II 109th CONGRESS 1st Session S. 1303 IN THE SENATE OF THE UNITED STATES June 23, 2005 Mr. Rockefeller (for himself, Mr. Reed, Mr. Lautenberg, Mr. Corzine, Mr. Sarbanes, and Mr. Kerry) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Social Security Act to guarantee comprehensive health care coverage for all children born after 2006.

1.

Short title; table of contents; findings

(a)

Short title

This Act may be cited as the MediKids Health Insurance Act of 2005. (b)

Table of contents

The table of contents of this Act is as follows: Sec. 1. Short title; table of contents; findings. Sec. 2. Benefits for all children born after 2006. Title XXII—MediKids program Sec. 2201. Eligibility. Sec. 2202. Benefits. Sec. 2203. Premiums. Sec. 2204. MediKids Trust Fund. Sec. 2205. Oversight and accountability. Sec. 2206. Inclusion of care coordination services. Sec. 2207. Administration and miscellaneous. Sec. 3. MediKids premium. Sec. 4. Refundable credit for cost-sharing expenses under MediKids program. Sec. 5. Report on long-term revenues. (c)

Findings

Congress finds the following: (1)More than 9 million American children are uninsured. (2)Children who are uninsured receive less medical care and less preventive care and have a poorer level of health, which result in lifetime costs to themselves and to the entire American economy. (3)Although SCHIP and Medicaid are successfully extending a health coverage safety net to a growing portion of the vulnerable low-income population of uninsured children, they alone cannot achieve 100 percent health insurance coverage for our nation’s children due to inevitable gaps during outreach and enrollment, fluctuations in eligibility, variations in access to private insurance at all income levels, and variations in States ability to provide required matching funds. (4)As all segments of society continue to become more transient, with many changes in employment over the working lifetime of parents, the need for a reliable safety net of health insurance which follows children across State lines, already a major problem for the children of migrant and seasonal farmworkers, will become a major concern for all families in the United States. (5)The medicare program has successfully evolved over the years to provide a stable, universal source of health insurance for the nation’s disabled and those over age 65, and provides a tested model for designing a program to reach out to America’s children. (6)The problem of insuring 100 percent of all American children could be gradually solved by automatically enrolling all children born after December 31, 2006, in a program modeled after Medicare (and to be known as MediKids), and allowing those children to be transferred into other equivalent or better insurance programs, including either private insurance, SCHIP, or Medicaid, if they are eligible to do so, but maintaining the child’s default enrollment in MediKids for any times when the child’s access to other sources of insurance is lost. (7)A family’s freedom of choice to use other insurers to cover children would not be interfered with in any way, and children eligible for SCHIP and Medicaid would continue to be enrolled in those programs, but the underlying safety net of MediKids would always be available to cover any gaps in insurance due to changes in medical condition, employment, income, or marital status, or other changes affecting a child’s access to alternate forms of insurance. (8)The MediKids program can be administered without impacting the finances or status of the existing Medicare program. (9)The MediKids benefit package can be tailored to the special needs of children and updated over time. (10)The financing of the program can be administered without difficulty by a yearly payment of affordable premiums through a family’s tax filing (or adjustment of a family’s earned income tax credit). (11)The cost of the program will gradually rise as the number of children using MediKids as the insurer of last resort increases, and a future Congress always can accelerate or slow down the enrollment process as desired, while the societal costs for emergency room usage, lost productivity and work days, and poor health status for the next generation of Americans will decline. (12)Over time 100 percent of American children will always have basic health insurance, and we can therefore expect a healthier, more equitable, and more productive society.

2.

Benefits for all children born after 2006

(a)

In general

The Social Security Act is amended by adding at the end the following new title: . (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 MediKids 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 MediKids Trust Fund established by title XVIII. (c)

Maintenance of Medicaid eligibility and benefits for children

(1)

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))— (A)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 (B)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 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 expansion of eligibility, improved nurse and nurse aide staffing and improved inspections of nursing facilities, and coverage of additional services. (2)

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. (d)

Expansion of medpac membership to 19

(1)

In general

Section 1805(c) of the Social Security Act (42 U.S.C. 1395b–6(c)) is amended— (A)in paragraph (1), by striking 17 and inserting 19; and (B)in paragraph (2)(B), by inserting experts in children’s health, after other health professionals,. (2)

Initial terms of additional members

(A)

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. (B)

Commencement of terms

Such terms shall begin on January 1, 2006. (3)

Duties

Section 1805(b)(1)(A) of such Act (42 U.S.C. 1395b–6(b)(1)(A)) is amended by inserting before the semicolon at the end the following: and payment policies under title XXII.

3.

MediKids premium

(a)

General rule

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: VIII

MediKids premium

Sec. 59B. MediKids premium.

59B.

MediKids premium

(a)

Imposition of tax

In the case of a taxpayer 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 a taxpayer if a MediKid is a dependent of the taxpayer for the taxable year. (2)

MediKid

For purposes of this section, the term MediKid means any individual enrolled in the MediKids program under title XXII of the Social Security Act. (c)

Amount of premium

For purposes of this section, the MediKids premium for a taxable year is the sum of the monthly premiums (for months in the taxable year) determined under section 2203 of the Social Security Act with respect to each MediKid who is a dependent of the taxpayer for 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)$19,245 in the case of a taxpayer having 1 MediKid, (ii)$24,135 in the case of a taxpayer having 2 MediKids, (iii)$29,025 in the case of a taxpayer having 3 MediKids, and (iv)$33,915 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 2005, 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 2004 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.

. (b)

Technical amendments

(1)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. . (2)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 . (c)

Effective date

The amendments made by this section shall apply to months beginning after December 2006, in taxable years ending after such date.

4.

Refundable credit for certain cost-sharing expenses under MediKids program

(a)

In general

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

36.

Catastrophic limit on cost-sharing expenses under MediKids program

(a)

In general

In the case of a taxpayer 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 the excess of— (1)the amount paid by the taxpayer during the taxable year as cost-sharing under section 2202(b)(4) of the Social Security Act, over (2)5 percent of the taxpayer’s adjusted gross income for the taxable year.

. (b)

Coordination with other provisions

The excess described in subsection (a) shall not be taken into account in computing the amount allowable to the taxpayer as a deduction under section 162(l) or 213(a). (c)

Technical amendments

(1)The table of sections for subpart C of part IV of subchapter A of chapter 1 of such Code is amended by redesignating the item relating to section 36 as an item relating to section 37 and by inserting before such item the following new item: Sec. 36. Catastrophic limit on cost-sharing expenses under MediKids program. . (2)Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting or 36 after section 35. (d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2006.

5.

Report on long-term revenues

Within one year after the date of the 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.