Sec. 611. State innovation programs

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If the Secretary determines that a State has reduced the average per capita premium for health insurance coverage in the small group market in year 3, in year 6, or year 9 (as defined in subsection (c)) below the premium baseline for such year (as defined paragraph (2)), the Secretary shall pay the State an amount equal to the product of— bonus premium percentage (as defined in paragraph (3)) for the State, market, and year; and the maximum State premium payment amount (as defined in paragraph (4)) for the State, market, and year.

If the Secretary determines that a State has reduced the average per capita premium for health insurance coverage in the individual market in year 3, in year 6, or in year 9 below the premium baseline for such year, the Secretary shall pay the State an amount equal to the product of— bonus premium percentage for the State, market, and year; and the maximum State premium payment amount for the State, market, and year. For purposes of this subsection, the term premium baseline means, for a market in a State— for year 1, the average per capita premiums for health insurance coverage in such market in the State in such year; or for a subsequent year, the baseline for the market in the State for the previous year under this paragraph increased by a percentage specified in accordance with a formula established by the Secretary, in consultation with the Congressional Budget Office and the Bureau of the Census, that takes into account at least the following:

The inflation in the costs of inputs to health care services in the year. Historic growth rates, during the 10 years before year 1, of per capita premiums for health insurance coverage. Historic average changes in the demographics of the population covered that impact on the rate of growth of per capita health care costs. For purposes of this subsection, the term bonus premium percentage means, for the small group market or individual market in a State for a year, such percentage as determined in accordance with the following table based on the State’s premium performance level (as defined in subparagraph (B)) for such market and year:

The bonus premium percentage for a State is— For year 3 if the premium performance level of the State is— For year 6 if the premium performance level of the State is— For year 9 if the premium performance level of the State is— 100 percent at least 8.5% at least 11% at least 13.5% 50 percent at least 6.38%, but less than 8.5% at least 10.38%, but less than 11% at least 12.88%, but less than 13.5% 25 percent at least 4.25%, but less than 6.38% at least 9.75%, but less than 10.38% at least 12.25%, but less than 12.88% 0 percent less than 4.25% less than 9.75% less than 12.25%.

For purposes of this subsection, the term premium performance level means, for a State, market, and year, the percentage reduction in the average per capita premiums for health insurance coverage for the State, market, and year, as compared to the premium baseline for such State, market, and year. For purposes of this subsection, the term maximum State premium payment amount means, for a State for the small group market or the individual market for a year, the product of— the proportion (as determined by the Secretary), of the number of nonelderly individuals lawfully residing in all the States who are enrolled in health insurance coverage in the respective market in the year, who are residents of the State; and the amount available for obligation from amounts appropriated under subsection

(d)for such market with respect to performance in such year. The Secretary shall establish, by rule and consistent with this subsection, a methodology for computing the average per capita premiums for health insurance coverage for the small group market and for the individual market in each State for each year beginning with year 1. Under such methodology, the Secretary shall provide for the following adjustments (in a manner determined appropriate by the Secretary): An adjustment so as not to take into account enrollees who are not lawfully present in the United States and their premium costs. An adjustment so as to increase per capita premiums to remove the impact of premium subsidies made directly by a State to reduce health insurance premiums. As a condition of receiving a payment under paragraph (1), a State must agree to submit aggregate, non-individually identifiable data to the Secretary, in a form and manner specified by the Secretary, for use by the Secretary to determine the State’s premium baseline and premium performance level for purposes of this subsection. If the Secretary determines that a State has reduced the percentage of uninsured nonelderly residents in year 5, year 7, or year 9, below the uninsured baseline (as defined in paragraph (2)) for the State for the year, the Secretary shall pay the State an amount equal to the product of— bonus uninsured percentage (as defined in paragraph (3)) for the State and year; and the maximum uninsured payment amount (as defined in paragraph (4)) for the State and year. For purposes of this subsection, and subject to subparagraph (B), the term uninsured baseline means, for a State, the percentage of nonelderly residents in the State who are uninsured in year 1. The Secretary may, at the written request of a State, adjust the uninsured baseline for States for a year to take into account unanticipated and exceptional changes, such as an unanticipated migration, of nonelderly individuals into, or out of, States in a manner that does not reflect substantially the proportion of uninsured nonelderly residents in the States involved in year 1. Any such adjustment shall only be done in a manner that does not result in the average of the uninsured baselines for nonelderly residents for all States being changed. For purposes of this subsection, the term bonus uninsured percentage means, for a State for a year, such percentage as determined in accordance with the following table, based on the uninsured performance level (as defined in subparagraph (B)) for such State and year: The bonus uninsured percentage for a State is— For year 5 if the uninsured performance level of the State is— For year 7 if the uninsured performance level of the State is— For year 9 if the uninsured performance level of the State is— 100 percent at least 10% at least 15% at least 20% 50 percent at least 7.5% but less than 10% at least 13.75% but less than 15% at least 18.75% but less than 20% 25 percent at least 5% but less than 7.5% at least 12.5% but less than 13.75% at least 17.5% but less than 18.75% 0 percent less than 5% less than 12.5% less than 17.5%. For purposes of this subsection, the term uninsured performance level means, for a State for a year, the reduction (expressed as a percentage) in the percentage of uninsured nonelderly residents in such State in the year as compared to the uninsured baseline for such State for such year. For purposes of this subsection, the term maximum State uninsured payment amount means, for a State for a year, the product of— the proportion (as determined by the Secretary), of the number of uninsured nonelderly individuals lawfully residing in all the States in the year, who are residents of the State; and the amount available for obligation under this subsection from amounts appropriated under subsection

(d)with respect to performance in such year. The Secretary shall establish, by rule and consistent with this subsection, a methodology for computing the percentage of nonelderly residents in a State who are uninsured in each year beginning with year 1. Such methodology shall treat as uninsured those residents who do not have health insurance coverage or other creditable coverage (as defined in section 9801(c)(1) of the Internal Revenue Code of 1986), except that such methodology shall rely upon data on the nonelderly and uninsured populations within each State in such year provided through population surveys conducted by federal agencies. Such methodology shall exclude individuals who are 65 years of age or older. Such methodology shall exclude individuals not lawfully present in the United States. As a condition of receiving a payment under paragraph (1), a State must agree to submit aggregate, non-individually identifiable data to the Secretary, in a form and manner specified by the Secretary, for use by the Secretary in determining the State’s uninsured baseline and uninsured performance level for purposes of this subsection. For purposes of this section: The term group health plan has the meaning given such term in section 9832(a) of the Internal Revenue Code of 1986. The term health insurance coverage has the meaning given such term in section 9832(b)(1) of the Internal Revenue Code of 1986. Except as the Secretary may otherwise provide in the case of group health plans that have fewer than 2 participants as current employees on the first day of a plan year, the term individual market means the market for health insurance coverage offered to individuals other than in connection with a group health plan. The term Secretary means the Secretary of Health and Human Services. The term small group market means the market for health insurance coverage under which individuals obtain health insurance coverage (directly or through any arrangement) on behalf of themselves (and their dependents) through a group health plan maintained by an employer who employed on average at least 2 but not more than 50 employees on business days during a calendar year. The term State means any of the 50 States and the District of Columbia. The terms year 1 , year 2 , year 3 , and similar subsequently numbered years mean 2014, 2015, 2016, and subsequent sequentially numbered years. From any funds in the Treasury not otherwise appropriated, there is appropriated for payments under subsection (a)(1)(A)— $18,000,000,000 with respect to performance in year 3; $5,000,000,000 with respect to performance in year 6; and $2,000,000,000 with respect to performance in year 9. Funds appropriated under clause

(i)shall remain available until expended. Subject to clause (ii), from any funds in the Treasury not otherwise appropriated, there is appropriated for payments under subsection (a)(1)(B)— $7,000,000,000 with respect to performance in year 3; $2,000,000,000 with respect to performance in year 6; and $1,000,000,000 with respect to performance in year 9. Of the funds appropriated under clause

(i)that are not expended or obligated by the end of the year following the year for which the funds are appropriated— 75 percent shall remain available until expended for payments under subsection (a)(1)(B); and 25 percent shall remain available until expended for payments under subsection (a)(1)(A). From any funds in the Treasury not otherwise appropriated, there is appropriated for payments under subsection (b)(1)— $10,000,000,000 with respect to performance in year 5; $3,000,000,000 with respect to performance in year 7; and $2,000,000,000 with respect to performance in year 9. Funds appropriated under subparagraph

(A)shall remain available until expended. Payments under this section shall be made in a form and manner specified by the Secretary in the year after the performance year involved.