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LegalText	42 U.S.C. § 300e–4	Loans and loan guarantees for initial operation costs	us	united_states_code	code_section	42	THE PUBLIC HEALTH AND WELFARE	6A	PUBLIC HEALTH SERVICE	300e–4	42 U.S.C. § 300e–4	current	119-100	2026-06-26	official	https://uscode.house.gov/download/releasepoints/us/pl/119/100/xml_usc42@119-100.zip	/us/usc/t42/s300e–4	data/legal/raw/us/code/title-42/usc42.xml	0026143e003443d830947e1706c8a8b45f210dad32a19473a195634d40ece39e	644321055a08eb1f260a6a3e31ac157fa024756abf612a9fd6857e7e400cf24e	73038dc69234aeea426c98f066a81bb92d6e4c15d6aa76e921681da1ec8e7ae3	2026-07-04	official	legal us-code

42 U.S.C. § 300e–4 - Loans and loan guarantees for initial operation costs

Text

(a) Authority The Secretary may—

(1) make loans to public or private health maintenance organizations to assist them in meeting the amount by which their costs of operation during a period not to exceed the first sixty months of their operation exceed their revenues in that period;

(2) make loans to public or private health maintenance organizations to assist them in meeting the amount by which their costs of operation, which the Secretary determines are attributable to significant expansion in their membership or area served and which are incurred during a period not to exceed the first sixty months of their operation after such expansion, exceed their revenues in that period which the Secretary determines are attributable to such expansion; and

(3) guarantee to non-Federal lenders payment of the principal of and the interest on loans made to private health maintenance organizations for the amounts referred to in paragraphs (1) and (2).

No loan or loan guarantee may be made under this subsection for the costs of operation of a health maintenance organization unless the Secretary determines that the organization has made all reasonable attempts to meet such costs, and unless the Secretary has made a grant or loan to, entered into a contract with, or guaranteed a loan for, the organization in fiscal year 1981, 1982, 1983, 1984, or 1985 under this section or section 300e–3(b) 11 See References in Text note below. of this title (as in effect before October 1, 1985).

(b) Limitations (1) Except as provided in paragraph (2), the aggregate amount of principal of loans made or guaranteed, or both, under subsection (a) for a health maintenance organization may not exceed $7,000,000. In any twelve-month period the amount disbursed to a health maintenance organization under this section (either directly by the Secretary, by an escrow agent under the terms of an escrow agreement, or by a lender under a guaranteed loan) may not exceed $3,000,000.

(2) The cumulative total of the principal of the loans outstanding at any time which have been directly made, or with respect to which guarantees have been issued, under subsection (a) may not exceed such limitations as may be specified in appropriation Acts.

(c) Source of loan funds Loans under this section shall be made from the fund established under section 300e–7(e) of this title.

(d) Time limit on loans and loan guarantees No loan may be made or guaranteed under this section after September 30, 1986.

(e) Repealed. Pub. L. 97–35, title IX, § 947(c), Aug. 13, 1981, 95 Stat. 577

(f) Medically underserved populations In considering applications for loan guarantees under this section, the Secretary shall give special consideration to applications for health maintenance organizations which will serve medically underserved populations.

(July 1, 1944, ch. 373, title XIII, § 1305, as added Pub. L. 93–222, § 2, Dec. 29, 1973, 87 Stat. 924; amended Pub. L. 93–641, § 8, Jan. 4, 1975, 88 Stat. 2276; Pub. L. 94–273, § 2(21), Apr. 21, 1976, 90 Stat. 376; Pub. L. 94–460, title I, §§ 107(c), 108(c), (d)(2), 109(a)(1), (2), 113(b), Oct. 8, 1976, 90 Stat. 1949, 1953; Pub. L. 95–559, §§ 2(b), 4(a), (b), Nov. 1, 1978, 92 Stat. 2131, 2132; Pub. L. 96–32, § 2(d), July 10, 1979, 93 Stat. 82; Pub. L. 97–35, title IX, §§ 943(a)–(c), 947(c), Aug. 13, 1981, 95 Stat. 576, 577; Pub. L. 99–660, title VIII, § 804(a), Nov. 14, 1986, 100 Stat. 3800.)

Notes

Editorial Notes

References in TextSection 300e–3(b) of this title, referred to in subsec. (a), was repealed by Pub. L. 99–660, title VIII, § 803(a), Nov. 14, 1986, 100 Stat. 3799.

Amendments1986—Subsec. (a). Pub. L. 99–660 inserted “, and unless the Secretary has made a grant or loan to, entered into a contract with, or guaranteed a loan for, the organization in fiscal year 1981, 1982, 1983, 1984, or 1985 under this section or section 300e–3(b) of this title (as in effect before October 1, 1985)” at end of last sentence. 1981—Subsec. (a). Pub. L. 97–35, § 943(a), in pars. (1) and (2) struck out “nonprofit” before “private”, and in par. (3) substituted provisions respecting guarantees for private health maintenance organizations, for guarantees for nonprofit private health maintenance organizations. Subsec. (b)(1). Pub. L. 97–35, § 943(b), generally revised limitations and, among many changes, increased amounts subject to coverage, and struck out requirements respecting Congressional oversight for increases in amounts. Subsec. (d). Pub. L. 97–35, § 943(c), substituted “1986” for “1981”. Subsec. (e). Pub. L. 97–35, § 947(c), struck out subsec. (e) which related to projects in nonmetropolitan areas. 1979—Subsec. (b)(1). Pub. L. 96–32 substituted “$4,500,000” for “$4,000,000” in two places. 1978—Subsec. (a). Pub. L. 95–559, § 4(b)(1), substituted “costs of operation” for “operating costs” wherever appearing. Subsec. (b)(1). Pub. L. 95–559, § 4(a), (b)(2), inserted “(or $4,000,000 if the Secretary makes a written determination that such loans or loan guarantees are necessary to preserve the fiscally sound operation of the health maintenance organization and to protect against the risk of insolvency of the health maintenance organization and, within 30 days of the making of such loans or loan guarantees, furnishes the Committee on Human Resources of the Senate and the Committee on Interstate and Foreign Commerce of the House of Representatives with written notification of the making of the loans or loan guarantees and a copy of the written determination made with respect to the loans or loan guarantees and the reasons for the determination) through September 30, 1979, and $4,000,000 thereafter” after “$2,500,000” and “(or $2,000,000 if the Secretary makes a written determination that such disbursements are necessary to preserve the fiscally sound operation of the health maintenance organization and protect against the risk of insolvency of the health maintenance organization and, within 30 days of such disbursement, furnishes the Committee on Human Resources of the Senate and the Committee on Interstate and Foreign Commerce of the House of Representatives with written notification of the making of the disbursement and a copy of the written determination made with respect to it and the reasons for the determination) through September 30, 1979, and $2,000,000 thereafter” after “$1,000,000” and substituted “any twelve-month period” for “any fiscal year”. Subsec. (d). Pub. L. 95–559, § 2(b), substituted “September 30, 1981” for “September 30, 1980”. 1976—Subsec. (a)(1), (2). Pub. L. 94–460, §§ 107(c), 109(a)(1), substituted “during a period not to exceed the first sixty months” for “in the period of the first thirty-six months”. Subsec. (a)(3). Pub. L. 94–460, § 108(c), substituted reference to loans made to nonprofit private health maintenance organizations for the amounts referred to in paragraph (1) or (2), or to other private health maintenance organizations for such amounts but only if the health maintenance organization will serve a medically underserved population for reference to loans made to any private health maintenance organization (other than a private nonprofit health maintenance organization) for the amounts referred to in paragraph (1) or (2), but only if such health maintenance organization will serve a medically underserved population. Subsec. (b)(1). Pub. L. 94–460, § 109(a)(2), substituted “In any fiscal year the amount disbursed to a health maintenance organization under this section (either directly by the Secretary or by an escrow agent under the terms of an escrow agreement or by a lender under a loan guaranteed under this section) may not exceed $1,000,000” for “In any fiscal year, the amount disbursed under a loan or loans made or guaranteed under this section for a health maintenance organization may not exceed $1,000,000,000”. Subsec. (d). Pub. L. 94–460, § 113(b), substituted “No loan may be made or guaranteed under this section after September 30, 1980” for “A loan or loan guarantee may be made under this section through the fiscal year ending June 30, 1978”. Pub. L. 94–273 substituted “September” for “June”. Subsec. (f). Pub. L. 94–460, § 108(d)(2), added subsec. (f). 1975—Subsec. (b)(1). Pub. L. 93–641 substituted provisions that amount disbursed under a loan or loans made or guaranteed under this section for a health maintenance organization may not exceed $1,000,000,000 for provisions that principal amount of any loan made or guaranteed under subsec. (a) of this section for a health maintenance organization may not exceed $1,000,000.

Statutory Notes and Related Subsidiaries

Effective Date of 1986 AmendmentPub. L. 99–660, title VIII, § 804(b), Nov. 14, 1986, 100 Stat. 3800, provided that: “The amendment made by subsection (a) [amending this section] does not apply to any loan or loan guarantee for the initial costs of operation of a health maintenance organization made under title XIII of the Public Health Service Act [42 U.S.C. 300e et seq.] before October 1, 1985.” Amendment by Pub. L. 99–660 effective Oct. 1, 1985, see section 815(a) of Pub. L. 99–660, set out as an Effective and Termination Dates of 1986 Amendment note under section 300e–1 of this title.

Effective Date of 1978 AmendmentPub. L. 95–559, § 4(d), Nov. 1, 1978, 92 Stat. 2133, provided that: “The amendments made by this section [amending this section and section 300e–7 of this title] shall only be effective for fiscal years beginning on or after October 1, 1978.”

Effective Date of 1976 AmendmentAmendment by Pub. L. 94–460 effective Oct. 8, 1976, except that the amendment of subsec. (a)(1), (2) of this section by section 107(c) of Pub. L. 94–460 applicable with respect to grants, contracts, loans, and loan guarantees made under this section and sections 300e–2 and 300e–3 of this title for fiscal years beginning after Sept. 30, 1976, and except that the amendment of subsec. (a)(1), (2) of this section by section 109(a)(1) of Pub. L. 94–460 applicable with respect to loan guarantees made under this section after Sept. 30, 1976, see section 118 of Pub. L. 94–460, set out as a note under section 300e of this title.