[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 1935 Introduced in Senate (IS)]







108th CONGRESS
  1st Session
                                S. 1935

 To amend the Public Health Service Act to require employers to offer 
 health care coverage for all employees, to amend the Social Security 
 Act to guarantee comprehensive health care coverage for all children 
                born after 2001, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 23, 2003

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

_______________________________________________________________________

                                 A BILL


 
 To amend the Public Health Service Act to require employers to offer 
 health care coverage for all employees, to amend the Social Security 
 Act to guarantee comprehensive health care coverage for all children 
                born after 2001, 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; FINDINGS.

    (a) Short Title.--This Act may be cited as the ``Universal Secure 
Access to Health Care Act of 2003''.
    (b) Findings.--
            (1) In 2002, 43,600,000 Americans, nearly 17.2 percent of 
        the total nonelderly population, were uninsured.
            (2) The number of uninsured has grown by nearly 10,000,000 
        over the past decade.
            (3) While 61 percent of Americans receive health insurance 
        coverage through their employers, millions of Americans lack 
        access to such coverage either because their employer does not 
        offer such coverage or the employer cannot afford to pay for 
        such coverage.
            (4) Today, fewer Americans have health insurance through 
        their employment to cover themselves and their dependents than 
        10 years ago.
            (5) Eighty-two percent of the individuals that are 
        uninsured in the United States are in working families.
            (6) Low-wage workers have more difficulty obtaining 
        affordable health care coverage since such workers are less 
        likely than high-wage workers to have such coverage offered as 
        a benefit by an employer, and prohibitive premiums for 
        individually purchased coverage often prevents such workers 
        from purchasing such coverage independently.
            (7) The consequences of our nation's significant uninsured 
        population are devastating.
            (8) The uninsured are significantly more likely to delay or 
        forego needed health care.
            (9) The uninsured are less likely to receive preventive 
        health care.
            (10) Delaying or foregoing health care treatment when such 
        treatment is needed can produce unnecessarily dire and 
        expensive results. More severe health care conditions may arise 
        and more expensive health care treatments, such as costly 
        hospitalizations, may be necessary even though such conditions 
        or treatments could have been avoided by the initial provision 
        of adequate and timely health care. The uninsured, for example, 
        are more likely to be hospitalized for conditions that could 
        have been avoided, such as pneumonia and uncontrolled diabetes, 
        than the insured. The uninsured with various forms of cancer 
        are also more likely to be diagnosed with late stage cancer 
        than the insured.

SEC. 2. AMENDMENT TO THE PUBLIC HEALTH SERVICE ACT.

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

          ``TITLE XXVIII--UNIVERSAL HEALTH INSURANCE COVERAGE

       ``Subtitle A--Employer Mandated Health Insurance Coverage

``SEC. 2801. EMPLOYER MANDATED HEALTH INSURANCE COVERAGE.

    ``(a) In General.--Each employer shall offer to enroll each of its 
employees and their families in a standard health benefit plan.
    ``(b) Standard Health Benefit Plan.--For purposes of this title, 
the term `standard health benefit plan' means a plan that provides 
benefits for health care items and services that are actuarily 
equivalent or greater in value than the benefits offered as of January 
1, 2000, under the Blue Cross/Blue Shield Standard Option Plan provided 
under the Federal Employees Health Benefit Program under chapter 89 of 
title 5, United States Code.
    ``(c) Part-Time Employees.--Subsection (a) shall apply to part-time 
employees.

``SEC. 2802. TYPE OF COVERAGE.

    ``(a) In General.--Each standard health benefit plan offered by an 
employer under section 2801(a) shall conform to the requirements of 
this section.
    ``(b) Prohibition Against Discrimination.--A standard health 
benefit plan offered by an employer under section 2801(a) shall not 
establish rules for eligibility of any individual to enroll under the 
plan or exclude or otherwise limit any individual from coverage under 
the plan based on--
            ``(1) medical history;
            ``(2) health status;
            ``(3) a preexisting medical condition, disease, or 
        disorder; or
            ``(4) genetic information.
    ``(c) Open Enrollment.--A standard health benefit plan offered by 
an employer under section 2801(a) shall offer an annual open enrollment 
period during which an individual may change enrollment from such plan 
to another standard health benefit plan offered by such employer.
    ``(d) Medically Necessary Services.--A standard health benefit plan 
offered by an employer under section 2801(a) shall, if such plan 
provides coverage for a certain health care item or service, provide 
coverage for such item or service if a doctor determines that such item 
or service is medically necessary.
    ``(e) Date of Initial Coverage.--In the case of an employee 
enrolled in a standard health benefit plan provided by an employer 
under section 2801(a), the coverage under such plan shall commence not 
later than 5 days after the day on which the employee first performs an 
hour of service as an employee of that employer. No waiting period 
beyond this initial 5-day period may be imposed regarding such 
coverage.

``SEC. 2803. PREMIUMS.

    ``(a) In General.--Each employer shall--
            ``(1) contribute to the cost of any standard health benefit 
        plan that an employee has enrolled in in accordance with this 
        section; and
            ``(2) withhold from wages of an employee, the employee 
        share of the premium assessed for coverage under the standard 
        health benefit plan.
    ``(b) Contribution.--
            ``(1) Employer share.--
                    ``(A) Full-time employees.--Each employer who has 
                enrolled an employee in a standard health benefit plan 
                shall contribute not less than 72 percent of the 
                monthly premium for such employee.
                    ``(B) Part-time employees.--
                            ``(i) Pro-rated portion paid.--Each 
                        employer who has enrolled a part-time employee 
                        in a standard health benefit plan shall pay a 
                        portion of the monthly premium for such 
                        employee that is pro-rated to correspond with 
                        the number of hours of work that such employee 
                        has provided during the past month.
                            ``(ii) Exception.--No employer contribution 
                        is required under this section with respect to 
                        an employee who works less than 10 hours per 
                        week.
            ``(2) Employee share.--
                    ``(A) In general.--Each employee enrolled in a 
                standard health benefit plan under section 2801(a) 
                shall pay the remaining portion of the monthly premium 
                after payment by the employer as required under 
                subsection (a).
                    ``(B) Part-time employees.--An employee who is 
                enrolled in a standard health benefit plan under 
                section 2801(a) and works for such employer for not 
                more than 30 hours and not less than 10 hours per week 
                shall be eligible for a subsidy to aid such employee in 
                paying his or her portion of the monthly premium.
            ``(3) Low-income employees.--An employee who is enrolled in 
        a standard health benefit plan under section 2801(a) whose 
        family income does not exceed 250 percent of the poverty line 
        (as defined by the Office of Management and Budget, and revised 
        annually in accordance with section 673(2) of the Community 
        Services Block Grant Act (42 U.S.C. 9902(2)) as applicable to a 
        family of the size involved, shall be eligible to receive a 
        subsidy from the State as described in subtitle B to aid in 
        payment of premiums.

``SEC. 2804. ENFORCEMENT.

    ``(a) State Ineligibility for Public Health Service Act Funds.--An 
employer that is a State or political subdivision of a State or an 
agency or instrumentality of a State or political subdivision that does 
not comply with the requirements of this title shall not be eligible to 
receive a grant, contract, cooperative agreement, loan, or loan 
guarantee under this Act.
    ``(b) Civil Penalty for Private Employers.--
            ``(1) In general.--Any nongovernmental employer that does 
        not comply with this title shall be subject to a civil penalty 
        of not more than 10 percent of the total amount of the 
        employer's expenditures for wages for employees in that year.
            ``(2) Assessment procedure.--A civil money penalty under 
        this section shall be assessed by the Secretary and collected 
        in a civil action brought by the United States in a United 
        States district court. The Secretary shall not assess such a 
        penalty on an employer until the employer has been given notice 
        and an opportunity to present its views on such charge.
            ``(3) Amount of penalty.--In determining the amount of the 
        penalty, or the amount agreed to in compromise, the Secretary 
        shall consider the gravity of the noncompliance and the 
        demonstrated good faith of the employer charged in attempting 
        to achieve rapid compliance after notification of a violation 
        of this title.

``SEC. 2805. DEFINITIONS.

    ``In this title:
            ``(1) Employer.--The term `employer' means, with respect to 
        a calendar year and plan year, an employer that employed an 
        average of at least 50 full-time employees on business days 
        during the preceding calendar year and employs not less than 50 
        employees on the first day of the plan year.
            ``(2) Part-time employee.--The term `part-time employee' 
        means any individual employed by an employer who works less 
        than 40 hours a week.
            ``(3) Waiting period.--The term `waiting period' means, 
        with respect to a plan and an individual who is a potential 
        beneficiary or participant in the plan, the period that must 
        pass with respect to the individual before the individual is 
        eligible to be covered for benefits under the terms of the 
        plan.noncompliance by the Secretary.

``SEC. 2806. EFFECTIVE DATE.

    ``This title shall take effect 2 years after the date of enactment 
of the Universal Secure Access to Health Care Act of 2003.

            ``Subtitle B--Individual and Employer Subsidies

``SEC. 2811. SUBSIDY PROGRAM.

    ``(a) In General.--The Secretary shall establish a Federal program 
to award grants to States for State premium assistance programs.
    ``(b) Federal Program.--
            ``(1) In general.--The Secretary shall establish a Federal 
        program that shall set all standards for administration of 
        State programs, receive applications from States for the 
        establishment of such programs, and receive reports from States 
        regarding the developments of such programs.
            ``(2) Regulations.--The Secretary shall promulgate 
        regulations specifying requirements for State programs under 
        this subtitle, including--
                    ``(A) standards for determining eligibility for 
                premium assistance;
                    ``(B) standards for States operating programs under 
                this subtitle which ensure that such programs are 
                operated in a uniform manner with respect to 
                application procedures, data processing systems, and 
                such other administrative activities as the Secretary 
                determines to be necessary; and
                    ``(C) standards for accepting reports regarding 
                developments of such programs.
            ``(3) Content.--The regulations described in paragraph (2) 
        shall require that a State program--
                    ``(A) enable an individual to file an application 
                for assistance with an agency designated by the State 
                at any time, in person, by mail, or online;
                    ``(B) provide for the use of an application form 
                developed by the Secretary;
                    ``(C) make applications accessible at locations 
                where individuals are most likely to obtain the 
                applications;
                    ``(D) require individuals to submit revised 
                applications to reflect changes in estimated family 
                incomes, including changes in employment status of 
                family members, during the year, and the State shall 
                revise the amount of any premium assistance based on 
                such a revised application; and
                    ``(E) provide for verification of the information 
                supplied in applications under this subtitle, including 
                examining return information disclosed to the State.
            ``(4) Application.--The Secretary shall develop an 
        application form for assistance to be used by a State which 
        shall--
                    ``(A) be simple in form and understandable to the 
                average individual;
                    ``(B) require the provision of information 
                necessary to make a determination as to whether an 
                individual is eligible for assistance, including a 
                declaration of estimated income by the individual 
                based, at the election of the individual--
                            ``(I) on multiplying by a factor of 4 the 
                        individual's family income for the 3-month 
                        period immediately preceding the month in which 
                        the application is made; or
                            ``(II) on estimated income for the entire 
                        year for which the application is submitted; 
                        and
                    ``(C) require attachment of such documentation as 
                deemed necessary by the Secretary in order to ensure 
                eligibility for assistance.
    ``(c) State Administration.--
            ``(1) In general.--A State shall have in effect a program 
        for furnishing premium assistance in accordance with this 
        subtitle.
            ``(2) Designation of state agency.--A State may designate 
        any appropriate State agency to administer the program under 
        this subtitle.
            ``(3) Effectiveness of eligibility.--A determination by a 
        State that an individual is eligible for premium assistance 
        shall be effective for the calendar year for which such 
        determination is made unless a revised application indicates 
        that an individual is no longer eligible for assistance.

``SEC. 2812. SUBSIDIES FOR LOW-INCOME WORKERS.

    ``(a) In General.--A low-income worker shall be eligible for 
premium assistance if such worker is eligible under subsection (b).
    ``(b) Eligibility.--A low-income worker is eligible for premium 
assistance under subsection (a) if the State determines that such 
worker has a family income which does not exceed 250 percent of the 
poverty line (as defined by the Office of Management and Budget, and 
revised annually in accordance with section 673(2) of the Community 
Services Block Grant Act (42 U.S.C. 9902(2)) as applicable to a family 
of the size involved.
    ``(c) Amount of Assistance.--The amount of premium assistance for a 
month for a low-income worker determined to be eligible under 
subsection (b) shall be determined by the Secretary.
    ``(d) Payments.--The amount of the premium assistance available to 
a low-income worker shall be paid by the State in which the individual 
resides directly to the standard health plan in which the individual is 
enrolled. Payments under the preceding sentence shall commence in the 
first month during which the individual is enrolled in a standard 
health benefit plan and determined to be eligible for premium 
assistance under this subtitle.

``SEC. 2813. SUBSIDIES FOR SMALL BUSINESS EMPLOYERS.

    ``(a) In General.--A small business employer that offers to enroll 
its employees and their families in a standard health benefit plan 
shall be eligible for premium assistance if the State determines that 
such employer qualifies for such assistance under subsection (b).
    ``(b) Eligibility.--A small business employer is eligible for 
premium assistance if such employer employs an average of not more than 
75 full-time employees on business days during the preceding calendar 
year and employs not more than 75 employees on the first day of the 
plan year.
    ``(c) Amount of Assistance.--The amount of premium assistance for a 
small business employer for a month shall be determined by the 
Secretary.
    ``(d) Payments.--The amount of the premium assistance available to 
a small business employer shall be paid by the State in which the 
business is located directly to the standard health benefit plan in 
which the employee of such business is enrolled. Payments under the 
preceding sentence shall commence in the first month during which the 
employee is enrolled in a standard health benefit plan and the employer 
is determined to be eligible for premium assistance under this 
subtitle.

                   ``Subtitle C--Election of Coverage

``SEC. 2815. ELECTION OF COVERAGE.

    ``(a) In General.--A small business employer as described in 
subsection (b) may elect to enroll its employees in--
            ``(1) a plan provided under the Federal Employees Health 
        Benefit Program under chapter 89 of title 5, United States 
        Code; or
            ``(2) the medicare program under title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.), if such employees are 
        not less than 50 years of age.
    ``(b) Small Business Employer.--In this section, the term `small 
business employer' means an employer that employs an average of not 
more than 75 full-time employees on business days during the preceding 
calendar year and employs not more than 75 employees on the first day 
of the plan year.

                     ``Subtitle D--Community Rating

``SEC. 2821. COMMUNITY RATING.

    ``(a) In General.--Each State shall establish community rating 
areas in which standard health benefit plans shall offer a standard 
premium in accordance with this subtitle for enrollment for all 
eligible individuals.
    ``(b) Community Rating Areas.--
            ``(1) In general.--In accordance with this subtitle, each 
        State shall, subject to approval of the Secretary, provide for 
        the division of the State into 1 or more community rating 
        areas.
            ``(2) Revision of areas.--Each State may, subject to 
        approval of the Secretary, redraw the boundaries of such 
        community rating areas as described in paragraph (1) if such 
        revision is reasonable or necessary.
            ``(3) Multiple areas.--With respect to a community rating 
        area--
                    ``(A) no metropolitan statistical area in a State 
                may be incorporated into more than 1 such area in the 
                State;
                    ``(B) the number of individuals residing within 
                such an area may not be less than 250,000; and
                    ``(C) no area incorporated in a community rating 
                area may be incorporated into another such area.
            ``(4) Nondiscrimination.--In establishing boundaries for 
        community rating areas, a State shall not directly or through 
        contractual arrangements--
                    ``(A) deny or limit access to or the availability 
                of health care services, or otherwise discriminate in 
                connection with the provision of health care services; 
                or
                    ``(B) limit, segregate, or classify an individual 
                in any way which would deprive or tend to deprive such 
                individual of health care services, or otherwise 
                adversely affect his or her access to health care 
                services;
        on the basis of race, national origin, sex, religion, language, 
        income, age, sexual orientation, disability, health status, or 
        anticipated need for health services.
            ``(5) Coordinating multiple community rating areas.--
        Nothing in this section shall be construed as preventing a 
        State from coordinating the activities of 1 or more community 
        rating areas in the State.
            ``(6) Interstate community rating areas.--Community rating 
        areas with respect to interstate areas shall be established in 
        accordance with rules established by the Secretary.
            ``(7) Coordination in multi-state areas.--One or more 
        States may coordinate their operations in contiguous community 
        rating areas. Such coordination may include, the adoption of 
        joint operating rules, contracting with standard health benefit 
        plans, enforcement activities, and establishment of fee 
        schedules for health providers.
    ``(c) Open Enrollment.--Each State, based on rules and procedures 
established by the Secretary, shall specify a uniform annual open 
enrollment period for each community rating area during which all 
eligible individuals are permitted the opportunity to change enrollment 
among the standard health benefit plans offered to such individuals in 
such area under this Act. The initial annual open enrollment period 
shall be for a period of 90 days.
    ``(d) Standard Premium.--Each standard health benefit plan shall 
establish within each community rating area in which the plan is to be 
offered a standard premium for enrollment of eligible individuals who 
seek enrollment in such plan.
    ``(e) Uniform Premiums Within Community Rating Areas.--
            ``(1) In general.--Subject to paragraphs (2) and (3), the 
        standard premium for each group health plan to which this 
        section applies shall be the same, but shall not include the 
        costs of premium processing and enrollment.
            ``(2) Application to enrollees.--
                    ``(A) In general.--The premium charged for coverage 
                in a group health plan which covers eligible employees 
                and eligible individuals shall be the product of--
                            ``(i) the standard premium (established 
                        under paragraph (1));
                            ``(ii) in the case of enrollment other than 
                        individual enrollment, the family adjustment 
                        factor specified under subparagraph (B); and
                            ``(iii) the age adjustment factor 
                        (specified under subparagraph (C)).
                    ``(B) Family adjustment factor.--
                            ``(i) In general.--The Secretary shall 
                        specify family adjustment factors that reflect 
                        the relative actuarial costs of benefit 
                        packages based on family classes of enrollment 
                        (as compared with such costs for individual 
                        enrollment).
                            ``(ii) Classes of enrollment.--For purposes 
                        of this subtitle, there are 4 classes of 
                        enrollment:
                                    ``(I) Coverage only of an 
                                individual (referred to in this 
                                subtitle as the `individual' enrollment 
                                or class of enrollment).
                                    ``(II) Coverage of a married couple 
                                without children (referred to in this 
                                subtitle as the `couple-only' 
                                enrollment or class of enrollment).
                                    ``(III) Coverage of an individual 
                                and one or more children (referred to 
                                in this subtitle as the `single parent' 
                                enrollment or class of enrollment).
                                    ``(IV) Coverage of a married couple 
                                and one or more children (referred to 
                                in this subtitle as the `dual parent' 
                                enrollment or class of enrollment).
                            ``(iii) References to family and couple 
                        classes of enrollment.--In this subtitle:
                                    ``(I) Family.--The terms `family 
                                enrollment' and `family class of 
                                enrollment' refer to enrollment in a 
                                class of enrollment described in any 
                                subclause of clause (ii) (other than 
                                subclause (I)).
                                    ``(II) Couple.--The term `couple 
                                class of enrollment' refers to 
                                enrollment in a class of enrollment 
                                described in subclause (II) or (IV) of 
                                clause (ii).
                            ``(iv) Spouse; married; couple.--
                                    ``(I) In general.--In this 
                                subtitle, the terms `spouse' and 
                                `married' mean, with respect to an 
                                individual, another individual who is 
                                the spouse of, or is married to, the 
                                individual, as determined under 
                                applicable State law.
                                    ``(II) Couple.--The term `couple' 
                                means an individual and the 
                                individual's spouse.
                    ``(C) Age adjustment factor.--The Secretary shall 
                specify uniform age categories and maximum rating 
                increments for age adjustment factors that reflect the 
                relative actuarial costs of benefit packages among 
                enrollees. For individuals who have attained age 18 but 
                not age 65, the highest age adjustment factor may not 
                exceed 3 times the lowest age adjustment factor.''.

SEC. 3. TAX DEDUCTION FOR SELF-EMPLOYED.

    (a) In General.--Paragraph (1) of section 162(l) of the Internal 
Revenue Code of 1986 is amended to read as follows:
            ``(l) Allowance of deduction.--In the case of an individual 
        who is an employee within the meaning of section 401(c)(1), 
        there shall be allowed as a deduction under this section an 
        amount equal to 100 percent of the amount paid during the 
        taxable year for insurance which constitutes medical care for 
        the taxpayer, the taxpayer's spouse, and taxpayer's 
        dependents.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2004.

SEC. 4. ACCESS TO MEDICARE BENEFITS FOR INDIVIDUALS 62-TO-65 YEARS OF 
              AGE.

    (a) In General.--Title XVIII of the Social Security Act is 
amended--
            (1) by redesignating section 1859 and part D as section 
        1858 and part E, respectively; and
            (2) by inserting after such section the following new part:

 ``Part D--Purchase of Medicare Benefits by Certain Individuals Age 62-
                           to-65 Years of Age

``SEC. 1859. PROGRAM BENEFITS; ELIGIBILITY.

    ``(a) Entitlement to Medicare Benefits for Enrolled Individuals.--
            ``(1) In general.--An individual enrolled under this part 
        is entitled to the same benefits under this title as an 
        individual entitled to benefits under part A and enrolled under 
        part B.
            ``(2) Definitions.--For purposes of this part:
                    ``(A) Federal or state cobra continuation 
                provision.--The term `Federal or State COBRA 
                continuation provision' has the meaning given the term 
                `COBRA continuation provision' in section 2791(d)(4) of 
                the Public Health Service Act and includes a comparable 
                State program, as determined by the Secretary.
                    ``(B) Federal health insurance program defined.--
                The term `Federal health insurance program' means any 
                of the following:
                            ``(i) Medicare.--Part A or part B of this 
                        title (other than by reason of this part).
                            ``(ii) Medicaid.--A State plan under title 
                        XIX.
                            ``(iii) FEHBP.--The Federal employees 
                        health benefit program under chapter 89 of 
                        title 5, United States Code.
                            ``(iv) TRICARE.--The TRICARE program (as 
                        defined in section 1072(7) of title 10, United 
                        States Code).
                            ``(v) Active duty military.--Health 
                        benefits under title 10, United States Code, to 
                        an individual as a member of the uniformed 
                        services of the United States.
                    ``(C) Group health plan.--The term `group health 
                plan' has the meaning given such term in section 
                2791(a)(1) of the Public Health Service Act.
    ``(b) Eligibility of Individuals Age 62-to-65 Years of Age.--
            ``(1) In general.--Subject to paragraph (2), an individual 
        who meets the following requirements with respect to a month is 
        eligible to enroll under this part with respect to such month:
                    ``(A) Age.--As of the last day of the month, the 
                individual has attained 62 years of age, but has not 
                attained 65 years of age.
                    ``(B) Medicare eligibility (but for age).--The 
                individual would be eligible for benefits under part A 
                or part B for the month if the individual were 65 years 
                of age.
                    ``(C) Not eligible for coverage under group health 
                plans or federal health insurance programs.--The 
                individual is not eligible for benefits or coverage 
                under a Federal health insurance program (as defined in 
                subsection (a)(2)(B)) or under a group health plan 
                (other than such eligibility merely through a Federal 
                or State COBRA continuation provision) as of the last 
                day of the month involved.
            ``(2) Limitation on eligibility if terminated enrollment.--
        If an individual described in paragraph (1) enrolls under this 
        part and coverage of the individual is terminated under section 
        1859A(d) (other than because of age), the individual is not 
        again eligible to enroll under this subsection unless the 
        following requirements are met:
                    ``(A) New coverage under group health plan or 
                federal health insurance program.--After the date of 
                termination of coverage under such section, the 
                individual obtains coverage under a group health plan 
                or under a Federal health insurance program.
                    ``(B) Subsequent loss of new coverage.--The 
                individual subsequently loses eligibility for the 
                coverage described in subparagraph (A) and exhausts any 
                eligibility the individual may subsequently have for 
                coverage under a Federal or State COBRA continuation 
                provision.
            ``(3) Change in health plan eligibility does not affect 
        coverage.--In the case of an individual who is eligible for and 
        enrolls under this part under this subsection, the individual's 
        continued entitlement to benefits under this part shall not be 
        affected by the individual's subsequent eligibility for 
        benefits or coverage described in paragraph (1)(C), or 
        entitlement to such benefits or coverage.

``SEC. 1859A. ENROLLMENT PROCESS; COVERAGE.

    ``(a) In General.--An individual may enroll in the program 
established under this part only in such manner and form as may be 
prescribed by regulations, and only during an enrollment period 
prescribed by the Secretary consistent with the provisions of this 
section. Such regulations shall provide a process under which--
            ``(1) individuals eligible to enroll as of a month are 
        permitted to pre-enroll during a prior month within an 
        enrollment period described in subsection (b); and
            ``(2) each individual seeking to enroll under section 
        1859(b) is notified, before enrolling, of the deferred monthly 
        premium amount the individual will be liable for under section 
        1859C(b) upon attaining 65 years of age as determined under 
        section 1859B(c)(3).
    ``(b) Enrollment Periods.--
            ``(1) Individuals 62-to-65 years of age.--In the case of 
        individuals eligible to enroll under this part under section 
        1859(b)--
                    ``(A) Initial enrollment period.--If the individual 
                is eligible to enroll under such section for July 2002, 
                the enrollment period shall begin on May 1, 2002, and 
                shall end on August 31, 2002. Any such enrollment 
                before July 1, 2002, is conditioned upon compliance 
                with the conditions of eligibility for July 2002.
                    ``(B) Subsequent periods.--If the individual is 
                eligible to enroll under such section for a month after 
                July 2002, the enrollment period shall begin on the 
                first day of the second month before the month in which 
                the individual first is eligible to so enroll and shall 
                end 4 months later. Any such enrollment before the 
                first day of the third month of such enrollment period 
                is conditioned upon compliance with the conditions of 
                eligibility for such third month.
            ``(2) Authority to correct for government errors.--The 
        provisions of section 1837(h) apply with respect to enrollment 
        under this part in the same manner as they apply to enrollment 
        under part B.
    ``(c) Date Coverage Begins.--
            ``(1) In general.--The period during which an individual is 
        entitled to benefits under this part shall begin as follows, 
        but in no case earlier than July 1, 2002:
                    ``(A) In the case of an individual who enrolls 
                (including pre-enrolls) before the month in which the 
                individual satisfies eligibility for enrollment under 
                section 1859, the first day of such month of 
                eligibility.
                    ``(B) In the case of an individual who enrolls 
                during or after the month in which the individual first 
                satisfies eligibility for enrollment under such 
                section, the first day of the following month.
            ``(2) Authority to provide for partial months of 
        coverage.--Under regulations, the Secretary may, in the 
        Secretary's discretion, provide for coverage periods that 
        include portions of a month in order to avoid lapses of 
        coverage.
            ``(3) Limitation on payments.--No payments may be made 
        under this title with respect to the expenses of an individual 
        enrolled under this part unless such expenses were incurred by 
        such individual during a period which, with respect to the 
        individual, is a coverage period under this section.
    ``(d) Termination of Coverage.--
            ``(1) In general.--An individual's coverage period under 
        this part shall continue until the individual's enrollment has 
        been terminated at the earliest of the following:
                    ``(A) General provisions.--
                            ``(i) Notice.--The individual files notice 
                        (in a form and manner prescribed by the 
                        Secretary) that the individual no longer wishes 
                        to participate in the insurance program under 
                        this part.
                            ``(ii) Nonpayment of premiums.--The 
                        individual fails to make payment of premiums 
                        required for enrollment under this part.
                            ``(iii) Medicare eligibility.--The 
                        individual becomes entitled to benefits under 
                        part A or enrolled under part B (other than by 
                        reason of this part).
                    ``(B) Termination based on age.--The individual 
                attains 65 years of age.
            ``(2) Effective date of termination.--
                    ``(A) Notice.--The termination of a coverage period 
                under paragraph (1)(A)(i) shall take effect at the 
                close of the month following for which the notice is 
                filed.
                    ``(B) Nonpayment of premium.--The termination of a 
                coverage period under paragraph (1)(A)(ii) shall take 
                effect on a date determined under regulations, which 
                may be determined so as to provide a grace period in 
                which overdue premiums may be paid and coverage 
                continued. The grace period determined under the 
                preceding sentence shall not exceed 60 days; except 
                that it may be extended for an additional 30 days in 
                any case where the Secretary determines that there was 
                good cause for failure to pay the overdue premiums 
                within such 60-day period.
                    ``(C) Age or medicare eligibility.--The termination 
                of a coverage period under paragraph (1)(A)(iii) or 
                (1)(B) shall take effect as of the first day of the 
                month in which the individual attains 65 years of age 
                or becomes entitled to benefits under part A or 
                enrolled for benefits under part B (other than by 
                reason of this part).

``SEC. 1859B. PREMIUMS.

    ``(a) Amount of Monthly Premiums.--
            ``(1) Base monthly premiums.--The Secretary shall, during 
        September of each year (beginning with 2001), determine the 
        following premium rates which shall apply with respect to 
        coverage provided under this title for any month in the 
        succeeding year:
                    ``(A) Base monthly premium for individuals 62 years 
                of age or older.--A base monthly premium for 
                individuals 62 years of age or older is equal to \1/12\ 
                of the base annual premium rate computed under 
                subsection (b) for each premium area.
                    ``(B) Deferred monthly premiums for individuals 62 
                years of age or older.--The Secretary shall, during 
                September of each year (beginning with 2001), determine 
                under subsection (c) the amount of deferred monthly 
                premiums that shall apply with respect to individuals 
                who first obtain coverage under this part under section 
                1859(b) in the succeeding year.
            ``(2) Establishment of premium areas.--For purposes of this 
        part, the term `premium area' means such an area as the 
        Secretary shall specify to carry out this part. The Secretary 
        from time to time may change the boundaries of such premium 
        areas. The Secretary shall seek to minimize the number of such 
        areas specified under this paragraph.
    ``(b) Base Annual Premium for Individuals 62 Years of Age or 
Older.--
            ``(1) National, per capita average.--The Secretary shall 
        estimate the average, annual per capita amount that would be 
        payable under this title with respect to individuals residing 
        in the United States who meet the requirement of section 
        1859(b)(1)(A) as if all such individuals were eligible for (and 
        enrolled) under this title during the entire year (and assuming 
        that section 1862(b)(2)(A)(i) did not apply).
            ``(2) Geographic adjustment.--The Secretary shall reduce, 
        as determined appropriate, the amount determined under 
        paragraph (1) for a premium area (specified under subsection 
        (a)(3)) that has costs below the national average, in order to 
        assure participation in all areas throughout the United States.
            ``(3) Base annual premium.--The base annual premium under 
        this subsection for months in a year for individuals 62 years 
        of age or older residing in a premium area is equal to the 
        average, annual per capita amount estimated under paragraph (1) 
        for the year, adjusted for such area under paragraph (2).
    ``(c) Deferred Premium Rate for Individuals 62 Years of Age or 
Older.--The deferred premium rate for individuals with a group of 
individuals who obtain coverage under section 1859(b) in a year shall 
be computed by the Secretary as follows:
            ``(1) Estimation of national, per capita annual average 
        expenditures for enrollment group.--The Secretary shall 
        estimate the average, per capita annual amount that will be 
        paid under this part for individuals in such group during the 
        period of enrollment under section 1859(b). In making such 
        estimate for coverage beginning in a year before 2006, the 
        Secretary may base such estimate on the average, per capita 
        amount that would be payable if the program had been in 
        operation over a previous period of at least 4 years.
            ``(2) Difference between estimated expenditures and 
        estimated premiums.--Based on the characteristics of 
        individuals in such group, the Secretary shall estimate during 
        the period of coverage of the group under this part under 
        section 1859(b) the amount by which--
                    ``(A) the amount estimated under paragraph (1); 
                exceeds
                    ``(B) the average, annual per capita amount of 
                premiums that will be payable for months during the 
                year under section 1859C(a) for individuals in such 
                group (including premiums that would be payable if 
                there were no terminations in enrollment under clause 
                (i) or (ii) of section 1859A(d)(1)(A)).
            ``(3) Actuarial computation of deferred monthly premium 
        rates.--The Secretary shall determine deferred monthly premium 
        rates for individuals in such group in a manner so that--
                    ``(A) the estimated actuarial value of such 
                premiums payable under section 1859C(b), is equal to
                    ``(B) the estimated actuarial present value of the 
                differences described in paragraph (2).
        Such rate shall be computed for each individual in the group in 
        a manner so that the rate is based on the number of months 
        between the first month of coverage based on enrollment under 
        section 1859(b) and the month in which the individual attains 
        65 years of age.
            ``(4) Determinants of actuarial present values.--The 
        actuarial present values described in paragraph (3) shall 
        reflect--
                    ``(A) the estimated probabilities of survival at 
                ages 62 through 84 for individuals enrolled during the 
                year; and
                    ``(B) the estimated effective average interest 
                rates that would be earned on investments held in the 
                trust funds under this title during the period in 
                question.

``SEC. 1859C. PAYMENT OF PREMIUMS.

    ``(a) Payment of Base Monthly Premium.--
            ``(1) In general.--The Secretary shall provide for payment 
        and collection of the base monthly premium, determined under 
        section 1859B(a)(1) for the age (and age cohort, if applicable) 
        of the individual involved and the premium area in which the 
        individual principally resides, in the same manner as for 
        payment of monthly premiums under section 1840, except that, 
        for purposes of applying this section, any reference in such 
        section to the Federal Supplementary Medical Insurance Trust 
        Fund is deemed a reference to the Trust Fund established under 
        section 1859D.
            ``(2) Period of payment.--In the case of an individual who 
        participates in the program established by this title, the base 
        monthly premium shall be payable for the period commencing with 
        the first month of the individual's coverage period and ending 
        with the month in which the individual's coverage under this 
        title terminates.
    ``(b) Payment of Deferred Premium for Individuals Covered After 
Attaining Age 62.--
            ``(1) Rate of payment.--
                    ``(A) In general.--In the case of an individual who 
                is covered under this part for a month pursuant to an 
                enrollment under section 1859(b), subject to 
                subparagraph (B), the individual is liable for payment 
                of a deferred premium in each month during the period 
                described in paragraph (2) in an amount equal to the 
                full deferred monthly premium rate determined for the 
                individual under section 1859B(c).
                    ``(B) Special rules for those who disenroll 
                early.--
                            ``(i) In general.--If such an individual's 
                        enrollment under such section is terminated 
                        under clause (i) or (ii) of section 
                        1859A(d)(1)(A), subject to clause (ii), the 
                        amount of the deferred premium otherwise 
                        established under this paragraph shall be pro-
                        rated to reflect the number of months of 
                        coverage under this part under such enrollment 
                        compared to the maximum number of months of 
                        coverage that the individual would have had if 
                        the enrollment were not so terminated.
                            ``(ii) Rounding to 12-month minimum 
                        coverage periods.--In applying clause (i), the 
                        number of months of coverage (if not a multiple 
                        of 12) shall be rounded to the next highest 
                        multiple of 12 months, except that in no case 
                        shall this clause result in a number of months 
                        of coverage exceeding the maximum number of 
                        months of coverage that the individual would 
                        have had if the enrollment were not so 
                        terminated.
            ``(2) Period of payment.--The period described in this 
        paragraph for an individual is the period beginning with the 
        first month in which the individual has attained 65 years of 
        age and ending with the month before the month in which the 
        individual attains 85 years of age.
            ``(3) Collection.--In the case of an individual who is 
        liable for a premium under this subsection, the amount of the 
        premium shall be collected in the same manner as the premium 
        for enrollment under such part is collected under section 1840, 
        except that any reference in such section to the Federal 
        Supplementary Medical Insurance Trust Fund is deemed to be a 
        reference to the Medicare Early Access Trust Fund established 
        under section 1859D.
    ``(c) Application of Certain Provisions.--The provisions of section 
1840 (other than subsection (h)) shall apply to premiums collected 
under this section in the same manner as they apply to premiums 
collected under part B, except that any reference in such section to 
the Federal Supplementary Medical Insurance Trust Fund is deemed a 
reference to the Trust Fund established under section 1859D.

``SEC. 1859D. MEDICARE EARLY ACCESS TRUST FUND.

    ``(a) Establishment of Trust Fund.--
            ``(1) In general.--There is hereby created on the books of 
        the Treasury of the United States a trust fund to be known as 
        the `Medicare Early Access Trust Fund' (in this section 
        referred to as the `Trust Fund'). The Trust Fund shall consist 
        of such gifts and bequests as may be made as provided in 
        section 201(i)(1) and such amounts as may be deposited in, or 
        appropriated to, such fund as provided in this title.
            ``(2) Premiums.--Premiums collected under section 1859B 
        shall be transferred to the Trust Fund.
    ``(b) Incorporation of Provisions.--
            ``(1) In general.--Subject to paragraph (2), subsections 
        (b) through (i) of section 1841 shall apply with respect to the 
        Trust Fund and this title in the same manner as they apply with 
        respect to the Federal Supplementary Medical Insurance Trust 
        Fund and part B, respectively.
            ``(2) Miscellaneous references.--In applying provisions of 
        section 1841 under paragraph (1)--
                    ``(A) any reference in such section to `this part' 
                is construed to refer to this part D;
                    ``(B) any reference in section 1841(h) to section 
                1840(d) and in section 1841(i) to sections 1840(b)(1) 
                and 1842(g) are deemed references to comparable 
                authority exercised under this part; and
                    ``(C) payments may be made under section 1841(g) to 
                the trust funds under sections 1817 and 1841 as 
                reimbursement to such funds for payments they made for 
                benefits provided under this part.

``SEC. 1859E. OVERSIGHT AND ACCOUNTABILITY.

    ``(a) Through Annual Reports of Trustees.--The Board of Trustees of 
the Medicare Early Access Trust Fund under section 1859D(b)(1) shall 
report on an annual basis to Congress concerning the status of the 
Trust Fund and the need for adjustments in the program under this part 
to maintain financial solvency of the program under this part.
    ``(b) Periodic GAO Reports.--The Comptroller General of the United 
States shall periodically submit to Congress reports on the adequacy of 
the financing of coverage provided under this part. The Comptroller 
General shall include in such report such recommendations for 
adjustments in such financing and coverage as the Comptroller General 
deems appropriate in order to maintain financial solvency of the 
program under this part.

``SEC. 1859F. ADMINISTRATION AND MISCELLANEOUS.

    ``(a) Treatment for Purposes of This Title.--Except as otherwise 
provided in this part--
            ``(1) an individual enrolled under this part shall be 
        treated for purposes of this title as though the individual was 
        entitled to benefits under part A and enrolled under part B; 
        and
            ``(2) benefits described in section 1859 shall be payable 
        under this title to such an individual in the same manner as if 
        such individual was so entitled and enrolled.
    ``(b) Not Treated as Medicare Program for Purposes of Medicaid 
Program.--For purposes of applying title XIX (including the provision 
of medicare cost-sharing assistance under such title), an individual 
who is enrolled under this part shall not be treated as being entitled 
to benefits under this title.
    ``(c) Not Treated as Medicare Program for Purposes of COBRA 
Continuation Provisions.--In applying a COBRA continuation provision 
(as defined in section 2791(d)(4) of the Public Health Service Act), 
any reference to an entitlement to benefits under this title shall not 
be construed to include entitlement to benefits under this title 
pursuant to the operation of this part.''.
    (b) Conforming Amendments to Social Security Act Provisions.--
            (1) Section 201(i)(1) of the Social Security Act (42 U.S.C. 
        401(i)(1)) is amended by striking ``or the Federal 
        Supplementary Medical Insurance Trust Fund'' and inserting 
        ``the Federal Supplementary Medical Insurance Trust Fund, and 
        the Medicare Early Access Trust Fund''.
            (2) Section 201(g)(1)(A) of such Act (42 U.S.C. 
        401(g)(1)(A)) is amended by striking ``and the Federal 
        Supplementary Medical Insurance Trust Fund established by title 
        XVIII'' and inserting 
        ``, the Federal Supplementary Medical Insurance Trust Fund, and 
        the Medicare Early Access Trust Fund established by title 
        XVIII''.
            (3) Section 1820(i) of such Act (42 U.S.C. 1395i-4(i)) is 
        amended by striking ``part D'' and inserting ``part E''.
            (4) Part C of title XVIII of such Act is amended--
                    (A) in section 1851(a)(2)(B) (42 U.S.C. 1395w-
                21(a)(2)(B)), by striking ``1859(b)(3)'' and inserting 
                ``1858(b)(3)'';
                    (B) in section 1851(a)(2)(C) (42 U.S.C. 1395w-
                21(a)(2)(C)), by striking ``1859(b)(2)'' and inserting 
                ``1858(b)(2)'';
                    (C) in section 1852(a)(1) (42 U.S.C. 1395w-
                22(a)(1)), by striking ``1859(b)(3)'' and inserting 
                ``1858(b)(3)'';
                    (D) in section 1852(a)(3)(B)(ii) (42 U.S.C. 1395w-
                22(a)(3)(B)(ii)), by striking ``1859(b)(2)(B)'' and 
                inserting ``1858(b)(2)(B)'';
                    (E) in section 1853(a)(1)(A) (42 U.S.C. 1395w-
                23(a)(1)(A)), by striking ``1859(e)(4)'' and inserting 
                ``1858(e)(4)''; and
                    (F) in section 1853(a)(3)(D) (42 U.S.C. 1395w-
                23(a)(3)(D)), by striking ``1859(e)(4)'' and inserting 
                ``1858(e)(4)''.
            (5) Section 1853(c) of such Act (42 U.S.C. 1395w-23(c)) is 
        amended--
                    (A) in paragraph (1), by striking ``and (7)'' and 
                inserting ``, (7), and (8)'', and
                    (B) by adding at the end the following:
            ``(8) Adjustment for early access.--In applying this 
        subsection with respect to individuals entitled to benefits 
        under part D, the Secretary shall provide for an appropriate 
        adjustment in the Medicare+Choice capitation rate as may be 
        appropriate to reflect differences between the population 
        served under such part and the population under parts A and 
        B.''.
    (c) Other Conforming Amendments.--
            (1) Section 138(b)(4) of the Internal Revenue Code of 1986 
        is amended by striking ``1859(b)(3)'' and inserting 
        ``1858(b)(3)''.
            (2)(A) Section 602(2)(D)(ii) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1162(2)) is amended by 
        inserting ``(not including an individual who is so entitled 
        pursuant to enrollment under section 1859A)'' after ``Social 
        Security Act''.
            (B) Section 2202(2)(D)(ii) of the Public Health Service Act 
        (42 U.S.C. 300bb-2(2)(D)(ii)) is amended by inserting ``(not 
        including an individual who is so entitled pursuant to 
        enrollment under section 1859A)'' after ``Social Security 
        Act''.
            (C) Section 4980B(f)(2)(B)(i)(V) of the Internal Revenue 
        Code of 1986 is amended by inserting ``(not including an 
        individual who is so entitled pursuant to enrollment under 
        section 1859A)'' after ``Social Security Act''.

SEC. 5. ACCESS TO MEDICARE BENEFITS FOR DISPLACED WORKERS 55-TO-62 
              YEARS OF AGE.

    (a) Eligibility.--Section 1859 of the Social Security Act, as 
inserted by section 4(a)(2), is amended by adding at the end the 
following new subsection:
    ``(c) Displaced Workers and Spouses.--
            ``(1) Displaced workers.--Subject to paragraph (3), an 
        individual who meets the following requirements with respect to 
        a month is eligible to enroll under this part with respect to 
        such month:
                    ``(A) Age.--As of the last day of the month, the 
                individual has attained 55 years of age, but has not 
                attained 62 years of age.
                    ``(B) Medicare eligibility (but for age).--The 
                individual would be eligible for benefits under part A 
                or B for the month if the individual were 65 years of 
                age.
                    ``(C) Loss of employment-based coverage.--
                            ``(i) Eligible for unemployment 
                        compensation.--The individual meets the 
                        requirements relating to period of covered 
                        employment and conditions of separation from 
                        employment to be eligible for unemployment 
                        compensation (as defined in section 85(b) of 
                        the Internal Revenue Code of 1986), based on a 
                        separation from employment occurring on or 
                        after January 1, 2001. The previous sentence 
                        shall not be construed as requiring the 
                        individual to be receiving such unemployment 
                        compensation.
                            ``(ii) Loss of employment-based coverage.--
                        Immediately before the time of such separation 
                        of employment, the individual was covered under 
                        a group health plan on the basis of such 
                        employment, and, because of such loss, is no 
                        longer eligible for coverage under such plan 
                        (including such eligibility based on the 
                        application of a Federal or State COBRA 
                        continuation provision) as of the last day of 
                        the month involved.
                            ``(iii) Previous creditable coverage for at 
                        least 1 year.--As of the date on which the 
                        individual loses coverage described in clause 
                        (ii), the aggregate of the periods of 
                        creditable coverage (as determined under 
                        section 2701(c) of the Public Health Service 
                        Act) is 12 months or longer.
                    ``(D) Exhaustion of available cobra continuation 
                benefits.--
                            ``(i) In general.--In the case of an 
                        individual described in clause (ii) for a month 
                        described in clause (iii)--
                                    ``(I) the individual (or spouse) 
                                elected coverage described in clause 
                                (ii); and
                                    ``(II) the individual (or spouse) 
                                has continued such coverage for all 
                                months described in clause (iii) in 
                                which the individual (or spouse) is 
                                eligible for such coverage.
                            ``(ii) Individuals to whom cobra 
                        continuation coverage made available.--An 
                        individual described in this clause is an 
                        individual--
                                    ``(I) who was offered coverage 
                                under a Federal or State COBRA 
                                continuation provision at the time of 
                                loss of coverage eligibility described 
                                in subparagraph (C)(ii); or
                                    ``(II) whose spouse was offered 
                                such coverage in a manner that 
                                permitted coverage of the individual at 
                                such time.
                            ``(iii) Months of possible cobra 
                        continuation coverage.--A month described in 
                        this clause is a month for which an individual 
                        described in clause (ii) could have had 
                        coverage described in such clause as of the 
                        last day of the month if the individual (or the 
                        spouse of the individual, as the case may be) 
                        had elected such coverage on a timely basis.
                    ``(E) Not eligible for coverage under federal 
                health insurance program or group health plans.--The 
                individual is not eligible for benefits or coverage 
                under a Federal health insurance program or under a 
                group health plan (whether on the basis of the 
                individual's employment or employment of the 
                individual's spouse) as of the last day of the month 
                involved.
            ``(2) Spouse of displaced worker.--Subject to paragraph 
        (3), an individual who meets the following requirements with 
        respect to a month is eligible to enroll under this part with 
        respect to such month:
                    ``(A) Age.--As of the last day of the month, the 
                individual has not attained 62 years of age.
                    ``(B) Married to displaced worker.--The individual 
                is the spouse of an individual at the time the 
                individual enrolls under this part under paragraph (1) 
                and loses coverage described in paragraph (1)(C)(ii) 
                because the individual's spouse lost such coverage.
                    ``(C) Medicare eligibility (but for age); 
                exhaustion of any cobra continuation coverage; and not 
                eligible for coverage under federal health insurance 
                program or group health plan.--The individual meets the 
                requirements of subparagraphs (B), (D), and (E) of 
                paragraph (1).
            ``(3) Change in health plan eligibility affects continued 
        eligibility.--For provision that terminates enrollment under 
        this section in the case of an individual who becomes eligible 
        for coverage under a group health plan or under a Federal 
        health insurance program, see section 1859A(d)(1)(C).
            ``(4) Reenrollment permitted.--Nothing in this subsection 
        shall be construed as preventing an individual who, after 
enrolling under this subsection, terminates such enrollment from 
subsequently reenrolling under this subsection if the individual is 
eligible to enroll under this subsection at that time.''.
    (b) Enrollment.--Section 1859A of such Act, as so inserted, is 
amended--
            (1) in subsection (a), by striking ``and'' at the end of 
        paragraph (1), by striking the period at the end of paragraph 
        (2) and inserting ``; and'', and by adding at the end the 
        following new paragraph:
            ``(3) individuals whose coverage under this part would 
        terminate because of subsection (d)(1)(B)(ii) are provided 
        notice and an opportunity to continue enrollment in accordance 
        with section 1859E(c)(1).'';
            (2) in subsection (b), by inserting after Notwithstanding 
        any other provision of law, (1) the following:
            ``(2) Displaced workers and spouses.--In the case of 
        individuals eligible to enroll under this part under section 
        1859(c), the following rules apply:
                    ``(A) Initial enrollment period.--If the individual 
                is first eligible to enroll under such section for July 
                2005, the enrollment period shall begin on May 1, 2002, 
                and shall end on August 31, 2002. Any such enrollment 
                before July 1, 2002, is conditioned upon compliance 
                with the conditions of eligibility for July 2002.
                    ``(B) Subsequent periods.--If the individual is 
                eligible to enroll under such section for a month after 
                July 2002, the enrollment period based on such 
                eligibility shall begin on the first day of the second 
                month before the month in which the individual first is 
                eligible to so enroll (or reenroll) and shall end 4 
                months later.'';
            (3) in subsection (d)(1), by amending subparagraph (B) to 
        read as follows:
                    ``(B) Termination based on age.--
                            ``(i) At age 65.--Subject to clause (ii), 
                        the individual attains 65 years of age.
                            ``(ii) At age 62 for displaced workers and 
                        spouses.--In the case of an individual enrolled 
                        under this part pursuant to section 1859(c), 
                        subject to subsection (a)(1), the individual 
                        attains 62 years of age.'';
            (4) in subsection (d)(1), by adding at the end the 
        following new subparagraph:
                    ``(C) Obtaining access to employment-based coverage 
                or federal health insurance program for individuals 
                under 62 years of age.--In the case of an individual 
                who has not attained 62 years of age, the individual is 
                covered (or eligible for coverage) as a participant or 
                beneficiary under a group health plan or under a 
                Federal health insurance program.'';
            (5) in subsection (d)(2), by amending subparagraph (C) to 
        read as follows:
                    ``(C) Age or medicare eligibility.--
                            ``(i) In general.--The termination of a 
                        coverage period under paragraph (1)(A)(iii) or 
                        (1)(B)(i) shall take effect as of the first day 
                        of the month in which the individual attains 65 
                        years of age or becomes entitled to benefits 
                        under part A or enrolled for benefits under 
                        part B.
                            ``(ii) Displaced workers.--The termination 
                        of a coverage period under paragraph (1)(B)(ii) 
                        shall take effect as of the first day of the 
                        month in which the individual attains 62 years 
                        of age, unless the individual has enrolled 
                        under this part pursuant to section 1859(b) and 
                        section 1859E(c)(1).''; and
            (6) in subsection (d)(2), by adding at the end the 
        following new subparagraph:
                    ``(D) Access to coverage.--The termination of a 
                coverage period under paragraph (1)(C) shall take 
                effect on the date on which the individual is eligible 
                to begin a period of creditable coverage (as defined in 
                section 2701(c) of the Public Health Service Act) under 
                a group health plan or under a Federal health insurance 
                program.''.
    (c) Premiums.--Section 1859B of such Act, as so inserted, is 
amended--
            (1) in subsection (a)(1), by adding at the end the 
        following:
                    ``(B) Base monthly premium for individuals under 62 
                years of age.--A base monthly premium for individuals 
                under 62 years of age, equal to \1/12\ of the base 
                annual premium rate computed under subsection (d)(3) 
                for each premium area and age cohort.''; and
            (2) by adding at the end the following new subsection:
    ``(d) Base Monthly Premium for Individuals Under 62 Years of Age.--
            ``(1) National, per capita average for age groups.--
                    ``(A) Estimate of amount.--The Secretary shall 
                estimate the average, annual per capita amount that 
                would be payable under this title with respect to 
                individuals residing in the United States who meet the 
                requirement of section 1859(c)(1)(A) within each of the 
                age cohorts established under subparagraph (B) as if 
                all such individuals within such cohort were eligible 
                for (and enrolled) under this title during the entire 
                year (and assuming that section 1862(b)(2)(A)(i) did 
                not apply).
                    ``(B) Age cohorts.--For purposes of subparagraph 
                (A), the Secretary shall establish separate age cohorts 
                in 5-year age increments for individuals who have not 
                attained 60 years of age and a separate cohort for 
                individuals who have attained 60 years of age.
            ``(2) Geographic adjustment.--The Secretary shall adjust 
        the amount determined under paragraph (1)(A) for each premium 
        area (specified under subsection (a)(3)) in the same manner and 
        to the same extent as the Secretary provides for adjustments 
under subsection (b)(2).
            ``(3) Base annual premium.--The base annual premium under 
        this subsection for months in a year for individuals in an age 
        cohort under paragraph (1)(B) in a premium area is equal to 165 
        percent of the average, annual per capita amount estimated 
        under paragraph (1) for the age cohort and year, adjusted for 
        such area under paragraph (2).
            ``(4) Pro-ration of premiums to reflect coverage during a 
        part of a month.--If the Secretary provides for coverage of 
        portions of a month under section 1859A(c)(2), the Secretary 
        shall pro-rate the premiums attributable to such coverage under 
        this section to reflect the portion of the month so covered.''.
    (d) Administrative Provisions.--Section 1859F of such Act, as so 
inserted, is amended by adding at the end the following:
    ``(d) Additional Administrative Provisions.--
            ``(1) Process for continued enrollment of displaced workers 
        who attain 62 years of age.--The Secretary shall provide a 
        process for the continuation of enrollment of individuals whose 
        enrollment under section 1859(c) would be terminated upon 
        attaining 62 years of age. Under such process such individuals 
        shall be provided appropriate and timely notice before the date 
        of such termination and of the requirement to enroll under this 
        part pursuant to section 1859(b) in order to continue 
        entitlement to benefits under this title after attaining 62 
        years of age.
            ``(2) Arrangements with states for determinations relating 
        to unemployment compensation eligibility.--The Secretary may 
        provide for appropriate arrangements with States for the 
        determination of whether individuals in the State meet or would 
        meet the requirements of section 1859(c)(1)(C)(i).''.
    (e) Conforming Amendment to Heading to Part.--The heading of part D 
of title XVIII of the Social Security Act, as so inserted, is amended 
by striking ``62'' and inserting ``55''.

SEC. 6. PROVISIONS TO MAKE FEHBP COVERAGE AVAILABLE FOR THE SELF-
              EMPLOYED.

    Chapter 89 of title 5, United States Code, is amended by adding at 
the end the following:
``Sec. 8915. Expanded access to coverage for the self-employed
    ``(a) The Office of Personnel Management (referred to in this 
section as the `Office') shall administer a health insurance program 
for eligible individuals who are non-Federal employees in accordance 
with this section.
    ``(b) The term `eligible individual' means a self-employed 
individual as defined in section 401(c)(1) of the Internal Revenue Code 
of 1986.
    ``(c) The Office shall prescribe regulations to apply the 
provisions of this chapter to the greatest extent practicable to 
eligible individuals covered under this section.
    ``(d) In no event shall the enactment of this section result in--
            ``(1) any increase in the level of individual or Government 
        contributions required under this chapter, including copayments 
        or deductibles;
            ``(2) any decrease in the types of benefits offered under 
        this chapter; or
            ``(3) any other change that would adversely affect the 
        coverage afforded under this chapter to employees and 
        annuitants and members of family under this chapter.
    ``(e) The Office shall develop methods to facilitate enrollment 
under this section, including the use of the Internet.
    ``(f) The Office may enter into contracts for the performance of 
appropriate administrative functions under this chapter.
    ``(g) Each contract entered into under section 8902 shall require a 
carrier to offer to eligible individuals under this chapter, throughout 
each term for which the contract remains effective, the same benefits 
(subject to the same maximums, limitations, exclusions, and other 
similar terms or conditions) as would be offered under such contract or 
applicable health benefits plan to employees, annuitants, and members 
of family.
    ``(h)(1) The Office may waive the requirements of this section, if 
the Office determines, based on a petition submitted by a carrier 
that--
            ``(A) the carrier is unable to offer the applicable health 
        benefits plan because of a limitation in the capacity of the 
        plan to deliver services or assure financial solvency;
            ``(B) the applicable health benefits plan is not sponsored 
        by a carrier licensed under applicable State law; or
            ``(C) bona fide enrollment restrictions make the 
        application of this chapter inappropriate, including 
        restrictions common to plans which are limited to individuals 
        having a past or current employment relationship with a 
        particular agency or other authority of the Government.
    ``(2) The Office may require a petition under this subsection to 
include--
                    ``(A) a description of the efforts the carrier 
                proposes to take in order to offer the applicable 
                health benefits plan under this chapter; and
                    ``(B) the proposed date for offering such a health 
                benefits plan.
    ``(3) A waiver under this section may be for any period determined 
by the Office. The Office may grant subsequent waivers under this 
section.
    ``(i) The Office shall provide for the implementation of procedures 
to provide for an annual open enrollment period during which eligible 
individuals may enroll with a plan or contract for coverage under this 
section.
    ``(j) Except as the Office may by regulation prescribe, any 
reference to this chapter (or any requirement of this chapter), made in 
any provision of law, shall not be considered to include this section 
(or any requirement of this section).
    ``(k) This section shall take effect on the date of enactment of 
this section and shall apply to contracts that take effect with respect 
to calendar year 2002 and each calendar year thereafter.''.

SEC. 7. MEDIKIDS HEALTH INSURANCE.

    (a) Benefits for All Children Born After 2002.--
            (1) In general.--The Social Security Act is amended by 
        adding at the end the following:

                     ``TITLE XXII--MEDIKIDS PROGRAM

``SEC. 2201. ELIGIBILITY.

    ``(a) Eligibility of Individuals Born After December 31, 2002; All 
Children Under 23 Years of Age in Sixth Year.--An individual who meets 
the following requirements with respect to a month is eligible to 
enroll under this title with respect to such month:
            ``(1) Age.--
                    ``(A) First year.--During the first year in which 
                this title is effective, the individual has not 
                attained 6 years of age.
                    ``(B) Second year.--During the second year in which 
                this title is effective, the individual has not 
                attained 11 years of age.
                    ``(C) Third year.--During the third year in which 
                this title is effective, the individual has not 
                attained 16 years of age.
                    ``(D) Fourth year.--During the fourth year in which 
                this title is effective, the individual has not 
                attained 21 years of age.
                    ``(E) Fifth and subsequent years.--During the fifth 
                year in which this title is effective and each 
                subsequent year, the individual has not attained 23 
                years of age.
            ``(2) Citizenship.--The individual is a citizen or national 
        of the United States or is permanently residing in the United 
        States under color of law.
    ``(b) Enrollment Process.--An individual may enroll in the program 
established under this title only in such manner and form as may be 
prescribed by regulations, and only during an enrollment period 
prescribed by the Secretary consistent with the provisions of this 
section. Such regulations shall provide a process under which--
            ``(1) individuals who are born in the United States after 
        December 31, 2002, are deemed to be enrolled at the time of 
        birth and a parent or guardian of such an individual is 
        permitted to pre-enroll in the month prior to the expected 
        month of birth;
            ``(2) individuals who are born outside the United States 
        after such date and who become eligible to enroll by virtue of 
        immigration into (or an adjustment of immigration status in) 
        the United States are deemed enrolled at the time of entry or 
        adjustment of status;
            ``(3) eligible individuals may otherwise be enrolled at 
        such other times and manner as the Secretary shall specify, 
        including the use of outstationed eligibility sites as 
        described in section 1902(a)(55)(A) and the use of presumptive 
        eligibility provisions like those described in section 1920A; 
        and
            ``(4) at the time of automatic enrollment of a child, the 
        Secretary provides for issuance to a parent or custodian of the 
        individual a card evidencing coverage under this title and for 
        a description of such coverage.
The provisions of section 1837(h) apply with respect to enrollment 
under this title in the same manner as they apply to enrollment under 
part B of title XVIII.
    ``(c) Date Coverage Begins.--
            ``(1) In general.--The period during which an individual is 
        entitled to benefits under this title shall begin as follows, 
        but in no case earlier than January 1, 2003:
                    ``(A) In the case of an individual who is enrolled 
                under paragraph (1) or (2) of subsection (b), the date 
                of birth or date of obtaining appropriate citizenship 
                or immigration status, as the case may be.
                    ``(B) In the case of an another individual who 
                enrolls (including pre-enrolls) before the month in 
                which the individual satisfies eligibility for 
                enrollment under subsection (a), the first day of such 
                month of eligibility.
                    ``(C) In the case of an another individual who 
                enrolls during or after the month in which the 
                individual first satisfies eligibility for enrollment 
                under such subsection, the first day of the following 
                month.
            ``(2) Authority to provide for partial months of 
        coverage.--Under regulations, the Secretary may, in the 
        Secretary's discretion, provide for coverage periods that 
        include portions of a month in order to avoid lapses of 
        coverage.
            ``(3) Limitation on payments.--No payments may be made 
        under this title with respect to the expenses of an individual 
        enrolled under this title unless such expenses were incurred by 
        such individual during a period which, with respect to the 
        individual, is a coverage period under this section.
    ``(d) Expiration of Eligibility.--An individual's coverage period 
under this part shall continue until the individual's enrollment has 
been terminated because the individual no longer meets the requirements 
of subsection (a) (whether because of age or change in immigration 
status).
    ``(e) Entitlement to MediKids Benefits for Enrolled Individuals.--
An individual enrolled under this section is entitled to the benefits 
described in section 2202.
    ``(f) Low-Income Information.--At the time of enrollment of a child 
under this title, the Secretary shall make an inquiry as to whether or 
not the family income of the family that includes the child is less 
than 150 percent of the poverty line for a family of the size involved. 
If the family income is below such level, the Secretary shall encode in 
the identification card issued in connection with eligibility under 
this title a code indicating such fact. The Secretary also shall 
provide for a toll-free telephone line at which providers can verify 
whether or not such a child is in a family the income of which is below 
such level.
    ``(g) Construction.--Nothing in this title shall be construed as 
requiring (or preventing) an individual who is enrolled under this 
section from seeking medical assistance under a State medicaid plan 
under title XIX or child health assistance under a State child health 
plan under title XXI.

``SEC. 2202. BENEFITS.

    ``(a) Secretarial Specification of Benefit Package.--
            ``(1) In general.--The Secretary shall specify the benefits 
        to be made available under this title consistent with the 
        provisions of this section and in a manner designed to meet the 
        health needs of enrollees.
            ``(2) Updating.--The Secretary shall update the 
        specification of benefits over time to ensure the inclusion of 
        age-appropriate benefits to reflect the enrollee population.
            ``(3) Annual updating.--The Secretary shall establish 
        procedures for the annual review and updating of such benefits 
        to account for changes in medical practice, new information 
        from medical research, and other relevant developments in 
        health science.
            ``(4) Input.--The Secretary shall seek the input of the 
        pediatric community in specifying and updating such benefits.
            ``(5) Limitation on updating.--In no case shall updating of 
        benefits under this subsection result in a failure to provide 
        benefits required under subsection (b).
    ``(b) Inclusion of Certain Benefits.--
            ``(1) Medicare core benefits.--Such benefits shall include 
        (to the extent consistent with other provisions of this 
        section) at least the same benefits (including coverage, 
        access, availability, duration, and beneficiary rights) that 
        are available under parts A and B of title XVIII.
            ``(2) All required medicaid benefits.--Such benefits shall 
        also include all items and services for which medical 
        assistance is required to be provided under section 
        1902(a)(10)(A) to individuals described in such section, 
        including early and periodic screening, diagnostic services, 
        and treatment services.
            ``(3) Inclusion of prescription drugs.--Such benefits also 
        shall include (as specified by the Secretary) prescription 
        drugs and biologicals.
            ``(4) Cost-sharing.--
                    ``(A) In general.--Subject to subparagraph (B), 
                such benefits also shall include the cost-sharing (in 
                the form of deductibles, coinsurance, and copayments) 
                applicable under title XVIII with respect to comparable 
                items and services, except that no cost-sharing shall 
                be imposed with respect to early and periodic screening 
                and diagnostic services included under paragraph (2).
                    ``(B) No cost-sharing for lowest income children.--
                Such benefits shall not include any cost-sharing for 
                children in families the income of which (as determined 
                for purposes of section 1905(p)) does not exceed 150 
                percent of the official income poverty line (referred 
                to in such section) applicable to a family of the size 
                involved.
                    ``(C) Refundable credit for cost-sharing for other 
                low-income children.--For a refundable credit for cost-
                sharing in the case of children in certain families, 
                see section 35 of the Internal Revenue Code of 1986.
    ``(c) Payment Schedule.--The Secretary, with the assistance of the 
Medicare Payment Advisory Commission, shall develop and implement a 
payment schedule for benefits covered under this title. To the extent 
feasible, such payment schedule shall be consistent with comparable 
payment schedules and reimbursement methodologies applied under parts A 
and B of title XVIII.
    ``(d) Input.--The Secretary shall specify such benefits and payment 
schedules only after obtaining input from appropriate child health 
providers and experts.
    ``(e) Enrollment in Health Plans.--The Secretary shall provide for 
the offering of benefits under this title through enrollment in a 
health benefit plan that meets the same (or similar) requirements as 
the requirements that apply to Medicare+Choice plans under part C of 
title XVIII. In the case of individuals enrolled under this title in 
such a plan, the Medicare+Choice capitation rate described in section 
1853(c) shall be adjusted in an appropriate manner to reflect 
differences between the population served under this title and the 
population under title XVIII.

``SEC. 2203. PREMIUMS.

    ``(a) Amount of Monthly Premiums.--
            ``(1) In general.--The Secretary shall, during September of 
        each year (beginning with 2002), establish a monthly MediKids 
        premium. Subject to paragraph (2), the monthly MediKids premium 
        for a year is equal to \1/12\ of the annual premium rate 
        computed under subsection (b).
            ``(2) Elimination of monthly premium for demonstration of 
        equivalent coverage (including coverage under low-income 
        programs).--The amount of the monthly premium imposed under 
        this section for an individual for a month shall be zero in the 
        case of an individual who demonstrates to the satisfaction of 
        the Secretary that the individual has basic health insurance 
        coverage for that month. For purposes of the previous sentence 
        enrollment in a medicaid plan under title XIX, a State child 
        health insurance plan under title XXI, or under the medicare 
        program under title XVIII is deemed to constitute basic health 
        insurance coverage described in such sentence.
    ``(b) Annual Premium.--
            ``(1) National, per capita average.--The Secretary shall 
        estimate the average, annual per capita amount that would be 
        payable under this title with respect to individuals residing 
        in the United States who meet the requirement of section 
        2201(a)(1) as if all such individuals were eligible for (and 
        enrolled) under this title during the entire year (and assuming 
        that section 1862(b)(2)(A)(i) did not apply).
            ``(2) Annual premium.--Subject to subsection (d), the 
        annual premium under this subsection for months in a year is 
        equal to 25 percent of the average, annual per capita amount 
        estimated under paragraph (1) for the year.
    ``(c) Payment of Monthly Premium.--
            ``(1) Period of payment.--In the case of an individual who 
        participates in the program established by this title, subject 
        to subsection (d), the monthly premium shall be payable for the 
        period commencing with the first month of the individual's 
        coverage period and ending with the month in which the 
        individual's coverage under this title terminates.
            ``(2) Collection through tax return.--For provisions 
        providing for the payment of monthly premiums under this 
        subsection, see section 59B of the Internal Revenue Code of 
        1986.
            ``(3) Protections against fraud and abuse.--The Secretary 
        shall develop, in coordination with States and other health 
        insurance issuers, administrative systems to ensure that claims 
        which are submitted to more than one payor are coordinated and 
        duplicate payments are not made.
    ``(d) Reduction in Premium for Certain Low-Income Families.--For 
provisions reducing the premium under this section for certain low-
income families, see section 59B(c) of the Internal Revenue Code of 
1986.

``SEC. 2204. MEDIKIDS TRUST FUND.

    ``(a) Establishment of Trust Fund.--
            ``(1) In general.--There is hereby created on the books of 
        the Treasury of the United States a trust fund to be known as 
        the `MediKids Trust Fund' (in this section referred to as the 
        `Trust Fund'). The Trust Fund shall consist of such gifts and 
        bequests as may be made as provided in section 201(i)(1) and 
        such amounts as may be deposited in, or appropriated to, such 
        fund as provided in this title.
            ``(2) Premiums.--Premiums collected under section 2203 
        shall be transferred to the Trust Fund.
    ``(b) Incorporation of Provisions.--
            ``(1) In general.--Subject to paragraph (2), subsections 
        (b) through (i) of section 1841 shall apply with respect to the 
        Trust Fund and this title in the same manner as they apply with 
        respect to the Federal Supplementary Medical Insurance Trust 
        Fund and part B, respectively.
            ``(2) Miscellaneous references.--In applying provisions of 
        section 1841 under paragraph (1)--
                    ``(A) any reference in such section to `this part' 
                is construed to refer to title XXII;
                    ``(B) any reference in section 1841(h) to section 
                1840(d) and in section 1841(i) to sections 1840(b)(1) 
                and 1842(g) are deemed references to comparable 
                authority exercised under this title;
                    ``(C) payments may be made under section 1841(g) to 
                the Trust Funds under sections 1817 and 1841 as 
                reimbursement to such funds for payments they made for 
                benefits provided under this title; and
                    ``(D) the Board of Trustees of the MediKids Trust 
                Fund shall be the same as the Board of Trustees of the 
                Federal Supplementary Medical Insurance Trust Fund.

``SEC. 2205. OVERSIGHT AND ACCOUNTABILITY.

    ``(a) Through Annual Reports of Trustees.--The Board of Trustees of 
the MediKids Trust Fund under section 2204(b)(1) shall report on an 
annual basis to Congress concerning the status of the Trust Fund and 
the need for adjustments in the program under this title to maintain 
financial solvency of the program under this title.
    ``(b) Periodic GAO Reports.--The Comptroller General of the United 
States shall periodically submit to Congress reports on the adequacy of 
the financing of coverage provided under this title. The Comptroller 
General shall include in such report such recommendations for 
adjustments in such financing and coverage as the Comptroller General 
deems appropriate in order to maintain financial solvency of the 
program under this title.

``SEC. 2206. INCLUSION OF CARE COORDINATION SERVICES.

    ``(a) In General.--
            ``(1) Program authority.--The Secretary, beginning in 2003, 
        may implement a care coordination services program in 
        accordance with the provisions of this section under which, in 
        appropriate circumstances, eligible individuals may elect to 
        have health care services covered under this title managed and 
        coordinated by a designated care coordinator.
            ``(2) Administration by contract.--The Secretary may 
        administer the program under this section through a contract 
        with an appropriate program administrator.
            ``(3) Coverage.--Care coordination services furnished in 
        accordance with this section shall be treated under this title 
        as if they were included in the definition of medical and other 
        health services under section 1861(s) and benefits shall be 
        available under this title with respect to such services 
        without the application of any deductible or coinsurance.
    ``(b) Eligibility Criteria; Identification and Notification of 
Eligible Individuals.--
            ``(1) Individual eligibility criteria.--The Secretary shall 
        specify criteria to be used in making a determination as to 
        whether an individual may appropriately be enrolled in the care 
        coordination services program under this section, which shall 
        include at least a finding by the Secretary that for cohorts of 
        individuals with characteristics identified by the Secretary, 
        professional management and coordination of care can reasonably 
        be expected to improve processes or outcomes of health care and 
        to reduce aggregate costs to the programs under this title.
            ``(2) Procedures to facilitate enrollment.--The Secretary 
        shall develop and implement procedures designed to facilitate 
        enrollment of eligible individuals in the program under this 
        section.
    ``(c) Enrollment of Individuals.--
            ``(1) Secretary's determination of eligibility.--The 
        Secretary shall determine the eligibility for services under 
        this section of individuals who are enrolled in the program 
        under this section and who make application for such services 
        in such form and manner as the Secretary may prescribe.
            ``(2) Enrollment period.--
                    ``(A) Effective date and duration.--Enrollment of 
                an individual in the program under this section shall 
                be effective as of the first day of the month following 
                the month in which the Secretary approves the 
                individual's application under paragraph (1), shall 
                remain in effect for one month (or such longer period 
                as the Secretary may specify), and shall be 
                automatically renewed for additional periods, unless 
                terminated in accordance with such procedures as the 
                Secretary shall establish by regulation. Such 
                procedures shall permit an individual to disenroll for 
                cause at any time and without cause at re-enrollment 
                intervals.
                    ``(B) Limitation on reenrollment.--The Secretary 
                may establish limits on an individual's eligibility to 
                reenroll in the program under this section if the 
                individual has disenrolled from the program more than 
                once during a specified time period.
    ``(d) Program.--The care coordination services program under this 
section shall include the following elements:
            ``(1) Basic care coordination services.--
                    ``(A) In general.--Subject to the cost-
                effectiveness criteria specified in subsection (b)(1), 
                except as otherwise provided in this section, enrolled 
                individuals shall receive services described in section 
                1905(t)(1) and may receive additional items and 
                services as described in subparagraph (B).
                    ``(B) Additional benefits.--The Secretary may 
                specify additional benefits for which payment would not 
                otherwise be made under this title that may be 
                available to individuals enrolled in the program under 
                this section (subject to an assessment by the care 
                coordinator of an individual's circumstance and need 
                for such benefits) in order to encourage enrollment in, 
                or to improve the effectiveness of, such program.
            ``(2) Care coordination requirement.--Notwithstanding any 
        other provision of this title, the Secretary may provide that 
        an individual enrolled in the program under this section may be 
        entitled to payment under this title for any specified health 
        care items or services only if the items or services have been 
        furnished by the care coordinator, or coordinated through the 
        care coordination services program. Under such provision, the 
        Secretary shall prescribe exceptions for emergency medical 
        services as described in section 1852(d)(3), and other 
        exceptions determined by the Secretary for the delivery of 
        timely and needed care.
    ``(e) Care Coordinators.--
            ``(1) Conditions of participation.--In order to be 
        qualified to furnish care coordination services under this 
        section, an individual or entity shall--
                    ``(A) be a health care professional or entity 
                (which may include physicians, physician group 
                practices, or other health care professionals or 
                entities the Secretary may find appropriate) meeting 
                such conditions as the Secretary may specify;
                    ``(B) have entered into a care coordination 
                agreement; and
                    ``(C) meet such criteria as the Secretary may 
                establish (which may include experience in the 
                provision of care coordination or primary care 
                physician's services).
            ``(2) Agreement term; payment.--
                    ``(A) Duration and renewal.--A care coordination 
                agreement under this subsection shall be for one year 
                and may be renewed if the Secretary is satisfied that 
                the care coordinator continues to meet the conditions 
                of participation specified in paragraph (1).
                    ``(B) Payment for services.--The Secretary may 
                negotiate or otherwise establish payment terms and 
                rates for services described in subsection (d)(1).
                    ``(C) Liability.--Case coordinators shall be 
                subject to liability for actual health damages which 
                may be suffered by recipients as a result of the care 
                coordinator's decisions, failure or delay in making 
                decisions, or other actions as a care coordinator.
                    ``(D) Terms.--In addition to such other terms as 
                the Secretary may require, an agreement under this 
                section shall include the terms specified in 
                subparagraphs (A) through (C) of section 1905(t)(3).

``SEC. 2207. ADMINISTRATION AND MISCELLANEOUS.

    ``(a) In General.--Except as otherwise provided in this title--
            ``(1) the Secretary shall enter into appropriate contracts 
        with providers of services, other health care providers, 
        carriers, and fiscal intermediaries, taking into account the 
        types of contracts used under title XVIII with respect to such 
        entities, to administer the program under this title;
            ``(2) individuals enrolled under this title shall be 
        treated for purposes of title XVIII as though the individual 
        were entitled to benefits under part A and enrolled under part 
        B of such title;
            ``(3) benefits described in section 2202 that are payable 
        under this title to such individuals shall be paid in a manner 
        specified by the Secretary (taking into account, and based to 
        the greatest extent practicable upon, the manner in which they 
        are provided under title XVIII);
            ``(4) provider participation agreements under title XVIII 
        shall apply to enrollees and benefits under this title in the 
        same manner as they apply to enrollees and benefits under title 
        XVIII; and
            ``(5) individuals entitled to benefits under this title may 
        elect to receive such benefits under health plans in a manner, 
        specified by the Secretary, similar to the manner provided 
        under part C of title XVIII.
    ``(b) Coordination With Medicaid and SCHIP.--Notwithstanding any 
other provision of law, individuals entitled to benefits for items and 
services under this title who also qualify for benefits under title XIX 
or XXI or any other Federally funded program may continue to qualify 
and obtain benefits under such other title or program, and in such case 
such an individual shall elect either--
            ``(1) such other title or program to be primary payor to 
        benefits under this title, in which case no benefits shall be 
        payable under this title and the monthly premium under section 
        2203 shall be zero; or
            ``(2) benefits under this title shall be primary payor to 
        benefits provided under such program or title, in which case 
        the Secretary shall enter into agreements with States as may be 
        appropriate to provide that, in the case of such individuals, 
        the benefits under titles XIX and XXI or such other program 
        (including reduction of cost-sharing) are provided on a `wrap-
        around' basis to the benefits under this title.''.
            (2) Conforming amendments to social security act 
        provisions.--
                    (A) Section 201(i)(1) of the Social Security Act 
                (42 U.S.C. 401(i)(1)) is amended by striking ``or the 
                Federal Supplementary Medical Insurance Trust Fund'' 
                and inserting ``the Federal Supplementary Medical 
                Insurance Trust Fund, and the MediKids Trust Fund''.
                    (B) Section 201(g)(1)(A) of such Act (42 U.S.C. 
                401(g)(1)(A)) is amended by striking ``and the Federal 
                Supplementary Medical Insurance Trust Fund established 
                by title XVIII'' and inserting ``, the Federal 
                Supplementary Medical Insurance Trust Fund, and the 
                MediKids Trust Fund established by title XVIII''.
                    (C) Section 1853(c) of such Act (42 U.S.C. 1395w-
                23(c)) is amended--
                            (i) in paragraph (1), by striking ``or 
                        (7)'' and inserting ``, (7), or (8)'', and
                            (ii) by adding at the end the following:
            ``(8) Adjustment for medikids.--In applying this subsection 
        with respect to individuals entitled to benefits under title 
        XXII, the Secretary shall provide for an appropriate adjustment 
        in the Medicare+Choice capitation rate as may be appropriate to 
        reflect differences between the population served under such 
        title and the population under parts A and B.''.
            (3) Maintenance of medicaid eligibility and benefits for 
        children.--
                    (A) In general.--In order for a State to continue 
                to be eligible for payments under section 1903(a) of 
                the Social Security Act (42 U.S.C. 1396b(a))--
                            (i) the State may not reduce standards of 
                        eligibility, or benefits, provided under its 
                        State medicaid plan under title XIX of the 
                        Social Security Act or under its State child 
                        health plan under title XXI of such Act for 
                        individuals under 23 years of age below such 
                        standards of eligibility, and benefits, in 
                        effect on the date of the enactment of this 
                        Act; and
                            (ii) the State shall demonstrate to the 
                        satisfaction of the Secretary of Health and 
                        Human Services that any savings in State 
                        expenditures under title XIX or XXI of the 
                        Social Security Act that results from children 
                        from enrolling under title XXII of such Act 
                        shall be used in a manner that improves 
                        services to beneficiaries under title XIX of 
                        such Act, such as through increases in provider 
                        payment rates, expansion of eligibility, 
                        improved nurse and nurse aide staffing and 
                        improved inspections of nursing facilities, and 
                        coverage of additional services.
                    (B) Medikids as primary payor.--In applying title 
                XIX of the Social Security Act, the MediKids program 
                under title XXII of such Act shall be treated as a 
                primary payor in cases in which the election described 
                in section 2207(b)(2) of such Act, as added by 
                subsection (a), has been made.
            (4) Expansion of Medpac membership to 19.--
                    (A) In general.--Section 1805(c) of the Social 
                Security Act (42 U.S.C. 1395b-6(c)) is amended--
                            (i) in paragraph (1), by striking ``17'' 
                        and inserting ``19''; and
                            (ii) in paragraph (2)(B), by inserting 
                        ``experts in children's health,'' after ``other 
                        health professionals,''.
                    (B) Initial terms of additional members.--
                            (i) In general.--For purposes of staggering 
                        the initial terms of members of the Medicare 
                        Payment Advisory Commission under section 
                        1805(c)(3) of the Social Security Act (42 
                        U.S.C. 1395b-6(c)(3)), the initial terms of the 
                        2 additional members of the Commission provided 
                        for by the amendment under subsection (a)(1) 
                        are as follows:
                                    (I) One member shall be appointed 
                                for 1 year.
                                    (II) One member shall be appointed 
                                for 2 years.
                            (ii) Commencement of terms.--Such terms 
                        shall begin on January 1, 2002.
    (b) MediKids Premium.--
            (1) In general.--Subchapter A of chapter 1 of the Internal 
        Revenue Code of 1986 (relating to determination of tax 
        liability) is amended by adding at the end the following new 
        part:

                     ``PART VIII--MEDIKIDS PREMIUM

                              ``Sec. 59B. MediKids premium.

``SEC. 59B. MEDIKIDS PREMIUM.

    ``(a) Imposition of Tax.--In the case of an individual to whom this 
section applies, there is hereby imposed (in addition to any other tax 
imposed by this subtitle) a MediKids premium for the taxable year.
    ``(b) Individuals Subject to Premium.--
            ``(1) In general.--This section shall apply to an 
        individual if the taxpayer has a MediKid at any time during the 
        taxable year.
            ``(2) Medikid.--For purposes of this section, the term 
        `MediKid' means, with respect to a taxpayer, any individual 
        with respect to whom the taxpayer is required to pay a premium 
        under section 2203(c) of the Social Security Act for any month 
        of the taxable year.
    ``(c) Amount of Premium.--For purposes of this section, the 
MediKids premium for a taxable year is the sum of the monthly premiums 
under section 2203 of the Social Security Act for months in the taxable 
year.
    ``(d) Exceptions Based on Adjusted Gross Income.--
            ``(1) Exemption for very low-income taxpayers.--
                    ``(A) In general.--No premium shall be imposed by 
                this section on any taxpayer having an adjusted gross 
                income not in excess of the exemption amount.
                    ``(B) Exemption amount.--For purposes of this 
                paragraph, the exemption amount is--
                            ``(i) $17,415 in the case of a taxpayer 
                        having 1 MediKid,
                            ``(ii) $21,945 in the case of a taxpayer 
                        having 2 MediKids,
                            ``(iii) $26,475 in the case of a taxpayer 
                        having 3 MediKids, and
                            ``(iv) $31,005 in the case of a taxpayer 
                        having 4 or more MediKids.
                    ``(C) Phaseout of exemption.--In the case of a 
                taxpayer having an adjusted gross income which exceeds 
                the exemption amount but does not exceed twice the 
                exemption amount, the premium shall be the amount which 
                bears the same ratio to the premium which would (but 
                for this subparagraph) apply to the taxpayer as such 
                excess bears to the exemption amount.
                    ``(D) Inflation adjustment of exemption amounts.--
                In the case of any taxable year beginning in a calendar 
                year after 2001, each dollar amount contained in 
                subparagraph (C) shall be increased by an amount equal 
                to the product of--
                            ``(i) such dollar amount, and
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        determined by substituting `calendar year 2000' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.
                If any increase determined under the preceding sentence 
                is not a multiple of $50, such increase shall be 
                rounded to the nearest multiple of $50.
            ``(2) Premium limited to 5 percent of adjusted gross 
        income.--In no event shall any taxpayer be required to pay a 
        premium under this section in excess of an amount equal to 5 
        percent of the taxpayer's adjusted gross income.
    ``(e) Coordination With Other Provisions.--
            ``(1) Not treated as medical expense.--For purposes of this 
        chapter, any premium paid under this section shall not be 
        treated as expense for medical care.
            ``(2) Not treated as tax for certain purposes.--The premium 
        paid under this section shall not be treated as a tax imposed 
        by this chapter for purposes of determining--
                    ``(A) the amount of any credit allowable under this 
                chapter, or
                    ``(B) the amount of the minimum tax imposed by 
                section 55.
            ``(3) Treatment under subtitle f.--For purposes of subtitle 
        F, the premium paid under this section shall be treated as if 
        it were a tax imposed by section 1.''.
            (2) Technical amendments.--
                    (A) Subsection (a) of section 6012 of such Code is 
                amended by inserting after paragraph (9) the following 
                new paragraph:
            ``(10) Every individual liable for a premium under section 
        59B.''.
                    (B) The table of parts for subchapter A of chapter 
                1 of such Code is amended by adding at the end the 
                following new item:

                              ``Part VIII. MediKids premium.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to months beginning after December 2002, in taxable 
        years ending after such date.
    (c) Refundable Credit for Cost-Sharing Expenses Under MediKids 
Program.--
            (1) 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 35 as 
        section 36 and by inserting after section 34 the following new 
        section:

``SEC. 35. COST-SHARING EXPENSES UNDER MEDIKIDS PROGRAM.

    ``(a) Allowance of Credit.--In the case of an individual who has a 
MediKid (as defined in section 59B) at any time during the taxable 
year, there shall be allowed as a credit against the tax imposed by 
this subtitle an amount equal to 50 percent of the amount paid by the 
taxpayer during the taxable year as cost-sharing under section 
2202(b)(4) of the Social Security Act.
    ``(b) Limitation Based on Adjusted Gross Income.--The amount of the 
credit which would (but for this subsection) be allowed under this 
section for the taxable year shall be reduced (but not below zero) by 
an amount which bears the same ratio to such amount of credit as the 
excess of the taxpayer's adjusted gross income for such taxable year 
over the exemption amount (as defined in section 59B(d)) bears to such 
exemption amount.''.
            (2) Technical amendments.--
                    (A) Paragraph (2) of section 1324(b) of title 31, 
                United States Code, is amended by inserting before the 
                period ``or from section 35 of such Code''.
                    (B) The table of sections for subpart C of part IV 
                of subchapter A of chapter 1 of such Code is amended by 
                striking the last item and inserting the following new 
                items:

                              ``Sec. 35. Cost-sharing expenses under 
                                        MediKids program.
                              ``Sec. 36. Overpayments of tax.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 2002.
    (d) Report on Long-Term Revenues.--Within 1 year after the date of 
enactment of this Act, the Secretary of the Treasury shall propose a 
gradual schedule of progressive tax changes to fund the program under 
title XXII of the Social Security Act, as the number of enrollees grows 
in the out-years.
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