[Congressional Bills 103th Congress]
[From the U.S. Government Printing Office]
[H.R. 5302 Introduced in House (IH)]
103d CONGRESS
2d Session
H. R. 5302
To promote portability of health insurance by limiting discrimination
in health coverage based on health status or past claims experience.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 29, 1994
Mr. Hayes introduced the following bill; which was referred jointly to
the Committees on Energy and Commerce and Education and Labor
_______________________________________________________________________
A BILL
To promote portability of health insurance by limiting discrimination
in health coverage based on health status or past claims experience.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Health Insurance Equity Act of
1994''.
SEC. 2. HEALTH INSURANCE STANDARDS.
The Social Security Act is amended by adding at the end the
following new title:
``TITLE XXI--STANDARDS FOR HEALTH COVERAGE
``SEC. 2101. PROHIBITION OF DISCRIMINATION BASED ON HEALTH STATUS FOR
COVERAGE, BENEFITS, AND PREMIUMS.
``(a) In General.--Except as provided under subsection (b), an
insurer or group health plan providing health coverage may not deny,
limit, or condition the health coverage or benefits with respect to
health services, or vary the premiums charged for such coverage, based
on the health status, claims experience, receipt of health care,
medical history, or lack of evidence of insurability, of an individual.
``(b) Exception for Certain Preexisting Conditions.--
``(1) In general.--Subject to the succeeding provisions of
this subsection, an insurer or group health plan providing
health coverage may exclude coverage of services related to
treatment of a preexisting condition, but the period of such
exclusion may not exceed 6 months. The exclusion of coverage
shall not apply to services furnished to newborns who are
covered at the time of birth or to treatment of conditions
relating to pregnancy.
``(2) Crediting of previous coverage.--
``(A) In general.--An insurer or group health plan
providing health coverage shall provide that if a
covered individual is in a period of continuous
coverage (as defined in subparagraph (B)(i)) with
respect to particular services as of the date of
application for coverage (determined without regard to
any waiting period for coverage), any period of
exclusion of coverage with respect to a preexisting
condition for such services or type of services shall
be reduced by 1 month for each month in the period of
continuous coverage.
``(B) Definitions.--As used in this subsection:
``(i) Period of continuous coverage.--The
term `period of continuous coverage' means,
with respect to particular services, the period
beginning on the date an individual has health
coverage (including coverage under title XVIII
or XIX) which provides substantially the same
or similar benefits with respect to such
services and ends on the date the individual
does not have such coverage for a continuous
period of more than 3 months.
``(ii) Preexisting condition.--The term
`preexisting condition' means a condition which
has been diagnosed or treated during the 6-
month period ending on the day before the first
date of such coverage.
``(3) Exception.--
``(A) In general.--Subsection (a) shall not affect
a variation of premiums based only on the age, sex, or
geographic area of residence of an individual.
``(B) Waiting period.--An insurer or group health
plan providing health coverage may offer to an
individual to waive an exclusion of coverage with
respect to a preexisting condition for which an
exclusion could otherwise be applied under this
subsection in exchange for an increase in the premium
during the period in which the exclusion could
otherwise be applied. If the individual rejects this
offer, the limitations on premiums and exclusions that
would apply in the absence of such offer shall continue
to apply.
``(c) Application of Rules by Certain Health Maintenance
Organizations.--A health maintenance organization that provides health
insurance coverage shall not be considered as failing to meet the
requirements of section 1301 of the Public Health Service Act
notwithstanding that it provides for an exclusion of the coverage based
on a preexisting condition consistent with the provisions of this
section so long as such exclusion is applied consistent with the
provisions of this section. Nothing in this section shall be construed
as requiring such an organization to impose such an exclusion.
``SEC. 2102. ENROLLMENT AND RENEWAL PRACTICES FOR HEALTH INSURANCE
COVERAGE.
``(a) Construction Involving Application of Capacity Limits for
Health Insurance Coverage.--
``(1) In general.--Subject to paragraph (2) and subsection
(b), nothing in this title shall be construed as preventing an
insurer providing health insurance coverage to individuals or
small employers in an area from ceasing to enroll individuals
or small employers under such coverage if--
``(A) the insurer ceases to enroll any new
individuals or small employers; and
``(B) the insurer can demonstrate to the State
insurance commissioner that the insurer's financial or
provider capacity to serve previously covered
individuals or small employers (and additional
individuals who will be expected to enroll because of
affiliation with such previously covered individuals or
small employers) will be impaired if it is required to
enroll additional individuals or small employers.
``(2) First-come-first-served.--An insurer is only eligible
to exercise the limitations provided for in paragraph (1) if
such insurer provides for enrollment of individuals or small
employers on a first-come-first-served basis (except in the
case of additional individuals or small employers described in
paragraph (1)(B)).
``(b) Requirements Relating to Renewal of Health Insurance
Coverage.--
``(1) In general.--Except as provided in paragraphs (2) and
(3), an insurer that provides health insurance coverage to an
individual or small employer shall not deny, cancel, or refuse
to renew such coverage of the individual or small employer.
``(2) Grounds for refusal to renew.--An insurer may deny,
cancel, refuse to renew, or terminate health insurance coverage
within a type of coverage option described in paragraph (4) in
an area described in paragraph (6) only--
``(A) for nonpayment of premiums;
``(B) for fraud on the part of the individual or
small employer;
``(C) with respect to an individual, for
misrepresentation of material facts on the part of the
individual relating to an application for coverage or
claim for benefits;
``(D) in the case of coverage provided through a
geographically limited managed care arrangement, the
individual or employer leaves the geographic service
area in which the coverage is provided; or
``(E) subject to paragraph (3), because the insurer
elects not to renew any health insurance coverage for
individuals or small employers in the area within such
type of coverage option and provides notice of such
election to the State insurance commissioner and to
each such employer and individual covered in the area
at least 180 days before the effective date of such
nonrenewal.
``(3) Prohibition on market reentry.--In the case of an
election described in paragraph (2)(E) by an insurer for an
area for a type of coverage option, the insurer may not provide
for any health insurance coverage to an individual or small
employer in the area within the type of coverage option during
the 5-year period beginning on the effective date of the
nonrenewal for the area and for the type of coverage option.
``(4) Options.--For purposes of this subsection, each of
the following is a `type of coverage option':
``(A) Fee-for-service option.--Health insurance
coverage is considered to provide a `fee-for-service
option' if, regardless of whether covered individuals
may receive benefits through a provider network,
benefits with respect to the covered items and services
in the coverage are made available for such items and
services provided through any lawful provider of such
covered items and services and payment is made to such
a provider whether or not there is a contractual
arrangement between the provider and the carrier or
plan.
``(B) Managed care option.--Health insurance
coverage is considered to provide a `managed care
option' if benefits with respect to the covered items
and services in the coverage are made available
exclusively through a provider network, except in the
case of emergency services and as otherwise required
under law.
``(C) Point-of-service option.--Health insurance
coverage is considered to provide a `point-of-service
option' if the benefits with respect to covered items
and services in the coverage are made available
principally through a managed care arrangement, with
the choice of the enrollee to obtain such benefits for
items and services provided through any lawful provider
of such covered items and services. The coverage may
provide for different cost sharing schedules based on
whether the items and services are provided through
such an arrangement or outside such an arrangement.
``(5) Managed care arrangements.--In this subsection:
``(A) Managed care arrangement.--The term `managed
care arrangement' means, with respect to health
insurance coverage, an arrangement under such coverage
under which providers agree to provide items and
services covered under the arrangement to individuals
who have such coverage.
``(B) Provider network.--The term `provider
network' means, with respect to health insurance
coverage, providers who have entered into an agreement
described in subparagraph (A).
``(6) Limitations on area.--An area described in this
paragraph is an area in which there is no division of any of
the following:
``(A) A 3-digit zip code.
``(B) Any county, parish, or borough.
``(C) All portions of a metropolitan statistical
area.
``SEC. 2103. ENFORCEMENT.
``(a) Health Insurance Coverage.--
``(1) Enforcement through state insurance commissioner.--
``(A) Establishment of enforcement programs.--Each
State, through its State insurance commissioner, is
responsible for establishing a program to enforce
requirements of this title with respect to insurers
(and health coverage offered by insurers) in the State.
The State shall provide the Secretary of Health and
Human Services annually (for years beginning with 1996)
with such description of the program established to
enforce adequately such requirements as the Secretary
specifies.
``(B) More stringent state standards permitted.--A
State may implement standards that are more stringent
than the standards established under this title.
``(C) Authorization of appropriations for state
enforcement programs.--There are authorized to be
appropriated to the Secretary of Health and Human
Services (for each fiscal year beginning with fiscal
year 1996) such sums as may be necessary to provide for
grants to States to provide for enforcement programs
described in subparagraph (A). Such grants shall be
made available in such amounts and subject to such
reasonable terms and conditions as the Secretary shall
provide.
``(2) Federal fallback enforcement.--
``(A) Review and contingency.--The Secretary
annually shall review State enforcement programs under
paragraph (1)(A) to determine if they provide for
adequate enforcement of the requirements of this title.
If the Secretary initially determines that such a
program does not provide for such enforcement, the
Secretary shall notify the State and provide the State
an opportunity to adopt such a plan of correction that
would provide for adequate enforcement. If the
Secretary makes a final determination that the State
program fails to provide for an adequate enforcement
program after such an opportunity, the succeeding
provisions of this paragraph shall apply with respect
to insurers and health insurance coverage in the State
until the Secretary has been provided a description of
an adequate enforcement program.
``(B) Civil money penalties.--
``(i) In general.--If this paragraph
applies in a State in a year, subject to clause
(ii), an insurer in that State that fails to
comply with a requirement applicable to the
insurer or health insurance coverage under this
title is subject to a civil money penalty of
$150 for each day during which such failure
persists for each individual to which such
failure relates.
``(ii) Limitation.--The amount of the
penalty imposed by this subparagraph for an
insurer with respect to health insurance
coverage shall not exceed 25 percent of the
amounts received under the plan for coverage
during the period such failure persists.
``(C) Exceptions.--
``(i) Corrections within 30 days.--No civil
money penalty shall be imposed under this
paragraph by reason of any failure if--
``(I) such failure was due to
reasonable cause and not to willful
neglect, and
``(II) such failure is corrected
within the 30-day period beginning on
the earliest date the insurer knew, or
exercising reasonable diligence would
have known, that such failure existed.
``(ii) Waiver by secretary.--In the case of
a failure which is due to reasonable cause and
not to willful neglect, the Secretary may waive
part or all of the penalty imposed by this
paragraph to the extent that payment of such
penalty would be excessive relative to the
failure involved.
``(D) Procedures.--The Secretary by regulation
shall provide for procedures for the imposition of
civil money penalties under this paragraph. Such
procedures shall assure written notice and opportunity
for a determination to be made on the record after a
hearing at which the insurer is entitled to be
represented by counsel, to present witnesses, and to
cross-examine witnesses against the insurer. The
provisions of subsections (e), (f), (j), and (k) of
section 1128A shall apply to determinations and civil
money penalties under this paragraph in the same manner
as they apply to determinations and civil money
penalties under such section.
``(b) Enforcement by Department of Labor for Group Health Plans.--
``(1) In general.--For purposes of part 5 of subtitle B of
title I of the Employee Retirement Income Security Act of 1974,
the provisions of sections 2101 and 2102 shall be deemed to be
provisions of title I of such Act irrespective of exclusions
under section 4(b) of such Act.
``(2) Regulatory authority.--With respect to the regulatory
authority of the Secretary of Labor under this title pursuant
to paragraph (1), section 505 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1135) shall apply.
``SEC. 2104. DEFINITIONS.
``For purposes of this title:
``(1) Group health plan.--The term `group health plan'
means an employee welfare benefit plan providing medical care
(as defined in section 213(d) of the Internal Revenue Code of
1986) to participants or beneficiaries directly or through
insurance, reimbursement, or otherwise, but does not include
any type of coverage excluded from the definition of an health
insurance coverage under paragraph (3)(B).
``(2) Health coverage.--The term `health coverage' means
health insurance coverage provided by an insurer or medical
care provided under a group health plan.
``(3) Health insurance coverage.--
``(A) In general.--Except as provided in
subparagraph (B), the term `health insurance coverage'
means any hospital or medical service policy or
certificate, hospital or medical service plan contract,
or health maintenance organization group contract
offered by an insurer.
``(B) Exception.--Such term does not include any of
the following (or any combination of the following):
``(i) Coverage only for accident, dental,
vision, disability income, or long-term care
insurance, or any combination thereof.
``(ii) Medicare supplemental health
insurance.
``(iii) Coverage issued as a supplement to
liability insurance.
``(iv) Liability insurance, including
general liability insurance and automobile
liability insurance.
``(v) Workers' compensation or similar
insurance.
``(vi) Automobile medical-payment
insurance.
``(vii) Coverage for a specified disease or
illness.
``(viii) A hospital or fixed indemnity
policy.
``(4) Insurer.--The term `insurer' means a licensed
insurance company, an entity offering prepaid hospital or
medical services, and a health maintenance organization, and
includes a similar organization regulated under State law for
solvency.
``(5) Small employer.--The term `small employer' means,
with respect to a calendar year, an employer (as defined in
section 3(5) of the Employee Retirement Income Security Act of
1974) that normally employs on a typical business day more than
1 but less than 50 employees who normally perform on a monthly
basis at least 30 hours of service per week for that employer.
For the purposes of this paragraph, the term `employee'
includes a self-employed individual. For purposes of
determining if an employer is a small employer, rules similar
to the rules of subsections (b) and (c) of section 414 of the
Internal Revenue Code of 1986 shall apply.
``(6) State insurance commissioner.--The term `State
insurance commissioner' includes a State superintendent of
insurance or other State authority responsible for regulation
of health insurance.''.
SEC. 3. EFFECTIVE DATE.
The requirements of title XXI of the Social Security Act, as added
by section 2, shall apply with respect to--
(1) group health plans for plan years beginning after
December 31, 1995, and
(2) insurers as of January 1, 1996, for health insurance
coverage issued or renewed on or after such date.
<all>
HR 5302 IH----2