Order Code RL34389
Health Insurance Reform and the 110th Congress
February 25, 2008
Jean Hearne
Specialist in Health Care Financing
Domestic Social Policy Division

Health Insurance Reform and the 110th Congress
Summary
Congress last debated comprehensive health insurance reform in the 1990s. At
that time, the Health Security Act, a bill originating with President Clinton and then
First Lady Hillary Clinton, was considered alongside a number of bills introduced by
Senators Chafee, Daschle, and Dole, and Representatives Gephardt and Bilirakis,
among others. The Health Security Act (H.R. 3600) would have established
universal health coverage for all U.S. citizens, reformed existing public health
insurance programs, and established caps on health care spending. At the time,
escalating health care and health insurance costs, declining numbers of individuals
with private coverage, and state experimentation and innovation spurred the federal
debate. Today, similar conditions may be setting the stage for reconsideration of
major health insurance reform.
Health insurance reform bills introduced in the 110th Congress can be classified
into the following categories:
! National health insurance (or a national health service).
! Expanding existing public programs.
! Expanding privately sponsored coverage — including proposals to
! expand employer-based health insurance,
! expand the individual market for health insurance, and
! improve the private market for health insurance.
! State-based reforms.
! Combinations of above approaches.
This report presents basic background on health insurance that may be useful
to legislators considering health insurance reforms. It describes reform approaches
and provides brief descriptions of health insurance reform bills introduced in the
110th Congress. The potential impact of various reform approaches and bills is not
analyzed in this report, however. As a result, it does not provide evaluations of how
well different bills, once enacted, would meet their objectives. The relative impact
of different bills on their varying objectives is likely to vary widely. This report will
be updated periodically as new bills are introduced.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
What Is Health Insurance Reform All About? . . . . . . . . . . . . . . . . . . . . . . . . 2
Different Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Prioritizing Among Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Scope of Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Text Box 1. Incremental Federal Health Insurance Reforms Since
the Early 1990s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
General Approaches to Health Insurance Reform . . . . . . . . . . . . . . . . . . . . . . . . . 6
National Health Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Expanding Existing Public Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Private Insurance Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Expanding Employer-Based Coverage . . . . . . . . . . . . . . . . . . . . . . . . . 8
Text Box 2. Subsidies for Private Health Insurance . . . . . . . . . . . . . . . 9
Improving Access to Health Insurance in the Individual Market . . . . 10
Text Box 3. Tax Benefits for Health Insurance . . . . . . . . . . . . . . . . . . 11
Market Reforms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Supporting State Reforms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Text Box 4. State Health Insurance Reforms . . . . . . . . . . . . . . . . . . . . 14
Other Comprehensive Reforms Utilizing Multiple Approaches . . . . . . . . . 15
Health Insurance Reform Bills in the 110th Congress . . . . . . . . . . . . . . . . . . . . . 16
National Health Insurance/National Health Service . . . . . . . . . . . . . . . . . . 16
H.R. 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
H.R. 676 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
H.R. 1200 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
H.R. 1841 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
H.R. 3000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Expanding Existing Public Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
H.R. 2034/S. 1218 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Expanding Privately Sponsored Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . 18
H.R. 227 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
H.R. 241 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
H.R. 914/S. 397 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
H.R. 1802 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
H.R. 2132 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
H.R. 2302 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
H.R. 2626 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
H.R. 2737 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
H.R. 3515 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
H.R. 3516 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
H.R. 3975 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
H.R. 5348 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
S. 99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
S. 733 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
S. 1019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
S. 1783 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

S. 1875 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
S. 1886 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
S. 1899 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Grants to States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
H.R. 506 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
H.R. 3507/S. 2031 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
S. 325 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Comprehensive Reforms that Utilize Multiple Approaches . . . . . . . . . . . . 23
S. 158 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
H.R. 2351 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
H.R. 3163 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
S. 334 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
CRS Products on Health Insurance and Tax Policy for Health Insurance . . . . . . 24
Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Tax Policy and Health Insurance
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25


Health Insurance Reform and
the 110th Congress
Introduction
Congress last debated comprehensive health insurance reform in the 1990s. At
that time, the Health Security Act, a bill originating with President Clinton and then
First Lady Hillary Clinton, was considered alongside a number of bills introduced by
Senators Chafee, Daschle, and Dole, and Representatives Gephardt and Bilirakis,
among others. The Health Security Act (H.R. 3600 — for legislative text, see H.R.
3600 from 103rd Congress) would have established universal health coverage for all
U.S. citizens, reformed existing public health insurance programs, and established
caps on health care spending. At the time, escalating health care and health insurance
costs, declining numbers of individuals with private coverage, and state
experimentation and innovation spurred the federal debate. Reforming the one-
seventh of the U.S. economy composed of health care would have been no small feat,
however, and despite considerable efforts by the 102nd and 103rd Congresses,
universal coverage and comprehensive health insurance reform did not succeed.
Support for the Health Security Act began to decline well before its formal
consideration was complete. Among the many concerns raised were the secretive
process under which the plan was developed and the level of government intrusion
that would result from its implementation.1 Many of the bills considered after H.R.
3600 were rejected for not extending coverage far enough among the uninsured.
Today, similar conditions may be setting the stage for reconsideration of major
health insurance reform. The cost of health insurance and health care services in
general is rising faster than inflation, while the percentage of individuals without
health insurance is rising. States are innovating and experimenting, providing useful
trials and errors to potentially inform the debate at the federal level. The prominence
of the issue among the 2008 presidential candidates may be elevating interest in
health reforms among the electorate.2 Finally, President Bush’s proposal to end the
1 There are a large number of articles and books examining the failure of H.R. 3600,
including Skocpol, T., “The Rise and Resounding Demise of the Clinton Plan,” Health
Affairs
, Spring 1995; Blendon, R., Brodie, M., Benson, J., “What Happened to Americans’
Support for the Clinton Health Plan?” Health Affairs, Summer 1995; Clymer, A., Pear, R.,
and Toner, R., “The Health Care Debate: What Went Wrong?” New York Times, August 29,
1994; “National Health Program, President’s Grandest Goal, Is Declared Dead in Congress,”
New York Times, September 27, 1994; Starr P., “What Happened to Health Care Reform?”
American Prospect, vol. 6. no. 20, December 1995:20-31.
2 For comparative information and summaries of presidential candidates’ proposals, see
Collins, S., Kriss, J., Envisioning the Future: The 2008 Presidential Candidates’ Health
(continued...)

CRS-2
existing tax exclusion for employer-provided health insurance, replacing it with a
standard deduction, suggests a potential source of funding for health reforms.3
This report presents basic background on health insurance that may be useful
to legislators considering health insurance reforms. It describes health insurance
reform approaches and provides brief descriptions of health insurance reform bills
introduced in the 110th Congress. The potential impact of various reform approaches
and bills is not analyzed in this report, however. As a result, it does not provide
evaluations of how well different bills, once enacted, would meet their objectives.
The relative impact on such objectives probably varies widely.
What Is Health Insurance Reform All About?
Health insurance reform is a broad term that could potentially span a large range
of policy options, all of which have their own inherent strengths and weaknesses.
Some health insurance reform bills address a discrete health insurance problem or
issue, such as expanding public health insurance coverage for uninsured children or
reducing the number of costly state mandates on private health insurance plans. At
the opposite end of the spectrum, however, are proposals that operate on a broader
scale — changing the way people access public and/or private health insurance,
investing large amounts of government resources to assist individuals with the cost
of health care or health insurance, reducing costs and improving quality. The scope
of proposed reforms is one factor that makes a simple yet comprehensive discussion
of all of the important options challenging. Other fundamental differences separating
health insurance reform approaches include different objectives of reforms and
different priorities among important stakeholders.
Different Objectives. Health insurance reform bills introduced in the 110th
Congress have surprisingly different primary objectives, which can include the
following:
! Reducing the number of people without health insurance. Most
health insurance reforms seek to improve access to needed medical
care. In the United States, access to a great deal of expensive
medical care is dependent on whether an individual has health
insurance.
! Reducing the reliance on health insurance for at least some
portion of needed medical care. A number of bills reflect the
position that part of the insurance problem in the United States is
that people have too much of it — that the presence of insurance has
desensitized Americans to the cost of health care services, allowing
2 (...continued)
Reform Proposals, The Commonwealth Fund, January 2008, and the Kaiser Family
Foundation interactive website at [http://www.health08.org/sidebyside.cfm].
3 For a description of the proposal, see pages 19-22 of “General Explanations of the
Administration’s Fiscal year 2009 Revenue Proposals,” at [http://www.treas.gov/offices/tax-
policy/library/bluebk08.pdf].

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both the demand for and the prices of medical care, whether
necessary or unnecessary, to grow too quickly. Those bills include
provisions to increase cost-conscious use of health insurance and
health services and include a group of approaches sometimes
referred to as promoting “consumer directed” health care.4
! Reducing the cost of health insurance. Some advocates of reform
believe that the rising cost of health insurance must be addressed
before other problems can be dealt with. Their reform approaches
reflect the belief that more people will purchase insurance once more
affordable plans are available. Thus, reducing the number of
uninsured is secondary to reducing the cost of the insurance. Cost-
reducing approaches span the continuum, from preempting the
application of costly state laws to establishing a single government
payer for all health insurance. Advocates of single payer approaches
believe such a system would improve administrative efficiencies,
thereby reducing overall health insurance costs.
A number of bills in the 110th Congress feature other objectives related to
improving the quality of medical care or the quality of health insurance products.
Proposals to improve health outcomes, increase the availability of information about
high-quality health care and providers, and establish disease management systems are
raising interest among private insurers, government programs, and employers. These
provisions alone, however, will not reduce the number of people without any
insurance, and their effect on medical costs is as yet undetermined.5
What constitutes adequate health insurance is an important consideration that
is beyond the scope of this report. Nonetheless, sponsors of bills extending coverage
are likely to grapple with complex questions about the kind of coverage that should
be extended. Sponsors of bills offering generous government subsidies for health
insurance may feel that it is their duty to set a minimum standard for qualifying
coverage as a way to ensure that taxpayers’ funds are being used responsibly.
Prioritizing Among Stakeholders. One of the challenges of undertaking
comprehensive health insurance reform is that every U.S. citizen is a stakeholder
whose preferences and needs differ from those of others. Reform approaches reflect
different choices about the relative importance of needs among stakeholder groups,
including health care providers; medical researchers; insurance carriers; federal, state,
and local governments; employers; workers; and consumers.
Needs can vary considerably between stakeholder groups, and even among
them. For example, health care consumers may prefer low-cost health insurance,
while health insurance carriers may prefer to maximize profits on their services and
products. Within consumer groups, there are healthy people who may prefer limited
4 Goodman, J., What Is Consumer-Directed Health Care? Health Affairs Web Exclusive,
at [http://content.healthaffairs.org/cgi/content/full/25/6/w540].
5 Mattke, S., Seid, M., Ma, S., “Evidence for the Effect of Disease Management: Is $1
Billion a Year a Good Investment?” American Journal of Managed Care, vol. 13, 2007.

CRS-4
insurance coverage or none at all, while elderly or less healthy consumers may prefer
more comprehensive coverage. Sometimes meeting the needs of one group can
exacerbate the problems encountered by others. For example, requiring health care
premiums to be community rated — or developed based on the experience of a large
group — can reduce rates (relative to rates developed based on past experience) for
individuals with expensive medical conditions. On the other hand, community-rated
rates could rise for the healthiest individuals in the group.
Scope of Reform. Following the challenging and acrimonious health
insurance reform debate of the early 1990s, Congress has not again revisited
comprehensive health insurance reform. A number of incremental health insurance
reforms have, however, been enacted (see Text Box 1). Health insurance reform
bills introduced in the 110th Congress reflect little consensus about whether continued
incremental improvements building on our current patchwork of coverage, or reforms
with much broader scope, changing the way people access health insurance, are
necessary to achieve the objectives of increasing coverage or reducing costs.
Text Box 1. Incremental Federal Health Insurance Reforms
Since the Early 1990s
Eligibility for Medicaid, initially passed in 1965 along with Medicare, was delinked from
cash welfare programs, and eligibility thresholds were raised for children, pregnant
women, and certain aged. (See CRS Report RL33019, Medicaid Eligibility for Adults and
Children
, by Jean Hearne.)
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) addressed a
number of problems in the offering and rating of health insurance in the small group and
individual markets for insurance. Ostensibly about improving portability of health
insurance, its insurance provisions reduced the length of preexisting condition exclusion
periods for certain individuals in the small group market, guaranteed the availability of
plans for certain eligible people, and reduced discrimination against individuals within
small groups based on health conditions. (See CRS Report RL31634, The Health
Insurance Portability and Accountability Act (HIPAA) of 1996: Overview and Guidance
on Frequently Asked Questions
, by Hinda Chaikind et. al.)
The Balanced Budget Act of 1997 created the State Children’s Health Insurance Program
(SCHIP), establishing grants for states to use to provide health insurance to children. (See
CRS Report RL30473, State Children’s Health Insurance Program (SCHIP): A Brief
Overview
, by Elicia Herz et. al.)
The Trade Act of 2002 created two new programs: grants for states to set up or expand
high-risk pools for individuals who cannot find health insurance in the individual market
and health coverage tax credits for certain unemployed individuals and people whose
pensions are guaranteed by the Pension Benefit Guarantee Corporation. (See CRS Report
RL31745, Health Insurance: State High Risk Pools, and CRS Report RL32620, Health
Coverage Tax Credit Authorized by the Trade Act of 2002
, both by Bernadette Fernandez.)
Note: Does not include reforms to Medicare or Medicaid unless they extended eligibility.

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A number of incremental reforms enacted over the past 15 years have improved
the availability of health insurance to at least limited populations. They have also,
however, built on a system where some individuals have no access to any insurance
and others to only unaffordable options, where the number of uninsured has
continued to rise, and where such changes may have exacerbated individuals losing
privately sponsored coverage. For example, a body of research has concluded that
expanding Medicaid and the State Children’s Health Insurance Program (SCHIP) has
generated some crowd-out of private coverage.6
Questions about the scope of reforms extend to the cost of the reform plans. At
one end of the federal financing spectrum are bills that feature subsidies for
individuals to use toward the cost of health insurance. Such bills presume that a
financial commitment from the federal government is essential to achieve universal
or near universal coverage, whether coverage is provided through government
programs or private plans. A fair amount of research supports the notion that
significant subsidies would be needed to induce many of the uninsured to purchase
coverage.7
On the other end of the spectrum are a number of market reform approaches that
reflect the position that government laws and regulations have raised the cost of
insurance, reduced the number of options available to people, and created
disincentives to purchasing low-cost insurance. For example, state benefit mandates
are blamed for increasing costs and reducing choices. Bills at this end of the
spectrum aim to make the market for insurance work better, proposing to achieve
higher coverage rates without subsidies because people will find health insurance
products are more affordable and available, and that meet, but do not exceed, their
needs.
6 Crowd-out occurs when public funds substitute for, rather than supplement, private
funding. For more information, see Gruber, J., Simon, K., Crowd-out Ten Years Later:
Have Recent Public Insurance Expansions Crowded out Private Health Insurance?
National
Bureau of Economic Research Working Paper 12858 [http://www.nber.org/papers/w12858];
Crowd-Out and SCHIP Reauthorization, An Alliance for Health Reform Toolkit, at
[http://www.allhealth.org/publications/Child_health_insurance/Crowd-out_and_SCHIP
_toolkit_70.pdf]; Long S., Marquis, S., “Participation in a Public Insurance Program:
Subsidies, Crowd-Out, and Adverse Selection,” Inquiry, vol. 39, no. 3, Fall 2002.
7 Reschovsky, J., Hadley, J., Employer Health Insurance Premium Subsidies Unlikely to
Enhance Coverage Significantly
, Center for Studying Health System Change Issue Brief No.
46, December 2001; Thomas, K., “Are Subsidies Enough to Encourage the Uninsured to
Purchase Health Insurance? An Analysis of Underlying Behavior,” Inquiry, vol. 31, no. 4
(Winter 1994-95); Pauly, M., Herring, B., and Song, D., Tax Credits, the Distribution of
Subsidized Health Insurance Premiums, and the Uninsured
, Forum for Health Economics
& Policy, 2002, (Frontiers in Health Policy Research), Article 5 [http://www.bepress.com/
fhep/5/5]; Marquis, S., Long, S., State Efforts to Insure the Uninsured, An Unfinished Story,
a RAND Research Brief, 2005.

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General Approaches to Health Insurance Reform
Health insurance reform bills introduced in the 110th Congress can be classified
into the following categories:8
! National health insurance (or a national health service).
! Expanding existing public programs.
! Expanding privately sponsored coverage — includes proposals to
! expand employer-based health insurance,
! expand the individual market for health insurance, and
! improve the private market for health insurance.
! State-based reforms.
! Combinations of above approaches.
National Health Insurance
A number of proposals introduced in the 110th and earlier Congresses are
directed at the creation of a national health insurance program. While the legislation
can take a variety of forms, the general thrust of such proposals is to make basic
health insurance available to all Americans so that access to health care would not
be contingent on individuals’ ability to pay or their employment status. These bills
all share at least two common features: universal entitlement to health care or health
insurance and government-provided health coverage.
There are a two approaches that national health insurance legislation in the 110th
Congress take: social insurance and national health service. Under a social insurance
approach, individuals obtain their health insurance through a government-
administered and financed system. Medicare is an example of a social insurance
program for elderly and disabled individuals. Private insurers can retain a role in
such a system, essentially acting as contractors. In contrast, the national health
service approach, modeled after systems like Britain’s National Health Service,
includes universal coverage, as well as reforms of some or all of the factors of health
care production — such as public ownership of hospitals, or public employment of
physicians. Private insurers may or may not have a role is such a system.
Because of the magnitude of the scope of such approaches, they would be
subject to criticism, particularly about the level of governmental intrusion they would
potentially introduce. On the other hand, with the complications raised by
incremental measures of the last two decades, such as crowd-out of private coverage
and the continuing rise in the number of people without any health insurance,
questions are raised as to whether more incremental changes can be relied on to
achieve universal or near universal coverage.
8 For other classification schemes, see Collins, S, Schoen, C., Davis, K., Gauthier, A.,
Schoenbaum, S., A Roadmap to Health Insurance for All: Principles for Reform,
Commonwealth Fund, October 2007; Insuring America’s Health: Principles and
Recommendations
, Institute of Medicine, Committee on the Consequences of Uninsurance,
January 2004 [http://www.iom.edu/CMS/3809/4660/16675.aspx].

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Expanding Existing Public Programs
If one measures the success of past health insurance reforms by the number of
previously uninsured individuals who obtained health coverage, then the expansion
of public programs (Medicare, Medicaid, and SCHIP) must be considered great
successes. A number of bills offered in the 110th Congress would build on those
programs to extend coverage to more uninsured individuals. Public program
expansions have an advantage over other types of reforms in that the programs are
already operational, and their administrative costs are lower, relative to the costs of
benefits, than for typical privately sponsored health insurance plans.9 If the target
population of a reform proposal are predominantly those who cannot afford private
coverage, or if the proposal includes sliding scale subsidies, utilizing existing
programs that already conduct income determinations and administer subsidies may
be efficient.
Proposals to expand public coverage while maintaining the existing private
market for insurance face an obstacle in “crowd out.” There is evidence that
expanding public coverage can drive loss of coverage in the existing private market
that would not have otherwise occurred. Analyses of the crowd-out impact have
concluded that when public programs cover the lowest income people, for whom few
affordable private sources of coverage exist, crowd-out is low. But when public
programs extend into higher income levels, crowd-out rises.10
The majority of bills in the 110th Congress to expand public health insurance
programs would do so only for certain targeted groups of individuals. For example,
some bills would allow younger adults (for example, those between ages 55 and 65)
to enroll in Medicare. Other bills would eliminate the two-year waiting period for
people who are disabled to obtain Medicare benefits. Yet other bills would extend
SCHIP and Medicaid, with an objective of achieving universal coverage for children.
None of these partial coverage bills are summarized at the end of this report. Instead,
the list of introduced legislation is focused on only those bills that are not limited to
particular demographic groups.11
9 Reported administrative costs for Medicare and Medicaid are generally between 3% to 4%
of benefits, while private plans range from between 5% to 50% of premium. Analysts argue,
however, about whether the administrative public program data are complete and
comparable. See Matthews, M., Medicare’s Hidden Administrative Costs: A Comparison
of Medicare and the Private Sector (Based in Part on a Technical Paper by Mark Litow of
Milliman, Inc.)
, Council on Affordable Health Insurance, January 2006.
10 Public program crowd-out of private coverage: What are the issues? The Robert Wood
Johnson Foundation, Research Synthesis Report No. 5, [http://www.rwjf.org/pr/synthesis/
reports_and_briefs/pdf/no5_researchreport.pdf].
11 Some of these limited scope bills, if enacted, however, could potentially extend coverage
to more uninsured individuals than some of the bills that are listed at the end of this report.
Because this report focuses on approaches and not impact, it does not address those
differences in coverage.

CRS-8
Private Insurance Options
Private health insurance sponsored by employers covers more than 60% of the
U.S. population.12 As a result, a major portion of health insurance in this country is
funded privately by workers and their employers. Reforms that do not carefully
consider this large population and how to retain or replace this source of funds for
health care are at a disadvantage. Bills aimed at strengthening and building on
existing private markets for insurance recognize this reality. Some of the bills focus
on expanding employer-based or “group” coverage generally, and others address the
particular needs of small employers or the problems present in the individual market
for insurance.13 Still other approaches focus on freeing private markets for insurance
from the laws, regulations, and incentives that raise costs and reduce flexibility, with
the hope that such changes would improve the availability and affordability of health
coverage.
Expanding Employer-Based Coverage. Because more than 80% of
uninsured individuals under age 65 are employed or are family members of a person
with ties to employment,14 efforts to expand or strengthen the employer-based or
group market for insurance can potentially be effective in reducing the number of
uninsured. Work-focused approaches, however, have limited impact on people who
have no or tenuous ties to the workforce, people who are rejected by insurers, and
those who change jobs but would like to maintain their coverage.
Nonetheless, many bills propose to subsidize workers’ or employers’ share of
premiums (either directly or through tax credits, exclusions or deductions; see Text
Box 2
), mandate that some or all employers offer coverage, or improve pooling in the
small employer market for insurance.15 A number of bills are intended to address the
disadvantages that small employers face in providing health insurance as a benefit
relative to large employers. (A number of these approaches are discussed more
thoroughly in the “Market Reforms” section below.) Large employer groups are able
to spread risk more broadly among their employees and enjoy economies of scale that
keep per person administrative costs low. When a large employer self-insures,16 its
12 CRS Report 96-891, Health Insurance Coverage: Characteristics of the Insured and
Uninsured Populations in 2006
, by Chris L. Peterson and April Grady.
13 For a background on the ways in which people obtain health insurance and the markets
for insurance, see CRS Report RL32237, Health Insurance Primer, by Bernadette
Fernandez.
14 See Figure 1 in CRS Report 96-891.
15 Risk pools are large groups of individuals whose medical costs are combined to calculate
premiums. Pooling risks together allows the costs of the less healthy to be subsidized by the
healthy. In general, the larger the risk pool, the more predictable and stable the premiums
can be. (From “Overview: Insurance Markets 101” presentation by Cori Uccello, American
Academy of Actuaries at the National Association for Social Insurance 2008 Annual
Meeting.)
16 Many large employers self-insure their own health coverage instead of purchasing
insurance through a traditional insurance carrier. Those employers retain the risk that costs
(continued...)

CRS-9
health benefits are not subject to state insurance laws and regulation (because it is not
defined as “insurance”). This, along with the broad risk spreading and low per
person administrative costs confers a considerable cost advantage over similar benefit
plans in the small group or individual markets for insurance.
Text Box 2. Subsidies for Private Health Insurance
To achieve universal or near universal private health insurance coverage, financial
assistance with the cost of health insurance is likely to be necessary. Various studies
examining individuals’ demand for health insurance find that subsidies need to cover a
significant portion of a premium, before a low- or modest-income person may be willing
to purchase it. (See footnote 7 for citations.) Even bills that require individuals to purchase
coverage tend to include assistance with costs, because health insurance premiums for a
family at twice the federal poverty level can easily encompass more than 25% of a family’s
income.
Three alternative ways to subsidize health coverage are proposed in bills offered in the 110th
Congress. Some bills would create direct subsidies for health insurance that would be
administered by the state or federal government’s designated health agency. Individuals
would apply to the appropriate office and, once determined eligible, would be provided
either with a payment or voucher to use toward their insurance costs, or payments would
be made directly to the insurance carrier. The second approach is to utilize the Internal
Revenue Service and build subsidies into the existing annual federal tax filings. Under the
second approach, tax filers would attest to their coverage during the past year and if their
income is determined to be below the eligibility threshold, they would receive tax credits
in the amount of the subsidy for which they are eligible. A final group of bills would
provide tax credits or subsidies directly to employers to encourage more generous employer
contributions to workers’ plans.
All approaches raise administrative challenges. The large variation in premium costs for
different plans, combined with varying income levels of those eligible for subsidies,
complicates routinized systems for subsidizing coverage. Many low-income individuals or
families without tax liability do not file annual tax returns; getting them into the system is
difficult. And employer subsidies may or may not ultimately help workers.
For bill writers, other complications arise in evaluating subsidies, whether delivered
directly or through the tax system. The goal of setting subsidy amounts is to achieve
maximum health insurance purchases with fewest public funds. It is difficult to know the
correct subsidy level to maximize the number of uninsured individuals or families who will
become willing to buy coverage, the maximum amount of income that a low-income
individual or family should be expected to contribute toward coverage, or the proper
phase-out schedule for individuals or families with increasing income. Finally, subsidies
could exacerbate budgetary problems by encouraging crowd-out of existing employer or
individual payments for coverage.
There are other ways to subsidize insurance via less direct routes. One of those,
re-insurance, has appeared in a number of health insurance reform bills during this
Congress. These bills propose to transfer some of the “excess” risk for covering certain
groups to either a pool funded by contributions from all insurers or to the government.
16 (...continued)
of medical benefits for their employees exceed the collected premiums instead of passing
that risk along to the insurance company (although many of them purchase a stop-loss policy
that reimburses them for losses above a specified level.)

CRS-10
Improving Access to Health Insurance in the Individual Market.
Most health insurance in the United States is obtained through employment. This is
due to a number of factors — employers often contribute to the cost of group health
insurance as a workplace benefit, and payments for group plans have tax-advantaged
status.17 Further, the cost of group plans are calculated for an entire group, whereas
individuals are often “underwritten” based on their own health status — that is, the
price of the insurance policy is based on an individual’s own set of health conditions.
While health underwriting could result in low-cost plans for healthy individuals
seeking coverage, those with medical conditions could be at a significant price
disadvantage relative to the price they might be charged if their premiums were
averaged across an employment based group. Insurers selling plans in many states
may even refuse to sell to individuals with health conditions, or sell policies that
exclude coverage for particular conditions and sometimes for entire body systems.18
Bills offered in the 110th Congress are intended to address some of those
problems, in the hopes of making the individual market work better for more people.
Potential advantages of improving the individual market for insurance include
! increasing individuals’ choices — coverage options would not be
limited to those chosen by their employer — and
! increasing the portability of health insurance — portable health
insurance does not have to be discontinued when you leave your job.
Tools utilized by individual market bills include
! giving individually purchased insurance the same tax-advantaged
status as employer-sponsored coverage and
! providing subsidies for the purchase of individually sponsored
coverage.
Some bills would eliminate the tax benefits for employer-based health insurance
premiums and replace them with new tax benefits for individually sponsored
coverage. (See Text Box 3 for summaries of tax policies related to health insurance.)
These provisions are intended, over time, to provide incentives for people to move
from employer-based coverage to coverage in the individual market. However,
because of the market limitations discussed above, such as health underwriting, lack
of guaranteed availability of plans, and the absence of employer contributions, these
proposals by themselves may improve options for some, but not others. For example,
employer contributions fund a large portion of the nation’s health insurance bills.
17 Under current law, people buying health insurance through their employers and
self-employed individuals are able to exclude premiums for health insurance from taxable
income. Others may deduct medical costs but only if they itemize deductions (which most
taxpayers do not) and only to the extent that premiums and other unreimbursed medical
expenses exceed 7.5% of income.
18 Pollitz, K., Sorian, R. and Thomas, K., How Accessible is Individual Health Insurance for
People in Less-Than-Perfect Health?
Report for the Kaiser Family Foundation, June 2001,
[http://www.kff.org/insurance/upload/How-Accessible-is-Individual-Health-Insurance
-for-Consumer-in-Less-Than-Perfect-Health-Report.pdf].

CRS-11
Without replacing those funds, some people may find individual insurance less
affordable than their employer-sponsored plan, at least in the short run.19 In addition,
risk pooling in the individual market in many states is limited, and individual
underwriting common. This could mean that once employers drop coverage, healthy
people easily find replacement policies in the individual market, but those less
healthy and arguably most in need of health insurance become a new and possibly
needier group of uninsured. Finally, the administrative costs in an environment with
few economies of scale are high. For these reasons, most bills proposing individual
market solutions tend to be combined with other reforms addressing some of these
issues.
Text Box 3. Tax Benefits for Health Insurance
Many of the health reform bills introduced in the 110th Congress utilize the U.S. tax system
to help meet the objectives of the bills. Below are brief descriptions of the some of the tax
benefits proposed in health insurance reform bills. For more information about tax benefits
for health insurance, see CRS Report RL33505, Tax Benefits for Health Insurance and
Expenses: Overview of Current Law and Legislation
, by Bob Lyke and Julie M. Whittaker.
Tax subsidies for the purchase of health insurance. A number of bills propose tax
credits for the purchase of health insurance. Some proposals would provide for larger
credits for lower-income people, with amounts that gradually become smaller as income
rises. Most of these bills would provide for refundable and/or advanceable credits.
Advanceable credits may improve the timeliness of those payments to assist individuals
with payment for premiums when they are due.
Expanded deduction for health insurance payments. Several bills would allow a
deduction in the calculation of adjusted gross income (an “above-the-line” deduction) for
health insurance premiums, sometimes for a standard amount. The deduction would be
available whether the tax payer itemizes or claims the standard deduction and would be
available to all tax-payers, whether or not insurance is employer-sponsored or individually
purchased. This approach would establish comparable tax treatment between purchasers
of employer-based and individually purchased insurance.
Ending or capping the current tax exclusion for health insurance premiums. Under
current law, any amount paid for employment-based health insurance may be excluded from
income. Capping the exclusion would make premium payments in excess of the cap
taxable. The purpose of such a policy would be to encourage more cost consciousness
among purchasers of health insurance. In addition, tax revenues raised from capping the
exclusion could be significant and could provide a funding source for other health insurance
expansions or subsidies. Proposals to end the exclusion usually would replace it with a
standard above-the-line deduction. See above description.
Tax-advantaged savings accounts. Recent legislation has expanded the availability of
tax-advantaged savings accounts that can be used to pay for necessary health care not paid
by the insurance. Sometimes these accounts are combined with high deductible health
plans. These proposals are often intended to improve cost conscious use of health services,
or to encourage savings.
19 Over time, employers would likely convert at least some portion of premium contributions
to wages. Nonetheless, there would probably be some “leakage” and in the immediate term,
not all employers have policies in place to raise wages immediately.

CRS-12
Market Reforms. A number of bills offered during the 110th Congress include
other market improvements intended to make private health insurance more
accessible and affordable. These approaches include proposals to
! reduce state regulation of health insurance plans, with an objective
of increasing affordability;
! broaden risk pools so that premiums for health insurance products
are averaged over a larger group of individuals; and
! encourage “consumer driven” health plans and health choices.
In general, such approaches would retain the current sources of coverage.
States are primarily responsible for regulating the business of insurance. Over
the years, states have developed a significant body of law dealing with all aspects of
health insurance. State laws and regulations include patient protections and
instructions on how insurance carriers may develop the rates charged for their
products, and describe procedures for approval of those rates. They address how
entities in the business of selling health insurance fund their enterprises and prepare
against the risk of insolvency. Insurance carriers are subject to fair marketing
practice laws, requirements related to the filing of grievances against the plans, and
appealing plan decisions. States also have benefit requirements that ensure that
certain medical services must be available for a product to be sold and marketed as
health insurance.20
Proposals to reduce state regulation would move insurance markets closer to an
unrestrained free market and would invariably reduce costs for some purchasers of
health insurance. (However, they may increase costs for others.) They would also
address insurers complaints about the challenges of selling products across state lines
when each states’ laws are significantly different from every other states’ laws.
Many of the state laws were developed, however, to protect consumers from certain
business practices. Bills that would preempt those state laws raise concerns about
those business practices reemerging.
Pooling proposals often focus specifically on small employers. Small employers
have a harder time providing insurance to their employees for a number of reasons.
Very small groups are not able to spread health risk broadly. As a result, premiums
for small firms, particularly those with older or less healthy workers (or workers’
dependents) are relatively higher for similar benefits than for larger employers.
Proposals encouraging small employers to join into health purchasing groups
(sometimes called health insurance purchasing cooperatives or regional purchasing
cooperatives) are meant to pool together those small groups, raising the number of
individuals over which premiums are calculated. Bills encouraging professional and
trade associations to offer coverage were considered in the 109th Congress and were
ostensibly about such pooling. In addition, those bills would have provided
20 See also CRS Report RS22476, Standardizing State Health Insurance Regulation by
Jean Hearne and Bernadette Fernandez.

CRS-13
regulatory relief for insurers selling products through associations. Most of those
bills, however, did not require premiums to be calculated across the entire group, and
so would not have raised the size of the risk pools.
Raising the size of risk pools is one objective of bills that would establish
programs similar to the Federal Employees Health Benefits Program (FEHBP). In
general, those bills would identify an existing federal agency or create a new one to
negotiate with a limited number of health plans. At least one plan would be available
in all areas of the country, and enrollment would be offered either to all small
employers or to both small employers and individuals. The coverage offered through
the groups would be modeled on the plans offered through the FEHBP. In general,
the bills would establish that premiums for plans offered through the program would
be averaged across all of the enrollees for each plan — the largest possible risk
pool.21 In addition, those bills usually include significant subsidies for low-income
employees or individuals and sometimes for employers as well.
Spreading risk broadly, however, is not a panacea. Community-rating (setting
the level of premiums based on the average of actual or anticipated services used by
all subscribers in a specific geographic area [or state]) could result in increased prices
for young healthy people with low health risk and lower prices for those who are
older or have health problems. If the goal of such approaches is to increase insurance
coverage among those who need it most, this trade-off may be acceptable. If,
however, the healthier and younger groups find their rates rising relative to their
perceived need, incentives are created for them to drop coverage altogether, making
the pool increasingly costly and undermining the objective of spreading risk. A
number of states have established community rating laws that effectively pool a great
deal of the risk together. Federal policies in this area might take into account the
unique state markets that have developed in response to state laws to ensure that
federal policies do not undermine improvements that states have already made.22
“Consumer driven” reforms are those that seek to encourage more choices for
individuals in terms of the cost and coverage, and to raise cost consciousness,
encouraging a preference for low-cost plans and better decision making about health
care use. Ultimately, these reforms are intended to reduce overall cost growth. For
example, proposals to create tax preferences for high deductible health plans
combined with health savings accounts are intended to encourage price reductions
in coverage through several mechanisms: high deductible health insurance plans offer
limited coverage relative to what may be covered by more typical comprehensive
products, and health savings accounts encourage people to think more before seeking
care for which money must be drawn from their savings account.
21 For a discussion of that debate see CRS Report RL31963, Association Sponsored Health
Plans: Legislation in the 109th Congress
, by Jean Hearne.
22 Herring, B., Pauly M., The Effect of State Community Rating Regulations On Premiums
and Coverage in the Individual Health Insurance Market
, NBER Working Paper Series
12504, [http://www.nber.org/papers/w12504]. Pauly, M., Herring, B., Pooling Health
Insurance Risks
, AEI Press, 1999.

CRS-14
Supporting State Reforms
As in the early 1990s, state experimentation with health insurance reform is
generating interest and discussion at the federal level. A number of states are
experimenting with comprehensive insurance reforms toward a primary objective of
achieving universal or near universal coverage (see Text Box 4). Some of these
reforms may serve as a blueprint for federal changes, providing demonstrations that
can better inform a federal debate. Many legislators, however, would rather have
states continue to undertake reforms to address coverage gaps for their citizens. As
a result, a number of bills have been introduced to provide grant funds for states to
continue and expand health insurance reforms on their own.
Text Box 4. State Health Insurance Reforms
A number of states are enacting health insurance reforms of historic proportions, utilizing
such tools as individual mandates, employer “pay or play” requirements, and rewriting
market regulations. For example, Massachusetts has implemented the following reforms:
individual mandates requiring citizens with sufficient income to obtain health insurance,
income-related subsidies, employer “pay or play” requirements (wherein employers that
do not provide health insurance pay an assessment towards subsidies for the uninsured),
Medicaid expansions, insurance market reforms, and statewide minimum benefit standards
for private insurance.
Massachusetts financed the reforms through a number of sources, with over half of those
funds coming from Medicaid. (See Massachusetts Health Care Reform Plan: An Update,
Kaiser Commission on Medicaid and the Uninsured, June 2007 at [http://www.kff.org/
uninsured/upload/7494-02.pdf].)
Vermont’s reforms include over 35 initiatives designed to contain cost, increase access,
and improve quality of health care. The state has established Catamount Health, a health
insurance product for people who are uninsured, ensuring all state residents have access
to health insurance. In addition, the state will
! provide premium subsidies for individuals with qualifying incomes and
! implement a statewide plan for preventing illness, encouraging healthy
lifestyles, managing chronic conditions, and containing health care costs.
In addition to Massachusetts and Vermont, a number of other states are developing health
coverage proposals. Maine, Illinois, and California are considering reforms intended to
improve access to health insurance. Other states, including Washington, Hawaii,
Tennessee, and Oregon, have enacted major reforms in the past, many of which have been
pulled back or repealed for lack of funding in the intervening years.
For further information on state health insurance reforms, see J. McDonough, M. Miller,
and C. Barber, A Progress Report on State Health Access Reform: States Are Filling the
Void in Federal Reform Activity, A Health Affairs Web Exclusive
, January 2007, and
Leading the Way: State Health Reform Initiatives, NGA Center for Best Practices Issue
Brief, July 2007.

CRS-15
State-led reform is appealing because local solutions may better reflect local
needs, particularly in smaller or more homogenous states. Access to health insurance
can be very localized, reflecting the close relationship between private health
insurance coverage and local labor markets and economic conditions. Access to
health care providers also varies considerably by geographic areas.
State based reforms, however, have several significant drawbacks. The
Employee Retirement Income Security Act of 1974 (ERISA) impedes states from
passing certain laws that affect employer benefits, including health insurance.23 As
a result, states may have more limited options for reform. Further, states’ track
record includes a number of failed initiatives — often related to inability to fund the
invariably rising costs of the reforms.24 States’ ability to pay for reforms can be
subject to the peaks and valleys of the states’ tax collections. During challenging
economic times, a need for state assistance of all kinds, including health insurance,
rises often at the same time that states’ tax base erodes, reducing states’ ability to
fund such needs. Finally, to ensure equity across states, federal reforms may be
necessary.
Other Comprehensive Reforms Utilizing Multiple Approaches
A large number of introduced bills include provisions incorporating
combinations of the approaches discussed above. Such proposals tend to rely on
existing sources of private insurance in combination with expanding public programs
to extend coverage among the uninsured. They reflect a view that no single approach
(except for the politically unlikely national health insurance) with its inherent
strengths and weaknesses will be sufficient to get to universal coverage. Bills
advocating multiple approaches often include other market improvements to extend
the availability of plans and subsidies to help low-income populations pay for their
health coverage. Some of these bills are new to the 110th Congress, while others have
been reintroduced from earlier Congresses. The newest of the bills advocating multi-
system reforms tend to include provisions to improve quality of care, chronic disease
management, and encourage healthier living.
While there may be a small number of introduced bills in this category, it is a
favored approach among many in the policy community. Proposals offered by
America’s Health Insurance Plans (AHIP, [http://www.ahipbelieves.com/]) and The
Health Coverage Coalition for the Uninsured ([http://www.coalitionfortheuninsured.
org/amuninsured/amuninsured.html]), which includes groups such as AARP, Blue
Cross Blue Shield Association, and the American Hospital Association, among many
others, advocate such multidimensional approaches.
23 Although exactly how much of an impediment ERISA creates is in flux as legal challenges
are considered. For more on ERISA and the legal landscape, see Butler, P., ERISA
Implications for State Health Care Access Initiatives: Impact of the Maryland “Fair Share
Act” Court Decision
, prepared for AcademyHealth and the National Academy for State
Health Policy, November 2006 and Employee Retirement Income Security Act (ERISA) and
State Health Reform, An Alliance for Health Reform Toolkit
, August 2007.
24 Klein, E., “Over State: Why the Laboratories of Democracy Can’t Achieve Universal
Health Care,” the Washington Monthly, July/August 2007, p. 26.

CRS-16
Health Insurance Reform Bills in the 110th Congress
Brief summaries of the major provisions of health insurance reform bills are
provided below. The bills are loosely classified into the reform approaches described
above, including
! national health insurance (or a national health service),
! expanding existing public programs,
! expanding privately sponsored coverage,
! state-based reforms, and
! combinations of above approaches.
Many of the bills do not lend themselves to such discrete categorization. This
is because most of the bills have provisions that fall into more than one category.
Also, the list includes both bills with fairly limited scope, as well as those with much
broader scope in an effort to provide as comprehensive a list of health reform
approaches as possible. Finally, the list reflects introduced bills on the date of
publication. Other bills are likely to be introduced in between updates of this
document and will be added in the next update.
National Health Insurance/National Health Service
H.R. 15. The National Health Insurance Act was introduced in January of 2007
by Representative John Dingell. The bill would require that medical services,
hospital services, and other personal health services be made available to all eligible
individuals, including U.S. wage earners and their dependents who are not eligible
for Medicare. States and local administrative committees or officers would
administer the health benefits. It would establish a National Health Insurance Board
in the Department of Health and Human Services and a National Advisory Medical
Policy Council. The Board would be required to (1) determine the amount of funds
required for the provision of the benefits and (2) determine allotment amounts to
states for services. The bill would establish a National Health Care Trust Fund, into
which proceeds from a value added tax of 5% on each sale of property, performance
of services, and importation of property for commercial purposes, with exceptions,
would be deposited for the purpose of funding the provisions of the Act.
H.R. 676. The United States National Health Insurance Act, introduced by
Representative John Conyers in January of 2007, would establish the United States
National Health Insurance (USNHI) Program to provide all individuals residing in
the United States and territories with all medically necessary health care at no cost.
Care would be provided by public or not for profit institutional providers, HMOs,
and participating physicians. It would prohibit health insurers from selling coverage
duplicative of USNHI benefits; however, they could sell coverage for services not
considered to be medically necessary. The bill would establish a USNHI Trust Fund
to finance the Program with amounts deposited (1) from existing sources of
government revenues for health care, (2) by increasing personal income taxes on the
top 5% income earners, (3) by instituting a progressive excise tax on payroll and
self-employment income, and (4) by instituting a small tax on stock and bond

CRS-17
transactions. The bill would establish a National Board of Universal Quality and
Access to provide advice on quality, access, and affordability.
H.R. 1200. The American Health Security Act of 2007 was introduced by
Representative Jim McDermott in February of 2007. The bill would require each
participating state to establish an American Health Security Program to provide every
U.S. citizen, national, or lawful resident alien with health care services. It would
eliminate Medicare, Medicaid, SCHIP, the Federal Employees Health Benefits
Program, and the Civilian Health and Medical Program of the Uniformed Services.
It would require each state to prohibit the sale of health insurance in that state that
duplicates benefits provided under the program. It would establish a benefits
standards board to (1) develop policies, procedures, guidelines, and requirements to
carry out the Act; (2) establish reporting standards; (3) create several advisory
councils; and (4) establish a budget for covered health care services. Finally, it
would create the American Health Security Trust Fund and appropriate to the Fund
specified tax liabilities and current health program receipts.
H.R. 1841. The AmeriCare Health Care Act of 2007 was introduced by
Representative Pete Stark in March of 2007. The bill would establish a new health
insurance program called AmeriCare, and establish an individual entitlement to its
benefits for all U.S. residents. It specifies the benefit packages to be offered as well
as allowable cost sharing. Benefits under AmeriCare would be (1) the same as the
benefits provided under Medicare Parts A and B or (2) equivalent to the coverage in
any of the four largest health plans offered under the Federal Employees Health
Benefits Program. Financing for the program would come from individual
premiums, employer contributions, state maintenance of effort payments, and general
revenue funds.
H.R. 3000. The Josephine Butler United States Health Service Act was
introduced by Representative Barbara Lee in July of 2007. The bill would establish
the United States Health Service (USHS), through which all individuals while within
the United States would be eligible to receive health care and supplemental services.
All health care services would be provided at federal health care facilities. Such
facilities would be established by the USHS in such number and location as to ensure
that every resident receives equitable access to needed health care resources funded
by the federal government. Benefits provided would include health promotion;
prevention; diagnosis and treatment of illness and injury; rehabilitation and therapy;
drugs and therapeutics, and ambulance and other transportation; child care;
homemaking and home health; and counseling and social service assistance. All
current law health provisions would be repealed. A health service tax would be
imposed on each individual, estate, trust, and corporation. All other health-related
tax deductions and exclusions would be ended. The Health Service Trust Fund is
created into which current Medicare trust fund amounts would be transferred along
with health service tax receipts.
Expanding Existing Public Programs
H.R. 2034/S. 1218. The Medicare for All Act was introduced by
Representative John Dingell in the House of Representatives and Senator Ted
Kennedy in the Senate in April of 2007. The bill would amend the Social Security

CRS-18
Act to establish a new health insurance program, Medicare for All. The program
would offer a choice of plans to eligible individuals, provided such individuals are
not eligible for Medicare. Persons eligible for this program would include all citizens
and persons with lawful status. The act specifies that the benefit packages to be
offered would be (1) a comprehensive set of benefits that include (but would not be
limited to) the full range of benefits under Medicare fee-for-service or (2) equivalent
to the coverage in any of the four largest health plans offered under the Federal
Employees Health Benefits Program. The act also specifies the cost-sharing to be
imposed under this new program, including reduced cost-sharing for low-income
persons. The program would be financed through new taxes on workers and
employers, and would be administered by the federal government.
Expanding Privately Sponsored Coverage
H.R. 227. The Health Care Tax Deduction Act of 2007 was introduced by
Representative Cliff Stearns in January of 2007. The bill would establish a standard
tax deduction from gross income for health insurance premiums and unreimbursed
prescription drug expenses paid for the benefit of the taxpayer, the taxpayer’s spouse,
and dependents.
H.R. 241. The Small Business Health Fairness Act of 2007, introduced by
Representative Sam Johnson in January of 2007, would provide for the establishment
and governance of association health plans (AHPs) — group health plans whose
sponsors are trade, industry, professional, chambers of commerce, or similar business
associations, and which meet certain certification requirements. AHP plans would
be exempt from certain state regulations. The bill would establish an Association
Health Plan Fund to make payments to maintain coverage for plans that become
insolvent and would establish a Solvency Standards Working Group. The bill would
preempt any state law that precludes a health insurance issuer from (1) offering
health insurance coverage in connection with a certified AHP or (2) offering health
insurance coverage of the same policy type to other employers operating in the state
that are eligible for coverage under such AHPs, whether or not such other employers
are participating employers in such a plan. (Similar AHP provisions are included in
H.R. 324, a minimum wage bill, and H.R. 1012, which provides for tax changes for
small businesses.)
H.R. 914/S. 397. Tax Equity and Affordability Act of 2007 was introduced
by Senator Mel Martinez in the Senate in January of 2007 and in the House by
Representative Paul Ryan in February of 2007. The bill would amend the Internal
Revenue Code (IRC) to (1) allow individual taxpayers a refundable tax credit for
health insurance costs paid for the benefit of the taxpayer, the taxpayer’s spouse, and
dependents; (2) require business taxpayers who receive payments for certain
employee health insurance coverage to file informational returns; (3) direct the
Secretary of the Treasury to make advance payments of health insurance tax credit
amounts to health insurance providers; and (4) limit the tax exclusion for
employer-provided health care coverage.
H.R. 1802. The Keeping Small Businesses Healthy Act of 2007, introduced
by Representative Darlene Hooley, would amend the IRC to allow certain small
business employers with 100 or fewer employees a refundable tax credit for up to

CRS-19
60% of the health insurance costs paid for their employees. The tax credit would be
calculated on a sliding scale. The smallest businesses would receive credits that
cover a greater percentage of cost.
H.R. 2132. The Small Business Health Plans Act of 2007 was introduced by
Representative Thomas Allen in May of 2007. The bill would direct the Secretaries
of HHS and Labor to provide for a national health pooling arrangement for eligible
small employers modeled after the FEHB program. Small employers would be able
to join the pool through which they could offer health insurance coverage to
employees and their dependents. The bill outlines program elements and coverage
requirements. Small employers would be provided access to qualified health pooling
arrangements under which their employees may elect coverage modeled after FEHB
plans. The bill would require the Secretary to (1) establish a program of premium
assistance for small employers that provides a sliding scale of assistance based on the
number of employees, the average wage, and the employer profit margin; (2) provide
for reinsurance coverage for an individual’s claims that exceed a specified amount
for a year; and (3) provide grants to states for the establishment, initial
administration, and operation of pooling arrangements.
H.R. 2302. The Health Insurance Affordability Act of 2007, introduced by
Representative Steve King in May of 2007, would amend the IRC to allow a
deduction from gross income for premiums paid for a high deductible health plan.
The deduction would not be allowed for those premiums that are excluded from
income under the existing exclusion for employer sponsored health insurance
premiums.
H.R. 2626. The Comprehensive Health Coverage And Reform Enhancement
Act of 2007, introduced by Representative Tom Price on June 7,2007, would amend
the IRC to allow an advanceable tax credit and a deduction for qualified health
insurance. It would impose a tax penalty on employers who do not make premium
contributions to individually sponsored health plans in lieu of the employer’s group
health coverage. The bill would change federal employee’s contribution requirement
so that the government contribution amount would not change based on the chosen
health benefits plan and would treat health care professionals negotiating with health
plans as collective bargaining units for purposes of antitrust laws. The bill includes
provisions regulating health care lawsuits, dispute resolution, and deems hospitals,
emergency departments, physicians, and physicians groups that provide emergency
care to be employees of the Public Health Service for purposes of any civil action
that may arise due to items and services furnished. Includes provisions to simplify
applicable state health insurance laws and would allow medical care providers (1) to
immediately deduct the cost of health care information technology and (2) a business
tax credit for certain telecommunication charges. It would allow certain physicians
a bad debt tax deduction for their costs in providing uncompensated care to
emergency room patients and would require the Secretary to establish a Technical
Advisory Group to review issues related to HIPAA.
H.R. 2737. The Health Care Relief Act of 2007, introduced by Representative
Leonard Boswell in June of 2007, would amend the IRC to allow (1) a refundable tax
credit of up to $1,000 for the health insurance coverage costs of a previously
uninsured taxpayer, the taxpayer’s spouse, and dependents, and (2) certain small

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business employers a business tax credit for amounts paid under a new health plan
for employee health insurance coverage.
H.R. 3515. The Health Insurance Tax Relief Act of 2007 was introduced by
Representative John McHugh in September of 2007. The bill would amend the IRC
to (1) allow individual taxpayers a refundable and advanceable tax credit for
payments for qualifying health insurance and (2) require business taxpayers who
receive payments for certain employee health insurance coverage to file informational
returns.
H.R. 3516. The Affordable Health Care for Americans Act of 2007 was also
introduced by Representative John McHugh in September 2007. The bill would
amend the IRC to allow a tax deduction from gross income for the health insurance
costs of an individual taxpayer, the taxpayer’s spouse, and dependents (available
whether or not a taxpayer itemizes deductions).
H.R. 3975. The Health Insurance Affordability Act of 2007, introduced by
Representative Steve Chabot in October of 2007, would amend the IRC to allow
individual taxpayers a tax deduction for health insurance costs.
H.R. 5348. The American Health Benefits Program Act of 2008, introduced
by Representative Langevin in February of 2008, would establish the American
Health Benefits Program based on the Federal Employees Health Benefits Program.
A limited number of health insurance plans, modeled after those offered to federal
employees would be made available to all individuals who are not eligible for
qualifying employer-sponsored insurance. The government would pay about 72%
of the cost of the plans and sliding scale subsidies would be available to those with
low-income for remaining cost sharing amounts. Includes other tax policy changes
and an individual mandate for coverage.
S. 99. The Small Business Health Care Tax Credit Act was introduced by
Senator John Kerry in January of 2007. The bill would provide a partially refundable
tax credit to small businesses (less than 50 employees) based on a percentage of the
employer’s cost of providing qualified health benefits to employees and dependents.
The tax credit would be calculated on a sliding scale basis, with the smallest
businesses receiving credits that would cover a greater percentage of costs.
S. 733. Promoting Health Care Purchasing Cooperatives Act was introduced
by Senator Russell Feingold in March of 2007. It would authorize the Secretary of
HHS, acting through the Director of the Agency for Healthcare Research and Quality
(AHRQ), to award grants for the development of health care purchasing cooperatives
of two or more self-insured employers. It would set requirements for cooperatives,
including that they (1) be nonprofit, wholly owned, and democratically governed by
its member-employers; (2) exist solely to serve the membership base; (3) assist
members in pooling their health care insurance purchasing power; (4) provide data
to improve the ability of the members to make data-based decisions regarding their
health plans; and (5) conduct activities to enhance quality improvement in the health
care community. The bill would also require the Secretary to carry out an identical
grant program for eligible groups of two or more employers that have 99 employees
or less and purchase health insurance for their employees.

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S. 1019. The Universal Health Care Choice and Access Act, introduced by
Senator Tom Coburn in March of 2007, would amend the Internal Revenue Code to
(1) allow participants in high deductible health care insurance plans an increased tax
deduction for contributions to a health savings account and (2) allow individual
taxpayers a refundable tax credit for health insurance costs paid. It would require
states to establish and operate a qualified high-risk pool or a state-designated
alternative that ensures access to private health insurance for medically uninsurable
individuals. It includes provisions allowing a health insurer to designate a primary
state. The insurance laws applicable to the individual market for insurance in that
primary state would apply to individual policies sold by that insurer in that state as
well as in other states. The laws of those other states would be preempted from
applying. S. 1019 would provide for health promotion and disease prevention
activities, including requiring the Secretary of Health and Human Services
(hereinafter referred to as the Secretary) to convene an interagency coordinating
committee to develop a national strategic plan for prevention.
S. 1783. The Ten Steps to Transform Health Care in America Act was
introduced by Senator Michael Enzi in July of 2007. The bill would require all adults
with dependent children to obtain qualified health insurance coverage for those
children and would establish an advanceable and refundable health insurance tax
credit for the purchase of health insurance. It would merge the small group and
individual markets for insurance, and includes provisions intended to simplify
insurance standards for health plans, to improve quality of health care and to
facilitate the adoption of health information technology. The bill would provide for
grants for demonstration projects encouraging residential or community based
settings of integrated skilled nursing care and for states to develop alternatives to tort
litigation for resolving disputes over injuries caused by health care providers.
S. 1875. The Healthy Tax Reform Act was introduced in July of 2007 by
Senator Jim DeMint. The bill would establish an advanceable and refundable health
insurance tax credit for the purchase of qualified health insurance, limit the
availability of certain tax preferences for individuals eligible for the health insurance
tax credit, and repeal the alternative minimum tax after 2006. In order to be eligible
for the credit, a taxpayer must be purchasing coverage in a state that has been deemed
by the Secretary of HHS to be making efforts to provide its citizens with greater
access to affordable private health insurance, including by establishing a state health
insurance exchange, a high risk pool, a reinsurance mechanism, or other high risk
solution. The bill sets requirements for state health insurance exchanges and would
amend Medicaid to allow for the offering of health opportunity accounts in all states.
S. 1886. The Every American Insured Health Act was introduced by Senator
Richard Burr in July of 2007. The bill would provide every American with a
refundable, advanceable flat tax credit of $2,160 per individual and $5,400 per
family. It would encourage the establishment of statewide insurance pools to reduce
costs and help high risk individuals access affordable coverage and would expand the
availability of health opportunity accounts under the Medicaid program.
S. 1899. The Universal Health Coverage Act of 2007, introduced by Senator
Ben Cardin in July of 2007, would require all Americans to enroll in a qualified
health care plan. The bill would require the Secretary of HHS, in consultation with

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the National Association of Insurance Commissioners, to develop at least three types
of low-cost health insurance plans for each State and the District of Columbia to
make available, on a guaranteed-issue basis, to all individuals with incomes below
400% of the federal poverty line. Those who fail to enroll for any coverage for a
continuous period greater than 60 days would be required to pay a tax equal to the
average monthly premium amount for qualified coverage as defined by the state in
which they reside. Funds collected by this tax would then be used to automatically
enroll them in a state-approved plan.
Grants to States
H.R. 506. The Health Partnership Through Creative Federalism Act,
introduced by Rep Tammy Baldwin in January of 2007, would require the Secretary
of HHS to establish a State Health Coverage Innovation Commission to oversee and
review proposals submitted by states (or other government entities) to expand and
improve health care and health programs; submit to Congress a list of state
applications that the Commission recommends for approval; report to the public
concerning progress made by states; and to make recommendations. Plans may
include other goals, such as improvements in quality, efficiency, cost-effectiveness,
and the appropriate use of information technology. The Secretary would provide
grants to those states with approved applications. The bill requires the commission
and Secretary to fund a balanced diversity of approaches and link allocations to goals
and performance measures. It authorizes an appropriation of such sums as are
necessary.
H.R. 3507/S. 2031. The States’ Right To Innovate in Health Care Act of 2007
was introduced by Representative John Tierney in the House of Representatives and
Senator Bernard Sanders in the Senate in September of 2007. The bill would
authorize planning and demonstration grants for states to develop cost-effective
delivery systems of universal, comprehensive health care with simplified
administration. It would direct the Secretary of HHS to establish a commission to
review applications. State plans would be required to provide for coverage of all
state residents with health benefits that are at least actuarially equivalent to the
standard Blue Cross/Blue Shield preferred provider option service benefit plan under
the Federal Employees Health Benefit Program.
S. 325. The Health Partnership Act was introduced bu Sen Jeff Bingaman in
January of 2007. The bill would make grants available to states to carry out health
care expansion and improvement programs. It would establish a State Health
Innovation Commission, which would provide states with reform options; establish
minimum performance measures and goals with respect to coverage, quality, and cost
of such programs; and review state applications and submit to Congress a list of state
applications that the commission recommends for approval. The bill sets forth rules
for congressional consideration of such proposals and establishes that priority would
be given to those programs that the commission determines have the greatest
opportunity to succeed in expanding health insurance coverage. It authorizes an
appropriation of such funds as necessary to carry out the Act.

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Comprehensive Reforms that Utilize Multiple Approaches
S. 158. The Access to Affordable Health Care Act was introduced by Senator
Susan Collins in January of 2007. The bill would amend the IRC to provide (1) tax
credits to small businesses for qualified employee health insurance expenses, (2) tax
credits for individuals and families for qualified health insurance, (3) deductions for
long-term care insurance premiums, and (4) tax credits for individuals with long-term
care needs. It would require the Secretary of Labor to award grants to states to assist
in planning, developing, and operating qualified small employer purchasing groups
for health insurance. It would direct the Small Business Administration to award
grants to states, local governments, and nonprofit organizations to provide health
insurance information to small employers and require the Secretary to award
demonstration grants for states on the effectiveness of innovative ways to increase
access to health insurance. It would amend the SCHIP program to (1) allow states
to extend coverage to qualified children, parents, and pregnant women; (2)
redistribute unspent FY2004 allotments; and (3) provide additional allotments to
eliminate funding shortfalls. It would provide for improved outreach and enrollment
in government programs for eligible children and homeless individuals and families
and express the sense of the Senate that appropriations for consolidated health centers
and the National Health Service Corps should be doubled over the next five fiscal
years. It requires the Secretary of HHS to (1) award grants to states for the promotion
of healthy lifestyles and for the establishment and operation of worksite wellness
programs for small employers and their employees, (2) expand comprehensive school
health education programs, and (3) establish demonstration projects related to
providing low-cost, high-quality health care and attracting educators and clinical
practitioners to underserved areas.
H.R. 2351. The Health Coverage, Affordability, Responsibility, and Equity
Act of 2007 was introduced by Representative Marcy Kaptur in May of 2007. The
bill supports the use of demonstration waivers by states to implement policies that
make comprehensive, affordable health coverage available for all state residents.
Coverage would emphasize the use of preventive services, care coordination, and
health information technology. If states choose to undertake such waivers, they
would be eligible to receive the grants funds and federal tax expenditures that would
otherwise be available under other provisions of this bill. If states do not undertake
such waivers, then the bill would extend Medicaid to allow for the coverage of all
individuals with incomes below 100% of the poverty line and amend SCHIP to
provide additional funds for states that extend coverage to all targeted low-income
children. The bill would provide for an advanceable, refundable tax credit for the
cost of qualified health insurance; establish an FEHBP-like purchasing pool for
individuals and small groups to obtain coverage; create standards for state-based
reinsurance programs; and make grants available to states toward the costs of such
programs.
H.R. 3163. The Healthy Americans Act was introduced by Representative
Brian Baird in September of 2007. Its provisions are almost identical to those of S.
334 (described below) except instead of replacing the existing tax exclusion for
payments for employer-provided health insurance with a standard deduction for
premiums for all taxpayers, it would replace the exclusion with a refundable tax-
credit.

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S. 334. The Healthy Americans Act was introduced by Senator Ron Wyden
in January of 2007. The major provisions of the bill would mandate that all
individuals (with some exceptions) have health coverage. Individuals would have
the opportunity to enroll in one of the private health plans (“Healthy Americans
Private Insurance Plans”) administered by regional insurance entities (“State Health
Help Agencies”). HAPI plans would be comprehensive and include prevention and
disease management programs. Full subsidies would be made available for
individuals and families with income below poverty, and partial subsidies for other
low income individuals. The program would be financed by individual and employer
responsibility payments, reductions in Medicare and Medicaid spending, and other
general treasury funds. The existing tax exclusion for payments for employer-
provided health insurance would be ended and a standard deduction would be
established for premiums for all taxpayers.
CRS Products on Health Insurance and Tax Policy
for Health Insurance
CRS Report RL32237, Health Insurance: A Primer, by Bernadette Fernandez
CRS Report RL33702, Health Insurance Basics: Roles for the Market and
Government in Providing, Financing, and Regulating Private Insurance
Coverage
, by Jennifer Jenson and Bernadette Fernandez
CRS Report RS22735, Spending by Employers on Health Insurance: A Data Brief,
by Jennifer Jenson
CRS Report RL31745, Health Insurance: State High Risk Pools, by Bernadette
Fernandez
CRS Report RS20315, ERISA Regulation of Health Plans: Fact Sheet, by Hinda
Chaikind
CRS Report RS22476, Standardizing State Health Insurance Regulation, by Jean
Hearne and Bernadette Fernandez
CRS Report RL31963, Association Sponsored Health Plans: Legislation in the 109th
Congress, by Jean Hearne
CRS Report RL33759, Health Care Markets, Prices, and Spending, by D. Andrew
Austin
CRS Report RL31374, Health Expenditures in 2005, by Paulette C. Morgan
CRS Report RL32545, Health Care Spending: Context and Policy, by Jennifer
Jenson
CRS Report RL34295, Spending by Consumers on Health Care and Health
Insurance: A Data Brief, by Jennifer Jenson

CRS-25
CRS Report RL33759, Health Care and Markets, by D. Andrew Austin
CRS Report RL34101, Does Price Transparency Improve Market Efficiency?
Implications of Empirical Evidence in Other Markets for the Health Sector, by
D. Andrew Austin and Jane Gravelle
CRS Report RL34175, U.S. Health Care Spending: Comparison with Other OECD
Countries, by Chris L. Peterson and Rachel Burton
Insurance Coverage
CRS Report 96-891, Health Insurance Coverage: Characteristics of the Insured and
Uninsured Populations in 2006, by Chris L. Peterson and April Grady
CRS Report 96-979, Health Insurance: Uninsured by State, 2006, by Chris L.
Peterson and April Grady
CRS Report 97-975, Health Insurance Coverage of Children, 2006, by Chris L.
Peterson and April Grady
CRS Report 97-310, Health Insurance: Uninsured Children by State, 2004-2006,
by Chris L. Peterson and April Grady
CRS Report RL32944, Health Insurance Coverage for Retirees, by Hinda Chaikind
CRS Report RS21974, Federal Employees Health Benefits Program: Available
Health Insurance Options, by Hinda Chaikind
Tax Policy and Health Insurance
CRS Report RL33505, Tax Benefits for Health Insurance and Expenses: Overview
of Current Law and Legislation, Bob Lyke and Julie M. Whittaker
CRS Report RL32656, Health Care Flexible Spending Accounts, by Bob Lyke
CRS Report RL33257, Health Savings Accounts: Overview of Rules for 2008, by
Bob Lyke
CRS Report RL32620, Health Coverage Tax Credit Authorized by the Trade Act of
2002, by Bernadette Fernandez
CRS Report RS21573, Tax-Advantaged Accounts for Health Care Expenses:
Side-by-Side Comparison, by Bob Lyke and Chris L. Peterso
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