[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1628 Engrossed in House (EH)]

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115th CONGRESS
  1st Session
                                H. R. 1628

_______________________________________________________________________

                                 AN ACT


 
 To provide for reconciliation pursuant to title II of the concurrent 
             resolution on the budget for fiscal year 2017.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``American Health Care Act of 2017''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents of this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
                      TITLE I--ENERGY AND COMMERCE

          Subtitle A--Patient Access to Public Health Programs

Sec. 101. The Prevention and Public Health Fund.
Sec. 102. Community health center program.
Sec. 103. Federal payments to States.
                Subtitle B--Medicaid Program Enhancement

Sec. 111. Repeal of Medicaid provisions.
Sec. 112. Repeal of Medicaid expansion.
Sec. 113. Elimination of DSH cuts.
Sec. 114. Reducing State Medicaid costs.
Sec. 115. Safety net funding for non-expansion States.
Sec. 116. Providing incentives for increased frequency of eligibility 
                            redeterminations.
Sec. 117. Permitting States to apply a work requirement for 
                            nondisabled, nonelderly, nonpregnant adults 
                            under Medicaid.
        Subtitle C--Per Capita Allotment for Medical Assistance

Sec. 121. Per capita allotment for medical assistance.
    Subtitle D--Patient Relief and Health Insurance Market Stability

Sec. 131. Repeal of cost-sharing subsidy.
Sec. 132. Patient and State Stability Fund.
Sec. 133. Continuous health insurance coverage incentive.
Sec. 134. Increasing coverage options.
Sec. 135. Change in permissible age variation in health insurance 
                            premium rates.
                   Subtitle E--Implementation Funding

Sec. 141. American Health Care Implementation Fund.
                 TITLE II--COMMITTEE ON WAYS AND MEANS

      Subtitle A--Repeal and Replace of Health-Related Tax Policy

Sec. 201. Recapture excess advance payments of premium tax credits.
Sec. 202. Additional modifications to premium tax credit.
Sec. 203. Small business tax credit.
Sec. 204. Individual mandate.
Sec. 205. Employer mandate.
Sec. 206. Repeal of the tax on employee health insurance premiums and 
                            health plan benefits.
Sec. 207. Repeal of tax on over-the-counter medications.
Sec. 208. Repeal of increase of tax on health savings accounts.
Sec. 209. Repeal of limitations on contributions to flexible spending 
                            accounts.
Sec. 210. Repeal of medical device excise tax.
Sec. 211. Repeal of elimination of deduction for expenses allocable to 
                            medicare part D subsidy.
Sec. 212. Reduction of income threshold for determining medical care 
                            deduction.
Sec. 213. Repeal of Medicare tax increase.
Sec. 214. Refundable tax credit for health insurance coverage.
Sec. 215. Maximum contribution limit to health savings account 
                            increased to amount of deductible and out-
                            of-pocket limitation.
Sec. 216. Allow both spouses to make catch-up contributions to the same 
                            health savings account.
Sec. 217. Special rule for certain medical expenses incurred before 
                            establishment of health savings account.
              Subtitle B--Repeal of Certain Consumer Taxes

Sec. 221. Repeal of tax on prescription medications.
Sec. 222. Repeal of health insurance tax.
                   Subtitle C--Repeal of Tanning Tax

Sec. 231. Repeal of tanning tax.
             Subtitle D--Remuneration From Certain Insurers

Sec. 241. Remuneration from certain insurers.
            Subtitle E--Repeal of Net Investment Income Tax

Sec. 251. Repeal of net investment income tax.

                      TITLE I--ENERGY AND COMMERCE

          Subtitle A--Patient Access to Public Health Programs

SEC. 101. THE PREVENTION AND PUBLIC HEALTH FUND.

    (a) In General.--Subsection (b) of section 4002 of the Patient 
Protection and Affordable Care Act (42 U.S.C. 300u-11), as amended by 
section 5009 of the 21st Century Cures Act, is amended--
            (1) in paragraph (2), by adding ``and'' at the end;
            (2) in paragraph (3)--
                    (A) by striking ``each of fiscal years 2018 and 
                2019'' and inserting ``fiscal year 2018''; and
                    (B) by striking the semicolon at the end and 
                inserting a period; and
            (3) by striking paragraphs (4) through (8).
    (b) Rescission of Unobligated Funds.--Of the funds made available 
by such section 4002, the unobligated balance at the end of fiscal year 
2018 is rescinded.

SEC. 102. COMMUNITY HEALTH CENTER PROGRAM.

     Effective as if included in the enactment of the Medicare Access 
and CHIP Reauthorization Act of 2015 (Public Law 114-10, 129 Stat. 87), 
paragraph (1) of section 221(a) of such Act is amended by inserting ``, 
and an additional $422,000,000 for fiscal year 2017'' after ``2017''.

SEC. 103. FEDERAL PAYMENTS TO STATES.

    (a) In General.--Notwithstanding section 504(a), 1902(a)(23), 
1903(a), 2002, 2005(a)(4), 2102(a)(7), or 2105(a)(1) of the Social 
Security Act (42 U.S.C. 704(a), 1396a(a)(23), 1396b(a), 1397a, 
1397d(a)(4), 1397bb(a)(7), 1397ee(a)(1)), or the terms of any Medicaid 
waiver in effect on the date of enactment of this Act that is approved 
under section 1115 or 1915 of the Social Security Act (42 U.S.C. 1315, 
1396n), for the 1-year period beginning on the date of the enactment of 
this Act, no Federal funds provided from a program referred to in this 
subsection that is considered direct spending for any year may be made 
available to a State for payments to a prohibited entity, whether made 
directly to the prohibited entity or through a managed care 
organization under contract with the State.
    (b) Definitions.--In this section:
            (1) Prohibited entity.--The term ``prohibited entity'' 
        means an entity, including its affiliates, subsidiaries, 
        successors, and clinics--
                    (A) that, as of the date of enactment of this Act--
                            (i) is an organization described in section 
                        501(c)(3) of the Internal Revenue Code of 1986 
                        and exempt from tax under section 501(a) of 
                        such Code;
                            (ii) is an essential community provider 
                        described in section 156.235 of title 45, Code 
                        of Federal Regulations (as in effect on the 
                        date of enactment of this Act), that is 
                        primarily engaged in family planning services, 
                        reproductive health, and related medical care; 
                        and
                            (iii) provides for abortions, other than an 
                        abortion--
                                    (I) if the pregnancy is the result 
                                of an act of rape or incest; or
                                    (II) in the case where a woman 
                                suffers from a physical disorder, 
                                physical injury, or physical illness 
                                that would, as certified by a 
                                physician, place the woman in danger of 
                                death unless an abortion is performed, 
                                including a life-endangering physical 
                                condition caused by or arising from the 
                                pregnancy itself; and
                    (B) for which the total amount of Federal and State 
                expenditures under the Medicaid program under title XIX 
                of the Social Security Act in fiscal year 2014 made 
                directly to the entity and to any affiliates, 
                subsidiaries, successors, or clinics of the entity, or 
                made to the entity and to any affiliates, subsidiaries, 
                successors, or clinics of the entity as part of a 
                nationwide health care provider network, exceeded 
                $350,000,000.
            (2) Direct spending.--The term ``direct spending'' has the 
        meaning given that term under section 250(c) of the Balanced 
        Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 
        900(c)).

                Subtitle B--Medicaid Program Enhancement

SEC. 111. REPEAL OF MEDICAID PROVISIONS.

    The Social Security Act is amended--
            (1) in section 1902 (42 U.S.C. 1396a)--
                    (A) in subsection (a)(47)(B), by inserting ``and 
                provided that any such election shall cease to be 
                effective on January 1, 2020, and no such election 
                shall be made after that date'' before the semicolon at 
                the end; and
                    (B) in subsection (l)(2)(C), by inserting ``and 
                ending December 31, 2019,'' after ``January 1, 2014,'';
            (2) in section 1915(k)(2) (42 U.S.C. 1396n(k)(2)), by 
        striking ``during the period described in paragraph (1)'' and 
        inserting ``on or after the date referred to in paragraph (1) 
        and before January 1, 2020''; and
            (3) in section 1920(e) (42 U.S.C. 1396r-1(e)), by striking 
        ``under clause (i)(VIII), clause (i)(IX), or clause (ii)(XX) of 
        subsection (a)(10)(A)'' and inserting ``under clause (i)(VIII) 
        or clause (ii)(XX) of section 1902(a)(10)(A) before January 1, 
        2020, section 1902(a)(10)(A)(i)(IX),''.

SEC. 112. REPEAL OF MEDICAID EXPANSION.

    (a) In General.--Title XIX of the Social Security Act (42 U.S.C. 
1396 et seq.) is amended--
            (1) in section 1902 (42 U.S.C. 1396a)--
                    (A) in subsection (a)(10)(A)--
                            (i) in clause (i)(VIII), by inserting ``and 
                        ending December 31, 2019,'' after ``2014,'';
                            (ii) in clause (ii)(XX), by inserting ``and 
                        ending December 31, 2017,'' after ``2014,''; 
                        and
                            (iii) in clause (ii), by adding at the end 
                        the following new subclause:
                            ``(XXIII) beginning January 1, 2020--
                                    ``(aa) who are expansion enrollees 
                                (as defined in subsection (nn)(1)); or
                                    ``(bb) who are grandfathered 
                                expansion enrollees (as defined in 
                                subsection (nn)(2));''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(nn) Expansion Enrollees.--In this title:
            ``(1) In general.--The term `expansion enrollee' means an 
        individual--
                    ``(A) who is under 65 years of age;
                    ``(B) who is not pregnant;
                    ``(C) who is not entitled to, or enrolled for, 
                benefits under part A of title XVIII, or enrolled for 
                benefits under part B of title XVIII;
                    ``(D) who is not described in any of subclauses (I) 
                through (VII) of subsection (a)(10)(A)(i); and
                    ``(E) whose income (as determined under subsection 
                (e)(14)) does not exceed 133 percent of the poverty 
                line (as defined in section 2110(c)(5)) applicable to a 
                family of the size involved.
            ``(2) Grandfathered expansion enrollees.--The term 
        `grandfathered expansion enrollee' means an expansion enrollee 
        who--
                    ``(A) was enrolled under the State plan under this 
                title (or under a waiver of such plan) as of December 
                31, 2019; and
                    ``(B) does not have a break in eligibility for 
                medical assistance under such State plan (or waiver) 
                for more than one month after such date.
            ``(3) Application of related provisions.--Any reference in 
        subsection (a)(10)(G), (k), or (gg) of this section or in 
        section 1903, 1905(a), 1920(e), or 1937(a)(1)(B) to individuals 
        described in subclause (VIII) of subsection (a)(10)(A)(i) shall 
        be deemed to include a reference to expansion enrollees 
        (including grandfathered expansion enrollees).''; and
            (2) in section 1905 (42 U.S.C. 1396d)--
                    (A) in subsection (y)(1), in the matter preceding 
                subparagraph (A)--
                            (i) by inserting ``and that has elected to 
                        cover newly eligible individuals before March 
                        1, 2017'' after ``that is one of the 50 States 
                        or the District of Columbia''; and
                            (ii) by inserting after ``subclause (VIII) 
                        of section 1902(a)(10)(A)(i)'' the following: 
                        ``who, for periods after December 31, 2019, are 
                        grandfathered expansion enrollees (as defined 
                        in section 1902(nn)(2))''; and
                    (B) in subsection (z)(2)--
                            (i) in subparagraph (A), by inserting after 
                        ``section 1937'' the following: ``and, for 
                        periods after December 31, 2019, who are 
                        grandfathered expansion enrollees (as defined 
                        in section 1902(nn)(2))''; and
                            (ii) in subparagraph (B)(ii)--
                                    (I) in subclause (III), by adding 
                                ``and'' at the end; and
                                    (II) by striking subclauses (IV), 
                                (V), and (VI) and inserting the 
                                following new subclause:
                    ``(IV) 2017 and each subsequent year is 80 
                percent.''.
    (b) Sunset of Essential Health Benefits Requirement.--Section 
1937(b)(5) of the Social Security Act (42 U.S.C. 1396u-7(b)(5)) is 
amended by adding at the end the following: ``This paragraph shall not 
apply after December 31, 2019.''.

SEC. 113. ELIMINATION OF DSH CUTS.

    Section 1923(f) of the Social Security Act (42 U.S.C. 1396r-4(f)) 
is amended--
            (1) in paragraph (7)--
                    (A) in subparagraph (A)--
                            (i) in clause (i)--
                                    (I) in the matter preceding 
                                subclause (I), by striking ``2025'' and 
                                inserting ``2019''; and
                            (ii) in clause (ii)--
                                    (I) in subclause (I), by adding 
                                ``and'' at the end;
                                    (II) in subclause (II), by striking 
                                the semicolon at the end and inserting 
                                a period; and
                                    (III) by striking subclauses (III) 
                                through (VIII); and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(C) Exemption from reduction for non-expansion 
                states.--
                            ``(i) In general.--In the case of a State 
                        that is a non-expansion State for a fiscal 
                        year, subparagraph (A)(i) shall not apply to 
                        the DSH allotment for such State and fiscal 
                        year.
                            ``(ii) No change in reduction for expansion 
                        states.--In the case of a State that is an 
                        expansion State for a fiscal year, the DSH 
                        allotment for such State and fiscal year shall 
                        be determined as if clause (i) did not apply.
                            ``(iii) Non-expansion and expansion state 
                        defined.--
                                    ``(I) The term `expansion State' 
                                means with respect to a fiscal year, a 
                                State that, as of July 1 of the 
                                preceding fiscal year, provides for 
                                eligibility under clause (i)(VIII) or 
                                (ii)(XX) of section 1902(a)(10)(A) for 
                                medical assistance under this title (or 
                                a waiver of the State plan approved 
                                under section 1115).
                                    ``(II) The term `non-expansion 
                                State' means, with respect to a fiscal 
                                year, a State that is not an expansion 
                                State.''; and
            (2) in paragraph (8), by striking ``fiscal year 2025'' and 
        inserting ``fiscal year 2019''.

SEC. 114. REDUCING STATE MEDICAID COSTS.

    (a) Letting States Disenroll High Dollar Lottery Winners.--
            (1) In general.--Section 1902 of the Social Security Act 
        (42 U.S.C. 1396a) is amended--
                    (A) in subsection (a)(17), by striking ``(e)(14), 
                (e)(14)'' and inserting ``(e)(14), (e)(15)''; and
                    (B) in subsection (e)--
                            (i) in paragraph (14) (relating to modified 
                        adjusted gross income), by adding at the end 
                        the following new subparagraph:
                    ``(J) Treatment of certain lottery winnings and 
                income received as a lump sum.--
                            ``(i) In general.--In the case of an 
                        individual who is the recipient of qualified 
                        lottery winnings (pursuant to lotteries 
                        occurring on or after January 1, 2020) or 
                        qualified lump sum income (received on or after 
                        such date) and whose eligibility for medical 
                        assistance is determined based on the 
                        application of modified adjusted gross income 
                        under subparagraph (A), a State shall, in 
                        determining such eligibility, include such 
                        winnings or income (as applicable) as income 
                        received--
                                    ``(I) in the month in which such 
                                winnings or income (as applicable) is 
                                received if the amount of such winnings 
                                or income is less than $80,000;
                                    ``(II) over a period of 2 months if 
                                the amount of such winnings or income 
                                (as applicable) is greater than or 
                                equal to $80,000 but less than $90,000;
                                    ``(III) over a period of 3 months 
                                if the amount of such winnings or 
                                income (as applicable) is greater than 
                                or equal to $90,000 but less than 
                                $100,000; and
                                    ``(IV) over a period of 3 months 
                                plus 1 additional month for each 
                                increment of $10,000 of such winnings 
                                or income (as applicable) received, not 
                                to exceed a period of 120 months (for 
                                winnings or income of $1,260,000 or 
                                more), if the amount of such winnings 
                                or income is greater than or equal to 
                                $100,000.
                            ``(ii) Counting in equal installments.--For 
                        purposes of subclauses (II), (III), and (IV) of 
                        clause (i), winnings or income to which such 
                        subclause applies shall be counted in equal 
                        monthly installments over the period of months 
                        specified under such subclause.
                            ``(iii) Hardship exemption.--An individual 
                        whose income, by application of clause (i), 
                        exceeds the applicable eligibility threshold 
                        established by the State, may continue to be 
                        eligible for medical assistance to the extent 
                        that the State determines, under procedures 
                        established by the State under the State plan 
                        (or in the case of a waiver of the plan under 
                        section 1115, incorporated in such waiver), or 
                        as otherwise established by such State in 
                        accordance with such standards as may be 
                        specified by the Secretary, that the denial of 
                        eligibility of the individual would cause an 
                        undue medical or financial hardship as 
                        determined on the basis of criteria established 
                        by the Secretary.
                            ``(iv) Notifications and assistance 
                        required in case of loss of eligibility.--A 
                        State shall, with respect to an individual who 
                        loses eligibility for medical assistance under 
                        the State plan (or a waiver of such plan) by 
                        reason of clause (i), before the date on which 
                        the individual loses such eligibility, inform 
                        the individual of the date on which the 
                        individual would no longer be considered 
                        ineligible by reason of such clause to receive 
                        medical assistance under the State plan or 
                        under any waiver of such plan and the date on 
                        which the individual would be eligible to 
                        reapply to receive such medical assistance.
                            ``(v) Qualified lottery winnings defined.--
                        In this subparagraph, the term `qualified 
                        lottery winnings' means winnings from a 
                        sweepstakes, lottery, or pool described in 
                        paragraph (3) of section 4402 of the Internal 
                        Revenue Code of 1986 or a lottery operated by a 
                        multistate or multijurisdictional lottery 
                        association, including amounts awarded as a 
                        lump sum payment.
                            ``(vi) Qualified lump sum income defined.--
                        In this subparagraph, the term `qualified lump 
                        sum income' means income that is received as a 
                        lump sum from one of the following sources:
                                    ``(I) Monetary winnings from 
                                gambling (as defined by the Secretary 
                                and including monetary winnings from 
                                gambling activities described in 
                                section 1955(b)(4) of title 18, United 
                                States Code).
                                    ``(II) Income received as liquid 
                                assets from the estate (as defined in 
                                section 1917(b)(4)) of a deceased 
                                individual.''; and
                            (ii) by striking ``(14) Exclusion'' and 
                        inserting ``(15) Exclusion''.
            (2) Rules of construction.--
                    (A) Interception of lottery winnings allowed.--
                Nothing in the amendment made by paragraph (1)(B)(i) 
                shall be construed as preventing a State from 
                intercepting the State lottery winnings awarded to an 
                individual in the State to recover amounts paid by the 
                State under the State Medicaid plan under title XIX of 
                the Social Security Act for medical assistance 
                furnished to the individual.
                    (B) Applicability limited to eligibility of 
                recipient of lottery winnings or lump sum income.--
                Nothing in the amendment made by paragraph (1)(B)(i) 
                shall be construed, with respect to a determination of 
                household income for purposes of a determination of 
                eligibility for medical assistance under the State plan 
                under title XIX of the Social Security Act (42 U.S.C. 
                1396 et seq.) (or a waiver of such plan) made by 
                applying modified adjusted gross income under 
                subparagraph (A) of section 1902(e)(14) of such Act (42 
                U.S.C. 1396a(e)(14)), as limiting the eligibility for 
                such medical assistance of any individual that is a 
                member of the household other than the individual (or 
                the individual's spouse) who received qualified lottery 
                winnings or qualified lump-sum income (as defined in 
                subparagraph (J) of such section 1902(e)(14), as added 
                by paragraph (1)(B)(i) of this subsection).
    (b) Repeal of Retroactive Eligibility.--
            (1) In general.--
                    (A) State plan requirements.--Section 1902(a)(34) 
                of the Social Security Act (42 U.S.C. 1396a(a)(34)) is 
                amended by striking ``in or after the third month 
                before the month in which he made application'' and 
                inserting ``in or after the month in which the 
                individual made application''.
                    (B) Definition of medical assistance.--Section 
                1905(a) of the Social Security Act (42 U.S.C. 1396d(a)) 
                is amended by striking ``in or after the third month 
                before the month in which the recipient makes 
                application for assistance'' and inserting ``in or 
                after the month in which the recipient makes 
                application for assistance''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to medical assistance with respect to individuals 
        whose eligibility for such assistance is based on an 
        application for such assistance made (or deemed to be made) on 
        or after October 1, 2017.
    (c) Updating Allowable Home Equity Limits in Medicaid.--
            (1) In general.--Section 1917(f)(1) of the Social Security 
        Act (42 U.S.C. 1396p(f)(1)) is amended--
                    (A) in subparagraph (A), by striking 
                ``subparagraphs (B) and (C)'' and inserting 
                ``subparagraph (B)'';
                    (B) by striking subparagraph (B);
                    (C) by redesignating subparagraph (C) as 
                subparagraph (B); and
                    (D) in subparagraph (B), as so redesignated, by 
                striking ``dollar amounts specified in this paragraph'' 
                and inserting ``dollar amount specified in subparagraph 
                (A)''.
            (2) Effective date.--
                    (A) In general.--The amendments made by paragraph 
                (1) shall apply with respect to eligibility 
                determinations made after the date that is 180 days 
                after the date of the enactment of this section.
                    (B) Exception for state legislation.--In the case 
                of a State plan under title XIX of the Social Security 
                Act that the Secretary of Health and Human Services 
                determines requires State legislation in order for the 
                respective plan to meet any requirement imposed by 
                amendments made by this subsection, the respective plan 
                shall not be regarded as failing to comply with the 
                requirements of such title solely on the basis of its 
                failure to meet such an additional requirement before 
                the first day of the first calendar quarter beginning 
                after the close of the first regular session of the 
                State legislature that begins after the date of the 
                enactment of this Act. For purposes of the previous 
                sentence, in the case of a State that has a 2-year 
                legislative session, each year of the session shall be 
                considered to be a separate regular session of the 
                State legislature.

SEC. 115. SAFETY NET FUNDING FOR NON-EXPANSION STATES.

    Title XIX of the Social Security Act is amended by inserting after 
section 1923 (42 U.S.C. 1396r-4) the following new section:

  ``adjustment in payment for services of safety net providers in non-
                            expansion states

    ``Sec. 1923A.  (a) In General.--Subject to the limitations of this 
section, for each year during the period beginning with fiscal year 
2018 and ending with fiscal year 2022, each State that is one of the 50 
States or the District of Columbia and that, as of July 1 of the 
preceding fiscal year, did not provide for eligibility under clause 
(i)(VIII) or (ii)(XX) of section 1902(a)(10)(A) for medical assistance 
under this title (or a waiver of the State plan approved under section 
1115) (each such State or District referred to in this section for the 
fiscal year as a `non-expansion State') may adjust the payment amounts 
otherwise provided under the State plan under this title (or a waiver 
of such plan) to health care providers that provide health care 
services to individuals enrolled under this title (in this section 
referred to as `eligible providers') so long as the payment adjustment 
to such an eligible provider does not exceed the provider's costs in 
furnishing health care services (as determined by the Secretary and net 
of payments under this title, other than under this section, and by 
uninsured patients) to individuals who either are eligible for medical 
assistance under the State plan (or under a waiver of such plan) or 
have no health insurance or health plan coverage for such services.
    ``(b) Increase in Applicable FMAP.--Notwithstanding section 
1905(b), the Federal medical assistance percentage applicable with 
respect to expenditures attributable to a payment adjustment under 
subsection (a) for which payment is permitted under subsection (c) 
shall be equal to--
            ``(1) 100 percent for calendar quarters in fiscal years 
        2018, 2019, 2020, and 2021; and
            ``(2) 95 percent for calendar quarters in fiscal year 2022.
    ``(c) Annual Allotment Limitation.--Payment under section 1903(a) 
shall not be made to a State with respect to any payment adjustment 
made under this section for all calendar quarters in a fiscal year in 
excess of the $2,000,000,000 multiplied by the ratio of--
            ``(1) the population of the State with income below 138 
        percent of the poverty line in 2015 (as determined based the 
        table entitled `Health Insurance Coverage Status and Type by 
        Ratio of Income to Poverty Level in the Past 12 Months by Age' 
        for the universe of the civilian noninstitutionalized 
        population for whom poverty status is determined based on the 
        2015 American Community Survey 1-Year Estimates, as published 
        by the Bureau of the Census), to
            ``(2) the sum of the populations under paragraph (1) for 
        all non-expansion States.
    ``(d) Disqualification in Case of State Coverage Expansion.--If a 
State is a non-expansion for a fiscal year and provides eligibility for 
medical assistance described in subsection (a) during the fiscal year, 
the State shall no longer be treated as a non-expansion State under 
this section for any subsequent fiscal years.''.

SEC. 116. PROVIDING INCENTIVES FOR INCREASED FREQUENCY OF ELIGIBILITY 
              REDETERMINATIONS.

    (a) In General.--Section 1902(e)(14) of the Social Security Act (42 
U.S.C. 1396a(e)(14)) (relating to modified adjusted gross income), as 
amended by section 114(a)(1), is further amended by adding at the end 
the following:
                    ``(K) Frequency of eligibility redeterminations.--
                Beginning on October 1, 2017, and notwithstanding 
                subparagraph (H), in the case of an individual whose 
                eligibility for medical assistance under the State plan 
                under this title (or a waiver of such plan) is 
                determined based on the application of modified 
                adjusted gross income under subparagraph (A) and who is 
                so eligible on the basis of clause (i)(VIII) or clause 
                (ii)(XX) of subsection (a)(10)(A), a State shall 
                redetermine such individual's eligibility for such 
                medical assistance no less frequently than once every 6 
                months.''.
    (b) Increased Administrative Matching Percentage.--For each 
calendar quarter during the period beginning on October 1, 2017, and 
ending on December 31, 2019, the Federal matching percentage otherwise 
applicable under section 1903(a) of the Social Security Act (42 U.S.C. 
1396b(a)) with respect to State expenditures during such quarter that 
are attributable to meeting the requirement of section 1902(e)(14) 
(relating to determinations of eligibility using modified adjusted 
gross income) of such Act shall be increased by 5 percentage points 
with respect to State expenditures attributable to activities carried 
out by the State (and approved by the Secretary) to increase the 
frequency of eligibility redeterminations required by subparagraph (K) 
of such section (relating to eligibility redeterminations made on a 6-
month basis) (as added by subsection (a)).

SEC. 117. PERMITTING STATES TO APPLY A WORK REQUIREMENT FOR 
              NONDISABLED, NONELDERLY, NONPREGNANT ADULTS UNDER 
              MEDICAID.

    (a) In General.--Section 1902 of the Social Security Act (42 U.S.C. 
1396a), as previously amended, is further amended by adding at the end 
the following new subsection:
    ``(oo) Work Requirement Option for Nondisabled, Nonelderly, 
Nonpregnant Adults.--
            ``(1) In general.--Beginning October 1, 2017, subject to 
        paragraph (3), a State may elect to condition medical 
        assistance to a nondisabled, nonelderly, nonpregnant individual 
        under this title upon such an individual's satisfaction of a 
        work requirement (as defined in paragraph (2)).
            ``(2) Work requirement defined.--In this section, the term 
        `work requirement' means, with respect to an individual, the 
        individual's participation in work activities (as defined in 
        section 407(d)) for such period of time as determined by the 
        State, and as directed and administered by the State.
            ``(3) Required exceptions.--States administering a work 
        requirement under this subsection may not apply such 
        requirement to--
                    ``(A) a woman during pregnancy through the end of 
                the month in which the 60-day period (beginning on the 
                last day of her pregnancy) ends;
                    ``(B) an individual who is under 19 years of age;
                    ``(C) an individual who is the only parent or 
                caretaker relative in the family of a child who has not 
                attained 6 years of age or who is the only parent or 
                caretaker of a child with disabilities; or
                    ``(D) an individual who is married or a head of 
                household and has not attained 20 years of age and 
                who--
                            ``(i) maintains satisfactory attendance at 
                        secondary school or the equivalent; or
                            ``(ii) participates in education directly 
                        related to employment.''.
    (b) Increase in Matching Rate for Implementation.--Section 1903 of 
the Social Security Act (42 U.S.C. 1396b) is amended by adding at the 
end the following:
    ``(aa) The Federal matching percentage otherwise applicable under 
subsection (a) with respect to State administrative expenditures during 
a calendar quarter for which the State receives payment under such 
subsection shall, in addition to any other increase to such Federal 
matching percentage, be increased for such calendar quarter by 5 
percentage points with respect to State expenditures attributable to 
activities carried out by the State (and approved by the Secretary) to 
implement subsection (oo) of section 1902.''.

        Subtitle C--Per Capita Allotment for Medical Assistance

SEC. 121. PER CAPITA ALLOTMENT FOR MEDICAL ASSISTANCE.

    Title XIX of the Social Security Act is amended--
            (1) in section 1903 (42 U.S.C. 1396b)--
                    (A) in subsection (a), in the matter before 
                paragraph (1), by inserting ``and section 1903A(a)'' 
                after ``except as otherwise provided in this section''; 
                and
                    (B) in subsection (d)(1), by striking ``to which'' 
                and inserting ``to which, subject to section 
                1903A(a),''; and
            (2) by inserting after such section 1903 the following new 
        section:

``SEC. 1903A. PER CAPITA-BASED CAP ON PAYMENTS FOR MEDICAL ASSISTANCE.

    ``(a) Application of Per Capita Cap on Payments for Medical 
Assistance Expenditures.--
            ``(1) In general.--If a State has excess aggregate medical 
        assistance expenditures (as defined in paragraph (2)) for a 
        fiscal year (beginning with fiscal year 2020), the amount of 
        payment to the State under section 1903(a)(1) for each quarter 
        in the following fiscal year shall be reduced by \1/4\ of the 
        excess aggregate medical assistance payments (as defined in 
        paragraph (3)) for that previous fiscal year. In this section, 
        the term `State' means only the 50 States and the District of 
        Columbia.
            ``(2) Excess aggregate medical assistance expenditures.--In 
        this subsection, the term `excess aggregate medical assistance 
        expenditures' means, for a State for a fiscal year, the amount 
        (if any) by which--
                    ``(A) the amount of the adjusted total medical 
                assistance expenditures (as defined in subsection 
                (b)(1)) for the State and fiscal year; exceeds
                    ``(B) the amount of the target total medical 
                assistance expenditures (as defined in subsection (c)) 
                for the State and fiscal year.
            ``(3) Excess aggregate medical assistance payments.--In 
        this subsection, the term `excess aggregate medical assistance 
        payments' means, for a State for a fiscal year, the product 
        of--
                    ``(A) the excess aggregate medical assistance 
                expenditures (as defined in paragraph (2)) for the 
                State for the fiscal year; and
                    ``(B) the Federal average medical assistance 
                matching percentage (as defined in paragraph (4)) for 
                the State for the fiscal year.
            ``(4) Federal average medical assistance matching 
        percentage.--In this subsection, the term `Federal average 
        medical assistance matching percentage' means, for a State for 
        a fiscal year, the ratio (expressed as a percentage) of--
                    ``(A) the amount of the Federal payments that would 
                be made to the State under section 1903(a)(1) for 
                medical assistance expenditures for calendar quarters 
                in the fiscal year if paragraph (1) did not apply; to
                    ``(B) the amount of the medical assistance 
                expenditures for the State and fiscal year.
    ``(b) Adjusted Total Medical Assistance Expenditures.--Subject to 
subsection (g), the following shall apply:
            ``(1) In general.--In this section, the term `adjusted 
        total medical assistance expenditures' means, for a State--
                    ``(A) for fiscal year 2016, the product of--
                            ``(i) the amount of the medical assistance 
                        expenditures (as defined in paragraph (2)) for 
                        the State and fiscal year, reduced by the 
                        amount of any excluded expenditures (as defined 
                        in paragraph (3)) for the State and fiscal year 
                        otherwise included in such medical assistance 
                        expenditures; and
                            ``(ii) the 1903A FY16 population percentage 
                        (as defined in paragraph (4)) for the State; or
                    ``(B) for fiscal year 2019 or a subsequent fiscal 
                year, the amount of the medical assistance expenditures 
                (as defined in paragraph (2)) for the State and fiscal 
                year that is attributable to 1903A enrollees, reduced 
                by the amount of any excluded expenditures (as defined 
                in paragraph (3)) for the State and fiscal year 
                otherwise included in such medical assistance 
                expenditures and includes non-DSH supplemental payments 
                (as defined in subsection (d)(4)(A)(ii)) and payments 
                described in subsection (d)(4)(A)(iii) but shall not be 
                construed as including any expenditures attributable to 
                the program under section 1928. In applying 
                subparagraph (B), non-DSH supplemental payments (as 
                defined in subsection (d)(4)(A)(ii)) and payments 
                described in subsection (d)(4)(A)(iii) shall be treated 
                as fully attributable to 1903A enrollees.
            ``(2) Medical assistance expenditures.--In this section, 
        the term `medical assistance expenditures' means, for a State 
        and fiscal year, the medical assistance payments as reported by 
        medical service category on the Form CMS-64 quarterly expense 
        report (or successor to such a report form, and including 
        enrollment data and subsequent adjustments to any such report, 
        in this section referred to collectively as a `CMS-64 report') 
        for which payment is (or may otherwise be) made pursuant to 
        section 1903(a)(1).
            ``(3) Excluded expenditures.--In this section, the term 
        `excluded expenditures' means, for a State and fiscal year, 
        expenditures under the State plan (or under a waiver of such 
        plan) that are attributable to any of the following:
                    ``(A) DSH.--Payment adjustments made for 
                disproportionate share hospitals under section 1923.
                    ``(B) Medicare cost-sharing.--Payments made for 
                medicare cost-sharing (as defined in section 
                1905(p)(3)).
                    ``(C) Safety net provider payment adjustments in 
                non-expansion states.--Payment adjustments under 
                subsection (a) of section 1923A for which payment is 
                permitted under subsection (c) of such section.
            ``(4) 1903A fy 16 population percentage.--In this 
        subsection, the term `1903A FY16 population percentage' means, 
        for a State, the Secretary's calculation of the percentage of 
        the actual medical assistance expenditures, as reported by the 
        State on the CMS-64 reports for calendar quarters in fiscal 
        year 2016, that are attributable to 1903A enrollees (as defined 
        in subsection (e)(1)).
    ``(c)  Target Total Medical Assistance Expenditures.--
            ``(1) Calculation.--In this section, the term `target total 
        medical assistance expenditures' means, for a State for a 
        fiscal year and subject to paragraph (4), the sum of the 
        products, for each of the 1903A enrollee categories (as defined 
        in subsection (e)(2)), of--
                    ``(A) the target per capita medical assistance 
                expenditures (as defined in paragraph (2)) for the 
                enrollee category, State, and fiscal year; and
                    ``(B) the number of 1903A enrollees for such 
                enrollee category, State, and fiscal year, as 
                determined under subsection (e)(4).
            ``(2) Target per capita medical assistance expenditures.--
        In this subsection, the term `target per capita medical 
        assistance expenditures' means, for a 1903A enrollee category 
        and State--
                    ``(A) for fiscal year 2020, an amount equal to--
                            ``(i) the provisional FY19 target per 
                        capita amount for such enrollee category (as 
                        calculated under subsection (d)(5)) for the 
                        State; increased by
                            ``(ii) the applicable annual inflation 
                        factor (as defined in paragraph (3)) for fiscal 
                        year 2020; and
                    ``(B) for each succeeding fiscal year, an amount 
                equal to--
                            ``(i) the target per capita medical 
                        assistance expenditures (under subparagraph (A) 
                        or this subparagraph) for the 1903A enrollee 
                        category and State for the preceding fiscal 
                        year, increased by
                            ``(ii) the applicable annual inflation 
                        factor for that succeeding fiscal year.
            ``(3) Applicable annual inflation factor.--In paragraph 
        (2), the term `applicable annual inflation factor' means, for a 
        fiscal year--
                    ``(A) for each of the 1903A enrollee categories 
                described in subparagraphs (C), (D), and (E) of 
                subsection (e)(2), the percentage increase in the 
                medical care component of the consumer price index for 
                all urban consumers (U.S. city average) from September 
                of the previous fiscal year to September of the fiscal 
                year involved; and
                    ``(B) for each of the 1903A enrollee categories 
                described in subparagraphs (A) and (B) of subsection 
                (e)(2), the percentage increase described in 
                subparagraph (A) plus 1 percentage point.
            ``(4) Decrease in target expenditures for required 
        expenditures by certain political subdivisions.--
                    ``(A) In general.--In the case of a State that had 
                a DSH allotment under section 1923(f) for fiscal year 
                2016 that was more than 6 times the national average of 
                such allotments for all the States for such fiscal year 
                and that requires political subdivisions within the 
                State to contribute funds towards medical assistance or 
                other expenditures under the State plan under this 
                title (or under a waiver of such plan) for a fiscal 
                year (beginning with fiscal year 2020), the target 
                total medical assistance expenditures for such State 
                and fiscal year shall be decreased by the amount that 
                political subdivisions in the State are required to 
                contribute under the plan (or waiver) without 
                reimbursement from the State for such fiscal year, 
                other than contributions described in subparagraph (B).
                    ``(B) Exceptions.--The contributions described in 
                this subparagraph are the following:
                            ``(i) Contributions required by a State 
                        from a political subdivision that, as of the 
                        first day of the calendar year in which the 
                        fiscal year involved begins--
                                    ``(I) has a population of more than 
                                5,000,000, as estimated by the Bureau 
                                of the Census; and
                                    ``(II) imposes a local income tax 
                                upon its residents.
                            ``(ii) Contributions required by a State 
                        from a political subdivision for administrative 
                        expenses if the State required such 
                        contributions from such subdivision without 
                        reimbursement from the State as of January 1, 
                        2017.
    ``(d) Calculation of FY19 Provisional Target Amount for Each 1903A 
Enrollee Category.--Subject to subsection (g), the following shall 
apply:
            ``(1) Calculation of base amounts for fiscal year 2016.--
        For each State the Secretary shall calculate (and provide 
        notice to the State not later than April 1, 2018, of) the 
        following:
                    ``(A) The amount of the adjusted total medical 
                assistance expenditures (as defined in subsection 
                (b)(1)) for the State for fiscal year 2016.
                    ``(B) The number of 1903A enrollees for the State 
                in fiscal year 2016 (as determined under subsection 
                (e)(4)).
                    ``(C) The average per capita medical assistance 
                expenditures for the State for fiscal year 2016 equal 
                to--
                            ``(i) the amount calculated under 
                        subparagraph (A); divided by
                            ``(ii) the number calculated under 
                        subparagraph (B).
            ``(2) Fiscal year 2019 average per capita amount based on 
        inflating the fiscal year 2016 amount to fiscal year 2019 by 
        cpi-medical.--The Secretary shall calculate a fiscal year 2019 
        average per capita amount for each State equal to--
                    ``(A) the average per capita medical assistance 
                expenditures for the State for fiscal year 2016 
                (calculated under paragraph (1)(C)); increased by
                    ``(B) the percentage increase in the medical care 
                component of the consumer price index for all urban 
                consumers (U.S. city average) from September, 2016 to 
                September, 2019.
            ``(3) Aggregate and average expenditures per capita for 
        fiscal year 2019.--The Secretary shall calculate for each State 
        the following:
                    ``(A) The amount of the adjusted total medical 
                assistance expenditures (as defined in subsection 
                (b)(1)) for the State for fiscal year 2019. 
                    ``(B) The number of 1903A enrollees for the State 
                in fiscal year 2019 (as determined under subsection 
                (e)(4)).
            ``(4) Per capita expenditures for fiscal year 2019 for each 
        1903a enrollee category.--The Secretary shall calculate (and 
        provide notice to each State not later than January 1, 2020, 
        of) the following:
                    ``(A)(i) For each 1903A enrollee category, the 
                amount of the adjusted total medical assistance 
                expenditures (as defined in subsection (b)(1)) for the 
                State for fiscal year 2019 for individuals in the 
                enrollee category, calculated by excluding from medical 
                assistance expenditures those expenditures attributable 
                to expenditures described in clause (iii) or non-DSH 
                supplemental expenditures (as defined in clause (ii)).
                    ``(ii) In this paragraph, the term `non-DSH 
                supplemental expenditure' means a payment to a provider 
                under the State plan (or under a waiver of the plan) 
                that--
                            ``(I) is not made under section 1923;
                            ``(II) is not made with respect to a 
                        specific item or service for an individual;
                            ``(III) is in addition to any payments made 
                        to the provider under the plan (or waiver) for 
                        any such item or service; and
                            ``(IV) complies with the limits for 
                        additional payments to providers under the plan 
                        (or waiver) imposed pursuant to section 
                        1902(a)(30)(A), including the regulations 
                        specifying upper payment limits under the State 
                        plan in part 447 of title 42, Code of Federal 
                        Regulations (or any successor regulations).
                    ``(iii) An expenditure described in this clause is 
                an expenditure that meets the criteria specified in 
                subclauses (I), (II), and (III) of clause (ii) and is 
                authorized under section 1115 for the purposes of 
                funding a delivery system reform pool, uncompensated 
                care pool, a designated state health program, or any 
                other similar expenditure (as defined by the 
                Secretary).
                    ``(B) For each 1903A enrollee category, the number 
                of 1903A enrollees for the State in fiscal year 2019 in 
                the enrollee category (as determined under subsection 
                (e)(4)).
                    ``(C) For fiscal year 2016, the State's non-DSH 
                supplemental and pool payment percentage is equal to 
                the ratio (expressed as a percentage) of--
                            ``(i) the total amount of non-DSH 
                        supplemental expenditures (as defined in 
                        subparagraph (A)(ii)) and payments described in 
                        subparagraph (A)(iii) for the State for fiscal 
                        year 2016; to
                            ``(ii) the amount described in subsection 
                        (b)(1)(A) for the State for fiscal year 2016.
                    ``(D) For each 1903A enrollee category an average 
                medical assistance expenditures per capita for the 
                State for fiscal year 2019 for the enrollee category 
                equal to--
                            ``(i) the amount calculated under 
                        subparagraph (A) for the State, increased by 
                        the non-DSH supplemental and pool payment 
                        percentage for the State (as calculated under 
                        subparagraph (C)); divided by
                            ``(ii) the number calculated under 
                        subparagraph (B) for the State for the enrollee 
                        category.
            ``(5) Provisional fy19 per capita target amount for each 
        1903a enrollee category.--Subject to subsection (f)(2), the 
        Secretary shall calculate for each State a provisional FY19 per 
        capita target amount for each 1903A enrollee category equal to 
        the average medical assistance expenditures per capita for the 
        State for fiscal year 2019 (as calculated under paragraph 
        (4)(D)) for such enrollee category multiplied by the ratio of--
                    ``(A) the product of--
                            ``(i) the fiscal year 2019 average per 
                        capita amount for the State, as calculated 
                        under paragraph (2); and
                            ``(ii) the number of 1903A enrollees for 
                        the State in fiscal year 2019, as calculated 
                        under paragraph (3)(B); to
                    ``(B) the amount of the adjusted total medical 
                assistance expenditures for the State for fiscal year 
                2019, as calculated under paragraph (3)(A).
    ``(e) 1903A Enrollee; 1903A Enrollee Category.--Subject to 
subsection (g), for purposes of this section, the following shall 
apply:
            ``(1) 1903A enrollee.--The term `1903A enrollee' means, 
        with respect to a State and a month and subject to subsection 
        (i)(1)(B), any Medicaid enrollee (as defined in paragraph (3)) 
        for the month, other than such an enrollee who for such month 
        is in any of the following categories of excluded individuals:
                    ``(A) CHIP.--An individual who is provided, under 
                this title in the manner described in section 
                2101(a)(2), child health assistance under title XXI.
                    ``(B) IHS.--An individual who receives any medical 
                assistance under this title for services for which 
                payment is made under the third sentence of section 
                1905(b).
                    ``(C) Breast and cervical cancer services eligible 
                individual.--An individual who is entitled to medical 
                assistance under this title only pursuant to section 
                1902(a)(10)(A)(ii)(XVIII).
                    ``(D) Partial-benefit enrollees.--An individual 
                who--
                            ``(i) is an alien who is entitled to 
                        medical assistance under this title only 
                        pursuant to section 1903(v)(2);
                            ``(ii) is entitled to medical assistance 
                        under this title only pursuant to subclause 
                        (XII) or (XXI) of section 1902(a)(10)(A)(ii) 
                        (or pursuant to a waiver that provides only 
                        comparable benefits);
                            ``(iii) is a dual eligible individual (as 
                        defined in section 1915(h)(2)(B)) and is 
                        entitled to medical assistance under this title 
                        (or under a waiver) only for some or all of 
                        medicare cost-sharing (as defined in section 
                        1905(p)(3)); or
                            ``(iv) is entitled to medical assistance 
                        under this title and for whom the State is 
                        providing a payment or subsidy to an employer 
                        for coverage of the individual under a group 
                        health plan pursuant to section 1906 or section 
                        1906A (or pursuant to a waiver that provides 
                        only comparable benefits).
            ``(2) 1903A enrollee category.--The term `1903A enrollee 
        category' means each of the following:
                    ``(A) Elderly.--A category of 1903A enrollees who 
                are 65 years of age or older.
                    ``(B) Blind and disabled.--A category of 1903A 
                enrollees (not described in the previous subparagraph) 
                who are eligible for medical assistance under this 
                title on the basis of being blind or disabled.
                    ``(C) Children.--A category of 1903A enrollees (not 
                described in a previous subparagraph) who are children 
                under 19 years of age.
                    ``(D) Expansion enrollees.--A category of 1903A 
                enrollees (not described in a previous subparagraph) 
                for whom the amounts expended for medical assistance 
                are subject to an increase or change in the Federal 
                medical assistance percentage under subsection (y) or 
                (z)(2), respectively, of section 1905.
                    ``(E) Other nonelderly, nondisabled, non-expansion 
                adults.--A category of 1903A enrollees who are not 
                described in any previous subparagraph.
            ``(3) Medicaid enrollee.--The term `Medicaid enrollee' 
        means, with respect to a State for a month, an individual who 
        is eligible for medical assistance for items or services under 
        this title and enrolled under the State plan (or a waiver of 
        such plan) under this title for the month.
            ``(4) Determination of number of 1903a enrollees.--The 
        number of 1903A enrollees for a State and fiscal year, and, if 
        applicable, for a 1903A enrollee category, is the average 
        monthly number of Medicaid enrollees for such State and fiscal 
        year (and, if applicable, in such category) that are reported 
        through the CMS-64 report under (and subject to audit under) 
        subsection (h).
    ``(f) Special Payment Rules.--
            ``(1) Application in case of research and demonstration 
        projects and other waivers.--In the case of a State with a 
        waiver of the State plan approved under section 1115, section 
        1915, or another provision of this title, this section shall 
        apply to medical assistance expenditures and medical assistance 
        payments under the waiver, in the same manner as if such 
        expenditures and payments had been made under a State plan 
        under this title and the limitations on expenditures under this 
        section shall supersede any other payment limitations or 
        provisions (including limitations based on a per capita 
        limitation) otherwise applicable under such a waiver.
            ``(2) Treatment of states expanding coverage after fiscal 
        year 2016.--In the case of a State that did not provide for 
        medical assistance for the 1903A enrollee category described in 
        subsection (e)(2)(D) during fiscal year 2016 but which provides 
        for such assistance for such category in a subsequent year, the 
        provisional FY19 per capita target amount for such enrollee 
        category under subsection (d)(5) shall be equal to the 
        provisional FY19 per capita target amount for the 1903A 
        enrollee category described in subsection (e)(2)(E).
            ``(3) In case of state failure to report necessary data.--
        If a State for any quarter in a fiscal year (beginning with 
        fiscal year 2019) fails to satisfactorily submit data on 
        expenditures and enrollees in accordance with subsection 
        (h)(1), for such fiscal year and any succeeding fiscal year for 
        which such data are not satisfactorily submitted--
                    ``(A) the Secretary shall calculate and apply 
                subsections (a) through (e) with respect to the State 
                as if all 1903A enrollee categories for which such 
                expenditure and enrollee data were not satisfactorily 
                submitted were a single 1903A enrollee category; and
                    ``(B) the growth factor otherwise applied under 
                subsection (c)(2)(B) shall be decreased by 1 percentage 
                point.
    ``(g) Recalculation of Certain Amounts for Data Errors.--The 
amounts and percentage calculated under paragraphs (1) and (4)(C) of 
subsection (d) for a State for fiscal year 2016, and the amounts of the 
adjusted total medical assistance expenditures calculated under 
subsection (b) and the number of Medicaid enrollees and 1903A enrollees 
determined under subsection (e)(4) for a State for fiscal year 2016, 
fiscal year 2019, and any subsequent fiscal year, may be adjusted by 
the Secretary based upon an appeal (filed by the State in such a form, 
manner, and time, and containing such information relating to data 
errors that support such appeal, as the Secretary specifies) that the 
Secretary determines to be valid, except that any adjustment by the 
Secretary under this subsection for a State may not result in an 
increase of the target total medical assistance expenditures exceeding 
2 percent.
    ``(h) Required Reporting and Auditing of CMS-64 Data; Transitional 
Increase in Federal Matching Percentage for Certain Administrative 
Expenses.--
            ``(1) Reporting.--In addition to the data required on form 
        Group VIII on the CMS-64 report form as of January 1, 2017, in 
        each CMS-64 report required to be submitted (for each quarter 
        beginning on or after October 1, 2018), the State shall include 
        data on medical assistance expenditures within such categories 
        of services and categories of enrollees (including each 1903A 
        enrollee category and each category of excluded individuals 
        under subsection (e)(1)) and the numbers of enrollees within 
        each of such enrollee categories, as the Secretary determines 
        are necessary (including timely guidance published as soon as 
        possible after the date of the enactment of this section) in 
        order to implement this section and to enable States to comply 
        with the requirement of this paragraph on a timely basis.
            ``(2) Auditing.--The Secretary shall conduct for each State 
        an audit of the number of individuals and expenditures reported 
        through the CMS-64 report for fiscal year 2016, fiscal year 
        2019, and each subsequent fiscal year, which audit may be 
        conducted on a representative sample (as determined by the 
        Secretary).
            ``(3) Temporary increase in federal matching percentage to 
        support improved data reporting systems for fiscal years 2018 
        and 2019.--For amounts expended during calendar quarters 
        beginning on or after October 1, 2017, and before October 1, 
        2019--
                    ``(A) the Federal matching percentage applied under 
                section 1903(a)(3)(A)(i) shall be increased by 10 
                percentage points to 100 percent;
                    ``(B) the Federal matching percentage applied under 
                section 1903(a)(3)(B) shall be increased by 25 
                percentage points to 100 percent; and
                    ``(C) the Federal matching percentage applied under 
                section 1903(a)(7) shall be increased by 10 percentage 
                points to 60 percent but only with respect to amounts 
                expended that are attributable to a State's additional 
                administrative expenditures to implement the data 
                requirements of paragraph (1).
    ``(i) Flexible Block Grant Option for States.--
            ``(1) In general.--In the case of a State that elects the 
        option of applying this subsection for a 10-fiscal-year period 
        (beginning no earlier than fiscal year 2020 and, at the State 
        option, for any succeeding 10-fiscal-year period) and that has 
        a plan approved by the Secretary under paragraph (2) to carry 
        out the option for such period--
                    ``(A) the State shall receive, instead of amounts 
                otherwise payable to the State under this title for 
                medical assistance for block grant individuals within 
                the applicable block grant category (as defined in 
                paragraph (6)) for the State during the period in which 
                the election is in effect, the amount specified in 
                paragraph (4);
                    ``(B) the previous provisions of this section shall 
                be applied as if--
                            ``(i) block grant individuals within the 
                        applicable block grant category for the State 
                        and period were not section 1903A enrollees for 
                        each 10-fiscal year period for which the State 
                        elects to apply this subsection; and
                            ``(ii) if such option is not extended at 
                        the end of a 10-fiscal-year-period, the per 
                        capita limitations under such previous 
                        provisions shall again apply after such period 
                        and such limitations shall be applied as if the 
                        election under this subsection had never taken 
                        place;
                    ``(C) the payment under this subsection may only be 
                used consistent with the State plan under paragraph (2) 
                for block grant health care assistance (as defined in 
                paragraph (7)); and
                    ``(D) with respect to block grant individuals 
                within the applicable block grant category for the 
                State for which block grant health care assistance is 
                made available under this subsection, such assistance 
                shall be instead of medical assistance otherwise 
                provided to the individual under this title.
            ``(2) State plan for administering block grant option.--
                    ``(A) In general.--No payment shall be made under 
                this subsection to a State pursuant to an election for 
                a 10-fiscal-year period under paragraph (1) unless the 
                State has a plan, approved under subparagraph (B), for 
                such period that specifies--
                            ``(i) the applicable block grant category 
                        with respect to which the State will apply the 
                        option under this subsection for such period;
                            ``(ii) the conditions for eligibility of 
                        block grant individuals within such applicable 
                        block grant category for block grant health 
                        care assistance under the option, which shall 
                        be instead of other conditions for eligibility 
                        under this title, except that in the case of a 
                        State that has elected the applicable block 
                        grant category described in--
                                    ``(I) subparagraph (A) of paragraph 
                                (6), the plan must provide for 
                                eligibility for pregnant women and 
                                children required to be provided 
                                medical assistance under subsections 
                                (a)(10)(A)(i) and (e)(4) of section 
                                1902; or
                                    ``(II) subparagraph (B) of 
                                paragraph (6), the plan must provide 
                                for eligibility for pregnant women 
                                required to be provided medical 
                                assistance under subsection 
                                (a)(10)(A)(i); and
                            ``(iii) the types of items and services, 
                        the amount, duration, and scope of such 
                        services, the cost-sharing with respect to such 
                        services, and the method for delivery of block 
                        grant health care assistance under this 
                        subsection, which shall be instead of the such 
                        types, amount, duration, and scope, cost-
                        sharing, and methods of delivery for medical 
                        assistance otherwise required under this title, 
                        except that the plan must provide for 
                        assistance for--
                                    ``(I) hospital care;
                                    ``(II) surgical care and treatment;
                                    ``(III) medical care and treatment;
                                    ``(IV) obstetrical and prenatal 
                                care and treatment;
                                    ``(V) prescribed drugs, medicines, 
                                and prosthetic devices;
                                    ``(VI) other medical supplies and 
                                services; and
                                    ``(VII) health care for children 
                                under 18 years of age.
                    ``(B) Review and approval.--A plan described in 
                subparagraph (A) shall be deemed approved by the 
                Secretary unless the Secretary determines, within 30 
                days after the date of the Secretary's receipt of the 
                plan, that the plan is incomplete or actuarially 
                unsound and, with respect to such plan and its 
                implementation under this subsection, the requirements 
                of paragraphs (1), (10)(B), (17), and (23) of section 
                1902(a) shall not apply.
            ``(3) Amount of block grant funds.--
                    ``(A) For initial fiscal year.--The block grant 
                amount under this paragraph for a State for the initial 
                fiscal year in the first 10-fiscal-year period is equal 
                to the sum of the products (for each applicable block 
                grant category for such State and period) of--
                            ``(i) the target per capita medical 
                        assistance expenditures for such State for such 
                        fiscal year (under subsection (c)(2));
                            ``(ii) the number of 1903A enrollees for 
                        such category and State for fiscal year 2019, 
                        as determined under subsection (e)(4); and
                            ``(iii) the Federal average medical 
                        assistance matching percentage (as defined in 
                        subsection (a)(4)) for the State for fiscal 
                        year 2019.
                    ``(B) For any subsequent fiscal year.--The block 
                grant amount under this paragraph for a State for each 
                succeeding fiscal year (in any 10-fiscal-year period) 
                is equal to the block grant amount under subparagraph 
                (A) (or this subparagraph) for the State for the 
                previous fiscal year increased by the annual increase 
                in the consumer price index for all urban consumers 
                (all items; U.S. city average) for the fiscal year 
                involved.
                    ``(C) Availability of rollover funds.--The block 
                grant amount under this paragraph for a State for a 
                fiscal year shall remain available to the State for 
                expenditures under this subsection for the succeeding 
                fiscal year but only if an election is in effect under 
                this subsection for the State in such succeeding fiscal 
                year.
            ``(4) Federal payment and state responsibility.--The 
        Secretary shall pay to each State with an election in effect 
        under this subsection for a fiscal year, from its block grant 
        amount under paragraph (3) available for such fiscal year, an 
        amount for each quarter of such fiscal year equal to the 
        enhanced FMAP described in the first sentence of section 
        2105(b) of the total amount expended under the State plan under 
        this subsection during such quarter, and the State is 
        responsible for the balance of funds to carry out such plan.
            ``(5) Block grant individual defined.--In this subsection, 
        the term `block grant individual' means, with respect to a 
        State for a 10-fiscal-year period, an individual who is not 
        disabled (as defined for purposes of the State plan) and who is 
        within an applicable block grant category for the State and 
        such period.
            ``(6) Applicable block grant category defined.--In this 
        subsection, the term `applicable block grant category' means 
        with respect to a State for a 10-fiscal-year period, either of 
        the following as specified by the State for such period in its 
        plan under paragraph (2)(A)(i):
                    ``(A) 2 enrollee categories.--Both of the following 
                1903A enrollee categories:
                            ``(i) Children.--The 1903A enrollee 
                        category specified in subparagraph (C) of 
                        subsection (e)(2).
                            ``(ii) Other nonelderly, nondisabled, non-
                        expansion adults.--The 1903A enrollee category 
                        specified in subparagraph (E) of such 
                        subsection.
                    ``(B) Other nonelderly, nondisabled, non-expansion 
                adults.--Only the 1903A enrollee category specified in 
                subparagraph (E) of subsection (e)(2).
            ``(7) Block grant health care assistance.--In this 
        subsection, the term `block grant health care assistance' means 
        assistance for health-care-related items and medical services 
        for block grant individuals within the applicable block grant 
        category for the State and 10-fiscal-year period involved who 
        are low-income individuals (as defined by the State).
            ``(8) Auditing.--As a condition of receiving funds under 
        this subsection, a State shall contract with an independent 
        entity to conduct audits of its expenditures made with respect 
        to activities funded under this subsection for each fiscal year 
        for which the State elects to apply this subsection to ensure 
        that such funds are used consistent with this subsection and 
        shall make such audits available to the Secretary upon the 
        request of the Secretary.''.

    Subtitle D--Patient Relief and Health Insurance Market Stability

SEC. 131. REPEAL OF COST-SHARING SUBSIDY.

    (a) In General.--Section 1402 of the Patient Protection and 
Affordable Care Act is repealed.
    (b) Effective Date.--The repeal made by subsection (a) shall apply 
to cost-sharing reductions (and payments to issuers for such 
reductions) for plan years beginning after December 31, 2019.

SEC. 132. PATIENT AND STATE STABILITY FUND.

    The Social Security Act (42 U.S.C. 301 et seq.) is amended by 
adding at the end the following new title:

             ``TITLE XXII--PATIENT AND STATE STABILITY FUND

``SEC. 2201. ESTABLISHMENT OF PROGRAM.

    ``There is hereby established the `Patient and State Stability 
Fund' to be administered by the Secretary of Health and Human Services, 
acting through the Administrator of the Centers for Medicare & Medicaid 
Services (in this section referred to as the `Administrator'), to 
provide funding, in accordance with this title, to the 50 States and 
the District of Columbia (each referred to in this section as a 
`State') during the period, subject to section 2204(c), beginning on 
January 1, 2018, and ending on December 31, 2026, for the purposes 
described in section 2202.

``SEC. 2202. USE OF FUNDS.

    ``(a) In General.--Subject to subsections (b) and (c), a State may 
use the funds allocated to the State under this title for any of the 
following purposes:
            ``(1) Helping, through the provision of financial 
        assistance, high-risk individuals who do not have access to 
        health insurance coverage offered through an employer enroll in 
        health insurance coverage in the individual market in the 
        State, as such market is defined by the State (whether through 
        the establishment of a new mechanism or maintenance of an 
        existing mechanism for such purpose).
            ``(2) Providing incentives to appropriate entities to enter 
        into arrangements with the State to help stabilize premiums for 
        health insurance coverage in the individual market, as such 
        markets are defined by the State.
            ``(3) Reducing the cost for providing health insurance 
        coverage in the individual market and small group market, as 
        such markets are defined by the State, to individuals who have, 
        or are projected to have, a high rate of utilization of health 
        services (as measured by cost) and to individuals who have high 
        costs of health insurance coverage due to the low density 
        population of the State in which they reside.
            ``(4) Promoting participation in the individual market and 
        small group market in the State and increasing health insurance 
        options available through such market.
            ``(5) Promoting access to preventive services; dental care 
        services (whether preventive or medically necessary); vision 
        care services (whether preventive or medically necessary); or 
        any combination of such services.
            ``(6) Maternity coverage and newborn care.
            ``(7) Prevention, treatment, or recovery support services 
        for individuals with mental or substance use disorders, focused 
        on either or both of the following:
                    ``(A) Direct inpatient or outpatient clinical care 
                for treatment of addiction and mental illness.
                    ``(B) Early identification and intervention for 
                children and young adults with serious mental illness.
            ``(8) Providing payments, directly or indirectly, to health 
        care providers for the provision of such health care services 
        as are specified by the Administrator.
            ``(9) Providing assistance to reduce out-of-pocket costs, 
        such as copayments, coinsurance, premiums, and deductibles, of 
        individuals enrolled in health insurance coverage in the State.
    ``(b) Required Use of Increase in Allotment.--A State shall use the 
additional allocation provided to the State from the funds appropriated 
under the second sentence of section 2204(a) for each year only for the 
purposes described in paragraphs (6) and (7) of subsection (a).
    ``(c) Required Use of Additional Increase to Certain Waiver States 
to Provide Financial Hardship Assistance.--A State shall use the 
additional allocation provided to the State from the funds appropriated 
under the last sentence of section 2204(a) only in accordance with such 
last sentence.

``SEC. 2203. STATE ELIGIBILITY AND APPROVAL; DEFAULT SAFEGUARD.

    ``(a) Encouraging State Options for Allocations.--
            ``(1) In general.--To be eligible for an allocation of 
        funds under this title for a year during the period described 
        in section 2201 for use for one or more purposes described in 
        section 2202, a State shall submit to the Administrator an 
        application at such time (but, in the case of allocations for 
        2018, not later than 45 days after the date of the enactment of 
        this title and, in the case of allocations for a subsequent 
        year, not later than March 31 of the previous year) and in such 
        form and manner as specified by the Administrator and 
        containing--
                    ``(A) a description of how the funds will be used 
                for such purposes;
                    ``(B) a certification that the State will make, 
                from non-Federal funds, expenditures for such purposes 
                in an amount that is not less than the State percentage 
                required for the year under section 2204(e)(1); and
                    ``(C) such other information as the Administrator 
                may require.
            ``(2) Automatic approval.--An application so submitted is 
        approved unless the Administrator notifies the State submitting 
        the application, not later than 60 days after the date of the 
        submission of such application, that the application has been 
        denied for not being in compliance with any requirement of this 
        title and of the reason for such denial.
            ``(3) One-time application.--If an application of a State 
        is approved for a year, with respect to a purpose described in 
        section 2202, such application shall be treated as approved, 
        with respect to such purpose, for each subsequent year through 
        2026.
            ``(4) Treatment as a state health care program.--Any 
        program receiving funds from an allocation for a State under 
        this title, including pursuant to subsection (b), shall be 
        considered to be a `State health care program' for purposes of 
        sections 1128, 1128A, and 1128B.
    ``(b) Default Federal Safeguard.--
            ``(1) In general.--
                    ``(A) 2018.--For allocations made under this title 
                for 2018, in the case of a State that does not submit 
                an application under subsection (a) by the 45-day 
                submission date applicable to such year under 
                subsection (a)(1) and in the case of a State that does 
                submit such an application by such date that is not 
                approved, subject to section 2204(e), the 
                Administrator, in consultation with the State insurance 
                commissioner, shall use the allocation that would 
                otherwise be provided to the State under this title for 
                such year, in accordance with paragraph (2), for such 
                State.
                    ``(B) 2019 through 2026.--In the case of a State 
                that does not have in effect an approved application 
                under this section for 2019 or a subsequent year 
                beginning during the period described in section 2201, 
                subject to section 2204(e), the Administrator, in 
                consultation with the State insurance commissioner, 
                shall use the allocation that would otherwise be 
                provided to the State under this title for such year, 
                in accordance with paragraph (2), for such State.
            ``(2) Required use for market stabilization payments to 
        issuers.--Subject to section 2204(a), an allocation for a State 
        made pursuant to paragraph (1) for a year shall be used to 
        carry out the purpose described in section 2202(2) in such 
        State by providing payments to appropriate entities described 
        in such section with respect to claims that exceed $50,000 (or, 
        with respect to allocations made under this title for 2020 or a 
        subsequent year during the period specified in section 2201, 
        such dollar amount specified by the Administrator), but do not 
        exceed $350,000 (or, with respect to allocations made under 
        this title for 2020 or a subsequent year during such period, 
        such dollar amount specified by the Administrator), in an 
        amount equal to 75 percent (or, with respect to allocations 
        made under this title for 2020 or a subsequent year during such 
        period, such percentage specified by the Administrator) of the 
        amount of such claims.

``SEC. 2204. ALLOCATIONS.

    ``(a) Appropriation.--For the purpose of providing allocations for 
States (including pursuant to section 2203(b)) under this title there 
is appropriated, out of any money in the Treasury not otherwise 
appropriated--
            ``(1) for 2018, $15,000,000,000;
            ``(2) for 2019, $15,000,000,000;
            ``(3) for 2020, $10,000,000,000;
            ``(4) for 2021, $10,000,000,000;
            ``(5) for 2022, $10,000,000,000;
            ``(6) for 2023, $10,000,000,000;
            ``(7) for 2024, $10,000,000,000;
            ``(8) for 2025, $10,000,000,000; and
            ``(9) for 2026, $10,000,000,000.
The amount otherwise appropriated under the previous sentence for 2020 
shall be increased by $15,000,000,000, to be used and available under 
subsection (d) only for the purposes described in paragraphs (6) and 
(7) of section 2202(a). The amount otherwise appropriated under this 
subsection shall be increased by $8,000,000,000 for the period 
beginning with 2018 and ending with 2023, to be allocated to States 
with a waiver in effect under section 2701(b) of the Public Health 
Service Act with respect to the purpose described in paragraph (1)(C) 
of such section, in accordance with an allocation methodology specified 
by the Secretary that takes into account the relative allocation of 
other amounts appropriated under this subsection among such States, and 
to be used by (and made available under subsection (d), for any year 
during such period that such waiver is in effect, to) such States for 
the purpose of providing assistance to reduce premiums or other out-of-
pocket costs of individuals who are subject to an increase in the 
monthly premium rate for health insurance coverage as a result of such 
waiver.
    ``(b) Allocations.--
            ``(1) Payment.--
                    ``(A) In general.--From amounts appropriated under 
                subsection (a) for a year, the Administrator shall, 
                with respect to a State and not later than the date 
                specified under subparagraph (B) for such year, 
                allocate, subject to subsection (e), for such State 
                (including pursuant to section 2203(b)) the amount 
                determined for such State and year under paragraph (2).
                    ``(B) Specified date.--For purposes of subparagraph 
                (A), the date specified in this subparagraph is--
                            ``(i) for 2018, the date that is 45 days 
                        after the date of the enactment of this title; 
                        and
                            ``(ii) for 2019 and subsequent years, 
                        January 1 of the respective year.
            ``(2) Allocation amount determinations.--
                    ``(A) For 2018 and 2019.--
                            ``(i) In general.--For purposes of 
                        paragraph (1), the amount determined under this 
                        paragraph for 2018 and 2019 for a State is an 
                        amount equal to the sum of--
                                    ``(I) the relative incurred claims 
                                amount described in clause (ii) for 
                                such State and year; and
                                    ``(II) the relative uninsured and 
                                issuer participation amount described 
                                in clause (iv) for such State and year.
                            ``(ii) Relative incurred claims amount.--
                        For purposes of clause (i), the relative 
                        incurred claims amount described in this clause 
                        for a State for 2018 and 2019 is the product 
                        of--
                                    ``(I) 85 percent of the amount 
                                appropriated under subsection (a) for 
                                the year; and
                                    ``(II) the relative State incurred 
                                claims proportion described in clause 
                                (iii) for such State and year.
                            ``(iii) Relative state incurred claims 
                        proportion.--The relative State incurred claims 
                        proportion described in this clause for a State 
                        and year is the amount equal to the ratio of--
                                    ``(I) the adjusted incurred claims 
                                by the State, as reported through the 
                                medical loss ratio annual reporting 
                                under section 2718 of the Public Health 
                                Service Act for the third previous 
                                year; to
                                    ``(II) the sum of such adjusted 
                                incurred claims for all States, as so 
                                reported, for such third previous year.
                            ``(iv) Relative uninsured and issuer 
                        participation amount.--For purposes of clause 
                        (i), the relative uninsured and issuer 
                        participation amount described in this clause 
                        for a State for 2018 and 2019 is the product 
                        of--
                                    ``(I) 15 percent of the amount 
                                appropriated under subsection (a) for 
                                the year; and
                                    ``(II) the relative State uninsured 
                                and issuer participation proportion 
                                described in clause (v) for such State 
                                and year.
                            ``(v) Relative state uninsured and issuer 
                        participation proportion.--The relative State 
                        uninsured and issuer participation proportion 
                        described in this clause for a State and year 
                        is--
                                    ``(I) in the case of a State not 
                                described in clause (vi) for such year, 
                                0; and
                                    ``(II) in the case of a State 
                                described in clause (vi) for such year, 
                                the amount equal to the ratio of--
                                            ``(aa) the number of 
                                        individuals residing in such 
                                        State who for the third 
                                        preceding year were not 
                                        enrolled in a health plan or 
                                        otherwise did not have health 
                                        insurance coverage (including 
                                        through a Federal or State 
                                        health program) and whose 
                                        income is below 100 percent of 
                                        the poverty line applicable to 
                                        a family of the size involved; 
                                        to
                                            ``(bb) the sum of the 
                                        number of such individuals for 
                                        all States described in clause 
                                        (vi) for the third preceding 
                                        year.
                            ``(vi) States described.--For purposes of 
                        clause (v), a State is described in this 
                        clause, with respect to 2018 and 2019, if the 
                        State satisfies either of the following 
                        criterion:
                                    ``(I) The ratio described in 
                                subclause (II) of clause (v) that would 
                                be determined for such State by 
                                substituting `2015' for each reference 
                                in such subclause to `the third 
                                preceding year' and by substituting 
                                `all such States' for the reference in 
                                item (bb) of such subclause to `all 
                                States described in clause (vi)' is 
                                greater than the ratio described in 
                                such subclause that would be determined 
                                for such State by substituting `2013' 
                                for each reference in such subclause to 
                                `the third preceding year' and by 
                                substituting `all such States' for the 
                                reference in item (bb) of such 
                                subclause to `all States described in 
                                clause (vi)'.
                                    ``(II) The State has fewer than 
                                three health insurance issuers offering 
                                qualified health plans through the 
                                Exchange for 2017.
                    ``(B) For 2020 through 2026.--For purposes of 
                paragraph (1), the amount determined under this 
                paragraph for a year (beginning with 2020) during the 
                period described in section 2201 for a State is an 
                amount determined in accordance with an allocation 
                methodology specified by the Administrator which--
                            ``(i) takes into consideration the adjusted 
                        incurred claims of such State, the number of 
                        residents of such State who for the previous 
                        year were not enrolled in a health plan or 
                        otherwise did not have health insurance 
                        coverage (including through a Federal or State 
                        health program) and whose income is below 100 
                        percent of the poverty line applicable to a 
                        family of the size involved, and the number of 
                        health insurance issuers participating in the 
                        insurance market in such State for such year;
                            ``(ii) is established after consultation 
                        with health care consumers, health insurance 
                        issuers, State insurance commissioners, and 
                        other stakeholders and after taking into 
                        consideration additional cost and risk factors 
                        that may inhibit health care consumer and 
                        health insurance issuer participation; and
                            ``(iii) reflects the goals of improving the 
                        health insurance risk pool, promoting a more 
                        competitive health insurance market, and 
                        increasing choice for health care consumers.
    ``(c) Annual Distribution of Previous Year's Remaining Funds.-- In 
carrying out subsection (b), the Administrator shall, with respect to a 
year (beginning with 2020 and ending with 2027), not later than March 
31 of such year--
            ``(1) determine the amount of funds, if any, from the 
        amounts appropriated under subsection (a) for the previous year 
        but not allocated for such previous year; and
            ``(2) if the Administrator determines that any funds were 
        not so allocated for such previous year, allocate such 
        remaining funds, in accordance with the allocation methodology 
        specified pursuant to subsection (b)(2)(B)--
                    ``(A) to States that have submitted an application 
                approved under section 2203(a) for such previous year 
                for any purpose for which such an application was 
                approved; and
                    ``(B) for States for which allocations were made 
                pursuant to section 2203(b) for such previous year, to 
                be used by the Administrator for such States, to carry 
                out the Federal Invisible Risk Sharing Program in such 
                States under section 2205;
        with, respect to a year before 2027, any remaining funds being 
        made available for allocations to States for the subsequent 
        year.
    ``(d) Availability.--Amounts appropriated under subsection (a) for 
a year and allocated to States in accordance with this section shall 
remain available for expenditure through December 31, 2027.
    ``(e) Conditions for and Limitations on Receipt of Funds.--The 
Secretary may not make an allocation under this title for a State, with 
respect to a purpose described in section 2202--
            ``(1) in the case of an allocation that would be made to a 
        State pursuant to section 2203(a), if the State does not agree 
        that the State will make available non-Federal contributions 
        towards such purpose in an amount equal to--
                    ``(A) for 2020, 7 percent of the amount allocated 
                under this subsection to such State for such year and 
                purpose;
                    ``(B) for 2021, 14 percent of the amount allocated 
                under this subsection to such State for such year and 
                purpose;
                    ``(C) for 2022, 21 percent of the amount allocated 
                under this subsection to such State for such year and 
                purpose;
                    ``(D) for 2023, 28 percent of the amount allocated 
                under this subsection to such State for such year and 
                purpose;
                    ``(E) for 2024, 35 percent of the amount allocated 
                under this subsection to such State for such year and 
                purpose;
                    ``(F) for 2025, 42 percent of the amount allocated 
                under this subsection to such State for such year and 
                purpose; and
                    ``(G) for 2026, 50 percent of the amount allocated 
                under this subsection to such State for such year and 
                purpose;
            ``(2) in the case of an allocation that would be made for a 
        State pursuant to section 2203(b), if the State does not agree 
        that the State will make available non-Federal contributions 
        towards such purpose in an amount equal to--
                    ``(A) for 2020, 10 percent of the amount allocated 
                under this subsection to such State for such year and 
                purpose;
                    ``(B) for 2021, 20 percent of the amount allocated 
                under this subsection to such State for such year and 
                purpose; and
                    ``(C) for 2022, 30 percent of the amount allocated 
                under this subsection to such State for such year and 
                purpose;
                    ``(D) for 2023, 40 percent of the amount allocated 
                under this subsection to such State for such year and 
                purpose;
                    ``(E) for 2024, 50 percent of the amount allocated 
                under this subsection to such State for such year and 
                purpose;
                    ``(F) for 2025, 50 percent of the amount allocated 
                under this subsection to such State for such year and 
                purpose; and
                    ``(G) for 2026, 50 percent of the amount allocated 
                under this subsection to such State for such year and 
                purpose; or
            ``(3) if such an allocation for such purpose would not be 
        permitted under subsection (c)(7) of section 2105 if such 
        allocation were payment made under such section.

``SEC. 2205. FEDERAL INVISIBLE RISK SHARING PROGRAM.

    ``(a) In General.--There is established within the Patient and 
State Stability Fund a Federal Invisible Risk Sharing Program (in this 
section referred to as the `Program'), to be administered by the 
Secretary of Health and Human Services, acting through the 
Administrator of the Centers for Medicare & Medicaid Services (in this 
section referred to as the `Administrator'), to provide payments to 
health insurance issuers with respect to claims for eligible 
individuals for the purpose of lowering premiums for health insurance 
coverage offered in the individual market.
    ``(b) Funding.--
            ``(1) Appropriation.--For the purpose of providing funding 
        for the Program there is appropriated, out of any money in the 
        Treasury not otherwise appropriated, $15,000,000,000 for the 
        period beginning on January 1, 2018, and ending on December 31, 
        2026.
            ``(2) Use of unallocated funds.--Funds provided under 
        section 2204(c)(2)(B) to carry out this section are in addition 
        to the amount appropriated under paragraph (1).
    ``(c) Operation of Program.--
            ``(1) In general.--The Administrator shall establish, after 
        consultation with health care consumers, health insurance 
        issuers, State insurance commissioners, and other stakeholders 
        and after taking into consideration high cost health conditions 
        and other health trends that generate high cost, parameters for 
        the operation of the Program consistent with this section and 
        consistent with the same limitation on payment with respect to 
        health insurance coverage that applies to payment with respect 
        health benefits coverage under section 2105(c)(7).
            ``(2) Deadline for initial operation.--Not later than 60 
        days after the date of the enactment of this title, the 
        Administrator shall establish sufficient parameters to specify 
        how the Program will operate for plan year 2018.
            ``(3) State operation of program.--The Administrator shall 
        establish a process for a State to operate the Program in such 
        State beginning with plan year 2020.
    ``(d) Details of Program.--The parameters for the Program shall 
include the following:
            ``(1) Eligible individuals.--A definition for eligible 
        individuals.
            ``(2) Health status statements.--The development and use of 
        health status statements with respect to such individuals.
            ``(3) Standards for qualification.--
                    ``(A) Automatic qualification.--The identification 
                of health conditions that automatically qualify 
                individuals as eligible individuals at the time of 
                application for health insurance coverage.
                    ``(B) Voluntary qualification.--A process under 
                which health insurance issuers may voluntarily qualify 
                individuals, who do not automatically qualify under 
                subparagraph (A), as eligible individuals at the time 
                of application for such coverage.
            ``(4) Percentage of insurance premiums to be applied.--The 
        percentage of the premiums paid, to health insurance issuers 
        for health insurance coverage by eligible individuals, that 
        shall be collected and deposited to the credit (and available 
        for the use) of the Program.
            ``(5) Attachment dollar amount and payment proportion.--The 
        dollar amount of claims for eligible individuals after which 
        the Program will provide payments to health insurance issuers 
        and the proportion of such claims above such dollar amount that 
        the Program will pay.''.

SEC. 133. CONTINUOUS HEALTH INSURANCE COVERAGE INCENTIVE.

    Subpart I of part A of title XXVII of the Public Health Service Act 
is amended--
            (1) in section 2701(a)(1)(B), by striking ``such rate'' and 
        inserting ``subject to section 2710A, such rate'';
            (2) by redesignating the second section 2709 as section 
        2710; and
            (3) by adding at the end the following new section:

``SEC. 2710A. ENCOURAGING CONTINUOUS HEALTH INSURANCE COVERAGE.

    ``(a) Penalty Applied.--
            ``(1) In general.--Subject to the succeeding provisions of 
        this section, a health insurance issuer offering health 
        insurance coverage in the individual market shall, in the case 
        of an individual who is an applicable policyholder of such 
        coverage with respect to an enforcement period applicable to 
        enrollments for a plan year beginning with plan year 2019 (or, 
        in the case of enrollments during a special enrollment period, 
        beginning with plan year 2018), increase the monthly premium 
        rate otherwise applicable to such individual for such coverage 
        during each month of such period, by an amount determined under 
        paragraph (2).
            ``(2) Amount of penalty.--The amount determined under this 
        paragraph for an applicable policyholder enrolling in health 
        insurance coverage described in paragraph (1) for a plan year, 
        with respect to each month during the enforcement period 
        applicable to enrollments for such plan year, is the amount 
        that is equal to 30 percent of the monthly premium rate 
        otherwise applicable to such applicable policyholder for such 
        coverage during such month.
    ``(b) Definitions.--For purposes of this section:
            ``(1) Applicable policyholder.--The term `applicable 
        policyholder' means, with respect to months of an enforcement 
        period and health insurance coverage, an individual who--
                    ``(A) is a policyholder of such coverage for such 
                months;
                    ``(B) cannot demonstrate that (through presentation 
                of certifications described in section 2704(e) or in 
                such other manner as may be specified in regulations, 
                such as a return or statement made under section 
                6055(d) or 36B of the Internal Revenue Code of 1986), 
                during the look-back period that is with respect to 
                such enforcement period, there was not a period of at 
                least 63 continuous days during which the individual 
                did not have creditable coverage (as defined in 
                paragraph (1) of section 2704(c) and credited in 
                accordance with paragraphs (2) and (3) of such 
                section); and
                    ``(C) in the case of an individual who had been 
                enrolled under dependent coverage under a group health 
                plan or health insurance coverage by reason of section 
                2714 and such dependent coverage of such individual 
                ceased because of the age of such individual, is not 
                enrolling during the first open enrollment period 
                following the date on which such coverage so ceased.
            ``(2) Look-back period.--The term `look-back period' means, 
        with respect to an enforcement period applicable to an 
        enrollment of an individual for a plan year beginning with plan 
        year 2019 (or, in the case of an enrollment of an individual 
        during a special enrollment period, beginning with plan year 
        2018) in health insurance coverage described in subsection 
        (a)(1), the 12-month period ending on the date the individual 
        enrolls in such coverage for such plan year.
            ``(3) Enforcement period.--The term `enforcement period' 
        means--
                    ``(A) with respect to enrollments during a special 
                enrollment period for plan year 2018, the period 
                beginning with the first month that is during such plan 
                year and that begins subsequent to such date of 
                enrollment, and ending with the last month of such plan 
                year; and
                    ``(B) with respect to enrollments for plan year 
                2019 or a subsequent plan year, the 12-month period 
                beginning on the first day of the respective plan 
                year.''.

SEC. 134. INCREASING COVERAGE OPTIONS.

    Section 1302 of the Patient Protection and Affordable Care Act (42 
U.S.C. 18022) is amended--
            (1) in subsection (a)(3), by inserting ``and with respect 
        to a plan year before plan year 2020'' after ``subsection 
        (e)''; and
            (2) in subsection (d), by adding at the end the following:
            ``(5) Sunset.--The provisions of this subsection shall not 
        apply after December 31, 2019, and after such date any 
        reference to this subsection or level of coverage or plan 
        described in this subsection and any requirement under law 
        applying such a level of coverage or plan shall have no force 
        or effect (and such a requirement shall be applied as if this 
        section had been repealed).''.

SEC. 135. CHANGE IN PERMISSIBLE AGE VARIATION IN HEALTH INSURANCE 
              PREMIUM RATES.

    Section 2701(a)(1)(A)(iii) of the Public Health Service Act (42 
U.S.C. 300gg(a)(1)(A)(iii)), as inserted by section 1201(4) of the 
Patient Protection and Affordable Care Act, is amended by inserting 
after ``(consistent with section 2707(c))'' the following: ``or, for 
plan years beginning on or after January 1, 2018, as the Secretary may 
implement through interim final regulation, 5 to 1 for adults 
(consistent with section 2707(c)) or such other ratio for adults 
(consistent with section 2707(c)) as the State involved may provide 
(or, in the case of a State with a waiver under subsection (b) in 
effect for such a plan year, the ratio applied for such plan year in 
accordance with such waiver)''.

SEC. 136. PERMITTING STATES TO WAIVE CERTAIN ACA REQUIREMENTS TO 
              ENCOURAGE FAIR HEALTH INSURANCE PREMIUMS.

    (a) In General.--Section 2701 of the Public Health Service Act (42 
U.S.C. 300gg) is amended by adding at the end the following new 
subsection:
    ``(b) Permissible State Waiver to Encourage Fair Health Insurance 
Premiums.--
            ``(1) In general.--A State may submit an application to the 
        Secretary for one or more of the following purposes:
                    ``(A) In the case of plan years beginning on or 
                after January 1, 2018, to apply, subject to paragraph 
                (5), under subsection (a)(1)(A)(iii), instead of the 
                ratio specified in such subsection, a higher ratio 
                specified by the State (consistent with section 
                2707(c)).
                    ``(B) In the case of plan years beginning on or 
                after January 1, 2020, for health insurance coverage 
                offered in the individual or small group market in such 
                State, to apply, subject to paragraph (5), instead of 
                the essential health benefits specified under 
                subsection (b) of section 1302 of the Patient 
                Protection and Affordable Care Act, essential health 
                benefits as specified by the State.
                    ``(C) In the case of a State that has in place a 
                program that carries out the purpose described in 
                paragraph (1) or (2) of section 2202(a) of the Social 
                Security Act or participates in the program established 
                under section 2205 of such Act, for health insurance 
                offered in the individual market in such State, with 
                respect to an individual who is an applicable 
                policyholder of such coverage with respect to an 
                enforcement period (as defined in section 2710A(b)) 
                applicable to enrollments for a plan year beginning 
                with plan year 2019 (or, in the case of enrollments 
                during a special enrollment period, beginning with plan 
                year 2018), to--
                            ``(i) subject to paragraph (5), not apply 
                        any increase to the monthly premium rate that 
                        would otherwise apply under section 2710A to 
                        such individual for such coverage; and
                            ``(ii) instead, subject to paragraph (5)--
                                    ``(I) apply subsection (a)(1) as if 
                                health status were included as a factor 
                                described in subparagraph (A) of such 
                                subsection; and
                                    ``(II) not apply section 2705(b).
            ``(2) Default approval.--An application submitted under 
        paragraph (1) is approved unless the Secretary notifies the 
        State submitting the application, not later than 60 days after 
        the date of the submission of such application, that the 
        application has been denied for not being in compliance with 
        any requirement of paragraph (3) and of the reason for such 
        denial.
            ``(3) Requirements.--The requirements of this paragraph, 
        with respect to an application submitted under paragraph (1), 
        are the following:
                    ``(A) The application is submitted at such time, 
                and in such manner, as the Secretary may require.
                    ``(B) The application specifies how the approval of 
                such application will provide for one or more of the 
                following:
                            ``(i) Reducing average premiums for health 
                        insurance coverage in the State.
                            ``(ii) Increasing enrollment in health 
                        insurance coverage in the State.
                            ``(iii) Stabilizing the market for health 
                        insurance coverage in the State.
                            ``(iv) Stabilizing premiums for individuals 
                        with pre-existing conditions.
                            ``(v) Increasing the choice of health plans 
                        in the State.
                    ``(C) The application specifies the period for 
                which the waiver is to be effective, consistent with 
                paragraph (4).
                    ``(D) In the case of an application for purposes of 
                paragraph (1)(A), the application specifies the higher 
                ratio to be applied pursuant to such paragraph.
                    ``(E) In the case of an application for purposes of 
                paragraph (1)(B), the application specifies the 
                essential health benefits to be applied pursuant to 
                such paragraph.
                    ``(F) In the case of an application for purposes of 
                paragraph (1)(C), the application demonstrates that the 
                State has in place a program that carries out the 
                purpose described in paragraph (1) or (2) of section 
                2202(a) of the Social Security Act or participates in 
                the program established under section 2205 of such Act.
            ``(4) Term of waiver.--
                    ``(A) In general.--No waiver for a State under this 
                subsection may extend over a period of longer than 10 
                years unless the State requests continuation of such 
                waiver, and such request shall be deemed granted unless 
                the Secretary, within 90 days after the date of its 
                submission to the Secretary, either denies such request 
                in writing or informs the State in writing with respect 
                to any additional information which is needed in order 
                to make a final determination with respect to the 
                request.
                    ``(B) Special rule.--A waiver applied for by a 
                State under paragraph (1)(C) may only be effective for 
                a period during which the State--
                            ``(i) has in place a program that carries 
                        out the purpose described in paragraph (1) or 
                        (2) of section 2202(a) of the Social Security 
                        Act; or
                            ``(ii) participates in the program 
                        established under section 2205 of such Act.
            ``(5) Non-application rules.--
                    ``(A) Specified non-application provisions.--In no 
                case may a waiver for purposes of paragraph (1) apply 
                with respect to any of the following provisions:
                            ``(i) Section 1301 of the Patient 
                        Protection and Affordable Care Act, to the 
                        extent that such section applies to qualified 
                        health plans offered through the CO-OP program 
                        under section 1322 of such Act or multi-State 
                        plans under section 1334 of such Act.
                            ``(ii) Sections 1312(d)(3)(D), 1331, 1332, 
                        1333, and 1334 of such Act.
                    ``(B) Hold harmless.--Any standard or requirement 
                adopted by a State pursuant to the terms of a waiver 
                approved under this subsection shall be deemed to 
                comply with section 1252 of the Patient Protection and 
                Affordable Care Act and subsection (a) of section 1324 
                of such Act, insofar as such standard or requirement 
                relates to a Federal or State law described in 
                subsection (b)(2) of such section (relating to 
                rating).''.
    (b) Application to Essential Health Benefits.--Section 1302(a)(1) 
of the Patient Protection and Affordable Care Act (42 U.S.C. 
18022(a)(1)) is amended by inserting ``(or, in the case of health 
insurance coverage offered in the individual or small group market in a 
State for which there is an applicable waiver in effect under section 
2701(b) of the Public Health Service Act for a plan year, the essential 
health benefits applicable under such waiver)'' after ``subsection 
(b)''.

SEC. 137. CONSTRUCTIONS.

    (a) No Gender Rating.--Nothing in this Act shall be construed as 
permitting health insurance issuers to discriminate in rates for health 
insurance coverage by gender.
    (b) No Limiting Access to Coverage for Individuals With Preexisting 
Conditions.--Nothing in this Act shall be construed as permitting 
health insurance issuers to limit access to health coverage for 
individuals with preexisting conditions.

                   Subtitle E--Implementation Funding

SEC. 141. AMERICAN HEALTH CARE IMPLEMENTATION FUND.

    (a) In General.--There is hereby established an American Health 
Care Implementation Fund (referred to in this section as the ``Fund'') 
within the Department of Health and Human Services to carry out 
sections 121, 132, 202, and 214 (including the amendments made by such 
sections).
    (b) Funding.--There is appropriated to the Fund, out of any funds 
in the Treasury not otherwise appropriated, $1,000,000,000 for Federal 
administrative expenses to carry out the sections described in 
subsection (a) (including the amendments made by such sections).

                 TITLE II--COMMITTEE ON WAYS AND MEANS

      Subtitle A--Repeal and Replace of Health-Related Tax Policy

SEC. 201. RECAPTURE EXCESS ADVANCE PAYMENTS OF PREMIUM TAX CREDITS.

    Subparagraph (B) of section 36B(f)(2) of the Internal Revenue Code 
of 1986 is amended by adding at the end the following new clause:
                            ``(iii) Nonapplicability of limitation.--
                        This subparagraph shall not apply to taxable 
                        years beginning after December 31, 2017, and 
                        before January 1, 2020.''.

SEC. 202. ADDITIONAL MODIFICATIONS TO PREMIUM TAX CREDIT.

    (a) Modification of Definition of Qualified Health Plan.--
            (1) In general.--Section 36B(c)(3)(A) of the Internal 
        Revenue Code of 1986 is amended--
                    (A) by inserting ``(determined without regard to 
                subparagraphs (A), (C)(ii), and (C)(iv) of paragraph 
                (1) thereof and without regard to whether the plan is 
                offered on an Exchange)'' after ``1301(a) of the 
                Patient Protection and Affordable Care Act'', and
                    (B) by striking ``shall not include'' and all that 
                follows and inserting ``shall not include any health 
                plan that--
                            ``(i) is a grandfathered health plan or a 
                        grandmothered health plan, or
                            ``(ii) includes coverage for abortions 
                        (other than any abortion necessary to save the 
                        life of the mother or any abortion with respect 
                        to a pregnancy that is the result of an act of 
                        rape or incest).''.
            (2) Definition of grandmothered health plan.--Section 
        36B(c)(3) of such Code is amended by adding at the end the 
        following new subparagraph:
                    ``(C) Grandmothered health plan.--
                            ``(i) In general.--The term `grandmothered 
                        health plan' means health insurance coverage 
                        which is offered in the individual health 
                        insurance market as of October 1, 2013, and is 
                        permitted to be offered in such market after 
                        January 1, 2014, as a result of CCIIO guidance.
                            ``(ii) CCIIO guidance defined.--The term 
                        `CCIIO guidance' means the letter issued by the 
                        Centers for Medicare & Medicaid Services on 
                        November 14, 2013, to the State Insurance 
                        Commissioners outlining a transitional policy 
                        for non-grandfathered coverage in the 
                        individual health insurance market, as 
                        subsequently extended and modified (including 
                        by a communication entitled `Insurance 
                        Standards Bulletin Series--INFORMATION--
                        Extension of Transitional Policy through 
                        Calendar Year 2017' issued on February 29, 
                        2016, by the Director of the Center for 
                        Consumer Information & Insurance Oversight of 
                        such Centers).
                            ``(iii) Individual health insurance 
                        market.--The term `individual health insurance 
                        market' means the market for health insurance 
                        coverage (as defined in section 9832(b)) 
                        offered to individuals other than in connection 
                        with a group health plan (within the meaning of 
                        section 5000(b)(1)).''.
            (3) Conforming amendment related to abortion coverage.--
        Section 36B(c)(3) of such Code, as amended by paragraph (2), is 
        amended by adding at the end the following new subparagraph:
                    ``(D) Certain rules related to abortion.--
                            ``(i) Option to purchase separate coverage 
                        or plan.--Nothing in subparagraph (A) shall be 
                        construed as prohibiting any individual from 
                        purchasing separate coverage for abortions 
                        described in such subparagraph, or a health 
                        plan that includes such abortions, so long as 
                        no credit is allowed under this section with 
                        respect to the premiums for such coverage or 
                        plan.
                            ``(ii) Option to offer coverage or plan.--
                        Nothing in subparagraph (A) shall restrict any 
                        health insurance issuer offering a health plan 
                        from offering separate coverage for abortions 
                        described in such subparagraph, or a plan that 
                        includes such abortions, so long as premiums 
                        for such separate coverage or plan are not paid 
                        for with any amount attributable to the credit 
                        allowed under this section (or the amount of 
                        any advance payment of the credit under section 
                        1412 of the Patient Protection and Affordable 
                        Care Act).
                            ``(iii) Other treatments.--The treatment of 
                        any infection, injury, disease, or disorder 
                        that has been caused by or exacerbated by the 
                        performance of an abortion shall not be treated 
                        as an abortion for purposes of subparagraph 
                        (A).''.
            (4) Conforming amendments related to off-exchange 
        coverage.--
                    (A) Advance payment not applicable.--Section 1412 
                of the Patient Protection and Affordable Care Act is 
                amended by adding at the end the following new 
                subsection:
    ``(f) Exclusion of Off-Exchange Coverage.--Advance payments under 
this section, and advance determinations under section 1411, with 
respect to any credit allowed under section 36B shall not be made with 
respect to any health plan which is not enrolled in through an 
Exchange.''.
                    (B) Reporting.--Section 6055(b) of the Internal 
                Revenue Code of 1986 is amended by adding at the end 
                the following new paragraph:
            ``(3) Information relating to off-exchange premium credit 
        eligible coverage.--If minimum essential coverage provided to 
        an individual under subsection (a) consists of a qualified 
        health plan (as defined in section 36B(c)(3)) which is not 
        enrolled in through an Exchange established under title I of 
        the Patient Protection and Affordable Care Act, a return 
        described in this subsection shall include--
                    ``(A) a statement that such plan is a qualified 
                health plan (as defined in section 36B(c)(3)),
                    ``(B) the premiums paid with respect to such 
                coverage,
                    ``(C) the months during which such coverage is 
                provided to the individual,
                    ``(D) the adjusted monthly premium for the 
                applicable second lowest cost silver plan (as defined 
                in section 36B(b)(3)) for each such month with respect 
                to such individual, and
                    ``(E) such other information as the Secretary may 
                prescribe.''.
                    (C) Other conforming amendments.--
                            (i) Section 36B(b)(2)(A) of such Code is 
                        amended by striking ``and which were enrolled'' 
                        and all that follows and inserting ``, or''.
                            (ii) Section 36B(b)(3)(B)(i) of such Code 
                        is amended by striking ``the same Exchange'' 
                        and all that follows and inserting ``the 
                        Exchange through which such taxpayer is 
                        permitted to obtain coverage, and''.
                            (iii) Section 36B(c)(2)(A)(i) of such Code 
                        is amended by striking ``that was enrolled in 
                        through an Exchange established by the State 
                        under section 1311 of the Patient Protection 
                        and Affordable Care Act''.
    (b) Modification of Applicable Percentage.--Section 36B(b)(3)(A) of 
such Code is amended to read as follows:
                    ``(A) Applicable percentage.--
                            ``(i) In general.--The applicable 
                        percentage for any taxable year shall be the 
                        percentage such that the applicable percentage 
                        for any taxpayer whose household income is 
                        within an income tier specified in the 
                        following table shall increase, on a sliding 
                        scale in a linear manner, from the initial 
                        percentage to the final percentage specified in 
                        such table for such income tier with respect to 
                        a taxpayer of the age involved:


------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  ``In the case of              Up to Age 29                         Age 30-39                          Age 40-49                         Age 50-59                        Over Age 59
  household income  ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  (expressed as a
   percent of the
   poverty line)
     within the          Initial %          Final %          Initial %         Final %         Initial %         Final %         Initial %         Final %         Initial %         Final %
  following income
       tier:
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Up to 133%           2...............  2...............  2...............  2..............  2..............  2..............  2..............  2..............  2..............  2
133%-150%            3...............  4...............  3...............  4..............  3..............  4..............  3..............  4..............  3..............  4
150%-200%            4...............  4.3.............  4...............  5.3............  4..............  6.3............  4..............  7.3............  4..............  8.3
200%-250%            4.3.............  4.3.............  5.3.............  5.9............  6.3............  8.05...........  7.3............  9..............  8.3............  10
250%-300%            4.3.............  4.3.............  5.9.............  5.9............  8.05...........  8.35...........  9..............  10.5...........  10.............  11.5
300%-400%            4.3.............  4.3.............  5.9.............  5.9............  8.35...........  8.35...........  10.5...........  10.5...........  11.5...........  11.5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

                            ``(ii) Age determinations.--
                                    ``(I) In general.--For purposes of 
                                clause (i), the age of the taxpayer 
                                taken into account under clause (i) 
                                with respect to any taxable year is the 
                                age attained by such taxpayer before 
                                the close of such taxable year.
                                    ``(II) Joint returns.--In the case 
                                of a joint return, the age of the older 
                                spouse shall be taken into account 
                                under clause (i).
                            ``(iii) Indexing.--In the case of any 
                        taxable year beginning in calendar year 2019, 
                        the initial and final percentages contained in 
                        clause (i) shall be adjusted to reflect--
                                    ``(I) the excess (if any) of the 
                                rate of premium growth for the period 
                                beginning with calendar year 2013 and 
                                ending with calendar year 2018, over 
                                the rate of income growth for such 
                                period, and
                                    ``(II) in addition to any 
                                adjustment under subclause (I), the 
                                excess (if any) of the rate of premium 
                                growth for calendar year 2018, over the 
                                rate of growth in the consumer price 
                                index for calendar year 2018.
                            ``(iv) Failsafe.--Clause (iii)(II) shall 
                        apply only if the aggregate amount of premium 
                        tax credits under this section and cost-sharing 
                        reductions under section 1402 of the Patient 
                        Protection and Affordable Care Act for calendar 
                        year 2018 exceeds an amount equal to 0.504 
                        percent of the gross domestic product for such 
                        calendar year.''.
    (c) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        taxable years beginning after December 31, 2017.
            (2) Advance payment not applicable to off-exchange 
        coverage.--The amendment made by subsection (a)(4)(A) shall 
        take effect on January 1, 2018.
            (3) Reporting.--The amendment made by subsection (a)(4)(B) 
        shall apply to coverage provided for months beginning after 
        December 31, 2017.
            (4) Modification of applicable percentage.--The amendment 
        made by subsection (b) shall apply to taxable years beginning 
        after December 31, 2018.

SEC. 203. SMALL BUSINESS TAX CREDIT.

    (a) In General.--Section 45R of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(j) Shall Not Apply.--This section shall not apply with respect 
to amounts paid or incurred in taxable years beginning after December 
31, 2019.''.
    (b) Disallowance of Small Employer Health Insurance Expense Credit 
for Plan Which Includes Coverage for Abortion.--Subsection (h) of 
section 45R of the Internal Revenue Code of 1986 is amended--
            (1) by striking ``Any term'' and inserting the following:
            ``(1) In general.--Any term''; and
            (2) by adding at the end the following new paragraph:
            ``(2) Exclusion of health plans including coverage for 
        abortion.--
                    ``(A) In general.--The term `qualified health plan' 
                does not include any health plan that includes coverage 
                for abortions (other than any abortion necessary to 
                save the life of the mother or any abortion with 
                respect to a pregnancy that is the result of an act of 
                rape or incest).
                    ``(B) Certain rules related to abortion.--
                            ``(i) Option to purchase separate coverage 
                        or plan.--Nothing in subparagraph (A) shall be 
                        construed as prohibiting any employer from 
                        purchasing for its employees separate coverage 
                        for abortions described in such subparagraph, 
                        or a health plan that includes such abortions, 
                        so long as no credit is allowed under this 
                        section with respect to the employer 
                        contributions for such coverage or plan.
                            ``(ii) Option to offer coverage or plan.--
                        Nothing in subparagraph (A) shall restrict any 
                        health insurance issuer offering a health plan 
                        from offering separate coverage for abortions 
                        described in such subparagraph, or a plan that 
                        includes such abortions, so long as such 
                        separate coverage or plan is not paid for with 
                        any employer contribution eligible for the 
                        credit allowed under this section.
                            ``(iii) Other treatments.--The treatment of 
                        any infection, injury, disease, or disorder 
                        that has been caused by or exacerbated by the 
                        performance of an abortion shall not be treated 
                        as an abortion for purposes of subparagraph 
                        (A).''.
    (c) Effective Dates.--
            (1) In general.--The amendment made by subsection (a) shall 
        apply to taxable years beginning after December 31, 2019.
            (2) Disallowance of small employer health insurance expense 
        credit for plan which includes coverage for abortion.--The 
        amendments made by subsection (b) shall apply to taxable years 
        beginning after December 31, 2017.

SEC. 204. INDIVIDUAL MANDATE.

    (a) In General.--Section 5000A(c) of the Internal Revenue Code of 
1986 is amended--
            (1) in paragraph (2)(B)(iii), by striking ``2.5 percent'' 
        and inserting ``Zero percent'', and
            (2) in paragraph (3)--
                    (A) by striking ``$695'' in subparagraph (A) and 
                inserting ``$0'', and
                    (B) by striking subparagraph (D).
    (b) Effective Date.--The amendments made by this section shall 
apply to months beginning after December 31, 2015.

SEC. 205. EMPLOYER MANDATE.

    (a) In General.--
            (1) Paragraph (1) of section 4980H(c) of the Internal 
        Revenue Code of 1986 is amended by inserting ``($0 in the case 
        of months beginning after December 31, 2015)'' after 
        ``$2,000''.
            (2) Paragraph (1) of section 4980H(b) of the Internal 
        Revenue Code of 1986 is amended by inserting ``($0 in the case 
        of months beginning after December 31, 2015)'' after 
        ``$3,000''.
    (b) Effective Date.--The amendments made by this section shall 
apply to months beginning after December 31, 2015.

SEC. 206. REPEAL OF THE TAX ON EMPLOYEE HEALTH INSURANCE PREMIUMS AND 
              HEALTH PLAN BENEFITS.

    Section 4980I of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new subsection:
    ``(h) Shall Not Apply.--No tax shall be imposed under this section 
with respect to any taxable period beginning after December 31, 2019, 
and before January 1, 2026.''.

SEC. 207. REPEAL OF TAX ON OVER-THE-COUNTER MEDICATIONS.

    (a) HSAs.--Subparagraph (A) of section 223(d)(2) of the Internal 
Revenue Code of 1986 is amended by striking ``Such term'' and all that 
follows through the period.
    (b) Archer MSAs.--Subparagraph (A) of section 220(d)(2) of the 
Internal Revenue Code of 1986 is amended by striking ``Such term'' and 
all that follows through the period.
    (c) Health Flexible Spending Arrangements and Health Reimbursement 
Arrangements.--Section 106 of the Internal Revenue Code of 1986 is 
amended by striking subsection (f) and by redesignating subsection (g) 
as subsection (f).
    (d) Effective Dates.--
            (1) Distributions from savings accounts.--The amendments 
        made by subsections (a) and (b) shall apply to amounts paid 
        with respect to taxable years beginning after December 31, 
        2016.
            (2) Reimbursements.--The amendment made by subsection (c) 
        shall apply to expenses incurred with respect to taxable years 
        beginning after December 31, 2016.

SEC. 208. REPEAL OF INCREASE OF TAX ON HEALTH SAVINGS ACCOUNTS.

    (a) HSAs.--Section 223(f)(4)(A) of the Internal Revenue Code of 
1986 is amended by striking ``20 percent'' and inserting ``10 
percent''.
    (b) Archer MSAs.--Section 220(f)(4)(A) of the Internal Revenue Code 
of 1986 is amended by striking ``20 percent'' and inserting ``15 
percent''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions made after December 31, 2016.

SEC. 209. REPEAL OF LIMITATIONS ON CONTRIBUTIONS TO FLEXIBLE SPENDING 
              ACCOUNTS.

    (a) In General.--Section 125 of the Internal Revenue Code of 1986 
is amended by striking subsection (i).
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2016.

SEC. 210. REPEAL OF MEDICAL DEVICE EXCISE TAX.

    Section 4191 of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new subsection:
    ``(d) Applicability.--The tax imposed under subsection (a) shall 
not apply to sales after December 31, 2016.''.

SEC. 211. REPEAL OF ELIMINATION OF DEDUCTION FOR EXPENSES ALLOCABLE TO 
              MEDICARE PART D SUBSIDY.

    (a) In General.--Section 139A of the Internal Revenue Code of 1986 
is amended by adding at the end the following new sentence: ``This 
section shall not be taken into account for purposes of determining 
whether any deduction is allowable with respect to any cost taken into 
account in determining such payment.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2016.

SEC. 212. REDUCTION OF INCOME THRESHOLD FOR DETERMINING MEDICAL CARE 
              DEDUCTION.

    (a) In General.--Subsection (a) of section 213 of the Internal 
Revenue Code of 1986 is amended by striking ``10 percent'' and 
inserting ``5.8 percent''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2016.

SEC. 213. REPEAL OF MEDICARE TAX INCREASE.

    (a) In General.--Subsection (b) of section 3101 of the Internal 
Revenue Code of 1986 is amended to read as follows:
    ``(b) Hospital Insurance.--In addition to the tax imposed by the 
preceding subsection, there is hereby imposed on the income of every 
individual a tax equal to 1.45 percent of the wages (as defined in 
section 3121(a)) received by such individual with respect to employment 
(as defined in section 3121(b)).''.
    (b) SECA.--Subsection (b) of section 1401 of the Internal Revenue 
Code of 1986 is amended to read as follows:
    ``(b) Hospital Insurance.--In addition to the tax imposed by the 
preceding subsection, there shall be imposed for each taxable year, on 
the self-employment income of every individual, a tax equal to 2.9 
percent of the amount of the self-employment income for such taxable 
year.''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to remuneration received after, and taxable years 
beginning after, December 31, 2022.

SEC. 214. REFUNDABLE TAX CREDIT FOR HEALTH INSURANCE COVERAGE.

    (a) In General.--Section 36B of the Internal Revenue Code of 1986 
is amended to read as follows:

``SEC. 36B. REFUNDABLE CREDIT FOR COVERAGE UNDER A QUALIFIED HEALTH 
              PLAN.

    ``(a) Allowance of Premium Tax Credit.--In the case of an 
individual, there shall be allowed as a credit against the tax imposed 
by this subtitle for the taxable year the sum of the monthly credit 
amounts with respect to such taxpayer for calendar months during such 
taxable year which are eligible coverage months appropriately taken 
into account under subsection (b)(2) with respect to the taxpayer or 
any qualifying family member of the taxpayer.
    ``(b) Monthly Credit Amounts.--
            ``(1) In general.--The monthly credit amount with respect 
        to any taxpayer for any calendar month is the lesser of--
                    ``(A) the sum of the monthly limitation amounts 
                determined under subsection (c) with respect to the 
                taxpayer and the taxpayer's qualifying family members 
                for such month, or
                    ``(B) the amount paid for a qualified health plan 
                for the taxpayer and the taxpayer's qualifying family 
                members for such month.
            ``(2) Eligible coverage month requirement.--No amount shall 
        be taken into account under subparagraph (A) or (B) of 
        paragraph (1) with respect to any individual for any month 
        unless such month is an eligible coverage month with respect to 
        such individual.
    ``(c) Monthly Limitation Amounts.--
            ``(1) In general.--The monthly limitation amount with 
        respect to any individual for any eligible coverage month 
        during any taxable year is \1/12\ of--
                    ``(A) $2,000 in the case of an individual who has 
                not attained age 30 as of the beginning of such taxable 
                year,
                    ``(B) $2,500 in the case of an individual who has 
                attained age 30 but who has not attained age 40 as of 
                such time,
                    ``(C) $3,000 in the case of an individual who has 
                attained age 40 but who has not attained age 50 as of 
                such time,
                    ``(D) $3,500 in the case of an individual who has 
                attained age 50 but who has not attained age 60 as of 
                such time, and
                    ``(E) $4,000 in the case of an individual who has 
                attained age 60 as of such time.
            ``(2) Limitation based on modified adjusted gross income.--
        The credit allowed under subsection (a) with respect to any 
        taxpayer for any taxable year shall be reduced (but not below 
        zero) by 10 percent of the excess (if any) of--
                    ``(A) the taxpayer's modified adjusted gross income 
                (as defined in section 36B(d)(2)(B), as in effect for 
                taxable years beginning before January 1, 2020) for 
                such taxable year, over
                    ``(B) $75,000 (twice such amount in the case of a 
                joint return).
            ``(3) Other limitations.--
                    ``(A) Aggregate dollar limitation.--The sum of the 
                monthly limitation amounts taken into account under 
                this section with respect to any taxpayer for any 
                taxable year shall not exceed $14,000.
                    ``(B) Maximum number of individuals taken into 
                account.--With respect to any taxpayer for any month, 
                monthly limitation amounts shall be taken into account 
                under this section only with respect to the 5 oldest 
                individuals with respect to whom monthly limitation 
                amounts could (without regard to this subparagraph) 
                otherwise be so taken into account.
    ``(d) Eligible Coverage Month.--For purposes of this section, the 
term `eligible coverage month' means, with respect to any individual, 
any month if, as of the first day of such month, the individual meets 
the following requirements:
            ``(1) The individual is covered by a health insurance 
        coverage which is certified by the State in which such 
        insurance is offered as coverage that meets the requirements 
        for qualified health plans under subsection (f).
            ``(2) The individual is not eligible for--
                    ``(A) coverage under a group health plan (within 
                the meaning of section 5000(b)(1)) other than coverage 
                under a plan substantially all of the coverage of which 
                is of excepted benefits described in section 9832(c), 
                or
                    ``(B) coverage described in section 5000A(f)(1)(A).
            ``(3) The individual is either--
                    ``(A) a citizen or national of the United States, 
                or
                    ``(B) a qualified alien (within the meaning of 
                section 431 of the Personal Responsibility and Work 
                Opportunity Reconciliation Act of 1996 (8 U.S.C. 
                1641)).
            ``(4) The individual is not incarcerated, other than 
        incarceration pending the disposition of charges.
    ``(e) Qualifying Family Member.--For purposes of this section, the 
term `qualifying family member' means--
            ``(1) in the case of a joint return, the taxpayer's spouse,
            ``(2) any dependent of the taxpayer, and
            ``(3) with respect to any eligible coverage month, any 
        child (as defined in section 152(f)(1)) of the taxpayer who as 
        of the end of the taxable year has not attained age 27 if such 
        child is covered for such month under a qualified health plan 
        which also covers the taxpayer (in the case of a joint return, 
        either spouse).
    ``(f) Qualified Health Plan.--For purposes of this section, the 
term `qualified health plan' means any health insurance coverage (as 
defined in section 9832(b)) if--
            ``(1) such coverage is offered in the individual health 
        insurance market within a State (within the meaning of section 
        5000A(f)(1)(C)),
            ``(2) substantially all of such coverage is not of excepted 
        benefits described in section 9832(c),
            ``(3) such coverage does not consist of short-term limited 
        duration insurance (within the meaning of section 2791(b)(5) of 
        the Public Health Service Act),
            ``(4) such coverage is not a grandfathered health plan (as 
        defined in section 1251 of the Patient Protection and 
        Affordable Care Act) or a grandmothered health plan (as defined 
        in section 36B(c)(3)(C) as in effect for taxable years 
        beginning before January 1, 2020), and
            ``(5) such coverage does not include coverage for abortions 
        (other than any abortion necessary to save the life of the 
        mother or any abortion with respect to a pregnancy that is the 
        result of an act of rape or incest).
    ``(g) Special Rules.--
            ``(1) Married couples must file joint return.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), if the taxpayer is married (within 
                the meaning of section 7703) at the close of the 
                taxable year, no credit shall be allowed under this 
                section to such taxpayer unless such taxpayer and the 
                taxpayer's spouse file a joint return for such taxable 
                year.
                    ``(B) Exception for certain taxpayers.--
                Subparagraph (A) shall not apply to any married 
                taxpayer who--
                            ``(i) is living apart from the taxpayer's 
                        spouse at the time the taxpayer files the tax 
                        return,
                            ``(ii) is unable to file a joint return 
                        because such taxpayer is a victim of domestic 
                        abuse or spousal abandonment,
                            ``(iii) certifies on the tax return that 
                        such taxpayer meets the requirements of clauses 
                        (i) and (ii), and
                            ``(iv) has not met the requirements of 
                        clauses (i), (ii), and (iii) for each of the 3 
                        preceding taxable years.
            ``(2) Denial of credit to dependents.--
                    ``(A) In general.--No credit shall be allowed under 
                this section to any individual who is a dependent with 
                respect to another taxpayer for a taxable year 
                beginning in the calendar year in which such 
                individual's taxable year begins.
                    ``(B) Coordination with rule for older children.--
                In the case of any individual who is a qualifying 
                family member described in subsection (e)(3) with 
                respect to another taxpayer for any month, in 
                determining the amount of any credit allowable to such 
                individual under this section for any taxable year of 
                such individual which includes such month, the monthly 
                limitation amount with respect to such individual for 
                such month shall be zero and no amount paid for any 
                qualified health plan with respect to such individual 
                for such month shall be taken into account.
            ``(3) Coordination with medical expense deduction.--Amounts 
        described in subsection (b)(1)(B) with respect to any month 
        shall not be taken into account in determining the deduction 
        allowed under section 213 except to the extent that such 
        amounts exceed the amount described in subsection (b)(1)(A) 
        with respect to such month.
            ``(4) Coordination with advance payments of credit.--With 
        respect to any taxable year--
                    ``(A) the amount which would (but for this 
                subsection) be allowed as a credit to the taxpayer 
                under subsection (a) shall be reduced (but not below 
                zero) by the aggregate amount paid on behalf of such 
                taxpayer under section 1412 of the Patient Protection 
                and Affordable Care Act for months beginning in such 
                taxable year, and
                    ``(B) the tax imposed by section 1 for such taxable 
                year shall be increased by the excess (if any) of--
                            ``(i) the aggregate amount paid on behalf 
                        of such taxpayer under such section 1412 for 
                        months beginning in such taxable year, over
                            ``(ii) the amount which would (but for this 
                        subsection) be allowed as a credit to the 
                        taxpayer under subsection (a).
            ``(5) Special rules for qualified small employer health 
        reimbursement arrangements.--
                    ``(A) In general.--If the taxpayer or any 
                qualifying family member of the taxpayer is provided a 
                qualified small employer health reimbursement 
                arrangement for an eligible coverage month, the sum 
                determined under subsection (b)(1)(A) with respect to 
                the taxpayer shall be reduced (but not below zero) by 
                \1/12\ of the permitted benefit (as defined in section 
                9831(d)(3)(C)) under such arrangement for each such 
                month such arrangement is provided to such taxpayer.
                    ``(B) Qualified small employer health reimbursement 
                arrangement.--For purposes of this paragraph, the term 
                `qualified small employer health reimbursement 
                arrangement' has the meaning given such term by section 
                9831(d)(2).
                    ``(C) Coverage for less than entire year.--In the 
                case of an employee who is provided a qualified small 
                employer health reimbursement arrangement for less than 
                an entire year, subparagraph (A) shall be applied by 
                substituting `the number of months during the year for 
                which such arrangement was provided' for `12'.
            ``(6) Certain rules related to nonqualified health plans.--
        The rules of section 36B(c)(3)(D), as in effect for taxable 
        years beginning before January 1, 2020, shall apply with 
        respect to subsection (f)(5).
            ``(7) Inflation adjustment.--
                    ``(A) In general.--In the case of any taxable year 
                beginning in a calendar year after 2020, each dollar 
                amount in subsection (c)(1), the $75,000 amount in 
                subsection (c)(2)(B), and the dollar amount in 
                subsection (c)(3)(A), shall be increased by an amount 
                equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        determined--
                                    ``(I) by substituting `calendar 
                                year 2019' for `calendar year 1992' in 
                                subparagraph (B) thereof, and
                                    ``(II) by substituting for the CPI 
                                referred to section 1(f)(3)(A) the 
                                amount that such CPI would have been if 
                                the annual percentage increase in CPI 
                                with respect to each year after 2019 
                                had been one percentage point greater.
                    ``(B) Terms related to cpi.--
                            ``(i) Annual percentage increase.--For 
                        purposes of subparagraph (A)(ii)(II), the term 
                        `annual percentage increase' means the 
                        percentage (if any) by which CPI for any year 
                        exceeds CPI for the prior year.
                            ``(ii) Other terms.--Terms used in this 
                        paragraph which are also used in section 
                        1(f)(3) shall have the same meanings as when 
                        used in such section.
                    ``(C) Rounding.--Any increase determined under 
                subparagraph (A) shall be rounded to the nearest 
                multiple of $50.
            ``(8) Rules related to state certification of qualified 
        health plans.--A certification shall not be taken into account 
        under subsection (d)(1) unless such certification is made 
        available to the public and meets such other requirements as 
        the Secretary may provide.
            ``(9) Regulations.--The Secretary may prescribe such 
        regulations and other guidance as may be necessary or 
        appropriate to carry out this section and section 1412 of the 
        Patient Protection and Affordable Care Act.''.
    (b) Advance Payment of Credit.--Section 1412(f) of the Patient 
Protection and Affordable Care Act, as added by section 202, is amended 
to read as follows:
    ``(f) Application to Certain Plans.--The Secretary and the 
Secretary of the Treasury shall prescribe such regulations as each 
respective Secretary may deem necessary in order to establish and 
operate the advance payment program established under this section for 
individuals covered under qualified health plans (whether enrolled in 
through an Exchange or otherwise) in such a manner that protects 
taxpayer information (including names, taxpayer identification numbers, 
and other confidential information), provides robust verification of 
all information necessary to establish eligibility of taxpayer for 
advance payments under this section, ensures proper and timely payments 
to appropriate health providers, and protects program integrity to the 
maximum extent feasible.''.
    (c) Increased Penalty on Erroneous Claims of Credit.--Section 
6676(a) of the Internal Revenue Code of 1986 is amended by inserting 
``(25 percent in the case of a claim for refund or credit relating to 
the health insurance coverage credit under section 36B)''.
    (d) Reporting by Employers.--Section 6051(a) of such Code is 
amended by striking ``and'' at the end of paragraph (14), by striking 
the period at the end of paragraph (15) and inserting ``, and'', and by 
inserting after paragraph (15) the following new paragraph:
            ``(16) each month with respect to which the employee is 
        eligible for coverage described in section 36B(d)(2) in 
        connection with employment with the employer.''.
    (e) Coordination With Other Tax Benefits.--
            (1) Credit for health insurance costs of eligible 
        individuals.--Section 35(g) of such Code is amended by adding 
        at the end the following new paragraph:
            ``(14) Coordination with health insurance coverage 
        credit.--
                    ``(A) In general.--An eligible coverage month to 
                which the election under paragraph (11) applies shall 
                not be treated as an eligible coverage month (as 
                defined in section 36B(d)) for purposes of section 36B 
                with respect to the taxpayer or any of the taxpayer's 
                qualifying family members (as defined in section 
                36B(e)).
                    ``(B) Coordination with advance payments of health 
                insurance coverage credit.--In the case of a taxpayer 
                who makes the election under paragraph (11) with 
                respect to any eligible coverage month in a taxable 
                year or on behalf of whom any advance payment is made 
                under section 7527 with respect to any month in such 
                taxable year--
                            ``(i) the tax imposed by this chapter for 
                        the taxable year shall be increased by the 
                        excess, if any, of--
                                    ``(I) the sum of any advance 
                                payments made on behalf of the taxpayer 
                                under section 7527 and section 1412 of 
                                the Patient Protection and Affordable 
                                Care Act, over
                                    ``(II) the sum of the credits 
                                allowed under this section (determined 
                                without regard to paragraph (1)) and 
                                section 36B (determined without regard 
                                to subsection (g)(4)(A) thereof) for 
                                such taxable year, and
                            ``(ii) section 36B(g)(4)(B) shall not apply 
                        with respect to such taxpayer for such taxable 
                        year.''.
            (2) Trade or business deduction.--Section 162(l) of such 
        Code is amended by adding at the end the following new 
        paragraph:
            ``(6) Coordination with health insurance coverage credit.--
        The deduction otherwise allowable to a taxpayer under paragraph 
        (1) for any taxable year shall be reduced (but not below zero) 
        by the amount of the credit allowable to such taxpayer under 
        section 36B (determined without regard to subsection (g)(4)(A) 
        thereof) for such taxable year.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to months beginning after December 31, 2019, in taxable years 
ending after such date.

SEC. 215. MAXIMUM CONTRIBUTION LIMIT TO HEALTH SAVINGS ACCOUNT 
              INCREASED TO AMOUNT OF DEDUCTIBLE AND OUT-OF-POCKET 
              LIMITATION.

    (a) Self-Only Coverage.--Section 223(b)(2)(A) of the Internal 
Revenue Code of 1986 is amended by striking ``$2,250'' and inserting 
``the amount in effect under subsection (c)(2)(A)(ii)(I)''.
    (b) Family Coverage.--Section 223(b)(2)(B) of such Code is amended 
by striking ``$4,500'' and inserting ``the amount in effect under 
subsection (c)(2)(A)(ii)(II)''.
    (c) Conforming Amendments.--Section 223(g)(1) of such Code is 
amended--
            (1) by striking ``subsections (b)(2) and'' both places it 
        appears and inserting ``subsection'', and
            (2) in subparagraph (B), by striking ``determined by'' and 
        all that follows through ```calendar year 2003'.'' and 
        inserting ``determined by substituting `calendar year 2003' for 
        `calendar year 1992' in subparagraph (B) thereof.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2017.

SEC. 216. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CONTRIBUTIONS TO THE SAME 
              HEALTH SAVINGS ACCOUNT.

    (a) In General.--Section 223(b)(5) of the Internal Revenue Code of 
1986 is amended to read as follows:
            ``(5) Special rule for married individuals with family 
        coverage.--
                    ``(A) In general.--In the case of individuals who 
                are married to each other, if both spouses are eligible 
                individuals and either spouse has family coverage under 
                a high deductible health plan as of the first day of 
                any month--
                            ``(i) the limitation under paragraph (1) 
                        shall be applied by not taking into account any 
                        other high deductible health plan coverage of 
                        either spouse (and if such spouses both have 
                        family coverage under separate high deductible 
                        health plans, only one such coverage shall be 
                        taken into account),
                            ``(ii) such limitation (after application 
                        of clause (i)) shall be reduced by the 
                        aggregate amount paid to Archer MSAs of such 
                        spouses for the taxable year, and
                            ``(iii) such limitation (after application 
                        of clauses (i) and (ii)) shall be divided 
                        equally between such spouses unless they agree 
                        on a different division.
                    ``(B) Treatment of additional contribution 
                amounts.--If both spouses referred to in subparagraph 
                (A) have attained age 55 before the close of the 
                taxable year, the limitation referred to in 
                subparagraph (A)(iii) which is subject to division 
                between the spouses shall include the additional 
                contribution amounts determined under paragraph (3) for 
                both spouses. In any other case, any additional 
                contribution amount determined under paragraph (3) 
                shall not be taken into account under subparagraph 
                (A)(iii) and shall not be subject to division between 
                the spouses.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2017.

SEC. 217. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED BEFORE 
              ESTABLISHMENT OF HEALTH SAVINGS ACCOUNT.

    (a) In General.--Section 223(d)(2) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new subparagraph:
                    ``(D) Treatment of certain medical expenses 
                incurred before establishment of account.--If a health 
                savings account is established during the 60-day period 
                beginning on the date that coverage of the account 
                beneficiary under a high deductible health plan begins, 
                then, solely for purposes of determining whether an 
                amount paid is used for a qualified medical expense, 
                such account shall be treated as having been 
                established on the date that such coverage begins.''.
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to coverage beginning after December 31, 2017.

              Subtitle B--Repeal of Certain Consumer Taxes

SEC. 221. REPEAL OF TAX ON PRESCRIPTION MEDICATIONS.

    Subsection (j) of section 9008 of the Patient Protection and 
Affordable Care Act is amended to read as follows:
    ``(j) Repeal.--This section shall apply to calendar years beginning 
after December 31, 2010, and ending before January 1, 2017.''.

SEC. 222. REPEAL OF HEALTH INSURANCE TAX.

    Subsection (j) of section 9010 of the Patient Protection and 
Affordable Care Act is amended to read as follows:
    ``(j) Repeal.--This section shall apply to calendar years beginning 
after December 31, 2013, and ending before January 1, 2017.''.

                   Subtitle C--Repeal of Tanning Tax

SEC. 231. REPEAL OF TANNING TAX.

    (a) In General.--The Internal Revenue Code of 1986 is amended by 
striking chapter 49.
    (b) Effective Date.--The amendment made by this section shall apply 
to services performed after June 30, 2017.

             Subtitle D--Remuneration From Certain Insurers

SEC. 241. REMUNERATION FROM CERTAIN INSURERS.

    Paragraph (6) of section 162(m) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new subparagraph:
                    ``(I) Termination.--This paragraph shall not apply 
                to taxable years beginning after December 31, 2016.''.

            Subtitle E--Repeal of Net Investment Income Tax

SEC. 251. REPEAL OF NET INVESTMENT INCOME TAX.

    (a) In General.--Subtitle A of the Internal Revenue Code of 1986 is 
amended by striking chapter 2A.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2016.

            Passed the House of Representatives May 4, 2017.

            Attest:

                                                                 Clerk.
115th CONGRESS

  1st Session

                               H. R. 1628

_______________________________________________________________________

                                 AN ACT

 To provide for reconciliation pursuant to title II of the concurrent 
             resolution on the budget for fiscal year 2017.