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“THE ``ERISA TARGETED HEALTH INSURANCE REFORM ACT OF 1995''” mentioning the U.S. Dept of Labor was published in the Extensions of Remarks section on pages E397-E400 on Feb. 22, 1995.
The publication is reproduced in full below:
THE ``ERISA TARGETED HEALTH INSURANCE REFORM ACT OF 1995''
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HON. HARRIS W. FAWELL
of illinois
in the house of representatives
Wednesday, February 22, 1995
Mr. FAWELL. Mr. Speaker, last year reform of health care focused on what was wrong with the system. This year reform should be driven by what is working in the system and how we can expand on what is being done. Yesterday, I introduced the ERISA Targeted Health Insurance Reform Act. I also introduced a related bill, the Targeted Individual Health Insurance Reform Market Act which I will explain separately.
Joining as original cosponsors of the ERISA targeted bill are: My colleagues Representatives Bill Goodling, Dick Armey, Tim Petri, Marge Roukema, Cass Ballenger, Pete Hoekstra, Buck McKeon, Jan Meyers, Jim Talent, James Greenwood, Tim Hutchinson, Joe Knollenberg, Lindsey Graham, Dave Weldon, and David McIntosh.
Our approach to fixing the problems--primarily lack of access to affordable coverage--is fundamentally different than that taken by the Clinton administration and Congress last year. In developing this legislation, we took the hippocratic oath: First, do no harm. We carefully target reforms to fix the problems without doing harm to the choice and quality of care enjoyed by most Americans. Moreover, we will not disturb the revolution in innovation and competition going on in the private sector--instead, we will build on it.
The legislation we are introducing addresses the problem areas in health care insurance: portability, preexisting conditions, and affordable coverage for small employers.
Most importantly, the framework builds on the successful and time-
tested cornerstone of employee benefits law, the Employee Retirement Income Security Act [ERISA]. Under ERISA, near universal coverage has been afforded the employees of larger companies, and this system is maintained in our legislation. But, we will offer small employers the opportunity to form multiple employer health plans to achieve the economies of scale and freedom from excessive regulation that have been ERISA's hallmark.
The legislation's provisions for worker portability and limits on preexisting conditions under health plans will help eliminate job lock. It gives increased purchasing power for employers and employees. Increased health plan competition will mean more affordable choice of coverage for many Americans.
Our legislation makes these targeted reforms without forcing Americans to give up their current coverage or restrict their choice of coverage--it should actually expand choice. Nor do we impose employer mandates, price controls, or a one-size-fits-all benefit package. Moreover, the legislation does not require any Government subsidies, expenditures, or taxes.
We have worked with many organizations in developing this
legislation and have received a number of letters supportive of our effort to begin the debate on health insurance reform. So far, we have supportive letters from: the National Federation of Independent Business, the U.S. Chamber of Commerce, the ERISA Industry Committee, the National Association of Wholesalers, the National Association of Manufacturers, the Self-Insurance Institute of America, Associated Builders and Contractors, the Association of Private Pension and Welfare Plans, the National Business Coalition on Health, the National Retail Federation, the National Restaurant Association, Mutual of
Omaha, and New York Life.I've attached a section by section analysis of the first bill, the ERISA Targeted Health Insurance Reform Act, that has five subtitles (A through E). I will now explain what is contained in subtitles A and B. Subtitle A, entitled ``Increased Availability and Continuity of Health Coverage for Employees and Their Families'' deals with the subject matter of portability, limitations on preexisting condition exclusions, and private standard setting organizations. Subtitle B, entitled ``Requirements for Insurers Providing Health Insurance Coverage to Group Health Plans of Small Employers'' contains fair rating standards and rules relating to insurance availability in the small group market. After I've explained this, I will, at another time, explain subtitles C, D, and E.
The ERISA Targeted Health Insurance Reform Act of 1995
summary
The ERISA Targeted Health Insurance Reform Act of 1995 presents a well-targeted and workable framework within which incremental health insurance reform can be enacted this year.
The framework builds on the successful and time-tested cornerstone of employee benefits law set in 1974 under ERISA. Under the umbrella of ERISA, near ``universal health coverage'' has been afforded the employees of larger companies. It is long-overdue that cost-conscious small employers be given the opportunity to achieve the economies of scale and freedom from excessive government regulation and taxation that have been ERISA's hallmark. The problems of uninsured families can be strongly attacked by removing barriers and releasing the purchasing power of employers acting
[[Page E398]] jointly to voluntarily form ERISA multiple employer health plans, both fully-insured and self-insured.
The increased health plan competition stimulated under the ERISA structure means that more affordable coverage will be available to more Americans. The bill is friendly towards the competitive revolution occurring in the health care marketplace, and gives new vigor to the ability of providers, insurers, and employers to bring cost-saving innovations into the marketplace and into the 21st century.
In addition to addressing the problems of the uninsured and cost-control, the legislation contains important new protections and freedoms for workers who must compete in a more mobile workforce. No longer would covered workers face job-lock because they fear the lack of access to health insurance or denial of coverage because of a preexisting health condition.
The bill contains targeted but important elements of health insurance reform including participation, portability, renewability, utilization review, solvency, claims processing and fair rating standards.
The foundation of this bill, built upon ERISA, is to create an unfettered 21st century framework in which employers, employees, and their representatives are free to set the level of their health benefit promises and in which those promises will be better kept.
what the erisa targeted health insurance reform bill does
New protections and freedoms for workers in a mobile workforce
Portability and limits on preexisting conditions under health plans helps eliminate job-lock (e.g. if an employee once chooses insurance coverage they do not have to again satisfy a preexisting condition as long as some form of coverage is continued).
Participation standards require annual open enrollment and limits exclusions based on certain age, service, and income criteria.
Insurers and multiple employer plans must guarantee the renewal of health coverage.
Increased purchasing power for employers and employees
Barriers are removed for employers to voluntarily form multiple employer health plans of the fully-insured and self-insured variety.
Barriers are removed to the formation of employer health coalitions enabling single and multiemployer plans to negotiate agreements with providers.
Let the market roar: Increased health plan competition means more affordable choice of coverage
State benefit mandates are limited.
State anti-managed-care laws are restructured and, instead, uniform standards are encouraged.
Restrictive state laws relating to Provider Health Networks, Employer Health Coalitions, insured plans, and self-insured plans are preempted.
Buyer cost awareness is encouraged through Medisave plans.
Access to fully-insured coverage expanded for employees of small employers
Insurers must open their small group (under 51 employees) markets to all eligible buyers.
Fair rating standards limit premium variations among similarly situated groups which balances the need to make insurance more affordable, but avoids ``sticker shock'' for the currently insured.
Increased consumer protections under ERISA plans
Claims processing and determinations must be timely and participant remedies are improved.
Under certain conditions, self-insured plans are required to maintain unpaid claims reserves.
what the erisa targeted health insurance reform bill does not do
As important as what the Targeted bill does do, is what it does not do.
It does not force Americans to give up their current health insurance coverage, nor does it restrict their choice of coverage (in fact, it will help expand their choice).
It does not impose employer mandates that result in lost wages and lost jobs.
It does not require any new federal spending or new taxes.
It does not have unfunded state or local mandates.
It does not have price controls or impose government-prescribed health care budgets that would lead to rationing or lower quality of care.
It does not establish a government-run health care system, nor does it create a massive bureaucracy.
It does not deny employers the right to self-insure, but does allow more employers to do so.
It does not impose a single, one-size-fits-all, national benefits package determined by the government.
Title I
Subtitle A--Increased availability and continuity of health coverage for employees and their families
The purpose of this subtitle is to expand access to affordable group health coverage for employers, employees, and their families and to help eliminate job-lock and the exclusion of such individuals from coverage due to preexisting condition restrictions.
Sec. 1001.--Access to affordable health plan coverage.
This section adds a new ERISA Part 8 providing for nondiscrimination, portability, renewability, and participation standards under Subpart A; encouragement of private standards--setting organizations for utilization review and provider networks under Subpart B; and standards and enforcement mechanisms applicable to insurers under Subpart C.
ERISA Part 8--Access and continuity of, Health Plan Coverage
``Sec. 800. Definitions and special rules.
Erisa Subpart A--Nondiscrimination, Portability, Renewability, and Plan
Participation Standards
``Sec. 801. Nondiscrimination and limitations on preexisting condition exclusions.
``Sec. 802. Portability.
These sections of Part 8 of ERISA limit preexisting condition restrictions under all employer group health benefit plans, including self-funded plans. The same provisions also apply to health insurance coverage sold in the small group market. Section 8 provides that a child who is covered at birth or adoption and remains covered shall not be considered to have a preexisting condition at the time of birth or adoption.
The provisions will help end job-lock and assure continuous availability of health coverage by prohibiting preexisting condition restrictions for those who are continuously covered and elect coverage when first eligible. Coverage is considered ``continuous'' as long as any lapse in coverage is not longer than 3 months (6 months for employees who terminate employment). Generally, plans may not have more than a 3/6 preexisting exclusion (i.e. treatments or diagnoses in the 3 months prior to coverage could be excluded from coverage for up to 6 months). Insurers in the small group market can also offer 6/12 coverage.
``Sec. 803.--Requirements for renewability of coverage.
This section prohibits employer health plans and health insurance coverage offered by insurers from being canceled or denied renewability except for reasons of: (a) nonpayment of premiums, (b) fraud or misrepresentation, (c) noncompliance with plan provisions, and (d) certain other conditions.
``Sec. 804.--Group Health Plan Participation Standards.
Under this Section, group health plans may not require as a condition of participation: (1) a waiting period beyond 90 days, (2) attainment of a specified age, (3) that an employee be highly compensated, or (4) that an employee perform more than a ``year of service'' as currently defined under ERISA. Employer contributions to a group health plan are not required.
An annual enrollment period of 30 days must be provided to enable employees to enroll in such coverage as provided under the terms of each group health plan. Employees and dependents may also enroll for coverage at the time of the loss of other coverage (if such coverage was the reason for declining enrollment when first eligible).
Subpart B--Encouragement of Private Standards Setting Organizations for
Provider Networks and Utilization Review Under Group Health Plans
``Sec. 811.--Encouragement of private standards setting organizations for provider networks under group health plans.
``Sec. 812.--Encouragement of private standards setting organizations for utilization review under group health plans.
This Subpart B of ERISA encourages the establishment of private standards setting organizations to provide certain guidelines which would be applicable to provider networks under provider networks and to
utilization review procedures under group health plans.The standards which group health plans would look to from any such private entity would be related to (1) reasonably prompt access of individuals to covered services, (2) the extent to which emergency services are provided to individuals outside the provider network, (3) notification and review regarding the termination of providers from a network, and (4) conditions relating to utilization review, including timely review and provider participation in such decisions.
ERISA Subpart C--Establishment of Standards; Enforcement
``Sec. 821.--Establishment of standards applicable to insurers offering health insurance coverage to group health plans.
``Sec. 822.--Enforcement with respect to insurers offering health insurance coverage to group health plans.
``Sec. 823.--Preemption.
The standards applicable to group health plans under ERISA Subparts A and B are generally enforced under ERISA Part 5.
With respect to the standards applicable to insurers only, and not to group health plans, states may (in accordance with Sections 821 and 822) implement and enforce the nationally uniform standards under Subparts A and B, including the uniform regulations which may be recommended by the NAIC. States that voluntarily elect to implement such standards have the exclusive authority to enforce such standards as they apply to insurers and not to the group health plans which purchase health insurance coverage. In this fashion the traditional regulation of insurers by the states is preserved while the uniform regulation of group health plans under ERISA is not disturbed.
Pursuant to the preemption provisions under Section 823, a state may not establish or enforce standards applicable to insurers
[[Page E399]] which are different than the nationally uniform standards under this subpart.
Subtitle B--Requirements for insurers providing health insurance coverage to group health plans of small employers
Sec. 1101. ERISA requirements for insurers providing health insurance coverage to group health plans for small employers.
In general, the purpose of this subtitle, adding a new Part 8, Subpart D to ERISA, is to expand access to health insurance by making private health insurance coverage marketed to small employers more affordable and available regardless of an employee's health status and previous claims experience.
ERISA Subpart D--Requirements for Insurers Providing Health Insurance
Coverage to Group Health Plans of Small Employers
``Sec. 831.--Definitions.
``Sec. 832.--Requirements for insurers to offer general, catastrophic, and Medisave coverage to small employers.
``Sec. 833.--General, catastrophic, and Medisave coverage defined.
These sections provide for the availability of health insurance coverage to all small employers from those insurers who sell health insurance in the small group market. Insurers would be required to open their general coverage market to small employers and to offer a catastrophic plan with higher cost-sharing provisions (unless the insurer is an HMO or does not otherwise offer fee-for-service coverage). Insurers may also offer a
Medisave plan that includes catastrophic coverage with an integrated family medical savings account. Among the general policies offered must be a fee-for-service option, a managed care option, and point-of-service option, but only if these are made available by the insurer under other policies of insurance. Insurers must accept every small employer and every eligible employee of a small employer who applies for coverage under a plan as long as the plan meets the minimum participation requirements. The initial and annual enrollment periods of 30 days applicable to small group plans are identical to those applicable to all group health plans under section 804.
``Sec. 834.--Use of fair rating, uniform marketing materials, and miscellaneous consumer protections.
``Sec. 835.--Establishment of standards.
``Sec. 836.--Enforcement.
``Sec. 837.--Preemption.
Under these sections, insurers must use fair rating standards in setting initial and renewal premiums in the small group market. In general, premiums may vary for age, geographic area, family class, and administrative category for a particular benefit design. Discounts for employer wellness programs may also be given.
When the fair rating standards are first effective, the premiums of two employers having workforces with similar demographic characteristics cannot vary by more than 50% based on initial underwriting factors or in subsequent years, based on claims experience. This rule and the permitted one year surcharge for coverage containing the less restrictive 3/6 preexisting condition clause will help insulate currently insured employers for the premium ``sticker shock'' which could otherwise result from more restrictive rules. Suggestions as to the extent to which this 50% variation may be reduced over time without reducing coverage are solicited from the NAIC and other interested parties.
Such premium variations for individual employers participating in a qualified association which is experience-rated is not permitted.
Under sections 835 and 836 states may, but are not required, to implement and enforce the nationally uniform standards under sections 832-834, including the uniform regulations which may be recommended by the NAIC. States that voluntarily elect to implement such standards have the exclusive authority to enforce such standards as they apply to insurers only and not to the group health plans which purchase health insurance coverage. A phase-in period of three years after the effective date of such standards is allowed for states to conform existing standards with the uniform standards. After such period standards differing from the uniform standards are preempted under section 837.
Sec. 1102. Effective date.
In general the requirements of ERISA Subpart D apply on January 1, 1998 with regard to insurers offering health insurance coverage to small employers.
Subtitle C--Encouragement of multiple employer health plans and preemption
The purpose of this subtitle is to improve access to health coverage and lower insurance costs for both small and larger employers by encouraging the establishment of multiple employer purchasing arrangements, by eliminating costly state regulations, and by freeing market forces and creating a more competitive environment in which health care is delivered.
Sec. 1201--Scope of State Regulation
ERISA Subpart E--Scope of State Regulation
``Sec. 841--Prohibition of State benefit mandates for group health plans.
``Sec. 842--Prohibition of provisions prohibiting employer groups from purchasing health insurance.
``Sec. 843--Preemption of State anti-managed care laws.
These sections facilitate the ability of employers to form groups for the purpose of purchasing fully-insured health insurance coverage. The provisions will help reduce costly regulation and allow any group of employers to form any arrangement to purchase insurance. The preemption of anti-managed care laws is intended to allow market forces to operate to help contain health care costs.
Section 841 will also help lower costs, eliminate inter-state barriers, and provide a level playing field between insured and self-funded plans by eliminating burdensome and expensive state mandates. Although states could continue to mandate a comprehensive and basic benefit package, insurers would be free to design and offer employers and employees the type of coverage they want and can afford.
Sec. 1202--Preemption of state laws for Multiple Employer Benefits Plans meeting Federal Standards.
Part 7--Multiple Employer Health Plans
Sec. 701. Definitions.
Sec. 702. Exempted multiple employer health plans relieved of certain restrictions on preemption of State law and treated as employee welfare benefit plans.
Sec. 703. Exemption procedure.
Sec. 704. Eligibility Requirements.
Sec. 705. Additional requirements applicable to exempted multiple employer health plans.
Sec. 706. Disclosure to participating employers by arrangements providing medical care.
Sec. 707. Maintenance of reserves.
Sec. 708. Notice requirements for voluntary termination.
Sec. 709. Corrective actions and mandatory termination.
Sec. 710. Expiration, suspension, or revocation of exemption.
Sec. 711. Review of actions of the secretary.
This section is designed to preserve well-run self-insured plans and to put an end to the fraudulent scams perpetrated by a few bogus unions and unscrupulous operators.
The section adds a new Part 7 to title I of ERISA which allows certain multiple employer welfare arrangements (MEWAS) providing health benefits to receive an exemption from the Department of Labor to become an ERISA multiple employer health plan (MEHP). Entities eligible for such an exemption include certain collectively-bargained and ``single-employer'' plans that otherwise fail to meet criteria exempting them from the MEWA definition. Also certain employer associations, employee leasing arrangements, and provider health networks may also qualify. Arrangements receiving an exemption would be subject to uniform standards under ERISA regarding reporting, disclosure, fiduciary requirements, and new funding/reserve requirements. Regulations would be promulgated by the Department of Labor in connection with the standards. Arrangements operating multiple employer health plans would be required to notify the states in which they operate. In addition, new arrangements could not commence operations unless an exemption is obtained. Failure to follow this procedure would result in criminal penalties. States could enter into agreements with the Department
regarding the enforcement of the federal statutory and exemption standards for exempted arrangements.Sec. 1203--Clarification of scope of preemption rules.
Sec. 1204--Clarification of treatment of single employer arrangement.
Sec. 1205--Clarification of treatment of certain collectively bargained arrangements.
Sec. 1206--Employee leasing health care arrangement.
Sec. 1207--Enforcement provisions relating to multiple employer welfare arrangements and employee leasing health care arrangement.
Sec. 1208--Fling requirements for multiple employer welfare arrangements providing health benefits.
Sec. 1209--Cooperation between Federal and State authorities Sec.
Sec. 1210--Clarification of treatment of employer health coalitions.
Sec. 1211--Single annual filing for all participating employers.
Sec. 1212--Effective date; transitional rules.
Subtitle D--Remedies and enforcement with respect to group health plans
This subtitle includes provisions for expediting the claim process and clarifying the remedies available in the case of claims disputes under ERISA group health plans.
Sec. 1301.--Claims procedures for group health plans.
This section expedites the claims process under ERISA health plans by requiring that claims for medical benefits be approved within 45 days of the filing completion date. A full and fair review must also be provided within 45 days of the review filing date. Requests for emergency preauthorization must be provided within 10 days (or 48 hours in the case of extreme emergencies), with the opportunity for a full and fair review of each within the same time period for approval. The same time frames for approval and review would apply to requests for utilization review determinations and emergency utilization review determinations.
Sec. 1302.--Available court remedies.
This section amends Section 502 of the Employee Retirement Income Security Act of 1974 (ERISA) to provide for the following court remedies in the case of a plaintiff prevails in a claim for benefits: (1) a cease and
[[Page E400]] desist order, (2) a grant of benefits denied or refused, (3) payment of prejudgment interest on the claims for benefits under the plan, and (4) payment of reasonable attorney's fees, and other reasonable costs relating to the action. In addition, the Secretary may assess a civil penalty against the insurer or the appropriate fiduciary of a group health plan who engages in a pattern or practice of repeated bad faith claims denials.
Sec. 1303.--Effective Date.
The amendments to ERISA in this Subtitle take effect January 1, 1998.
Subtitle E--Funding and plan termination requirements for self-insured group health plans
Sec. 1401.--Special rules Self-Insured Group Health Plans.
This section adds a new section 610 to ERISA Part 6 providing for plan termination and funding requirements for certain plans. Under subsection 610(b) the single-employer self-insured group health plans maintained by small employers are required to establish reserves in an amount equal to 25% of expected annual incurred claims and expenses or the estimated amount of incurred, but unpaid, claims, if greater. Alternative means of meeting such requirements would take into account factors such as the size of the plan, the benefit design, the presence of stop-loss coverage, and
either security, guarantee, or financial arrangements. The self-insured plans maintained by large plan sponsors who meet certain distress criteria would also have to file notice and a financial plan demonstrating the basis for the continued timely payment of benefits. A safe-harbor for large plans meeting the above described reserve requirements for small plans would be provided, thus obviating the need to file such a notice in the event of the distress of the plan sponsor. Multiemployer plans would have to maintain contributions and assets at a level so as to avoid becoming financially overburdened.
New ERISA section 611 spells out the requirements for notice and procedures related to the voluntary termination of self-insured plans and to the mandatory termination by the Secretary of Labor of such plans in the event of their failure to meet reserve or other requirements.
Sec. 1402.--Effective Date.
Section 610 applies to plan years beginning on or after January 1, 1998.
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