[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 284 Introduced in Senate (IS)]
107th CONGRESS
1st Session
S. 284
To amend the Internal Revenue Code of 1986 to provide incentives to
expand health care coverage for individuals.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 7, 2001
Mr. McCain (for himself, Mr. Edwards, Mr. Kennedy, Mr. L. Chafee, Mr.
Graham, Mr. Specter, Mrs. Lincoln, Mr. Harkin, Mr. Baucus, Mr.
Torricelli, Mr. Dodd, Mr. Nelson of Florida, Mr. Schumer, and Mr.
Corzine) introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide incentives to
expand health care coverage for individuals.
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 ``Bipartisan Patient Protection Act of
2001--Part II''.
SEC. 2. EXPANDED AVAILABILITY OF ARCHER MSAS.
(a) Extension of Program.--Paragraphs (2) and (3)(B) of section
220(i) of the Internal Revenue Code of 1986 (defining cut-off year) are
each amended by striking ``2002'' each place it appears and inserting
``2004''.
(b) Increase In Number of Permitted Account Participants.--
(1) In general.--Subsection (j) of section 220 of such Code
is amended by redesignating paragraphs (3), (4), and (5) as
paragraphs (4), (5), and (6) and by inserting after paragraph
(2) the following new paragraph:
``(3) Determination of whether limit exceeded for years
after 2001.--
``(A) In general.--The numerical limitation for any
year after 2001 is exceeded if the sum of--
``(i) the number of Archer MSA returns
filed on or before April 15 of such calendar
year for taxable years ending with or within
the preceding calendar year, plus
``(ii) the Secretary's estimate (determined
on the basis of the returns described in clause
(i)) of the number of Archer MSA returns for
such taxable years which will be filed after
such date, exceeds 1,000,000. For purposes of
the preceding sentence, the term `Archer MSA
return' means any return on which any exclusion
is claimed under section 106(b) or any
deduction is claimed under this section.
``(B) Alternative computation of limitation.--The
numerical limitation for any year after 2001 is also
exceeded if the sum of--
``(i) 90 percent of the sum determined
under subparagraph (A) for such calendar year,
plus
``(ii) the product of 2.5 and the number of
medical savings accounts established during the
portion of such year preceding July 1 (based on
the reports required under paragraph (5)) for
taxable years beginning in such year,
exceeds 1,000,000.''
(2) Conforming amendments.--
(A) Clause (ii) of section 220(j)(2)(B) of such
Code is amended by striking ``paragraph (4)'' and
inserting ``paragraph (5)''.
(B) Subparagraph (A) of section 220(j)(4) of such
Code is amended by striking ``and 2001'' and inserting
``2001, 2002, and 2003''.
(c) Increase in Size of Eligible Employers.--Subparagraph (A) of
section 220(c)(4) of such Code is amended by striking ``50 or fewer
employees'' and inserting ``100 or fewer employees''.
(d) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
(e) GAO Study.--Not later than 1 year after the date of the
enactment of this Act, the Comptroller General of the United States
shall prepare and submit a report to the Committee on Ways and Means of
the House of Representatives and the Committee on Finance of the Senate
on the impact of Archer MSAs on the cost of conventional insurance
(especially in those areas where there are higher numbers of such
accounts) and on adverse selection and health care costs.
SEC. 3. DEDUCTION FOR 100 PERCENT OF HEALTH INSURANCE COSTS OF SELF-
EMPLOYED INDIVIDUALS.
(a) In General.--Paragraph (1) of section 162(l) of the Internal
Revenue Code of 1986 is amended to read as follows:
``(1) Allowance of deduction.--In the case of an individual
who is an employee within the meaning of section 401(c)(1),
there shall be allowed as a deduction under this section an
amount equal to 100 percent of the amount paid during the
taxable year for insurance which constitutes medical care for
the taxpayer and the taxpayer's spouse and dependents.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2001.
SEC. 4. CREDIT FOR HEALTH INSURANCE EXPENSES OF SMALL BUSINESSES.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to business-related
credits) is amended by adding at the end the following:
``SEC. 45E. SMALL BUSINESS HEALTH INSURANCE EXPENSES.
``(a) General Rule.--For purposes of section 38, in the case of a
small employer, the health insurance credit determined under this
section for the taxable year is an amount equal to the applicable
percentage of the expenses paid by the taxpayer during the taxable year
for health insurance coverage for such year provided under a new health
plan for employees of such employer.
``(b) Applicable Percentage.--For purposes of subsection (a), the
applicable percentage is--
``(1) in the case of insurance purchased as a member of a
qualified health benefit purchasing coalition (as defined in
section 9841), 30 percent, and
``(2) in the case of insurance not described in paragraph
(1), 20 percent.
``(c) Limitations.--
``(1) Per employee dollar limitation.--The amount of
expenses taken into account under subsection (a) with respect
to any employee for any taxable year shall not exceed--
``(A) $2,000 in the case of self-only coverage, and
``(B) $5,000 in the case of family coverage.
In the case of an employee who is covered by a new health plan
of the employer for only a portion of such taxable year, the
limitation under the preceding sentence shall be an amount
which bears the same ratio to such limitation (determined
without regard to this sentence) as such portion bears to the
entire taxable year.
``(2) Period of coverage.--Expenses may be taken into
account under subsection (a) only with respect to coverage for
the 4-year period beginning on the date the employer
establishes a new health plan.
``(d) Definitions.--For purposes of this section--
``(1) Health insurance coverage.--The term `health
insurance coverage' has the meaning given such term by section
9832(b)(1).
``(2) New health plan.--
``(A) In general.--The term `new health plan' means
any arrangement of the employer which provides health
insurance coverage to employees if--
``(i) such employer (and any predecessor
employer) did not establish or maintain such
arrangement (or any similar arrangement) at any
time during the 2 taxable years ending prior to
the taxable year in which the credit under this
section is first allowed, and
``(ii) such arrangement provides health
insurance coverage to at least 70 percent of
the qualified employees of such employer.
``(B) Qualified employee.--
``(i) In general.--The term `qualified
employee' means any employee of an employer if
the annual rate of such employee's compensation
(as defined in section 414(s)) exceeds $10,000.
``(ii) Treatment of certain employees.--The
term `employee' shall include a leased employee
within the meaning of section 414(n).
``(3) Small employer.--The term `small employer' has the
meaning given to such term by section 4980D(d)(2); except that
only qualified employees shall be taken into account.
``(e) Special Rules.--
``(1) Certain rules made applicable.--For purposes of this
section, rules similar to the rules of section 52 shall apply.
``(2) Amounts paid under salary reduction arrangements.--No
amount paid or incurred pursuant to a salary reduction
arrangement shall be taken into account under subsection (a).
``(f) Termination.--This section shall not apply to expenses paid
or incurred by an employer with respect to any arrangement established
on or after January 1, 2010.''.
(b) Credit To Be Part of General Business Credit.--Section 38(b) of
such Code (relating to current year business credit) is amended by
striking ``plus'' at the end of paragraph (12), by striking the period
at the end of paragraph (13) and inserting ``, plus'', and by adding at
the end the following:
``(14) in the case of a small employer (as defined in
section 45E(d)(3)), the health insurance credit determined
under section 45E(a).''
(c) No Carrybacks.--Subsection (d) of section 39 of such Code
(relating to carryback and carryforward of unused credits) is amended
by adding at the end the following:
``(10) No carryback of section 45e credit before effective
date.--No portion of the unused business credit for any taxable
year which is attributable to the employee health insurance
expenses credit determined under section 45E may be carried
back to a taxable year ending before the date of the enactment
of section 45E.''
(d) Denial of Double Benefit.--Section 280C of such Code is amended
by adding at the end the following new subsection:
``(d) Credit for Small Business Health Insurance Expenses.--
``(1) In general.--No deduction shall be allowed for that
portion of the expenses (otherwise allowable as a deduction)
taken into account in determining the credit under section 45E
for the taxable year which is equal to the amount of the credit
determined for such taxable year under section 45E(a).
``(2) Controlled groups.--Persons treated as a single
employer under subsection (a) or (b) of section 52 shall be
treated as 1 person for purposes of this section.''
(e) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of such Code is amended by adding
at the end the following:
``Sec. 45E. Small business health
insurance expenses.''
(f) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred in taxable years beginning after
December 31, 2001, for arrangements established after the date of the
enactment of this Act.
SEC. 5. CERTAIN GRANTS BY PRIVATE FOUNDATIONS TO QUALIFIED HEALTH
BENEFIT PURCHASING COALITIONS.
(a) In General.--Section 4942 of the Internal Revenue Code of 1986
(relating to taxes on failure to distribute income) is amended by
adding at the end the following:
``(k) Certain Qualified Health Benefit Purchasing Coalition
Distributions.--
``(1) In general.--For purposes of subsection (g), sections
170, 501, 507, 509, and 2522, and this chapter, a qualified
health benefit purchasing coalition distribution by a private
foundation shall be considered to be a distribution for a
charitable purpose.
``(2) Qualified health benefit purchasing coalition
distribution.--For purposes of paragraph (1)--
``(A) In general.--The term `qualified health
benefit purchasing coalition distribution' means any
amount paid or incurred by a private foundation to or
on behalf of a qualified health benefit purchasing
coalition (as defined in section 9841) for purposes of
payment or reimbursement of amounts paid or incurred in
connection with the establishment and maintenance of
such coalition.
``(B) Exclusions.--Such term shall not include any
amount used by a qualified health benefit purchasing
coalition (as so defined)--
``(i) for the purchase of real property,
``(ii) as payment to, or for the benefit
of, members (or employees or affiliates of such
members) of such coalition, or
``(iii) for any expense paid or incurred
more than 48 months after the date of
establishment of such coalition.
``(3) Termination.--This subsection shall not apply--
``(A) to qualified health benefit purchasing
coalition distributions paid or incurred after December
31, 2009, and
``(B) with respect to start-up costs of a coalition
which are paid or incurred after December 31, 2010.''.
(b) Qualified Health Benefit Purchasing Coalition.--
(1) In general.--Chapter 100 of such Code (relating to
group health plan requirements) is amended by adding at the end
the following new subchapter:
``Subchapter D--Qualified Health Benefit Purchasing Coalition
``Sec. 9841. Qualified health benefit
purchasing coalition.
``SEC. 9841. QUALIFIED HEALTH BENEFIT PURCHASING COALITION.
``(a) In General.--A qualified health benefit purchasing coalition
is a private not-for-profit corporation which--
``(1) sells health insurance through State licensed health
insurance issuers in the State in which the employers to which
such coalition is providing insurance are located, and
``(2) establishes to the Secretary, under State
certification procedures or other procedures as the Secretary
may provide by regulation, that such coalition meets the
requirements of this section.
``(b) Board of Directors.--
``(1) In general.--Each purchasing coalition under this
section shall be governed by a Board of Directors.
``(2) Election.--The Secretary shall establish procedures
governing election of such Board.
``(3) Membership.--The Board of Directors shall--
``(A) be composed of representatives of the members
of the coalition, in equal number, including small
employers and employee representatives of such
employers, but
``(B) not include other interested parties, such as
service providers, health insurers, or insurance agents
or brokers which may have a conflict of interest with
the purposes of the coalition.
``(c) Membership of Coalition.--
``(1) In general.--A purchasing coalition shall accept all
small employers residing within the area served by the
coalition as members if such employers request such membership.
``(2) Other members.--The coalition, at the discretion of
its Board of Directors, may be open to individuals and large
employers.
``(3) Voting.--Members of a purchasing coalition shall have
voting rights consistent with the rules established by the
State.
``(d) Duties of Purchasing Coalitions.--Each purchasing coalition
shall--
``(1) enter into agreements with small employers (and, at
the discretion of its Board, with individuals and other
employers) to provide health insurance benefits to employees
and retirees of such employers,
``(2) where feasible, enter into agreements with 3 or more
unaffiliated, qualified licensed health plans, to offer
benefits to members,
``(3) offer to members at least 1 open enrollment period of
at least 30 days per calendar year,
``(4) serve a significant geographical area and market to
all eligible members in that area, and
``(5) carry out other functions provided for under this
section.
``(e) Limitation on Activities.--A purchasing coalition shall not--
``(1) perform any activity (including certification or
enforcement) relating to compliance or licensing of health
plans,
``(2) assume insurance or financial risk in relation to any
health plan, or
``(3) perform other activities identified by the State as
being inconsistent with the performance of its duties under
this section.
``(f) Additional Requirements for Purchasing Coalitions.--As
provided by the Secretary in regulations, a purchasing coalition shall
be subject to requirements similar to the requirements of a group
health plan under this chapter.
``(g) Relation to Other Laws.--
``(1) Preemption of state fictitious group laws.--
Requirements (commonly referred to as fictitious group laws)
relating to grouping and similar requirements for health
insurance coverage are preempted to the extent such
requirements impede the establishment and operation of
qualified health benefit purchasing coalitions.
``(2) Allowing savings to be passed through.--Any State law
that prohibits health insurance issuers from reducing premiums
on health insurance coverage sold through a qualified health
benefit purchasing coalition to reflect administrative savings
is preempted. This paragraph shall not be construed to preempt
State laws that impose restrictions on premiums based on health
status, claims history, industry, age, gender, or other
underwriting factors.
``(3) No waiver of hipaa requirements.--Nothing in this
section shall be construed to change the obligation of health
insurance issuers to comply with the requirements of title
XXVII of the Public Health Service Act with respect to health
insurance coverage offered to small employers in the small
group market through a qualified health benefit purchasing
coalition.
``(h) Definition of Small Employer.--For purposes of this section--
``(1) In general.--The term `small employer' means, with
respect to any calendar year, any employer if such employer
employed an average of at least 2 and not more than 50
qualified employees on business days during either of the 2
preceding calendar years. For purposes of the preceding
sentence, a preceding calendar year may be taken into account
only if the employer was in existence throughout such year.
``(2) Employers not in existence in preceding year.--In the
case of an employer which was not in existence throughout the
1st preceding calendar year, the determination under paragraph
(1) shall be based on the average number of qualified employees
that it is reasonably expected such employer will employ on
business days in the current calendar year.''.
(2) Conforming amendment.--The table of subchapters for
chapter 100 of such Code is amended by adding at the end the
following item:
``Subchapter D. Qualified health benefit
purchasing coalition.''.
(c) Effective Date.--The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 2001.
SEC. 6. STATE GRANT PROGRAM FOR MARKET INNOVATION.
(a) In General.--The Secretary of Health and Human Services (in
this section referred to as the ``Secretary'') shall establish a
program (in this section referred to as the ``program'') to award
demonstration grants under this section to States to allow States to
demonstrate the effectiveness of innovative ways to increase access to
health insurance through market reforms and other innovative means.
Such innovative means may include (and are not limited to) any of the
following:
(1) Alternative group purchasing or pooling arrangements,
such as a purchasing cooperatives for small businesses,
reinsurance pools, or high risk pools.
(2) Individual or small group market reforms.
(3) Consumer education and outreach.
(4) Subsidies to individuals, employers, or both, in
obtaining health insurance.
(b) Scope; Duration.--The program shall be limited to not more than
10 States and to a total period of 5 years, beginning on the date the
first demonstration grant is made.
(c) Conditions for Demonstration Grants.--
(1) In general.--The Secretary may not provide for a
demonstration grant to a State under the program unless the
Secretary finds that under the proposed demonstration grant--
(A) the State will provide for demonstrated
increase of access for some portion of the existing
uninsured population through a market innovation (other
than merely through a financial expansion of a program
initiated before the date of the enactment of this
Act);
(B) the State will comply with applicable Federal
laws;
(C) the State will not discriminate among
participants on the basis of any health status-related
factor (as defined in section 2791(d)(9) of the Public
Health Service Act), except to the extent a State
wishes to focus on populations that otherwise would not
obtain health insurance because of such factors; and
(D) the State will provide for such evaluation, in
coordination with the evaluation required under
subsection (d), as the Secretary may specify.
(2) Application.--The Secretary shall not provide a
demonstration grant under the program to a State unless--
(A) the State submits to the Secretary such an
application, in such a form and manner, as the
Secretary specifies;
(B) the application includes information regarding
how the demonstration grant will address issues such as
governance, targeted population, expected cost, and the
continuation after the completion of the demonstration
grant period; and
(C) the Secretary determines that the demonstration
grant will be used consistent with this section.
(3) Focus.--A demonstration grant proposal under section
need not cover all uninsured individuals in a State or all
health care benefits with respect to such individuals.
(d) Evaluation.--The Secretary shall enter into a contract with an
appropriate entity outside the Department of Health and Human Services
to conduct an overall evaluation of the program at the end of the
program period. Such evaluation shall include an analysis of
improvements in access, costs, quality of care, or choice of coverage,
under different demonstration grants.
(e) Option To Provide for Initial Planning Grants.--Notwithstanding
the previous provisions of this section, under the program the
Secretary may provide for a portion of the amounts appropriated under
subsection (f) (not to exceed $5,000,000) to be made available to any
State for initial planning grants to permit States to develop
demonstration grant proposals under the previous provisions of this
section.
(f) Authorization of Appropriations.--There are authorized to be
appropriated $100,000,000 for each fiscal year to carry out this
section. Amounts appropriated under this subsection shall remain
available until expended.
(g) State Defined.--For purposes of this section, the term
``State'' has the meaning given such term for purposes of title XIX of
the Social Security Act.
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