Home > 105th Congressional Bills > H.R. 2544 (rfs) To improve the ability of Federal agencies to license federally owned inventions. ...

H.R. 2544 (rfs) To improve the ability of Federal agencies to license federally owned inventions. ...

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  1st Session
                                H. R. 2544

To improve the quality, availability, diversity, personal privacy, and 
            innovation of health care in the United States.



                             June 19, 2003

 Mr. Rohrabacher introduced the following bill; which was referred to 
 the Committee on Ways and Means, and in addition to the Committees on 
Energy and Commerce, and the Judiciary, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned


                                 A BILL

To improve the quality, availability, diversity, personal privacy, and 
            innovation of health care in the United States.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,


    (a) Short Title.--This Act may be cited as the ``Medical 
Independence, Privacy, and Innovation Act of 2003''.
    (b) Table of Contents.--The table of contents of this Act is as 

Sec. 1. Short title; table of contents.

Sec. 101. Findings.
Sec. 102. Deduction of medical expenses for individuals.
Sec. 103. Medical checking accounts.
Sec. 104. Decrease in minimum annual deductibles under a high 
                            deductible health plan for purposes of 
                            Archer MSAs.
                       TITLE II--MEDICAL PRIVACY

Sec. 201. Findings.
Sec. 202. Modification of regulations on privacy of individually 
                            identifiable health information.
                      FOOD, DRUG, AND COSMETIC ACT

Sec. 301. Definition of drug.
Sec. 302. Striking of effectiveness requirement; modifications 
                            regarding patent listings, patent 
                            certifications, and thirty-month rule.
Sec. 303. Granting of exclusive or partially exclusive licenses 
                            regarding inventions made with Federal 
Sec. 304. Importation of certain drugs.



    The Congress finds the following:
            (1) Current law confers tax benefits for health insurance 
        provided as an employee fringe benefit, but no similar tax 
        benefit for health insurance purchased by individuals thus 
        creating an unfair bias toward employer provided medical 
        insurance plans and an unfair discrimination against 
        individuals who seek marketplace alternatives to health 
            (2) Current law confers a tax benefits for third party 
        payment of medical expenses but no similar tax benefits for 
        direct individual payment of medical expenses. This has 
        promoted employer-provided third party payment systems and 
        discouraged direct doctor-patient relationships.
            (3) The current tax treatment of medical expenses has 
        resulted in a greatly distorted marketplace in medical 
        insurance where decreased opportunities for private personal 
        health insurance has reduced competition both for medical 
        insurance and health care services. This has resulted in an 
        increased costs of both health insurance and health care 
        services and fostered over use of low high premium health 
        insurance plans.
            (4) The current tax treatment of medical expenses has 
        restricted the freedom of individuals to exercise direct 
        control over their health care dollars. The exclusion from 
        gross income for employer-provided health care with no 
        corresponding tax benefit for health insurance and health care 
        costs bourn by individuals represents a strong incentive toward 
        employers group plans.
            (5) The tax codes preferment of employer-provided group 
        plans has triggered a marketplace response reflected in the 
        significant increases in large health care delivery, and the 
        creation of a relative few health care conglomerates in lieu of 
        thousands of competitive providers of medical insurance and 
        services. This has increasingly placed medical decisions in the 
        hands of health care bureaucracies and has eroded doctor-
        patient relationships.
            (6) The role of the marketplace in both medical insurance 
        and medical services should be strengthened. The discriminatory 
        tax policies in the area of health insurance and health care 
        should be ended. Private individuals should be able to contract 
        for their health insurance and health care delivery in 
        atmosphere free of discriminatory tax pressures. High 
        deductible low premium as well as catastrophic alternatives in 
        health insurance should be viable options for all Americans.


    (a) In General.--Subsection (a) of section 213 of the Internal 
Revenue Code of 1986 (relating to treatment of medical, dental, etc., 
expenses) is amended to read as follows:
    ``(a) Allowance of Deduction.--There shall be allowed as a 
deduction the expenses paid during the taxable year, not compensated 
for by insurance or otherwise, for medical care of the taxpayer, his 
spouse, or a dependent (as defined by section 152).''.
    (b) Deduction Allowed in Computing Adjusted Gross Income.--
Subsection (a) of section 62 of such Code is amended by inserting after 
paragraph (18) the following new paragraph:
            ``(19) Medical care.--The deduction allowed by section 
    (c) Conforming Amendments.--
            (1) Section 56(b)(1) of such Code is amended by striking 
        subparagraph (B).
            (2) Section 67(b) is amended by striking paragraph (5).
            (3) Section 72(t)(B) of such Code is amended by striking 
        ``to the extent such distributions do not exceed the amount'' 
        and inserting ``which are''.
            (4) Sections 104(a) and 105(b) of such Code are both 
        amended by striking ``(and not in excess of)''.
    (d) Effective Date.-- The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.


    (a) In General.--Subchapter F of chapter 1 of the Internal Revenue 
Code of 1986 (relating to exempt organizations) is amended by adding at 
the end the following:


                              ``Sec. 530A. Medical checking accounts.


    ``(a) General Rule.--A medical checking account shall be exempt 
from taxation under this subtitle. Notwithstanding the preceding 
sentence, any medical checking account shall be subject to the taxes 
imposed by section 511 (relating to imposition of tax on unrelated 
business income of charitable, etc., organizations). Rules similar to 
the rules of paragraphs (2) and (4) of section 408(e) shall apply to 
medical checking accounts, and any amount treated as distributed under 
such rules shall be treated as not used to pay qualified medical 
    ``(b) Deduction for Contributions.--
            ``(1) In general.--In the case of an individual, there 
        shall be allowed as a deduction an amount equal to the 
        aggregate amount paid in cash during the taxable year to a 
        medical checking account of the taxpayer.
            ``(2) Limitations.--
                    ``(A) Maximum annual contribution.--The deduction 
                under paragraph (1) for a taxable year shall not exceed 
                $1,000 ($2,000 in the case of a joint return).
                    ``(B) Maximum allowable deduction based on balance 
                in account.--No deduction shall be allowed for a 
                taxable year for any amount contributed to a medical 
                checking account if the sum of such amount plus the 
                balance in the account determined as the end of the 
                taxable year would exceed $2,000 ($4,000 in the case of 
                married individuals filing a joint return, a surviving 
                spouse, and a head of household).
    ``(c) Credit for Contributions.--
            ``(1) In general.--In the case of an individual, there 
        shall be allowed as a credit against the tax imposed by this 
        chapter for the taxable year an amount equal to the credit 
        amount with respect to contributions made during the taxable 
        year to the medical checking account of the taxpayer.
            ``(2) Credit amount.--For purposes of paragraph (1), the 
        credit amount is the lesser of--
                    ``(A) the total amount of contributions to the 
                medical checking account for the taxable year reduced 
                by the amount of contributions allowed as a deduction 
                under subsection (b), and
                    ``(B) $1,000.
    ``(d) Definitions and Special Rules.--For purposes of this 
            ``(1) Medical checking account.--The term `medical checking 
        account' means a trust created or organized in the United 
        States for the exclusive benefit of a qualified individual or 
        his beneficiaries, but only if the written governing instrument 
        creating the trust meets the following requirements:
                    ``(A) Except in the case of a rollover contribution 
                described in paragraph (4)(C), no contribution will be 
                accepted unless it is in cash, or it exceeds $1,000 
                ($2,000 in the case of married individuals filing a 
                joint return, a surviving spouse, and a head of 
                    ``(B) The trustee is a bank (as defined in section 
                408(n), an insurance company (as defined in section 
                816), or another person who demonstrates to the 
                satisfaction of the Secretary that the manner in which 
                such person will administer the trust will be 
                consistent with the requirements of this section.
                    ``(C) No part of the trust assets will be invested 
                in life insurance contracts.
                    ``(D) The assets of the trust will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
                    ``(E) The interest of an individual in the balance 
                in his account is nonforfeitable.
            ``(2) Qualified medical expenses.--The term `qualified 
        medical expenses' means, with respect to an account holder, 
        amounts paid by such holder for medical care (as defined in 
        section 213(d) for such individual, the spouse of such 
        individual, and any dependent (as defined in section 152 of 
        such individual, but only to the extent such amounts are not 
        compensated for by insurance or otherwise (including 
        distributions from an Archer MSA which are not includible in 
        gross income by reason of section 220(f)(1)).
            ``(3) Change in filing status.--In the case of a taxpayer 
        whose filing status changes during the taxable year, the 
        limitation under subparagraph (B) shall be apportioned among 
        the filing statuses of the taxpayer in accordance with 
        regulations prescribed by the Secretary.
            ``(4) Certain rules to apply.--Rules similar to the 
        following rules shall apply for purposes of this section:
                    ``(A) Section 219(d)(2) (relating to no deduction 
                for rollovers).
                    ``(B) Section 219(f)(3) (relating to time when 
                contributions deemed made).
                    ``(C) Section 219(f)(5) (relating to employer 
                    ``(D) Section 220(f)(5) (relating to rollover 
                    ``(E) Section 220(f)(7) (relating to transfer of 
                account incident to divorce).
                    ``(F) Section 220(f)(8) (relating to treatment 
                after death of account holder).
                    ``(G) Section 408(g) (relating to community 
                property laws).
                    ``(H) Section 408(h) (relating to custodial 
    ``(e) Tax Treatment of Distributions.--
            ``(1) Amounts used for qualified medical expenses.--Any 
        amount paid or distributed out of a medical checking account 
        which is used exclusively to pay qualified medical expenses of 
        any account holder shall not be includible in gross income.
            ``(2) Inclusion of amounts not used for qualified medical 
        expenses.--Any amount paid or distributed out of a medical 
        checking account which is not used exclusively to pay the 
        qualified medical expenses of the account holder shall be 
        included in the gross income of such holder.
            ``(3) Additional tax on distributions not used for 
        qualified medical expenses.--For purposes of this section, 
        rules similar to the rules of section 220(f)(4) shall apply.
            ``(4) Coordination with medical expense deduction.--For 
        purposes of determining the amount of the deduction under 
        section 213, any payment or distribution out of a medical 
        checking account for qualified medical expenses shall not be 
        treated as an expense paid for medical care.
    ``(f) Reports.--The Secretary may require the trustee of a medical 
checking account to make such reports regarding such account to the 
Secretary and to the account holder with respect to contributions, 
distributions, and such other matters as the Secretary determines 
appropriate. The reports required by this subsection shall be filed at 
such time and in such manner and furnished to such individuals at such 
time and in such manner as may be required by the Secretary.''.
    (b) Tax on Excess Contributions.--Section 4973 of such Code 
(relating to tax on excess contributions to individual retirement 
accounts, certain section 403(b) contracts, and certain individual 
retirement annuities) is amended--
            (1) in subsection (a) by striking ``or'' at the end of 
        paragraph (3), by inserting ``or'' at the end of paragraph (4), 
        and by inserting after paragraph (4) the following:
            ``(5) a medical checking account (within the meaning of 
        section 530A(d)),'', and
            (2) by adding at the end the following new subsection:
    ``(g) Excess Contributions to Medical Checking Accounts.--For 
purposes of this section, in the case of medical checking accounts 
(within the meaning of section 530A(d)), the term `excess 
contributions' means the sum of--
            ``(1) the aggregate amount contributed for the taxable year 
        to the accounts (other than rollover contributions referred to 
        in section 530A(d)(4)(C)) which is neither excludable from 
        gross income under section 106(b) nor allowable as a deduction 

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