Section 1322

SEC. 1322. FEDERAL PROGRAM TO ASSIST ESTABLISHMENT AND OPERATION OF NONPROFIT, MEMBER-RUN HEALTH INSURANCE ISSUERS.

[a] ESTABLISHMENT OF PROGRAM.—

[1] IN GENERAL.—The Secretary shall establish a program to carry out the purposes of this section to be known as the Consumer Operated and Oriented Plan [CO–OP] program.

[2] PURPOSE.—It is the purpose of the CO–OP program to foster the creation of qualified nonprofit health insurance issuers to offer qualified health plans in the individual and small group markets in the States in which the issuers are licensed to offer such plans.

[b] LOANS AND GRANTS UNDER THE CO–OP PROGRAM.—

[1] IN GENERAL.—The Secretary shall provide through the CO–OP program for the awarding to persons applying to become qualified nonprofit health insurance issuers of—

[A] loans to provide assistance to such person in meeting its start-up costs; and

[B] grants to provide assistance to such person in meeting any solvency requirements of States in which the person seeks to be licensed to issue qualified health plans.

[2] REQUIREMENTS FOR AWARDING LOANS AND GRANTS.—

[A] IN GENERAL.—In awarding loans and grants under the CO–OP program, the Secretary shall—

[i] take into account the recommendations of the advisory board established under paragraph [3];

[ii] give priority to applicants that will offer qualified health plans on a Statewide basis, will utilize integrated care models, and have significant private support; and

[iii] ensure that there is sufficient funding to establish at least 1 qualified nonprofit health insurance

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issuer in each State, except that nothing in this clause shall prohibit the Secretary from funding the establishment of multiple qualified nonprofit health insurance issuers in any State if the funding is sufficient to do so.

[B] STATES WITHOUT ISSUERS IN PROGRAM.—If no health insurance issuer applies to be a qualified nonprofit health insurance issuer within a State, the Secretary may use amounts appropriated under this section for the awarding of grants to encourage the establishment of a qualified nonprofit health insurance issuer within the State or the expansion of a qualified nonprofit health insurance issuer from another State to the State.

[C] AGREEMENT.—

[i] IN GENERAL.—The Secretary shall require any person receiving a loan or grant under the CO–OP program to enter into an agreement with the Secretary which requires such person to meet [and to continue to meet]—

[I] any requirement under this section for such person to be treated as a qualified nonprofit health insurance issuer; and

[II] any requirements contained in the agreement for such person to receive such loan or grant.

[ii] RESTRICTIONS ON USE OF FEDERAL FUNDS.— The agreement shall include a requirement that no portion of the funds made available by any loan or grant under this section may be used—

[I] for carrying on propaganda, or otherwise attempting, to influence legislation; or

[II] for marketing. Nothing in this clause shall be construed to allow a person to take any action prohibited by section 501[c][29] of the Internal Revenue Code of 1986.

[iii] FAILURE TO MEET REQUIREMENTS.—If the Secretary determines that a person has failed to meet any requirement described in clause [i] or [ii] and has failed to correct such failure within a reasonable period of time of when the person first knows [or reasonably should have known] of such failure, such person shall repay to the Secretary an amount equal to the sum of—

[I] 110 percent of the aggregate amount of loans and grants received under this section; plus

[II] interest on the aggregate amount of loans and grants received under this section for the period the loans or grants were outstanding.

The Secretary shall notify the Secretary of the Treasury of any determination under this section of a failure that results in the termination of an issuer's tax-exempt status under section 501[c][29] of such Code.

[D] TIME FOR AWARDING LOANS AND GRANTS.—The Secretary shall not later than July 1, 2013, award the loans and grants under the CO–OP program and begin the distribution of amounts awarded under such loans and grants.

[3] ADVISORY BOARD.—

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[A] IN GENERAL.—The advisory board under this paragraph shall consist of 15 members appointed by the Comptroller General of the United States from among individuals with qualifications described in section 1805[c][2] of the Social Security Act.

[B] RULES RELATING TO APPOINTMENTS.—

[i] STANDARDS.—Any individual appointed under subparagraph [A] shall meet ethics and conflict of interest standards protecting against insurance industry involvement and interference.

[ii] ORIGINAL APPOINTMENTS.—The original appointment of board members under subparagraph [A][ii] shall be made no later than 3 months after the date of enactment of this Act.

[C] VACANCY.—Any vacancy on the advisory board shall be filled in the same manner as the original appointment.

[D] PAY AND REIMBURSEMENT.—

[i] NO COMPENSATION FOR MEMBERS OF ADVISORY BOARD.—Except as provided in clause [ii], a member of the advisory board may not receive pay, allowances, or benefits by reason of their service on the board.

[ii] TRAVEL EXPENSES.—Each member shall receive travel expenses, including per diem in lieu of subsistence under subchapter I of chapter 57 of title 5, United States Code.

[E] APPLICATION OF FACA.—The Federal Advisory Committee Act [5 U.S.C. App.] shall apply to the advisory board, except that section 14 of such Act shall not apply.

[F] TERMINATION.—The advisory board shall terminate on the earlier of the date that it completes its duties under this section or December 31, 2015.

[c] QUALIFIED NONPROFIT HEALTH INSURANCE ISSUER.—For purposes of this section—

[1] IN GENERAL.—The term "qualified nonprofit health insurance issuer" means a health insurance issuer that is an organization—

[A] that is organized under State law as a nonprofit, member corporation;

[B] substantially all of the activities of which consist of the issuance of qualified health plans in the individual and small group markets in each State in which it is licensed to issue such plans; and

[C] that meets the other requirements of this subsection.

[2] CERTAIN ORGANIZATIONS PROHIBITED.—An organization shall not be treated as a qualified nonprofit health insurance issuer if—

[A] the organization or a related entity [or any predecessor of either] was a health insurance issuer on July 16, 2009; or

[B] the organization is sponsored by a State or local government, any political subdivision thereof, or any instrumentality of such government or political subdivision.

[3] GOVERNANCE REQUIREMENTS.—An organization shall not be treated as a qualified nonprofit health insurance issuer unless—

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[A] the governance of the organization is subject to a majority vote of its members;

[B] its governing documents incorporate ethics and conflict of interest standards protecting against insurance industry involvement and interference; and

[C] as provided in regulations promulgated by the Secretary, the organization is required to operate with a strong consumer focus, including timeliness, responsiveness, and accountability to members.

[4] PROFITS INURE TO BENEFIT OF MEMBERS.—An organization shall not be treated as a qualified nonprofit health insurance issuer unless any profits made by the organization are required to be used to lower premiums, to improve benefits, or for other programs intended to improve the quality of health care delivered to its members.

[5] COMPLIANCE WITH STATE INSURANCE LAWS.—An organization shall not be treated as a qualified nonprofit health insurance issuer unless the organization meets all the requirements that other issuers of qualified health plans are required to meet in any State where the issuer offers a qualified health plan, including solvency and licensure requirements, rules on payments to providers, and compliance with network adequacy rules, rate and form filing rules, any applicable State premium assessments and any other State law described in section 1324[b].

[6] COORDINATION WITH STATE INSURANCE REFORMS.—An organization shall not be treated as a qualified nonprofit health insurance issuer unless the organization does not offer a health plan in a State until that State has in effect [or the Secretary has implemented for the State] the market reforms required by part A of title XXVII of the Public Health Service Act [as amended by subtitles A and C of this Act].

[d] ESTABLISHMENT OF PRIVATE PURCHASING COUNCIL.—

[1] IN GENERAL.—Qualified nonprofit health insurance issuers participating in the CO–OP program under this section may establish a private purchasing council to enter into collective purchasing arrangements for items and services that increase administrative and other cost efficiencies, including claims administration, administrative services, health information technology, and actuarial services.

[2] COUNCIL MAY NOT SET PAYMENT RATES.—The private purchasing council established under paragraph [1] shall not set payment rates for health care facilities or providers participating in health insurance coverage provided by qualified nonprofit health insurance issuers.

[3] CONTINUED APPLICATION OF ANTITRUST LAWS.—

[A] IN GENERAL.—Nothing in this section shall be construed to limit the application of the antitrust laws to any private purchasing council [whether or not established under this subsection] or to any qualified nonprofit health insurance issuer participating in such a council.

[B] ANTITRUST LAWS.—For purposes of this subparagraph, the term "antitrust laws" has the meaning given the term in subsection [a] of the first section of the Clayton Act [15 U.S.C. 12[a]]. Such term also includes section 5 of the Federal Trade Commission Act [15 U.S.C. 45] to

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the extent that such section 5 applies to unfair methods of competition.

[e] LIMITATION ON PARTICIPATION.—No representative of any Federal, State, or local government [or of any political subdivision or instrumentality thereof], and no representative of a person described in subsection [c][2][A], may serve on the board of directors of a qualified nonprofit health insurance issuer or with a private purchasing council established under subsection [d].

[f] LIMITATIONS ON SECRETARY.—

[1] IN GENERAL.—The Secretary shall not—

[A] participate in any negotiations between 1 or more qualified nonprofit health insurance issuers [or a private purchasing council established under subsection [d]] and any health care facilities or providers, including any drug manufacturer, pharmacy, or hospital; and

[B] establish or maintain a price structure for reimbursement of any health benefits covered by such issuers.

[2] COMPETITION.—Nothing in this section shall be construed as authorizing the Secretary to interfere with the competitive nature of providing health benefits through qualified nonprofit health insurance issuers.

[g] APPROPRIATIONS.—There are hereby appropriated, out of any funds in the Treasury not otherwise appropriated, $6,000,000,000 to carry out this section.

[h] TAX EXEMPTION FOR QUALIFIED NONPROFIT HEALTH INSURANCE ISSUER.—

[1] IN GENERAL.—Section 501[c] of the Internal Revenue Code of 1986 [relating to list of exempt organizations] is amended by adding at the end the following:

"[29] CO–OP HEALTH INSURANCE ISSUERS.—

"[A] IN GENERAL.—A qualified nonprofit health insurance issuer [within the meaning of section 1322 of the Patient Protection and Affordable Care Act] which has received a loan or grant under the CO–OP program under such section, but only with respect to periods for which the issuer is in compliance with the requirements of such section and any agreement with respect to the loan or grant.

"[B] CONDITIONS FOR EXEMPTION.—Subparagraph [A] shall apply to an organization only if—

"[i] the organization has given notice to the Secretary, in such manner as the Secretary may by regulations prescribe, that it is applying for recognition of its status under this paragraph,

"[ii] except as provided in section 1322[c][4] of the Patient Protection and Affordable Care Act, no part of the net earnings of which inures to the benefit of any private shareholder or individual,

"[iii] no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation, and

"[iv] the organization does not participate in, or intervene in [including the publishing or distributing of statements], any political campaign on behalf of [or in opposition to] any candidate for public office.".

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[2] ADDITIONAL REPORTING REQUIREMENT.—Section 6033 of such Code [relating to returns by exempt organizations] is amended by redesignating subsection [m] as subsection [n] and by inserting after subsection [l] the following:

"[m] ADDITIONAL INFORMATION REQUIRED FROM CO–OP INSURERS.—An organization described in section 501[c][29] shall include on the return required under subsection [a] the following information:

"[1] The amount of the reserves required by each State in which the organization is licensed to issue qualified health plans.

"[2] The amount of reserves on hand.".

[3] APPLICATION OF TAX ON EXCESS BENEFIT TRANS-ACTIONS.—Section 4958[e][1] of such Code [defining applicable tax-exempt organization] is amended by striking "paragraph [3] or [4]" and inserting "paragraph [3], [4], or [29]".

[i] GAO STUDY AND REPORT.—

[1] STUDY.—The Comptroller General of the General Accountability Office shall conduct an ongoing study on competition and market concentration in the health insurance market in the United States after the implementation of the reforms in such market under the provisions of, and the amendments made by, this Act. Such study shall include an analysis of new issuers of health insurance in such market.

[2] REPORT.—The Comptroller General shall, not later than December 31 of each even-numbered year [beginning with 2014], report to the appropriate committees of the Congress the results of the study conducted under paragraph [1], including any recommendations for administrative or legislative changes the Comptroller General determines necessary or appropriate to increase competition in the health insurance market.