HR 6210
110th CONGRESS
2d Session
H. R. 6210
To amend the Public Health Service Act to establish a nationwide
health insurance purchasing pool for small businesses and the self-employed
that would offer a choice of private health plans and make health coverage
more affordable, predictable, and accessible.
IN THE HOUSE OF REPRESENTATIVES
June 9, 2008
Mr. KIND (for himself, Mr. ENGLISH of Pennsylvania, Mr. BARROW, Mr. YOUNG
of Florida, Mr. CARNAHAN, Mrs. EMERSON, Mr. ALLEN, Mr. GERLACH, Mr. ALTMIRE,
Mr. SHAYS, Mr. COURTNEY, and Mr. RAMSTAD) introduced the following bill; which
was referred to the Committee on Energy and Commerce, and in addition to the
Committees on Education and Labor, Ways and Means, 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 amend the Public Health Service Act to establish a nationwide
health insurance purchasing pool for small businesses and the self-employed
that would offer a choice of private health plans and make health coverage
more affordable, predictable, and accessible.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Small Business Health Options Program Act of
2008' or the `SHOP Act'.
SEC. 2. AMENDMENT TO THE PUBLIC HEALTH SERVICE ACT.
The Public Health Service Act (42 U.S.C. 201 et seq.) is amended by adding
at the end the following:
`TITLE XXX--SMALL BUSINESS HEALTH OPTIONS PROGRAM
`SEC. 3001. DEFINITIONS.
`(a) In General- In this title:
`(1) ADMINISTRATOR- The term `Administrator' means the Administrator appointed
under section 3002(a).
`(2) SMALL BUSINESS HEALTH BOARD- The term `Small Business Health Board'
means the Board established under section 3002(d).
`(3) EMPLOYEE- The term `employee' has the meaning given such term under
section 3(6) of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1002(6)). Such term shall not include an employee of the Federal
Government.
`(4) EMPLOYER- The term `employer' has the meaning given such term under
section 3(5) of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1002(5)), except that such term shall include employers who employed
an average of at least 1 but not more than 100 employees (who worked an
average of at least 35 hours per week) on business days during the year
preceding the date of application, and shall include self-employed individuals
with either not less than $5,000 in net earnings or not less than $15,000
in gross earnings from self-employment in the preceding taxable year. Such
term shall not include the Federal Government.
`(5) HEALTH INSURANCE COVERAGE- The term `health insurance coverage' has
the meaning given such term in section 2791.
`(6) HEALTH INSURANCE ISSUER- The term `health insurance issuer' has the
meaning given such term in section 2791.
`(7) HEALTH STATUS-RELATED FACTOR- The term `health status-related factor'
has the meaning given such term in section 2791(d)(9).
`(8) PARTICIPATING EMPLOYER- The term `participating employer' means an
employer that--
`(A) elects to provide health insurance coverage under this title to its
employees; and
`(B) is not offering other comprehensive health insurance coverage to
such employees.
`(b) Application of Certain Rules in Determination of Employer Size- For purposes
of subsection (a)(3):
`(1) APPLICATION OF AGGREGATION RULE FOR EMPLOYERS- All persons treated
as a single employer under subsection (b), (c), (m), or (o) of section 414
of the Internal Revenue Code of 1986 shall be treated as 1 employer.
`(2) EMPLOYERS NOT IN EXISTENCE IN PRECEDING YEAR- In the case of an employer
which was not in existence for the full year prior to the date on which
the employer applies to participate, the determination of whether such employer
meets the requirements of subsection (a)(4) shall be based on the average
number of employees that it is reasonably expected such employer will employ
on business days in the employer's first full year.
`(3) PREDECESSORS- Any reference in this subsection to an employer shall
include a reference to any predecessor of such employer.
`(c) Waiver and Continuation of Participation-
`(1) WAIVER- The Administrator may waive the limitations relating to the
size of an employer which may participate in the health insurance program
established under this title on a case by case basis if the Administrator
determines that such employer makes a compelling case for such a waiver.
In making determinations under this paragraph, the Administrator may consider
the effects of the employment of temporary and seasonal workers and other
factors.
`(2) CONTINUATION OF PARTICIPATION- An employer participating in the program
under this title that experiences an increase in the number of employees
so that such employer has in excess of 100 employees, may not be excluded
from participation solely as a result of such increase in employees.
`(d) Treatment of Health Insurance Coverage as Group Health Plan- Health insurance
coverage offered under this title shall be treated as a group health plan
for purposes of applying the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1001 et seq.) except to the extent that a provision of this title
expressly provides otherwise.
`(e) Application of HIPAA Rules- Notwithstanding any provision of State law,
the provisions of subparts 1, 3, and 4 of part A of title XXVII shall apply
to health insurance coverage offered under this title. A State may modify
State law as appropriate to provide for the enforcement of such provisions
for health insurance coverage offered in the State under this title.
`SEC. 3002. ADMINISTRATION OF SMALL BUSINESS HEALTH INSURANCE POOL.
`(a) Office and Administrator- The Secretary shall designate an office within
the Department of Health and Human Services to administer the program under
this title. Such office shall be headed by an Administrator to be appointed
by the Secretary.
`(b) Qualifications- The Secretary shall ensure that the individual appointed
to serve as the Administrator under subsection (a) has an appropriate background
with experience in health insurance, business, or health policy.
`(c) Duties- The Administrator shall--
`(1) enter into contracts with health insurance issuers to provide health
insurance coverage to individuals and employees who enroll in health insurance
coverage in accordance with this title;
`(2) maintain the contracts for health insurance policies when an employee
elects which health plan offered under this title to enroll in as permitted
under section 3007(d)(7);
`(3) ensure that health insurance issuers comply with the requirements of
this title;
`(4) ensure that employers meet eligibility requirements for participation
in the health insurance pool established under this title;
`(5) enter into agreements with entities to serve as navigators, as defined
in section 3003;
`(6) collect premiums from employers and employees and make payments for
health insurance coverage;
`(7) collect other information needed to administer the program under this
title;
`(8) compile, produce, and distribute information (which shall not be subject
to review or modification by the States) to employers and employees (directly
and through navigators) concerning the open enrollment process, the health
insurance coverage available through the pool, and standardized comparative
information concerning such coverage, which shall be available through an
interactive Internet website, including a description of the coverage plans
available in each State and comparative information, about premiums, index
rates, benefits, quality, and consumer satisfaction under such plans;
`(9) provide information to health insurance issuers, including, at the
discretion of the Administrator, notification when proposed rates are not
in a competitive range;
`(10) conduct public education activities (directly and through navigators)
to raise the awareness of the public of the program under this title and
the associated tax credit under the Internal Revenue Code of 1986;
`(11) develop methods to facilitate enrollment in health insurance coverage
under this title, including through the use of the Internet;
`(12) if appropriate, enter into contracts for the performance of administrative
functions under this title as permitted under section 3009;
`(13) carefully consider benefit recommendations that are endorsed by at
least two-thirds of the members of the Small Business Health Board;
`(14) establish and administer a contingency fund for risk corridors as
provided for in section 3008; and
`(15) carry out any other activities necessary to administer this title.
`(d) Limitations- The Administrator shall not--
`(1) negotiate premiums with participating health insurance issuers; or
`(2) exclude health insurance issuers from participating in the program
under this title except for violating contracts or the requirements of this
title.
`(e) Small Business Health Board-
`(1) IN GENERAL- There shall be established a Small Business Health Board
to monitor the implementation of the program under this title and to make
recommendations to the Administrator concerning improvements in the program.
`(2) APPOINTMENT- The Comptroller General shall appoint 13 individuals who
have expertise in health care benefits, financing, economics, actuarial
science or other related fields, to serve as members of the Small Business
Health Board. In appointing members under the preceding sentence, the Comptroller
General shall ensure that such members include--
`(A) a mix of different types of professionals;
`(B) a broad geographic representation;
`(C) not less than 3 individuals with an employee perspective;
`(D) not less than 3 individuals with a small business perspective, at
least 1 of whom shall have a self-employed perspective;
`(E) not less than 1 individual with a background in insurance regulation;
and
`(F) not less than 1 individual with a patient perspective.
`(3) TERMS- Members of the Small Business Health Board shall serve for a
term of 3 years, such terms to end on March 15 of the applicable year, except
as provided in paragraph (4). The Comptroller General shall stagger the
terms for members first appointed. A member may be reappointed after the
expiration of a term. A member may serve after expiration of a term until
a successor has been appointed.
`(4) SMALL BUSINESS REPRESENTATIVES- Beginning on March 16, 2012, 3 of the
individuals the Comptroller General appoints to the Small Business Health
Board shall be representatives of the 3 navigators through which the largest
number of individuals have enrolled for health insurance coverage over the
previous 2-year period. Such appointees shall serve for 1 year. The Comptroller
General shall consider for appointment in years prior to the date specified
in this paragraph, individuals who are representatives of entities that
may serve as navigators.
`(5) CHAIRPERSON; VICE CHAIRPERSON- The Comptroller General shall designate
a member of the Small Business Health Board, at the time of appointment
of such member, to serve as Chairperson and a member to serve as Vice Chairperson
for the term of the appointment, except that in the case of a vacancy of
either such position, the Comptroller General may designate another member
to serve in such position for the remainder of such member's term.
`(6) COMPENSATION- While serving on the business of the Small Business Health
Board (including travel time), a member of the Small Business Health Board
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 Small Business Health Board.
`(7) DISCLOSURE- The Comptroller General shall establish a system for the
public disclosure, by members of the Small Business Health Board, of financial
and other potential conflicts of interest.
`(8) MEETINGS- The Small Business Health Board shall meet at the call of
the Chairperson. Each such meeting shall be open to the public.
`(9) DUTIES- The Small Business Health Board shall--
`(A) provide general oversight of the program under this title and make
recommendations to the Administrator;
`(B) monitor and make recommendations to the Administrator on the benefit
requirements for national plans in this title;
`(C) make recommendations concerning information that the Administrator,
health plans, and navigators should distribute to employers and employees
participating in the program under this title; and
`(D) monitor and make recommendations to the Administrator on adverse
selection within the program under this title and between the coverage
provided under the program and the State-regulated health insurance market.
`(10) APPROVAL OF RECOMMENDATIONS- A recommendation shall require approval
by not less than two-thirds of the members of the Board.
`(11) PUBLIC NOTICE AND COMMENT ON RECOMMENDATIONS- The Administrator shall--
`(A) publish recommendations by the Small Business Health Board in the
Federal Register;
`(B) solicit written comments concerning such recommendations; and
`(C) provide an opportunity for the presentation of oral comments concerning
such recommendations at a public meeting.
`SEC. 3003. NAVIGATORS.
`(a) In General- The Administrator shall enter into agreements with private
and public entities, beginning a reasonable period prior to the beginning
of the first calendar year in which health insurance coverage is offered under
this title, under which such entities will serve as navigators.
`(b) Eligibility- To be eligible to enter into an agreement under subsection
(a), an entity shall demonstrate to the Administrator that the entity has
existing relationships with, or could readily establish relationships with,
employers and employees, and self-employed individuals, likely to be eligible
to participate in the program under this title. Such entities may include
trade, industry and professional associations, chambers of commerce, unions,
small business development centers, and other entities that the Administrator
determines to be capable of carrying out the duties described in subsection
(c).
`(c) Duties- An entity that serves as a navigator under an agreement under
subsection (a) shall--
`(1) coordinate with the Administrator on public education activities to
raise awareness of the program under this title;
`(2) distribute information developed by the Administrator on the open enrollment
process, private health plans available through the program under this title,
and standardized comparative information about the health insurance coverage
under the program;
`(3) distribute information about the availability of the tax credit under
section 36 of the Internal Revenue Code of 1986 as added by the Small Business
Health Options Program Act of 2008;
`(4) assist employers and employees in enrolling in the program under this
title; and
`(5) respond to questions about the program under this title and participating
plans.
`(d) Supplemental Materials- In addition to information developed by the Administrator
under subsection (c)(2), a navigator may develop and distribute other information
that is related to the health insurance program established under this title,
subject to review and approval by the Administrator and filing in each State
in which the navigator operates.
`(1) IN GENERAL- The Administrator shall establish standards for navigators
under this section, including provisions to avoid conflicts of interest.
Under such standards, a navigator may not--
`(A) be a health insurance issuer; or
`(B) receive any consideration directly or indirectly from any health
insurance issuer in connection with the participation of any employer
in the program under this title or the enrollment of any eligible employee
in health insurance coverage under this title.
`(2) FAIR AND IMPARTIAL INFORMATION AND SERVICES- The Administrator shall
consult with the Small Business Health Board concerning the standards necessary
to ensure that a navigator will provide fair and impartial information and
services. An agreement between the Administrator and a navigator may include
specific provisions with respect to such navigator to ensure that such navigator
will provide fair and impartial information and services. If a navigator,
or entity seeking to become a navigator, is a party to any arrangement with
any health insurance issuer to receive compensation related to other health
care programs not covered under this title, the entity shall disclose the
terms of such compensation arrangements to the Administrator, and the Administrator
shall take such information into account in determining the appropriate
standards and agreement terms for such navigator.
`SEC. 3004. CONTRACTS WITH HEALTH INSURANCE ISSUERS.
`(a) In General- The Administrator may enter into contracts with qualified
health insurance issuers, without regard to section 5 of title 41, United
States Code, or other statutes requiring competitive bidding, to provide health
benefits plans to employees of participating employers and self-employed individuals
under this title. Each contract shall be for a uniform term of at least 1
year, but may be made automatically renewable from term to term in the absence
of notice of termination by either party. In entering into such contracts,
the Administrator shall ensure that health benefits coverage is provided for
an individual only, two adults in a household, one adult and one or more children,
and a family.
`(b) Eligibility- A health insurance issuer shall be eligible to enter into
a contract under subsection (a) if such issuer--
`(1) is licensed to offer health benefits plan coverage in each State in
which the plan is offered; and
`(2) meets such other reasonable requirements as determined appropriate
by the Administrator, after an opportunity for public comment and publication
in the Federal Register.
`(c) Cost-Sharing and Networks- The Administrator shall ensure that health
benefits plans with a range of cost-sharing and network arrangements are available
under this title.
`(d) Revocation- Approval of a health benefits plan participating in the program
under this title may be withdrawn or revoked by the Administrator only after
notice to the health insurance issuer involved and an opportunity for a hearing
without regard to subchapter II of chapter 5 and chapter 7 of title 5, United
States Code.
`(1) IN GENERAL- Except as provided in paragraph (2), a contract may not
be made or a plan approved under this section if the health insurance issuer
under such contract or plan does not provide to each enrollee whose coverage
under the plan is terminated, including a termination due to discontinuance
of the contract or plan, the option to have issued to that individual a
nongroup policy without evidence of insurability. A health insurance issuer
shall provide a notice of such option to individuals who enroll in the plan.
An enrollee who exercises such conversion option shall pay the full periodic
charges for the nongroup policy.
`(2) EXCEPTIONS- A health insurance issuer shall not be required to offer
a nongroup policy under paragraph (1) if the termination under the plan
occurred because--
`(A) the enrollee failed to pay any required monthly premiums under the
plan;
`(B) the enrollee performed an act or practice that constitutes fraud
in connection with the coverage under the plan;
`(C) the enrollee made an intentional misrepresentation of a material
fact under the terms of coverage of the plan; or
`(D) the terminated coverage under the plan was replaced by similar coverage
within 31 days after the date of termination.
`(f) Payment of Premiums-
`(1) IN GENERAL- Employers shall collect premium payments from their employees
through payroll deductions and shall forward such payments and the contribution
of the employer (if any) to the Administrator. The Administrator shall develop
procedures through which such payments shall be received and forwarded to
the health insurance issuer involved.
`(2) FAILURE TO PAY- The Administrator shall establish--
`(A) procedures for the termination of employers that fail for a two consecutive
month period (or such other time period as determined appropriate by the
Administrator) to make premium payments in a timely manner; and
`(B) other procedures regarding unpaid and uncollected premiums.
`SEC. 3005. EMPLOYER PARTICIPATION.
`(a) Participation Procedure- The Administrator shall develop a procedure
for employers and self-employed individuals to participate in the program
under this title, including procedures relating to the offering of health
benefits plans to employees and the payment of premiums for health insurance
coverage under this title. For the purpose of premium payments, a self-employed
individual shall be considered an employer that is making a 100 percent contribution
toward the premium amount.
`(b) Enrollment and Offering of Other Coverage-
`(1) ENROLLMENT- A participating employer shall ensure that each eligible
employee has an opportunity to enroll in a plan of the employer's choice
or a plan of the employee's choice in accordance with section 3007(d)(7).
`(2) PROHIBITION ON OFFERING OTHER COMPREHENSIVE HEALTH BENEFIT COVERAGE-
A participating employer may not offer a health insurance plan providing
comprehensive health benefit coverage to employees other than a health benefits
plan offered under this title.
`(3) PROHIBITION ON COERCION- An employer shall not pressure, coerce, or
offer inducements to an employee to elect not to enroll in coverage under
the program under this title or to select a particular health benefits plan.
`(4) OFFER OF SUPPLEMENTAL COVERAGE OPTIONS-
`(A) IN GENERAL- A participating employer may offer supplementary coverage
options to employees.
`(B) DEFINITION- In subparagraph (A), the term `supplementary coverage'
means benefits described as `excepted benefits' under section 2791(c).
`(c) Regulatory Flexibility- In developing the procedure under subsection
(a), the Administrator shall comply with the requirements specified under
the Regulatory Flexibility Act under chapter 6 of title 5, United States Code,
consider the economic impacts that the regulation will have on small businesses,
and consider regulatory alternatives that would mitigate such impact. The
Administrator shall publish and publicly disseminate a small business compliance
guide, pursuant to section 212 of the Small Business Regulatory Enforcement
Fairness Act, that explains the compliance requirements for employer participation.
Such compliance guide shall be published not later than the date of the publication
of the final rule under this title, or the effective date of such rules, whichever
is later.
`(d) Rule of Construction- Except as provided in section 3004(f), nothing
in this title shall be construed to require that an employer make premium
contributions on behalf of employees.
`SEC. 3006. ELIGIBILITY AND ENROLLMENT.
`(a) In General- An individual shall be eligible to enroll in health insurance
coverage under this title for coverage beginning in 2011 if such individual
is an employee of a participating employer described in section 3001(a)(4)
or is a self-employed individual as defined in section 401(c)(1)(B) of the
Internal Revenue Code of 1986 and meets the definition of a participating
employer in section 3001(a)(8). An employer may allow employees who average
fewer than 35 hours per week to enroll.
`(b) Limitation- A health insurance issuer may not refuse to provide coverage
to any eligible individual under subsection (a) who selects a health benefits
plan offered by such issuer under this title.
`(c) Type of Enrollment- An eligible individual may enroll as an individual
or as an adult with one or more children regardless of whether another adult
is present in the enrollee's household or family.
`(1) IN GENERAL- The Administrator shall establish an annual open enrollment
period during which an employer may elect to become a participating employer
and an employee may enroll in a health benefits plan under this title for
the following calendar year.
`(2) OPEN ENROLLMENT PERIOD- For purposes of this title, the term `open
enrollment period' means, with respect to calendar year 2011 and each succeeding
calendar year, the period beginning on October 1, 2010, and ending December
1, 2010, and each succeeding period beginning October 1 and ending December
1. Coverage in a health benefits plan selected during such an open enrollment
period shall begin on January 1 of the calendar year following the selection.
`(3) NEWLY ELIGIBLE EMPLOYERS AND EMPLOYEES- Notwithstanding the open enrollment
period provided for under paragraph (2), the Administrator shall establish
an enrollment process to enable a newly eligible employer or an employer
with an existing health benefits policy whose term is ending to become a
participating employer and for an employee of such employer, or a new employee
of a participating employer, to enroll in a health benefits plan under this
title outside of an open enrollment period. The Administrator may establish
a process for setting the renewal date for the participation of an employer
that initially becomes a participating employer outside of the open enrollment
period to coincide with a subsequent open enrollment period.
`(4) LIMITATION OF CHANGING ENROLLMENT- An employer or employee (as the
case may be) may elect to change the health benefits plan that the employee
is enrolled in only during an open enrollment period.
`(5) EFFECTIVENESS OF ELECTION AND CHANGE OF ELECTION- An election to change
a health benefits plan that is made during the open enrollment period under
paragraph (2) shall take effect as of the first day of the following calendar
year.
`(6) CONTINUATION OF ENROLLMENT- An employee who has enrolled in a health
benefits plan under this title is considered to have been continuously enrolled
in that health benefits plan until such time as--
`(A) the employer or employee (as the case may be) elects to change health
benefits plans; or
`(B) the health benefits plan is terminated.
`(e) Providing Information To Promote Informed Choice- The Administrator shall
compile, produce, and disseminate information to employers, employees, and
navigators under section 3002(c)(8) to promote informed choice that shall
be made available at least 30 days prior to the beginning of each open enrollment
period.
`(f) Termination of Employment- An employee may remain enrolled in a health
plan under this title for the remainder of the calendar year following the
termination or separation of the employee from employment or termination of
the employer, if the employee pays 102 percent of the monthly premium for
the remainder of the year involved.
`(g) Rule of Construction- Nothing in this title shall be construed to prohibit
a health insurance issuer providing coverage through the program under this
title from using the services of a licensed agent or broker.
`SEC. 3007. HEALTH COVERAGE AVAILABLE WITHIN THE SMALL BUSINESS POOL.
`(a) Preexisting Condition Exclusions-
`(1) IN GENERAL- Each contract under this title may include a preexisting
condition exclusion as defined under section 9801(b)(1) of the Internal
Revenue Code of 1986.
`(2) EXCLUSION PERIOD- A preexisting condition exclusion under this subsection
shall provide for coverage of a preexisting condition to begin not later
than 6 months after the date on which the coverage of the individual under
a health benefits plan commences, reduced by the aggregate of 1 day for
each day that the individual was covered under creditable health insurance
coverage (as defined for purposes of section 2701(c)) immediately preceding
the date the individual submitted an application for coverage under this
title. This provision shall be applied notwithstanding the applicable provision
for the reduction of the exclusion period provided for in section 701(a)(3)
of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1181(a)(3)).
`(b) Rates and Premiums; State Laws-
`(1) IN GENERAL- Rates charged and premiums paid for a health benefits plan
under this title--
`(A) shall be determined in accordance with subsection (d);
`(B) may be annually adjusted; and
`(C) shall be adjusted to cover the administrative costs of the Administrator
under this title and the office established under section 3002.
`(2) BENEFIT MANDATE LAWS- With respect to a contract entered into under
this title under which a health insurance issuer will offer health benefits
plan coverage, State mandated benefit laws in effect in the State in which
the plan is offered shall continue to apply, except in the case of a nationwide
plan.
`(3) LIMITATION- Nothing in this subsection shall be construed to preempt
any State or local law (including any State grievance, claims, and appeals
procedure laws, State provider mandate laws, and State network adequacy
laws) except those laws and regulations described in subsection (b)(2),
(d)(2)(B), and (d)(5).
`(c) Termination and Reenrollment- If an individual who is enrolled in a health
benefits plan under this title voluntarily terminates the enrollment, except
in the case of an individual who has lost or changes employment or whose employer
is terminated for failure to pay premiums, the individual shall not be eligible
for reenrollment until the first open enrollment period following the expiration
of 6 months after the date of such termination.
`(d) Rating Rules and Transitional Application of State Law-
`(1) YEARS 2011 AND 2012- With respect to calendar years 2011 and 2012 (open
enrollment period beginning October 1, 2010, and October 1, 2011), the following
shall apply:
`(A) In the case of an employer that elects to participate in the program
under this title, the State rating requirements applicable to employers
purchasing health insurance coverage in the small group market in the
State in which the employer is located shall apply with respect to such
coverage, except that premium rates for such coverage shall not vary based
on health-status related factors.
`(B) State rating requirements shall apply to health insurance coverage
purchased in the small group market in the State, except that a State
shall be prohibited from allowing premium rates to vary based on health-status
related factors.
`(A) NAIC RECOMMENDATIONS-
`(i) RATING REQUIREMENTS- Beginning in 2009, the Administrator shall
contract with the National Association of Insurance Commissioners to
conduct a study of the rating requirements utilized in the program under
this title and the rating requirements that apply to health insurance
purchased in the small group markets in the States, and to develop recommendations
concerning rating requirements. Such recommendations shall be submitted
as a legislative proposal to Congress during calendar year 2011.
`(ii) STATE LAW HARMONIZATION- Beginning in 2009, the Administrator
shall contract with the National Association of Insurance Commissioners
to conduct a study of administrative procedures, including rate and
form filing, standards of external review, and standards of internal
review, that apply to the program under this title and to health insurance
purchased in the small group markets in the States.
`(iii) CONSULTATION- In conducting the studies and developing the recommendations
under clauses (i) and (ii), the National Association of Insurance Commissioners
shall consult with key stakeholders (including small businesses, self-employed
individuals, employees of small businesses, health insurance issuers,
health care providers, and patient advocates).
`(iv) RECOMMENDATIONS REGARDING RATINGS- During 2011, the recommendations
of the National Association of Insurance Commissioners under clause
(i) shall be submitted to Congress in the form of a legislative proposal
and shall concern--
`(I) rating requirements for health insurance coverage under this
title for 2013 and subsequent years; and
`(II) a maximum permissible variance between State rating requirements
and the rating requirements for coverage under this title that will
allow State flexibility without causing significant adverse selection
for health insurance coverage under this title.
`(B) APPLICATION OF RATING REQUIREMENTS- If, pursuant to this subsection,
an Act is enacted to implement recommendations submitted under subparagraph
(A)(i), or alternative rating requirements developed by Congress, such
rating requirements shall apply to the program under this title beginning
in 2013 (open enrollment periods beginning October 1, 2012, and thereafter).
`(3) FAILURE TO ENACT LEGISLATION REGARDING RATING REQUIREMENTS- If an Act
is not enacted as provided for in paragraph (2)(B) with respect to rating
requirements, the fallback rating rules under paragraph (5) shall apply
beginning in 2013 (open enrollment periods beginning October 1, 2012, and
thereafter).
`(4) EXPEDITED CONGRESSIONAL CONSIDERATION-
`(A) INTRODUCTION AND COMMITTEE CONSIDERATION-
`(i) INTRODUCTION- A legislative proposal submitted to Congress pursuant
to paragraph (2) shall be introduced in the House of Representatives
by the Speaker, and in the Senate by the majority leader, immediately
upon receipt of the language and shall be referred to the appropriate
committees of Congress. If the proposal is not introduced in accordance
with the preceding sentence, legislation may be introduced in either
House of Congress by any member thereof.
`(ii) COMMITTEE CONSIDERATION- Legislation introduced in the House of
Representatives and the Senate under clause (i) shall be referred to
the appropriate committees of jurisdiction of the House of Representatives
and the Senate. Not later than 45 calendar days after the introduction
of the legislation or February 15, 2012, whichever is later, the committee
of Congress to which the legislation was referred shall report the legislation
or a committee amendment thereto. If the committee has not reported
such legislation (or identical legislation) at the end of 45 calendar
days after its introduction, or February 15, 2012, whichever is later,
such committee shall be deemed to be discharged from further consideration
of such legislation and such legislation shall be placed on the appropriate
calendar of the House involved.
`(B) EXPEDITED PROCEDURE-
`(i) CONSIDERATION- Not later than 15 calendar days after the date on
which a committee has been or could have been discharged from consideration
of legislation under this paragraph, the Speaker of the House of Representatives,
or the Speaker's designee, or the majority leader of the Senate, or
the leader's designee, shall move to proceed to the consideration of
the committee amendment to the legislation, and if there is no such
amendment, to the legislation. It shall also be in order for any member
of the House of Representatives or the Senate, respectively, to move
to proceed to the consideration of the legislation at any time after
the conclusion of such 15-day period. All points of order against the
legislation (and against consideration of the legislation) with the
exception of points of order under the Congressional Budget Act of 1974
are waived. A motion to proceed to the consideration of the legislation
is highly privileged in the House of Representatives and is privileged
in the Senate and is not debatable. The motion is not subject to amendment,
to a motion to postpone consideration of the legislation, or to a motion
to proceed to the consideration of other business. A motion to reconsider
the vote by which the motion to proceed is agreed to or not agreed to
shall not be in order. If the motion to proceed is agreed to, the House
of Representatives or the Senate, as the case may be, shall immediately
proceed to consideration of the legislation in accordance with the Standing
Rules of the House of Representatives or the Senate, as the case may
be, without intervening motion, order, or other business, and the resolution
shall remain the unfinished business of the House of Representatives
or the Senate, as the case may be, until disposed of, except as provided
in clause (iii).
`(ii) CONSIDERATION BY OTHER HOUSE- If, before the passage by one House
of the legislation that was introduced in such House, such House receives
from the other House legislation as passed by such other House--
`(I) the legislation of the other House shall not be referred to a
committee and shall immediately displace the legislation that was
introduced in the House in receipt of the legislation of the other
House; and
`(II) the legislation of the other House shall immediately be considered
by the receiving House under the same procedures applicable to legislation
reported by or discharged from a committee under this paragraph.
`Upon disposition of legislation that is received by one House from
the other House, it shall no longer be in order to consider the legislation
that was introduced in the receiving House.
`(iii) SENATE VOTE REQUIREMENT- Legislation under this paragraph shall
only be approved in the Senate if affirmed by the votes of 3/5 of the
Senators duly chosen and sworn. If legislation in the Senate has not
reached final passage within 10 days after the motion to proceed is
agreed to (excluding periods in which the Senate is in recess) it shall
be in order for the majority leader to file a cloture petition on the
legislation or amendments thereto, in accordance with rule XXII of the
Standing Rules of the Senate. If such a cloture motion on the legislation
fails, is shall be in order for the majority leader to proceed to other
business and the legislation shall be returned to or placed on the Senate
calendar.
`(iv) CONSIDERATION IN CONFERENCE- Immediately upon a final passage
of the legislation that results in a disagreement between the two Houses
of Congress with respect to the legislation, conferees shall be appointed
and a conference convened. Not later than 15 days after the date on
which conferees are appointed (excluding periods in which one or both
Houses are in recess), the conferees shall file a report with the House
of Representatives and the Senate resolving the differences between
the Houses on the legislation. Notwithstanding any other rule of the
House of Representatives or the Senate, it shall be in order to immediately
consider a report of a committee of conference on the legislation filed
in accordance with this subclause. Debate in the House of Representatives
and the Senate on the conference report shall be limited to 10 hours,
equally divided and controlled by the Speaker of the House of Representatives
and the minority leader of the House of Representatives or their designees
and the majority and minority leaders of the Senate or their designees.
A vote on final passage of the conference report shall occur immediately
at the conclusion or yielding back of all time for debate on the conference
report. The conference report shall be approved in the Senate only if
affirmed by the votes of 3/5 of the Senators duly chosen and sworn.
`(C) RULES OF THE SENATE AND HOUSE OF REPRESENTATIVES- This paragraph
is enacted by Congress--
`(i) as an exercise of the rulemaking power of the Senate and House
of Representatives, respectively, and is deemed to be part of the rules
of each House, respectively, but applicable only with respect to the
procedure to be followed in that House in the case of legislation under
this paragraph, and it supersedes other rules only to the extent that
it is inconsistent with such rules; and
`(ii) with full recognition of the constitutional right of either House
to change the rules (so far as they relate to the procedure of that
House) at any time, in the same manner, and to the same extent as in
the case of any other rule of that House.
`(5) FALLBACK RATING RULES- For purposes of paragraph (3), the fallback
rating rules are as follows:
`(i) RATING RULES- A health insurance issuer that enters into a contract
under the program under this title shall determine the amount of premiums
to assess for coverage under a health benefits plan based on a community
rate that may be annually adjusted only--
`(I) based on the age of covered individuals (subject to clause (iii));
`(II) based on the geographic area involved if the adjustment is based
on geographical divisions that are not smaller than a metropolitan
statistical area and the issuer provides evidence of geographic variation
in cost of services;
`(III) based on industry (subject to clause (iv));
`(IV) based on tobacco use; and
`(V) based on whether such coverage is for an individual, 2 adults
in a household, 1 adult and 1 or more children, or a family.
`(ii) LIMITATION- Premium rates charged for coverage under the program
under this title shall not vary based on health-status related factors,
gender, class of business, or claims experience or any other factor
not described in clause (i).
`(I) IN GENERAL- With respect to clause (i)(I), in making adjustments
based on age, the Administrator shall establish not more than 5 age
brackets to be used by a health insurance issuer in establishing rates
for individuals under the age of 65. The rates for any age bracket
shall not exceed 300 percent of the rate for the lowest age bracket.
Age-related premiums may not vary within age brackets.
`(II) AGES 65 AND OLDER- With respect to clause (i)(I), a health insurance
issuer may develop separate rates for covered individuals who are
65 years of age or older for whom the primary payor for health benefits
coverage is the Medicare Program under title XVIII of the Social Security
Act, for the coverage of health benefits that are not otherwise covered
under Medicare.
`(iv) INDUSTRY ADJUSTMENT- With respect to clause (i)(III), in making
adjustments based on industry, the rates for any industry shall not
exceed 115 percent of the rate for the lowest industry and shall be
based on evidence of industry variation in cost of services.
`(B) STATE RATING RULES- State rating requirements shall apply to health
insurance coverage purchased in the small group market, except that a
State shall not permit premium rates to vary based on health-status related
factors.
`(6) STATE WITH LESS PREMIUM VARIATION- Effective beginning in calendar
year 2013, in the case of a State that provides a rating variance with respect
to age that is less than the Federal limit established under paragraph (2)(B)
or (3) or that provides for some form of community rating, or that provides
a rating variance with respect to industry that is less than the Federal
limit established under paragraph (2)(B) or (3), or that provides a rating
variance with respect to the geographic area involved that is less than
the Federal limit established in paragraph (2)(B) or (3), premium rates
charged for health insurance coverage under this title in such State with
respect to such factor shall reflect the rating requirements of such State.
`(A) CALENDAR YEARS 2011 AND 2012- With respect to calendar years 2011
and 2012 (open enrollment periods beginning October 1, 2010, and October
1, 2011), in the case of a State that applies community rating or adjusted
community rating where any age bracket does not exceed 300 percent of
the lowest age bracket, employees of an employer located in that State
may elect to enroll in any health plan offered under this title.
`(B) SUBSEQUENT YEARS- Beginning in calendar year 2013 (open enrollment
periods beginning October 1, 2012, and thereafter), employees of an employer
that participates in the program under this title may elect to enroll
in any health plan offered under this title.
`(C) EXCEPTION- In any State or year in which an employee is not able
to select a health plan as provided for in subparagraph (A) or (B), the
employer shall select the health plan or plans that shall be made available
to the employees of such employer.
`(8) STATE APPROVAL OF RATES- State laws requiring the approval of rates
with respect to health insurance shall continue to apply to health insurance
coverage under this title in such State unless the State fails to enforce
the application of rates that would otherwise apply to health insurance
issuers under the program under this title.
`(1) STATEMENT OF BENEFITS- Each contract under this title shall contain
a detailed statement of benefits offered and shall include information concerning
such maximums, limitations, exclusions, and other definitions of benefits
as the Administrator considers necessary or reasonable.
`(A) IN GENERAL- In the case of contracts with health insurance issuers
that offer a health benefit plan on a nationwide basis, in the first year
after the date of enactment of this title, the benefit package shall include
benefits established by the Administrator.
`(B) PROCESS FOR ESTABLISHING BENEFITS FOR NATIONWIDE PLANS- The benefits
provide for under subparagraph (A) shall be determined as follows:
`(i) Not later than 30 days after the date of enactment of this title,
the Secretary shall enter into a contract with the Institute of Medicine
to develop a minimum set of benefits to be offered by nationwide plans.
`(ii) In developing such minimum set of benefits, the Institute of Medicine
shall convene public forums to allow input from key stakeholders (including
small businesses, self-employed individuals, employees of small businesses,
health insurance issuers, insurance regulators, health care providers,
and patient advocates) and shall consult with the Small Business Health
Board.
`(iii) The Institute of Medicine shall consider--
`(I) the clinical appropriateness and effectiveness of the benefits
covered;
`(II) the affordability of the benefits covered;
`(III) the financial protection of enrollees against high health care
expenses;
`(IV) access to necessary health care services; and
`(V) benefits similar to those available in the small group market
on the date of enactment of this title.
`(iv) The benefits package shall not be discriminatory or be likely
to promote or induce adverse selection.
`(v) The Administrator shall publish the benefits recommended by the
Institute of Medicine for public comment.
`(vi) Based on the comments received, the Administrator may make changes
only to the extent that the recommendation from the Institute of Medicine
is not consistent with the criteria contained in clause (iii) or there
is a compelling need for the changes to ensure the effective functioning
of the program.
`(C) CHANGES TO BENEFITS-
`(i) IN GENERA1- By a vote of a two-thirds majority, the Small Business
Health Board may recommend to the Administrator changes to the benefit
package for nationwide plans under this paragraph for years subsequent
to the first year in which such benefits are in effect.
`(ii) REDUCTION IN BENEFITS- The Administrator may reduce benefits that
were previously covered under this paragraph only if--
`(I) two-thirds of the Small Business Health Board recommend such
change; or
`(II) there is a compelling need for the change to prevent a substantial
reduction in participation in the program under this title.
`(f) Additional Premium for Delayed Enrollment-
`(1) IN GENERAL- A self-employed individual who is eligible to participate
in the program under this title, who does not reside in a State where a
self-employed individual is eligible for coverage in the small group market,
and who does not elect to enroll in coverage under such program in the first
year in which the self-employed individual is eligible to so enroll, shall
be subject to an additional premium for delayed enrollment.
`(2) AMOUNT- The Administrator shall establish the amount of the additional
premium under paragraph (1), which shall be the amount determined by the
Administrator to be actuarially appropriate, to encourage enrollment, and
to reduce adverse selection. The amount of the additional premium shall
be calculated by the Administrator based on the number of years specified
in paragraph (4).
`(3) PAYMENT- A self-employed individual shall pay the additional premium
under this subsection, if any, for a period of time equal to the number
of years specified in paragraph (4). After the expiration of such period
the additional premium for delayed enrollment shall be terminated.
`(4) YEARS- The number of years specified in this paragraph is the number
of years that the self-employed individual involved was eligible to participate
in the program under this title but did not enroll in coverage under such
program and did not otherwise have creditable coverage (as defined for purposes
of section 2701(c)).
`(1) STATE AUTHORITY- With respect to the enforcement of provisions in this
title that supersede State law (as described in paragraph (2)), a State
may require that health insurance issuers that issue, sell, renew, or offer
health insurance coverage in the State in the small group market or through
the program under this title, comply with the requirements of this title
with respect to such issuers.
`(2) PROVISIONS DESCRIBED- The provisions described in this paragraph shall
include the following:
`(A) Prohibitions on varying premium rates based on health-status related
factors (subsections (d)(1)(A) and (B) of section 3007).
`(B) The implementation of rating requirements that shall apply to the
program under this title beginning in calendar year 2013 (subsections
(d)(2)(B) and (d)(3) of section 3007).
`(C) Benefit requirements for nationwide plans available in the program
under this title (subsection (e)).
`(3) FAILURE TO IMPLEMENT OR ENFORCE PROVISIONS- In the case of a determination
by the Secretary that a State has failed to substantially enforce a provision
(or provisions) described in paragraph (2) with respect to health insurance
issuers in the State, the Secretary shall enforce such provision (or provisions).
`(4) SECRETARIAL ENFORCEMENT AUTHORITY- The Secretary shall have the same
authority in relation to the enforcement of the provisions of this title
with respect to issuers of health insurance coverage in a State as the Secretary
has under section 2722(b)(2) in relation to the enforcement of the provisions
of part A of title XXVII with respect to issuers of health insurance coverage
in the small group market in the State.
`(h) State Opt Out- A State may prohibit small employers and self-employed
individuals in the State from participating in the program under this title
if the State--
`(1) defines its small group market to include groups of one (so that self-employed
individuals are eligible for coverage in such market);
`(2) prohibits the use of health-status related factors and other factors
described in subsection (d)(5)(A);
`(3) has in effect rating rules that--
`(A) in calendar years 2011 and 2012, comply with subsection (d)(5)(A);
and
`(B) in calendar year 2013 and thereafter, comply with subsection (d)(2)(B)
or (d)(3), whichever is in effect for such calendar year;
except that such rules may impose limits on rating variation in addition
to those provided for in such subsection;
`(4) maintains a State-wide purchasing pool that provides purchasers in
the small group market a choice of health benefit plans, with comparative
information provided concerning such plans and the premiums charged for
such plans made available through the Internet; and
`(5) enacts a law to request an opt out under this subsection.
`SEC. 3008. ENCOURAGING PARTICIPATION BY HEALTH INSURANCE ISSUERS THROUGH
ADJUSTMENTS FOR RISK.
`(a) Application of Risk Corridors-
`(1) IN GENERAL- This section shall only apply to health insurance issuers
with respect to health benefits plans offered under this Act during any
of calendar years 2011 through 2013.
`(2) NOTIFICATION OF COSTS UNDER THE PLAN- In the case of a health insurance
issuer that offers a health benefits plan under this title in any of calendar
years 2011 through 2013, the issuer shall notify the Administrator, before
such date in the succeeding year as the Administrator specifies, of the
total amount of costs incurred in providing benefits under the health benefits
plan for the year involved and the portion of such costs that is attributable
to administrative expenses.
`(3) ALLOWABLE COSTS DEFINED- For purposes of this section, the term `allowable
costs' means, with respect to a health benefits plan offered by a health
insurance issuer under this title, for a year, the total amount of costs
described in paragraph (2) for the plan and year, reduced by the portion
of such costs attributable to administrative expenses incurred in providing
the benefits described in such paragraph.
`(b) Adjustment of Payment-
`(1) NO ADJUSTMENT IF ALLOWABLE COSTS WITHIN 3 PERCENT OF TARGET AMOUNT-
If the allowable costs for the health insurance issuer with respect to the
health benefits plan involved for a calendar year are at least 97 percent,
but do not exceed 103 percent, of the target amount for the plan and year
involved, there shall be no payment adjustment under this section for the
plan and year.
`(2) INCREASE IN PAYMENT IF ALLOWABLE COSTS ABOVE 103 PERCENT OF TARGET
AMOUNT-
`(A) COSTS BETWEEN 103 AND 108 PERCENT OF TARGET AMOUNT- If the allowable
costs for the health insurance issuer with respect to the health benefits
plan involved for the year are greater than 103 percent, but not greater
than 108 percent, of the target amount for the plan and year, the Administrator
shall reimburse the issuer for such excess costs through payment to the
issuer of an amount equal to 75 percent of the difference between such
allowable costs and 103 percent of such target amount.
`(B) COSTS ABOVE 108 PERCENT OF TARGET AMOUNT- If the allowable costs
for the health insurance issuer with respect to the health benefits plan
involved for the year are greater than 108 percent of the target amount
for the plan and year, the Administrator shall reimburse the issuer for
such excess costs through payment to the issuer in an amount equal to
the sum of--
`(i) 3.75 percent of such target amount; and
`(ii) 90 percent of the difference between such allowable costs and
108 percent of such target amount.
`(3) REDUCTION IN PAYMENT IF ALLOWABLE COSTS BELOW 97 PERCENT OF TARGET
AMOUNT-
`(A) COSTS BETWEEN 92 AND 97 PERCENT OF TARGET AMOUNT- If the allowable
costs for the health insurance issuer with respect to the health benefits
plan involved for the year are less than 97 percent, but greater than
or equal to 92 percent, of the target amount for the plan and year, the
issuer shall be required to pay into a contingency reserve fund established
and maintained by the Administrator, an amount equal to 75 percent of
the difference between 97 percent of the target amount and such allowable
costs.
`(B) COSTS BELOW 92 PERCENT OF TARGET AMOUNT- If the allowable costs for
the health insurance issuer with respect to the health benefits plan involved
for the year are less than 92 percent of the target amount for the plan
and year, the issuer shall be required to pay into the contingency fund
established under subparagraph (A), an amount equal to the sum of--
`(i) 3.75 percent of such target amount; and
`(ii) 90 percent of the difference between 92 percent of such target
amount and such allowable costs.
`(4) TARGET AMOUNT DESCRIBED-
`(A) IN GENERAL- For purposes of this subsection, the term `target amount'
means, with respect to a health benefits plan offered by an issuer under
this title in any of calendar years 2011 through 2013, an amount equal
to--
`(i) the total of the monthly premiums estimated by the health insurance
issuer and accepted by the Administrator to be paid for enrollees in
the plan under this title for the calendar year involved; reduced by
`(ii) the amount of administrative expenses that the issuer estimates,
and the Administrator accepts, will be incurred by the issuer with respect
to the plan for such calendar year.
`(B) SUBMISSION OF TARGET AMOUNT- Not later than December 31, 2010, and
each December 31 thereafter through calendar year 2012, an issuer shall
submit to the Administrator a description of the target amount for such
issuer with respect to health benefits plans provided by the issuer under
this title.
`(c) Disclosure of Information-
`(1) IN GENERAL- Each contract under this title shall provide--
`(A) that a health insurance issuer offering a health benefits plan under
this title shall provide the Administrator with such information as the
Administrator determines is necessary to carry out this subsection including
the notification of costs under subsection (a)(2) and the target amount
under subsection (b)(4)(B); and
`(B) that the Administrator has the right to inspect and audit any books
and records of the issuer that pertain to the information regarding costs
provided to the Administrator under such subsections.
`(2) RESTRICTION ON USE OF INFORMATION- Information disclosed or obtained
pursuant to the provisions of this subsection may be used by the office
designated under section 3002(a) and its employees and contractors only
for the purposes of, and to the extent necessary in, carrying out this section.
`SEC. 3009. ADMINISTRATION THROUGH REGIONAL OR OTHER ADMINISTRATIVE ENTITIES.
`(a) In General- In order to provide for the administration of the benefits
under this title with maximum efficiency and convenience for participating
employers and health care providers and other individuals and entities providing
services to such employers, the Administrator--
`(1) shall enter into contracts with eligible entities, to the extent appropriate,
to perform, on a regional or other basis, activities to receive, disburse,
and account for payments of premiums to participating employers by individuals,
and for payments by participating employers and employees to health insurance
issuers; and
`(2) may enter into contracts with eligible entities, to the extent appropriate,
to perform, on a regional or other basis, one or more of the following:
`(A) Collect and maintain all information relating to individuals, families,
and employers participating in the program under this title.
`(B) Serve as a channel of communication between health insurance issuers,
participating employers, and individuals relating to the administration
of this title.
`(C) Otherwise carry out such activities for the administration of this
title, in such manner, as may be provided for in the contract entered
into under this section.
`(b) Application- To be eligible to receive a contract under subsection (a),
an entity shall prepare and submit to the Administrator an application at
such time, in such manner, and containing such information as the Administration
may require.
`(1) COMPETITIVE BIDDING- All contracts under this section shall be awarded
through a competitive bidding process on a bi-annual basis.
`(2) REQUIREMENT- No contract shall be entered into with any entity under
this section unless the Administrator finds that such entity will perform
its obligations under the contract efficiently and effectively and will
meet such requirements as to financial responsibility, legal authority,
and other matters as the Administrator finds pertinent.
`(3) PUBLICATION OF STANDARDS AND CRITERIA- If the Administrator enters
into contracts under subsection (a), the Administrator shall publish in
the Federal Register standards and criteria for the efficient and effective
performance of contract obligations under this section, and opportunity
shall be provided for public comment prior to implementation. In establishing
such standards and criteria, the Administrator shall provide for a system
to measure an entity's performance of responsibilities.
`(4) TERM- Each contract under this section shall be for a term of at least
2 years, and may be made automatically renewable from term to term in the
absence of notice by either party of intention to terminate at the end of
the current term, except that the Administrator may terminate any such contract
at any time (after such reasonable notice and opportunity for hearing to
the entity involved as the Administrator may provide in regulations) if
the Administrator finds that the entity has failed substantially to carry
out the contract or is carrying out the contract in a manner inconsistent
with the efficient and effective administration of the program established
by this title.
`(d) Terms of Contract- A contract entered into under this section shall include--
`(1) a description of the duties of the contracting entity;
`(2) an assurance that the entity will furnish to the Administrator such
timely information and reports as the Administrator determines appropriate;
`(3) an assurance that the entity will maintain such records and afford
such access thereto as the Administrator finds necessary to assure the correctness
and verification of the information and reports under paragraph (2) and
otherwise to carry out the purposes of this title;
`(4) an assurance that the entity shall comply with such confidentiality
and privacy protection guidelines and procedures as the Administrator may
require;
`(5) an assurance that the entity does not have, and will continue to avoid,
any conflicts of interest relative to any functions it will perform; and
`(6) such other terms and conditions not inconsistent with this section
as the Administrator may find necessary or appropriate.
`SEC. 3010. PUBLIC EDUCATION CAMPAIGN AND REPORT.
`(a) In General- In carrying out this title, the Administrator shall develop
and implement an educational campaign with interagency participation (including
at a minimum the Small Business Administration, the Department of Labor, and
employees of the office established under section 3002 who oversee the provision
of information through navigators) to provide information to employers and
the general public concerning the health insurance program developed under
this title, including the contact information relating to an individual or
individuals who will be available to resolve various types of problems with
health insurance coverage provided under this title.
`(b) Public Education Campaign- There is authorized to be appropriated to
carry out this section, such sums as may be necessary for each of fiscal years
2008 through 2010.
`(c) Reports to Congress- Not later than 1 year and 2 years after the implementation
of the campaign under subsection (a), the Administrator shall submit to the
appropriate committees of Congress a report that describes the activities
of the Administrator under subsection (a), including a determination by the
Administrator of the percentage of employers with knowledge of the health
benefits program under this title.
`SEC. 3011. APPROPRIATIONS.
`There are authorized to be appropriated to the Administrator such sums as
may be necessary in each fiscal year for the development and administration
of the program under this title.
`SEC. 3012. EFFECTIVE DATE.
`This title shall take effect on the date of enactment of this title.'.
SEC. 3. AMENDMENT TO ERISA.
Section 514(b)(2) of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1144(b)(2)) is amended by adding at the end the following:
`(C) Notwithstanding subparagraph (A), the provisions of subsections (d)(1)(B)
and (g)(2)(A) of section 3007 of the Public Health Service Act (relating to
the prohibition on health-status related rating and the Federal enforcement
of such provisions) shall supercede any State law that conflicts with such
provisions.'.
SEC. 4. CREDIT FOR SMALL BUSINESS EMPLOYEE HEALTH INSURANCE EXPENSES.
(a) In General- Subpart D of part IV of subchapter A of chapter 1 of the Internal
Revenue Code of 1986 (relating to credits) is amended by inserting after section
45N the following new section:
`SEC. 45O. SMALL BUSINESS EMPLOYEE HEALTH INSURANCE CREDIT.
`(a) Determination of Credit- In the case of a qualified small employer, there
shall be allowed as a credit against the tax imposed by this chapter for the
taxable year an amount equal to the credit amount described in subsection
(b).
`(b) General Credit Amount- For purposes of this section--
`(1) IN GENERAL- The credit amount described in this subsection is the product
of--
`(A) the amount specified in paragraph (2),
`(B) the employer size factor specified in paragraph (3), and
`(C) the percentage of year factor specified in paragraph (4).
`(2) APPLICABLE AMOUNT- For purposes of paragraph (1)--
`(A) IN GENERAL- The applicable amount is equal to--
`(i) $1,000 for each employee of the employer who receives self-only
health insurance coverage through the employer,
`(ii) $2,000 for each employee of the employer who receives family health
insurance coverage through the employer, and
`(iii) $1,500 for each employee of the employer who receives health
insurance coverage for two adults or one adult and one or more children
through the employer.
`(B) BONUS FOR PAYMENT OF GREATER PERCENTAGE OF PREMIUMS- The applicable
amount otherwise specified in subparagraph (A) shall be increased by $200
in the case of subparagraph (A)(i), $400 in the case of subparagraph (A)(ii),
and $300 in the case of subparagraph (A)(iii), for each additional 10
percent of the qualified employee health insurance expenses exceeding
60 percent which are paid by the qualified small employer.
`(3) EMPLOYER SIZE FACTOR- For purposes of paragraph (1), the employer size
factor is the percentage determined in accordance with the following table:
-------------------------------------------------------------------------
`If the employer size is: The percentage is:
-------------------------------------------------------------------------
10 or fewer full-time employees 100%
More than 10 but not more than 20 full-time employees 80%
More than 20 but not more than 30 full-time employees 60%
More than 30 but not more than 40 full-time employees 40%
More than 40 but not more than 50 full-time employees 20%
More than 50 full-time employees 0%
-------------------------------------------------------------------------
`(4) PERCENTAGE OF YEAR FACTOR- For purposes of paragraph (1), the percentage
of year factor is equal to the ratio of--
`(A) the number of months during the taxable year for which the employer
paid or incurred qualified employee health insurance expenses, and
`(c) Definitions and Special Rules- For purposes of this section--
`(1) QUALIFIED SMALL EMPLOYER-
`(A) IN GENERAL- The term `qualified small employer' means any employer
(as defined in section 3001(a)(4) of the Public Health Service Act) which--
`(I) purchases health insurance coverage for its employees in a small
group market in a State which meets the requirements under subparagraph
(B), or
`(II) with respect to any taxable year beginning after 2010, is a
participating employer (as defined in section 3001(a)(8) of such Act)
in the program under title XXX of such Act,
`(ii) pays or incurs at least 60 percent of the qualified employee health
insurance expenses of such employer or is self-employed, and
`(iii) employed an average of 50 or fewer full-time employees during
the preceding taxable year or was a self-employed individual with either
not less than $5,000 in net earnings or not less than $15,000 in gross
earnings from self-employment in the preceding taxable year.
`(B) STATE SMALL GROUP MARKET REQUIREMENTS- A State meets the requirements
of this subparagraph if--
`(i) during calendar years 2009 and 2010, the State--
`(I) defines its small group market to include groups of one (so that
self-employed individuals are eligible for coverage in such market),
`(II) prohibits the use of health-status related factors and other
factors described in section 3007(d)(5)(A) of such Act, and
`(III) has in effect rating rules that comply with section 3007(d)(5)(A)
of such Act (except that such rules may impose limits on rating variation
in addition to those provided for in such section),
`(ii) during calendar years 2011 and 2012, the State--
`(I) meets the requirements under clause (i), and
`(II) maintains a State-wide purchasing pool that provides purchasers
in the small group market a choice of health benefit plans, with comparative
information provided concerning such plans and the premiums charged
for such plans made available through the Internet, and
`(iii) for calendar years after 2012, the State--
`(I) meets the requirements under clauses (i)(I), (i)(II), and (ii)(II),
and
`(II) has in effect rating rules that comply with paragraph (2)(B)
or (3) of section 3007(d) of such Act, whichever is in effect for
such calendar year (except that such rules may impose limits on rating
variation in addition to those provided for in such section).
`(2) QUALIFIED EMPLOYEE HEALTH INSURANCE EXPENSES-
`(A) IN GENERAL- The term `qualified employee health insurance expenses'
means any amount paid by an employer or an employee of such employer for
health insurance coverage under such Act to the extent such amount is
attributable to coverage--
`(i) provided to any employee (as defined in subsection 3001(a)(3) of
such Act), or
`(ii) for the employer, in the case of a self-employed individual.
`(B) EXCEPTION FOR AMOUNTS PAID UNDER SALARY REDUCTION ARRANGEMENTS- No
amount paid or incurred for health insurance coverage pursuant to a salary
reduction arrangement shall be taken into account under subparagraph (A).
`(3) FULL-TIME EMPLOYEE- The term `full-time employee' means, with respect
to any period, an employee (as defined in section 3001(a)(3) of such Act)
of an employer if the average number of hours worked by such employee in
the preceding taxable year for such employer was at least 35 hours per week.
`(d) Inflation Adjustment-
`(1) IN GENERAL- For each taxable year after 2009, the dollar amounts specified
in subsections (b)(2)(A), (b)(2)(B), and (c)(1)(A)(iii) (after the application
of this paragraph) shall be the amounts in effect in the preceding taxable
year or, if greater, the product of--
`(A) the corresponding dollar amount specified in such subsection, and
`(B) the ratio of the index of wage inflation (as determined by the Bureau
of Labor Statistics) for August of the preceding calendar year to such
index of wage inflation for August of 2008.
`(2) ROUNDING- If any amount determined under paragraph (1) is not a multiple
of $100, such amount shall be rounded to the next lowest multiple of $100.
`(e) Application of Certain Rules in Determination of Employer Size- For purposes
of this section--
`(1) APPLICATION OF AGGREGATION RULE FOR EMPLOYERS- All persons treated
as a single employer under subsection (b), (c), (m), or (o) of section 414
shall be treated as 1 employer.
`(2) EMPLOYERS NOT IN EXISTENCE IN PRECEDING YEAR- In the case of an employer
which was not in existence for the full preceding taxable year, the determination
of whether such employer meets the requirements of this section shall be
based on the average number of full-time employees that it is reasonably
expected such employer will employ on business days in the employer's first
full taxable year.
`(3) PREDECESSORS- Any reference in this subsection to an employer shall
include a reference to any predecessor of such employer.
`(f) 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 by the aggregate amount
paid on behalf of such taxpayer under section 7527A for months beginning in
such taxable year. If the amount determined under this subsection is less
than zero, the taxpayer shall owe additional tax in such amount under this
chapter.
`(g) Credits for Nonprofit Organizations- Any credit which would be allowable
under subsection (a) with respect to a qualified small business if such qualified
small business were not exempt from tax under this chapter shall be treated
as a credit allowable under this subpart to such qualified small business.'.
(b) Advance Payments of Credit- Chapter 77 of the Internal Revenue Code of
1986 is amended by inserting after section 7527 the following new section:
`SEC. 7527A. ADVANCE PAYMENT OF CREDIT FOR HEALTH INSURANCE COSTS FOR QUALIFIED
SMALL EMPLOYERS.
`(a) General Rule- Not later than December 31, 2008, the Secretary shall establish
a program for making monthly payments on behalf of qualified small employers
to the program established under title XXX of the Public Health Service Act.
The amount of the monthly payment for a qualified small employer shall be
one twelfth of the amount of the credit for the tax year to which the qualified
small employer is entitled under section 36. If a monthly payment is made
by the Secretary for which the employer is not entitled to a corresponding
credit, the employer shall owe additional tax in such amount under this chapter.
`(b) Qualified Small Employer- For purposes of this section, the term `qualified
small employer' has the meaning given such term in section 36(c)(1).'.
(c) Conforming Amendments-
(1) The table of sections for subpart D of part IV of subchapter A of chapter
1 of the Internal Revenue Code of 1986 is amended by adding at the end the
following new items:
`Sec. 45O. Small business employee health insurance credit.'.
(2) The table of sections for chapter 77 of such Code is amended by inserting
after the item relating to section 7527 the following new item:
`Sec. 7527A. Advance payment of credit for health insurance costs for qualified
small employers.'.
(d) Deductibility- The payment of premiums by a participating employer under
this Act shall be considered to be an ordinary and necessary expense in carrying
on a trade or business for purposes of the Internal Revenue Code of 1986 and
shall be deductible.
(e) Effective Date- The amendments made by this section shall apply to amounts
paid or incurred in taxable years beginning after December 31, 2008.
END
