Prior Reform Efforts Involving State Incentives

VII. Key Issues: Regulation & Reform >> C. Health Reform >> Affordable Care Act (ACA) >> ACA Repeal >> Pending Legal/Constitutional Challenges >> IRS Challenge (Exchange Subsidies) >> Prior Reform Efforts Involving State Incentives (last updated 11.16.15)

Overview

Health industry reformers have been pondering for decades how best to motivate states to cooperate with national legislation. Professors Robert Rich and William White ask, in their 1997 book Health Policy, Federalism, and the American States, “suppose a state fails to comply with national standards? What assurances are there that the political will exists at the federal level to impose sanctions?”
The first documented attempts to use financial inducements to persuade states to cooperate with national reform efforts are found in the early 1970’s. The concept of state coercion has endured throughout several subsequent reform plans.

Application to IRS Challenge Cases

Do Obamacare’s Challengers Have A ‘Nutty,’ ‘Stupid’ Or ‘Screwy’ Interpretation Of The Law? “Were Obamacare architects incapable of using ‘sticks’ masquerading as ‘carrots’ to coerce states into setting up Exchanges?… Any serious student of reform legislation would inform us that Congress quite easily may have included these provisions in the 2010 law.  In fact, national health reform advocates have over 40 years of history of embedding similar arm-twisting techniques in their proposals.” Conover, Chris. (Forbes, 2.18.15)

History of Reform Efforts

President Richard Nixon’s 1974 Comprehensive Health Insurance Program

In his health reform address to Congress, President Nixon noted that under his plan “failure on the part of States to enact the necessary authorities would prevent them from receiving any Federal support of their State-administered health assistance plan.”

1973-74 National Healthcare Act

Six identical bills were offered by Reps. Omar Burleson, John Moakley, Trent Lott, Yvonne Burke, Gus Yatron, and Don Fuqua. Failure to develop a “Qualified State Healthcare Plan” would result in loss of Title X (Maternal and Child Health Services) and Title XIX (Medicaid) funding.

President Gerald Ford’s 1976 Financial Assistance for Health Care Act

Ford proposed to eliminate Medicaid and “15 categorical Federal Health programs” and return the funds as block grants to the states. To qualify for a return of these funds, the state must develop a Federally approved “annual health care plan.”

Senator Paul Wellstone’s American Health Security Act of 1993

Under this proposal, if a state program created under the law failed to meet federal requirements, it would be placed into full or partial receivership under the jurisdiction of a federal board. The bill funded reform by eliminating existing programs (e.g., Medicare, Medicaid, Tricare, and the Federal Employees Health Benefit Program). In the case of a state under receivership, the proposal fails to describe a mechanism for providing insurance to that state’s residents.

(2) CURRENT PROGRAM RECEIPTS- Notwithstanding any other provision of law, there are hereby appropriated to the Trust Fund for each fiscal year (beginning with fiscal year 1995) the amounts that would otherwise have been appropriated to carry out the following programs (and any other Federal program identified by the Board, in consultation with the Secretary of the Treasury, as providing for payment for health services the payment of which may be made under this Act): (A) The medicare program, under parts A and B of title XVIII of the Social Security Act (other than amounts attributable to any premiums under such parts). (B) The medicaid program, under State plans approved under title XIX of such Act. (C) The Federal employees health benefit program, under chapter 89 of title 5, United States Code. (D) The CHAMPUS program, under chapter 55 of title 10, United States Code.”
(2) CONSEQUENCES OF FAILURE TO COMPLY.— If the Board finds that a State plan submitted under paragraph (1)** does not meet the requirements for approval under this section or that a State health security program or specific portion of such program, the plan for which was previously approved, no longer meets such requirements, the Board shall provide notice to the State of such failure and that unless corrective action is taken within a period specified by the Board, the Board shall place the State health security program (or specific portions of such program) in receivership under the jurisdiction of the Board.
(1) IN GENERAL.—The Board shall review plans submitted under subsection (a) and determine whether such plans meet the requirements for ap proval. The Board shall not approve such a plan unless it finds that the plan (or State law) provides, consistent with the provisions of this Act, for the following: (A) Payment for required health services for eligible individuals in the State in accordance with this Act. B) Establishment of a State Health Security Advisory Council, in accordance with sub8 section (d). (C) Adequate administration, including the designation of a single State agency responsible for the administration (or supervision of the administration) of the program. (D) The establishment of a State health security budget and establishment of an approval process for capital expenditures. (E) Establishment of payment methodologies (consistent with subtitle B of title VI). (F) Assurances that individuals have the freedom to choose practitioners and other health care providers for services covered under this Act. (G) A procedure for carrying out long-term regional management and planning functions, including establishment of District Health Advisory Councils in accordance with section 406, with respect to the delivery and distribution of health care services that— (i) ensures participation of consumers of health services and providers of health services, (ii) takes into account the recommendations of District Health Advisory Councils under section 406, and (iii) gives priority to the most acute shortages and maldistributions of health personnel and facilities and the most serious deficiencies in the delivery of covered services and to the means for the speedy alleviation of these shortcomings, and (iv) encourages the integration of preventive public health and primary care services, incorporating epidemiologic data and community-based clinical results. (H) The licensure and regulation of all health providers and facilities to ensure compliance with Federal and State laws and to promote quality of care. (I) Establishment of a quality review system in accordance with section 502.

Representative Thomas Andrew’s National Health Security Act of 1993

According to the Congressional Research Service, this proposal repeals: (1) titles XVIII (Medicare) and XIX (Medicaid) of the Social Security Act; (2) provisions of the Internal Revenue Code relating to hospital insurance; and (3) specified provisions of Federal law relating to the Civilian Health and Medical Program of the Uniformed Services and to health benefits for Federal officials and employees. As with the Wellstone proposal, state programs created under the law would be placed into full or partial receivership under the jurisdiction of a federal board if they failed to meet federal requirements, and in the case of a state under receivership, the proposals failed to describe a mechanism for providing insurance to that state’s residents.

SEC. 311. STATE PROGRAMS. (a) Submission of Programs- (1) IN GENERAL- Not later than October 1, 1996, each State shall submit to the Board the State program in the State. (2) REGIONAL PROGRAMS- Any State may join with neighboring States to submit to the Board a regional program in lieu of a State program, as described in section 314.
(b) REVIEW AND APPROVAL OF PROGRAMS- The Board shall review programs submitted under subsection (a) and determine whether such programs meet the requirements for approval, not later than October 1, 1997. The Board shall not approve such a program unless it finds that the program provides, consistent with the provisions of this Act, for– (1) adequate financing of health care services and long-term care services covered under this Act through a designated fund, including the annual submission of the State program budget to the Board, (2) adequate administration, including the designation of a single nonprofit State agency responsible for administration of the program, and sufficient provisions to ensure against fraud and abuse, (3) the establishment of– (A) an institution reimbursement negotiation board to negotiate global operating, capital, and health training budgets with hospitals and other health care and long-term care institutions, (B) a practitioner reimbursement negotiation board (with membership including State government representatives, consumers, general practice physicians, specialists, and nonphysician practitioners) to negotiate reimbursement rates for participating providers, and (C) at the State’s option, a State advisory board (with broad representation of health policy experts, institutional providers, practitioners, and consumers) to generally oversee and review the performance of the State program, (4) assurances that individuals have the freedom to choose practitioners and other health care providers for services covered under this Act, and (5) an organized grievance procedure available to consumers through which complaints about the organization and administration of the State program may be filed, heard, and resolved.
(c) OPERATIONAL STATUS- A State program in a State shall not be considered operational unless it is approved and remains approved under subsection (b).
(d) FAILURE TO COMPLY WITH THIS ACT- Whenever the Board, after reasonable notice and opportunity for hearing to the designated State agency finds that in the administration of the State program there is a failure to comply with any provision of this Act, the Board may– (1) withhold further payments to the State under section 402 and may limit such withholding to specific portions of such program affected by the failure, or (2) place the State program, or specific portions of such program, in receivership under the jurisdiction of the Board, until such failure has been corrected. (e) JUDICIAL REVIEW- (1) IN GENERAL- If any State is dissatisfied with the Board’s action in denying approval of such State’s program or finding a failure under subsection (d) with respect to such program, such State may, within 60 days after notice of such action, file with the United States court of appeals for the circuit in which such State is located a petition for review of that action. A copy of the petition shall be forthwith transmitted by the clerk of the court to the Board. The Board thereupon shall file in the court the record of the proceedings upon which the Board’s action was based, as provided in section 2112 of title 28, United States Code.
SEC. 423. FEDERAL HEALTH TRUST FUND. FUNDING: (2) TRANSFER OF FUNDS- All amounts, not otherwise obligated, that remain in the Federal Hospital Insurance Trust Fund (Medicare Part A) and the Federal Supplemental Medical Insurance Trust Fund (Medicare Part B) on the first day of the fiscal year 2000 shall be transferred to the Trust Fund.
(3) APPROPRIATION OF ADDITIONAL SUMS- For fiscal years beginning after September 30, 1999, there are hereby authorized to be appropriated, and are appropriated, to the Trust Fund such additional sums as equal the amounts appropriated with respect to title XIX (Medicaid) of the Social Security Act, section 1079 of title 10 (Contracts for medical care for spouses and children), United States Code (CHAMPUS), and chapter 89 of title 5 (FEHB), United States Code, as in effect for fiscal year 1999. Such amount shall be adjusted each fiscal year by the increase in the Consumer Price Index (as determined by the Department of Labor) for the previous fiscal year.

Senator Pete Domenici’s Health Care Reform Act of 1994

This proposal would limit noncooperative states’ receipt of “premium discounts” to prior levels of Medicaid funding.

SEC. 311. STATE HEALTH DISCOUNT PROGRAMS.
(a) IN GENERAL- To be certified by the Secretary as meeting the requirements of this Act, each State shall include within the State health reform plan a State administered program, consistent with this subtitle and such other requirements as determined necessary by the Secretary and issued in regulations, under which eligible persons shall receive premium assistance (hereafter in this part referred to as ‘health discounts’) for purchasing health care coverage from AHPs (Accountable Health Plans).
SEC. 103. STATE HEALTH REFORM PROGRAM REQUIREMENTS. (a) IN GENERAL- To be certified by the Secretary as meeting the requirements of this section, a State health reform program must include the following requirements, in addition to any other requirements established by the Secretary by regulation for carrying out this Act. (c) ENFORCEMENT- If a State does not have a certified State health reform program, Federal spending for health discounts in the State under title III shall be limited to the level of Federal spending that would have occurred in such State under title XIX (Medicaid) of the Social Security Act (42 U.S.C. 1396 et seq.) if this Act had not been enacted.

Representative James McDermott’s American Health Security Acts (proposed 1993, 1995, 1997, 1999, 2001, 2003, and 2005)

McDermott’s seven proposals require states to establish a “State health security program for providing for health care services to the residents of the State in accordance with this Act,” and carry out specific functions. As with the Wellstone and Andrews plans, if a state fails to meet federal standards, its health program is place under full or partial receivership by a federal board. If a state is placed under receivership, the proposal does not describe a mechanism for providing insurance to its residents, as several federal programs are terminated to fund the act.

SEC. 801. AMERICAN HEALTH SECURITY TRUST FUND. (a) IN GENERAL- There is hereby created on the books of the Treasury of the United States a trust fund to be known as the American Health Security Trust Fund. (2) CURRENT PROGRAM RECEIPTS- Notwithstanding any other provision of law, there are hereby appropriated to the Trust Fund for each fiscal year (beginning with fiscal year 2004) the amounts that would otherwise have been appropriated to carry out the following programs: (A) The medicare program, under parts A and B of title XVIII of the Social Security Act (other than amounts attributable to any premiums under such parts). (B) The medicaid program, under State plans approved under title XIX of such Act. (C) The Federal employees health benefit program, under chapter 89 of title 5, United States Code. (D) The TRICARE program (formerly known as the CHAMPUS program), under chapter 55 of title 10, United States Code. (E) The maternal and child health program (under title V of the Social Security Act), vocational rehabilitation programs, programs for drug abuse and mental health services under the Public Health Service Act, programs providing general hospital or medical assistance, and any other Federal program identified by the Board, in consultation with the Secretary of the Treasury, to the extent the programs provide for payment for health services the payment of which may be made under this Act.
SEC. 101. ESTABLISHMENT OF A STATE-BASED AMERICAN HEALTH SECURITY PROGRAM. (a) IN GENERAL- There is hereby established in the United States a State-Based American Health Security Program to be administered by the individual States in accordance with Federal standards specified in, or established under, this Act.
SEC. 311. STATE PROGRAMS. (d) FAILURE TO COMPLY WITH THIS ACT- Whenever the Board, after reasonable notice and opportunity for hearing to the designated State agency finds that in the administration of the State program there is a failure to comply with any provision of this Act, the Board may– (1) withhold further payments to the State under section 402 and may limit such withholding to specific portions of such program affected by the failure, or (2) place the State program, or specific portions of such program, in receivership under the jurisdiction of the Board, until such failure has been corrected.

Senator Ted Kennedy’s 1995 Affordable Health Care for All Americans Act

 Under this proposal, a state that didn’t establish itself as a “Participating State” would be subject to “immediate sanctions,” “corrective actions,” and eventual forced conversion to a Participating State.

SEC. 1200. PARTICIPATING STATE. (a) IN GENERAL- As used in this title, the term ‘participating State’ means a State that meets the applicable requirements of this Act, including the requirement for the establishment of a market reform program described in this subtitle and the administration of subsidies as provided for in title V.
(b) REFORM PLAN- To become a participating State under this section, a State shall submit to the Secretary a reform plan describing a health care system meeting the requirements of this Act that the State intends to establish (or has established), update such plan at time periods and in a manner specified by the Secretary, and implement such plan.
(c) DEADLINE FOR PARTICIPATION- If a State is not a participating State by January 1, 1999, the provisions of section 1521 (relating to the Federal government’s role in the case of default by a State) shall apply to such State.
SEC. 1521. FEDERAL ROLE IN THE CASE OF A DEFAULT BY A STATE.
If a State fails to become a participating State under section 1200 or, having become a participating State, the State fails to continue to meet the requirements of such section, the Secretary shall, after notice and opportunity for correction, impose intermediate sanctions, order corrective actions, and may, if necessary to fulfill the purposes of this Act, carry out activities under this Act in the same manner as a participating State would carry out such activities.

President Bill Clinton’s 1993-1994 Health Security Act

Buried deep within the Clinton Library working papers, are documents demonstrating that the Clinton White House also hoped to coerce states into compliance. One document details the meeting notes from December 1993:
“(T)he President wants to use withholding federal funds as lever to get all states to participate.”
On page 203 is this revelation:
“State’s [sic] have no incentives to run the system since the Federal government guarantees health care to all their citizens and we enforce the budget. Heavy tax penalties are the principal tool to assure state action.”
In the subsequent bill, noncompliant states indeed faced discrimination. A Heritage Foundation analysis explains that if a state’s failure to participate threatens residents’ access to “comprehensive benefits,” the “Secretary is authorized to withhold federal health appropriations, such as payments to academic health centers, federal research funds, or federal payments to hospitals in the state.”

Wyden-Bennett Healthy Americans Act, 2007 and 2009

A bi-partisan reform effort co-sponsored by Senator William Bennett, this reform package encouraged states to create a new agency — the Health Help Agency (HHA). The HHA was assigned “responsibility” and “authorization” for administering, calculating, receiving, adjusting, and distributing premium subsidies for HAPI (“Healthy Americans Private Insurance”) plans. If a state refused to establish an HHA, the federal government offered residents “fallback” plans. However, notably absent in the plan was authorization for the federal government to issue subsidies for those owning “fallback” plans (i.e., the bill fails to establish a federal HHA).

Selected Text of the Proposal

TITLE V–STATE HEALTH HELP AGENCIES. SEC. 501. ESTABLISHMENT. As a condition of receiving payment under section 503, a State shall, not later than the date that is 2 years after the date of enactment of this Act, establish or designate a State agency, to be known as the State “Health Help Agency” (referred to in this Act as a “HHA”) to– (1) carry out the administration of HAPI plans to individuals in such State; and (2) carry out the functions described in section 502.
SEC. 502. RESPONSIBILITIES AND AUTHORITIES. (c) Determination and Administration of HAPI Plan Subsidies.–Each HHA shall oversee the determination and administration of HAPI plan subsidies by– (1) informing State residents about how subsidy eligibility determinations are made; (2) obtaining necessary information about income from individuals and Federal and State agencies; (3) making eligibility determinations on an individual basis and informing individuals of such determinations; (4) establishing a process by which an individual may appeal an eligibility determination; (5) collecting from health insurance issuers an administrative fee for joining the HHA system and offering a HAPI plan in a State; (6) collecting premium payments made by, or on behalf of, covered individuals, and remitting such payments to the HAPI plans; and (7) collecting Federal premium subsidies for covered individuals and remitting such subsidies to HAPI plans.
SEC. 123. DEFINITIONS AND SPECIAL RULES. (c) Other Procedures To Determine Subsidies.–The Secretary shall promulgate regulations to be used by HHAs to calculate the premium subsidies under section 121 and personal responsibility subsidies under section 122 for individuals whose modified adjusted gross income described in subsection (a)(2) is significantly lower than the modified adjusted gross income of the year involved.
SEC. 502. RESPONSIBILITIES AND AUTHORITIES. c) Determination and Administration of HAPI Plan Subsidies.–Each HHA shall oversee the determination and administration of HAPI plan subsidies by–(1) informing State residents about how subsidy eligibility determinations are made; (2) obtaining necessary information about income from individuals and Federal and State agencies; (3) making eligibility determinations on an individual basis and informing individuals of such determinations; (4) establishing a process by which an individual may appeal an eligibility determination; (5) collecting from health insurance issuers an administrative fee for joining the HHA system and offering a HAPI plan in a State; (6) collecting premium payments made by, or on behalf of, covered individuals, and remitting such payments to the HAPI plans; and (7) collecting Federal premium subsidies for covered individuals and remitting such subsidies to HAPI plans.
SEC. 631. STATE RESPONSIBILITIES. (a) GENERAL REQUIREMENTS.—As a condition of receiving payment under section 503, each State shall— (1) designate or create a Health Help Agency as described in title V; (2) ensure that the HAPI plans offered in the State— (A) are sold only through the State HHA (except for employer-sponsored health coverage plans described under section 103 offered by employers); and (B) comply with the requirements of this Act; (3) ensure that health insurance issuers offering a HAPI plan in such State comply with the requirements described in section 621; (4) make risk-adjusted payments to all health insurance issuers and employers offering a HAPI plan in such State to account for the specific population covered by the plan, in accordance with guidelines established by the Secretary; (5) implement methods to check enrollment status and enroll individuals in HAPI plans, such as through the Department of Motor Vehicles of the State, the enrollment of children in elementary and secondary schools, the voter registration authority of the State, and other checkpoints determined appropriate by the State;… Each State shall– (3) implement mechanisms, which may not include revocation or ineligibility for coverage under a HAPI plan, to enforce the responsibility of each adult individual to purchase HAPI plan coverage for such individual and any dependent children of such individual; and (4) implement a mechanism to automatically enroll individuals in a HAPI plan who present in emergency departments without health insurance.
SEC. 641. FEDERAL GUARANTEE OF ACCESS TO COVERAGE. (a) Federal Guarantee.– (1) In general.–If a State does not establish an HHA in compliance with title V by the date that is 2 years after the date of enactment of this Act, the Secretary shall ensure that each individual has available, consistent with paragraph (2), a choice of enrollment in at least 2 HAPI plans in the coverage area in which the individual resides. In any such case in which such plans are not available, the individual shall be given the opportunity to enroll in a fallback HAPI plan. (2) Requirement for different plan sponsors.–The requirement in paragraph (1) is not satisfied with respect to a coverage area if only 1 entity offers all the HAPI plans in the area. (b) Contracts.– (1) In general.–The Secretary shall enter into contracts under this subsection with entities for the offering of fallback HAPI plans in coverage areas in which the guarantee under subsection (a) is not met. (2) Competitive procedures.–Competitive procedures (as defined in section 4(5) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(5))) shall be used to enter into a contract under this subsection. (c) Fallback HAPI Plan.–For purposes of this section, the term “fallback HAPI plan” means a HAPI plan that– (1) meets the requirements described in section 111(b)* and does not provide actuarially equivalent coverage described in section 111(c)**; and (2) meets such other requirements as the Secretary may specify.

[*111(B) a list of such additional benefits, items, or services, and the prices applicable to such additional benefits, items, and services, is displayed in a manner that is separate from the description of the standardized benefits, items, or services required under the plan under this section (and consistent with the manner in (which such items are displayed by medigap policies) and that enables a consumer to identify such additional benefits, items, and services and the cost associated with such; and
**111(C) no premium subsidies are available under subtitle C for any portion of the premiums for a HAPI plan that are attributable to such additional benefits, items, or services]

Subtitle F—Federal Financing Responsibilities. SEC. 651. APPROPRIATION FOR SUBSIDY PAYMENTS. There is authorized to be appropriated and there is appropriated for each fiscal year such sums as may be necessary to fund the insurance premium subsidies under section 121.*** The Public Health Trust Fund shall be available for that fiscal year for the following purposes: PROVIDING PREMIUM AND PERSONAL RESPONSIBILITY CONTRIBUTION SUBSIDIES.—For making appropriations authorized under section 651 of the Healthy Americans Act for providing premium and personal responsibility contribution subsidies in accordance with section 122 of such Act.
SEC. 673. MEDICAID AND CHIP. TRANSITION TO COVERAGE UNDER HAPI PLANS; REQUIREMENT TO PROVIDE SUPPLEMENTAL COVERAGE; TERMINATION OF UNNECESSARY PROVISIONS. SEC. 1943. (a) TRANSITION AND SUPPLEMENTAL COVERAGE REQUIREMENTS.—The Secretary shall provide technical assistance to States and health insurance issuers of HAPI plans to ensure that individuals receiving medical assistance under State Medicaid plans under this title or child health assistance under child health plans under title XXI are— (1)informed of— (2) (A) the guarantee of private coverage for essential services for all Americans established by the Healthy Americans Act; and (B) each individual’s personal responsibility— for health care prevention; (ii) to enroll (or to be enrolled on their behalf) in a HAPI plan through the applicable State HHA during an open enrollment period; and  (iii) to submit necessary documentation to their State HHA so that the HHA may determine the individual’s eligibility for premium and personal responsibility contribution subsidies;
SEC. 601. INDIVIDUAL RESPONSIBILITY TO ENSURE HAPI PLAN COVERAGE. (a) OPEN SEASON.—An adult individual, on behalf of such individual and the dependent children of such individual, shall— (1) enroll in a HAPI plan through the HHA of the individual’s State of residence during an open enrollment period; and (2) submit necessary documentation to the applicable HHA so that such HHA may determine individual eligibility for premium and personal responsibility contribution subsidies.
SEC. 621. INSURER RESPONSIBILITIES. (1) IN GENERAL.—A health insurance issuer offering a HAPI plan in a State shall not receive subsidy payments from the applicable State HHA unless such issuer agrees to use standardized common claim forms prescribed by the applicable State HHA.
SEC. 9511. HEALTHY AMERICANS PUBLIC HEALTH TRUST FUND. EXPENDITURES FROM TRUST FUND.—With respect to each fiscal year for which transfers are made under subsection (b), amounts in the Healthy Americans Public Health Trust Fund shall be available for that fiscal year for the following purposes: (1) PROVIDING PREMIUM AND PERSONAL RESPONSIBILITY CONTRIBUTION SUBSIDIES.—For making appropriations authorized under section 651 of the Healthy Americans Act for providing premium and personal responsibility contribution subsidies in accordance with section 122 of such Act.
SEC. 3431. DEFINITIONS AND SPECIAL RULES. (8) HAPI PLAN PREMIUM AMOUNT.—The term ‘HAPI plan premium amount’ means, with respect to any individual, the monthly premium for the HAPI plan under which such individual is enrolled, determined after taking into account any subsidy provided to such individual under section 131 (re: Wellness Discount) of the Healthy Americans Act.

***SEC. 121. ELIGIBILITY FOR PREMIUM SUBSIDIES.
(a) Individuals and Families At or Below the Poverty Line.–For any calendar year, in the case of a covered individual who is determined to have a modified adjusted gross income that is at or below 100 percent of the poverty line, as applicable to a family of the size involved, the covered individual is entitled under this section to an income- related premium subsidy equal to the basic premium subsidy amount. (b) Partial Subsidy for Other Individuals and Families.– (1) In general.–For any calendar year, in the case of a covered individual who is determined to have a modified adjusted gross income that is greater than 100 percent of the poverty line, as applicable to a family of the size involved, but below the applicable percentage of the poverty line, as applicable to a family of the size involved, the covered individual is entitled under this section to an income-related premium subsidy equal to the basic premium subsidy amount reduced by the amount determined under paragraph (2). (2) Amount of reduction.–The amount of the reduction determined under this paragraph is the amount that bears the same ratio to the basic premium subsidy amount as– (A) the excess of– (i) such individual’s modified adjusted gross income, over (ii) an amount equal to 100 percent of the poverty line as applicable to a family of the size involved, bears to (B) the excess of– (i) an amount equal to the applicable percentage of the poverty line as applicable to a family of the size involved, over (ii) an amount equal to 100 percent of the poverty line as applicable to a family of the size involved. (3) Applicable percentage.–For purposes of this subsection, the applicable percentage is 400 percent. (c) Basic Premium Subsidy Amount.–For purposes of this section, the term “basic premium subsidy amount” means, with respect to any individual, the lesser of– (1) the annual premium for the HAPI plan under which the individual is a covered individual; or (2) the weighted average of the premium for HAPI plans of the same class of coverage (as described in section 111(d)(1)) as the individual’s in the applicable coverage area. (d) Change in Status Notification.– (1) In general.–If an individual’s modified adjusted income changes such that the individual becomes eligible or ineligible for a subsidy under this section, the individual shall report that change to the HHA of the individual’s State of residence not more than 60 days after the change takes effect. If an individual reports the change within 60 days under the preceding sentence, the individual’s HAPI plan coverage shall be deemed credible coverage for the purposes of maintaining coverage for preexisting conditions. (2) Adjustment.–The HHA shall adjust the premium subsidy  of such individual to take effect on the first month after the date of the notification under paragraph (1) for which the next premium payment would be due from the individual. (e) Catastrophic Event.–A State may develop mechanisms to ensure that covered individuals do not have a break in coverage due to a catastrophic financial event.
SEC. 122. ELIGIBILITY FOR PERSONAL RESPONSIBILITY CONTRIBUTION. SUBSIDIES. (a) Full Subsidy.–To meet the eligibility requirements under subtitle B for an HHA, for any taxable year, in the case of a covered individual who is determined to have a modified adjusted gross income that is below 100 percent of the poverty line as applicable to a family of the size involved, an HHA shall provide to such an individual a subsidy equal to the full amount of any personal responsibility contributions applicable to such individual. (b) Partial Subsidy.–To meet the eligibility requirements under subtitle B for an HHA, for any taxable year, in the case of a covered individual who is determined to have a modified adjusted gross income that is at or above 100 percent of the poverty line as applicable to a family of the size involved, an HHA may provide to such an individual a subsidy equal to the part of the amount of any personal responsibility contributions applicable to such individual.

SEC. 123. DEFINITIONS AND SPECIAL RULES. (a) Determination of Modified Adjusted Gross Income.– (1) In general.–In this subtitle, the term “modified adjusted gross income” means adjusted gross income (as defined in section 62 of the Internal Revenue Code of 1986)– (A) determined without regard to sections 86, 135, 137, 199, 221, 222, 911, 931, and 933 of such Code; and (B) increased by– (i) the amount of interest received or accrued during the taxable year which is exempt from tax under such Code; and (ii) the amount of any social security benefits (as defined in section 86(d) of such Code) received or accrued during the taxable year. (2) Taxable year to be used to determine modified adjusted gross income.–In applying this subtitle to determine an individual’s annual premiums, the covered individual’s modified adjusted gross income shall be such income determined using the individual’s most recent income tax return or other information furnished to the Secretary by such individual, as the Secretary may require. (b) Poverty Line.–In this subtitle, the term ”poverty line” has the meaning given such term in section 673(2) of the Community Health Services Block Grant Act (42 U.S.C. 9902(2)), including any revision required by such section. (c) Other Procedures To Determine Subsidies.–The Secretary shall promulgate regulations to be used by HHAs to calculate the premium  subsidies under section 121 and personal responsibility subsidies under  section 122 for individuals whose modified adjusted gross income described in subsection (a)(2) is significantly lower than the modified adjusted gross income of the year involved. (d) Special Rule for Unlawfully Present Aliens.–A health insurance issuer shall remit to the Federal Government any funding, including any subsidy payments, received by such issuer from the Federal Government on behalf of any adult alien who is unlawfully present in the United States. (e) Special Rule for Aliens.–The Secretary of Homeland Security may not extend or renew an alien’s eligibility for status in the United States or adjust the status of an alien in the United States if the alien owes– (1) a premium payment for a HAPI plan that is past due; or (2) a penalty incurred for failing to pay such a premium. (f) No Discharge in Bankruptcy.–In the case of any bankruptcy filed by or on behalf of any person after the date that is 2 years after the date of enactment of this Act, under title 11, United States Code, any penalty imposed with respect to such person for failure to pay a HAPI plan premium shall not be subject to discharge under such title.

In the text, the language “HAPI plan” is linked with “states” or “HHA” in 13 places. The fallback HAPI plans are given sparse attention.

  • HAPI plans and supplemental health insurance options provided by the State HHA: p. 17
  • HAPI plan provided through the State HHA: p. 18, 43, 44, 52
  • HAPI plan offered through an HHA: p. 21
  • HAPI plan through the applicable state HHA: p. 146
  • HAPI plans…offered through the HHA: p. 20
  • HAPI plan offered through the HHA: p. 21
  • HAPI plan offered through a HHA: p. 27
  • HAPI plan offered in the State: p. 119
  • Healthy American plan offered through an HHA: p. 24
  • HAPI plan that is offered in a State: p. 39

Nixon’s Influence on Subsequent Reform Proposals

In his 2009 New York Times piece titled “Missing Richard Nixon,” Paul Krugman points out that many of Nixon’s reform ideas are found in Democrat proposals.
Researcher Joshua Madden agrees. Writing in 2010, he observes that “Nixon proposed many of the ideas for health care reform that Democratic politicians would continue to advocate for over the course of four decades.” Madden believes Nixon’s influence on subsequent reform was carried across administrations through Nixon contemporaries like Alan Greenspan and Senators Daniel Patrick Moynihan, Joe Biden, Ted Kennedy, and Chris Dodd.

  • “Most of Nixon‘s health care proposals would not be seriously addressed until the Clinton administration,” he writes, noting that Nixon advisor Moynihan was intimately involved with the Clinton reform plan.
  • “Even factoring the Clintons into the equation,” Madden continues, “the Obama administration appears to be the group that took Nixon‘s proposals most seriously.”
  • Health policy experts have reached the same conclusion. Stuart Altman, architect of health care reform policy for five administrations, says the Obama plan draws “extensively from legislation offered by President Nixon in January 1974.” And political economist Robert Reich writes in Salon that “in February 1974, Republican President Richard Nixon proposed, in essence, today’s Affordable Care Act.”

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