[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 1030 Introduced in Senate (IS)]







108th CONGRESS
  1st Session
                                S. 1030

To expand the number of individuals and families with health insurance 
                   coverage, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 8, 2003

 Mr. Bingaman introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To expand the number of individuals and families with health insurance 
                   coverage, 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 ``Health Coverage, 
Affordability, Responsibility, and Equity Act of 2003''or the 
``HealthCARE Act of 2003''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
                TITLE I--INCREASING HEALTH CARE COVERAGE

                     Subtitle A--Medicaid and SCHIP

Sec. 101. State option to offer medicaid coverage based on need.
Sec. 102. State option to provide coverage of children under SCHIP in 
                            excess of the State's allotment.
  Subtitle B--Refundable Tax Credit for Health Insurance Costs of Low-
                    Income Individuals and Families

Sec. 111. Credit for health insurance costs of certain low-income 
                            individuals.
Sec. 112. Advance payment of credit for health insurance costs of 
                            eligible low-income individuals.
               TITLE II--IMPROVING ACCESS TO HEALTH PLANS

Sec. 201. Definitions.
Sec. 202. Establishment of health insurance purchasing pools.
Sec. 203. Purchasing pools.
Sec. 204. Purchasing pool operators.
Sec. 205. Contracts with participating insurers.
Sec. 206. Options for health benefits coverage.
Sec. 207. Enrollment process for eligible individuals.
Sec. 208. Plan premiums.
Sec. 209. Enrollee premium share.
Sec. 210. Payments to purchasing pool operators and payments to 
                            participating insurers.
Sec. 211. State-based reinsurance programs.
Sec. 212. Coverage under individual health insurance.
Sec. 213. Use of premium subsidies to unify family coverage with 
                            members enrolled in medicaid and SCHIP.
Sec. 214. Coverage through employer-sponsored health insurance.
Sec. 215. Participation by small employers.
Sec. 216. Report.
Sec. 217. Authorization of appropriations.
 TITLE III--NATIONAL ADVISORY COMMISSION ON EXPANDED ACCESS TO HEALTH 
                                  CARE

Sec. 301. National Advisory Commission on Expanded Access to Health 
                            Care.
Sec. 302. Congressional action.
                        TITLE IV--STATE WAIVERS

Sec. 401. State waivers.

                TITLE I--INCREASING HEALTH CARE COVERAGE

                     Subtitle A--Medicaid and SCHIP

SEC. 101. STATE OPTION TO OFFER MEDICAID COVERAGE BASED ON NEED.

    (a) State Option.--Section 1902(a)(10)(A)(ii) of the Social 
Security Act (42 U.S.C. 1396a) is amended--
            (1) by striking ``or'' at the end of subclause (XVII);
            (2) by adding ``or'' at the end of subclause (XVIII); and
            (3) by adding at the end the following:
                                    ``(XIX) who are not otherwise 
                                eligible for medical assistance under 
                                this title and whose income does not 
                                exceed such income level as the State 
                                may establish, expressed as a 
                                percentage (not to exceed 100) of 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 
                                Omnibus Budget Reconciliation Act of 
                                1981) applicable to a family of the 
                                size involved;''.
    (b) Increased FMAP.--Section 1905 of the Social Security Act (42 
U.S.C. 1396d) is amended--
            (1) in the first sentence of subsection (b)--
                    (A) by striking ``and (4)'' and inserting ``(4)''; 
                and
                    (B) by inserting before the period the following: 
                ``, and (5) in the case of a State that meets the 
                conditions described in paragraph (1) of subsection 
                (x), the Federal medical assistance percentage shall be 
                equal to the need-based enhanced FMAP described in 
                paragraph (2) of subsection (x)''; and
            (2) by adding at the end the following:
    ``(x)(1) For purposes of clause (5) of the first sentence of 
subsection (b), the conditions described in this subsection are the 
following:
            ``(A) The State provides medical assistance to individuals 
        described in subsection (a)(10)(A)(ii)(XIX).
            ``(B) The State uses streamlined enrollment and outreach 
        measures to all individuals described in subparagraph (A) 
        including--
                    ``(i) the same application and retention procedures 
                (such as 1-page enrollment forms and enrollment by 
                mail) used by the majority of State programs under 
                title XXI during the preceding year; and
                    ``(ii) outreach efforts proportional in scope and 
                reasonably expected effectiveness to those employed by 
                the State during a comparable stage of implementation 
                of the State's program under title XXI.
            ``(C) The State applies eligibility standards and 
        methodologies under this title with respect to individuals 
        residing in the State who have not attained age 65 that are not 
        more restrictive (as determined under section 
        1902(a)(10)(C)(i)(III)) than the standards and methodologies 
        that applied under this title with respect to such individuals 
        as of July 1, 2003.
    ``(2)(A) For purposes of clause (5) of the first sentence of 
subsection (b), the need-based enhanced FMAP for a State for a fiscal 
year, is equal to the Federal medical assistance percentage (as defined 
in the first sentence of subsection (b)) for the State increased, 
subject to subparagraph (B), by such percentage increase as would 
compensate all States for the additional expenditures that would be 
incurred by all States if the States were to provide medical assistance 
to all individuals whose income does not exceed 100 percent of 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 Omnibus Budget Reconciliation Act of 1981) applicable to a family 
of the size involved and who are eligible for such assistance only on 
the basis of section 1902(a)(10)(A)(ii)(XIX).
    ``(B) In the case of a State that provides medical assistance to 
individuals described in section 1902(a)(10)(A)(ii)(XIX) but limits 
such assistance to individuals with income at or below a percentage of 
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 Omnibus Budget Reconciliation Act of 1981) applicable to 
a family of the size involved that is less than 100, the Secretary 
shall reduce the need-based enhanced FMAP otherwise determined for the 
State under subparagraph (A) by a proportion based on the national 
income distribution of all individuals in all States who are 
(regardless of whether such individuals are enrolled under this title) 
eligible for medical assistance only on the basis of section 
1902(a)(10)(A)(ii)(XIX).''.
    (c) Conforming Amendments.--Section 1905(a) of the Social Security 
Act (42 U.S.C. 1396d(a)) is amended in the matter preceding paragraph 
(1)--
            (1) by striking ``or'' at the end of clause (xii);
            (2) by adding ``or'' at the end of clause (xiii); and
            (3) by inserting after clause (xiii) the following:
            ``(xiv) individuals who are eligible for medical assistance 
        on the basis of section 1902(a)(10)(A)(ii)(XIX);''.
    (d) Effective Date.--The amendments made by this section take 
effect on October 1, 2004, and apply to medical assistance provided on 
or after that date, without regard to whether final regulations to 
carry out such amendments have been promulgated by such date.

SEC. 102. STATE OPTION TO PROVIDE COVERAGE OF CHILDREN UNDER SCHIP IN 
              EXCESS OF THE STATE'S ALLOTMENT.

    (a) In General.--Title XXI of the Social Security Act (42 U.S.C. 
1397aa et seq.) is amended by adding at the end the following:

``SEC. 2111. STATE OPTION TO PROVIDE COVERAGE OF CHILDREN IN EXCESS OF 
              THE STATE'S ALLOTMENT.

    ``(a) State Option.--In the case of a State that meets the 
condition described in subsection (b), the following shall apply:
            ``(1) Notwithstanding section 2105 and without regard to 
        the State's allotment under section 2104, the Secretary shall 
        pay the State an amount for each quarter equal to the enhanced 
        FMAP of expenditures incurred in the quarter that are described 
        in section 2105(a)(1).
            ``(2) The Secretary shall reduce the State's allotment 
        under section 2104, for the first fiscal year for which the 
        State amendment described in subsection (b) applies, and for 
        each fiscal year thereafter, by an amount equal to the amount 
        that the Secretary determines the State would have expended to 
        provide child health assistance to targeted low-income children 
        during that fiscal year if that State had not elected the State 
        option to provide such assistance in accordance with this 
        section.
            ``(3) Subsections (f) and (g) of section 2104 shall not 
        apply to the State's reduced allotment (after the application 
        of paragraph (2)).
    ``(b) Condition Described.--For purposes of subsection (a), the 
condition described in this subsection is that the State has made an 
irrevocable election, through a plan amendment, to provide child health 
assistance to all targeted low-income children residing in the State 
(without regard to date of application for assistance) and to cover 
health services listed in the State plan whenever medically 
necessary.''.
    (b) Effective Date.--The amendment made by this section takes 
effect on October 1, 2004, and apply to child health assistance 
provided on or after that date, without regard to whether final 
regulations to carry out such amendment have been promulgated by such 
date.

  Subtitle B--Refundable Tax Credit for Health Insurance Costs of Low-
                    Income Individuals and Families

SEC. 111. CREDIT FOR HEALTH INSURANCE COSTS OF CERTAIN LOW-INCOME 
              INDIVIDUALS.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by redesignating section 36 as section 37 and inserting 
after section 35 the following new section:

``SEC. 36. HEALTH INSURANCE COSTS OF ELIGIBLE LOW-INCOME INDIVIDUALS.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this subtitle for the 
taxable year an amount equal to the applicable percentage of the amount 
paid by the taxpayer (or on behalf of the taxpayer) for coverage of the 
taxpayer or qualifying family members under qualified health insurance 
for eligible coverage months beginning in such taxable year.
    ``(b) Applicable Percentage.--For purposes of this section--
            ``(1) In general.--Subject to paragraph (2), the term 
        `applicable percentage' means the standard Government 
        contribution (determined for full-time Federal employees 
        enrolling in coverage for which such contribution is not 
        limited by section 8906(b)(1) of title 5, United States Code) 
        for an employee enrolled in a health benefits plan under 
        chapter 89 of title 5, United States Code, for the calendar 
        year in which the taxable year begins, expressed as a 
        percentage of the total premium for such plan.
            ``(2) Increased percentage for certain taxpayers.--
                    ``(A) In general.--In the case of a taxpayer whose 
                adjusted gross income for the preceding taxable year 
                does not exceed 150 percent of the poverty level, the 
                applicable percentage determined under paragraph (1) 
                shall be increased by such percentage points as the 
                Secretary determines will fully compensate such an 
                individual for the individual's limited purchasing 
                power in comparison to individuals whose adjusted gross 
                income equals the average adjusted gross income for all 
                Federal employees, to the extent that the amount of the 
                resulting increase in the credit amount for all such 
                eligible low-income individuals for the taxable year is 
not reasonably expected to exceed the 5 percentage point dollar amount 
for that year, as determined under subparagraph (B).
                    ``(B) Determination of 5 percentage point dollar 
                amount.--For purposes of subparagraph (A), the 5 
                percentage point dollar amount for any taxable year is 
                the product of--
                            ``(i) the total number of individuals 
                        receiving credits under this section for such 
                        year, and
                            ``(ii) the amount equal to 5 percent of the 
                        average health insurance premium amount to 
                        which such credits are applied.
                    ``(C) Rule of construction.--Nothing in this 
                paragraph shall be construed to prevent the Secretary 
                from establishing more than 1 level of supplemental 
                assistance that provides greater assistance to 
                individuals with lower income, determined as a 
                percentage of poverty.
            ``(3) Application of fehbp coverage categories to 
        determination of credit.--The percentages described in 
        paragraphs (1) and (2) shall be applied to a taxpayer 
        consistent with the coverage categories (such as self or family 
        coverage) applied with respect to a health benefits plan under 
        chapter 89 of title 5, United States Code.
    ``(c) Maximum Premium Amount.--The amount paid for qualified health 
insurance taken into account under subsection (a) for any taxable year 
shall not exceed an amount equal to the capped premium established for 
the applicable State under section 204(c)(10) of the Health Coverage, 
Affordability, Responsibility, and Equity Act of 2003 for the calendar 
year in which the such taxable year begins.
    ``(d) Eligible Coverage Month.--For purposes of this section--
            ``(1) In general.--The term `eligible coverage month' means 
        any month if during such month the taxpayer or a qualifying 
        family member--
                    ``(A) is an eligible low-income individual,
                    ``(B) is covered by qualified health insurance, the 
                premium for which is paid by the taxpayer (or on behalf 
                of the taxpayer),
                    ``(C) does not have other specified coverage, and
                    ``(D) is not imprisoned under Federal, State, or 
                local authority.
            ``(2) Joint returns.--In the case of a joint return, the 
        requirement of paragraph (1)(A) shall be treated as met with 
        respect to any month if at least 1 spouse satisfies such 
        requirement.
    ``(e) Eligible Low-Income Individual.--For purposes of this 
section--
            ``(1) In general.--The term `eligible low-income 
        individual' means an individual--
                    ``(A) who has not attained age 65,
                    ``(B) whose adjusted gross income does not exceed 
                200 percent of the poverty level,
                    ``(C) who is ineligible for the medicaid program or 
                the State children's health insurance program under 
                title XIX or XXI of the Social Security Act (other than 
                under section 1928 of such Act),
                    ``(D) who has limited access to health insurance 
                coverage through the employer of the individual or a 
                member of the individual's family (either because the 
                employer does not offer such coverage to the individual 
                or because the employee contribution for such coverage 
                would exceed an amount equal to 5 percent of the 
                household income of such individual, as determined in 
                accordance with paragraph (2)),
                    ``(E) who applies for a credit under this section 
                not later than 60 days after receiving notice of 
                potential eligibility for such credit, under procedures 
                established by the Secretary, and
                    ``(F) who resides in a State where the eligibility 
                standards and methodologies applied under the medicaid 
                and State children's health insurance programs with 
                respect to individuals residing in the State who have 
                not attained age 65 are not more restrictive (as 
                determined under section 1902(a)(10)(C)(i)(III) of the 
                Social Security Act) than the standards and 
                methodologies that applied under such programs with 
                respect to such individuals as of July 1, 2003.
            ``(2) Determination of eligibility.--
                    ``(A) SCHIP agency.--
                            ``(i) In general.--The determination of 
                        whether an individual is an eligible low-income 
                        individual for purposes of this section shall 
                        be made by the State agency with responsibility 
                        for determining the eligibility of individuals 
                        for assistance under the State children's 
                        health insurance program under title XXI of the 
                        Social Security Act.
                            ``(ii) Application of screen and enroll 
                        requirements.--
                                    ``(I) In general.--The State agency 
                                referred to in clause (i) shall ensure 
                                that individuals applying for a 
                                certificate of eligibility are screened 
                                for potential eligibility under the 
                                medicaid and State children's health 
                                insurance programs and that individuals 
                                found through screening to be eligible 
                                for assistance under such a program are 
                                enrolled for assistance under the 
                                appropriate program. To the maximum 
                                extent possible pursuant to State 
                                options under title XIX of the Social 
                                Security Act, and notwithstanding any 
                                otherwise applicable provision of, or 
                                State plan provision under, such title, 
                                screening and enrollment activities 
                                described in the previous sentence 
                                shall use the procedures employed by 
                                the State children's health insurance 
                                program operated under title XXI of the 
                                Social Security Act, if such procedures 
                                differ from those ordinarily employed 
by the State program operated under title XIX of such Act.
                                    ``(II) No delay of issuance of 
                                certificate.--The application of the 
                                screen and enroll requirements of 
                                clause (i) shall not delay the issuance 
                                of a certificate of eligibility to an 
                                individual for purposes of this 
                                section. The State agency referred to 
                                in clause (i) shall adopt procedures to 
                                ensure that an individual issued a 
                                certificate of eligibility under this 
                                paragraph who is subsequently 
                                determined to be eligible for the State 
                                medicaid program under title XIX of the 
                                Social Security Act or the State 
                                children's health insurance program 
                                under XXI of such Act shall be enrolled 
                                in the appropriate program without an 
                                interruption in the individual's health 
                                insurance coverage.
                    ``(B) Standards.--
                            ``(i) In general.--An individual is an 
                        eligible low-income individual for purposes of 
                        this section if--
                                    ``(I) on the basis of the 
                                individual's tax return for the 
                                preceding taxable year, the individual 
                                meets the requirements of paragraph 
                                (1)(B), and the individual otherwise 
                                satisfies the requirements of paragraph 
                                (1), or
                                    ``(II) the individual is determined 
                                to satisfy the requirements of 
                                paragraph (1) after the application of 
                                the same eligibility methodologies as 
                                would apply for purposes of determining 
                                the eligibility of an individual for 
                                assistance under the State children's 
                                health insurance program under title 
                                XXI of the Social Security Act.
                            ``(ii) Application of schip income 
                        determination methodologies.--For purposes of 
                        clause (i)(II), determinations of income levels 
                        shall be made using the methodologies described 
                        in that clause, to the extent such 
                        methodologies for ascertaining household income 
                        differ from any otherwise applicable method for 
                        determining adjusted gross income or the 
                        definition of adjusted gross income.
                    ``(C) Certificate of eligibility.--
                            ``(i) In general.--An individual who is 
                        determined to be an eligible low-income 
                        individual shall be issued a certificate of 
                        eligibility by the State agency referred to in 
                        subparagraph (A).
                            ``(ii) Certificate amount.--Such 
                        certificate shall indicate the applicable 
                        percentage of the amount paid for coverage 
                        under qualified health insurance that the 
                        individual is eligible for under this section 
                        (including any supplemental assistance which 
                        the individual may be eligible for under 
                        subsection (b)(2), unless the individual elects 
                        to not receive such supplemental assistance).
                            ``(iii) 12-month period of issue.--The 
                        certificate of eligibility shall apply for a 
                        12-month period from the date of issue, 
                        notwithstanding any changes in household 
                        circumstances following the individual's 
                        application for a credit under this section or 
                        supplemental assistance.
                    ``(D) Supplemental assistance.--The State agency 
                described in subparagraph (A) shall determine an 
                individual's eligibility for supplemental assistance 
                under subsection (b)(2) based on the methodologies 
                referred to in subparagraph (B)(ii).
    ``(f) Qualifying Family Member.--For purposes of this section--
            ``(1) In general.--The term `qualifying family member' 
        means--
                    ``(A) the taxpayer's spouse, and
                    ``(B) any dependent of the taxpayer with respect to 
                whom the taxpayer is entitled to a deduction under 
                section 151(c).
        Such term does not include any individual who is not an 
        eligible low-income individual under subsection (e)(1).
            ``(2) Special dependency test in case of divorced parents, 
        etc.--If paragraph (2) or (4) of section 152(e) applies to any 
        child with respect to any calendar year, in the case of any 
        taxable year beginning in such calendar year, such child shall 
        be treated as described in paragraph (1)(B) with respect to the 
        custodial parent (within the meaning of section 152(e)(1)) and 
        not with respect to the noncustodial parent.
    ``(g) Qualified Health Insurance.--For purposes of this section--
            ``(1) In general.--The term `qualified health insurance' 
        means any of the following:
                    ``(A) Coverage under an insurance plan 
                participating in a purchasing pool established pursuant 
                to section 203 of the Health Coverage, Affordability, 
                Responsibility, and Equity Act of 2003.
                    ``(B) Coverage under individual health insurance 
                pursuant to section 212 of such Act.
                    ``(C) Coverage, pursuant to section 213 of such 
                Act, under the medicaid program or the State children's 
                health insurance program if 1 or more family members 
                qualifies for coverage under such program.
                    ``(D) Coverage, pursuant to section 214 of such 
                Act, under an employer-sponsored insurance plan, 
                including--
                            ``(i) coverage under a COBRA continuation 
                        provision (as defined in section 9832(d)(1)),
                            ``(ii) State-based continuation coverage 
                        provided under a State law that requires such 
                        coverage,
                            ``(iii) coverage voluntarily offered by a 
                        former employer of the individual or family 
                        member; or
                            ``(iv) coverage under a group health plan 
                        that is available through the employment of the 
                        individual or a family member.
            ``(2) Exception.--The term `qualified health insurance' 
        shall not include--
                    ``(A) a flexible spending or similar arrangement, 
                and
                    ``(B) any insurance if substantially all of its 
                coverage is of excepted benefits described in section 
                9832(c).
            ``(3) Definitions.--For purposes of this subsection--
                    ``(A) Employer-sponsored insurance.--
                            ``(i) In general.--The term `employer-
                        sponsored insurance' means any insurance which 
                        covers medical care under any health plan 
                        maintained by any employer (or former employer) 
                        of the taxpayer or the taxpayer's spouse.
                            ``(ii) Treatment of cafeteria plans.--For 
                        purposes of clause (i), the cost of coverage 
                        shall be treated as paid or incurred by an 
                        employer to the extent the coverage is in lieu 
                        of a right to receive cash or other qualified 
                        benefits under a cafeteria plan (as defined in 
                        section 125(d)).
                    ``(B) Individual health insurance.--The term 
                `individual health insurance' means any insurance which 
                constitutes medical care offered to individuals other 
                than in connection with a group health plan and does 
                not include Federal- or State-based health insurance 
                coverage.
    ``(h) Other Specified Coverage.--For purposes of this section, an 
individual has other specified coverage for any month if, as of the 
first day of such month--
            ``(1) Coverage under medicare.--Such individual is entitled 
        to benefits under part A of title XVIII of the Social Security 
        Act or is enrolled under part B of such title.
            ``(2) Certain other coverage.--Such individual--
                    ``(A) is enrolled in a health benefits plan under 
                chapter 89 of title 5, United States Code, or
                    ``(B) is entitled to receive benefits under chapter 
                55 of title 10, United States Code.
    ``(i) Federal Poverty Level; Poverty Level; Poverty.--For purposes 
of this section, the terms `Federal poverty level', `poverty level', 
and `poverty' mean 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 Omnibus Budget Reconciliation Act of 1981) 
applicable to a family of the size involved.
    ``(j) Special Rules.--
            ``(1) Coordination with advance payments of credit.--With 
        respect to any taxable year, the amount which would (but for 
        this subsection) be allowed as a credit to the taxpayer under 
        subsection (a) shall be reduced (but not below zero) by the 
        aggregate amount paid on behalf of such taxpayer under section 
        7528 for months beginning in such taxable year.
            ``(2) Coordination with other deductions.--Amounts taken 
        into account under subsection (a) shall not be taken into 
        account in determining any deduction allowed under section 
        162(l) or 213.
            ``(3) MSA distributions.--Amounts distributed from an 
        Archer MSA (as defined in section 220(d)) shall not be taken 
        into account under subsection (a).
            ``(4) Denial of credit to dependents.--No credit shall be 
        allowed under this section to any individual with respect to 
        whom a deduction under section 151 is allowable to another 
        taxpayer for a taxable year beginning in the calendar year in 
        which such individual's taxable year begins.
            ``(5) Both spouses eligible low-income individuals.--The 
        spouse of the taxpayer shall not be treated as a qualifying 
        family member for purposes of subsection (a), if--
                    ``(A) the taxpayer is married at the close of the 
                taxable year,
                    ``(B) the taxpayer and the taxpayer's spouse are 
                both eligible low-income individuals during the taxable 
                year, and
                    ``(C) the taxpayer files a separate return for the 
                taxable year.
            ``(6) Marital status; certain married individuals living 
        apart.--Rules similar to the rules of paragraphs (3) and (4) of 
        section 21(e) shall apply for purposes of this section.
            ``(7) Insurance which covers other individuals.--For 
        purposes of this section, rules similar to the rules of section 
        213(d)(6) shall apply with respect to any contract for 
        qualified health insurance under which amounts are payable for 
        coverage of an individual other than the taxpayer and 
        qualifying family members.
            ``(8) Treatment of payments.--For purposes of this section:
                    ``(A) Payments by secretary.--Any payment made by 
                the Secretary on behalf of any individual under section 
                7528 (relating to advance payment of credit for health 
                insurance costs of eligible low-income individuals) 
                shall be treated as having been made by the taxpayer 
                (or on behalf of the taxpayer) on the first day of the 
                month for which such payment was made.
                    ``(B) Payments by taxpayer.--Any payment made by 
                the taxpayer (or on behalf of the taxpayer) for 
                eligible coverage months shall be treated as having 
                been so made on the first day of the month for which 
such payment was made.
            ``(9) Regulations.--
                    ``(A) In general.--The Secretary, in consultation 
                with the Secretary of Health and Human Services, shall 
                administer the credit allowed under this section and 
                shall prescribe such regulations and other guidance as 
                may be necessary or appropriate to carry out this 
                section, section 6050U, and section 7528.
                    ``(B) Eligibility determinations.--Such regulations 
                shall include such standards as the Secretary of Health 
                and Human Services may specify with respect to the 
                requirements for eligibility determinations under 
                subsection (e)(2).
                    ``(C) Measures to combat fraud and abuse.--Such 
                regulations shall include appropriate procedures to 
                deter, detect, and penalize fraudulent efforts to 
                obtain a credit under this section by individuals, 
                providers of qualified health insurance, and others.''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting before the period ``, or 
        from section 36 of such Code''.
            (2) The table of sections for subpart C of part IV of 
        chapter 1 of the Internal Revenue Code of 1986 is amended by 
        striking the last item and inserting the following new items:

                              ``Sec. 36. Health insurance costs of 
                                        eligible low-income 
                                        individuals.
                              ``Sec. 37. Overpayments of tax.''.

    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.
    (d) Reimbursement for Administrative Costs Incurred in Determining 
Eligibility for Credit.--
            (1) In General.--The Secretary of Health and Human Services 
        shall reimburse States for the reasonable administrative costs 
        incurred in making eligibility determinations in accordance 
        with section 36(e) of the Internal Revenue Code of 1986 (as 
        added by subsection (a)). Such reimbursement shall not apply to 
        State costs required under the medicaid or State children's 
        health insurance programs.
            (2) Application.--A State desiring reimbursement under this 
        subsection shall submit an application to the Secretary of 
        Health and Human Services in such manner, at such time, and 
        containing such information as the Secretary may require.
            (3) Appropriation.--Out of any money in the Treasury of the 
        United States not otherwise appropriated, there are 
        appropriated such sums as may be necessary to carry out this 
        subsection.

SEC. 112. ADVANCE PAYMENT OF CREDIT FOR HEALTH INSURANCE COSTS OF 
              ELIGIBLE LOW-INCOME INDIVIDUALS.

    (a) In General.--Chapter 77 of the Internal Revenue Code of 1986 
(relating to miscellaneous provisions) is amended by adding at the end 
the following new section:

``SEC. 7528. ADVANCE PAYMENT OF CREDIT FOR HEALTH INSURANCE COSTS OF 
              ELIGIBLE LOW-INCOME INDIVIDUALS.

    ``(a) General Rule.--Not later than August 1, 2005, the Secretary 
shall establish a program for making payments on behalf of certified 
individuals to providers of qualified health insurance (as defined in 
section 36(g)) for such individuals.
    ``(b) Limitation on Advance Payments During Any Taxable Year.--The 
Secretary may make payments under subsection (a) only to the extent 
that the total amount of such payments made on behalf of any individual 
during the taxable year is not reasonably expected to exceed the 
applicable percentage (as defined in section 36(b)) of the amount paid 
by the taxpayer (or on behalf of the taxpayer) for coverage of the 
taxpayer and qualifying family members under qualified health insurance 
for eligible coverage months beginning in the taxable year.
    ``(c) Certified Individual.--For purposes of this section, the term 
`certified individual' means any individual for whom a health coverage 
eligibility certificate is in effect.
    ``(d) Health Coverage Eligibility Certificate.--For purposes of 
this section, the term `health coverage eligibility certificate' means 
any written statement that an individual is an eligible low-income 
individual (as defined in section 36(e)) if such statement provides 
such information as the Secretary may require for purposes of this 
section and is issued by the State agency responsible for administering 
the State children's health insurance program under title XXI of the 
Social Security Act.''.
    (b) Disclosure of Return Information for Purposes of Carrying Out a 
Program for Advance Payment of Credit for Health Insurance Costs of 
Eligible Low-Income Individuals.--
            (1) In general.--Subsection (l) of section 6103 of the 
        Internal Revenue Code of 1986 (relating to disclosure of 
        returns and return information for purposes other than tax 
        administration) is amended by adding at the end the following 
        new paragraph:
            ``(19) Disclosure of return information for purposes of 
        carrying out a program for advance payment of credit for health 
        insurance costs of eligible low-income individuals.--The 
        Secretary may disclose to providers of health insurance for any 
        certified individual (as defined in section 7528(c)) return 
        information with respect to such certified individual only to 
        the extent necessary to carry out the program established by 
        section 7528 (relating to advance payment of credit for health 
        insurance costs of eligible low-income individuals).''.
            (2) Procedures and recordkeeping related to disclosures.--
        Subsection (p) of such section is amended--
                    (A) in paragraph (3)(A) by striking ``or (18)'' and 
                inserting ``(18), or (19)'', and
                    (B) in paragraph (4), as amended by section 
                202(b)(2)(B) of the Trade Act of 2002 (Public Law 107-
                210; 116 Stat. 961), by striking ``or (17)'' after 
                ``any other person described in subsection (l)(16)'' 
                each place it appears and inserting ``(18), or (19)''.
            (3) Unauthorized inspection of returns or return 
        information.--Section 7213A(a)(1)(B) of such Code is amended by 
        striking ``section 6103(n)'' and inserting ``subsection (l)(18) 
        or (19) or (n) of section 6103''.
    (c) Information Reporting.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 of the Internal Revenue Code of 1986 (relating to 
        information concerning transactions with other persons) is 
        amended by inserting after section 6050T the following new 
        section:

``SEC. 6050U. RETURNS RELATING TO CREDIT FOR HEALTH INSURANCE COSTS OF 
              ELIGIBLE LOW-INCOME INDIVIDUALS.

    ``(a) Requirement of Reporting.--Every person who is entitled to 
receive payments for any month of any calendar year under section 7528 
(relating to advance payment of credit for health insurance costs of 
eligible low-income individuals) with respect to any certified 
individual (as defined in section 7528(c)) shall, at such time as the 
Secretary may prescribe, make the return described in subsection (b) 
with respect to each such individual.
    ``(b) Form and Manner of Returns.--A return is described in this 
subsection if such return--
            ``(1) is in such form as the Secretary may prescribe, and
            ``(2) contains--
                    ``(A) the name, address, and TIN of each individual 
                referred to in subsection (a),
                    ``(B) the number of months for which amounts were 
                entitled to be received with respect to such individual 
                under section 7528 (relating to advance payment of 
                credit for health insurance costs of eligible low-
                income individuals),
                    ``(C) the amount entitled to be received for each 
                such month, and
                    ``(D) such other information as the Secretary may 
                prescribe.
    ``(c) Statements To Be Furnished to Individuals With Respect to 
Whom Information Is Required.--Every person required to make a return 
under subsection (a) shall furnish to each individual whose name is 
required to be set forth in such return a written statement showing--
            ``(1) the name and address of the person required to make 
        such return and the phone number of the information contact for 
        such person, and
            ``(2) the information required to be shown on the return 
        with respect to such individual.
The written statement required under the preceding sentence shall be 
furnished on or before January 31 of the year following the calendar 
year for which the return under subsection (a) is required to be 
made.''.
            (2) Assessable penalties.--
                    (A) Subparagraph (B) of section 6724(d)(1) of such 
                Code (relating to definitions) is amended by 
                redesignating clauses (xii) through (xviii) as clauses 
                (xiii) through (xix), respectively, and by inserting 
                after clause (xi) the following new clause:
                            ``(xii) section 6050U (relating to returns 
                        relating to credit for health insurance costs 
                        of eligible low-income individuals),''.
                    (B) Paragraph (2) of section 6724(d) of such Code 
                is amended by striking ``or'' at the end of 
                subparagraph (AA), by striking the period at the end of 
                subparagraph (BB) and inserting ``, or'', and by adding 
                after subparagraph (BB) the following new subparagraph:
                    ``(CC) section 6050U (relating to returns relating 
                to credit for health insurance costs of eligible low-
                income individuals).''.
    (d) Clerical Amendments.--
            (1) Advance payment.--The table of sections for chapter 77 
        of the Internal Revenue Code of 1986 is amended by adding at 
        the end the following new item:

                              ``Sec. 7528. Advance payment of credit 
                                        for health insurance costs of 
                                        eligible low-income 
                                        individuals.''.

            (2) Information reporting.--The table of sections for 
        subpart B of part III of subchapter A of chapter 61 of such 
        Code is amended by inserting after the item relating to section 
        6050T the following new item:

                              ``Sec. 6050U. Returns relating to credit 
                                        for health insurance costs of 
                                        eligible low-income 
                                        individuals.''.

    (e) Effective Date.--The amendments made by this section shall take 
effect on January 1, 2006.

               TITLE II--IMPROVING ACCESS TO HEALTH PLANS

SEC. 201. DEFINITIONS.

    In this title:
            (1) Eligible individual.--The term ``eligible individual'' 
        means an individual with respect to whom a tax credit is 
        allowed under section 36 of the Internal Revenue Code of 1986 
        (as added by section 111).
            (2) Participating insurer.--The term ``participating 
        insurer'' means an entity with a contract under section 205(a).
            (3) Private group health insurance plan.--The term 
        ``private group health insurance plan'' means a plan offered by 
        a participating insurer that provides health benefits coverage 
        to eligible individuals and that meets the requirements of this 
        title.
            (4) Purchasing pool operator.--The term ``purchasing pool 
        operator'' means the entity designated by the State under 
        section 204.
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (6) Small employer.--The term ``small employer'' means an 
        employer with not less than 2 and not more than 100 employees.

SEC. 202. ESTABLISHMENT OF HEALTH INSURANCE PURCHASING POOLS.

    There is established a program under which the Secretary shall 
ensure that each eligible individual has the opportunity to enroll, 
through a purchasing pool operator, in a private group health insurance 
plan offered by a participating insurer under this title.

SEC. 203. PURCHASING POOLS.

    (a) Establishment of Purchasing Pools.--Each State participating in 
the program under this title shall establish a purchasing pool that is 
available to each eligible individual who resides in the State.
    (b) Types of Purchasing Pools.--
            (1) In general.--A purchasing pool established under 
        subsection (a) shall be 1 of the following:
                    (A) A statewide purchasing pool operated by the 
                State.
                    (B) A statewide purchasing pool operated on behalf 
                of the State by the Director of the Office of Personnel 
                Management, or the designee of such Director.
            (2) OPM operated pool.--In the case of a statewide 
        purchasing pool described in paragraph (1)(B), the Director of 
        the Office of Personnel Management or the Director's designee, 
        may limit participating insurers in such pool to those 
        described in section 205(e), except that the Director or such 
        designee shall ensure that additional private group health 
        insurance plans participate in such a pool to the extent 
        necessary to meet the requirements of section 204(c)(9).
    (c) State Election Process.--
            (1) In general.--Each State participating in the program 
        under this title shall notify the Secretary, not later than 
        January 4, 2005, of the type of purchasing pool that applies to 
        residents of the State.
            (2) Default choice.--If a State participating in the 
        program under this title fails to notify the Secretary of the 
        type of purchasing pool elected by the State by the date 
        described in paragraph (1), the State shall be deemed to have 
        elected the type of purchasing pool described in subsection 
        (b)(1)(B).
            (3) Change of election.--The Secretary shall establish 
        procedures under which a State participating in the program 
        under this title may change the election of the type of 
        purchasing pool applicable to residents of the State.

SEC. 204. PURCHASING POOL OPERATORS.

    (a) Designation.--Each State shall designate a purchasing pool 
operator that shall be responsible for operating the purchasing pool 
established under section 203(a). A purchasing pool operator may be 
(or, to have 1 or more of its functions performed, may contract with) a 
private entity that has entered into a contract with the State if such 
entity meets requirements established by the Secretary for purposes of 
the program under this title.
    (b) Operation Similar to FEHBP.--Each purchasing pool operator 
shall operate the purchasing pool established under section 203(a) in a 
manner that is similar to the manner in which the Director of the 
Office of Personnel Management operates the Federal employees' health 
benefits program under chapter 89 of title 5, United States Code, 
including (but not limited to) the performance of the specific 
functions described in subsection (c).
    (c) Specific Functions Described.--The specific functions described 
in this subsection include the following:
            (1) Each purchasing pool operator shall offer one-stop 
        shopping for eligible individuals to enroll for health benefits 
        coverage under private, group health insurance plans offered by 
        participating insurers.
            (2) Each purchasing pool operator shall limit participating 
        insurers to those that meet the conditions for participation 
        described in this title.
            (3) Each purchasing pool operator shall negotiate (or, in 
        the case of a purchasing pool described in section 
        203(b)(1)(B), shall negotiate or otherwise determine) bids and 
        terms of coverage with insurers.
            (4) Each purchasing pool operator shall provide eligible 
        individuals with comparative information on private group 
        health insurance plans offered by participating insurers.
            (5) Each purchasing pool operator shall assist eligible 
        individuals in enrolling with a private group health insurance 
        plan offered by a participating insurer.
            (6) Each purchasing pool operator shall collect private 
        group health insurance plan premium payments for participating 
        insurers and process such premium payments.
            (7) Each purchasing pool operator shall reconcile from year 
        to year aggregate premium payments and claims costs of private 
        group health insurance plans consistent with practices under 
        the Federal employees' health benefits program under chapter 89 
        of title 5, United States Code.
            (8) Each purchasing pool operator shall offer customer 
        service to eligible individuals enrolled for health benefits 
        coverage under a private group health insurance plan offered by 
        a participating insurer.
            (9) Each purchasing pool operator shall ensure that each 
        eligible individual has the option of enrolling in either of at 
        least 2 benchmark or benchmark-equivalent plans with--
                    (A) a premium at or below a cap established by the 
                pool operator for purposes of this title; and
                    (B) coverage of essential services included in the 
                report required under section 301(e)(2), with cost-
                sharing consistent with such report.
            (10) Each purchasing pool operator shall establish a 
        premium cap for purposes of determining the credit limitation 
        under section 36(c) of the Internal Revenue Code of 1986, as 
        added by section 111(a). The cap required under this paragraph 
        may not be less than the premium charged to Federal employees 
        by the most highly-enrolled health plan under the Federal 
        employees' health benefits program under chapter 89 of title 5, 
        United States Code. If the most highly-enrolled plan in that 
        program differs for Federal enrollees in the State and all 
        Federal enrollees nationally in such plan, the minimum 
        permitted premium cap shall be the lower of such premiums.

SEC. 205. CONTRACTS WITH PARTICIPATING INSURERS.

    (a) In General.--Each purchasing pool operator shall negotiate and 
enter into contracts for the provision of health benefits coverage 
under the program under this title with entities that meet the 
conditions of participation described in subsection (b) and other 
applicable requirements of this Act.
    (b) Consumer Information.--In carrying out its duty under section 
204(c)(4) to inform eligible individuals about private group health 
plans, the purchasing pool operator shall provide information that 
meets the requirements of section 212(b)(2).
    (c) State Licensure.--
            (1) In general.--Subject to paragraph (2), a health plan 
        shall not be a participating insurer unless the plan has a 
        State license to provide State residents with the private group 
        coverage health insurance plans that it offers through the 
        pool.
            (2) Exception.--A pool operator may enter into a contract 
        under subsection (a) to cover pool participants through a 
        health plan without a State license described in paragraph (1) 
        if such plan is offered to Federal employees nationwide and, 
        with respect to such employees, is exempt from State health 
        insurance regulation. Nothing in this paragraph shall be 
        construed to permit coverage of pool participants through such 
        a plan except with groups, contracts, and premium rates that 
        are entirely distinct from those used for individuals covered 
        under the Federal employee's health benefits program under 
        chapter 89 of title 5, United States Code.
    (d) Additional Stop-Loss Coverage and Reinsurance.--Purchasing pool 
operators are authorized to encourage participation in the program 
under this title, improve covered benefits, reduce out-of-pocket cost-
sharing, limit premiums, or achieve other objectives of this Act by--
            (1) funding stop-loss coverage above levels otherwise 
        offered in the purchasing pool; or
            (2) providing or subsidizing reinsurance in addition to 
        that provided under section 211.
    (e) Participation of FEHBP Plans.--
            (1) In general.--Each entity with a contract under section 
        8902 of title 5, United States Code, shall be a participating 
        insurer unless such entity notifies the Secretary in writing of 
        its intention not to participate in the program under this 
        title prior to such time as is designated by the Secretary so 
        as to allow such decisions to be taken into account with 
        respect to eligible individuals' choice of a private group 
        health insurance plan under such program. Such participation in 
        the program under this title shall include at least the covered 
        benefits and provider networks available through such an entity 
        and shall not involve greater out-of-pocket cost-sharing than 
        the plan offered by such entity pursuant to its contract under 
        section 8902 of title 5, United States Code.
            (2) No effect on fehbp coverage.--The Director of Office of 
        Personnel Management shall take such steps as are necessary to 
        ensure that each individual enrolled for health benefits 
        coverage under the program under chapter 89 of title 5, United 
        States Code, is not adversely affected by eligible individuals 
        or others enrolled for coverage under the program under this 
        title. Such steps shall include (but need not be limited to) 
        the establishment of separate risk pools, separate contracts 
        with participating insurers, and separately negotiated 
        premiums.

SEC. 206. OPTIONS FOR HEALTH BENEFITS COVERAGE.

    (a) Scope of Health Benefits Coverage.--The health benefits 
coverage provided to an eligible individual under a private group 
health insurance plan offered by a participating insurer shall consist 
of any of the following:
            (1) Benchmark coverage.--Health benefits coverage that is 
        equivalent to the benefits coverage in a benchmark benefit 
        package described in subsection (b).
            (2) Benchmark-equivalent coverage.--Health benefits 
        coverage that meets the following requirements:
                    (A) Inclusion of essential services.--The coverage 
                includes each of the essential services identified by 
                the National Advisory Commission on Expanded Access to 
                Health Care and adopted by Congress under title III.
                    (B) Aggregate actuarial value equivalent to 
                benchmark package.--The coverage has an aggregate 
                actuarial value that is equal to or greater than the 
                actuarial value of one of the benchmark benefit 
                packages.
            (3) Alternative coverage.--Any other health benefits 
        coverage that the Secretary determines, upon application by a 
        State, offers health benefits coverage equivalent to or greater 
        than a plan described in and offered under section 8903(1) of 
        title 5, United States Code.
    (b) Benchmark Benefit Packages.--The benchmark benefit packages are 
as follows:
            (1) FEHBP-equivalent health benefits coverage.--The plan 
        described in and offered under chapter 89 of title 5, United 
        States Code with the highest number of enrollees under such 
        section for the year preceding the year in which the private 
        group health insurance plan is proposed to be offered.
            (2) Public program-equivalent health benefits coverage.--
        Coverage provided under the State plan approved under the 
        medicaid program under title XIX of the Social Security Act or 
        the State children's health insurance program under title XXI 
        of such Act (42 U.S.C. 1396 et seq., 1397aa et seq.) (without 
        regard to coverage provided under a waiver of the requirements 
        of either such program).
            (3) Coverage offered through hmo.--The health insurance 
        coverage plan that--
                    (A) is offered by a health maintenance organization 
                (as defined in section 2791(b)(3) of the Public Health 
                Service Act (42 U.S.C. 33gg-91(b)(3))), and
                    (B) has the largest insured commercial, nonmedicaid 
                enrollment of covered lives of such coverage plans 
offered by such a health maintenance organization in the State.
            (4) State employee coverage.--The health insurance plan 
        that is offered to State employees and has the largest 
        enrollment of covered lives of any such plan.
            (5) Application of benchmark standards.--A private group 
        health plan offers benchmark benefits if, with respect to a 
        benchmark plan described in paragraph (1), (2), (3), or (4), 
        the private group health plan covers all items and services 
        offered by the benchmark plan, with out-of-pocket cost-sharing 
        for such items and services that is not greater than under the 
        benchmark plan. Nothing in this title shall be construed to 
        forbid a private group health plan from offering additional 
        items and services not covered by such a benchmark plan or 
        reducing out-of-pocket cost-sharing below levels applicable 
        under such plan.

SEC. 207. ENROLLMENT PROCESS FOR ELIGIBLE INDIVIDUALS.

    (a) In General.--The Secretary shall establish a process through 
which an eligible individual--
            (1) may make an annual election to enroll in any private 
        group health insurance plan offered by a participating insurer 
        that has been awarded a contract under section 205(a) and 
        serves the geographic area in which the individual resides, 
        provided that such insurer's geographic area of service and 
        guaranteed issuance under this section is conterminous with, or 
        includes all of, a geographic area served pursuant to an 
        entity's contact under section 8902 of title 5, United States 
        Code; and
            (2) may make an annual election to change the election 
        under this clause.
    (b) Rules.--In establishing the process under subsection (a), the 
Secretary shall use rules similar to the rules for enrollment, 
disenrollment, and termination of enrollment under the Federal 
employees health benefits program under chapter 89 of title 5, United 
States Code, including the application of the guaranteed issuance 
provision described in subsection (c).
    (c) Guaranteed Issuance.--An eligible individual who is eligible to 
enroll for health benefits coverage under a private group health 
insurance plan that has been awarded a contract under section 205(a) at 
a time during which elections are accepted under this title with 
respect to the plan shall not be denied enrollment based on any health 
status-related factor (described in section 2702(a)(1) of the Public 
Health Service Act (42 U.S.C. 300gg-1(a)(1))) or any other factor.

SEC. 208. PLAN PREMIUMS.

    (a) In General.--Each purchasing pool operator shall negotiate (or, 
in the case of a purchasing pool operated pursuant to section 
203(b)(1)(B), shall otherwise determine) a premium for each private 
group health insurance plan offered by a participating insurer.
    (b) Permitted Profit Margins.--
            (1) In general.--Each premium negotiated under subsection 
        (a) may not permit a profit margin that exceeds the applicable 
        percentage (as defined in paragraph (2)).
            (2) Applicable percentage defined.--In this subsection, the 
        term ``applicable percentage'' means--
                    (A) for the first 3 years that a purchasing pool is 
                operated, 2 percent;
                    (B) for any subsequent year, the percentage 
                determined by the purchasing pool operator, which may 
                not be--
                            (i) less than the profit margin permitted 
                        under the Federal employees health benefits 
                        program under chapter 89 of title 5, United 
                        States Code; or
                            (ii) more than a multiple, established by 
                        the Secretary for purposes of this subsection, 
                        of profit margins permitted under such program.

SEC. 209. ENROLLEE PREMIUM SHARE.

    (a) In General.--A participating insurer offering a private group 
health insurance plan that has been awarded a contract under section 
205(a) in which the eligible individual is enrolled may not deny, 
limit, or condition the coverage (including out-of-pocket cost-sharing) 
or provision of health benefits coverage or vary or increase the 
enrollee premium share under the plan based on any health status-
related factor described in section 2702(a)(1) of the Public Health 
Service Act (42 U.S.C. 300gg-1(a)(1)) or any other factor.
    (b) Risk-Adjusted Plan Payments and Premiums Charged to 
Enrollees.--
            (1) In general.--For each private group health insurance 
        plan operated by a participating insurer, the pool operator 
        shall adjust premium payments to compensate for the difference 
        in health risk factors between plan enrollees and State 
        residents as a whole (including residents who are not eligible 
        individuals). Such adjustments shall employ risk-adjustment 
        mechanisms promulgated by the Secretary.
            (2) Additional adjustments.--The pool operator shall also 
        provide additional adjustments to premium payments that 
        compensate participating insurers for the cost of keeping out-
        of-pocket cost-sharing amounts consistent with section 
        204(c)(9)(B).
            (3) Enrollee premium costs.--The adjustments described in 
        this subsection shall not affect enrollee premium shares, which 
        shall be based on the premium that would be charged for 
        enrollees with health risk factors for State residents as a 
        whole (as described in paragraph (1)), without taking into 
        account cost-sharing adjustments under section 204(c)(9)(B).
    (c) Amount of Premium.--The amount of the enrollee premium share 
shall be equal to premium amounts (if any) above the applicable cap set 
pursuant to section 204(c)(10), plus 100 percent of the remainder minus 
the applicable percentage (as defined in section 36(b) of the Internal 
Revenue Code of 1986, as added by section 111).

SEC. 210. PAYMENTS TO PURCHASING POOL OPERATORS AND PAYMENTS TO 
              PARTICIPATING INSURERS.

    The Secretary shall establish procedures for making payments to 
each purchasing pool operator as follows:
            (1) Risk-adjustment payment.--The Secretary shall pay each 
        purchasing pool operator for the net costs of risk-adjusted 
        payments to plans under section 209(b), to the extent the sum 
        of upward adjustments exceeds the sum of downward adjustments 
        for the pool operator.
            (2) Stop-loss and reinsurance payments.--
                    (A) In general.--The Secretary shall pay each 
                purchasing pool operator for the applicable percentage 
                (as defined in subparagraph (B)) of--
                            (i) the costs of any stop-loss coverage 
                        funded by the purchasing pool operator under 
                        section 205(d)(1); and
                            (ii) any reinsurance provided in accordance 
                        with section 205(d)(2).
                    (B) Applicable percentage defined.--In this 
                paragraph, the term ``applicable percentage'' means--
                            (i) for the first 3 years that a purchasing 
                        pool is operated, 100 percent;
                            (ii) for the next 2 years that such 
                        purchasing pool is operated, 50 percent; and
                            (iii) for any subsequent year, 0 percent.
            (3) Payments necessary to keep cost-sharing within 
        applicable limits.--The Secretary shall make payments to 
        purchasing pool operators to reimburse purchasing pool 
        operators for the amount paid by such operators to 
        participating insurers necessary to keep out-of-pocket cost-
        sharing for individuals with limited ability to pay within 
        applicable limits.
            (4) Payment for administrative costs.--The Secretary shall 
        make payments to each purchasing pool operator for necessary 
        pool administrative expenses.
            (5) Payments to opm.--In the case of a purchasing pool 
        described in section 203(b)(1)(B), payments under this section 
        shall be made to the Director of the Office of Personnel 
        Management.

SEC. 211. STATE-BASED REINSURANCE PROGRAMS.

    (a) Establishment.--The Secretary shall establish standards for 
State-based reinsurance programs for eligible individuals to guard 
against adverse selection and to improve the functioning of the 
individual health insurance market.
    (b) Grants for Statewide Reinsurance Programs.--
            (1) In general.--The Secretary may award grants to States 
        for the reasonable costs incurred in providing reinsurance 
        under this section, consistent with standards developed by the 
        Secretary, for coverage offered in the individual health 
        insurance market and through State-based purchasing pools 
        described in section 203.
            (2) Limitation.--Such grants may not pay for reinsurance 
        extending beyond individuals in the top 3 percent of the 
        national health care spending distribution, as determined by 
        the Secretary.
            (3) Application.--A State desiring a grant under this 
        section shall submit an application to the Secretary in such 
        manner, at such time, and containing such information as the 
        Secretary may require.
            (4) Authorization of appropriations.--There are authorized 
        to be appropriated to the Secretary such sums as may be 
        necessary for making grants under this section.

SEC. 212. COVERAGE UNDER INDIVIDUAL HEALTH INSURANCE.

    (a) In General.--Eligible individuals may use credits allowed under 
the Internal Revenue Code of 1986 (including supplemental assistance 
provided under such Code) for the purchase of health insurance coverage 
to enroll in State-licensed individual health insurance meeting the 
conditions of participation described in subsection (b).
    (b) Conditions of Participation.--The Secretary shall promulgate 
regulations that establish the terms and conditions under which an 
entity may participate in the program under this section and that 
include the following:
            (1) Plan marketing.--Conditions of participation for plans 
        in the individual market (as developed by the Secretary) that--
                    (A) ensure that consumers receive the consumer 
                information described in paragraph (2) before selecting 
                a plan; and
                    (B) detect, deter, and penalize marketing fraud by 
                entities offering or purporting to offer individual 
                insurance.
            (2) Consumer information.--Requirements for each entity 
        offering individual insurance to provide eligible individuals 
        with information in a uniform and easily comprehensible manner 
        that allows for informed comparisons by eligible individuals 
        and that includes information regarding the health benefits 
        coverage, costs, provider networks, quality, the amount and 
        proportion of health insurance premium payments that go 
        directly to patient care, and the plan's coverage rules 
        (including amount, duration, and scope limits) and out-of-
        pocket cost-sharing (both inside and outside plan networks) for 
        each essential service recommended by the National Advisory 
        Commission on Expanded Access to Health Care and adopted by 
        Congress under title III (which shall be prominently identified 
        as an essential service, including by reference to the 
        Commission recommendation denoting the service as essential). 
        To the maximum extent feasible, such requirements shall specify 
        that the content and presentation of the information shall be 
        provided in the same manner as similar information is presented 
        to enrollees in the Federal employees health benefits program 
        under chapter 89 of title 5, United States Code.
            (3) Other conditions, including the elimination of barriers 
        to affordable coverage.--
                    (A) In general.--Requirements for each entity 
                offering individual insurance to abide by conditions of 
                participation that the Secretary believes are 
reasonable and appropriate measures to address barriers to affordable 
health insurance coverage.
                    (B) Specific conditions.--The requirements 
                developed by the Secretary under subparagraph (A) shall 
                include (but need not be limited to)--
                            (i) guaranteed renewability, without 
                        premium increases based on changed individual 
                        risk; and
                            (ii) limits on risk rating.
            (4) Rule of construction.--Nothing in this section shall be 
        construed to authorize the Secretary to impose any requirements 
        on individual insurance, except with respect to eligible 
        individuals purchasing individual insurance using advance 
        payment of a tax credit provided under section 36 of the 
        Internal Revenue Code of 1986.

SEC. 213. USE OF PREMIUM SUBSIDIES TO UNIFY FAMILY COVERAGE WITH 
              MEMBERS ENROLLED IN MEDICAID AND SCHIP.

    Notwithstanding any other provision of law, the Secretary shall 
establish procedures under which, in the case of a family with 1 or 
more members enrolled in with a managed care entity under the State 
medicaid program under title XIX of the Social Security Act or the 
State children's health insurance program under title XXI of such Act 
(42 U.S.C. 1396 et seq., 1397aa et seq.) and 1 or more members who are 
an eligible individual under this title, the family shall have the 
option to enroll all family members with the managed care entity under 
either or both such State programs. The procedures established by the 
Secretary shall provide that premiums charged to eligible individuals 
for enrollment with such an entity shall be based on the capitated 
payments established for adults or children, excluding adults and 
children who are known to be pregnant, blind, disabled, or (in the case 
of adults) elderly, under the applicable State program (except that, in 
the case of an eligible individual known to be pregnant, premiums shall 
reflect capitated payments established under such State program for 
individuals known to be pregnant) plus reasonable administrative costs.

SEC. 214. COVERAGE THROUGH EMPLOYER-SPONSORED HEALTH INSURANCE.

    (a) In General.--Eligible individuals may use credits allowed under 
the Internal Revenue Code of 1986 and supplemental assistance to enroll 
in coverage offered by eligible employers.
    (b) Eligible Employers.--For purposes of this section, the term 
``eligible employers'' includes the following:
            (1) The current employer of the eligible individual or a 
        member of such individual's family.
            (2) A former employer required to offer coverage of the 
        eligible individual under a COBRA continuation provision (as 
        defined in section 9832(d)(1) of the Internal Revenue Code) or 
        a State law requiring continuation coverage; and
            (3) A former employer voluntarily offering coverage of the 
        eligible individual.
    (c) Application of Disregard of Preexisting Conditions 
Exclusions.--Notwithstanding any other provision of law, in the case of 
an individual who experiences a qualifying event (as defined in section 
603 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1163) and who, not later than 6 months after such event, is determined 
to be an eligible individual under this title, the same rules with 
respect to preexisting conditions as apply to a nonelecting TAA-
eligible individual under section 605(b) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1165(b)) shall apply with 
respect to such individual, regardless of which type of qualified 
coverage the individual purchases.
    (d) Extension of COBRA Election Period.--Notwithstanding any other 
provision of law, in the case of an individual who experiences a 
qualifying event (as defined in section 603 of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1163) and who, not later than 6 
months after such event, is determined to be an eligible individual 
under this title, the same rules with respect to the temporary 
extension of a COBRA election period as apply to a nonelecting TAA-
eligible individual under section 605(b) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1165(b)) shall apply with 
respect to such individual.
    (e) Current Employer Coverage.--If an eligible individual uses the 
credits allowed under the Internal Revenue Code of 1986 and 
supplemental assistance to purchase coverage from an employer described 
in subsection (b), such credits and assistance shall apply as a 
percentage, not of the total premium amount for the eligible 
individual, but of the employee's or former employee's share of premium 
payments.

SEC. 215. PARTICIPATION BY SMALL EMPLOYERS.

    (a) In General.--Notwithstanding any other provision of this title, 
the Secretary shall establish procedures under which, during annual 
open enrollment periods, a small employer shall have the option of 
purchasing group coverage for employees and dependents of employees, 
including individuals who are not otherwise eligible individuals under 
this title, through a purchasing pool established under section 203(a).
    (b) Conditions of Participation.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the same requirements that apply with respect to 
        participating insurers covering eligible low-income individuals 
        under section 203 shall apply with respect to coverage offered 
        by such insurers through a small employer.
            (2) Risk adjustment.--
                    (A) Increased payments.--If employees of a small 
                employer who are not otherwise eligible individuals 
                under this title enroll in a private group health 
                insurance plan under this title and have a collective 
                risk level that exceeds the statewide average (as 
                determined pursuant to risk adjustment mechanisms 
                developed by the Secretary consistent with section 
                209(b)(1)), the Secretary (through a pool operator) 
                shall provide participating insurers with such small 
                employer enrollment bonus payments as are necessary to 
                compensate the insurers for such increased risk. The 
                premium charged to enrollees under this section shall 
be the same premium that is the basis of premium charges to enrollees 
who are eligible low-income individuals.
                    (B) Reduced payments.--A pool operator shall reduce 
                payments to any plan with a risk level that falls below 
                the statewide average (as so determined).
            (3) Administrative guidelines.--The Secretary shall develop 
        guidelines for pool operators to use in serving small 
        employers, which shall be modeled after existing, successful, 
        longstanding small business purchasing cooperatives, and shall 
        include administratively simple methods for small employers and 
        licensed insurance brokers to participate in the program 
        established under this title.
    (c) Information Campaign.--
            (1) In general.--The pool operator for a State shall 
        establish and conduct, directly or through 1 or more public or 
        private entities (which may include licensed insurance 
        brokers), a health insurance information program to inform 
        small employers about health coverage for employees.
            (2) Requirements.--The program established under paragraph 
        (1) shall educate small employers with respect to matters that 
        include (but are not limited to) the following:
                    (A) The benefits of providing health insurance to 
                employees, including tax benefits to both the employer 
                and employees, increased productivity, and decreased 
                employee turnover.
                    (B) The rights of small employers under Federal and 
                State health insurance reform laws.
                    (C) Options for purchasing coverage, including (but 
                not limited to) through the State's purchasing pool 
                operated pursuant to section 203.
    (d) Grants To Help State-Based Pools Promote Small Business 
Coverage.--
            (1) In general.--The Secretary may award grants to a pool 
        operator for the following:
                    (A) The net costs of risk-adjusted payments under 
                paragraph (b)(2), to the extent the sum of upward 
                adjustments exceeds the sum of downward adjustments for 
                the pool operator.
                    (B) The reasonable cost of the information campaign 
                under subsection (c).
                    (C) The pool operator's reasonable administrative 
                costs to implement this section.
            (2) Limitation.--This section shall not apply to a State's 
        pool unless sufficient grant funds have been received under 
        this subsection to implement this section on a fiscally sound 
        basis and such receipt is certified by the pool operator.
            (3) Application.--A pool operator desiring a grant under 
        this section shall submit an application to the Secretary in 
        such manner, at such time, and containing such information as 
        the Secretary may require.
            (4) Authorization of appropriations.--There are authorized 
        to be appropriated to the Secretary such sums as may be 
        necessary for making grants under this section.

SEC. 216. REPORT.

    Not later than 1 year after the date of enactment of this Act, the 
Secretary shall submit to Congress a report containing recommendations 
for such legislative and administrative changes as the Secretary 
determines are appropriate to permit affinity groups related for 
reasons other than a common employer to participate in purchasing pools 
established under section 203.

SEC. 217. AUTHORIZATION OF APPROPRIATIONS.

    (a) In General.--There are authorized to be appropriated, such sums 
as may be necessary to carry out this title for fiscal year 2006 and 
each fiscal year thereafter.
    (b) Rule of Construction.--Amounts appropriated in accordance with 
subsection (a) shall be in addition to other amounts appropriated 
directly under this title and nothing in subsection (a) shall be 
construed to relieve the Secretary of mandatory payment obligations 
required under this title.

 TITLE III--NATIONAL ADVISORY COMMISSION ON EXPANDED ACCESS TO HEALTH 
                                  CARE

SEC. 301. NATIONAL ADVISORY COMMISSION ON EXPANDED ACCESS TO HEALTH 
              CARE.

    (a) Establishment.--Not later than October 1, 2003, the Secretary 
of Health and Human Services (referred to in this section as the 
``Secretary''), shall establish an entity to be known as the National 
Advisory Commission on Expanded Access to Health Care (referred to in 
this section as the ``Commission'').
    (b) Appointment of Members.--
            (1) In general.--Not later than 45 days after the date of 
        enactment of this Act, the House and Senate Majority and 
        Minority Leaders shall each appoint 4 members of the Commission 
        and the Secretary shall appoint 1 member.
            (2) Criteria.--Members of the Commission shall include 
        representatives of the following:
                    (A) Consumers of health insurance.
                    (B) Health care professionals.
                    (C) State officials.
                    (D) Economists.
                    (E) Health care providers.
                    (F) Experts on health insurance.
                    (G) Experts on expanding health care to individuals 
                who are uninsured.
            (3) Chairperson.--At the first meeting of the Commission, 
        the Commission shall select a Chairperson from among its 
        members.
    (c) Meetings.--
            (1) In general.--After the initial meeting of the 
        Commission which shall be called by the Secretary, the 
        Commission shall meet at the call of the Chairperson.
            (2)  Quorum.--A majority of the members of the Commission 
        shall constitute a quorum, but a lesser number of members may 
        hold hearings.
            (3) Supermajority voting requirement.--To approve a report 
        required under paragraph (2) or (3) of subsection (e), at least 
60 percent of the membership of the Commission must vote in favor of 
such a report.
    (d) Duties.--The Commission shall--
            (1) assess the effectiveness of programs designed to expand 
        health care coverage or make health care coverage affordable to 
        the otherwise uninsured individuals through identifying the 
        accomplishments and needed improvements of each program;
            (2) make recommendations about benefits and cost-sharing to 
        be included in health care coverage for various groups, taking 
        into account--
                    (A) the special health care needs of children and 
                individuals with disabilities;
                    (B) the different ability of various populations to 
                pay out-of-pocket costs for services;
                    (C) incentives for efficiency and cost-control; and
                    (D) preventative care, disease management services, 
                and other factors;
            (3) recommend mechanisms to discourage individuals and 
        employers from voluntarily opting out of health insurance 
        coverage;
            (4) recommend mechanisms to expand health care coverage to 
        uninsured individuals with incomes above 200 percent of the 
        official income poverty line (as defined by the Office of 
        Management and Budget, and revised annually in accordance with 
        section 673(2) of the Omnibus Budget Reconciliation Act of 
        1981) applicable to a family of the size involved;
            (5) recommend automatic enrollment and retention procedures 
        and other measures to increase health care coverage among those 
        eligible for assistance;
            (6) review the roles, responsibilities, and relationship 
        between Federal and State agencies with respect to health care 
        coverage and recommend improvements; and
            (7) analyze the size, effectiveness, and efficiency of 
        current tax and other subsidies for health care coverage and 
        recommend improvements.
    (e) Reports.--
            (1) Annual report.--The Commission shall submit annual 
        reports to the President and Congress addressing the matters 
        identified in subsection (d).
            (2) Biennial report.--
                    (A) In general.--The Commission shall submit 
                biennial reports to the President and Congress, which 
                shall contain--
                            (i) recommendations concerning essential 
                        benefits and maximum out-of-pocket cost-sharing 
                        (for the general population and for individuals 
                        with limited ability to pay, which shall not 
                        exceed the out-of-pocket cost-sharing permitted 
                        under section 2103(e) of the Social Security 
                        Act (42 U.S.C. 1397cc(e))) for the coverage 
                        options described in title II; and
                            (ii) proposed legislative language to 
                        implement such recommendations.
                    (B) Congressional action.--The legislative language 
                proposed under subparagraph (A)(ii) shall proceed to 
                immediate consideration on the floor of the House of 
                Representatives and the Senate and shall be approved or 
                rejected, without amendment, using procedures employed 
                for recommendations of military base closing 
                commissions.
            (3) Commission report.--No later than January 15, 2007, the 
        Commission shall submit a report to the President and Congress, 
        which shall include--
                    (A) recommendations on policies to provide health 
                care coverage to uninsured individuals with incomes 
                above 200 percent of the official income poverty line 
                (as defined by the Office of Management and Budget, and 
                revised annually in accordance with section 673(2) of 
                the Omnibus Budget Reconciliation Act of 1981) 
                applicable to a family of the size involved;
                    (B) recommendations on changes to policies enacted 
                under this Act; and
                    (C) proposed legislative language to implement such 
                recommendations.
    (f) Administration.--
            (1) Powers.--
                    (A) Hearings.--The Commission may hold such 
                hearings, sit and act at such times and places, take 
                such testimony, and receive such evidence as the 
                Commission considers advisable to carry out this 
                section.
                    (B) Information from federal agencies.--The 
                Commission may secure directly from any Federal 
                department or agency such information as the Commission 
                considers necessary to carry out this section. Upon 
                request of the Chairperson of the Commission, the head 
                of such department or agency shall furnish such 
                information to the Commission.
                    (C) Postal services.--The Commission may use the 
                United States mails in the same manner and under the 
                same conditions as other departments and agencies of 
                the Federal Government.
                    (D)  Gifts.--The Commission may accept, use, and 
                dispose of gifts or donations of services or property.
            (2) Compensation.--While serving on the business of the 
        Commission (including travel time), a member of the Commission 
        shall be entitled to compensation at the per diem equivalent of 
        the rate provided for level IV of the Executive Schedule under 
        section 5315 of title 5, United States Code, and while so 
        serving away from home and the member's regular place of 
        business, a member may be allowed travel expenses, as 
        authorized by the chairperson of the Commission. All members of 
        the Commission who are officers or employees of the United 
        States shall serve without compensation in addition to that 
        received for their services as officers or employees of the 
        United States.
            (3) Staff.--
                    (A) In general.--The Chairperson of the Commission 
                may, without regard to the civil service laws and 
                regulations, appoint and terminate an executive 
                director and such other additional personnel as may be 
                necessary to enable the Commission to perform its 
                duties. The employment of an executive director shall 
                be subject to confirmation by the Commission.
                    (B) Staff compensation.--The Chairperson of the 
                Commission may fix the compensation of the executive 
                director and other personnel without regard to chapter 
                51 and subchapter III of chapter 53 of title 5, United 
                States Code, relating to classification of positions 
                and General Schedule pay rates, except that the rate of 
                pay for the executive director and other personnel may 
                not exceed the rate payable for level V of the 
                Executive Schedule under section 5316 of such title.
                    (C) Detail of government employees.--Any Federal 
                Government employee may be detailed to the Commission 
                without reimbursement, and such detail shall be without 
                interruption or loss of civil service status or 
                privilege.
                    (D) Procurement of temporary and intermittent 
                services.--The Chairperson of the Commission may 
                procure temporary and intermittent services under 
                section 3109(b) of title 5, United States Code, at 
                rates for individuals which do not exceed the daily 
                equivalent of the annual rate of basic pay prescribed 
                for level V of the Executive Schedule under section 
                5316 of such title.
    (g) Termination.--Except with respect to activities in connection 
with the ongoing biennial report required under subsection (e)(2), the 
Commission shall terminate 90 days after the date on which the 
Commission submits the report required under subsection (e)(3).
    (h) Authorization of Appropriations.--There are authorized to be 
appropriated, such sums as may be necessary to carry out this section 
for fiscal year 2004 and each fiscal year thereafter.

SEC. 302. CONGRESSIONAL ACTION.

    (a) Bill Introduction.--
            (1) In general.--Any legislative language included in the 
        report required under section 301(e)(3) may be introduced as a 
        bill by request in the following manner:
                    (A) House of representatives.--In the House of 
                Representatives, by the Majority Leader and the 
                Minority Leader not later than 10 days after receipt of 
                the legislative language.
                    (B) Senate.--In the Senate, by the Majority Leader 
                and the Minority Leader not later than 10 days after 
                receipt of the legislative language.
            (2) Alternative by administration.--The President may 
        submit legislative language based on the recommendations of the 
        Commission and such legislative language may be introduced in 
        the manner described in paragraph (1).
    (b) Committee Consideration.--
            (1) In general.--Any legislative language submitted 
        pursuant to paragraph (1) or (2) of subsection (a) (in this 
        section referred to as ``implementing legislation'') shall be 
        referred to the appropriate committees of the House of 
        Representatives and the Senate.
            (2) Reporting.--
                    (A) Committee action.--If, not later than 150 days 
                after the date on which the implementing legislation is 
                referred to a committee under paragraph (1), the 
                committee has reported the implementing legislation or 
has reported an original bill whose subject is related to reforming the 
health care system, or to providing access to affordable health care 
coverage for Americans, the regular rules of the applicable House of 
Congress shall apply to such legislation.
                    (B) Discharge from committees.--
                            (i) Senate.--
                                    (I) In general.--If the 
                                implementing legislation or an original 
                                bill described in subparagraph (A) has 
                                not been reported by a committee of the 
                                Senate within 180 days after the date 
                                on which such legislation was referred 
                                to committee under paragraph (1), it 
                                shall be in order for any Senator to 
                                move to discharge the committee from 
                                further consideration of such 
                                implementing legislation.
                                    (II) Sequential referrals.--Should 
                                a sequential referral of the 
                                implementing legislation be made, the 
                                additional committee has 30 days for 
                                consideration of implementing 
                                legislation before the discharge motion 
                                described in subclause (I) would be in 
                                order.
                                    (III) Procedure.--The motion 
                                described in subclause (I) shall not be 
                                in order after the implementing 
                                legislation has been placed on the 
                                calendar. While the motion described in 
                                subclause (I) is pending, no other 
                                motions related to the motion described 
                                in subclause (I) shall be in order. 
                                Debate on a motion to discharge shall 
                                be limited to not more than 10 hours, 
                                equally divided and controlled by the 
                                Majority Leader and the Minority 
                                Leader, or their designees. An 
                                amendment to the motion shall not be in 
                                order, nor shall it be in order to move 
                                to reconsider the vote by which the 
                                motion is agreed or disagreed to.
                                    (IV) Exception.--If implementing 
                                language is submitted on a date later 
                                than May 1 of the second session of a 
                                Congress, the committee shall have 90 
                                days to consider the implementing 
                                legislation before a motion to 
                                discharge under this clause would be in 
                                order.
                            (ii) House of representatives.--If the 
                        implementing legislation or an original bill 
                        described in subparagraph (A) has not been 
                        reported out of a committee of the House of 
                        Representatives within 180 days after the date 
                        on which such legislation was referred to 
                        committee under paragraph (1), then on any day 
                        on which the call of the calendar for motions 
                        to discharge committees is in order, any member 
                        of the House of Representatives may move that 
                        the committee be discharged from consideration 
                        of the implementing legislation, and this 
                        motion shall be considered under the same terms 
                        and conditions, and if adopted the House of 
                        Representatives shall follow the procedure 
                        described in subsection (c)(1).
    (c) Floor Consideration.--
            (1) Motion to proceed.--If a motion to discharge made 
        pursuant to subsection (b)(2)(B)(i) or (b)(2)(B)(ii) is 
        adopted, then, not earlier than 5 legislative days after the 
        date on which the motion to discharge is adopted, a motion may 
        be made to proceed to the bill.
            (2) Failure of motion.--If the motion to discharge made 
        pursuant to subsection (b)(2)(B)(i) or (b)(2)(B)(ii) fails, 
        such motion may be made not more than 2 additional times, but 
        in no case more frequently than within 30 days of the previous 
        motion. Debate on each of such motions shall be limited to 5 
        hours, equally divided.
            (3) Applicable rules.--Once the Senate is debating the 
        implementing legislation the regular rules of the Senate shall 
        apply.

                        TITLE IV--STATE WAIVERS

SEC. 401. STATE WAIVERS.

    (a) In General.--Notwithstanding any other provision of law, a 
State may apply to the Secretary of Health and Human Services for 
waivers of such provisions of law as may be necessary for the State to 
implement policies that make comprehensive, affordable health coverage 
available for all State residents, including access to essential 
benefits with limits on cost-sharing, as provided in the most recent 
report under section 301(e)(2).
    (b) Requirements.--In order to ensure that waivers under this 
section benefit rather than harm health care consumers, a State shall 
not be eligible for a waiver under this section unless--
            (1) the State reasonably expects to achieve a level of 
        enrollment in coverage described in subsection (a) that is at 
        least equal to the level of coverage (taking into account the 
        number of insured individuals, covered benefits, and premium 
        and out-of-pocket costs to the consumer for such coverage) that 
        the State would have achieved if the State had fully 
        implemented the coverage options available under titles I and 
        II of this Act;
            (2) no individual who would have qualified for assistance 
        under the State medicaid program under title XIX of the Social 
        Security Act or the State children's health insurance program 
        under title XXI of such Act, as of either the date of the 
        waiver request or the date of enactment of this Act, will be 
        denied eligibility for such program, have a reduction in 
        benefits under such program, have reduced access to 
        geographically and linguistically appropriate care or essential 
        community providers, or be subject to increased premiums or 
        cost-sharing under the waiver program under this section; and
            (3) the State agrees to comply with such standards or 
        guidelines as the Secretary of Health and Human Services may 
require to ensure that the requirements of paragraphs (1) and (2) are 
satisfied.
    (c) Federal Payments.--
            (1) In general.--The Secretary of Health and Human Services 
        shall pay a State with a waiver approved under this section an 
        amount each quarter equal to the sum of--
                    (A) the Federal payments the State and residents of 
                the State (including, but not limited to, through the 
                credit allowed under section 36 of the Internal Revenue 
                Code of 1986 for health insurance costs) would have 
                received if the State had exercised the coverage 
                options under titles I and II of this Act with respect 
                to residents of the State who have not attained age 65; 
                and
                    (B) the amount of any grants authorized by this Act 
                that the State would have received if the State had 
                applied for such grants.
            (2) Additional payment for medicare beneficiaries under age 
        65.--
                    (A) In general.--In the case of a State that elects 
                to enroll an individual described in subparagraph (B) 
                in coverage described in subsection (a), the amount 
                described in paragraph (1) with respect to a quarter 
                shall be increased by the amount described in 
                subparagraph (C).
                    (B) Individual described.--An individual is 
                described in this subparagraph if the individual--
                            (i) has not attained age 65;
                            (ii) is eligible for coverage under title 
                        XVIII of the Social Security Act; and
                            (iii) voluntarily elects to enroll in 
                        coverage described in subsection (a).
                    (C) Amount described.--The amount described in this 
                subparagraph is the amount equal to the amount that the 
                Federal Government would have incurred with respect to 
                a quarter for providing coverage to an individual 
                described in subparagraph (B) under title XVIII of the 
                Social Security Act (42 U.S.C. 1395 et seq.).
    (d) Implementation Date.--No State may submit a request for a 
waiver under this section before October 1, 2007.
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