SEC. 2744. STATE FLEXIBILITY IN INDIVIDUAL MARKET REFORMS.
Title[ Title I\Subtitle B\Sec. 111 Contents
<<NOTE: 42 USC 300gg-44.>>
``(a) Waiver of Requirements Where Implementation of Acceptable
Alternative Mechanism.--
``(1) In general.--The requirements of section 2741 shall
not apply with respect to health insurance coverage offered in
the individual market in the State so long as a State is found
to be implementing, in accordance with this section and
consistent with section 2746(b), an alternative mechanism (in
this section referred to as an `acceptable alternative
mechanism')--
``(A) under which all eligible individuals are
provided a choice of health insurance coverage;
``(B) under which such coverage does not impose any
preexisting condition exclusion with respect to such
coverage;
``(C) under which such choice of coverage includes
at least one policy form of coverage that is comparable
to comprehensive health insurance coverage offered in
the individual market in such State or that is
comparable to a standard option of coverage available
under the group or individual health insurance laws of
such State; and
``(D) in a State which is implementing--
``(i) a model act described in subsection
(c)(1),
``(ii) a qualified high risk pool described in
subsection (c)(2), or
``(iii) a mechanism described in subsection
(c)(3).
``(2) Permissible Forms of mechanisms.--A private or public
individual health insurance mechanism (such as a health
insurance coverage pool or programs, mandatory group conversion
policies, guaranteed issue of one or more plans of individual
health insurance coverage, or open enrollment by one or more
health insurance issuers), or combination of such mechanisms,
that is designed to provide access to health benefits for
individuals in the individual market in the State in accordance
with this section may constitute an acceptable alternative
mechanism.
``(b) Application of Acceptable Alternative Mechanisms.--
``(1) Presumption.--
``(A) In general.--Subject to the succeeding
provisions of this subsection, a State is presumed to be
implementing an acceptable alternative mechanism in
accordance with this section as of July 1, 1997, if, by
not later than April 1, 1997, the chief executive
officer of a State--
``(i) notifies the Secretary that the State
has enacted or intends to enact (by not later than
January 1, 1998, or July 1, 1998, in the case of a
State described in subparagraph (B)(ii)) any
necessary legislation to provide for the
implementation of a mechanism reasonably designed
to be an acceptable alternative mechanism as of
January 1, 1998, (or, in the case of a State
described in subparagraph (B)(ii), July 1, 1998);
and
``(ii) provides the Secretary with such
information as the Secretary may require to review
the mechanism and its implementation (or proposed
implementation) under this subsection.
``(B) Delay permitted for certain states.--
``(i) Effect of delay.--In the case of a State
described in clause (ii) that provides notice
under subparagraph (A)(i), for the presumption to
continue on and after July 1, 1998, the chief
executive officer of the State by April 1, 1998--
``(I) must notify the Secretary that
the State has enacted any necessary
legislation to provide for the
implementation of a mechanism reasonably
designed to be an acceptable alternative
mechanism as of July 1, 1998; and
``(II) must provide the Secretary
with such information as the Secretary
may require to review the mechanism and
its implementation (or proposed
implementation) under this subsection.
``(ii) States described.--A State described in
this clause is a State that has a legislature that
does not meet within the 12-month period beginning
on the date of enactment of this Act.
``(C) Continued application.--In order for a
mechanism to continue to be presumed to be an acceptable
alternative mechanism, the State shall provide the
Secretary every 3 years with information described in
subparagraph (A)(ii) or (B)(i)(II) (as the case may be).
``(2) Notice.--If the Secretary finds, after review of
information provided under paragraph (1) and in consultation
with the chief executive officer of the State and the insurance
commissioner or chief insurance regulatory official of the
State, that such a mechanism is not an acceptable alternative
mechanism or is not (or no longer) being implemented, the
Secretary--
``(A) shall notify the State of--
``(i) such preliminary determination, and
``(ii) the consequences under paragraph (3) of
a failure to implement such a mechanism; and
``(B) shall permit the State a reasonable
opportunity in which to modify the mechanism (or to
adopt another mechanism) in a manner so that may be an
acceptable alternative mechanism or to provide for
implementation of such a mechanism.
``(3) Final determination.--If, after providing notice and
opportunity under paragraph (2), the Secretary finds that the
mechanism is not an acceptable alternative mechanism or the
State is not implementing such a mechanism, the Secretary shall
notify the State that the State is no longer considered to be
implementing an acceptable alternative mechanism and that the
requirements of section 2741 shall apply to health insurance
coverage offered in the individual market in the State,
effective as of a date specified in the notice.
``(4) Limitation on secretarial authority.--The Secretary
shall not make a determination under paragraph (2) or (3) on any
basis other than the basis that a mechanism is not an acceptable
alternative mechanism or is not being implemented.
``(5) Future adoption of mechanisms.--If a State, after
January 1, 1997, submits the notice and information described in
paragraph (1), unless the Secretary makes a finding described in
paragraph (3) within the 90-day period beginning on the date of
submission of the notice and information, the mechanism shall be
considered to be an acceptable alternative mechanism for
purposes of this section, effective 90 days after the end of
such period, subject to the second sentence of paragraph (1).
``(c) Provision Related to Risk.--
``(1) Adoption of naic models.--The model act referred to in
subsection (a)(1)(D)(i) is the Small Employer and Individual
Health Insurance Availability Model Act (adopted by the National
Association of Insurance Commissioners on June 3, 1996) insofar
as it applies to individual health insurance coverage or the
Individual Health Insurance Portability Model Act (also adopted
by such Association on such date).
``(2) Qualified high risk pool.--For purposes of subsection
(a)(1)(D)(ii), a `qualified high risk pool' described in this
paragraph is a high risk pool that--
``(A) provides to all eligible individuals health
insurance coverage (or comparable coverage) that does
not impose any preexisting condition exclusion with
respect to such coverage for all eligible individuals,
and
``(B) provides for premium rates and covered
benefits for such coverage consistent with standards
included in the NAIC Model Health Plan for Uninsurable
Individuals Act (as in effect as of the date of the
enactment of this title).
``(3) Other mechanisms.--For purposes of subsection
(a)(1)(D)(iii), a mechanism described in this paragraph--
``(A) provides for risk adjustment, risk spreading,
or a risk spreading mechanism (among issuers or policies
of an issuer) or otherwise provides for some financial
subsidization for eligible individuals, including
through assistance to participating issuers; or
``(B) is a mechanism under which each eligible
individual is provided a choice of all individual health
insurance coverage otherwise available.
``
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