SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Catastrophic Health Coverage 
Promotion Act''.

SEC. 2. DEMONSTRATION PROJECTS.

    (a) In General.--Not later than 6 months after the date of 
enactment of this Act, the Secretary of Health and Human Services 
(referred to in this Act as the ``Secretary'') shall establish not more 
than 6 demonstration projects in accordance with the provisions of this 
section to provide--
            (1) in conjunction with the program under title XVIII of 
        the Social Security Act (42 U.S.C. 1395 et seq.), health 
        insurance coverage for individuals who--
                    (A) are not eligible for benefits under Medicare or 
                Medicaid program and who have exceeded $10,500 in out-
                of-pocket health care costs in a year, or an adjusted 
                amount based on the average out-of-pocket costs of 
                individuals with catastrophic illnesses in a State for 
                the year, but in no case less than $8,000 and not more 
                than $15,000 in out-of-pocket health care costs during 
                such year; or
                    (B) were receiving benefits under Medicare or 
                Medicaid but who have exhausted their eligibility for 
                such benefits and any additional private health 
                insurance coverage; and
            (2) in conjunction with the program under title XIX of the 
        Social Security Act (42 U.S.C. 1396 et seq.), health insurance 
        coverage for catastrophic health care expenses, including 
        prevention benefits, to individuals who do not have health 
        insurance coverage.
    (b) Design of Demonstration Projects.--The Secretary shall ensure 
that the demonstration projects carried out under this section are 
conducted in a manner that will, to the greatest extent practicable, 
allow for comparisons of the information resulting from the evaluations 
of such programs under subsection (e).
    (c) Number and Requirements for Demonstration Projects.--
            (1) Number.--The Secretary shall establish, in accordance 
        with this subsection--
                    (A) not less than 2 demonstration projects to 
                provide health insurance coverage under subsection 
                (a)(1);
                    (B) not less than 2 demonstration projects to 
                provide catastrophic coverage under subsection (a)(2); 
                and
                    (C) if funds remain available after complying with 
                subparagraphs (A) and (B), additional demonstration 
                projects under subsection (a).
            (2) Requirements for projects under subsection (a)(1).--In 
        designing the demonstration projects under subsection (a)(1), 
        the Secretary shall--
                    (A) use State risk pools;
                    (B) use reinsurance mechanisms for small 
                businesses;
                    (C) use public or private arrangements for the 
                provision of affordable health insurance coverage to 
                cover catastrophic health care expenses; and
                    (D) use any combination of such arrangements.
            (3) Requirements for projects under subsection (a)(2).--
                    (A) In general.--In designing the demonstration 
                projects under subsection (a)(2) the Secretary shall--
                            (i) use a catastrophic health insurance 
                        product administered by private health plans 
                        that shall--
                                    (I) be sold in both the individual 
                                and small group insurance markets;
                                    (II) offer a deductible of not less 
                                than $5,000 for an individual and 
                                $7,500 for a family, a deductible that 
                                is indexed to the individual's or 
                                family's income level, or an adjusted 
                                deductible amount based on the average 
                                out-of-pocket costs of individuals or 
                                families, but in no case lower than 
                                $2,500 for an individual and $5,000 for 
                                a family;
                                    (III) include preventive health 
                                services based on recommendations made 
                                by the United States Preventive Task 
                                Force, including not less than 1 
                                primary care provider's office visit; 
                                and
                                    (IV) require reasonable co-
                                insurance as determined by the State 
                                administering the demonstration 
                                project, in consultation with the 
                                Secretary;
                            (ii) subsidize such catastrophic coverage 
                        to provide an affordable product and may 
                        provide subsidies on sliding scale, to offer a 
                        more affordable product for individuals in the 
                        individual and group market earning below 200 
                        percent of the Federal poverty level; and
                            (iii) consider subsidizing the cost of such 
                        catastrophic coverage for small businesses that 
                        do not offer employer-sponsored insurance by 
                        using reinsurance mechanisms or other public 
                        and private partnerships.
                    (B) Eligibility.--An individual or small business 
                shall be eligible to participate in a demonstration 
                project under subsection (a)(2) only if--
                            (i) such individual did not have health 
                        insurance coverage within the 1-year period 
                        immediately prior to applying for coverage 
                        under the demonstration project; or
                            (ii) such small business did not offer 
                        employer-sponsored health insurance coverage 
                        within such 1-year period.
    (d) Duration; Evaluation.--
            (1) Duration.--The Secretary shall complete the 
        demonstration projects established under this section not later 
        than 6 and \1/2\ years after the date of enactment of this Act.
            (2) Evaluation.--During the 18-month period beginning after 
        the date that is 5 years after the date the demonstration 
        projects have all been established under this section, the 
        Secretary shall complete an evaluation of such demonstration 
        projects established to determine--
                    (A) the ability of individuals and small businesses 
                to access health insurance coverage;
                    (B) the length of time individuals participated in 
                and maintained such coverage;
                    (C) with respect to each geographic area of a 
                demonstration project--
                            (i) the impact on the amount of charity or 
                        other uncompensated care provided by health 
                        care providers who participated in the 
                        demonstration projects;
                            (ii) the impact on insurance rates in the 
                        commercial market; and
                            (iii) the impact on the number of medical 
                        related bankruptcies; and
                    (D) if additional information is needed and whether 
                the projects should be continued or modified, as the 
                Secretary determines appropriate.
    (e) Application; Site Selection.--
            (1) Application.--A State may submit an application to the 
        Secretary to participate in any of the demonstration projects 
        established under this section at such time, in such manner, 
        and containing such information as the Secretary may require.
            (2) In general.--In selecting States to participate in a 
        demonstration project, the Secretary shall--
                    (A) consider the current structure of a State's 
                programs to assist individuals with catastrophic health 
                care costs and individuals that do not have health 
                insurance coverage;
                    (B) determine what parameters for the demonstration 
                project will be least intrusive to the State's existing 
                such structures; and
                    (C) consider the overall health status of the 
                State, the age demographics of individuals with high 
                health care costs and of individuals who do not have 
                health insurance coverage, and the historical health 
                care costs and efficiency of the State's health care 
                system.
            (3) Specific site.--The Secretary shall select as a 
        demonstration project site the State in which (according to the 
        Hospital Referral Region of Residence, 1994-1995, as listed in 
        the Dartmouth Atlas of Health Care 1998) the largest 
        metropolitan areas of the State had the lowest percentage of 
        Medicare beneficiary deaths in a hospital when compared to the 
        largest metropolitan areas of each other State and the 
        percentage of enrollees who experienced intensive care during 
        the last 6 months of life was 21.5 percent.
    (f) Funding.--
            (1) In general.--Notwithstanding sections 1901, 1903(a)(1) 
        and 1923 of the Social Security Act (42 U.S.C. 1396, 
        1396a(a)(13)(A)(iv), 1396b(a)(1), 1396r-4), the Secretary shall 
        expend not less than $50,000,000 of the total amount of 
        unexpended State DSH allotments under section 1923 of such Act 
        for each of fiscal years 2007 through 2012 for purposes of 
        carrying out the demonstration projects authorized under this 
        section.
            (2) Use of other funding sources.--A State may contribute 
        other public funds (other than otherwise obligated Federal 
        funds), and an employer may contribute private funds, to a 
        demonstration project funded under this section.
    (g) Reports to Congress.--
            (1) Preliminary report.--Not later than 3 years after the 
        date of enactment of this Act, the Secretary shall submit to 
        the Committee on Finance of the Senate and the Committee on 
        Ways and Means of the House of Representatives a preliminary 
        report on the progress made in the demonstration projects 
        established under this section.
            (2) Interim report.--Not later than 30 months after the 
        implementation of the demonstration projects established under 
        this section, the Secretary, in consultation with the 
        participants in such demonstration projects, shall submit to 
        the Committees described in paragraph (1), an interim report on 
        such demonstration projects.
            (3) Final report.--Not later than the date on which all 
        demonstration projects established under this section end, the 
        Secretary shall submit to the Committees described in paragraph 
        (1) a final report on such demonstration projects that includes 
        the results of the evaluation conducted under subsection (f) 
        and recommendations for appropriate legislative changes.
Catastrophic Health Coverage Promotion Act - Requires the Secretary of Health and Human Services to establish demonstration projects to provide health care coverage to individuals who: (1) are not eligible for Medicaid or Medicare benefits and have exceeded $10,500 in out-of-pocket health care costs in a year or an adjusted amount based on the average out-of-pocket costs of individuals with catastrophic illnesses in a state for the year; or (2) were receiving Medicare or Medicaid benefits but who have exhausted their eligibility and any additional private health insurance coverage. Directs the Secretary, in designing such demonstration projects, to use: (1) state risk pools; (2) reinsurance mechanisms for small businesses; (3) public or private arrangements for the provision of affordable health insurance coverage to cover catastrophic health care expenses; and (4) any combination of such arrangements.

Requires the Secretary to establish demonstration projects to provide health insurance coverage for catastrophic health benefits to individuals who do not have health insurance coverage. Directs the Secretary, in designing such demonstration projects, to: (1) use a catastrophic health insurance product administered by private health insurance plans with a deductible indexed to income level or an adjusted deductible amount based on average out-of-pocket costs; and (2) subsidize such catastrophic coverage and allow subsidies on a sliding scale to offer an affordable product for individuals earning below 200% of the federal poverty level.

Establishes evaluation requirements for the projects.
A bill to determine successful methods to provide protection from catastrophic health expenses for individuals who have exceeded health insurance coverage for uninsured individuals, and for other purposes.