[Pages S4262-S4327]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

HEALTH INSURANCE MARKETPLACE MODERNIZATION AND AFFORDABILITY ACT OF
2006

The PRESIDING OFFICER. The Senate will proceed to the consideration
of S. 1955, which the clerk will report.
The assistant legislative clerk read as follows:

A bill (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.

The Senate proceeded to consider the bill which had been reported
from the Committee on Health, Education, Labor, and Pensions, with an
amendment in the nature of a substitute.
(Strike the part shown in black brackets and insert the part shown in
italic.)

S. 1955

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

[[Page S4263]]

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

[[Page S4264]]

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.

[[Page S4265]]

[``(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

[[Page S4266]]

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

[[Page S4267]]

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--

[[Page S4268]]

[``(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

[[Page S4269]]

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.''.]

SECTION 1. SHORT TITLE; TABLE OF CONTENTS; PURPOSE.

(a) Short Title.--This Act may be cited as the ``Health
Insurance Marketplace Modernization and Affordability Act of
2006''.
(b) Table of Contents.--The table of contents is as
follows:

Sec. 1. Short title; table of contents; purposes.

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--MARKET RELIEF

Sec. 201. Market relief.

TITLE III--HARMONIZATION OF HEALTH INSURANCE STANDARDS

Sec. 301. Health Insurance Standards Harmonization.
(c) Purposes.--It is the purpose of this Act to--
(1) make more affordable health insurance options available
to small businesses, working families, and all Americans;
(2) assure effective State regulatory protection of the
interests of health insurance consumers; and
(3) create a more efficient and affordable health insurance
marketplace through collaborative development of uniform
regulatory standards.

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 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;
``(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; and
``(4) does not condition membership on the basis of a
minimum group size.
Any sponsor consisting of an association of entities which
meet the requirements of paragraphs (1), (2), (3), and (4)
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 business health plan involved is failing to comply with
the requirements of this part.
``(d) Expedited and Deemed Certification.--
``(1) In general.--If the Secretary fails to act on an
application for certification under this section within 90
days of receipt of such application, the applying small
business health plan

[[Page S4270]]

shall be deemed certified until such time as the Secretary
may deny for cause the application for certification.
``(2) Civil penalty.--The Secretary may assess a civil
penalty against the board of trustees and plan sponsor
(jointly and severally) of a small business health plan that
is deemed certified under paragraph (1) of up to $500,000 in
the event the Secretary determines that the application for
certification of such small business health plan was
willfully or with gross negligence incomplete or inaccurate.

``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 2006.
``(B) Sole authority.--The board has sole authority under
the plan to approve applications for participation in the
plan and to contract with insurers.
``(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, 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 dependents of individuals described in
subparagraph (A).
``(b) 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.
``(c) 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) information regarding all coverage options available
under the plan is made readily available to any employer
eligible to participate; 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.

[[Page S4271]]

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
2006.
``(c) Domicile and Non-Domicile States.--
``(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 but in which the
insurer of the small business health plan in the domicile
State is not yet licensed, the following shall apply:
``(A) Temporary preemption.--If, upon the expiration of the
90-day period following the submission of a licensure
application by such insurer (that includes a certified copy
of an approved licensure application as submitted by such
insurer in the domicile State) to such State, such State has
not approved or denied such application, such State's health
insurance licensure laws shall be temporarily preempted and
the insurer shall be permitted to operate in such State,
subject to the following terms:
``(i) Application of non-domicile state law.--Except with
respect to licensure and with respect to the terms of
subtitle A of title XXIX of the Public Health Service Act
(relating to rating and benefits as added by the Health
Insurance Marketplace Modernization and Affordability Act of
2006), the laws and authority of the non-domicile State shall
remain in full force and effect.
``(ii) Revocation of preemption.--The preemption of a non-
domicile State's health insurance licensure laws pursuant to
this subparagraph, shall be terminated upon the occurrence of
either of the following:

``(I) Approval or denial of application.--The approval of
denial of an insurer's licensure application, following the
laws and regulations of the non-domicile State with respect
to licensure.
``(II) Determination of material violation.--A
determination by a non-domicile State that an insurer
operating in a non-domicile State pursuant to the preemption
provided for in this subparagraph is in material violation of
the insurance laws (other than licensure and with respect to
the terms of subtitle A of title XXIX of the Public Health
Service Act (relating to rating and benefits added by the
Health Insurance Marketplace Modernization and Affordability
Act of 2006)) of such State.

``(B) No prohibition on promotion.--Nothing in this
paragraph shall be construed to prohibit a small business
health plan or an insurer from promoting coverage prior to
the expiration of the 90-day period provided for in
subparagraph (A), except that no enrollment or collection of
contributions shall occur before the expiration of such 90-
day period.
``(C) Licensure.--Except with respect to the application of
the temporary preemption provision of this paragraph, nothing
in this part shall be construed to limit the requirement that
insurers issuing coverage to small business health plans
shall be licensed in each State in which the small business
health plans operate.
``(D) Servicing by licensed insurers.--Notwithstanding
subparagraph (C), the requirements of this subsection may
also be satisfied if the participating employers of a small
business health plan are serviced by a licensed insurer in
that State, even where such insurer is not the insurer of
such small business health plan in the State in which such
small business health plan is domiciled.

``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 the small business health
plans operate.
``(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, or
``(B) in the case of a sponsor with members which consist
of associations, a person who is a member or employee of any
such association and elects an affiliated status with the
sponsor.
``(2) Applicable authority.--The term `applicable
authority' means the Secretary of Labor, 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), except that such term shall not include excepted
benefits (as defined in section 733(c)).
``(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).
``(11) Trade association and professional association.--The
terms `trade association' and `professional association' mean
an entity that meets the requirements of section 1.501(c)(6)-
1 of title 26, Code of Federal Regulations (as in effect on
the date of enactment of this Act).
``(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

[[Page S4272]]

``(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.
``(c) Renewal.--Notwithstanding any provision of law to the
contrary, a participating employer in a small business health
plan shall not be deemed to be a plan sponsor in applying
requirements relating to coverage renewal.
``(d) Health Savings Accounts.--Nothing in this part shall
be construed to inhibit the development of health savings
accounts pursuant to section 223 of the Internal Revenue Code
of 1986.''.
(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 subtitle A of
title XXIX of the Public Health Service Act (as added by
title II of the Health Insurance Marketplace Modernization
and Affordability Act of 2006) (concerning health plan rating
and benefits) are met.''.
(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 12 months 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 6 months 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--MARKET RELIEF

SEC. 201. 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 MODERNIZATION

``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--Market Relief

``PART I--RATING REQUIREMENTS

``SEC. 2911. DEFINITIONS.

``(a) General Definitions.--In this part:
``(1) Adopting state.--The term `adopting State' means a
State that, with respect to the small group market, has
enacted either the Model Small Group Rating Rules or, if
applicable to such State, the Transitional Model Small Group
Rating Rules, each in their entirety and as the exclusive
laws of the State that relate to rating in the small group
insurance market.
``(2) 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
insurance laws of such State.
``(3) Base premium rate.--The term `base premium rate'
means, for each class of business with respect to a rating
period, the lowest premium rate charged or that could have
been charged under a rating system for that class of business
by the small employer carrier to small employers with similar
case characteristics for health benefit plans with the same
or similar coverage
``(4) Eligible insurer.--The term `eligible insurer' means
a health insurance issuer that is licensed in a 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 Model Small Group Rating Rules or, as
applicable, transitional small group rating rules in a 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 Model Small Group
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); 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 Model Small
Group Rating Rules and an affirmation that such Rules are
included in the terms of such contract.

[[Page S4273]]

``(5) Health insurance coverage.--The term `health
insurance coverage' means any coverage issued in the small
group health insurance market, except that such term shall
not include excepted benefits (as defined in section
2791(c)).
``(6) Index rate.--The term `index rate' means for each
class of business with respect to the rating period for small
employers with similar case characteristics, the arithmetic
average of the applicable base premium rate and the
corresponding highest premium rate.
``(7) Model small group rating rules.--The term ` Model
Small Group Rating Rules' means the rules set forth in
subsection (b).
``(8) Nonadopting state.--The term `nonadopting State'
means a State that is not an adopting State.
``(9) 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).
``(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.
``(b) Definition Relating to Model Small Group Rating
Rules.--The term `Model Small Group Rating Rules' means
adapted rating rules drawn from the Adopted Small Employer
Health Insurance Availability Model Act of 1993 of the
National Association of Insurance Commissioners consisting of
the following:
``(1) Premium rates.--Premium rates for health benefit
plans to which this title applies shall be subject to the
following provisions relating to premiums:
``(A) Index rate.--The index rate for a rating period for
any class of business shall not exceed the index rate for any
other class of business by more than 20 percent.
``(B) Class of businesses.--With respect to a class of
business, the premium rates charged during a rating period to
small employers with similar case characteristics for the
same or similar coverage or the rates that could be charged
to such employers under the rating system for that class of
business, shall not vary from the index rate by more than 25
percent of the index rate under subparagraph (A).
``(C) Increases for new rating periods.--The percentage
increase in the premium rate charged to a small employer for
a new rating period may not exceed the sum of the following:
``(i) The percentage change in the new business premium
rate measured from the first day of the prior rating period
to the first day of the new rating period. In the case of a
health benefit plan into which the small employer carrier is
no longer enrolling new small employers, the small employer
carrier shall use the percentage change in the base premium
rate, except that such change shall not exceed, on a
percentage basis, the change in the new business premium rate
for the most similar health benefit plan into which the small
employer carrier is actively enrolling new small employers.
``(ii) Any adjustment, not to exceed 15 percent annually
and adjusted pro rata for rating periods of less then 1 year,
due to the claim experience, health status or duration of
coverage of the employees or dependents of the small employer
as determined from the small employer carrier's rate manual
for the class of business involved.
``(iii) Any adjustment due to change in coverage or change
in the case characteristics of the small employer as
determined from the small employer carrier's rate manual for
the class of business.
``(D) Uniform application of adjustments.--Adjustments in
premium rates for claim experience, health status, or
duration of coverage shall not be charged to individual
employees or dependents. Any such adjustment shall be applied
uniformly to the rates charged for all employees and
dependents of the small employer.
``(E) Use of industry as a case characteristic.--A small
employer carrier may utilize industry as a case
characteristic in establishing premium rates, so long as the
highest rate factor associated with any industry
classification does not exceed the lowest rate factor
associated with any industry classification by more than 15
percent.
``(F) Consistent application of factors.--Small employer
carriers shall apply rating factors, including case
characteristics, consistently with respect to all small
employers in a class of business. Rating factors shall
produce premiums for identical groups which differ only by
the amounts attributable to plan design and do not reflect
differences due to the nature of the groups assumed to select
particular health benefit plans.
``(G) Treatment of plans as having same rating period.--A
small employer carrier shall treat all health benefit plans
issued or renewed in the same calendar month as having the
same rating period.
``(H) Restricted network provisions.--For purposes of this
subsection, a health benefit plan that contains a restricted
network provision shall not be considered similar coverage to
a health benefit plan that does not contain a similar
provision if the restriction of benefits to network providers
results in substantial differences in claims costs.
``(I) Prohibition on use of certain case characteristics.--
The small employer carrier shall not use case characteristics
other than age, gender, industry, geographic area, family
composition, group size, and participation in wellness
programs without prior approval of the applicable State
authority.
``(J) Require compliance.--Premium rates for small business
health benefit plans shall comply with the requirements of
this subsection notwithstanding any assessments paid or
payable by a small employer carrier as required by a State's
small employer carrier reinsurance program.
``(2) Establishment of separate class of business.--Subject
to paragraph (3), a small employer carrier may establish a
separate class of business only to reflect substantial
differences in expected claims experience or administrative
costs related to the following:
``(A) The small employer carrier uses more than one type of
system for the marketing and sale of health benefit plans to
small employers.
``(B) The small employer carrier has acquired a class of
business from another small employer carrier.
``(C) The small employer carrier provides coverage to one
or more association groups that meet the requirements of this
title.
``(3) Limitation.--A small employer carrier may establish
up to 9 separate classes of business under paragraph (2),
excluding those classes of business related to association
groups under this title.
``(4) Additional groupings.--The applicable State authority
may approve the establishment of additional distinct
groupings by small employer carriers upon the submission of
an application to the applicable State authority and a
finding by the applicable State authority that such action
would enhance the efficiency and fairness of the small
employer insurance marketplace.
``(5) Limitation on transfers.--A small employer carrier
shall not transfer a small employer involuntarily into or out
of a class of business. A small employer carrier shall not
offer to transfer a small employer into or out of a class of
business unless such offer is made to transfer all small
employers in the class of business without regard to case
characteristics, claim experience, health status or duration
of coverage since issue.
``(6) Suspension of the rules.--The applicable State
authority may suspend, for a specified period, the
application of paragraph (1) to the premium rates applicable
to one or more small employers included within a class of
business of a small employer carrier for one or more rating
periods upon a filing by the small employer carrier and a
finding by the applicable State authority either that the
suspension is reasonable when considering the financial
condition of the small employer carrier or that the
suspension would enhance the efficiency and fairness of the
marketplace for small employer health insurance.

``SEC. 2912. RATING RULES.

``(a) Implementation of Model Small Group Rating Rules.--
Not later than 6 months after the enactment of this title,
the Secretary shall promulgate regulations implementing the
Model Small Group Rating Rules pursuant to section 2911(b).
``(b) Transitional Model Small Group Rating Rules.--
``(1) In general.--Not later than 6 months after the date
of enactment of this title and to the extent necessary to
provide for a graduated transition to the Model Small Group
Rating Rules, the Secretary, in consultation with the NAIC,
shall promulgate Transitional Model Small Group Rating Rules
in accordance with this subsection, which shall be applicable
with respect to certain non-adopting States for a period of
not to exceed 5 years from the date of the promulgation of
the Model Small Group Rating Rules pursuant to subsection
(a). After the expiration of such 5-year period, the
transitional model small group rating rules shall expire, and
the Model Small Group Rating Rules shall then apply with
respect to all non-adopting States pursuant to the provisions
of this part.
``(2) Premium variation during transition.--
``(A) Transition states.--During the transition period
described in paragraph (1), small group health insurance
coverage offered in a non-adopting State that had in place
premium rating band requirements or premium limits that
varied by less than 12.5 percent from the index rate within a
class of business on the date of enactment of this title,
shall not be subject to the premium variation provision of
section 2911(b)(1) of the Model Small Group Rating Rules and
shall instead be subject to the Transitional Model Small
Group Rating Rules as promulgated by the Secretary pursuant
to paragraph (1).
``(B) Non-transition states.--During the transition period
described in paragraph (1), and thereafter, small group
health insurance coverage offered in a non-adopting State
that had in place premium rating band requirements or premium
limits that varied by more than 12.5 percent from the index
rate within a class of business on the date of enactment of
this title, shall not be subject to the Transitional Model
Small Group Rating Rules as promulgated by the Secretary
pursuant to paragraph (1), and instead shall be subject to
the Model Small Group Rating Rules effective beginning with
the first plan year or calendar year following the
promulgation of such Rules, at the election of the eligible
insurer.
``(3) Transitioning of old business.--In developing the
transitional model small group rating rules under paragraph
(1), the Secretary shall, after consultation with the
National Association of Insurance Commissioners and
representatives of insurers operating in the small group
health insurance market, promulgate special transition
standards and timelines with respect to independent rating
classes for old and new business, to the extent reasonably
necessary to protect health insurance consumers and to ensure
a stable and fair transition for old and new market entrants.
``(4) Other transitional authority.--In developing the
Transitional Model Small Group Rating Rules under paragraph
(1), the Secretary shall provide for the application of the
Transitional Model Small Group Rating Rules in transition
States as the Secretary may determine necessary for a an
effective transition.
``(c) Market Re-Entry.--

[[Page S4274]]

``(1) In general.--Notwithstanding any other provision of
law, a health insurance issuer that has voluntarily withdrawn
from providing coverage in the small group market prior to
the date of enactment of the Health Insurance Marketplace
Modernization and Affordability Act of 2006 shall not be
excluded from re-entering such market on a date that is more
than 180 days after such date of enactment.
``(2) Termination.--The provision of this subsection shall
terminate on the date that is 24 months after the date of
enactment of the Health Insurance Marketplace Modernization
and Affordability Act of 2006.

``SEC. 2913. APPLICATION AND PREEMPTION.

``(a) Superseding of State Law.--
``(1) In general.--This part shall supersede any and all
State laws of a non-adopting State 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,
including with respect to coverage issued to a small employer
through a small business health plan, in a 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,
marketing, or implementing small group health insurance
coverage consistent with the Model Small Group Rating Rules
or transitional model small group rating rules; or
``(B) have the effect of retaliating against or otherwise
punishing in any respect 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.
``(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 supercede 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 Model Small
Group Rating Rules or transitional model small group rating
rules.
``(4) No effect on preemption.--In no case shall this part
be construed to limit or affect in any manner the preemptive
scope of sections 502 and 514 of the Employee Retirement
Income Security Act of 1974. In no case shall this part be
construed to create any cause of action under Federal or
State law or enlarge or affect any remedy available under the
Employee Retirement Income Security Act of 1974.
``(c) Effective Date.--This section shall apply, at the
election of the eligible insurer, beginning in the first plan
year or the first calendar year following the issuance of the
final rules by the Secretary under the Model Small Group
Rating Rules or, as applicable, the Transitional Model Small
Group Rating Rules, but in no event earlier than the date
that is 12 months after the date of enactment of this title.

``SEC. 2914. CIVIL ACTIONS AND JURISDICTION.

``(a) In General.--The courts of the United States shall
have exclusive jurisdiction over civil actions involving the
interpretation of this part.
``(b) Actions.--An eligible insurer may bring an action in
the district courts of the United States for injunctive or
other equitable relief against any officials or agents of a
nonadopting State in connection with any conduct or action,
or proposed conduct or action, by such officials or agents
which violates, or which would if undertaken violate, section
2913.
``(c) Direct Filing in Court of Appeals.--At the election
of the eligible insurer, an action may be brought under
subsection (b) directly in the United States Court of Appeals
for the circuit in which the nonadopting State is located by
the filing of a petition for review in such Court.
``(d) Expedited Review.--
``(1) District court.--In the case of an action brought in
a district court of the United States under subsection (b),
such court shall complete such action, including the issuance
of a judgment, prior to the end of the 120-day period
beginning on the date on which such action is filed, unless
all parties to such proceeding agree to an extension of such
period.
``(2) Court of appeals.--In the case of an action brought
directly in a United States Court of Appeal under subsection
(c), or in the case of an appeal of an action brought in a
district court under subsection (b), such Court shall
complete all action on the petition, including the issuance
of a judgment, prior to the end of the 60-day period
beginning on the date on which such petition is filed with
the Court, unless all parties to such proceeding agree to an
extension of such period.
``(e) Standard of Review.--A court in an action filed under
this section, shall render a judgment based on a review of
the merits of all questions presented in such action and
shall not defer to any conduct or action, or proposed conduct
or action, of a nonadopting State.

``SEC. 2915. ONGOING REVIEW.

``Not later than 5 years after the date on which the Model
Small Group Rating Rules are issued under this part, and
every 5 years thereafter, the Secretary, in consultation with
the National Association of Insurance Commissioners, shall
prepare and submit to the appropriate committees of Congress
a report that assesses the effect of the Model Small Group
Rating Rules on access, cost, and market functioning in the
small group market. Such report may, if the Secretary, in
consultation with the National Association of Insurance
Commissioners, determines such is appropriate for improving
access, costs, and market functioning, contain legislative
proposals for recommended modification to such Model Small
Group Rating Rules.

``PART II--AFFORDABLE PLANS

``SEC. 2921. DEFINITIONS.

``In this part:
``(1) Adopting state.--The term `adopting State' means a
State that has enacted the Benefit Choice Standards in their
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) Benefit choice standards.--The term `Benefit Choice
Standards' means the Standards issued under section 2922.
``(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 Benefit Choice 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 health insurance coverage in
that State consistent with the Benefit Choice Standards, 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 Benefit Choice
Standards and that adherence to such Standards is included as
a term of such contract.
``(4) Health insurance coverage.--The term `health
insurance coverage' means any coverage issued in the group or
individual health insurance markets, except that such term
shall not include excepted benefits (as defined in section
2791(c)).
``(5) Nonadopting state.--The term `nonadopting State'
means a State that is not an adopting State.
``(6) 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).
``(7) 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 AFFORDABLE PLANS.

``(a) Benefit Choice Options.--
``(1) Development.--Not later than 6 months after the date
of enactment of this title, the Secretary shall issue, by
interim final rule, Benefit Choice Standards that implement
the standards provided for in this part.
``(2) Basic options.--The Benefit Choice Standards shall
provide that a health insurance issuer in a State, may offer
a coverage plan or plan in the small group market, individual
market, large group market, or through a small business
health plan, that does not comply with one or more mandates
regarding covered benefits, services, or category of provider
as may be in effect in such State with respect to such market
or markets (either prior to or following the date of
enactment of this title), if such issuer also offers in such
market or markets an enhanced option as provided for in
paragraph (3).
``(3) Enhanced option.--A health insurance issuer issuing a
basic option as provided for in paragraph (2) shall also
offer to purchasers (including, with respect to a small
business health plan, the participating employers of such
plan) an enhanced option, which shall at a minimum include
such covered benefits, services, and categories of providers
as are covered by a State employee coverage plan in one of
the 5 most populous States as are in effect in the calendar
year in which such enhanced option is offered.
``(4) Publication of benefits.--Not later than 3 months
after the date of enactment of this title, and on the first
day of every calendar year thereafter, the Secretary shall
publish in the Federal Register such covered benefits,
services, and categories of providers covered in that
calendar year by the State employee coverage plans in the 5
most populous States.
``(b) Effective Dates.--
``(1) Small business health plans.--With respect to health
insurance provided to participating employers of small
business health plans, the requirements of this part
(concerning lower cost plans) shall apply beginning on the
date that is 12 months after the date of enactment of this
title.
``(2) Non-association coverage.--With respect to health
insurance provided to groups or individuals other than
participating employers of small business health plans, the
requirements of this part shall apply beginning on the date
that is 15 months after the date of enactment of this title.

``SEC. 2923. APPLICATION AND PREEMPTION.

``(a) Superceding of State Law.--
``(1) In general.--This part shall supersede any and all
State laws insofar as such laws relate to mandates relating
to covered benefits,

[[Page S4275]]

services, or categories of provider in the health insurance
market as applied to an eligible insurer, or health insurance
coverage issued by an eligible insurer, including with
respect to coverage issued to a small business health plan,
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,
marketing, or implementing health insurance coverage
consistent with the Benefit Choice Standards, as provided for
in section 2922(a); or
``(B) have the effect of retaliating against or otherwise
punishing in any respect an eligible insurer for offering,
marketing, or implementing health insurance coverage
consistent with the Benefit Choice Standards.
``(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 supercede 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 Benefit Choice
Standards.
``(4) No effect on preemption.--In no case shall this part
be construed to limit or affect in any manner the preemptive
scope of sections 502 and 514 of the Employee Retirement
Income Security Act of 1974. In no case shall this part be
construed to create any cause of action under Federal or
State law or enlarge or affect any remedy available under the
Employee Retirement Income Security Act of 1974.

``SEC. 2924. CIVIL ACTIONS AND JURISDICTION.

``(a) In General.--The courts of the United States shall
have exclusive jurisdiction over civil actions involving the
interpretation of this part.
``(b) Actions.--An eligible insurer may bring an action in
the district courts of the United States for injunctive or
other equitable relief against any officials or agents of a
nonadopting State in connection with any conduct or action,
or proposed conduct or action, by such officials or agents
which violates, or which would if undertaken violate, section
2923.
``(c) Direct Filing in Court of Appeals.--At the election
of the eligible insurer, an action may be brought under
subsection (b) directly in the United States Court of Appeals
for the circuit in which the nonadopting State is located by
the filing of a petition for review in such Court.
``(d) Expedited Review.--
``(1) District court.--In the case of an action brought in
a district court of the United States under subsection (b),
such court shall complete such action, including the issuance
of a judgment, prior to the end of the 120-day period
beginning on the date on which such action is filed, unless
all parties to such proceeding agree to an extension of such
period.
``(2) Court of appeals.--In the case of an action brought
directly in a United States Court of Appeal under subsection
(c), or in the case of an appeal of an action brought in a
district court under subsection (b), such Court shall
complete all action on the petition, including the issuance
of a judgment, prior to the end of the 60-day period
beginning on the date on which such petition is filed with
the Court, unless all parties to such proceeding agree to an
extension of such period.
``(e) Standard of Review.--A court in an action filed under
this section, shall render a judgment based on a review of
the merits of all questions presented in such action and
shall not defer to any conduct or action, or proposed conduct
or action, of a nonadopting State.

``SEC. 2925. RULES OF CONSTRUCTION.

``(a) In General.--Notwithstanding any other provision of
Federal or State law, a health insurance issuer in an
adopting State or an eligible insurer in a non-adopting State
may amend its existing policies to be consistent with the
terms of this subtitle (concerning rating and benefits).
``(b) Health Savings Accounts.--Nothing in this subtitle
shall be construed to inhibit the development of health
savings accounts pursuant to section 223 of the Internal
Revenue Code of 1986.''.

TITLE III--HARMONIZATION OF HEALTH INSURANCE STANDARDS

SEC. 301. HEALTH INSURANCE STANDARDS 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--Standards Harmonization

``SEC. 2931. DEFINITIONS.

``In this subtitle:
``(1) 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.
``(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 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 health insurance coverage in
that State consistent with the harmonized standards published
pursuant to section 2932(d), 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 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.
``(3) Harmonized standards.--The term `harmonized
standards' means the standards certified by the Secretary
under section 2932(d).
``(4) Health insurance coverage.--The term `health
insurance coverage' means any coverage issued in the health
insurance market, except that such term shall not include
excepted benefits (as defined in section 2791(c).
``(5) Nonadopting state.--The term `nonadopting State'
means a State that fails to enact, within 18 months of the
date on which the Secretary certifies 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.
``(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. 2932. HARMONIZED STANDARDS.

[[Page S4276]]

``(B) seek such assistance and support as may be required
in the performance of its duties from appropriate Federal
departments and agencies;
``(C) enter into contracts or make other arrangements, as
may be necessary for the conduct of the work of the Board
(without regard to section 3709 of the Revised Statutes (41
U.S.C. 5));
``(D) make advance, progress, and other payments which
relate to the work of the Board;
``(E) provide transportation and subsistence for persons
serving without compensation; and
``(F) prescribe such rules as it deems necessary with
respect to the internal organization and operation of the
Board.
``(7) Terms.--The members of the Board shall serve for the
duration of the Board. Vacancies in the Board shall be filled
as needed 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 Board shall identify and recommend
nationally harmonized standards for each of the following
process categories:
``(A) Form filing and rate filing.--Form and rate filing
standards shall be established which promote speed to market
and include the following defined areas for States that
require such filings:
``(i) Procedures for form and rate filing pursuant to a
streamlined administrative filing process.
``(ii) Timeframes for filings to be reviewed by a State if
review is required before they are deemed approved.
``(iii) Timeframes for an eligible insurer to respond to
State requests following its review.
``(iv) A process for an eligible insurer to self-certify.
``(v) State development of form and rate filing templates
that include only non-preempted State law and Federal law
requirements for eligible insurers with timely updates.
``(vi) Procedures for the resubmission of forms and rates.
``(vii) Disapproval rationale of a form or rate filing
based on material omissions or violations of non-preempted
State law or Federal law with violations cited and explained.
``(viii) For States that may require a hearing, a rationale
for hearings based on violations of non-preempted State law
or insurer requests.
``(B) Market conduct review.--Market conduct review
standards shall be developed which provide for the following:
``(i) Mandatory participation in national databases.
``(ii) The confidentiality of examination materials.
``(iii) The identification of the State agency with primary
responsibility for examinations.
``(iv) Consultation and verification of complaint data with
the eligible insurer prior to State actions.
``(v) Consistency of reporting requirements with the
recordkeeping and administrative practices of the eligible
insurer.
``(vi) Examinations that seek to correct material errors
and harmful business practices rather than infrequent errors.
``(vii) Transparency and publishing of the State's
examination standards.
``(viii) Coordination of market conduct analysis.
``(ix) Coordination and nonduplication between State
examinations of the same eligible insurer.
``(x) Rationale and protocols to be met before a full
examination is conducted.
``(xi) Requirements on examiners prior to beginning
examinations such as budget planning and work plans.
``(xii) Consideration of methods to limit examiners' fees
such as caps, competitive bidding, or other alternatives.
``(xiii) Reasonable fines and penalties for material errors
and harmful business practices.
``(C) Prompt payment of claims.--The Board shall establish
prompt payment standards for eligible insurers based on
standards similar to those applicable to the Social Security
Act as set forth in section 1842(c)(2) of such Act (42 U.S.C.
1395u(c)(2)). Such prompt payment standards shall be
consistent with the timing and notice requirements of the
claims procedure rules to be specified under subparagraph
(D), and shall include appropriate exceptions such as for
fraud, nonpayment of premiums, or late submission of claims.
``(D) Internal review.--The Board shall establish standards
for claims procedures for eligible insurers that are
consistent with the requirements relating to initial claims
for benefits and appeals of claims for benefits under the
Employee Retirement Income Security Act of 1974 as set forth
in section 503 of such Act (29 U.S.C. 1133) and the
regulations thereunder.
``(2) Recommendations.--The Board shall recommend
harmonized standards for each element of the categories
described in subparagraph (A) through (D) of paragraph (1)
within each such market. Notwithstanding the previous
sentence, the Board shall not recommend any harmonized
standards that disrupt, expand, or duplicate the benefit,
service, or provider mandate standards provided in the
Benefit Choice Standards pursuant to section 2922(a).
``(c) Process for Identifying Harmonized Standards.--
``(1) In general.--The Board shall develop recommendations
to harmonize inconsistent State insurance laws with respect
to each of the process categories described in subparagraphs
(A) through (D) of subsection (b)(1).
``(2) Requirements.--In adopting standards under this
section, the Board shall consider the following:
``(A) Any model acts or regulations of the National
Association of Insurance Commissioners in each of the process
categories described in subparagraphs (A) through (D) of
subsection (b)(1).
``(B) Substantially similar standards followed by a
plurality of States, as reflected in existing State laws,
relating to the specific process categories described in
subparagraphs (A) through (D) of subsection (b)(1).
``(C) Any Federal law requirement related to specific
process categories described in subparagraphs (A) through (D)
of subsection (b)(1).
``(D) In the case of the adoption of any standard that
differs substantially from those referred to in subparagraphs
(A), (B), or (C), the Board shall provide evidence to the
Secretary that such standard is necessary to protect health
insurance consumers or promote speed to market or
administrative efficiency.
``(E) The criteria specified in clauses (i) through (iii)
of subsection (d)(2)(B).
``(d) Recommendations and Certification by Secretary.--
``(1) Recommendations.--Not later than 18 months after the
date on which all members of the Board are selected under
subsection (a), the Board shall recommend to the Secretary
the certification of the harmonized standards identified
pursuant to subsection (c).
``(2) Certification.--
``(A) In general.--Not later than 120 days after receipt of
the Board's recommendations under paragraph (1), the
Secretary shall certify the recommended harmonized standards
as provided for in subparagraph (B), and issue such standards
in the form of an interim final regulation.
``(B) Certification process.--The Secretary shall establish
a process for certifying the recommended harmonized standard,
by category, as recommended by the Board under this section.
Such process shall--
``(i) ensure that the certified standards for a particular
process area achieve regulatory harmonization with respect to
health plans on a national basis;
``(ii) ensure that the approved standards are the minimum
necessary, with regard to substance and quantity of
requirements, to protect health insurance consumers and
maintain a competitive regulatory environment; and
``(iii) ensure that the approved standards will not limit
the range of group health plan designs and insurance
products, such as catastrophic coverage only plans, health
savings accounts, and health maintenance organizations, that
might otherwise be available to consumers.
``(3) Effective date.--The standards certified by the
Secretary under paragraph (2) shall be effective on the date
that is 18 months after the date on which the Secretary
certifies the harmonized standards.
``(e) Termination.--The Board shall terminate and be
dissolved after making the recommendations to the Secretary
pursuant to subsection (d)(1).
``(f) Ongoing Review.--Not earlier than 3 years after the
termination of the Board under subsection (e), and not
earlier than every 3 years thereafter, the Secretary, in
consultation with the National Association of Insurance
Commissioners and the entities and constituencies represented
on the Board and the Advisory Panel, shall prepare and submit
to the appropriate committees of Congress a report that
assesses the effect of the harmonized standards on access,
cost, and health insurance market functioning. The Secretary
may, based on such report and applying the process
established for certification under subsection (d)(2)(B), in
consultation with the National Association of Insurance
Commissioners and the entities and constituencies represented
on the Board and the Advisory Panel, update the harmonized
standards through notice and comment rulemaking.
``(g) Publication.--
``(1) Listing.--The Secretary shall maintain an up to date
listing of all harmonized standards certified 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 certified 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 18
months after the certification by the Secretary of 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.

[[Page S4277]]

``(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 supercede 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 harmonized
standards under this subtitle.
``(4) No effect on preemption.--In no case shall this
subtitle be construed to limit or affect in any manner the
preemptive scope of sections 502 and 514 of the Employee
Retirement Income Security Act of 1974. In no case shall this
subtitle be construed to create any cause of action under
Federal or State law or enlarge or affect any remedy
available under the Employee Retirement Income Security Act
of 1974.
``(c) Effective Date.--This section shall apply beginning
on the date that is 18 months after the date on harmonized
standards are certified by the Secretary under this subtitle.

``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.--An eligible insurer may bring an action in
the district courts of the United States for injunctive or
other equitable relief against any officials or agents of a
nonadopting State in connection with any conduct or action,
or proposed conduct or action, by such officials or agents
which violates, or which would if undertaken violate, section
2933.
``(c) Direct Filing in Court of Appeals.--At the election
of the eligible insurer, an action may be brought under
subsection (b) directly in the United States Court of Appeals
for the circuit in which the nonadopting State is located by
the filing of a petition for review in such Court.
``(d) Expedited Review.--
``(1) District court.--In the case of an action brought in
a district court of the United States under subsection (b),
such court shall complete such action, including the issuance
of a judgment, prior to the end of the 120-day period
beginning on the date on which such action is filed, unless
all parties to such proceeding agree to an extension of such
period.
``(2) Court of appeals.--In the case of an action brought
directly in a United States Court of Appeal under subsection
(c), or in the case of an appeal of an action brought in a
district court under subsection (b), such Court shall
complete all action on the petition, including the issuance
of a judgment, prior to the end of the 60-day period
beginning on the date on which such petition is filed with
the Court, unless all parties to such proceeding agree to an
extension of such period.
``(e) Standard of Review.--A court in an action filed under
this section, shall render a judgment based on a review of
the merits of all questions presented in such action and
shall not defer to any conduct or action, or proposed conduct
or action, of a nonadopting State.

``SEC. 2935. AUTHORIZATION OF APPROPRIATIONS; RULE OF
CONSTRUCTION.

``(a) Authorization of Appropriations.--There are
authorized to be appropriated such sums as may be necessary
to carry out this subtitle.
``(b) Health Savings Accounts.--Nothing in this subtitle
shall be construed to inhibit the development of health
savings accounts pursuant to section 223 of the Internal
Revenue Code of 1986.''.

The PRESIDING OFFICER. The majority leader is recognized.
Mr. FRIST. With the authorization of the majority of the HELP
Committee members, I ask that the committee substitute be modified with
the changes that are at the desk.
The PRESIDING OFFICER. The substitute is so modified.
The committee amendment in the nature of a substitute, as modified,
is as follows:

(Purpose: In the nature of a substitute)

Strike all after the enacting clause and insert the
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS; PURPOSE.

(a) Short Title.--This Act may be cited as the ``Health
Insurance Marketplace Modernization and Affordability Act of
2006''.
(b) Table of Contents.--The table of contents is as
follows:

Sec. 1. Short title; table of contents; purposes.

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--MARKET RELIEF

Sec. 201. Market relief.

TITLE III--HARMONIZATION OF HEALTH INSURANCE STANDARDS

Sec. 301. Health Insurance Standards Harmonization.

(c) Purposes.--It is the purpose of this Act to--
(1) make more affordable health insurance options available
to small businesses, working families, and all Americans;
(2) assure effective State regulatory protection of the
interests of health insurance consumers; and
(3) create a more efficient and affordable health insurance
marketplace through collaborative development of uniform
regulatory standards.

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.

``SEC. 802. CERTIFICATION OF SMALL BUSINESS HEALTH PLANS.

``SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF
TRUSTEES.

[[Page S4278]]

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.--

``(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 2006.
``(B) Sole authority.--The board has sole authority under
the plan to approve applications for participation in the
plan and to contract with insurers.
``(c) Treatment of Franchises.--In the case of a group
health plan which is established and maintained by a
franchiser for a franchisor or for 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 franchisor were deemed to be the sponsor referred
to in section 801(b) and each franchisee were deemed to be a
member (of the sponsor) referred to in section 801(b); and
``(2) the requirements of section 804(a)(1) shall be deemed
met.
For purposes of this subsection the terms `franchisor' and
`franchisee' shall have the meanings given such terms for
purposes of sections 436.2(a) through 436.2(c) of title 16,
Code of Federal Regulations (including any such amendments to
such regulation after the date of enactment of this part).

``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.

``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 trustees 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, subject to subparagraph (B) and the
terms of this title.
``(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 that meets the
requirements of this part, 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 small
business health plan so long as any variation in such rates
for participating small employers complies with the
requirements of clause (ii), except that small business
health plans shall not be subject, in non-adopting states, to
subparagraphs (A)(ii) and (C) of section 2912(a)(2) of the
Public Health Service Act, and in adopting states, to any
State law that would have the effect of imposing requirements
as outlined in such subparagraphs (A)(ii) and (C); or
``(ii) varying contribution rates for participating small
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 small group 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 2006.
``(3) Exceptions regarding self-employed and large
employers.--
``(A) Self employed.--
``(i) In general.--Small business health plans with
participating employers who are self-employed individuals
(and their dependents) shall enroll such self-employed
participating employers in accordance with rating rules that
do not violate the rating rules for self-employed individuals
in the State in which such self-employed participating
employers are located.
``(ii) Guarantee issue.--Small business health plans with
participating employers who are self-employed individuals
(and their dependents) may decline to guarantee issue to such
participating employers in States in which guarantee issue is
not otherwise required for the self-employed in that State.
``(B) Large employers.--Small business health plans with
participating employers that are larger than small employers
(as defined in section 808(a)(10)) shall enroll such large
participating employers in accordance with rating rules that
do not violate the rating rules for large employers in the
State in which such large participating employers are
located.
``(4) 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

[[Page S4279]]

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 2006.
``(c) Domicile and Non-Domicile States.--
``(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 but in which the
insurer of the small business health plan in the domicile
State is not yet licensed, the following shall apply:
``(A) Temporary preemption.--If, upon the expiration of the
90-day period following the submission of a licensure
application by such insurer (that includes a certified copy
of an approved licensure application as submitted by such
insurer in the domicile State) to such State, such State has
not approved or denied such application, such State's health
insurance licensure laws shall be temporarily preempted and
the insurer shall be permitted to operate in such State,
subject to the following terms:
``(i) Application of non-domicile state law.--Except with
respect to licensure and with respect to the terms of
subtitle A of title XXIX of the Public Health Service Act
(relating to rating and benefits as added by the Health
Insurance Marketplace Modernization and Affordability Act of
2006), the laws and authority of the non-domicile State shall
remain in full force and effect.
``(ii) Revocation of preemption.--The preemption of a non-
domicile State's health insurance licensure laws pursuant to
this subparagraph, shall be terminated upon the occurrence of
either of the following:

``SEC. 806. REQUIREMENTS FOR APPLICATION AND RELATED
REQUIREMENTS.

``SEC. 807. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.

``SEC. 808. DEFINITIONS AND RULES OF CONSTRUCTION.

[[Page S4280]]

``(11) Trade association and professional association.--The
terms `trade association' and `professional association' mean
an entity that meets the requirements of section 1.501(c)(6)-
1 of title 26, Code of Federal Regulations (as in effect on
the date of enactment of this Act).
``(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.
``(c) Renewal.--Notwithstanding any provision of law to the
contrary, a participating employer in a small business health
plan shall not be deemed to be a plan sponsor in applying
requirements relating to coverage renewal.
``(d) Health Savings Accounts.--Nothing in this part shall
be construed to create any mandates for coverage of benefits
for HSA-qualified health plans that would require
reimbursements in violation of section 223(c)(2) of the
Internal Revenue Code of 1986.''.
(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 subtitle A of
title XXIX of the Public Health Service Act (as added by
title II of the Health Insurance Marketplace Modernization
and Affordability Act of 2006) (concerning health plan rating
and benefits) are met.''.
(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

SEC. 102. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

SEC. 103. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

(a) Effective Date.--The amendments made by this title
shall take effect 12 months 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 6 months 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 has control over 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--MARKET RELIEF

SEC. 201. 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 MODERNIZATION

``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--Market Relief

``PART I--RATING REQUIREMENTS

``SEC. 2911. DEFINITIONS.

[[Page S4281]]

intends to offer health insurance coverage consistent with
the Model Small Group Rating Rules or, as applicable,
transitional small group rating rules in a 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 Model Small Group
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); 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 Model Small
Group Rating Rules and an affirmation that such Rules are
included in the terms of such contract.
``(5) Health insurance coverage.--The term `health
insurance coverage' means any coverage issued in the small
group health insurance market, except that such term shall
not include excepted benefits (as defined in section
2791(c)).
``(6) Index rate.--The term `index rate' means for each
class of business with respect to the rating period for small
employers with similar case characteristics, the arithmetic
average of the applicable base premium rate and the
corresponding highest premium rate.
``(7) Model small group rating rules.--The term ` Model
Small Group Rating Rules' means the rules set forth in
section 2912(a)(2).
``(8) Nonadopting state.--The term `nonadopting State'
means a State that is not an adopting State.
``(9) 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).
``(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) Variation limits.--
``(A) Composite variation limit.--
``(i) In general.--The term `composite variation limit'
means the total variation in premium rates charged by a
health insurance issuer in the small group market as
permitted under applicable State law based on the following
factors or case characteristics:

``(I) Age.
``(II) Duration of coverage.
``(III) Claims experience.
``(IV) Health status.

``(ii) Use of factors.--With respect to the use of the
factors described in clause (i) in setting premium rates, a
health insurance issuer shall use one or both of the factors
described in subclauses (I) or (IV) of such clause and may
use the factors described in subclauses (II) or (III) of such
clause.
``(B) Total variation limit.--The term `total variation
limit' means the total variation in premium rates charged by
a health insurance issuer in the small group market as
permitted under applicable State law based on all factors and
case characteristics (as described in section 2912(a)(1)).

``SEC. 2912. RATING RULES.

``(a) Establishment of Minimum Standards for Premium
Variations and Model Small Group Rating Rules.--Not later
than 6 months after the date of enactment of this title, the
Secretary shall promulgate regulations establishing the
following Minimum Standards and Model Small Group Rating
Rules:
``(1) Minimum standards for premium variations.--
``(A) Composite variation limit.--The composite variation
limit shall not be less than 3:1.
``(B) Total variation limit.--The total variation limit
shall not be less than 5:1.
``(C) Prohibition on use of certain case characteristics.--
For purposes of this paragraph, in calculating the total
variation limit, the State shall not use case characteristics
other than those used in calculating the composite variation
limit and industry, geographic area, group size,
participation rate, class of business, and participation in
wellness programs.
``(2) Model small group rating rules.--The following apply
to an eligible insurer in a non-adopting State:
``(A) Premium rates.--Premium rates for small group health
benefit plans to which this title applies shall comply with
the following provisions relating to premiums, except as
provided for under subsection (b):
``(i) Variation in premium rates.--The plan may not vary
premium rates by more than the minimum standards provided for
under paragraph (1).
``(ii) Index rate.--The index rate for a rating period for
any class of business shall not exceed the index rate for any
other class of business by more than 20 percent, excluding
those classes of business related to association groups under
this title.
``(iii) Class of businesses.--With respect to a class of
business, the premium rates charged during a rating period to
small employers with similar case characteristics for the
same or similar coverage or the rates that could be charged
to such employers under the rating system for that class of
business, shall not vary from the index rate by more than 25
percent of the index rate under clause (ii).
``(iv) Increases for new rating periods.--The percentage
increase in the premium rate charged to a small employer for
a new rating period may not exceed the sum of the following:

``(I) The percentage change in the new business premium
rate measured from the first day of the prior rating period
to the first day of the new rating period. In the case of a
health benefit plan into which the small employer carrier is
no longer enrolling new small employers, the small employer
carrier shall use the percentage change in the base premium
rate, except that such change shall not exceed, on a
percentage basis, the change in the new business premium rate
for the most similar health benefit plan into which the small
employer carrier is actively enrolling new small employers.
``(II) Any adjustment, not to exceed 15 percent annually
and adjusted pro rata for rating periods of less then 1 year,
due to the claim experience, health status or duration of
coverage of the employees or dependents of the small employer
as determined from the small employer carrier's rate manual
for the class of business involved.
``(III) Any adjustment due to change in coverage or change
in the case characteristics of the small employer as
determined from the small employer carrier's rate manual for
the class of business.

[[Page S4282]]

for under subsection (a)(1) (concerning minimum standards for
premium variation), shall be deemed to be an adopting State
if the State complies with the transitional small group
rating rules as promulgated by the Secretary pursuant to
paragraph (1).
``(3) Transitioning of old business.--
``(A) In general.--In developing the transitional small
group rating rules under paragraph (1), the Secretary shall,
after consultation with the National Association of Insurance
Commissioners and representatives of insurers operating in
the small group health insurance market in non-adopting
States, promulgate special transition standards with respect
to independent rating classes for old and new business, to
the extent reasonably necessary to protect health insurance
consumers and to ensure a stable and fair transition for old
and new market entrants.
``(B) Period for operation of independent rating classes.--
In developing the special transition standards pursuant to
subparagraph (A), the Secretary shall permit a carrier in a
non-adopting State, at its option, to maintain independent
rating classes for old and new business for a period of up to
5 years, with the commencement of such 5-year period to begin
at such time, but not later than the date that is 3 years
after the date of enactment of this title, as the carrier
offers a book of business meeting the minimum standards for
premium variation provided for in subsection (a)(1) or the
transitional small group rating rules under paragraph (1).
``(4) Other transitional authority.--In developing the
transitional small group rating rules under paragraph (1),
the Secretary shall provide for the application of the
transitional small group rating rules in transition States as
the Secretary may determine necessary for a an effective
transition.
``(c) Market Re-Entry.--
``(1) In general.--Notwithstanding any other provision of
law, a health insurance issuer that has voluntarily withdrawn
from providing coverage in the small group market prior to
the date of enactment of the Health Insurance Marketplace
Modernization and Affordability Act of 2006 shall not be
excluded from re-entering such market on a date that is more
than 180 days after such date of enactment.
``(2) Termination.--The provision of this subsection shall
terminate on the date that is 24 months after the date of
enactment of the Health Insurance Marketplace Modernization
and Affordability Act of 2006.

``SEC. 2913. APPLICATION AND PREEMPTION.

``(a) Superseding of State Law.--
``(1) In general.--This part shall supersede any and all
State laws of a non-adopting State 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,
including with respect to coverage issued to a small employer
through a small business health plan, in a 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,
marketing, or implementing small group health insurance
coverage consistent with the Model Small Group Rating Rules
or transitional model small group rating rules; or
``(B) have the effect of retaliating against or otherwise
punishing in any respect 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.
``(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 supercede 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 Model Small
Group Rating Rules or transitional model small group rating
rules.
``(4) No effect on preemption.--In no case shall this part
be construed to limit or affect in any manner the preemptive
scope of sections 502 and 514 of the Employee Retirement
Income Security Act of 1974. In no case shall this part be
construed to create any cause of action under Federal or
State law or enlarge or affect any remedy available under the
Employee Retirement Income Security Act of 1974.
``(5) Preemption limited to rating.--Subsection (a) shall
not preempt any State law that does not have a reference to
or a connection with State rating rules that would otherwise
apply to eligible insurers.
``(c) Effective Date.--This section shall apply, at the
election of the eligible insurer, beginning in the first plan
year or the first calendar year following the issuance of the
final rules by the Secretary under the Model Small Group
Rating Rules or, as applicable, the Transitional Model Small
Group Rating Rules, but in no event earlier than the date
that is 12 months after the date of enactment of this title.

``SEC. 2914. CIVIL ACTIONS AND JURISDICTION.

``SEC. 2915. ONGOING REVIEW.

``PART II--AFFORDABLE PLANS

``SEC. 2921. DEFINITIONS.

[[Page S4283]]

have the meaning given the term `small group market' in
section 2791(e)(5).
``(7) 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 AFFORDABLE PLANS.

``SEC. 2923. APPLICATION AND PREEMPTION.

``(a) Superceding of State Law.--
``(1) In general.--This part shall supersede any and all
State laws insofar as such laws relate to mandates relating
to covered benefits, services, or categories of provider in
the health insurance market as applied to an eligible
insurer, or health insurance coverage issued by an eligible
insurer, including with respect to coverage issued to a small
business health plan, 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,
marketing, or implementing health insurance coverage
consistent with the Benefit Choice Standards, as provided for
in section 2922(a); or
``(B) have the effect of retaliating against or otherwise
punishing in any respect an eligible insurer for offering,
marketing, or implementing health insurance coverage
consistent with the Benefit Choice Standards.
``(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 supercede 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 Benefit Choice
Standards.
``(4) No effect on preemption.--In no case shall this part
be construed to limit or affect in any manner the preemptive
scope of sections 502 and 514 of the Employee Retirement
Income Security Act of 1974. In no case shall this part be
construed to create any cause of action under Federal or
State law or enlarge or affect any remedy available under the
Employee Retirement Income Security Act of 1974.
``(5) Preemption limited to benefits.--Subsection (a) shall
not preempt any State law that does not have a reference to
or a connection with State mandates regarding covered
benefits, services, or categories of providers that would
otherwise apply to eligible insurers.

``SEC. 2924. CIVIL ACTIONS AND JURISDICTION.

``(a) In General.--The courts of the United States shall
have exclusive jurisdiction over civil actions involving the
interpretation of this part.
``(b) Actions.--An eligible insurer may bring an action in
the district courts of the United States for injunctive or
other equitable relief against any officials or agents of a
nonadopting State in connection with any conduct or action,
or proposed conduct or action, by such officials or agents
which violates, or which would if undertaken violate, section
2923.
``(c) Direct Filing in Court of Appeals.--At the election
of the eligible insurer, an action may be brought under
subsection (b) directly in the United States Court of Appeals
for the circuit in which the nonadopting State is located by
the filing of a petition for review in such Court.
``(d) Expedited Review.--
``(1) District court.--In the case of an action brought in
a district court of the United States under subsection (b),
such court shall complete such action, including the issuance
of a judgment, prior to the end of the 120-day period
beginning on the date on which such action is filed, unless
all parties to such proceeding agree to an extension of such
period.
``(2) Court of appeals.--In the case of an action brought
directly in a United States Court of Appeal under subsection
(c), or in the case of an appeal of an action brought in a
district court under subsection (b), such Court shall
complete all action on the petition, including the issuance
of a judgment, prior to the end of the 60-day period
beginning on the date on which such petition is filed with
the Court, unless all parties to such proceeding agree to an
extension of such period.
``(e) Standard of Review.--A court in an action filed under
this section, shall render a judgment based on a review of
the merits of all questions presented in such action and
shall not defer to any conduct or action, or proposed conduct
or action, of a nonadopting State.

``SEC. 2925. RULES OF CONSTRUCTION.

``(a) In General.--Notwithstanding any other provision of
Federal or State law, a health insurance issuer in an
adopting State or an eligible insurer in a non-adopting State
may amend its existing policies to be consistent with the
terms of this subtitle (concerning rating and benefits).
``(b) Health Savings Accounts.--Nothing in this subtitle
shall be construed to create any mandates for coverage of
benefits for HSA-qualified health plans that would require
reimbursements in violation of section 223(c)(2) of the
Internal Revenue Code of 1986.''.

TITLE III--HARMONIZATION OF HEALTH INSURANCE STANDARDS

SEC. 301. HEALTH INSURANCE STANDARDS 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--Standards Harmonization

``SEC. 2931. DEFINITIONS.

[[Page S4284]]

``(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. 2932. HARMONIZED STANDARDS.

``(a) Board.--
``(1) Establishment.--Not later than 3 months after the
date of enactment of this title, the Secretary, in
consultation with the NAIC, shall establish the Health
Insurance Consensus Standards Board (referred to in this
subtitle as the `Board') to develop recommendations that
harmonize inconsistent State health insurance laws in
accordance with the procedures described in subsection (b).
``(2) Composition.--
``(A) In general.--The Board shall be composed of the
following voting members to be appointed by the Secretary
after considering the recommendations of professional
organizations representing the entities and constituencies
described in this paragraph:
``(i) Four State insurance commissioners as recommended by
the National Association of Insurance Commissioners, of which
2 shall be Democrats and 2 shall be Republicans, and of which
one shall be designated as the chairperson and one shall be
designated as the vice chairperson.
``(ii) Four representatives of State government, two of
which shall be governors of States and two of which shall be
State legislators, and two of which shall be Democrats and
two of which shall be Republicans.
``(iii) Four representatives of health insurers, of which
one shall represent insurers that offer coverage in the small
group market, one shall represent insurers that offer
coverage in the large group market, one shall represent
insurers that offer coverage in the individual market, and
one shall represent carriers operating in a regional market.
``(iv) Two representatives of insurance agents and brokers.
``(v) Two independent representatives of the American
Academy of Actuaries who have familiarity with the actuarial
methods applicable to health insurance.
``(B) Ex officio member.--A representative of the Secretary
shall serve as an ex officio member of the Board.
``(3) Advisory panel.--The Secretary shall establish an
advisory panel to provide advice to the Board, and shall
appoint its members after considering the recommendations of
professional organizations representing the entities and
constituencies identified in this paragraph:
``(A) Two representatives of small business health plans.
``(B) Two representatives of employers, of which one shall
represent small employers and one shall represent large
employers.
``(C) Two representatives of consumer organizations.
``(D) Two representatives of health care providers.
``(4) Qualifications.--The membership of the Board shall
include individuals with national recognition for their
expertise in health finance and economics, actuarial science,
health plans, providers of health services, and other related
fields, who provide a mix of different professionals, broad
geographic representation, and a balance between urban and
rural representatives.
``(5) Ethical disclosure.--The Secretary shall establish a
system for public disclosure by members of the Board of
financial and other potential conflicts of interest relating
to such members. Members of the Board shall be treated as
employees of Congress for purposes of applying title I of the
Ethics in Government Act of 1978 (Public Law 95-521).
``(6) Director and staff.--Subject to such review as the
Secretary deems necessary to assure the efficient
administration of the Board, the chair and vice-chair of the
Board may--
``(A) employ and fix the compensation of an Executive
Director (subject to the approval of the Comptroller General)
and such other personnel as may be necessary to carry out its
duties (without regard to the provisions of title 5, United
States Code, governing appointments in the competitive
service);
``(B) seek such assistance and support as may be required
in the performance of its duties from appropriate Federal
departments and agencies;
``(C) enter into contracts or make other arrangements, as
may be necessary for the conduct of the work of the Board
(without regard to section 3709 of the Revised Statutes (41
U.S.C. 5));
``(D) make advance, progress, and other payments which
relate to the work of the Board;
``(E) provide transportation and subsistence for persons
serving without compensation; and
``(F) prescribe such rules as it deems necessary with
respect to the internal organization and operation of the
Board.
``(7) Terms.--The members of the Board shall serve for the
duration of the Board. Vacancies in the Board shall be filled
as needed 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 Board shall identify and recommend
nationally harmonized standards for each of the following
process categories:
``(A) Form filing and rate filing.--Form and rate filing
standards shall be established which promote speed to market
and include the following defined areas for States that
require such filings:
``(i) Procedures for form and rate filing pursuant to a
streamlined administrative filing process.
``(ii) Timeframes for filings to be reviewed by a State if
review is required before they are deemed approved.
``(iii) Timeframes for an eligible insurer to respond to
State requests following its review.
``(iv) A process for an eligible insurer to self-certify.
``(v) State development of form and rate filing templates
that include only non-preempted State law and Federal law
requirements for eligible insurers with timely updates.
``(vi) Procedures for the resubmission of forms and rates.
``(vii) Disapproval rationale of a form or rate filing
based on material omissions or violations of non-preempted
State law or Federal law with violations cited and explained.
``(viii) For States that may require a hearing, a rationale
for hearings based on violations of non-preempted State law
or insurer requests.
``(B) Market conduct review.--Market conduct review
standards shall be developed which provide for the following:
``(i) Mandatory participation in national databases.
``(ii) The confidentiality of examination materials.
``(iii) The identification of the State agency with primary
responsibility for examinations.
``(iv) Consultation and verification of complaint data with
the eligible insurer prior to State actions.
``(v) Consistency of reporting requirements with the
recordkeeping and administrative practices of the eligible
insurer.
``(vi) Examinations that seek to correct material errors
and harmful business practices rather than infrequent errors.
``(vii) Transparency and publishing of the State's
examination standards.
``(viii) Coordination of market conduct analysis.
``(ix) Coordination and nonduplication between State
examinations of the same eligible insurer.
``(x) Rationale and protocols to be met before a full
examination is conducted.
``(xi) Requirements on examiners prior to beginning
examinations such as budget planning and work plans.
``(xii) Consideration of methods to limit examiners' fees
such as caps, competitive bidding, or other alternatives.
``(xiii) Reasonable fines and penalties for material errors
and harmful business practices.
``(C) Prompt payment of claims.--The Board shall establish
prompt payment standards for eligible insurers based on
standards similar to those applicable to the Social Security
Act as set forth in section 1842(c)(2) of such Act (42 U.S.C.
1395u(c)(2)). Such prompt payment standards shall be
consistent with the timing and notice requirements of the
claims procedure rules to be specified under subparagraph
(D), and shall include appropriate exceptions such as for
fraud, nonpayment of premiums, or late submission of claims.
``(D) Internal review.--The Board shall establish standards
for claims procedures for eligible insurers that are
consistent with the requirements relating to initial claims
for benefits and appeals of claims for benefits under the
Employee Retirement Income Security Act of 1974 as set forth
in section 503 of such Act (29 U.S.C. 1133) and the
regulations thereunder.
``(2) Recommendations.--The Board shall recommend
harmonized standards for each element of the categories
described in subparagraph (A) through (D) of paragraph (1)
within each such market. Notwithstanding the previous
sentence, the Board shall not recommend any harmonized
standards that disrupt, expand, or duplicate the covered
benefit, service, or category of provider mandate standards
provided for in section 2922.
``(c) Process for Identifying Harmonized Standards.--
``(1) In general.--The Board shall develop recommendations
to harmonize inconsistent State insurance laws with respect
to each of the process categories described in subparagraphs
(A) through (D) of subsection (b)(1).
``(2) Requirements.--In adopting standards under this
section, the Board shall consider the following:
``(A) Any model acts or regulations of the National
Association of Insurance Commissioners in each of the process
categories described in subparagraphs (A) through (D) of
subsection (b)(1).
``(B) Substantially similar standards followed by a
plurality of States, as reflected in existing State laws,
relating to the specific process categories described in
subparagraphs (A) through (D) of subsection (b)(1).
``(C) Any Federal law requirement related to specific
process categories described in subparagraphs (A) through (D)
of subsection (b)(1).
``(D) In the case of the adoption of any standard that
differs substantially from those referred to in subparagraphs
(A), (B), or (C), the Board shall provide evidence to the
Secretary that such standard is necessary to protect health
insurance consumers or promote speed to market or
administrative efficiency.

[[Page S4285]]

``(E) The criteria specified in clauses (i) through (iii)
of subsection (d)(2)(B).
``(d) Recommendations and Certification by Secretary.--
``(1) Recommendations.--Not later than 18 months after the
date on which all members of the Board are selected under
subsection (a), the Board shall recommend to the Secretary
the certification of the harmonized standards identified
pursuant to subsection (c).
``(2) Certification.--
``(A) In general.--Not later than 120 days after receipt of
the Board's recommendations under paragraph (1), the
Secretary shall certify the recommended harmonized standards
as provided for in subparagraph (B), and issue such standards
in the form of an interim final regulation.
``(B) Certification process.--The Secretary shall establish
a process for certifying the recommended harmonized standard,
by category, as recommended by the Board under this section.
Such process shall--
``(i) ensure that the certified standards for a particular
process area achieve regulatory harmonization with respect to
health plans on a national basis;
``(ii) ensure that the approved standards are the minimum
necessary, with regard to substance and quantity of
requirements, to protect health insurance consumers and
maintain a competitive regulatory environment; and
``(iii) ensure that the approved standards will not limit
the range of group health plan designs and insurance
products, such as catastrophic coverage only plans, health
savings accounts, and health maintenance organizations, that
might otherwise be available to consumers.
``(3) Effective date.--The standards certified by the
Secretary under paragraph (2) shall be effective on the date
that is 18 months after the date on which the Secretary
certifies the harmonized standards.
``(e) Termination.--The Board shall terminate and be
dissolved after making the recommendations to the Secretary
pursuant to subsection (d)(1).
``(f) Ongoing Review.--Not earlier than 3 years after the
termination of the Board under subsection (e), and not
earlier than every 3 years thereafter, the Secretary, in
consultation with the National Association of Insurance
Commissioners and the entities and constituencies represented
on the Board and the Advisory Panel, shall prepare and submit
to the appropriate committees of Congress a report that
assesses the effect of the harmonized standards on access,
cost, and health insurance market functioning. The Secretary
may, based on such report and applying the process
established for certification under subsection (d)(2)(B), in
consultation with the National Association of Insurance
Commissioners and the entities and constituencies represented
on the Board and the Advisory Panel, update the harmonized
standards through notice and comment rulemaking.
``(g) Publication.--
``(1) Listing.--The Secretary shall maintain an up to date
listing of all harmonized standards certified 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 certified 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 18
months after the certification by the Secretary of 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 certified under
this subtitle shall supersede any and all State laws of a
non-adopting State 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, including with respect to coverage issued to a small
business health plan, 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,
marketing, or implementing health insurance coverage
consistent with the harmonized standards; or
``(B) have the effect of retaliating against or otherwise
punishing in any respect an eligible insurer for offering,
marketing, or implementing health insurance coverage
consistent with the harmonized standards under this subtitle.
``(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 supersede 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 harmonized
standards under this subtitle.
``(4) Non-application where consistent with market conduct
examination harmonized standard.--Subsection (a)(1) shall not
supersede any State law of a nonadopting State that relates
to the harmonized standards issued under section
2932(b)(1)(B) to the extent that the State agency responsible
for regulating insurance (or other applicable State agency)
exercises its authority under State law consistent with the
harmonized standards issued under section 2932(b)(1)(B).
``(5) No effect on preemption.--In no case shall this
subtitle be construed to limit or affect in any manner the
preemptive scope of sections 502 and 514 of the Employee
Retirement Income Security Act of 1974. In no case shall this
subtitle be construed to create any cause of action under
Federal or State law or enlarge or affect any remedy
available under the Employee Retirement Income Security Act
of 1974.
``(6) Preemption limited to harmonized standards.--
Subsection (a) shall not preempt any State law that does not
have a reference to or a connection with State requirements
for form and rate filing, market conduct reviews, prompt
payment of claims, or internal reviews that would otherwise
apply to eligible insurers.
``(c) Effective Date.--This section shall apply beginning
on the date that is 18 months after the date on harmonized
standards are certified by the Secretary under this subtitle.

``SEC. 2934. CIVIL ACTIONS AND JURISDICTION.

``(a) In General.--The courts of the United States shall
have exclusive jurisdiction over civil actions involving the
interpretation of this subtitle.
``(b) Actions.--An eligible insurer may bring an action in
the district courts of the United States for injunctive or
other equitable relief against any officials or agents of a
nonadopting State in connection with any conduct or action,
or proposed conduct or action, by such officials or agents
which violates, or which would if undertaken violate, section
2933.
``(c) Direct Filing in Court of Appeals.--At the election
of the eligible insurer, an action may be brought under
subsection (b) directly in the United States Court of Appeals
for the circuit in which the nonadopting State is located by
the filing of a petition for review in such Court.
``(d) Expedited Review.--
``(1) District court.--In the case of an action brought in
a district court of the United States under subsection (b),
such court shall complete such action, including the issuance
of a judgment, prior to the end of the 120-day period
beginning on the date on which such action is filed, unless
all parties to such proceeding agree to an extension of such
period.
``(2) Court of appeals.--In the case of an action brought
directly in a United States Court of Appeal under subsection
(c), or in the case of an appeal of an action brought in a
district court under subsection (b), such Court shall
complete all action on the petition, including the issuance
of a judgment, prior to the end of the 60-day period
beginning on the date on which such petition is filed with
the Court, unless all parties to such proceeding agree to an
extension of such period.
``(e) Standard of Review.--A court in an action filed under
this section, shall render a judgment based on a review of
the merits of all questions presented in such action and
shall not defer to any conduct or action, or proposed conduct
or action, of a nonadopting State.

``SEC. 2935. AUTHORIZATION OF APPROPRIATIONS; RULE OF
CONSTRUCTION.

``(a) Authorization of Appropriations.--There are
authorized to be appropriated such sums as may be necessary
to carry out this subtitle.
``(b) Health Savings Accounts.--Nothing in this subtitle
shall be construed to create any mandates for coverage of
benefits for HSA-qualified health plans that would require
reimbursements in violation of section 223(c)(2) of the
Internal Revenue Code of 1986.''.

Amendment No. 3886

Mr. FRIST. I send a first-degree amendment to the desk and ask for
its consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Tennessee [Mr. Frist] proposes an
amendment No. 3886 to S. 1955, as modified.

Mr. FRIST. I ask unanimous consent that reading of the amendment be
with dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

At the end of the modified amendment add the following:
``This act shall become effective 1 day after enactment.''

Mr. FRIST. I ask for the yeas and nays.

[[Page S4286]]

The PRESIDING OFFICER. Is there a sufficient second?
There appears to be a sufficient second.
The yeas and nays were ordered.

Amendment No. 3887 to Amendment No. 3886

Mr. FRIST. I send a second-degree amendment to the desk.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Tennessee [Mr. Frist] proposes an
amendment numbered 3887 to amendment No. 3886.

Mr. FRIST. I ask unanimous consent that reading of the amendment be
dispensed with.
The PRESIDING OFFICER. Is there objection?
Mr. KENNEDY. Mr. President, I haven't had an opportunity to see the
amendment. I want to cooperate, but I would like to have reading of the
amendment.
The PRESIDING OFFICER. The clerk will read the amendment.
The assistant legislative clerk read as follows:

In the amendment strike ``1'' day and insert ``2'' days.

Mr. KENNEDY. I have no objection to waiving the reading.
Mr. FRIST. Was that the second-degree amendment?
The PRESIDING OFFICER. The second-degree amendment has been read.

Amendment No. 3888 to motion to recommit

Mr. FRIST. I now move to recommit the bill to the HELP Committee, and
I send that motion to the desk.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Tennessee [Mr. Frist] moves to recommit
the bill to the Committee on Health, Education, Labor, and
Pensions with instructions to report back forthwith with the
following:

(Purpose: In the nature of a substitute)

Strike all after the enacting clause and insert the
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS; PURPOSE.

(a) Short Title.--This Act may be cited as the ``Health
Insurance Marketplace Modernization and Affordability Act of
2006''.
(b) Table of Contents.--The table of contents is as
follows:

Sec. 1. Short title; table of contents; purposes.

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--MARKET RELIEF

Sec. 201. Market relief.

TITLE III--HARMONIZATION OF HEALTH INSURANCE STANDARDS

Sec. 301. Health Insurance Standards 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.

``SEC. 802. CERTIFICATION OF SMALL BUSINESS HEALTH PLANS.

``SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF
TRUSTEES.

[[Page S4287]]

``(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 2006.
``(B) Sole authority.--The board has sole authority under
the plan to approve applications for participation in the
plan and to contract with insurers.
``(c) Treatment of Franchises.--In the case of a group
health plan which is established and maintained by a
franchiser for a franchisor or for 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 franchisor were deemed to be the sponsor referred
to in section 801(b) and each franchisee were deemed to be a
member (of the sponsor) referred to in section 801(b); and
``(2) the requirements of section 804(a)(1) shall be deemed
met.
For purposes of this subsection the terms `franchisor' and
`franchisee' shall have the meanings given such terms for
purposes of sections 436.2(a) through 436.2(c) of title 16,
Code of Federal Regulations (including any such amendments to
such regulation after the date of enactment of this part).

``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.

``SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS,
CONTRIBUTION RATES, AND BENEFIT OPTIONS.

[[Page S4288]]

``SEC. 806. REQUIREMENTS FOR APPLICATION AND RELATED
REQUIREMENTS.

``SEC. 807. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.

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.

[[Page S4289]]

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 subtitle A of
title XXIX of the Public Health Service Act (as added by
title II of the Health Insurance Marketplace Modernization
and Affordability Act of 2006) (concerning health plan rating
and benefits) are met.''.
(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

SEC. 102. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

SEC. 103. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

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--MARKET RELIEF

SEC. 201. 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 MODERNIZATION

``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--Market Relief

``PART I--RATING REQUIREMENTS

``SEC. 2911. DEFINITIONS.

``In this part:
``(1) Adopting state.--The term `adopting State' means a
State that, with respect to the small group market, has
enacted small group rating rules that meet the minimum
standards set forth in section 2912(a)(1) or, as applicable,
transitional small group rating rules set forth in section
2912(b).
``(2) 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
insurance laws of such State.
``(3) Base premium rate.--The term `base premium rate'
means, for each class of business with respect to a rating
period, the lowest premium rate charged or that could have
been charged under a rating system for that class of business
by the small employer carrier to small employers with similar
case characteristics for health benefit plans with the same
or similar coverage
``(4) Eligible insurer.--The term `eligible insurer' means
a health insurance issuer that is licensed in a 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 Model Small Group Rating Rules or, as
applicable, transitional small group rating rules in a 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 Model Small Group
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); 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 Model Small
Group Rating Rules and an affirmation that such Rules are
included in the terms of such contract.
``(5) Health insurance coverage.--The term `health
insurance coverage' means any coverage issued in the small
group health insurance market, except that such term shall
not include excepted benefits (as defined in section
2791(c)).
``(6) Index rate.--The term `index rate' means for each
class of business with respect to the rating period for small
employers with similar case characteristics, the arithmetic
average of the applicable base premium rate and the
corresponding highest premium rate.

[[Page S4290]]

``(7) Model small group rating rules.--The term ` Model
Small Group Rating Rules' means the rules set forth in
section 2912(a)(2).
``(8) Nonadopting state.--The term `nonadopting State'
means a State that is not an adopting State.
``(9) 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).
``(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) Variation limits.--
``(A) Composite variation limit.--
``(i) In general.--The term `composite variation limit'
means the total variation in premium rates charged by a
health insurance issuer in the small group market as
permitted under applicable State law based on the following
factors or case characteristics:

``(I) Age.
``(II) Duration of coverage.
``(III) Claims experience.
``(IV) Health status.

``SEC. 2912. RATING RULES.

``(v) Uniform application of adjustments.--Adjustments in
premium rates for claim experience, health status, or
duration of coverage shall not be charged to individual
employees or dependents. Any such adjustment shall be applied
uniformly to the rates charged for all employees and
dependents of the small employer.
``(vi) Prohibition on use of certain case characteristic.--
A small employer carrier shall not utilize case
characteristics, other than those permitted under paragraph
(1)(C), without the prior approval of the applicable State
authority.
``(vii) Consistent application of factors.--Small employer
carriers shall apply rating factors, including case
characteristics, consistently with respect to all small
employers in a class of business. Rating factors shall
produce premiums for identical groups which differ only by
the amounts attributable to plan design and do not reflect
differences due to the nature of the groups assumed to select
particular health benefit plans.
``(viii) Treatment of plans as having same rating period.--
A small employer carrier shall treat all health benefit plans
issued or renewed in the same calendar month as having the
same rating period.
``(ix) Require compliance.--Premium rates for small
business health benefit plans shall comply with the
requirements of this subsection notwithstanding any
assessments paid or payable by a small employer carrier as
required by a State's small employer carrier reinsurance
program.
``(B) Establishment of separate class of business.--Subject
to subparagraph (C), a small employer carrier may establish a
separate class of business only to reflect substantial
differences in expected claims experience or administrative
costs related to the following:
``(i) The small employer carrier uses more than one type of
system for the marketing and sale of health benefit plans to
small employers.
``(ii) The small employer carrier has acquired a class of
business from another small employer carrier.
``(iii) The small employer carrier provides coverage to one
or more association groups that meet the requirements of this
title.
``(C) Limitation.--A small employer carrier may establish
up to 9 separate classes of business under subparagraph (B),
excluding those classes of business related to association
groups under this title.
``(D) Limitation on transfers.--A small employer carrier
shall not transfer a small employer involuntarily into or out
of a class of business. A small employer carrier shall not
offer to transfer a small employer into or out of a class of
business unless such offer is made to transfer all small
employers in the class of business without regard to case
characteristics, claim experience, health status or duration
of coverage since issue.
``(b) Transitional Model Small Group Rating Rules.--
``(1) In general.--Not later than 6 months after the date
of enactment of this title and to the extent necessary to
provide for a graduated transition to the minimum standards
for premium variation as provided for in subsection (a)(1),
the Secretary, in consultation with the National Association
of Insurance Commissioners (NAIC), shall promulgate State-
specific transitional small group rating rules in accordance
with this subsection, which shall be applicable with respect
to non-adopting States and eligible insurers operating in
such States for a period of not to exceed 3 years from the
date of the promulgation of the minimum standards for premium
variation pursuant to subsection (a).
``(2) Compliance with transitional model small group rating
rules.--During the transition period described in paragraph
(1), a State that, on the date of enactment of this title,
has in effect a small group rating rules methodology that
allows for a variation that is less than the variation
provided for under subsection (a)(1) (concerning minimum
standards for premium variation), shall be deemed to be an
adopting State if the State complies with the transitional
small group rating rules as promulgated by the Secretary
pursuant to paragraph (1).
``(3) Transitioning of old business.--
``(A) In general.--In developing the transitional small
group rating rules under paragraph (1), the Secretary shall,
after consultation with the National Association of Insurance
Commissioners and representatives of insurers operating in
the small group health insurance market in non-adopting
States, promulgate special transition standards with respect
to independent rating classes for old and new business, to
the extent reasonably necessary to protect health insurance
consumers and to ensure a stable and fair transition for old
and new market entrants.
``(B) Period for operation of independent rating classes.--
In developing the special transition standards pursuant to
subparagraph (A), the Secretary shall permit a carrier in a
non-adopting State, at its option, to maintain independent
rating classes for old and new business for a period of up to
5 years, with the commencement of such 5-year period to begin
at such time, but not later than the date that is 3 years
after the date of enactment of this title, as the carrier
offers a book of business meeting the minimum standards for
premium variation provided for in subsection (a)(1) or the
transitional small group rating rules under paragraph (1).
``(4) Other transitional authority.--In developing the
transitional small group rating rules under paragraph (1),
the Secretary

[[Page S4291]]

shall provide for the application of the transitional small
group rating rules in transition States as the Secretary may
determine necessary for a an effective transition.
``(c) Market Re-Entry.--
``(1) In general.--Notwithstanding any other provision of
law, a health insurance issuer that has voluntarily withdrawn
from providing coverage in the small group market prior to
the date of enactment of the Health Insurance Marketplace
Modernization and Affordability Act of 2006 shall not be
excluded from re-entering such market on a date that is more
than 180 days after such date of enactment.
``(2) Termination.--The provision of this subsection shall
terminate on the date that is 24 months after the date of
enactment of the Health Insurance Marketplace Modernization
and Affordability Act of 2006.

``SEC. 2913. APPLICATION AND PREEMPTION.

``(a) Superseding of State Law.--
``(1) In general.--This part shall supersede any and all
State laws of a non-adopting State 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,
including with respect to coverage issued to a small employer
through a small business health plan, in a 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,
marketing, or implementing small group health insurance
coverage consistent with the Model Small Group Rating Rules
or transitional model small group rating rules; or
``(B) have the effect of retaliating against or otherwise
punishing in any respect 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.
``(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 supercede 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 Model Small
Group Rating Rules or transitional model small group rating
rules.
``(4) No effect on preemption.--In no case shall this part
be construed to limit or affect in any manner the preemptive
scope of sections 502 and 514 of the Employee Retirement
Income Security Act of 1974. In no case shall this part be
construed to create any cause of action under Federal or
State law or enlarge or affect any remedy available under the
Employee Retirement Income Security Act of 1974.
``(5) Preemption limited to rating.--Subsection (a) shall
not preempt any State law that does not have a reference to
or a connection with State rating rules that would otherwise
apply to eligible insurers.
``(c) Effective Date.--This section shall apply, at the
election of the eligible insurer, beginning in the first plan
year or the first calendar year following the issuance of the
final rules by the Secretary under the Model Small Group
Rating Rules or, as applicable, the Transitional Model Small
Group Rating Rules, but in no event earlier than the date
that is 12 months after the date of enactment of this title.

``SEC. 2914. CIVIL ACTIONS AND JURISDICTION.

``SEC. 2915. ONGOING REVIEW.

``PART II--AFFORDABLE PLANS

``SEC. 2921. DEFINITIONS.

``SEC. 2922. OFFERING AFFORDABLE PLANS.

[[Page S4292]]

covered by a State employee coverage plan in one of the 5
most populous States as are in effect in the calendar year in
which such enhanced option is offered.
``(4) Publication of benefits.--Not later than 3 months
after the date of enactment of this title, and on the first
day of every calendar year thereafter, the Secretary shall
publish in the Federal Register such covered benefits,
services, and categories of providers covered in that
calendar year by the State employee coverage plans in the 5
most populous States.
``(b) Effective Dates.--
``(1) Small business health plans.--With respect to health
insurance provided to participating employers of small
business health plans, the requirements of this part
(concerning lower cost plans) shall apply beginning on the
date that is 12 months after the date of enactment of this
title.
``(2) Non-association coverage.--With respect to health
insurance provided to groups or individuals other than
participating employers of small business health plans, the
requirements of this part shall apply beginning on the date
that is 15 months after the date of enactment of this title.

``SEC. 2923. APPLICATION AND PREEMPTION.

``SEC. 2924. CIVIL ACTIONS AND JURISDICTION.

``(a) In General.--The courts of the United States shall
have exclusive jurisdiction over civil actions involving the
interpretation of this part.
``(b) Actions.--An eligible insurer may bring an action in
the district courts of the United States for injunctive or
other equitable relief against any officials or agents of a
nonadopting State in connection with any conduct or action,
or proposed conduct or action, by such officials or agents
which violates, or which would if undertaken violate, section
2923.
``(c) Direct Filing in Court of Appeals.--At the election
of the eligible insurer, an action may be brought under
subsection (b) directly in the United States Court of Appeals
for the circuit in which the nonadopting State is located by
the filing of a petition for review in such Court.
``(d) Expedited Review.--
``(1) District court.--In the case of an action brought in
a district court of the United States under subsection (b),
such court shall complete such action, including the issuance
of a judgment, prior to the end of the 120-day period
beginning on the date on which such action is filed, unless
all parties to such proceeding agree to an extension of such
period.
``(2) Court of appeals.--In the case of an action brought
directly in a United States Court of Appeal under subsection
(c), or in the case of an appeal of an action brought in a
district court under subsection (b), such Court shall
complete all action on the petition, including the issuance
of a judgment, prior to the end of the 60-day period
beginning on the date on which such petition is filed with
the Court, unless all parties to such proceeding agree to an
extension of such period.
``(e) Standard of Review.--A court in an action filed under
this section, shall render a judgment based on a review of
the merits of all questions presented in such action and
shall not defer to any conduct or action, or proposed conduct
or action, of a nonadopting State.

``SEC. 2925. RULES OF CONSTRUCTION.

``(a) In General.--Notwithstanding any other provision of
Federal or State law, a health insurance issuer in an
adopting State or an eligible insurer in a non-adopting State
may amend its existing policies to be consistent with the
terms of this subtitle (concerning rating and benefits).
``(b) Health Savings Accounts.--Nothing in this subtitle
shall be construed to create any mandates for coverage of
benefits for HSA-qualified health plans that would require
reimbursements in violation of section 223(c)(2) of the
Internal Revenue Code of 1986.''.

TITLE III--HARMONIZATION OF HEALTH INSURANCE STANDARDS

SEC. 301. HEALTH INSURANCE STANDARDS 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--Standards Harmonization

``SEC. 2931. DEFINITIONS.

``SEC. 2932. HARMONIZED STANDARDS.

[[Page S4293]]

that offer coverage in the small group market, one shall
represent insurers that offer coverage in the large group
market, one shall represent insurers that offer coverage in
the individual market, and one shall represent carriers
operating in a regional market.
``(iv) Two representatives of insurance agents and brokers.
``(v) Two independent representatives of the American
Academy of Actuaries who have familiarity with the actuarial
methods applicable to health insurance.
``(B) Ex officio member.--A representative of the Secretary
shall serve as an ex officio member of the Board.
``(3) Advisory panel.--The Secretary shall establish an
advisory panel to provide advice to the Board, and shall
appoint its members after considering the recommendations of
professional organizations representing the entities and
constituencies identified in this paragraph:
``(A) Two representatives of small business health plans.
``(B) Two representatives of employers, of which one shall
represent small employers and one shall represent large
employers.
``(C) Two representatives of consumer organizations.
``(D) Two representatives of health care providers.
``(4) Qualifications.--The membership of the Board shall
include individuals with national recognition for their
expertise in health finance and economics, actuarial science,
health plans, providers of health services, and other related
fields, who provide a mix of different professionals, broad
geographic representation, and a balance between urban and
rural representatives.
``(5) Ethical disclosure.--The Secretary shall establish a
system for public disclosure by members of the Board of
financial and other potential conflicts of interest relating
to such members. Members of the Board shall be treated as
employees of Congress for purposes of applying title I of the
Ethics in Government Act of 1978 (Public Law 95-521).
``(6) Director and staff.--Subject to such review as the
Secretary deems necessary to assure the efficient
administration of the Board, the chair and vice-chair of the
Board may--
``(A) employ and fix the compensation of an Executive
Director (subject to the approval of the Comptroller General)
and such other personnel as may be necessary to carry out its
duties (without regard to the provisions of title 5, United
States Code, governing appointments in the competitive
service);
``(B) seek such assistance and support as may be required
in the performance of its duties from appropriate Federal
departments and agencies;
``(C) enter into contracts or make other arrangements, as
may be necessary for the conduct of the work of the Board
(without regard to section 3709 of the Revised Statutes (41
U.S.C. 5));
``(D) make advance, progress, and other payments which
relate to the work of the Board;
``(E) provide transportation and subsistence for persons
serving without compensation; and
``(F) prescribe such rules as it deems necessary with
respect to the internal organization and operation of the
Board.
``(7) Terms.--The members of the Board shall serve for the
duration of the Board. Vacancies in the Board shall be filled
as needed 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 Board shall identify and recommend
nationally harmonized standards for each of the following
process categories:
``(A) Form filing and rate filing.--Form and rate filing
standards shall be established which promote speed to market
and include the following defined areas for States that
require such filings:
``(i) Procedures for form and rate filing pursuant to a
streamlined administrative filing process.
``(ii) Timeframes for filings to be reviewed by a State if
review is required before they are deemed approved.
``(iii) Timeframes for an eligible insurer to respond to
State requests following its review.
``(iv) A process for an eligible insurer to self-certify.
``(v) State development of form and rate filing templates
that include only non-preempted State law and Federal law
requirements for eligible insurers with timely updates.
``(vi) Procedures for the resubmission of forms and rates.
``(vii) Disapproval rationale of a form or rate filing
based on material omissions or violations of non-preempted
State law or Federal law with violations cited and explained.
``(viii) For States that may require a hearing, a rationale
for hearings based on violations of non-preempted State law
or insurer requests.
``(B) Market conduct review.--Market conduct review
standards shall be developed which provide for the following:
``(i) Mandatory participation in national databases.
``(ii) The confidentiality of examination materials.
``(iii) The identification of the State agency with primary
responsibility for examinations.
``(iv) Consultation and verification of complaint data with
the eligible insurer prior to State actions.
``(v) Consistency of reporting requirements with the
recordkeeping and administrative practices of the eligible
insurer.
``(vi) Examinations that seek to correct material errors
and harmful business practices rather than infrequent errors.
``(vii) Transparency and publishing of the State's
examination standards.
``(viii) Coordination of market conduct analysis.
``(ix) Coordination and nonduplication between State
examinations of the same eligible insurer.
``(x) Rationale and protocols to be met before a full
examination is conducted.
``(xi) Requirements on examiners prior to beginning
examinations such as budget planning and work plans.
``(xii) Consideration of methods to limit examiners' fees
such as caps, competitive bidding, or other alternatives.
``(xiii) Reasonable fines and penalties for material errors
and harmful business practices.
``(C) Prompt payment of claims.--The Board shall establish
prompt payment standards for eligible insurers based on
standards similar to those applicable to the Social Security
Act as set forth in section 1842(c)(2) of such Act (42 U.S.C.
1395u(c)(2)). Such prompt payment standards shall be
consistent with the timing and notice requirements of the
claims procedure rules to be specified under subparagraph
(D), and shall include appropriate exceptions such as for
fraud, nonpayment of premiums, or late submission of claims.
``(D) Internal review.--The Board shall establish standards
for claims procedures for eligible insurers that are
consistent with the requirements relating to initial claims
for benefits and appeals of claims for benefits under the
Employee Retirement Income Security Act of 1974 as set forth
in section 503 of such Act (29 U.S.C. 1133) and the
regulations thereunder.
``(2) Recommendations.--The Board shall recommend
harmonized standards for each element of the categories
described in subparagraph (A) through (D) of paragraph (1)
within each such market. Notwithstanding the previous
sentence, the Board shall not recommend any harmonized
standards that disrupt, expand, or duplicate the covered
benefit, service, or category of provider mandate standards
provided for in section 2922.
``(c) Process for Identifying Harmonized Standards.--
``(1) In general.--The Board shall develop recommendations
to harmonize inconsistent State insurance laws with respect
to each of the process categories described in subparagraphs
(A) through (D) of subsection (b)(1).
``(2) Requirements.--In adopting standards under this
section, the Board shall consider the following:
``(A) Any model acts or regulations of the National
Association of Insurance Commissioners in each of the process
categories described in subparagraphs (A) through (D) of
subsection (b)(1).
``(B) Substantially similar standards followed by a
plurality of States, as reflected in existing State laws,
relating to the specific process categories described in
subparagraphs (A) through (D) of subsection (b)(1).
``(C) Any Federal law requirement related to specific
process categories described in subparagraphs (A) through (D)
of subsection (b)(1).
``(D) In the case of the adoption of any standard that
differs substantially from those referred to in subparagraphs
(A), (B), or (C), the Board shall provide evidence to the
Secretary that such standard is necessary to protect health
insurance consumers or promote speed to market or
administrative efficiency.
``(E) The criteria specified in clauses (i) through (iii)
of subsection (d)(2)(B).
``(d) Recommendations and Certification by Secretary.--
``(1) Recommendations.--Not later than 18 months after the
date on which all members of the Board are selected under
subsection (a), the Board shall recommend to the Secretary
the certification of the harmonized standards identified
pursuant to subsection (c).
``(2) Certification.--
``(A) In general.--Not later than 120 days after receipt of
the Board's recommendations under paragraph (1), the
Secretary shall certify the recommended harmonized standards
as provided for in subparagraph (B), and issue such standards
in the form of an interim final regulation.
``(B) Certification process.--The Secretary shall establish
a process for certifying the recommended harmonized standard,
by category, as recommended by the Board under this section.
Such process shall--
``(i) ensure that the certified standards for a particular
process area achieve regulatory harmonization with respect to
health plans on a national basis;
``(ii) ensure that the approved standards are the minimum
necessary, with regard to substance and quantity of
requirements, to protect health insurance consumers and
maintain a competitive regulatory environment; and
``(iii) ensure that the approved standards will not limit
the range of group health plan

[[Page S4294]]

designs and insurance products, such as catastrophic coverage
only plans, health savings accounts, and health maintenance
organizations, that might otherwise be available to
consumers.
``(3) Effective date.--The standards certified by the
Secretary under paragraph (2) shall be effective on the date
that is 18 months after the date on which the Secretary
certifies the harmonized standards.
``(e) Termination.--The Board shall terminate and be
dissolved after making the recommendations to the Secretary
pursuant to subsection (d)(1).
``(f) Ongoing Review.--Not earlier than 3 years after the
termination of the Board under subsection (e), and not
earlier than every 3 years thereafter, the Secretary, in
consultation with the National Association of Insurance
Commissioners and the entities and constituencies represented
on the Board and the Advisory Panel, shall prepare and submit
to the appropriate committees of Congress a report that
assesses the effect of the harmonized standards on access,
cost, and health insurance market functioning. The Secretary
may, based on such report and applying the process
established for certification under subsection (d)(2)(B), in
consultation with the National Association of Insurance
Commissioners and the entities and constituencies represented
on the Board and the Advisory Panel, update the harmonized
standards through notice and comment rulemaking.
``(g) Publication.--
``(1) Listing.--The Secretary shall maintain an up to date
listing of all harmonized standards certified 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 certified 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 18
months after the certification by the Secretary of 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 certified under
this subtitle shall supersede any and all State laws of a
non-adopting State 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, including with respect to coverage issued to a small
business health plan, 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,
marketing, or implementing health insurance coverage
consistent with the harmonized standards; or
``(B) have the effect of retaliating against or otherwise
punishing in any respect an eligible insurer for offering,
marketing, or implementing health insurance coverage
consistent with the harmonized standards under this subtitle.
``(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 supersede 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 harmonized
standards under this subtitle.
``(4) Non-application where consistent with market conduct
examination harmonized standard.--Subsection (a)(1) shall not
supersede any State law of a nonadopting State that relates
to the harmonized standards issued under section
2932(b)(1)(B) to the extent that the State agency responsible
for regulating insurance (or other applicable State agency)
exercises its authority under State law consistent with the
harmonized standards issued under section 2932(b)(1)(B).
``(5) No effect on preemption.--In no case shall this
subtitle be construed to limit or affect in any manner the
preemptive scope of sections 502 and 514 of the Employee
Retirement Income Security Act of 1974. In no case shall this
subtitle be construed to create any cause of action under
Federal or State law or enlarge or affect any remedy
available under the Employee Retirement Income Security Act
of 1974.
``(6) Preemption limited to harmonized standards.--
Subsection (a) shall not preempt any State law that does not
have a reference to or a connection with State requirements
for form and rate filing, market conduct reviews, prompt
payment of claims, or internal reviews that would otherwise
apply to eligible insurers.
``(c) Effective Date.--This section shall apply beginning
on the date that is 18 months and one day after the date on
harmonized standards are certified by the Secretary under
this subtitle.

``SEC. 2934. CIVIL ACTIONS AND JURISDICTION.

``SEC. 2935. AUTHORIZATION OF APPROPRIATIONS; RULE OF
CONSTRUCTION.

``(a) Authorization of Appropriations.--There are
authorized to be appropriated such sums as may be necessary
to carry out this subtitle.
``(b) Health Savings Accounts.--Nothing in this subtitle
shall be construed to create any mandates for coverage of
benefits for HSA-qualified health plans that would require
reimbursements in violation of section 223(c)(2) of the
Internal Revenue Code of 1986.''.

Mr. FRIST. I ask for the yeas and nays on the motion.
The PRESIDING OFFICER. Is there a sufficient second?
There appears to be a sufficient second.
The yeas and nays were ordered.

Amendment No. 3889

Mr. FRIST. I send a first-degree amendment to the desk.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Tennessee [Mr. Frist] proposes an
amendment numbered 3889 to the instructions to the motion to
recommit.

Mr. FRIST. I ask unanimous consent that reading of the amendment be
dispensed with.
Mr. KENNEDY. Mr. President, until I have a chance to see the
amendment, I will have to object.
The PRESIDING OFFICER. The clerk will read the amendment.
The assistant legislative clerk read as follows:

In the amendment strike the number ``3'' and insert the
number ``4''

Mr. KENNEDY. I withdraw my objection.
The PRESIDING OFFICER. The majority leader.
Mr. FRIST. Mr. President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There appears to be a sufficient second.
The yeas and nays were ordered.

Amendment No. 3890 to Amendment No. 3889

Mr. FRIST. I now send a second-degree amendment to the desk.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Tennessee [Mr. Frist] proposes an
amendment numbered 3890 to amendment No. 3889.

Mr. FRIST. I ask unanimous consent that reading of amendment be
dispensed with.

[[Page S4295]]

The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

At the end of the amendment add the following;
``This act shall become effective 3 days after enactment.''

Mr. FRIST. Mr. President, let me summarize or attempt to summarize
where we are in terms of what we just did and where we have been. After
a 96-to-2 vote on invoking cloture on the motion to proceed, we have
now finally proceeded to the small business health plans bill. We are
now at a point that we can begin debating the substance of this bill.
Chairman Enzi is here and is ready for relevant amendments to come
forward and be debated. He will have more to say on that shortly.
What is clear is that there have been attempts or suggestions that we
use this bill as a Christmas tree for all sorts of amendments, as well
intended as they might be, but amendments that don't relate to the
underlying bill.
Earlier this week, we began to address and tried to address issues
surrounding medical liability. We were unable to do so. We have now
proceeded to the small business bill, and it is my intention to stay on
that bill, with amendments related to the bill. This bill should have
strong, bipartisan support. As it plays out, we will see how strong
that bipartisan support may be.
Mr. DURBIN. Will the majority leader yield for a question?
Mr. FRIST. Yes.
Mr. DURBIN. I ask the majority leader to clarify something in his
remarks. He referred to amendments as ``Christmas tree amendments.''
There is one amendment on this side of the aisle that he supports on
stem cell research. If this is Health Care Week, it would seem that
this is a related issue. Does the majority leader characterize that
amendment as a ``Christmas tree amendment''?
Mr. FRIST. Mr. President, the issue of stem cells is a very important
issue. As my colleague knows, I am very committed to addressing that
particular issue.
What is very clear to me, as we started discussing health care on
Friday of last week--and it is now Wednesday--is that we need to
systematically take an issue, one by one, that is important to the
American people, that I have clearly laid out, starting with medical
liability, and then proceed to another medical liability bill and
proceed to small business, without jumping to other important issues.
There is a whole range of issues that affect cost, quality, research,
and affect people's lives and affect access to health care. But the
only way we are going to be able to address those in an intelligent,
effective, step-wise way is to take them one at a time, like medical
liability. We were unsuccessful there. We are now moving to small
business and focusing on that. There will be amendments, and we welcome
them. The chairman is here and ready to talk substance on those
amendments. Let's dispose of those and stay on small business. Then we
will go and look at a whole range of other issues on health care at an
appropriate time.
My intention is to go step-wise through this, with relevant
amendments. The chairman is willing to address that and address the
issue of small business health plans. We have 46 million people out
there who are uninsured today. This doesn't solve the problem, but it
fits very nicely with allowing the people out there who don't have
access to health care today, who work in small businesses, to have for
the first time the opportunity to get the reasonable, affordable health
care they simply don't have today. There are a million people--if we
pass this bill and it is signed by the President--who are uninsured who
will have the opportunity to have insurance.
Let me yield to our chairman because I do encourage our Members on
both sides of the aisle to come forward so that we can have substantive
debate on the small business health insurance issues out there, without
trying--because I know the other side wants to address many other
issues, as has been expressed over the last several days, which are
their priorities that they want to put before small business health
reform plans. But we are simply not going to do that.
Mr. KENNEDY. Well, Mr. President, I say with the greatest respect
that it is kind of interesting that the majority leader presents a
proposal to the Chamber on behalf of the human resources committee--and
as we know, under the Senate rules, that is entirely appropriate--and
then in the same breath he asks us to recommit the legislation back to
the committee, after he has just spoken for the committee, which
suggests that there is a parliamentary maneuver, which is now quite
apparent to all of us, that we are not going to have the opportunity to
even get a debate on small business assistance, because we have on this
side of the aisle the Durbin legislation dealing with relief for small
business which effectively we are precluded from having an opportunity
to offer.
If I understand the last sentence of the leader, he said we are going
to have to dispose of this and go this route before we consider any
other amendments. As I understand it from our Democratic leader, we
could have reduced those to four or five different amendments that deal
with the emergency penalties that some 8 million seniors are going to
pay on the prescription drug program, the issue of the ability of
Medicare to be able to negotiate lower prices, and the stem cell issue,
which my friend has commented on, and Senator Harkin and Senator
Feinstein, and I know the Senator from Tennessee understands the full
potential of this. But effectively, as I understand it, this is
Wednesday at 3 o'clock; we were here Wednesday morning. I have been
effectively here since 10 o'clock in the morning, and we have Wednesday
and Thursday and a full week where we can deal with these issues.
It just is troubling to many of us, when we went through this whole
argument a week or 10 days ago on the immigration issue, where we were
listening to those on that side of the aisle say: Let's have some
amendments. Now we hear from them that, no, we cannot. We want lots of
amendments on that, but we refuse to have amendments on this.
I daresay that the Senate rules permit debate on different
amendments. We have a set of rules out there. You can have an amendment
in the first or second degree, and you can have ultimate judgments and
decisions. I just want to mention at this time that the action that has
been taken now by the leader is effectively going to foreclose an
opportunity at this time, when we are having our health care debate, to
debate either stem cell research or relief for our senior citizens, who
will be paying the penalty because of the requirements of the
prescription drug program. We will be denied an opportunity to consider
reimportation or negotiation for lower prices. Those are effectively
issues that I think most Americans can understand. Certainly these are
issues which Members of this body are familiar with and not new issues.
We have not been able to get an opportunity.
I certainly regret that is the case because I think, with all
respect, as the CBO talks about, there are 48 million Americans without
health insurance. According to CBO, this is going to help solve it for
600,000, where we have the option with the Durbin proposal to solve it
for millions in small business. But we are denied that opportunity. It
is difficult for me to follow that kind of rationale, but we are where
we are. I regret that judgment and decision, but that is where we are.
The PRESIDING OFFICER. The Senator from Wyoming is recognized.
Mr. ENZI. Mr. President, I wish to comment a little bit on that. I
think there is plenty of blame to go around for any delays that are
happening around here. When we are talking about incorporating in this
bill, which deals with small business health plans, an opportunity to
give small businessmen a chance at negotiating in the market to bring
down costs, with an alternative being proposed--when we are being asked
to incorporate into this and put all the weight of the stem cell debate
or drug reimportation or Medicare Part D on top of this as a full-blown
debate, everybody in this body knows that any one of those would easily
take up not just a full week but probably 3 weeks because there would
be other kinds of motions and parliamentary objections and processes
that would drag any one of those out for that time.
The difficulty with being able to debate anything around here is the

[[Page S4296]]

length of time as a result of the right to offer any amendments that
anybody wants on any topic. So we do make some efforts to try to keep
them relevant. If we do cloture, then they are germane. Germane is a
much tougher test, but relevant is not any health care idea in the
whole world that could be amended and amended and amended and debated
and have processes put in against it that would keep us from ever
getting to a decision on small business health plans.
So we are trying to stay with small business health plans. I know
Senators Durbin and Lincoln have an alternate approach. The alternate
approach ought to be voted on, but the alternate approach should not be
voted on to the exclusion of ever getting to a vote on this. So we
don't want to have just one of them vote and one side feel very good
because they got a vote for that one and the other side never gets to
their vote. We are trying to find a way to make sure there are votes on
both sides on the issues and that not just one side is taking the tough
votes but that we do something so we can get to a conclusion for small
business. Yes, we are trying to focus this on the problems of small
business.
I would like to speak a little bit on the managers' amendment that is
before us because there are some changes to the bill that I think the
other side of the aisle will like. In most respects, this amendment
corresponds very closely to the underlying bill reported out of the
HELP Committee in March. It enables small businesses to pool together
to save costs and increase access. It allows small business health
plans and other plans to offer more affordable coverage options. It
will also help streamline the current hodgepodge of health insurance
regulation. However, the managers' amendment does make a number of new
and important changes to the bill, most importantly in the area of
premium rating.
Before I address the managers' amendment, I want to first emphasize,
as I have throughout this debate, that I am eager to start sorting the
amendments my colleagues might want to offer. As we start the amendment
process, I look forward to debating all amendments from my colleagues
on both sides of the aisle that are relevant--I mean relevant to the
goal of more affordable health insurance for small business owners and
their employees and their families.
I have reviewed some of the amendments Members have filed and want to
offer. There are many that don't have any place on this bill and only
serve to obstruct or delay passage of the bill--amendments addressing
the energy efficiency of hybrid cars, Medicare benefits, hate crimes,
and environmental air standards. They don't have any place on this
bill. This bill is about health insurance for small business owners and
their families and their employees and their families. I stand ready
and willing to debate all relevant amendments to this bill.
For instance, Senator Snowe will file an amendment on the issue of
benefit mandates. Her amendment would ensure that benefits and services
which have been mandated by a majority of States would continue to
apply to small business health plans and other insurers. I know there
is a lot of strong feeling on all sides of this issue, and I look
forward to a lively and serious debate on it. I will have more to say
about the Snowe amendment later.
For now, I will focus on what we have done in the managers' amendment
to address the concerns raised by many Members of this Chamber. The
main change we have made is related to how health insurance premiums
are priced for small business. Most States do have rating laws. Those
laws limit the amount of variation between premiums charged to
different small businesses. Some States allow a great variation; some
States allow very little variation.
During debate on this bill yesterday, I heard my Democratic
colleagues make a number of speeches on this issue. They expressed
their concern about how the bill, as reported from our committee, would
affect the health insurance market in their States. They expressed
concerns about how the rating rules in our bill might affect businesses
with older workers or workers who have serious or chronic illnesses. I
also heard these concerns in private conversations with a number of my
colleagues over the past few weeks. I don't believe everybody should
have to pay exactly the same amount for health insurance. Rules like
that hurt young families and lower income workers. They get hurt
because they get priced out of the affordable health insurance market.
But I have listened to my colleagues. I have also consulted with some
of my colleagues on our committee and with Senator Nelson of Nebraska,
who coauthored this bill with me. I value his perspective as a former
State insurance commissioner. I also reviewed the bill Senators Durbin
and Lincoln have offered. I have talked with experts in the insurance
markets and insurance regulation, and they don't think the bill
Senators Durbin and Lincoln have offered would create new and
affordable options. In fact, some of those experts think that bill
would make things worse, not better.
I will speak some other time in more detail on that. I prefer to go
in the direction that we know can work. We know small business health
plans will work because they worked in the past before the thicket of
conflicting State laws made it too cumbersome to offer such plans.
Our committee heard testimony on this last year, but Senator Nelson
and I looked at the Durbin-Lincoln bill anyway to see if there were
some ideas we could harvest, some ideas we could incorporate.
After talking with Senator Nelson and my colleagues on the committee,
we have developed an amendment that should address the concerns of most
of my colleagues on the issue of rating.
The managers' amendment would do two things: First, it would permit
States to limit the allowable variation in premiums to a much narrower
ratio between the highest and the lowest rates as compared to the bill
my committee originally reported.
Second, it would allow States to continue to require community rating
of the health insurance policies. What that means is that the bill
would allow States to prohibit small business health plans or insurance
companies from using the health status of a group of workers as a
factor in determining the group's premium.
If States want to allow health status as a factor, they can allow it;
if they don't, they can disallow it. This means two things: First of
all, most States would be unaffected by the new rating threshold of the
managers' amendment. As a matter of fact, we estimate the rating
provisions would have no impact on approximately 40 States. The vast
majority of those States have reasonably competitive markets, although
those markets would be even more competitive if we allow for the
creation of small business health plans, allowing small business to
band together across State lines to increase their leverage and to cut
administrative costs. That is a huge factor.
Second, the managers' amendment preserves much of our original intent
to create greater affordability for low-wage workers and for younger
workers and their families, but it also allows States to retain
reasonable limits on what high-risk groups can be charged. The
managers' amendment sets a different threshold for allowable variation
in premiums.
The new threshold is similar to the model act published by the
National Association of Insurance Commissioners and updated in 2000,
its most recent model, and it is what Senators Durbin and Lincoln used
as the basis of their bill.
So under the managers' amendment, the States use community rating and
could continue to use community rating. That means these States could
still prohibit the use of health status as a rating factor as long as
their system is adjusted to the point that it maintains affordability
for low-wage workers and young people and families.
Under the managers' amendment, States would also be permitted to
limit small business health plans and other insurers from setting rates
that vary by more than a 5-to-1 ratio. In other words, the highest rate
for a group in a particular insurance pool could not be more than five
times the lowest rate. That would ensure that the insurance pool has a
better and more stable balance of risks in the pool while ensuring
meaningful limits on premiums for higher risk groups. This is an
adjusted community rating standard used in the bill authored by
Senators Durbin and Lincoln.

[[Page S4297]]

Again, just like the Durbin-Lincoln bill, the managers' amendment
follows the most recent model from the National Association of
Insurance Commissioners. The Durbin-Lincoln standard works out to the
same 5-to-1 ratio between lowest and highest rating. So I hope my
colleagues understand that here is an area where we have tried to
strike a compromise, where we tried to work with them.
I should point out that most States don't use community rating. They
use what is known as rating bands. These bands allow for a variety of
factors to be used in setting premiums, including health status. We
will allow States that use rating bands to continue to use rating
bands. None of these States would be required to use community rating
if they don't want to. They can continue to allow greater premium
variation than the 5-to-1 ratio if they choose. It is a very important
point.
The managers' amendment allows States to continue the use of two
systems for rating health insurance policies. They can use either the
community rating or what is known as rating bands. All the managers'
amendment asks is that community-rated States follow the model set
forth in the Durbin-Lincoln bill. At least if some reasonable variation
in premiums is allowed, young families and lower wage workers may be
able to find affordable policies. Of course, affordability would be
enhanced if their State markets became competitive enough to attract
small business health plans. So we are saying in 10 States it may not
attract small business health plans.
I know the rating is extremely complex. This is a very difficult
issue to talk about. I kind of enjoy it as an accountant. But the
bottom line is very simple. First, we need to maintain a minimum level
of affordability in how premiums are set across the country. Young
families and lower wage workers in certain States deserve access to
affordable health insurance and, therefore, affordable health care, and
they deserve the ability to join together with other employees as part
of a pool of small business workers through the association in their
industries.
Ensuring that all the States have competitive health insurance
markets will enable small business health plans to create truly
national pools so they can maximize the full size of their membership
as they negotiate for better benefits and for better prices.
This is a major area of compromise, and I hope my colleagues
recognize it. We have taken a major concept from the bill authored by
Senators Durbin and Lincoln and we have incorporated it in the
managers' amendment. We have done this because Senator Nelson and I and
the other cosponsors of the bill are working in good faith to find
common ground.
While rating is the most significant issue that we revised in the
managers' amendment, it is not the only one. For example, the managers'
amendment includes several provisions to make it clear that the scope
of the bill's preemption of State law is very narrowly tailored to only
three areas. Those three areas are rating, as I have already discussed,
benefits, to enable small business health plans to offer national
benefit packages, and administrative functions, to reduce some
unnecessary costs of health insurance regulation.
It has been a key priority for my Democratic cosponsor, Senator Ben
Nelson, that State oversight authority be retained to the maximum
extent possible. We have a few former State insurance commissioners in
the Senate, and I know they share Senator Nelson's opinion on that.
There are also a few former attorneys general in the Senate, and I have
listened to them. I have also listened to some of our current attorneys
general who have voiced their concerns recently.

I mention that some of their concerns refer more to the House-
associated health plans bill, and it is important for people to know
this is different from that bill.
We have listened and done these appropriate changes. We have added
new provisions that make it very clear that this bill does not preempt,
affect, or even disrupt traditional State authority regarding consumer
protection, plan solvency, and insurance oversight. That stays with the
State.
Most importantly, it would be crystal clear that the bill does not
limit in any way a consumer's right to petition their State insurance
commissioner or the State courts. That is a very important point. I
want to repeat that. It should be crystal clear that it does not limit
in any way a consumer's right to petition the State insurance
commissioner or their State courts.
The managers' amendment before the Senate represents a significant
effort to find common ground. It addresses the issue of rating, which
is one of the two major concerns that Senator Nelson and I have heard
from colleagues. Senator Snowe's amendment with respect to State-
mandated benefits is an attempt to address the other major concern.
So Members who have raised concerns about these two issues ought to
see we are willing to work toward a compromise. There should be no
reason we can't arrive at a solution over the next couple of days.
Small business owners and working families I don't think are going to
accept excuses.
The matter at hand is small business health plans. It is not stem
cell research, it is not drug importation, and it is not Medicare. The
matter at hand is about creating more affordable health insurance
options for small business, and it is an issue that I think can be
covered this week or a very small part of next week.
As a manager of this bill, I am willing to entertain any germane
amendments. With the consent of my colleagues, I will even go further
than that. I will consider relevant amendments. But stem cell research
is not relevant to this bill. Drug importation is not relevant to this
bill. Medicare is not relevant to this bill. What is relevant to this
bill is amendments that address the 27 million Americans without health
insurance who work for or depend on small businesses.
If my colleagues have amendments like that, Senator Nelson and I are
more than willing to discuss them. Let's focus on the matter at hand.
Let's take a meaningful step forward to give America's small business
owners and working families more affordable health care.
In regard to some of the comments that have been made, as an
accountant, I do remind my colleagues that this is not a case of
subtraction. This insurance plan is addition. It will be bringing in
newly insured people. When you go to the dry cleaners tonight to pick
up your laundry, can you look that person in the eye and say: I don't
think you deserve health insurance because you might not demand enough
for yourself, so I saved you from yourself? Can you look them in the
eye and say to the mom and pop running the business down the street
from your home: You don't deserve health insurance either; you don't
have it now, we're not going to make it more affordable for you; too
bad, we had other things we wanted to discuss?
As you go home today, after you leave the Hill, think about the
people around you, the regular people--the cab driver, the worker at
the dry cleaner, the person in your neighborhood restaurant, all those
people you may not notice who really make the world operate. Many of
them don't have any insurance. Some may even own a little business just
around the corner, be the owners of it, and still not be able to have
insurance.
I am not talking about deluxe insurance, I am talking about any
insurance. We are not talking about the employees at the big hotel
chains or the big chain restaurants. We are not talking about the
employees at Wal-Mart. We already said to them: You can form whatever
benefits package you want. You don't have to answer to any State. You
don't even have to have review or oversight by insurance commissioners.
You don't have to meet any State requirements. We already said that to
big business, and big business has done that. They haven't left out
critical things. They said: Let's see, this is a competitive market. We
have to be competitive. We want to have employees. And you know what. I
think they included almost everything that has been talked about here.
They did it because they wanted to compete.
Small business isn't any different. They need good employees. They
want good employees. They know that if they are going to have good
employees they have to do as much as they can afford.

[[Page S4298]]

Oh, yes, and when they are doing that, they can also pick up some
insurance for themselves, and what they do for themselves, they do for
their employees. We hear the estimates of how much this will or will
not save. I would like to make a couple of comments on that. We have
already seen that the big businesses, instead of paying 35 percent in
administrative costs--35 percent--remember, each 1 percent of insurance
costs drives 200,000 to 300,000 people out of the market. We are
talking about 35 percent administrative costs. But those big businesses
that we gave permission to do whatever they wanted to, theirs runs
about 8 percent. Do you think they would be more competitive than the
small businesses? What keeps the small businesses in business is their
flexibility and how much less they make.

So I am not talking about deluxe insurance; I am talking about any
insurance. Did you know that in several States there is only deluxe
insurance? Did you know that in some States there may only be one
insurance provider? Others have been driven out of the market. No, it
hasn't been the competition that has driven them out; it could be well-
meaning legislators wanting to make sure that everybody has everything
they need.
There is a lot with our bodies that we ought to be doing on a regular
basis. We ought to be taking care of our body like we take care of our
car--well, maybe not like we take care of our car. But the way we
usually take care of our body is similar to a rental car. We drive it
until something goes wrong and then we take it into the shop. But there
are regular services that we ought to provide for our own bodies, and
we can do that.
The big companies get to do that tax deductible. It would be nice if
the small businesses were able to do that tax deductible as well, and
we can get into several of those issues later. We do have a plan here.
We are willing to make modifications to it. We are willing to take
relevant amendments. We do want to be sure that we get a vote on this
bill, if we vote on an alternative measure. I think that is fair.
Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator from Illinois is recognized.
Mr. DURBIN. Mr. President, let me say at the outset that I salute
Senator Enzi from Wyoming. He has shown extraordinary leadership and
political courage to bring this issue to the floor. The last time we
had a serious conversation about health care for American families and
businesses was in that one brief shining moment when the Democrats were
in control and brought the Patients' Bill of Rights to the floor;
otherwise, during the time that I have served in the Senate, we have
run away from this issue. I salute Senator Enzi. Although I disagree
with his bill, and I will explain why, I admire his political courage
and vision to report a bill from his committee and bring the issue to
the floor. I have said that before the press, I have said it at home,
and I want to say it on the floor on the Record. Although we may
disagree on approach, I respect him very much for being willing to
bring this complex and politically controversial issue to the floor.
I think if you put it up for a vote as to when a week ends in
America, we might not reach a consensus. There are some people who
would argue: Why, a week ends on Friday night. That is the end of the
week. Others say: No, a week ends on Sunday night. But what we have
found is that Health Care Week in the Senate ends at 2:30 on Wednesday
afternoon because that is when the Republican majority leader came to
the floor and filled the tree, which means closed down amendments on
the health care debate.
The Republican majority leader felt there were only two issues
relevant to health care in America. The first was the issue of medical
malpractice and preempting the States that traditionally regulate
medical malpractice. For I believe the fourth time, Senator Frist
offered the medical malpractice bills at the beginning of the week, and
they failed again, this time failing to even attract a majority of the
Senators supporting either bill that he brought. Then the Senator moved
to the health care issue before us: small business health insurance.
Then the majority leader came today, having given us all of about a day
and a half to consider this issue, and said that is the end of the
story. No more amendments. We are not going to consider any other
health care amendments in the bill before us. We are closing down the
Senate when it comes to health care issues.
That is interesting because what the Republicans have done is to
close down debate on stem cell research. Senator Frist came to the
floor and said: We don't want Christmas tree amendments. Christmas tree
amendments--stem cell research. I don't know if Senator Frist has been
back in his State. I have. They have roundtable discussions about stem
cell research. They sit at a table surrounded by men and women who have
their hopes pinned on medical research, those who are suffering from
juvenile diabetes and the serious problems that come with it--a mother
who gets up several times during the course of the night to wake her
young daughter and to test her blood to see if she needs insulin, if
she needs to eat something; another family with a young man with Lou
Gehrig's disease who has reached the point now where he cannot
communicate. All he can do is sit in his wheelchair, this young man in
his 20s, with tears rolling down his face, as his mother says: Senator,
please, please do something about stem cell research. It may not save
him, but it may save someone else. Parkinson's disease--to have my
colleague and closest friend in Congress, Lane Evans, a young man
stricken with Parkinson's, forced to end his congressional career, who
had the strength to come to the floor last year in the House and beg
for stem cell research and others suffering from Parkinson's and spinal
cord injuries. Think of those people whose lives have been compromised
and slowed down because of these injuries. All they want is a chance
for a vote on stem cell research.
This President has prohibited stem cell research beyond a single line
of available stem cells and has virtually closed it down as a Federal
undertaking. We have decided, as a matter of Federal policy, that we
will not do this research. We have been asking for over a year for a
vote on the floor of the Senate on stem cell research. We were
heartened when the Senate majority leader, Senator Frist, came to the
floor in July of last year and said: I may be switching my position, he
said, but I am going to support stem cell research. It meant so much
because we respect him, a heart transplant surgeon, a man with his
medical credentials, to break from the President on this issue, on stem
cell research and say he would join us in the fight. But how
disheartening to hear today as the Senator from Wyoming and the Senator
from Tennessee refer to debate on stem cell research as not relevant to
health care. Not relevant. It may not be relevant to their lives, but
it is relevant to the lives of thousands of Americans.
We in the Senate know what is at stake. If we don't bring this matter
up for a vote this week on stem cell research, the chances of seeing
the bill before the end of the year are slim to none. When we think of
all of the families counting on us to step up for stem cell research,
I want to ask you, Mr. President, isn't this worth a fight? Isn't this
worth a fight on the floor of the Senate, to make sure that we get a
vote this week on stem cell research, for the people who are counting
on us, whose lives are compromised and broken because of disease and
illness? Isn't this worth a fight in Health Care Week? Obviously, not
on the other side of the aisle. They have declared stem cell research
not relevant to Health Care Week.

And what else? They have decided that Medicare prescription Part D is
not an important part of Health Care Week. Medicare prescription Part
D, where some 9 million Americans in 5 days, if they don't sign up for
this program, will face a lifetime penalty. Medicare prescription Part
D is a program written by pharmaceutical companies and insurance
companies, a program which has been one of the worst that has ever been
dreamed up on Capitol Hill. When we want to take a few moments to fix
some basics and take the penalty off seniors, the Republican leadership
says, now, wait a minute. That is not relevant to a Health Care Week
debate. Prescription drugs for 9 million seniors, that is not relevant
to a health care debate.
Of course, we have heard Senator Dorgan of North Dakota repeatedly

[[Page S4299]]

asking for the opportunity to reimport drugs into the United States so
that people have a fighting chance to pay for the drugs that keep them
alive. He has been stopped by the Bush administration. He has fought
for this opportunity to bring this issue to the floor time and again
and insists on it this week in Health Care Week, and the Republican
leadership has said, affordable prescription drugs coming in from
foreign countries is not relevant to Health Care Week.
So, Mr. President, I think you can understand why many of us come to
the floor at this point disappointed. First, we were encouraged by
Senator Enzi's decision to bring this matter forward, and then when
Senator Frist said we are going to make it not just the Enzi bill, it
will be Health Care Week, we finally said: Here is our chance, a chance
for all of the people who have been waiting on us and who have been
counting on us. Well, that chance was snuffed out at 2:30 this
afternoon with Senator Frist's procedural motion. Health Care Week
turned out to be too good to be true.
It is interesting as well when we consider the basic underlying issue
of health insurance. Do you know what the two competing issues are on
health insurance? It is very basic. I don't have to explain it to my
colleagues in the Senate, and I will tell you why. The proposal that I
and Senator Blanche Lincoln have brought to the floor of the Senate to
make available to every business across America is exactly the same
health insurance that Members of Congress have. If it is good enough
for Members of Congress, we think it is good enough for American
families. But I listen as Senator Enzi and Republicans stand up and
talk about what a terrible idea this would be, to offer to every
American the same kind of health insurance that Members of Congress and
Federal employees have. Well, if it is so bad, I wonder how many of
them have decided not to sign up for it themselves. My guess is they
have all signed up for it.
Do you know why it is so good? It is not a government plan. It is a
plan administered by the Government at less than 1 percent
administrative cost that offers private insurance plans to Federal
employees and their families, retirees, and Members of Congress.
Private insurance offered by the Government. It is so good that it has
worked for 40 years.
Now we have the Republicans coming to the floor, Senator Enzi and
others, saying what a terrible idea this is, the same health insurance
that protects the Senator arguing against it. You have to ask yourself
why, if it is so good for us, can't we offer it to American families?
Instead, Senator Enzi has come forward with a plan which makes dramatic
changes, not to the health insurance we might offer to the uninsured
but in reducing protection, reducing coverage, and increasing costs for
people who are already insured. If you thought to yourself for a
moment, that is an interesting debate on health insurance, but I am not
worried about it, I already have my plan, think twice, because the Enzi
bill which he brings before us is going to make your health care less
valuable, less protection, and more cost. That is the Enzi plan. That
is unnecessary and unfair.
Let me tell you what two organizations have to say about Senator
Enzi's proposal, his health insurance plan. You might expect I am going
to read something that has some political ring to it. Who is this
organization that Senator Durbin is quoting? They must have some
political agenda. I would like to quote from a letter, dated May 10--
today--from the American Cancer Society. The American Cancer Society is
hardly a political organization. How do they describe the Enzi bill
before us?

It is our view that the basic construct of this legislation
is fatally flawed and therefore, we ask you to oppose it,
regardless of the amendment process on the Senate floor.
Consumers will be at the risk of losing important cancer-
related protections such as guaranteed insurance coverage of
colorectal cancer screening and clinical trial participation.

They go on to say:

It is our view that the Enzi bill will not result in
increased access to quality care for most people.

That is from the American Cancer Society.
Now let me go to another letter, and you decide whether this is a
political organization. It is the American Diabetes Association. The
American Diabetes Association believes that:

The proposed approach in the Enzi bill is fundamentally
flawed and must be opposed in all forms in order to protect
your constituents with diabetes. Any preemption or weakening
of State laws is a major threat to the well-being and lives
of people with diabetes and should not be acceptable to the
Senate.

And listen to these statistics: Every 24 hours, 4,100 people in
America are diagnosed with diabetes--4,100 every 24 hours. There are
230 amputations from diabetes every day in America. There are 120
people entering end-stage kidney disease programs, and 55 people go
blind every day from diabetes. We lose 613 Americans daily and 225,000
annually due to this epidemic. Diabetes continues to grow by more than
8 percent each year. And listen to this: One in three of our children
will be diagnosed with diabetes in their lifetime--one in three of our
children will be diagnosed with diabetes in their lifetime.
They go on to say:

. . . we cannot allow for any loss of ground in this
battle.

Signed by the chairman of the board and the chief executive officer.
They say:

Accordingly, we ask you to stand with us in full opposition
to [the Enzi legislation], no matter which cosmetic changes
may be proposed on the floor.

This is a stark and clear choice for the Members of the Senate, what
we offer to small businesses and Americans presently uninsured: the
same quality health insurance that protects our families as Members of
Congress have or we offered them a watered down health insurance
program that has been rejected by the American Cancer Society, the
American Diabetes Association, the American Association of Retired
Persons, the AFL/CIO, AMA, the American Nurses Association--I could go
on for three pages of health groups in America that reject the Enzi
approach because it will reduce coverage.
We know what the problem is. It has been a long time since we have
even taken up this issue. During that period of time, we have seen the
number of uninsured Americans grow from 37 million in 1993 to 46
million today--46 million uninsured Americans. But this is the wrong
medicine. This Enzi bill will put the insurance companies, not the
doctors, in charge of health care. People will be worse off, with less
protection.
Yesterday, Senator Kennedy and I went down to a press conference a
few blocks from here. A beautiful young lady came up. She was from
Cleveland, OH. She brought her guide dog with her and she told the
story about how her diabetes, untreated, resulted in her blindness--
young, beautiful lady. She said: I didn't have coverage for it in my
health insurance, and as a result my life is much different. She said:
I almost died. I am lucky to be alive and thankful to be alive. But
when you talk about diabetes protection, you are talking about that
young woman and others who could be just like her.
Another young woman came to speak to us and told us how she was a
young mother, healthy as could be, but tired from raising those three
little kids. Somebody suggested to her to get a mammogram. She thought
about it because she had a history of breast cancer in her family, but
she said to herself: How much is it going to cost?
They said: $250.
She said: We don't have that. I need $250 for my kids.
She said to her husband: Check the health insurance and see if it
covers mammograms.
Her husband called her the next day and said: You can get the test
the next day for free.
This beautiful young woman went to get a mammogram and learned within
24 hours that she had the earliest stage of breast cancer. They did a
lumpectomy. She went through months of chemotherapy.
She said: I lost my hair, but I got through it all and I am here and
I am alive and I am safe and I am going to be a mother for these kids
for a long time to come.
So when we talk about cancer screening in health insurance, I don't
think that is deluxe care. I don't think that is luxury care. I don't
think that is going overboard. Whether it is prostate screening,
colorectal screening, or

[[Page S4300]]

mammograms, that is basic preventive medicine that saves lives and
spares suffering and cuts the cost of health care.
Unfortunately, many of those benefits are casualties in the Enzi
approach. As I travel around Illinois, health insurance is the No. 1
issue and has been for years for businesses large and small, labor
unions, individuals, families, parents whose kids reach the age of 23
and they finally realize: They are not going to be under my policy. How
are they going to be covered?
Between 1993 and 2003, annual premiums Americans paid for health
insurance in that 10-year period increased by 79 percent. Employer
contributions to their employee insurance increased by 90 percent.
These premium increases make it tough for businesses to survive and
offer health care protection.
Let be me give an example of one family I know, Jim and Carole
Britton. They own the Express Personnel Services in my home town of
Springfield, IL. They are good folks, good hard-working businesspeople.
They have 24 employees. They pay 85 percent of their employees'
premiums. They want to keep doing it. They really believe it is the
right thing to do.
Like many small business owners they shop for a small business policy
every year because premium costs keep going through the roof. They have
been forced to raise the deductible to keep premiums manageable. Last
year, the deductible doubled from $500 to $1,000. To save money, Jim
and Carole offered a health savings account, which many on the other
side of the aisle think is the salvation, a health savings account. I
won't go into it in detail, but it is a perfect health insurance plan
if you are wealthy and never expect to get sick. They offered it. One
of their employees decided they would sign up for a health savings
account. That employee now regrets the choice because his wife is
pregnant and he wishes he had better, real health insurance coverage.
To those who say solving the health insurance problem is too
complicated or too expensive, look beyond the obvious. We already have
the Federal Employees Health Benefit Program. It has worked for 40
years for every Member of Congress and 8 million Federal workers. Small
business owners and their employees deserve nothing less.
I, along with my colleague from Arkansas, Senator Blanche Lincoln,
have introduced legislation to give small businesses affordable choices
among private health insurance plans and expanded access to coverage.
We call it the Small Employers Health Benefits Plan. We presented it to
Senator Enzi. It has been a while now, a few months ago, that we said
to him: Take a look at it. You know what this plan is all about. You
live with it. We all live with it. We love it. It is a wonderful plan
that has competition and real choice from private insurance.
We didn't convince him. I am sorry we didn't. Maybe someday we will.
We will keep working on it. But let me tell you why we think it is
important, why there are many advantages to the Federal employees
program model. This chart spells them out.
Nationwide availability. It covers Federal employees from one coast
to the other. Young and old, rich and poor, black, white, and brown,
healthy and sick, every Federal employee is covered by it.
Consumer choice. There are more than 278 private insurance companies
that bid for this Federal employee coverage. For these private
insurance companies, they believe this is a good deal, to get in a pool
of people this large.

Group purchasing discounts for small employers: In our bill, we
create one nationwide purchasing pool of small employers and self-
employed people, which means they can fight for premium discounts just
like the Federal Government.
Low administrative costs: Do you know what it costs the Government to
run the health insurance program for 8 million Federal employees? Less
than 1 percent a year. Some of these plans we are talking about that
private businesses have to turn to charge 25 to 30 percent
administrative costs each year. You wonder why the costs go up? They
are making more money, charging for administration. We don't have the
administrative overhead. We use private insurance plans already there.
There is strict oversight and regulation in the Federal Employees
Health Benefit Program. We know it works. We like it so much that every
single one of us is protected by it.
Two economists have examined our proposal, Dr. Len Nichols of the
nonpartisan New America Foundation, and Dr. John Gruber, Ph.D, from
MIT. They estimate that our bill could save small businesses between 27
percent and 37 percent on health care premium costs every year, just
offering to these small businesses the same health insurance deal that
Members of Congress and Federal employees currently receive.
That means Jim and Carole, whom I mentioned earlier, currently
offering a policy for a family of four that costs $10,000 a year and
paying $8,500 of the premium, could save anywhere from $3,000 to $3,100
as employers and $400 to $500 for each employee. That is before any tax
credit, which we propose in our bill, for low-wage workers.
Under our plan, premiums would not be government subsidized, but
employers will receive an annual tax credit for contributions made on
behalf of workers making $25,000 or less per year.
There is a big debate in this town about tax cuts. If you read the
morning paper, you may have noticed the chart on the front page of the
Washington Post. The new tax cut proposal from the Bush administration,
when it comes to capital gains and dividend incomes, is a very generous
proposal to a very small group of Americans. Let me tell you what I
mean.
If you are making less than $75,000 a year, the Bush tax cut
proposal, warmly embraced by the Republican majority in the House and
Senate, means about $100 a year in tax breaks. There is that old $100
check they wanted to give you last week for your gas bill. Here it
comes again. That is your tax cut if you are making less than $75,000.
But the same Bush Republican tax cut proposal which will come through
Congress now gives to those who are making $1 million a year in income
almost $42,000 in tax cuts. I don't recall receiving a single letter
from a millionaire saying: Would you please give me a tax cut?
They are insistent on it. We must do this. We have to give them a
break. But when Senator Lincoln and I suggest giving a tax cut to a
business that offers health insurance to low-income employees: Oh, that
is a terrible Federal subsidy. How could you consider doing that?
Senator Thune from South Dakota came to the floor yesterday and said
it was going to cost us $78 billion over 10 years. Today he came and
said it would cost $73 billion. We are gaining some ground. But the
bottom line is there is no estimate in that range, anywhere near that
range. My challenge to my colleagues on both sides of the aisle, if you
believe in tax cuts, why wouldn't you believe in tax cuts for small
businesses that provide health insurance for their employees? Isn't
that closer to the American dream than a $42,000 tax cut for somebody
making $1 million a year? I think it is fairly clear. Obviously they
don't.
There are more than 26 million Americans making less than $25,000 a
year working in small businesses; 12 million, 40 percent of them, have
no health insurance. Is it valuable for America that these people who
get up and go to work every day in the small shops and small businesses
across our country have health insurance.
I go around Illionis and talk to all kinds of different groups--
downstate in my home area, small towns, rural areas, the big city of
Chicago. Whenever I say to people: Wouldn't it be part of the American
dream that every American had health insurance, it never fails to get a
round of applause. That is really an aspiration and a dream which many
of us share. We can't reach that dream if we insist on giving tax cuts
to millionaires who aren't asking for them and don't provide a helping
hand to businesses that are doing the right thing, providing health
insurance to low-wage employees.
The tax credit we propose would equal 25 percent of the cost to that
business for self-only policies, 30 percent for employees who are
either married or single with a child, and 25 percent for family
policies. So if a family of four working for Jim and Carole in
Springfield make less than $25,000 a

[[Page S4301]]

year, there would be an additional savings of $1,874 to $2,172.
Under the Durbin-Lincoln bill, private insurance plans would compete
to offer insurance to small businesses, just like they do in the
Federal employees program. This chart shows the potential savings that
come from the current system and what might occur under the Small
Employers Health Benefit Program that Senator Lincoln and I will offer.
Currently, many of these businesses, like the one I described, pay 85
percent of insurance costs, so on a $10,000 policy they are paying
$8,500.
Look at how it drops for family coverage under the plan we are
proposing--to $3,230 for family coverage. It shows the dramatic savings
for each business and the opportunity for them to offer real health
care.
A lot of people say: Are you talking about a government insurance
plan? Let me show you the choices that my wife, Loretta, and I had when
it came to health insurance this year as Federal employees and Members
of Congress. Look at these plans: There are 13 plans that we had to
choose from as Federal employees.
I will tell you what happened to one of my employees. She chose a
plan 1 year, didn't like the way they treated her, and when open
enrollment came the following September she dropped them and picked up
another plan. What a luxury, real competition. You don't treat me
right, you don't get my business next year. It is like shopping for a
car and having some real choices.
Most small businesses and most Americans have no real choices, so
when we come up with this plan, the Federal employees model plan, and
those on the other side of the aisle dismiss it as unrealistic, unfair,
deluxe, it is exactly the same health insurance coverage they are
living with right now.
If it is good enough for us, why isn't it good enough for the rest of
America? That is the bottom line.
All Federal employees receive a booklet every year about the choices
that are available for coverage. If you want to take an expensive plan,
they will take more out of your paycheck. For the basic plan they take
less.
I have a lot of young people on my staff. Krista Donahue, my staffer
on this issue, gets up and swims every morning. She picks her health
plan. She signed up for a very cheap HMO. My wife and I, maybe not in
the same physical condition, sign up for more coverage. That is our
choice.
That is everyone's choice in the Senate and the House of
Representatives and throughout the Federal Government.
What is wrong with giving that choice to America? Senator Enzi's plan
does not give that choice to America. This bill we are proposing has
been supported by many groups. It isn't just a matter of Senator
Lincoln and I coming together.
Look at some of the groups that have endorsed the Lincoln-Durbin
plan, or the Durbin-Lincoln plan, depending on whether you are from
Arkansas or Illinois: The American Academy of Family Physicians, the
American Academy of Pediatricians, the American Cancer Society, the
American Medical Association, the American Osteopathic Association, the
American Psychological Association, Consumers Union, Families USA,
Federation of American Hospitals, International Chiropractors, March of
Dimes, the National Association of Community Health Centers--the list
goes on and on.
And the indication is that these men and women and groups that focus
their professional lives on health care reject the Enzi approach which
offers less coverage and less protection and believe, as I do, that the
plan being offered to Federal employees should be offered to businesses
across America.
Sadly, the Enzi plan will wipe out benefit requirements.
I will concede that what I am about to say may have changed somewhat
in the managers' amendment. To his credit, as Senator Enzi has realized
the weaknesses of his legislation, he has added more protection. If I
am going to cite something that has been changed in the managers'
amendment, I apologize and will stand corrected on the Record. But what
I am about to read is based on our best knowledge of what was in the
Enzi bill. Maybe it has been changed. I want to give the Senator a
chance to correct me, if I misread it.
The Enzi bill will wipe out benefit requirements, including diabetes
supplies, mental health coverage, cancer screening, maternity coverage,
and child immunizations for 84 million Americans. That includes almost
4 million people in the State of Illinois. The number of Americans who
will lose benefit protection under the Enzi plan, S. 1955, each one of
these ``stick'' pictures represents 1 million Americans who will lose
benefit protection. These are not people who currently have no health
insurance. These are people who are gathered here and watching this and
have health insurance who think they are part of this debate. Surprise.
The Enzi bill has brought you into this debate. Your health insurance
is about to be reduced in coverage. The things that you thought you had
signed up for, the things that you had bargained for as part of your
union that you believe were covered in your plan will be reduced. The
coverage will be reduced by the Enzi bill.
His belief is, if we can just lower basic health insurance coverage
to a lower level, we can say everybody has it. But what good is it to
have health insurance if it isn't there when you need it?
That is the point he missed. If we miss the most basic things in
terms of protecting Americans and then sit back and fold our arms and
say: Well, we took care of that uninsured problem, sure, we took care
of it until someone desperately needs health care and can't afford it
because their health insurance plan doesn't cover it.
The idea behind Senator Enzi's bill is if you provide less benefits
and less coverage and less protection, it should cost less. That is
right. It is reasonable. But if the insurance doesn't cover your
illness, if you are left exposed to paying for it out of your own
packet, what are you going to do?
One of the ladies who came to our press conference yesterday is a
perfect illustration. Her husband had bought a health insurance plan
that he thought was a good one, one through an association. He even
signed up for a chemotherapy rider on the plan because there had been a
history of cancer in his family. Guess what happened. Sadly, he
developed virulent lung cancer which required a lot of treatment. They
went to their health insurance plan, and they said: We are glad we
bought that rider.
Then, in the fine print, there was a limitation on how much they
would pay. The poor man lived for years and died an agonizing death.
His beautiful young wife from California was there yesterday. When he
died, she was left with medical bills of $480,000.

Is that deluxe coverage--what we heard earlier--luxury coverage of
health insurance? Would you want to find yourself and your family in a
situation where you needed cancer therapy to survive and your plan
didn't cover it?
Unfortunately, the Enzi bill moves in that direction, and it doesn't
have it. All of the benefit cuts result in about 3 percent to 4 percent
savings on premium costs. These are not expensive when they are spread
across large populations. They are expensive when they are borne by one
family. But if there are millions of people being covered, and a small
percentage need it, you spread out the cost. That is what insurance is
all about. It is a point that is missed in the Enzi legislation. That
is not much of a savings--3 or 4 percent--when you are talking about
diabetes, maternity coverage.
Maternity coverage. I know a little bit about that, being the father
of three. I can tell you that one of the toughest moments in my life
was as a law student--I got married in law school. Yes. We used to do
that back in the old days. Loretta was pregnant. The baby came along
and she had a serious health problem. We had no health insurance. We
went to Children's Hospital in Washington. God bless them. They
couldn't have treated us better. They finally said after a while: You
are not going to be able to afford to pay this, Durbin. You either sign
up for welfare, which you can do because you don't have any income, but
get ready to go bankrupt. You won't be able to pay these bills. There
is one choice. There is another choice you can consider. You can go to
a clinic for people who are uninsured.
Sure enough. I had to leave my law school and cut a class, drive out
to

[[Page S4302]]

Maryland, pick up my wife and our little baby girl and sit in a clinic
for hours to get a doctor in rotation--never knowing who you would see
and sure you would never see them again. They would ask you all the
same questions. Let's go through the history again. You tell them over
and over--you want to give them everything.
That is what life is like when you don't have health insurance.
When it comes to maternity care, you have to be careful. I will tell
you why.
Twenty-five years ago when I was an attorney working in the Illinois
State Senate, it came to our attention that there was a company selling
health insurance in Illinois with maternity benefits, but when you read
closely, the maternity benefits did not cover the newborn infant for
the first 30 days of life. Do you know what that means? In our case, in
my family's situation, a situation just like it, that sick baby
dramatically in need of expensive care for the first 30 days wasn't
covered. We put a provision in the Illinois State law which said you
cannot offer maternity benefits saying you will pay for the delivery of
a baby unless you cover that baby from the moment it is born. That is a
requirement in law.
It makes sense, doesn't it? It would be wiped out as one of the State
requirements under Senator Enzi's approach. You can buy maternity care.
You may be on your own the first 30 days. Heaven forbid you are in a
situation with a sick child--and I have been there. It is no fun at
all. It took us years to pay those medical bills. We were glad to pay
them, and they couldn't have been nicer waiting to be paid, but there
were a lot of anxious moments when this father sat in that waiting room
wondering if he would ever get to see a doctor for his little girl.
There was a study in the New England Journal of Medicine in the years
after President Clinton required that the Federal Employees Health
Benefits Program cover mental health benefits. I can't go to a town
meeting in my State and mention mental health clinic benefits where I
don't have the following occur. I can guarantee you that in any large
group this will happen: I will say that health insurance ought to cover
mental health benefits--and I think it should. Senator Paul Wellstone,
that great champion, used to sit in that back row and stand and beg for
health care to cover mental health benefits.
If you mention that at a town meeting in my State or any other State,
do you know what happens when the meeting ends? Two or three people are
going to wait for you. They will want to talk to you privately. It has
happened time and again. They say: Senator, we have a teenage son with
a serious mental health problem. We don't know where to turn. We can't
get health insurance. There is no coverage for him.
Every time you mention mental health, you find that across America
there are people in need of mental health benefits.
When it came to mental health benefits, it was one of the first
casualties in the Enzi bill. About 42 States currently offer mental
health benefits as part of their health insurance. And that State
requirement would be wiped away in the Enzi bill.
Is that deluxe coverage? If you have a bipolar teenage son, a
schizophrenic daughter, someone suffering from grave depression in your
own household, is that deluxe and luxury coverage? I think it is basic.
I think it is what we should be about in America: taking away the
stigma of mental disease and offer mental health coverage.
We received letters from organizations such as the American Nurses
Association--God bless them--the American Cancer Society, AARP, and the
American Diabetes Association. They are all opposed to the Enzi
watered-down approach.
In a letter to Congress, 41 attorneys general, including my own
attorney general, Lisa Madigan, in Illinois, have publicly opposed this
bill.
Another way the Bush-Enzi bill would make people worse off is that it
sets Federal rules of how insurers can charge people. I will try to
explain what I understand Senator Enzi just did.
Right now in America you can charge health insurance premiums based
on a number of factors: Are you well? Are you sick? Are you young? Are
you old? Where did you live? What is your injury?
You can be charged different health premiums depending on how you
answer those questions. The disparity in health insurance premiums
between well people and sick people can be 26 times as expensive for
sick people as it is for well people.
There are nine States--most of them in New England, except for North
Dakota and Oregon--that have community ratings, which means that
everybody in the State of Massachusetts represented by my friend,
Senator Kerry, is in the same pool, everybody just like the Federal
employees pool. So everyone is charged the same premium, young and old,
regardless of their medical history. Senator Enzi comes and says: We
just want to change this slightly. We want to be able to say that you
can charge five times as much for someone who is sick than someone who
is well, even in States with community ratings--five times as much.
They tried that in New Hampshire a few years ago, increasing the
premiums for sick people. They dropped their coverage, and 21,000
people were dropped. In a year New Hampshire dropped the plan, saying
it is not a good idea. It wasn't a good idea in New Hampshire, and it
is not a good idea in the Enzi bill.
That is what is being proposed. Let me show you a study. The Lewin
Group, a nonpartisan actuarial firm, shows rates would rise
dramatically for businesses with a higher number of older Americans or
women of childbearing years.
This shows the average premiums for community-rated States, the
average cost per contract. You can see this yellow line. What is
happening because Senator Enzi is allowing this divergence and
differing amounts of premiums to be charged, you can see a dramatic
range of increase that could occur in any given State.
So there is no protection on the upside below 5 to 1. There could be
a 5-to-1 difference in premiums charged the lowest rated person in the
State to the highest rated person. It is a significant difference.
The Lewin study found that small businesses in strictly regulated
States are currently paying the average of $7,738 per month for health
insurance for their employees. Under the Enzi bill, businesses with a
high number of older people or women of childbearing years would see
their premiums increase to more than $20,000 a month, while companies
that have a disproportionately high number of healthy, young people
would see a decrease in their premiums to $3,096 a month.
Finally, the Bush-Enzi bill will not help the self-employed. Self-
employed people are the worst off. They are forced to purchase
insurance in the individual market which has the least amount of State
oversight. The Enzi bill will take away what little protection self-
employed people already have in benefit mandates, which means if you
are on your own--you own your little business and looking for health
insurance, and you at least know when you are offered a policy it has
to provide the basic coverage that your State requires--Senator Enzi
wipes that away. It will not give self-employed people a way to pool
with larger businesses.
The Enzi bill prohibits self-employed people from being pooled with
larger businesses, so they miss out on the discounts of the larger
groups. Right now, we believe the realtors who are pushing the Enzi
bill ought to step back and take a close look at that provision and ask
themselves what percentage of the membership of realtors across America
is self-employed. The coverage and protection is not there for you.
This may sound good for their members until they take a look at the
policy and there is no protection.
Individuals would be pooled with other individuals, so they may save
on marketing costs, but they will be priced the same way they are
today: individually. Under the Enzi bill, self-employed people can
still be denied coverage if their State law permits it, and they can be
charged exorbitant rates based on their health status, gender, age, or
industry.
Diane Ladley of Aurora, IL, is self-employed and has a chronic
condition called fibromyalgia, which causes

[[Page S4303]]

chronic pain and fatigue. She has been denied insurance in the
individual market. She is currently cutting her pills in half because
she cannot afford them.
The Bush-Enzi bill will do nothing to help Diane. Even if she joins
an association health plan, an insurer could deny her coverage. If she
is offered coverage, insurers will still be able to exclude her current
condition or charge an amount so high she could not afford it.
The Lincoln-Durbin bill would allow Diane to be pooled with other
small businesses in one national pool. She would have access to the
same negotiated discounts as all other small businesses in the pool.
We can make health insurance for small businesses more affordable
without slashing benefits or charging people who need insurance even
higher prices. My bill, with Senator Lincoln, is an example of how it
can be done. It is a reasonable approach.
I will come back to my starting point as I close my remarks because I
know there are other Senators in the Senate waiting to speak. This is a
matter of simple justice. If Members of the Senate and the House of
Representatives take advantage of the Federal Employees Health Benefit
Program because they believe it is fair and right for their families,
why won't they offer that same opportunity to other Americans who need
health insurance? Why should we give ourselves the status of a
privileged class when it comes to health insurance? Why should we say
that people across America shouldn't have the same protection our wives
and our families have? We ought to offer them in good faith an approach
that is the same as our own. If this health insurance we use is good
enough for Members of Congress, it is good enough for American
families.
I yield the floor.
The PRESIDING OFFICER (Mr. Coburn). The Senator from Wyoming.
Mr. ENZI. Mr. President, I would like a chance to answer the 45
minutes of accusations that were made about my bill and also bring up a
few things about the Durbin-Lincoln bill that I have not had a chance
to talk about yet, but could I inquire how long the Senator from
Massachusetts will speak?
Mr. KERRY. Not that long, maybe 15 minutes, something like that. Hard
to say entirely.
Mr. ENZI. I almost hate to break the continuity of the debate when we
are talking about some very specific things.
Mr. KERRY. I welcome it. It is not often a debate breaks out in the
Senate anymore, so I am happy to welcome it. I ask, through the
Presiding Officer, how long the Senator from Wyoming might think he
would engage in debate?
Mr. ENZI. Probably about as long as it took Senator Durbin to cover
the fallacies and to boost his bill. I ask that I be the next to
speaker after the Senator.
Mr. KERRY. I appreciate that. Maybe that will work because I will
just add to some of the things the Senator will probably want to
answer, and he can take it all in one bundle.
The PRESIDING OFFICER. The Senator from Massachusetts is recognized.
A unanimous consent has been requested that Senator Enzi speak after
the Senator. Without objection, it is so ordered.
Mr. KERRY. I thank the Chair, and I thank my colleague from Wyoming.
I listened carefully, and I hope a lot of other folks did, to the
comments of the Senator from Illinois and from other colleagues in the
Senate over the course of the last days.
I wish the Senate were engaging in this issue in a serious way that
allows Members to debate the merits of individual approaches to small
businesses being covered. Regrettably, that is not the choice of our
friends on the other side of the aisle. What they have done is come in
with a series of amendments, with second-degree amendments, and, in the
language of the Senate, filled the legislative tree, which basically
means blocked out the ability of Democrats to bring amendments, to have
a real choice between plans as to how we approach small businesses.
That is point No. 1. That is irrefutable and damaging to the prospects
of trying to deal with the health care crisis we face.
Two years ago, when I was traveling the country as a candidate, no
matter what State I went to, no matter what town or what size community
or what the political definition of that community was, you always felt
a profound sense of responsibility was thrown at you by the people you
met from all walks of life.
I met people in town meeting halls, in VFW halls, in rope lines at
rallies, in visits to factories, in visits to medium-sized businesses,
large businesses. A whole bunch of folks would come up and tug at my
sleeve, often with tears in their eyes, look at me, and say: Senator,
you have to help us on health care. You have to do something to help us
be able to afford health care. They would show me a photograph and say:
Look, this is my sister, or this is my mom, and they would tell you
about a loved one who could not afford the medicine they needed or who
lost their health care when a factory shut down or when a business
closed or moved overseas. The faces of those people stay with you
forever. Their names do, too.

People--many of them Republicans, many of them conservative small
businesspeople--were pleading not for a dumbing down of the system, not
for an automatic reduction in coverage, but for a way to expand the
ability to have the level of coverage they have today and be able to
pay for it. They were looking wearily to this city for help.
I met an awful lot of poor folks who obviously do not have any health
care, and the numbers are climbing. More importantly, there is a change
in the fabric of our society. I met an awful lot of working Americans
who are increasingly watching health care costs go up, education costs
go up, energy costs go up, and their wages either stay the same or go
down. That is not a sustainable equation in our country.
Increasingly, those workers are being pushed out of the middle class
into the working poor or downward within the middle class itself. There
isn't one of us who has not met a mother of a child who would describe
situations in which she would make life choices for that child, about
whether to let her kid play football or some other sport--hockey--
because she was afraid she could not afford the medical care if her
child broke a leg or somehow were injured.
I heard again and again stories from teachers who would tell me about
kids who get no preventive care, they do not get routine exams. Schools
have cut nurses, so you do not have a nurse in the school now to take
care of someone.
I heard instance after instance of kids who had some form of acting-
out in the classroom as a consequence of either an earache or some
other chronic disorder. Some of them went to the doctor for the first
time when they were 9, 10, 12 years old, and it was too late; they
discovered they had a permanent hearing impairment as a consequence. I
met the head of pediatrics in the State of Washington at an event we
did in Seattle for children's health insurance who told me specifically
of kids she had examined who had permanent hearing impairment, and now
they will be in special needs education because we did not care enough
to give them early intervention.
I met a lot of small business owners who would like to be able to
provide their employees with health care but cannot afford it and who
know the health care costs are so high that they are standing in the
way of being able to hire more workers because they do not have the
flexibility and the ability to be able to expand the business and try
to cover people or pay even a portion of the health care.
In New Hampshire, I met a woman who had breast cancer. I got to know
her pretty well. She told me how she had to keep working day after day
right through her chemotherapy no matter how sick she felt because she
was absolutely terrified of losing her family's health insurance if she
did not show up for a day or two.
In Erie, PA, I met a man named Albert Barker who wonders how he is
going to pay literally thousands of dollars in medical bills that he
cannot afford. And after he suffered a heart attack and he underwent
surgery, guess what. His employer just stopped his health coverage
because it was too expensive because he had gotten sick. So they cut
him off at the moment of need, and he was basically at that time facing
bankruptcy as a consequence. His wife said at the time that she was

[[Page S4304]]

reduced to hoping and praying that nothing else happened.
In Council Bluffs, IA, I met a woman named Myrtle Walck who at the
time did not know what she would do if the price of medicine rose any
higher--which it has--and she paid a huge chunk of her Social Security,
which was not very big and was her only source of income, her Social
Security check, to the drugstore every month just to cover the cost of
her two daily prescriptions.
In Jacksonville, FL, Renee Harris, who owns a schoolbus company that
was in her family for over 50 years, was forced to sell the company
because she could no longer afford to insure her workers and felt
compelled to want to be able to do so.
I heard daily about workers' fears of losing coverage because they
either could not afford the higher premiums, the deductibles, the
copays, or they thought their employers would drop the coverage
altogether.
I talked to people who told me what it was like to live knowing they
were one medicine bill, one hospital visit away from bankruptcy. That
is the real world we are living in today. That is the real world the
Senate ought to be debating. All of these problems are in our health
care system today. Yet there is so little time devoted in this Congress
to finding the common ground, to finding solutions to get something
done for those people who want to believe we will do something to help
them.
Instead, what do we have? We have a so-called Health Week in the
Senate. This is Health Week so that Senators can come to the Senate and
give speeches--not legislate but give speeches. We have speech after
speech in a stalemate where the whole week is going to go by, and
everyone knows what will happen at the end because we are not really
legislating because we are not really here to solve problems. The
people I have met deserve to have a Congress that insists on a real
debate, really getting the job done.
In all the 22 years I have been here, this is one of those
peculiarities of a moment in American history where the Senate is about
as dysfunctional as it has been in that whole period of time. Serious
efforts to try to deal with problems are just not on the table.
What are we going to have? We are going to have one up-or-down vote
on a flawed bill with no chance for Democratic amendments. I know the
Senator from Wyoming is going to argue it is a good bill--and we will
go through some of those details in a minute, et cetera--but what we
have been reduced to doing here is spending an awful lot of time trying
to stop bad things from happening instead of putting the competent
energy of a lot of people who think a lot about these issues, some of
whom have extraordinary expertise, into trying to fix them and move
toward a positive health care agenda for our Nation.
Right now, we are fighting to fix the devastating changes that have
been forced on the Medicaid Program. We need to overturn the rules
allowing increased cost sharing that has been imposed on families who
cannot afford it. And we need to prevent new rules from tossing out the
early periodic screening diagnosis and treatment protections for
children on Medicaid.
Who wrote to the Congress and said: ``Kids in America have enough
coverage. We ought to cut out early periodic screening''? Every doctor
you talk to worth their salt in this country will tell you what we need
is more preventive care, wellness. We need to teach wellness in
America. We need to be doing preventive care instead of treating people
when they finally get sick, at a time when it is far more expensive
than if we intervened early.
On diabetes alone, if we had diabetes screening for every person in
America, you could probably save $50 billion. You would avoid a lot of
amputations. You would avoid a lot of dialysis. And you could treat it
in a far less expensive, more easy way. Are we talking about that here?
We also have to fix the Medicare prescription drug debacle and extend
that May 15 deadline for signing up without penalties. Why? Because it
has been confusing to seniors all across this country. Because the
implementation has been exactly what a lot of people predicted. The
result is a whole bunch of things that ought to be happening to reduce
the cost for seniors are not happening.
A simple thing would be bulk purchasing to negotiate lower prices on
prescription drugs. We ought to be simplifying the enrollment
procedures. We ought to be making the benefit more comprehensive, by
closing the gaps in coverage.
But the bottom line is, it would be a tragedy if all we did was try
to stop these bad things from happening, when everybody knows we have a
health care system that is increasingly in extremis, a health care
system that is in crisis and imploding on itself in many ways.
This bill, I regret to say, because it deregulates in a selective way
all of the insurance delivered in the States, is going to create chaos
for people as States choose different offerings and the rules go out
the window.
I might add, for a group of people who traditionally have come to the
floor to defend States rights, they have, in the last years, proven
themselves remarkably selective in where and when they want to protect
those States rights because State after State across the country has
passed a certain standard of health care. Why? Because they know it
works. Because they know it reduces costs. Because they know it helps
people have greater quality of care and a better quality of life.
Instead, this bill is going to open up the opportunity for people to
reduce the level of coverage for people.
There are a whole series of real health care initiatives that the
Senate ought to be dealing with. I am convinced we can find an ethical
way of dealing with the thorny issue--I recognize there are ethical
considerations--but we could find, if we wanted to, an ethical way to
deal with a host of in vitro embryos who, regrettably, are going to be
discarded altogether, thrown out into the garbage and lost, rather than
applied to the possibility of saving life. It seems to me there is a
way to fully fund, in a limited way, the appropriate research of
initiatives at the National Institutes of Health.
We also need to take up real legislation to get at the heart of
racial and ethnic health disparities. We need to make it legal to
import prescription drugs from Canada. We need to put medical decisions
back in the hands of doctors and nurses and patients, not insurance
company bureaucrats. We need to address the nursing shortage by fully
funding all the programs under the Nurse Reinvestment Act that we
fought so hard to enact.
We need mental health parity, which I heard the Senator from Illinois
talk about. We need to address our growing childhood obesity problem
which is going to increase the cost of health care all across the
country. And we definitely need to reauthorize the State Child Health
Insurance Program.
But this is Health Week, and we are going to have a Health Week on
the floor of the Senate. It is not going to deal with any of those
issues. It also avoids giving families and small businesses access to
the same private health insurance that Members of Congress give
themselves. I heard the Senator from Illinois talk about this.
I raised this all across the country in 2004. What is it about being
a representative of the people, elected by the people to come here to
represent the interests of the people, that empowers us to abuse that
privilege by giving ourselves the best health care in the world, at
less expense, with a nice Government match, bigger than what most
businesses can afford, and we are not willing to allow that to happen
all across the country? What kind of values does that represent for
those who run around talking about values?
It seems to me we ought to stand up and make it clear that every
single family's health care is as important as any Member's of
Congress. We ought to be offering every single person the opportunity
to at least buy into it. Why shouldn't they be able to buy into it and
get the coverage? Why shouldn't we open up Medicare and let people who
are 55 or older buy into Medicare early? That could happen, and a whole
bunch of people would get coverage and we would reduce costs to
America.
All you have to do is talk to any hospital administrator in America.
First of all, they are dipping into their reserves. A lot of them are
on the brink of bankruptcy. Many of them get refunded so late and with
such difficulty,

[[Page S4305]]

it is hard to plan and come up with a business plan for the hospital.
Most importantly, none of them can afford the massive investments in
technology that would, in and of themselves, reduce the cost of health
care and raise the quality of life.
Something like 45,000 to 50,000 to 90,000 people a year die in
hospitals because of medical error. And often, that medical error is
the result of pain management or pain mismanagement. The VA has a
terrific system. I have been in the VA hospitals. I have seen it. Why
do they have the system? Because it is the VA. It is a Government
health care plan, and the Government made certain they could invest in
these pain management computerized systems. The result is, they have
reduced the incidence of mistaken pharmaceuticals being taken, people
getting the wrong medicine, getting too much, getting it at the wrong
time, getting it even when they took it already--all of these kinds of
things that happen.

This week, unfortunately, instead of bringing up a bill that would
grant real relief to our small businesses, we are considering a bill
that 41 attorneys general of the United States have written to say is
bad policy and will only exacerbate the problems in States today. Why
are we doing that? Attorneys general are looking at the regulatory
process. They are looking at the overall ability of a State without
regard, in many cases, to the politics of it but to the law and to the
implementation of what happens. And 41 attorneys general have written
to say this bill is going to exacerbate current troubles. I hope the
Senator from Wyoming will address all of the concerns expressed in the
letter of the attorneys general of the United States.
We have also seen the numbers. The Kaiser Family Foundation reports
that the number of firms offering health benefits has declined from 69
percent in the year 2000 to 60 percent in 2005. Forty-seven percent of
firms with fewer than 10 employees offer health insurance, compared to
90 percent of firms with 50 employees or more.
So everybody agrees something ought to be done. The problem is, the
plan offered by the Republican leadership today is not going to help
the small businesses to be able to gain coverage for their employees,
unless, of course, they give up a whole set of things that currently
they are covered for and then without regard to what the pricing is
going to be for that. It is a wholesale deregulation of insurance
markets. And a wholesale deregulation of insurance markets is, in fact,
going to put consumers at risk. The studies show the approach we are
being offered will, in fact, have a better chance of increasing the
numbers of uninsured, rather than offering small businesses a lot of
the relief they so desperately need.
The proponents argue prices are going to drop once we get rid of the
benefit mandates created and enacted by State legislatures. Well, first
of all, that claim, frankly, does not stand up. There are two separate
studies that show benefit mandates are estimated to increase health
premiums by a small total of about 3 to 5 percent. Juxtaposed against
the annual double-digit premium increases that we have been seeing, it
is clear a benefit mandate is not at the heart of the problem. If the
benefit mandate is only a 3- to 5-percent increase, but we have been
seeing double-digit increases over a period of time, something else has
happened.
More importantly, why do we have mandates? What happened to the right
of a State to make a decision, as Massachusetts has in the last weeks,
that they want to make certain every person is going to be covered and
to mandate a system by which businesses have agreed and the legislature
has agreed they are going to fund it and people are going to be
covered?
Now, the people who have often argued about the heavy unfunded
mandate hand of the Government--the people who have most objected to
the Federal solution for individual States--are now going to come in
and literally give this great gift to some small businesses to be able
to go out and do whatever they want and take away from States the
ability to guarantee a quality of care for their citizens.
Forty-nine States have passed laws mandating that insurers cover
mammography services because they are proven to save lives. Twenty-
seven States have passed laws requiring cervical cancer screenings
because too many women are dying as a result of poor detection. Forty-
six States have passed laws requiring diabetes supplies to be covered
because 20.8 million Americans are living with this disease and they
have a basic need for care.
So the Senate is going to come in and say: Those mandates are not
important. You do not have to do that anymore. And companies are going
to be able to create this unbelievable morass of different offerings
which are going to confuse and, I predict, infuriate the consumers of
this country, just the way the prescription drug medicine Part D
program has infuriated seniors across the country.
Now, the numbers I cited about cervical cancer and mammograms and
screening, those are not just numbers in a report. We have seen, every
day in Massachusetts, how those things make a difference.
Kirsten Paragona of Ipswich discovered, in a routine pap test, that
she had developed stage 3 cervical cancer. She was 23 years old. And
because that pap test was included as a mandatory benefit in her health
plan, Kirsten is alive today, with a 2-year-old daughter, instead of
living without a reproductive system.
For all those in the Senate who want to talk about a culture of life,
that is a culture of life. And that is a culture of life worth fighting
for.
And then there is Gracie Bieda Javier of Jamaica Plain. She lost her
mother to breast cancer in 1987. Without mandated coverage for
treatment, Gracie's mother was unable to afford the service. And now
Gracie is dedicated to helping other women avoid her mother's fate. And
because Massachusetts now requires mammography and treatment services,
Gracie screens and treats more than 800 low-income women a year. That
is because it is mandated.
What is going to happen when you open this up to so-called market
forces? People who cannot afford it are really going to get hurt. In
her own words: ``[Gracie] could not think of a better way to honor
[her] mother on Mother's Day than to make sure we maintain these
lifesaving mammogram services.''
I think she has it right. It saves lives.
Under this bill, 2.3 million people in Massachusetts alone will lose
guaranteed health benefits. So what are we going to do? We are going to
go back and tell them: Gee, the Senate, in all of its wisdom, deemed
that these things that the State thought were important for you--they
are not important for you. And the State does not have to provide them.
Typically, the great thing about a democracy is that if there is a
better idea, people get to hear it and they get to perhaps choose it.
They get to debate that kind of alternative on the Senate floor and
engage in a debate on the merits of each of these approaches. What is
so fundamentally frustrating about this week's discussion is that
differing approaches are not really allowed to see the light of day
except in speeches.
Frankly, there are a lot of ways we could approach the small business
issue. Senator Snowe and I have had hearings in the Small Business
Committee. We have worked for a number of years to try to narrow down
options on AHPs. A lot of people don't like them because of the mandate
issue. We have tried to wrestle with how do you deal with the mandates
and still lower costs. There actually is a way to open regional pooling
for States and allow a State that doesn't want to lose its mandates to
opt out. Why can't we have that discussion on the floor of the Senate?
You could create pooling. You could create a regional effort to reduce
costs. But you could allow people the right to also choose to hold onto
the benefits they want, if they want, and not deprive the States of
that option. There were a host of other ideas that we have been working
on.
I regret enormously that all of the effort that went into those
negotiations and discussions is not going to see the effort of real
legislation by voting on those different amendments. We also had
hearings which suggested a whole bunch of different ways which we could
provide and help small businesses without doing harm to the system.
None of that has been incorporated or is going to be incorporated here.

[[Page S4306]]

In 2004, I offered America a plan that would provide every single
American the same health insurance enjoyed by Members of Congress.
Since that time, Senator Durbin and Senator Lincoln have taken that
idea and turned it into a bill that creates the Small Employers Health
Benefits Program which he discussed. I am a sponsor of that. Under that
bill, small businesses could join a national pool and could take
advantage of the same Federal administrative functions and bargaining
power that is enjoyed by 8 million Federal employees across the Nation.
Why should we discriminate against them? Those small businesses could
have the ability to pool, to come in and negotiate less expensive
health care and provide better benefits to their people and do it with
the same leverage that the 8 million Federal employees do. Most
importantly, it would protect the State mandates that individual States
have decided they want to put in.
Republicans argue that that alternative does not provide the savings
that small business owners desperately need. The facts tell a different
story. We all want savings. We have to reduce the burden of health care
on small business. I understand that. That is why Senator Snowe and I
have been working to arrive at a way to do so. But experts predict that
premium savings for participating small businesses could reach as high
as 50 percent higher in the first 2 years, if it passes. It seems to me
there is a way to approach this. If you go with the idea of Senator
Durbin and Senator Lincoln, we would actually be able to reduce those
costs by almost 50 percent.
If this week was actually an effort to provide relief to small
businesses, we would be discussing all of the options to provide that
relief. I don't think that coming up with a precooked, one-size-fits-
all, one-ideology, one-approach, one-party plan is the way to help
businesses. It seems to me that what is going to happen is, a lot of
our small business owners and about 25 million uninsured Americans who
work for them are going to get caught up in this political show of the
week. It is obvious there is a partisan disagreement in what is keeping
the Senate as divided and as incapable of doing real legislative
effort. And that is a shame. It doesn't have to be that way, if we
mapped out enough time and actually worked across the aisle to try to
find the common ground. This is one of those issues where you have to
put the politics aside. That is how you are going to win one for
struggling entrepreneurs.
There are a couple of places we ought to be able to find that common
ground pretty quickly. First, how about for children in America? The
example I gave earlier of a mother who makes a decision about a child
not playing a sport or a child who comes up with a permanent impairment
is replicated tens of thousands of times over across the country. We
have 11 million children who have no health insurance at all. Sure, if
they get extremely sick, they will wind up being taken care of in a
hospital and somebody will ultimately see them, if it isn't too late.
But the fact is, by that early screening and by involving ourselves
early in their lives, educators and medical experts tell us that kids
who are properly fed, who have good nutritional practices as a
consequence of their meeting with doctors and mothers, learning about
those kinds of things, do 68 percent better in school and, in fact,
reduces the cost in the long run because they begin to learn good
health practices as a consequence of that exposure.
Why couldn't we be using Health Week to talk about the most
fundamental value of all, which is caring for our children and
providing every child in America with health insurance? You would
reduce unnecessary hospitalizations by 22 percent, and you would
replace expensive critical care and inexpensive preventative care.
Obviously, we would do much better in the classroom and much better in
families if that were the case. We are the richest Nation on the
planet. Yet one in four kids in America goes without immunizations. One
in three children with asthma don't get the medicine they need. It is
unbelievable to me that there is as much talk about family values as we
hear in the political dialog, such as it is in the country, but then
you have 11 million children who don't have any health care, and the
country is content to let it stand.
You could insure every single child in America for less than it costs
to roll back the Bush tax cut for the wealthiest people. That is the
choice. Every child in America could be covered with health insurance
if people earning more than $1 million a year didn't have to get
another tax cut. But Washington chooses the tax break for the few who
don't need it instead of health care for the 11 million who need it
desperately.
A 2005 Mason-Dixon poll found the following: 82 percent of
respondents think that every child in America should be covered by a
Federal health program, if their parents can't afford it; 90 percent of
voters believe that 11 million uninsured children in America is a
serious problem and Congress ought to address it and resolve it; 79
percent agree that it is our moral responsibility to ensure health care
for every child and for the Federal Government to invest in such
programs.
In addition, the poll found that when voters are presented with a
description of Kids First, the specifics of the bill that would provide
kids with health care, 75 percent of voters support it and support its
passage by a margin of three to one. They have said overwhelmingly that
providing health care to kids is more important than providing the next
round of the tax cuts and making them permanent.

So Americans know what we need to do. There is no more pressing need
than improving health care for our children. That is why nearly 25
national organizations representing over 20 million Americans have
endorsed the Kids First proposal. When I first sent an e-mail telling
people about the Kids First, within 2 days, over 20,000 parents phoned
in with recordings of why the Kids First Health Program is important to
their families. Let me share one or two of those with you.
Jennifer from Central Islip, NY, called in and said:

I have a child who is on medication . . . that costs me
$250 or more a month. I have children who can't go to the
dentist. You know, it's the worst feeling in the world, as a
mother, to know that in order to afford health care, you're
not going to be able to afford the home you live in.

Jordan from Reading, PA, called in and said:

Nalani . . . my 3-year-old . . . was born with cataracts .
. . Eventually chances are she will be blind. Unfortunately,
times are really hard in my house and we don't have health
insurance and I can't afford to give her the surgery that
will fix the problem that she has. I just can't imagine
growing up knowing that there was a way that you could have
helped. But because nobody thought you were important enough
and because your parents didn't have enough money for health
insurance . . . you went blind.

With calls like this, it is extraordinary to me that Congress
continues to offer a blind eye to these cries for help. This program
that is being offered, I regret to say, is only going to confound and
confuse and make worse the current delivery of health care in America.
I yield the floor.
The PRESIDING OFFICER. Under the previous unanimous consent
agreement, the Senator from Wyoming is recognized.
Mr. ENZI. That went a little longer than I anticipated. I have now
listened for an hour and 25 minutes to the other side. I ask unanimous
consent that our side have that kind of an opportunity.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ENZI. I have an office that is kind of interesting. It is Phil
Gramm's old office. He retired from the Senate after several years of
mentoring a number of us and was a real force around here.
Occasionally, when I am sitting in my office, some phrases will come by
that he used. I grab them and I put them in a jar. I figure I will
never have an opportunity to use them. But I think today I will pick
out of the jar again. He said: When the Democrats talk about health
care, they want national health care. The ship of health, they do not
care who steers it, as long as it wrecks, and we can have national
health care. That is a little bit about what we are talking about
today, that plus a combination of saying we are not going to let
anybody out there have anything unless they can have everything. That
would be nice. I would like for the people of this country to have
better insurance than we in the Senate have. That would be my dream.

[[Page S4307]]

I wish we could give them better insurance than we have.
Before I came to the Senate, I had better insurance than I have now.
When the Democrats say that they want to open up the Federal employee
health plans to everybody, they want everybody to have the same thing
we have, they don't really mean that. They can't really mean that. I am
willing to bet that if we were actually opening up that same pool and
letting the Federal employee insurance be used by everybody in the
country, the Federal employees would say: Whoa, not on my shift. The
Federal unions would say: No, not on my shift. That is a closed pool.
That isn't open to everybody. If it was open to everybody, it would be
a whole different range of costs. And it is subsidized.
The Democratic alternative, S. 2382, is an open, voluntary pool
purchasing agreement. That kind of an arrangement has failed nearly
everywhere they have been tried. There is no evidence that they would
succeed if they tried it now and would succeed where others have not.
Many States have tried this. It is with very little success.
It may look like the Federal Employees Health Benefit Plan, but the
Federal employees plan is a closed pool that provides premium support
to all eligible individuals. The Democratic alternative is an open pool
that would provide a tax subsidy to some of the eligible employers. In
other words, it would be apples versus oranges.
A tax subsidy? Let's see, would everybody be able to get a tax
subsidy for their health? No, you only get a tax subsidy if you buy the
Durbin-Lincoln health plan, a one plan fits all for the United States.
Now, there was some discussion about whether it was $78 billion or
$73 billion over 10 years. Let me tell you, they have never scored it,
so they have no idea what it would cost. That is what some of the
separate actuaries have looked at and said it would score. The Enzi-
Nelson-Burns bill would reduce costs and increase coverage, and that is
according to respected actuaries. No one can say for sure what that
Democratic alternative would do--whether it is tens or hundreds of
billions over 10 years.
The Durbin-Lincoln proposal eliminates the ability for national plans
in that bill to offer uniform benefit packages. Why is that important?
The plan I have put forth--the plan that has come out of committee--
allows small businesses to work across State lines to form bigger pools
so that they can negotiate effectively against the insurance companies.
That is where the savings are. We talk about mandates a lot in here,
but the savings come from the ability to have a uniform package so that
people in adjoining States can all be bargaining for the same package
and have a big enough pool to go up against the insurance companies to
be sure they get a better price.
The national plan--the Durbin-Lincoln plan--would still have to meet
the requirements of each and every State, even down to the specific
particulars of each mandate. Did you know that there are currently
1,700 mandates in the United States? Did you know that those mandates
are seldom the same from State to State? They may have the same title,
but they are not the same. So how do you put together a package where
you say you have to do all of them and be able to go across State
boundaries to form bigger pools? You cannot. You would have to do 1,700
mandates if you wanted it to be uniform across the United States.
I need to tell you, too, that some of these mandates we are talking
about are screenings. We heard about mammography over there. That is
very
important. I hope women get mammographies. But did you know that in
Wyoming, we really emphasize at this time of year--and I will mention
it because Mother's Day is coming up, and this is a huge program in
Wyoming to encourage people to buy that for their mother for Mother's
Day. It works well. People know exactly what they are buying and
exactly how much it costs. It isn't one of many mandates that are in
the package that they pay for even though they don't use it.
Somebody said that mandates only add 3 to 4 percent to the bill. No.
In the State with the minimum amount in mandates, it adds 5 percent, up
to Massachusetts, which adds 22 percent in mandates. Now, I am not
suggesting that any of those mandates should not be done. The bill I
worked on does set up the ability to have a basic plan. Would people
necessarily do the basic plan? They can do the basic plan up to
whatever they think is responsible coverage for the people in their
association. That doesn't mean nothing; it means they can pick.
You get the impression here that if you allow a basic package,
everybody in the country is going to jump on the basic package and say:
I can really sock it to my employees; I don't have to provide them with
anything anymore. That is not America, and that is particularly not
small business America. In small business America, they know they need
their employees. Of course, as somebody pointed out, sometimes the only
employees are mom and pop. They would like to be insured if they could
possibly afford it. So we have to find some way for them to be able to
afford it. But this notion that just because there is a mandate out
there, everybody will use it, and this notion that just because there
is a mandate out there, if we don't require it, it will be dropped--you
know, we allow big business in this country to do whatever they want.
And do you know what. They provide those basic things.
Now, one of the things which has been mentioned is colorectal cancer
screening. Again, the facts suggest that health plans cover important
tests like this regardless of State mandate, so it is likely that small
business health plans would cover them as well.
In 2004, the Government Accountability Office found that 20 States
had laws mandating coverage of colorectal cancer screening tests, which
are strongly recommended by the U.S. Preventive Services Task Force for
people 50 years or older. Now, the GAO then surveyed 19 small employer
plans in 10 of the States without laws mandating this coverage--without
laws mandating that. This is an opportunity for those small
businessmen, if they are the way they are accused of being here, to
just drop it for everybody. Now, despite the absence of State mandates
to cover colorectal cancer screening, all 19 small employer plans in
those 10 States provided the benefit. Can you believe that? If you have
been listening to the discussion this week, you would think they would
just drop it. They didn't drop it. They said: Our employees are
valuable, and we need to do whatever we can afford to to help them.
Now, how do we help them to afford it better? Let's see. If we could
join up with all of the other realtors in the United States--
incidentally, the realtors are coming to town next week to their
regular annual meeting. As I understand it, 9,000 of them will be here
next week, coming to a national convention. Oh, how I wish they would
have come 1 week earlier. They could have explained their case. But we
have a whole bunch of small businesses out there that really think it
is important to be able to band together and get a better deal. It
works.
Part of the discussion we have heard today has gone off on some other
tangents. That is one of the reasons we are talking about relevant
amendments. One of them that we went off on is prescription drug Part D
and how, by Monday, people need to sign up for a plan. I really
appreciate the coverage we have gotten to get that word out to people
across America to make that decision this week. Make it this week.
Don't have a penalty because you missed the deadline.
Now, for months I have listened to the Democrats say: This is
terrible; this is confusing; this doesn't work; we need to do something
different; we have to make it simpler for our seniors. Let's see. Let's
just have one Federal plan for them to pick from. It sounds like Phil
Gramm again, doesn't it? Ship of state wreck so we can have a national
opportunity.
Let me tell you what happened. I was really worried about this
prescription drug plan. Wyoming has such a small population--less than
500,000--and we keep hoping we will get off that mark. So far, we have
never gotten a city big enough to kind of feed on itself and grow. I
said that Wyoming just doesn't have any luck attracting businesses for
competition, and we probably won't have any luck on prescription drugs,
so I wanted to make sure there was an underlying thing that says if
nobody is interested in Wyoming, the Federal Government will take care
of it. Do you know what. Wyoming got 41 plans--41 of them. Competition
works.

[[Page S4308]]

Now, that is what causes the confusion the Democrats keep talking
about on prescription drugs. They say that there are too many plans out
there for people to make a logical choice. That makes it confusing for
seniors. If we infuriate them, we can really get them storming. They
have done a pretty good job of that.
You know, I did town meetings, and I tried to help them out. Not only
were they appreciative, but a whole bunch of people already signed up
and were getting far more benefits than they ever dreamed of. I said:
How were you able to make such a critical decision all by yourself?
They said: There is this 800 number, and all I needed was to know my
prescriptions and the dose and whether I want to buy them locally or do
them by mail order, and I got a list of four plans that line up, line
by line, that I can make a comparison on. So I know exactly what I am
buying, what it is going to cost, and I know what it will be in the
long run. How difficult is that?
Oh, but the telephone isn't your only opportunity. You can also go
online. There is an online spot that will do the math for you, provide
this same kind of list for you to make the comparison. I did it for my
mom. Quite frankly, a lot of seniors are going to need help from their
kids--kids who are young like me--and they will go through the process
and find out how it works. There were things I had questions about, and
I got ahold of Health and Human Services and got some changes to make
it easier. At first, it looked as if you were signing up before you
knew what you were buying, but they changed that so you could get the
evaluation first.
Did you know that competition brought down the price by 25 percent
even before the first person signed up? That is what those 41 companies
who were competing did. Yes, the Democrats say: Wait a minute, there is
this penalty and there are a whole bunch of people who don't need any
drugs now, so they should not have to sign up now. That is not how
insurance works. You buy insurance in case something happens to you.
This is a Federal program, so we built in a benefit so that if you had
something already happen to you, you can still get low-cost insurance.
In Wyoming, there is a package you can buy for $1.87 a month and
avoid all penalties. It gives you assurance that you have coverage in a
number of areas. And this is something that would only happen on the
Federal level, too. If you come up with something that changes your
whole drug prescription thing and it goes up dramatically, every
November 15 to December 30 you can change plans. You can go to somebody
who will provide all of the benefits you need--the cheapest possible
plan. Again, you can have Medicare do the math for you.
So one-size-fits-all doesn't bring prices down. Competition brings
prices down. I know that the dream of every person is not to have to
sit down with every insurance agent and try to work out something or
even understand what their package is. That is where the confusion in
the Medicare prescription plan comes in--that possibility of having to
sit down with 41 different insurance agents. How many evenings will
that take you? There has to be simplification. The simplification we
provide in the bill I have been talking about is the ability for your
association to work across State lines, build a big pool that is
competitive, and to be able to sit down and talk to all of those
insurance agents so you can come up with the best possible plan for
your association and to save administrative costs.
I am not talking about eliminating the mandate to save the 5 percent
to 22 percent--although when they are doing those, they don't only use
25 percent of them, so maybe there is some consideration there. I am
not worried about that part. That is not where the savings come in. The
savings come in being able to negotiate in a competitive way and reduce
administrative costs. Right now, a small businessman pays 35 percent in
administrative costs. Big companies that do their own plans pay 8
percent. That is a pretty nice savings, especially if every 1 percent
in costs brings 200,000 to 300,000 more people into the market. Let's
find a way to bring them into the market. So 35 percent minus 8 percent
is a 27-percent savings. Multiply that by 200,000 and see how many
people it brings into the market.
We have small businessmen out there--22 million of them--who work in
small businesses who are uninsured. That is counting the owners and the
employees in the small businesses. We have another 5 million who are
self-employed who are uninsured. That is 27 million people in whose
lives we can make a difference because they can work through their
associations to get better prices--not by eliminating mandates. They
want those for their employees. They need those for their employees, to
keep their employees; otherwise, they move on to bigger companies.
Employees are the heart of the business, and small businessmen realize
that more than big businessmen.
But there is another reason the Durbin bill won't work. He has taken
away the ability of plans to form these uniform benefits on a national
basis, like the national Federal employees plans can do.

So there is not going to be this national pooling because they are
not going to be allowed to do what our Federal Employees Health
Benefits Plan does because there would not be any insurers who would
want to offer a national plan without the same freedom from State
mandates that exists for national plans under--get this--the national
plans under FEHBP, what we are proposing and what is referred to as the
Enzi bill. I like to think about it as the small working peoples bill.
This bill would just create 50 State pools, no true national pools,
and all of the 50 State pools will have all the other problems we
cited. The Enzi-Nelson-Burns bill trusts small business owners to band
together to negotiate for good benefits, while the Democratic
alternative gives small business no say in the matter.
They say: The Federal Government is right again; we are going to do
what the Federal Government does; oh, but we can't do what the Federal
Government does or anything like what the Federal Government does, but
that is what you have to settle for.
The Democratic alternative will create a new insurance pool that will
operate under a different set of rules which creates the same
opportunity for cherry-picking which is adverse selection that
Democrats claim the House bill creates. You have to look because the
Enzi-Nelson-Burns bill solves that. It solves that cherry-picking. It
levels the playing field. It doesn't just grab the best customers from
the insurance companies and move them over into the health plans. It
allows the insurance companies to compete and also to reinsure, but
they have to work with a bigger group.
The Democratic alternative sets up a dual Federal-State regulatory
structure that would create confusion for consumers and participating
insurers. I will probably cover that a little bit more later. I made a
lot of notes on points I ought to cover.
There is one very important one. We were talking about childcare a
while ago, and everybody considers childcare to be extremely important.
We talked about newborn care. I think everybody considers newborn care
to be extremely important. When they talk about eliminating mandates,
they like to expand that well beyond what the bill ever allows.
There are requirements in States for who are covered persons. This
doesn't change that one bit. Newborns who are covered are not touched--
not now, not ever, no intention to do that. So if they are covered now,
they will be covered then. It is the law.
I have several other people who would like to use a portion of this
time that I just reserved a while ago. I yield time to Senator Burns
who has been very patient. I yield Senator Burns 15 minutes.
The PRESIDING OFFICER. The Senator from Montana is recognized.
Mr. BURNS. Mr. President, I thank my friend from Wyoming, a man who
lives south of the 45th parallel from our State, for the work he has
done on this legislation.
We have been asked a lot of times what drives us on this legislation.
I have been on the Small Business Committee now for three terms. We
tried to pass an association health plan for the last 12 to 15 years.
Even Senator Bumpers, the senior Senator from Arkansas back in those
days, worked on a bill, and his own side wouldn't let him complete that
exercise.
The landscape has changed a little bit, and the numbers we are
getting

[[Page S4309]]

now are much larger than they were, say, 10 years ago: 27 million
working Americans are uninsured; 63 percent are either self-employed or
work for a small business. For small businesses with 10 or fewer
employees, 34 percent of those are uninsured. And for firms with 10 to
24 workers, 27 percent of them are uninsured.
Then I looked at my own State and looked at those numbers, and they
are compelling numbers. In Montana, 60 percent of small businesses with
fewer than 10 employees do not offer health insurance. That is a big
number, 60 percent. Incidentally, most employers in Montana are small
businesses. They make up the vast majority of our working force. They
are people who run small firms that we typically think of as small
business, but there is another small business--and some are a little
bit bigger and can be defined as a big business--that we tend to
overlook, and they are the people who live on farms and ranches across
this country. They have the same desire and same needs for insurance
coverage.
As I talk to my folks who live in rural Montana, ranch families
simply cannot afford health insurance. Those who can, typically carry a
high deductible catastrophic policy and then hope they will be able to
weather the health care costs should tragedy strike. Consequently, many
ranch families must work second jobs, and do, simply to get health
insurance benefits.
Furthermore, very few farm and ranch owners provide their farm
workers with health insurance. This isn't because they don't wish to
provide that coverage. It is because providing such coverage is
unaffordable. One ranch family my staff spoke with currently spends
$2,000 a month for coverage of their family of four. As expensive as it
is, they can't afford to go without the coverage as one of the members
was in a ranch accident which confined him to a wheelchair for the rest
of his life.

Consequently, these hard-working Americans are forced to rely on
already burdened emergency rooms and health clinics. These small
hospitals in rural Montana, some of which we define as critical access
hospitals, could not have kept their doors open had it not been for a
redefinition of critical access hospitals, telemedicine, and the
ability for people to afford health insurance. I fear if we do not
begin to seriously address this issue of the uninsured, particularly in
rural areas, many of these small critical access facilities cannot
survive.
I have heard their argument on the other side. Why would they put at
peril health care facilities in rural America? And that is what they
would be doing should we continue to do nothing. Therefore, the choice
we must make this week could not be clearer. Do we prefer to give small
business and individual proprietors the ability to offer their
employees health benefits, or do we prefer to continue to limit their
ability to offer benefits by Government regulations--mandates?
People like to have a choice. They don't want to go to the store and
just buy one brand. It is an easy question for me to answer. The
farmers and ranchers and small businesses of Montana--and Senator Enzi
has almost the same makeup in his State as we have in our State.
Agriculture plays a huge role in Wyoming and Montana. In fact, it
contributes more to the GDP than any other industry. So it is not fair
to those hard-working folks in rural areas to deny them the benefits
that large corporations enjoy or unions and, yes, those of us who serve
in this Senate. It is incumbent on us to get these business health
plans in place, and now.
As we have no doubt heard, one of the major criticisms of the bill is
it allows small business health plans to avoid State-enacted insurance
mandates. I don't think that is quite accurate. Specifically, some of
the loudest critics allege this bill will cut off coverage for
mammograms, childhood immunizations, supplies, colorectal cancer
screening, and many other procedures. It is not true. It just isn't
true. To use a scare tactic does not do much to further the debate on
how we should approach this particular problem.
Studies have shown that health care plans cover these and other
services regardless of State mandates. Members of the Senate need look
no further than their own health benefits package to know this is the
case. Federal employee health benefits plans are not subject to State
mandates. Yet these plans provide comprehensive coverage for these
services and often provide better coverage than would be covered under
most State mandates.
I don't like to see small business characterized as this is a way to
save money at the expense of their employees. Small businesspeople are
closer to their employees. They understand their responsibilities
better than anybody in the world of commerce because they are small,
they are a family. That is why the owner has to take the same policy as
the employee. You wouldn't even have to mandate that.
I can remember I started a small business and it stayed that way. It
wasn't planned, but it did. We insured our employees, and yet my wife
and I carried no insurance, and we had a growing family at that time.
We did it for economic reasons. But we had the responsibility to
protect the folks who worked there.
Most plans cover essential services required by State mandates
regardless of whether they are mandated. So why? Because it is not only
good policy, but it is good business. For instance, plans generally
cover breast cancer screenings regardless of State mandates because it
is far cheaper than having to pay for a mastectomy. Plans generally
cover screenings for colorectal cancer regardless of State mandates
because it is far cheaper to catch it early. Plans cover diabetes
treatment regardless of State mandates because it is far less expensive
than having to pay for all the maladies that can come about if you are
not treated, such as blindness and, yes, amputations.
It is far better to have childhood immunizations in your plan than
pay for the more serious diseases that may develop if you are not
immunized.
It just makes good sense if you want to keep the employee around and
their family that you have grown to know because when you run a small
business, it is a personal thing.
We have crafted this approach--and it is not a panacea to cure
everything, but at least it is a step in the right direction to cover
people who have no insurance today.
It is impossible for small business associations to offer uniform
health insurance benefits packages affordably on a regional or national
basis. It is hard. If we try to do anything around here, we try to pass
legislation that is one size fits all. That is pretty tough to do.
Circumstances in Maryland or Virginia are probably a little bit
different than they are when you get west of the Mississippi River,
especially in my State of Montana.
For instance, what is required for diabetes coverage in Montana is
not the same as is required in the States of my friends from Idaho,
North Dakota, South Dakota, and Wyoming. Thus, the association that
offers benefits to small businesses in this region must adhere to the
different mandates in each State. Having to fashion a plan to meet the
mandates for each State drives up the cost. What we are trying to do is
get our arms around the cost of it. It is impossible to offer a plan
without first addressing cost. According to the nonpartisan
Congressional Budget Office and the Government Accountability Office,
these State-imposed benefit mandates raise the cost of insurance and
cause countless Americans to go with no coverage at all.

Moreover, some of those mandates in certain States are for coverage
procedures that the vast majority of Americans would not want and
probably do not even know are offered. Acupuncture, for example, is a
mandated benefit in some States. Some people may benefit from this
service, but the vast majority of Americans do not. This is but one
example of the hundreds and hundreds of mandates throughout this
country for services many do not realize they are covered for and would
not avail themselves of if they did. Yet the cost of covering this and
other procedures is paid by everyone in that State due to those
mandates.
It is a simple thing, insurance. I don't think I have heard it used
on the floor since this debate got started. Simply put, when costs go
up, coverages go down. It is a simple fact in the underwriting
business.
So by allowing the businesses to band together and pool their
resources, thereby giving them the same bargaining power large
corporations enjoy, this bill, S. 1955, will lower cost

[[Page S4310]]

and improve access for millions and millions of Americans who do not
have it today. This bill will not create a perfect health plan for all
Americans, but that is not what we are talking about. This bill will
increase the number of Americans with health insurance. This body can
debate endlessly on what the perfect health plan is, but that does
little good for the employees of small businesses who currently have
none at all. So the choice is clear: Do we increase the amount of
working American families with health insurance or do we let
partisanship rule the day, as it has for too many years? The American
people need better and they deserve better, and this bill will give
them better as we move it along.
S. 1955 will lower health costs. All the figures we see tell us that.
More importantly, it will give many working Americans affordable health
benefits, something they don't have today. My farmers, my ranchers, and
the small businesses in small towns across America, which are the
backbone of our economy, deserve the same rights as the Fortune 500
companies, unions, and yes, even us, the Government.
It is time to act, even though it may not be perfect. Perfection
should never get in the way of doing something for small businesses and
their employees.
I thank my friend from Wyoming for allowing me this time.
Mr. CORNYN addressed the Chair.
The PRESIDING OFFICER. The Senator from Wyoming controls the time.
Mr. ENZI. Mr. President, I thank the Senator from Montana. I thank
him for all of the work he went through during the past year as we
talked with the insurance companies sitting down with us and the
insurance commissioners sitting down with us, trying to work out a
plan. I appreciate the efforts of those two groups and all of the
associations, and I will talk about those a little bit later.
At this time I yield 15 minutes to the Senator from Texas, Mr.
Cornyn.
The PRESIDING OFFICER. The Senator from Texas is recognized for 15
minutes.
Mr. CORNYN. Mr. President, I wish to express my wholehearted support
for the bill that the chairman of the HELP Committee, the Health,
Education, Labor and Pensions Committee, the Senator from Wyoming,
Senator Enzi, has shepherded so far through this process, this small
business health plan bill. I think it presents an outstanding
opportunity for the Senate to do what my constituents tell me they want
every time I go back home and I talk to them, and that is to have
access to good quality health care.
The fact is this bill will allow small businesses to band together on
a national basis and give them the leverage they need to negotiate good
terms with insurance companies for their small businesses and for their
employees. This bill would let these insurers bypass some of the
mandates that are well-intentioned but which have the impact of driving
up the cost of health insurance for employers to the point where many
people can't afford it.
In my State we have the unfortunate distinction of having one-quarter
of the population without health insurance. What that means is that
people end up going to the emergency room for their health care, which
has a couple of unintended consequences: No. 1, it costs a whole lot
more than it should to treat those conditions in places like a clinic
or somewhere else where they could be treated on a nonemergency basis.
No. 2, it has the consequence of causing emergency rooms to have to go
on divert status, and that is when people come with true emergencies to
those emergency rooms and they can't be seen because the emergency
rooms are full of people who are going there for nonemergency care. It
literally endangers the life and certainly the well-being of that
individual who needs to be seen in an emergency room. So we have a
broken health care system that can be so inefficient and not serve the
best interests of the American people.
What this bill does is provides a means for, as I said, small
businesses to band together to increase their negotiating leverage. It
is anticipated to be able to bring down the price of health insurance
by about 12 percent, which will allow more and more people to gain
access to health insurance so they don't have to go to the emergency
room, so they have more choices, and so they have the peace of mind
that comes with having that coverage in a way that allows them to enjoy
the benefits that many of us have but which we take for granted.
We have an alternative that has been offered by Senator Durbin and
Senator Lincoln, and I think it serves a useful purpose, not because I
agree with the alternative proposed, but what it does is it
demonstrates the competing approaches or visions or principles between
this side of the aisle and that side of the aisle when it comes to
providing access to health care.
It has become increasingly apparent to me that while we share the
goal of access to good quality health care on both sides of the aisle,
we approach it in fundamentally different ways. For example, our side
of the aisle--and this bill, I think, reflects the fact that we believe
there ought to be something other than a government-run health care
system; that private insurance companies offering competitive plans to
individuals create consumer choice. It creates competition. And we know
that competition creates better service and better prices for American
consumers.
The alternative being offered is a command-and-control health care
system operated by the Federal Government that is neither efficient nor
does it offer the sort of choice and competition, lower price and
better service that would be offered through private health insurance
options. Indeed, I think our friends on the other side of the aisle
have, if nothing else, been consistent in their approach to health
care. They believe the Government ought to dictate health care choices
for the American people, whether it has to do with CHIPS, the
Children's Health Insurance Program, the Medicaid Program, the Medicare
Program, or whether it is veterans health care. They believe the
Federal Government knows best and that bureaucrats in Washington, DC
ought to make the choices that I believe ought to be reserved for me
and my family when it comes to what is best for us.

As I said, this is an issue I hear about all the time when I talk to
my constituents. It is, in fact, the growing cost of health care and
the unavailability of health care that is one of the greatest concerns
of my constituents in Texas. Rising costs, systemic inefficiencies,
barriers to access, and the increasing costs of coverage represent the
challenge we have to confront and which this bill directly addresses.
I understand the difficulties that small businesses have in Texas
when trying to obtain quality health care coverage for their employees
at reasonable prices. One employee of a small business in Addison, TX,
for example, had this to say about the disparity in coverage available
to small versus big businesses:

Our February 2006 renewal premium increased by nearly 40
percent. For a group of 4 insured with no major medical
issues and no increases in plan benefits, this was difficult
to understand. Our course of action was to look for
affordable plans with fewer benefits, but that proved to be
difficult and the results undesirable. Fortunately, one of
our employees decided to waive coverage and join the policy
offered by a large corporation that employs her husband. Her
premium under our policy would have been $4,740 a year. The
price to carry her on her husband's policy was only $700 a
year. Now, that is a disparity. If adequate health coverage
is to be provided to employees of small businesses, it is
going to be vital that small businesses be allowed to pool
their employees in order to maximize their leverage and in
order to minimize the premiums to which they are now being
subjected.

That is exactly why I support this legislation. Because it would
allow associations such as trade, industry, professional, chambers of
commerce, for other small business associations to offer fully insured
health plans to small businesses. I am a proud cosponsor of this
legislation, and I believe this bill is an important step toward making
health insurance more available and affordable to more Americans.
I thank Chairman Enzi and his committee for their hard work in
bringing this bill to the floor.
The goal of this bill is to reduce health care costs and expand
access by creating small business plans. As I mentioned, a recent study
indicated that the price of health insurance could literally be brought
down as much as 12 percent and as many as an additional 1 million
working Americans insured who currently are not insured and have no
alternative but to go

[[Page S4311]]

to the emergency room for their health care.
Recently, the Small Business Health Plan Coalition sent a letter
signed by organizations that represent more than 12 million employers
and 80 million workers. They wrote in support of this bill, saying it
will:

Provide workers employed in small businesses and the self-
employed with access to Fortune 500-style health benefits now
enjoyed by workers in corporate and labor union health plans.

This is a principle that resonates with the American people, and I
must say that the American people have every right to be frustrated at
Congress's unwillingness to step up and deal with this problem. And woe
be it to those politicians who stand between the American people and
their desire to see health coverage expanded and access increased.
Almost 90 percent of voters, including 93 percent of Republicans and 86
percent of Democrats, in recent polls state that they favor allowing
self-employed workers and small business employees to band together to
negotiate lower insurance costs.
It is time for the Senate to act. In 2005 alone, health care costs
rose three times faster than inflation--and even faster than that for
many small businesses. Many small firms had to simply cut benefits or
eliminate health care coverage entirely. Only 41 percent of firms with
9 or less employees offer health benefits, compared with 99 percent of
larger firms.
We all know that small businesses are our Nation's chief job
generator, our No. 1 job creator. They deserve to be treated fairly.
But by themselves, these small firms and self-employed people have
almost no leverage against insurance companies to try to negotiate fair
prices and fair plans.
As it stands now, if they want to join other small employers and
purchase insurance through national associations, they have to deal
with an enormous array of State-level health insurance regulations and
benefit mandates. It goes without saying that many of the mandates that
are ordered by State legislators to be included in insurance policies
in their States are passed with the best of intentions, but they have
the unfortunate effect of raising the price of the insurance to the
point where many people simply cannot afford it.
It makes no sense to say that everyone must have a Cadillac with all
the bells and whistles when all some people want or can afford is a
basic model of a similar vehicle. Big businesses, for the most part, do
not have to deal with these regulations. The Congressional Budget
Office and Government Accountability Office and others have found that
State-imposed benefit mandates raise the cost of health insurance and,
in effect, represent an unfunded mandate on employers.
Small business health plans will have a strong incentive to offer the
best policies possible for their members. After all, that is what the
competitive market is all about. Small businesses will have to compete
with large businesses for employees. And when employees decide where
they want to go to work, they will look at not only the salary they
will be offered but the benefits that will be offered, including the
health coverage that is available. This is simply a case of the market
working and allowing individuals the maximum freedom to choose what is
best for themselves and their families.
In order to remain competitive and attract a talented workforce, I
believe small businesses would want to have the ability to offer high-
quality health benefits, the same opportunity that large companies
currently enjoy. Right now, small businesses effectively have the
choice of offering expensive plans with all the required mandates,
whether employees will actually even use those services or simply not
offering insurance at all. That policy in my State is part of what has
been responsible for 25 percent of the people of Texas not having
health insurance. It must change.
This is not a complete panacea, but it will provide dramatically
better and expanded coverage to the people of my State and the people
across this country.
Under the Enzi bill, every small business owner will have the
opportunity to choose a comprehensive plan, but they will also have
other, more affordable, high-quality choices, too. This will improve
access for millions of Americans who currently do not have any
insurance at all. I believe this legislation is a good step in the
right direction toward increasing the affordability and access to
health care that all Americans deserve.
More can certainly be done, and I certainly believe that while this
is an important step, we should not stop here. We should continue to
increase the number of choices available to the American people--things
like consumer-oriented health care, which provides greater transparency
and provides information to consumers so they can determine where to go
for their health care services based not only on price but based on
outcomes--things like health savings plans, which would give people
greater access and greater control over their health care decisions and
allow them to determine how their health care dollars will be utilized
rather than having to buy high-priced plans that contain attributes
that they frankly don't need or don't want and which cost them
additional money.
Certainly, more could be done, but I urge my colleagues today to
support this important legislation because I think it represents a
dramatic and long overdue improvement over the status quo.
I yield the floor.
The PRESIDING OFFICER. The Senator from Wyoming.
(Disturbance in the Visitors' Galleries)
The PRESIDING OFFICER. The Sergeant at Arms will restore order in the
gallery.
The Senator from Wyoming is recognized.
Mr. ENZI. Mr. President, I do have several things I need to cover. I
think I have another speaker or two on their way down. People are
talking about being able to offer amendments. They can offer
amendments. We want to have discussion, debate; we want to cover
objections, answers, proposals on this bill, and we are willing to do
anything that is relevant.
There has been a lot of talk about needing to talk about drug
reimportation. That is important--at least a 3-week topic. Prescription
drugs, that one best wait until after Monday until we see what the
exact problem is before we do it. And stem cells, that is probably
another 3-week debate.
It took us a year to be able to get this one to the floor so we could
talk about small business health plans.
I need to make some comments in regard to a couple of the letters
that were read earlier because I am aghast at what was in the letter.
The American Cancer Society, as part of that, said: No matter what is
done to the Enzi bill, don't vote for it.
That means that should we have an amendment that does everything that
is done across the United States for cancer at the present time, they
are still urging people to vote against it? It is a little early to say
that. It is a little early to say there are not going to be any changes
because we will have votes. It may require cloture in order to stay
with germane ones instead of the ones that I mentioned and also to make
sure--I want to have a vote on the Durbin-Lincoln bill. But I want to
have a vote on my bill as well. I think we both ought to have them.
If we release the Durbin-Lincoln one for a vote now, then they can
put all kinds of blockages on there so I can't ever get to a vote. And
the only vote that we will have had will have been theirs.
We are trying to have some fairness, and so far we have not been able
to get to that point.
Another one was the diabetes letter. Again, it said: No matter what
you do to the Enzi bill, vote against it. That means, if we instituted
every single thing that is being done for diabetes in any State in the
Nation, they are still suggesting that they will vote against the bill?
Wow. I mean, I have never run into anything such as that.
We looked at the diabetes thing and we said: How do we do this?
Because out of the States that do it, there are no two that do it
alike, so how do we get these agreements across State lines so they can
pool into bigger pools and be able to negotiate against the insurance
company so they can bring down rates through negotiation and they can
bring down rates by eliminating administrative costs? We are not
talking about bringing down rates by eliminating mandates. We are
allowing

[[Page S4312]]

them to have some flexibility in the mandates so they can come up with
a common package, and I am sure that it would include that, just as I
did the thing on colorectal cancer. All 19 places that they have been
allowed to do that, they included that, even though it wasn't a
mandate. They were excluded from that.
I also wanted to put into the Record an editorial from the Arkansas
Democrat Gazette. It was in the ``Opinion'' section. It says:

Ever face a really tough decision like where to attend
college, or whether to take that new job, or should you go
with the lasagna or the meatloaf for lunch? So you get out
the yellow legal pad and make a list of the pros and cons,
right? Well, maybe not for the meatloaf vs. lasagna bit. Some
things are a simple gut decision.
But it helps to compare and contrast. And it sure helped to
compare and contrast the two bills now floating around the
U.S. Senate to make it easier for small businesses to offer
health-insurance to their employees. One bill is co-sponsored
by Arkansas' senior Senator, Blanche Lincoln.
You could find the comparison on page 2A of Wednesday's
paper. There was Senate Bill 1955 (sponsored by Mike Enzi of
Wyoming) on one side, and Senate Bill 2510 (Blanche's bill)
on the other.
Both sounded fairly similar.
Both promised to make it simpler for businesses to band
together and buy cheaper health insurance.
Both promised to save businesses money and cover more
folks.
Then we got down to the bottom, to the very latest, biggest
question, and, boyohboy, talk about a pro and a con.
The question: What would it cost the Federal Government?
The answers: Nothing for the Enzi Bill.
For the Blanche bill, oh, somewhere in the ritzy
neighborhood of between $50 billion and $73 billion over 10
years.
When an estimate for new government spending has a margin
of error of some twenty-three billion dollars, you know that
new program is just gonna bleed money.
What's worse, or at least as bad, is that Senator Lincoln's
bill creates a national health program that'll be under the
administration of the federal Office of Personnel Management.
Translation: We the American Taxpayers will be in charge of
the care and feeding of yet another bloated bureaucracy.
Why? Why do we need another federal program under federal
so-called management adhering not just to federal rules and
regs but all the state rules and regs, too? (It gives us a
headache just thinking about filling out those insurance
forms.)
We suppose it's because some politicians, who may have the
best intentions in the world, can't imagine a health plan
that doesn't have the government deciding what should and
should not be offered at every single bureaucratic level.
Thank goodness that isn't required of private employer plans.
Can you imagine the red tape? Perish the pencil-pushing
thought.
Senator Enzi's proposal, unfortunately entitled the Health
Insurance Marketplace Modernization and Affordability Act,
takes a freer-market approach. His bill would let small
businesses band together and get better deals on health
insurance through trade associations.
Now for the devilish detail: Senator Enzi's bill would be
regulated by the feds but largely exempt from individual
state mandates. The better to offer these plans nationwide
and keep costs down.
Remember, the idea is to help small business, not burden
them with more state regulations.
Besides, it's nothing new. Major companies like General
Motors long have been granted exemptions from state laws
regulating insurance--it's called an ERISA exemption, because
they have employees all over the country. They couldn't very
well insure their employees from sea to shining sea while
abiding by every queer detail of every law in every state.
Especially when employees move or get transferred and want to
keep their insurance.
But won't the absence of state regulations lower standards?
Not if the small businesses offering the insurance want to
keep their employees. It's in businesses' interest to have
good health insurance for their workers, or their workers
will go somewhere else. It's how the free market works.
Think of these small-biz health plans like charter schools.
They'd be free of, to quote Senator Enzi, ``the current
hodgepodge of varying state regulation.'' That way, small
businesses across the country can band together and negotiate
group health insurance on their terms. Which would be more
affordable for the businesses, the employees and, unlike the
Blanche bill, the taxpayers.
If we gotta have a federally regulated Small Business
Health Plan, we sure don't need one as costly as Blanche
Lincoln's. And, yes, we gotta have a Small Business, etc.
Because what we've got now isn't working.
Look at the numbers: Of the more than 45 million uninsured
Americans, 60 percent are employed by small businesses or are
in some way dependent on those businesses. But it's getting
harder for a small business to offer health plans because
insurance premiums cost so much these days. Since 2000, the
cost of health-care premiums for employers has gone up almost
60 percent, including some 11 percent in 2004 alone.
Pass the Enzi Bill and, according to a study by a Milwaukee
consulting firm, small businesses would save 12 percent on
health insurance premiums. Even more important, some 900,000
uninsured folks would finally get coverage.
Hey, sounds like a plan. Blanche Lincoln's bill, meanwhile,
sounds like an expensive, bureaucratic pain in the
pocketbook.

Mr. ENZI. I would like to have you see the small business
organizations that are supporting the Enzi-Nelson bill. There are a
couple of hundred of them here--12 million employers, 80 million
workers.
I would like for you to see the small business organizations that are
supporting the Durbin-Lincoln bill. Oh, there are two. OK.
I want to share a letter from the National Association of Insurance
Commissioners as well. They are writing in response to our May 2
request for a review of S. 2510 Small Employers Health Benefits Program
sponsored by Senators Durbin and Lincoln.
I ask unanimous consent the letter be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

May 9, 2006.
Hon. Michael B. Enzi,
Chair, Committee on Health, Education, Labor and Pensions,
Washington, DC.
Dear Chairman Enzi: We are writing in response to your May
2, 2006, request for our review of S. 2510, the Small
Employers Health Benefits Program Act, sponsored by Senators
Durbin and Lincoln.
The authors of S. 2510 sought the input of the NAIC when
drafting their bill and we appreciate their willingness to
work with and consider the views of insurance regulators.
Like your bill, S. 1955, the Durbin/Lincoln bill does not
include the option of self-funded association plans, instead
requiring coverage to be purchased from carriers that are
licensed in and regulated by the states. This is a
significant improvement over association health plan
legislation, such as S. 406. The bill would also preserve
state rating rules and benefit mandates, thus maintaining
state authority over health insurance regulatory policy.
We are concerned, however, about the practical impact this
legislation would have. S. 2510 creates an unlevel playing
field by requiring plans sold through the Small Employer
Health Benefit Plan (SEHBP) to meet different rating
standards than those required of plans not sold through the
SEHBP. By setting different rules for different carriers, S.
2510 could create an unworkable market in some states.
For example, if state law allows carriers in the general
market to charge small employers with healthier, younger
workers significantly less, and the federal law requires
carriers in the SEHBP to have only a modest variation in
rates, the SEHBP carriers will be selected against. In fact,
few carriers would want to participate in this program in
states with such rating disparity.
S. 2510 does attempt to ameliorate this problem by
providing subsidies for those that participate in the SEHBP.
We agree that these subsidies will help, but they are not
sufficient. We believe that states are best suited to
establish rating rules for all carriers--creating two sets of
rules would be harmful to the workings of the small group
markets. This could also limit the ability of states to
develop innovative programs to address the growing health
care crisis.
Finally, both S. 2510 and S. 1955 will not affect the
underlying and primary causes of skyrocketing health care
costs that are making health insurance increasingly
unaffordable for millions of Americans. However, we do
applaud you and Senators Durbin and Lincoln for your efforts
and we hope our dialogue will continue and yield real
solutions.
Sincerely,
Catherine J. Weatherford,
Executive Vice President and CEO;
Alessandro Iuppa,
Superintendent of Insurance, State of Maine, NAIC
President;
Walter Bell,
Commissioner of Insurance, State of Alabama, NAIC
President-Elect.

Mr. ENZI. The experts on S. 2510, the Durbin bill, from the National
Association of Insurance Commissioners, write:

S. 2510 creates an unlevel playing field . . . could create
an unworkable market in some states. . . . Few carriers would
want to participate in this program. . . .

Again, people can read the entire letter, and I am sure they will
find that very enlightening. There is a lot more detail there.
Last, I ask unanimous consent to have a letter from the National
Association of Health Underwriters printed in the Record.

[[Page S4313]]

There being no objection, the material was ordered to be printed in
the Record, as follows:

May 10, 2006.
Hon. Michael B. Enzi,
Chairman, Senate Health, Education, Labor and Pensions
Committee, U.S. Senate, Washington, DC.
Dear Chairman Enzi: We're very pleased that the Senate will
spend this week working on important health issues. The
issues to be addressed are critical to the health of America.
One of the most important issues to be addressed this week
is health insurance market reform under S. 1955. Our members
work on a daily basis out in the real health insurance
markets of America. We are in a unique position to be able to
observe which markets work better than others and would like
to commend everyone who has worked so hard on this
legislation to produce an end product that will make health
insurance more affordable for small employers. S. 1955. has
been modeled to produce a competitive market and a level
playing field. Markets with these characteristics are always
the strongest and produce the most affordable products.
We are in particular pleased that reform did not go in the
direction of S. 2510, Small Employers Health Benefits Program
Act of 2006. Under the auspices of creating a more
competitive environment, S. 2510 creates the worst kind of
unlevel playing field by providing subsidies in the form of
reinsurance and a risk corridor only to health plans offered
in one purchasing vehicle within the small employer market.
It is very important that all plans operating within a
special market segment play by the same rules. This ensures
the financial integrity of all market players and results in
more product availability within that market. S. 2510 does
just the opposite. The subsidies it provides are not
available to plans that offer coverage in the small employer
market outside the purchasing pool and it would provide a
significant competitive advantage to carriers operating in
the pool, versus those that offer coverage outside the pool.
Under this anticompetition model, there would soon be very
little choice outside the pool as carriers would be forced to
exit a marketing environment where they could not possible
operate competitively. This would force more and more people
to purchase coverage within the pool, and the cost to
government for the subsidies would increase even more.
There is, of course, a reason for the subsidies. Rating
rules inside the pool would be considerably more restrictive
than they are in the majority of states today, so the pool
could not be competitive in many areas without the subsidies.
And although the subsidies are for a limited period of time,
the unlevel playing field created under this scenario would
likely result in no other coverage being available outside
the pool for consumers to select once the subsidies to plans
operating inside the pool stopped and costs returned to a
higher level. And although the subsidies would at that point
stop, the rating structure and other mandate provisions
inside the pool would continue and the cost of coverage would
be predictably high. The ultimate result would be an
increased number of people being priced out of coverage and
ultimately, more, rather than fewer people would be
uninsured.
We do appreciate the positive direction you've taken with
S. 1955, and the extreme efforts you've taken to listen to
everyone's concerns and respond in a reasonable way. My staff
and I look forward to working with you toward achieving
enactment of your bill. Please let us know how we can help.
Sincerely,
Janet Trautwein,
Executive Vice President and CEO.

Mr. ENZI. Again, it is a much more extensive letter. I hope people
will take the time to read the Record, but it is from the National
Association of Health Underwriters. These are the experts on health
insurance. They look at this stuff all the time.
It says:

``2510 creates the worst kind of unlevel playing field;''
``the cost of coverage would be predictably high;'' ``an
increased number of people being priced out of coverage;''
and, ``Bottom line: More rather than fewer people would be
uninsured.''

That is the National Association of Health Underwriters.
I wish to have some time to go over the good comments, too. But I
have been joined on the floor by the majority whip. I will relinquish a
few minutes for him to say a few words.
The PRESIDING OFFICER. The Senator from Kentucky.
Mr. McCONNELL. Mr. President, I thank my colleague from Wyoming. I
congratulate him for a superb job in crafting this important measure to
deal with what many of us think is one of the most pressing problems
confronting our country. I have talked to a lot of people in my State,
and right up there with gas prices today, they raise the issue of
affordability of health insurance.
I have heard from workers who fear that their employer may have to
cut back on their coverage. I have met with employers who are concerned
that high health care costs prevent them from investing in their
businesses and creating new jobs. It would be safe to say I am
confident that most if not all of our colleagues have had similar
experiences in their own States.
These are real concerns. In every sort of noon-time civic club
engagement I have, this is the first thing people bring up. Health
premiums have increased nearly three times the rate of inflation, and
the percentage of employers offering health care benefits continues to
decline.
This is a particular problem for our small employers and
entrepreneurs. These are the people who create the majority of the new
jobs in our country. Sixty percent of the working uninsured--those
Americans who have jobs but don't have health insurance--are either
self-employed or they are employed by small businesses.
The sad truth is, it is too darn expensive for many small businesses
to provide health coverage to their employees in our country today.
There are a lot of reasons for this.
First, small businesses don't have as much negotiating clout with
insurers when they are negotiating premiums as large businesses do. It
makes sense. That leaves them stuck, of course, with higher costs.
Also, employees in small firms must absorb a larger share of their
plan's administrative costs because there are fewer employees to share
those costs.
Third, small businesses must typically purchase care in the
uncompetitive, expensive, small group market.
Add all of these factors up and small business health care costs
become too expensive for many small businesses to afford.
Small business, as we all know, is the engine that drives the
American economy. We must allow them to band together so they can buy
health insurance at lower costs so that our people and our economy can
keep moving full speed ahead. I commend the HELP Committee for
reporting a bill that will do just that.
Finally, I commend Chairman Enzi who has done a magnificent job in
moving this legislation forward.
It addresses the unique challenges facing small businesses by
allowing them to join together across State lines to offer insurance to
their employees. This will give them the needed purchasing power to get
a better deal on insurance policies.
Enacting the Health Insurance Marketplace Modernization and
Affordability Act will address many of these problems all at once. It
will reduce health care premiums. It will increase the number of
Americans with insurance. It will reduce the Medicaid rolls. And, most
importantly, while doing all of this, the bill will not increase the
burden on the taxpayers.
That is not just my opinion; these are the findings of the
nonpartisan experts at the Congressional Budget Office. Their cost
estimate for S. 1955 shows that the bill will reduce health care
premiums in the small group market by 2 to 3 percent. That is important
because we know that with every 1-percent change in premiums, 200,000
to 300,000 Americans are able to afford insurance.
So do the math. According to the Congressional Budget Office
estimates, 700,000 Americans who would be uninsured under current law--
who are currently uninsured--would be covered under the Enzi proposal;
700,000 Americans who would be uninsured under current law, would be
insured under Chairman Enzi's proposal.
By helping small businesses expand coverage for their employees, CBO
estimates that 135,000 Americans, who without the Enzi bill would be on
Medicaid, would now receive private insurance under the Enzi bill.
Clearly, this is the way to go.
Most importantly, and unlike the Democrats' alternative, the bill
accomplishes this without increasing the burden on the Federal
taxpayers. In fact, the Enzi-Nelson bill will save the taxpayers $3
billion over the next 10 years. Nearly 1 million Americans get better
health coverage, and the taxpayers will save the $3 billion I referred
to over the next 10 years. This legislation is good, strong medicine.
My colleagues across the aisle have called the plight of small
business a ``distraction.'' But this situation that affects the
economic engine of our country--the small businesses--is a real
problem, not a distraction, and the problem is not getting better on
its own. It ought to be addressed.

[[Page S4314]]

In 4 of the past 5 years, small businesses paid double-digit
increases each year in health insurance premiums. At that rate, more
and more employers will be forced to scale back or drop coverage
altogether for their employees. The Enzi bill is the first step in
righting that crisis.
Again, I commend the HELP Committee for reporting the bill that
addresses the challenges facing small businesses.
I also note the tremendous contribution made throughout this process
by Senator Talent, who has been a tireless advocate for small business
health plans during his tenure in the House and during his 4 years here
in the Senate.
This is an important piece of legislation that will address a very
significant problem facing many of our small businesses--the high cost
of health insurance.
I urge our colleagues to vote to invoke cloture and to support the
Enzi bill. It would be an important step in the right direction for
Americans.
I yield the floor.
The PRESIDING OFFICER. The Senator from Wyoming is recognized.
Mr. ENZI. Mr. President, I thank Senator McConnell. I appreciate all
of his effort and help. I appreciate the Senator bringing up Senator
Talent. I need to mention Senator Snowe as well. They were the original
sponsors of associated health plans on this side. They asked for a
hearing. We held a hearing. After the hearing, people on my committee
were saying, Golly, this is a problem for small business. What can we
do to solve it?
It was also obvious from the discussion that there were some
difficulties with the true AHP approach which we modified in the
meantime. That is how we got to the position we are now in.
Mr. McCONNELL. Mr. President, if the Senator will yield for one
question, I have heard the Senator talk about the process by which he
developed this legislation. Does he have any idea how many hours he
spent consulting with the various entities across America that care
about this and trying to move this legislation to this point?
Mr. ENZI. Mr. President, I don't have any idea. I spent a lot of
hours and my staff people spent a lot more hours. Senator Nelson's
staff and Senator Burns' staff worked on this for so long that I
actually thought maybe their staff people worked for me, too.
I was pleased spending days on end and sitting down, understanding
all of the parts of this and getting it to work.
Another important part of this, Senator Durbin asked me to talk to
him about his plan. I made an appointment that same day and met with
Senator Durbin and Senator Lincoln. We tried to work some of the
principles which they had into this format. Eventually, we were kind of
invited to leave by staff. We need to resolve more of that.
Mr. McCONNELL. Mr. President, I say to the chairman that this has
been a laborious and meticulous effort on his part. He has headed this
up, and he has led us in an extraordinary way, and I, on behalf of all
Members of the Senate, commend him for this accomplishment.
Mr. ENZI. I thank the Senator.
Mr. President, as an accountant I have to remind people that this
bill is not a case of subtraction. This insurance plan is an addition.
It will bring additional insurance to people. There are 27 million
people out there who are uninsured. This will bring a number of them
into the market. It will also allow people who are already insured to
increase the amount of insurance which they have because they will be
able to save some dollars. I am sure they will put that back into
insurance and into more benefits for people. So it is an addition, not
a subtraction, and it will bring in newly insured people.
One of the things I ask people is, when you go to the dry cleaners
tonight to pick up your laundry, can you look that person in the eye
and say, I don't think you deserve health insurance because you might
not demand enough for yourself? So I am going to save you from
yourself. Can you say to the mom and pop who are running the business
down the street from your home, You don't deserve health insurance?
As you go home today, as you leave the Hill, think about the people
around you, the regular people, the cab driver, the worker at the dry
cleaner, the person at the neighborhood restaurant, all of those people
who often you may not notice, the real people who make the world
operate. Many of them do not have any insurance. Some may even own the
little business around the corner and still are not able to have
insurance. We always assume that if people own a business, they make a
lot of money. There are times that the employees make a lot more than
the owner of the business. They always have to pay themselves last.
As Senator Burns said, when he was in business he provided health
care to his employees, but he couldn't afford it for himself and his
wife. But you do that to keep employees. I am not talking about deluxe
insurance, I am talking about any insurance.
When people get the kinds of screenings that they would like to have,
or even get the screenings they would like to have, and then find out
there is a problem, if they don't have any insurance, they can't get
anything done unless they pay for it.
We are not talking about the employees at the big chain hotels or the
big chain restaurants. We are not even talking about the employees at
Wal-Mart. We already said to them you can form whatever kind of benefit
package you want. You do not have to answer to any State. You don't
have to have review or oversight by the insurance commissioners.
Those are all things we provide for in our bill. You don't have to
meet any State requirement. So instead of 35-percent administrative
costs, you only pay 8-percent administrative costs. I am not talking
about deluxe insurance, I am talking about any insurance.
Right now in several States, there is only deluxe insurance. Did you
know that in some States there may be only one insurance provider
because others have been driven out of the market?
I hope people will take a close look at this bill. I hope the other
side will offer some amendments which are relevant to this bill and let
us work through the bill. I hope, if the only way we can maintain
germaneness is through cloture, that they will join in cloture because
there are thousands of businesses out there that need insurance. They
need hope. They want to ensure their employees. Think about that--27
million uninsured.
I yield the floor.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. CARPER. Mr. President, while he is still on the floor, I say to
my colleague from Wyoming, I think from all of us, I thank him for
taking an earlier position on the health plan bill that passed the
House. In my view, and I think in the view of lot of us, it was badly
flawed. Thanks for the Senator's efforts over an extended period of
time, along with our colleague, Senator Nelson of Nebraska, to take
that product and make it better, and for your willingness to work I
think in conjunction with Senator Snowe to improve on it further, to be
responsive to the concerns that a lot of us are raising, I wanted to go
on the record.
As I said yesterday--and I will say it in front of my colleague--I
find that he and Senator Nelson of Nebraska are two of the most
thoughtful Members we have in the Senate. It is a pleasure working with
you.
One of the disappointments that I find around here is sometimes even
when we appear to agree on things, it is hard to get anything done. In
this case, there appears to be pretty good agreement that if we could
somehow find a way to harness market forces, we could bring down health
care costs for small business and their employees and find a way to
pool the purchasing power of those small businesses and our employees
could maybe bring down health care costs and get a better selection of
options from which to choose.
There has been a fair amount of discussion today and the days leading
up to this debate over mandated coverage that certain States offer. I
will give an example of one State in our experience with respect to
mandates.
Before I came here, in my last job I was Governor of Delaware for 8
years. Roughly 10 or 12 years ago we learned, to our alarm and dismay,
that Delaware had the highest rate of cancer mortality in the country.
We also learned at the same time that while we had the highest rate of
cancer mortality in the country, we did not have

[[Page S4315]]

the highest rate of cancer incidence. In fact, we were at number 20 or
so.
We looked at those numbers and sort of scratched our head about them
to figure out why we were No. 1 in cancer mortality--which is the last
place you want to be--and number 20 or so with respect to the incidence
of cancer.
We pulled in some people a lot smarter than me to look over those
results and asked: What is going on here? Why the high cancer mortality
number, particularly in light of the fact that cancer incidence is more
like the middle of the pack?
After assessing the situation for a while, they said: We conclude--
and we are fairly sure of this--the problem is, in your State, in
Delaware, you do not do a very good job of early detection and
treatment of cancer. If you want to bring down your cancer mortality
number to be closer to your cancer incidence number, you have to do a
better job of early detection and treatment.
We took that charge seriously. We went to work in three areas: The
first of those, Delaware at the time, was one of the higher ranking
States in terms of incidence of smoking, tobacco usage. We said one of
the things we want to do is reduce the use of tobacco products. We
decided to start with young people to reduce the likelihood young
people will start smoking and continue to smoke. We made it more
difficult for them to have access to tobacco products. We also reduced
the opportunities for people to smoke indoors, an effort that continued
under my successor.
The second thing we did was, with respect to expanding the
opportunity for people to find a health care home by expanding
opportunities for people to participate in Medicaid and the SCHIP
Program for young children, partnership between the State of Delaware
and the Federal Government as other States participated, too.
The third thing we decided to do was to say maybe we ought to have
health insurance plans in our State offer as part of their package
screening for certain kinds of cancer. For example, mammography
screening for breast cancer, colorectal screening, cervical cancer
screening, and a couple of others. We did all those things roughly 10
years or so ago. Every year we have had an opportunity to find out how
we are doing with respect to cancer mortality and cancer incidence.
I have a chart. Delaware is small, so rather than use 1 year's
numbers we look at 5 years. We have a 5-year rolling average. We went
back to 1989 to 1993, when Delaware was No. 1 in cancer mortality. In
the next 5-year period, 1990 to 1994, we were No. 1. In 1992 to 1996 we
were No. 1, and so on. During the 1990s and into the decade we start
out No. 1. We were the first State to ratify the constitution and our
State slogan, which is ``We are the first State.'' We like to think it
is good to be first. This is one thing we do not want to be first in.

The State that was No. 1 in cancer mortality for too many years
started to drop by 1997 when we fell down to No. 2, and we continued to
drop so that by the year 2000 we were down to No. 5.
I am happy to report standing before the Senate today that in the
most recent numbers which I think run up through 2003, we dropped out
of the top 5. We might still be in the top 10, but we know we are not
in the top 5, and certainly not No. 1. We are heading in the right
direction. I will not be happy until we are No. 50.
I would like my colleagues to consider that all of our States are
different. Delaware is different. Wyoming is different from Oklahoma.
We all have different priorities. We had a real problem in Delaware. We
still have a significant concern with respect to cancer mortality. We
developed a good game plan and we implemented that game plan. And lo
and behold, it is working. It is actually working. We want to make sure
it continues to work.
Reducing cancer mortality is like the Navy guys changing the course
of an aircraft carrier, turning an aircraft carrier. The same is true
as we try to reduce cancer mortality. It is a slow process. It is not
an easy process. It takes time. If you stick with it, you can turn
aircraft carriers. You also can bring down cancer mortality numbers.
How does this relate to the debate today? It relates because an
earlier version of the association health plan legislation passed by
the House any number of times does not let us do in Delaware what has
proven to be successful in reducing cancer mortality. Even with the
efforts of Senator Enzi and Senator Nelson, as this bill came to the
floor, it did not let us continue in Delaware requiring the screenings
for mammography, screenings in colorectal, prostate, and cervical
cancer. It does not help us do those things.
With the amendment that may be offered or suggested by Senator Snowe,
we can do some of this stuff, not all of it but we can do some of it.
Particularly the breast cancer screenings would be allowed to continue,
maybe one of the others.
The reason I bring this up, I want to keep in mind that States are
different. What we have focused on in Delaware is what works--what
works to reduce unemployment, what works to improve student outcomes,
what works to get people off of welfare roles, what works in a variety
of things. This is a multipronged approach that worked in reducing
cancer mortality.
Let me talk more about the Enzi-Nelson preliminarily with respect to
the Lincoln-Durbin proposal. They actually share some things in common,
as I said earlier. They both say: Health care costs are a major problem
in this country. They are a problem for little businesses; they are a
problem for big businesses.
As we watch my generation aging and look to the future, when the
boomers are in full retirement--and I might add, the generation of the
Presiding Officer is in full retirement--we will see Medicare,
Medicaid, and Social Security which today account for roughly 8 percent
of gross domestic production, by the time our generation is in full
retirement, 25 or 30 years, I am told that Medicare, Medicaid, and
Social Security may well consume something like 16 percent of gross
domestic production. The amount of spending for those three programs
alone is roughly equal to 16 percent of our gross domestic production
as a country.
If you look back over the history of our country, in the last 50
years or so we spend as a percentage of gross domestic product
something like 18 or 19 percent of gross domestic production to run the
whole Government. If we are looking at 25 years or 30 years down the
line where we are spending 16 percent of gross domestic production just
to run three programs, with nothing for the environment, nothing for
housing, nothing for defense, nothing for homeland security, nothing
for education, that is a scary prospect.
So the concerns we have about finding a way to constrain the growth
of health care costs are not just a concern of small or large business
but a great concern for those in the public sector who worry about how
to continue to fund and offer benefits through Medicare and Medicaid.
Senator Enzi took a few minutes to talk about the Durbin-Lincoln
proposal. The proposals are similar in a couple of respects: One, they
say rising health care costs are a major concern. They are a concern
not just for government, for big business, but a concern to small
businesses.
Wouldn't it be great if we could find a way to somehow combine the
purchasing power of a lot of small employers across the country and
their employees, much as we do for Federal employees? All Federal
employees do not work for one employer. We work for hundreds of
agencies. The Senate is an agency. The House is an agency. We have the
courts around here that are separate courts and agencies.

Throughout the country we are, in a way, sort of like small
businesses. We talk about being three branches of Government, but we
actually are, in a sense, small employers. There are big employers
among us, bigger agencies, such as Defense, but there are a lot of
small agencies that are much like a small employer.
What we have done to be able to constrain the growth of health care
costs for Federal employees is to find a way, working with the Office
of Personnel Management, to pool our purchasing power, to get a whole
lot of health insurance products available to be offered to us, to give
us the opportunity to shop among them and figure out what works for
each of us best, what we can afford, the kind of benefits we are
looking for, and then we can pick

[[Page S4316]]

and choose. We end up with a great cross section of product to choose
from. Given the kind of purchasing power we have, we are able to
constrain the cost of coverage. We have to pay something, I think it is
about 25 percent of the cost of our coverage. But it is, frankly, a lot
lower premium than otherwise it would be if we did not have the
purchasing power pool.
When you add active Federal employees and Federal retirees, you add
in all the families, we are talking about a lot of people, maybe as
many as 6, 7, 8 million people, and it gives us a chance to have a real
impact on what is available in terms of coverage and how much that
coverage is going to cost.
Senator Enzi raised a question about the cost of the Lincoln-Durbin
plan. The Lincoln-Durbin plan is different from where it was initially
introduced, as I understood it. There is a tax break in their plan from
which the cost arises.
He mentioned the cost over 10 years as much as $50 or $60 billion. It
is a tax cut for smaller businesses that offer coverage for their
employees. The reason there is a cost associated with the Durbin-
Lincoln plan is because of that tax cut. Ironically, some of my
colleagues have suggested that is one of the few times they recall our
Republican friends being opposed to a tax cut. I know there are tax
cuts they are opposed to, but that is the reason there is this cost. It
is considerable.
In the conversation we had earlier this afternoon, I was sharing with
my friend, Senator Enzi, it involves Senator Lincoln, myself, Senator
Salazar of Colorado, and a number of folks from the business community
who were gathered around just to have a good discussion about the
problems we face in trying to look for some common ground.
I said to Senator Enzi when I came to the Senate a bit ago, we had a
side bar conversation while another colleague was speaking. It is too
bad that conversation we had with the business community in Senator
Lincoln's conference, too bad we did not have that 12 months ago or 12
weeks ago. He shared with me a conversation that occurred maybe 9
months or so ago that involved him and some of my colleagues on this
subject.
Senator Enzi is good, as are Senators Durbin and Lincoln, in reaching
out to the other side and trying to find common ground. We need to find
common ground. I remain convinced I am one of the people who, like
Senator Enzi, sees the glass half full even when it is almost dry. As
to this issue today, I think the glass is at least half full.
I cannot help but think, given the good will on both sides, that if
guys like me and gals like Senator Lincoln and guys like Senators
Nelson and Enzi and Durbin put it in their minds, we could find a way
to further reduce the differences between our respective proposals.
I do not know what is going to happen when we vote. I guess we are
going to vote on cloture tomorrow, I am told. I am not sure what is
going to happen. I don't know if the debate will basically continue or,
because of that, sort of end for now. If it does, I hope the discussion
actually will begin in earnest, and discussion, certainly, with the
principals on both sides who have interests in this issue, and that out
of that discussion we come to a more satisfactory resolution.
One of the problems we have on our side--and I think Senator Enzi has
heard this before--is sometimes, even when we pass what we think is a
pretty good bill in the Senate, and we go to conference with a much
different bill from our friends in the House, when the conference is
created between the House and the Senate, we, as Democrats, are not
always full participants in those conferences, and what comes out at
the end of the day does not look a whole lot like what we passed in the
Senate, or at least not enough. That is going to be a concern. And I
just need to say that.
But having said that, we will cast our votes tomorrow and see what
happens with respect to them. But I would say to my friend Senator
Enzi, my hope is that if we do not come to resolution and this is an
issue that continues to be outstanding. It is too important just to let
it die. I hope we will have an opportunity--whether it is tomorrow or
next week or the weeks after that--to find a common ground and get
something done.
Mr. President, I brought these charts. We might as well use them.
Actually, I think for a guy from Delaware they are actually pretty
interesting. I do not know what these numbers look like in Wyoming. But
when you look at the leading causes of death in my State--this chart
goes back to about, oh, Lord, a dozen years or so. In the early part of
the 1990s, about 32 percent of the folks who died in our State died
from heart disease, about 26 percent died from cancer, 6 percent died
from strokes, 4 percent died from chronic lower respiratory disease, 4
percent died from accidents, and 3 percent died from diabetes, and 25
percent died from ``all others.''
Keep in mind, in the early 1990s, cancer was right around 26 percent,
heart disease was 32 percent.
Let's see what it looked like a decade later. Heart disease was at 32
percent, now it is down to 29 percent; and cancer, which was at 26
percent, is now down to 24 percent. The rest are pretty much the same,
although ``all other'' is gaining. In fact, ``all other'' is in first
place now, whatever ``all other'' is.
We are real pleased to see the drop in the number of cancer deaths.
Does that sound like a lot over a 10-year period of time, to drop from
26 percent down to 24 percent? It is not. But as I said earlier, it is
a little bit like changing that aircraft carrier. The numbers have
dropped. We are convinced we are doing something right, and we want to
continue what seems to be working.
I have a couple of other charts, and then I will close. This is a
chart that goes back to the beginning of the 1980s--1980 to 1984--and
up to 2002. The red numbers are the cancer mortality rates for the
country, and the numbers above are cancer mortality rates for Delaware,
starting in the early 1980s and going to the early part of this decade.
As you can see, the gap by around 1990--the early 1990s--the gap
right here, was pretty large, back here, but it is even larger here.
That is when we started doing something different, changing up our game
plan in Delaware. And we are still above the national average here, but
it is about half of what it was a decade or so ago. So we are convinced
we are on the right path.
One more chart. My staff thinks this is not a very good chart, and
maybe it is not. I kind of like it. Let's see if I can get it straight.
We look here at the percentage of the reduction in cancers. It dropped
between the early 1990s and the early part of this decade. The
mortality rate of all cancers in Delaware went down by about 13
percent--a drop in all cancers.
The cancer mortality rate in the United States during the same period
went down about 7 or 8 percent. The drop in the lung cancer mortality
rate in Delaware, over the last decade, was, again, by about 13
percent. In the country, it went down by about 5 percent, in this same
period of time. Colorectal deaths went down in our State by over 15
percent over that 10-year period of time, and down about 12 percent in
the country. Breast cancer deaths in Delaware went down, in the last
decade or so, by about almost 20 percent. In the country, it went down
by about 12 or 13 percent.
And for guys like us--Senator Enzi and my colleague, the Presiding
Officer--this is a real attention getter. For prostate cancer, the
mortality rate in our State, in the last decade, went down by almost 50
percent, in Delaware, as compared to the rest of the country, which was
about half that, roughly 25 percent.
I think that is a pretty good chart, and I am glad it was made up for
us to look at.
The point I want to make is, actually sometimes we have these
mandates, along with other things I mentioned earlier, and some
positive things do happen in our respective States.
We are pleased with the progress we have made, and we have a long way
to go in Delaware. We want to make sure we have the tools to be able to
continue in that vein.
I have said my piece. I look forward to seeing how the smoke clears
and what things will look like after tomorrow. We will just take it
from there.
I yield back my time. Thank you, Mr. President.
The PRESIDING OFFICER (Mr. Enzi). The Senator from Nevada.
Mr. ENSIGN. Mr. President, I will not be very long. I will be very
brief. I

[[Page S4317]]

want to speak about the bill that the Presiding Officer, the Senator
from Wyoming, has brought forth from the HELP Committee.
I have the honor of serving with the chairman on the HELP Committee.
I think he has done a great job crafting this bill, which will offer
more people the ability to afford health insurance in America.
We have heard reports about how many uninsured Americans are in our
country today. The fundamental point is that a lot of Americans simply
cannot afford to buy health insurance. And, many uninsured Americans
are employed by small businesses. I have built, owned, and operated two
animal hospitals, veterinary hospitals. As a small business owner, it
is very difficult to afford to buy health insurance, not only for
yourself, but, obviously, for your employees. One of the reasons it is
difficult to buy health insurance relates to purchasing power. When you
have a small number of people, it is difficult to go to insurance
companies and negotiate effectively for good prices. If you have 20
employees versus a company that has 20,000 employees, the company with
20,000 employees has a lot more buying power and, therefore, can
negotiate prices down more effectively than the smaller company.
The bill before us today establishes small business health plans,
which will allow small businesses, such as the veterinarians, the
restaurant owners, and the physical therapists to band together through
their associations, and negotiate for health care coverage at prices
they can afford. What this means is that a lot of people who are
currently uninsured can become part of the insurance market. There is
also a side benefit for the people who already have health insurance. A
lot of people who are currently uninsured are young, healthy people who
happen to want some type of health insurance coverage. If we bring
these individuals into the health insurance market, they will help
spread out the risk, which lowers costs for everyone else.
Now, we have heard criticism from the other side of the aisle saying
that we are not maintaining the mandates that a lot of States have put
forward. Opponents say that some people are going to be without
coverage for mammograms, cancer treatments, and other services.
These same people today have no health insurance coverage
whatsoever--isn't basic coverage better than no coverage at all? We
would love to offer and be able to afford to offer everyone every type
of service possible. But the reality is that a lot of people cannot
afford health insurance plans today because insurance coverage has
become too expensive. One of the reasons for this is that small
businesses cannot pool together across state lines. Another reason has
to do with mandates.
We talk about a lot of different proposals that can lower the cost of
health care for hard-working Americans. Everybody campaigns and tells
their constituents: We have to do something about the high cost of
health care. We must do something. Let's act.
We have an opportunity to act now in the Senate. There is a good bill
before us. We need to act on this bill so that uninsured Americans can
come into the insurance market.
This bill is estimated, by an actuarial firm, to lower the cost of
health insurance for small employers by as much as 12 percent. This is
a significant number. Every dollar you lower the cost of health
insurance makes more and more people able to afford it.
It is time for us to enact legislation that is actually going to be
good for the American people, a proposal that will allow more people to
be able to afford health care coverage.
Mr. President, the bill before us today goes a long way toward making
health insurance more affordable for small business owners and
employees. I encourage this Senate to get behind this legislation.
Let's move it forward, work out the legislative differences with the
House, and send a bill to the President that will help Americans afford
health care insurance today.
Thank you, Mr. President. I yield the floor.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. COBURN. Mr. President, first of all, thank you for taking my
stead in the Chair this evening so I could participate in this debate.
I have been in the Chair 2 hours and 30 minutes and have heard quite a
range of things.
Health care is a problem that affects the whole country today. We are
going to spend in our Nation $2.3 trillion this year. The largest
amount of money we are going to spend on anything in our country, we
are going to spend on health care, and one out of every three dollars
we spend does not help anybody get well.
We ought to ask ourselves--with 45 million people truly not covered
in an insurance product, with the cost of health care rising double
digits every year, with the cost of drugs skyrocketing, with the cost
of hospitalization, emergency care skyrocketing--how is it we are
spending all this money, with $1 out of every $3 not helping somebody
get well, and costs are going through the roof?
It is because we have some real structural problems. This bill is
meant to address a small portion of that. It is not the end-all,
answer-all to our problems in health care. We all realize that. But
this is something we can do in the short term that will make available
an opportunity for costs to be controlled in a small area of our
economy that will have impact and will create accessibility.
I would say we all in this body want everybody to have access to
health care. The question is, Who pays for it? Right now, in terms of
Medicare, our grandchildren are paying for it because it ran a $120
billion deficit last year. In other words, we borrowed $120 billion to
run Medicare last year because that is the amount of money we did not
have coming in from Medicare premiums.
The whole question on how we address health care is going to be: How
do we get a better system that will give more people access, that does
not waste that $1 out of $3? That is what we have to be concerned with.
We have the brains, we have the science, we have the facilities, but
something is wrong. What is wrong is there is not a competitive system
out there where we allocate scarce resources based on quality and value
and price.
This bill will move a little bit in that direction. There are going
to be a lot of areas where we move. The one thing I have heard from the
other side that I agree with today is, we ought to be emphasizing
prevention. I agree with that 100 percent.
We have 19 different agencies in the Federal Government that have
something to do with prevention. We are going to be introducing a bill
that pulls all those together into one and has a leader who is
emphasizing prevention and what we can teach the American people about
saving money, preventive health care. As grandma used to say: An ounce
of prevention is worth a pound of cure. And it works every time.
We know we can prevent diabetes. We can stop 50 percent of diabetes
just with education, but we don't have it. We are wasting resources and
duplicating resources. We have opportunity costs from programs that are
designed to do it and don't do it well. Others do it much better, but
we are still funding the ones that don't do it well. There are lots of
problems we have.
I want the American people to understand that the choice that has
been outlined by those who oppose this bill today isn't a choice of
whether we have to have mandates. It is a choice of somebody who has no
care now, no mandate, versus getting some care. If we do our job on
prevention, then we will be educating the American people. But the
ultimate health care responsibility in this country isn't the Congress.
It isn't the States. It is the individuals who make choices about what
is going to impact their lives and what value they want on their health
care. That is why HSAs, although they have been blocked, need to be
expanded vastly. They need to be funded better. They need to have an
application for chronic care, and they need to have a tax deductibility
to bring you up to the level of that so that we put everybody's skin in
the game, so you know you are going to make a choice based on what is
valuable to you.
Everywhere else in this country, we have trusted markets to allocate
scarce resources. We are a little timid about how they are doing it in
oil, but the fact is, the market is scarce, and the price is up. As
soon as either demand decreases or supply increases,

[[Page S4318]]

the price will come back down, or some other form of energy is going to
be there to supply it, such as agrifuels.
We have to trust the market to help us because we can't afford what
we have promised. We can't afford what we promised in Medicaid, in
Medicare. The money is not going to be there in 10 years. It is going
to start winnowing away. So what are we to do? Continue to create a
charade for the American people that says yes, we can, or start with
one small step with this bill which offers availability through group
purchasing, expanded purchasing power, lowering the overall risk to a
million people? Why would we not want to do that?
Is it perfect? No. There isn't a bill we pass that is perfect. But
this is a step in the right direction, although it does walk over some
State mandates, I agree. But the problem is, Medicaid walks over State
mandates every day. Medicare walks over State mandates every day. They
set a mandate.
We have two choices in health care: the Government is going to run it
all, or we go to the private sector where we really trust the market to
allocate and protect those who need the help, those who can't help
themselves. Those are the only two choices we have on health care. If
you think we have problems now, wait until the Government runs it all.
I am a physician. I have practiced since 1983. That is 23 years. I
have delivered 4,000 babies. I have done every kind of operation you
can think of. I have seen a system decline based on how insurance has
been applied to it and copying the mandates of the Federal Government.
So we are in a mess on health care. Let's get out of the mess. Let's
start with this, but let's don't stop there. Let's start with
prevention. Let's make sure there is competition in the pharmaceutical
industry. We don't have it.
As a practicing physician, there is no competition in the
pharmaceutical industry. Drugs that do exactly the same thing and are
priced the same way, nobody wants an increased market share. The
Federal Trade Commission ought to be asking why. Why don't they want
increased market share? I believe there is collusion on sharing of
markets in the pharmaceutical industry so that they can keep the prices
high. We need worldwide competition on pharmaceuticals. If we will do
that, we will get a lot of bang for our buck.
There is even collusion when it comes to the generics. The FDA has
created this wonderful system which enhances no competition for 6
months to 18 months for the first person who comes out with a generic.
What is that all about? That is taking away from the market.
There are lots of problems, but this is a good start. It is not
perfect. Is it as good as we can get? It probably is right now. But it
starts us down the path on what we need to do to fix health care in
this country. That is competition.
We need transparency. We have seen recently hospitals not wanting to
give their rates, doctors not wanting to give rates, Medicare not
wanting to publish rates. Why not? Let people know what they are
supposed to be getting charged. Let's have a little open sunshine on
the health care industry.
Let's talk about the 19 percent of every dollar that goes into the
health insurance industry that never goes to help anybody get well.
Let's talk about that. Let's create real competition in the health
insurance industry. The more people get into it, the more competition
we will have.
I thank the Senator for filling in for me so I could take the time to
address the Senate. Our goal is making sure everybody has access to
care and doing it in a way that our children can afford to pay for it
because we are not paying for it today. We need to be mindful of that
as we make those decisions. This bill starts with that.
I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. BURR. I ask unanimous consent that the order for the quorum call
be rescinded.
The PRESIDING OFFICER (Mr. Coburn). Without objection, it is so
ordered.
Mr. BURR. Mr. President, as you spoke on this bill, you inspired me
to come back over for another opportunity to talk. To put in context
why we are here, you have to talk about where we have been this week.
We started this week focused on exactly what you raised, and that was
the inflation factors that go into health care.
On Monday, we were slated to consider two different proposals. One
was a proposal that limited the liability that all medical
professionals have, and we have seen liability premiums rise at a rate
that is unsustainable for doctors across the country. That bill was
quickly questioned as to whether we would bring it to the floor. Some
argued that there was no need to; it is not a problem. We were forced
to have a vote on whether we could proceed to consider the bill. We
didn't vote on the bill. We didn't offer amendments on the bill. We had
a vote on whether we could proceed, which requires 60 Members of the
Senate to support. We didn't get 60 votes. The American people didn't
get cost reductions because some in this body chose not to extend the
privilege of debate and the voice of the American people in the
amendment process into that bill.
We turned around and we introduced another bill. The bill's coverage
applied to those specialists who are OB/GYNs; in other words,
individuals who deliver babies, something that is vital in this
country.
I know the Presiding Officer is, in fact, an OB/GYN. He delivers
babies. He delivered babies throughout his career in the House of
Representatives. He would leave the House, he would go home and deliver
babies on the weekends so that he could keep his practice alive. He
doesn't have the luxury now in the Senate. That is a shame because he
was good.
There are communities all across this country that have lost their
OB/GYNs, not because they became U.S. Senators but because they can't
afford liability insurance anymore. They have been forced to leave
rural America and go to urban America where they are under the umbrella
of coverage of a large medical institution, in all likelihood
affiliated with an academic institution.
What happened on Monday night when we took up liability limitations
for those across this country who deliver babies? We didn't get the
opportunity to debate it. We didn't get the opportunity to amend it. We
had a motion we had to vote on to proceed. Because 60 Senators didn't
agree to move forward, that died a quick death. Two bills that
addressed substantive ways to cut the cost of health care died in a
matter of 1 hour on the Senate floor because people didn't think it was
important enough to address things that are inflationary to the cost of
health care.
I said shortly after that I was going to come back to the floor
because I thought it was important for my colleagues on the Senate
floor and people in the gallery and across the country to hear real
stories from real Americans.
In North Carolina, we have a lot of people who are suffering today
because they lack insurance. So the third part of Health Care Week is
to take up a bill that allows small businesses--really the heart and
soul of America--to purchase as associations, as groups, to negotiate
en masse because they don't get the luxury of the benefits of large
corporations to leverage the cost of health insurance. For that reason,
many small businesses today can't afford to provide health care and to
keep the doors open of their businesses. So they choose to hire folks
and to employ them and to pay them but not to extend health care
benefits. Those are numbers that are counted in the national uninsured
population.
In North Carolina, we have 671,000 small businesses. Small businesses
make up 98 percent of the firms in North Carolina. Women-owned small
businesses have increased 24 percent since 1997. Hispanic-owned small
businesses have increased 24 percent since 1997; Black-owned small
businesses, 31 percent; Asian small businesses, 74 percent. Are they
any better off because of the categories they are in to provide health
insurance for their employees? No, because they are caught in the same
problem. They don't employ enough people to negotiate like the larger
corporations.
In North Carolina, there are 1.3 million uninsured individuals, and
900,000

[[Page S4319]]

of those uninsured individuals are in families or on their own with one
full-time worker. One full-time worker is in that house either with a
family or is the individual in the house. The opportunity with this one
bill is that we will have 900,000 people who potentially have the
opportunity for the first time to be covered by health insurance.
Many run to this floor, and they talk about what we need to do as a
Congress. They don't really mean we need to pass legislation that
creates an affordable health care bill. What they mean is they would
like for the Federal Government, through taxpayer funding, to produce a
benefit we pay for for anybody who is without health care.
I think we have the right approach. The right approach is to make
sure that small businesses can band together, that they can negotiate
with the private insurance market, that they can offer a benefit, for
the first time for many of them, to their employees, and the retention
of their employees is better because that benefit is now extended.
Do you realize that the most expensive benefit that is offered by a
business today is health care? It is not retirement, not any of the
things that historically we have looked at. The health care benefit is
the single most important thing.
I heard the Presiding Officer talk about the future and the fact that
our children are the ones paying for Medicare today.
That is, in fact, right. Three things control our competitiveness in
the world, and they are health care, energy, and labor. But I guarantee
you, when we bring up energy, we are going to be blocked from
proceeding because we will try to bring down gas prices and try to come
up with things that bring stability in energy. Some would rather see
nothing happen on the Senate floor.
I have an individual who is in the appraisal business in North
Carolina who wrote to me and said that small businesses need help with
insurance. That is in big letters. He says he is now paying $986 per
month for his wife and himself. This is for only 60 percent coverage
and a $2,500 deductible. He says he knows people with group insurance
paying $600 for 80 percent coverage and a $250 deductible, and many of
those have dental insurance as well. He said his policy provides none.
``Please help me out.''
This came from a store owner, and it says that as a small business
owner, it is important to enable some economy of scale in allowing
franchises to obtain more affordable health insurance.
The economies of scale is exactly what we are on the Senate floor to
debate. I might add at this time that this debate really didn't start
until several hours ago because on the third bill--this bill--we had to
vote on a motion to proceed, which we won this time, and we had to
delay some 30 hours before we could engage in the amendment process and
general debate.
This comes from an individual from Hickory, NC. She said that as a
parent and an employer, she knows the importance of having affordable
insurance and the financial devastation that occurs when you have no
coverage. Unfortunately, there has to be a tradeoff. She says she has
only one of two options to keep her doors open: either her employees
have no insurance or they receive a livable wage. When there are no
viable alternatives for employers to purchase reasonably priced
insurance, the losers are her employees.
What are we here debating? We are debating a change from today's
policy. What is the choice employees of small business have today? It
is a choice between nothing and nothing. That is unacceptable. That is
why the chairman, Chairman Enzi, has worked so hard to carefully craft
a bill that doesn't bypass those who are charged today with regulating
insurance, every State insurance commissioner. But it incorporates them
fully and allows products that can be created that, for once, are
affordable. Sure, they don't have all the bells and whistles. They
don't cover the full scope of coverage that every insurance product has
today. But when your options are nothing and nothing, isn't it
reasonable to believe that we can have a debate about creating
something and nothing? Isn't that, in fact, why we are here?
In South Carolina, there is a textile company, a small business owner
in Greenville who says that providing health insurance is becoming an
unbearable hardship for small businesses such as hers. She is a widow,
self-employed, and her health insurance is an expense she can hardly
afford. Like many of her employees, she has a $5,000 deductible, and
her monthly premium constantly increases 35 to 40 percent every 6
months. Most would say that is impossible, but I have her name and her
address, I have the city in which she lives, and I have her company
name. She wrote to me.
It is individuals who are turning to the U.S. Senate now. The House
passed it. They are saying: Please produce something for us.
Here is one from Alabama. It is not all North Carolina. This is an
owner of a nursing services company who said that the cost to cover one
employee is $225 a month, and it is $617 for full family coverage,
which is up 6 percent over last year. She recently lost a long-term
employee to a larger company because that company could afford to pay
100 percent of the employee's health care costs. She thinks it is
simply unfair that we don't do anything.
Janice is from Kentucky. She is the owner of an elevator company. She
was hit with an astonishing 60-percent increase in health care premiums
in 2002. There are a lot of similarities in the last letter. Some might
have thought that is impossible. It is not.
Here is another one. Some of this increase in cost was passed down to
employees because her company simply could not absorb all of the costs.
If this trend continues, which she fully expects, they will have to
drop the coverage she has provided for employees for years.
The writing is on the wall. We need to do something to relieve the
pressure for small business in America or the uninsured rolls will
increase. The rolls will not decrease because these small business
owners cannot afford to continue to supply health care as a benefit.
Here is one from Mississippi. As a new small business owner in
Mississippi, he finds it harder every day to make sense of why he pays
three times as much for family health insurance as he paid when he
worked in the same industry for a large company. He says there needs to
be a way for his company to offer his employees similar high-value
health insurance that he was offered when working with the big guys at
a reasonable rate. Small businesses are at an immediate disadvantage
simply because they are small, he said.
I talked earlier today about my election to the House of
Representatives, when the Presiding Officer and I came in. I came from
what I considered to be a small business, but it was over 50 people. We
had adequate health care. I paid 25 percent, and the company paid 75
percent. I got to Washington as a Member of Congress. I found that my
choices for health care increased in number, but I thought it was
probably most prudent to choose, in fact, the same plan I had in the
private sector, the same company, the same plan. I paid the same 25
percent, the Government paid the same 75 percent. What was the one
difference? The one difference, now that I was part of 2 million people
who worked for the Federal Government, was that my premium went up $50.

You see, there are some that will argue that the only way to solve
the health care crisis in America is to have the Government take it
over. If you want to solve small businesses' problems, let the
Government negotiate a health care plan for them. Well, my experience
with the Government negotiating health care is that it costs me more
money. I would be willing to bet that most will find that to be the
case. Incredibly, nobody is calling my office saying: I wish you guys
would negotiate for me, or I wish the Government would take this over.
Don't provide me choices, just give me one. I don't want to choose.
This is from Larry in Mississippi, who owns a small company. He has
little buying power and few affordable options for health care. It is
similar to what has happened in so many States, where one insurer
controls more than 75 percent of the small-group market. This lack of
competition resulted in an 80-percent increase in the last 2 years for
his John Deere dealership.
I will tell you what, if there is anybody I would work hard for to
find him

[[Page S4320]]

a deal on health insurance, it is a John Deere dealership. He increased
the deductible from $250 to $2,500. He says that if he doesn't receive
relief soon, he will be forced to drop all insurance coverage or lose
his business. So he has an option: He can close the door, and everybody
who works for him would be out of business.
You see, we are here because today the choice that small businesses
and their employees have is a choice between nothing and nothing. All
we are here to do is to suggest that we engage in this bill and that we
have an up-or-down vote about something. Nobody will see this as a
silver bullet that solves the health care crisis, as the Presiding
Officer said earlier. That will take a much more in-depth engagement, a
much more difficult debate on the Senate floor. We really will bring in
the experts as we try to provide the changes that are needed so our
children have the same benefits we have. But it doesn't make me too
optimistic if we cannot solve this simple thing that so many small
businesses are experiencing today.
Here is one from Virginia, not too far from us. The owner of a small
industrial service firm is facing a crisis trying to provide health
insurance for employees. His small business, with 20 employees, has
struggled for the past 10 years to provide a health benefit plan. He
has been able to continue to provide this insurance only by reducing
coverage, raising individual office fees, and asking his employees to
pay a higher share of the monthly premium. Underwriting penalties for
small groups and rising medical costs and increasing mandates from
government are collectively squeezing his small business to the point
where meaningful health coverage will simply not be affordable.
I thought our job was to try to bring more people under the umbrella
of coverage. I thought that was the objective, to try to create new
products, create more affordable products, make sure that health care
is not just more affordable but more accessible.
Here we are on the Senate floor with one of the most carefully
crafted bills I have ever seen--a bill that a group of actuaries from a
well-respected firm found would reduce health insurance costs for small
business by 12 percent in today's dollars. That is $1,000 per employee.
Is somebody in this institution telling me that small business
employees across the country don't want to save $1,000 or that they
don't want to have the opportunity to have less of their out-of-pocket
money go to health care coverage or that we should ignore a well-
respected actuary?
By the way, the actuary also found that S. 1955 would reduce the
number of workers who are uninsured by about 8 percent, or 1 million
people. This would automatically bring a million people under the
umbrella of coverage. That hits home to me because I have 1.3 million
uninsured in North Carolina. I have 1.3 million uninsured individuals,
and 17 percent of North Carolina's population is uninsured today; 16
percent are uninsured nationally in this country.
Do you realize that only 205,000 of those 1.3 million uninsured are
part-time workers? There is this belief that that number includes all
part-time workers. If we could just make sure Wal-Mart supplied health
insurance, this would all be over. No. The majority of mine--1.1
million--in all likelihood work for small businesses. They are
uninsured. And 900,000 of them certainly are in a family where they
could have a chance at health care coverage if, in fact, we pass this
bill.
The Congressional Budget Office has also looked at the bill, and they
found similar numbers of newly uninsured Americans. If S. 1955 were
signed into law, CBO estimates that nearly 750,000 more people would
have private health insurance than under current law. I guess that is
the key. I guess some don't want there to be private health insurance.
When we leave the marketplace alone, when we set it up so it is fair,
it is amazing what competition does.
As a gentleman from Mississippi said, when one company controls 75
percent, where is my negotiation point? We are talking about letting
national associations band together. We are talking about potentially
shopping for national coverage, with national firms, but letting the
State insurance commissioner regulate the product. I am not sure there
is a downside to that, unless the downside is that we have now brought
more individuals under the umbrella of coverage and this issue begins
to diminish from a standpoint of the politics that comes along with
health care.
Mr. President, I am going to end for the evening. I will not end for
the debate, though. I still continue to get letters into my office that
are real stories about real people. I think many times real people are
forgotten on the floor. We get so wrapped up in the debate of issues
that we forget that everything we do here affects somebody in this
country or in the world.
Each time we stop long enough--maybe this weekend; I am not sure we
will finish this bill this week; I hope we do--we figure out who these
uninsured are. Maybe everybody will take an opportunity to go to a
small business if they haven't visited one in their State, and they can
ask those small business owners: What is the health care market like
for your employees? I have a feeling what they are going to hear is
what I have shared with you from real businesses, real owners about
real people who can't afford what is available to them today.
There are in North Carolina 671,000 small businesses that desperately
want a choice of something. Today all they have is nothing versus
nothing. Their employees have nothing or nothing. Not a very good
choice.
I am glad we are on this bill. I am glad the 30 hours is over. I
commend Chairman Enzi for legislation that is incredibly well crafted.
It is focused exactly where it needs to be, and that is to make sure
plans are not cherry-picking, to make sure that regardless of the money
that is available, there is a health care option so an employer and
their employees can decide whether it is, in fact, affordable.
At the end of the day, it is my hope that Members of this very
historic institution will remember the folks back home who sent them
here, that they will remember the next generation we are obligated to
represent, that we have an obligation today to make sure individuals
who want to be covered have an affordable option to be covered, to make
sure we fix some of the problems so the next generation, our kids,
don't fight the same challenges we fight today.
I am convinced this debate will continue, and at the end of the day,
I am convinced the American people will win regardless of what the
intent is of some in this institution.
Mr. President, I yield the floor, and I suggest the absence of a
quorum.
The PRESIDING OFFICER (Mr. DeMint.) The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
The PRESIDING OFFICER. The Senator from Iowa is recognized.
Mr. HARKIN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HARKIN. Mr. President, something is wrong when 45 million
Americans, 8 out of 10 of them in working families, cannot afford
access to quality health insurance. This past weekend I met a woman in
Des Moines who has been without health insurance for herself and her
daughter since her husband died several years ago. She works hard as an
administrative assistant in a small law office. She lives, like many
Iowans, from paycheck to paycheck. She cannot afford private health
insurance and she makes too much money to qualify for the State's
Children's Health Insurance Program or Medicaid. This has consequences.
She has not had any screenings or preventive care in years. Her
daughter does not go to the doctor regularly, despite the fact that
their family has a long history of diabetes and cancer. She knows she
is at risk but cannot do anything about it. What happens to her if she
gets sick?
Many people believe the United States has the best health care system
in the world--the best treatments, the best medical technology, the
best pharmaceuticals. But this is a cruel joke to the uninsured,
including more than 8 million children, because they are forced to make
do with substandard care or none at all. The result is a paradox. The
United States has a world-class health care system, but we fall behind
most industrialized countries when our general health outcomes are

[[Page S4321]]

measured. In 2000, the World Health Organization ranked our health care
system 37th in outcomes that our health system provides. Just this
week, CNN reported a new study which found that the U.S. ranked next to
last in infant mortality among industrialized countries.
Bear in mind again that health insurance is not just about seeing a
doctor when you are sick; it is about prevention as well. If you have
insurance, you are more likely to have a relationship with a doctor or
health care specialist who knows you and your health history. You are
more likely to have access to preventive care so that chronic disease
can be prevented in the first place. Without health care coverage,
minor illnesses turn into major ones and small incidents turn into
chronic conditions. Once this happens, it becomes almost impossible to
afford quality health insurance without restrictions on benefits.
That is why this debate is so important. This week we are considering
a major overhaul of the insurance system in an effort to help provide
health care coverage to small business owners and their employees. I
applaud the goal, but this particular legislation before us now is
sorely lacking and will not provide access to quality health care at
affordable prices.
I oppose the bill before us for the following reasons:
First, the bill eliminates consumer protections found in current
State regulations, including in Iowa. In Iowa, under the bill, 840,000
consumers would lose coverage for diabetes testing supplies and
education, emergency services, mammography screenings, State mental
health parity, and well child care. They would also lose guaranteed
access to dentists, nurses, nurse practitioners, and other providers.
Iowa does not have a laundry list of coverage services. Iowa State
regulations guarantee quality insurance. But S. 1955 would do away with
the compromises that were worked out at the State level to guarantee
quality.
Secondly, the supporters of this bill argue that the bill would lower
insurance premiums for small businesses. What they don't tell you is
that it comes at a cost. Many people, especially those who are older
and sicker, would see their insurance premiums increase under the
legislation, even with the changes found in the managers' amendment.
CBO found that insurers will charge significantly higher premiums to
those who are sicker, older, and otherwise less favorable to insurance
companies. They will do this in order to reduce health insurance
premiums for small firms with workers who have relatively low expected
costs for health care. Imagine the shock of business owners all across
America, including many I have met with recently in Iowa, when they are
billed for the first insurance premiums under the new bill.
So keep in mind, of course, you can always get cheaper insurance, but
what does it cover, at what cost, and what are the premiums going to be
for the person who is covered?
Third, and importantly, this bill would undermine State efforts to
guarantee coverage for preventive services. As I have often said many
times, we don't have a health care system in America, we have a sick
care system. If you are sick, you get care. But we spend precious
little money and we have very few incentives for keeping people out of
the hospital, keeping them out of the doctors' offices, and keeping
them healthy in the first place. This bill would make it worse. In
short order, insurers would offer stripped-down policies that do not
cover preventive services. The result would be the elimination, as I
said, of cancer screenings, well child care, mental health services,
access to certain physicians or nurses or other providers such as
chiropractors, for example, who might give you good care and keep you
from getting a chronic condition, something that might cause you to
have an operation in the first place. So importantly, this would mean
elimination of benefits for everyone, not just small business.
Americans should have access to quality, affordable health care
coverage. Coverage that is stripped down is not sufficient, and we
shouldn't settle for it. People's lives, their livelihoods, their
ability to contribute to society will all be undermined if they are not
healthy.
I met with small business leaders in Iowa. Of course they want relief
from high insurance premiums or from not even being able to get
policies at all for their workers. We all do. Small business is the
backbone of my State. And they need--they need--to have some kind of
insurance coverage for their workers. With regard to this bill, what I
have said to them is, don't think it is this bill or nothing. I also
ask them: Are you willing to lose access to quality health insurance?
Just check with the American Cancer Society. We have cancer societies
in our small towns and communities all over America. People who run
small businesses contribute heavily to our local cancer societies. But
here is what the American Cancer Society said:

In one stroke, this bill would erase all that state
legislatures have done to prevent and more effectively treat
cancer by ensuring access to life-saving screenings for
breast, colon, and prostate cancer, cancer specialists
coverage for evidence based off label drug use, clinical
trials, and proven smoking cessation services.

That is from the American Cancer Society about this bill.
I ask all my friends; I ask anyone who has had a history of cancer in
their families: Would you want insurance that doesn't cover screenings
for breast cancer or colon cancer or prostate cancer?
How about the American Diabetes Association. We know that diabetes is
hitting people younger and younger all the time. We have to do
something to prevent diabetes. But here is what the American Diabetes
Association said about this bill:

We must ask ourselves how people with diabetes will be able
to pay for a disease that costs an average of $13,243 per
person to manage. Unfortunately, it will be our emergency
rooms and Medicaid system that are forced to pay.

I ask my friends who are diabetic or who have family members with
diabetes: Would you want insurance that doesn't cover diabetes-related
services?
Those are just two examples, but there are many others. So, again, it
is not this bill or nothing. There is a better option out there that
will guarantee coverage for these services and at the same time provide
small business access to quality insurance.
One realistic solution that I support would be to give small
businesses the option of joining a program modeled after the Federal
Employees Health Benefits Program. That is the program that covers us
here and we love it, believe me. All Senators, all Congressmen, Supreme
Court Justices, all our Post Office people--anybody who has anything to
do with the Federal Government belongs to the Federal Employees Health
Benefit Program. It is great coverage. Why shouldn't small businesses
have access to the same kind of program we have?
That is why I have joined with Senators Durbin and Lincoln to
introduce S. 2510, the Small Business Health Benefits Plan. Here is why
this bill is superior to the bill we have before us:
First, it would create a larger purchasing pool, a nationwide pool,
rather than the fragmented pools that will be created under S. 1955. A
national pool would reduce insurance rates for everyone.
A few years ago, before I came to this place, I sold insurance. There
is a principle in insurance that we all know: The more people in the
pool, the cheaper it is for everybody. It is one of the fundamental
principles of insurance. The more people in the pool, cheaper it is for
everyone. So you want a big pool when you are dealing with health care.
S. 1955, the bill before us, sets up thousands and thousands of small
pools. But the Federal Employees Health Benefit Plan is one big pool.
So if you have that national pool, insurers will be able to offer a
range of plans such as we have now. Every year we have open season and
I can choose from--I don't know, I didn't count last time--maybe about
18 different plans. But the Office of Personnel Management would
negotiate the rates and benefits offered under the plans.
Should they do that? OPM has been negotiating with private plans for
decades. They have consistently negotiated better rates for Federal
employees than have been achieved in the non-Federal market.
All the Senators here, all those who love the free market system--you
will hear speech after speech praising the

[[Page S4322]]

free market system, but everyone here belongs to the Federal Employees
Health Benefit Plan, and OPM is the one that manages the rates and
negotiates the rates in these plans. As I said, they are better than
anything that has ever been achieved in the non-Federal market.
Second, our bill offers a tax credit to small employers that would
help offset the cost of premiums for employees if they make $25,000 a
year or less. S. 1955 doesn't do this. There are no tax breaks for
small businesses in S. 1955. There are more than 26 million Americans
making $25,000 or less working in small businesses. Of those, 12
million, or 40 percent, are totally uninsured. That is what we want to
get at.
I will be glad to go to any small business with those who are
advocating S. 1955. We will take S. 2510 and we will take S. 1955, we
will lay it out there and let the small business owner decide which one
they would want to have. I would love to see that happen. I tell you I
know what would happen: They would pick S. 2510, the one I am talking
about, the one that would give them a tax break for covering and would
provide quality insurance.
Third, our bill does not preempt State consumer protection laws. S.
1955, the bill before us, would do away with the guarantees I
discussed, the guarantees of preventive services such as breast cancer
screening, mammography, cancer, prostate screening, things such as
that. By contrast, our bill would keep State insurance laws where they
are. The insurance would cover mammograms, cervical cancer screening,
diabetes testing supplies, immunizations, and on and on.
If you are a small businessperson and you happen to be watching this
session and you are listening to my remarks, you are probably saying:
Senator Harkin, that all sounds good. Why don't you get S. 2510, the
bill you are talking about, up for a vote?
Welcome to the unreal world of the Senate, when we are not allowed to
do things such as that. We have S. 1955. The majority leader has, if
you will pardon the expression, filled the tree. That is sort of
gobbledygook around this place which means they have blocked us from
offering any amendments, and then we are supposed to vote on cloture on
the bill, which means debate comes to an end on the bill and you can't
file anything that is not germane.
Tomorrow night we are going to be asked to vote for cloture on it? I
am not going to vote for cloture on that. If you want to have an open
Health Week here and you want to bring out S. 1955, leave it wide open
so we can offer S. 2510 and we can have a debate on it and have up-or-
down votes. I am all for that. I think the small business community in
America ought to know that we are not being allowed to bring up our
bill for amendment and discussion. I think our bill would pass. I think
the small business community would support it.

But as I have understood, being out in Iowa last weekend and as I
talked with small business owners, they have sort of been led to
believe it is S. 1955 or nothing. And of course they will take S. 1955.
If I thought that was all there was, I would probably take it, too. But
that is not the option before us. We have better options than S. 1955.
We have the option of S. 2510, the bill I spoke about, introduced by
Senator Durbin and Senator Lincoln.
Again, it is unfortunate--not for us. It is not unfortunate for us.
We have great health care coverage. We have great health care coverage.
It is not unfortunate for us but unfortunate for the small business
owners and the 25 million Americans who work for small businesses--12
million who do not have any insurance at all. This is what is
unfortunate. It is unfortunate that this bill has been brought up in a
way that makes it impossible for our side to amend it.
Besides getting a vote on our bill, I was prepared to offer a series
of amendments that focused on preventive care. I think if we are going
to have a Health Week and we are going to have a bill, I want to start
focusing on preventive care. We know it saves money. But we can't do
that, either.
Count me as one who will not vote for cloture on this bill tomorrow,
but count me as one who wants to have an open debate and amendment on a
health insurance program that will be beneficial to our small
businesses. I am sorry we are not going to be able to do it now.
Again, we are supposed to have a Health Week. Yet tomorrow I guess we
will take all day tomorrow talking about the tax reconciliation bill,
and then we are not going to be here Friday. What kind of Health Week
is this? What kind of Health Week is it when we are not allowed to
offer amendments and debate preventive health care, offer a different
bill for the one before us?
I think the small business owners of America now know what is going
on. I have heard from some who basically have been supportive of S.
1955 and they are backing off of it. They are saying no, we would
rather have your bill, we would rather have the one that provides us
with some tax credits so we can go out and join a bigger pool like the
Federal Employees Health Benefit Program; so we can join a big pool and
we can have preventive services; we can have the State mandates that
are there now that cover quality. They would rather have that bill.
But I am sorry we probably will not be able to get it done this year
and I think, as I said, that is not just unfortunate for us--heck, we
have the best health care coverage. We have great health care coverage.
The health coverage we have ought to be available to every American out
there.
I yield the floor.
The PRESIDING OFFICER. The Senator from Wyoming.
Mr. ENZI. Mr. President, one of the difficulties around here is the
process we have to use. Another one is that nobody listens to anybody's
debate. We have covered this in some detail earlier today, that
relevant amendments would be accepted. The Durbin-Lincoln bill ought to
be voted on. But it should not be voted on and then S. 1955 precluded
from getting a vote. That is one of the possibilities in the
organization and the rules that we have around here, that we could wind
up voting on that one and skipping the vote on S. 1955 and saying:
Look, all these people voted against that; that means they don't like
health care for small business. But they wouldn't have gotten to vote
for the one that they might have liked.
I went through a number of the reasons why S. 2510 has some problems.
I object to people saying we ought to give everybody the same health
care the Senators have. We ought to give them better health care than
the Senators have. The only problem is we can't do either of those
things. The bill that is on the floor by Durbin-Lincoln doesn't do
either of those things. It is a different plan that uses kind of the
same structure so we build the same kind of bureaucracy, except a lot
bigger bureaucracy to handle all the people in America, and it limits
all of the pools to each State because they will have to meet all of
the mandates of each of those States instead of what we have in the
Federal plan which is a national level of mandates.
We have our own level of mandates. We don't go by what the States do.
But that is not what is in that bill. In that bill they would still
have to go State by State, and if you go State by State, you can't form
the kinds of pools that we need to be able to have the clout to
negotiate a better price and to bring around the administration.
People say you want to get rid of mandates so that will save money.
No. Every experiment, every minilab that has happened out there where
small business people have been given the opportunity to band together
and to do something, they have covered those mandates. They didn't give
those mandates up.
How do you save money with this thing? Small businesses pay 35
percent for their administration. Big business, which we already
excluded from all mandates, we excluded them from Federal control, we
excluded them from State oversight and consumer protection, which is in
my bill--it still has the State oversight and consumer protection in
there--we gave the big businesses the wave on all of those things. They
still kept the mandates. But where they saved the money is in
administration. It costs them 8 percent to administer their plans. So
35 percent minus 8 percent means they save 27 percent over what a small
businessman will do. And every 1 percent we can save on insurance
brings 200,000 to 300,00 people back into the market.

[[Page S4323]]

That is why we want to have associations to be able to offer plans
under State consumer protection, under the insurance commissioner's
oversight.
But with some kind of a blended plan, they can cross State lines and
have a uniform package, and they can have a big enough group so they
can negotiate. That is what 1955 is about. We need to have a vote on
that as well.
As far as mandates, Senator Snowe is putting in a bill that will
cover those basic things people are talking about.
The letter that the Senator read from--the American Diabetes
Association--I talked about that a little bit earlier today. One of the
difficulties we had in trying to do something with diabetes is that 42
States--it may even be 47 States--are doing something with diabetes,
but no two do it alike.
Again, how do you blend across State boundaries unless you can get
some kind of basic package? I know they will cover diabetes. Under the
Snowe amendment, they will for sure.
The distressing part of their letter was, no matter what changes are
made to the Enzi bill, defeat it. That is not a very reasonable
approach by any disease group. That means that if I have an amendment
that said find out everything that is done for diabetes and do
everything for diabetes that is done anywhere, they would still be
suggesting voting against my bill. I don't think that is a reasonable
approach by any group.
The American Cancer Society wrote pretty much the same letter and
said pretty much the same thing.
We are not trying to subtract, we are trying to add. We want people
who are uninsured to come into the market, and we want people who
already have insurance to be able to get more and better insurance for
the same dollar. That is what employers are able to afford. We are
trying to come up with a system such as that.
The only thing about filling the tree--which I agree with the Senator
is gobbledygook--the only thing with that is to stick to small business
health insurance.
There are another dozen things on insurance and health care that we
ought to be debating. Each of them would take about 3 weeks to debate.
At this point in the season, we are not going to get 3 weeks to debate
anything. I am lucky to put together a few days to be able to talk
about this. I hope to make more progress on that.
I have been working hard with everybody to try to come up with some
kind of mechanism that will work. That is where we are on the bill. If
we could do the things that are relevant to this, or also germane after
cloture, then we could stay on the bill a little longer and keep
working on it. If we don't get cloture, we are probably done with this
discussion for the whole year. That will probably be the end of health
care for the year. People have to keep that in mind when they are
voting on cloture.
Even individual mandates can be brought up one at a time and put into
the thing, or at least be voted on. The desire is not to keep votes
from happening but to stick to small business health plans.
These folks have been asking us for 15 years for a change and some
way to handle it. They have been encouraged several times because eight
times the House has passed the association health plan. That was very
exciting for them. They said I think we can get it. It never made it
out of committee on the Senate side because there are some problems
with the basic plan that the House passed.
When I got this chairmanship, I said we are going to do something to
change this. We are going to find out what the objections are and see
if there isn't a way to get something done that will get relief for the
small businessman. The insurance companies were convinced that we were
going to do something, so they sat down with me. The insurance
commissioners had concerns, and they have always been one of the
stakeholders. They sat down with me, and they had their representatives
sit down with us days on end to work on some kind of a compromise. This
is one.
Nobody is raving about it except the small businesses because they
see it as an answer--not the final answer, not the total answer, but an
answer--that moves closer to what they can afford to do. Again, it
isn't by cutting mandates.
Mr. HARKIN. Mr. President, will the Senator yield?
Mr. ENZI. Yes.
Mr. HARKIN. He is a gentleman, and a good friend. I know he is
serious about this because he is a small business owner himself.
As I said earlier--and I want to make sure we are clear--that under
this gobbledygook, the filling of the tree--no one understands what we
are talking about out there--because of the way the bill is laid down,
the majority leader, under the rules of the Senate, today offered
amendments to the bill so that we can't offer amendments. There is no
way we can now offer amendments. If cloture is invoked tomorrow, then
we have 30 hours on the bill, and that tree could stay filled. So we
can never offer an amendment to this bill. We would then have a final
vote on S. 1955 without being able to offer any amendments. Is that not
so?
Mr. ENZI. Not quite.
Mr. HARKIN. Inform me.
Mr. ENZI. Even during the course of today and any other debate we
have on this bill, we have said if there is a relevant amendment, we
would consider taking that up and voting on it. One exception we have
on that is the difficulty with Durbin-Lincoln. If we vote on that, that
might be the only vote we ever get because the other side can block any
further votes from happening because you would have to have unanimous
consent to have a vote. So we would be blocked from ever having a vote
on our bill.
Mr. HARKIN. That is the problem with this whole cloture process. Why
didn't we try to reach a time agreement and an agreement on how many
amendments would be offered? As I understand it, our side was willing
to do that. Then we would not have this problem of cloture where we are
precluded then from offering amendments.

As the Senator pointed out, if S. 2510 is offered, I don't know what
would happen after that. The Senator said it wouldn't be offered. This
whole thing with the cloture has screwed up everything.
Mr. ENZI. No, I wasn't suggesting that S. 2510 would pass. I was
saying that a lot of Democrats would vote for it and it would fail.
Then there will be no further votes on it. You folks could all say we
voted for small business and the Republicans didn't vote for small
business. It would be because the Republicans wanted S. 1955 with a few
amendments which can be offered by both sides. That would happen
postcloture. The only thing that happens postcloture is amendments have
to be germane. That means they actually would have to apply to the
bill. The Durbin-Lincoln bill is germane. Many of the things people
talked about would be germane. What wouldn't be germane are some of the
long-term debates and things people would like to do, namely the stem
cell debate which we are going to have a debate on. They promised a
vote on it. We don't know how much debate there would be with that;
prescription drugs, Part D, and those would not be germane to the bill.
Each of those would take about 3 weeks to debate.
Mr. HARKIN. I say to my friend, I think if agreements were made with
this side and the other side, we could agree on time limits and
structures without having this on us.
I also say to my friend, I think we should take 3 weeks to debate
health care. We have been wasting so much time around here doing
nothing. Now tomorrow we have tax reconciliation. So my friend from
Wyoming is getting a day cut out of his deal. I think we ought to take
3 weeks to debate health care around here. It wouldn't bother me any.
Mr. ENZI. The Senator certainly is not the only one. I would love to
have a lot of time. We have had a lot of bills that came out of
committee already that could be brought up. We have some more that are
going to come out next Tuesday. A lot of those I think would pass here
by unanimous consent. I would love to have some agreement. The Senator
knows how hard it is to get 1 week around here. We spent 3 days getting
cloture to proceed. That is to proceed; that wasn't to actually do any
votes on the bill. So we were offered the moment, but between the two
sides we didn't get the moment.
Mr. HARKIN. I ask my friend, what was the vote on the motion to
proceed?
Mr. ENZI. It was 98 to 2.
Mr. HARKIN. Then there was no problem with that.

[[Page S4324]]

Mr. ENZI. If there was no problem with it, why did we have to wait 3
days to get the vote?
Mr. HARKIN. We didn't have to wait 3 days to get the vote.
Mr. ENZI. I am talking about time limits and that sort of thing.
Those requests were made between leaders to come up with some tight
time agreements. It is beyond my pay grade.
Mr. HARKIN. It is beyond my pay grade, too. I wasn't involved in
that.
Mr. ENZI. There were a lot negotiations to try to stick to small
business and have some kind of a mechanism where the votes from both
sides could be done. But there was not any agreement on that, so we are
stuck in this kind of a situation where small business may be penalized
once again.
Mr. HARKIN. That is a shame.
Mr. ENZI. If we get cloture, we could have a lot of debate on the
small business stuff, not all of other ones. If we could get in a
situation where we started doing these things a little quicker, with
more time agreements, some of the more difficult ones could probably
get some floor time. I am for that.
Mr. HARKIN. If we get cloture, we have 30 hours. Every Senator gets
one 1 to speak. That is putting handcuffs on people; 30 hours, run the
clock out. One person can get up and offer an amendment and that could
be the only amendment we would have for that 30 hours. That is the way
things work under cloture. It is not a good way to proceed. I think
that is why some of us are upset. We want to help small business. I
think there is a fair debate to be had between S. 1955 and S. 2510,
with amendments. But somehow we are told that we are going to do this
in 1 week. Monday is shot. We didn't do anything Monday. We had two
votes Monday night. Tuesday, Wednesday, and then Thursday, tomorrow, is
tax reconciliation. Health Week is 2 days. I don't think that is fair
to small business, either. I think it is worth taking a couple of weeks
around here to do it, and to do it right.
I thank the Senator for yielding.
Mr. ENZI. I am with the Senator.
Yes, it would be nice if we could wrap up something for small
business. I think there is a plan there. I think there is a way to get
there. I don't think it is going to happen without the cooperation of
both sides in either coming to some time agreements or passing cloture.
We will have to wait and see what happens. I would wait until the end
of next week to have a vote on either of them as long as we can do
amendments. And I am excited about doing amendments. There are always
perfecting things. No bill is perfect when we finish it. Even after
conference it is never perfect. But it is usually much better than when
we started. We need to have that process.
I thank everyone for their participation today.
Mr. FEINGOLD. Mr. President, I wish to speak today about the Medicare
Prescription Drug Program. I opposed the final version of the
legislation that created the Part D drug benefit, the Medicare
Modernization Act, because I believed that it would not provide
adequate relief for Medicare beneficiaries. I was concerned about the
structure of the program, and worried that it would negatively affect
Wisconsinites and other Americans who must quickly and affordably
access prescription drugs. I have been trying to fix some of these
problems since the program was enacted, but supporters of the program
have been unwilling to consider these reforms. Instead, they have
allowed these problems to remain, and the results, since the benefit
was implemented in January, have been disastrous.
I have heard from a number of Wisconsinites who found the
prescription drug plan enrollment process exceedingly confusing. Many
people had difficulty finding a plan that would cover their
prescriptions, while others could not get through to Medicare
representatives to ask questions about the enrollment process. There
have been breakdowns in the entire information process, and these
failures by the insurance companies and the Centers for Medicare and
Medicaid Services have sometimes completely blocked beneficiaries from
accessing essential medications such as insulin, antipsychotics, and
even immunosuppressants.
We can't afford to wait any longer in improving the Part D program so
that it can better serve its beneficiaries. We need to minimize the
negative effects of Part D's implementation problems and high costs. As
part of this effort, I strongly support S. 1841, Senator Bill Nelson's,
Medicare Informed Choice Act. This plan would allow beneficiaries extra
time to navigate this confusing system by extending the enrollment
period through the end of 2006. In addition, it would allow a one-time
penalty-free change of programs for beneficiaries who have made a
mistake in choosing their prescription drug plan.
Supporters of the Medicare prescription drug benefit have touted it
as the vehicle that would supply affordable, easily accessible
prescription drugs for seniors. The program has so far fallen far short
of that goal. The outcry that I have heard from pharmacists,
beneficiaries, and health care providers over the past couple months
makes clear that the implementation of the program has been a disaster.
This program has not provided either affordable or easily accessed
drugs to many Medicare beneficiaries. Instead it has presented
providers and beneficiaries with frustration, confusion, expensive
medications, and sometimes no medications at all. It is unacceptable
for individuals to go without life saving medications. Yet this is what
has been happening in Wisconsin and across the country since this
program commenced.
Since the beginning of January, I have received panicked phone calls
from people in my State saying they were unable to receive drugs that
they had been routinely getting at their pharmacy every other month. At
the same time as I was hearing from people suffering from pain because
they did not receive their pain medications, I read press releases from
the Centers for Medicare and Medicaid that expressed satisfaction with
the launch of the program, and boasted of the millions of participants
in the program. There may be millions participating in the program, but
too many of them cannot receive their drugs and too many pharmacists
are unable to comply with the complicated regulations in the program.
CMS should be focusing its efforts on addressing this emergency rather
than disseminating public relations messages.
I have written Secretary Leavitt and Dr. McClellan repeatedly to
express my concerns about Medicare Part D, including the approaching
deadline. I hope that the administration will soon realize that it
cannot continue to ignore these problems or hope they go away on their
own, and that significant changes in the program are needed to better
serve beneficiaries. I think it is time that CMS remember who this plan
is supposed to serve: the people, not the drug and insurance companies.
We cannot sustain a great nation if we do not care for our elderly,
sick, disabled, and home-bound. These are the people this drug plan is
supposed to be serving, but they have been dismally let down. Let us
make a simple change to the drug plan that will provide immense help to
this group--extend the May 15 deadline. I urge the majority leader to
bring up S. 1841 for a vote before the deadline passes.
Mr. OBAMA. Mr. President, over the past year and a half, I have spent
a few days every month holding townhall meetings around my home State
of Illinois. I have now done almost 50 of these in cities and towns all
over the State.
After I give a short presentation, I open the floor to questions from
the audience. And without fail, one of the first questions asked at
every townhall is about health care. Too many hard-working Americans
can't afford their medical bills or health insurance premiums. Too many
employers are finding it difficult to offer the coverage their
employees need. And sadly, too many people in the world's wealthiest
country have no insurance at all.
When Senator Frist declared the second week in May as ``Health
Week,'' I naively assumed that maybe, just maybe, we would actually
begin a real discussion about health care in the United States. I
thought we would talk about serious and meaningful ways to address the
health care problems faced by average Americans--important problems
like: the 45 million Americans without health insurance; the worsening
epidemic of chronic diseases, including asthma, obesity, and diabetes;
the persistent and pervasive problems with patient safety and health

[[Page S4325]]

care quality; or the status of emergency and pandemic avian flu
preparedness.
I know that I am not the only Senator who has been disappointed. A
number of my Democratic colleagues have mentioned other pressing,
critical issues on the floor this week, including stem cells, the
looming enrollment deadline for Medicare Part D, and drug importation.
Yet so far we have had only a sham discussion on medical malpractice,
revisiting the same old bills that have been rejected in the past that
do not represent any real attempt to compromise and find solutions to
the problems that many of our doctors and patients face.
And now, the Senate has turned its attention to the Enzi small
business health plan. I know that small businesses need help in
providing health care coverage to their employees. Small businesses are
paying the price for this Congress's refusal to seriously embrace
comprehensive health care reform, to expand coverage and contain costs.
Yet this bill is not the solution, and it is not part of a solution.
In fact, some have described it as the antisolution.
In my opinion, any health coverage reform bill that passes the
Congress should meet, at a minimum, three criteria: First, it may sound
crazy, but I think a health coverage bill should actually expand
coverage. The Enzi bill has been estimated to expand coverage to less
than 1 million of the 45 million uninsured Americans. This is
laughable.
In fact, some States will actually see an increase in the number of
uninsured. In New York, for instance, 28,000 people could lose their
health insurance coverage because of this bill.
Second, a good health reform bill should ensure comprehensive,
quality health care. Over 200 health professional and patient advocacy
groups have expressed their opposition to this bill, because it will
promote health plans that won't offer the basic health care services
that we all depend upon and take for granted, such as maternity care,
mental health services, diabetes care, dental care, and so forth.
I have rarely seen such a large number of groups come together as
swiftly, as vociferously, and as united as these groups have been
against this bill.
Third, a good health reform bill should have a positive effect on the
health insurance market. Will the market be stabilized and
strengthened, or will it be weakened and fragmented? Again, the Enzi
bill does not pass muster. Over 40 attorneys general have expressed
serious concerns about this bill's preemption of State protections and
laws and its restrictions on State oversight and regulation.
This so-called health week makes a mockery of the efforts of those
who are working to achieve real health care reform. While we in
Congress are squandering precious time on this bill, our States are
moving ahead, exerting leadership because Congress has failed to act.
Illinois is in the process of implementing a program called All Kids,
which will ensure that every child in the State is covered by health
insurance. And we all know that Massachusetts just passed a sweeping,
universal health coverage bill, negotiated and passed in bipartisan
fashion.
In contrast, the last major health insurance reform passed by
Congress was in 1997, when the SCHIP program was created. Even though
the number of uninsured has continued to rise, almost 10 years have
gone by without a serious congressional effort to address this crisis.
This is wrong. The Durbin-Lincoln amendment, which I have
cosponsored, is a good example of how we can meaningfully expand health
coverage without sacrificing the quality of care received.
The central tenet of the amendment is that small business employees
should have access to the same health insurance coverage that members
of Congress and other Federal employees receive themselves.
The health care problems facing our country are serious ones, and the
solutions will not be easy. But we need to have a serious debate about
this issue--a debate that addresses the whole problem and isn't just
about scoring political points in an election year.
The American people expect as much, and I hope this failed attempt at
a ``health week'' is not the last chance we will have to talk about an
issue that is the chief financial concern of millions upon millions of
people in this country.
Mr. LEAHY. Mr. President, for all of the recent talk from the
majority about up-or-down votes, and allegations of Democratic
obstruction on amendments, I find it astounding that the Republican
majority has locked up Senator Enzi's bill and will not allow
amendments to be offered. We now face exactly the type of obstruction
the majority has decried so loudly. On a bill for which Senator Enzi
has urged full debate, the Republican majority has now decided the
Senate and the American people we represent should not get the benefit
of the full legislative process. For example, I am being prohibited
from offering an amendment to help prevent medical malpractice insurers
from bid rigging, price fixing, and other anticompetitive behavior that
hurts doctors and patients. For another, we are prohibited from
offering an amendment to extend the arbitrary deadline for seniors to
sign up for prescription drug benefits without a penalty. Why not
provide our seniors more time and assistance in examining the
prescription drug provisions that have frustrated so many? Seniors did
not grow up in the computer age and many are not trained accountants
who can sift through the confusion. They should not be penalized by an
arbitrary cutoff date which could easily be extended.
This week, the Senate has already refused to proceed to legislation
that would have abridged our citizens' access to justice when they are
injured by medical errors. Those bills purported to lower medical
malpractice insurance costs when, in fact, it is not payouts that have
led to rising insurance premiums. The Senate has done the right thing
by rejecting these bills once again.
The debate that preceded the votes demonstrated that capping medical
malpractice awards is not the way to lower insurance premiums, which we
all agree are unfair to the men and women who devote their lives to the
care of others. There can be no disagreement that exorbitant insurance
costs make it harder for medical professionals to do their jobs. Health
care providers, like all Americans, deserve fair treatment in the
marketplace. We also know that the insurance marketplace is unique,
because unlike other business interests, insurers are not subject to
some of the most important Federal antitrust laws.
High malpractice insurance premiums are not the result of malpractice
lawsuit verdicts. This myth has been repeatedly discredited. They are
the result of investment decisions by the insurance companies and of
business models geared toward ever-increasing profits. But an insurer
that has made a bad investment, or that has experienced the same
disappointments from Wall Street that so many Americans have, should
not be able to recoup its losses from the doctors it insures. The
insurance industry should have to bear the burdens of its own business
model, just as the other businesses in the economy do.
High malpractice premiums for doctors can occur because there is
nothing stopping insurers in a soft market from collectively raising
rates and stifling competition. Any other business would be prohibited
from this activity, and I have heard no arguments as to why the
insurance industry should be treated differently. The insurance
industry is special because it is exempt from most Federal antitrust
laws. The McCarran-Ferguson Act permits insurance companies to operate
without being subject to those laws, and our Nation's physicians and
their patients have been the worse off for it. Using their exemption,
insurers can collude to set rates, resulting in higher premiums than
true competition would achieve--and because of this exemption,
enforcement officials cannot investigate any such collusion. If
Congress is serious about controlling rising premiums, we must
objectively limit this broad exemption in the McCarran-Ferguson Act.
The amendment I wanted to propose modifies the McCarran-Ferguson Act
with respect to medical malpractice insurance, and only for the most
pernicious antitrust offenses: Price fixing, bid rigging, and market
allocations.

[[Page S4326]]

Only those anticompetitive practices that most certainly will affect
premiums are addressed. I am hard pressed to imagine how anyone could
object to a prohibition on insurance carriers' fixing prices or
dividing territories.
After all, the rest of our Nation's industries manage either to abide
by these laws or suffer the consequences. If medical malpractice
insurers are certain that malpractice lawsuits drive their rates, then
there should be no reason to object to bringing their business within
the reach of the same Federal laws that apply to all others.
Many State insurance commissioners police the industry well within
the power they are accorded in their own laws, and some States have
antitrust laws of their own that could cover some anticompetitive
activities in the insurance industry. My proposal, which I wanted to
offer, is a scalpel, not a saw. It would not affect regulation of
insurance by State insurance commissioners and other State regulators.
But there is no reason to perpetuate a system in which Federal
enforcers are precluded from prosecuting the most harmful antitrust
violations just because they are committed by insurance companies.
This amendment is a carefully tailored solution to one critical
aspect of the problem of excessive medical malpractice insurance rates.
I am sorry that I was stopped by the Republican leadership and could
not offer this narrowly drawn legislation as a positive step towards
improving the American health care system, which would help ensure that
doctors and patients are treated fairly.
Mr. KENNEDY. Mr. President, the Senate is currently considering
legislation proposed by Senator Enzi that would profoundly change
health care coverage. The proposal has been modified from the version
approved by our committee.
It is important for the Senate to understand fully the impact that
this legislation would have on millions of Americans. I have requested
an analysis of this modified proposal from Professor Mila Kofman of the
Georgetown University Health Policy Institute.
I ask unanimous consent to have this analysis printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Georgetown University,

May 10, 2006.
Senator Edward Kennedy,
Hart Senate Office Building,
Washington, DC.
Dear Senator Kennedy: This is a response to your request
for an analysis of the proposed rating structure in the
Manager's Amendment to S. 1955. This also addresses your
question on how the proposed amendment compares with the
current NAIC model law on small group rating:.
In general, the proposed Manager's Amendment would not
improve the bill. Under the new proposed rating structure
there would be no new protections for consumers and a
significant loss of existing state-based protections in the
area of premiums. This loss of protections will adversely
impact people with medical needs, older workers, and women of
child-bearing years. This will also have a negative impact on
``micro'' groups (employers with fewer than 10 employees)
because insurers will be allowed to charge these groups
higher rates solely on the basis of the employer's size.
Here is a brief summary of how the proposed amendment would
work:
Associations: The amendment clarifies that associations
certified as small business health plans (by the U.S.
Department of Labor under Title I of the bill) would enjoy a
complete carve-out from small group rating state pools in
both adopting and non-adopting states. Each certified
association would be allowed to have their own premium rate
not tied to the rest of the small group market. This would
segment the small group market. Assuming associations attract
healthy businesses (there are many ways that the bill would
allow associations to ``cherry-pick'' healthy people), any
restrictions on rates in the rest of the small group market
would be undermined. Rates between association coverage and
coverage outside the association could vary broadly. For a
discussion of this, please see attached paper ``Health
Insurance Regulation by States and the Federal Government: A
Review of Current Approaches and Proposals for Change.''
In adopting states, the bill clarifies that premiums within
an association may vary using the same standards that would
apply in small group market (see discussion below). This
would be at least 500 percent variation in rates for
businesses covered by the association or if the state allows,
variations in rates could be even greater.
In non-adopting states, it is unclear whether the rating
standards in the bill would even apply. If they apply. then a
variation in premiums of 500 percent would be allowed for
businesses covered by an association (so some employers would
pay 5 times more than others for the same coverage within an
association).
Small group market: In adopting states, insurers are
required to vary rates by at least 500 percent (called
``total variation limit''). This means that states can allow
insurers to have greater variations in rates. Using age.
health, claims. and duration factors. variations of at least
300% are required. Note that insurers must use age, health,
or both and may use duration and claims experience. The
option is given to insurers. If a state wants to adopt this
approach and become an ``adopting state.'' it must allow
insurers to use age and health. This requirement essentially
eliminates community rating and adjusted community rating by
allowing insurers to adjust rates based on health. Allowable
factors included in the 500 percent minimum required
variation are: industry. geography. group size, participation
rate, class of business. and wellness programs. Note that
gender is not listed. The bill is unclear whether gender
rating is prohibited or is added to the 500 percent
variation.
At renewal, the same rules would apply. This means that
premiums may increase at least by 500 percent if a smaIl
business has high claims the year before.
In non-adopting states (generally states with greater
protections for consumers). the language in the bill is
ambiguous. The proposal says ``The plan may not vary premium
rates by more than 500 percent].'' The term ``plan'' is not
defined. If the term ``plan'' means an ``insurer,'' then one
possible interpretation is that premium variations are
limited to 500 percent (if insurers chose to follow this new
tederal standard). What is clear. however, is that adjusted
community rating and pure community rating would be
preempted.
Renewal rates would limited to trend plus 15 percent to
reflect claims of small business.
Importantly, in non-adopting states insurers would have a
choice of whether to follow a state's existing laws or the
new federal one. As a way of example, in DC, which has no
rating laws, assuming DC chooses not to adopt the bill's
rating structure and is therefore a non-adopting state.
Insurers are not likely to use the rating restrictions in the
bill.
The proposed rating structure varies significantly from the
NAIC model law for small business health insurance premiums.
By way of background. the National Association of Insurance
Commissioners (NAIC) in the early 1990's adopted and since
replaced a model law that provided for rate bands that permit
premium variation up to 200 percent based on health status.
The old model, which is the basis for the original bill,
allowed further premium variation based on age, gender,
industry, small business group size, geography, and family
composition. Rates based on adjustments for these factors had
to be actuarially justified but were not limited except for
industry, which was limited to a 15 percent variation. The
old NAIC model act permitted a wide variation in rates,
allowing for a price difference of 26 to 1, or more. This
means that for the same policy an insurer could charge a
business or a person $100 per month or $2600 per month
depending on risk and other factors. Higher rates under the
model would be permitted as long as there was actuarial
evidence to support wider variations.
Shortly after adopting its original model with rate bands,
the NAIC replaced it with a model law for small groups that
requires adjusted community rating, prohibiting premium
surcharges based on health or other risk characteristics
(like claims experience and durational rating). The current
NAlC model act limits premium surcharges based on age to 200
percent; it prohihits insurers from varying small group
premiums based on gender of people in the group or an
employer's size. Today 12 states follow the current NAlC
model act. Ten states require all insurers to use community
rating or adjusted community rating for all small group
policies. Two others, Michigan and Pennsylvania, require Blue
Cross Blue Shield plans (their largest insurers) and HMOs to
use adjusted community rating. The proposed amendment would
preempt these state rating protections.
Please let me know if you need additional information.
Thank you for the opportunity to address your questions.
Very truly yours,
Mila Kofman, J.D.,
Associate Research Professor.

Cloture Motion

Mr. FRIST. Mr. President, I send a cloture motion to the desk.
The PRESIDING OFFICER. The cloture motion having been presented under
rule XXII, the Chair directs the clerk to read the motion.
The assistant legislative clerk read as follows:

Cloture Motion

We the undersigned Senators, in accordance with the
provisions of rule XXII of the Standing Rules of the Senate,
do hereby move to bring to a close debate on the pending
modified substitute amendment to Calendar No. 417, S. 1955,
Health Insurance Marketplace Modernization and Affordability
Act of 2005.
Bill Frist, Johnny Isakson, Sam Brownback, John Thune,
Thad Cochran, Wayne Allard, John Ensign, Richard
Shelby, Larry Craig, Ted Stevens,

[[Page S4327]]

John McCain, Lamar Alexander, Norm Coleman, Judd Gregg,
John E. Sununu, Pat Roberts, Craig Thomas.

____________________