[Congressional Record Volume 141, Number 98 (Thursday, June 15, 1995)]
[Senate]
[Pages S8493-S8516]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. GREGG:
  S. 924. A bill to amend the Internal Revenue Code of 1986 to provide 
a reduction in the capital gains tax for assets held more than 2 years, 
to impose a surcharge on short-term capital gains, and for other 
purposes; to the Committee on Finance.


             THE LONG-TERM INVESTMENT INCENTIVE ACT OF 1995

Mr. GREGG. Mr. President, I introduce a bill that will have a 
significant impact on the promotion of long-term investment through a 
reduction in the capital gains tax. I believe the Congress has a 
responsibility to enact laws promoting long-term capital investment and 
savings by all Americans. Part of fulfilling this obligation must 
include implementing a plan that would reduce the current capital gains 
tax rate on long-term investments.
  We must also, however, balance this important economic goal against 
the moral issue of adding increasing debt onto our children's 
shoulders. This becomes an unavoidable issue in the capital gains 
debate because the Joint Committee on Taxation scores capital gains a 
big revenue loser. This scoring issue is an unfortunate fact that we in 
Congress cannot ignore.
  Accordingly, I have developed legislation that would encourage long-
term investment by amending the current capital gains tax using a 
sliding scale plan. My bill encourages an individual to hold an asset 
over a number of years, thus, allowing a greater tax reduction on 
investments, with the maximum benefit being reached after 4 years. It 
would reward individuals who look toward contributing to a savings plan 
over a number of years, while at the same time making quick fix 
investments less attractive. This sliding scale plan would encourage 
investments that benefit long-term savings, [[Page S8494]] such as a 
child's education, an individual's retirement, or other nonspeculative 
holdings.
  The theory behind the sliding scale reduction on capital gains hinges 
upon an agreed goal: the promotion of savings and long-term investment 
through a capital gains cut, while recognizing our current fiscal 
realities. The Joint Committee on Taxation estimates this plan would 
lose just $7.4 billion in revenue over the 1995-2000 period.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:
                                 S. 924
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This Act may be cited as the ``Long-Term 
     Investment Incentive Act of 1995''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

     SEC. 2. REDUCTION OF TAX ON LONG-TERM CAPITAL GAINS ON ASSETS 
                   HELD MORE THAN 2 YEARS.

       (a) In General.--Part I of subchapter P of chapter 1 
     (relating to treatment of capital gains) is amended by 
     redesignating section 1202 as section 1203 and by inserting 
     after section 1201 the following new section:

     ``SEC. 1202. CAPITAL GAINS DEDUCTION FOR ASSETS HELD BY 
                   NONCORPORATE TAXPAYERS MORE THAN 2 YEARS.

       ``(a) General Rule.--If a taxpayer other than a corporation 
     has a net capital gain for any taxable year, there shall be 
     allowed as a deduction an amount equal to the sum of--
       ``(1) 20 percent of the qualified 4-year capital gain,
       ``(2) 10 percent of the qualified 3-year capital gain, plus
       ``(3) 5 percent of the qualified 2-year capital gain.
       ``(b) Definitions.--For purposes of this title--
       ``(1) Qualified 4-year capital gain.--The term `qualified 
     4-year capital gain' means the lesser of--
       ``(A) the amount of long-term capital gain which would be 
     computed for the taxable year if only gain from the sale or 
     exchange of property held by the taxpayer for more than 4 
     years were taken into account, or
       ``(B) the net capital gain.
       ``(2) Qualified 3-year capital gain.--The term `qualified 
     3-year capital gain' means the lesser of--
       ``(A) the amount of long-term capital gain which would be 
     computed for the taxable year if only gain from the sale or 
     exchange of property held by the taxpayer for more than 3 
     years but not more than 4 years were taken into account, or
       ``(B) the net capital gain, reduced by the qualified 4-year 
     capital gain.
       ``(3) Qualified 2-year capital gain.--The term `qualified 
     2-year capital gain' means the lesser of--
       ``(A) the amount of long-term capital gain which would be 
     computed for the taxable year if only gain from the sale or 
     exchange of property held by the taxpayer for more than 2 
     years but not more than 3 years were taken into account, or
       ``(B) the net capital gain, reduced by the qualified 4-year 
     capital gain and qualified 3-year capital gain.
       ``(c) Estates and Trusts.--In the case of an estate or 
     trust, the deduction under subsection (a) shall be computed 
     by excluding the portion (if any) of the gains for the 
     taxable year from sales or exchanges of capital assets which, 
     under sections 652 and 662 (relating to inclusions of amounts 
     in gross income of beneficiaries of trusts), is includible by 
     the income beneficiaries as gain derived from the sale or 
     exchange of capital assets.
       ``(d) Coordination With Treatment of Capital Gain Under 
     Limitation on Investment Interest.--For purposes of this 
     section, the net capital gain for any taxable year shall be 
     reduced (but not below zero) by the amount which the taxpayer 
     takes into account as investment income under section 
     163(d)(4)(B)(iii).
       ``(e) Treatment of Collectibles.--
       ``(1) In general.--Solely for purposes of this section, any 
     gain or loss from the sale or exchange of a collectible shall 
     be treated as a short-term capital gain or loss (as the case 
     may be), without regard to the period such asset was held. 
     The preceding sentence shall apply only to the extent the 
     gain or loss is taken into account in computing taxable 
     income.
       ``(2) Treatment of certain sales of interest in 
     partnership, etc.--For purposes of paragraph (1), any gain 
     from the sale or exchange of an interest in a partnership, S 
     corporation, or trust which is attributable to unrealized 
     appreciation in the value of collectibles held by such entity 
     shall be treated as gain from the sale or exchange of a 
     collectible. Rules similar to the rules of section 751(f) 
     shall apply for purposes of the preceding sentence.
       ``(3) Collectible.--For purposes of this subsection, the 
     term `collectible' means any capital asset which is a 
     collectible (as defined in section 408(m) without regard to 
     paragraph (3) thereof).
       ``(f) Transitional Rule.--
       ``(1) In general.--Gain may be taken into account under 
     subsection (b)(1)(A), (b)(2)(A), or (b)(3)(A) only if such 
     gain is properly taken into account on or after July 1, 1995.
       ``(2) Special rules for pass-thru entities.--
       ``(A) In general.--In applying paragraph (1) with respect 
     to any pass-thru entity, the determination of when gains and 
     losses are properly taken into account shall be made at the 
     entity level.
       ``(B) Pass-thru entity defined.--For purposes of 
     subparagraph (A), the term `pass-thru entity' means--
       ``(i) a regulated investment company,
       ``(ii) a real estate investment trust,
       ``(iii) an S corporation,
       ``(iv) a partnership,
       ``(v) an estate or trust, and
       ``(vi) a common trust fund.''
       (b) Deduction Allowable in Computing Adjusted Gross 
     Income.--Subsection (a) of section 62 is amended by inserting 
     after paragraph (15) the following new paragraph:
       ``(16) Long-term capital gains.--The deduction allowed by 
     section 1202.''
       (c) Maximum Capital Gains Rate.--Clause (i) of section 
     1(h)(1)(A), as amended by section 3(a), is amended by 
     striking ``the net capital gain'' and inserting ``the excess 
     of the net capital gain over the deduction allowed under 
     section 1202''.
       (d) Treatment of Certain Pass-Thru Entities.--
       (1) Capital gain dividends of regulated investment 
     companies.--
       (A) Subparagraph (B) of section 852(b)(3) is amended to 
     read as follows:
       ``(B) Treatment of capital gain dividends by 
     shareholders.--A capital gain dividend shall be treated by 
     the shareholders as gain from the sale or exchange of a 
     capital asset held for more than 1 year but not more than 2 
     years; except that--
       ``(i) the portion of any such dividend designated by the 
     company as allocable to qualified 4-year capital gain of the 
     company shall be treated as gain from the sale or exchange of 
     a capital asset held for more than 4 years,
       ``(ii) the portion of any such dividend designated by the 
     company as allocable to qualified 3-year capital gain of the 
     company shall be treated as gain from the sale or exchange of 
     a capital asset held for more than 3 years but not more than 
     4 years, and
       ``(iii) the portion of any such dividend designated by the 
     company as allocable to qualified 2-year capital gain of the 
     company shall be treated as gain from the sale or exchange of 
     a capital asset held for more than 2 years but not more than 
     3 years.

     Rules similar to the rules of subparagraph (C) shall apply to 
     any designation under clause (i), (ii), or (iii).''

       (B) Clause (i) of section 852(b)(3)(D) is amended by adding 
     at the end the following new sentence: ``Rules similar to the 
     rules of subparagraph (B) shall apply in determining 
     character of the amount to be so included by any such 
     shareholder.''
       (2) Capital gain dividends of real estate investment 
     trusts.--Subparagraph (B) of section 857(b)(3) is amended to 
     read as follows:
       ``(B) Treatment of capital gain dividends by 
     shareholders.--A capital gain dividend shall be treated by 
     the shareholders or holders of beneficial interests as gain 
     from the sale or exchange of a capital asset held for more 
     than 1 year but not more than 2 years; except that--
       ``(i) the portion of any such dividend designated by the 
     real estate investment trust as allocable to qualified 4-year 
     capital gain of the trust shall be treated as gain from the 
     sale or exchange of a capital asset held for more than 4 
     years,
       ``(ii) the portion of any such dividend designated by the 
     trust as allocable to qualified 3-year capital gain of the 
     trust shall be treated as gain from the sale or exchange of a 
     capital asset held for more than 3 years but not more than 4 
     years, and
       ``(iii) the portion of any such dividend designated by the 
     trust as allocable to qualified 2-year capital gain of the 
     trust shall be treated as gain from the sale or exchange of a 
     capital asset held for more than 2 years but not more than 3 
     years.

     Rules similar to the rules of subparagraph (C) shall apply to 
     any designation under clause (i) or (ii).''

       (3) Common trust funds.--Subsection (c) of section 584 is 
     amended--
       (A) by inserting ``and not more than 2 years'' after ``1 
     year'' each place it appears in paragraph (2),
       (B) by striking ``and'' at the end of paragraph (2), and
       (C) by redesignating paragraph (3) as paragraph (6) and 
     inserting after paragraph (2) the following new paragraphs:
       ``(3) as part of its gains from sales or exchanges of 
     capital assets held for more than 2 years but less than 3 
     years, its proportionate share of the gains of the common 
     trust fund from sales or exchanges of capital assets held for 
     more than 2 years but not more than 3 years,
       ``(4) as part of its gains from sales or exchanges of 
     capital assets held for more than 3 years but less than 4 
     years, its proportionate share of the gains of the common 
     trust fund from sales or exchanges of capital 
     [[Page S8495]] assets held for more than 3 years but less 
     than 4 years,
       ``(5) as part of its gains from sales or exchanges of 
     capital assets held more than 4 years, its proportionate 
     share of the gains of the common trust fund from sales or 
     exchanges of capital assets held for more than 4 years, 
     and''.
       (e) Technical and Conforming Changes.--
       (1) Subparagraph (B) of section 170(e)(1) is amended by 
     inserting ``(or, in the case of a taxpayer other than a 
     corporation, the percentage of such gain equal to 100 percent 
     minus the percentage applicable to such gain under section 
     1202(a))'' after ``the amount of gain''.
       (2) Subparagraph (B) of section 172(d)(2) is amended to 
     read as follows:
       ``(B) the deduction under section 1202 and the exclusion 
     under section 1203 shall not be allowed.''
       (3)(A) Section 220 (relating to cross reference) is amended 
     to read as follows:

     ``SEC. 220. CROSS REFERENCES.

       ``(1) For deduction for net capital gains in the case of a 
     taxpayer other than a corporation, see section 1202.
       ``(2) For deductions in respect of a decedent, see section 
     691.''
       (B) The table of sections for part VII of subchapter B of 
     chapter 1 is amended by striking ``reference'' in the item 
     relating to section 220 and inserting ``references''.
       (4) The last sentence of section 453A(c)(3) is amended by 
     striking all that follows ``long-term capital gain,'' and 
     inserting ``the maximum rate on net capital gain under 
     section 1(h) or 1201 or the deduction under section 1202 
     (whichever is appropriate) shall be taken into account.''
       (5) Paragraph (4) of section 642(c) is amended to read as 
     follows:
       ``(4) Adjustments.--To the extent that the amount otherwise 
     allowable as a deduction under this subsection consists of 
     gain from the sale or exchange of capital assets held for 
     more than 1 year, proper adjustment shall be made for any 
     deduction allowable to the estate or trust under section 1202 
     or any exclusion allowable to the estate or trust under 
     section 1203(a). In the case of a trust, the deduction 
     allowed by this subsection shall be subject to section 681 
     (relating to unrelated business income).''
       (6) The last sentence of paragraph (3) of section 643(a) is 
     amended to read as follows: ``The deduction under section 
     1202 and the exclusion under section 1203 shall not be taken 
     into account.''
       (7) Subparagraph (C) of section 643(a)(6) is amended by 
     inserting ``(i)'' before ``there shall'' and by inserting 
     before the period ``, and (ii) the deduction under section 
     1202 (relating to capital gains deduction) shall not be taken 
     into account''.
       (8) Paragraph (4) of section 691(c) is amended by striking 
     ``sections 1(h), 1201, and 1211'' and inserting ``sections 
     1(h), 1201, 1202, and 1211''.
       (9) The second sentence of section 871(a)(2) is amended by 
     inserting ``or 1203'' after ``1202''.
       (10) Subsection (d) of section 1044 is amended by striking 
     ``1202'' and inserting ``1203''.
       (11) Paragraph (1) of section 1402(i) is amended by 
     inserting ``, and the deduction provided by section 1202 
     shall not apply'' before the period at the end thereof.
       (f) Clerical Amendment.--The table of sections for part I 
     of subchapter P of chapter 1 is amended by inserting after 
     the item relating to section 1201 the following new item:
``Sec. 1202. Capital gains deduction for assets held by noncorporate 
              taxpayers more than 2 years.''
       (g) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to taxable years ending after June 30, 1995.
       (2) Contributions.--The amendment made by subsection (e)(1) 
     shall apply to contributions on or after July 1, 1995.

     SEC. 3. SURCHARGE ON CAPITAL GAINS ON ASSETS HELD 1 YEAR OR 
                   LESS.

       (a) In General.--Subsection (h) of section 1 (relating to 
     maximum capital gains rate) is amended to read as follows:
       ``(h) Maximum Capital Gains Taxes.--
       ``(1) In general.--If a taxpayer has a net capital gain for 
     any taxable year, then the tax imposed by this section shall 
     not exceed the sum of--
       ``(A) a tax computed at the rates and in the same manner as 
     if this subsection had not been enacted on the greater of--
       ``(i) taxable income reduced by the amount of net capital 
     gain, or
       ``(ii) the amount of taxable income taxed at a rate below 
     28 percent, plus
       ``(B) a tax of 28 percent of the amount of taxable income 
     in excess of the amount determined under subparagraph (A).

     For purposes of the preceding sentence, the net capital gain 
     for any taxable year shall be reduced (but not below zero) by 
     the amount which the taxpayer elects to take into account as 
     investment income for the taxable year under section 
     163(d)(4)(B)(iii).

       ``(2) Surcharge on net short-term capital gain.--
       ``(A) In general.--If a taxpayer has a net short-term 
     capital gain for any taxable year, the tax imposed by this 
     section (without regard to this paragraph) shall be increased 
     by an amount equal to the sum of--
       ``(i) 5.6 percent of the taxpayer's 6-month short-term 
     capital gain, plus
       ``(ii) 2.8 percent of the taxpayer's 12-month short-term 
     capital gain.
       ``(B) Maximum rate.--
       ``(i) In general.--Subparagraph (A) shall not be applied to 
     the extent it would result in--

       ``(I) 6-month short-term capital gain being taxed at a rate 
     greater than 33.6 percent, or
       ``(II) 12-month short-term capital gain being taxed at a 
     rate greater than 30.8 percent.

       ``(ii) Ordering rule.--For purposes of clause (i), the rate 
     or rates at which 6-month or 12-month short-term capital gain 
     is being taxed shall be determined as if--

       ``(I) such gain were taxed after all other taxable income, 
     and
       ``(II) 12-month short-term capital gain were taxed after 6-
     month short-term capital gain.

       ``(C) Definitions.--For purposes of this paragraph--
       ``(i) 6-month short-term capital gain.--The term `6-month 
     short-term capital gain' means the lesser of--

       ``(I) the amount of short-term capital gain which would be 
     computed for the taxable year if only gain from the sale or 
     exchange of property held by the taxpayer for 6 months or 
     less were taken into account, or
       ``(II) net short-term capital gain.

       ``(ii) 12-month short-term capital gain.--The term `12-
     month short-term capital gain' means the lesser of--

       ``(I) the amount of short-term capital gain which would be 
     computed for the taxable year if only gain from the sale or 
     exchange of property held by the taxpayer for more than 6 
     months but not more than 12 months were taken into account, 
     or
       ``(II) net short-term capital gain, reduced by 6-month 
     short-term capital gain.

     For purposes of clause (i)(I) or (ii)(I), gain may be taken 
     into account only if such gain is properly taken into account 
     on or after July 1, 1995.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years ending after June 30, 
     1995.
                                 ______

      By Mr. MACK (for himself, Mr. Lieberman, Mr. Gramm, Mr. Helms, 
        and Mr. Dole):
  S. 925. A bill to impose congressional notification and reporting 
requirements on any negotiations or other discussions between the 
United States and Cuba with respect to normalization of relations; to 
the Committee on Foreign Relations.


                            cuba legislation

  Mr. MACK. Mr. President, on May 2, the Clinton administration 
reversed 30 years of United States policy by agreeing with Fidel Castro 
that future refugees would be picked up by United States forces and 
returned to Cuba. The administration portrays its decision as an 
immigration control measure reached in secret for the good of misguided 
Cubans who might set out on rafts and inner tubes to reach the United 
States before the doors slammed shut. Apparently, it was necessary to 
keep senior United States officials responsible for Cuba policy in the 
dark as well. The Clinton administration has not satisfactorily 
explained its motives and objectives in reaching this agreement with 
the Castro regime. Therefore, I am introducing this bill which would 
deny funds for negotiations or other contacts related to normalization 
with the Castro regime unless the administration has notified Congress 
15 days in advance.
  This measure is not intended to interfere with the administration's 
ability to conduct diplomacy. It simply requires that if and when 
President Clinton decides to abandon the centerpiece of the United 
States' historic policy toward the Castro dictatorship, he does so in 
an open and public way.
  For 36 years, Fidel Castro has terrorized Cuba's people, destroyed 
its economy, and used it as a base for subversion. I could never have 
imagined circumstances under which the United States would treat 
Castro's Cuba like just another negotiating partner. But last month, 
that's just what the Clinton administration did when it cut a deal 
reversing 30 years of United States policy on welcoming refugees from 
Castro's Cuba.
  I will not dignify what the administration did by calling it ``secret 
diplomacy.'' It was a craven exercise. As A.M. Rosenthal wrote in the 
New York Times, the Clinton administration ``got a contemptuous zero 
from Castro for breaking its promises, not even the release of some 
political prisoners, not the grant of a single civil liberty.''
  At a briefing on Capitol Hill the day the policy U-turn was 
announced, a Clinton administration official was asked whether, under 
the terms of a deal between the United States and Cuba on interdiction 
and repatriation of refugees, the Castro regime had pledged to repeal 
the Cuban law that makes it a crime to leave Cuba without 
[[Page S8496]] permission. The official didn't know. Then the official 
was asked how we can be sure the Castro regime won't use the law to 
retaliate against returned rafters. ``Prosecutorial discretion,'' 
replied the official.
  In a nutshell, that anecdote illustrates the mindset of the Clinton 
administration. Administration officials--some of them anyway--cannot 
distinguish between the Castro regime and governments based on the rule 
of law. This is why many of my colleagues and I are so deeply disturbed 
by recent overtures to Castro. We don't know where they will stop. We 
have no reason to believe that the administration won't continue to 
make concessions at the expense of the Cuban people. My colleagues and 
I are introducing this bill to let the administration know that the 
friends of the Cuban people in the United States Congress will not 
stand by and let this administration engage in anything but a strong 
policy of support for democracy and freedom in Cuba.
                                 ______

      By Mr. BRYAN:
  S. 926. A bill to improve the interstate enforcement of child support 
and parentage court orders, and for other purposes; to the Committee on 
Finance.


                   the child support enforcement act

  Mr. BRYAN. Mr. President, today I am introducing my Child Support 
Enforcement Act legislation from the last Congress to help further 
strengthen our efforts to get deadbeat parents to responsibly provide 
for their children.
  Congress has recently taken many positive steps to increase the 
effectiveness of child support enforcement laws. In the 102d Congress, 
we were successful in enacting legislation, which I sponsored in the 
Senate, to require credit bureaus to indicate on an individual's credit 
file when he or she is delinquent in child support payments. This has 
provided a strong incentive for parents to stay current in their 
payments.
  The 103d Congress enacted laws to make deadbeat parents who fail to 
pay child support ineligible for small business loans; to designate 
child support payments as priority debts when an individual files for 
bankruptcy; to strengthen State paternity establishment procedures and 
to require health insurers to carry out orders for medical child 
support; and to restrict a State court's ability to modify a child 
support order issued by another State.
  As part of much needed welfare reform, we must include improvements 
to the child support enforcement system. I will introduce portions of 
this bill as an amendment when welfare reform is debated in the Senate, 
which I hope will be done before July 4. We need to find as many ways 
as possible to find delinquent parents, and hold them to their 
responsibilities.
  We all lament the increasing number of unwed teenage girls who have 
children. This situation is particularly disheartening when these young 
mothers are themselves mere children. But too often in the past, our 
public policies have focused on the mother and ignored the 
responsibility of the father. Those fathers, who many times have 
already walked away before their children are even born, must face the 
reality of their parental and financial responsibilities.
  During the past 2 months, I have visited child support enforcement 
offices in Las Vegas and Reno, NV. These visits included both the State 
welfare division and the district attorney child support enforcement 
offices. It was an eye-opening experience.
  I was overwhelmed by the thousands of case files stacked throughout 
these offices. Employees in these offices are literally surrounded by 
files. They are joined by scores of investigators and attorneys who 
work ceaselessly to ensure as many deadbeat parents as possible are 
found, and legally persuaded to fulfill their financial 
responsibilities.
  Although Nevada is the fastest growing State in the Nation, it is a 
comparatively small State with about 1.6 million people. Yet its State 
Child Support Enforcement Program had 66,385 cases in fiscal year 1994. 
The program was able to collect $62.7 million. The unfortunate fact, 
however, is that the total owed was almost $352 million, leaving an 
uncollected balance of almost $290 million. In April of this year, 
Nevada's caseload has already grown to over 69,000 cases.
  These cases represent only those children whose families are 
receiving aid to families with dependent children, or who are using the 
services of the county district attorney offices to enforce child 
support. The many Nevadans using private attorneys are not included.
  The facts are simple. Nationally, one in four children live in a 
single-parent household. But one of the most startling statistics is 
that only half of these single parents have sought and obtained child 
support orders.
  This means 50 percent of these single mothers either have been unable 
to track down the father, have not pursued support, or are unaware of 
their legal child support enforcement rights.
  Of the parents who have sought out and obtained child support, only 
half receive the full amount to which they are entitled.
  Let me make this clear--50 percent of single mothers do not even have 
child support orders, and of the 50 percent that do, only half of them 
are getting what their children are entitled to receive. Thus 25 
percent of the single parents who have child support orders actually 
receive nothing at all.
  These facts should concern us. It is all too true that many single 
parents must seek public welfare assistance in order to be able to 
support their children. When we taxpayers are asked to lend a helping 
hand to these children, we should be assured every effort is being made 
to require absent deadbeat parents meet their financial 
responsibilities to those same children. Public assistance should not 
be the escape valve relied upon by those parents who want to walk away 
from their children.
  No one who shares the responsibility for bringing children into this 
world should later be allowed to shirk that responsibility by refusing 
to admit paternity or failing to pay child support. The legislation I 
am introducing today adds to the arsenal available to those trying to 
enforce child support.
  In April, I visited with eligibility workers in a local Las Vegas 
welfare office. I was incredulous when I learned many Federal welfare 
assistance programs do not require recipients to participate in State 
and Federal child support enforcement efforts. In fact, only Aid to 
Families with Dependent Children or AFDC, and Medicaid currently 
require their recipients cooperate with child support enforcement 
efforts.
  For example, if a parent with children receives food stamps, there is 
no requirement, as a condition of receiving that assistance, that the 
parent cooperate with child support enforcement agencies to collect any 
child support payments to which he or she is entitled. Under my 
legislation, all welfare assistance programs receiving Federal funds 
will require all recipients to cooperate with efforts to collect child 
support benefits as a condition of receiving benefits.
  Second, this legislation authorizes State and Federal Governments to 
deny delinquent parents an array of benefits. A delinquent parent can 
be denied an occupational, professional, or business license, a Federal 
loan or guarantee, and could even have his or her passport revoked if 
the threat of fleeing the country was likely. The goal is not to drive 
those who want to meet their obligations away, but rather to make sure 
those ignoring their children understand society will not tolerate that 
irresponsible behavior.
  These provisions should be particularly effective in dealing with 
delinquent parents who are self-employed, and who are not covered by 
the mandatory employer child support payment withholding.
  The bill also builds on our past efforts of using the credit 
reporting system. It permits State agencies to obtain credit files in 
order to track down delinquent parents, or to help determine the 
appropriate amount of child support payment.
  The bill also improves the interstate enforcement process by 
establishing a jurisdictional basis for State court recognition of 
child support orders of other States. The problems associated with 
collecting child support are magnified when parents live in different 
States. Part of the difficulty stems from differences in State laws, 
policies, and procedures.
  I have heard numerous cases of frustrating experiences in attempting 
to serve process on out-of-State delinquent parents, and in getting 
certain [[Page S8497]] evidence obtained in one State admitted at a 
hearing in another State. One in three children support orders involve 
parents in different States. On average, it takes 1 year to locate an 
absent parent, and 2 years to establish a court order if the parent has 
deserted a family.
  Finally, the bill makes it more difficult for parents to hide assets 
in an attempt to avoid paying their fair share of child support. A 
difficult problem to resolve is when a delinquent parent transfers 
property to a friend or relative for little compensation to avoid child 
support payments. Under this bill, States would be allowed to void 
conveyances of property made to avoid paying child support.
  We must give our courts and law enforcement agencies the tools they 
need to crack down on delinquent parents. We must assure taxpayers who 
lend the helping hand to impoverished single mothers and their children 
that every effort is being made to get the deadbeat parents to pay up. 
We must ensure the children receive adequate and consistent child 
support, so they are able to have the opportunity to become successful, 
productive and healthy adults.
  I believe my legislation will move us a long way on the path to meet 
those goals. I request my colleagues to join with me in this effort to 
make this law before the end of the year. The children deserve no less.
                                 ______

      By Mr. HELMS:
  S. 927. A bill to provide for the liquidation or reliquidation of a 
certain entry of warp knitting machines as free of certain duties; to 
the Committee on Finance.


                            duty legislation

  Mr. HELMS. Mr. President, I send to the desk, for appropriate 
referral, a bill on behalf of D&S International of Burlington, NC, 
which imported from Germany, four warp knitting machines at a duty-free 
rate which D&S then sold to a Venezuelan company, which decided not to 
keep the machines and returned them to D&S.
  Upon reentry, the Customs Service mistakenly classified the machines 
first as a reentry of United States goods, instead of a German, then 
misclassified them at a duty rate of 4.4 percent.
  D&S contacted Customs to protest the duty assessment. However, 
Customs ruled that the D&S memorandum did not qualify as a formal 
protest because D&S did not file form 19. Amazingly, no right of appeal 
exists within Customs on such rulings if a company misses the deadline 
for protesting. D&S would have to spend a lot of money going to court 
to try to rectify the mistake.
  Mr. President, as a result of these mistakes, D&S now owes $25,000 in 
duties on machines that were supposed to be duty-free. This error by 
the Customs Service will be remedied by my bill, which instructs 
Customs to reclassify the machines as duty-free and refund to D&S the 
duties improperly assessed.
                                 ______

      By Mr. INHOFE (for himself, Mr. Burns and Mrs. Kassebaum):
  S. 928. A bill to enhance the safety of air travel through a more 
effective Federal Aviation Administration, and for other purposes; to 
the Committee on Commerce, Science, and Transportation.


         THE FEDERAL AVIATION ADMINISTRATION REFORM ACT OF 1995

  Mr. INHOFE. Mr. President, today I will be introducing a major piece 
of legislation with Senator Kassebaum and Senator Burns.
  As a frequent user of the air traffic control system, I have a very 
real stake in addressing the persistent problems which have plagued the 
FAA for many years. Former Senator Barry Goldwater accurately described 
way back in 1975 the current FAA shortcomings when he introduced a bill 
to reestablish the FAA as an independent agency.
  Senator Goldwater noted, and this was back in 1975, 20 years ago:

       In 1967, when the then new Department of Transportation was 
     created, the Federal Aviation Agency was terminated and its 
     powers and functions were transferred to and vested in the 
     Secretary of DOT. The previously independent Federal Aviation 
     Agency was in effect converted to a new bureau within the 
     Department of Transportation, named the Federal Aviation 
     Administration. The Administrator of this ``bureau'' reports 
     to and is subject to the control of the Secretary of 
     Transportation.

  Barry Goldwater went on to say, 20 years ago:

       There is extensive evidence to show that subsequent to this 
     transformation, there has been undue interference on the part 
     of the Department of Transportation in the internal affairs 
     of the Federal Aviation Administration, so much so that the 
     FAA's procurement process has been slowed down to an average 
     time period of 1\1/2\ years or more--

  I understand it is more than that today, but I am quoting from 20 
years ago.

     resulting in the cancellation of many procurement projects or 
     unnecessary losses in the millions of dollars to companies 
     involved. It is important to note, too, that aviation users, 
     who pay much of the money which goes into the Airport and 
     Airway Trust Fund, have no effective participation in the 
     development of FAA finance plans so long as it is under the 
     Department.

  These words that were stated on the floor of the Senate by Senator 
Barry Goldwater 20 years ago are just as true today as they were then. 
Unfortunately, the Senate failed to pass the Goldwater bill. The 
problems Senator Goldwater identified in 1975 are yet to be resolved.
  As a pilot, I have found holding town hall meetings in small towns 
and airports is an effective way of communicating with people. In doing 
these on the weekends--virtually every weekend, I do 10 or so--I talk 
to pilots, I talk to controllers. I do not think there is a controller 
that I do not know by their first name in Oklahoma.
  They all agree that something needs to be done about changing the 
FAA. Even though Barry Goldwater attempted to do this back 20 years 
ago, what he said then is true today and we need to do it.
  A careful analysis of these proposals that have been made in order to 
corporatize or privatize shows that they really do not work and there 
is a lack of understanding.
  Mr. President, there has been an effort by the administration to 
privatize or corporatize the FAA. I think that while I do believe in 
privatizing, it is not appropriate in this case.
  People who use the system oppose the privatization of the FAA. After 
working with users of the system, I am pleased to announce that we have 
been able to come up with a workable solution. Along with Senators 
Conrad Burns and Nancy Kassebaum, I am introducing legislation to 
reform the Federal Aviation Administration.
  Our bill is similar to a bill introduced in the House by my good 
friend from Iowa, Representative Jim Lightfoot, and also Representative 
John Duncan. This bill provides dramatic yet realistic reform that will 
resolve the problems that were identified by Senator Goldwater in 1975 
and continue today to plague the FAA.
  It will restore the Federal Aviation Administration to an independent 
agency status. This will ensure that the agency is able to manage and 
regulate the safety of the air traffic control system without the 
second-guessing or interference by the politically appointed Department 
of Transportation officials and staff.
  Our approach represents a reform from within Government. It offers a 
more prudent and realistic approach to the FAA reform than the 
extremely risky alternative of privatizing or corporatizing the air 
traffic control system.
  As a former mayor of a major metropolitan area, I know something 
about privatizing. I have been a fan of privatizing for a long time. In 
fact, I privatized everything I could when I was mayor of the city of 
Tulsa, OK, many years ago.
  One of the systems that has been emulated today by cities all over 
America was the privatization of the trash system. A refuge or trash 
system is not a sensitive system like air traffic control.
  As a believer in the ability of the private sector to generally do a 
better job of managing than Government, I believe that there are some 
inherently governmental functions. Oversight of our air traffic control 
system is one. The safety implications are too great to allow a 
management team that has to worry about the bottom line to make these 
decisions.
  Those who use the system and those who use it in commercial 
aircraft--it does not matter whether you are in an American Airline 747 
as a pilot or a passenger, or you are with me in a 20-year-old Piper 
Aztec. The fact is that your lives are in the hands of these 
individuals on the ground. [[Page S8498]] 
  In addition, our proposal provides for appointment of an FAA 
Administrator with a fixed term of 7 years. The average tenure of the 
FAA Administrator since I have been in Congress has been less than 2 
years. By the time they find their way to the cafeteria, they are out 
of there. There is no continuity in planning for the FAA. Clearly, we 
need the continuity of leadership if real changes are to take hold.
  This proposal establishes a personnel pilot program which would 
provide FAA greater latitude managing personnel by giving increased 
flexibility in measuring performance. The pilot program has been 
designed to improve performance of individuals and departments, rather 
than merely rewarding longevity.
  Our bill establishes a procurement reform pilot program which will 
permit the FAA to simplify its procurement procedures by shifting from 
the rigid procurement rules to allow routine off-the-shelf purchases.
  We have example after example of instances where complicated 
procurement practices have delayed the purchasing of technology and of 
products that are needed to save lives, until they are no longer 
current, in terms of their technology.
  A good example is the microwave landing system. The MLS system is 
supposed to replace the ILS system. By the time they got around to 
implementing this program, the GPS, the global position system, had 
reached a degree of technology that allows for precision approaches.
  The other areas are in the area of costs. I mean, the same thing 
regarding the GPS system. I happen to be the only Member of Congress in 
history to fly an airplane around the world. I did it a couple of years 
ago. In doing this I used a GPS system. Never, all the way around the 
world, did I lose a satellite. This system is a beautiful system. Yet 
that system that I used only 2 years ago flying around the world is 
one-fourth the cost today that it was then.
  That means if we and the FAA procure this highly technical machinery, 
the mechanics to run the system, by the time the system goes through 
following the procurement practices, that which you have purchased is 
much cheaper and it would be out of date. So, for cost purposes and 
technology purposes, this has to happen.
  Under our bill, a select panel is created to review and report back 
to Congress on innovative financing mechanisms for long-term funding of 
our aviation infrastructure and needs. Panel members will review loan 
guarantees, financial partnerships with for-profit private sector 
entities, multiyear appropriations, revolving loan funds, mandatory 
spending authority, authority to borrow, and restructured grant 
programs.
  Each of these proposals has the support of virtually all of the 
aviation industry. This bill is strongly supported by the Aircraft 
Owners and Pilots Association, who have, in just the State of Oklahoma, 
4,500 general aviation pilots; and throughout America have 340,000 
general aviation pilots. They support this.
  In addition, the National Aviation Coalition Association, a 
consortium of 28 major aviation organizations representing all segments 
of the aviation community, has indicated that this proposal is a 
valuable contribution to a healthy debate concerning much needed reform 
of the FAA.
  Mr. President, it is clear that everyone, the administration, 
Congress, and the aviation community, agrees on the need to reform the 
FAA. I urge my colleagues to join with Senators Burns and Kassebaum, 
Representative Lightfoot and Representative Duncan from the House, and 
Senator Goldwater and me in supporting a meaningful reform of the FAA.
                                 ______

      By Mr. ABRAHAM (for himself, Mr. Dole, Mr. Faircloth, Mr. 
        Nickles, Mr. Gramm, and Mr. Brown):
  S. 929. A bill to abolish the Department of Commerce; to the 
Committee on Governmental Affairs.


           the department of commerce dismantling act of 1995

  Mr. ABRAHAM. Mr. President, when President Theodore Roosevelt sat 
down with his Cabinet for a meeting, he needed just nine chairs to 
accommodate everyone, including the Post-Master General. If he desired 
an impromptu gathering, he could just walk to the Old Executive Office 
Building next door. The offices of almost the entire executive branch 
were located there.
  Ninety-four years later, a Cabinet meeting has almost twice as many 
participants--even without the Postmaster's presence--and includes the 
Secretaries of 14 Cabinet-level Departments spread all over the 
District of Columbia. These meetings don't include the heads of 
hundreds of administrations, commissions, boards, and other Federal 
agencies below the Cabinet level.
  This tremendous growth in the size and scope of the Federal 
Government has resulted in enormous tax and debt burdens on our economy 
which, in turn, means lower living standards and fewer job 
opportunities for the American people. The Federal budget in 1901 
consumed just over 2 percent of total national income. Today, it spends 
almost 25 cents for every dollar we produce. Measured against the size 
of the economy, the Federal Government is 12 times larger than it was 
at the turn of the century. In the meantime, a Federal budget that 
routinely enjoyed surpluses of 10 percent or more during Roosevelt's 
tenure hasn't seen the black in 25 years.
  In restraining the growth of the Federal Government, we need to 
target those departments and agencies whose activities are unnecessary, 
duplicative, wasteful, and simply outside the limits of Federal power 
prescribed by the U.S. Constitution. While this description fits much 
of the Federal Government, Majority Leader Bob Dole has set the 
standard by calling for the elimination of four Cabinet departments--
Commerce, Energy, Housing and Urban Development, and Education. These 
four departments alone employ more than 74,000 bureaucrats and have 
combined budgets of $70 billion--133 times more than the entire Federal 
Government spent in Roosevelt's era. While some of the programs within 
these departments serve useful purposes, we don't need these huge 
bureaucracies and buildings to oversee them. Instead, these programs 
ought to be consolidated, privatized, and devolved to the States and 
localities.
  Today, I am joined by Senators Dole, Faircloth, Nickles, Gramm, and 
Brown in introducing legislation to begin that process by abolishing 
the Department of Commerce. The Department of Commerce Dismantling Act 
of 1995 is the product of the Dole Task Force on the Elimination of 
Federal Agencies. It is the first of several bills the task force 
intends to introduce this Congress targeted at reducing the size of 
Government. It is the product of extensive work by several Senate 
offices, as well as the members of the House Freshmen Task Force, and 
it has been endorsed by the National TaxPayers Union, Citizens For a 
Sound Economy, the Business Leadership Council, Americans For Tax 
Reform, and the Small Business Survival Committee.
  The Department of Commerce houses the least defensible collection of 
Federal agencies in Washington, many of which are either duplicated or 
outperformed by other Government agencies and private industry. 
According to the General Accounting Office [GAO], Commerce shares its 
mission with ``at least 71 Federal departments, agencies, and offices'' 
while former Commerce Secretary Robert Mosbacher recently called the 
Department ``nothing more than a hall closet where you throw in 
everything that you don't know what to do with.''
  Ironically, regulating interstate commerce isn't one of them. That's 
handled by the independent Interstate Commerce Commission, itself a 
target for elimination. Commerce is a bit player in international trade 
as well. At least 10 Federal agencies are charged with promoting U.S. 
exports, but only a fraction of the funding is directed to Commerce. 
The Agriculture Department receives three-fourths.
  So what's left for Secretary Ron Brown, 263 political appointees, and 
the 36,000 bureaucrats who work for Commerce? Over half of the 
Department's $3.6 billion budget is consumed by the National Oceanic 
and Atmospheric Administration [NOAA]--the Nation's weather and ocean 
mapping service.
 Another $400 million funds the notorious Economic Development 
Administration [EDA], a traditional source of [[Page S8499]] pork 
barrel spending on things like public docks and sewer systems. At one 
point in its history, 40 percent of the Administration's loans were in 
default, while economic assistance grants were distributed to such 
economically troubled areas as Key Biscayne, FL. Even when it is 
effective, the EDA duplicates the efforts of numerous other programs in 
other departments.

  The Commerce Dismantling Act targets this waste and duplication. It 
transfers those functions that can be better served elsewhere, 
consolidates duplicative agencies, and eliminates the remaining 
unnecessary or wasteful programs. The terminations, transfers and 
consolidations are to be completed over a 36-month period under the 
direction of a temporary Commerce Programs Resolution Agency. According 
to preliminary Congressional Budget Office figures, the bill saves the 
American taxpayer $7.7 billion over 5 years. Let me quickly go through 
the bill.
  While the activities of NOAA are only tangentially related to the 
promotion of commerce, it makes up over half of the Department of 
Commerce budget. The individual functions of this agency would be sent 
to more appropriate agencies or departments.
  First, the enforcement functions of the National Marine Fisheries 
Service are transferred to the Coast Guard, while the scientific 
functions are transferred to the Fish and Wildlife Service. Seafood 
inspection is transferred to the Department of Agriculture, which 
already carries out most food inspection programs. The State fishery 
grants and commercial fisheries promotion activities are terminated.
  Second, the geodesy functions of the National Ocean Service are 
transferred to the U.S. Geological Survey while coastal and water 
pollution research duplicated by the Environmental Protection Agency is 
terminated. Marine and estuarine sanctuary management would be 
transferred to the Interior Department, which already manages some 
fisheries. Nautical and aeronautical charting is privatized, as the 
private sector undertakes this activity already.
  Third, the National Environmental Satellite, Data and Information 
Service's weather satellite of this agency are transferred to the 
National Weather Service to consolidate these functions which, in turn, 
is transferred to the Interior Department. The NESDIS data centers 
would be privatized.
  Fourth, because many of its activities are duplicative of other 
Federal agencies or could be better served by the private sector, this 
office is terminated. The labs which could operate in the private 
sector will be sold and the remaining labs will be transferred to the 
Interior Department.
  Finally, the NOAA Corps is terminated and its vessels sold to the 
private sector. Services can be obtained in the private sector and its 
fleet is in disrepair.
  Another significant part of the Department of Commerce, the Economic 
Development Administration, is terminated under this legislation. The 
EDA provides grants and assistance to loosely defined ``economically 
depressed'' regions. EDA's functions are duplicated by numerous other 
Federal agencies including the Departments of Agriculture, HUD, and 
Interior, the Small Business Administration, the Tennessee Valley 
Authority and the Appalachian Regional Commission. The parochial nature 
of the program often targets EDA grants to locations with healthy 
economies which do not need Federal assistance. This bill terminates 
the EDA, transferring outstanding obligations to the Treasury 
Department for management or sale.
  Although the Minority Business Development Administration has spent 
hundreds of millions on management assistance--not capital assistance--
since 1971, the program has never been formally authorized by Congress. 
The MBDA's stated mission, to help minority-owned businesses get 
Government contracts, is duplicated by such agencies and programs as 
the Small Business Administration and its failed 8(a) loan program, and 
Small Business Development Centers, along with the private sector. The 
MBDA is terminated and its 98 field offices closed.
  The U.S. Travel and Tourism Administration seeks to promote travel 
and tourism in the United States through trade fairs and other 
promotional activities. According to the Heritage Foundation, ``the 
agency often works with private sector organizations, including the 
Travel Industry Association of America, to organize events such as the 
`Discover America Pow Wow' or the `Pow Wow Europe.' There is no 
justification for Federal involvement in such promotional
 activities of a commercial nature.'' Because functions such as these 
are already extensively addressed by States, localities, public sector 
organizations, and the private sector, the USTTA is immediately 
terminated.

  The Technology Administration currently works with industry to 
promote the use and development of new technology. Because Government 
in general, and the Federal Government in particular, is poorly 
equipped to pick winners and losers in the marketplace--frequently 
allowing political criteria rather than market criteria determine the 
choice--this agency is terminated, including the Office of Technology 
Policy, Technology Commercialization, and Technology Evaluation and 
Assessment.
  The Industrial Technology Service programs, including the Advanced 
Technology Program [ATP] and the Manufacturing Extension Partnerships, 
are terminated; these programs are often cited as prime examples of 
corporate welfare, wherein the Federal Government invests in applied 
research programs which should be conducted in the private sector.
  The weights and measures functions of the National Institute for 
Standards and Technology would be transferred to the National Science 
Foundation. The National Technical Information Service, a clearinghouse 
for technical Government information, would be privatized.
  The National Telecommunications and Information Administration, an 
advisory body on national telecommunications policy, would be 
terminated, including its grant programs. Federal spectrum management 
functions would be transferred to the Federal Communications 
Commission.
  Providing for patents and trademarks is a constitutionally-mandated 
Government function. Our proposal would transfer this office to the 
Justice Department, requiring the PTO to be supported completely 
through fee collection.
  The Bureau of the Census, another constitutionally-mandated function, 
is transferred to the Treasury Department. Select General Accounting 
Office recommendations for savings at the Bureau would be implemented. 
The Bureau of Economic Analysis is transferred to the Federal Reserve 
System to ensure the integrity of data. The superfluous ESA bureaucracy 
would be eliminated.
  The Bureau of Export Administration is one of several agencies 
responsible for monitoring U.S. exports that may compromise national 
security. Because this function remains important to the country, this 
legislation would reassign these functions as follows.
  The determination of export controls is transferred to the Department 
of Defense. The United States Trade Representative would advise the 
Defense Department in disputed cases. The Customs Service, which 
already has the staff, expertise, and facilities, would enforce the 
export licensing determined by the DOD.
  While the Department of Commerce claims to be the lead in trade 
promotion, it actually plays a small part. Five percent of Commerce's 
budget is dedicated to trade promotion, and it comprises only 8 percent 
of total Federal spending on trade promotion. The International Trade 
Administration is the primary trade agency within the Department of 
Commerce. This bill makes the following changes.
  The Import Administration is transferred to the Office of the United 
States Trade Representative. The USTR, which already plays a role in 
this area, would make determinations of unfair trade practices.
  The U.S. and Foreign Commercial Service is transferred to the Office 
of the U.S. Trade Representative. The domestic component of USFCS is 
terminated, and the foreign component would be transferred to the 
Office of the U.S. Trade Representative, which already takes the lead 
in trade policy.
  The International Economic Policy is also terminated and these 
functions would continue to be carried out by the USTR.
  Finally, the Trade Development functions are terminated and replaced 
with [[Page S8500]] a series of industry advisory boards, composed of 
representatives from the private sector to provide advice to policy 
makers, at no cost to the Federal Government.
  Mr. President, the philosophy behind the Dole Task Force, and the 
underlying objectives of this bill, are based upon the same fundamental 
principles of limited and efficient government that the electorate 
overwhelmingly supported last November. It is a reasonable approach to 
restore some much needed fiscal sanity to our Federal Government; 
making it smaller, less costly, yet more efficient.
  The new Republican Congress is committed to balancing the budget by 
the year 2002. While this commitment means we must do the heavy lifting 
of reducing the growth of Government, it also presents us an 
opportunity to establish a proper balance between States and the 
Federal Government that protects the vigor and diversity of our States 
and local communities. Only by recognizing the limits of the Federal 
Government can we restore the vitality that breeds character, 
innovation, and a sense of community.
  This bill represents the first step in the process of achieving that 
goal. It conforms with both the Senate and House-passed budgets and it 
has the support of leadership in both House and the Senate. I encourage 
my colleagues to support it as well.
  Mr. President, I ask unanimous consent that additional material be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                     National Taxpayers Union,

                                                    June 14, 1995.
     Hon. Spencer Abraham,
     U.S. Senate, Dirksen Senate Office Building, Washington, DC.
       Dear Senator Abraham: National Taxpayers Union is pleased 
     to endorse the ``Commerce Department Dismantling Act of 
     1995,'' as proposed by you and Congressman Dick Chrysler. 
     Your excellent proposal will streamline the federal 
     government and provide significant savings for America's 
     taxpayers.
       The terminations, transfers and consolidations provided in 
     your proposed legislation would be completed over a thirty-
     six month period. The ``Abraham/Chrysler Act'' would save 
     $7.765 billion over five years.
       The General Accounting Office has reported that the 
     Commerce Department ``faces the most complex web of divided 
     authorities,'' sharing its ``missions with at least 71 
     federal departments, agencies, and offices.'' Your bill will 
     finally end this wasteful duplication.
       Again, NTU is pleased to endorse the ``Abraham/Chrysler 
     Commerce Department Dismantling Act of 1995.'' We urge your 
     colleagues to join you in this effort.
           Sincerely,
                                                    David Keating,
     Executive Vice President.
                                                                    ____

                                  Business Leadership Council,

                                     Washington, DC, June 9, 1995.
     Hon. Spencer Abraham,
     U.S. Senate, Dirksen Senate Office Building, Washington, DC.
       Dear Senator Abraham: The Business Leadership Council, a 
     newly-formed business association of entrepreneurial business 
     leaders who are committed to working to limit the size of 
     government and to expand global economic growth, strongly 
     endorses the Abraham-Chrysler Commerce Department Dismantling 
     Act of 1995.
       BLC represents businesses of all types and sizes who want 
     what is best for America, rather than a perk or subsidy that 
     may be best in the narrow, short-term, self-interest of their 
     individual business. Its members are willing to take bold, 
     principled positions and are not afraid to confront the 
     status quo. They recognize that, although some of their 
     businesses may benefit from particular Commerce Department 
     programs, it is clear America is better off saving the money, 
     reducing subsidies, and eliminating unnecessary regulations.
       For that reason, we enthusiastically support the 
     dismantling of corporate welfare, whose voice in the cabinet 
     has been the Commerce Department. The old established 
     business groups fear the wrath of their members who enjoy 
     corporate pork and therefore will not take a stand on this 
     controversial issue. BLC, on the other hand, applauds your 
     efforts to abolish unnecessary, duplicative, wasteful 
     programs and save the taxpayers $7.8 billion over the next 
     five years. In these times, when Congress is endeavoring to 
     balance the budget and reduce the size and scope of the 
     federal government, the business community must do its part.
           Sincerely,
                                               Thomas L. Phillips,
     Chairman of the Board of Governors.
                                                                    ____

                                     Americans For Tax Reform,

                                    Washington, DC, June 14, 1995.
     Hon. Spencer Abraham,
     U.S. Senate, Dirksen Senate Office Building, Washington, DC.
       Dear Senator Abraham: Americans for Tax Reform, a 60,000 
     member coalition of individuals, taxpayer groups and 
     businesses concerned with federal tax policy and spending 
     reduction, enthusiastically endorses the Abraham-Chrysler 
     Commerce Department Dismantling Act of 1995.
       The Commerce Department is a classic example of wasteful 
     government spending run amok. Its own Inspector General 
     referred to it as ``a loose collection of more than 100 
     programs.'' If we are ever to balance the budget, rein in 
     federal spending and allow Americans to keep more of their 
     hard-earned dollars, unnecessary departments must be 
     eliminated. The Commerce Department is such a department.
       We are impressed by the four principles used in drafting 
     the legislation: terminating unnecessary or wasteful 
     programs, consolidating programs duplicated by other 
     departments or agencies, transferring programs that serve a 
     valid purpose to other agencies, and privatizing programs 
     better performed outside the government. If all federal 
     agencies were scrutinized in this fashion, we would be well 
     on our way toward the smaller and more efficient government 
     that Americans are demanding. Indeed, your legislation alone 
     would allow budget savings of almost $7.8 billion over five 
     years, according to estimates by the Congressional Budget 
     Office. That's $7.8 billion more for hard-working Americans 
     to keep for themselves.
       Certainly there will be howls of outrage from special 
     interests which gain some advantage from a pet program. But 
     for too long, Washington has ignored the concerns of the most 
     important national interest: the American taxpayer. That era 
     has come to an end. Americans have signalled that they have 
     had enough of endless government taxing and spending. The 
     Commerce Department Dismantling Act of 1995 begins the 
     scaling back of the overgrown federal government. Americans 
     for Tax Reform fully supports this important legislation.
           Sincerely,
                                               Grover G. Norquist,
     President.
                                                                    ____

                            Small Business Survival Committee,

                                    Washington, DC., June 7, 1995.
     Hon. Spencer Abraham,
     U.S. Senate, Washington, DC.
       Dear Senator Abraham: Every so often, a piece of 
     legislation crosses my desk that the Small Business Survival 
     Committee (SBSC) can support without any reservations. ``The 
     Commerce Department Dismantling Act of 1995'' is such a 
     legislative act.
       First, let me compliment you on your four straightforward 
     principles for evaluating the Commerce Department. They 
     should serve as a guide for reviewing every federal 
     government department:
       Terminating unnecessary and wasteful programs;
       Consolidating programs duplicative of other departments or 
     agencies;
       Transferring valid programs to more appropriate agencies; 
     and
       Privatizing programs which can be better performed in the 
     private sector.
       Federal government spending has been out of control for 
     decades. The Commerce Department, with its myriad unnecessary 
     and duplicative programs, serves as one of the most glaring 
     examples of wasting taxpayer dollars. The elimination of the 
     Department of Commerce will send a loud and clear message to 
     the American people--business-as-usual, big-government 
     politics is finished. Indeed, eliminating the Commerce 
     Department would be an historic step toward bringing some 
     sanity back to the federal government, while saving U.S. 
     taxpayers an estimated $7.8 billion over five years.
       ``The Commerce Department Dismantling Act of 1995'' offers 
     a sound plan for eliminating programs within the Commerce 
     Department that government should not be undertaking in the 
     first place (e.g., the United States Travel & Tourism 
     Administration); for moving programs to more appropriate 
     areas of the federal government (e.g., the Bureau of the 
     Census and the Bureau of Economic Analysis); or for 
     privatizing programs (e.g., the National Technical 
     Information Service).
       Naturally, every federal department or program has a vocal 
     special interest attached to it. The Commerce Department is 
     no different. Indeed, a small part of the business community 
     likely will oppose the termination of the Commerce 
     Department. Please rest assured that any business voices 
     raised in support of the Commerce Department will be a very 
     small minority. America's entrepreneurs have little use, if 
     any, for the U.S. Department of Commerce.
       The best agenda for entrepreneurs, business and the economy 
     is clear: deregulation, tax reduction, and smaller 
     government. Eliminating the Department of Commerce has the 
     full support of SBSC and our more than 40,000 small business 
     members. The time has come to rein in federal government 
     spending, and the Department of Commerce is a fine place to 
     start.
           Sincerely,
                                                   Karen Kerrigan,
                                                        President.


                                 s. 929

  Mr. GRAMM. Mr. President, I am proud to be an original cosponsor of 
the Commerce Department Dismantling Act of 1995. I want to compliment 
Senator Abraham and Senator [[Page S8501]] Faircloth for their hard 
work in producing this legislation, and I look forward to working with 
them as this legislation is considered in committee and the Senate. The 
Commerce Department is the only Cabinet-level agency terminated in the 
Senate budget resolution, and it is important that we keep our promise 
to the American people to put the Federal Government on a budget, say 
no to more Federal spending, and allow American families to keep more 
of what they earn.
  Mr. President, I do have concerns about some specific transfers of 
Commerce authority to other Departments and feel that, with further 
study, we can find a more appropriate destination for those functions 
that are retained. Nevertheless, I am strongly supportive of our effort 
to eliminate the Commerce Department, and will work with my colleagues 
to strengthen the bill we are introducing today.
                                 ______

      By Mr. PRESSLER (for himself, Mr. Daschle, Mr. Grassley, Mr. 
        Harkin, and Mr. Wellstone):
  S. 931. A bill to authorize the construction of the Lewis and Clark 
Rural Water System and to authorize assistance to the Lewis and Clark 
Rural Water System, Inc., a nonprofit corporation, for the planning and 
construction of the water supply system, and for other purposes; to the 
Committee on Energy and Natural Resources.


           THE LEWIS AND CLARK RURAL WATER SYSTEM ACT OF 1995

  Mr. PRESSLER. Mr. President, today I am introducing legislation that 
authorizes construction of the Lewis and Clark Rural Water System. This 
system, when complete, will provide much needed, safe drinking water 
for hundreds of communities in southeastern South Dakota, northwestern 
Iowa, and southwestern Minnesota.
  Joining me in introducing this legislation are Senators Daschle, 
Grassley, Harkin, and Wellstone.
  Mr. President, this is the second year I have introduced legislation 
to authorize this water project. I am proud of the citizens of South 
Dakota who have worked extremely hard on this project. They are to be 
commended. Nothing is more important to the health of the South Dakota 
ranchers, farmers, and people living in towns and cities than the 
availability of safe drinking water. The bill I am introducing today 
will achieve that goal.
  Since first coming to Congress, I have continually fought for the 
development of South Dakota water projects. In return for the 
sacrifices South Dakota made for the construction of the dams and 
reservoirs along the Missouri River, the Federal Government made a 
commitment to South Dakota. That commitment was to support water 
development in my State. This water project, in part, helps to meet 
that commitment.
  In this day of fiscal austerity, only projects of the greatest public 
benefit can be brought forward. The Lewis and Clark Rural Water System 
is the only feasible means of ensuring that future supplies of good 
quality water will be available well into the next century. The Lewis 
and Clark Rural Water System will provide a supplemental supply of 
drinking water that is expected to serve over 180,500 people.
  Mr. President, water development is a health issue, economic 
development issue, and a rural development issue. The ability of rural 
America to survive and grow is intrinsically related to its ability to 
provide adequate supplies of safe drinking water. Without a reliable 
supply of water, these areas cannot attract new businesses and cannot 
create jobs. The creation of jobs is a paramount issue to a rural State 
such as South Dakota. The Lewis and Clark Rural Water System will help 
assure job growth in the areas to be served.
  It is extremely difficult for rural communities and residents to 
maintain a healthy standard of living if they do not have access to 
good quality drinking water.
  I urge my colleagues to take a close look at this legislation. We 
would greatly appreciate their support for it.
  Mr. DASCHLE. Mr. President, I join my colleague, Senator Pressler, in 
introducing legislation to authorize the Lewis and Clark Rural Water 
System. The Lewis and Clark Rural Water System is seeking authorization 
for the construction of a rural water system to provide clean water to 
southeastern South Dakota, northwest Iowa, and southwest Minnesota.
  The need for this project is clear. In Sioux Falls, and in the rural 
counties that rely on Sioux Falls as a center of economic growth, we 
are now face-to-face with water shortages. Population growth is 
outstripping existing supplies of clean water.
  Despite heroic efforts by the city of Sioux Falls to conserve water, 
supplies are not keeping up with demand. Sioux Falls has imposed water 
restrictions every year since 1987. Water rights for the Big Sioux 
aquifer, which supplies water to Sioux Falls, have been committed. 
Therefore, Sioux Falls has been forced to explore other long-term 
options. Similar problems exist in the nearby rural counties in 
southeastern South Dakota, Iowa and Minnesota, areas where water use 
restrictions are not uncommon. Unless the water supply problem is 
resolved, it could affect the long-term growth and development of the 
city.
  Not only are there shortages of water, but much of the water that 
currently supplies the area is contaminated with high levels of iron, 
manganese, sulfate, and total dissolved solids. In many cases, drinking 
water is at or above EPA limits, leading to concern over public health 
in those areas.
  There is a solution; the people of this region can tap the enormous 
resources of the Missouri River to provide long-term public health and 
economic development benefits. But they cannot do this alone. It will 
require a partnership between local, State, and Federal governments.
  With the Missouri River carrying billions of gallons of water by this 
area each year, I am reminded of the ironic line ``water, water 
everywhere, but not a drop to drink.'' With the construction of the 
Lewis and Clark system to convey Missouri River water to the people of 
this region, that irony will cease. Impacts of this project on the flow 
of the Missouri River will be negligible. Nearly all the water would be 
returned to the Missouri River via the James, Vermillion, Big Sioux, 
Little Sioux, Rock, and Floyd Rivers.
  In conclusion, there is a strong need for this project throughout the 
three-State area. The water supply shortages, the poor water quality, 
and the need to allow this region to grow economically, all demand that 
a solution be found that allows the people of this region access to 
clean, safe drinking water. The Lewis and Clark project is a sensible 
and timely answer to those needs. I encourage my colleagues to lend 
their support to this project in hopes that Congress will authorize its 
construction in the near future.
                                 ______

      By Mr. JEFFORDS (for himself, Mr. Kennedy, Mr. Chafee, Mr. Akaka, 
        Mr. Bingaman, Mrs. Boxer, Mr. Bradley, Mr. Dodd, Mr. Feingold, 
        Mrs. Feinstein, Mr. Glenn, Mr. Harkin, Mr. Inouye, Mr. Kerrey, 
        Mr. Kerry, Mr. Kohl, Mr. Lautenberg, Mr. Leahy, Mr. Levin, Mr. 
        Lieberman, Ms. Mikulski, Ms. Moseley-Braun, Mr. Moynihan, Mrs. 
        Murray, Mr. Packwood, Mr. Pell, Mr. Robb, Mr. Sarbanes, Mr. 
        Simon, and Mr. Wellstone):
  S. 932. A bill to prohibit employment discrimination on the basis of 
sexual orientation; to the Committee on Labor and Human Resources.


             the employment non-discrimination act of 1995

  Mr. JEFFORDS. Mr. President, today I am pleased to introduce the 
Employment Non-Discrimination Act of 1995. I am joined in doing so by 
nearly one-third of the Members of the Senate.
  In my view, Mr. President, this bill is perhaps the most important 
civil rights legislation to come before Congress this year. I am 
honored to be a principal sponsor of the legislation in the Senate.
  The legislation extends to sexual orientation the same federal 
employment discrimination protections established for race, religion, 
gender, national origin, age, and disability. The time has come to 
extend this type of protection to the only group--millions of 
Americans--still subjected to legal discrimination on the job.
  The principles of equality and opportunity must apply to all 
Americans. [[Page S8502]] Success at work should be directly related to 
one's ability to do the job, period. People who work hard and perform 
well should not be kept from leading productive and responsible lives--
from paying their taxes, meeting their mortgage payments and otherwise 
contributing to the economic life of the nation--because of irrational, 
non-work-related prejudice.
  Mr. President: As a 61-year-old white male who grew up in a rural 
area, I fully understand how one could feel prejudice. I was not immune 
to it myself. However, through education and understanding, we must 
overcome such prejudice, as individuals and as a nation.
  When this issue has been raised in the states, the debate has often 
turned on the phrase ``special rights.'' This bill does not create any 
``special rights.'' Rather, it simply protects a right that should 
belong to every American, the right to be free from discrimination at 
work because of personal characteristics unrelated to successful 
performance on the job.
  I'm proud to say that my home state of Vermont is one of several 
states that have enacted sexual orientation discrimination laws. It is 
no surprise, Mr. President, that the sky has not fallen. I am not aware 
of a single complaint from Vermont employers about the enforcement of 
the state law. However, I do know that thousands of Vermonters no 
longer need to live and work in the shadows.
  My little state of Vermont was the first to abolish slavery, the 
first to answer Lincoln's call to arms, and the only state I know of 
with the audacity to declare war on Germany before Pearl Harbor. Once 
again, I think it is time for the federal government to follow the lead 
of Vermont, and the other states and cities across the country that 
have declared war on this, the final front of discrimination. The bill 
we introduce today takes important steps in that direction. I look 
forward to the day when we can see it signed into law.
  Mr. President, I ask unanimous consent that a summary of the bill be 
printed in the Record.
  There being no objection, the summary was ordered to be printed in 
the Record, as follows:

           Summary--Employment Non-Discrimination Act of 1995

       The Employment Non-Discrimination Act of 1995 (ENDA) 
     extends federal employment discrimination protections 
     currently provided based on race, religion, gender, national 
     origin, age and disability to sexual orientation. Thus, ENDA 
     will ensure fair employment practices--not special rights--
     for lesbians, gay men and bisexuals.
       ENDA prohibits employers, employment agencies, and labor 
     unions from using an individual's sexual orientation as the 
     basis for employment decisions, such as hiring, firing, 
     promotion, or compensation.
       Under ENDA, covered entities cannot subject an individual 
     to different standards or treatment based on that 
     individual's sexual orientation, or discriminate against an 
     individual based on the sexual orientation of those with whom 
     the individual associates.
       The ``disparate impact'' claim available under Title VII of 
     the Civil Rights Act of 1964 (Title VII) is not available 
     under ENDA. Therefore, an employer is not required to justify 
     a neutral practice that may have a statistically disparate 
     impact based on sexual orientation.
       ENDA exempts small businesses, as do existing civil rights 
     statutes, and does not apply to employers with fewer than 
     fifteen employees.
       ENDA exempts religious organizations, including educational 
     institutions substantially controlled or supported by 
     religious organizations.
       ENDA prohibits preferential treatment, including quotas, 
     based on sexual orientation.
       ENDA does not require an employer to provide benefits for 
     the same-sex partner of an employee.
       ENDA does not apply to the uniformed members of the armed 
     forces and thus does not affect the current law on lesbians 
     and gay men in the military.
       ENDA provides for the same remedies (injunctive relief and 
     damages) as are permitted under Title VII and the Americans 
     with Disabilities Act (ADA).
       ENDA applies to Congress, with the same remedies as 
     provided by the Congressional Accountability Act of 1995.
       ENDA is not retroactive.
  Mr. KENNEDY. Mr. President, from the beginning, civil rights has been 
the great unfinished business of America--and it still is. In the past 
thirty years, this nation has made significant progress in removing the 
burden of bigotry from our land. This ongoing bipartisan peaceful 
revolution of civil rights is one of the great hallmarks of our 
democracy and an enduring tribute to the remarkable resilience of the 
nation's founding principles.
  Federal law now rightly prohibits job discrimination on the basis of 
race, gender, religion, national origin, age, and disability. 
Establishing these essential protections was not easy or quick. But 
they have stood the test of time--and they have made us a better and a 
stronger nation.
  Today, we seek to take the next step on this journey of justice by 
banning discrimination based on sexual orientation.
  The Employment Non-Discrimination Act is a significant step in that 
direction. The Act parallels the protections against job discrimination 
already provided under Title VII of the Civil Rights Act. It prohibits 
the discriminatory use an individual's sexual orientation as the basis 
for decisions on hiring, firing, promotion, or compensation. This kind 
of prohibition on job discrimination is well-established in the civil 
rights laws and can be easily applied to sexual orientation.
  Our bill is not about granting special rights--it is about righting 
senseless wrongs. Its goal--plain and simple--is to eliminate job 
discrimination against fellow Americans. It does not allow for 
disparate impact claims, it prohibits quotas, it does not require 
domestic partners benefits, and it does not apply to the armed forces.
  What it does require is basic fairness for gay men and lesbians, who 
deserve to be judged in their job settings--like all other Americans--
by their ability to do the work.
  Today, job discrimination on the basis of sexual orientation is too 
often a fact of life. From corporate suites to plant floors, qualified 
employees live in fear of losing their livelihood for reasons that have 
nothing to do with their skills or their job performance. Yet in 42 
states a person can be fired--just for being gay.
  This bill is not about statistics. It is about real Americans whose 
lives are being shattered and whose potential is being wasted. They are 
American heroes who paid dearly for being true to themselves as they 
pursued their professions. They performed well and were rewarded by 
being fired or brutally beaten. For them, ability didn't count--bigotry 
did.
  That kind of vicious discrimination happens every day, in communities 
across America. The price of this prejudice, in both human and economic 
terms, is unacceptable. It is time for Congress to take a stand against 
it.
  Job discrimination is not only un-American--it is counterproductive. 
It excludes qualified individuals, lowers workforce productivity, and 
hurts us all. For the nation to compete effectively in a global 
economy, we have to use all our available talent, and create a 
workplace environment where everyone can excel.
  This view is shared by many leaders in labor and management. They 
understand that ending discrimination based on sexual orientation is 
good for workers, good for business, good for the economy, and good for 
the country.
  In the absence of federal action, many state and local governments 
have acted responsibly to prohibit job discrimination based on sexual 
orientation. Over a hundred mayors and governors, Republicans and 
Democrats, have signed laws and issued orders protecting gay and 
lesbian employees. It is time for the federal government to make this 
protection nationwide.
  We know we cannot change attitudes overnight. But the great lesson of 
American history is that changes in the law are an essential step in 
breaking down barriers of bigotry, exposing prejudice for what it is, 
and building a strong and fair nation.
  I am honored to join my colleagues in introducing the Employment Non-
Discrimination Act of 1995. This bipartisan legislation has the support 
of a broad bipartisan coalition that includes Coretta Scott King and 
Barry Goldwater--the conscience of civil rights and the conscience of 
conservatives.
  Today's action brings us one step closer to the ideals of liberty. 
Our case is strong, our cause is just, and we intend to prevail.
  I urge the Senate to support this essential effort.
                                 ______

      By Mr. SIMON:
  S. 933. A bill to amend the Public Health Service Act to ensure that 
affordable, comprehensive, high quality health care coverage is 
available [[Page S8503]] through the establishment of State-based 
programs for children and for all uninsured pregnant women, and to 
facilitate access to health services, strengthen public health 
functions, enhance health-related research, and support other 
activities that improve the health of mothers and children, and for 
other purposes; to the Committee on Labor and Human Resources.

             HEALTHY MOTHERS, HEALTHY CHILDREN ACT OF 1995

  Mr. SIMON. Mr. President, we have a serious problem in health care. 
We have almost 41 million now who do not have health care coverage.
  As the Presiding Officer knows, because he has now been designated to 
lead the effort for the Republican Party, and he and I last year had 
some discussions about what kind of a practical compromise could be 
made.
  This is a compromise. I would love to have universal coverage for 
everyone. This is a practical compromise that says ``Let's protect 
pregnant women and children 6 and under.'' It provides affordable, 
comprehensive, quality private health care coverage for these groups.
  The health of America's mothers and children is simply unacceptable. 
The U.S. is No. 1 in wealth; we are 22d in infant mortality; we are 
18th in maternal mortality.
  Mr. President, 24 percent of the children of our country live in 
poverty. No other Western industrialized nation has anything like these 
figures. Many developing countries have much more coverage in terms of 
immunization.
  Mongolia is a country I have had a chance to visit. Very few 
Americans visit Mongolia. It is really remote. Talk about developing 
nations that have problems, and yet they have a higher percentage of 
their children immunized than we do.
  Mr. President, 22 percent of pregnant women do not have prenatal care 
in the first trimester. Uninsured children of the United States today, 
11.1 million, or 1 out of 6, and it is getting worse.
  What is going to happen, whether the Clinton bill passes in terms of 
the budget or the Republican budget passes--and obviously it is more 
likely to be the Republican budget--what if the distinguished junior 
Senator from Utah were a hospital administrator and the amount you get 
for coverage for Medicare and Medicaid goes down, what happens is you 
shift the burden to the nonMedicaid/nonMedicare patient and health 
insurance premiums go up? As health insurance premiums go up, the 
percentage of employers providing insurance will go down.
  The estimate is the year 2002, somewhere between 17 million and 20 
million children will not be covered.
  Incidentally, I would love to have a bill that covers all children, 
covers 18 and under. But I know, realistically, that does not have a 
chance of passage.
  But if we were to say let us at least cover pregnant women and 
children 6 and under, of the 1.1 million net increase in uninsured 
persons from 1992 to 1993, 84 percent, 922,000, were children. That is 
the increase for children. That is the increase for adults. Obviously, 
we are talking about the future of our Nation when we talk about the 
children.
  Guiding principles of this act, the Healthy Mothers, Healthy Children 
Act? Coverage is independent of family income, employment, or health 
status. Everyone can get insurance.
  This is a single-tier health care system for everyone.
  Coverage is affordable for all families. We have some flexibility 
here. Health services are comprehensive. And we ensure quality.
  Eligibility? All children under the age of 7 and pregnant women; 
replaces Medicaid for those groups. The States save money and the 
Federal Government would save money. And it calls for a report on 
possible future expansion.
  Enrollment? There would be a national open enrollment month; plus, if 
you go to the hospital, if you go to a physician, if you are not 
enrolled, you can enroll at that point. It is administratively simple. 
Plans must accept any eligible person, no preexisting conditions. And 
within the State, you would have competition among the insurers so we 
keep the rates down.
  Cost sharing is part of it. Our friends in Canada say they made a 
great mistake in not having all people contribute something. There is 
overutilization of the system when you do not have everyone 
contributing something. So we have all families contributing. Families 
receive premium subsidies ranging from 99 percent to 5 percent, 
depending on income. And there is a cap because even a family of upper 
income, if you have a devastating kind of an illness--we just heard 
Senator Chafee talk about someone who had a $3 million medical bill.
  State flexibility and accountability--States and plans are given 
maximum flexibility; States develop and administer the program; States 
and Federal Government and health plans are accountable for meeting 
certain objectives.
  There is a matching rate. The Federal matching rate is more generous 
than Medicaid. The national average would be 80 percent. That means 
very substantial savings for Illinois, for Utah, and for the other 
States. The maximum matching rate would be 90 percent.
  Comprehensive health care services, and there are some limits here, 
let me just say, because--which I will outline in a minute. Preventive 
health, ambulatory care, laboratory services, prescription drugs, 
hospital, and in-home services, mental health services, dental and 
vision care--this is an example where there are limitations. We do not 
cover orthodontia services. We do not cover cosmetic surgery. There are 
obviously limitations that have to be here.
  Long-term health care for children with disabilities and chronic 
health conditions, durable medical equipment, allied health services. 
Here is the way it would work. A family of four at 250 percent of 
poverty, that is $37,000 with one child under 7, the mother is 
pregnant, the father works in a small business, with no dependent 
health care coverage, they would have the option to enroll into this 
plan. They would receive comprehensive coverage for the mother and the 
child--not for the father, not for any children over the age of 6. With 
their income, they would receive a 40 percent premium subsidy. In other 
words, they would have to pay 60 percent of the costs and they would 
pay a maximum, during the course of the year, of $1,830 per year. Then, 
if their costs exceed that $1,830, the Federal Government would pay.
  Here is a lower-income family, a family of four at 100 percent of 
poverty, $15,000 with two children under 7, a single parent who works 
part time and is covered by Medicaid. Both children are automatically 
enrolled. Everyone who is on Medicaid is automatically enrolled into 
the Healthy Mothers, Healthy Children Act. The parent remains in 
Medicaid also, but we do not cover that parent. The Medicaid Program 
continues as is for that parent. They would have a choice of provider, 
get quality services, and coordination of care improves. They would 
receive a 90-percent subsidy. In other words, if they have a problem, 
they would have to pay 10 percent, even a poor family. So we do not 
have overutilization. But they would pay a maximum of $80 per year. For 
a family that is on the poverty level or below, that is still a sizable 
amount of money but it is a restraining factor. But then the Federal 
Government picks the tab up after that.
  An upper-income family, a family of four, at 500 percent of poverty, 
$75,000, with two children under 7, one parent works for a large 
company and has a health plan through the employer but no coverage for 
preexisting conditions. They have the option of staying with the 
company plan or enrolling in this plan. They receive complete coverage, 
including preexisting conditions. They receive only a 5 percent premium 
subsidy. They would have to pay 95 percent. Obviously, at $75,000 a 
year, they can afford that.
  But they can pay a maximum of $6,000 per child for a year. So if you 
have a child who is a diabetic, who has a serious problem--if you have 
the kind of problem that Senator Chafee just mentioned, with somebody 
who had a $3 million expenditure--that would be covered.
  Financing sources? Medicaid funds, that we have right now. Here is 
the tough one. We increase the tax on a package of cigarettes by $1.50. 
There is no question that is going to be tough. Some of our colleagues 
are going to resist it strongly. I add, even if we were not providing 
any benefits for anybody, [[Page S8504]] we would have a healthier 
America if we increase the tax on cigarettes $1.50 per pack. Young 
people, particularly, like these pages--if I may pick on them here--
they are very price sensitive. That really would make a difference.
  The State has to match. They will not have to match as much as they 
have been. The States would save some money; some employers would save 
some money. The family has to contribute. I think that is proper. There 
would be savings from elimination and reduction of duplicative 
programs.
  In controlling costs, they are controlled by market competition. They 
have to bid within the State. Premium subsidies are based on the 
lowest-priced plan. Obviously, quality has to be there. The funding 
increases to States limited to the national rate of inflation.
  If, for example, in Utah you have a plan and it increases the cost 20 
percent while the national average is 5 percent, we say to Utah: Sorry, 
you can only have a 5-percent increase. So there is that limitation.
  Specific options for reducing program costs to ensure financial 
integrity of the program.
  Then, finally, a quote from this radical by the name of Herbert 
Hoover. Herbert Hoover said:

       The greatness of any nation, its freedom from poverty and 
     crime, its aspirations and ideals are the direct quotient of 
     the care of its children.
       There should be no child in America that is not born and 
     does not live under sound conditions of health.

  That is not the case today. We ought to make Herbert Hoover's dream 
for America a reality.
  So I have this bill. I think it is appropriate that the two Members 
on the Republican side who are here right now are Senator Bennett and 
Senator Chafee. Senator Chafee provided excellent leadership last 
session. We were not able to put the package together. Senator Bennett 
now has that mantle on the Republican side.
  We ought to do something. My proposal is let us provide coverage for 
pregnant women and children 6 and under. That would be a great initial 
step for the future of our country, and would protect 11 million 
children in our country today. I hope we take a look at this. At some 
point, whether the Finance Committee approves this idea or not, I am 
going to offer it as an amendment on the floor so we get a vote on it.
  My instinct is you have to be pretty hardhearted to vote against 
coverage for pregnant women and children 6 and under. I think this 
might be politically acceptable. I certainly know the American people 
would favor it.
  So I am introducing this bill today. I hope we will consider it. I 
commend it to my colleagues who have done more work in the health care 
field on the other side of the aisle than any others--Senator Chafee 
and Senator Bennett.
  The purpose of this act is to ensure that affordable, comprehensive, 
high quality private health care coverage is available through State-
based programs for all children, initially for those under seven, and 
for all uninsured pregnant women.
  Mr. President, friends, yesterday was Flag Day. A day for all 
Americans to reflect upon our country, where we've been and where we 
are heading. When I think about the future of this country, I realize 
that the future is already here--in our children. What should be our 
national direction? Let me share with you my vision for our children. I 
suggest that we move towards a society where every child at least has 
adequate health care, receives a good education, lives in a caring 
family, and grows up in a safe community.


           the poor health of america's mothers and children

  How are we doing in fulfilling that vision? My friends, I have to 
tell you that we as a country are failing to properly care for our 
children. We are the wealthiest Nation in the world. But if our wealth 
was measured by the health status of mothers and children, we fall well 
behind the other major industrialized nations. Despite the highest per 
capita spending on health care of any country, we currently rank 22d in 
infant mortality and 18th in maternal mortality. Approximately 24 
percent of all our children live in poverty. Many developing countries 
including Albania, Malawi, Mongolia, and Turkmenistan, have higher 
childhood immunization rates than we do. In addition, approximately 22 
percent of mothers did not receive prenatal care in the first 
trimester. We can do better.


     lack of health insurance among children and pregnant women is 
                               increasing

  What about health care coverage? Unfortunately, the lack of insurance 
among children and pregnant women is unacceptable and is getting worse. 
A recent report by the Employee Benefit Research Institute shows that 
between 1992 and 1993, the number of uninsured people increased by 1.1 
million or 17.8 percent to 40.9 million. The most alarming finding is 
that children accounted for the largest proportion of the net increase 
in the number of the uninsured: Of the 1.1 million net increase between 
1992 and 1993, 922,500 or 84 percent, were children under 18.
  In 1993, 11.1 million or one of every six children did not have 
health insurance or publicly-financed health care, up from 10.2 million 
or 15 percent in 1992. Despite recent expansions in Medicaid, 22 
percent of all poor children were uninsured, and approximately 500,000 
pregnant women did not have health insurance in 1992.
  In addition, if this Congress significantly reduces the Medicaid 
budget as proposed under the current Senate and House budget 
resolutions, it is estimated that between five and seven million 
children in addition to the 12.6 million children already projected to 
be uninsured under the current health care system, will not have health 
coverage by the year 2002.
  It is important to note that lack of health insurance is not solely a 
problem of poverty. A large proportion of children in middle class 
families are uninsured. For example, among children in families with 
incomes between 100 and 199 percent of poverty, 25 percent are 
uninsured. And among children in families with incomes between 200 and 
399 percent of poverty, 12 percent lack insurance.
  My friends, we can do better. We must do better.
            investing in the health of mothers and children

  Given the state of the Federal deficit, some of you may question 
whether the Government should be expanding health coverage for 
children. You may ask, ``Is this a proper role for government?''
  I think the words of Abraham Lincoln are helpful. He said: ``The 
legitimate object of government, is to do for a community of people, 
whatever they need to have done, but cannot do, at all, or cannot, so 
well do, for themselves--in their separate, and individual 
capacities.'' Children do not have the capacity to ensure their health. 
Yes, families have primary responsibility for ensuring that their 
children receive medically necessary care. The Government's role is to 
ensure that health coverage is accessible and affordable for all. It is 
clear that the private sector has been unable to accomplish this goal.
  There are more reasons why we should invest in our children's health. 
Investing in health services for children substantially increases their 
potential to be productive members of society and averts more serious 
or more expensive conditions later in life. Similarly, ensuring that 
all pregnant women receive adequate prenatal care is cost saving to 
society. Ensuring coverage for children is also relatively inexpensive: 
In 1993, the Medicaid program spent an average of $1,012 per child 
compared to $8,220 per elderly adult.
  Therefore, if the question to me is ``Can we afford to invest in the 
health of our children?,'' I reply by asking you, ``How can we afford 
not to?''


    guiding principles for the healthy mothers, healthy children act

  In developing the Healthy Mothers, Healthy Children Act, I considered 
10 fundamental guiding principles that I believe should be the basis 
for any national health care program for children and pregnant women. 
They are:
  First, coverage is independent of family income, employment, or 
health status;
  Second, there is a single-tier health care system;
  Third, coverage is affordable for all families;
  Fourth, health services are comprehensive;
  Fifth, ensuring quality is a primary goal; [[Page S8505]] 
  Sixth, everyone shares responsibility for mothers and children;
  Seventh, health, not just health care, is emphasized;
  Eighth, States and health plans have maximum flexibility and 
accountability;
  Ninth, administrative costs and complexity are minimized; and
  Tenth, program costs and fraud and abuse are controlled.


          summary of the healthy mothers, healthy children act

  Let me summarize the legislation I am introducing:
  A national trust fund is established to support state-based programs 
that involve private health plans. Participation is voluntary for 
states, health plans, and families.
  All children under age seven are eligible, regardless of family 
income, employment, or insurance status. Pregnant women without 
employer-based coverage are eligible. Medicaid-eligible children and 
pregnant women are brought into the program to enhance their choice of 
providers and to avert a multi-tier health care system. There is no 
impact on the Medicaid program for nonparticipating States for 
noneligible children seven years of age and older. Every 2 years, if 
sufficient funds are available and the public is supportive of the 
program, the Secretary will increase eligibility to older children on a 
national basis. A State that has achieved universal coverage for 
children under seven in their State can extend coverage to older 
children before such children are eligible on a national basis.
  In my legislation, children are enrolled during a national open 
enrollment period. States ensure that the enrollment process is simple 
and is not a barrier to care. Participating plans must accept any 
eligible person who wishes to enroll and cannot deny coverage for pre-
existing conditions or any other reason.
  All families contribute according to their ability to pay and receive 
a premium subsidy, ranging from 99 percent to 5 percent, based on a 
sliding scale of income. There is a cap on annual family medical 
expenses and a required $5 copayment for most services, except for 
preventive services.
  The legislation is based on a management by objectives approach: 
States and health plans are given maximum flexibility to determine how 
they will meet program objectives, but are also fully accountable for 
results. States develop and administer the program, and are evaluated 
on an annual basis regarding their progress in achieving program 
objectives.
  State funds are matched by Federal funds at a rate based on the State 
per capita income that is more generous than the State's current 
Medicaid matching rate. The average Federal matching rate for all 
States is 80 percent with a maximum matching rate of 90 percent.
  Health services in the Healthy Mothers, Healthy Children Act are 
provided by private health plans. States certify health plans and 
negotiate premium rates with all interested plans. Participating plans 
compete to deliver the highest quality care at the lowest price. There 
are a series of standards to prevent adverse selection and 
discrimination, ensure access to primary and specialty care, and ensure 
that all participating plans compete on a ``level playing field.'' The 
program encourages innovation by existing plans and formation of new 
health plans.
  All participating health plans must provide a comprehensive package 
of services.
  The services will be specified by the Secretary and health 
professional groups. In general, services include: preventive health, 
ambulatory care, laboratory services, prescription drugs, hospital and 
in-home services, mental health services, dental and vision care, long-
term health care for children with disabilities and chronic health 
conditions, durable medical equipment, and allied health services.
  Because I believe that we must emphasize quality and accountability, 
the bill includes a series of standards to ensure quality at the health 
plan, State, and Federal levels. National guidelines for quality 
assessment and improvement, utilization review, and other programs are 
developed in consultation with private health plans and other 
nongovernmental organizations. All participating States must have a 
program for preventing, monitoring, and controlling fraud and abuse. As 
a check and balance, nongovernment advisory council provides program 
oversight and advises the Secretary on program administration and 
modifications. A national maternal and child health information system 
and a national childhood immunization database are established to 
monitor program quality and to increase childhood immunization rates.
  How would employers be affected by this bill? Experience from the 
last Congress demonstrates that the issue of the role of employers in 
health care reform is extremely difficult to resolve. I propose that 
employers who drop coverage of employee-dependent children as a result 
of this Act must pay a temporary (5-year) annual maintenance of effort 
fee equivalent to 50 percent of health coverage costs for their 
employees' children. To discourage dropping of coverage, families whose 
coverage is dropped by their employers are not eligible for the program 
for 6 months.
  In my legislation, there is a strong emphasis on prevention. Up to 5 
percent of trust monies can be used to fund activities by States and 
nonprofit organizations to improve the health of mothers and children. 
Eligible activities include: supporting school-based clinics, 
increasing the use of telecommunications and computer technology to 
increase health care access, supporting biomedical and health-related 
research,
 enhancing core public health functions, and supporting health 
promotion and disease prevention activities. To minimize duplicative 
programs, existing Federal and State maternal and child health programs 
are integrated and coordinated under the bill.

  Controlling health care costs is crucial. Therefore, I have several 
mechanisms designed to control costs in the program. Costs are 
controlled by market competition and delivery of care primarily through 
management care plans. Because premium subsidies for families are based 
on the lowest priced plan in an area, plans have an incentive to 
control costs. Because annual funding increases to the States are 
limited to the average increase in medical care costs for children and 
pregnant women on a national basis, states have an incentive to control 
program costs. There are also mechanisms in the bill that allow the 
Secretary to reduce program costs or request additional funds as 
necessary to ensure the financial integrity of the program. I am asking 
the Congressional Budget Office to score the bill.
  How will we pay for the program? Funding sources for my legislation 
include shifting of Federal Medicaid funds for targeted groups, 
increase in Federal excise taxes on cigarettes of $1.50/pack, state 
matching funds, partial premiums from families, savings from 
elimination/reduction of duplicative Federal and State programs, and 
charitable contributions.
  Perhaps I can best summarize my legislation by illustrating how it 
affects different families.
  First, let's take the example of a middle class family of four at 250 
percent of poverty with one child under seven, a pregnant mother, and a 
father who works in a small business that does not offer dependent 
coverage. In this situation, the mother and child may be enrolled into 
the Healthy Mothers, Healthy Children Program. They would receive 
comprehensive health care coverage and 40 percent of the cost would be 
subsidized. The family would pay a maximum of $1,830 per year for total 
medical expenses for the mother and child.
  Now let's look at a lower income, single parent family at 100 percent 
of poverty with two children under 7, the parent works part time and 
the family is covered by Medicaid. In this case, the children would be 
automatically enrolled into the Healthy Mother, Healthy Children 
program. Under this program, the choice of provider, quality of care, 
and coordination of care would improve. Ninety percent of the cost of 
the coverage would be subsidized, and the family would pay a maximum of 
$80 per year for total medical expenses for both children.
  Finally, what about higher income families? Let's consider a family 
at 500 percent of poverty with two children under 7, one parent works 
in a large company that provides family coverage but does not cover the 
children's preexisting conditions. This family may [[Page S8506]] elect 
to stay with their coverage or enroll their children into the Healthy 
Mothers, healthy Children program. The children would receive 
comprehensive health coverage including for pre-existing conditions. 
The family would also receive a 5 percent premium subsidy, and pay a 
maximum of $6,000 per year for total medical expenses for the mother 
and child.


                 toward a healthy future for our nation

  Mr. President, I am introducing this bill today as a starting point 
for discussions towards a bipartisan bill to ensure that the most 
vulnerable members of our society have a chance to lead productive 
lives regardless of the circumstances of their birth. I urge all of my 
colleagues who are concerned with our Nation's future to join me and 
further develop my proposal.
  As Congress revisits health care reform this year, it is likely that 
we will agree to at least provide for portability of coverage for 
employed individuals and limit exclusions for pre-existing conditions. 
These insurance reforms will improve access for some, but such reforms 
unfortunately fall far short of what we should and can do to expand 
coverage for children and pregnant women. We can do better.
  There is a health care crisis in this country. Should we accept a 
society where children in many neighborhoods have better access to drug 
and handguns than to doctors? A society that ensures health care for 
all prisoners but does not extend that guarantee to all children?
  I recognize that health care reform is complex. We must move 
cautiously and incrementally. A sensible approach is to start by at 
least ensuring that every child under seven and all uninsured pregnant 
women have affordable, comprehensive, high quality health care 
coverage.
  In accepting the Republican nomination for President in 1928, Herbert 
Hoover said ``* * * the greatness of any nation, its freedom from 
poverty and crime, its aspirations and ideals are the direct quotient 
of the care of its children.'' And that ``* * * there should be no 
child in America that is not born and does not live under sound 
conditions of health * * *''
  Sixty-seven years later, we are the only developed Nation that does 
not ensure that all children and pregnant women have health coverage as 
part of national maternal and child health policy. I know we can do 
better.
  There is a saying that children will treat us as they have been 
treated. I urge that we, our society, start treating them well.
  Mr. President, I ask unanimous consent that a summary of the bill be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

             Healthy Mothers, Healthy Children Act of 1995

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


      Title 1--National Health Trust Fund for Mothers and Children

                        Sec. 101. Establishment

       Amends subchapter A of chapter 98 of Internal Revenue Code 
     of 1986.


                    Part II--Health Care Trust Funds

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

       Establishes the National Health Trust Fund for Mothers and 
     Children to support state-based programs that ensure 
     affordable, comprehensive, high quality health care coverage 
     for all children, and for all uninsured pregnant women.
       Transfers into the Trust Fund shall include: (1) revenue 
     from an increased tobacco tax, (2) shifting of funds from the 
     Medicaid program, (3) designation of overpayments on tax 
     returns and charitable contributions, and (4) savings from 
     duplication of services or functions of existing federal 
     programs.
       Expenditures from the Trust Fund shall include: (1) funding 
     state-based programs to cover children and pregnant women; 
     (2) up to 5% of Trust Fund monies for awarding grants to 
     states, universities, and other nonprofit organizations for 
     activities to improve the health of mothers and children; and 
     (3) up to 0.2% of the annual revenue from the increased 
     tobacco tax to fund activities at the Office of Smoking and 
     Health, Centers for Disease Control and Prevention to prevent 
     the use of tobacco products by children and to coordinate 
     federal and state tobacco control initiatives.


           Title 2--Healthy Mothers, Health Children Program

            Sec. 201. Establishment and Allocation of Funds

       Amends the Public Health Service Act (42 USC 201).


         Title XXVII--Healthy Mothers, Healthy Children Program

                  Sec. 2700. Establishment of Program

       States that wish to participate in this program must 
     establish a state program to provide for or cover 
     comprehensive, high quality health services for eligible 
     individuals.


                      Part A--Allocation of Funds

         Sec. 2701. Allocation of Funds to Participating States

       For the first two years, the amount of funds allocated to 
     each participating state will be determined by the Secretary 
     of Health and Human Services, hereafter referred to as the 
     Secretary, based on three factors: the estimated number of 
     eligible children under seven years, the number of uninsured 
     pregnant women in the state, and a geographic adjustment 
     factor that is dependent on the average cost of health care 
     in the state. In subsequent years, to encourage enrollment of 
     all eligible persons, allocations to each state shall also be 
     based on the number of persons enrolled in the state program 
     in the previous year (the greater the number of eligible 
     persons enrolled in the previous year, the greater the funds 
     to the state).
       After the first two years of funding to participating 
     states, the annual per capita allocation to the states shall 
     be increased each year up to an amount as determined by a 
     formula, calculated and established annually by the 
     Secretary. The formula shall be based on an index that 
     reflects the estimated national average rate of inflation or 
     health care expenditures for children and a similar index for 
     pregnant women. The Secretary may consider state-specific 
     waivers to this requirement on an annual basis if the state 
     can demonstrate that extenuating circumstances within the 
     state caused unavoidable increases in the cost of health 
     services to children and pregnant women, and that the state 
     has considered all reasonable strategies to control costs, 
     including, but not limited to, working with certified plans 
     to control costs, reducing administrative costs, 
     restructuring the state program, and minimizing fraud and 
     abuse.

         Sec. 2702. State Trust Funds and Matching Contribution

       Each state shall establish its own state trust fund (or in 
     the case of regional programs, a regional trust fund) in 
     which allocated federal funds and matching state funds shall 
     be deposited. States are allowed to deposit additional funds 
     into their trust fund at any time, but these state funds 
     shall not be subject to federal matching unless they are 
     deposited for the purposes specified in sections 2732, 2735, 
     and 2753. Monies from the state or federal trust funds may be 
     used only for activities directly related to the provision of 
     health services or other activities specifically covered by 
     this Act. Monies from the Trust Fund shall be transferred 
     directly to the state's trust fund on an annual basis and the 
     states shall deposit their matching funds
      on an annual basis. The annual transfer of funds to the 
     states is contingent on a satisfactory annual evaluation 
     of the state's program and approval of the state's annual 
     plan by the Secretary as specified in section 2731.
       Each participating state is required to match federal funds 
     to the state trust fund at a rate determined by a formula 
     developed by the Secretary that takes into account each 
     State's annual per capita income. The Secretary shall ensure 
     that: 1) each State's matching requirement is more generous 
     for the State than the State's matching requirement under the 
     Medicaid program at the time of the approval of the State 
     program, 2) the average State matching requirement for all 
     States is $2 for every $8 of Federal funds under the 
     allocation (average Federal matching rate for all States of 
     80%), and 3) no State shall have a matching requirement less 
     than $1 for every $9 of Federal funds under the allocation 
     (maximum Federal matching rate of 90%).
       States may elect to accept a donation of funds, services, 
     or equipment toward a state program under this Act from 
     individuals and the private sector. However, the state shall 
     ensure that donations from individuals and for-profit 
     entities do not result in a conflict of interest in terms of 
     the state giving preference to the individual or entity 
     related to the award of contracts for a federal or state 
     health program.

        Sec. 2703. Excess and Insufficient Funds in Trust Funds

       In the case that monies exist in the Trust Fund that are 
     not transferred to participating states or awarded for 
     activities under this Act, such monies shall remain in the 
     Trust Fund and be available for use in subsequent years. In 
     the event that there exists a surplus of monies in a state 
     trust fund, such monies do not need to be transferred back to 
     the Trust Fund. However, such surplus state monies must be 
     used to expand eligibility to older children.
       In the case that there exist insufficient monies in the 
     Trust Fund, or it is expected that insufficient funds will 
     exist, in any given year to fully transfer to the states the 
     amount ordinarily allocated by the Secretary, then the 
     National Advisory Council [[Page S8507]] for Mother's and 
     Children's Health as established under section 2742, and to 
     be referred to hereafter as the Council, shall recommend to 
     the Secretary, within 60 days of the Council's discovery, 
     strategies for correcting the discrepancy. The Council may 
     choose to recommend additional sources of revenue for the 
     Trust Fund, adjusting the state matching requirements under 
     section 2702, adjusting the range or nature of health 
     benefits provided under section 2721, adjusting the cost 
     sharing requirements for families under sections 2725-2728, 
     decreasing grants awarded under Part F, or other measures as 
     deemed appropriate by the Council. In consultation with the 
     Council, the Secretary shall submit implementing legislation 
     to Congress, within 60 days of the Council's recommendations, 
     for correcting the problem.
       In the event that a state does not have sufficient monies 
     in the state trust fund to meet its obligations during a 
     given year, the state may petition the Secretary for 
     additional monies and the Secretary shall make a decision for 
     funding or a loan from the Trust Fund within 90 days of the 
     petition. However, the Secretary shall not transfer any 
     additional funds to the state if it is determined that the 
     state mismanaged funds, failed to prevent foreseeable fiscal 
     problems, or failed to control fraud and abuse.


                   part b--eligibility and enrollment

                         subpart i--eligibility

                 Sec. 2710. Eligibility of Individuals

       The following groups are eligible under this Act:
       1. All children under seven years of age regardless of 
     income or insurance status, plus older children (up to 21 
     years) as the Secretary or states expand eligibility as funds 
     are available.
       2. All pregnant women, regardless of income, who are not 
     insured through their own employer or their family's 
     employer. However, pregnant women who have employer-based 
     coverage, but do not have coverage for pregnancy-related 
     health benefits, shall also be eligible. (The 1978 Pregnancy 
     Discrimination Act, which applies to employers who have 15 or 
     more employees and requires that any health insurance 
     provided to employees must cover expanses for pregnancy-
     related conditions on the same basis as expenses for other 
     medical conditions, shall remain in effect.)
       3. Legal residents or United States citizens only. States 
     may elect to extend eligibility to other residents, but no 
     federal funds shall be used to provide for such coverage.
       An individual is not eligible under this program if he/she 
     was covered under an employer-based health plan and coverage 
     was dropped by the employer within the six-month-period prior 
     to the individual's application.

                   Sec. 2711. Election of Eligibility

       Children who are eligible for or receive health services 
     from the Department of Defense (military medicine or the 
     Civilian Health and Medical Program of the Uniform Services 
     (CHAMPUS)), the Indian Health Service, or the Department of 
     Veterans' Affairs, may continue to use such services or elect 
     to enroll in a certified plan under this Act.
       All age-eligible children who are enrolled in Medicaid at 
     the time of full
      implementation of this Act in their state of residence shall 
     be automatically enrolled in the respective state program 
     under this Act. In the case of an age-eligible child in 
     state-supervised care or a child who does not live with 
     his/her parents, the child shall be enrolled in a plan by 
     the state agency or guardian that has been awarded 
     temporary or permanent custody of the child unless there 
     is a specially designed health care system for such 
     children.
       Pregnant women who are enrolled in Medicaid at the time of 
     full implementation of this Act in their state of residence 
     shall be automatically enrolled in the respective state 
     program under this Act. Pregnant women who are eligible for 
     health services under the Department of Defense, the Indian 
     Health Service, the Department of Veterans' Affairs, and 
     other federally sponsored health plans are not eligible under 
     this Act.
       In the case where an individual elects or is automatically 
     enrolled in a state program under this Act, all privileges 
     (such as choice of certified plans) and responsibilities 
     (such as payment of premiums or copayments) accorded to their 
     families or themselves under this Act shall apply.

             Sec. 2712. Eligible Health Plans and Providers

       All health plans and providers who are licensed and 
     credentialed, or otherwise legally authorized by their state, 
     to provide the health services specified under this Act, 
     under the respective rules and regulations of their state, 
     are potentially eligible to participate in the state program 
     if they meet all relevant state and federal requirements 
     under this Act.


                         subpart ii--enrollment

               Sec. 2715. Enrollment of Eligible Persons

       Families with eligible children may enroll their children 
     during a national open enrollment period as defined by the 
     Secretary. Congress shall designate this one-month period as 
     National Healthy Mothers, Healthy Children's Month.
       Participating states shall establish a system for enrolling 
     eligible children and pregnant women that minimizes barriers 
     to enrollment. The application process shall be reasonably 
     convenient, efficient, and available through a wide range of 
     methods. At a minimum, enrollment shall be available through 
     the mail, telephone (via a toll free number), and in person.
       Enrollment materials shall be available from health care 
     providers, health provider organizations, hospitals, health 
     clinics, and at facilities that provide health and nutrition 
     services to children and women, and from local and state 
     government health offices. The Secretary, in consultation 
     with the states and representatives of certified plans, shall 
     develop the essential data elements for a standardized 
     enrollment form and it shall not be more than one page in 
     length. However, additional data collection instruments for 
     the purposes of program assessment and improvement may be 
     allowed as long as they are not a requirement for enrollment.
       States shall process enrollment applications and give a 
     final decision on the application to the family and relevant 
     plan within 30 days of application submission. Approval of 
     the application shall be dependent on eligibility and income 
     verification and must occur within 30 days. Upon approval, 
     the state shall notify the family and relevant plan of the 
     family's expected annual premium contribution, the first 
     payment of which must be received by the plan or the state 
     within 30 days of application approval. Income verification 
     mechanisms and requirements shall be developed by the state. 
     States may elect to waive income verification requirements 
     for families who are already subject to similar requirements 
     under other state or federal programs or in other situations 
     deemed to be appropriate by the state.
       Children may also be enrolled by their family at any time 
     outside of the open enrollment period, but a late enrollment 
     surcharge, to be determined by the state, will be imposed for 
     doing so. Families shall be given the opportunity to enroll 
     their newborn before or at the time of delivery (through the 
     hospital or birthing center). In order to avoid a surcharge, 
     newborns must be enrolled into the program prior to their 
     birth, within 30 days of their birthdate, or during the open 
     enrollment period.
       Upon enrollment application, the family shall indicate 
     their choice of certified plan. The period of enrollment 
     shall not be less than one year for a child, and in the case 
     of a pregnant woman, the period shall be for the duration of 
     her pregnancy and eligible post-partum period. Families with 
     enrolled children in a certified plan may freely elect to 
     change plans during the next open enrollment period. Families 
     with enrolled children may also change plans outside of the 
     open enrollment period but the state shall impose a 
     substantial surcharge, to be determined by the state, for 
     doing so. However, there shall be no surcharge for families 
     with enrolled children or pregnant women if the change of 
     certified plans is due to the family moving to another area 
     not served by the current plan, in the case of a plan 
     withdrawing from a market area, or for other justifiable and 
     legitimate reasons as determined by the state.
       A pregnant woman may enroll at any time after the diagnosis 
     of pregnancy is confirmed by a physician or qualified health 
     professional, or she may enroll in order to confirm her 
     pregnancy. Women who plan to become pregnant may also enroll 
     in the program, but covered benefits are available only after 
     the pregnancy is confirmed by a physician or qualified health 
     professional.
       There shall be no waiting period for covered health 
     services; access to services shall
      be effective immediately at the time of enrollment 
     application. All applicants shall be presumed to be 
     eligible until the state has determined otherwise. 
     Certified plans must provide covered health services to 
     any pregnant woman or child who has not been enrolled in a 
     certified plan under this Act and who reasonably appears 
     to be of an eligible age until such time that the state 
     has notified the plan that the applicant is not eligible 
     under this Act. In these cases, however, an application 
     for enrollment in the certified plan must be submitted by 
     the pregnant woman or on behalf of the child during the 
     initial point-of-service visit. The state shall impose a 
     surcharge, to be determined by the state, for enrollment 
     at the point-of-service. States may elect to directly 
     compensate plans for services delivered to persons who are 
     subsequently deemed ineligible, or allow plans to factor 
     in the estimated costs of providing services to such 
     persons in their rate negotiations with the state.
       Waivers to any enrollment surcharge may be obtained from 
     the state if the applicant can demonstrate that he/she was 
     out-of-state during the open enrollment period or for other 
     unavoidable and legitimate reasons as determined by the 
     state, including, but not limited to, sudden loss of health 
     coverage due to unemployment, divorce, and financial crisis.

                 Sec. 2716. Transition from Eligibility

       When a child enrolled in a certified plan reaches the end 
     of an enrollment period on the day of or after attaining his/
     her seventh birthday, he/she shall no longer be eligible for 
     premium subsidies under this Act. However, the child's health 
     plan in effect immediately prior to the individual attaining 
     his/her seventh birthday must continue to provide coverage 
     indefinitely, at the discretion of the child's family, for as 
     long as the full unsubsidized premium and copayments are 
     paid. There shall not be any exclusion of coverage for pre-
     existing conditions. In addition, if the individual's family 
     elects to leave [[Page S8508]] the current health plan for 
     another plan or for an employer-provided plan that provides 
     similar benefits to employee dependents, the plan or employer 
     must accept the individual into the plan and is not allowed 
     to exclude coverage for any pre-existing conditions.
       A woman shall no longer be eligible for health benefits 
     under the program two months after the end of pregnancy. If 
     the woman was covered under a health plan or employer-based 
     plan (without pregnancy-related benefits) immediately prior 
     to her enrollment in the state program, her previous plan and 
     employer must readmit her into the plan with no exclusions 
     for pre-existing or pregnancy-related conditions at a cost 
     comparable to what she had paid prior to her enrollment in 
     the state program.

 Sec. 202--Comprehensive Health Benefits and Cost Sharing Requirements

       Amends title XXVII of the Public Health Service Act.


  part c--comprehensive health benefits and cost sharing requirements

                subpart 1--comprehensive health benefits

            Sec. 2721. Comprehensive Health Benefits Package

       Within 180 days of enactment of this Act, the Secretary, in 
     consultation with specific health care professional and 
     health-related organizations, shall develop a specific 
     comprehensive benefits package for children and pregnant 
     women based on the general groups of benefits outlined in 
     section 2722. The Secretary shall determine the organizations 
     that will be consulted in development of the benefits 
     package. At a minimum, the American Academy of Pediatrics, 
     the Association of Maternal and Child Health Programs, and 
     the American Dental Association shall be consulted in 
     developing the benefits package for children, and the 
     American College of Obstetricians and Gynecologists and the 
     Association of Maternal and Child Health Programs shall be 
     consulted in developing the benefits package for pregnant 
     women. To the extent possible, periodicity schedules for 
     preventive services shall be specified in the benefits 
     packages.
       As a guide for development of the comprehensive benefits 
     packages for children and pregnant women, the Secretary shall 
     ensure that the specific comprehensive benefits packages are 
     consistent with the following ``floor'' and ``ceiling'': The 
     actuarial equivalent of the specific comprehensive benefits 
     packages must exceed the average actuarial equivalent of 
     health benefits offered to the children and pregnant women by 
     all states under the Medicaid program on the date of 
     enactment of this Act. In addition, the actuarial equivalent 
     of the specific comprehensive benefits packages shall not 
     exceed the actuarial equivalent of health benefits provided 
     to children and pregnant women in the specifics state(s) with 
     the most generous Medicaid benefits package for these 
     populations on the date of enactment of this Act.
       In addition to developing the specific benefits package, 
     the Secretary, in consultation with selected health 
     professional organizations, shall determine which types of 
     services shall be subject to utilization copayments under 
     section 2727. At a minimum, preventive services shall be 
     exempt from any utilization copayment.
       The benefits packages shall be reviewed and revised as 
     necessary every two years by the Secretary in conjunction 
     with relevant professional organizations and the Council. 
     Revision of the benefits packages shall be consistent with 
     changes in the age group of eligible children, standard 
     medical practice, new technologies, emerging health problems 
     and health care needs. The benefits package may be revised 
     immediately if children seven and older are eligible on a 
     national basis or in a state within two years of the 
     development of the initial benefits package.
       Certified plans operating under this Act shall cover or 
     provide the comprehensive
      health services as specified by the Secretary. Certified 
     plans may not offer any plan to eligible individuals under 
     this Act that does not cover or provide for all the 
     benefits specified by the Secretary. However, certified 
     plans may offer additional plans that have more generous 
     benefits than those specified by the Secretary.
       In the case where the State has determined that no 
     participating health plan is able to provide for or cover all 
     the services in the comprehensive benefits package, or the 
     State has determined that certain services are most 
     effectively delivered by providers other than participating 
     health plans, then the State may elect to develop an 
     alternative mechanism, such as entering into agreements with 
     other providers, to provide for or cover specific services. 
     In all cases, however, the State must ensure that all 
     services covered under the comprehensive benefits package are 
     of high quality and are fully coordinated and integrated.

            Sec. 2722. General Categories of Health Benefits

       At a minimum, the following general categories of health 
     services shall be provided for or covered by certified plans 
     participating under this Act:
       For children, from birth up to seventh birthday (or end of 
     enrollment period after birthday): preventive services 
     (including immunizations as recommended by the Advisory 
     Committee on Immunization Practices (ACIP), well baby/child 
     care, routine exams and check ups, recommended screening 
     tests, dental prophylaxis and exams, preventive health 
     counseling and health education); ambulatory care; laboratory 
     services; prescription drugs; inpatient care; vision, 
     audiology and aural rehabilitative, and other rehabilitative 
     services (including prescription eyeglasses, hearing aids); 
     durable medical equipment (including orthotics, prosthetics); 
     dental care (excludes orthodontic care); mental health and 
     substance abuse services; long-term and chronic care 
     services; special health care services for children with 
     disabilities or chronic health conditions; occupational, 
     physical, and respiratory therapy; speech-language pathology 
     services; investigational treatments (limited to 
     participation in a clinical investigation as part of an 
     approved research trial as defined by the Secretary. Services 
     or other items related to the trial normally paid for by 
     other funding sources need not be covered.)
       For pregnant women, from diagnosis of pregnancy through 60 
     days after the end of pregnancy: maternity care (including 
     prenatal, delivery, and postpartum care, including preventive 
     services such as routine exams and check ups, recommended 
     immunizations and screening tests, family planning services, 
     preventive health counseling including nutrition and health 
     education); ambulatory care; laboratory services; 
     prescription drugs; inpatient care; inpatient hospital and 
     nonhospital delivery services; mental health and substance 
     abuse services; any other pregnancy- or nonpregnancy-related 
     health condition; investigational treatments (limited to 
     participation in a clinical investigation as part of an 
     approved research trial as defined by the Secretary. Services 
     or other items related to the trial normally paid for by 
     other funding sources need not be covered.)
       States may elect to extend comprehensive coverage or 
     coverage of selected health services to pregnant women beyond 
     the two-month postpartum period as long as federal funds are 
     not used for such additional coverage.
       During the first two years of the implementation of this 
     Act, the items and services in the comprehensive benefits 
     package shall not be subject to any duration or scope 
     limitation. In addition, there shall be no cost sharing that 
     is not required or allowed under this Act. In subsequent 
     years, however, the Secretary, in consultation with selected 
     professional organizations and the Council, may implement 
     utilization or other limitations on covered benefits on a 
     national basis if such limitations are deemed to be 
     absolutely necessary for the solvency of the program and 
     Congress fails to authorize and appropriate additional monies 
     to the Trust Fund. However, alternatives to decrease program 
     costs such as minimizing administrative costs, increasing 
     cost sharing requirements, and increasing federal or state 
     funding shall be considered before limitations on covered 
     benefits are considered. In no case, however, shall 
     preventive services in the benefits package be subject to 
     such limitations.
       Certified plans need not provide coverage for health 
     services that are greater in frequency than that specified in 
     recommended periodicity schedules, to the extent they are 
     specified under section 2721. However, certified plans must 
     cover any health services, within the general scope of the 
     comprehensive benefits package, that are medically necessary 
     or appropriate for children and pregnant women.
       Nothing in this Act shall be construed as limiting the 
     ability of states or certified plans
      from providing additional health services not covered by 
     this Act, as long as federal funds are not used to pay for 
     such additional services. However, a certified plan may 
     provided for extra contractual services and items 
     determined to be appropriate by the plan and individual 
     (or family).
       Nothing in this Act shall be construed as limiting the 
     ability of individuals to obtain additional health services 
     that are not covered by the benefits package as long as 
     federal funds are not to pay for such services.
       In the interest of ensuring that all children in the United 
     States receive comprehensive health services, employer-based, 
     self-insured, and other health plans not participating under 
     this Act, are encouraged to, but are not required to, provide 
     comprehensive benefits to children and pregnant women similar 
     to those specified in this Act.


                 Subpart II--Cost Sharing Requirements

                 Sec. 2725. Principles of Cost Sharing

       All families who participate under this Act shall 
     contribute towards the cost of their own or their child's 
     health care. There shall be two types of costs for 
     individuals participating in a state program: a premium and 
     copayments. There are no deductibles allowed under this Act.
       The following schedules for determining premium subsidies, 
     copayments, and maximum annual family contributions are 
     intended as a guide for participating states. States may 
     elect to develop their own specific cost sharing requirements 
     as long as they are consistent with the principles that all 
     participating families contribute towards the program and all 
     families receive premium subsidies, all families pay the same 
     copayment for services, and coverage is affordable for all 
     income levels. In addition, state cost sharing schedules 
     shall not result in any overall funding obligations to the 
     federal government in excess of that based on the cost 
     sharing schedules specified in this Act. In all participating 
     states, the annual family contribution under this Act shall 
     not be less than $10 per child and $20 per pregnant woman.
       States may not require additional cost sharing for families 
     with annual incomes less [[Page S8509]] than 150% of the 
     federal poverty level that exceed the cost sharing amounts 
     specified in this title. States may elect to provide 
     additional premium or copayment subsidies for families whose 
     income is less than 400% of the federal poverty level if 
     there are sufficient funds in the state trust fund and no 
     additional federal monies are used for such additional 
     subsidies.
       Participating states, in conjunction with certified plans, 
     shall monitor the impact of cost sharing requirements 
     (premiums and copayments) on low income families and ensure 
     that any cost sharing requirements are not significant 
     barriers that prevent such families from enrolling in a 
     certified plan or from obtaining medically appropriate care. 
     An analysis of the impact of cost sharing on low income 
     families shall be presented to the Secretary in the State's 
     annual quality assessment and improvement plan specified in 
     section 2741.

                Sec. 2726. Premiums and Premium Subsidy

       All families are responsible for paying their portion of 
     the premium to enroll into a certified plan. Premium payments 
     are payable directly to the plan or the state (as elected by 
     the state) on a monthly, quarterly, or other basis. Upon 
     final approval of an enrollment application, states shall 
     transfer funds directly to certified plans for the amount of 
     the premium subsidy calculated for each individual enrolled.
       All families, regardless of income, shall receive a subsidy 
     on their premiums. The annual premium amount to be paid by 
     families to the plan is the annual per capita premium 
     negotiated by the state with each certified plan minus the 
     premium subsidy provided by the state. In no case shall the 
     annual premium subsidy be greater than the annual premium 
     negotiated with the plan.
       In the case where multiple certified plans are available in 
     a geographic area or a certified plan offers additional 
     benefits package options at additional cost, the premium 
     subsidy shall be calculated based on the lowest priced 
     certified plan that is available in the area. Families shall 
     be responsible for any costs not covered by the premium 
     subsidy as a result of enrolling in higher priced plans. In 
     addition, any such premium amounts that result from the 
     selection of higher priced plans shall not be credited toward 
     the maximum annual family contribution amounts under section 
     2728.
       In the case where the calculated annual premium 
     contribution for a family after applying the appropriate 
     premium subsidy exceeds the maximum annual family 
     contribution, the difference shall be paid by the state 
     directly to the plan.
       In the case of a single eligible individual enrolled, the 
     percentage of the annual premium subsidy shall apply to the 
     individual annual premium, and, in the case of multiple 
     eligible individuals enrolled from one family, the premium 
     subsidy percentage shall be applied to the total annual 
     family premium.
       The annual premium subsidy percentage is based on the 
     following scale of adjusted annual family gross income as a 
     percentage of federal poverty level (FPL):
     Annual Income (% FPL) and Percentage Subsidy:
     <50, 99%.
     50-149, for each 10% point increase in FPL, decrease subsidy 
         by 1.5% points.
     150-299, for each 10 % point increase in FPL, decrease 
         subsidy by 4% points.
     300-399, for each 10% point increase in FPL, decrease subsidy 
         by 1.5% points.
     <400, 5%.
       The following are examples of premium subsidies at various 
     incomes.
                                                             Percentage
                                                                subsidy
Annual income (% FPL):
    <50..............................................................99
    <100.............................................................90
    150..............................................................80
    250..............................................................40
    350..............................................................15
    >=400.............................................................5

       For example, if the annual premium negotiated by the state 
     with a certified plan is $500 per child, a family of four 
     with two children enrolled and an annual family income at 
     250% of the federal poverty level ($37,875 in 1995), would 
     contribute $600 (i.e. $1000--$1000(.40)=$600).

                   Sec. 2727. Utilization Copayments

       There shall be a $5 copayment for selected services or 
     items covered by this Act as designated by the Secretary 
     under section 2721, which is payable to the certified plan. 
     Preventive services are exempt from copayments.
       In addition to plans with a standard $5 copayment, a state 
     may also choose to offer plans that have higher copayments 
     and lower annual premiums. However, the premium subsidy for a 
     family who selects a high copayment plan shall not be greater 
     than that calculated for the plan with a $5 utilization 
     copayment. In all cases, the copayment amount shall be the 
     same for all income levels and the minimum copayment amount 
     shall be $5.
       Utilization copayments are waived by the plan after a 
     family's annual contribution (includes premiums and 
     copayments) has exceeded the maximum annual family 
     contribution.

             Sec. 2728. Maximum Annual Family Contribution

       For families with children, the maximum annual family 
     contribution towards health care (inclusive of premiums and 
     copayments) for each child shall be capped according to the 
     following scale based on adjusted annual family gross income:
     Annual Income (% FPL and Maximum Contribution Per Child
     < 50, $10.
     50-149, $15 increased by $5 for each 10% increase in annual 
         income in excess of 49%.
     150-299, $110 increased by $50 for each 10% increase in 
         annual income in excess of 149%.
     300-399, $960 increased by $150 for each 10% increase in 
         annual income in excess of 299%.
     >=400, $3,000.
       The following are examples of maximum family contribution 
     per child at various income levels.

                                                                Maximum
                                                           contribution
                                                              per child
Annual Income (% FPL):
    < 50............................................................$10
    100............................................................. 40
    150.............................................................110
    250.............................................................610
    350...........................................................1,710
    >=400.........................................................3,000

       The above caps represent the maximum annual family 
     contribution for a family with one child. Maximum 
     contribution for families with two children are double the 
     above amounts. For a family with three children enrolled, the 
     maximum annual family contribution shall increase by an 
     additional 40% beyond the cap for a family with two children. 
     For a family with four or more children enrolled, the maximum 
     annual family contribution shall increase by an additional 
     80% beyond the cap for a family with two children.
       For example, a family of four with two children enrolled 
     and an annual family income at 250% of the federal poverty 
     level ($37,875 in 1995), would contribute a maximum of $1,220 
     annually (i.e., $610 2=$1,220). A family of six with four 
     children enrolled and an annual family income at 250% of the 
     federal poverty level ($50,675 in 1995), would contribute a 
     maximum of $2,196 annually ($610 2 1.8=$2,196).
       For families with a pregnant woman, the maximum annual 
     family contribution towards health care (inclusive of 
     premiums and copayments for the pregnant woman) for each 
     pregnant woman, shall be capped according to the following 
     scale based on adjusted annual family gross income:
     Annual Income (% FPL and Maximum Contribution Per Woman:
     < 50, $20.
     50-149, $30 increased by $10 for each 10% increase in annual 
         income in excess of 49%.
     150-299, $220 increased by $100 for each 10% increase in 
         annual income in excess of 149%.
     300-399, $1,820 increased by $200 for each 10% increase in 
         annual income in excess of 299%.
     >=400, $5,000.
       The following are examples of maximum family contribution 
     per pregnant woman at various income levels.

                                                                Maximum
                                                           contribution
                                                              per woman
Annual Income (% FPL):
    < 50............................................................$20
    100............................................................. 80
    150.............................................................220
    250...........................................................1,220
    350...........................................................2,820
    >=400.........................................................5,000

       For example, for a family of four with one pregnant woman 
     and one child enrolled with an annual family income at 250% 
     of the federal poverty level ($37,875 in 1995), the maximum 
     annual family contribution would be $1,220 + $610=$1,830.
       These maximum family contribution caps shall be in effect 
     for the first two years of the program. In subsequent years, 
     the maximum annual contribution shall be adjusted upwards 
     annually to the nearest $5 indexed directly to the indexes 
     used by the Secretary to calculate funding allocations to the 
     states under section 2701.
       The premium contribution or copayments assessed for 
     families under this Act shall not be subject to any increase 
     during the one-year-period of enrollment until the subsequent 
     open enrollment period. However, the amount of the premium 
     subsidy and maximum annual family contribution assessed may 
     be adjusted during the one-year-period of enrollment before 
     the subsequent open enrollment period, if the family can 
     demonstrate a sufficient decrease in income that allows them 
     to receive a larger premium subsidy. The premium contribution 
     for the family shall then be recalculated based on the larger 
     premium subsidy for the remainder of the period up to the 
     next open enrollment period. Families must apply directly to 
     the state for income reconciliation adjustments and each 
     family shall be limited to one income reconciliation 
     adjustment on their cost sharing amounts per year. In cases 
     where
      premium subsidies have been subject to income 
     reconciliation, the state shall appropriately adjust its 
     payments to the respective plan.

         Sec. 203. State Program Development and Administration

       Amends Title XXVII of the Public Health Service Act.
       [[Page S8510]]
       
          Part D--State Program Development and Administration

           Sec. 2731. Application and Date of Implementation

       States that wish to participate in the program must 
     implement their coverage for children and pregnant women 
     under this Act by January 1, 2000. However, states may elect 
     to implement their program as early as January 1, 1996.
       States intending to participate in this program may submit 
     their initial five-year strategic plan to the Secretary at 
     any time after the enactment of this Act. The Secretary, in 
     consultation with the Maternal and Child Health Bureau, shall 
     provide specific guidance to the states on the elements of an 
     acceptable plan within 90 days of the enactment of this Act. 
     At a minimum, the initial plan must describe the current 
     health status of the target population, short- and long-term 
     health objectives with time schedules, performance and 
     outcome measures and mechanisms for monitoring health 
     indicators, details of the proposed structure, comparative 
     analyses of at least one alternative structure considered, 
     and cost estimates. In addition, the strategic plan must 
     outline how coverage for all eligible persons can be achieved 
     within five years under the proposed structure. In the case 
     that a State proposes a structure that is different from that 
     described in this title, the plan must include a comparative 
     analysis of the State's proposed structure and the structure 
     described in this title, including an analysis of achievement 
     of the objectives of this title and program costs.
       The initial plan may incorporate elements required under 
     current state Title V program applications. If the plan is 
     not accepted, the Secretary shall work with the state to 
     improve it and give specific guidance on how to achieve an 
     acceptable plan. The Secretary must give a final decision on 
     the proposal within 90 days of receiving the state 
     submission. States with plans that are not approved may 
     submit another initial strategic plan in the following year.
       Not later than 90 days after the date of enactment of this 
     title, the Secretary, in consultation with the Maternal and 
     Child Health Bureau, shall develop and make available 
     specific criteria that will be the basis for evaluation and 
     approval of state strategic plans.
       Regardless of the proposed structure, the state program 
     must be likely to ensure affordable, comprehensive, high 
     quality health care coverage for all children under seven 
     years and pregnant women within a reasonable time period. In 
     addition, the proposed program must offer the comprehensive 
     benefits package specified in section 2721, be consistent 
     with the principle that all families contribute towards their 
     own or their children's health care, have a quality 
     assessment and improvement program and utilization review 
     program under section 2743, fulfill health information 
     systems requirements under sections 2744-2745, and have a 
     program for preventing and controlling fraud and abuse under 
     section 2746.
       Participating states shall, at a minimum, offer a program 
     consistent with the guidelines and principles outlined in 
     this Act. States must consider a program similar in structure 
     to that described in this Act, but are encouraged to be 
     innovative and may propose structures or a blend of 
     structures for their program that are different from that 
     described in this Act. Such structures may include, but are 
     not limited to, modifications of existing state or federal 
     programs, capitated programs, fee-for-service programs, 
     subsidy programs for individual purchase of insurance, and 
     programs where the state is the direct payer for services. 
     However, such structures must be as effective in meeting the 
     program objectives and containing program costs as the 
     structure described in this title. States shall be allowed to 
     establish a state-specific program or establish regional 
     programs with neighboring states.

                    Sec. 2732. Special Status States

       If a state considers that their existing health care 
     program has achieved, or is expected to achieve within one 
     year, affordable, comprehensive, high quality care coverage 
     for all children under seven and pregnant women, the state 
     may petition the Secretary to designate it as a special 
     status state in their initial five-year strategic plan. In 
     addition, states participating under this Act that have 
     achieved this objective may petition for special status in 
     their annual quality assessment and improvement plan after 
     the first year of state program implementation. For the 
     purposes of this section, a state will be considered as 
     fulfilling the requirements for special status if the state 
     can demonstrate that at least 95% of all eligible children 
     and pregnant women in the state are covered either by the 
     state program or other sources of health insurance.
       Special status states so designated by the Secretary may 
     submit proposals to expand health services for children under 
     seven years and pregnant women or to expand comparable 
     coverage for health services for older children up to age 21. 
     Funding for expanded eligibility programs shall be subject to 
     the respective state federal matching requirement under 
     section 2702. Proposals from special status states shall 
     receive the same priority for funding as non-special status 
     states. Any expanded eligibility programs, however, must be 
     consistent with the requirements and guidelines under this 
     Act. The Secretary shall make a final decision on the state 
     petition for special status within 90 days of receiving the 
     state proposal.
                Sec. 2733. States with Medicaid Waivers

       States that have Medicaid waivers under sections 1115 or 
     1915 of the Social Security Act are eligible to be a 
     participating state under this Act. Such states that elect to 
     participate shall be subject to all program guidelines and 
     responsibilities that apply to non-waiver states. States with 
     Medicaid waivers may also elect to petition for designation 
     as a special status state if it qualifies as such under 
     section 2732.

           Sec. 2734. Development Grants for State Programs.

       Upon approval of a state's initial five-year strategic plan 
     under section 2731, the Secretary shall make a one-time 
     program development grant available from the Trust Fund to 
     the state for a period not to exceed two years. The amount of 
     funds distributed to each state shall be based on a formula 
     developed by the Secretary. Such funds may be used only for 
     the purposes of developing and implementing the approved 
     proposed state program including the development of 
     community-based health networks and plans. There is no 
     requirement for states to match federal development grant 
     funds.

                  Sec. 2735. Expansion of Eligibility

       Every two years after the enactment of this Act, the 
     Secretary, in consultation with the Council, shall determine 
     if sufficient public support and funds exist to expand 
     eligibility coverage to additional groups of children up to 
     21 years of age. If the Secretary has determined that 
     sufficient public support and monies exist in the Trust Fund 
     to expand coverage to additional age groups on a national 
     basis, then he/she must do so. If public support exists but 
     funds are insufficient, then the Secretary may recommend to 
     Congress that legislation be passed to expand the program to 
     cover additional age groups with appropriate additional 
     federal funding.
       States that do not qualify as special status states under 
     section 2732 may also petition to expand their program to 
     cover additional age groups in their annual evaluation report 
     to the Secretary, if sufficient funds are available in the 
     state's trust fund or if additional state funds are deposited 
     into the state's trust fund. Additional state funds deposited 
     into the state fund for the purposes of expanding eligibility 
     to older children in the state not eligible on a national 
     basis shall be matched by monies from the Trust Fund on an 
     equal basis (1.1 state/federal ratio) if the Secretary 
     approves the expansion petition. Such expanded eligibility 
     programs, however, must be consistent with the requirements 
     and guidelines under this Act. The approved expanded 
     eligibility component of the state program shall be 
     considered for funding only after funds for all participating 
     states with approved programs covering the regular target 
     population (children under seven and pregnant women) and 
     approved expanded eligibility programs of special status 
     states are allocated. The Secretary shall give a final 
     decision on a state request for expanding eligibility within 
     90 days of receiving the state petition.

Sec. 2736. Failure of State to Administer a Program in Compliance with 
                                 Title

       If the Secretary has determined that a participating 
     state's program has failed to meet the program guidelines in 
     this Act, including cost containment and the prevention and 
     control of fraud and abuse, the state must demonstrate that 
     it has made a reasonable effort to address the deficiencies 
     or the Secretary may elect to directly administer, or enter 
     into agreement with a non-state government organization to 
     administer, the state program. Premiums and copayments for 
     federal or non-state government administered programs shall 
     not be greater than those ordinarily charged by a state 
     administered program. The budget for running the federal or 
     non-state government administered program shall not be 
     greater than that ordinarily allocated to the state. Under a 
     federal or non-state government administered program, the 
     state must continue to provide matching funds at the 
     respective state: federal matching ratio.

      Sec. 2737. Limits on State and Federal Administrative Costs

       States and the Secretary shall ensure that administrative 
     complexity and costs of programs under this Act are minimized 
     to the extent possible. Administrative costs for state 
     programs shall not exceed 5% of the annual budget for any 
     given year subsequent to the first two years of the program. 
     The state shall be responsible for any administrative costs 
     in excess of 5%. Similarly, the administrative costs for 
     federal or non-state government administered programs shall 
     not exceed 5% of the annual budget for any given year 
     subsequent to the first two years of the program.


    Part E--Ensuring Quality, Establishing Information Systems, and 
                            Preventing abuse

       Sec. 2741. Annual Quality Assessment and Improvement Plans

       Subsequent to the approval of the initial strategic plan, 
     participating states in coordination with existing state 
     Title V health programs, shall submit a quality assessment 
     and improvement plan to the Secretary on an annual basis. The 
     Secretary, in consultation with the Maternal and Children 
     Health Bureau, shall provide guidance on the elements of an 
     acceptable annual quality assessment and improvement plan 
     within 180 [[Page S8511]] days of the enactment of this Act. 
     At a minimum, the plan shall include an assessment of the 
     state's progress toward ensuring coverage for all eligible 
     persons, cost containment, assurance of quality care, impact 
     on the health status of the target population (including 
     outcome measures and process objectives), a financial 
     statement, and proposed changes to the state program. The 
     Secretary shall give feedback and make a final decision on 
     proposed modifications to the state program within 90 days of 
     receiving the state's evaluation and quality improvement 
     plan. Evaluations of the state program by the Secretary shall 
     be based on an assessment of the performance of the state 
     program in meeting program
      objectives rather than on the specific methods used to 
     achieve such objectives.

Sec. 2742. Establishment of National Advisory Council for Mothers' and 
                           Children's Health

       The National Advisory Council for Mothers' and Children's 
     Health, to be referred to hereafter as the Council, shall be 
     established to advise the Secretary regarding the 
     administration of and modifications to programs under this 
     Act.
       The Council shall have the responsibility for evaluating 
     programs under this Act and advising the Secretary on 
     improving the health of children and pregnant women. The 
     Council evaluates and makes recommendations in the following 
     areas: covered benefits; cost sharing; allocation and 
     management of funds; eligibility and enrollment issues; 
     standards and responsibilities of certified plans, of the 
     states, and of the federal government; quality improvement 
     programs; development of practice guidelines; information 
     systems and reporting requirements; general program 
     administration; and any other relevant areas identified by 
     the Council. As part of its evaluation, the Council shall 
     provide an assessment of the impact of programs under this 
     Act on the health status of children and pregnant women.
       The Council shall be comprised of 11 individuals, appointed 
     by the Secretary within 90 days of the enactment of this Act, 
     confirmed by the Senate, who were not employed by the federal 
     government within the one-year period prior to their 
     appointment. Members of the Council shall represent 
     pediatricians, obstetricians, and other health care 
     providers, consumers, health policy experts, state and local 
     government health officials, public health and maternal and 
     child health professionals, experts in population-based 
     health information systems, experts in health promotion and 
     disease prevention, health care managers and economists, 
     medical ethicists, representatives of the health care 
     industry, and other related disciplines as deemed appropriate 
     by the Secretary. The ratios of affiliations may vary, but no 
     less than three members shall be health care providers and no 
     less than three members shall represent consumers (members 
     representing health care providers or consumers must be 
     different individuals). After the initial appointment of 
     consumer representatives, subsequent consumer representatives 
     must be from families currently enrolled in a certified plan 
     under this Act.
       Members of the Council shall be appointed on the basis of 
     their experience and expertise. No member shall have a 
     substantial financial interest in the issues addressed by the 
     Council. Each member shall be appointed for a two year term 
     and six of the initial Council members shall be appointed to 
     three year terms. No member may serve more than two complete 
     terms. The Secretary shall appoint one chairperson and one 
     vice chairperson of the Council for a term of two years. No 
     chairperson shall serve in that capacity for more than one 
     term. In the case that a member does not complete a full 
     term, the Secretary shall appoint a replacement, subject to 
     Senate confirmation, to serve the remainder of the term.
       The Council shall meet on a regular basis, not less than 
     four times a year, to review the operations of the program 
     and to make specific recommendations to address identified 
     problems. The Council may elect to appoint professional or 
     technical task groups, as necessary, to carry out specific 
     functions if appropriate expertise is not sufficient in the 
     Council. The Council shall submit a summary of their 
     activities, analyses, and evaluation of the program with 
     their recommendations for program improvement to the 
     Secretary on an annual basis. The Secretary shall provide all 
     necessary logistic, administrative, and financial support to 
     the Council. Council members shall be compensated for each 
     day spent on official Council business and reimbursed for 
     official travel and business expenses. Compensation shall not 
     exceed the maximum rate of basic pay for level IV of the 
     Executive Schedule under section 5315 of title 5, U.S. Code.
       In cases where the Council and the Secretary irreconcilably 
     differ on major policy related to programs under this Act or 
     the Council has evidence that the Secretary is not fulfilling 
     his/her responsibilities under this Act to ensure affordable, 
     comprehensive, high quality health care coverage for all 
     eligible individuals, the Council may elect to issue a report 
     to Congress.

Sec. 2743. Establishment of National Quality Assessment and Improvement 
      Program Guidelines and Utilization Review Program Guidelines

       Within one year of the enactment of this Act, the 
     Secretary, in consultation with relevant government and non-
     government organizations as determined by the Secretary, 
     shall develop national guidelines for quality assessment and 
     improvement programs and national utilization review 
     guidelines for certified plans under this Act. At a minimum, 
     the National Committee on Quality Assurance, the National 
     Association of Insurance Commissioners, private health care 
     accreditation organizations, representatives of certified 
     plans, and relevant maternal and child health care 
     professional organizations shall be consulted. The quality 
     assessment and improvement guidelines should be consistent 
     with the concepts and principles of Continuous Quality 
     Improvement/Total Quality Management (CQI/TQM). The national 
     guidelines shall be specific for pediatric and maternal 
     health care delivery systems to the extent possible. The 
     guidelines shall be flexible and adaptable, and serve as the 
     basis for each certified plan's quality assessment and 
     improvement program and utilization review program.
       At a minimum, certified plans must ensure that the 
     following attributes are incorporated into a utilization 
     review program: The utilization review program is clearly 
     documented; only qualified licensed or certified health 
     professionals with training/experience in pediatric or 
     obstetrical care are used for specific case utilization 
     reviews; persons involved in specific case utilization review 
     do not have a financial
      interest or incentive to deny or limit utilization; 
     descriptions and protocols for utilization review are 
     disclosed to enrollees, affiliated providers, and 
     appropriate state officials upon demand while protecting 
     proprietary business information; criteria for review must 
     be based on sound scientific principles and standard 
     medical practice; and there is a mechanism for regular 
     evaluation and modification of the program.

Sec. 2744. National Health Information Systems for Mothers and Children

       Within one year of enactment of this Act, the Secretary 
     shall implement the National Health Information System for 
     Mothers and Children. The Secretary, in consultation with 
     states and representatives of certified plans, the Agency for 
     Health Care Policy Research, the Health Resources and 
     Services Administration, the Centers for Disease Control and 
     Prevention, other agencies or nongovernment organizations as 
     deemed fit by the Secretary, shall develop the specific data 
     elements and operating procedures for a national information 
     system.
       Data from the information system shall be used for the 
     purposes of: Monitoring and evaluation of certified plans, 
     monitoring the health status of the population; supporting 
     core public health functions; increasing capacity for health 
     policy and program evaluation, planning, and research; 
     quality assessment and improvement activities; improving 
     provider coordination and access to care; and other purposes 
     related to the public health.
       States shall require that each certified health plan submit 
     the requested data in electronic form under the guidelines 
     established by the Secretary. The Secretary shall develop and 
     freely distribute computer software that will allow states 
     and certified plans to efficiently collect and transmit the 
     requested data. States and certified plans are not required 
     to use such software if they can fully comply with the data 
     collection and reporting requirements with their own 
     information system.
       To ensure privacy of medical information, the Secretary and 
     the states shall implement safeguards against unauthorized 
     access to medically confidential information, and penalties 
     shall be developed under section 2746 for such violations. 
     Applicable state laws that protect medical confidentiality 
     shall also apply to data collected under this Act excepting 
     such laws that interfere with the uses of the data as 
     specified in this Act. The state is responsible for ensuring 
     reporting of data from certified plans and transmitting the 
     data from all plans within the state to the Secretary. Data 
     collected by certified plans shall be available to the plan, 
     and data collected by the state shall be available to the 
     state. States shall use these data and other information as 
     deemed relevant by the state as the basis for their 
     monitoring and evaluation of certified plans.
       Certified plans must use the standards established by the 
     Secretary and the state for all relevant administrative, 
     financial, quality improvement, and public health activities 
     covered under this Act. The Secretary and states shall ensure 
     that any similar data reporting requirements for certified 
     plans under other state and federal health programs are 
     integrated with those established under this Act to the 
     extent possible. In addition, the Secretary and states shall 
     ensure that the resources and time required for certified 
     plans to comply with the Secretary's and state's information 
     standards are reasonable and not excessive.
       Any state law that requires medical or health records, 
     including billing information, to be maintained in written, 
     rather than electronic, form shall be satisfied if such 
     records are maintained in a manner consistent with the 
     information system standards developed by the Secretary in 
     this section.

          Sec. 2745. National Childhood Immunization Database

       To reduce missed opportunities for immunization with the 
     goal of 100% age-appropriate immunization coverage for 
     children, the Secretary shall establish a National Childhood 
     Immunization Database as part of [[Page S8512]] the National 
     Health Information System for Mothers and Children. The 
     database shall contain up-to-date information regarding 
     childhood immunization on every child enrolled in a certified 
     plan under this Act. This database would ensure that current 
     immunization information is available on a real time basis to 
     health care providers who need the information to access 
     appropriate immunizations. Information in this database shall 
     be accessible to the child's enrolled plan electronically or 
     by toll free telephone. If the child presents to a certified 
     plan other than his/her enrolled plan, the presenting plan or 
     public health authorities may access the child's immunization 
     record if it is needed to assess the need for appropriate 
     immunization. Certified plans shall ensure that electronic 
     immunization records are brought up-to-date as required under 
     the guidelines developed by the Secretary and the state.
       All certified plans participating in a State program under 
     this title and all other health plans not participating under 
     this title but located in a participating State under this 
     title and providing 10,000 or more childhood immunizations 
     per year, shall participate in the National Childhood 
     Immunization Database.
       Nothing in this title shall be construed as preempting 
     existing state or federal statues regarding disease reporting 
     or reporting of other health-related data to local, state, 
     and federal health authorities. However, in the design of the 
     National Health Information System for Mothers and Children, 
     the Secretary and the states shall integrate existing health 
     data reporting requirements with the proposed system to the 
     extent possible.
       Within one year of enactment of this Act, the Secretary 
     shall establish penalties for unauthorized use of data 
     collected under the requirements of this Act, including the 
     sale or transfer of data for commercial use or use of data 
     for illegal activities.
   Sec. 2746. Prevention, Monitoring, and Control of Fraud and Abuse

       Within 180 days of the enactment of this Act, the Secretary 
     and the U.S. Attorney General shall establish a federal 
     program and develop state guidelines for preventing, 
     monitoring, and investigating fraud related to this program. 
     The duties of the federal program include assisting states in 
     monitoring and control of fraud and abuse, and investigating 
     and prosecuting individuals and certified plans whose 
     activities cross state lines.
       Within 180 days of the enactment of this Act, the Secretary 
     and the U.S. Attorney General shall submit to Congress a 
     legislative proposal for civil and criminal penalties for 
     fraud and abuse or other violations by individuals and 
     certified plans related to any aspect of this Act unless such 
     penalties are already specified in this Act.
       Prior to transfer of federal funds to a state, the state 
     health department and state attorney general shall establish 
     a system for preventing, monitoring, and investigating fraud 
     and abuse that occurs within the state. The state program 
     must have the authority to prosecute individuals or certified 
     plans for criminal activities. This state program shall also 
     solicit consumer feedback, investigate complaints and assist 
     in the resolution of consumer complaints against certified 
     plans. Such a state system may be integrated with existing 
     systems for controlling Medicaid fraud and abuse. The state 
     system shall have a formal mechanism for sharing information 
     and working with its federal counterpart. The state system 
     shall submit an annual report summarizing its activities to 
     the program established by the Secretary and the U.S. 
     Attorney General.
       Federal or state guidelines developed and implemented under 
     this section shall be developed in recognition of the 
     differences among the various types of health plans and be 
     applicable to all health plans.
       Any funds recovered or fines collected related to fraud and 
     abuse shall be deposited in the trust fund of the state where 
     the fraud and abuse occurred. Funds recovered on a national 
     or regional level shall be apportioned by the Secretary among 
     the states involved.
       Any certified plan, health care provider, or other 
     individual or entity participating in a state or federal 
     program under this Act, that has been found guilty of fraud 
     or abuse, shall not be allowed to continue or renew a 
     contract with a state or federal government program under 
     this Act, or otherwise participate in a program under this 
     Act, for a period not less than five years, unless there is 
     compelling reason to allow such participation (e.g., in the 
     case where the plan or provider is the only source of 
     services in an area) as determined by the Secretary.

 Sec. 204. Grants to Improve the Health of Children and Pregnant Women

       Amends title XXVII of the Public Health Service Act.

      Sec. 2751. Establishment of Program and Eligible Activities

       Authorizes the Secretary to use monies in the Trust Fund to 
     award grants to states, universities, and other nonprofit 
     organizations, for the following purposes: increasing 
     capacity of the primary care health system; developing and 
     enhancing enabling services; increasing access to health 
     services in rural and underserved areas (including the use of 
     telecommunications and computer technology such as 
     telemedicine and information systems); supporting school-
     based health programs; enhancing core public health functions 
     of state and local health departments; supporting health 
     promotion and disease prevention, including population- and 
     community-based health assessments and interventions; 
     supporting biomedical, social science, health policy, and 
     public health research; supporting pediatric- and maternal-
     specific quality assessment and outcomes research to improve 
     health plan and program accountability including quality 
     assessment of services for children with disabilities and 
     chronic health conditions; development and implementation of 
     clinical practice guidelines; and other purposes related to 
     improving the health of children and pregnant women.
       All funded activities must be primarily targeted, but need 
     not be exclusively targeted towards children (under 21 years) 
     or pregnant women.
       All grant proposals will be evaluated on a competitive 
     basis. The Secretary shall ensure, however, that at least 50% 
     of funds awarded annually to states, universities, or 
     organizations within a specific state, support activities 
     that are not directly related to the delivery of health care 
     services, such as research, public health, community health, 
     and health promotion and disease prevention activities.
       The Secretary may elect to designate existing Department of 
     Health and Human Services agencies to administer the grants 
     in this title. However, the Secretary shall ensure that any 
     monies transferred from the Trust Fund are only used to 
     support grant awards under this title, there is a full 
     accounting of such monies, and that there is maintenance of 
     effort regarding current federal grant funding for maternal 
     and child health activities. In addition, the Secretary shall 
     ensure that all federally-funded activities related to 
     material and child health are coordinated and integrated to 
     the extent possible, and that such activities are consistent 
     with the strategic plan outlined by the Secretary in section 
     2754.

             Sec. 2752. Eligibility and Application Process
       To be eligible for funding, states must be a participating 
     state under this Act, and universities and other nonprofit 
     organizations must be located in a participating state. There 
     shall be a single application procedure for all grants 
     awarded under this title.

  Sec. 2753. Matching of Federal Funds and State Maintenance of Effort

       There is a matching of federal funds requirement for grants 
     awarded under this title. States, universities, and nonprofit 
     organizations shall match federal funds on a 1:9 basis 
     (States or other applying entities shall provide $1 in 
     funding for every $9 in federal funds). Matching funds may be 
     in cash or in kind such as equipment, facilities, personnel, 
     or services. Private sector funds may be solicited to 
     partially or fully subsidize matching funds on behalf of 
     states, universities, and nonprofit organizations.
       States receiving grant awards under this title shall also 
     be subject to a maintenance of effort requirement that the 
     state maintains a level of state funding for the activity 
     covered by the grant award that is at least equal to the 
     level in the year previous to the grant award for the 
     duration of the grant award.

     Sec. 2754. Development of Priority Areas and Funding Criteria

       Within 180 days of this Act's enactment, the Secretary 
     shall develop a five-year strategic plan that outlines the 
     national priorities for maternal and child health, including 
     priority areas for funding, short- and long-term objectives, 
     specific criteria for determining merit of funding proposals, 
     standards for monitoring and evaluating funded activities 
     (including outcome and performance measures), and 
     administrative procedures for processing proposals. In 
     addition, the strategic plan should specifically review 
     existing federal programs related to maternal and child 
     health and develop national priorities for research, 
     population-based activities, and other activities outlined in 
     section 2751.
       In determining the evaluation criteria for funding 
     proposals, the Secretary shall consider the following 
     attributes: technical and scientific merit, relative need of 
     the population or geographic area targeted, potential 
     positive impact of activity on advancing the goals of the 
     Healthy People 2000 objectives, innovation in program design 
     and cost effectiveness, application of current scientific and 
     medical knowledge, integration with existing similar health 
     programs or research, quality control and program 
     accountability, and other attributes deemed to be relevant by 
     the Secretary.

      Sec. 2755. Coordination and Integration of Funded Activities

       The Secretary shall ensure that the functions of funded 
     activities are fully integrated and coordinated with similar 
     existing federally funded activities, and the states shall 
     ensure that funded activities are fully integrated and 
     coordinated with similar state and locally funded activities.
       To ensure coordination of related activities and programs 
     within the state, universities and other nonprofit 
     organizations that apply for funds under this section must 
     initially submit their proposal to the state for review and 
     comment before submitting the proposal to the Secretary. 
     Proposals submitted to the Secretary shall be accompanied by 
     the state's comments and the submitting organization's 
     response to the state's comments. All proposals must describe 
     existing similar programs in the targeted community and 
     describe how the proposed program will be coordinated and 
     integrated with existing similar programs, including state 
     Title V maternal and child health programs.
     [[Page S8513]]
     
                        Sec. 2756. Annual Budget

       The total annual budget for such grants shall not exceed 5% 
     of the total federal funds transferred into the Trust Fund in 
     that year.

  Sec. 205. Responsibilities of Families, Certified Plans, Employers, 
                   States and the Federal Government

       Amends Title XXVII of the Public Health Service Act.


   part g--responsibilities of families, certified plans, employers, 
                   states, and the federal government

                Sec. 2761. Responsibilities of Families

       Families with uninsured children under seven years of age 
     and uninsured pregnant women are responsible for: enrolling 
     their age-eligible children or themselves into a certified 
     plan; paying their share of premiums and copayments; and 
     assuming an active role and participating in the health care 
     system to ensure that their children receive appropriate, 
     high quality health care.

             Sec. 2762. Responsibilities of Certified Plans

       All certified health plans participating in state programs 
     under this Act shall: be certified by their state and fulfill 
     all requirements for such certification or recertification 
     and participate in a national open enrollment period and 
     allow for point-of-service enrollment.
       In the case of families who have at least one eligible 
     child enrolled in the plan and other children who are not 
     eligible under this Act due to age limitations, also offer 
     optional family enrollment for additional older children who 
     are not eligible under this Act as a reasonable cost. (The 
     premium subsidy, however, shall be calculated based on the 
     prorated portion of the premium assessed for the eligible 
     children. The family shall be responsible for the portion of 
     the family premium amount in excess of that ordinarily 
     assessed for the eligible children under this Act.)
       In the case of a family that has at least one eligible 
     child enrolled in the certified plan and one or more other 
     children who are eligible for health services under Medicaid 
     but not eligible for coverage under this title, offer health 
     services under Medicaid for such other children in the 
     family.
       Not discriminate against persons during marketing, 
     enrollment, or provision of services based on pre-existing 
     conditions, genetic predisposition of health conditions, 
     medical history, expected utilization of services or health 
     expenditures, race, ethnicity, national origin, religion, age 
     (within the eligible age group), gender, income, or 
     disability. The plan must accept any applicant who is 
     eligible within the geographic area served by the plan and 
     may not deny enrollment to any eligible person except on the 
     basis of documented plan capacity. In addition, in the case 
     of currently enrolled individuals who are re-enrolling in the 
     plan, such persons cannot be denied re-enrollment even on the 
     basis of plan capacity.
       Not use excessive pressure, misleading advertising or 
     marketing, or other unethical practices to coerce or 
     discourage certain persons or groups from enrolling into the 
     plan or disenrolling from the plan.
       Establish a system for collecting premiums and copayments; 
     not drop an individual from the plan except in cases of 
     failure to pay for premiums or copayments, fraud and abuse, 
     or withdrawal of the health plan from the market. The plan 
     must notify the state of its intention to drop an enrolled 
     individual not later than 60 days before discontinuing the 
     enrollee's coverage.
       Not impose a waiting period before coverage begins and 
     provide for and cover all health benefits as specified under 
     sections 2721 and 2722, and shall consider the premium amount 
     negotiated by the state under this Act to be the full 
     premium. Other than authorized copayments, there shall not be 
     any additional charges for covered services.
       Not exclude coverage or deny care for any pre-existing 
     conditions, congenital conditions, or genetic predispositions 
     to conditions that are covered by the comprehensive benefits 
     package.
       Ensure that a choice of primary care providers is 
     available, and that primary care and preventive services are 
     readily available and convenient to all plan members within 
     the geographic area served, and that emergency services are 
     available on a 24-hour basis, seven days a week.
       Establish a program for credentialing and performance 
     monitoring of providers. In addition, adequate health 
     provider to enrolled ratios shall be established.
       Provide strong, comprehensive preventive health and patient 
     education services.
       Ensure that the special health needs of children with 
     disabilities or chronic health conditions are adequately met. 
     If sufficient capacity to deliver health services for such 
     children do not exist within the certified plan, including 
     pediatric specialty and subspecialty care, the plan must 
     enter into agreements with such providers or facilities to 
     provide appropriate care.
       To the extent that such resources or services are not 
     available within the plan, provide access to an integrated 
     child and maternal health care network, which consists of a 
     network of providers who together can provide for the full 
     continuum of health care, including preventive, primary, 
     secondary, tertiary, rehabilitation, chronic and long-term 
     care, home care, and hospice care. This network must 
     specifically include access to pediatric and maternal 
     specialty and subspecialty care. In areas covered by the 
     plan, the plan shall enter into cooperative agreements with 
     providers or facilities to provide the continuum of care if 
     resources to provide such care are not available within the 
     plan. If medically-indicated subspecialty care is not 
     available within the geographic area, the plan shall provide 
     transportation to the nearest appropriate facility.
       Cover emergency care obtained in out-of-area or out-of-
     state facilities as long as the health condition was 
     certified to be an emergency by the attending physician or 
     could have been reasonably assumed to be an emergency by the 
     family; and cover deliveries of newborns at nonhospital 
     facilities in areas where such facilities are available.
       Make a reasonable effort to provide language translation 
     services in areas where languages other than English are 
     relatively common.
       Implement disincentives (e.g., high copayments) for 
     inappropriate use of emergency rooms for nonemergency care; 
     and provide incentives (e.g., reduced premiums, premium 
     rebates, additional services) for enrollees and their 
     families to follow medical and public health recommendations 
     for immunizations, prenatal care, health behaviors, or other 
     preventive health guidelines.
       Implement an information system to collect and report data 
     as specified in sections 2744 and 2745; implement a quality 
     assessment and improvement program and utilization review 
     program as specified in section 2743; and within the 
     guidelines developed by the state, submit an annual 
     evaluation and quality improvement plan, including an 
     evaluation of the plan's cost containment measures, assurance 
     of quality care, impact on the health status of the enrolled 
     population (including outcome measures and process 
     objectives), a financial statement, proposed changes in 
     premium rates, and other relevant changes to the plan. The 
     state shall provide guidance to certified plans on the 
     elements of an acceptable annual evaluation and quality 
     improvement plan. The state may use the annual evaluation and 
     quality improvement plan as the basis for recertification of 
     plans.
       Establish a program for consumer feedback and resolution of 
     consumer complaints that includes specified time frames for 
     decision. The program shall
      be clearly documented and made available to all enrollees.
       In consultation with local health departments and maternal 
     and child health programs under title V of the Social 
     Security Act, establish, support, or substantially 
     participate in a community-based maternal and/or child health 
     program in the coverage area served by the plan.
       Comply with any other relevant state or federal regulations
       In order to minimize regulatory burden and potentially 
     duplicative standards and regulations, a certified plan shall 
     be considered as fulfilling a requirement or complying with a 
     standard under this Act, if the plan is already meeting an 
     existing state or federal requirement or standard that has 
     been deemed to be identical or at least as effective as that 
     specified under this Act, by the state or the Secretary (as 
     appropriate).
       The requirements and guidelines specified in this Act shall 
     not apply to health plans that do not participate in a state 
     program under this Act, and shall not apply (unless the plan 
     elects for such requirements to apply), to the care and 
     treatment of individuals in the plan who are not enrolled in 
     the state program under this Act.

                Sec. 2763. Responsibilities of Employers

       Under this Act, employers shall: in the case of an employer 
     who provides health benefits to pregnant women, not drop such 
     coverage as result of this Act; and in the case of an 
     employer who provides health benefits to employee dependents 
     under seven years of age, not drop such coverage unless the 
     employer agrees to pay the temporary maintenance-or-effort 
     fee specified in section 2771. The employer is restricted 
     from dropping such coverage until 180 days after the 
     implementation date of the State program.

                 Sec. 2764. Responsibilities of States

       Under this Act, participating states shall:
       Develop and submit an approved initial five-year strategic 
     plan and annual evaluation and quality improvement plans to 
     the Secretary.
       Develop a process for certifying and re-certifying health 
     plans under this Act. The criteria for certification shall 
     include, but are not limited to, an evaluation of minimum 
     capital requirements, solvency requirements, and other 
     standards related to financial stability, premium rating 
     methodology, quality of services provided by the plan, and 
     ability of the plan to provide required services. Certified 
     plans shall be re-certified at least once every four years 
     and when the plan has undergone significaticant changes such 
     as a merger or other changes as determined by the state.
       Establish a system whereby the state shall solicit and 
     evaluate proposals from all interested certified plans 
     operating in the state, and enter into cooperative agreements 
     with certified plans. In order to maximize the choice of 
     plans in an area, states shall ensure that any certified 
     health plan that fulfills all state and federal requirements 
     and guidelines under this Act, and is otherwise in good 
     standing with the state, is allowed to participate in the 
     state program. In addition, states may elect to enter into 
     risk and/or profit sharing agreements with all or selected 
     certified plans. States may elect to implement rate margin 
     provisions in their agreements with certified plans such 
     that, at the end of a contract period, certified plans 
     [[Page S8514]] would be reimbursed by the state if incurred 
     costs exceeded anticipated costs, and states could recover 
     excess premiums from the plan if incurred costs are less than 
     anticipated costs at the time of rate negotiation.
       Implement risk adjustment methods, reinsurance mechanisms, 
     or other mechanisms to ensure that state payments to specific 
     certified plans are reflective of the expected utilization or 
     expenditure rates of its enrollees and to protect specific 
     certified plans that enroll a disproportionate share of 
     persons who are expected to have higher than average 
     utilization or expenditure rates.
       Ensure that the plans' premium rating methodologies are 
     well documented, actuarially sound, and minimize large 
     variations in annual premium rates; and directly reimburse 
     each certified plan for the state's portion of the negotiated 
     premium for enrolling eligible children and pregnant women.
       Ensure that the premiums negotiated with each certified 
     plan applies for all eligible children and applies for all 
     eligible pregnant women who enroll in the plan; negotiate 
     with certified plans discounted premiums for families with 
     multiple children (i.e., if the premium for a family with a 
     single child enrolled is $100, the premium for a family with 
     two children enrolled shall be less than $200); and ensure 
     that negotiated premium rates fairly compensate certified 
     plans for their services, but that such rates do not result 
     in excessive profits by plans.
       Offer families a choice of certified plans to the extent 
     possible as long as at least one managed care plan for 
     children is available to all eligible children regardless of 
     geographic location.
       May use financial or other incentives to encourage adequate 
     coverage of rural and undeserved areas.
       Develop and implement an open enrollment system during the 
     national open enrollment period consistent with the 
     guidelines specified in section 2715; and implement an 
     outreach program to maximize enrollment of eligible 
     individuals.
       Ensure that certified plans accept any applicant who is 
     eligible within the geographic area and do not discriminate 
     or use coercive or unethical practices to encourage or 
     dissuade enrollment into their plan.
       In determining or approving the boundaries of coverage 
     areas for certified plans, ensure that the coverage areas are 
     consistent with the anti-discrimination standards specified 
     in section 2762, and that such boundaries do not result in 
     plans avoiding enrollment of persons who are expected to have 
     higher than
      average rates of utilization or expenditures.
       Impose a surcharge for persons who enroll outside of the 
     regular open enrollment period as specified in section 2715; 
     and monitor, evaluate, and address the potential barriers, 
     including cost sharing requirements, that may prevent certain 
     families, especially low income families, from enrolling in 
     the state program or from obtaining health services after 
     enrollment.
       Develop a mechanism to assist families who cannot 
     temporarily pay for premiums or copayments due to unexpected 
     shortfalls in income; in the case of fee-for-service plans, 
     the state must use pediatric- and maternal-specific 
     prospective payment schedules for the reimbursement of 
     services. Such schedules shall be negotiated between 
     providers, plans, and the state.
       Ensure that any relevant health services provided by local 
     and state health departments are integrated and coordinated 
     with the state program under this Act; and establish a state 
     advisory council analogous to the national council under 
     section 2742, except that the composition, organization, and 
     other guidelines for the state council shall be determined by 
     the state. The majority of state council members, however, 
     must be comprised of health care providers and consumers.
       Develop and implement standards for dissemination of 
     consumer information provided by certified plans, provide 
     consumers with comparative information on certified plans 
     during the open enrollment period as requested, and set up 
     hotlines and other mechanisms to assist consumers. Standards 
     for consumer information must address services for children 
     with special health care needs. States shall approve all 
     advertising or other marketing materials from participating 
     plans to ensure that such materials do not contain misleading 
     or false information, and that the content of the material 
     does not selectively encourage or selectively discourage 
     certain groups of persons from enrolling in or disenrolling 
     from the plan. States may elect to contract with non-
     government entities to perform these functions. States shall 
     ensure that decisions regarding the approval of advertising 
     or other marketing materials are made in a reasonable time 
     frame and are based on consistently applied criteria as 
     determined by the state.
       Establish a mechanism for consumer feedback, collection of 
     complaints, filing of grievances, and assist in the 
     resolution of complaints against certified plans. Establish 
     at least one alternative dispute resolution mechanism for 
     malpractice claims filed by persons enrolled in a certified 
     plan.
       Address deficiencies in enabling services to ensure access 
     to health services among underserved areas or populations; 
     and ensure that primary care services are accessible by 
     public transportation in municipalities that have a public 
     transportation system.
       For a period not less than five years, ensure that health 
     facilities that provide care to large numbers of children, 
     pregnant women, children with special health care needs, or 
     low income persons, including non-investor-owned hospitals, 
     community health centers, school-based health clinics, rural 
     health clinics, and local health departments, are able to 
     participate fully in the state program, are adequately 
     reimbursed for their services, and are able to enter into 
     agreements with certified plans. In cases where such 
     providers are not affiliated with a certified plan, the state 
     may encourage such providers to form their own certified 
     plan.
       Enter into agreements with bordering states to ensure that 
     persons who need to travel across state borders for medically 
     necessary health services that are otherwise not accessible 
     may do so without penalty.
       May elect to implement laws to take legal action against 
     families who fail to enroll their children or who fail to pay 
     premiums for children under their care who require medical 
     treatment for a health condition.
       Establish a system for preventing, monitoring, and 
     controlling fraud and abuse as specified in section 2746. In 
     addition, establish a system to prevent and address any 
     conflicts of interest on the part of the state or its 
     designated representatives regarding the award, management, 
     or evaluation of contracts with certified plans, ensure that 
     certified plans are in compliance with state and federal 
     guidelines under this Act.

          Sec. 2765. Responsibilities of the Secretary of HHS

       Establish and administer the Trust Fund as specified in 
     Part A; approve, evaluate, and monitor state programs as 
     specified in Parts D and E; provide states with technical and 
     or other assistance; establish, appoint, and support the 
     Council as specified in section 2742; and establish and 
     coordinate the national open enrollment period as specified 
     in section 2715.
       Develop a specific comprehensive benefits package as 
     specified in section 2721; develop national guidelines for 
     quality assessment and improvement programs and utilization 
     review programs as specified in section 2743; and develop and 
     implement the National Health Information System for Mothers 
     and Children and the National Childhood Immunization Database 
     as specified in sections 2744 and 2745.
       Review, prioritize, integrate, and coordinate federally 
     funded material and child health programs as specified in 
     sections 2754, 2755, and 2773.
       In conjunction with the US Attorney General, establish a 
     system for preventing, monitoring, and controlling fraud and 
     abuse as specified in section 2746.
       Devleop and administer the grants program to support 
     states, universities, and nonprofit organizations for the 
     purposes of improving the health of mothers and children as 
     specified in 2751.

         Sec. 2766. Responsibilities of the US Attorney General

       In conjunction with the Secretary of HHS, establish a 
     system for preventing, monitoring, and controlling fraud and 
     abuse as specified in section 2746.
      Sec. 2767. Responsibilities of the Secretary of Agriculture
       Establish and administer the Tobacco Alternatives Trust 
     Fund as specified in section 9512

                      Sec. 205. Existing Programs

       Amends title XXVII of the Public Health Service Act.


           part h--impact on employers and existing programs

                     Sec. 2771. Impact on Employers

       Employers are encouraged to, but not required to, provide 
     or continue to provide comprehensive health services to their 
     employees' dependent children. In participating states, 
     employers who provide health benefits for an employee's 
     dependent children at the time of enactment of this Act and 
     drop their coverage of all children or children under seven 
     years after the enactment of this Act, shall be subject to a 
     temporary annual maintenance of effort fee, which will be 
     deposited into the Trust Fund. The fee will be equivalent to 
     50% of the estimated annual cost of providing comprehensive 
     coverage for all employee-dependent children. The annual fee 
     shall be in effect for a period not to exceed five years.
       In no case, however, shall the employer drop such coverage 
     until 180 days after the implementation date of the 
     respective state program. Employers shall not selectively 
     drop coverage for specific employee-dependent children who 
     have, or are expected to have, higher than average 
     utilization or health care costs. Employers who provide 
     pregnancy-related benefits for their employees and dependents 
     shall continue to do so after the implementation of this Act. 
     (The Pregnancy Discrimination Act of 1978 would remain in 
     effect.) Funds from the temporary employer maintenance of 
     effort fee shall be transferred by the Treasury of the United 
     States into the Trust Fund.

                     Sec. 2772. Impact on Medicaid

       In participating states, children under seven years and 
     pregnant women who are enrolled in Medicaid shall be 
     automatically enrolled into the respective state program 
     under this Act, and all health benefits, including long-term 
     and chronic care services for children with disabilities or 
     chronic health conditions, shall be received under the state 
     program. States may elect not to shift long-term and chronic 
     care services for children with disabilities or chronic 
     health conditions into the state program under this 
     [[Page S8515]] Act, if the state can demonstrate that doing 
     so would significantly compromise the quality of care for 
     such children. However, states that elect not to shift long-
     term and chronic care services into the state program under 
     this Act must develop health care coordination plans that 
     integrate the various sources of health services for such 
     children in consultation with state Title V maternal and 
     child health programs. States may also elect to establish a 
     transitional period to gradually phase in children with 
     disabilities or chronic health conditions into the state 
     program.
       Federal Medicaid payments to states towards the care of 
     children under seven and pregnant women in effect at the time 
     of enactment of this Act shall be shifted to the Trust Fund. 
     Except for the state-federal matching requirements specified 
     in sections 102 and 503, there is no additional maintenance 
     of effort required on the part of the states' Medicaid 
     contribution towards the care of the targeted group.
       There is no impact on the Medicaid program for noneligible 
     children seven years of age and older under this Act. 
     Applicable federal guidelines and payments to the state 
     towards the care of these children shall remain in effect. 
     States are required to maintain their effort towards the 
     Medicaid program for children who are not eligible under this 
     Act. There is no impact on the Medicaid program for states 
     that do not participate under this Act.

   Sec. 2773. Integration of Health Services and Impact on Existing 
              Federal and State Government Health Programs

       Every two years after the enactment of this title, the 
     Secretary, in consultation with the Maternal and Child Health 
     Bureau, shall review all federal maternal and child health 
     programs. Participating states, acting through a single 
     designated lead agency, in consultation with state health 
     programs authorized under Title V of the Social Security Act, 
     shall review state-funded programs that provide health 
     services to children under seven and pregnant women to ensure 
     that these programs are integrated and coordinated with the 
     services covered by this Act. If the Secretary determines 
     that specific functions performed by federal health programs 
     under review are duplicated or made extraneous by the 
     benefits provided under this Act, then the Secretary may 
     recommend to Congress that the federal program, or portions 
     of the program, be eliminated or reduced. The most recent 
     year appropriation for the program or portion of the program 
     shall be transferred to the Trust Fund. Similarly, states 
     shall deposit any savings from duplicated state-funded 
     services to the state-specific trust fund (this does not 
     apply to the state contribution to the Medicaid program).
       In all cases, however, the Secretary and the states shall 
     ensure that federal Title V funds and matching state funds 
     are retained within existing programs to meet the needs of 
     children over seven years, and eligible children and pregnant 
     women who do not participate in the state program under this 
     Act, to perform core public health functions, to coordinate 
     care for children with special health care needs, and 
     otherwise to meet needs identified through Title V needs 
     assessments consistent with Healthy People 2000 objectives.

                      Sec. 207. General Provisions
       Amends title XXVII of the Public Health Service Act.


                       Part I--general provisions

                         Sec. 2781. Definitions

       For purposes of this legislation, the following are 
     definitions of terms used:
       Adjusted family gross income--means the sum of all adjusted 
     gross income of all family members of the child or pregnant 
     women involved in the most recent tax year. In the case of a 
     pregnant woman, such term also includes the adjusted gross 
     income of the pregnant woman.
       Advisory council--means the National Advisory Council for 
     Mother's and Children's Health established under section 
     2742.
       Certified plan--means the agreement entered into by an 
     organized health care entity to cover or provide specified 
     health care services under State and Federal guidelines under 
     this title. Organizations that may enter into such agreement 
     shall include health maintenance organizations, preferred 
     provider organizations, point-of-service plans, fee-for-
     service plans, indemnity insurance plans, hybrids of such 
     plans, and any other organized health care entities that 
     fulfill the requirements of this title.
       Child--In general means an individual who has not attained 
     the age of 21. References in this title to a child shall be 
     construed to mean, in the case of a State program that does 
     not have an expanded access component, an individual under 7 
     years of age and, in the case of a State program that offers 
     an expanded eligibility component, an individual under 21 
     years of age.
       Comprehensive benefits package--means either the benefits 
     package for children or the benefits package for pregnant 
     women, as the case may be, developed by the Secretary under 
     section 2721.
       Core public health functions--means the following: (A) The 
     collection and analysis of public health-related data and the 
     technical aspects of developing and operating information 
     systems. (B) Activities related to protecting the environment 
     and ensuring the safety of workplaces, food, and water. (C) 
     Investigation and control of adverse health conditions and 
     exposures to individuals and the community. (D) Information 
     and education programs to prevent adverse health conditions. 
     (E) Accountability and health care quality improvement 
     activities. (F) The provision of public health laboratory 
     services. (G) Training for public health professionals.
       (H) Health care leadership, policy development, coalition-
     building, and administrative activities. (I) Integration and 
     coordination of prevention programs and services of health 
     plans, community-based providers, government health agencies, 
     and other government agencies that affect health including 
     education, labor, transportation, welfare, criminal justice, 
     environment, agriculture and housing. (J) Research on 
     effective and cost-effective public health practices.
       Enabling services--means community outreach, health 
     education, transportation, language translation, and other 
     services that facilitate or otherwise assist eligible 
     individuals to receive health service provided under this 
     title.
       Family--means a pregnant woman residing alone or a group of 
     two or more individuals who reside together in the same 
     housing unit. Such individuals may be related (such as parent 
     and child) or unrelated (such as guardian and foster child) 
     individuals. In the case of children who do not reside with 
     their parents, such term may also include individuals (such 
     as family friends) or entities (such as government agencies) 
     that have primary responsibility for the health and welfare 
     of the child.
       Information system--means the National Health Information 
     System for Mothers and Children established under section 
     2744.
       Participating state--means any of the 50 States, the 
     District of Columbia, Puerto Rico, and any of the trust 
     territories of the United States, that elects to participate 
     in the program established under this title.
       Poverty level--means the income official poverty line (as 
     defined by the Office of Management and Budget, and revised 
     annually in accordance with section 673(2) of the Community 
     Service Block Grant Act (42 USC 9902(2)) applicable to a 
     family of the size involved.
       Tobacco alternatives trust fund--means the trust fund 
     established under section 9512 of the Internal Revenue Code 
     of 1986.
       Trust fund--means the National Health Trust Fund for 
     Mothers and Children established under section 9551 of the 
     Internal Revenue Code of 1986.

               Sec. 2782. Authorization of Appropriations

       From the Trust Fund, the Department of Health and Human 
     Services and the Department of Justice is hereby authorized 
     such sums as may be necessary for each
      of the fiscal years 1996 through 2000 to develop and 
     implement the requirements of this Act.

   Sec. 208. Unlawful Use of Tobacco Products Manufactured for Export

       Amends section 2341 of title 18 USC.
       Any person or business entity who illegally purchases, 
     sells, distributes, or smuggles (or assists in these 
     activities), tobacco products that are manufactured in the US 
     and designated for export only shall be subject to a fine of 
     $10,000 or an amount equal to five times the tax imposed 
     under this Act, in addition to any taxes ordinarily assessed 
     for such tobacco products. Any equipment or vehicles 
     (includes ships, aircraft, motor vehicles, etc.) used to 
     illegally transport export-designated tobacco products in the 
     US shall be confiscated and deemed to be the property of the 
     US. Any penalties recovered from successful prosecution of 
     these illegal activities, including the proceeds from sale of 
     related equipment and vehicles, shall be transferred to the 
     Trust Fund.


                    Title III--Financing provisions

            Sec. 301. Increase in Taxes on Tobacco Products

       Amends section 5701 of IRS Code 1986.

                         Sec. 5701. Rate of Tax

       Federal excise taxes on cigarettes offered for sale in the 
     US shall increase over the existing tax ($0.24/pack) by 
     $1.50/pack. There shall also be an equivalent tax increase 
     for smokeless tobacco products calculated on an equivalent 
     retail unit basis (e.g., $1.50 increase per package of chew 
     tobacco and similar increase per tin of snuff). In addition, 
     an equivalent increase shall apply to cigars, cigarette 
     papers, cigarette tubes, or other products that are used to 
     ``roll your own'' cigarettes. The total federal excise tax 
     shall be indexed to the CPI in subsequent years and 
     recalculated on an annual basis.

    Sec. 302. Assistance to States Adversely Impacted by Tobacco Tax

       Amends subchapter A of chapter 98 of the Internal Revenue 
     Code of 1986.

               Sec. 9512. Tobacco Alternatives Trust Fund

       To minimize the potential economic impact of the increased 
     tax on tobacco farmers and tobacco industry workers, the 
     Tobacco Alternatives Trust Fund is established at the time of 
     enactment and shall exist for a period not to exceed five 
     years. Every year, 2% of the annual federal revenue from the 
     increased tobacco tax will be deposited into the Tobacco 
     Alternative Trust Fund. Monies from this Fund shall be 
     allocated on an annual basis by the Secretary of Agriculture 
     to states adversely affected by the tobacco tax.
       States that are significantly impacted by the tax shall 
     develop an initial five-year strategic plan for assisting 
     tobacco farmers and tobacco manufacturing/production workers 
     who are adversely affected by the increased tobacco tax. The 
     strategic plan must be approved by the Secretary of 
     Agriculture before any federal monies are provided to the 
     [[Page S8516]] state. The Secretary shall allocate funds on 
     an annual basis to each state based on a formula that takes 
     into account the number of farmers and workers affected in 
     that state and the severity of the economic impact. Monies 
     from the Fund may be used for direct payments to tobacco 
     farmers or workers, assisting farmers in converting to 
     alternative crop and livestock production, infrastructure and 
     business-related financing in impacted areas with significant 
     numbers of tobacco-related jobs, job training, and other 
     economic development projects that the state considers 
     worthwhile upon approval of the Secretary of Agriculture.
       Each year the states receiving monies from the Fund shall 
     submit to the Secretary of Agriculture an annual report 
     documenting the economic impact of the tax, an evaluation of 
     their program activities, and their improvement plan for the 
     coming year. Upon approval by the Secretary, the state's 
     annual allocation from the Fund shall be transferred to the 
     state.
       Administrative costs for this program are limited to 5% of 
     annual program expenditures and shall be offset by monies in 
     the Tobacco Alternatives Trust Fund.

    Sec. 303. Designation of Overpayments and Contributions for the 
          National Health Trust Fund for Mothers and Children

       Amends subchapter A of chapter 61 of the Internal Revenue 
     Code of 1986.


Part ix--designation of overpayments and contributions for the national 
               health trust fund for mothers and children

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

       Beginning with the first full tax year subsequent to the 
     enactment of this Act, every individual (or couple in the 
     case of joint returns) filing a tax return shall have the 
     option of making a contribution to the Trust Fund through 
     either electing to donate any portion (not less than $1) of a 
     tax overpayment for that year, or electing to make a cash 
     contribution to be transferred to the Trust Fund. These 
     mechanisms for contributions through tax returns shall not 
     apply in the second year subsequent to any year where the 
     total contributions designated from tax returns are less than 
     $5 million.
       In addition, any individual, corporation, foundation, or 
     private sector entity may elect to donate monies to the Trust 
     Fund or to one of the state trust funds established under 
     this Act at any time. Charitable donations to the state or 
     national trust funds shall be considered tax deductible 
     donations to the extent allowed by federal and state tax 
     laws.

  Mr. CHAFEE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. CHAFEE. Mr. President, I want to commend the distinguished 
Senator from Illinois for the presentation he made, and for the effort 
he is making to cover pregnant women and children. I certainly will 
look at the legislation he has presented.
  I think it is a great help in this ongoing debate that we are having 
that the Senator has stepped forward with this legislation, which seems 
to me to hold a lot of promise.
  As he mentioned, always the funding part is difficult. But, 
nonetheless, I agree with the source of funding from the increased tax 
on cigarettes. I am not sure everybody else will enthusiastically 
embrace it. But I think the Senator mentioned Rhode Island and what we 
are doing to fund this program. There may have to be, in fact, an 
increase in the price of cigarettes, which will hopefully keep them 
away from those who are price sensitive in connection with purchasing 
that kind of deleterious substance.
  So, again, I think it is wonderful what the Senator has done. I take 
it that the Senator has not yet introduced that legislation.
  Mr. SIMON. I just introduced it. I welcome any suggestions for a 
modification. I welcome having John Chafee, as well as the 
distinguished junior Senator from Utah, as cosponsors, if at any point 
they feel comfortable doing that.
  Mr. CHAFEE. I will certainly take a good look at it. I will get a 
copy either from the Senator's office or from the reprint here, and 
take a good look at it.
  Mr. SIMON. I thank the Senator.
  

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