HR 16 IH

To provide a program of national health insurance, and for other purposes.

January 6, 1999

Mr. DINGELL introduced the following bill; which was referred to the Committee on Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To provide a program of national health insurance, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

That this Act, with the following table of contents, may be cited as the `National Health Insurance Act'.

TABLE OF CONTENTS

Secs. 2-5. Declaration of purpose.

TITLE I--BENEFITS AND ELIGIBILITY

Sec. 101. Classes of personal health services.

Sec. 102. Availability of benefits.

Sec. 103. How benefits obtained; free choice by patient.

Sec. 104. Eligibility for benefits.

Sec. 105. Provision of benefits for noninsured needy and other individuals.

TITLE II--PARTICIPATION OF PHYSICIANS, DENTISTS, NURSES, HOSPITALS, AND OTHERS

Sec. 201. Physicians and dentists; specialists.

Sec. 202. Nurses.

Sec. 203. Hospitals.

Sec. 204. Auxiliary services.

Sec. 205. Agreements with individual practitioners, hospitals, and others.

Sec. 206. Agreements with voluntary health insurance and other organizations.

Sec. 207. Provisions common to all agreements.

Sec. 208. Methods of payments for services.

Sec. 209. Amount of payments for services.

Sec. 210. Professional rights and responsibilities.

TITLE III--LOCAL ADMINISTRATION

Sec. 301. Decentralization of administration.

Sec. 302. Local administrative committee or officer.

Sec. 303. Local area committees.

Sec. 304. Local professional committees.

Sec. 305. Methods of administration.

TITLE IV--STATE ADMINISTRATION

Sec. 401. Declaration of policy.

Sec. 402. State plan of operations.

TITLE V--NATIONAL HEALTH INSURANCE BOARD; NATIONAL ADVISORY MEDICAL POLICY COUNCIL; GENERAL ADMINISTRATIVE PROVISIONS

Sec. 501. National Health Insurance Board.

Sec. 502. Advisory Council.

Sec. 503. Studies, recommendations, and reports.

Sec. 504. Nondisclosure of information.

Sec. 505. Prohibition against discrimination.

TITLE VI--ELIGIBILITY DETERMINATIONS, COMPLAINTS, HEARINGS, AND JUDICIAL REVIEW

Sec. 601. Determinations as to eligibility for benefits.

Sec. 602. Complaints of eligible individuals and of persons furnishing benefits.

TITLE VII--APPLICATION OF ACT TO INDIVIDUALS COVERED UNDER MEDICARE PROGRAM

Sec. 701. Eligibility; benefits available.

Sec. 702. Study and report.

TITLE VIII--FISCAL PROVISIONS

Sec. 801. Personal health services account.

Sec. 802. Allotment of funds.

Sec. 803. Grants-in-aid for training and education.

TITLE IX--MISCELLANEOUS PROVISIONS

Sec. 901. Definitions.

Sec. 902. Effective date.

TITLE X--VALUE ADDED TAX AND NATIONAL HEALTH CARE TRUST FUND

Sec. 1001. Imposition of value added tax.

Sec. 1002. Revenue from value added tax to fund National Health Care Trust Fund.

TITLE XI--STUDY AND DEVELOPMENT OF COST CONTROL MECHANISMS

Sec. 1101. Development of cost control mechanisms.

findings and declaration of purpose

SEC. 2. (a) The Congress finds that--

(1) the health of the Nation's people is the foundation of our Nation's strength, productivity, and wealth;

(2) the assurance of adequate medical care to all of our people is essential to the general welfare and to the Nation's security;

(3) since the tremendous advances in medical science in recent years have necessarily meant great advances in the cost of health services, our archaic system of paying for medical care--based on public and private charity for the poor, on unpredictable and often unbearable costs to the otherwise self-supporting, and on disproportionate charges for the well-to-do--has resulted in the following conditions:

(A) the inability of the vast majority of our people to meet the shattering cost of serious or chronic illness;

(B) the inability of most of our people to benefit from modern preventive medicine; and

(C) wholly inadequate provision for the health needs of our farm families and agricultural workers;

(4) the conditions described in the preceding paragraph cannot effectively be remedied under the present system of payment for medical care, or under any voluntary insurance system; and

(5) a medical dole as an answer to this problem is repugnant to the American people and would certainly result in a system of state medicine, paid for from tax funds and rendered by regimented doctors.

(b) The Congress declares the purposes of this Act to be to provide a sound economic foundation for our free system of medicine and to correct the maldistribution of health personnel and facilities by establishing a system of prepaid personal health insurance on the principle of social insurance.

SEC. 3. In establishing a system of national health insurance, it is the policy of this Act that those persons and their dependents who are insured under the provisions

of the Act shall be assured full freedom to choose their physicians and to change their choice as they may desire; that physicians and other professions furnishing services in accordance with the provisions of this Act shall be assured full freedom in the practice of their professions, including the right to accept or reject patients except as this right may be restricted by their own professional ethics or by the laws of the several States; and that the administration of this Act shall be based upon the American principle of decentralization.

SEC. 4. In carrying out these policies, it is the intention of Congress that the major administrative responsibilities be placed in the hands of local bodies representing both those who pay for and receive services and those who render services, and operating within the framework of plans made by the several States, and approved by the Federal agency; that the National Health Care Trust Fund created by this Act shall be allotted equitably among the several States and by the States to their local areas; that voluntary as well as governmental organizations shall be recognized and utilized; and that all eligible individuals and their dependents as specified in this Act shall be entitled to its benefits without discrimination because of race, color, or creed.

TITLE I--BENEFITS AND ELIGIBILITY

CLASSES OF PERSONAL HEALTH SERVICES

SEC. 101. (a) The personal health services to be made available as benefits to eligible individuals as provided in this title are medical services, dental services, podiatric services, home-nursing services, hospital services, and auxiliary services. Each class of services shall be provided by persons (including individuals, partnerships, corporations, associations, consumer cooperatives, and other organizations) who are authorized by applicable State law, and who are qualified under title II of this Act, to do so.

(b) Medical services consist of (1) general medical services such as can be rendered by a physician engaged in the general or family practice of medicine, including preventive, diagnostic, and therapeutic care and periodic medical examinations; and (2) specialist services rendered by a physician who is a specialist in the class of services rendered, as defined in section 201 of this Act. Such services may be rendered at the office, home, hospital, or elsewhere, as necessary.

(c) Dental services consist of (1) general dental services rendered by a dentist engaged in the general practice of dentistry, including preventive, diagnostic, and therapeutic care, and periodic dental examinations; and (2) specialist services rendered by a dentist who is a specialist in the class of services rendered, as defined in section 201 of this Act. Such services may be rendered at the office, home, hospital, or elsewhere, as necessary.

(d) Podiatric services consist of those professional services of a podiatrist who is legally authorized to perform such services in the State in which he practices.

(e) Home-nursing services consist of nursing care of the sick rendered in the home by a registered professional nurse or a qualified practical nurse.

(f) Hospital services consist of hospitalization, including necessary nursing services, and such physician, laboratory, ambulance, and other services in connection with hospitalization as the National Health Insurance Board (hereinafter in this Act referred to as the `Board'), after consultation with the National Advisory Medical Policy Council (hereinafter in this Act referred to as the `Advisory Council'), by regulation designates as essential to good hospital care, for a maximum of sixty days in any benefit year; but hospital services shall not include hospitalization in a mental disease hospital or institution, or hospitalization for any day more than thirty days following the diagnosis of a psychosis. Whenever the Board, after consultation with the Advisory Council, finds that moneys in the account (established by section 701) are adequate and that facilities are available, it may by regulation increase the maximum days of hospitalization in any benefit year.

(g) Auxiliary services consist of such chemical, bacteriological, pathological, diagnostic X-ray and related laboratory services; X-ray, radium, and related therapy; physiotherapy; services of optometrists; and prescribed drugs which are unusually expensive, special appliances, and eyeglasses; as the Board, after consultation with the Advisory Council, by regulation designates as auxiliary services on the basis of its finding that their provision under this Act is practicable and is essential to good health care.

availability of benefits

SEC. 102. (a) Medical services, hospital services, and, except as otherwise provided in subsection (b) of this section, all other personal health services specified in section 101 shall be made available (subject to section 701) as benefits to eligible individuals in all health-service areas within the United States as rapidly and as completely as possible having regard for the availability of the professional and technical personnel and the hospital and other facilities needed to provide such services. To this end the resources and needs of each State shall be surveyed and a program developed in each State to assure the maximum participation and use of health personnel and facilities in the provision of benefits, and to encourage improvement

in the number and distribution of such personnel and facilities throughout the State. Additional surveys shall be undertaken as required, and the program in the State from time to time modified on the basis thereof.

(b) If the Board, after consultation with the Advisory Council, finds that the personnel or facilities or funds that are or can be made available are inadequate to insure the provision of all services included as dental, home-nursing, or auxiliary services under section 101 of this Act, it may by regulation limit for a specified period the services which may be provided as benefits, or modify the extent to which, or the circumstances under which, they will be provided to eligible individuals. Any such restriction or limitation shall be reduced or withdrawn as rapidly as may be practicable; and, in the case of dental services, priority in the reduction or withdrawal of any such restriction or limitation shall be given to children.

(c) The Board shall have the duty of studying and making recommendations as to needed services and facilities for the care of the chronic sick afflicted with physical ailments, and for the care of individuals afflicted with mental or nervous diseases, and as to needed provisions for the prevention of chronic physical diseases and of mental or nervous diseases; and of making reports from time to time, with recommendations as to legislation, but the first such report shall be made not later than two years after benefits under this Act first become available.

HOW BENEFITS OBTAINED: FREE CHOICE BY PATIENT

SEC. 103. Every individual eligible for personal health services available under this Act may freely select the physician, dentist, podiatrist, nurse, medical group, hospital, or other person of his choice to render such services, and may change such selection if the practitioner, medical group, hospital, or other person has agreed under title II of this Act to furnish the class of services required and consents to furnish such services to the individual. General medical, dental, and podiatric services may be obtained by request made by the individual directly to the practitioner of the individual's choice. Specialist, home-nursing, hospital, and auxiliary services shall be obtained from the specialist, nurse, hospital, or other person of the individual's choice, whenever the practitioner from whom he is receiving medical or dental services as benefits under this Act refers him for specialist, home-nursing, hospital, or auxiliary services upon determining that such services are required in the proper care of his particular case; or whenever, upon request of the individual, an administrative medical officer, upon a like determination, refers him for such services. The Board, by regulation, shall dispense with the necessity of referral in cases of emergency, and may dispense with the necessity of referral under specified circumstances or as respects specified classes of services, or both, if it finds, after consultation with the Advisory Council, that such action will be conducive to the provision of a more adequate amount and quality of health care and will not unreasonably increase the expenditures from the account for such services.

eligibility for benefits

SEC. 104. (a) Subject to section 701, every individual shall be eligible for benefits under this Act throughout any benefit year if--

(1) he has received (or, in the case of income from self-employment, has accrued)--

(A) not less than $2,000 in wages during the first four of the last six calendar quarters preceding the beginning of the benefit year; or

(B) not less than $1,500 in wages in each of six calendar quarters during the first twelve of the last fourteen calendar quarters preceding the beginning of the benefit year (not counting as one of such fourteen calendar quarters any quarter in any part of which the individual was under a total disability which continued for six months or more);

(2) he is entitled, for the first month in the benefit year, to a benefit under title II of the Social Security Act or to an annuity under subchapter III (relating to civil service retirement) of chapter 83 of title 5, United States Code; or

(3) he is on the first day of the benefit year a dependent of an individual who is eligible under paragraph (1) or paragraph (2).

(b) Subject to section 701, every individual, not eligible therefor under subsection (a), shall be eligible for benefits under this Act during the remainder of a benefit year, beginning with--

(1) the first day of any calendar quarter in such benefit year, if he has received (or, in the case of income from self-employment, has accrued) not less than $150 in wages during the first four of the last six calendar quarters preceding the beginning of such calendar quarter;

(2) the first day of the first month in such benefit year for which he is entitled to a benefit or annuity referred to in subsection (a)(2); or

(3) the first day in such benefit year on which he is or becomes a dependent of an individual who is eligible for benefits under subsection (a) (1) or (2) under paragraph (1) or (2) of this subsection.

(c) No individual shall be deemed eligible for any personal health services as a benefit under this Act which

are required by reason of any injury, disease, or disability on account of which any medical, dental, home-nursing, hospital, or auxiliary service is being received, or upon application therefor would be received, under a workmen's compensation law of the United States or of any State, unless equitable reimbursements to the fund for the provision of such services as benefits have been made or assured under section 105 of this Act. In any case in which an individual receives any personal health service as a benefit under this Act with respect to any such injury, disease, or disability, for which no reimbursement to the fund has been made or assured, the United States shall to the extent permitted by State law be subrogated to all rights of such individual, or of the person who furnished such service, to be paid or reimbursed, pursuant to such workmen's compensation law, for the cost of furnishing such service.

provision of benefits for noninsured needy and other individuals

SEC. 105. (a) Subject to section 701, any or all benefits provided under this Act to individuals eligible for such benefits may be furnished to individuals (including the needy) not otherwise eligible therefor, for any period for which equitable reimbursements to the account on behalf of such needy or other individuals have been made, or for which reasonable assurance of such reimbursements have been given, by public agencies of the United States, the several States, or any of them or of their political subdivisions, such reimbursements to be in accordance with agreements and working arrangements negotiated with such public agencies. Services furnished to such needy or other individuals as benefits shall be of the same quality, be furnished by the same methods, and be paid for through the same arrangements, as services furnished to individuals eligible for benefits under this Act.

(b) Federal grants to States under title XIX, and part A of title IV, of the Social Security Act, and Federal grants to States for aid or assistance under other provisions of such Act, shall be available to the States for provision of personal-health services for noninsured needy individuals in accordance with the provisions of subsection (a) of this section.

TITLE II--PARTICIPATION OF PHYSICIANS, DENTISTS, NURSES, HOSPITALS, AND OTHERS

PHYSICIANS AND DENTISTS; SPECIALISTS

SEC. 201. Any individual who is a physician, dentist, or podiatrist legally authorized in a State to render any services included as general medical, dental, or podiatric services shall be deemed qualified to render such services in that State as benefits under this Act. Any such individual who is found to possess skill and experience of a degree and kind sufficient to meet standards established for a class of specialist services shall be deemed qualified to receive compensation for specialist services of such class as benefits under this Act. The Board, after consultation with the Advisory Council, shall establish standards as to the special skills and experience required to qualify an individual to render each such class of specialist services as benefits under this Act, and to receive compensation for such specialist services. In establishing such standards and in determining whether individuals qualify thereunder, standards and certifications developed by professional agencies shall be utilized as far as is consistent with the purposes of this Act, and regard shall be had for the varying needs and the available resources in professional personnel of the States and of local health-service areas.

nurses

SEC. 202. Any individual shall be deemed qualified to render home-nursing services in a State as benefits under this title if such individual is (a) a professional nurse registered in such State, or (b) a practical nurse (1) who is qualified as such under State standards or requirements, or, in the absence of State standards or requirements, is found to be qualified under standards established by the Board after consultation with the Advisory Council and with nursing agencies, and (2) who furnishes nursing care under the direction or supervision of the State health agency, the health agency of a political subdivision of the State, or an organization supplying and supervising the services of registered professional nurses in the State.

hospitals

SEC. 203. Any hospital or other institution shall be deemed qualified to furnish all or particular classes of hospital services as benefits under this Act if it is qualified to furnish such services under State standards or requirements for the maintenance and operation of hospitals which apply to the class or classes of services to be furnished, or if, in the absence of such State standards or requirements, it is found to afford professional services, personnel, and equipment adequate to promote the health and safety of individuals requiring the class or classes of hospital services to be furnished, according to standards which the Board shall establish after consultation with the Advisory Council.

auxiliary services

SEC. 204. Any person (as defined in section 901(1)) who is qualified under State standards or requirements to furnish a class of services included as auxiliary services, or, in the absence of State standards or requirements, is

found to be qualified to furnish a class of such services under standards established for such class by the Board after consultation with the Advisory Council, shall be deemed qualified to furnish such class of auxiliary services in that State as benefits under this Act.

agreements with individual practitioners, hospitals, and others

SEC. 205. Any individual (or, in the case of hospital or auxiliary services, any person) qualified under this title to furnish any class or classes of personal health services as benefits may enter into an agreement with the State agency which in accordance with title IV has assumed responsibility for the administration in the State of benefits under this Act (hereinafter in this Act referred to as the `State agency'), to furnish such class or classes of services as benefits to individuals eligible therefor under this Act.

AGREEMENTS WITH VOLUNTARY HEALTH INSURANCE AND OTHER ORGANIZATIONS

SEC. 206. (a) In the provision of personal health services, it shall be the policy to utilize individuals or organizations qualified under this title to render such services, including (1) any organized group of individuals, (2) any partnership, association, or consumer cooperative, (3) any hospital or any hospital and its staff, or (4) any organization operating a voluntary health-service insurance plan or other voluntary health-service plan.

(b) The State agency is authorized to enter into an agreement with any organization referred to in subsection (a) for the provision of personal health services under this Act. Any such organization, whether or not it enters into an agreement with the State agency on its own behalf, shall be permitted to act as agent for individuals or other persons in negotiating or in carrying out agreements with the State agency for rendering personal health services under this Act.

(c) Any agreement under this section shall provide that each class of personal health services will be furnished only by individuals (or, in the case of hospital or auxiliary benefits, by persons, as defined in section 901(1)) who are qualified under this title to render such class of services and each of whom has agreed or has authorized an agreement to be made on his behalf with the State agency that he will furnish such services in accordance with this Act and with regulations prescribed thereunder. Each such individual or person shall be responsible, both to the State agency and (in accordance with applicable State law) to individuals eligible for personal health services as benefits, for carrying out such agreement made by him or on his behalf.

provisions common to all agreements

SEC. 207. (a) Each agreement made under this title shall specify the class or classes of services to be furnished or provided pursuant to its terms, shall contain an undertaking to comply with this Act and with regulations prescribed thereunder, shall be made upon terms and conditions consistent with the efficient and economical administration of this Act, and shall continue in force for such period and be terminable upon such notice as may be agreed upon.

(b) No agreement under section 206, and no designation of an agent, shall for more than one year preclude any individual or person qualified to furnish personal health services from exercising such rights as he would otherwise have under this title (1) to negotiate and enter into an agreement directly with the State agency, or (2) to designate another agent for such negotiation, or (3) to participate in another agreement under section 206.

(c) No agreement made under this title shall confer upon any individual or other person, or any group or other organization, the right of furnishing or providing personal health services as benefits, to the exclusion in whole or in part of other individuals, persons, groups, or organizations qualified to furnish or provide such services.

(d) If the State agency after investigation finds that an individual or other person under agreement to furnish or provide personal health services as benefits is no longer qualified to furnish or provide such services, or has committed a substantial breach of the agreement, it shall notify such person of its findings, together with the reasons therefor, and in the absence of a request for a hearing by such person under title VI, or in the event of a final decision sustaining its findings after any hearing and further review provided under title VI, may terminate the agreement and withdraw the person's name from the list published pursuant to title III. After an agreement has been so terminated, no new agreement shall be entered into with such person under this Act unless and until such person gives reasonable assurances to the State agency of his or its ability and willingness to discharge all obligations and responsibilities under a new agreement satisfactorily in accordance with its provisions.

methods of payments for services

SEC. 208. (a) Agreements for the furnishing of medical, dental, or podiatric services (other than specialist services) as benefits under this Act shall provide for payment--

(1) on the basis of fees for services rendered as benefits, according to a fee schedule;

(2) on a per capita basis, the amount being according to the number of individuals eligible for benefits who are on the practitioner's list;

(3) on a salary basis, whole time or part time; or

(4) on such combinations or modifications of these bases, including separate provision for travel and related expenses, as may be approved by the State agency;

according in each health-service area as the majority of the medical practitioners or of the dental practitioners, respectively, under agreement to furnish such services shall elect. Provision shall be made for another method or methods of payment (from among the methods listed in this subsection) to those medical practitioners or to those dental practitioners who do not elect the method of such majority, when it is found that such alternative method of making payments contributes to carrying out the provisions of section 305 of this Act or otherwise promotes the efficient and economical provision of medical or dental services in the area.

(b) Agreements for the furnishing of specialist services as benefits under this Act may provide for payments on the basis of fee for service, per case, per session, per capita, on salary (whole time or part time), or other basis, or combination thereof.

(c) Any of the methods of making payments from among the methods listed in subsection (a) or subsection (b) may be used in making payments to groups or practitioners or organizations or other agencies which undertake to provide specialist services as well as general medical or general dental services.

(d) Agreements for the furnishing of hospital services as benefits under this Act shall provide for payment on the basis of the reasonable costs of hospitalization furnished as benefits. The Board, after consultation with the Advisory Council and with representatives of interested hospital organizations, may by regulation prescribe maximum rates for hospitalization furnished as benefits under this Act, and such maximum rates may be varied according to classes of localities or types of service. Payments to hospitals shall be based on the least expensive multiple-bed accommodations available in the hospital unless the patient's condition makes the use of private accommodations essential for his proper medical care. An agreement made for furnishing such services shall not affect the right of the hospital or other person with whom the agreement is made to require payments from patients with respect to the additional cost of more expensive facilities occupied at the request of the patient, or with respect to services not included as benefits under this Act.

(e) Agreements for the furnishing of home-nursing services or auxiliary services as benefits under this Act shall provide for payment in accordance with such methods as the State agency may approve from among those set forth in regulations prescribed pursuant to this Act.

(f) In any health-service area where agreements for the furnishing of general medical or general dental services provide for payment only on a per capita basis, the per capita payments with respect to those individuals residing in the area who have failed to select a practitioner or other person to furnish such services to them shall be made on a pro rata basis among the practitioners and other persons under agreement to furnish such services in the area.

AMOUNT OF PAYMENTS FOR SERVICES

SEC. 209. (a) Rates or amounts of payment for particular services or classes of services furnished as benefits under this Act shall be adapted to take account of relevant regional, State, or local conditions and practices. In arriving at the payments to be made for services of general medical and dental practitioners, specialists, professional and practical nurses, or other practitioners, regard shall be had for the annual income or its equivalent which the payments will provide, and consideration shall be given to degree of specialization, and to the skill, experience, and responsibility involved in rendering the services. Such payments, together with the other terms and conditions of the agreements made under this title, shall be adequate to provide professional and financial incentives to practitioners to advance in their professions and to practice in localities where their services are most needed, to encourage high standards in the quality of services furnished, to give assistance in their use of opportunities for postgraduate study, and to allow for adequate vacation.

(b) The rates and amounts of payments fixed under the different methods of payments specified in subsections (a), (b), (c), and (e) of section 208, and the methods of making payments, shall assure reasonably equivalent awards for practitioners selecting different methods of payment, in consideration of the value of the services they render.

(c) Maximum limits upon the number of eligible individuals with respect to whom any person may undertake to render services in any local health-service area may be fixed by the local administrative committee or local administrative officer of that health-service area only on the basis of a recommendation of the professional committee in that area that such limitation is necessary to maintain high standards in the quality of medical, dental, or other

services furnished as benefits. Any such limits shall take account of professional needs and practices and shall provide suitable exceptions for emergency and temporary situations.

(d) The making of an agreement under section 206 with a group or other organization shall not operate to increase the payments to be made pursuant to any such agreement over the amounts which, in the absence of such group or organization would be payable for the same services pursuant to agreements made under section 205 directly with the person or persons who furnish the services.

professional rights and responsibilities

SEC. 210. (a) Any person who enters into an agreement under this title may terminate such agreement after reasonable notice and after suitable arrangements are made to fulfill professional obligations to eligible individuals.

(b) Every physician, dentist, or nurse agreeing to render services as benefits under this Act shall be free to practice his profession in the locality of his own choosing, consistent with the requirements of the laws of the States.

(c) Every physician, dentist, nurse, hospital, or other person entering into an agreement under this title shall be free to the extent consistent with applicable State law and customary professional ethics to accept or reject as a patient any individual requesting his services.

(d) No supervision or control over the details of administration or operation, or over the selection, tenure, or compensation of personnel, shall be exercised under the authority of this Act over any hospital which has agreed to furnish personal health services as benefits.

TITLE III--LOCAL ADMINISTRATION

decentralization of administration

SEC. 301. In order that personal health-service benefits may be made available promptly and in a manner best adapted to local practices, conditions, and needs, responsibility for administration of the benefits provided under this Act in the several local health-service areas shall be decentralized as fully as practicable to local administrative committees or local administrative officers, acting with the advice and assistance, as provided in this title, of local professional committees and, in the case of local administrative officers, the advice and assistance of local area committees. The health-service areas of a State shall be those so designated in the State plan of operations.

local administrative committee or officer

SEC. 302. The local administrative agency for each local health-service area may, as determined by the State, be either--

(1) a local administrative committee established in accordance with section 303, which shall act through a local executive officer; or

(2) a local administrative officer, who shall act with the advice and assistance of a local advisory committee established in accordance with section 303.

The local administrative committee or officer, with the advice and assistance of such local professional committees as may from time to time be established, shall arrange for the furnishing of personal health-service benefits to eligible individuals in the area and to that end shall--

(a) publish, and make readily available to eligible individuals in the area, lists of the names of all persons who have agreed to furnish personal health services in the area, together with the class or classes of services which each has undertaken to furnish;

(b) disseminate pertinent information concerning the rights and privileges under this Act of eligible individuals and of persons qualified to furnish personal health services as benefits;

(c) maintain effective relationships with physicians, dentists, nurses, hospitals, and other persons who have entered into agreements to furnish personal health services in the area, in order to facilitate the furnishing of such services in accordance with such agreements, to assure full and prompt payment to such persons for services so furnished, and to enlist their full cooperation in the administration of benefits under this Act in the area;

(d) receive and, to the extent possible in the local area, adjust any complaints which may be made concerning the administration of benefits under this Act in the area;

(e) perform such other duties (including the making of payments to persons furnishing personal health services in the area) as may be assigned by the State agency; and

(f) take or initiate such other administrative action as he finds will best carry out, within the area, the provisions of this Act, and best effectuate its purposes.

local area committees

SEC. 303. (a) A local area committee shall be established in each health-service area. If designated by the State as a local administrative committee, the local area committee shall perform the functions specified in section 302 and shall formulate policies for the administration of benefits under this Act in the area. If designated as an advisory committee, it shall advise and assist in the performance of such functions and the formulation of such policies. The committee, whether administrative or advisory, shall participate in the solution of problems affecting the administration of such benefits, shall promote impartiality and freedom from political influence in such administration, and shall perform related functions to the end that administration in the area may be responsive to the wishes and needs of persons furnishing and receiving benefits in the area, be adapted to local practices and resources, and provide adequate and high quality personal health services to all eligible individuals.

(b) Each local area committee shall consist of not less than eight nor more than sixteen members. The members shall be so selected that a majority of the committee shall be representative of the interests of individuals in the area who are eligible for benefits, and the remaining members shall be chosen from the several professions, hospitals, and other organizations in the area by whom such benefits will be provided.

(c) The local area committee shall meet as often as may be necessary, and whenever one-third or more of the members request a meeting; in the case of a local administrative committee, not less frequently than once each month, and in the case of a local advisory committee, not less frequently than once in each quarter of the year. At

least one meeting of the committee each year shall be open to the public, notice of which shall be published and at which any person in the area may participate. At least once each year there shall be a statewide meeting of local administrative officers and representatives of local administrative committees. At least once in each year there shall be a statewide meeting of representatives of all local advisory committees in the State, and any reports or recommendations made at such meeting shall on the request of such meeting be transmitted through the State agency to the Board.

local professional committees

SEC. 304. Local committees representative of the persons furnishing personal health services in the area shall be established in each health-service area to assist the local administrative committee and its executive officer, or the local administrative officer and the local advisory committee, as the case may be, in the preservation of the customary freedom and responsibility (under applicable State law) of practitioners in the exercise of professional judgment as to the care of patients, and in the solution of technical problems concerning the participation of professional personnel, hospitals, and other qualified persons in the provision of personal health services as benefits, and to advise the local administrative or executive officer and the local area committee regarding matters of professional practice or conduct arising in connection with the performance of agreements for the provision of such services. Such local committees shall meet on call of the local administrative committee or officer, as the case may be, or upon their own motion. The members of any such local professional committee may be professional members of the local area committee or other professional persons or both.

methods of administration

SEC. 305. (a) In each health-service area the methods of administration shall be such as to--

(1) insure the prompt and efficient care of individuals entitled to personal health services as benefits;

(2) promote personal relationships between physician and patients;

(3) promote coordination among and between general practitioners, specialists, those who furnish auxiliary services, nurses, and hospitals, in the furnishing of services under this Act, between them and public-health centers and agencies, and educational service, research, and other related agencies or institutions, and between preventive, diagnostic, and curative services, public and private;

(4) aid in the prevention of disease, disability, and premature death;

(5) encourage improvement in the number and distribution of professional personnel and facilities; and

(6) insure the provision of adequate service with the greatest economy consistent with high standards of quality.

(b) Local administrative officers shall be appointed by the State agency or the head thereof, in accordance with the merit system provided for in the State plan of operations; local administrative committees shall be appointed by such agency or the head thereof, from individuals residing in the respective health-service areas, and the executive officers of such committees shall be appointed by the committees in accordance with the merit system; the local health-service areas shall be those so designated in such plan; and members of

local advisory committees and of local professional committees shall be selected in accordance with methods set forth in such plan.

(c) In exercising their functions and discharging their responsibilities under this Act, local administrative officers and communities, local advisory committees, and local professional committees shall observe the provisions of this Act, and of regulations prescribed thereunder, and of any regulations, standards, and procedures prescribed by the State agency.

TITLE IV--STATE ADMINISTRATION

declaration of policy

SEC. 401. It is the intent of Congress that the benefits provided under this Act be administered wherever possible by the several States, in accordance with plans of operations submitted and approved as provided in this title, and in each State insofar as feasible by the same State agency which administers, or supervises the administration of, the State's general public health and maternal and child health programs.

state plan of operations

SEC. 402. (a) Any State desiring to assume responsibility for the administration in the State of the personal health-service benefits provided under this Act to all individuals in the State who are eligible for such benefits, may do so for the period beginning October 1, 2000 (when benefits first become available under this Act), or for the period beginning October 1 of any succeeding year, if it has undertaken, through its legislature, to administer such benefits in accordance with the provisions of this Act and with the provisions of regulations and standards prescribed thereunder, and, at least twelve months in advance, has submitted and had approved a State plan of operations which--

(1) designates as the sole agency for the statewide administration of benefits under this Act a single State agency duly authorized under the law of the State to administer such benefits within the State in accordance with the provisions of this Act, the provisions of regulations and standards prescribed thereunder, and the provisions of the State plan;

(2) provides for the designation of a State advisory committee which shall include members who are familiar with the needs for personal health services in urban and rural areas, and who are representative of the interests of individuals in the State who are eligible for benefits, such members to constitute a majority, and members chosen from the several professions, hospitals, and other organizations in the State by whom such benefits will be provided, to advise the State agency in carrying out the administration of such benefits in the State;

(3) provides for the decentralized administration of this Act in the State in accordance with title III for the designation of local health-service areas, and for such methods of selecting the members of local advisory committees and of local professional committees as are calculated to insure representation of the nature set forth in sections 303 and 304, respectively;

(4) provides such methods of administration, including methods relating to the establishment and maintenance of personnel standards on a merit basis (except that the Board shall exercise no authority with respect to the selection, tenure of office, or compensation of any individual employed in accordance with such methods), as are found by the Board to be necessary for the proper and efficient administration of such benefits in the State;

(5) provides for the making of surveys of the resources and needs of the State, in accordance with section 102(a), and sets forth a program for the administration of such benefits in the State which gives reasonable assurance (A) that maximum use will be made of all available health personnel and facilities desiring to participate in the provision of benefits to eligible individuals, (B) that funds allotted to the State for the several classes of benefits will be allocated in such manner as to give reasonable assurance of the availability of services in all health-service areas in the State, and (C) that any maldistribution or other inadequacies in the health personnel or facilities available for such purpose, or in the quality of the services rendered, will be progressively improved as rapidly as may be practicable;

(6) provides that the State agency will make such reports in such form and containing such information as the Board may from time to time reasonably require, and give the Board, upon demand, access to the records upon which such information is based;

(7) provides that all Federal funds paid to the State agency for purposes of carrying out this Act in the State shall be properly safeguarded and expended solely for the purposes for which paid, and provides for the repayment by the State to the United States of any such funds lost by the State agency or diverted from the purposes for which paid; and

(8) provides for cooperation, including where necessary entering into working agreements (with any appropriate transfer of funds), with other public agencies of the State or of its political subdivisions concerned with programs related to the purposes of this Act, and with appropriate agencies of other States or of the United States administering this Act, or benefits under this Act, in other States.

(b) The Board shall approve any State plan and any modification thereof submitted by the State which it finds complies with the provisions of subsection (a). No change in a State plan shall be required within one year after initial approval thereof, or within one year after any change thereafter required therein, by reason of any change in the regulations or standards prescribed pursuant to this Act, except with the consent of the State or in accordance with further action by Congress.

(c) In the event of its disapproval of any plan or any modification therein submitted by a State pursuant to this title, the Board shall notify the State of such disapproval and shall, upon request of the State, afford it reasonable notice and opportunity for a hearing on such disapproval.

(d) If a State has not prior to October 1, 2000, submitted and had approved a plan of operations, the Board shall notify the Governor of the State that the Board will be required to administer this Act in the State, commencing October 1, 2000. The Board shall provide for the publication of such notice in at least two newspapers of general circulation in the State. If within sixty days after such notification to the Governor the State has not submitted an approvable plan, the Board shall continue such administration until one year after the submission and approval of a plan of operations in accordance with this section. The Board may waive the requirement that a State plan must be submitted and approved one year prior to commencement of State administration if it is satisfied in a particular case that the substitution of a shorter preparatory period will not prejudice the interests of eligible individuals in the State.

(e) Whenever the Board, after reasonable notice and opportunity for hearing to the State, finds that the State, having submitted and had approved a plan of operations under this title--

(1) is not complying substantially with the provisions of such plan, or with the provisions of this Act or any regulations or standards prescribed thereunder, or

(2) has withdrawn its plan or failed to change it when and as required by a change in this Act or in regulations prescribed thereunder,

the Board shall notify the Governor of the State of such findings, together with its reasons therefor and a statement concerning the effect of such findings under this Act, and shall provide for the publication of such notice in at least two newspapers of general circulation in the State. If within sixty days following such a notice the State has not taken appropriate action to bring its plan or its administration thereof into conformity with this Act and regulations and standards thereunder, the Board shall immediately assume responsibility for the administration of this Act in the State and shall administer the same in such State for so long thereafter as the State fails to give reasonable assurances of substantial compliance or fails to submit an approvable plan, as the case may be.

(f) In any State in which the Board has assumed responsibility for the administration of benefits under this Act as provided in subsections (d) and (e) of this section, the Board shall have and discharge all authority and duties, in accordance with the provisions of this Act, which it finds necessary for that purpose, and the term `State agency' wherever used in title II or title III of this Act shall be deemed to refer to the Board.

(g) Nothing in this Act shall preclude any State or any political subdivision thereof, whether or not the State has assumed responsibility for the administration of benefits under this Act, from furnishing, with funds available from sources other than the account, any additional health services to individuals who are eligible for benefits under this Act or any or all health services to individuals who are not so eligible.

TITLE V--NATIONAL HEALTH INSURANCE BOARD; NATIONAL ADVISORY MEDICAL POLICY COUNCIL; GENERAL ADMINISTRATIVE PROVISIONS

national health insurance board

SEC. 501. (a) There is hereby established in the Department of Health and Human Services a National Health Insurance Board, to be composed of five members, three of whom shall be appointed by the President by and with the advice and consent of the Senate, and the other two of whom shall be the Surgeon General of the Public Health Service and the Commissioner of Social Security. During his term of membership on the Board, no appointed member shall engage in any other business, vocation, or employment. At least one of the appointed members shall be a doctor of medicine licensed to practice medicine or surgery in one of the States. Each appointed member shall receive a salary at an annual rate of basic pay, established by the President, which is not less than the annual rate of basic pay for positions at level V of the Executive Schedule and which is not greater than the annual rate of basic pay for positions at level IV of the Executive Schedule, and shall hold office for a term of six years, except that (1) any member appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed for the remainder of such term; and (2) the terms of office of the members first taking office after the date of the enactment of this Act shall expire, as designated by the President at the time of appointment, one at the end of two years, one at the end of four years, and one at the end of six years, after the date of the enactment of this Act. The President shall designate one of the appointed members as the Chairman of the Board.

(b) All functions of the Board shall be administered by the Board under the direction and supervision of the Secretary of Health and Human Services. The board shall perform such functions as it finds necessary to carry out the provisions of this Act, and shall make all regulations and standards specifically authorized to be made in this Act and such other regulations not inconsistent with this Act as may be necessary. The Board may delegate to any of its members, officers, or employees, or with the approval of the Secretary to any other officer or employee of the Department of Health and Human Services, such of its powers or duties, except that of making regulations, as it may consider necessary and proper to carry out the provisions of this Act. The Board may also enter into agreements for the furnishing or provision of personal health services under this Act without regard to the provisions of title 5, United States Code, pertaining to the appointment, status, or compensation of Federal employees, or pertaining to contracts for personal services, and without regard to section 3709 of the Revised Statutes (41 U.S.C. 5), and any person rendering services pursuant to an agreement so made shall not by reason thereof be deemed to be an employee of the United States.

(c) In administering the provisions of this Act, the Board is authorized to utilize the services and facilities of any executive department or other agency of the United States in accordance with an agreement with the head thereof. Payment for such services and facilities shall be made in advance or by way of reimbursement, as may be agreed upon with the head of the executive department or other agency furnishing them.

(d) Personnel of the Board shall be appointed by the Secretary upon recommendation of the Board. The Secretary is authorized to detail to the Board, upon its request, any officer or employee of the Department of Health and Human Services, and in his discretion to reimburse, from funds available for the administration of this Act, the appropriation from which the salary or, in the case of commissioned officers of the Public Health Service, the pay and allowances of such officer or employee are paid.

(e) Upon the request of any State agency administering a State plan of operations pursuant to title IV of this Act, or upon the request of any State desiring to prepare and submit a plan of operations, any officer or employee of the Board (including any officer or employee detailed to the Board pursuant to subsection (d)) may be detailed by the Board to assist in the administration, or in the preparation, of such State plan of operations. The funds available for the Federal administration of this Act may, in the discretion of the Secretary, be reimbursed from funds allotted to the State pursuant to section 802 and available for State administration, for the salary (or for the pay and allowances) of any officer or employee so detailed.

ADVISORY COUNCIL

SEC. 502. (a) There is hereby established a National Advisory Medical Policy Council to consist of the Chairman of the Board, who shall serve as Chairman of the Advisory Council ex officio, and sixteen members appointed by the Secretary of Health and Human Services. At least eight of the sixteen appointed members shall be individuals who are familiar with the need for personal health services in urban or rural areas and who are representative of the interests of individuals eligible for benefits under this Act, and at least six of the members shall be individuals who are outstanding in the medical or other

professions concerned with the provision of services provided as benefits under this Act and who are representative of the individuals, organizations, and other persons by whom personal health services will be provided. Each appointed member shall hold office for a term of four years, except that any member appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed for the remainder of that term, and the terms of the members first taking office shall expire, as designated by the Secretary at the time of appointment, four at the end of the first year, four at the end of the second year, four at the end of the third year, and four at the end of the fourth year after the date of appointment. The Advisory Council is authorized to appoint such special advisory technical or professional committees as may be useful in carrying out its functions, and the members of such committees may be members of the Advisory Council, or other persons, or both. Appointed Advisory Council members and members of technical or professional committees, while serving on business of the Council (inclusive of traveltime), shall receive compensation at rates fixed by the Secretary, but not exceeding $200 per day, and shall be entitled to receive actual and necessary traveling expenses and per diem in lieu of subsistence while so serving away from their places of residence. The Advisory Council, its appointed members, and its committees, shall be provided with such secretarial, clerical, or other assistance as may be provided by the Congress for carrying out their respective functions. The Advisory Council shall meet as frequently as the Board deems necessary, but not less than twice each year. Upon request by six or more members, it shall be the duty of the Chairman to call a meeting of the Council.

(b) The Advisory Council shall advise the Board with reference to matters of general policy and administration arising in connection with the making of regulations, the establishment of professional standards, and the performance of its other duties under this Act.

(c) Section 14 of the Federal Advisory Committee Act shall not apply to the Advisory Council.

studies, recommendations, and reports

SEC. 503. The Board shall have the duty of studying and making recommendations as to the most effective methods of providing health services, and as to legislation and matters of administrative policy concerning health and related subjects. At the beginning of each regular session of Congress, it shall make a full report to Congress of the administration of this Act, including a report with regard to the adequacy of its financial provisions contained in this Act and of appropriations made pursuant thereto, the methods of allotment of funds among the States, and related matters. Such report shall include a record of consultations with the Advisory Council, recommendations of the Advisory Council, and comments thereon.

nondisclosure of information

SEC. 504. Information concerning an individual, obtained from him or from any physician, dentist, nurse, or hospital, or from any other person pursuant to or as a result of the administration of this Act, shall be held confidential (except for statistical purposes) and shall not be disclosed or be open to public inspection in any manner revealing the identity of the individual or other person from whom the information was obtained or to whom the information pertains, except as may be necessary for the proper administration of this Act or of other laws, State or Federal. Any person who shall violate any provision of this section shall be deemed guilty of a misdemeanor and, upon conviction thereof, shall be punished by a fine not exceeding $50,000 or by imprisonment not exceeding one year, or both.

prohibition against discrimination

SEC. 505. In carrying out the provisions of this Act there shall be no discrimination on account of race, creed, or color. Personal health services shall be made available as benefits to all eligible individuals, and all persons qualified under title II to enter into agreements to furnish or provide such services shall be permitted to do so.

TITLE VI--ELIGIBILITY DETERMINATIONS, COMPLAINTS, HEARINGS, AND JUDICIAL REVIEW

determinations as to eligibility for benefits

SEC. 601. (a) The Secretary of Health and Human Services through such units of the Department of Health and Human Services as he may determine, shall upon his own initiative or upon application of any individual make determinations as to the eligibility of individuals for benefits under this Act. Whenever requested by any individual determined by the Secretary not to be eligible for benefits for any period, or by a dependent of any such individual, the Secretary shall give such individual or such dependent reasonable notice and opportunity for a hearing with respect to such determination and on the basis of the evidence adduced at the hearing shall affirm, modify, or reverse his determination.

(b) In carrying out his responsibility under this section, the Secretary shall have all the powers and duties conferred upon him under sections 205 and 206 of the Social Security Act. Such powers and duties shall be subject to the same limitations and rights of judicial review

as are contained in section 205 of such Act. Eligibility for benefits under this title based on entitlement to an annuity under subchapter III (relating to civil service retirement) of chapter 83 of title 5, United States Code, shall be determined on the basis of certification by the Office of Personnel Management.

(c) Nothing in title IV of this Act shall be deemed to require or authorize any assumption by the State agency, designated in accordance with an approved State plan of operations approved under such title, of any of the Secretary's responsibilities under this section, but the Secretary may utilize existing facilities and services of any such agency on the basis of mutual agreements with such agency.

complaints of eligible individuals and of persons furnishing benefits

SEC. 602. (a) Any eligible individual aggrieved by reason of his failure to receive any personal health-service benefits to which he believes himself entitled, or dissatisfied with any service rendered him as a personal health-service benefit, and any person who has entered into an agreement to furnish services as personal health-service benefits and who is aggrieved by the failure or alleged failure of a local or other administrative officer or a local administrative committee to carry out the agreement in accordance with its terms, may make a complaint to the local administrative officer or local executive officer in the area in which the action or inaction complained of occurred, or to such other officer as may be provided in regulations. If the officer to whom such complaint is made finds, after investigation, that the complaint is well founded, he shall promptly take such steps as may be necessary and appropriate to correct the action or inaction complained of; and he shall notify the individual or other person making the complaint of his disposition thereof. Any such individual or other person dissatisfied with the action taken may in writing request a hearing thereon and shall be afforded opportunity for the same pursuant to subsection (b) of this section.

(b) Provision shall be made for the establishment of necessary and sufficient impartial tribunals to afford hearings to individuals and other persons entitled thereto under subsection (a) of this section, or section 207(d) of this Act, and for further review of the findings, conclusions, and recommendations of such tribunals, in accordance with regulations made by the Board, after consultation with the Advisory Council. With respect to any complaint involving matters or questions of professional practice or conduct, the hearing body shall contain competent and disinterested professional representation; and with respect to any complaint involving only matters or questions of professional practice or conduct the hearing body shall consist exclusively of such professional persons.

(c) In administering this section in any State which has not assumed responsibility for the administration of benefits under this Act as provided in title IV, the Board (subject to the provisions of section 501(b)) shall, insofar as they are applicable to its functions under this Act, have all the powers and duties conferred upon the Secretary by sections 205 and 206 of the Social Security Act. Such powers and duties shall be subject to the limitations and rights of judicial review contained in section 205 of such Act.

(d) In any State which has assumed responsibility for the administration of benefits under this Act as provided in title IV the powers and duties of the State agency shall be subject to such rights of judicial review in the courts of the State as the law of the State may provide; subject, however, to review by the Supreme Court of the United States in such cases and in such manner as is provided in section 1257 of title 28 of the United States Code.

TITLE VII--APPLICATION OF ACT TO INDIVIDUALS COVERED UNDER MEDICARE PROGRAM

ELIGIBILITY; BENEFITS AVAILABLE

SEC. 701. (a) In the case of any individual who is entitled to hospital insurance benefits under part A of title XVIII of the Social Security Act, or to supplementary medical insurance benefits under the insurance program established by part B of such title, during any benefit year or part thereof in which he is otherwise eligible for benefits under this Act in accordance with section 104 or would otherwise be furnished such benefits in accordance with section 105, the personal health services (specified in section 101) which may be made available to him as benefits under this Act shall be limited to those services (otherwise available to him in accordance with section 102) for which he is ineligible under part A or B of such title XVIII. For purposes of the preceding sentence, an individual shall be considered ineligible under part A or B of such title XVIII if no payment is or can be made to him or on his behalf thereunder with respect to the item or service involved, whether because he is not entitled to benefits under whichever such part is applicable, because no payment is provided under either such part for the item or service involved, or because he has exhausted his entitlement to

have payment made thereunder for items or services of the type involved; and shall also be considered ineligible under part A or B of such title XVIII with respect to any item or service (for which he is otherwise entitled to have payment made thereunder) to the extent that payment is not made with respect to such item or service because of the application of the deductible and coinsurance provisions of sections 1813 and 1833 of the Social Security Act.

(b) The Board, after consultation with the Advisory Council, shall prescribe such regulations as may be necessary or appropriate to insure, in the case of individuals whose benefits under this Act are limited under subsection (a), that the combination of benefits under this Act and title XVIII of the Social Security Act will effectively carry out (without duplication of benefits) the purpose of this Act.

(c) The limitation under subsection (a) of an individual's benefits under this Act shall not be construed as affecting the eligibility of his dependents for such benefits in accordance with subsection (a)(3) or (b)(3) of section 104.

study and report

SEC. 702. As soon as practicable after the enactment of this Act the Secretary of Health and Human Services shall undertake and carry out a full and complete study of the interrelationship of the program of national health insurance under this Act and the program of health insurance for the aged under title XVIII of the Social Security Act, in order to determine the way in which the latter program may be most effectively and equitably transferred to and incorporated in the program under this Act. In conducting such study, the Secretary shall give particular attention to the transitional problems which would result from such a transfer, and shall consider in detail (with respect to each such program) the benefits provided, the standards of eligibility therefor, the standards and qualifications for participation by providers of services of various types, the methods of administration, the costs and methods of financing, and any other matters which might assist in making such determination and in insuring that all desirable features of the program under title XVIII of the Social Security Act will to the maximum extent feasible be preserved with respect to the individuals covered by that program (and, in appropriate cases, included in the program under this Act for all individuals who are eligible thereunder, without regard to any transfer). The Secretary shall submit to the President and the Congress, no later than one year after the date of the enactment of this Act, a complete report of the study conducted under this section together with his findings as to the most effective and equitable way in which the transfer under consideration could be effected and his detailed recommendations for legislative, administrative, and other actions to accomplish it.

TITLE VIII--FISCAL PROVISIONS

USE OF TRUST FUND

SEC. 801. (a) Funds in the National Health Care Trust Fund shall be available for all expenditures necessary or appropriate to carry out this Act; except that (subject to the provisions of section 802(g)) only so much of such funds shall be available for salaries or other administrative expenses of any department or agency of the United States as may be authorized in annual or other appropriation Acts.

(b) Sums received as reimbursements to the account pursuant to section 104(c) or section 105, or by virtue of subrogation pursuant to section 104(c), shall be deposited in the account and shall be available in accordance with the provisions of subsection (a) of this section.

allotment of funds

SEC. 802. (a) The Board, after consultation with the Advisory Council, shall determine, as far in advance of the beginning of each fiscal year as is possible, the sums which shall be available from the Trust Fund for provision during the fiscal year of all classes, and of each of the five classes, of personal health-service benefits specified in section 101(a). Such sums shall be determined, after taking into consideration the estimated amount which will be in the Trust Fund at the beginning of the fiscal year and the anticipated income of the account thereafter, with a view (1) to maintaining as nearly as practicable a uniform rate of expenditure for personal health-service benefits in successive fiscal years, except for appropriated allowance on account of anticipated increase in the personnel and facilities available to furnish personal health-service benefits and on account of reduction or withdrawal of restrictions or limitations pursuant to section 102(b), and (2) to establishing and maintaining a reserve in the Trust Fund adequate to meet emergency demands in accordance with subsection (d) of this section and adequate to maintain the rate of expenditure or to permit its gradual reduction if the income of the Trust Fund should fall below the income which had been anticipated.

(b) In accordance with regulations prescribed after consultation with the State agencies, the Board, prior to the beginning of each fiscal year shall allot to the several States, for the fiscal years 2000, 2001, and 2002, 90 percent, and for each fiscal year thereafter 95 percent of each

sum determined pursuant to subsection (a). Such regulations shall provide for allotments on the basis of--

(1) the population in the several States eligible for benefits under this Act;

(2) professional and other personnel, hospitals, and other facilities, and supplies and commodities, to be available in the several States in the provision of such benefits; and

(3) the cost of reasonable and equitable compensation to such personnel and facilities and for such supplies and commodities.

Such allotments shall operate, to the maximum extent possible, both to assure provision to eligible individuals of adequate personal health-service benefits in all States and all local health-service areas, and also to increase the adequacy of services where personnel and facilities are below the national average.

(c) From time to time during each fiscal year, the Board shall allot to the several States the remaining 10 percent or the remaining 5 percent, as the case may be, of each sum determined pursuant to subsection (a). In making allotments under this subsection, the Board shall take into consideration the factors specified in subsection (b), but shall, in addition, give special consideration to the extent of which allotments under subsection (b) have proved to be insufficient to permit provision of reasonably adequate benefits under this Act.

(d) In addition to the sums determined pursuant to subsection (a) to be available for the provision of personal health-service benefits, the Board, after consultation with the Advisory Council, is authorized to make emergency allotments from the account if it finds that a disaster, epidemic, or other cause has substantially increased the volume of personal health-service benefits required in any part of the United States over the volume anticipated when the determinations pursuant to subsection (a) were made. Allotments pursuant to this subsection shall be made to such State or States, for such class or classes of personal health-service benefits, and in such amounts, as the Board may find necessary to meet the emergency.

(e) The Board shall from time to time determine the amounts to be paid to each State from its allotments under this section, and shall certify to the Secretary of the Treasury the amounts so determined. The Secretary shall thereupon, and prior to audit or settlement by the General Accounting Office, pay to the State the amounts so certified.

(f) Funds paid to a State for any class of personal health-service benefits shall be used exclusively for the provision of benefits of that class, except that the administrative costs of the State in administering personal health-service benefits under this Act may be met from the allotments to the State. Such administrative costs, which in any fiscal year shall not exceed 5 percent of the aggregate allotments to the State for such fiscal year, shall be apportioned as between the several allotments in accordance with the costs of administering the respective classes of benefits; and such apportionment may be made in such manner, and by such sampling, statistical, or other methods, as may be agreed upon between the Board and the State agency.

(g) In any case in which the Board has assumed responsibility for the administration in a State of benefits under this Act in accordance with section 402 (d) or (e), all allotments or balances of allotments to such State shall be available for expenditure by the Board for the provision of personal health-service benefits in that State, and (until the Congress shall make funds available therefor pursuant to section 801(a)) for the costs of administration of such benefits in such State. Expenditures authorized pursuant to section 801(a) for such costs of administration shall be charged against allotments to such State.

grants-in-aid for training and education

SEC. 803. (a) For the purpose of increasing the availability of training and education for professional and technical personnel engaged or undertaking to engage in the provision or administration of personal health services as benefits under this Act, and to carry out the policies of section 209(a), the Board is authorized to make grants--

(1) to public or nonprofit institutions or agencies engaging in undergraduate or postgraduate professional, technical, or administration education or training, for the cost (in whole or in part) of courses or projects which the Board finds, after consultation with the Advisory Council and appropriate Federal departments and agencies, (A) cannot be carried out without financial assistance under this section, and (B) show promise of making valuable contributions to the education, training, or retraining of professional or technical personnel engaged or undertaking to engage in the provision or administration of benefits, or

(2) to individuals who are professional or technical persons engaged or who undertake to engage in the provision of personal health-service benefits, or who are engaged or undertake to engage in the administration of such benefits, for maintenance (in whole or in part) while in attendance at courses or projects assisted under paragraph (1) or approved

by the Board for similar training or education, and for costs of necessary travel.

(b) Such grants, in such amounts and for payment at such times as are approved by the Board, shall be certified for payment to the Secretary of the Treasury, who shall pay them from the account to the designated individuals, institutions, or agencies.

(c) For the purposes of this section there shall be available for the fiscal year 2000 the sum of $5,000,000, for the fiscal year 2001 the sum of $5,000,000, and for each fiscal year thereafter an amount not to exceed one-half of 1 percent of the amount expended for benefits under this Act in the last preceding calendar year.

TITLE IX--MISCELLANEOUS PROVISIONS

definition

SEC. 901. As used in this Act:

(1) The term `wages' means the sum of the following items, excluding any amount in excess of the applicable contribution and benefit base (as determined under section 230 of the Social Security Act with respect to the hospital insurance tax) which is received (or, in the case of income from self-employment, accrued) by any individual during any calendar year--

(A) all remuneration for employment, including the cash value of all remuneration paid in any medium other than cash; except that such term does not include--

(i) the amount of any payment made to, or on behalf of, an employee under a plan or system established by an employer which makes provision for his employees generally or for a class or classes of his employees (including any amount paid by an employer for insurance or annuities, or into a fund to provide for any such payment), on account of retirement, or sickness or accident disability, or medical and hospitalization expenses in connection with sickness or accident disability, or death; provided, in the case of a death benefit, that the employee (I) has not the option to receive, instead of provision for such death benefit, any part of such payment or, if such death benefit is insured, any part of the premiums (or contributions to premiums) paid by his employer, and (II) has not the right, under the provisions of the plan or system or policy of insurance providing for such death benefit, to assign such benefit, or to receive a cash consideration in lieu of such benefit either upon his withdrawal from the plan or system providing for such benefit or upon termination of such plan or system or policy of insurance or of his employment with such employer;

(ii) the payment by an employer (without deductions from the remuneration of the employee) of any social-insurance taxes or contributions imposed upon an employee; or

(iii) the value of services exchanged for other services for which there is no payment other than the exchange; and

(B) all net income from farm, business, professional, or other self-employment.

(2) The term `employment' means any service of whatever nature performed by an employee for the person employing him, irrespective of the citizenship or residence of either, within United States, or on or in connection with an American vessel or an American civil aircraft under a contract of service which is entered into within the United States or during the performance of which the vessel or aircraft touches at a port or airport in the United States, if the employee is employed on and in connection with such vessel or aircraft when outside the United States, except--

(A) service on active duty in the Armed Forces of the United States;

(B) service performed in the employ of a State or any political subdivision thereof, or any instrumentality of any one or more of the foregoing which is wholly owned by one or more States or political subdivisions;

(C) casual labor not in the course of the employer's trade or business;

(D) service performed by an employee on or in connection with a vessel not an American vessel, or an aircraft not an American aircraft, if the employee is employed on and in connection with such vessel or aircraft when outside the United States;

(E) service performed by a duly ordained or duly commissioned or licensed minister of any church in the regular exercise of his ministry and service performed by a regular member of a religious order in the exercise of duties required by such order;

(F) service performed by an individual as an employee or employee representative as defined in section 1 of the Railroad Retirement Act of 1937 or section 1 of the Railroad Retirement Act of 1974;

(G) service performance in any calendar quarter in the employ of any organization exempt from income tax under section 501 of the Internal Revenue Code of 1986 if--

(i) the renumeration for such services does not exceed $150; or

(ii) such service is in connection with the collection of dues or premiums for a fraternal beneficiary society, order, or association, and is performed away from the home office or is ritualistic service in connection with any such society, order, or association; or

(iii) such service is performed by a student who is enrolled and is regularly attending classes at a school, college, or university;

(H) service performed in the employ of a foreign government (including service as a consular or other officer or employee or a nondiplomatic representative);

(I) service performed in the employ of an instrumentality wholly owned by a foreign government, if--

(i) the service is of a character similar to that performed in foreign countries by employees of the United States Government or of an instrumentality thereof; and

(ii) the Secretary of State shall certify to the Secretary of Health and Human Services that the foreign government, with respect to whose instrumentality and employees thereof exemption is claimed, grants an equivalent exemption with respect to similar service performed in the foreign country by employees of the United States Government and of instrumentalities thereof; and

(J) service performed in the employ of an international organization entitled to enjoy privileges, exemptions, and immunities as an international organization under the International Organizations Immunities Act.

(3) In any case in which an individual has received wages equal to the applicable contribution and benefit base (as determined under section 230 of the Social Security Act), in a calendar year, not less than $500 of such wages shall be deemed, for the purpose of section 104(a), to have been received by him in the quarter during which the first of such wages were in fact received by him and in each quarter of such calendar year thereafter.

(4) The term `benefit year' means a period commencing on July 1 of any year and ending on June 30 of the succeeding year.

(5) The term `quarter' and the term `calendar quarter' mean a period of three calendar months ending on March 31, June 30, September 30, or December 31.

(6) The term `employee' includes (in addition to any individual who is a servant under the law of master and servant) any individual who performs service, of whatever nature, for a person, unless the service is performed by the individual in pursuit of his own independently established business. The term `employee' also includes an officer of a corporation.

(7) The term `American vessel' means any vessel documented or numbered under the laws of the United States; and includes any vessel which is neither documented nor numbered under the laws of any foreign country, if its crew is employed solely by one or more citizens or residents of the United States or corporations organized under the laws of the United States or of any State.

(8) The term `American aircraft' means an aircraft registered under the laws of the United States.

(9) The term `State' includes the District of Columbia.

(10) The term `United States', when used in a geographic sense, means the several States, as defined in paragraph (9).

(11) The term `dependent' means an unmarried child (including a stepchild, adopted, or foster child) of an individual, who is under the age of eighteen, or who is under a total disability which has continued for a period of not less than six consecutive calendar months and is living with such individual or receiving regular support from him; a wife of an individual living with such individual or receiving regular support from him; a husband who is under a total disability which has continued for a period of not less than six consecutive calendar months, and is living with or receiving regular and substantial support from such individual; and a parent who is living with or receiving regular and substantial support from such individual.

(12) The term `person' means an individual, a trust or estate, a partnership, a corporation, an association, a consumer cooperative, or other organization.

effective date

SEC. 902. The effective date of this Act shall be the date of its enactment, but personal health services shall first become available as benefits in accordance with this Act on October 1, 2000.

TITLE X--VALUE ADDED TAX AND NATIONAL HEALTH CARE TRUST FUND

IMPOSITION OF VALUE ADDED TAX

SEC. 1001. (a) IN GENERAL- Subtitle D of the Internal Revenue Code of 1986 (relating to miscellaneous excise taxes) is amended by inserting before chapter 31 the following new chapter:

`CHAPTER 30--VALUE ADDED TAX

`SUBCHAPTER A. Imposition of tax.

`SUBCHAPTER B. Taxable transaction.

`SUBCHAPTER C. Taxable amount; rate of tax for certain transactions; credit against tax.

`SUBCHAPTER D. Administration.

`SUBCHAPTER E. Definitions and special rules; treatment of certain transactions.

`Subchapter A--Imposition of Tax

`Sec. 3901. Imposition of tax.

`SEC. 3901. IMPOSITION OF TAX.

`(a) GENERAL RULE- A tax is hereby imposed on each taxable transaction.

`(b) AMOUNT OF TAX- Except as otherwise provided in this chapter, the amount of the tax shall be 5 percent of the taxable amount.

`Subchapter B--Taxable Transaction

`Sec. 3903. Taxable transaction.

`Sec. 3904. Commercial-type transaction.

`Sec. 3905. Taxable person.

`Sec. 3906. Transactions in the United States.

`Sec. 3907. Rules relating to other terms used in section 3903.

`SEC. 3903. TAXABLE TRANSACTION.

`For purposes of this chapter, the term `taxable transaction' means--

`(1) the sale of property in the United States,

`(2) the performance of services in the United States, and

`(3) the importing of property into the United States,

by a taxable person in a commercial-type transaction.

`SEC. 3904. COMMERCIAL-TYPE TRANSACTION.

`(a) GENERAL RULE- For purposes of this chapter, the term `commercial-type transaction' means a transaction engaged in by--

`(1) a corporation, or

`(2) any person (other than a corporation) in connection with a business.

`(b) SALES AND LEASES OF REAL PROPERTY; IMPORTS- For purposes of this chapter--

`(1) IN GENERAL- The term `commercial-type transaction' includes--

`(A) any sale or leasing of real property, and

`(B) any importing of property,

whether or not such transaction is described in subsection (a).

`(2) CERTAIN IMPORTED ARTICLES- Notwithstanding paragraph (1)(B), the importing of an article which is free of duty under part 2 of schedule 8 of the Tariff Schedules of the United States shall not be treated as a commercial-type transaction unless such transaction is described in subsection (a).

`SEC. 3905. TAXABLE PERSON.

`(a) GENERAL RULE- Except as otherwise provided in this chapter, for purposes of this chapter, the term `taxable person' means a person who engages in a business or in a commercial-type transaction.

`(b) TREATMENT OF EMPLOYEES, ETC- For purposes of this chapter, an employee shall not be treated as a taxable person with respect to activities engaged in as an employee.

`SEC. 3906. TRANSACTIONS IN THE UNITED STATES.

`(a) SALES OF PROPERTY- For purposes of this chapter--

`(1) IN GENERAL- Except as provided in paragraph (2), the sale of property shall be treated as occurring where delivery takes place.

`(2) REAL PROPERTY- The sale of real property shall be treated as occurring where the real property is located.

`(b) PERFORMANCE OF SERVICE- For purposes of this chapter--

`(1) IN GENERAL- Except as otherwise provided in this subsection, a service shall be treated as occurring where it is performed.

`(2) SERVICES PERFORMED INSIDE AND OUTSIDE THE UNITED STATES- If a service is performed both inside and outside the United States, such service shall be treated as performed--

`(A) inside the United States, if 50 percent or more of such service is performed inside the United States, and

`(B) outside the United States, if less than 50 percent of such service is performed inside the United States.

`SEC. 3907. RULES RELATING TO OTHER TERMS USED IN SECTION 3903.

`(a) EXCHANGES TREATED AS SALES- For purposes of this chapter--

`(1) an exchange of property for property or services shall be treated as a sale of property, and

`(2) an exchange of services for property or services shall be treated as the performance of services.

`(b) CERTAIN TRANSFERS TO EMPLOYEES TREATED AS SALES- For purposes of this chapter, the transfer of property to an employee as compensation (other than a transfer of a type for which no amount is includible in the gross income of employees for purposes of chapter 1) shall be treated as the sale of property.

`(c) PERFORMANCE OF SERVICES- For purposes of this chapter--

`(1) CERTAIN ACTIVITIES TREATED AS PERFORMANCE OF SERVICES- Activities treated as included in the performance of services shall include (but shall not be limited to)--

`(A) permitting the use of property,

`(B) the granting of a right to the performance of services or to reimbursement (including the granting of warranties, insurance, and similar items), and

`(C) the making of a covenant not to compete (or similar agreement to refrain from doing something).

`(2) Employers and employees-

`(A) SERVICES FOR EMPLOYER- An employee's services for his employer shall not be treated as the performance of services.

`(B) SERVICES FOR EMPLOYEE- An employer's services for his employee shall not be treated as the performance of services unless such services are of a type which constitute gross income to the employee for purposes of chapter 1.

`(3) PERFORMANCE OF SERVICES TREATED AS SALE OF SERVICES- The performance of services shall be treated as the sale of services.

`Subchapter C--Taxable Amount; Rate of Tax for Certain Transactions; Credit Against Tax

`Sec. 3911. Taxable amount.

`Sec. 3912. Zero rating for food, housing, and medical care.

`Sec. 3913. Zero rating for exports and interest.

`Sec. 3914. Governmental entities.

`Sec. 3915. Exempt organizations.

`Sec. 3916. Credit against tax.

`SEC. 3911. TAXABLE AMOUNT.

`(a) AMOUNT CHARGED CUSTOMER- For purposes of this chapter, the taxable amount for any transaction for which money is the only consideration shall be the price charged the purchaser of the property or services by the seller thereof--

`(1) including all invoiced charges for transportation, and other items payable to the seller with respect to this transaction, but

`(2) excluding the tax imposed by section 3901 with respect to this transaction and excluding any

State and local sales and use taxes with respect to this transaction.

`(b) EXCHANGES- For purposes of this chapter, the taxable amount in any exchange of property or services shall be the fair market value of the property or services transferred by the person liable for the tax (determined as if such person had sold the property or services to the other party to the exchange).

`(c) IMPORTS- For purposes of this chapter, the taxable amount in the case of any import shall be--

`(1) the customs value plus customs duties and any other duties which may be imposed, or

`(2) if there is no such customs value, the fair market value (determined as if the importer had sold the property).

`(d) SPECIAL RULE IN THE CASE OF SALES OF CERTAIN USED CONSUMER GOODS- For purposes of this chapter, if--

`(1) a taxable person acquires any tangible personal property in a transaction which was not a taxable transaction, and

`(2) such property had been used by an ultimate consumer before such acquisition,

the taxable amount in the case of any sale of such property by such taxable person (determined without regard to this subsection) shall be reduced by the amount paid for such property by such taxable person.

`SEC. 3912. ZERO RATING FOR FOOD, HOUSING, AND MEDICAL CARE.

`(a) ZERO RATING FOR FOOD, HOUSING, AND MEDICAL CARE- The rate of the tax imposed by section 3901 shall be zero with respect to the following:

`(1) FOOD- The retail sale of food and nonalcoholic beverages for human consumption (other than consumption on the premises).

`(2) HOUSING- The sale and renting of residential real property for use by the purchaser or tenant as a principal residence.

`(3) MEDICAL CARE- Medical care.

`(b) DEFINITIONS- For purposes of subsection (a)--

`(1) NONALCOHOLIC BEVERAGES- The term `nonalcoholic beverages' does not include any article which is taxable under chapter 51.

`(2) MEDICAL CARE- The term `medical care' means the performance of any service, and the retail sale of any property, payment for which by the purchaser would constitute medical care within the meaning of section 213.

`(3) MOBILE HOMES, ETC., TREATED AS REAL PROPERTY- A mobile or floating home shall be treated as real property.

`(c) ADVANCE ZERO RATING- The Secretary shall prescribe regulations under which any item which becomes clearly identifiable as an item to which subsection (a) will apply when it reaches the retail stage shall be zero rated for all transactions after it becomes so clearly identifiable.

`SEC. 3913. ZERO RATING FOR EXPORTS AND INTEREST.

`The rate of the tax imposed by section 3901 shall be zero with respect to the following:

`(1) EXPORTS- Exports of property.

`(2) INTEREST- Interest.

`SEC. 3914. GOVERNMENTAL ENTITIES.

`(a) ZERO RATING FOR SALES TO GOVERNMENTAL ENTITIES AND EDUCATIONAL ACTIVITIES OF GOVERNMENTAL ENTITIES- The rate of the tax imposed by section 3901 shall be zero with respect to the following:

`(1) SALES TO GOVERNMENTAL ENTITIES- Any sale of property or services to a governmental entity.

`(2) EDUCATIONAL ACTIVITIES- The providing by a governmental entity of property and services in connection with the education of students.

`(b) SALES, ETC., BY GOVERNMENTAL ENTITIES TAXABLE ONLY WHERE SEPARATE CHARGE IS MADE- For purposes of this chapter, the sale of property and the performance of services by a governmental entity shall be a taxable transaction if (and only if) a separate charge of fee is made therefor.

`(c) GOVERNMENTAL ENTITY DEFINED- For purposes of this chapter, the term `governmental entity' means the United States, any State or political subdivision thereof, the District of Columbia, a Commonwealth or possession of the United States, or any agency or instrumentality of any of the foregoing.

`SEC. 3915. EXEMPT ORGANIZATIONS.

`(a) ZERO RATING FOR SECTION 501(c)(3) ORGANIZATIONS; CREDIT ALLOWED FOR ALL PURCHASES-

`(1) ZERO RATING- The rate of the tax imposed by section 3901 shall be zero with respect to any taxable transaction engaged in by a section 501(c)(3) organization other than as part of an unrelated business.

`(2) CREDIT ALLOWED FOR ALL PURCHASES- For purposes of this chapter, a section 501(c)(3) organization shall be treated as engaged in a business with respect to all of its activities.

`(b) TAXABLE TRANSACTIONS IN CASE OF OTHER EXEMPT ORGANIZATIONS- For purposes of this chapter, the sale of property and the performance of services by any exempt organization other than a section 501(c)(3) organization shall be a taxable transaction if (and only if) a charge or fee is made for such services.

`(c) DEFINITIONS- For purposes of this chapter--

`(1) SECTION 501(c)(3) ORGANIZATIONS- The term `section 501(c)(3) organization' means an organization described in section 501(c)(3) which is exempt from tax under section 501(a).

`(2) OTHER EXEMPT ORGANIZATION- The term `other exempt organization' means any organization (other than a section 501(c)(3) organization) which is exempt from tax under chapter 1.

`SEC. 3916. CREDIT AGAINST TAX.

`(a) GENERAL RULE- There shall be allowed as a credit against the tax imposed by section 3901 the aggregate amount of tax imposed by section 3901 which has been paid by sellers to the taxpayer of property and services which the taxpayer uses in the business to which the transaction relates.

`(b) EXEMPT TRANSACTIONS, ETC- If--

`(1) property or services are used partly in the business and partly for other purposes, or

`(2) property or services are used partly for taxable transactions and partly for other transactions,

the credit shall be allowable only with respect to the property and services used for taxable transactions in the business. No credit shall be allowable for any transaction occurring when the taxpayer was a nontaxable person.

`(c) EXCESS CREDIT TREATED AS OVERPAYMENT-

`(1) IN GENERAL- If for any taxable period the aggregate amount of the credits allowable by subsection (a) exceeds the aggregate amount of the tax imposed by section 3901 for such period, such excess shall be treated as an overpayment of the tax imposed by section 3901.

`(2) TIME WHEN OVERPAYMENT ARISES- Any overpayment under paragraph (1) for any taxable period shall be treated as arising on the later of--

`(A) the due date for the return for such period, or

`(B) the date on which the return is filed.

`Subchapter D--Administration

`Sec. 3921. Seller liable for tax.

`Sec. 3922. Tax invoices.

`Sec. 3923. De minimis exemption.

`Sec. 3924. Time for filing return and claiming credit; deposits of tax.

`Sec. 3925. Treatment of related businesses, etc.

`Sec. 3926. Secretary to be notified of certain events.

`Sec. 3927. Regulations.

`SEC. 3921. SELLER LIABLE FOR TAX.

`The person selling the property or services shall be liable for the tax imposed by section 3901.

`SEC. 3922. TAX INVOICES.

`(a) SELLER MUST GIVE PURCHASER TAX INVOICE- Any taxable person engaging in a taxable transaction shall give the purchaser a tax invoice with respect to such transaction if the seller has reason to believe that the purchaser is a taxable person.

`(b) CONTENT OF INVOICE- The tax invoice required by subsection (a) with respect to any transaction shall set forth--

`(1) the name and identification number of the seller,

`(2) the name of the purchaser,

`(3) the amount of the tax imposed by section 3901, and

`(4) such other information as may be prescribed by regulations.

`(c) NO CREDIT WITHOUT INVOICE-

`(1) IN GENERAL- Except as provided in paragraphs (2) and (3), a purchaser may claim a credit with respect to a transaction only if the purchaser--

`(A) has received from the seller and has in his possession a tax invoice which meets the requirements of subsection (b), and

`(B) is named as the purchaser in such invoice.

`(2) EMPLOYEES OR OTHER AGENTS NAMED IN INVOICES- To the extent provided in regulations, the naming of an employee or other agent of the purchaser shall be treated as the naming of the purchaser.

`(3) WAIVER OF INVOICE REQUIREMENT IN CERTAIN CASES- To the extent provided in regulations, paragraph (1) shall not apply--

`(A) where the purchaser without fault on his part fails to receive or fails to have in his possession a tax invoice,

`(B) to a taxable transaction (or category of transactions) where--

`(i) the amount involved is de minimis, or

`(ii) the information required by subsection (b) can be reliably established by sampling or by another method and can be adequately documented.

`(d) TIME FOR FURNISHING INVOICE- Any invoice required to be furnished by subsection (a) with respect to any transaction shall be furnished not later than 15 business days after the tax point for such transaction.

`SEC. 3923. DE MINIMIS EXEMPTION.

`(a) IN GENERAL- Under regulations, a person--

`(1) whose aggregate taxable transactions for the calendar year do not exceed $20,000, and

`(2) whose aggregate taxable transactions for the next calendar year can reasonably be expected not to exceed $20,000,

may elect to be treated as a person who is not a taxable person for the next calendar year.

`(b) EXCEPTIONS- Subsection (a) shall not apply--

`(1) to any sale or leasing of real property, and

`(2) to any importing of property.

`(c) TERMINATION OF ELECTION- Any election under subsection (a) for a calendar year shall terminate if the aggregate taxable transactions--

`(1) for the first calendar quarter in such year exceed $7,000,

`(2) for the first 2 calendar quarters in such year exceed $12,000, or

`(3) for the first 3 calendar quarters in such year exceed $17,000.

Such termination shall take effect on the first day of the second month following the close of the first period in which the requirements of paragraph (1), (2), or (3) are met.

`(d) TAXABLE AMOUNT TREATED AS ZERO FOR ZERO-RATED TRANSACTIONS- For purposes of this section, the taxable amount of any zero-rated transaction shall be treated as zero.

`(e) CONDITION OF ELECTION- In the case of a person who is a taxable person for any period, an election under subsection (a) may be made for succeeding periods only with the consent of the Secretary. Such consent shall be conditioned on placing such person, for all succeeding periods, in the same position with respect to the tax imposed by section 3901 (and the credit allowed by section 3916) he would have been in if all property and services he holds at the time he becomes a nontaxable person had been acquired as a nontaxable person.

`(f) CASUAL SALES AND LEASES OF REAL PROPERTY EXCLUDED- For purposes of this section, the term `taxable transaction' does not include a transaction which is treated as a commercial-type transaction solely by reason of section 3904(b)(1)(A).

`SEC. 3924. TIME FOR FILING RETURN AND CLAIMING CREDIT; DEPOSITS OF TAX.

`(a) FILING RETURN- Before the first day of the second calendar month beginning after the close of each taxable period, each taxable person shall file a return of the tax imposed by section 3901 on taxable transactions having a tax point within such taxable period.

`(b) CREDIT ALLOWED FOR TAXABLE PERIOD IN WHICH PURCHASER RECEIVES INVOICE-

`(1) IN GENERAL- Except as provided in paragraph (2), a credit allowable by section 3916 with respect to a transaction may be allowed only for the first taxable period by the close of which the taxpayer--

`(A) has paid or accrued amounts properly allocable to the tax imposed by section 3901 with respect to such transaction, and

`(B) has a tax invoice (or equivalent) with respect to such transaction.

`(2) USE FOR LATER PERIOD- Under regulations, a credit allowable by section 3916 may be allowed for a period after the period set forth in paragraph (1).

`(c) TAXABLE PERIOD- For purposes of this chapter--

`(1) IN GENERAL- The term `taxable period' means a calendar quarter.

`(2) EXCEPTION-

`(A) ELECTION OF 1-MONTH PERIOD- If the taxpayer so elects, the term `taxable period' means a calendar month.

`(B) OTHER PERIODS- To the extent provided in regulations, the term `taxable period' includes a period, other than a calendar quarter or month, selected by the taxpayer.

`(d) TAX POINT- For purposes of this chapter--

`(1) CHAPTER 1 RULES WITH RESPECT TO SELLER GOVERN- Except as provided in paragraph (2), the tax point for any sale of property or services is the earlier of--

`(A) the time (or times) when any income from the sale should be treated by the seller as received or accrued (or any loss should be taken into account by the seller) for purposes of chapter 1, or

`(B) the time (or times) when the seller receives payment for the sale.

`(2) IMPORTS- In the case of the importing of property, the tax point is when the property is entered, or withdrawn from warehouse, for consumption in the United States.

`(e) MONTHLY DEPOSITS REQUIRED- To the extent provided in regulations, monthly deposits may be required

of the estimated liability for any taxable period for the tax imposed by section 3901.

`SEC. 3925. TREATMENT OF RELATED BUSINESSES, ETC.

`(a) GENERAL RULE- For purposes of this chapter (other than section 3923), to the extent provided in regulations, the taxpayer may elect--

`(1) to treat as 1 taxable person 2 or more businesses which may be treated under section 52(b) as 1 employer, and

`(2) to treat as separate taxable persons separate divisions of the same business.

`(b) DE MINIMIS EXEMPTION- For purposes of section 3923, all businesses which are under common control (within the meaning of section 52(b)) shall be treated as 1 business.

`SEC. 3926. SECRETARY TO BE NOTIFIED OF CERTAIN EVENTS.

`To the extent provided in regulations, each person engaged in a business shall notify the Secretary (at such time or times as may be prescribed by such regulations) of any change in the form in which a business is conducted or any other change which might affect the liability for the tax imposed by section 3901 or the amount of such tax or any credit against such tax, or otherwise affect the administration of such tax in the case of such person.

`SEC. 3927. REGULATIONS.

`The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this chapter.

`Subchapter E--Definitions and Special Rules; Treatment of Certain Transactions

`Sec. 3931. Definitions.

`Sec. 3932. Special rules.

`Sec. 3933. Personal use by owner of business property or services.

`Sec. 3934. Gift of business property or services.

`Sec. 3935. Special rules for dispositions of nonbusiness real property.

`Sec. 3936. Special rule for insurance contracts.

`SEC. 3931. DEFINITIONS.

`(a) PROPERTY- For purposes of this chapter, the term `property' means any tangible property.

`(b) BUSINESS- For purposes of this chapter, the term `business' includes--

`(1) a trade, and

`(2) an activity regularly carried on for profit.

`(c) EMPLOYEE- For purposes of this chapter, the term `employee' has the meaning such term has for purposes of chapter 24 (relating to withholding).

`(d) PERSON- For purposes of this chapter, the term `person' includes any governmental entity.

`(e) BUSINESS DAY- For purposes of this chapter, the term `business day' means any day other than Saturday and Sunday and other than a legal holiday (within the meaning of section 7503).

`(f) UNITED STATES- For purposes of this chapter, the term `United States', when used in a geographical sense, includes a Commonwealth and any possession of the United States.

`SEC. 3932. SPECIAL RULES.

`(a) COORDINATION WITH SUBTITLE A- For purposes of subtitle A--

`(1) TREATMENT OF CREDIT- Any credit allowable to a taxpayer under section 3916 which is attributable to any property or services shall be treated as a reduction in the amount paid or incurred by the taxpayer for such property or services.

`(2) AMOUNT OF DEDUCTION FOR TAX- The amount allowable as a deduction for the tax imposed by section 3901 shall be determined without regard to any credit allowable under section 3916.

`(3) COMPUTATION OF PERCENTAGE DEPLETION- For purposes of sections 613 and 613A--

`(A) gross income shall be reduced by the amount of the tax imposed by section 3901, and

`(B) taxable income shall be determined without regard to any deduction allowed for such tax.

`(b) SPECIAL RULE SALE OF PROPERTY INCLUDES INCIDENTAL PERFORMANCE OF SERVICES- For purposes of this chapter, if in connection with the sale of any property there is an incidental performance of services, such performance of services shall be treated as part of the sale of such property.

`(c) SPECIAL RULE WHERE PERFORMANCE OF SERVICES INCLUDES INCIDENTAL TRANSFER OF PROPERTY- For purposes of this chapter, if in connection with the performance of any services there is an incidental transfer of property, such transfer shall be treated as part of the performance of such services.

`(d) AUTHORITY TO ZERO RATE DE MINIMIS TRANSACTIONS, ETC- The Secretary may prescribe regulations providing that the rate of tax shall be zero for a taxable transaction (or category of such transactions) where--

`(1) the amount involved is de minimis, or

`(2) the revenue raised by taxing the transaction is not sufficient to justify the administrative and other costs involved in the payment and collection of the tax.

`(e) IMPORTING TREATED AS SALE AND PURCHASE- For purposes of this chapter, the importing of any property into the United States shall be treated as both a sale and purchase of such property by the person importing such property.

`(f) SUBCHAPTER S CORPORATION TREATED AS NOT A CORPORATION- For purposes of this chapter, an S corporation (as defined in section 1361(a)) shall be treated as a person which is not a corporation.

`(g) USE INCLUDES HELD FOR USE- For purposes of this chapter, property and services held for use by any person shall be treated as used by the person.

`SEC. 3933. PERSONAL USE BY OWNER OF BUSINESS PROPERTY OR SERVICES.

`(a) GENERAL RULE- If any business property or services are used by an owner of the taxpayer for personal purposes, for purposes of this chapter such use shall be treated as a taxable transaction.

`(b) TAXABLE AMOUNT- In the case of a use described in subsection (a), for purposes of this chapter, the taxable amount shall be--

`(1) except as provided in paragraph (2), the fair market value of the property or the services, or

`(2) if such use is only the temporary use of property, the fair rental value of such use.

`(c) DEFINITIONS- For purposes of this section--

`(1) BUSINESS PROPERTY OR SERVICES- The term `business property or services' means any property or services if a sale of such property, or the performance of such services, by the taxpayer would be a taxable transaction.

`(2) OWNER- The term `owner' means--

`(A) in the case of a sole proprietorship, the proprietor,

`(B) in the case of any other business enterprise, any holder of a beneficial interest in the corporation, partnership, or other entity, and

`(C) any member of the family (within the meaning of section 267(c)(4)) of an individual described in subparagraph (A) or (B).

`SEC. 3934. GIFT OF BUSINESS PROPERTY OR SERVICES.

`(a) GENERAL RULE- In the case of any gift of business property or services, for purposes of this chapter--

`(1) such gift shall be treated as a taxable transaction, and

`(2) the taxable amount shall be the amount determined under section 3933(b).

`(b) GIFTS RELATED TO BUSINESS PROMOTION ACTIVITIES- For purposes of subsection (a), the term `gift' includes any gift of property or services transferred in connection with business promotion activities.

`SEC. 3935. SPECIAL RULES FOR DISPOSITIONS OF NONBUSINESS REAL PROPERTY.

`(a) IN GENERAL- In the case of any sale of real property which is treated as a commercial-type transaction solely by reason of section 3904(b)(1)(A), for purposes of this chapter, the taxable amount shall be the excess (if any) of--

`(1) the amount realized on such sale, over

`(2) the adjusted cost to the taxpayer of such real property.

`(b) ADJUSTED COST- For purposes of subsection (a)--

`(1) IN GENERAL- Except as provided in paragraph (2), the term `adjusted cost' means, with respect to any property, the basis of such property increased by expenditures properly chargeable to capital account (other than taxes or other carrying charges described in section 266) for periods during the holding period for such property.

`(2) TRANSITIONAL RULE- The adjusted cost of any property shall include only amounts incurred during periods after December 31, 1997.

`(c) VALUE ADDED TAX NOT TAKEN INTO ACCOUNT- For purposes of this section, the amount realized on any sale of real property shall not include any amount attributable to the tax imposed by this chapter.

`SEC. 3936. SPECIAL RULE FOR INSURANCE CONTRACTS.

`In the case of any contract of insurance, for purposes of this chapter, the taxable amount is the excess of--

`(1) the portion of the premium attributable to insurance coverage, over

`(2) the actuarial cost to the insurer of providing such insurance coverage.'

(b) CLERICAL AMENDMENT- The table of chapters for subtitle D of the Internal Revenue Code of 1986 is amended by inserting before the item relating to chapter 31 the following:

`CHAPTER 30. Value added tax.'

(c) EFFECTIVE DATE- The amendments made by this section shall apply to transactions occurring after December 31, 1999.

SEC. 1002. REVENUE FROM VALUE ADDED TAX TO FUND NATIONAL HEALTH CARE TRUST FUND.

(a) IN GENERAL- Subchapter A of chapter 98 of the Internal Revenue Code of 1986 (relating to trust fund code) is amended by adding at the end the following new section:

`SEC. 9511. NATIONAL HEALTH CARE TRUST FUND.

`(a) CREATION OF TRUST FUND- There is established in the Treasury of the United States a trust fund to be known as the `National Health Care Trust Fund', consisting of such amounts as may be appropriated or credited to the Trust Fund as provided in this section or section 9602(b).

`(b) TRANSFERS TO TRUST FUND- There are hereby appropriated to the National Health Care Trust Fund amounts equivalent to amounts received in the Treasury from the tax imposed under section 3901 of the Internal Revenue Code of 1986 (relating to the value added tax).

`(c) EXPENDITURES FROM TRUST FUND- Amounts in the National Health Care Trust Fund shall be available only for purposes of making expenditures to carry out the program of health benefits under the National Health Insurance Act.'

(b) CLERICAL AMENDMENT- The table of sections for such subchapter A is amended by adding at the end the following new item:

`Sec. 9511. National Health Care Trust Fund.'

(c) EFFECTIVE DATE- The amendments made by this section shall take effect on January 1, 1999.

TITLE XI--STUDY AND DEVELOPMENT OF COST CONTROL MECHANISMS

DEVELOPMENT OF COST CONTROL MECHANISMS

SEC. 1101. (a) STUDY- The Secretary of Health and Human Services shall conduct a study analyzing various methods to control the costs of providing personal health benefits under this Act, and shall include in such study an analysis of the effects on such costs of medical malpractice claims and the purchase of medical malpractice liability insurance by providers of the benefits.

(b) REPORTS TO CONGRESS- Not later than October 1, 2001, the Secretary shall submit a report to Congress describing the study conducted under subsection (a), and shall include in the report recommendations on methods to control costs under this Act, including recommendations on the development of a system under which medical malpractice claims brought against providers of benefits under this Act may be resolved in an equitable and cost-effective manner. Not later than April 1, 2002, the Secretary shall promulgate regulations to implement the recommendations made in the report.

END