A BILL TO BE ENTITLED
AN ACT TO ENACT THE NORTH CAROLINA FAIR SHARE HEALTH insurance ACCESS PROGRAM AND TO APPROPRIATE FUNDS FOR THIS PURPOSE. 
The General Assembly of North Carolina enacts:
SECTION 1.(a)  Findings. – This act is the North Carolina Fair Share Health Insurance Access Act of 2006.  The General Assembly finds:
(1)	More than one million residents of this State who are under the age of 65 are uninsured for their health care.
(2)	State and federal funds currently used to provide health care through Medicaid, other public benefit programs, and uncompensated care could be better directed to maximize federal funds and improve efficiency in the delivery of and payment for health care services.
(3)	The premium cost for health insurance that provides comprehensive health care benefits is unaffordable to many small employers and to many individuals and their dependents.
(4)	A reasonable approach to lowering the cost of health care coverage includes the requirement that all residents obtain coverage and all employers participate in covering their employees, and that all but the lowest income individuals and families, and the smallest of employers must pay their fair share of the cost of providing coverage.
(5)	In order to provide coverage at an affordable cost requires the cooperation and contribution of insurers, employers, individuals, and the State.
SECTION 1.(b)  Intent. – It is the intent of the General Assembly to enact the North Carolina Fare Share Health Insurance Access Program and to make available the resources necessary to implement the Program such that all residents of North Carolina shall have comprehensive, affordable health insurance or other health coverage by the year 2010.  
SECTION 2.(a)  Program Established. – There is established the North Carolina Fair Share Health Insurance Access Program.  The Program is established for budgetary purposes only in the Department of Administration.  Program implementation shall be phased in over a four-year period commencing July 1, 2006.  The Program shall be fully implemented not later than July 1, 2010.  
SECTION 2.(b)   Program Components. – The Program shall include the following basic components to be implemented in accordance with this act:
(1)	The establishment of the NC Health Link Authority, an independent entity governed by a board of directors to link individuals and small groups with affordable, high‑quality health insurance products. NC Health Link shall have  responsibility for implementing the Program.
(2)	The requirement that all residents of North Carolina age 18 years and older obtain health insurance coverage through their employer, through NC Health Link, through government-funded health insurance programs such as Medicaid, Medicare, or NC Health Choice, or through other public or private avenues of access. Coverage must be verified on NC Income Tax forms. Failure to obtain coverage will result in a monetary penalty.
(3)	The requirement that all employers with 11 or more employees contribute to or provide health insurance coverage to their employees. Failure to provide coverage will result in a fair‑share contribution and free‑rider surcharge imposed on the noncomplying employer.
(4)	Expansion of the State Medical Assistance Program to cover children in families with income up to three hundred percent (300%) of the federal poverty level.
(5)	Expansion of the NC Health Choice Program to cover children in families with income up to three hundred percent (300%) of the federal poverty program.
(6)	State subsidized premium assistance to low‑income individuals and families.
(7)	Increases in rates provided to hospitals and health care providers for providing care to Medicaid recipients.
(8)	To make available affordable health insurance for young adults, age 19 through 26 years through young adult health benefit plans. These plans shall be designed to provide affordable coverage to those young adults who do not otherwise have access to health insurance coverage subsidized by an employer.
SECTION 3.(a)  Definitions.  
(1)	'Authority'. – The North Carolina Health Link Authority.
(2)	'Board'. – The Board of Directors of the North Carolina Health Link Authority.
(3)	'Creditable coverage'. – Coverage of an individual under any of the following:
a.	A group health benefit plan.
b.	Health insurance coverage.
c.	Medicare, Medicaid, and NC Health Choice.
d.	Any other health benefit plan, as defined under G.S. 58‑3‑167.
(4)	'Fund'. – The North Carolina Fair Share Fund.
(5)	'Health benefit plan' and 'Insurer' have the meanings applied in G.S. 58‑3‑167.
(6)	'Program'. – The North Carolina Fair Share Health Insurance Access Program.	
SECTION 3.(b)  North Carolina Health Link Authority Established. – There is established the North Carolina Health Link Authority, an independent entity.  The Authority shall be governed by a board of directors composed of 11 members, five of whom shall be appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives, five of whom shall be appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate, and one of whom shall be appointed at large by the Governor.  The members of the board shall be appointed for four-year terms commencing July 1, 2006, except that four of the initial public appointees by the General Assembly shall serve initial terms of three years. Vacancies in the membership of the board shall be filled by the appointing authority for the unexpired portion of the term. Members of the board shall be subject to removal from office in like manner as are State, county, town, and district officers. Immediately after such appointment, the board shall enter upon the performance of their duties. The board shall annually elect one of its members as chair and another as vice‑chair and shall also elect annually a secretary, or a secretary‑treasurer, who may or may not be a member of the board. The chair or in the chair's absence, the vice‑chair shall preside at all meetings of the board. In the absence of both the chair and vice‑chair, the board shall appoint a chair pro tempore, who shall preside at such meetings. Six directors shall constitute a quorum for the transaction of the business of the Authority, and no vacancy in the membership of the board shall impair the right of a quorum to exercise all the rights and perform all the duties of the Authority. The favorable vote of at least a majority of the members of the board present at any meeting is required for the adoption of any resolution or motion or for other official action. The members of the board are entitled to the travel expenses, subsistence allowances, and compensation provided in G.S. 138‑5. These expenses and compensation shall be paid from funds provided under this Article, or as otherwise provided.
SECTION 3.(c)  Duties. – The board shall have the following duties:
(1)	Develop a plan of operation for the Authority sufficient to administer the Program in accordance with this act.
(2)	Certify and offer health insurance products of high value and good quality. 
(3)	Link individuals and small businesses with health insurance products approved by the board. 
(4)	Procure health insurance plans that are eligible for premium assistance payments in accordance with criteria set by the board. The criteria shall include consideration of appropriate geographic distribution of providers, set a sliding‑scale premium contribution payment schedule for enrollees, and establish procedures for determining eligibility and enrolling residents. No premium shall be charged to individuals that earn less than one hundred percent (100%) of the federal poverty level. 
(5)	Propose reform of insurance laws to facilitate provision of health benefit plans at the lowest premium rate while maintaining quality coverage and financial stability.
(6)	Review how indigent care is currently funded in North Carolina and make recommendations for reforms that will promote efficiency and redirect funds to supporting the Program. 
(7)	Develop a plan for outreach and education that is designed to reach all residents of this State, particularly low‑income populations. In developing this outreach plan, the board shall consult with the Director of the Division of Medical Assistance, representatives of any insurer eligible to receive premium subsidy payments under the Program, representatives of hospitals that serve a high number of uninsured individuals, and representatives of low‑income health care advocacy organizations.
(8)	Review on an annual basis the operation of the Program and its effectiveness in ensuring that all residents of this State have access to health care coverage.
SECTION 4.(a)  Eligibility of Residents. – Uninsured residents of the State are eligible to participate in the Program only if:
(1)	An individual or family's household income does not exceed three hundred percent (300%) of the federal poverty level;
(2)	The individual has been a resident of the State for the six months prior to applying for Program benefits;
(3)	The individual is not eligible for Medicare, Medicaid, and NC Health Choice;
(4)	The individual's or family member's employer has not in the last six months preceding application provided insurance coverage for which the individual is eligible and for which the employer covers at least twenty percent (20%) of the annual premium cost of a family health insurance plan, or at least thirty‑three percent (33%) of an individual health insurance plan; and
(5)	The individual has not accepted a financial incentive from the individual's employer to decline the employer's subsidized health insurance plan.
SECTION 4.(b)  Premium Assistance. – Premium assistance payments shall be made in accordance with a schedule set annually by the board in consultation with the Division of Medical Assistance.  Premium assistance payments shall be supported from  appropriations by the General Assembly and shall be  made directly by the board to eligible health insurance plans.  Premium assistance payments shall be made only on behalf of enrollees who purchase health plans with no annual deductible.  Premium assistance payments may be suspended if the board finds that the amounts available for premium assistance are insufficient to meet the projected costs of new enrollees.
SECTION 5.(a)  Employer Requirements. – 
(1)	Effective January 1, 2010, all employers doing business in this State and employing not fewer than 11 full‑time  employees shall contribute to or arrange for the purchase of health insurance coverage for their employees. Health insurance coverage shall be subject to the approval of the Authority.  Employers and their employees shall sign and submit to the Authority Health Insurance Responsibility Disclosure forms indicating whether the employer has offered to pay for or arrange for the purchase of health insurance for its employees and whether the employee has declined or accepted the coverage. Employer contributions for the purchase of health insurance coverage shall be based on wages paid and the number of employees. Contribution rates shall be established by the Authority, based in part on the size of the employer.
(2)	If an employer subject to this section does not offer employees health insurance through a group health plan to which the employer makes a fair and reasonable contribution, as determined by the Authority, then the employer shall be assessed a per‑employee fair-share contribution. The amount of a "fair and reasonable" contribution determined by the NC Health Link Authority shall not exceed two hundred ninety-five dollars ($295.00) per employee per year.
(3)	In addition to the fair-share contribution applicable under subdivision (2) of this section, a "free‑rider" surcharge shall be imposed on employers who do not contribute to or arrange for the purchase of health insurance for employees and whose employees use a certain amount of free care during a one‑year period. The "free‑rider" surcharge does not apply with respect to employees for whom the employer contributes to employees' insurance obtained through the Authority. The Authority shall determine the amount of the "free‑rider" surcharge as a percentage of costs to the State of free‑care services provided.
(4)	Effective January 1, 2010, employers with 11 or more full‑time employees shall offer to their employees Section 125 cafeteria plans so that employees may purchase health insurance products and other benefits on a pretax basis.
SECTION 5.(b)  Individual Requirements. – Effective January 1, 2010, the following individuals over the age of 18 years shall obtain and maintain creditable coverage:
(1)	Residents of North Carolina.
(2)	Individuals who have terminated any prior creditable coverage, provided that creditable coverage is deemed affordable for the individual according to the schedule established by NC Health Link Authority.
SECTION 5.(c)  Penalties. – 
(1)	Individuals. – Every person who files a tax return as a resident of this State, either separately or jointly with a spouse, shall indicate on the return, in a manner prescribed by the Secretary of Revenue, whether the person had creditable coverage in force for each of the 12 months of the taxable year for which the return is filed. If the person fails to indicate or indicates that the person did not have the coverage in force, then a penalty shall be assessed on the return, as provided in subdivision (2) of this subsection. An individual subject to this penalty may seek an exemption from the penalty requirements if imposition of the penalty would create extreme hardship. Criteria for extreme hardship shall be determined by the Authority.
(2)	For the first tax year of implementation of the Program, the penalty assessed against an individual as provided under subdivision (1) of this subsection shall be the loss of the State personal tax exemption, or one‑half of the personal exemption for an individual filing jointly with a spouse. For subsequent tax years, the penalty shall increase to a portion, not to exceed fifty percent (50%) of what the individual would have paid for an affordable premium.
SECTION 6.  Effective January 1, 2008, every insurer authorized to issue or deliver a health benefit plan under Chapter 58 of the General Statutes may contract to sell a health benefit plan policy with an employer only if the policy is offered by the employer to all full‑time employees of that employer who live in this State.
SECTION 7.  Medicaid and NC Health Choice Expansion. – It is the intent of the General Assembly to expand eligibility for health care services under the State Medical Assistance Program, and under the NC Health Choice Program to children whose family income does not exceed three hundred percent (300%) of the federal poverty level.  The Department of Health and Human Services shall seek necessary waivers from the Centers for Medicare and Medicaid (CMS) and shall submit proposed amendments to the State Medical Assistance Plan to CMS.
SECTION 8.  The Department of Insurance shall work with the Authority to compare Program goals with current insurance laws and shall recommend necessary changes to the law for enactment by the General Assembly.  
SECTION 9.  There is established the NC FAIR SHARE FUND in the Office of the State Treasurer.  Monies deposited to the Fund from employer contributions, General Fund appropriations, and other sources shall be used exclusively to support the North Carolina Fair Share Health Insurance Access Program.  It is the intent of the General Assembly that a portion of the proceeds of the excise tax on alcohol, and the cigarette tax, shall be earmarked for the NC FAIR SHARE FUND.
SECTION 10.  The North Carolina Health Link Authority shall report on its progress in developing the North Carolina Fair Share Health Insurance Access Program not later than April 1, 2007, and annually thereafter.  The Authority's report may include recommendations for proposed legislation and funding necessary to carry out the intent of this act.
SECTION 11.  There is appropriated from the General Fund to the  Department of Administration the sum of twenty‑five thousand dollars ($25,000) for the 2006‑2007 fiscal year.  These funds shall be allocated for expenses of the North Carolina Health Link Authority.
SECTION 12.  This act is effective when it becomes law.