverage described in subsection (a), the amount
described in paragraph (1) with respect to a quarter
shall be increased by the amount described in
subparagraph (C).
(B) Individual described.--An individual is
described in this subparagraph if the individual--
(i) has not attained age 65;
(ii) is eligible for coverage under title
XVIII of the Social Security Act; and
(iii) voluntarily elects to enroll in
coverage described in subsection (a).
(C) Amount described.--The amount described in this
subparagraph is the amount equal to the amount that the
Federal Government would have incurred with respect to
a quarter for providing coverage to an individual
described in subparagraph (B) under title XVIII of the
Social Security Act (42 U.S.C. 1395 et seq.).
(d) Implementation Date.--No State may submit a request for a
waiver under this section before October 1, 2007.
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