[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1229 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 1229

   To amend the Public Health Service Act to ensure that affordable, 
 comprehensive, high quality health care coverage is available through 
  the establishment of State-based programs for children and for all 
uninsured pregnant women, and to facilitate access to health services, 
 strengthen public health functions, enhance health-related research, 
  and support other activities that improve the health of mothers and 
                   children, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 8, 1997

 Mr. Ackerman introduced the following bill; which was referred to the 
 Committee on Commerce, and in addition to the Committees on Ways and 
Means, the Judiciary, and Education and the Workforce, 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 amend the Public Health Service Act to ensure that affordable, 
 comprehensive, high quality health care coverage is available through 
  the establishment of State-based programs for children and for all 
uninsured pregnant women, and to facilitate access to health services, 
 strengthen public health functions, enhance health-related research, 
  and support other activities that improve the health of mothers and 
                   children, and for other purposes.

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

SECTION 1. SHORT TITLE, TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Healthy Mothers, 
Healthy Children Act of 1997''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title, table of contents.
      TITLE I--NATIONAL HEALTH TRUST FUND FOR MOTHERS AND CHILDREN

Sec. 101. Establishment.
          TITLE II--HEALTHY MOTHERS, HEALTHY CHILDREN PROGRAM

Sec. 201. Establishment and allocation of funds.
        ``TITLE XXVIII--HEALTHY MOTHERS, HEALTH CHILDREN PROGRAM

        ``Sec. 2800. Establishment of program.
                     ``Part A--Allocation of Funds

        ``Sec. 2801. Allocation of funds to participating States.
        ``Sec. 2802. State trust funds and matching contribution.
        ``Sec. 2803. Excess and insufficient funds in trust funds.
                  ``Part B--Eligibility and Enrollment

                        ``Subpart 1--Eligibility

        ``Sec. 2810. Eligibility of individuals.
        ``Sec. 2811. Election of eligibility.
        ``Sec. 2812. Eligible health plans and providers.
                        ``Subpart 2--Enrollment

        ``Sec. 2815. Enrollment of eligible persons.
        ``Sec. 2816. Transition from eligibility.
Sec. 202. Comprehensive health benefits and cost sharing requirements.
 ``Part C--Comprehensive Health Benefits and Cost Sharing Requirements

               ``Subpart 1--Comprehensive Health Benefits

        ``Sec. 2821. Comprehensive health benefits package.
        ``Sec. 2822. General categories of health benefits.
                 ``Subpart 2--Cost Sharing Requirements

        ``Sec. 2825. Principles of cost sharing.
        ``Sec. 2826. Premiums and premium subsidy.
        ``Sec. 2827. Utilization copayments.
        ``Sec. 2828. Maximum annual family contribution.
Sec. 203. State program development and administration.
         ``Part D--State Program Development and Administration

        ``Sec. 2831. Application and date of implementation.
        ``Sec. 2832. Special status States.
        ``Sec. 2833. States with medicaid waivers.
        ``Sec. 2834. Development grants for State programs.
        ``Sec. 2835. Expansion of eligibility.
        ``Sec. 2836. Failure of State to administer a program in 
                            compliance with title.
        ``Sec. 2837. Limits on State and Federal administrative costs.
   ``Part E--Ensuring Quality, Establishing Information Systems, and 
                            Preventing Abuse

        ``Sec. 2841. Annual quality assessment and improvement plans.
        ``Sec. 2842. National advisory council for mothers' and 
                            children's health.
        ``Sec. 2843. National quality assessment and improvement 
                            program guidelines and utilization review 
                            program guidelines.
        ``Sec. 2844. National health information systems for mothers 
                            and children.
        ``Sec. 2845. National childhood immunization database.
        ``Sec. 2846. Prevention, monitoring, and control of fraud and 
                            abuse.
Sec. 204. Responsibilities of families, certified plans, employers, 
                            States, and the Federal government.
  ``Part F--Responsibilities of Families, Certified Plans, Employers, 
                   States, and the Federal Government

        ``Sec. 2851. Responsibilities of families.
        ``Sec. 2852. Responsibilities of certified plans.
        ``Sec. 2853. Responsibilities of employers.
        ``Sec. 2854. Responsibilities of the State.
        ``Sec. 2855. Responsibilities of the Secretary.
        ``Sec. 2856. Responsibilities of the Attorney General.
        ``Sec. 2857. Responsibilities of the Secretary of Agriculture.
Sec. 205. Existing programs.
          ``Part G--Impact on Employers and Existing Programs

        ``Sec. 2861. Impact on employers.
        ``Sec. 2862. Impact on medicaid.
        ``Sec. 2863. Integration of health services and impact on 
                            existing Federal and State government 
                            health programs.
Sec. 206. General provisions.
                      ``Part H--General Provisions

        ``Sec. 2871. Definitions.
        ``Sec. 2872. Authorization of appropriations.
Sec. 207. Unlawful use of tobacco products manufactured for export.
                    TITLE III--FINANCING PROVISIONS

Sec. 301. Increase in taxes on tobacco products.
Sec. 302. Assistance to States adversely affected by the tobacco tax.
Sec. 303. Designation of overpayments and contributions for the 
                            National Health Trust Fund for Mothers and 
                            Children.

      TITLE I--NATIONAL HEALTH TRUST FUND FOR MOTHERS AND CHILDREN

SEC. 101. ESTABLISHMENT.

    (a) In General.--Subchapter A of chapter 98 of the Internal Revenue 
Code of 1986 (relating to establishment of trust funds) is amended by 
adding at the end the following new part:

                   ``PART II--HEALTH CARE TRUST FUNDS

                              ``Sec. 9551. National Health Trust Fund 
                                        for Mothers and Children

``SEC. 9551. NATIONAL HEALTH TRUST FUND FOR MOTHERS AND CHILDREN.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `National Health 
Trust Fund for Mothers and Children' to support State-based programs 
under title XXVIII of the Public Health Service Act that ensure 
affordable, comprehensive, high quality health care coverage for 
children, and for all uninsured pregnant women. The National Health 
Trust Fund for Mothers and Children shall consist of such amounts as 
may be appropriated or credited to the Trust Fund as provided for in 
this section or section 9602(b) and such cash contributions as may be 
made.
    ``(b) Transfers to the Trust Fund.--
            ``(1) In general.--There are hereby appropriated to the 
        National Health Trust Fund for Mothers and Children amounts 
        received in the Treasury under--
                    ``(A) section 5701 (relating to taxes on tobacco 
                products) to the extent attributable to the increases 
                of such taxes as the result of the enactment of section 
                301 of the Healthy Mothers, Healthy Children Act of 
                1997 minus any amount appropriated to the Tobacco 
                Alternatives Trust Fund under section 9512(b), and
                    ``(B) section 6097 (relating to the designation of 
                overpayments and contributions to the Trust Fund).
            ``(2) Savings amounts.--There are hereby appropriated to 
        the National Health Trust Fund for Mothers and Children for 
        each fiscal year amounts equivalent to the amount of estimated 
        Federal savings in such fiscal year--
                    ``(A) under the medicaid program under title XIX of 
                the Social Security Act resulting from the enactment of 
                the Healthy Mothers, Healthy Children Act of 1997, and
                    ``(B) attributable to the elimination of services 
                or functions under any other Federal health program 
                resulting from the enactment of the Healthy Mothers, 
                Healthy Children Act of 1997.
    ``(c) Expenditures.--
            ``(1) In general.--Except as provided in paragraph (2), 
        amounts in the National Health Trust Fund for Mothers and 
        Children are appropriated as provided for in section 2871 of 
        the Public Health Service Act, and to the extent any such 
        amount is not expended during any fiscal year, such amount 
        shall be available for such purpose for subsequent fiscal 
        years.
            ``(2) Prevention of tobacco use.--
                    ``(A) In general.--Amounts not to exceed the amount 
                described in subparagraph (B) are appropriated in each 
                fiscal year to fund activities at the Office on Smoking 
                and Health, Centers for Disease Control and Prevention 
                to prevent the initiation of smoking and use of other 
                tobacco products by children and to coordinate Federal 
                and State tobacco prevention and control initiatives. 
                To the extent any such amount is not expended during 
                any fiscal year, such amount shall be available for 
                such purpose for subsequent fiscal years.
                    ``(B) Amount described.--The Secretary of Health 
                and Human Services may determine an amount under this 
                subparagraph not to exceed 0.2 percent of the annual 
                amounts described under subsection (b)(1)(A) received 
                in the National Health Trust Fund for Mothers and 
                Children.''.
    (b) Conforming Amendment.--Subchapter A of chapter 98 is amended by 
inserting after the subchapter heading the following new items:

                              ``Part I.  General trust funds.
                              ``Part II. Health care trust fund.

                    ``PART I--GENERAL TRUST FUNDS''.

          TITLE II--HEALTHY MOTHERS, HEALTHY CHILDREN PROGRAM

SEC. 201. ESTABLISHMENT AND ALLOCATION OF FUNDS.

    The Public Health Service Act (42 U.S.C. 201 et seq.) is amended by 
adding at the end thereof the following new title:

        ``TITLE XXVIII--HEALTHY MOTHERS, HEALTH CHILDREN PROGRAM

``SEC. 2800. ESTABLISHMENT OF PROGRAM.

    ``A State that desires to become a participating State under this 
title and receive an allocation under section 2801, shall, in 
accordance with this title, establish a State program to ensure that 
eligible children and pregnant women residing in the State are enrolled 
in certified plans that provide for or cover the costs of 
comprehensive, high quality health care items or services provided to 
such eligible individuals.

                     ``Part A--Allocation of Funds

``SEC. 2801. ALLOCATION OF FUNDS TO PARTICIPATING STATES.

    ``(a) Initial Allocation.--With respect to a participating State, 
during each of the first two fiscal years in which the State program is 
in effect, the Secretary shall make available to the State, from the 
Trust Fund, an amount based on a formula developed by the Secretary 
that takes into consideration--
            ``(1) the estimated number of eligible children under 7 
        years of age residing in the State;
            ``(2) the number of pregnant women residing in the State 
        that lack health insurance; and
            ``(3) a geographic adjustment factor for the State that is 
        dependent on the average cost of health care in such State.
    ``(b) Subsequent Fiscal Years.--
            ``(1) Formula.--With respect to a participating State, 
        during each fiscal year subsequent to the first two fiscal 
        years in which the State program is in effect, the Secretary 
        shall make available to the State, from the Trust Fund, an 
        amount based on a formula developed by the Secretary that takes 
        into consideration--
                    ``(A) the factors referred to in subsection (a);
                    ``(B) to encourage the enrollment of all eligible 
                individuals in the State program of that State, an 
                additional factor developed by the Secretary that takes 
                into consideration the number of eligible individuals 
                enrolled in the State program in the year immediately 
                preceding the year for which the allocation under this 
                subsection is being made; and
                    ``(C) an index that reflects the estimated national 
                average rate of inflation for health care expenditures 
                for children and a similar index for pregnant women, to 
                ensure that any increase in allocations under this 
                subsection do not exceed the increase in such inflation 
                index from the previous fiscal year.
        The additional factor shall be developed under subparagraph (B) 
        so that as the number of eligible individuals enrolled in the 
        previous year increases, the amount of the allocation for the 
        State also increases.
            ``(2) Waivers.--
                    ``(A) Request by state.--A participating State may 
                request that the Secretary, in allocating funds under 
                paragraph (1), waive the consideration of the index 
                under subparagraph (C) of such paragraph with respect 
                to such State.
                    ``(B) Grant of waiver.--The Secretary may grant a 
                request for a waiver under subparagraph (A) if the 
                Secretary determines that the participating State has 
                demonstrated that extenuating circumstances within the 
                State existed which caused unavoidable increases in the 
                cost of health services provided to children and 
                pregnant women, and that the State has considered all 
                reasonable strategies to control costs, including 
                working with certified plans to control costs, reducing 
                administrative costs, restructuring the State program, 
                and minimizing fraud and abuse.

``SEC. 2802. STATE TRUST FUNDS AND MATCHING CONTRIBUTION.

    ``(a) State Trust Fund.--
            ``(1) Establishment.--To be a participating State under 
        this title, a State shall establish a State trust fund (or in 
        the case of regional programs, a regional trust fund) in which 
        the State shall deposit--
                    ``(A) all funds allocated to the State under 
                section 2801;
                    ``(B) all funds provided by the State under 
                subsection (b); and
                    ``(C) any additional funds determined appropriated 
                by the State.
            ``(2) Transfer of funds.--From the Trust Fund, the 
        Secretary shall, on an annual basis, transfer to the trust fund 
        of a participating State the amount of the State's allocation 
        under section 2801 for the fiscal year involved. Such annual 
        transfer of funds shall be contingent on a satisfactory annual 
        evaluation of the program of the participating State, and the 
        approval of the annual plan of the State by the Secretary as 
        required in section 2831(b).
            ``(3) Use of funds.--Amounts contained in the State trust 
        fund shall be used solely for activities directly related to 
        the provision of health services to eligible children or 
        pregnant women or for other activities specifically authorized 
        under this title.
    ``(b) Matching Requirement.--
            ``(1) In general.--The Secretary may not make an allocation 
        to a participating State under section 2801 unless that State 
        agrees that, with respect to the costs to be incurred by the 
        State in carrying out the program for which the allocation is 
        provided, the State will make available an amount determined by 
        the Secretary based on a formula that takes into account the 
        annual per capita income of each State. In determining the 
        matching requirement applicable to each State under this 
        paragraph, the Secretary shall ensure that--
                    ``(A) each such matching requirement is more 
                generous for the State than the matching requirement 
                applicable under title XIX of the Social Security Act 
                at the time of the approval of the State application 
                under this title;
                    ``(B) the average State matching requirement for 
                all States is $2 for every $8 of Federal funds provided 
                under the allocation (average Federal matching rate for 
                all States of 80 percent); and
                    ``(C) no State shall have a matching requirement 
                that is less than $1 for every $9 of Federal funds 
                provided under the allocation (maximum Federal matching 
                rate of 90 percent).
            ``(2) Donations.--A participating State may elect to accept 
        a donation of funds, services, or equipment for a State program 
        under this title from individuals and entities in the private 
        sector. A State shall ensure that any such donations from 
        individuals and for-profit entities do not result in a conflict 
        of interest in terms of the State giving preference to the 
        individual or entity related to the awarding of contracts for a 
        program under this title or for any other State or Federally 
        funded health programs not covered by this Act.
            ``(3) No requirement.--With respect to amounts deposited in 
        the State trust fund under subsection (a)(1)(C), such funds 
        shall not be subject to the matching requirements of paragraph 
        (1) unless such funds are deposited for the purposes described 
        in sections 2832 and 2835.

``SEC. 2803. EXCESS AND INSUFFICIENT FUNDS IN TRUST FUNDS.

    ``(a) Availability of Unallocated Funds.--
            ``(1) National trust fund.--With respect to amounts 
        remaining in the Trust Fund after the Secretary makes the 
        allocations required under section 2801 or otherwise provides 
        grants under this title for a fiscal year, such amounts shall 
        remain in the Trust Fund and be available for use in subsequent 
        years.
            ``(2) State trust funds.--With respect to amounts remaining 
        in the trust fund of a participating State after allocations or 
        expansions in eligibility are made for a fiscal year under this 
        title, such amounts shall remain in the State trust fund and 
        may not be transferred back to the Trust Fund.
    ``(b) Insufficient Federal Funds.--
            ``(1) In general.--If the Secretary determines that amounts 
        contained in the Trust Fund for a fiscal year are not 
        sufficient to make allocations under section 2801, or to 
        otherwise carry out this title, the Secretary shall notify the 
        Advisory Council. Not later than 60 days after receipt of a 
        notification under this paragraph, the Advisory Council shall 
        recommend to the Secretary strategies to correct the 
        insufficiency of funds.
            ``(2) Recommendations by council.--Under paragraph (1), the 
        Advisory Council may recommend--
                    ``(A) the generation of additional sources of 
                revenue for the Trust Fund;
                    ``(B) an adjustment of the State matching 
                requirements under section 2802(b);
                    ``(C) an adjustment in the range or nature of the 
                health benefits provided under part B;
                    ``(D) an adjustment in the cost sharing 
                requirements for families under part B; or
                    ``(E) other measures as determined appropriate by 
                the Council.
            ``(3) Implementing legislation.--Not later than 60 days 
        after receipt of recommendations under paragraph (1), the 
        Secretary shall prepare and submit to Congress, appropriate 
        implementing legislation that incorporates one or more of such 
        recommendations, if determined appropriate by the Secretary.
    ``(c) Insufficient State Funds.--
            ``(1) In general.--If the chief executive officer of a 
        participating State determines that the State does not have 
        sufficient funds in the State trust fund to meet the 
        requirements of this title for a fiscal year, the chief 
        executive officer may petition the Secretary for additional 
        funds. Not later than 90 days after receipt of a petition under 
        this subsection the Secretary shall determine whether to 
        provide the State with additional funds or a loan from the 
        Trust Fund.
            ``(2) Prohibition.--The Secretary may not transfer any 
        additional funds to a State under paragraph (1) if the 
        Secretary determines that the State mismanaged funds, failed to 
        prevent foreseeable fiscal problems, or failed to control fraud 
        and abuse.

                  ``Part B--Eligibility and Enrollment

                        ``Subpart 1--Eligibility

``SEC. 2810. ELIGIBILITY OF INDIVIDUALS.

    ``(a) In General.--To be eligible to receive benefits or services 
under this title an individual shall--
            ``(1) be a--
                    ``(A) child who is under the age of 7 years, 
                regardless of the income or health insurance status of 
                the child or his or her parents, or an older child (up 
                to 21 years or age) if the Secretary has expanded the 
                program on a national basis or the State in which the 
                child resides has expanded the State program to 
                encompass such older children; or
                    ``(B) pregnant woman who is not insured (or who if 
                insured, has no pregnancy-related benefits) through the 
                employer of the woman or the family's employer (in 
                compliance with the Pregnancy Discrimination Act of 
                1978), regardless of the income status of the woman; 
                and
            ``(2) be a United States citizen or a citizen of another 
        country legally residing in the United States.
    ``(b) Certain Individuals Not Eligible.--A child or pregnant woman 
shall not be eligible to participate in the program established under 
this title if such child or pregnant woman, during the 6-month period 
ending on the date on which such individual desires to participate, was 
covered under an employer-based health plan, and such coverage was 
dropped by the employer.
    ``(c) Definition.--As used in subsection (a)(2), the term `citizen 
of another country legally residing in the United States' means any of 
the following:
            ``(1) An alien lawfully admitted for permanent residence 
        (within the meaning of section 101(a)(20) of the Immigration 
        and Nationality Act).
            ``(2) An alien granted work authorization by the 
        Immigration and Naturalization Service.
            ``(3) An alien permanently residing in the United States 
        under color of law, including (but not limited to) any of the 
        following:
                    ``(A) An alien who is admitted as a refugee under 
                section 207 of the Immigration and Nationality Act.
                    ``(B) An alien who is granted asylum under section 
                208 of such Act.
                    ``(C) An alien whose deportation is withheld under 
                section 243(h) of such Act.
                    ``(D) An alien who is admitted for temporary 
                residence under section 210, 210A, or 245A of such Act.
                    ``(E) An alien who has been paroled into the United 
                States under section 212(d)(5) of such Act for an 
                indefinite period or who has been granted extended 
                voluntary departure, temporary protected status, or 
                deferred enforced departure.
                    ``(F) An alien who is the spouse or unmarried child 
                under 21 years of age of a citizen of the United 
                States, or the parent of such a citizen if the citizen 
                is over 21 years of age, and with respect to whom an 
                application for adjustment to lawful permanent 
                residence is pending.
                    ``(G) An alien within such other classification of 
                aliens permanently residing under color of law for 
                purposes of this title as the Secretary may establish 
                by regulation. Such regulation shall include categories 
                of such aliens who are included in regulations as in 
                effect on the date of the enactment of this Act under 
                title XIX of the Social Security Act and other 
                categories within a public health priority.
            ``(4) An alien not otherwise covered under this subsection 
        who the State elects to consider eligible. A State shall ensure 
        that Federal funds provided under this title are not used to 
        provide coverage for aliens under this paragraph.

``SEC. 2811. ELECTION OF ELIGIBILITY.

    ``(a) Coverage of Children Under Other Federal Programs.--
            ``(1) In general.--An eligible individual described in 
        section 2810(a)(1)(A) who receives benefits or services under--
                    ``(A) the Civilian Health and Medical Program of 
                the Uniformed Services (CHAMPUS), as defined in section 
                1073(4) of title 10, United States Code;
                    ``(B) chapter 17 of title 38, United States Code; 
                or
                    ``(C) a health program of the Indian Health 
                Service;
        may elect to continue to use such services or elect to enroll 
        in a certified plan under this title.
            ``(2) Medicaid.--An eligible individual described in 
        section 2810(a)(1)(A) who receives benefits or services under 
        title XIX of the Social Security Act shall, on the date on 
        which the State program of the participating State in which 
        such individual resides provides for open enrollment, be 
        automatically enrolled in a certified plan of such individuals 
        choice under the State program of the participating State which 
        such individual resides in.
            ``(3) State programs.--In the case of an eligible 
        individual described in section 2810(a)(1)(A) who resides in a 
        State-supervised care setting or who does not live with his or 
        her parents, such child shall be enrolled in a certified plan 
        by the State agency or guardian that has been awarded the 
        temporary or permanent custody of the child unless there is an 
        otherwise more appropriate, specially designed health care 
        system for such a child.
    ``(b) Coverage of Pregnant Women Under Other Federal Programs.--
            ``(1) In general.--An eligible individual described in 
        section 2810(a)(1)(B) who receives benefits or services under--
                    ``(A) the Civilian Health and Medical Program of 
                the Uniformed Services (CHAMPUS), as defined in section 
                1073(4) of title 10, United States Code;
                    ``(B) chapter 17 of title 38, United States Code; 
                or
                    ``(C) a health program of the Indian Health 
                Service;
        shall not be eligible for coverage under a certified plan under 
        this title.
            ``(2) Medicaid.--An eligible individual described in 
        section 2810(a)(1)(B) who receives benefits or services under 
        title XIX of the Social Security Act shall, on the date on 
        which the State program of the participating State in which 
        such individual resides provides for open enrollment, be 
        automatically enrolled in a certified plan of such individuals 
        choice under the State program of the participating State which 
        such individual resides in.
    ``(c) Enrollment in Certified Plans.--In the case of an eligible 
individual who elects or is automatically enrolled in a State program 
under this title, all privileges (such as choice of certified plans) 
and responsibilities (such as payment of premiums or copayments) 
accorded to their families or themselves under this title shall apply.

``SEC. 2812. ELIGIBLE HEALTH PLANS AND PROVIDERS.

    ``A health plan or health care provider that is licensed and 
credentialed, or otherwise legally authorized by the State in which 
such plan or provider operates, to provide health services of a type 
described in this title, under the respective rules and regulations of 
the State, shall be eligible to participate in the State program under 
this title if such plan or provider meets all applicable Federal and 
State requirements under this title.

                        ``Subpart 2--Enrollment

``SEC. 2815. ENROLLMENT OF ELIGIBLE PERSONS.

    ``(a) National Open Enrollment Period.--Not later than 30 days 
after the effective date, the Secretary shall establish a national 
annual open enrollment period to be held during a month that shall be 
designated as `National Healthy Mothers, Healthy Children Month'. 
During such enrollment period, an eligible child may be enrolled in a 
certified plan operating in the State in which such individual resides 
in accordance with the enrollment requirements of the State.
    ``(b) Establishment of Enrollment System.--
            ``(1) In general.--Not later than 30 days after the 
        approval of a State program under section 2831, the State shall 
        establish a system for the enrollment of all eligible 
        individuals residing within the State in a certified plan under 
        this title. Such enrollment system shall be designed to 
        minimize, to the maximum extent practicable, any barriers that 
        may exist to prevent enrollment. All applicants shall be 
        presumed to be eligible until the State has determined 
        otherwise.
            ``(2) Method of enrollment.--The enrollment process 
        established under paragraph (1) shall be reasonably convenient, 
        efficient, and provide for enrollment through a wide range of 
        methods. At a minimum, such process shall provide for 
        enrollment through the mail, telephone (via a toll free 
        number), and in person.
    ``(c) Enrollment Materials.--
            ``(1) In general.--Under a process established under 
        subsection (b), a State shall ensure that enrollment materials 
        are made available through health care providers, health 
        provider organizations, hospitals, health clinics, at 
        facilities that provide health and nutrition services to 
        children and women, and from State and local government health 
        offices.
            ``(2) Essential data.--The Secretary, in consultation with 
        the States and representatives of certified plans, shall 
        develop essential data elements for the establishment and use 
        by participating States of a standardized enrollment form that 
        shall not exceed one page in length. The Secretary may utilize 
        or permit such States to utilize additional data collection 
        instruments for the purpose of assessing and improving State 
        programs so long as such instruments are not a requirement for 
        enrollment in a certified plan.
    ``(d) Processing of Applications.--
            ``(1) In general.--Not later than 30 days after the date on 
        which an application for enrollment in a certified plan is 
        submitted to a State by or on behalf of an eligible individual, 
        the State shall process and render a final decision with 
        respect to the application. Approval of such an application 
        shall be dependent on eligibility and income verification by 
        the State. Income verification mechanisms and requirements 
        shall be developed by the State in accordance with guidelines 
        prescribed by the Secretary.
            ``(2) Waiver.--A participating State may elect to waive the 
        income verification requirements for families who are already 
        subject to similar requirements under other appropriate Federal 
        or State programs or in other situations determined appropriate 
        by the State.
            ``(3) Notification.--Not later than 30 days after the date 
        on which an application for enrollment is approved under 
        paragraph (1), the State shall notify the family and the 
        relevant certified plan of the approval and the expected annual 
        premium contribution of the family, the first payment of which 
        must be received by the plan or the State within 30 days of 
        such notification.
    ``(e) Time of Enrollment.--
            ``(1) In general.--An eligible child shall be enrolled, or 
        change enrollment, in a certified plan during the national 
        annual open enrollment period.
            ``(2) Pregnant woman.--An eligible pregnant woman may 
        enroll in a certified plan at any time after the diagnosis of 
        pregnancy is confirmed by a physician or qualified health 
        professional. A woman may also enroll in a certified plan in 
        order to confirm her pregnancy. Except as otherwise provided in 
        subsection (f)(1), a pregnant woman enrolled in a certified 
        plan under this section may not change such enrollment.
            ``(3) Surcharge.--
                    ``(A) In general.--Except as provided in paragraph 
                (4), with respect to an eligible individual who does 
                not enroll in a certified plan during, or who elects to 
                change the plan in which such individual is enrolled 
                outside of, the national open enrollment period, the 
                participating State involved may assess a late 
                enrollment surcharge in an amount determined 
                appropriate by the State.
                    ``(B) Waiver.--A State may grant a waiver of any 
                enrollment surcharges if the applicant or applicant's 
                family can demonstrate that the applicant or was out-
                of-State during the open enrollment period or for other 
                unavoidable and legitimate reasons as determined 
                appropriate by the State, including sudden loss of 
                health coverage due to unemployment, divorce, and 
                financial crisis.
            ``(4) Enrollment of newborns.--A participating State shall 
        provide a family with the opportunity to enroll the newborn 
        children of such family in a certified plan prior to or at the 
        time of the delivery (through the hospital or birthing center) 
        of such children. To avoid a surcharge under paragraph (2), a 
        newborn must be enrolled in a certified plan prior to birth or 
        within 30 days after birth or during the open enrollment 
        period.
    ``(f) Plan Choice and Termination of Enrollment.--
            ``(1) Plan choice.--As part of an enrollment application, 
        the family shall indicate the choice of certified plan. A 
        family with a child enrolled in a certified plan may at any 
        time elect to change enrollment in plans and such new 
        enrollment shall become effective on the first day of the next 
        open enrollment period. A family that desires to change 
        certified plans at a time that is not within the open 
        enrollment period may do so but shall be subject to a 
        substantial surcharge to be imposed by the State. An enrolled 
        pregnant woman who elects to change plans shall be subject to a 
        similar surcharge. The State shall not impose a surcharge on a 
        family with an enrolled child or on a pregnant woman if the 
        change of certified plans is due to the family moving to 
        another area not served by the current plan, in the case of a 
        plan withdrawing from a market area, or for other justifiable 
        and legitimate reasons as determined by the State.
            ``(2) Period of enrollment.--The period during which 
        enrollment in a certified plan shall be effective shall--
                    ``(A) in the case of an eligible child, not be less 
                than 1 year; and
                    ``(B) in the case of a pregnant woman, be for the 
                duration of the pregnancy and eligible post-partum 
                period.
            ``(3) Prohibition on waiting periods.--A certified plan may 
        not impose a waiting period with respect to the provision of 
        covered health services under the plan. Access to such services 
        shall be effective immediately upon the date on which the 
        enrollment application is submitted.
            ``(4) Provision of services.--Upon the submission of an 
        application for enrollment during an initial point-of-service 
        visit, a certified plan shall provide covered health services 
        to the applicant individual if the individual declares that 
        such individual is not otherwise enrolled in a certified plan 
        under this title and the individual reasonably appears to be of 
        an eligible age. The provision of such services shall continue 
        until such time as the State has notified the plan that the 
        applicant is not eligible under this title. The State shall 
        impose a surcharge, in an amount to be determined appropriate 
        by the State, for enrollment at the point-of-service outside of 
        the open enrollment period. A State may elect to directly 
        compensate a certified plan for services provided to 
        individuals who are subsequently determined to be ineligible, 
        or permit such plans to factor in the estimated costs of 
        providing services to such individuals in their rate 
        negotiations with the State.

``SEC. 2816. TRANSITION FROM ELIGIBILITY.

    ``(a) Eligible Child.--
            ``(1) Termination of subsidies.--With respect to an 
        eligible child enrolled in a certified plan who attains the age 
        of seven years during the term of enrollment under the plan, 
        premium subsidies under this title for such plan shall 
        terminate on the date on which the term of enrollment 
        terminates. The plan in which the child is enrolled shall 
        continue to provide coverage for such child for an indefinite 
        period if the full unsubsidized premium and copayments for such 
        plan are paid.
            ``(2) Preexisting conditions.--With respect to an eligible 
        child, a certified plan may not exclude coverage for 
        preexisting conditions. If an eligible child elects to 
        terminate coverage under a certified plan after the seventh 
        birthday of the child and enroll in another health plan or in 
        an employer-provided health plan that provides similar benefits 
        to employee dependents, the plan or employer shall accept the 
        child into the plan and may not exclude coverage for any 
        preexisting conditions.
    ``(b) Eligible Pregnant Woman.--With respect to an eligible 
pregnant woman enrolled in a certified plan, coverage for health 
benefits under the plan shall terminate on the date that is 2 months 
after the date of the end of the pregnancy. If the woman was covered 
under a health plan or employer-based health plan (without pregnancy-
related benefits) immediately prior to enrollment in the certified plan 
under the State program, the previous health plan or employer shall 
readmit the woman into the plan with no exclusions for preexisting or 
pregnancy-related conditions at a cost comparable to the cost paid 
prior to enrollment in the certified plan.''.

SEC. 202. COMPREHENSIVE HEALTH BENEFITS AND COST SHARING REQUIREMENTS.

    Title XXVIII of the Public Health Service Act (as added by section 
201) is amended by adding at the end thereof the following new part:

 ``Part C--Comprehensive Health Benefits and Cost Sharing Requirements

               ``Subpart 1--Comprehensive Health Benefits

``SEC. 2821. COMPREHENSIVE HEALTH BENEFITS PACKAGE.

    ``(a) Development of Package.--
            ``(1) In general.--Not later than 180 days after the date 
        of enactment of this title, the Secretary, in consultation with 
        health care professionals and health-related organizations 
        determined appropriate by the Secretary and in accordance with 
        paragraph (2), shall develop a comprehensive benefits package 
        for both children and pregnant women. Such benefits packages 
        shall be based on the general categories of benefits described 
        in section 2822.
            ``(2) Consultation.--In developing a comprehensive benefits 
        package under paragraph (1), the Secretary shall, at a minimum, 
        consult with--
                    ``(A) in the case of a benefits package for 
                children, the American Academy of Pediatrics, the 
                Association of Maternal and Child Health Programs, and 
                the American Dental Association; and
                    ``(B) in the case of a benefits package for 
                pregnant women, the American College of Obstetricians 
                and Gynecologists and the Association of Maternal and 
                Child Health Programs.
            ``(3) Periodicity schedules.--To the extent practicable, 
        the comprehensive benefits packages developed under paragraph 
        (1) shall contain periodicity schedules for preventive 
        services.
    ``(b) Limitations.--In developing the comprehensive benefits 
packages under subsection (a), the Secretary shall ensure that such 
packages are consistent with the following:
            ``(1) The actuarial equivalent of the specific 
        comprehensive benefits packages shall exceed the average 
        actuarial equivalent of all health benefits offered to children 
        and pregnant women by all States under the program under title 
        XIX of the Social Security Act on the date of enactment of this 
        title.
            ``(2) The actuarial equivalent of the specific 
        comprehensive benefits packages shall not exceed the actuarial 
        equivalent of health benefits offered to children and pregnant 
        women in the State or States providing the most generous 
        benefits package under title XIX of the Social Security Act for 
        such populations on the date of enactment of this title.
    ``(c) Copayments.--In addition to developing the comprehensive 
benefits package under subsection (a), the Secretary, in consultation 
with health professional organizations determined appropriate by the 
Secretary, shall determine the types of services under the benefits 
package that shall be subject to utilization copayments under section 
2827. The Secretary shall ensure that preventive services are exempt 
from any utilization copayment requirements.
    ``(d) Review and Modification.--Not later than 2 years after the 
development of the comprehensive benefits package under subsection (a), 
and every 2 years thereafter, the Secretary, in consultation with 
relevant health professional organizations and the Advisory Council, 
shall review and revise the comprehensive benefits package. The 
Secretary shall ensure that any revision of the comprehensive benefits 
package is consistent with changes in the age group of eligible 
children, standard medical practice, new technologies, emerging health 
problems and health care needs. If children seven years of age or older 
are eligible on a national basis or in a participating State prior to 2 
years after the development of the initial benefits package, the 
Secretary shall revise the benefits package as necessary by the methods 
specified in this section.
    ``(e) Requirements of Certified Plan.--To be eligible to operate as 
a certified plan under this title, the plan shall provide coverage for 
or directly provide the items or services required under the applicable 
comprehensive benefits package. A certified plan may not offer coverage 
to eligible individuals under this title if such plan does not ensure 
the provision of all items or services required under the comprehensive 
benefits package. Certified plans may provide a benefits package that 
is more generous than the comprehensive benefits package required by 
the Secretary.
    ``(f) Exception to Requirements of Certified Plan.--In a case in 
which a State has determined that no participating health plan is able 
to provide for or cover all the services in the comprehensive benefits 
package, or the State has determined that certain services are most 
effectively delivered by providers other than participating health 
plans, the State may elect to develop an alternative mechanism, such as 
entering into agreements with other providers, to provide for or cover 
specific services. In all cases the State shall ensure that all 
services covered under the comprehensive benefits package are of high 
quality and are fully coordinated and integrated.

``SEC. 2822. GENERAL CATEGORIES OF HEALTH BENEFITS.

    ``(a) In General.--At a minimum, the following general categories 
of health benefits shall be included in the comprehensive benefits 
package:
            ``(1) Children.--With respect to the comprehensive benefits 
        package for children (from birth through the child's seventh 
        birthday) the package shall require coverage for--
                    ``(A) preventive services (including immunizations 
                as recommended by the Advisory Committee on 
                Immunization Practices, well baby/child care, routine 
                medical examinations and check ups, recommended 
                screening tests, dental prophylaxis and examinations, 
                and preventive health counseling and health education);
                    ``(B) ambulatory care;
                    ``(C) laboratory services;
                    ``(D) prescription drugs;
                    ``(E) inpatient care;
                    ``(F) vision, audiology and aural rehabilitative, 
                and other rehabilitative services (including 
                prescription eyeglasses and hearing aids);
                    ``(G) durable medical equipment (including 
                orthotics and prosthetics);
                    ``(H) dental care, excluding orthodontic care;
                    ``(I) mental health and substance abuse services;
                    ``(J) long-term and chronic health care services;
                    ``(K) special health care services for children 
                with disabilities or chronic health conditions;
                    ``(L) occupational, physical, and respiratory 
                therapy, and speech-language pathology services; and
                    ``(M) investigational treatments (limited to 
                participation in a clinical investigation as part of an 
                approved research trial as defined by the Secretary, 
                services or other items related to the trial that are 
                normally paid for by other funding sources need not be 
                covered);
            ``(2) Pregnant women.--With respect to the comprehensive 
        benefits package for pregnant women (from diagnosis of 
        pregnancy through 60 days after the end of the pregnancy) the 
        package shall require coverage for--
                    ``(A) maternity care (including prenatal, delivery, 
                and postpartum care, preventive services such as 
                routine examinations and check ups, recommended 
                immunizations and screening tests, family planning 
                services, and preventive health counseling including 
                nutrition and health education);
                    ``(B) ambulatory care;
                    ``(C) laboratory services;
                    ``(D) prescription drugs;
                    ``(E) inpatient care;
                    ``(F) inpatient hospital and nonhospital delivery 
                services;
                    ``(G) mental health and substance abuse services;
                    ``(H) other pregnancy- or nonpregnancy-related 
                health conditions determined appropriate by the 
                Secretary; and
                    ``(I) investigational treatments (limited to 
                participation in a clinical investigation as part of an 
                approved research trial as defined by the Secretary, 
                and services or other items related to the trial 
                normally paid for by other funding sources need not be 
                covered).
            ``(3) Extension of period of coverage.--With respect to the 
        comprehensive benefits package for pregnant women, a 
        participating State may elect to extend coverage of selected 
        health services under the benefits package beyond the 60-day 
        postpartum period if Federal funds are not used for such 
        additional coverage.
    ``(b) Limitations and Reduction in Coverage.--
            ``(1) Initial implementation.--During the 2-year period 
        that begins on the date of the implementation of this title, 
        the items and services covered under the comprehensive benefits 
        package may not be subject to any duration or scope limitation. 
        During such period, a certified plan may not require any cost 
        sharing that is not permitted under this title.
            ``(2) Reduction in coverage.--In years subsequent to the 
        period referred to in paragraph (1), the Secretary, in 
        consultation with professional organizations determined 
        appropriate by the Secretary and the Advisory Council, may 
        implement utilization limitations or other limitations on items 
        or services covered under the comprehensive benefits package on 
        a national basis if--
                    ``(A) the Secretary determines that such 
                limitations are necessary for the solvency of the 
                program established under this title; and
                    ``(B) additional funds are not appropriated and 
                deposited into the Trust Fund.
            ``(3) Alternatives.--Prior to implementing limitations 
        under paragraph (2), the Secretary shall consider alternatives 
        such as minimizing administrative costs, increasing cost 
        sharing requirements, and increasing Federal or State funding 
        requirements. In no case may the Secretary subject required 
        preventive services to such limitations.
    ``(c) Periodicity Schedules.--A certified plan may not be required 
to provide coverage for the provision of items or services under the 
comprehensive benefits package that are greater in frequency than that 
required under the periodicity schedules contained in the benefits 
package. Notwithstanding the preceding sentence, a certified plan shall 
provide coverage for the provision of any items or services, within the 
general scope of the comprehensive benefits package, that are medically 
necessary or appropriate for children and pregnant women.
    ``(d) Rules of Construction.--Nothing in this title shall be 
construed as--
            ``(1) limiting the ability of a participating State or a 
        certified plan to provide items or services in addition to 
        those required under the comprehensive benefits package, so 
        long as Federal funds are not used to pay for the provision of 
        such additional services;
            ``(2) limiting the ability of eligible individuals to 
        obtain items or services in addition to those required under 
        the comprehensive benefits package so long as Federal funds are 
        not used to pay for the provision of such additional services.
A certified plan may provide coverage for extra contractual services 
and items determined to be appropriate by the plan and individual or 
family involved.
    ``(e) Encouraging the Provision of Benefits.--In the interest of 
ensuring that all children in the United States receive comprehensive 
health services, it is the sense of Congress that employer-based, self-
insured, and other health plans not participating in the program 
established under this title be encouraged to provide comprehensive 
benefits to children and pregnant women similar to those required in 
this title.

                 ``Subpart 2--Cost Sharing Requirements

``SEC. 2825. PRINCIPLES OF COST SHARING.

    ``(a) General Principle.--All families who participate in the 
program established under this title shall be required to contribute 
toward the cost of health care for themselves or their children. Such 
required contribution shall be in the form of a required premium or a 
copayment requirement. In no case may a certified plan or participating 
State require the payment of deductibles.
    ``(b) General State Requirements and Limitations.--
            ``(1) State specific cost sharing.--A participating State 
        may elect to develop State specific cost sharing requirements 
        that differ from those specified in this section so long as 
        such requirements are consistent with the guidelines developed 
        by the Secretary that ensure that--
                    ``(A) all families participating in the program 
                contribute toward the program cost;
                    ``(B) all families participating in the program 
                receive premium subsidies;
                    ``(C) all families participating in the program pay 
                the same copayment for services; and
                    ``(D) coverage under the program is affordable for 
                families at all income levels.
            ``(2) Funding limitation.--State specific cost sharing 
        requirements developed under paragraph (1) shall not result in 
        any increase in overall Federal funding obligations in excess 
        of such obligations that would exist under the cost sharing 
        schedules described in this title.
            ``(3) Annual contribution.--In all participating States, 
        the annual family contribution under this title shall not be 
        less than $10 per eligible child and $20 per eligible pregnant 
        woman.
            ``(4) Requirements applicable with respect to low income 
        families.--
                    ``(A) Prohibition.--A participating State may not 
                require cost sharing under a certified plan, for 
                families with annual incomes that are less than 150 
                percent of the Federal poverty level, in an amount that 
                exceeds the applicable cost sharing amount described in 
                this title.
                    ``(B) Additional subsidies.--A participating State 
                may elect to provide additional premium or copayment 
                subsidies under certified plans for families with 
                annual incomes that are less than 400 percent of the 
                Federal poverty level if there are sufficient funds in 
                the State trust fund to cover the costs of such 
                subsidies and if no additional Federal funds are used.
                    ``(C) Monitoring impact of cost sharing.--
                Participating States, in consultation with certified 
                plans, shall monitor the impact of cost sharing 
                requirements (premiums and copayments) on low income 
                families and ensure that any cost sharing requirements 
                are not significant barriers that prevent such families 
                from enrolling in a certified plan or from obtaining 
                medically appropriate care. An analysis of the impact 
                of cost sharing on low income families shall be 
                presented to the Secretary as part of the annual 
                quality assessment and improvement plan of the State 
                under section 2841.

``SEC. 2826. PREMIUMS AND PREMIUM SUBSIDY.

    ``(a) Payment.--
            ``(1) Family portion.--A family enrolled in a certified 
        plan shall be responsible for paying the family portion of the 
        premium for coverage under such plan. Premium payments under a 
        certified plan may be made directly to the plan or to the State 
        (if the State elects to accept such payments on behalf of the 
        certified plan) on a monthly, quarterly, or other basis as 
        determined by the State.
            ``(2) Subsidy portion.--Upon the final approval of an 
        enrollment application under this title, a participating State 
        shall transfer to the certified plan in which the family is 
        enrolled an amount of funds equal to the amount of the 
        applicable premium subsidy under subsection (d) with respect to 
        the family that is enrolled in the plan.
            ``(3) Limitation.--If the annual premium contribution under 
        a certified plan for an eligible family, after the application 
        of the appropriate premium subsidy, exceeds the maximum annual 
        family contribution amount for such family under section 2828, 
        such excess amount shall be paid by the State directly to the 
        plan.
    ``(b) Annual Limitation.--All eligible families in a participating 
State, regardless of their incomes, shall receive a subsidy (in an 
amount determined under subsection (d)) with respect to the premiums 
required for enrollment in certified plans. The annual premium amount 
that a certified plan may require an eligible family to pay under this 
title shall be equal to--
            ``(1) the annual per capita premium that is negotiated by 
        the State with the certified plan; less
            ``(2) the annual premium subsidy amount provided by the 
        State.
In no case shall the annual premium subsidy amount be greater than the 
annual per capita premium negotiated with the certified plan.
    ``(c) Basis for Determination of Subsidy.--With respect to cases in 
which multiple certified plans are available in a geographic area or in 
which certified plans offer additional benefit package options at an 
additional cost, the amount of the premium subsidy shall be determined 
based on the lowest priced certified plan that is available in the 
area. A family shall be responsible for the payment of any premium 
amounts not covered by the premium subsidy under this title. In 
addition, any such premium amounts that result from the selection of 
more expensive plans shall not be credited toward the maximum annual 
family contribution under section 2828.
    ``(d) Subsidy Amount.--
            ``(1) In general.--The annual premium subsidy amount to be 
        applied to the premiums assessed with respect to an eligible 
        family enrolled in certified plan under this title shall be 
        equal to the product of--
                    ``(A) the amount of the annual per capita premium 
                for the certified plan involved; and
                    ``(B) the annual premium subsidy percentage for the 
                family as determined under paragraph (2).
            ``(2) Annual premium subsidy percentage.--The annual 
        premium subsidy percentage under this paragraph shall be--
                    ``(A) with respect to an eligible family with an 
                annual gross income that is less than 50 percent of the 
                Federal poverty level, 99 percent;
                    ``(B) with respect to an eligible family with an 
                annual gross income that is equal to between 50 and 149 
                percent of the Federal poverty level, 97.5 percent 
                reduced by 1.5 percentage points for each 10 percent 
                increase in the annual gross income of the family in 
                excess of 49 percent of the Federal poverty level;
                    ``(C) with respect to an eligible family with an 
                annual gross income that is equal to between 150 and 
                299 percent of the Federal poverty level, 80 percent 
                reduced by 4 percentage points for each 10 percent 
                increase in the annual gross income of the family in 
                excess of 149 percent of the Federal poverty level;
                    ``(D) with respect to an eligible family with an 
                annual gross income that is equal to between 300 and 
                399 percent of the Federal poverty level, 22.5 percent 
                reduced by 1.5 percentage points for each 10 percent 
                increase in the annual gross income of the family in 
                excess of 299 percent of the Federal poverty level; and
                    ``(E) with respect to an eligible family with an 
                annual gross income that is equal to 400 percent or 
                more of the Federal poverty level, 5 percent.

``SEC. 2827. UTILIZATION COPAYMENTS.

    ``(a) General Copayment.--With respect to items or services 
designated by the Secretary under section 2821(c), and provided under a 
certified plan, the plan shall assess an eligible family a $5 copayment 
for the provision of such items or services to such family. Preventive 
services shall be exempt from such copayment requirement.
    ``(b) Higher Copayments.--In addition to offering certified plans 
with a $5 copayment, a participating State may elect to permit the 
offering of certified plans that have higher copayment requirements. 
With respect to such plans, the copayment amount shall be the same for 
eligible families at all income levels and the minimum copayment amount 
shall be $5. Premium subsidies for an eligible family who selects a 
high copayment plan may not exceed the subsidy determined to be 
applicable to an similarly situated eligible family enrolled in a 
certified plan with a $5 utilization copayment requirement.
    ``(c) Limitation.--An eligible family may not be required to make 
utilization copayments under this section after the annual 
contributions of the family (including premiums and copayments) have 
exceeded the maximum annual family contribution for the family under 
section 2828.

``SEC. 2828. MAXIMUM ANNUAL FAMILY CONTRIBUTION.

    ``(a) Families With Eligible Children.--
            ``(1) In general.--With respect to a family with an 
        eligible child enrolled in a certified plan under this title, 
        the maximum annual family contribution that such family may be 
        required to pay under this title (including premiums and 
        copayments) for such eligible child shall be--
                    ``(A) with respect to an eligible family with an 
                annual gross income that is less than 50 percent of the 
                Federal poverty level, $10;
                    ``(B) with respect to an eligible family with an 
                annual gross income that is between 50 percent and 149 
                percent of the Federal poverty level, $15 increased by 
                $5 for each 10 percent increase in the annual gross 
                income of the family in excess of 49 percent;
                    ``(C) with respect to an eligible family with an 
                annual gross income that is between 150 percent and 299 
                percent of the Federal poverty level, $110 increased by 
                $50 for each 10 percent increase in the annual gross 
                income of the family in excess of 149 percent;
                    ``(D) with respect to an eligible family with an 
                annual gross income that is between 300 percent and 399 
                percent of the Federal poverty level, $960 increased by 
                $150 for each 10 percent increase in the annual gross 
                income of the family in excess of 299 percent; and
                    ``(E) with respect to an eligible family with an 
                annual gross income that is equal to 400 percent or 
                more of the Federal poverty level, $3,000.
            ``(2) Families with multiple children.--With respect to an 
        eligible family that enrolls more than one eligible child in a 
        certified plan under this title, the maximum annual family 
        contribution that such family may be required to pay under 
        paragraph (1) shall be--
                    ``(A) in the case of a family enrolling two 
                eligible children, twice the amount under paragraph (1) 
                applicable to the family based on family income;
                    ``(B) in the case of a family enrolling three 
                eligible children, twice the amount under paragraph (1) 
                applicable to the family based on family income 
                increased by an amount equal to 40 percent of such 
                amount; and
                    ``(C) in the case of a family enrolling four or 
                more eligible children, twice the amount under 
                paragraph (1) applicable to the family based on family 
                income increased by an amount equal to 80 percent of 
                such amount.
    ``(b) Families With Pregnant Woman.--With respect to a family with 
an eligible pregnant woman enrolled in a certified plan under this 
title, the maximum annual family contribution that such family may be 
required to pay under this title (including premiums and copayments) 
for such pregnant woman shall be--
            ``(1) with respect to an eligible family with an annual 
        gross income that is less than 50 percent of the Federal 
        poverty level, $20;
            ``(2) with respect to an eligible family with an annual 
        gross income that is between 50 percent and 149 percent of the 
        Federal poverty level, $30 increased by $10 for each 10 percent 
        increase in the annual gross income of the family in excess of 
        49 percent;
            ``(3) with respect to an eligible family with an annual 
        gross income that is between 150 percent and 299 percent of the 
        Federal poverty level, $220 increased by $100 for each 10 
        percent increase in the annual gross income of the family in 
        excess of 149 percent;
            ``(4) with respect to an eligible family with an annual 
        gross income that is between 300 percent and 399 percent of the 
        Federal poverty level, $1,820 increased by $200 for each 10 
        percent increased in the annual gross income of the family in 
        excess of 299 percent; and
            ``(5) with respect to an eligible family with an annual 
        gross income that is equal to 400 percent or more of the 
        Federal poverty level, $5,000.
    ``(c) Families With Eligible Children and Pregnant Women.--In the 
case of an eligible family with both an eligible child and eligible 
pregnant woman enrolled in a certified plan, the maximum annual family 
contribution that such family may be required to pay under this title 
(including premiums and copayments) shall be equal to the sum of--
            ``(1) the amount determined under subsection (a) with 
        respect to the family involved; and
            ``(2) the amount determined under subsection (b) with 
        respect to the family involved.
    ``(d) Adjustment for Subsequent Years.--The maximum annual family 
contribution amounts described in subsections (a) and (b) shall remain 
in effect during the first 2 fiscal years in which the program under 
this title is in effect. In subsequent years, the maximum annual family 
contribution amounts under such subsections shall be increased annually 
(and adjusted to the nearest $5 increment) based on the indexes used by 
the Secretary to calculate funding allocations under section 
2801(b)(1)(B).
    ``(e) Limitation and Calculations.--
            ``(1) Prohibition on premium increases.--The amount of the 
        premium contribution or copayments assessed to an eligible 
        family enrolled in certified plans under this title shall not 
        be increased during the 1-year period beginning on the date of 
        such enrollment.
            ``(2) Permissible adjustments.--The amount of the premium 
        subsidy and the maximum annual family contribution applied 
        under this part with respect to an eligible family enrolled in 
        a certified plan may be adjusted during the 1-year period 
        beginning on the date of enrollment, if the family can 
        demonstrate a decrease in income of an amount to permit such 
        family to qualify for a larger premium subsidy. In such case, 
        the premium contribution for the family shall be recalculated 
        based on the larger premium
            ``(3) Application for reconciliation.--A family that 
        desires to have an income reconciliation adjustment made under 
        paragraph (2) shall apply directly to the State. Such a family 
        shall be limited to one such income reconciliation adjustment 
        during each year in which the family is enrolled in a certified 
        plan. In cases where premium subsidies have been subject to 
        income reconciliation under this subsection, the State shall 
        appropriately adjust its payments to the respective certified 
        plan.''.

SEC. 203. STATE PROGRAM DEVELOPMENT AND ADMINISTRATION.

    Title XXVIII of the Public Health Service Act (as added by section 
201 and amended by section 202) is further amended by adding at the end 
thereof the following new part:

         ``Part D--State Program Development and Administration

``SEC. 2831. APPLICATION AND DATE OF IMPLEMENTATION.

    (a) In General.--A State that desires to participate in the program 
established under this title shall prepare and submit to the Secretary 
an application at such time, in such manner, and containing such 
information as the Secretary may require, including the State strategic 
plan under subsection (b). To be approved by the Secretary, an 
application shall contain assurances that the State program to be 
established under this title will fully implement coverage for eligible 
children and pregnant women by January 1, 2002. The Secretary may 
approve the application of a State that desires to implement a program 
under this title as early as January 1, 1998.
    ``(b) State Strategic Plan.--
            ``(1) Submission.--A State that desires to participate in 
        the program established under this title shall submit, as part 
        of their application under subsection (a), an initial 5-year 
        strategic plan.
            ``(2) Plan guidelines.--Not later than 90 days after the 
        date of enactment of this title, the Secretary, in consultation 
        with the Maternal and Child Health Bureau, shall develop and 
        make available specific guidelines to assist States in 
        preparing and submitting an acceptable strategic plan under 
        this subsection. At a minimum, such guidelines shall require 
        that a strategic plan--
                    ``(A) describe the current health status of the 
                target population in the State;
                    ``(B) describe the short- and long-term health 
                objectives of the State, including time schedules for 
                the achievement of such objectives;
                    ``(C) describe the performance and outcome measures 
                and mechanisms to be used by the State for monitoring 
                health indicators;
                    ``(D) describe specific details of the proposed 
                structure of the State program, analyses of at least 
                one alternative structure considered, and cost 
                estimates;
                    ``(E) in the case of a State that proposes a 
                structure that is different from that described in this 
                title, contain a comparative analysis of the State's 
                proposed structure, including an analysis of 
                achievement of the objectives of the State under this 
                title and the program costs; and
                    ``(F) contain an outline of the manner in which 
                coverage for all eligible individuals residing within 
                the State will be achieved within the first 5 years in 
                which the program is in operation in the State.
        Such plan may incorporate elements required under current State 
        application submitted under title V of the Social Security Act.
            ``(3) Criteria for evaluation.--Not later than 90 days 
        after the date of enactment of this title, the Secretary, in 
        consultation with Maternal and Child Health Bureau, shall 
        develop and make available specific criteria that will serve as 
        the basis for the evaluation and approval of State strategic 
        plans by the Secretary.
    ``(c) Requirements.--In addition to otherwise meeting the 
requirements of this title, a State program under an application 
submitted under this section shall--
            ``(1) ensure that affordable coverage is available for 
        comprehensive, high quality health care for all children under 
        seven years of age and all pregnant women residing within the 
        State within a time period determined to be reasonable by the 
        Secretary;
            ``(2) ensure that each certified plan operating in the 
        State provide the comprehensive benefits package required under 
        section 2821;
            ``(3) be consistent with the principle that all families 
        contribute towards their own or their children's health care;
            ``(4) ensure that the State is responsible for the 
        certification of health plans, entering into agreements with 
        certified plans to provide health services, and negotiating 
        premiums with certified plans on behalf of eligible 
        individuals;
            ``(5) have a quality assessment and improvement program in 
        effect under section 2841;
            ``(6) have a utilization review program in effect under 
        section 2842;
            ``(7) fulfill health information system requirements under 
        sections 2843 and 2844; and
            ``(8) have a program in effect for preventing and 
        controlling fraud and abuse under section 2845.
    ``(d) Decision by Secretary.--Not later than 90 days after the date 
on which the Secretary receives the application of a State under this 
section, the Secretary shall notify the State concerning the final 
decision of the Secretary with respect to such application. If the 
Secretary fails to approve the State application, the Secretary shall 
assist the State in modifying such application and provide specific 
guidance on the manner in which to gain approval. A State that has 
submitted an application that is not approved may submit another 
application in the following fiscal year.
    ``(e) State Innovation and Program Flexibility.--A State with an 
application approved under this section shall, at a minimum, implement 
a State program that is consistent with the guidelines, principles and 
requirements described in this title. In developing and implementing 
such a program, a State is encouraged to be innovative and propose 
structures or a blend of structures for the State program that are 
different from that described in this title. Such structures may 
include, modifications of existing State or Federal programs, capitated 
programs, fee-for-service programs, subsidy programs for the individual 
purchase of health insurance, and programs where the State is the 
direct payer for services. Such structures, however, must be shown to 
be or expected to be, as effective or more effective in meeting the 
program objectives of this title and containing program costs as the 
structure described in this title. A State may establish a State-
specific program or participate in a program with neighboring States.

``SEC. 2832. SPECIAL STATUS STATES.

    ``(a) Petition.--
            ``(1) Existing programs.--A State that determines that the 
        existing health care program of the State provides, or that 
        expects such provision to be made within 1 year from the date 
        of a petition under this subsection, affordable, comprehensive, 
        high quality, health care coverage for all children under seven 
        years of age and pregnant women residing within the State, may 
        petition the Secretary to designate such State as a special 
        status State.
            ``(2) Participating states.--A participating State that 
        determines that the program of the State under this title has 
        achieved the objective described in paragraph (1), may, in 
        their annual quality assessment and improvement plan, petition 
        the Secretary to designate such State as a special status 
        State.
            ``(3) Approval of petitions.--The Secretary shall approve a 
        petition under this subsection if the Secretary determines that 
        the petitioning State has demonstrated that at least 95 percent 
        of all eligible children and pregnant women residing in the 
        State are covered either under the State program or under other 
        sources of health insurance. The Secretary shall make a 
        determination on the State petition under this section within 
        90 days of the date on which the Secretary receives the 
        petition.
    ``(b) Effect of Designation.--
            ``(1) Expansion of services.--A State designated as a 
        special status State under subsection (a) may submit a proposal 
        to the Secretary for the expansion of health services provided 
        under this title to children under seven years of age and 
        pregnant women, or to expand comparable coverage with respect 
        to health services for older children up to age 21. Such 
        expanded eligibility shall be consistent with the requirements 
        and guidelines under this title.
            ``(2) Matching requirements.--The matching requirement in 
        section 2802 shall apply to expanded eligibility programs under 
        paragraph (1).

``SEC. 2833. STATES WITH MEDICAID WAIVERS.

    ``A State that has in effect a waiver under section 1115 or 1915 of 
the Social Security Act shall be eligible to be a participating State 
under this title. If such a State desires to become a participating 
State, the State program shall be subject to all program guidelines and 
requirements under this title. A State with a waiver described in this 
section may submit a petition under section 2832 to be designated as a 
special status State.

``SEC. 2834. DEVELOPMENT GRANTS FOR STATE PROGRAMS.

    ``(a) In General.--Upon the approval of a State application under 
section 2831, the Secretary, from the Trust Fund, shall award a one-
time program development grant to the State.
    ``(b) Amount.--The amount of a grant awarded under subsection (a), 
shall be determined based on a formula developed by the Secretary.
    ``(c) Use of Funds.--Amounts received under a grant under this 
section shall be used to develop and implement the approved State 
program and State strategic plan, including the development of 
community-based health networks and health plans.

``SEC. 2835. EXPANSION OF ELIGIBILITY.

    ``(a) Determination by Secretary.--
            ``(1) In general.--Not later than the date that is 2 years 
        after the date of enactment of this title, and every 2 years 
        thereafter, the Secretary, in consultation with the Advisory 
        Council, shall determine whether sufficient funding and public 
        support exists to enable the Secretary to expand the categories 
        of individuals eligible for coverage under this title to 
        include additional groups of children up to 21 years of age.
            ``(2) Requirement.--If the Secretary determines under 
        paragraph (1) that sufficient funding and public support exists 
        to permit the expansion of individuals eligible for coverage to 
        include additional age groups on a national basis, the 
        Secretary shall implement guidelines to provide for such 
        expansion.
            ``(3) Recommendations.--If the Secretary determines under 
        paragraph (1) that public support exists for the expansion of 
        individuals eligible for coverage but that funding is 
        insufficient, the Secretary may recommend to Congress that 
        appropriate legislation be considered to expand the program 
        under this title to expand such eligibility.
    ``(b) Petition by States.--
            ``(1) In general.--A participating State that does not 
        qualify as a special status State under section 2832 may, in 
        the annual evaluation report of the State, petition the 
        Secretary to expand the State program to provide coverage for 
        additional age groups if the State determines that sufficient 
        funds are available in the State trust fund or if additional 
        State funds are deposited into the State trust fund. The 
        Secretary shall make a final determination on a State request 
        for expanded eligibility within 90 days of the date of 
        receiving the State petition.
            ``(2) Matching requirement.--The Secretary shall make 
        available to a State, with respect to additional funds 
        deposited into the State trust fund for the purpose of 
        expanding eligibility under paragraph (1) to children not 
        eligible for coverage on a national basis, Federal funds in an 
        amount equal to the amount of State funds so deposited.
            ``(3) Funding.--An approved petition under this section may 
        be considered by the Secretary for Federal funding only after 
        funds are provided to all participating States with approved 
        programs and approved expanded eligibility programs of special 
        status States are allocated.

``SEC. 2836. FAILURE OF STATE TO ADMINISTER A PROGRAM IN COMPLIANCE 
              WITH TITLE.

    ``(a) Failure To Comply.--If the Secretary determines that the 
State program of a participating State fails to meet the requirements 
of this title, including requirements relating to cost containment and 
the prevention and control of fraud and abuse, the Secretary shall 
notify the State. Upon receiving such a notification, the State shall 
be required to demonstrate that the State has made a reasonable effort 
to address program deficiencies.
    ``(b) Administration by Secretary.--If the Secretary determines 
that a State has failed to demonstrate a reasonable effort under 
subsection (a), the Secretary may elect to directly administer, or 
enter into agreement with a non-State government organization to 
administer, the State program.
    ``(c) Premiums and Copayments.--Premiums and copayments under this 
title for a State program administered by a Federal or non-State 
government entity may not be in excess of the premiums and copayments 
assessed under this title.
    ``(d) Funding and Matching Requirement.--The costs of administering 
a State program under subsection (b) may not be in excess of that 
amount that would be provided to the State under this title. A State 
shall continue to provide matching funds in accordance with section 
2802.

``SEC. 2837. LIMITS ON STATE AND FEDERAL ADMINISTRATIVE COSTS.

    ``The Secretary and a participating State shall, to the maximum 
extent practicable, ensure that the administrative complexity and costs 
of the program implemented under this title are minimized. A 
participating State may expend not to exceed 5 percent of the amount in 
the State trust fund in any fiscal year for the administration of the 
State program. The State shall be responsible for any administrative 
costs in excess of such 5 percent.

   ``Part E--Ensuring Quality, Establishing Information Systems, and 
                            Preventing Abuse

``SEC. 2841. ANNUAL QUALITY ASSESSMENT AND IMPROVEMENT PLANS.

    ``(a) Requirement.--Not later than 1 year after the date on which 
the Secretary approves the application of a State under section 2831, 
and annually thereafter, the State, in coordination with existing State 
programs under title V of the Social Security Act, shall prepare and 
submit to the Secretary a quality assessment and improvement plan.
    ``(b) Guidelines for Plans.--Not later than 180 days after the date 
of enactment of this title, the Secretary, in consultation with the 
Maternal and Child Health Bureau, shall develop and submit to 
participating States guidelines concerning the elements that must be 
included in the annual quality assessment and improvement plan of such 
participating State. At a minimum, such guidelines shall require a 
State plan to include an assessment of the--
            ``(1) progress the State had made towards ensuring health 
        care coverage for all eligible individuals residing within the 
        State;
            ``(2) cost containment measures implemented under the State 
        program;
            ``(3) assurances provided for ensuring the provision of 
        high quality health care;
            ``(4) impact within the State on the health status of the 
        target populations (including process and outcome measures and 
        objectives);
            ``(5) the financial and administrative aspects of the State 
        program; and
            ``(6) any proposed modifications to the State program.
    ``(c) Response by Secretary.--Not later than 90 days after the date 
on which the Secretary has received the quality assessment and 
improvement plan of a participating State, the Secretary shall provide 
a response to such State concerning such plan. Such response shall 
include the determination of the Secretary with respect to any proposed 
modifications in the State program as contained in the plan. 
Evaluations of the State program by the Secretary shall be based on an 
assessment of the performance of the State program in meeting program 
objectives rather than on the specific methods used to achieve such 
objectives.

``SEC. 2842. NATIONAL ADVISORY COUNCIL FOR MOTHERS' AND CHILDREN'S 
              HEALTH.

    ``(a) Establishment.--The Secretary shall establish an advisory 
council to be known as the ``National Advisory Council for Mothers' and 
Children's Health'' to provide advice to the Secretary concerning the 
administration of and modifications to programs established under this 
title.
    ``(b) Membership.--
            ``(1) In general.--The Advisory Council shall be composed 
        of 11 individuals to be appointed by the President in 
        consultation with the Secretary, not later than 90 days after 
        the date of the enactment of this title, with the advice and 
        consent of the Senate. Members of the Advisory Council shall be 
        appointed on the basis of their experience and expertise.
            ``(2) Representation.--In appointing the members of the 
        Advisory Council under paragraph (1), the Secretary shall 
        ensure the appropriate representation of--
                    ``(A) pediatricians, obstetricians, and other 
                health care providers;
                    ``(B) consumers;
                    ``(C) health policy experts;
                    ``(D) State and local government health officials;
                    ``(E) public health and maternal and child health 
                professionals;
                    ``(F) experts in population-based health 
                information systems;
                    ``(G) experts in health promotion and disease 
                prevention;
                    ``(H) health care managers and economists;
                    ``(I) medical ethicists;
                    ``(J) health care industry representatives; and
                    ``(K) other related disciplines as determined 
                appropriate by the Secretary.
        In appointing such members, the Secretary shall ensure that not 
        less than three members are health care providers and not less 
        than three members are representatives of consumers.
            ``(3) Enrolled individuals.--After the expiration of the 
        initial terms of the members of the Advisory Council appointed 
        to represent consumers, subsequent consumer representatives 
        shall be from families currently enrolled in a certified plan.
            ``(4) Chairperson.--In appointing members of the Advisory 
        Council, the Secretary shall designate one member to serve as 
        chairperson and one member to serve as vice chairperson. A 
        Chairperson shall not serve in that capacity for more than one 
        full term.
            ``(5) Terms.--
                    ``(A) In general.--A member of the Advisory Council 
                shall be appointed for a term of 2 years, except that 
                of the members first appointed six such members shall 
                be appointed for a term of 3 years.
                    ``(B) Limitation.--No member of the Advisory 
                Council may serve more than two complete terms.
            ``(6) Vacancies.--
                    ``(A) In general.--A vacancy on the Advisory 
                Council shall be filled in the manner in which the 
                original appointment was made and shall be subject to 
                any conditions which applied with respect to the 
                original appointment.
                    ``(B) Filling unexpired term.--An individual chosen 
                to fill a vacancy shall be appointed for the unexpired 
                term of the member replaced.
            ``(7) Expiration of terms.--The term of any member shall 
        not expire before the date on which the member's successor 
        takes office.
            ``(8) Employment by federal government.--An individual may 
        not be appointed to the Advisory Council if such individual was 
        employed by the Federal Government at any time during the 1-
        year period prior to the appointment.
            ``(9) No financial interest.--A member of the Advisory 
        Council shall have no substantial financial interest in any 
        entity related to any issue to be addressed by the Council.
    ``(c) Responsibilities.--
            ``(1) In general.--The Advisory Council shall evaluate 
        programs established under this title and provide advice to the 
        Secretary concerning methods to improve the health of children 
        and pregnant women. As part of such evaluation, the Advisory 
        Council shall include an assessment of the impact of State 
        programs under this title on the health status of children and 
        pregnant women. Specifically, the Advisory Council shall 
        evaluate and make recommendations concerning--
                    ``(A) items and services covered under the 
                comprehensive benefits package;
                    ``(B) State program cost sharing requirements;
                    ``(C) the allocation and management of funds from 
                the Trust Fund;
                    ``(D) eligibility and enrollment issues with 
                respect to State programs;
                    ``(E) standards for and the responsibilities of 
                certified plans, at both the Federal and State level;
                    ``(F) national assessment and quality improvement 
                program guidelines and utilization review program 
                guidelines;
                    ``(G) the development of pediatric and maternal 
                health care practice guidelines;
                    ``(H) health care information systems and reporting 
                requirements;
                    ``(I) general State and Federal program 
                administration; and
                    ``(J) any other relevant matters determined to be 
                appropriate by the Advisory Council.
            ``(2) Annual summary.--The Advisory Council shall prepare 
        and submit to the Secretary an annual summary of the Council's 
        activities, analyses, and evaluations of State programs 
        together with the recommendations of the Council for program 
        improvement.
    ``(d) Meetings.--
            ``(1) Initial meeting.--Not later than 30 days after the 
        date on which all members of the Advisory Council have been 
        appointed, the Council shall hold its first meeting.
            ``(2) Regular meetings.--The Advisory Council shall meet at 
        the call of the Chairperson, but not less than four times each 
        year.
            ``(3) Quorum.--A majority of the members of the Advisory 
        Council shall constitute a quorum, but a lesser number of 
        members may hold hearings.
    ``(e) Task forces.--The Advisory Council may establish professional 
or technical task forces to carry out specific functions if the Council 
determines that appropriate expertise is not otherwise available.
    ``(f) Information From Federal Agencies.--The Secretary shall 
ensure that the Advisory Council has access to all necessary logistic, 
administrative, and financial support. Upon request of the chairperson 
of the Council, the head of each Federal department or agency shall 
furnish information to the Council.
    ``(g) Advisory Council Personnel Matters.--
            ``(1) Compensation.--Each member of the Advisory Council 
        shall be compensated at a rate equal to the daily equivalent of 
        the annual rate of basic pay prescribed for level IV of the 
        Executive Schedule under section 5315 of title 5, United States 
        Code, for each day (including travel time) during which such 
        member is engaged in the performance of the responsibilities of 
        the Council.
            ``(2) Travel expenses.--The members of the Advisory Council 
        shall be allowed travel expenses, including per diem in lieu of 
        subsistence, at rates authorized for employees of agencies 
        under subchapter I of chapter 57 of title 5, United States 
        Code, while away from their homes or regular places of business 
        in the performance of services for the Council.
    ``(h) Report to Congress.--If the Advisory Council--
            ``(1) irreconcilably differs with Secretary concerning 
        major policy issues related to the program established under 
        this title; or
            ``(2) has evidence that the Secretary is not fulfilling the 
        responsibilities of the Secretary under this title to ensure 
        affordable, comprehensive, high quality health care coverage 
        for all eligible individuals;
the Council may prepare and submit to Congress a report concerning such 
matters.

``SEC. 2843. NATIONAL QUALITY ASSESSMENT AND IMPROVEMENT PROGRAM 
              GUIDELINES AND UTILIZATION REVIEW PROGRAM GUIDELINES.

    ``(a) National Quality Assessment and Improvement Program 
Guidelines.--
            ``(1) Establishment.--Not later than 1 year after the date 
        of enactment of this title, the Secretary, in consultation with 
        relevant governmental and non-governmental organizations as 
        determined appropriate by the Secretary, shall develop national 
        quality assessment and improvement program guidelines for use 
        by certified plans under this title.
            ``(2) Requirement.--The guidelines developed under 
        paragraph (1) shall be consistent with the concepts and 
        principles established under the Continuous Quality 
        Improvement/Total Quality Management programs.
    ``(b) National Utilization Review Program Guidelines.--
            ``(1) Establishment.--Not later than 1 year after the date 
        of enactment of this title, the Secretary, in consultation with 
        relevant governmental and non-governmental organizations as 
        determined appropriate by the Secretary, shall develop national 
        utilization review program guidelines for use by certified 
        plans under this title.
            ``(2) Requirements.--The guidelines developed under 
        paragraph (1) shall, at a minimum, require that a certified 
        plan ensure that the following attributes are incorporated into 
        the utilization review program of the plan:
                    ``(A) The utilization review program is clearly 
                documented in printed materials provided to the 
                enrolled individual.
                    ``(B) That only qualified licensed or certified 
                health professionals with training or experience in 
                pediatric or obstetric care are used for specific case 
                utilization reviews.
                    ``(C) That individuals involved in specific case 
                utilization reviews do not have a financial interest or 
                incentive to deny or limit utilization.
                    ``(D) That descriptions and protocols for 
                utilization review are disclosed to enrollees, 
                affiliated providers, and appropriate State officials 
                upon demand, and that such descriptions and protocols 
                protect proprietary business information.
                    ``(E) That criteria for utilization review shall be 
                based on sound scientific principles and standard 
                medical practice.
                    ``(F) That there is a mechanism for the regular 
                evaluation and modification of the utilization review 
                program.
    ``(c) General Requirements.--The guidelines developed under this 
section shall be specific with respect to pediatric and maternal health 
care delivery systems to the maximum extent practicable. Such 
guidelines shall be flexible and adaptable, and serve as the basis for 
the quality assessment and improvement program and utilization review 
program of a certified plan.
    ``(d) Consultation.--The Secretary, in developing guidelines under 
this section shall, at a minimum, consult with the National Committee 
on Quality Assurance, the National Association of Insurance 
Commissioners, private health care accreditation organizations, 
representatives of certified plans, and relevant maternal and child 
health care professional organizations.

``SEC. 2844. NATIONAL HEALTH INFORMATION SYSTEMS FOR MOTHERS AND 
              CHILDREN.

    ``(a) Establishment and Implementation.--Not later than 1 year 
after the date of enactment of this title, the Secretary shall 
establish and implement a National Health Information System for 
Mothers and Children. The Secretary, in consultation with States and 
representatives of certified plans, the Administrator of the Agency for 
Health Care Policy Research, the Administrator of the Health Resources 
and Services Administration, the Director of the Centers for Disease 
Control and Prevention, and the heads of other agencies or 
nongovernment organizations as determined appropriate by the Secretary, 
shall develop specific data elements and operating procedures with 
respect to such Information System.
    ``(b) Submission of Data.--
            ``(1) Electronic form.--A participating State shall be 
        responsible for ensuring that certified plans operating within 
        the State submit the data required under this title. Such data 
        shall be transmitted to the Secretary. The State shall require 
        that each certified plan operating within the State submit data 
        to the Information System, as required by the Secretary under 
        the policies of the System, in electronic form.
            ``(2) Software.--The Secretary shall develop and freely 
        distribute to participating States, the computer software 
        necessary to permit such States and certified plans to 
        efficiently collect and transmit data to the Information 
        System. A participating State or certified plan may not be 
        required to use such software if such State or plan is able to 
        otherwise comply with the data collection and reporting 
        requirements.
            ``(3) Integration of data reporting requirements.--The 
        Secretary, and each participating State, shall, to the maximum 
        extent practicable, integrate reporting requirements applicable 
        to certified plans under other Federal and State health 
        programs with those established under this title to ensure that 
        duplicative requirements are eliminated.
            ``(4) Reasonable requirements.--The Secretary, and each 
        participating State, shall ensure that, with respect to 
        certified plans, the resources and time required to comply with 
        the information requirements of the Secretary and State under 
        this title are reasonable and not excessive.
            ``(5) Maintenance of records.--Any law of a participating 
        State that requires that medical or health records, including 
        billing information, be maintained in written, rather than 
        electronic, form shall be satisfied if such records are 
        maintained in a manner consistent with the Information System 
        requirements developed by the Secretary under this section.
    ``(c) Use of Data.--Data received by the Information System from 
States and certified plans shall be used to--
            ``(1) monitor and evaluate certified plans;
            ``(2) monitor the health status of the populations served 
        by such plans;
            ``(3) support core public health functions;
            ``(4) increase capacity for health policy and program 
        evaluation, planning, and research;
            ``(5) provide for quality assessment and improvement 
        activities;
            ``(6) improve provider coordination and access to care; and
            ``(7) carry out other activities related to the public 
        health.
    ``(d) Privacy.--
            ``(1) In general.--To ensure the privacy of medical 
        information provided under this title, the Secretary and each 
        participating State shall implement safeguards to prevent the 
        unauthorized access of individuals or entities to medically 
        confidential information.
            ``(2) Applicability of state laws.--A participating State 
        shall ensure that State laws that protect medical 
        confidentiality are applicable to data collected by the State 
        or a certified plan operating within the State under this 
        title, except that such laws that interfere with the use of the 
        data as required under this title shall be preempted.

``SEC. 2845. NATIONAL CHILDHOOD IMMUNIZATION DATABASE.

    ``(a) Establishment.--In order to achieve the goal of providing 
age-appropriate immunization coverage for 100 percent of the children 
in the United States, the Secretary shall establish a National 
Childhood Immunization Database as part of the Information System.
    ``(b) Requirements.--
            ``(1) In general.--As part of the data provided under 
        section 2844, a certified plan shall ensure that the 
        immunization records of all enrolled individuals are updated as 
        required under guidelines developed by the Secretary and the 
        participating State involved. Such immunization record data 
        shall be maintained in the database established under 
        subsection (a). The Secretary shall, to the maximum extent 
        practicable, ensure that the database contains accurate and up-
        to-date information concerning the immunization records of 
        every child enrolled in a certified plan under this title.
            ``(2) Application to all health plans.--All certified plans 
        participating in a State program under this title and all other 
        health plans that provide coverage for 10,000 or more childhood 
        immunizations per year that are not participating under this 
        title but that are offered within a participating State, shall 
        participate in the National Childhood Immunization Database.
            ``(3) Availability of information.--The database 
        established under subsection (a) shall ensure that current 
        immunization information is available on a real time basis to 
        health care providers who need such information to assess the 
        appropriate immunization needs of their patients.
            ``(4) Access.--
                    ``(A) In general.--Information in the database 
                shall be accessible to the certified plan in which a 
                child is enrolled electronically or through a toll free 
                telephone number.
                    ``(B) Other plans.--With respect to a child 
                accessing a certified plan, other than the certified 
                plan in which such child is enrolled, such accessed 
                plan or the public health authorities involved may 
                utilize the database to access the immunization record 
                of the child if such access is needed to assess the 
                need for appropriate immunization.
    ``(c) Rule of Construction.--Nothing in this section shall be 
construed as preempting existing Federal or State laws concerning 
disease reporting or the reporting of other health-related data to 
local, State, and Federal health authorities.

``SEC. 2846. PREVENTION, MONITORING, AND CONTROL OF FRAUD AND ABUSE.

    ``(a) Establishment of Program.--Not later than 180 days after the 
date of enactment of this title, the Secretary, in consultation with 
the Attorney General, shall establish a program and develop State 
guidelines for preventing, monitoring, and investigating fraud related 
to the program established under this title. Under such Federal 
program, the Secretary and the Attorney General shall provide 
assistance to participating States for the monitoring and control of 
fraud and abuse in the State programs, and in investigating and 
prosecuting individuals and certified plans whose activities violate 
the provisions of this title, any law enacted in the administration of 
this title, or any act in violation of such laws that involve 
interstate activity.
    ``(b) State Systems.--
            ``(1) Certification.--Prior to making an allocation to a 
        participating State under section 2801, the Secretary shall 
        certify that the State has established and implemented a 
        Statewide system for preventing, monitoring, and investigating 
        fraud and abuse that occurs within the State with respect to 
        the State program.
            ``(2) Requirements of system.--To be certified under 
        paragraph (1), a State system shall--
                    ``(A) provide authority to State officials to 
                prosecute individuals or certified plans for criminal 
                violations of the provisions of this title or any law 
                enacted to administer or enforce this title;
                    ``(B) solicit and receive consumer feedback 
                regarding compliance with requirements under the State 
                program;
                    ``(C) provide for the investigation of complaints 
                of violations of requirements under the State program;
                    ``(D) assist in the resolution of consumer 
                complaints against certified plans;
                    ``(E) have a formal mechanism for the sharing of 
                information with and assisting the Federal entity 
                responsible for policing compliance with this title; 
                and
                    ``(F) prepare and submit to the Secretary and the 
                Attorney General an annual report summarizing the 
                activities under the State system.
            ``(3) Integration.--A State system established under this 
        subsection may be integrated into existing State systems 
        responsible for controlling fraud and abuse under the State 
        program under title XIX of the Social Security Act.
    ``(c) Penalties.--
            ``(1) Development of legislative proposal.--Not later than 
        180 days after the date of the enactment of this title, the 
        Secretary, in consultation with the Attorney General, shall 
        submit to the Congress a legislative proposal to modify or 
        establish civil and criminal penalties for fraud and abuse or 
        for other violations by individuals and certified plans related 
        to the program established under this title.
            ``(2) Data.--Not later than 1 year after the date of 
        enactment of this title, the Secretary, in consultation with 
        the Attorney General, shall submit to the Congress a 
        legislative proposal to modify or establish civil and criminal 
        penalties for the unauthorized use of data collected under this 
        title, including the sale or transfer of data for commercial 
        use or use of data for illegal activities.
            ``(3) Recovery of funds.--Any funds recovered or fines 
        collected under any civil or criminal actions related to fraud 
        and abuse under this title shall be deposited into the trust 
        fund of the State or States in which the fraud and abuse 
        occurred. Funds recovered on a national level shall be 
        deposited into the Trust Fund.
    ``(d) Prohibition on Participation.--A certified plan, health care 
provider, or other individual or entity participating in the Federal 
program or a State program under this title, that has been found guilty 
of fraud or abuse in connection with activities under this title, shall 
be prohibited from participating in any manner in such Federal or a 
State program, for a period of not less than 5 years. The Secretary may 
waive the 5-year limitation if the Secretary determines that there is a 
compelling reason to grant such waiver.
    ``(e) Applicability of Guidelines.--Federal and State guidelines 
developed and implemented under this section shall be developed in 
recognition of the differences among the various types of health plans, 
and be applicable to all health plans.''.

SEC. 204. RESPONSIBILITIES OF FAMILIES, CERTIFIED PLANS, EMPLOYERS, 
              STATES, AND THE FEDERAL GOVERNMENT.

    Title XXVIII of the Public Health Service Act (as added by section 
201 and amended by sections 202 and 203) is further amended by adding 
at the end thereof the following new part:

  ``Part F--Responsibilities of Families, Certified Plans, Employers, 
                   States, and the Federal Government

``SEC. 2851. RESPONSIBILITIES OF FAMILIES.

    ``A family with an eligible child under seven years of age, or an 
eligible pregnant woman, who is not covered under a health plan shall--
            ``(1) be responsible for enrolling such child or pregnant 
        woman in a certified plan;
            ``(2) pay the share of premiums and copayments required of 
        such family under this title; and
            ``(3) maintain an active role and participate in the health 
        care system to ensure that the child or pregnant woman receives 
        appropriate, high quality health care.

``SEC. 2852. RESPONSIBILITIES OF CERTIFIED PLANS.

    ``(a) In General.--A certified plan participating in a State 
program under this title shall--
            ``(1) be certified by the State and comply with all 
        requirements for such certification or recertification;
            ``(2) participate in a national open enrollment period and 
        permit enrollment at the point-of-service;
            ``(3) in the case of a family that has at least one 
        eligible child enrolled in the certified plan and one or more 
        other children who are not eligible for coverage under this 
        title, offer optional family enrollment with respect to such 
        other children at a reasonable cost;
            ``(4) in the case of a family that has at least one 
        eligible child enrolled in the certified plan, and one or more 
        other children who are eligible for health services under title 
        XIX of the Social Security Act but not eligible for coverage 
        under this title, offer health services under title XIX for 
        such other children in the family;
            ``(5) not discriminate against individuals during 
        marketing, enrollment, or provision of services based on pre-
        existing conditions, genetic predisposition of health 
        conditions, medical history, expected utilization of services 
        or health expenditures, race, ethnicity, national origin, 
        religion, age (within the eligible age group), gender, income, 
        or disability;
            ``(6) accept any applicant for enrollment if such applicant 
        is an eligible individual and resides within the geographic 
        area served by the plan, and may not deny enrollment to any 
        eligible individual except on the basis of documented plan 
        capacity;
            ``(7) in the case of enrolled individuals who are re-
        enrolling in the plan, ensure that such individuals are re-
        enrolled if eligibility is maintained;
            ``(8) not use pressure, misleading advertising or 
        marketing, or other unethical practices to coerce or discourage 
        certain individuals or groups from enrolling in the plan or 
        disenrolling from the plan;
            ``(9) establish a system for collecting premiums and 
        copayments;
            ``(10) not terminate the enrollment of an individual except 
        in cases of failure to pay premiums or copayments, fraud and 
        abuse, or withdrawal of the plan from the market, and notify 
        the State of the intention of the plan to terminate the 
        enrollment of an enrollee not later than 60 days prior to the 
        date on which coverage under such plan is terminated;
            ``(11) not impose a waiting period prior to the date on 
        which coverage under the plan commences;
            ``(12) directly provide or provide coverage for all items 
        and services required under the comprehensive benefits package 
        under part C, ensure that the premium amount negotiated with 
        the State under this title is the full required premium, and 
        not impose any additional charges for covered items or 
        services;
            ``(13) not exclude coverage or deny care for any pre-
        existing conditions, congenital conditions, or genetic 
        predispositions to conditions that are covered under the 
        comprehensive benefits package;
            ``(14) ensure that a choice of primary care providers is 
        available to enrollees, that primary care and preventive 
        services are readily available and convenient to all enrollees 
        within the geographic area served, and that emergency services 
        are available on a 24-hour basis, 7 days a week;
            ``(15) establish a program for the credentialing and 
        performance monitoring of providers under the plan and ensure 
        that adequate health provider to enrolled individual ratios are 
        established and maintained;
            ``(16) provide strong, comprehensive preventive health and 
        patient education services;
            ``(17) ensure that the special health needs of children 
        with disabilities or chronic health conditions are adequately 
        met;
            ``(18) if sufficient capacity to deliver health services 
        for children described in paragraph (16) does not exist within 
        the certified plan, including pediatric specialty and 
        subspecialty care, enter into agreements with such providers or 
        facilities to provide appropriate care;
            ``(19) to the extent that resources or services are not 
        available within the plan, provide access to an integrated 
        child and maternal health care network, which consists of a 
        network of providers who together can provide for the full 
        continuum of health care, including preventive, primary, 
        secondary, tertiary, rehabilitation, chronic and long-term 
        care, home care, and hospice care;
            ``(20) ensure that with respect to any network described in 
        paragraph (19), the network specifically provide access to 
        pediatric and maternal specialty and subspecialty care;
            ``(21) enter into cooperative agreements with providers or 
        facilities to provide a continuum of care if resources to 
        provide such care are not available within the plan;
            ``(22) if medically-indicated subspecialty care is not 
        available within the geographic area served by the plan, 
        provide transportation to the nearest appropriate facility;
            ``(23) provide coverage for emergency care obtained in out-
        of-area or out-of-State facilities so long as the health 
        condition was certified to be an emergency by the attending 
        physician or could have been reasonably assumed to be an 
        emergency by the family;
            ``(24) provide coverage for deliveries of newborns at 
        nonhospital facilities in areas where such facilities are 
        available;
            ``(25) make a reasonable effort to provide language 
        translation services in areas where languages other than 
        English are relatively common;
            ``(26) implement disincentives (such as higher copayments) 
        for the inappropriate use of emergency rooms for nonemergency 
        care;
            ``(27) provide incentives (such as reduced premiums, 
        premium rebates, or additional services) for enrollees who 
        comply with medical and public health recommendations for 
        immunizations, prenatal care, healthy behaviors, or other 
        preventive health guidelines;
            ``(28) implement an information system to collect and 
        report data as required under sections 2844 and 2845;
            ``(29) implement a quality assessment and improvement 
        program and utilization review program as required under 
        section 2843;
            ``(30) pursuant to the guidelines developed by the State, 
        submit an annual evaluation and quality improvement plan, 
        including an evaluation of the plan's cost containment 
        measures, assurance of quality care, impact on the health 
        status of the enrolled population (including outcome measures 
        and process objectives), a financial statement, proposed 
        changes in premium rates, and a description of other relevant 
        changes to the plan (the State shall provide guidance to 
        certified plans concerning the elements of an acceptable annual 
        evaluation and quality improvement plan, and may use the annual 
        evaluation and quality improvement plan as the basis for the 
        recertification of plans);
            ``(31) establish a program for consumer feedback and the 
        resolution of consumer complaints that includes specified time 
        frames for decisions, such program to be clearly documented and 
        made available to all enrollees;
            ``(32) in consultation with local health departments and 
        maternal and child health programs under title V of the Social 
        Security Act, establish, support, or substantially participate 
        in a community-based maternal or child health program in the 
        coverage area served by the plan;
            ``(33) comply with any other relevant State or Federal 
        regulations.
    ``(b) Regulatory Burden.--To minimize the regulatory burdens and 
potentially duplicative standards and regulations that may be applied 
under this title or any other Federal or State program that duplicates 
activities undertaken under this title, a certified plan shall be 
considered as fulfilling a requirement or complying with a standard 
under this title, if the plan is meeting an existing State or Federal 
requirement or standard that has been determined by the Secretary (or 
the State, as appropriate) to be identical or at least as effective as 
that specified under this title.
    ``(c) Nonapplication of Provisions.--The requirements and 
guidelines described in this title shall not apply to health plans that 
do not participate in a State program under this title (with the 
exception of health plans complying with section 2845), and shall not 
apply (unless the plan elects for such requirements to apply), to the 
care and treatment of individuals in the plan who are not enrolled in 
the State program under this title.

``SEC. 2853. RESPONSIBILITIES OF EMPLOYERS.

    ``With respect to the program established under this title, an 
employer shall--
            ``(1) in the case of an employer that provides health 
        benefits to pregnant women, not terminate such benefits as 
        result of the establishment of such program;
            ``(2) in the case of an employer that provides health 
        benefits to employee dependents under seven years of age, not 
        terminate such benefits unless the employer agrees to pay the 
        temporary maintenance-of-effort fee required under section 
        2861(b).
An employer may not terminate the benefits described in this section 
until the expiration of the 180-day period beginning on the date on 
which the State in which such employer fully implements a State 
program.

``SEC. 2854. RESPONSIBILITIES OF THE STATE.

    ``A participating State shall--
            ``(1) develop and submit an approved initial 5-year 
        strategic plan and annual evaluation and quality improvement 
        plans to the Secretary as required under this title;
            ``(2) develop a process for certifying and re-certifying 
        health plans under this title under which--
                    ``(A) the criteria for certification or 
                recertification shall include--
                            ``(i) an evaluation of minimum capital 
                        requirements, solvency requirements, and other 
                        standards related to the financial stability of 
                        the plan;
                            ``(ii) premium rating methodology;
                            ``(iii) the quality of services to be 
                        provided by the plan; and
                            ``(iv) the ability of the plan to provide 
                        the required items and services; and
                    ``(B) such plans shall be re-certified at least 
                once during every 4-year period and subsequent to each 
                instance in which the plan has undergone significant 
                changes (such as a merger) as determined appropriate by 
                the State;
            ``(3) establish a system through which the State can 
        solicit and evaluate proposals from all health plans desiring 
        to be certified under this title, and enter into cooperative 
        agreements with such certified plans;
            ``(4) to maximize the choice of certified plans in an area, 
        ensure, through the system established under paragraph (3), 
        that any certified health plan that fulfills all State and 
        Federal requirements and guidelines under this title, and is 
        otherwise in good standing with the State, is permitted to 
        participate in the State program;
            ``(5) elect whether to enter into risk or profit sharing 
        agreements with all or selected certified plans;
            ``(6) elect whether to implement rate margin provisions in 
        agreements with certified plans such that, at the end of a 
        contract period, certified plans would be reimbursed by the 
        State if incurred costs exceeded anticipated costs, and States 
        could recover excess premiums from the plan if incurred costs 
        are less than anticipated costs at the time of rate 
        negotiation;
            ``(7) implement risk adjustment methods, reinsurance 
        mechanisms, or other appropriate mechanisms to ensure that 
        State payments to specific certified plans are reflective of 
        the expected utilization or expenditure rates of plan enrollees 
        and to protect specific certified plans that enroll a 
        disproportionate share of individuals who are expected to incur 
        a higher than average utilization or expenditure rate;
            ``(8) ensure that the premium rating methodologies of 
        certified plans are well documented, actuarially sound, and 
        minimize large variations in annual premium rates;
            ``(9) directly reimburse each certified plan for the State 
        portion of the negotiated premium for enrolling eligible 
        children and pregnant women;
            ``(10) ensure that the premiums negotiated with each 
        certified plan apply with respect to all eligible children and 
        all eligible pregnant women who enroll in the plan;
            ``(11) negotiate discounted premiums for families with 
        multiple children with certified plans;
            ``(12) ensure that premium rates negotiated with certified 
        plans fairly compensate such plans for the services provided, 
        but that such rates do not result in excessive profits by 
        plans;
            ``(13) offer families a choice of certified plans to the 
        extent practicable so long as at least one managed care plan 
        for children is available to all eligible children regardless 
        of geographic location;
            ``(14) elect whether to use financial or other incentives 
        to encourage adequate coverage of rural and underserved areas;
            ``(15) develop and implement an open enrollment system 
        during the national open enrollment period consistent with the 
        guidelines described in section 2815;
            ``(16) implement an outreach program to maximize the 
        enrollment of eligible individuals;
            ``(17) ensure that certified plans accept any applicant who 
        is eligible for coverage within the geographic area and that 
        such plans do not discriminate or use coercive or unethical 
        practices to encourage or dissuade enrollment into the plan;
            ``(18) in determining or approving the boundaries of 
        coverage areas for certified plans, ensure that the coverage 
        areas are consistent with the antidiscrimination standards 
        specified in subsection (a)(4) or section 2852, and that such 
        boundaries do not result in plans avoiding enrollment of 
        individuals who are expected to have higher than average rates 
        of utilization or expenditures;
            ``(19) impose a surcharge for persons who enroll outside of 
        the regular open enrollment period as required under section 
        2815;
            ``(20) monitor, evaluate, and address the potential 
        barriers, including cost sharing requirements, that may prevent 
        certain families, particularly low income families, from 
        enrolling in the State program or from obtaining health 
        services after enrollment;
            ``(21) develop a mechanism to assist families who cannot 
        temporarily pay for premiums or copayments due to unexpected 
        shortfalls in income;
            ``(22) in the case of fee-for-service plans, use pediatric- 
        and maternal-specific prospective payment schedules for the 
        reimbursement of services, such schedules to be negotiated 
        between providers, plans, and the State;
            ``(23) ensure that State maternal and child health programs 
        under title V of the Social Security Act and any relevant 
        health services provided by local and State health departments 
        are integrated and coordinated with the State program under 
        this title;
            ``(24) establish a State advisory council similar in nature 
        to the Advisory Council, except that the composition, 
        organization, and other guidelines for the State council shall 
        be determined by the State, with the majority of State council 
        members being comprised of health care providers and consumers;
            ``(25) develop and implement standards for the 
        dissemination of consumer information provided by certified 
        plans (including information concerning services for children 
        with special health care needs), provide consumers with 
        comparative information on certified plans during the open 
        enrollment period as requested, and set up hotlines and other 
        mechanisms to assist consumers;
            ``(26) approve all advertising or other marketing materials 
        from certified plans to ensure that such materials do not 
        contain misleading or false information, and that the content 
        of the material does not selectively encourage or selectively 
        discourage certain groups of individuals, as referred to in 
        section 2852, from enrolling in or disenrolling from the plan 
        (a State may elect to contract with nongovernment entities to 
        perform such functions);
            ``(27) ensure that decisions regarding the approval of the 
        advertising or other marketing materials of a certified plan 
        are made in a reasonable time frame and are based on 
        consistently applied criteria as determined appropriate by the 
        State;
            ``(28) establish a mechanism for consumer feedback, the 
        collection of complaints, filing of grievances, and assist in 
        the resolution of complaints against certified plans;
            ``(29) establish at least one alternative dispute 
        resolution mechanism for malpractice claims filed by 
        individuals enrolled in a certified plan;
            ``(30) address deficiencies in enabling services to ensure 
        access to health services among underserved areas or 
        populations;
            ``(31) ensure that primary care services are accessible by 
        public transportation in municipalities that have a public 
        transport system;
            ``(32) for a period of not less than 5 years after the date 
        of the implementation of the State program, ensure that health 
        facilities that provide care to large numbers of children, 
        pregnant women, children with special health care needs, or low 
        income persons, including--
                    ``(A) non-investor-owned hospitals;
                    ``(B) community health centers;
                    ``(C) school-based health clinics;
                    ``(D) rural health clinics; and
                    ``(E) local health departments;
        are able to participate fully in the State program, are 
        adequately reimbursed for their services, and are able to enter 
        into agreements with certified plans (in cases where such 
        providers are not affiliated with a certified plan, the State 
        may encourage such providers to form their own certified plan);
            ``(33) enter into agreements with bordering States to 
        ensure that individuals who need to travel across State borders 
        for medically necessary health services that are otherwise not 
        accessible may do so without penalty;
            ``(34) if determined appropriate, elect to implement laws 
        to take legal action against families who fail to enroll their 
        children or who fail to pay premiums for children under their 
        care who require medical treatment for a health condition;
            ``(35) establish a system for preventing, monitoring, and 
        controlling fraud and abuse as required under section 2846, and 
        establish a system to prevent and address any conflicts of 
        interest on the part of the State or its designated 
        representatives regarding the award, management, or evaluation 
        of contracts with certified plans; and
            ``(36) ensure that certified plans are in compliance with 
        State and Federal guidelines under this title.

``SEC. 2855. RESPONSIBILITIES OF THE SECRETARY.

    ``With respect to the program established under this title, the 
Secretary shall--
            ``(1) administer amounts provided to the Secretary from the 
        Trust Fund;
            ``(2) approve, evaluate, and monitor State programs as 
        required under part D;
            ``(3) provide participating States with technical and other 
        assistance;
            ``(4) establish, appoint, and provide support for the 
        Advisory Council as required under section 2842;
            ``(5) establish and coordinate the national open enrollment 
        period as required under section 2815;
            ``(6) develop a specific comprehensive benefits package 
        required under part B;
            ``(7) develop national guidelines for quality assessment 
        and improvement programs and utilization review programs as 
        required under section 2843;
            ``(8) develop and implement the Information System and the 
        National Childhood Immunization Database;
            ``(9) review, prioritize, integrate, and coordinate 
        Federally funded health programs for children and pregnant 
        women as required under section 2863; and
            ``(10) in conjunction with the Attorney General, establish 
        a system for preventing, monitoring, and controlling fraud and 
        abuse as required under section 2846.

``SEC. 2856. RESPONSIBILITIES OF THE ATTORNEY GENERAL.

    ``With respect to the program established under this title, the 
Attorney General in conjunction with the Secretary shall establish a 
system for preventing, monitoring, and controlling fraud and abuse as 
required under section 2846.

``SEC. 2857. RESPONSIBILITIES OF THE SECRETARY OF AGRICULTURE.

    ``With respect to the program established under this title, the 
Secretary of Agriculture shall administer amount distributed from the 
Tobacco Alternatives Trust Fund established under section 9512 of the 
Internal Revenue Code of 1986.''.

SEC. 205. EXISTING PROGRAMS.

    Title XXVIII of the Public Health Service Act (as added by section 
201 and amended by sections 202, 203, and 204) is further amended by 
adding at the end thereof the following new part:

          ``Part G--Impact on Employers and Existing Programs

``SEC. 2861. IMPACT ON EMPLOYERS.

    ``(a) In General.--The Congress encourages employers to provide, or 
continue to provide, comprehensive health care coverage to the 
dependent children of their employees.
    ``(b) Dropping of Coverage.--
            ``(1) In general.--With respect to a participating State, 
        if the Secretary of Labor determines that an employer who 
        provided health care coverage for the dependent children of the 
        employees of the employer, has terminated such coverage on or 
        after the date of enactment of this title, for all children or 
        children under 7 years of age, the Secretary may impose a 
        temporary annual maintenance of effort fee on such employer, 
        the proceeds of which shall be deposited into the Trust Fund. 
        In no case may an employer drop coverage of employee-dependent 
        children until the date that is 180 days after the State fully 
        implements a State program. An employer may not selectively 
        drop health care coverage for specific employee-dependent 
        children who have, or are expected to have, higher than average 
        utilization or health care costs.
            ``(2) Amount of fee.--The amount of a fee assessed under 
        paragraph (1) shall be equivalent to 50 percent of the 
        estimated annual cost of providing comprehensive coverage for 
        all employee-dependent children.
            ``(3) Period of fee.--An annual fee imposed under paragraph 
        (1) shall be in effect for a period not to exceed 5 years.
            ``(4) Pregnancy coverage.--Employers who provide pregnancy-
        related health care benefits for their employees and dependents 
        shall continue to do so after the date of enactment of this 
        Act.

``SEC. 2862. IMPACT ON MEDICAID.

    (a) Automatic Enrollment.--With respect to a participating State, 
children under 7 years of age, and pregnant women, who are enrolled in 
the program under title XIX of the Social Security Act shall be 
automatically enrolled into the appropriate State program under this 
title.
    ``(b) Benefits.--All health benefits provided under title XIX of 
the Social Security Act, including long-term and chronic care services 
for children with disabilities or chronic health conditions, shall be 
received under the State program under this title. A participating 
State may elect not to shift long-term and chronic care services for 
children with disabilities or chronic health conditions under such 
title XIX into the State program under this title, if the State can 
demonstrate that doing so would significantly compromise the quality of 
care for such children. A participating State that elects not to shift 
such long-term and chronic care services into the State program under 
this Act shall develop health care coordination plans that integrate 
the various sources of health services for such children in 
consultation with State maternal and child health programs under title 
V of such Act. A participating State may elect to establish a 
transitional period to gradually phase in children with disabilities or 
chronic health condition benefits into the State program.

``SEC. 2863. INTEGRATION OF HEALTH SERVICES AND IMPACT ON EXISTING 
              FEDERAL AND STATE GOVERNMENT HEALTH PROGRAMS.

    ``(a) Review by Secretary and States.--Not later than 2 years after 
the date of enactment of this Act, and every 2 years thereafter--
            ``(1) the Secretary, in consultation with the Maternal and 
        Child Health Bureau, shall review all Federal health programs 
        that provide health services to children under 7 years of age 
        and pregnant women; and
            ``(2) a participating State, acting through a designated 
        single State agency or other entity, and in consultation with 
        State health programs authorized under title V of the Social 
        Security Act, shall review State-funded programs that provide 
        health services to children under seven years of age and 
        pregnant women;
to ensure that such programs are integrated and coordinated with the 
services covered by this title.
    ``(b) Recommendations.--If the Secretary, through the review 
conducted under subsection (a), determines that specific functions 
performed by Federal health programs under such review are duplicated 
or made extraneous by the programs and benefits provided under this 
title, the Secretary shall submit recommendation to Congress concerning 
the elimination or reduction in such programs or benefits. With respect 
to any amounts appropriated for any programs terminated, such remaining 
appropriations shall be transferred to the Trust Fund.
    ``(c) Assurance.--The Secretary and all participating States shall 
ensure that Federal payments under title V of the Social Security Act 
and matching State funds provided under this title are retained within 
existing programs to--
            ``(1) meet the health care needs of children over 7 years 
        of age, and eligible children and pregnant women who do not 
        participate in the State program under this title;
            ``(2) perform core public health functions;
            ``(3) coordinate care for children with special health care 
        needs; and
            ``(4) otherwise to meet needs identified through title V 
        needs assessments consistent with Healthy People 2000 
        objectives.

SEC. 206. GENERAL PROVISIONS.

    Title XXVIII of the Public Health Service Act (as added by section 
201 and amended by sections 202, 203, 204, and 205) is further amended 
by adding at the end thereof the following new part:

                      ``Part H--General Provisions

``SEC. 2871. DEFINITIONS.

    ``Unless specifically provided otherwise, for purposes of this 
title:
            ``(1) Adjusted family gross income.--The term `adjusted 
        family gross income' means the sum of all adjusted gross income 
        of all family members of the child or pregnant women involved 
        in the most recent tax year. In the case of a pregnant woman, 
        such term also includes the adjusted gross income of the 
        pregnant woman.
            ``(2) Advisory council.--The term `Advisory Council' means 
        the National Advisory Council for Mother's and Children's 
        Health established under section 2842.
            ``(3) Certified plan.--The term `certified plan' means the 
        agreement entered into by an organized health care entity to 
        cover or provide specified health care services under State and 
        Federal guidelines under this title. Organizations that may 
        enter into such agreement shall include health maintenance 
        organizations, preferred provider organizations, point-of-
        service plans, fee-for-service plans, indemnity insurance 
        plans, hybrids of such plans, and any other organized health 
        care entities that fulfill the requirements of this title.
            ``(4) Child.--
                    ``(A) In general.--The term `child' means an 
                individual who has not attained the age of 21.
                    ``(B) References.--References in this title to a 
                child shall be construed to mean--
                            ``(i) in the case of a State program that 
                        does not have an expanded eligibility 
                        component, an individual under 7 years of age; 
                        and
                            ``(ii) in the case of a State program that 
                        offers an expanded eligibility component, an 
                        individual under 21 years of age.
            ``(5) Comprehensive benefits package.--The term 
        `comprehensive benefits package' means either the benefits 
        package for children or the benefits package for pregnant 
        women, as the case may be, developed by the Secretary under 
        section 2821(a).
            ``(6) Core public health functions.--The term `core public 
        health functions' means the following:
                    ``(A) The collection and analysis of public health-
                related data and the technical aspects of developing 
                and operating information systems.
                    ``(B) Activities related to protecting the 
                environment and ensuring the safety of workplaces, 
                food, and water.
                    ``(C) Investigation and control of adverse health 
                conditions and exposures to individuals and the 
                community.
                    ``(D) Information and education programs to prevent 
                adverse health conditions.
                    ``(E) Accountability and health care quality 
                improvement activities.
                    ``(F) The provision of public health laboratory 
                services.
                    ``(G) Training for public health professionals.
                    ``(H) Health care leadership, policy development, 
                coalition-building, and administrative activities.
                    ``(I) Integration and coordination of prevention 
                programs and services of health plans, community-based 
                providers, government health agencies, and other 
                government agencies that affect health including 
                education, labor, transportation, welfare, criminal 
                justice, environment, agriculture and housing.
                    ``(J) Research on effective and cost-effective 
                public health practices.
            ``(7) Enabling services.--The term `enabling services' 
        means community outreach, health education, transportation, 
        language translation, and other services that facilitate or 
        otherwise assist eligible individuals to receive health 
        services provided under this title.
            ``(8) Family.--The term `family' means a pregnant woman 
        residing alone or a group of two or more individuals who reside 
        together in the same housing unit. Such individuals may be 
        related (such as parent and child) or unrelated (such as 
        guardian and foster child) individuals. In the case of children 
        who do not reside with their parents, such term may also 
        include individuals (such as family friends) or entities (such 
        as government agencies) that have primary responsibility for 
        the health and welfare of the child.
            ``(9) Information system.--The term `Information System' 
        means the National Health Information System for Mothers and 
        Children established under section 2844.
            ``(10) National childhood immunization database.--The term 
        `National Childhood Immunization Database' means the electronic 
        database established under section 2845.
            ``(11) Participating state.--The term `participating State' 
        means any of the 50 States, the District of Columbia, Puerto 
        Rico, and any of the trust territories of the United States, 
        that elects to participate in the program established under 
        this title.
            ``(12) Poverty level.--The term `poverty level' the income 
        official poverty line (as defined by the Office of Management 
        and Budget, and revised annually in accordance with section 
        673(2) of the Community Services Block Grant Act (42 U.S.C. 
        9902(2)) applicable to a family of the size involved.
            ``(13) Tobacco alternatives trust fund.--The term `Tobacco 
        Alternatives Trust Fund' means the trust fund established under 
        section 9512 of the Internal Revenue Code of 1986.
            ``(14) Trust fund.--The term `Trust Fund' means the 
        National Health Trust Fund for Mothers and Children established 
        under section 9551 of the Internal Revenue Code of 1986.

``SEC. 2872. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) Availability of Funds From Trust Fund.--From the Trust Fund 
established under section 9551 of the Internal Revenue Code of 1986, 
there shall be available such sums as may be necessary to carry out 
this title in each fiscal year.
    ``(b) HHS Activities.--With respect to the development and 
implementation of programs and activities required to be carried out by 
the Secretary under this title, there are authorized to be appropriate 
such sums as may be necessary for each of the fiscal years 1998 through 
2002.
    ``(c) Justice Activities.--With respect to the development and 
implementation of programs and activities required to be carried out by 
the Attorney General under this title, there are authorized to be 
appropriate such sums as may be necessary for each of the fiscal years 
1998 through 2002.''.

SEC. 207. UNLAWFUL USE OF TOBACCO PRODUCTS MANUFACTURED FOR EXPORT.

    (a) Definitions.--Section 2341 of title 18, United States Code, is 
amended--
            (1) in paragraph (4), by striking ``; and'' and inserting a 
        semicolon;
            (2) by striking the period at the end of paragraph (5) and 
        inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(6) the term `tobacco products' has the meaning given 
        such term in section 5702(c) of the Internal Revenue Code of 
        1986.''.
    (b) Unlawful Acts.--Section 2342 of title 18, United States Code, 
is amended by adding at the end the following new subsection:
    ``(c) It shall be unlawful for any person knowingly to purchase, 
sell, distribute, or smuggle into the United States, tobacco products 
that are designated for consumption beyond the territorial jurisdiction 
of the internal revenue laws of the United States.''.
    (c) Penalty.--Section 2344 of title 18, United States Code, is 
amended by adding at the end the following new subsection:
    ``(d)(1) Whoever knowingly violates section 2342(c) shall be fined 
the greater of--
            ``(A) $10,000; or
            ``(B) an amount equal to 5 times the amount of the tax 
        imposed under section 5701 of the Internal Revenue Code of 
        1986,
which shall be deposited into the Fund created pursuant to section 9512 
of the Internal Revenue Code of 1986.
    ``(2) A judgment for a violation of section 2342(c), may, in 
addition to the penalty under paragraph (1), order the confiscation of 
any equipment and vehicles, including ships, aircraft, and motor 
vehicles, used to transport tobacco products in violation of such 
section. Any property confiscated under this paragraph shall become the 
property of the United States.''.

                    TITLE III--FINANCING PROVISIONS

SEC. 301. INCREASE IN TAXES ON TOBACCO PRODUCTS.

    (a) Establishment of Increase.--
            (1) In general.--Section 5701 of the Internal Revenue Code 
        of 1986 (relating to rate of tax on cigars, smokeless tobacco, 
        pipe tobacco, and cigarette papers and tubes) is amended to 
        read as follows:

``SEC. 5701. RATE OF TAX.

    ``(a) Cigars.--On cigars manufactured in or imported into the 
United States and removed during 1998, there shall be imposed the 
following taxes:
            ``(1) Small cigars.--On cigars weighing not more than 3 
        pounds per thousand, $76.1325 per thousand.
            ``(2) Large cigars.--On cigars weighing more than 3 pounds 
        per thousand, 92.4375 percent of the price for which sold but 
        not more than $217.50 per thousand.
Cigars not exempt from tax under this chapter which are removed but not 
intended for sale shall be taxed at the same rate as similar cigars 
removed for sale.
    ``(b) Cigarettes.--On cigarettes manufactured in or imported into 
the United States and removed during 1998, there shall be imposed the 
following taxes:
            ``(1) Small cigarettes.--On cigarettes, weighing not more 
        than 3 pounds per thousand, $87 per thousand.
            ``(2) Large cigarettes.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), on cigarettes, weighing more than 3 
                pounds per thousand, $182.70 per thousand.
                    ``(B) Long cigarettes.--In the case of cigarettes 
                weighing more than 3 pounds per thousand that are more 
                than 6\1/2\ inches in length, such cigarettes shall be 
                taxable at the rate prescribed for cigarettes weighing 
                not more than 3 pounds per thousand, counting each 2\3/
                4\ inches, or fraction thereof, of the length of each 
                as one cigarette.
    ``(c) Cigarette Papers.--On each book or set of cigarette papers 
containing more than 25 papers, manufactured in or imported into the 
United States and removed during 1998, there shall be imposed a tax of 
5.445 cents for each 50 papers or fractional part thereof (except that 
if cigarette papers measure more than 6\1/2\ inches, such papers shall 
be taxable at the rate prescribed, counting each 2\3/4\ inches, or 
fraction thereof, of the length of each as one cigarette paper).
    ``(d) Cigarette Tubes.--On cigarette tubes, manufactured in or 
imported into the United States and removed during 1998, there shall be 
imposed a tax of 10.89 cents for each 50 tubes or fractional part 
thereof, except that if cigarette tubes measure more than 6\1/2\ inches 
in length, such tubes shall be taxable at the rate prescribed, counting 
each 2\3/4\ inches, or fraction thereof as the length of each as one 
cigarette tube.
    ``(e) Smokeless Tobacco.--On smokeless tobacco, manufactured in or 
imported into the United States and removed during 1998, there shall be 
imposed the following taxes:
            ``(1) Snuff.--On snuff, $20.355 per pound and a 
        proportionate tax at the like rate on all fractional parts of a 
        pound.
            ``(2) Chewing tobacco.--On chewing tobacco, $8.115 per 
        pound and a proportionate tax at the like rate on all 
        fractional parts of a pound.
    ``(f) Pipe Tobacco.--On pipe tobacco, manufactured in or imported 
into the United States and removed during 1998, there shall be imposed 
a tax of $25.6875 per pound and a proportionate tax at the like rate on 
all fractional parts of a pound.
    ``(g) Roll-Your-Own Tobacco.--On roll-your-own tobacco, 
manufactured in or imported into the United States and removed during 
1998, there shall be imposed a tax of $26.025 per pound (and a 
proportionate tax at the like rate on all fractional parts of a pound).
    ``(h) Determination of Tax in Years After 1998.--On all tobacco 
products, cigarette papers, and cigarette tubes removed after 1998, 
there shall be imposed a tax equal to the tax imposed on such product 
during 1998 increased by an amount equal to--
            ``(1) such dollar amount, multiplied by
            ``(2) the cost of living adjustment determined under 
        section 1(f)(3) for the calendar year in which the cigarettes 
        are removed, by substituting `calendar year 1997' for `calendar 
        year 1992' in subparagraph (B) thereof.
    ``(i) Determination of Floor Stocks Tax in Increase Years.--
            ``(1) In general.--On all tobacco products, cigarette 
        papers, and cigarette tubes manufactured in or imported into 
        the United States which are removed before January 1 of any 
        increase year and held on such date for sale by any person, 
        there shall be imposed a tax equal to the amount by which--
                    ``(A) the applicable tax on such product determined 
                under this section for such year, exceeds
                    ``(B) such applicable tax on such product under 
                this section for the preceding calendar year.
            ``(2) Liability for tax and method of payment.--
                    ``(A) Liability for tax.--A person holding tobacco 
                products, cigarette papers, and cigarette tubes on 
                January 1 of any increase year to which any tax imposed 
                by paragraph (1) applies shall be liable for such tax.
                    ``(B) Method of payment.--The tax imposed by 
                paragraph (1) or (2) shall be treated as a tax imposed 
                under subsection (a) through (g) or subsection (h) of 
                this section, as applicable, and shall be due and 
                payable on February 15 of each increase year in the 
                same manner as the tax imposed under such section is 
                payable with respect to tobacco products, cigarette 
                papers, and cigarette tubes removed on or after January 
                1 of such increase year.
            ``(3) Exception for retail stocks.--The taxes imposed by 
        paragraph (1) shall not apply to tobacco products, cigarette 
        papers, and cigarette tubes in retail stocks held on January 1 
        of any increase year at the place where intended to be sold at 
        retail.
    ``(j) Foreign Trade Zones.--Notwithstanding the Act of June 18, 
1934 (19 U.S.C. 81a et seq.) or any other provision of law--
            ``(1) tobacco products, cigarette papers, and cigarette 
        tubes--
                    ``(A) on which taxes imposed by Federal law are 
                determined, or customs responsibilities are liquidated, 
                by a customs officer pursuant to a request made under 
                the first proviso of section 3(a) of the Act of June 
                18, 1934 (19 U.S.C. 81c(a)) before January 1 of any 
                increase year, and
                    ``(B) which are entered into the customs territory 
                of the United States on or after January 1 of such 
                increase year from a foreign trade zone, and
            ``(2) tobacco products, cigarette paper, and cigarette 
        tubes which--
                    ``(A) are placed under the supervision of a customs 
                officer pursuant to the provisions of the second 
                proviso of section 3(a) of the Act of June 18, 1934 (19 
                U.S.C. 81c(a)) before January 1 of such increase year, 
                and
                    (B) are entered into the customs territory of the 
                United States on or after January 1 of such increase 
                year, from a foreign trade zone,
        shall be subject to the tax imposed by subsection (i) and such 
        tobacco products, cigarette papers, and cigarette tubes shall, 
        for purposes of subsection (i), be treated as being held on 
        January 1 of such increase year for sale.
    ``(k) Imported Products and Cigarette Papers and Tubes.--The taxes 
imposed by this section on tobacco products and cigarette papers, and 
cigarette tubes imported into the United States shall be in addition to 
any import responsibilities imposed on such articles, unless such 
import responsibilities are imposed in lieu of internal revenue tax.
    ``(l) Increase Year.--For purposes of this section, the term 
`increase year' means any calendar year after 1998.''
            (2) Roll-your-own tobacco.--Section 5702 of such Code 
        (relating to definitions) is amended by adding at the end the 
        following new subsection:
    ``(p) Roll-Your-Own Tobacco.--The term `roll-your-own tobacco' 
means any tobacco which, because of its appearance, type, packaging, or 
labeling, is suitable for use and likely to be offered to, or purchased 
by, consumers as tobacco for making cigarettes.''
            (3) Technical amendments.--
                    (A) Subsection (c) of section 5702 of such Code is 
                amended by striking ``and pipe tobacco'' and inserting 
                ``pipe tobacco, and roll-your-own tobacco''.
                    (B) Subsection (d) of section 5702 of such Code is 
                amended--
                            (i) in the material preceding paragraph 
                        (1), by striking ``or pipe tobacco'' and 
                        inserting ``pipe tobacco, or roll-your-own 
                        tobacco'', and
                            (ii) by striking paragraph (1) and 
                        inserting the following new paragraph:
            ``(1) a person who produces cigars, cigarettes, smokeless 
        tobacco, pipe tobacco, or roll-your-own tobacco solely for the 
        person's own personal consumption or use, and''.
                    (C) The chapter heading for chapter 52 of such Code 
                is amended to read as follows:

    ``CHAPTER 52--TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES''.

                    (D) The table of chapters for subtitle E of such 
                Code is amended by striking the item relating to 
                chapter 52 and inserting the following new item:

                              ``Chapter 52. Tobacco products and 
                                        cigarette papers and tubes.''
            (4) Effective date.--
                    (A) In general.--The amendments made by this 
                section shall apply to tobacco products, cigarette 
                papers, and cigarette tubes removed (as defined in 
                section 5702 of the Internal Revenue Code of 1986, as 
                amended by this section) after December 31, 1997.
                    (B) Transitional rule.--Any person who--
                            (i) on the date of the enactment of this 
                        Act is engaged in business as a manufacturer of 
                        roll-your-own tobacco or as an importer of 
                        tobacco products or cigarette papers and tubes, 
                        and
                            (ii) before January 1, 1998, submits an 
                        application under subchapter B of chapter 52 of 
                        such Code to engage in such business,
                may, notwithstanding such subchapter B, continue to 
                engage in such business pending final action on such 
                application. Pending such final action, all provisions 
                of such chapter 52 shall apply to such applicant in the 
                same manner and to the same extent as if such applicant 
                were a holder of a permit under such chapter 52 to 
                engage in such business.
    (b) Special Rules for 1998.--
            (1) Floor stocks.--On tobacco products, cigarette papers, 
        and cigarette tubes manufactured in or imported into the United 
        States which are removed before January 1, 1998, and held on 
        such date for sale by any person, there shall be imposed the 
        following taxes:
                    (A) Small cigars.--On cigars, weighing not more 
                than 3 pounds per thousand, $75.0075 per thousand.
                    (B) Large cigars.--On cigars, weighing more than 3 
                pounds per thousand, a tax equal to 79.6875 percent of 
                the price for which sold, but not more than $187.50 per 
                thousand.
                    (C) Small cigarettes.--On cigarettes, weighing not 
                more than 3 pounds per thousand, $75 per thousand.
                    (D) Large cigarettes.--On cigarettes, weighing more 
                than 3 pounds per thousand, $157.50 per thousand; 
                except that, if more than 6\1/2\ inches in length, they 
                shall be taxable at the rate prescribed for cigarettes 
                weighing not more than 3 pounds per thousand, counting 
                each 2\3/4\ inches, or fraction thereof, of the length 
                of each as one cigarette.
                    (E) Cigarette papers.--On cigarette papers, 4.695 
                cents for each 50 papers or fractional part thereof; 
                except that, if cigarette papers measure more than 6\1/
                2\ inches in length, they shall be taxable at the rate 
                prescribed, counting each 2\3/4\ inches, or fraction 
thereof, of the length of each as one cigarette paper.
                    (F) Cigarette tubes.--On cigarette tubes, 9.39 
                cents for each 50 tubes or fractional part thereof; 
                except that, if cigarette tubes measure more than 6\1/
                2\ inches in length, they shall be taxable at the rate 
                prescribed, counting each 2\3/4\ inches, or fraction 
                thereof, of the length of each as one cigarette tube.
                    (G) Snuff.--On snuff, $19.995 per pound and a 
                proportionate tax at the like rate on all fractional 
                parts of a pound.
                    (H) Chewing tobacco.--On chewing tobacco, $7.995 
                per pound and a proportionate tax at the like rate on 
                all fractional parts of a pound.
                    (I) Pipe tobacco.--On pipe tobacco, $25.0125 per 
                pound and a proportionate tax at the like rate on all 
                fractional parts of a pound.
                    (J) Roll-your-own tobacco.--On roll-your-own 
                tobacco, $26.025 per pound and a proportionate tax at 
                the like rate on all fractional parts of a pound.
            (2) Foreign trade zones.--Notwithstanding the Act of June 
        18, 1934 (19 U.S.C. 81a et seq.) or any other provision of 
        law--
                    (A) tobacco products, cigarette papers, and 
                cigarette tubes--
                            (i) on which taxes imposed by Federal law 
                        are determined, or customs responsibilities are 
                        liquidated, by a customs officer pursuant to a 
                        request made under the first proviso of section 
                        3(a) of the Act of June 18, 1934 (19 U.S.C. 
                        81c(a)) before January 1, 1998, and
                            (ii) which are entered into the customs 
                        territory of the United States on or after 
                        January 1, 1998 from a foreign trade zone, and
                    (B) tobacco products, cigarette papers, and 
                cigarette tubes which--
                            (i) are placed under the supervision of a 
                        customs officer pursuant to the provisions of 
                        the second proviso of section 3(a) of the Act 
                        of June 18, 1934 (19 U.S.C. 81c(a)) before 
                        January 1, 1998, and
                            (ii) are entered into the customs territory 
                        of the United States on or after January 1 of 
                        such increase year, from a foreign trade zone,
                shall be subject to the tax imposed by paragraph (1) 
                and such tobacco products, cigarette papers, and 
                cigarette tubes shall, for purposes of paragraph (1) be 
                treated as being held on January 1, 1998 for sale.
            (3) Cigars, cigarettes, cigarette paper, cigarette tubes, 
        snuff, chewing tobacco, pipe tobacco, roll-your-own tobacco, 
        and tobacco products.--For purposes of this subsection, the 
        terms ``cigar'', ``cigarette'', ``cigarette paper'', 
        ``cigarette tubes'', ``snuff'', ``chewing tobacco'', ``pipe 
        tobacco'', ``roll-your-own tobacco'', and ``tobacco products'' 
        shall have the meaning given to such terms by subsections (a), 
        (b), (e), and (g), paragraphs (2) and (3) of subsection (n), 
        subsection (o), subsection (p), and subsection (c) of section 
        5702 of the Internal Revenue Code of 1986, respectively.

SEC. 302. ASSISTANCE TO STATES ADVERSELY AFFECTED BY THE TOBACCO TAX.

    (a) Establishment of Trust Fund.--
            (1) In general.--Subchapter A of chapter 98 of the Internal 
        Revenue Code of 1986 (relating to trust fund code) is amended 
        by adding at the end the following new section:

``SEC. 9512. TOBACCO ALTERNATIVES TRUST FUND.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `Tobacco 
Alternatives Trust Fund' (hereafter referred to in this section as the 
`Trust Fund'), consisting of such amounts as may be appropriated or 
credited to the Trust Fund as provided in this section or section 
9602(b).
    ``(b) Transfers to Trust Fund.--The Secretary shall transfer to the 
Trust Fund an amount equivalent to 2 percent of the net increase in 
revenues received in the Treasury attributable to the amendments made 
to section 5701 by subsections (b) and (c) of section 301 and the 
provisions contained in section 301(d) of the Healthy Mothers, Healthy 
Children Act of 1997, as estimated by the Secretary.
    ``(c) Distribution of Amounts in Trust Fund.--
            ``(1) In general.--Amounts in the Trust Fund shall be 
        available to the Secretary of Agriculture, as provided by 
        appropriation Acts, for making grants to States that have 
        submitted an application in accordance with paragraph (2) for 
        the purposes of--
                    ``(A) making direct payments to tobacco farmers and 
                workers,
                    ``(B) providing assistance to farmers in converting 
                from tobacco to other crops and improving the access of 
                such farmers to markets for other crops,
                    ``(C) providing infrastructure and business-related 
                financing in areas with significant numbers of tobacco-
                related jobs,
                    ``(D) providing job training for tobacco farmers 
                and workers, and
                    ``(E) establishing other economic development 
                projects (upon approval of the Secretary of 
                Agriculture) in areas with significant numbers of 
                tobacco-related jobs.
            ``(2) Application.--Each State desiring to receive a grant 
        under this subsection shall submit an application to the 
        Secretary of Agriculture describing--
                    ``(A) the economic impact of the increase in the 
                rate of tax attributable to the amendments made to 
                section 5701 by subsections (b) and (c) of section 301 
                and the provisions contained in section 301(d) of the 
                Healthy Mothers, Healthy Children Act of 1997,
                    ``(B) the State's 5-year goals with regard to 
                minimizing such economic impact, and
                    ``(C) the State's proposal for the use of the grant 
                funds.
            ``(3) Allocation formula.--The Secretary of Agriculture 
        shall develop a formula for allocating grant funds under this 
        section that shall take into account the number of farmers and 
        workers affected by the increase in the rate of tax described 
        in paragraph (2)(A) in a State and the severity of the economic 
        impact in the State.
            ``(4) Annual reports.--Each State that has received a grant 
        under this subsection shall submit an annual report to the 
        Secretary of Agriculture describing--
                    ``(A) the economic impact of the increase in the 
                rate of tax described in paragraph (2)(A),
                    ``(B) an evaluation of the State's activities using 
                grant amounts in the previous year, and
                    ``(C) an improvement plan for the following year.
            ``(5) Termination.--The authority provided by this section 
        shall terminate on December 31, 2002.''
            (2) Clerical amendment.--The table of sections for such 
        subchapter A is amended by adding at the end the following new 
        item:

                              ``Sec. 9512. Tobacco Alternatives Trust 
                                        Fund.''

SEC. 303. DESIGNATION OF OVERPAYMENTS AND CONTRIBUTIONS FOR THE 
              NATIONAL HEALTH TRUST FUND FOR MOTHERS AND CHILDREN.

    (a) Designation of Overpayments and Contributions for the National 
Health Trust Fund for Mothers and Children.--
            (1) In general.--Subchapter A of chapter 61 of the Internal 
        Revenue Code of 1986 (relating to returns and records) is 
        amended by adding at the end the following new part:

   ``PART IX--DESIGNATION OF OVERPAYMENTS AND CONTRIBUTIONS FOR THE 
          NATIONAL HEALTH TRUST FUND FOR MOTHERS AND CHILDREN

``Sec. 6097. Amounts for the National Health Trust Fund for Mothers and 
                            Children.

``SEC. 6097. AMOUNTS FOR THE NATIONAL HEALTH TRUST FUND FOR MOTHERS AND 
              CHILDREN.

    ``(a) In General.--Every individual (other than a nonresident 
alien) may designate that--
            ``(1) a portion (not less than $1) of any overpayment of 
        the tax imposed by chapter 1 for the taxable year, and
            ``(2) a cash contribution (not less than $1),
be paid over to the National Health Trust Fund for Mothers and 
Children. In the case of a joint return of a husband and wife, each 
spouse may designate one-half of any such overpayment of tax (not less 
than $2).
    ``(b) Manner and Time of Designation.--Any designation under 
subsection (a) may be made with respect to any taxable year only at the 
time of filing the original return of the tax imposed by chapter 1 for 
such taxable year. Such designation shall be made either on the 1st 
page of the return or on the page bearing the taxpayer's signature.
    ``(c) Overpayments Treated as Refunded.--For purposes of this 
section, any overpayment of tax designated under subsection (a) shall 
be treated as being refunded to the taxpayer as of the last day 
prescribed for filing the return of tax imposed by chapter 1 
(determined with regard to extensions) or, if later, the date the 
return is filed.
    ``(d) Designated Amounts Not Deductible.--No amount designated 
pursuant to subsection (a) shall be allowed as a deduction under 
section 170 or any other section for any taxable year.
    ``(e) Termination.--This section shall not apply to taxable years 
beginning in a calendar year after a determination by the Secretary 
that the sum of all designations under subsection (a) for taxable years 
beginning in the second year preceding the calendar year is less than 
$5,000,000.''.
    (b) Clerical Amendment.--The table of parts for subchapter A of 
chapter 61 of such Code is amended by adding at the end the following 
new item:

                              ``Part IX. Designation of overpayments 
                                        and contributions for the 
                                        National Health Trust Fund for 
                                        Mothers and Children.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning with the first calendar year beginning 
after the date of enactment of this Act.
                                 <all>