Health Care Choice Act of 2005 - (Sec. 4) Amends the Public Health Service Act to provide that the laws of the state designated by a health insurance issuer (primary state) shall apply to individual health insurance coverage offered by that issuer in the primary state and in any other state (secondary state), but only if the coverage and issuer comply with the conditions of this Act.
Exempts issuers from any secondary state's laws that would prohibit or regulate the operation of the issuer in such state, except that any such state may require such an issuer to: (1) pay applicable premium and other taxes which are levied on insurers, brokers, or policyholders in that state; (2) register with and designate the state insurance commissioner as its agent for the purpose of receiving services of legal documents or process; (3) submit to a qualified examination of its financial condition if the primary state has not done an examination within the period recommended by the National Association of Insurance Commissioners; (4) comply with a lawful order issued in a delinquency proceeding related to a financial impairment or in a voluntary dissolution proceeding; (5) comply with an injunction issued by a court of competent jurisdiction upon a petition by the state insurance commission alleging that the issuer is in hazardous financial condition; (6) participate in any insurance insolvency guaranty association or similar association to which an issuer in the state is required to belong; (7) comply with any state law regarding fraud and abuse or unfair claims settlement practices; or (8) comply with the applicable requirements for independent review with respect to coverage offered in the state.
Exempts issuers from any secondary state's laws that would: (1) require any individual health insurance coverage to be countersigned by an insurance agent or broker residing in such state; or (2) otherwise discriminate against the issuer issuing insurance in both the primary and secondary states.
Specifies the notice that an issuer must provide in any insurance coverage offered in a secondary state and at renewal of the policy.
Prohibits an issuer that provides individual health insurance coverage in a primary or secondary state, upon renewal, from: (1) moving or reclassifying the insured based on the individual's health-status related factors; or (2) increasing the premiums assessed based on the individual's health status-related factors or past or prospective claim experience.
Prohibits an issuer from offering for sale individual heath insurance coverage in a secondary state unless that coverage is currently offered for sale in the primary state.
Allows a state to require that a person acting as an agent or broker for an issuer offering individual health insurance coverage obtain a license from that state. Prohibits a state from imposing any qualification or requirement which discriminates against a nonresident agent or broker.
Requires each issuer issuing individual health insurance coverage in both primary and secondary states to submit to: (1) the insurance commissioners of such states a copy of the plan of operation or feasibility study and written notice of any change in its designation of its primary state and of its compliance with all the laws of the primary state; and (2) the insurance commission of each secondary state a copy of the issuer's quarterly financial statement that was submitted to the primary state.
Requires an issuer to comply with the guaranteed availability requirements under the Public Health Service Act if: (1) the issuer is offering coverage in a primary state that does not accommodate, or provide a working mechanism for, residents of a secondary state; and (2) the secondary state has not adopted a qualified high risk pool as its acceptable alternative mechanism.
Prohibits an issuer from offering, selling, or issuing individual health insurance coverage in a secondary state if the state insurance commissioner does not use a risk-based capital formula for the determination of capital and surplus requirements for all issuers.
Prohibits an issuer from offering, selling, or issuing individual health insurance coverage in a secondary state unless: (1) both the secondary and primary states have legislation or regulations in place establishing an independent review process for individuals who have individual health insurance coverage; or (2) the issuer provides an acceptable mechanism under which the review is conducted by an independent medical reviewer or panel.
Sets forth criteria for qualification as an independent medical reviewer, including that such person: (1) be a physician or health care professional; and (2) not have a conflict of interest. Provides that compensation provided by the issuer to an independent medical reviewer shall not exceed a reasonable level nor be contingent on the decision rendered.
Gives sole jurisdiction to the primary state to enforce the primary state's covered laws in the primary state and any secondary state. Allows the secondary state to notify the primary state if the coverage offered in a secondary state fails to comply with the covered laws of the primary state.
Requires the Comptroller General to study and report to Congress on the effect of this Act on: (1) the number of uninsured and underinsured; (2) the availability and cost of health insurance policies for individuals with preexisting medical conditions; (3) the availability and cost of health insurance policies generally; (4) the elimination or reduction of different types of benefits under health insurance policies offered in different states; and (5) cases of fraud or abuse relating to health insurance coverage offered under this Act and the resolution of such cases.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2355 Introduced in House (IH)]
1st Session
H. R. 2355
To amend the Public Health Service Act to provide for cooperative
governing of individual health insurance coverage offered in interstate
commerce.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 12, 2005
Mr. Shadegg (for himself, Mr. Akin, Mr. Bartlett of Maryland, Mr.
Cannon, Mr. Carter, Mr. Cole of Oklahoma, Mr. Cox, Mrs. Cubin, Mr.
Feeney, Mr. Flake, Mr. Franks of Arizona, Mr. Gutknecht, Mr.
Hensarling, Mr. Herger, Mr. Hoekstra, Mr. Hostettler, Mr. Istook, Mr.
Jones of North Carolina, Mr. Kennedy of Minnesota, Mr. King of Iowa,
Mr. Linder, Mr. McHenry, Mr. Miller of Florida, Mrs. Musgrave, Mrs.
Myrick, Mr. Otter, Mr. Paul, Mr. Pence, Mr. Price of Georgia, Mr.
Radanovich, Mr. Renzi, Mr. Rohrabacher, Mr. Ryan of Wisconsin, Mr. Ryun
of Kansas, Mr. Sensenbrenner, Mr. Sessions, Mr. Souder, Mr. Wamp, Mr.
Weldon of Florida, Mr. Wicker, Mr. Wilson of South Carolina, and Mr.
Green of Wisconsin) introduced the following bill; which was referred
to the Committee on Energy and Commerce
_______________________________________________________________________
A BILL
To amend the Public Health Service Act to provide for cooperative
governing of individual health insurance coverage offered in interstate
commerce.
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 ``Health Care Choice Act of 2005''.
SEC. 2. SPECIFICATION OF CONSTITUTIONAL AUTHORITY FOR ENACTMENT OF LAW.
This Act is enacted pursuant to the power granted Congress under
article I, section 8, clause 3, of the United States Constitution.
SEC. 3. FINDINGS.
Congress finds the following:
(1) The application of numerous and significant variations
in State law impacts the ability of insurers to offer, and
individuals to obtain, affordable individual health insurance
coverage, thereby impeding commerce in individual health
insurance coverage.
(2) Individual health insurance coverage is increasingly
offered through the Internet, other electronic means, and by
mail, all of which are inherently part of interstate commerce.
(3) In response to these issues, it is appropriate to
encourage increased efficiency in the offering of individual
health insurance coverage through a collaborative approach by
the States in regulating this coverage.
(4) The establishment of risk-retention groups has provided
a successful model for the sale of insurance across State
lines, as the acts establishing those groups allow insurance to
be sold in multiple States but regulated by a single State.
SEC. 4. COOPERATIVE GOVERNING OF INDIVIDUAL HEALTH INSURANCE COVERAGE.
(a) In General.--Title XXVII of the Public Health Service Act (42
U.S.C. 300gg et seq.) is amended by adding at the end the following new
part:
``Part D--Cooperative Governing of Individual Health Insurance Coverage
``SEC. 2795. DEFINITIONS.
``In this part:
``(1) Primary state.--The term `primary State' means, with
respect to individual health insurance coverage offered by a
health insurance issuer, the State designated by the issuer as
the State whose covered laws shall govern the health insurance
issuer in the sale of such coverage under this part. An issuer,
with respect to a particular policy, may only designate one
such State as its primary State with respect to all such
coverage it offers. Such an issuer may not change the
designated primary State with respect to individual health
insurance coverage once the policy is issued, except that such
a change may be made upon renewal of the policy. With respect
to such designated State, the issuer is deemed to be doing
business in that State.
``(2) Secondary state.--The term `secondary State' means,
with respect to individual health insurance coverage offered by
a health insurance issuer, any State that is not the primary
State. In the case of a health insurance issuer that is selling
a policy in, or to a resident of, a secondary State, the issuer
is deemed to be doing business in that secondary State.
``(3) Health insurance issuer.--The term `health insurance
issuer' has the meaning given such term in section 2791(b)(2),
except that such an issuer must be licensed in the primary
State and be qualified to sell individual health insurance
coverage in that State.
``(4) Individual health insurance coverage.--The term
`individual health insurance coverage' means health insurance
coverage offered in the individual market, as defined in
section 2791(e)(1).
``(5) Applicable state authority.--The term `applicable
State authority' means, with respect to a health insurance
issuer in a State, the State insurance commissioner or official
or officials designated by the State to enforce the
requirements of this title for the State with respect to the
issuer.
``(6) Hazardous financial condition.--The term `hazardous
financial condition' means that, based on its present or
reasonably anticipated financial condition, a health insurance
issuer is unlikely to be able--
``(A) to meet obligations to policyholders with
respect to known claims and reasonably anticipated
claims; or
``(B) to pay other obligations in the normal course
of business.
``(7) Covered laws.--The term `covered laws' means the
laws, rules, regulations, agreements, and orders governing the
insurance business pertaining to--
``(A) individual health insurance coverage issued
by a health insurance issuer;
``(B) the offer, sale, and issuance of individual
health insurance coverage to an individual; and
``(C) the provision to an individual in relation to
individual health insurance coverage of--
``(i) health care and insurance related
services;
``(ii) management, operations, and
investment activities of a health insurance
issuer; and
``(iii) loss control and claims
administration for a health insurance issuer
with respect to liability for which the issuer
provides insurance.
``(8) State.--The term `State' means only the 50 States and
the District of Columbia.
``(9) Unfair claims settlement practices.--The term `unfair
claims settlement practices' means only the following
practices:
``(A) Knowingly misrepresenting to claimants and
insured individuals relevant facts or policy provisions
relating to coverage at issue.
``(B) Failing to acknowledge with reasonable
promptness pertinent communications with respect to
claims arising under policies.
``(C) Failing to adopt and implement reasonable
standards for the prompt investigation and settlement
of claims arising under policies.
``(D) Failing to effectuate prompt, fair, and
equitable settlement of claims submitted in which
liability has become reasonably clear.
``(E) Refusing to pay claims without conducting a
reasonable investigation.
``(F) Failing to affirm or deny coverage of claims
within a reasonable period of time after having
completed an investigation related to those claims.
``(10) Fraud and abuse.--The term `fraud and abuse' means
an act or omission committed by a person who, knowingly and
with intent to defraud, commits, or conceals any material
information concerning, one or more of the following:
``(A) Presenting, causing to be presented or
preparing with knowledge or belief that it will be
presented to or by an insurer, a reinsurer, broker or
its agent, false information as part of, in support of
or concerning a fact material to one or more of the
following:
``(i) An application for the issuance or
renewal of an insurance policy or reinsurance
contract.
``(ii) The rating of an insurance policy or
reinsurance contract.
``(iii) A claim for payment or benefit
pursuant to an insurance policy or reinsurance
contract.
``(iv) Premiums paid on an insurance policy
or reinsurance contract.
``(v) Payments made in accordance with the
terms of an insurance policy or reinsurance
contract.
``(vi) A document filed with the
commissioner or the chief insurance regulatory
official of another jurisdiction.
``(vii) The financial condition of an
insurer or reinsurer.
``(viii) The formation, acquisition,
merger, reconsolidation, dissolution or
withdrawal from one or more lines of insurance
or reinsurance in all or part of a State by an
insurer or reinsurer.
``(ix) The issuance of written evidence of
insurance.
``(x) The reinstatement of an insurance
policy.
``(B) Solicitation or acceptance of new or renewal
insurance risks on behalf of an insurer reinsurer or
other person engaged in the business of insurance by a
person who knows or should know that the insurer or
other person responsible for the risk is insolvent at
the time of the transaction.
``(C) Transaction of the business of insurance in
violation of laws requiring a license, certificate of
authority or other legal authority for the transaction
of the business of insurance.
``(D) Attempt to commit, aiding or abetting in the
commission of, or conspiracy to commit the acts or
omissions specified in this paragraph.
``SEC. 2796. APPLICATION OF LAW.
``(a) In General.--The covered laws of the primary State shall
apply to individual health insurance coverage offered by a health
insurance issuer in the primary State and in any secondary State, but
only if the coverage and issuer comply with the conditions of this
section with respect to the offering of coverage in any secondary
State.
``(b) Exemptions From Covered Laws in a Secondary State.--Except as
provided in this section, a health insurance issuer with respect to its
offer, sale, renewal, and issuance of individual health insurance
coverage in any secondary State is exempt from any covered laws of the
secondary State (and any rules, regulations, agreements, or orders
sought or issued by such State under or related to such covered laws)
to the extent that such laws would--
``(1) make unlawful, or regulate, directly or indirectly,
the operation of the health insurance issuer operating in the
secondary State, except that any secondary State may require
such an issuer--
``(A) to pay, on a nondiscriminatory basis,
applicable premium and other taxes (including high risk
pool assessments) which are levied on insurers and
surplus lines insurers, brokers, or policyholders under
the laws of the State;
``(B) to register with and designate the State
insurance commissioner as its agent solely for the
purpose of receiving service of legal documents or
process;
``(C) to submit to an examination of its financial
condition by the State insurance commissioner in any
State in which the issuer is doing business to
determine the issuer's financial condition, if--
``(i) the State insurance commissioner of
the primary State has not done an examination
within the period recommended by the National
Association of Insurance Commissioners; and
``(ii) any such examination is conducted in
accordance with the examiners' handbook of the
National Association of Insurance Commissioners
and is coordinated to avoid unjustified
duplication and unjustified repetition;
``(D) to comply with a lawful order issued--
``(i) in a delinquency proceeding commenced
by the State insurance commissioner if there
has been a finding of financial impairment
under subparagraph (C); or
``(ii) in a voluntary dissolution
proceeding;
``(E) to comply with an injunction issued by a
court of competent jurisdiction, upon a petition by the
State insurance commissioner alleging that the issuer
is in hazardous financial condition;
``(F) to participate, on a nondiscriminatory basis,
in any insurance insolvency guaranty association or
similar association to which a health insurance issuer
in the State is required to belong;
``(G) to comply with any State law regarding fraud
and abuse (as defined in section 2795(10)), except that
if the State seeks an injunction regarding the conduct
described in this subparagraph, such injunction must be
obtained from a court of competent jurisdiction; or
``(H) to comply with any State law regarding unfair
claims settlement practices (as defined in section
2795(9));
``(2) require any individual health insurance coverage
issued by the issuer to be countersigned by an insurance agent
or broker residing in that Secondary State; or
``(3) otherwise discriminate against the issuer issuing
insurance in both the primary State and in any secondary State.
``(c) Clear and Conspicuous Disclosure.--A health insurance issuer
shall provide the following notice, in 12-point bold type, in any
insurance coverage offered in a secondary State under this part by such
a health insurance issuer and at renewal of the policy, with the 5
blank spaces therein being appropriately filled with the name of the
health insurance issuer, the name of primary State, the name of the
secondary State, the name of the secondary State, and the name of the
secondary State, respectively, for the coverage concerned:
`Notice
`This policy is issued by _____ and is governed by the laws and
regulations of the State of _____, and it has met all the laws of that
State as determined by that State's Department of Insurance. This
policy may be less expensive than others because it is not subject to
all of the insurance laws and regulations of the State of _____,
including coverage of some services or benefits mandated by the law of
the State of _____. Additionally, this policy is not subject to all of
the consumer protection laws or restrictions on rate changes of the
State of _____. As with all insurance products, before purchasing this
policy, you should carefully review the policy and determine what
health care services the policy covers and what benefits it provides,
including any exclusions, limitations, or conditions for such services
or benefits.'.
``(d) Prohibition on Certain Reclassifications and Premium
Increases.--
``(1) In general.--For purposes of this section, a health
insurance issuer that provides individual health insurance
coverage to an individual under this part in a primary or
secondary State may not upon renewal--
``(A) move or reclassify the individual insured
under the health insurance coverage from the class such
individual is in at the time of issue of the contract
based on the health-status related factors of the
individual; or
``(B) increase the premiums assessed the individual
for such coverage based on a health status-related
factor or change of a health status-related factor or
the past or prospective claim experience of the insured
individual.
``(2) Construction.--Nothing in paragraph (1) shall be
construed to prohibit a health insurance issuer--
``(A) from terminating or discontinuing coverage or
a class of coverage in accordance with subsections (b)
and (c) of section 2742;
``(B) from raising premium rates for all policy
holders within a class based on claims experience;
``(C) from changing premiums or offering discounted
premiums to individuals who engage in wellness
activities at intervals prescribed by the issuer, if
such premium changes or incentives--
``(i) are disclosed to the consumer in the
insurance contract;
``(ii) are based on specific wellness
activities that are not applicable to all
individuals; and
``(iii) are not obtainable by all
individuals to whom coverage is offered;
``(D) from reinstating lapsed coverage; or
``(E) from retroactively adjusting the rates
charged an individual insured individual if the initial
rates were set based on material misrepresentation by
the individual at the time of issue.
``(e) Prior Offering of Policy in Primary State.--A health
insurance issuer may not offer for sale individual health insurance
coverage in a secondary State unless that coverage is currently offered
for sale in the primary State.
``(f) Licensing of Agents or Brokers for Health Insurance
Issuers.--Any State may require that a person acting, or offering to
act, as an agent or broker for a health insurance issuer with respect
to the offering of individual health insurance coverage obtain a
license from that State, except that a State many not impose any
qualification or requirement which discriminates against a nonresident
agent or broker.
``(g) Documents for Submission to State Insurance Commissioner.--
Each health insurance issuer issuing individual health insurance
coverage in both primary and secondary States shall submit--
``(1) to the insurance commissioner of each State in which
it intends to offer such coverage, before it may offer
individual health insurance coverage in such State--
``(A) a copy of the plan of operation or
feasibility study or any similar statement of the
policy being offered and its coverage (which shall
include the name of its primary State and its principal
place of business);
``(B) written notice of any change in its
designation of its primary State; and
``(C) written notice from the issuer of the
issuer's compliance with all the laws of the primary
State; and
``(2) to the insurance commissioner of each secondary State
in which it offers individual health insurance coverage, a copy
of the issuer's quarterly financial statement submitted to the
primary State, which statement shall be certified by an
independent public accountant and contain a statement of
opinion on loss and loss adjustment expense reserves made by--
``(A) a member of the American Academy of
Actuaries; or
``(B) a qualified loss reserve specialist.
``(h) Power of Courts to Enjoin Conduct.--Nothing in this section
shall be construed to affect the authority of any Federal or State
court to enjoin--
``(1) the solicitation or sale of individual health
insurance coverage by a health insurance issuer to any person
or group who is not eligible for such insurance; or
``(2) the solicitation or sale of individual health
insurance coverage by, or operation of, a health insurance
issuer that is in hazardous financial condition.
``(i) State Powers to Enforce State Laws.--
``(1) In general.--Subject to the provisions of subsection
(b)(1)(G) (relating to injunctions) and paragraph (2), nothing
in this section shall be construed to affect the authority of
any State to make use of any of its powers to enforce the laws
of such State with respect to which a health insurance issuer
is not exempt under subsection (b).
``(2) Courts of competent jurisdiction.--If a State seeks
an injunction regarding the conduct described in paragraphs (1)
and (2) of subsection (h), such injunction must be obtained
from a Federal or State court of competent jurisdiction.
``(j) States' Authority to Sue.--Nothing in this section shall
affect the authority of any State to bring action in any Federal or
State court.
``(k) Generally Applicable Laws.--Nothing in this section shall be
construed to affect the applicability of State laws generally
applicable to persons or corporations.
``SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR BEFORE ISSUER MAY
SELL INTO SECONDARY STATES.
``A health insurance issuer may not offer, sell, or issue
individual health insurance coverage in a secondary State if the
primary State does not meet the following requirements:
``(1) The State insurance commissioner must use a risk-
based capital formula for the determination of capital and
surplus requirements for all health insurance issuers.
``(2) The State must have legislation or regulations in
place establishing an independent review process for
individuals who are covered by individual health insurance
coverage unless the issuer provides an independent review
mechanism functionally equivalent (as determined by the primary
State insurance commissioner or official) to that prescribed in
the `Health Carrier External Review Model Act' of the National
Association of Insurance Commissioners for all individuals who
purchase insurance coverage under the terms of this part.
``SEC. 2798. ENFORCEMENT.
``(a) In General.--Subject to subsection (b), with respect to
specific individual health insurance coverage the primary State for
such coverage has sole jurisdiction to enforce the primary State's
covered laws in the primary State and any secondary State.
``(b) Secondary State's Authority.--Nothing in subsection (a) shall
be construed to affect the authority of a secondary State to enforce
its laws as set forth in the exception specified in section 2796(b)(1).
``(c) Court Interpretation.--In reviewing action initiated by the
applicable secondary State authority, the court of competent
jurisdiction shall apply the covered laws of the primary State.
``(d) Notice of Compliance Failure.--In the case of individual
health insurance coverage offered in a secondary State that fails to
comply with the covered laws of the primary State, the applicable State
authority of the secondary State may notify the applicable State
authority of the primary State.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to individual health insurance coverage offered, issued, or sold
after the date of the enactment of this Act.
SEC. 5. SEVERABILITY.
If any provision of the Act or the application of such provision to
any person or circumstance is held to be unconstitutional, the
remainder of this Act and the application of the provisions of such to
any other person or circumstance shall not be affected.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Energy and Commerce.
Referred to the Subcommittee on Health.
Subcommittee Hearings Held.
Subcommittee on Health Discharged.
Committee Consideration and Mark-up Session Held.
Ordered to be Reported (Amended) by the Yeas and Nays: 24 - 23.
Reported (Amended) by the Committee on Energy and Commerce. H. Rept. 109-378.
Reported (Amended) by the Committee on Energy and Commerce. H. Rept. 109-378.
Placed on the Union Calendar, Calendar No. 207.
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