Healthy Competition for Better Care Act
- Bill Number
- S. 4027
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 2
- Policy Area
- Health
- Status
- Introduced
- Latest Action
- 2026-03-09: Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
- Last Updated
- 2026-04-30T19:51:26Z
AI-Generated Summary
Purpose
The "Healthy Competition for Better Care Act" (S. 4027) aims to promote fair competition in the health care market by prohibiting certain restrictive terms in contracts between health insurance plans and health care providers or networks. This is intended to prevent agreements that limit patients' access to higher-quality, lower-cost care options, encouraging more choice and potentially reducing costs for consumers.
Key Provisions
- Prohibitions on Anticompetitive Agreements: Group health plans and health insurance issuers (companies that sell health coverage) cannot enter into contracts with "covered entities" (such as doctors, hospitals, provider networks, third-party administrators, or other service providers) if the contract:
- Directly or indirectly blocks the plan from guiding (or "steering") patients to other providers or offering rewards (like lower copays) to encourage use of specific providers.
- Forces the plan to sign separate deals with the covered entity's affiliates (related companies).
- Requires the plan to set payment rates or terms for the covered entity's affiliates who aren't part of the main contract.
- Stops other plans from paying less for the same services than what the original plan pays (a "most-favored-nation" clause that could raise prices industry-wide).
- Exceptions: These rules do not apply to:
- Health Maintenance Organizations (HMOs) that mainly use exclusive deals with multi-specialty doctor groups, or their affiliates.
- "Value-based" networks, which focus on quality and outcomes (e.g., accountable care organizations, centers of excellence, or integrated systems where providers are rewarded for better care rather than volume).
- State Grandfathering Option: States can exempt specific contracts signed on June 19, 2019 (and related ones by December 31, 2020) from the steering/incentive prohibition for up to 10 years if they determine it won't harm competition. States can also decide on renewals within that period.
- Preservation of Flexibility: The law does not limit plans' ability to design networks based on cost, quality, or performance (e.g., tiered provider lists or pay-for-performance programs).
- Implementation:
- Amends the Public Health Service Act (PHSA), Employee Retirement Income Security Act (ERISA, which governs employer-sponsored plans), and Internal Revenue Code (IRC, for tax-related health plans).
- Federal agencies (Health and Human Services, Labor, and Treasury) must issue regulations within 1 year of enactment.
- Takes effect 18 months after enactment for new, amended, or renewed contracts.
Significant Changes to Existing Law
- Builds on prior transparency rules in PHSA (Section 2799A-9), ERISA (Section 724), and IRC (Section 9824) by adding a new subsection (b) focused on banning anticompetitive contract terms, while updating section headings to reflect this shift from just "removing gag clauses" (restrictions on sharing price info) to broader prohibitions.
- Minor technical fixes, like changing "section" to "subsection" in existing text for clarity.
- Introduces definitions (e.g., "covered entity") and exceptions not previously detailed, expanding federal oversight of health contracts without overriding state authority in limited cases.
Potential Impacts
- On Government Agencies: The Departments of Health and Human Services, Labor, and Treasury will need to develop and enforce new regulations, potentially increasing administrative workload but standardizing rules across federal health laws.
- On Citizens (Patients and Enrollees): Could improve access to affordable, high-quality care by allowing plans to steer patients to better options and offer incentives, potentially lowering out-of-pocket costs and premiums through increased competition.
- On Health Insurance Plans and Providers: Insurers gain protection from forced "all-or-nothing" deals with provider networks, but must adjust contracts to avoid prohibited terms; providers may face more competition, possibly pressuring them to lower prices or improve quality.
- On International Relations: No direct impact, as the bill focuses on domestic U.S. health care markets.
Main Stakeholders Affected
- Health Insurance Issuers and Group Health Plans: Directly regulated; they must review and modify contracts to comply.
- Health Care Providers and Networks: Including hospitals, doctors, associations, and third-party administrators; they cannot impose restrictive terms that limit competition.
- Patients and Beneficiaries: Benefit from potential cost savings and better care choices.
- Employers and Plan Sponsors: Affected through ERISA-governed plans, with possible changes to employee benefits.
- State Regulators: Gain authority to grandfather certain contracts, allowing flexibility in implementation.
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens antitrust-like protections in health care contracts under federal law, potentially reducing lawsuits over restrictive provider deals by clarifying prohibited practices; aligns with existing transparency rules but could lead to enforcement actions or disputes over exceptions (e.g., what qualifies as a "value-based" network).
- Constitutional: Operates under Congress's authority to regulate interstate commerce in health insurance; no apparent challenges to free speech, due process, or federalism, though state grandfathering respects state roles in insurance regulation.
- Political: Promotes consumer-friendly competition in a politically charged health care sector, potentially appealing to those seeking lower costs without overhauling systems like the Affordable Care Act; may face opposition from provider groups concerned about network stability.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Recent Actions
- 2026-03-09: Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
- 2026-03-09: Introduced in Senate
Bill Versions
- Healthy Competition for Better Care Act — issued 2026-03-09 — PDF (15 pages)