Health Insurance Marketplace Modernization and Affordability Act of 2006 - Title I: Small Business Health Plans - (Sec. 101) Amends the Employee Retirement Income Security Act of 1974 (ERISA) to set forth rules for the establishment and governance of small business health plans (SBHPs). Defines a "small business health plan" as a fully insured group health plan sponsored by a trade association, an industry association, a professional association, or a chamber of commerce or similar business association that: (1) is organized and maintained in good faith for substantial purposes other than obtaining medical care; (2) is established as a permanent entity which receives the active support of its members and which requires periodic membership payments to maintain eligibility; and (3) does not condition membership or dues on health status-related factors.
Requires the Secretary of Labor to prescribe a procedure for certification of small business health plans. Deems an SBHP to be certified after 90 days if the Secretary fails to act on the certification. Allows the Secretary to assess a civil penalty for submission of an application that is willfully or with gross negligence incomplete or inaccurate.
Sets forth requirements for sponsors of SBHPs, including that sponsors must: (1) have been in operation for three years; and (2) have a Board of Trustees with complete fiscal control to operate the plan pursuant to a three-year plan. Establishes rules governing group health plans established and maintained by a franchiser.
Requires a participating employer to be the sponsor, a member of the sponsor, or an affiliated member. Requires individuals covered by the sponsor's health plan to be active or retired owners (including self-employed individuals), officers, directors, or employees of, or partners in participating employers or the dependents of such individuals.
Prohibits participating employers from providing coverage in the individual market for any employee not covered by the employer's health plan which is similar to coverage provided under the plan, if such exclusion of the employee from plan coverage is based on a health status-related factor and such employee would, but for such exclusion, be eligible for plan coverage.
Requires that an SBHP be available to all eligible employers and that information on all coverage options be readily available to any employer eligible to participate.
Prohibits the contribution rates for any participating employer from varying on the basis of any health status-related factor or the employer's type of business or industry.
Gives the SBHP sole discretion in selecting the specific benefits and services covered under the plan consistent with this Act.
Requires coverage to be issued to an SBHP in the state in which the sponsor's principal place of business is located (domicile state).
Allows an SBHP to offer coverage without a license in non-domicile states where participating employers are located if such state has failed to act on the licensure application within 90 days. Preempts state laws related to licensure, ratings, and benefits. Deems licensure requirements to be satisfied if the participating employers of an SBHP are serviced by a licensed insurer in that state, even where such insurer is not the SBHP's insurer in the domicile state.
Sets a filing fee for certification applications. Requires notification to the Secretary of any material changes in information required to be submitted in a certification plan.
Sets forth notice requirements before a certified SBHP may terminate.
Preempts any and all state laws relating to ratings and benefits which may preclude a health insurance issuer from offering health insurance coverage in connection with an SBHP.
(Sec. 102) Amends ERISA to require the Secretary to consult with the domicile state regarding the Secretary's exercise of authority under this title. Requires the Secretary to ensure that only one state for each SBHP will be recognized as the state with which consultation is required.
(Sec. 103) Deems certain state plans to be SBHPs if such plans have been in existence for at least 10 years.
Title II: Market Relief - (Sec. 201) Amends the Public Health Service Act to set forth rules governing coverage issued in the small group health insurance market.
Requires the Secretary of Health and Human Services to promulgate the Model Small Group Rating Rules to include: (1) limits on the variance of the index rate across classes of business; (2) limits on the variance of premium rates charged within a class of business among small employers with similar case characteristics for similar coverage; (3) limits on increases in the premium rate charged upon renewal; (4) limits on differential rate factors between industries; and (5) consistent application of rating factors within a class of business. Allows a small employer carrier to establish a separate class of business only to reflect substantial differences in expected claims experience or administrative costs, with a maximum of nine separate classes of business. Allows the applicable state authority to approve additional groupings to enhance the efficiency and fairness of the small employer health insurance marketplace. Prohibits a small employer carrier from transferring a small employer involuntarily from one class of business to another. Allows the applicable state authority to suspend applicable premium rates if such suspension is reasonable when considering the financial condition of the small employer carrier or if the suspension would enhance the efficiency and fairness of the marketplace.
Requires the Secretary to establish Transitional Model Small Group Rating Rules to provide for a graduated transition to the Model Small Group Rating Rules. Allows certain states that choose not to adopt the Model Small Group Rating Rules to use the Transitional Rules for a period not to exceed five years. Applies the transitional rules only to states with premium rating band requirements or premium limits that varied by less than 12.5% from the index rate within a class of business on the date of enactment of this Act. Requires the Secretary, in developing the transitional model small group rating rules, to: (1) promulgate special transition standards and timelines with respect to independent rating classes for old and new business,; and (2) provide for the application of the Transitional Model Small Group Rating Rules in transition states as necessary.
Allows an insurer that has departed the small group market in a state to reenter the market if it has been out of the market for at least 180 days.
Preempts any and all state laws that relate to rating in the small group insurance market of any state that has not enacted either the Model Small Group Rating Rules or the Transitional Model Small Group Rating Rules in their entirety and as the exclusive laws of the state (non-adopting state).
Supersedes any and all state laws of a non-adopting state insofar as such state laws: (1) prohibit an eligible insurer from offering, marketing, or implementing small group health insurance coverage consistent with the Model Small Group Rating Rules or transitional model small group rating rules; or (2) have the effect of retaliating against or otherwise punishing an eligible insurer for offering, marketing, or implementing small group health insurance coverage consistent with the Model Small Group Rating Rules or transitional model small group rating rules. Applies such preemption only to eligible insurers that offer small group health insurance coverage in a non-adopting state.
Requires the Secretary to report to Congress on the effect of the Small Group Rating Rules on access, cost, and market functioning in the small group market.
Requires the Secretary to issue Benefit Choice Standards to allow a health insurance issuer to offer individual, small group, or large group coverage in a state when such coverage does not comply with state requirements, but only if such issuer also offers an enhanced option of that coverage that is equivalent to the coverage by a state employee coverage plan in one of the five most populous states. Requires the Secretary to publish covered benefits, services, and categories of providers covered by the state employee coverage plans in the five most populous states.
Preempts any and all state laws relating to covered benefits, services, or categories of provider in the health insurance market in a non-adopting state.
Supersedes any and all state laws of a non-adopting state insofar as such laws: (1) prohibit an eligible insurer from offering, marketing, or implementing health insurance coverage consistent with the Benefit Choice Standard; or (2) have the effect of retaliating against or otherwise punishing an eligible insurer for offering, marketing, or implementing health insurance coverage consistent with the Benefit Choice Standard.
Title III: Harmonization of Health Insurance Standards - (Sec. 301) Amends the Public Health Service Act to require the Secretary of Health and Human Services to: (1) establish the Health Insurance Consensus Standards Board (and a related advisory panel) to develop recommendations that harmonize inconsistent state health insurance laws; and (2) establish a system for public disclosure by members of the Board of financial and other potential conflicts of interest relating to such members.
Requires the Board to identify and recommend nationally harmonized standards related to: (1) form and rate filing to promote speed to market; (2) market conduct review; (3) prompt payment of claims; and (4) claims procedures consistent with ERISA. Directs the Board to recommend harmonized standards and recommendations to harmonize inconsistent state insurance laws. Prohibits the Board from recommending any harmonized standards that disrupt, expand, or duplicate the benefit, service, or provider mandate standards provided in the Benefit Choice Standards.
Requires the Secretary to certify the recommended harmonized standards using a process that ensures that the certified standards: (1) achieve regulatory harmonization nationally; (2) are the minimum necessary, with regard to substance and quantity of requirements, to protect health insurance consumers and maintain a competitive regulatory environment; and (3) will not limit the range of group health plan designs and insurance products that might otherwise be available to consumers.
Requires the Secretary to: (1) report to Congress on the effect of the harmonized standards on access, cost, and health insurance market functioning; (2) maintain an up-to-date listing of all certified harmonized standards; and (3) publish sample contract language that incorporates the harmonized standards, which may be used by insurers seeking to qualify as an eligible insurer.
Allows the states to adopt such harmonized standards.
Preempts any and all state laws of a non-adopting state that may: (1) prohibit an eligible insurer from offering, marketing, or implementing health insurance coverage consistent with the harmonized standards; or (2) have the effect of punishing an eligible insurer for offering, marketing, or implementing health insurance coverage consistent with the harmonized standards.
Gives the federal courts exclusive jurisdiction over civil actions involving the interpretation of this Act. Allows an eligible insurer to bring a federal action for injunctive or other equitable relief against any officials or agents of a non-adopting state for any conduct or action which violates this Act.
Authorizes appropriations.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1955 Introduced in Senate (IS)]
109th CONGRESS
1st Session
S. 1955
To amend title I of the Employee Retirement Security Act of 1974 and
the Public Health Service Act to expand health care access and reduce
costs through the creation of small business health plans and through
modernization of the health insurance marketplace.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
November 2, 2005
Mr. Enzi (for himself, Mr. Nelson of Nebraska, and Mr. Burns)
introduced the following bill; which was read twice and referred to the
Committee on Health, Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To amend title I of the Employee Retirement Security Act of 1974 and
the Public Health Service Act to expand health care access and reduce
costs through the creation of small business health plans and through
modernization of the health insurance marketplace.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Health Insurance
Marketplace Modernization and Affordability Act of 2005''.
(b) Table of Contents.--The table of contents is as follows:
Sec. 1. Short title and table of contents.
TITLE I--SMALL BUSINESS HEALTH PLANS
Sec. 101. Rules governing small business health plans.
Sec. 102. Cooperation between Federal and State authorities.
Sec. 103. Effective date and transitional and other rules.
TITLE II--NEAR-TERM MARKET RELIEF
Sec. 201. Near-term market relief.
TITLE III--HARMONIZATION OF HEALTH INSURANCE LAWS
Sec. 301. Health Insurance Regulatory Harmonization.
TITLE I--SMALL BUSINESS HEALTH PLANS
SEC. 101. RULES GOVERNING SMALL BUSINESS HEALTH PLANS.
(a) In General.--Subtitle B of title I of the Employee Retirement
Income Security Act of 1974 is amended by adding after part 7 the
following new part:
``PART 8--RULES GOVERNING SMALL BUSINESS HEALTH PLANS
``SEC. 801. SMALL BUSINESS HEALTH PLANS.
``(a) In General.--For purposes of this part, the term `small
business health plan' means a fully insured group health plan whose
sponsor is (or is deemed under this part to be) described in subsection
(b).
``(b) Sponsorship.--The sponsor of a group health plan is described
in this subsection if such sponsor--
``(1) is organized and maintained in good faith, with a
constitution and bylaws specifically stating its purpose and
providing for periodic meetings on at least an annual basis, as
a bona fide trade association, a bona fide industry association
(including a rural electric cooperative association or a rural
telephone cooperative association), a bona fide professional
association, or a bona fide chamber of commerce (or similar
bona fide business association, including a corporation or
similar organization that operates on a cooperative basis
(within the meaning of section 1381 of the Internal Revenue
Code of 1986)), for substantial purposes other than that of
obtaining or providing medical care;
``(2) is established as a permanent entity which receives
the active support of its members and requires for membership
payment on a periodic basis of dues or payments necessary to
maintain eligibility for membership in the sponsor; and
``(3) does not condition membership, such dues or payments,
or coverage under the plan on the basis of health status-
related factors with respect to the employees of its members
(or affiliated members), or the dependents of such employees,
and does not condition such dues or payments on the basis of
group health plan participation.
Any sponsor consisting of an association of entities which meet the
requirements of paragraphs (1), (2), and (3) shall be deemed to be a
sponsor described in this subsection.
``SEC. 802. CERTIFICATION OF SMALL BUSINESS HEALTH PLANS.
``(a) In General.--Not later than 6 months after the date of
enactment of this part, the applicable authority shall prescribe by
interim final rule a procedure under which the applicable authority
shall certify small business health plans which apply for certification
as meeting the requirements of this part.
``(b) Requirements Applicable to Certified Plans.--a small business
health plan with respect to which certification under this part is in
effect shall meet the applicable requirements of this part, effective
on the date of certification (or, if later, on the date on which the
plan is to commence operations).
``(c) Requirements for Continued Certification.--The applicable
authority may provide by regulation for continued certification of
small business health plans under this part. Such regulation shall
provide for the revocation of a certification if the applicable
authority finds that the small employer health plan involved is failing
to comply with the requirements of this part.
``(d) Class Certification for Fully Insured Plans.--The applicable
authority shall establish a class certification procedure for small
business health plans under which all benefits consist of health
insurance coverage. Under such procedure, the applicable authority
shall provide for the granting of certification under this part to the
plans in each class of such small business health plans upon
appropriate filing under such procedure in connection with plans in
such class and payment of the prescribed fee under section 806(a).
``SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF TRUSTEES.
``(a) Sponsor.--The requirements of this subsection are met with
respect to a small business health plan if the sponsor has met (or is
deemed under this part to have met) the requirements of section 801(b)
for a continuous period of not less than 3 years ending with the date
of the application for certification under this part.
``(b) Board of Trustees.--The requirements of this subsection are
met with respect to a small business health plan if the following
requirements are met:
``(1) Fiscal control.--The plan is operated, pursuant to a
plan document, by a board of trustees which pursuant to a trust
agreement has complete fiscal control over the plan and which
is responsible for all operations of the plan.
``(2) Rules of operation and financial controls.--The board
of trustees has in effect rules of operation and financial
controls, based on a 3-year plan of operation, adequate to
carry out the terms of the plan and to meet all requirements of
this title applicable to the plan.
``(3) Rules governing relationship to participating
employers and to contractors.--
``(A) Board membership.--
``(i) In general.--Except as provided in
clauses (ii) and (iii), the members of the
board of trustees are individuals selected from
individuals who are the owners, officers,
directors, or employees of the participating
employers or who are partners in the
participating employers and actively
participate in the business.
``(ii) Limitation.--
``(I) General rule.--Except as
provided in subclauses (II) and (III),
no such member is an owner, officer,
director, or employee of, or partner
in, a contract administrator or other
service provider to the plan.
``(II) Limited exception for
providers of services solely on behalf
of the sponsor.--Officers or employees
of a sponsor which is a service
provider (other than a contract
administrator) to the plan may be
members of the board if they constitute
not more than 25 percent of the
membership of the board and they do not
provide services to the plan other than
on behalf of the sponsor.
``(III) Treatment of providers of
medical care.--In the case of a sponsor
which is an association whose
membership consists primarily of
providers of medical care, subclause
(I) shall not apply in the case of any
service provider described in subclause
(I) who is a provider of medical care
under the plan.
``(iii) Certain plans excluded.--Clause (i)
shall not apply to a small business health plan
which is in existence on the date of the
enactment of the Health Insurance Marketplace
Modernization and Affordability Act of 2005.
``(B) Sole authority.--The board has sole authority
under the plan to approve applications for
participation in the plan and to contract with insurers
and service providers.
``(c) Treatment of Franchise Networks.--In the case of a group
health plan which is established and maintained by a franchiser for a
franchise network consisting of its franchisees--
``(1) the requirements of subsection (a) and section 801(a)
shall be deemed met if such requirements would otherwise be met
if the franchiser were deemed to be the sponsor referred to in
section 801(b), such network were deemed to be an association
described in section 801(b), and each franchisee were deemed to
be a member (of the association and the sponsor) referred to in
section 801(b); and
``(2) the requirements of section 804(a)(1) shall be deemed
met.
The Secretary may by regulation define for purposes of this subsection
the terms `franchiser', `franchise network', and `franchisee'.
``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.
``(a) Covered Employers and Individuals.--The requirements of this
subsection are met with respect to a small business health plan if,
under the terms of the plan--
``(1) each participating employer must be--
``(A) a member of the sponsor;
``(B) the sponsor; or
``(C) an affiliated member of the sponsor with
respect to which the requirements of subsection (b) are
met, except that, in the case of a sponsor which is a
professional association or other individual-based
association, if at least one of the officers,
directors, or employees of an employer, or at least one
of the individuals who are partners in an employer and
who actively participates in the business, is a member
or such an affiliated member of the sponsor,
participating employers may also include such employer;
and
``(2) all individuals commencing coverage under the plan
after certification under this part must be--
``(A) active or retired owners (including self-
employed individuals), officers, directors, or
employees of, or partners in, participating employers;
or
``(B) the beneficiaries of individuals described in
subparagraph (A).
``(b) Coverage of Previously Uninsured Employees.--In the case of a
small business health plan in existence on the date of the enactment of
the Health Insurance Marketplace Modernization and Affordability Act of
2005, an affiliated member of the sponsor of the plan may be offered
coverage under the plan as a participating employer only if--
``(1) the affiliated member was an affiliated member on the
date of certification under this part; or
``(2) during the 12-month period preceding the date of the
offering of such coverage, the affiliated member has not
maintained or contributed to a group health plan with respect
to any of its employees who would otherwise be eligible to
participate in such small business health plan.
``(c) Individual Market Unaffected.--The requirements of this
subsection are met with respect to a small business health plan if,
under the terms of the plan, no participating employer may provide
health insurance coverage in the individual market for any employee not
covered under the plan which is similar to the coverage
contemporaneously provided to employees of the employer under the plan,
if such exclusion of the employee from coverage under the plan is based
on a health status-related factor with respect to the employee and such
employee would, but for such exclusion on such basis, be eligible for
coverage under the plan.
``(d) Prohibition of Discrimination Against Employers and Employees
Eligible to Participate.--The requirements of this subsection are met
with respect to a small business health plan if--
``(1) under the terms of the plan, all employers meeting
the preceding requirements of this section are eligible to
qualify as participating employers for all geographically
available coverage options, unless, in the case of any such
employer, participation or contribution requirements of the
type referred to in section 2711 of the Public Health Service
Act are not met;
``(2) upon request, any employer eligible to participate is
furnished information regarding all coverage options available
under the plan; and
``(3) the applicable requirements of sections 701, 702, and
703 are met with respect to the plan.
``SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, CONTRIBUTION
RATES, AND BENEFIT OPTIONS.
``(a) In General.--The requirements of this section are met with
respect to a small business health plan if the following requirements
are met:
``(1) Contents of governing instruments.--
``(A) In general.--The instruments governing the
plan include a written instrument, meeting the
requirements of an instrument required under section
402(a)(1), which--
``(i) provides that the board of directors
serves as the named fiduciary required for
plans under section 402(a)(1) and serves in the
capacity of a plan administrator (referred to
in section 3(16)(A)); and
``(ii) provides that the sponsor of the
plan is to serve as plan sponsor (referred to
in section 3(16)(B)).
``(B) Description of material provisions.--The
terms of the health insurance coverage (including the
terms of any individual certificates that may be
offered to individuals in connection with such
coverage) describe the material benefit and rating, and
other provisions set forth in this section and such
material provisions are included in the summary plan
description.
``(2) Contribution rates must be nondiscriminatory.--
``(A) In general.--The contribution rates for any
participating small employer shall not vary on the
basis of any health status-related factor in relation
to employees of such employer or their beneficiaries
and shall not vary on the basis of the type of business
or industry in which such employer is engaged.
``(B) Effect of title.--Nothing in this title or
any other provision of law shall be construed to
preclude a health insurance issuer offering health
insurance coverage in connection with a small business
health plan, and at the request of such small business
health plan, from--
``(i) setting contribution rates for the
small business health plan based on the claims
experience of the plan so long as any variation
in such rates complies with the requirements of
clause (ii); or
``(ii) varying contribution rates for
participating employers in a small business
health plan in a State to the extent that such
rates could vary using the same methodology
employed in such State for regulating premium
rates, subject to the terms of part I of
subtitle A of title XXIX of the Public Health
Service Act (relating to rating requirements),
as added by title II of the Health Insurance
Marketplace Modernization and Affordability Act
of 2005.
``(3) Regulatory requirements.--Such other requirements as
the applicable authority determines are necessary to carry out
the purposes of this part, which shall be prescribed by the
applicable authority by regulation.
``(b) Ability of Small Business Health Plans to Design Benefit
Options.--Nothing in this part or any provision of State law (as
defined in section 514(c)(1)) shall be construed to preclude a small
business health plan or a health insurance issuer offering health
insurance coverage in connection with a small business health plan,
from exercising its sole discretion in selecting the specific benefits
and services consisting of medical care to be included as benefits
under such plan or coverage, except that such benefits and services
must meet the terms and specifications of part II of subtitle A of
title XXIX of the Public Health Service Act (relating to lower cost
plans), as added by title II of the Health Insurance Marketplace
Modernization and Affordability Act of 2005, provided that, upon
issuance by the Secretary of Health and Human Services of the List of
Required Benefits as provided for in section 2922(a) of the Public
Health Service Act, the required scope and application for each benefit
or service listed in the List of Required Benefits shall be--
``(1) if the domicile State mandates such benefit or
service, the scope and application required by the domicile
State; or
``(2) if the domicile State does not mandate such benefit
or service, the scope and application required by the non-
domicile State that does require such benefit or service in
which the greatest number of the small business health plan's
participating employers are located.
``(c) State Licensure and Informational Filing.--
``(1) Domicile state.--Coverage shall be issued to a small
business health plan in the State in which the sponsor's
principal place of business is located.
``(2) Non-domicile states.--With respect to a State (other
than the domicile State) in which participating employers of a
small business health plan are located, an insurer issuing
coverage to such small business health plan shall not be
required to obtain full licensure in such State, except that
the insurer shall provide each State insurance commissioner (or
applicable State authority) with an informational filing
describing policies sold and other relevant information as may
be requested by the applicable State authority.
``SEC. 806. REQUIREMENTS FOR APPLICATION AND RELATED REQUIREMENTS.
``(a) Filing Fee.--Under the procedure prescribed pursuant to
section 802(a), a small business health plan shall pay to the
applicable authority at the time of filing an application for
certification under this part a filing fee in the amount of $5,000,
which shall be available in the case of the Secretary, to the extent
provided in appropriation Acts, for the sole purpose of administering
the certification procedures applicable with respect to small business
health plans.
``(b) Information to Be Included in Application for
Certification.--An application for certification under this part meets
the requirements of this section only if it includes, in a manner and
form which shall be prescribed by the applicable authority by
regulation, at least the following information:
``(1) Identifying information.--The names and addresses
of--
``(A) the sponsor; and
``(B) the members of the board of trustees of the
plan.
``(2) States in which plan intends to do business.--The
States in which participants and beneficiaries under the plan
are to be located and the number of them expected to be located
in each such State.
``(3) Bonding requirements.--Evidence provided by the board
of trustees that the bonding requirements of section 412 will
be met as of the date of the application or (if later)
commencement of operations.
``(4) Plan documents.--A copy of the documents governing
the plan (including any bylaws and trust agreements), the
summary plan description, and other material describing the
benefits that will be provided to participants and
beneficiaries under the plan.
``(5) Agreements with service providers.--A copy of any
agreements between the plan, health insurance issuer, and
contract administrators and other service providers.
``(c) Filing Notice of Certification With States.--A certification
granted under this part to a small business health plan shall not be
effective unless written notice of such certification is filed with the
applicable State authority of each State in which at least 25 percent
of the participants and beneficiaries under the plan are located. For
purposes of this subsection, an individual shall be considered to be
located in the State in which a known address of such individual is
located or in which such individual is employed.
``(d) Notice of Material Changes.--In the case of any small
business health plan certified under this part, descriptions of
material changes in any information which was required to be submitted
with the application for the certification under this part shall be
filed in such form and manner as shall be prescribed by the applicable
authority by regulation. The applicable authority may require by
regulation prior notice of material changes with respect to specified
matters which might serve as the basis for suspension or revocation of
the certification.
``SEC. 807. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.
``A small business health plan which is or has been certified under
this part may terminate (upon or at any time after cessation of
accruals in benefit liabilities) only if the board of trustees, not
less than 60 days before the proposed termination date--
``(1) provides to the participants and beneficiaries a
written notice of intent to terminate stating that such
termination is intended and the proposed termination date;
``(2) develops a plan for winding up the affairs of the
plan in connection with such termination in a manner which will
result in timely payment of all benefits for which the plan is
obligated; and
``(3) submits such plan in writing to the applicable
authority.
Actions required under this section shall be taken in such form and
manner as may be prescribed by the applicable authority by regulation.
``SEC. 808. DEFINITIONS AND RULES OF CONSTRUCTION.
``(a) Definitions.--For purposes of this part--
``(1) Affiliated member.--The term `affiliated member'
means, in connection with a sponsor--
``(A) a person who is otherwise eligible to be a
member of the sponsor but who elects an affiliated
status with the sponsor,
``(B) in the case of a sponsor with members which
consist of associations, a person who is a member of
any such association and elects an affiliated status
with the sponsor, or
``(C) in the case of a small business health plan
in existence on the date of the enactment of the Health
Insurance Marketplace Modernization and Affordability
Act of 2005, a person eligible to be a member of the
sponsor or one of its member associations.
``(2) Applicable authority.--The term `applicable
authority' means the Secretary, except that, in connection with
any exercise of the Secretary's authority with respect to which
the Secretary is required under section 506(d) to consult with
a State, such term means the Secretary, in consultation with
such State.
``(3) 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 title XXVII of the Public Health Service Act
for the State involved with respect to such issuer.
``(4) Group health plan.--The term `group health plan' has
the meaning provided in section 733(a)(1) (after applying
subsection (b) of this section).
``(5) Health insurance coverage.--The term `health
insurance coverage' has the meaning provided in section
733(b)(1).
``(6) Health insurance issuer.--The term `health insurance
issuer' has the meaning provided in section 733(b)(2).
``(7) Individual market.--
``(A) In general.--The term `individual market'
means the market for health insurance coverage offered
to individuals other than in connection with a group
health plan.
``(B) Treatment of very small groups.--
``(i) In general.--Subject to clause (ii),
such term includes coverage offered in
connection with a group health plan that has
fewer than 2 participants as current employees
or participants described in section 732(d)(3)
on the first day of the plan year.
``(ii) State exception.--Clause (i) shall
not apply in the case of health insurance
coverage offered in a State if such State
regulates the coverage described in such clause
in the same manner and to the same extent as
coverage in the small group market (as defined
in section 2791(e)(5) of the Public Health
Service Act) is regulated by such State.
``(8) Medical care.--The term `medical care' has the
meaning provided in section 733(a)(2).
``(9) Participating employer.--The term `participating
employer' means, in connection with a small business health
plan, any employer, if any individual who is an employee of
such employer, a partner in such employer, or a self-employed
individual who is such employer (or any dependent, as defined
under the terms of the plan, of such individual) is or was
covered under such plan in connection with the status of such
individual as such an employee, partner, or self-employed
individual in relation to the plan.
``(10) Small employer.--The term `small employer' means, in
connection with a group health plan with respect to a plan
year, a small employer as defined in section 2791(e)(4).
``(b) Rule of Construction.--For purposes of determining whether a
plan, fund, or program is an employee welfare benefit plan which is a
small business health plan, and for purposes of applying this title in
connection with such plan, fund, or program so determined to be such an
employee welfare benefit plan--
``(1) in the case of a partnership, the term `employer' (as
defined in section 3(5)) includes the partnership in relation
to the partners, and the term `employee' (as defined in section
3(6)) includes any partner in relation to the partnership; and
``(2) in the case of a self-employed individual, the term
`employer' (as defined in section 3(5)) and the term `employee'
(as defined in section 3(6)) shall include such individual.''.
(b) Conforming Amendments to Preemption Rules.--
(1) Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) is
amended by adding at the end the following new subparagraph:
``(E) The preceding subparagraphs of this paragraph do not apply
with respect to any State law in the case of a small business health
plan which is certified under part 8.''.
(2) Section 514 of such Act (29 U.S.C. 1144) is amended--
(A) in subsection (b)(4), by striking ``Subsection
(a)'' and inserting ``Subsections (a) and (d)'';
(B) in subsection (b)(5), by striking ``subsection
(a)'' in subparagraph (A) and inserting ``subsection
(a) of this section and subsections (a)(2)(B) and (b)
of section 805'', and by striking ``subsection (a)'' in
subparagraph (B) and inserting ``subsection (a) of this
section or subsection (a)(2)(B) or (b) of section
805'';
(C) by redesignating subsection (d) as subsection
(e); and
(D) by inserting after subsection (c) the following
new subsection:
``(d)(1) Except as provided in subsection (b)(4), the provisions of
this title shall supersede any and all State laws insofar as they may
now or hereafter preclude a health insurance issuer from offering
health insurance coverage in connection with a small business health
plan which is certified under part 8.
``(2) In any case in which health insurance coverage of any policy
type is offered under a small business health plan certified under part
8 to a participating employer operating in such State, the provisions
of this title shall supersede any and all laws of such State insofar as
they may establish rating and benefit requirements that would otherwise
apply to such coverage, provided the requirements of section
805(a)(2)(B) and (b) (concerning small business health plan rating and
benefits) are met.''.
(3) Section 514(b)(6)(A) of such Act (29 U.S.C.
1144(b)(6)(A)) is amended--
(A) in clause (i)(II), by striking ``and'' at the
end;
(B) in clause (ii), by inserting ``and which does
not provide medical care (within the meaning of section
733(a)(2)),'' after ``arrangement,'', and by striking
``title.'' and inserting ``title, and''; and
(C) by adding at the end the following new clause:
``(iii) subject to subparagraph (E), in the case of any
other employee welfare benefit plan which is a multiple
employer welfare arrangement and which provides medical care
(within the meaning of section 733(a)(2)), any law of any State
which regulates insurance may apply.''.
(4) Section 514(e) of such Act (as redesignated by
paragraph (2)(C)) is amended by striking ``Nothing'' and
inserting ``(1) Except as provided in paragraph (2), nothing''.
(c) Plan Sponsor.--Section 3(16)(B) of such Act (29 U.S.C.
102(16)(B)) is amended by adding at the end the following new sentence:
``Such term also includes a person serving as the sponsor of a small
business health plan under part 8.''.
(d) Savings Clause.--Section 731(c) of such Act is amended by
inserting ``or part 8'' after ``this part''.
(e) Clerical Amendment.--The table of contents in section 1 of the
Employee Retirement Income Security Act of 1974 is amended by inserting
after the item relating to section 734 the following new items:
``Part 8--Rules Governing Small Business Health Plans
``801. Small business health plans.
``802. Certification of small business health plans.
``803. Requirements relating to sponsors and boards of trustees.
``804. Participation and coverage requirements.
``805. Other requirements relating to plan documents, contribution
rates, and benefit options.
``806. Requirements for application and related requirements.
``807. Notice requirements for voluntary termination.
``808. Definitions and rules of construction.''.
SEC. 102. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.
Section 506 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1136) is amended by adding at the end the following new
subsection:
``(d) Consultation With States With Respect to Small Business
Health Plans.--
``(1) Agreements with states.--The Secretary shall consult
with the State recognized under paragraph (2) with respect to a
small business health plan regarding the exercise of--
``(A) the Secretary's authority under sections 502
and 504 to enforce the requirements for certification
under part 8; and
``(B) the Secretary's authority to certify small
business health plans under part 8 in accordance with
regulations of the Secretary applicable to
certification under part 8.
``(2) Recognition of domicile state.--In carrying out
paragraph (1), the Secretary shall ensure that only one State
will be recognized, with respect to any particular small
business health plan, as the State with which consultation is
required. In carrying out this paragraph such State shall be
the domicile State, as defined in section 805(c).''.
SEC. 103. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.
(a) Effective Date.--The amendments made by this title shall take
effect 1 year after the date of the enactment of this Act. The
Secretary of Labor shall first issue all regulations necessary to carry
out the amendments made by this title within 1 year after the date of
the enactment of this Act.
(b) Treatment of Certain Existing Health Benefits Programs.--
(1) In general.--In any case in which, as of the date of
the enactment of this Act, an arrangement is maintained in a
State for the purpose of providing benefits consisting of
medical care for the employees and beneficiaries of its
participating employers, at least 200 participating employers
make contributions to such arrangement, such arrangement has
been in existence for at least 10 years, and such arrangement
is licensed under the laws of one or more States to provide
such benefits to its participating employers, upon the filing
with the applicable authority (as defined in section 808(a)(2)
of the Employee Retirement Income Security Act of 1974 (as
amended by this subtitle)) by the arrangement of an application
for certification of the arrangement under part 8 of subtitle B
of title I of such Act--
(A) such arrangement shall be deemed to be a group
health plan for purposes of title I of such Act;
(B) the requirements of sections 801(a) and 803(a)
of the Employee Retirement Income Security Act of 1974
shall be deemed met with respect to such arrangement;
(C) the requirements of section 803(b) of such Act
shall be deemed met, if the arrangement is operated by
a board of trustees which--
(i) is elected by the participating
employers, with each employer having one vote;
and
(ii) has complete fiscal control over the
arrangement and which is responsible for all
operations of the arrangement;
(D) the requirements of section 804(a) of such Act
shall be deemed met with respect to such arrangement;
and
(E) the arrangement may be certified by any
applicable authority with respect to its operations in
any State only if it operates in such State on the date
of certification.
The provisions of this subsection shall cease to apply with
respect to any such arrangement at such time after the date of
the enactment of this Act as the applicable requirements of
this subsection are not met with respect to such arrangement or
at such time that the arrangement provides coverage to
participants and beneficiaries in any State other than the
States in which coverage is provided on such date of enactment.
(2) Definitions.--For purposes of this subsection, the
terms ``group health plan'', ``medical care'', and
``participating employer'' shall have the meanings provided in
section 808 of the Employee Retirement Income Security Act of
1974, except that the reference in paragraph (7) of such
section to an ``small business health plan'' shall be deemed a
reference to an arrangement referred to in this subsection.
TITLE II--NEAR-TERM MARKET RELIEF
SEC. 201. NEAR-TERM MARKET RELIEF.
The Public Health Service Act (42 U.S.C. 201 et seq.) is amended by
adding at the end the following:
``TITLE XXIX--HEALTH CARE INSURANCE MARKETPLACE REFORM
``SEC. 2901. GENERAL INSURANCE DEFINITIONS.
``In this title, the terms `health insurance coverage', `health
insurance issuer', `group health plan', and `individual health
insurance' shall have the meanings given such terms in section 2791.
``Subtitle A--Near-Term Market Relief
``PART I--RATING REQUIREMENTS
``SEC. 2911. DEFINITIONS.
``In this part:
``(1) Adopting state.--The term `adopting State' means a
State that has enacted either the NAIC model rules or the
National Interim Model Rating Rules in their entirety and as
the exclusive laws of the State that relate to rating in the
small group insurance market.
``(2) Commission.--The term `Commission' means the
Harmonized Standards Commission established under section 2921.
``(3) Eligible insurer.--The term `eligible insurer' means
a health insurance issuer that is licensed in a nonadopting
State and that--
``(A) notifies the Secretary, not later than 30
days prior to the offering of coverage described in
this subparagraph, that the issuer intends to offer
small group health insurance coverage consistent with
the National Interim Model Rating Rules in a
nonadopting State;
``(B) notifies the insurance department of a
nonadopting State (or other State agency), not later
than 30 days prior to the offering of coverage
described in this subparagraph, that the issuer intends
to offer small group health insurance coverage in that
State consistent with the National Interim Model Rating
Rules, and provides with such notice a copy of any
insurance policy that it intends to offer in the State,
its most recent annual and quarterly financial reports,
and any other information required to be filed with the
insurance department of the State (or other State
agency) by the Secretary in regulations; and
``(C) includes in the terms of the health insurance
coverage offered in nonadopting States (including in
the terms of any individual certificates that may be
offered to individuals in connection with such group
health coverage) and filed with the State pursuant to
subparagraph (B), a description in the insurer's
contract of the National Interim Model Rating Rules and
an affirmation that such Rules are included in the
terms of such contract.
``(4) Health insurance coverage.--The term `health
insurance coverage' means any coverage issued in small group
health insurance market.
``(5) NAIC model rules.--The term `NAIC model rules' means
the rating rules provided for in the 1992 Adopted Small
Employer Health Insurance Availability Model Act of the
National Association of Insurance Commissioners.
``(6) National interim model rating rules.--The term
`National Interim Model Rating Rules' means the rules
promulgated under section 2912(a).
``(7) Nonadopting state.--The term `nonadopting State'
means a State that is not an adopting State.
``(8) Small group insurance market.--The term `small group
insurance market' shall have the meaning given the term `small
group market' in section 2791(e)(5).
``(9) State law.--The term `State law' means all laws,
decisions, rules, regulations, or other State actions
(including actions by a State agency) having the effect of law,
of any State.
``SEC. 2912. RATING RULES.
``(a) National Interim Model Rating Rules.--Not later than 6 months
after the date of enactment of this title, the Secretary, in
consultation with the National Association of Insurance Commissioners,
shall, through expedited rulemaking procedures, promulgate National
Interim Model Rating Rules that shall be applicable to the small group
insurance market in certain States until such time as the provisions of
subtitle B become effective. Such Model Rules shall apply in States as
provided for in this section beginning with the first plan year after
the such Rules are promulgated.
``(b) Utilization of NAIC Model Rules.--In promulgating the
National Interim Model Rating Rules under subsection (a), the
Secretary, except as otherwise provided in this subtitle, shall utilize
the NAIC model rules regarding premium rating and premium variation.
``(c) Transition in Certain States.--
``(1) In general.--In promulgating the National Interim
Model Rating Rules under subsection (a), the Secretary shall
have discretion to modify the NAIC model rules in accordance
with this subsection to the extent necessary to provide for a
graduated transition, of not to exceed 3 years following the
promulgation of such National Interim Rules, with respect to
the application of such Rules to States.
``(2) Initial premium variation.--
``(A) In general.--Under the modified National
Interim Model Rating Rules as provided for in paragraph
(1), the premium variation provision of subparagraph
(C) shall be applicable only with respect to small
group policies issued in States which, on the date of
enactment of this title, have in place premium rating
band requirements that vary by less than 50 percent
from the premium variation standards contained in
subparagraph (C) with respect to the standards provided
for under the NAIC model rules.
``(B) Other states.--Health insurance coverage
offered in a State that, on the date of enactment of
this title, has in place premium rating band
requirements that vary by more than 50 percent from the
premium variation standards contained in subparagraph
(C) shall be subject to such graduated transition
schedules as may be provided by the Secretary pursuant
to paragraph (1).
``(C) Amount of variation.--The amount of a premium
rating variation from the base premium rate due to
health conditions of covered individuals under this
subparagraph shall not exceed a factor of--
``(i) +/- 25 percent upon the issuance of
the policy involved; and
``(ii) +/- 15 percent upon the renewal of
the policy.
``(3) Other transitional authority.--In developing the
National Interim Model Rating Rules, the Secretary may also
provide for the application of transitional standards in
certain States with respect to the following:
``(A) Independent rating classes for old and new
business.
``(B) Such additional transition standards as the
Secretary may determine necessary for an effective
transition.
``SEC. 2913. APPLICATION AND PREEMPTION.
``(a) Superceding of State Law.--
``(1) In general.--This part shall supersede any and all
State laws insofar as such State laws (whether enacted prior to
or after the date of enactment of this subtitle) relate to
rating in the small group insurance market as applied to an
eligible insurer, or small group health insurance coverage
issued by an eligible insurer, in a nonadopting State.
``(2) Nonadopting states.--This part shall supersede any
and all State laws of a nonadopting State insofar as such State
laws (whether enacted prior to or after the date of enactment
of this subtitle)--
``(A) prohibit an eligible insurer from offering
coverage consistent with the National Interim Model
Rating Rules in a nonadopting State; or
``(B) discriminate against or among eligible
insurers offering health insurance coverage consistent
with the National Interim Model Rating Rules in a
nonadopting state.
``(b) Savings Clause and Construction.--
``(1) Nonapplication to adopting states.--Subsection (a)
shall not apply with respect to adopting states.
``(2) Nonapplication to certain insurers.--Subsection (a)
shall not apply with respect to insurers that do not qualify as
eligible insurers that offer small group health insurance
coverage in a nonadopting State.
``(3) Nonapplication where obtaining relief under state
law.--Subsection (a)(1) shall not apply to any State law in a
nonadopting State to the extent necessary to permit individuals
or the insurance department of the State (or other State
agency) to obtain relief under State law to require an eligible
insurer to comply with the terms of the small group health
insurance coverage issued in the nonadopting State. In no case
shall this paragraph, or any other provision of this title, be
construed to create a cause of action on behalf of an
individual or any other person under State law in connection
with a group health plan that is subject to the Employee
Retirement Income Security Act of 1974 or health insurance
coverage issued in connection with such a plan.
``(4) Nonapplication to enforce requirements relating to
the national rule.--Subsection (a)(1) shall not apply to any
State law in a nonadopting State to the extent necessary to
provide the insurance department of the State (or other State
agency) with the authority to enforce State law requirements
relating to the National Interim Model Rating Rules that are
not set forth in the terms of the small group health insurance
coverage issued in a nonadopting State, in a manner that is
consistent with the National Interim Model Rating Rules and
that imposes no greater duties or obligations on health
insurance issuers than the National Interim Model Rating Rules.
``(5) Nonapplication to subsection (a)(2).--Paragraphs (3)
and (4) shall not apply with respect to subsection (a)(2).
``(6) No affect on preemption.--In no case shall this
subsection be construed to affect the scope of the preemption
provided for under the Employee Retirement Income Security Act
of 1974.
``(c) Effective Date.--This section shall apply beginning in the
first plan year following the issuance of the final rules by the
Secretary under the National Interim Model Rating Rules.
``SEC. 2914. CIVIL ACTIONS AND JURISDICTION.
``(a) In General.--The district courts of the United States shall
have exclusive jurisdiction over civil actions involving the
interpretation of this part.
``(b) Actions.--A health insurance issuer may bring an action in
the district courts of the United States for injunctive or other
equitable relief against a nonadopting State in connection with the
application of a state law that violates this part.
``(c) Violations of Section 2913.--In the case of a nonadopting
State that is in violation of section 2913(a)(2), a health insurance
issuer may bring an action in the district courts of the United States
for damages against the nonadopting State and, if the health insurance
issuer prevails in such action, the district court shall award the
health insurance issuer its reasonable attorneys fees and costs.
``SEC. 2915. SUNSET.
``The National Interim Model Rating Rules shall remain in effect in
a non-adopting State until such time as the harmonized national rating
rules are promulgated and effective pursuant to part II. Upon such
effective date, such harmonized rules shall supersede the National
Rules.
``PART II--LOWER COST PLANS
``SEC. 2921. DEFINITIONS.
``In this part:
``(1) Adopting state.--The term `adopting State' means a
State that has enacted the State Benefit Compendium in its
entirety and as the exclusive laws of the State that relate to
benefit, service, and provider mandates in the group and
individual insurance markets.
``(2) Eligible insurer.--The term `eligible insurer' means
a health insurance issuer that is licensed in a nonadopting
State and that--
``(A) notifies the Secretary, not later than 30
days prior to the offering of coverage described in
this subparagraph, that the issuer intends to offer
group health insurance coverage consistent with the
State Benefit Compendium in a nonadopting State;
``(B) notifies the insurance department of a
nonadopting State (or other State agency), not later
than 30 days prior to the offering of coverage
described in this subparagraph, that the issuer intends
to offer group health insurance coverage in that State
consistent with the State Benefit Compendium, and
provides with such notice a copy of any insurance
policy that it intends to offer in the State, its most
recent annual and quarterly financial reports, and any
other information required to be filed with the
insurance department of the State (or other State
agency) by the Secretary in regulations; and
``(C) includes in the terms of the health insurance
coverage offered in nonadopting States (including in
the terms of any individual certificates that may be
offered to individuals in connection with such group
health coverage) and filed with the State pursuant to
subparagraph (B), a description in the insurer's
contract of the State Benefit Compendium and that
adherence to the Compendium is included as a term of
such contract.
``(3) Health insurance coverage.--The term `health
insurance coverage' means any coverage issued in the group or
individual health insurance markets.
``(4) Nonadopting state.--The term `nonadopting State'
means a State that is not an adopting State.
``(5) State benefit compendium.--The term `State Benefit
Compendium' means the Compendium issued under section 2922.
``(6) State law.--The term `State law' means all laws,
decisions, rules, regulations, or other State actions
(including actions by a State agency) having the effect of law,
of any State.
``SEC. 2922. OFFERING LOWER COST PLANS.
``(a) List of Required Benefits.--Not later than 3 months after the
date of enactment of this title, the Secretary shall issue by interim
final rule a list (to be known as the `List of Required Benefits') of
the benefit, service, and provider mandates that are required to be
provided by health insurance issuers in at least 45 States as a result
of the application of State benefit, service, and provider mandate
laws.
``(b) State Benefit Compendium.--
``(1) Variance.--Not later than 12 months after the date of
enactment of this title, the Secretary shall issue by interim
final rule a compendium (to be known as the `State Benefit
Compendium') of harmonized descriptions of the benefit,
service, and provider mandates identified under subsection (a).
In developing the Compendium, with respect to differences in
State mandate laws identified under subsection (a) relating to
similar benefits, services, or providers, the Secretary shall
review and define the scope and application of such State laws
so that a common approach shall be applicable under such
Compendium in a uniform manner. In making such determination,
the Secretary shall adopt an approach reflective of the
approach used by a plurality of the States requiring such
benefit, service, or provider mandate.
``(2) Effect.--The State Benefit Compendium shall provide
that any State benefit, service, and provider mandate law
(enacted prior to or after the date of enactment of this title)
other than those described in the Compendium shall not be
binding on health insurance issuers in an adopting State.
``(3) Implementation.--The effective date of the State
Benefit Compendium shall be the later of--
``(A) the date that is 12 months from the date of
enactment of this title; or
``(B) such subsequent date on which the interim
final rule for the State Benefit Compendium shall be
issued.
``(c) Non-Association Coverage.--With respect to health insurers
selling insurance to small employers (as defined in section 808(a)(10)
of the Employee Retirement Income Security Act of 1974), in the event
the Secretary fails to issue the State Benefit Compendium within 12
months of the date of enactment of this title, the required scope and
application for each benefit or service listed in the List of Required
Benefits shall, other than with respect to insurance issued to a Small
Business Health Plan, be--
``(1) if the State in which the insurer issues a policy
mandates such benefit or service, the scope and application
required by such State; or
``(2) if the State in which the insurer issues a policy
does not mandate such benefit or service, the scope and
application required by such other State that does require such
benefit or service in which the greatest number of the
insurer's small employer policyholders are located.
``(d) Updating of State Benefit Compendium.--Not later than 2 years
after the date on which the Compendium is issued under subsection
(b)(1), and every 2 years thereafter, the Secretary, applying the same
methodology provided for in subsections (a) and (b)(1), in consultation
with the National Association of Insurance Commissioners, shall update
the Compendium. The Secretary shall issue the updated Compendium by
regulation, and such updated Compendium shall be effective upon the
first plan year following the issuance of such regulation.
``SEC. 2923. APPLICATION AND PREEMPTION.
``(a) Superceding of State Law.--
``(1) In general.--This part shall supersede any and all
State laws (whether enacted prior to or after the date of
enactment of this title) insofar as such laws relate to
benefit, service, or provider mandates in the health insurance
market as applied to an eligible insurer, or health insurance
coverage issued by an eligible insurer, in a nonadopting State.
``(2) Nonadopting states.--This part shall supersede any
and all State laws of a nonadopting State (whether enacted
prior to or after the date of enactment of this title) insofar
as such laws--
``(A) prohibit an eligible insurer from offering
coverage consistent with the State Benefit Compendium,
as provided for in section 2922(a), in a nonadopting
State; or
``(B) discriminate against or among eligible
insurers offering or seeking to offer health insurance
coverage consistent with the State Benefit Compendium
in a nonadopting State.
``(b) Savings Clause and Construction.--
``(1) Nonapplication to adopting states.--Subsection (a)
shall not apply with respect to adopting States.
``(2) Nonapplication to certain insurers.--Subsection (a)
shall not apply with respect to insurers that do not qualify as
eligible insurers who offer health insurance coverage in a
nonadopting State.
``(3) Nonapplication where obtaining relief under state
law.--Subsection (a)(1) shall not apply to any State law of a
nonadopting State to the extent necessary to permit individuals
or the insurance department of the State (or other State
agency) to obtain relief under State law to require an eligible
insurer to comply with the terms of the group health insurance
coverage issued in a nonadopting State. In no case shall this
paragraph, or any other provision of this title, be construed
to create a cause of action on behalf of an individual or any
other person under State law in connection with a group health
plan that is subject to the Employee Retirement Income Security
Act of 1974 or health insurance coverage issued in connection
with such plan.
``(4) Nonapplication to enforce requirements relating to
the compendium.--Subsection (a)(1) shall not apply to any State
law in a nonadopting State to the extent necessary to provide
the insurance department of the State (or other state agency)
authority to enforce State law requirements relating to the
State Benefit Compendium that are not set forth in the terms of
the group health insurance coverage issued in a nonadopting
State, in a manner that is consistent with the State Benefit
Compendium and imposes no greater duties or obligations on
health insurance issuers than the State Benefit Compendium.
``(5) Nonapplication to subsection (a)(2).--Paragraphs (3)
and (4) shall not apply with respect to subsection (a)(2).
``(6) No affect on preemption.--In no case shall this
subsection be construed to affect the scope of the preemption
provided for under the Employee Retirement Income Security Act
of 1974.
``(c) Effective Date.--This section shall apply upon the first plan
year following final issuance by the Secretary of the State Benefit
Compendium.
``SEC. 2924. CIVIL ACTIONS AND JURISDICTION.
``(a) In General.--The district courts of the United States shall
have exclusive jurisdiction over civil actions involving the
interpretation of this part.
``(b) Actions.--A health insurance issuer may bring an action in
the district courts of the United States for injunctive or other
equitable relief against a nonadopting State in connection with the
application of a State law that violates this part.
``(c) Violations of Section 2923.--In the case of a nonadopting
State that is in violation of section 2923(a)(2), a health insurance
issuer may bring an action in the district courts of the United States
for damages against the nonadopting State and, if the health insurance
issuer prevails in such action, the district court shall award the
health insurance issuer its reasonable attorneys fees and costs.''.
TITLE III--HARMONIZATION OF HEALTH INSURANCE LAWS
SEC. 301. HEALTH INSURANCE REGULATORY HARMONIZATION.
Title XXIX of the Public Health Service Act (as added by section
201) is amended by adding at the end the following:
``Subtitle B--Regulatory Harmonization
``SEC. 2931. DEFINITIONS.
``In this subtitle:
``(1) Access.--The term `access' means any requirements of
State law that regulate the following elements of access:
``(A) Renewability of coverage.
``(B) Guaranteed issuance as provided for in title
XXVII.
``(C) Guaranteed issue for individuals not eligible
under subparagraph (B).
``(D) High risk pools.
``(E) Pre-existing conditions limitations.
``(2) Adopting state.--The term `adopting State' means a
State that has enacted the harmonized standards adopted under
this subtitle in their entirety and as the exclusive laws of
the State that relate to the harmonized standards.
``(3) Eligible insurer.--The term `eligible insurer' means
a health insurance issuer that is licensed in a nonadopting
State and that--
``(A) notifies the Secretary, not later than 30
days prior to the offering of coverage described in
this subparagraph, that the issuer intends to offer
health insurance coverage consistent with the
harmonized standards in a nonadopting State;
``(B) notifies the insurance department of a
nonadopting State (or other State agency), not later
than 30 days prior to the offering of coverage
described in this subparagraph, that the issuer intends
to offer group health insurance coverage in that State
consistent with the State Benefit Compendium, and
provides with such notice a copy of any insurance
policy that it intends to offer in the State, its most
recent annual and quarterly financial reports, and any
other information required to be filed with the
insurance department of the State (or other State
agency) by the Secretary in regulations; and
``(C) includes in the terms of the health insurance
coverage offered in nonadopting States (including in
the terms of any individual certificates that may be
offered to individuals in connection with such group
health coverage) and filed with the State pursuant to
subparagraph (B), a description of the harmonized
standards published pursuant to section 2932(g)(2) and
an affirmation that such standards are a term of the
contract.
``(4) Harmonized standards.--The term `harmonized
standards' means the standards adopted by the Secretary under
section 2932(d).
``(5) Health insurance coverage.--The term `health
insurance coverage' means any coverage issued in the health
insurance market.
``(6) Nonadopting state.--The term `nonadopting State'
means a State that fails to enact, within 2 years of the date
in which final regulations are issued by the Secretary adopting
the harmonized standards under this subtitle, the harmonized
standards in their entirety and as the exclusive laws of the
State that relate to the harmonized standards.
``(7) Patient protections.--The term `patient protections'
means any requirement of State law that regulate the following
elements of patient protections:
``(A) Internal appeals.
``(B) External appeals.
``(C) Direct access to providers.
``(D) Prompt payment of claims.
``(E) Utilization review.
``(F) Marketing standards.
``(8) Plurality requirement.--The term `plurality
requirement' means the most common substantially similar
requirements for elements within each area described in section
2932(b)(1).
``(9) Rating.--The term `rating' means, at the time of
issuance or renewal, requirements of State law the regulate the
following elements of rating:
``(A) Limits on the types of variations in rates
based on health status.
``(B) Limits on the types of variations in rates
based on age and gender.
``(C) Limits on the types of variations in rates
based on geography, industry and group size.
``(D) Periods of time during which rates are
guaranteed.
``(E) The review and approval of rates.
``(F) The establishment of classes or blocks of
business.
``(G) The use of actuarial justifications for rate
variations.
``(10) State law.--The term `State law' means all laws,
decisions, rules, regulations, or other State actions
(including actions by a State agency) having the effect of law,
of any State.
``(11) Substantially similar.--The term `substantially
similar' means a requirement of State law applicable to an
element of an area identified in section 2932 that is similar
in most material respects. Where the most common State action
with respect to an element is to adopt no requirement for an
element of an area identified in such section 2932, the
plurality requirement shall be deemed to impose no requirements
for such element.
``SEC. 2932. HARMONIZED STANDARDS.
``(a) Commission.--
``(1) Establishment.--The Secretary, in consultation with
the NAIC, shall establish the Commission on Health Insurance
Standards Harmonization (referred to in this subtitle as the
`Commission') to develop recommendations that harmonize
inconsistent State health insurance laws in accordance with the
laws adopted in a plurality of the States.
``(2) Composition.--The Commission shall be composed of the
following individuals to be appointed by the Secretary:
``(A) Two State insurance commissioners, of which
one shall be a Democrat and one shall be a Republican,
and of which one shall be designated as the chairperson
and one shall be designated as the vice chairperson.
``(B) Two representatives of State government, one
of which shall be a governor of a State and one of
which shall be a State legislator, and one of which
shall be a Democrat and one of which shall be a
Republican.
``(C) Two representatives of employers, of which
one shall represent small employers and one shall
represent large employers.
``(D) Two representatives of health insurers, of
which one shall represent insurers that offer coverage
in all markets (including individual, small, and large
markets), and one shall represent insurers that offer
coverage in the small market.
``(E) Two representatives of consumer
organizations.
``(F) Two representatives of insurance agents and
brokers.
``(G) Two representatives of healthcare providers.
``(H) Two independent representatives of the
American Academy of Actuaries who have familiarity with
the actuarial methods applicable to health insurance.
``(I) One administrator of a qualified high risk
pool.
``(3) Terms.--The members of the Commission shall serve for
the duration of the Commission. The Secretary shall fill
vacancies in the Commission as needed and in a manner
consistent with the composition described in paragraph (2).
``(b) Development of Harmonized Standards.--
``(1) In general.--In accordance with the process described
in subsection (c), the Commission shall identify and recommend
nationally harmonized standards for the small group health
insurance market, the individual health insurance market, and
the large group health insurance market that relate to the
following areas:
``(A) Rating.
``(B) Access to coverage.
``(C) Patient protections.
``(2) Recommendations.--The Commission shall recommend
separate harmonized standards with respect to each of the three
insurance markets described in paragraph (1) and separate
standards for each element of the areas described in
subparagraph (A) through (C) of such paragraph within each such
market. Notwithstanding the previous sentence, the Commission
shall not recommend any harmonized standards that disrupt,
expand, or duplicate the benefit, service, or provider mandate
standards provided in the State Benefit Compendium pursuant to
section 2922(a).
``(c) Process for Identifying Harmonized Standards.--
``(1) In general.--The Commission shall develop
recommendations to harmonize inconsistent State insurance laws
with the laws adopted in a plurality of the States. In carrying
out the previous sentence, the Commission shall review all
State laws that regulate insurance in each of the insurance
markets and areas described in subsection (b)(1) and identify
the plurality requirement within each element of such areas.
Such plurality requirement shall be the harmonized standard for
such area in each such market.
``(2) Consultation.--The Commission shall consult with the
National Association of Insurance Commissioners in identifying
the plurality requirements for each element within the area and
in recommending the harmonized standards.
``(3) Review of federal laws.--The Commission shall review
whether any Federal law imposes a requirement relating to the
markets and areas described in subsection (b)(1). In such case,
such Federal requirement shall be deemed the plurality
requirement and the Commission shall recommend the Federal
requirement as the harmonized standard for such elements.
``(d) Recommendations and Adoption by Secretary.--
``(1) Recommendations.--Not later than 1 year after the
date of enactment of this title, the Commission shall recommend
to the Secretary the adoption of the harmonized standards
identified pursuant to subsection (c).
``(2) Regulations.--Not later than 120 days after receipt
of the Commission's recommendations under paragraph (1), the
Secretary shall issue final regulations adopting the
recommended harmonized standards. If the Secretary finds the
recommended standards for an element of an area to be arbitrary
and inconsistent with the plurality requirements of this
section, the Secretary may issue a unique harmonized standard
only for such element through the application of a process
similar to the process set forth in subsection (c) and through
the issuance of proposed and final regulations.
``(3) Effective date.--The regulations issued by the
Secretary under paragraph (2) shall be effective on the date
that is 2 years after the date on which such regulations were
issued.
``(e) Termination.--The Commission shall terminate and be dissolved
after making the recommendations to the Secretary pursuant to
subsection (d)(1).
``(f) Updated Harmonized Standards.--
``(1) In general.--Not later than 2 years after the
termination of the Commission under subsection (e), and every 2
years thereafter, the Secretary shall update the harmonized
standards. Such updated standards shall be adopted in
accordance with paragraph (2).
``(2) Updating of standards.--
``(A) In general.--The Secretary shall review all
State laws that regulate insurance in each of the
markets and elements of areas set forth in subsection
(b)(1) and identify whether a plurality of States have
adopted substantially similar requirements that differ
from the harmonized standards adopted by the Secretary
pursuant to subsection (d). In such case, the Secretary
shall consider State laws that have been enacted with
effective dates that are contingent upon adoption as a
harmonized standard by the Secretary. Substantially
similar requirements for each element within such area
shall be considered to be an updated harmonized
standard for such an area.
``(B) Report.--The Secretary shall request the
National Association of Insurance Commissioners to
issue a report to the Secretary every 2 years to assist
the Secretary in identifying the updated harmonized
standards under this paragraph. Nothing in this
subparagraph shall be construed to prohibit the
Secretary from issuing updated harmonized standards in
the absence of such a report.
``(C) Regulations.--The Secretary shall issue
regulations adopting updated harmonized standards under
this paragraph within 90 days of identifying such
standards. Such regulations shall be effective
beginning on the date that is 2 years after the date on
which such regulations are issued.
``(g) Publication.--
``(1) Listing.--The Secretary shall maintain an up to date
listing of all harmonized standards adopted under this section
on the Internet website of the Department of Health and Human
Services.
``(2) Sample contract language.--The Secretary shall
publish on the Internet website of the Department of Health and
Human Services sample contract language that incorporates the
harmonized standards adopted under this section, which may be
used by insurers seeking to qualify as an eligible insurer. The
types of harmonized standards that shall be included in sample
contract language are the standards that are relevant to the
contractual bargain between the insurer and insured.
``(h) State Adoption and Enforcement.--Not later than 2 years after
the issuance by the Secretary of final regulations adopting harmonized
standards under this section, the States may adopt such harmonized
standards (and become an adopting State) and, in which case, shall
enforce the harmonized standards pursuant to State law.
``SEC. 2933. APPLICATION AND PREEMPTION.
``(a) Superceding of State Law.--
``(1) In general.--The harmonized standards adopted under
this subtitle shall supersede any and all State laws (whether
enacted prior to or after the date of enactment of this title)
insofar as such State laws relate to the areas of harmonized
standards as applied to an eligible insurer, or health
insurance coverage issued by a eligible insurer, in a
nonadopting State.
``(2) Nonadopting states.--This subtitle shall supersede
any and all State laws of a nonadopting State (whether enacted
prior to or after the date of enactment of this title) insofar
as they may--
``(A) prohibit an eligible insurer from offering
coverage consistent with the harmonized standards in
the nonadopting State; or
``(B) discriminate against or among eligible
insurers offering or seeking to offer health insurance
coverage consistent with the harmonized standards in
the nonadopting State.
``(b) Savings Clause and Construction.--
``(1) Nonapplication to adopting states.--Subsection (a)
shall not apply with respect to adopting States.
``(2) Nonapplication to certain insurers.--Subsection (a)
shall not apply with respect to insurers that do not qualify as
eligible insurers who offer health insurance coverage in a
nonadopting State.
``(3) Nonapplication where obtaining relief under state
law.--Subsection (a)(1) shall not apply to any State law of a
nonadopting State to the extent necessary to permit individuals
or the insurance department of the State (or other State
agency) to obtain relief under State law to require an eligible
insurer to comply with the terms of the health insurance
coverage issued in a nonadopting State. In no case shall this
paragraph, or any other provision of this subtitle, be
construed to permit a cause of action on behalf of an
individual or any other person under State law in connection
with a group health plan that is subject to the Employee
Retirement Income Security Act of 1974 or health insurance
coverage issued in connection with such plan.
``(4) Nonapplication to enforce requirements relating to
the compendium.--Subsection (a)(1) shall not apply to any State
law in a nonadopting State to the extent necessary to provide
the insurance department of the State (or other state agency)
authority to enforce State law requirements relating to the
harmonized standards that are not set forth in the terms of the
health insurance coverage issued in a nonadopting State, in a
manner that is consistent with the harmonized standards and
imposes no greater duties or obligations on health insurance
issuers than the harmonized standards.
``(5) Nonapplication to subsection (a)(2).--Paragraphs (3)
and (4) shall not apply with respect to subsection (a)(2).
``(6) No affect on preemption.--In no case shall this
subsection be construed to affect the scope of the preemption
provided for under the Employee Retirement Income Security Act
of 1974.
``(c) Effective Date.--This section shall apply beginning on the
date that is 2 years after the date on which final regulations are
issued by the Secretary under this subtitle adopting the harmonized
standards.
``SEC. 2934. CIVIL ACTIONS AND JURISDICTION.
``(a) In General.--The district courts of the United States shall
have exclusive jurisdiction over civil actions involving the
interpretation of this subtitle.
``(b) Actions.--A health insurance issuer may bring an action in
the district courts of the United States for injunctive or other
equitable relief against a nonadopting State in connection with the
application of a State law that violates this subtitle.
``(c) Violations of Section 2933.--In the case of a nonadopting
State that is in violation of section 2933(a)(2), a health insurance
issuer may bring an action in the district courts of the United States
for damages against the nonadopting State and, if the health insurance
issuer prevails in such action, the district court shall award the
health insurance issuer its reasonable attorneys fees and costs.
``SEC. 2935. AUTHORIZATION OF APPROPRIATIONS.
``There are authorized to be appropriated such sums as may be
necessary to carry out this subtitle.''.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S12242-12244)
Read twice and referred to the Committee on Health, Education, Labor, and Pensions. (text of measure as introduced: CR S12244-12251)
Committee on Health, Education, Labor, and Pensions. Ordered to be reported with an amendment in the nature of a substitute favorably.
Committee on Health, Education, Labor, and Pensions. Reported by Senator Enzi with an amendment in the nature of a substitute. Without written report.
Committee on Health, Education, Labor, and Pensions. Reported by Senator Enzi with an amendment in the nature of a substitute. Without written report.
Placed on Senate Legislative Calendar under General Orders. Calendar No. 417.
Motion to proceed to consideration of measure made in Senate. (consideration: CR S4095)
Cloture motion on the motion to proceed presented in Senate. (consideration: CR S4095-4096; text: CR S4095)
Motion to proceed to consideration of measure withdrawn in Senate.
Motion to proceed to measure considered in Senate. (consideration: CR S4163-4177, S4177-4205)
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Cloture on the motion to proceed invoked in Senate by Yea-Nay Vote. 96 - 2. Record Vote Number: 117. (consideration: CR S4165; text: CR S4165)
Roll Call #117 (Senate)Motion to proceed to consideration of measure s. 1955 agreed to in Senate by Unanimous Consent. (consideration: CR S4262-4327; text of measure as reported in Senate: CR S4262-4277)
Measure laid before Senate by motion.
The committee substitute was modified by Unanimous Consent. (text: CR S4277-4285)
Motion by Senator Frist to recommit to Senate Committee on Health, Education, Labor, and Pensions with instructions that the committee report back forthwith the following amendment (SA 3888) made in Senate.
Cloture motion on the modified committee substitute presented in Senate. (consideration: CR S4326-4327; text: CR S4326)
Considered by Senate. (consideration: CR S4447-4460)
Cloture on the modified committee substitute not invoked in Senate by Yea-Nay Vote. 55 - 43. Record Vote Number: 119. (consideration: CR S4459-4460; text: CR S4459)
Roll Call #119 (Senate)Returned to the Calendar. Calendar No. 417.