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Reauthorizes SCHIP permanently, makes other program changes, and establishes a tax credit toward the purchase of health insurance for children in families up to 350% of the federal poverty level (FPL) who are not eligible for public coverage.

The bills would add a new section to ERISA providing for rules governing Association Health Plans (AHPs). AHPs are health plans sponsored by, for example, bona fide trade, industry or professional associations or bona fide chambers of commerce, for the benefit of their members, typically small businesses and self-employed individuals. To become certified as an AHP, an entity would have to meet requirements relating to membership, governance, premiums, marketing, and other operations. AHPs offering self-insured plans would have to meet additional requirements, especially related to financial reserves and solvency. Certified AHPs would be exempt from most state insurance laws, including mandated benefit requirements and restrictions on premiums (i.e., rating rules).

The bill would expand health insurance coverage by requiring that all individuals have health insurance and that employers (with exceptions for certain smaller employers) play or pay, that is, either sponsor and contribute to insurance for their employees or pay into a trust fund that would be used to help finance expanded coverage. The bill would also create a national Health Insurance Exchange through which individuals and smaller employers could purchase health insurance from among an array of private options and a public option, all meeting certain federal standards. Premium and cost-sharing credits would be available to individuals and families with incomes up to 400% of the federal poverty level (FPL) and Medicaid would be expanded to cover individuals with incomes not exceeding 133% of FPL. Tax credits would be available to certain smaller employers who provide health insurance coverage to their workers.

Individuals with existing insurance coverage would generally be able to keep that coverage, although employer-based plans would eventually have to meet specific requirements, including those related to the adequacy of the benefit package. Newly sold individual and group insurance would have to comply with the bill’s insurance, consumer protection, and benefit requirements. Most requirements would apply in the same way to insurance sold through the Exchange and outside the Exchange. Most of the insurance requirements apply as of Year 1 (2013).

The bill also includes other provisions related to Medicare, Medicaid, the health care work force, and other aspects of the health care delivery system.

Financing would largely come from savings in Medicare and Medicaid through a variety of program changes and from a surtax on incomes of very high income taxpayers.

Provides increased appropriations for the State Children's Health Insurance Program (SCHIP) through 2012, offers state option for coverage of pregnant women, phases out coverage of childless adults, limits coverage of parents, eliminates federal matching payments for children above 300% of the federal poverty level (FPL), provides for improved outreach and enrollment of eligible children, requires dental coverage and mental health parity, gives states an option for using SCHIP funds for employer plan premium assistance, requires development of child health quality measures and makes other changes to SCHIP and Medicaid.

Creates a new part of the Public Health Service Act to provide for the "cooperative governing of individual health insurance coverage." Would enable a health insurer offering individual (nongroup) policies to designate one state as its primary state for purposes of complying with state insurance laws and it could then sell individual policies in any other state in the U.S.