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PART D-COMPLEMENTARY PRIVATE HEALTH INSURANCE FOR INDIVIDUALS AGED SIXTY-FIVE OR OVER

PURPOSE

SEC. 230. The Congress hereby declares that it is the purpose of this part to provide, for all individuals aged sixty-five or over, the opportunity to secure at reasonable cost private health insurance which will insure them against the cost of health services which are not covered under the program established by title XVIII of the Social Security Act.

DEFINITIONS

SEC. 231. For purposes of the succeeding provisions of this part

(a) the term "health insurance policy" means the policy, contract, agreement, or other arrangement entered into between a carrier and another person whereby the carrier, in consideration of the payment to it of a periodic premium, undertakes to provide, pay for, or reimburse the cost of, health services for the individual (or group of individuals) who are the beneficiaries of such policy, contract, agreement, or other arrangement;

(b) the "standard policy" of insurance to be devised pursuant to the provisions of section 232 (c) may include any of the "health insurance benefits" described in subsection (c), and shall include at least the following health insurance benefits

(1) payment of part or all of most charges for or toward physician's services whether performed at the physician's office or any other place; (2) payment, in accordance with a schedule, for or toward the costs of surgery performed in or out of a hospital;

(3) payment of not less than the first $15 of charge for consultation with a physician who is a specialist in any area of medicine or surgery; and

(4) payment, in accordance with a schedule of fees for or toward charges for diagnostic care, and laboratory and X-ray services; (c) the term "health insurance benefits" or the term "benefits" when used in connection with health insurance, means insurance against all or any part of the costs of any or all of the following

(1) services provided by physicians, surgeons, dentists, or any other medical or remedial care recognized under State law;

(2) diagnostic care, and laboratory and X-ray services;

(3) prescribed drugs, eyeglasses, dentures, and prosthetic devices; (4) private-duty nursing services;

(5) home health care services;

(6) inpatient hospital services;

(7) skilled nursing services;

but only to the extent that any such care, services, or benefits are not covered under the program established by title XVIII of the Social Security Act;

(d) the term "carrier" means a voluntary association, corporation, partnership, or other nongovernmental organization which is lawfully engaged in providing, paying for, or reimbursing the costs of, health services for individuals or groups under health insurance policies in consideration of premiums payable to the carrier and which meets reasonable standards prescribed by the Secretary;

(e) the term "premium" means the amount of the consideration charged by a carrier for coverage by a health insurance policy offered by the carrier and

(f) the term "Secretary" means the Secretary of Health, Education, and Welfare.

AUTHORIZATION OF ASSOCIATION

SEC. 232. (a) In order to carry out the purposes of this part, there is hereby authorized to be established, subject to the approval of the Secretary, an association to be known as the National Association of Carriers To Provide Health Insurance for Individuals Aged Sixty-five or Over (hereinafter referred to as the "association").

(b) The association shall be composed of carriers which shall have voluntarily joined together for the purpose of carrying out the purposes of this part, and membership therein shall be open to all responsible carriers which desire

to participate in the activities of the association and agree to abide by the rules and regulations governing the association as set forth in, or promulgated pursuant to, the provisions of this part.

(c) (1) It shall be the function of the association to devise (in cooperation with and subject to the approval of the Secretary), and offer for sale through its members, a health insurance policy offering health insurance benefits for the aged designed to complement the health insurance benefits provided for eligibleindividuals under title XVIII of the Social Security Act. Such policy shall offer at least the health insurance benefits described in section 231(b). All the terms and conditions of such policy as well as the terms and conditions under which it is offered and sold shall be uniform, except that the association may provide that the amount of the premium to be paid for such a policy and the extent of the benefits provided thereunder shall vary in different areas of the United States as well as within different areas of any State, whenever necessary to reflect differences in the cost of securing health services of the type for which benefits are provided under such policy.

(2) The policy devised by the association pursuant to paragraph (1) shall in the succeeding provisions of this part be referred to as the "standard policy". In order to minimize the factor of adverse selection in the sale of the standard policy, the association shall establish appropriate limitations upon the period, during each year, when such policy may be offered to new subscribers.

(3) The association with the approval of the Secretary shall develop and circulate among its members minimum standards with respect to health insurance for the purpose of enabling its members, or any of them, to devise and offer for sale one or more health insurance policies each of which may serve as an alternative to the standard policy. Such standards shall require that any such policy shall fulfill the same purposes as does the standard policy and will represent to the subscriber thereof a dollar value which is not less than that represented by the standard policy. Any member of the association desiring to offer for sale any such policy shall first submit to the association and to the Secretary copies of the proposed policy. together with any information related thereto which the association shall deem pertinent. If the association and the Secretary after due consideration, find that such proposed policy fulfills the same purposes as does the standard policy and will represent to the subscriber thereof a dollar value which is not less than that represented by the standard policy, they shall approve such proposed policy. Upon the approval by the association and the Secretary of any such proposed policy, such policy may thereafter be offered for sale by any carrier which is a member of the association in the same manner and subject to the same conditions as obtain with respect to the standard policy. In this part any such policy shall be referred to as an "alternative policy".

(4) All premiums receivable on account of the standard policy or alternative policies sold by members of the association shall be covered into a common fund (hereinafter referred to as the "reserve fund") established by the association for the purpose of receiving such premiums, and all benefits payable on account of such policies as well as the reasonable administrative expenses incurred in connection with such policies shall be paid from the reserve fund. The association shall invest such portion of the reserve fund as is not, in their judgment, required to meet current withdrawals. Moneys in the reserve fund may be invested only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. The assets of the reserve fund shall be the property of the association and the expenses of the association shall be defrayed from moneys in such fund.

(5) In order to hold within proper limits the portion of the premiums paid for the standard policy or alternative policies which are attributable to expenses in connection with the sale and administration of such policies, appropriate limitations shall be placed upon the amounts which members of the association may claim from the reserve fund on account of such expenses. Such limitation shall be established by the association, subject to the approval of the Advisory Council (established pursuant to section 235) and of the Secretary.

(6) The association, in cooperation with the Advisory Council and with the approval of the Secretary, shall devise programs designed to enable persons who have not attained age sixty-five and are still employed to purchase the insurance provided by the standard policy or an alternative policy on a prepaid basis.

(d) The management of the reserve fund and the administration of the activities of the association shall be vested in an executive committee which.

shall consist of three individuals elected by the Advisory Council authorized to be established by section 235.

(e) Members of the association are authorized and encouraged to offer supplementary health insurance policies designed to provide to subscribers of the standard policy or an alternative policy coverage in addition to that provided by such policy. Such policies need not be uniform and may be offered at premiums which would permit a fair profit to the members offering them. Such policies may be offered for sale in conjunction with the standard policy or an alternative policy, but in such case, shall be offered in such a manner as to enable the prospective subscriber clearly to distinguish between the benefits and premiums provided by the standard policy or the alternative policy and the benefits and premiums provided by the supplementary policy.

(f) The association is authorized, with the approval of the Secretary and the Advisory Council, to adopt two separate and distinct symbols, one of which may be used in connection with the sale of the standard policy and which shall signify public endorsement of such policy and the other of which may be used in connection with the sale of alternative policies and which shall signify official public endorsement of such alternative policies.

(g) Nothing in this part shall be construed to authorize any control to be exercised over carriers who are members of the association with respect to any policy of insurance offered by them other than standard policies (as described in subsection (c)(2)) and alternative policies (as described in subsection (c) (3)); and the right of such carriers to offer other insurance policies shall be unaffected by their membership in the association.

REGIONAL DIVISIONS OF THE ASSOCIATION

SEO. 233. (a) Any one or more members of the association which desire to confine their business of offering for sale the standard policy or alternative policies, or both, to a particular geographical region may, pursuant to rules established by the association (with the approval of the Secretary), establish a regional division of the association for the purpose of offering such policies for sale in such region.

(b) Membership in any regional division of the association shall be open to all members of the association which desire to confine their sale of the standard policy or alternative policies, or both, to the geographical region with respect to which such division is established.

(c) Members of any such division shall, in lieu of depositing in the reserve fund provided for in section 232 (c) (4) premiums received by them on account of any such policies sold by them, deposit such premiums in a common fund to be known as the regional reserve fund for such region. The regional reserve fund for any regional division of the association shall be managed by the members of such division, in accordance with regulations prescribed by the executive committee of the association with the approval of the Secretary and the Advisory Council. Any such regional reserve fund shall serve the same purposes and shall be subject to the same requirements as are prescribed with respect to the reserve fund provided for in section 232 (c) (4). The assets of any such regional reserve fund shall be the property of the regional division of the association for which such fund is established, and the expenses of such division shall be defrayed from moneys in such fund.

(d) The executive committee of the association, with the approval of the Secretary and the Advisory Council, shall prescribe regulations governing the manner in which any regional division of the association shall be operated. Such regulations shall vest responsibility for the management and operation of the division in the membership thereof, but shall contain necessary safeguards to insure that the division will be managed and operated in such a manner as to carry out in the region with respect to which it is established purposes and functions which are the same as those of the association.

ESTABLISHMENT OF ASSOCIATION

SEC. 234. (a) Whenever five or more carriers shall have applied to the Secre tary to form the association (provided for in section 232) the Secretary shall as soon as he is satisfied that such carriers are ready, willing, and able to carry out the functions of the association (as set forth in section 232) in accordance with the requirements contained in such section, he shall declare the association (as so provided for) to be established by such carriers.

(b) The Secretary shall have the duty and the authority to make such rules and regulations as may be necessary or desirable to insure that the association, in carrying out its functions, complies with the requirements of section 232 and fulfills the purposes of this title.

ADVISORY COUNCIL

SEC. 235. (a) For the purpose of consulting with and advising the Secretary with respect to the administration of title XVIII of the Social Security Act, for the purpose of electing the executive committee of the association, and for the purpose of advising and assisting the association, the executive committee, and the Secretary in carrying out their respective functions under this part, there is hereby created an "Advisory Council on Health Insurance for the Aged" (hereinafter referred to as the "Advisory Council").

(b) The Advisory Council shall conduct a continuing study and investigation of the programs of insurance provided for in this part and in title XVIII of the Social Security Act with a view to assisting in the formulation and implementation of national policy in the field of health care for the aged. The Council shall from time to time make reports to the President (for transmittal by him to the Congress) of its findings and recommendations resulting from such study and investigation.

(c) In order to assist the Advisory Council in carrying out its duties the Council is authorized to employ, in accordance with the civil service laws and the Classification Act of 1949, as amended, such staff as may be necessary.

(d) The Advisory Council shall consist of twenty-four members who shall be appointed by the President. Members of the Advisory Council shall be selected by the President with a view to providing a broad representation, among the membership of the Council, of the insurance industry, labor, business, medical profession, consumers, and other interested elements of society. Not less than four members of the Council shall be persons whom the insurance industry shall have approved as having adequate insurance experience. The members of the Advisory Council shall elect a member of the Advisory Council as Chairman thereof.

(e) Each 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 only for the remainder of such term, and except that the terms of office of the members first taking office shall expire, as designated by the President 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. A member shall not be eligible to serve continuously or more than two terms.

(f) Members of the Advisory Council, while attending meetings or conferences of the Council or otherwise serving on business of the Council shall receive compensation at rates fixed by the Secretary, but not exceeding $100 per day, and while so serving away from their homes or regular places of business they may be allowed travel expenses, including per diem in lieu of subsistence, as authorized by section 5 of the Administrative Expenses Act of 1946 (5 U.S.C. 73b-2) for persons in the Government service employed intermittently. The Advisory Council shall meet as frequently as it deems necessary, but not less often than two times per year. Upon request of thirteen or more of its members, it shall be the duty of the Chairman to call a meeting of the Advisory Council.

EXEMPTION OF ASSOCIATION FROM CERTAIN LAWS

SEC. 236. (a) The association and each carrier which is a member of the association shall, with respect to so much of its business operations as is concerned exclusively with offering for sale, selling, and administering, the standard policy or alternative policies (as described in section 232 (c)), be considered to be a charitable and benevolent institution, and as such, be exempt from— (1) regulation by a State or political subdivision thereof, (2) Federal or State income taxation,

(3) All State taxes on such policies or premiums payable on account thereof, and

(4) the provisions of the Act of July 2, 1890, as amended (known as the Sherman Act); the Act of October 15, 1914, as amended (known as the Clayton Act); and the Federal Trade Commission Act.

(b) Any operation of a carrier which is the subject of an exemption provided in subsection (a) shall be subject to the exclusive regulation of the Secretary.

COMPLIANCE PROVISIONS

SEC. 237. (a) If, after reasonable opportunity for hearing extended to the carrier concerned, it is determined by the Secretary that a carrier has failed to comply with any requirement of this part, or with any regulation promulgated pursuant to this part, the Secretary may declare either that the membership of such carrier in the association is permanently terminated or that such membership is suspended until such time as the Secretary is satified that such carrier will no longer fail to comply with such requirement or such regulation. (b) During any period that the membership of any carrier is inoperative by reason of action taken by the Secretary pursuant to subsection (a), such carrier shall not be entitled to any exemption provided by section 236(a), and shall not, for any purpose, represent itself as being a member of the association. Any carrier who, in offering for sale any health insurance policy, falsely represents itself to be a member of the association shall be fined not more than $10,000.

HEARINGS AND JUDICIAL REVIEW

SEC. 238. (a) Prior to promulgating any regulation, issuing any order, making any finding of fact, or taking any other action under this part which affects the association or any member thereof, the Secretary shall hold an appropriate hearing on the matter and provide adequate opportunity to representatives of the association and to any interested member thereof to be present and present testimony at such hearing.

(b) If the association, or any member thereof, is dissatisfied with any action of the Secretary on which a hearing is required to be held under subsection (a), the association, or such member, as the case may be, may appeal to the United States District Court for the District of Columbia by filing with such court a notice of appeal. The jurisdiction of the court shall attach upon the filing of such notice. A copy of the notice of appeal shall be forthwith transmitted by the clerk of the court to the Secretary, or any officer designated by him for that purpose. The Secretary shall thereupon file in the court the record of the proceedings on which he based his action. The action of the Secretary shall be reviewed by the court (on the record) in accordance with the provisions of the Administrative Procedure Act."

[H.R. 11865, 88th Cong., 2d sess.]

AMENDMENT No. 1178

AMENDMENTS Intended to be proposed by Mr. GORE for himself. Mr. MCCARTHY, Mr. BARTLETT, Mr. CLARK, Mr. DODD, Mr. DOUGLAS, Mr. HART, Mr. HUMPHREY, Mr. MCINTYRE, Mr. MCNAMARA, Mr. MUSKIE, Mr. RANDOLPH, Mr. RIBICOFF, and Mr. WILLIAMS of New Jersey) to H.R. 11865, an Act to increase benefits under the Federal Old-Age, Survivors, and Disability Insurance System, to provide child's insurance benefits beyond age 18 while in school, to provide widow's benefits at age 60 on a reduced basis, to provide benefits for certain individuals not otherwise eligible at age 72, to improve the actuarial status of the Trust Funds, to extend coverage, and for other purposes, viz: On the first page of the bill, strike out lines 3 and 4, and insert in lieu thereof the following:

TABLE I-SOCIAL SECURITY AMENDMENTS

SEC. 101. This title may be cited as the "Social Security Amendments of 1964".

On page 3, line 3, strike out "SEC. 2." and insert in lieu thereof "SEC. 102.". On page 6, line 13, strike out "SEC. 3." and insert in lieu thereof "SEC. 103." On page 15, line 11, strike out "SEC. 4." and insert in lieu thereof "SEC. 104.' On page 20, line 10, strike out "SEC. 5." and insert in lieu thereof "SEC. 105. On page 22, line 11, strike out "SEC. 6." and insert in lieu thereof "SEC. 106.". On page 28, line 5, strike out "section 6" and insert in lieu thereof "section 106".

On page 28, line 16, strike out "SEC. 7." and insert in lieu thereof "SEC. 107.". On page 29, line 2, strike out "SEC. 8." and insert in lieu thereof "SEC. 108." On page 31, line 18, strike out "SEC. 9." and insert in lieu thereof "SEC. 109.”.

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