II
110th CONGRESS
1st Session
S. 1298
IN THE SENATE OF THE UNITED STATES
May 3, 2007
Mr. Kerry (for himself and Mr. Reed) introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To amend the Social Security Act to establish a Federal Reinsurance Program for Catastrophic Health Care Costs.
Short title
This Act may be cited as
the Healthy Businesses, Healthy
Workers Reinsurance Act of 2007
.
Findings
Congress finds the following:
The cost of health insurance premiums for families has risen 87 percent since 2000, nearly 4 times the growth in overall inflation and workers earnings.
Health insurance premium increases have resulted in a nearly 10 percentage point drop in the number of firms choosing to offer coverage to their workers over that time period.
Today, just 48 percent of firms with between 3 and 9 employees offer health insurance benefits, down from 58 percent in 2001.
The decline in employer-sponsored coverage has added to the growing problem of the uninsured. An additional 4 million Americans have been added to the ranks of the uninsured since 2001.
Health care costs are highly concentrated. Twenty percent of the population that is catastrophically or chronically ill accounts for 80 percent of the health care spending, with just 1 percent driving a full 22 percent of health care costs.
Federal Reinsurance Program for Catastrophic Health Care Costs
Program
The Social Security Act (42 U.S.C. 301 et seq.) is amended by adding at the end the following new title:
Federal Reinsurance Program for Catastrophic Health Care Costs
Office of Federal Reinsurance
In general
There is established
within the Department of Health and Human Services an office to be known as the
Office of Federal Reinsurance
.
Duty
The Office of Federal Reinsurance shall establish and administer the Federal Reinsurance Program for Catastrophic Health Care Costs in accordance with the provisions of this title.
Program
Establishment
In general
The Office shall establish and administer a Federal
Reinsurance Program for Catastrophic Health Care Costs under which reinsurance
payments are provided to eligible health plans that experience catastrophic
health care costs during a year with respect to an individual covered under the
plan. For purposes of this title, the term individual covered under the
plan
includes employees, retirees, spouses, and dependants.
Program to begin in 2009
The Office shall establish the Program in a manner so that reinsurance payments are made with respect to catastrophic health care costs occurring on or after January 1, 2009.
Eligible health plan
In general
In this title, the term eligible health
plan
means any of the following:
A group health plan that meets the requirements described in subparagraph (B).
A governmental plan (as defined in section 3(32) of the Employee Retirement Income Security Act of 1974) that meets the requirements described in subparagraph (B).
A multiemployer plan (as defined in section 3(37) of the Employee Retirement Income Security Act of 1974) that meets the requirements described in subparagraph (B).
A plan that offers coverage through health purchasing cooperatives in conjunction with a State health program that makes available health insurance coverage to the small group market and the individual market on the same terms and that meets the requirements described in subparagraph (B).
Requirements
The requirements described in this subparagraph are that—
the plan involved—
provides eligibility for health insurance coverage (after any waiting period (as defined in section 9801(b)(4))) to all full-time employees of the employer maintaining or contributing to the plan;
ensures that if there is a deductible under the plan, such deductible does not exceed $1,000 for an individual and $2,000 for a family;
ensures that the plan offers preventative benefits; and
ensures that the plan employs effective high-cost case management tools (in accordance with the definition of disease management by the Disease Management Association of America) in order to reduce costs over time; and
the employer maintaining or contributing to the plan involved pays at least 50 percent of the costs of health insurance coverage for each employee covered under the plan (regardless of whether the employee is a full-time or part-time employee).
Cost-of-living adjustment
In general
In the case of any calendar year after 2009. each dollar amount in subparagraph (B)(ii) shall be increased by an amount equal to—
such dollar amount, multiplied by
the
cost-of-living adjustment determined under section 1(f)(3) of the Internal
Revenue Code of 1986 for such calendar year determined by substituting
calendar year 2008
for calendar year 1992
in
subparagraph (B) thereof.
Date for determination
For purposes of clause (i), section 1(f)(4) of such
Code shall be applied by substituting March 31
for August
31
, and the Secretary of the Treasury shall publish the adjusted
amounts under subparagraph (B)(ii) for the calendar year not later than June 1
of the preceding calendar year.
Rounding
If any increase under clause (i) is not a multiple of $50, such increase shall be rounded to the nearest multiple of $50.
Employer
For
purposes of this title, the term employer
includes the Federal
government and any other governmental entity (within the meaning of section
5000(d) of Internal Revenue Code of 1986).
Enrollment
Procedures
The Office shall establish procedures for the enrollment of eligible health plans in the Program.
Application and annual recertification
In general
The procedures established under paragraph (1) shall include a process for an eligible health plan—
to submit an application to the Office for enrollment in the Program; and
to be annually recertified for enrollment in the Program.
Requirement
The application and recertification process under subparagraph (A) shall require that an eligible health plan submit to the Office—
a detailed description of the projected and actual reduction in total costs under the plan that are a result of the Program, including both individual and employer portions; and
such other information determined appropriate by the Office.
Approval
In general
The procedures established under paragraph (1) shall provide for the approval or disapproval of applications and requests for recertification submitted by eligible health plans under paragraph (2).
Specific requirement
The Office shall not approve an application or a request for recertification unless the Office finds that the eligible health plan is reducing total costs under the plan, based on the information submitted under paragraph (2)(B) and audits conducted under paragraph (4).
Audits
The Office shall conduct audits of claims data of eligible health plans in order to ensure that the eligible health plan is in compliance with the requirements under the Program, including the requirement under paragraph (3)(B). An eligible health plan shall not be eligible for reinsurance payments unless it provides the Office with access to such data.
Cost-sharing in costs of Program
In general
An eligible health plan that participates in the Program shall pay the fee established by the Office under paragraph (2).
Authorization
The Office is authorized to charge a fee to each eligible health plan that participates in the Program. Any amounts collected shall be deposited into the Trust Fund.
Requirements
In establishing the fee under paragraph (2)—
the Office shall consult with interested parties; and
shall ensure that the amount of such fee is not excessive so as to unduly discourage eligible health plans from enrolling in the Program.
Appeals process
The Office shall establish an appeals process under the Program.
Procedures to protect against fraud, waste, and abuse
The Office shall establish procedures to protect against fraud, waste, and abuse under the Program.
Reinsurance payments
Amount
In general
The amount of a reinsurance payment under the Program to an eligible health plan that experiences catastrophic health care costs in a year with respect to an individual covered under the plan shall be an amount equal to 75 percent of such costs.
Catastrophic health care costs
In general
In this title, the term catastrophic health care costs means, with respect to a year, costs for medical care (as defined in section 9832(d)(3) of the Internal Revenue Code of 1986) provided under an eligible health plan to an individual covered under the plan, but only with respect to such costs which exceed $50,000.
Negotiated prices
In determining the amount of catastrophic health care costs under the Program, the eligible health care plan shall take into account any negotiated price concessions, such as discounts, direct or indirect subsidies, rebates, and direct or indirect remunerations, obtained by the plan.
Inflation adjustment
In general
In the case of a calendar year after 2009, the $50,000 amount in subparagraph (A) shall be increased by an amount equal to—
such dollar amount; multiplied by
the percentage (if any) by which the average of the medical care component of the Consumer Price Index for all urban consumers (United States city average) for the 12-month period ending with August of the preceding calendar year exceeds such average for the 12-month period ending with August 2008.
Rounding
If any dollar amount after being increased under clause (i) is not a multiple of $1,000, such dollar amount shall be rounded to the nearest multiple of $1,000.
Requests for payment
To be eligible for a reinsurance payment with respect to an individual for a year, an eligible health plan shall submit to the Office, at a time and in a manner determined appropriate by the Office, a request for payment that contains—
a certification—
that the plan paid or incurred catastrophic health care costs during the year with respect to the individual; and
of the amount of such costs; and
such other information determined appropriate by the Office.
Payments from Trust Fund
In general
Payments to eligible health plans under the Program shall be made from the Trust Fund.
Tax treatment
For purposes of the Internal Revenue Code of 1986—
payments from the Trust Fund to the eligible health plan shall not be included in gross income; and
no deduction shall be allowed to the eligible health plan with respect to the payment of any catastrophic health care costs for the portion of such costs which was reimbursed from the Trust Fund.
Federal Reinsurance for Catastrophic Health Care Costs Trust Fund
Creation of Trust Fund
There is established in the Treasury of the United
States a trust fund to be known as the Federal Reinsurance for
Catastrophic Health Care Costs Trust Fund
, consisting of such amounts
as may be appropriated or credited to the Trust Fund (including any fees
deposited under section 2202(c)).
Mandatory appropriations
There are appropriated to the Trust Fund such sums as may be necessary in order to make the reinsurance payments required under section 2203.
Rules regarding transfers to and management of Trust Fund
For purposes of this section, rules similar to the rules of sections 9601 and 9602 of the Internal Revenue Code of 1986 shall apply.
Distribution of amounts in Trust Fund
Amounts in the Trust Fund shall be available for making payments under section 2203.
Reports
Secretary
In general
Not later than March 1, 2011, and biennially thereafter, the Secretary shall submit to Congress a report on the Program.
Requirements
In general
Each report submitted under paragraph (1) shall contain—
a detailed description of the Program, including a detailed description of the impact the Program has had on reducing premiums for health insurance coverage and increasing the number of individuals with health insurance coverage; and
any other information or recommendations determined appropriate by the Secretary.
Individual market
The first report submitted under paragraph (1) shall also contain recommendations regarding expanding the Program to the individual market.
Consultation
The Secretary shall consult with the National Association of Insurance Commissioners in preparing each report under paragraph (1).
GAO
In general
Not later than March 1, 2011, and biennially thereafter, the Comptroller General of the United States shall submit to Congress and the Secretary a report on the Program.
Requirements
In general
Each report submitted under paragraph (1) shall contain—
a detailed description of the Program, including a detailed description of the impact the Program has had on reducing premiums for health insurance coverage and increasing the number of individuals with health insurance coverage; and
any other information or recommendations determined appropriate by the Comptroller General.
Individual market
The first report submitted under paragraph (1) shall also contain recommendations regarding expanding the Program to the individual market.
Definitions
In this title:
Group health plan
The term group health plan has the meaning given such term by section 5000(b)(1) of the Internal Revenue Code of 1986.
Individual market; small group market
The terms individual
market
and small group market
have the meanings given
such terms by section 2791 of the Public Health Service Act.
Office
The
term Office
means the Office of Federal Reinsurance established
under section 2201.
Program
The
term Program
means the Federal Reinsurance Program for
Catastrophic Health Care Costs under this title.
Trust Fund
The term Trust Fund
means the Federal
Reinsurance for Catastrophic Health Care Costs Trust Fund established under
section
2204.
.
Funding start-Up administrative costs for Program
In general
There are appropriated to the Secretary of Health and Human Services $200,000,000 to carry out the provisions of, and amendments made by, this Act.
Availability
Amounts appropriated under paragraph (1) shall remain available until September 30, 2009.