[Congressional Record Volume 145, Number 139 (Thursday, October 14, 1999)]
[Senate]
[Pages S12634-S12645]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. JEFFORDS:
  S. 1725. A bill to amend title XVIII of the Social Security Act to 
modernize Medicare supplemental policies so that outpatient 
prescription drugs are affordable and accessible for medicare 
beneficiaries; to the Committee on Finance.


             the druggap insurance for seniors act of 1999

  Mr. JEFFORDS. Mr. President, I come to the floor today to introduce 
the DrugGap Insurance for Seniors Act of 1999, which will provide much-
needed insurance coverage for medicines for low-income seniors, and 
will allow all other seniors, for the first time, to purchase an 
affordable, drug-only insurance policy to protect them against the 
runaway cost of drugs.
  Mr. President, we are all aware that prescription drug costs continue 
to grow at an alarming rate. Seniors are being forced to spend greater 
and greater portions of their fixed incomes on prescription drugs that 
they need to live. Research and development of prescription drugs have 
come a long way since Medicare was originally enacted in 1965. Today, 
drugs are just as important, and in many cases more important, than 
hospital visits. It does not make sense for Medicare to reimburse 
hospitals for surgery, but not provide coverage for the drugs that 
might prevent surgery. That is why I am committed to modernizing the 
Medicare program so that it does not go bankrupt in the next 10 to 15 
years. In addition, we must ensure that any Medicare reform proposal we 
consider includes a prescription drug benefit that helps all seniors.
  This is a basic coverage problem that we must address as we modernize 
the Medicare program, and it is one of my top priorities. Ideally, it 
should be part of broad Medicare reform. Even if we are not able to 
achieve broad reform in the Medicare program this year, we must at 
least do something to address this basic need for seniors.
  Today, I am introducing a bill that will target the most needy 
seniors. Currently, Medicare beneficiaries can purchase private 
insurance plans, called Medigap plans, to pay certain health care 
expenses that are not covered by Medicare. The law allows Medigap 
insurers to offer ten standardized plans to beneficiaries. However, 
only the three most expensive Medigap plans cover prescription drugs.
  My plan calls for three new Medigap insurance plans to be developed 
that will cover only prescription drugs. The federal government will 
use a small portion of the budget surplus to purchase these new 
``DrugGap'' policies for low-income Medicare beneficiaries who do not 
already have prescription drug coverage under Medicaid or through an 
employer sponsored plan. This bill provides all seniors the option of 
purchasing affordable, comprehensive coverage for prescription drugs 
even if they do not qualify for the federal government purchase plan. 
The bill also includes reforms to the Medigap system to give seniors 
more choice, and to keep Medigap premiums affordable.
  Mr. President, this bill offers several significant advantages to 
Medicare beneficiaries who need coverage for prescription drugs. First, 
nothing will change for those Medicare beneficiaries who like their 
current Medigap plans. This bill will offer more choices for Medicare 
beneficiaries, but will not make seniors change coverage that they 
like.
  Second, this plan does not mandate prescription drug benefits on the 
current standardized plans, which some critics have argued will raise 
premiums. Indeed, one of the goals of this legislation is to make 
Medigap more affordable, and to seek solutions to the problem of the 
spiraling cost of Medigap premiums. This bill offers a way to 
accomplish this goal.
  This bill also gives DrugGap policy holders access to the deep 
discounts on drugs that HMOs get, even if the beneficiary has not met 
the policy's deductible, and makes it clear that insurance companies 
can issue drug discount cares to Medigap policy holders even if the 
policy doesn't cover prescription drugs.
  Finally, this bill will provide federal grants to the states for 
counseling for seniors regarding this new benefit.
  Mr. President, this bill is not a substitute for the much-needed 
Medicare reform and Medicare drug benefit, but it is a positive step 
that we can take right now to protect Medicare beneficiaries until 
Medicare reform can be achieved, and a broad drug benefit is 
implemented. I hope my colleagues will support this moderate approach 
to helping Medicare beneficiaries deal with the runaway costs of 
prescription drugs.
  Mr. President, I ask unanimous consent that the text of the bill and 
a brief summary of the bill be printed in the Record.
  There being no objection, the items were ordered to be printed in the 
Record, as follows:

                                S. 1725

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``DrugGap 
     Insurance for Seniors Act of 1999''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Modernization of medicare supplemental benefit packages.
Sec. 4. Assistance to qualified low-income medicare beneficiaries.
Sec. 5. Grandfathering of current Medigap enrollees.
Sec. 6. Health insurance information, counseling, and assistance 
              grants.
Sec. 7. NAIC study and report.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--Congress finds the following:

[[Page S12635]]

       (1) Coverage of outpatient prescription drugs is the most 
     important aspect of medical care not currently provided under 
     the medicare program under title XVIII of the Social Security 
     Act.
       (2) The medicare program needs to be reformed, and should 
     include provisions that provide access to outpatient 
     prescription drugs for all medicare beneficiaries.
       (3) Comprehensive medicare reform will require extensive 
     time and effort, but Congress must act now to provide 
     outpatient prescription drug coverage to the most vulnerable 
     medicare beneficiaries until such time as the medicare 
     program is reformed.
       (4) Low-income medicare beneficiaries are the most 
     vulnerable to the high cost of outpatient prescription drugs, 
     since they are often not eligible to receive benefits under 
     medicaid, yet have incomes too low to afford medicare 
     supplemental policies that include coverage for outpatient 
     prescription drugs.
       (5) Medicare beneficiaries deserve meaningful choices among 
     medicare supplemental policies, including the option of 
     purchasing affordable outpatient prescription drug-only 
     medicare supplemental policies.
       (6) Premiums for medicare supplemental policies have risen 
     dramatically in recent years, and steps must be taken to keep 
     premiums from rising out of the reach of medicare 
     beneficiaries.
       (7) Increased use of medicare supplemental policies does 
     not represent sufficient structural medicare reform.
       (b) Purposes.--The purposes of this Act are as follows:
       (1) To provide medicare supplemental policies covering 
     outpatient prescription drugs to low-income medicare 
     beneficiaries at no cost.
       (2) To provide expanded choice to all medicare 
     beneficiaries by creating affordable drug-only medicare 
     supplemental policies.
       (3) To ensure that medicare supplemental policies are 
     modernized in a manner that promotes competition and 
     preserves affordability for all medicare beneficiaries.

     SEC. 3. MODERNIZATION OF MEDICARE SUPPLEMENTAL BENEFIT 
                   PACKAGES.

       (a) Addition of DrugGap Policies and Modification of 
     Existing Medigap Policies.--Section 1882 of the Social 
     Security Act (42 U.S.C. 1395ss) is amended by adding at the 
     end the following:
       ``(v) Modernized Benefit Packages for Medicare Supplemental 
     Policies.--
       ``(1) Promulgation of model regulation.--
       ``(A) NAIC model regulation.--If, within 9 months after the 
     date of enactment of the DrugGap Insurance for Seniors Act of 
     1999, the National Association of Insurance Commissioners (in 
     this subsection referred to as the ``NAIC'') changes the 1991 
     NAIC Model Regulation (described in subsection (p)) to 
     incorporate--
       ``(i) limitations on the benefit packages that may be 
     offered under a medicare supplemental policy consistent with 
     paragraphs (2) and (3) of this subsection;
       ``(ii) an appropriate range of coverage options for 
     outpatient prescription drugs, including at least a minimal 
     level of coverage under each benefit package;
       ``(iii) a deductible for outpatient prescription drugs that 
     is uniform across each benefit package;
       ``(iv) uniform language and definitions to be used with 
     respect to such benefits;
       ``(v) uniform format to be used in the policy with respect 
     to such benefits; and
       ``(vi) other standards to meet the additional requirements 
     imposed by the amendments made by the DrugGap Insurance for 
     Seniors Act of 1999;

     subsection (g)(2)(A) shall be applied in each State, 
     effective for policies issued to policy holders on and after 
     the date specified in subparagraph (C), as if the reference 
     to the Model Regulation adopted on June 6, 1979, were a 
     reference to the 1991 NAIC Model Regulation as changed under 
     this subparagraph (such changed regulation referred to in 
     this section as the `2000 NAIC Model Regulation').
       ``(B) Regulation by the secretary.--If the NAIC does not 
     make the changes in the 1991 NAIC Model Regulation within the 
     9-month period specified in subparagraph (A), the Secretary 
     shall promulgate, not later than 9 months after the end of 
     such period, a regulation and subsection (g)(2)(A) shall be 
     applied in each State, effective for policies issued to 
     policy holders on and after the date specified in 
     subparagraph (C), as if the reference to the Model Regulation 
     adopted on June 6, 1979, were a reference to the 1991 NAIC 
     Model Regulation as changed by the Secretary under this 
     subparagraph (such changed regulation referred to in this 
     section as the `2000 Federal Regulation').
       ``(C) Date specified.--
       ``(i) In general.--Subject to clause (ii), the date 
     specified in this subparagraph for a State is the date the 
     State adopts the 2000 NAIC Model Regulation or 2000 Federal 
     Regulation or 1 year after the date the NAIC or the Secretary 
     first adopts such standards, whichever is earlier.
       ``(ii) States requiring revisions to state law.--In the 
     case of a State which the Secretary identifies, in 
     consultation with the NAIC, as--

       ``(I) requiring State legislation (other than legislation 
     appropriating funds) in order for medicare supplemental 
     policies to meet the 2000 NAIC Model Regulation or 2000 
     Federal Regulation; but
       ``(II) having a legislature which is not scheduled to meet 
     in 2001 in a legislative session in which such legislation 
     may be considered;

     the date specified in this subparagraph is the first day of 
     the first calendar quarter beginning after the close of the 
     first legislative session of the State legislature that 
     begins on or after January 1, 2000. For purposes of the 
     previous sentence, in the case of a State that has a 2-year 
     legislative session, each year of such session shall be 
     deemed to be a separate regular session of the State 
     legislature.
       ``(D) Consultation with working group.--In promulgating 
     standards under this paragraph, the NAIC or Secretary shall 
     consult with a working group composed of representatives of 
     issuers of medicare supplemental policies, consumer groups, 
     medicare beneficiaries, and other qualified individuals. Such 
     representatives shall be selected in a manner so as to assure 
     balanced representation among the interested groups.
       ``(E) Modification of standards if medicare benefits 
     change.--If benefits (including deductibles and coinsurance) 
     under this title are changed and the Secretary determines, in 
     consultation with the NAIC, that changes in the 2000 NAIC 
     Model Regulation or 2000 Federal Regulation are needed to 
     reflect such changes, the preceding provisions of this 
     paragraph shall apply to the modification of standards 
     previously established in the same manner as they applied to 
     the original establishment of such standards.
       ``(2) Core group of benefits and number of benefit 
     packages.--The benefits under the 2000 NAIC Model Regulation 
     or 2000 Federal Regulation shall provide--
       ``(A) for such groups or packages of benefits as may be 
     appropriate taking into account the considerations specified 
     in paragraph (3) and the requirements of the succeeding 
     subparagraphs;
       ``(B) for identification of a core group of basic benefits 
     common to all policies other than the medicare supplemental 
     policies described in paragraph (12)(B); and
       ``(C) that, subject to paragraph (4)(B), the total number 
     of different benefit packages (counting the core group of 
     basic benefits described in subparagraph (B) and each other 
     combination of benefits that may be offered as a separate 
     benefit package) that may be established in all the States 
     and by all issuers shall not exceed 10 plus the 2 benefit 
     packages described in paragraph (11) and the 3 policies 
     described in paragraph (12)(B).
       ``(3) Balance of objectives.--The benefits under paragraph 
     (2) shall, to the extent possible, balance the objectives 
     of--
       ``(A) ensuring that medicare supplemental policies are 
     affordable for beneficiaries under this title, and that the 
     policies modernized under this subsection do not have 
     premiums higher than the medicare supplemental policies 
     available on the date of enactment of the DrugGap Insurance 
     for Seniors Act of 1999;
       ``(B) facilitating comparisons among policies;
       ``(C) avoiding adverse selection;
       ``(D) providing consumer choice;
       ``(E) providing market stability;
       ``(F) promoting competition;
       ``(G) including some drug coverage, however limited, in 
     each of the 10 benefit packages described in paragraph 
     (2)(C); and
       ``(H) ensuring that beneficiaries under this title receive 
     the benefit of prices for outpatient prescription drugs 
     negotiated by issuers of medicare supplemental policies under 
     this section.
       ``(4) States may offer new or innovative supplemental 
     benefits.--
       ``(A) Compliance with applicable 2000 naic model regulation 
     or 2000 federal regulation required.--
       ``(i) States.--Except as provided in subparagraph (B) or 
     paragraph (6), no State with a regulatory program approved 
     under subsection (b)(1) may provide for or permit the 
     grouping of benefits (or language or format with respect to 
     such benefits) under a medicare supplemental policy unless 
     such grouping meets the applicable 2000 NAIC Model Regulation 
     or 2000 Federal Regulation.
       ``(ii) Federal government.--Except as provided in 
     subparagraph (B), the Secretary may not provide for or permit 
     the grouping of benefits (or language or format with respect 
     to such benefits) under a medicare supplemental policy 
     seeking approval by the Secretary unless such grouping meets 
     the applicable 2000 NAIC Model Regulation or 2000 Federal 
     Regulation.
       ``(B) Additional benefits.--The issuer of a medicare 
     supplemental policy may offer the benefits described in 
     subsection (p)(3)(B) under the circumstances described in 
     such subsection as if each reference to `1991' were a 
     reference to `2000'.
       ``(5) States may not restrict core benefits.--
       ``(A) Medicare supplemental policies subject to state 
     regulation.--Except as provided in subparagraph (B), this 
     subsection shall not be construed as preventing a State from 
     restricting the groups of benefits that may be offered in 
     medicare supplemental policies in the State.
       ``(B) Must make core benefits available.--A State with a 
     regulatory program approved under subsection (b)(1) may not 
     restrict under subparagraph (A) the offering of a medicare 
     supplemental policy consisting only of the core group of 
     benefits described in paragraph (2)(B).
       ``(6) State alternative simplification programs.--The 
     Secretary may waive the application of standards described in 
     clauses (i) through (vi) of paragraph (1)(A) in those States 
     that on the date of enactment of the DrugGap Insurance for 
     Seniors Act of 1999

[[Page S12636]]

     had in place an alternative simplification program.
       ``(7) Discounts for items and services not covered under 
     medicare supplemental policies.--This subsection shall not be 
     construed as preventing an issuer of a medicare supplemental 
     policy who otherwise meets the requirements of this section 
     from providing, through an arrangement with a vendor, for 
     discounts from that vendor to policy holders or certificate 
     holders for the purchase of items or services not covered 
     under its medicare supplemental policies or under this title, 
     including the issuance of drug discount cards.
       ``(8) Civil penalty for violation of the model 
     regulation.--Except as provided in paragraph (10), any person 
     who sells or issues a medicare supplemental policy, on and 
     after the effective date specified in paragraph (1)(C), in 
     violation of the applicable 2000 NAIC Model Regulation or 
     2000 Federal Regulation insofar as such regulation relates to 
     the requirements of subsection (o) or (q) or clauses (i) 
     through (vi) of paragraph (1)(A) is subject to a civil money 
     penalty of not to exceed $25,000 (or $15,000 in the case of a 
     seller who is not an issuer of a policy) for each such 
     violation. The provisions of section 1128A (other than the 
     first sentence of subsection (a) and other than subsection 
     (b)) shall apply to a civil money penalty under the previous 
     sentence in the same manner as such provisions apply to a 
     penalty or proceeding under section 1128A(a).
       ``(9) Requirements of sellers.--
       ``(A) Core benefit package.--Anyone who sells a medicare 
     supplemental policy to an individual shall make available for 
     sale to the individual a medicare supplemental policy with 
     only the core group of basic benefits (described in paragraph 
     (2)(B)).
       ``(B) Outline of coverage.--Anyone who sells a medicare 
     supplemental policy to an individual shall provide the 
     individual, before the sale of the policy, an outline of 
     coverage which describes the benefits under the policy. Such 
     outline shall be on a standard form approved by the State 
     regulatory program or the Secretary (as the case may be) 
     consistent with the 2000 NAIC Model Regulation or 2000 
     Federal Regulation under this subsection.
       ``(C) Penalties.--Whoever sells a medicare supplemental 
     policy in violation of this paragraph is subject to a civil 
     money penalty of not to exceed $25,000 (or $15,000 in the 
     case of a seller who is not the issuer of the policy) for 
     each such violation. The provisions of section 1128A (other 
     than the first sentence of subsection (a) and other than 
     subsection (b)) shall apply to a civil money penalty under 
     the previous sentence in the same manner as such provisions 
     apply to a penalty or proceeding under section 1128A(a).
       ``(D) Effective date.--Subject to paragraph (10), this 
     paragraph shall apply to sales of policies occurring on or 
     after the effective date specified in paragraph (1)(C).
       ``(10) Safe harbor for sellers.--No penalty may be imposed 
     under paragraph (8) or (9) in the case of a seller who is not 
     the issuer of a policy until the Secretary has published a 
     list of the groups of benefit packages that may be sold or 
     issued consistent with paragraph (1)(A)(i).
       ``(11) Addition of high deductible medicare supplemental 
     policies.--For purposes of paragraph (2), the benefit 
     packages described in this paragraph are the benefit packages 
     modernized under this subsection that the Secretary 
     determines are most comparable to the benefit packages 
     described in subsection (p)(11).
       ``(12) Druggap medicare supplemental policies.--
       ``(A) Establishment of drug-only medicare supplemental 
     policies.--
       ``(i) In general.--There are established 3 benefit 
     packages, consistent with the benefit packages described in 
     subparagraph (B), that--

       ``(I) consist of only outpatient prescription drug 
     benefits;
       ``(II) may be designed to incorporate the utilization 
     management techniques described in subparagraph (C);
       ``(III) do not include benefits for prescription drugs 
     otherwise available under part A or B; and
       ``(IV) do not include benefits for any prescription drug 
     excluded by the State in which the medicare supplemental 
     policy is issued or sold under section 1927(d).

       ``(ii) Definition.--In this section, the term `DrugGap 
     medicare supplemental policy' means a medicare supplemental 
     policy (as defined in subsection (g)(1)) that has 1 of the 
     benefit packages described in subparagraph (B).
       ``(B) Benefit packages described.--The benefit packages for 
     DrugGap medicare supplemental policies described in this 
     paragraph are as follows:
       ``(i) Standard druggap benefit packages.--

       ``(I) Standard druggap.--A Standard DrugGap medicare 
     supplemental policy that provides a deductible not to exceed 
     $250, coinsurance not to exceed 20 percent, and a $5,000 
     maximum benefit.
       ``(II) Low-cost standard druggap.--A Low-Cost Standard 
     DrugGap medicare supplemental policy that provides a 
     deductible not to exceed $750, coinsurance not to exceed 30 
     percent, and a $5,000 maximum benefit.

       ``(ii) Stop-loss druggap benefit package.--A Stop-Loss 
     DrugGap medicare supplemental policy that provides a stop-
     loss coverage benefit that limits the application of any 
     beneficiary cost-sharing during a year after the beneficiary 
     incurs out-of-pocket covered expenditures in excess of 
     $5,000, or, in the case that the beneficiary owns a DrugGap 
     medicare supplemental policy described in clause (i), such 
     beneficiary reaches the maximum benefit under such policy.
       ``(iii) Maximum benefit defined.--In this paragraph, the 
     term `maximum benefit' means the total amount paid for 
     covered outpatient prescription drugs, including any amounts 
     paid by the issuer of the DrugGap medicare supplemental 
     policy and any cost-sharing paid by the policyholder.
       ``(C) Use of utilization management techniques.--
       ``(i) Formularies.--An issuer may use a formulary to 
     contain costs under any benefit package established under 
     subparagraph (A)(i) only if the issuer--

       ``(I) includes in the formulary at least 1 drug from each 
     therapeutic class and provides at least 1 generic equivalent, 
     if available; and
       ``(II) provides for coverage of otherwise covered 
     nonformulary drugs when a nonformulary alternative is 
     medically necessary and appropriate.

       ``(ii) Other utilization management techniques.--Nothing in 
     this part shall be construed as preventing an issuer offering 
     DrugGap medicare supplemental policies from using reasonable 
     utilization management techniques, including generic drug 
     substitution, consistent with applicable law.''.
       (b) DrugGap Medigap Policies Do Not Duplicate Other Medigap 
     Policies.--Section 1882(d)(3) of the Social Security Act (42 
     U.S.C. 1395ss(d)(3)) is amended--
       (1) in subparagraph (A), by adding at the end the 
     following:
       ``(ix) Nothing in this subparagraph shall be construed as 
     preventing the sale of a DrugGap policy to an individual, 
     provided that the sale is of a DrugGap policy that does not 
     duplicate any health benefits under a medicare supplemental 
     policy owned by the individual.'';
       (2) in subparagraph (B)(ii)(I), by inserting ``and one 
     DrugGap medicare supplemental policy'' before the comma; and
       (3) in subparagraph (B)(iii)--
       (A) in subclause (I), by striking ``(II) and (III)'' and 
     inserting ``(II), (III), and (IV)'';
       (B) by redesignating subclause (III) as subclause (IV); and
       (C) by inserting after subclause (II) the following:
       ``(III) If the statement required by clause (i) is obtained 
     and indicates that the individual is enrolled in 1 or more 
     medicare supplemental policies, the sale of a DrugGap policy 
     is not in violation of clause (i) if such DrugGap policy does 
     not duplicate health benefits under any policy in which the 
     individual is enrolled.''.
       (c) Enrollment in Case of Involuntary Terminations of 
     Coverage.--Section 1882(s)(3)(C)(i) of the Social Security 
     Act (42 U.S.C. 1395ss(s)(3)(C)(i)) is amended by striking 
     ``under subsection (p)(2)'' and inserting ``under subsection 
     (v)(2), a Standard DrugGap medicare supplemental policy under 
     the standards established under subsection (v)(12)(B)(i), and 
     a Stop-Loss DrugGap medicare supplemental policy under the 
     standards established under subsection (v)(12)(B)(ii)''.
       (d) Special Enrollment Period.--Section 1882(n) of the 
     Social Security Act (42 U.S.C. 1395ss(n)) is amended by 
     adding at the end the following:
       ``(7)(A) No medicare supplemental policy of the issuer 
     shall be deemed to meet the standards in subsection (c) 
     unless the issuer--
       ``(i) provides written notice, within a 60-day period 
     specified in the modernization of the medicare supplemental 
     policies under subsection (v), to the policyholder or 
     certificate holder (at the most recent available address) of 
     the offer described in clause (ii); and
       ``(ii) offers the individual under the terms described in 
     subparagraph (B), during a period of 180 days beginning on 
     the date specified in subparagraph (C), institution of 
     coverage effective as of the date specified in the 
     modernization described in clause (i) for such purpose, for 
     any policy described under subsection (v).
       ``(B) The terms described under this subparagraph are terms 
     which do not--
       ``(i) deny or condition the issuance or effectiveness of a 
     medicare supplemental policy described in subparagraph 
     (A)(ii) that is offered and is available for issuance to new 
     enrollees by such issuer;
       ``(ii) discriminate in the pricing of such policy, because 
     of health status, claims experience, receipt of health care, 
     or medical condition; or
       ``(iii) impose an exclusion of benefits based on a 
     preexisting condition under such policy.
       ``(C) The date specified in this subparagraph for a policy 
     issued in a State is such date as the Secretary, in 
     consultation with the NAIC, specifies (taking into account 
     the method used under paragraph (4) for establishing a date 
     under this subsection).''.
       (e) Conforming Amendments.--Section 1882 of the Social 
     Security Act (42 U.S.C. 1395ss) is amended--
       (1) in subsection (a)(2)--
       (A) in the matter preceding subparagraph (A), by striking 
     ``(p)'' and inserting ``(v)'';
       (B) in subparagraph (A)--
       (i) by striking ``1991'' each place it appears and 
     inserting ``2000''; and
       (ii) by striking ``(p)'' and inserting ``(v)''; and
       (C) in the matter following subparagraph (B), by striking 
     ``(p)'' and inserting ``(v)'';
       (2) in subsection (o)--
       (A) in paragraph (1), by striking ``(p)'' and inserting 
     ``(v)''; and

[[Page S12637]]

       (B) in paragraph (2), by striking ``(p)'' and inserting 
     ``(v)''; and
       (3) in subsection (r)--
       (A) in paragraph (1)--
       (i) in the matter preceding subparagraph (A), by striking 
     ``(p)'' and inserting ``(v)''; and
       (ii) in the matter following subparagraph (B), by striking 
     ``(p)'' and inserting ``(v)''; and
       (B) in paragraph (2)(A)--
       (i) by striking ``(p)'' and inserting ``(v)''; and
       (ii) by striking ``the date specified in section 171(m)(4) 
     of the Social Security Act Amendments of 1994'' and inserting 
     ``the date of enactment of the DrugGap Insurance for Seniors 
     Act of 1999''.

     SEC. 4. ASSISTANCE TO QUALIFIED LOW-INCOME MEDICARE 
                   BENEFICIARIES.

       (a) In General.--Part B of title XVIII of the Social 
     Security Act (42 U.S.C. 1395j et seq.) is amended by adding 
     at the end the following:

     ``SEC. 1849. ASSISTANCE TO QUALIFIED LOW-INCOME MEDICARE 
                   BENEFICIARIES.

       ``(a) Qualified Low-Income Medicare Beneficiary Defined.--
     For purposes of this part, the term `qualified low-income 
     medicare beneficiary' means an individual--
       ``(1) who is--
       ``(A) entitled to benefits under part A;
       ``(B) enrolled under this part; and
       ``(C) who does not have coverage for outpatient 
     prescription drugs through enrollment in a Medicare+Choice 
     plan offered by a Medicare+Choice organization under part C 
     or in a group health plan;
       ``(2) who would be eligible for medical assistance under 
     title XIX but for the fact that the individual's income 
     exceeds the income level (expressed as a percentage of the 
     poverty line) established by the State for eligibility for 
     medical assistance under such title, including at least the 
     care and services listed in paragraphs (1) through (5), (17), 
     and (21) of section 1905(a), but does not exceed the lesser 
     of--
       ``(A) 50 percentage points above such income level; or
       ``(B) 200 percent of the poverty line; and
       ``(3) who is enrolled in--
       ``(A) a Standard DrugGap medicare supplemental policy and a 
     Stop-Loss DrugGap medicare supplemental policy as such 
     policies are described in clauses (i)(I) and (ii) of section 
     1882(v)(12)(B), respectively; or
       ``(B) a Low-Cost Standard DrugGap medicare supplemental 
     policy and a Stop-Loss DrugGap medicare supplemental policy 
     as such policies are described in clauses (i)(II) and (ii) of 
     section 1882(v)(12)(B), respectively.
       ``(b) Program Administered by the States.--
       ``(1) In general.--The Secretary shall establish an 
     arrangement with each State (as defined under section 
     1861(x)) under which the State performs the functions 
     described in paragraphs (2) through (4).
       ``(2) Annual eligibility.--The State shall determine 
     whether a beneficiary under this title in the State is a 
     qualified low-income medicare beneficiary. A determination 
     that such an individual is a qualified low-income medicare 
     beneficiary shall remain valid for a period of 12 months but 
     is conditioned upon continuing enrollment in medicare 
     supplemental policies described in subsection (a)(4).
       ``(3) Computation of state weighted average premium for 
     standard druggap and stop-loss druggap medicare supplemental 
     policies.--For each year, the State shall compute a State 
     weighted average premium equal to the weighted average of the 
     premiums for medicare supplemental policies described in 
     clause (i)(I) of section 1882(v)(12)(B) and the medicare 
     supplemental policies described in clause (ii) of such 
     section for the State, with the weight for each medicare 
     supplemental policy being equal to the average number of 
     beneficiaries under this title enrolled under such policy in 
     the previous year. In the initial year that such medicare 
     supplemental policies are available, the State shall estimate 
     the State weighted average premium for each type of policy.
       ``(4) Payment by states on behalf of qualified low-income 
     medicare beneficiaries.--The State shall provide for payment 
     to the appropriate entity on behalf of a qualified low-income 
     medicare beneficiary for a year in an amount equal to--
       ``(A) for the medicare supplemental policy described under 
     clause (i) of section 1882(v)(12)(B) in which such 
     beneficiary is enrolled, the lesser of--
       ``(i) the amount of the State weighted average premium (as 
     computed under paragraph (3)) for the policies described 
     under subclause (I) of such clause; or
       ``(ii) the full quoted premium for the policy;
       ``(B) for the medicare supplemental policy described under 
     clause (ii) of section 1882(v)(12)(B) in which such 
     beneficiary is enrolled, the lesser of--
       ``(i) the amount of the State weighted average premium (as 
     computed under paragraph (3)) for the policies described 
     under such clause; or
       ``(ii) the full quoted premium for the policy; and
       ``(C) such beneficiary out-of-pocket expenses related to 
     the supplemental benefits provided under the policies 
     described in subparagraphs (A) and (B) as the State 
     determines is appropriate.
       ``(c) Payments to States.--
       ``(1) Reimbursement from federal supplementary medical 
     insurance trust fund.--Each calendar quarter in a fiscal 
     year, the Secretary shall pay to each State from the Federal 
     Supplementary Medical Insurance Trust Fund under section 1841 
     an amount equal to the amount paid by the State under 
     subsection (b)(4).
       ``(2) Exclusion of additional part b costs from 
     determination of part b premium.--In estimating the benefits 
     and administrative costs that will be payable from the 
     Federal Supplementary Medical Insurance Trust Fund for a year 
     for purposes of determining the monthly premium rate under 
     section 1839(a)(3), the Secretary shall exclude an estimate 
     of any benefits and administrative costs attributable to the 
     application of this section.
       ``(3) Construction relative to other benefits.--Nothing in 
     this section shall be construed as requiring a State, under 
     its plan under title XIX, to be responsible for any portion 
     of the subsidy or beneficiary cost-sharing provided under 
     this section to qualified low-income medicare beneficiaries.
       ``(d) Maintenance of State Effort Requirement.--In the case 
     of any State in which the income level (expressed as a 
     percentage of the poverty line) established by the State for 
     eligibility for medical assistance under title XIX (that 
     includes at least the care and services listed in paragraphs 
     (1) through (5), (17), and (21) of section 1905(a)) is less 
     than 150 percent of the poverty line applicable to a family 
     of the size involved in a calendar quarter in a fiscal year--
       ``(1) no payment may be made to such State under section 
     1849(c) for a calendar quarter in a fiscal year unless the 
     State demonstrates to the satisfaction of the Secretary that 
     the expenditures of the State for any State-funded 
     prescription drug program for which individuals entitled to 
     benefits under this section are eligible during the fiscal 
     year is not less than the level of such expenditures for 
     fiscal year 1999; and
       ``(2) payments shall not be made under this section for 
     coverage of prescription drugs to the extent that--
       ``(A) payment is made under such a program; or
       ``(B) the Secretary determines payment would be made under 
     such a program as in effect on the date of enactment of the 
     DrugGap Insurance for Seniors Act of 1999.
       ``(e) Poverty Line Defined.--The term `poverty line' has 
     the meaning given such term in section 673(2) of the 
     Community Services Block Grant Act (42 U.S.C. 9902(2)), 
     including any revision required by such section.''.
       (b) Conforming Amendment.--Section 1839(a)(3) of the Social 
     Security Act (42 U.S.C. 1395r(a)(3)), as amended by section 
     5101(e) of the Tax and Trade Relief Extension Act of 1998 
     (contained in division J of Public Law 105-277), is amended 
     by striking ``except as provided in subsection (g)'' and 
     inserting ``except as provided in subsection (g) or section 
     1849(d)''.

     SEC. 5. GRANDFATHERING OF CURRENT MEDIGAP ENROLLEES.

       (a) In General.--The amendments made by this Act shall take 
     effect on the date of enactment of this Act, and shall apply 
     to medicare supplemental policies issued or sold after the 
     date specified in subsection (b), but shall not apply to the 
     renewal of medicare supplemental policies that are in 
     existence on such date.
       (b) Date Specified.--The date specified in this subsection 
     for each State is the date specified under section 
     1882(n)(7)(C) of the Social Security Act (42 U.S.C. 
     1395ss(n)(7)(C)) (as added by section 3(d) of this Act).

     SEC. 6. HEALTH INSURANCE INFORMATION, COUNSELING, AND 
                   ASSISTANCE GRANTS.

       (a) In General.--Section 4360(b)(2)(A)(ii) of the Omnibus 
     Budget Reconciliation Act of 1990 (42 U.S.C. 1395b-
     4(b)(2)(A)(ii)) is amended by striking ``and information'' 
     and inserting ``, providing specific information regarding 
     any DrugGap benefit medicare supplemental policy described 
     under section 1882(v) of the Social Security Act (42 U.S.C. 
     1395ss(v)), and information''.
       (b) Authorization of Appropriations.--In addition to any 
     amounts otherwise appropriated, there are authorized to be 
     appropriated $50,000,000 for each fiscal year, beginning with 
     the first year in which a DrugGap medicare supplemental 
     policy described in section 1882(v)(12) is available, for the 
     purpose of carrying out the provisions of section 4360 of the 
     Omnibus Budget Reconciliation Act of 1990 (as amended by 
     subsection (a)).

     SEC. 7. NAIC STUDY AND REPORT.

       (a) Study.--The Secretary of Health and Human Services 
     shall contract with the National Association of Insurance 
     Commissioners (referred to in this section as the ``NAIC'') 
     to conduct a study of medicare supplemental policies offered 
     under section 1882 of the Social Security Act (42 U.S.C. 
     1395ss) in order to identify--
       (1) areas that are the cause of increasing medicare 
     supplemental insurance claims costs (such as outpatient 
     expenses) that affect the affordability of medicare 
     supplemental policies;
       (2) changes to Federal law (if any) required to address the 
     issues identified under paragraph (1) to make medicare 
     supplemental policies more affordable for beneficiaries under 
     the medicare program under title XVIII of the Social Security 
     Act (42 U.S.C. 1395 et seq.); and
       (3) methods of encouraging additional issuers to offer such 
     policies and to reduce the cost of premiums for such 
     policies.

[[Page S12638]]

       (b) Report.--Not later than November 1, 2001, the NAIC 
     shall submit a report to the Secretary of Health and Human 
     Services on the study conducted under subsection (a) that 
     contains a detailed statement of the findings and conclusions 
     of the NAIC together with recommendations for such 
     legislation and administrative actions as the NAIC considers 
     appropriate.
       (c) Transmission to Congress.--Not later than January 1, 
     2002, the Secretary of Health and Human Services shall 
     transmit the report submitted under subsection (b) to 
     Congress together with recommendations for such legislation 
     and administrative actions as the Secretary considers 
     appropriate.
                                  ____


                   DrugGap Insurance for Seniors Act


                                proposal

       The Federal government will purchase Medicare supplemental 
     (``Medigap'') insurance policies covering prescription drugs 
     (called ``DrugGap'' plans) for low-income seniors, which 
     provides greater access to affordable medicines, and 
     affordable insurance policies for all Medicare beneficiaries 
     through modernized Medigap plans.


                              how it works

       Current Coverage Continues: All beneficiaries currently 
     enrolled in Medigap who are satisfied with their plans will 
     keep their current policies, but those who want to take 
     advantage of a new drug-only plan may do so.
       Medigap Modernization: Under this proposal, the ten Medigap 
     standardized plans will be reconsidered by the National 
     Association of Insurance Commissioners (NAIC) in order to 
     develop more efficient standardized policies that more 
     appropriately represent today's dynamic health care system. 
     The NAIC will use the same collaborative process outlined in 
     OBRA '90 to modernize the ten standardized Medigap plans and 
     determine the appropriate level of prescription drug coverage 
     in each of the ten modernized plans. This process requires 
     the participation of consumer groups, Medicare beneficiaries, 
     and other representatives selected in a manner to assure 
     balanced representation among the interested groups.
       New Drug-Only ``DrugGap'' Plans: In addition to modernizing 
     the existing ten standardized plans, NAIC would be required 
     to develop three new standardized DrugGap plans, within the 
     following structure:
       (1) ``Standard DrugGap'' plan will have low deductible 
     (maximum $250) and cost-sharing levels (maximum 20% copay), 
     and a $5000 maximum benefit;
       (2) ``Low-Cost Standard DrugGap'' will have somewhat higher 
     deductible (maximum $750) and cost-sharing levels (maximum 
     30% copay), and $5000 maximum benefit;
       (3) ``Stop-Loss DrugGap'' plan will cover any out-of-pocket 
     prescription medicine costs after total prescription medicine 
     costs reach $5000.
       Affordability: Issuers of the new DrugGap plans will be 
     given flexibility to employ a variety utilization management 
     techniques to ensure affordability in these plans, including 
     incentives to encourage appropriate generic substitution. The 
     NAIC standards will include standards by which formularies 
     could be developed, including requirements that all 
     therapeutic classes of drugs will be covered, and 
     beneficiaries will be guaranteed access to off-formulary 
     drugs when they are necessary and appropriate. The standards 
     will also include a mechanism to ensure appropriate 
     utilization and to minimize incidents of adverse drug 
     interactions, as well as mechanisms to ensure reasonable 
     accessibility. Competition between plans will push actual 
     deductible and coinsurance levels lower than the maximum 
     allowable deductible and cost-sharing amounts.
       Eligibility for Assistance: Any Medicare beneficiary who: 
     (1) has income of less than 150% of the federal poverty level 
     (in states where Medicaid eligibility is currently above 100% 
     of poverty, the eligibility level will be 50 percentage 
     points above the states' current Medicaid eligibility, up to 
     200% of the federal poverty level); (2) does not currently 
     have employer-sponsored coverage for prescription drugs; and 
     (3) who is not eligible to receive prescription drugs through 
     Medicaid, is eligible to receive federal assistance. Each 
     eligible beneficiary will receive federal assistance in 
     purchasing a Standard DrugGap and Stop-Loss DrugGap plan.
       Beneficiary Access: Any DrugGap plan may be purchased by 
     any Medicare beneficiary regardless of whether the 
     beneficiary is eligible for federal government assistance 
     under this proposal.
       Access to Discounts: Before the deductible has been 
     satisfied, and after the maximum coverage amount of the 
     DrugGap plan has been reached, plans are required to make 
     drugs available to covered beneficiaries at the same price 
     that is referenced by the plan in determining the plan 
     coverage--i.e., beneficiaries purchase medications at the 
     plan's discounted price. When providing drugs in these 
     situations, plans may assess nominal administration/
     dispensing fees. This allows seniors to access the heavily 
     discounted plan prices, which may be 20% to 25% lower than 
     the market price for important prescription medicines.
       Grants to States: This proposal will include grants to the 
     states ($50 million) for counseling of seniors regarding this 
     new benefit, and to help them access the new DrugGap 
     policies.
       Affordable Premiums: As a part of this Act, Congress would 
     also instruct the NAIC to make recommendations regarding 
     other regulatory and statutory changes which, if enacted, 
     would reduce the cost of Medigap premiums, and would 
     encourage more issuers to offer Medigap policies. These 
     changes would address issues such as balance-billing and 
     outpatient expenses.
                                 ______
                                 
      By Mr. McCAIN (for himself, Mr. Campbell, Mr. Inouye):
  S. 1726. A bill to amend the Internal Revenue Code of 1986 to treat 
for unemployment compensation purposes Indian tribal governments the 
same as State or local units of government or as nonprofit 
organizations; to the Committee on Finance.


 the indian tribal government unemployment compensation act tax relief 
                           amendments of 1999

  Mr. McCAIN. Mr. President, I rise today on behalf of myself, Senator 
Campbell and Senator Inouye to introduce the Indian Tribal Government 
Unemployment Compensation Act Tax Relief Amendments of 1999.
  This bill would correct a serious oversight in the way the Internal 
Revenue Code treats Indian tribal governments for unemployment tax 
purposes under the unique, State-Federal program authorized by the 
Federal Unemployment Tax Act (FUTA). It would clarify existing tax 
statutes so that tribal governments are treated just as State and local 
units of governments are treated for unemployment tax purposes.
  It is well-settled that tribal governments are not taxable entities 
under the Federal Tax Code because of their governmental status. But in 
recent years, both the Internal Revenue service and the U.S. Department 
of Labor have begun to advance an interpretation of FUTA that is 
particularly burdensome to Indian tribal governments.
  The IRS has begun to insist on collecting the Federal portion of the 
FUTA tax from tribal governmental employers. The IRS rationale is that 
because the FUTA statute expressly exempts charitable organizations and 
all State and local units of government from paying the Federal portion 
of the FUTA tax, but does not expressly mention tribal governments, it 
must collect the Federal portion of the tax from tribal employers.
  The Labor Department, for its part, several years ago issued an 
opinion declaring that State unemployment funds may not treat tribal 
government employers like other governmental units and accord them 
``reimburser'' status. The Department's rationale was that FUTA statute 
does not expressly authorize tribal governments to participate on a 
reimbursable basis, and so State Unemployment Funds were prohibited 
from allowing them to do so.
  The Congressional Research Service conducted a study at my request in 
the early 1990s which revealed that FUTA was being applied to tribal 
government employers differently throughout our Nation. Some were 
allowed to participate, even as reimbursers. Others were denied 
participation but charged the full tax without getting any benefit 
whatsoever. The recent actions by the IRS and the Labor Department have 
only served to make the application of FUTA to tribal government 
employers even more confusing, contradictory, and unfair.
  FUTA involves a joint Federal-State taxation system that levies two 
taxes on most employers: an 0.8 percent unemployment tax and a State 
unemployment tax ranging up to more than 9 percent of a portion of an 
employer's payroll. Since its enactment in the 1930s, FUTA has treated 
foreign, Federal, State, and local government employers differently 
from private commercial business employers. It exempts all foreign, 
Federal, State, and local government employers from the 0.8 percent 
Federal FUTA tax. It exempts foreign and Federal government employers 
from State unemployment programs and allows State and local government 
employers to pay lower State unemployment taxes as reimbursers. FUTA 
also treats income tax-exempt charitable organizations the same as 
State and local governments. All other private sector employers pay 
both the Federal and State FUTA tax rates. The FUTA statute does not 
expressly include tribal government employers within the definition of 
governmental employers.

  This legislation will expressly authorize tribal governments, like 
State and local units of government and charitable organizations, to 
contribute to a State fund on a reimbursable basis for unemployment 
benefits actually

[[Page S12639]]

paid out. Private sector employers typically must pay an unemployment 
tax in advance. The rationale for reimburser status is that 
governmental employers, like tribes and States, have a far more stable 
employment environment than that of the private sector, and that 
governmental revenue should not be committed to such purposes in 
advance of when the obligation to pay arises.
  Let me be clear, this bill would ensure that tribes participate in 
the unemployment compensation system. Some now do not do so. Their 
participation would be on the same terms as other governments. Tribal 
government employers would pay for every dime that is paid out in 
benefits to workers they lay off. But the bill would clarify the law to 
ensure that tribal government employers do not pay more than what is 
paid, a ``reimburser'' status long accorded all other governmental 
employers and tax-exempt organization employers.
  The bill I am introducing today would permanently resolve this matter 
across the Nation for every Indian tribal government. Unless this 
problem is resolved, many former tribal government employees will 
continue to be denied benefits by State unemployment funds and many 
tribal government employers will be charged at much higher rates than 
are all other governmental and tax-exempt employers. I believe tribal 
governments should be treated no differently than all other governments 
under our tax code, and that Indian and non-Indian workers who are 
separated from tribal governmental employment should be included within 
our Nation's comprehensive unemployment benefit system. This bill will 
go a long way toward ensuring mandatory participation by tribal 
governments on a fair and equitable basis in the Federal-State 
unemployment fund system. I can think of nothing more fair than the 
approach clarified in this bill. I urge my colleagues to support this 
legislation.
  Mr. President, the Joint Committee on Taxation, through the 
Congressional Budget Office, estimates the cost of this bill to be 
minimal, about ten million dollars over a ten-year period. The cost to 
implement these provisions in the first few years will eventually be 
offset over the ten-year period, resulting in a negligible effect on 
the Federal treasury.
  I ask unanimous consent that the text of the legislation, as well as 
a September 27, 1999 letter from the Joint Committee on Taxation 
providing the revenue estimate on this bill, be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1726

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Indian Tribal Government 
     Unemployment Compensation Act Tax Relief Amendments of 
     1999''.

     SEC. 2. TREATMENT OF INDIAN TRIBAL GOVERNMENTS UNDER FEDERAL 
                   UNEMPLOYMENT TAX ACT.

       (a) In General.--Section 3306(c)(7) of the Internal Revenue 
     Code of 1986 (defining employment) is amended--
       (1) by inserting ``or in the employ of an Indian tribe,'' 
     after ``service performed in the employ of a State, or any 
     political subdivision thereof,''; and
       (2) by inserting ``or Indian tribes'' after ``wholly owned 
     by one or more States or political subdivisions''.
       (b) Payments in Lieu of Contributions.--Section 3309 of the 
     Internal Revenue Code of 1986 (relating to State law coverage 
     of services performed for nonprofit organizations or 
     governmental entities) is amended--
       (1) in subsection (a)(2), by inserting ``, including an 
     Indian tribe,'' after ``the State law shall provide that a 
     governmental entity'';
       (2) in subsection (b)(3)(B), by inserting ``, or of an 
     Indian tribe'' after ``of a State or political subdivision 
     thereof'';
       (3) in subsection (b)(3)(E), by inserting ``or the 
     tribe's'' after ``the State''; and
       (4) in subsection (b)(5) by inserting ``or of an Indian 
     tribe'' after ``an agency of a State or political subdivision 
     thereof''.
       (c) State Law Coverage.--Section 3309 of the Internal 
     Revenue Code of 1986 (relating to State law coverage of 
     services performed for nonprofit organizations or 
     governmental entities) is amended by adding at the end the 
     following:
       ``(d) Election by Indian Tribe.--The State law shall 
     provide that an Indian tribe may elect to make contributions 
     for employment as if the employment is within the meaning of 
     section 3306 or to make payments in lieu of contributions 
     under this section, and shall provide that an Indian tribe 
     may make separate elections for itself and each subdivision, 
     subsidiary, or business enterprise chartered and wholly owned 
     by such Indian tribe. State law may require an electing tribe 
     to post a reasonable payment bond or take other reasonable 
     measures to assure the making of payments in lieu of 
     contributions under this section. An election under this 
     subsection may not be made except by an Indian tribe within 
     the meaning of section 4(e) of the Indian Self-Determination 
     and Education Assistance Act (25 U.S.C. 450b(e)).''.
       (d) Definitions.--Section 3306 of the Internal Revenue Code 
     of 1986 (relating to definitions) is amended by adding at the 
     end the following:
       ``(u) Indian Tribe.--For purposes of this chapter, the term 
     `Indian tribe' has the meaning given to such term by section 
     4(e) of the Indian Self-Determination and Education 
     Assistance Act (25 U.S.C. 450b(e)), and includes any 
     subdivision, subsidiary, or business enterprise chartered and 
     wholly owned by such an Indian tribe.''.
       (e) Transition Rule.--For purposes of the Federal 
     Unemployment Tax Act, service performed in the employ of an 
     Indian tribe (as defined in section 3306(u) of the Internal 
     Revenue Code of 1986 (as added by this Act)) shall not be 
     treated as employment (within the meaning of section 3306 of 
     such Code) if--
       (1) it is service which is performed before the date of 
     enactment of this Act and with respect to which the tax 
     imposed under the Federal Unemployment Tax Act has not been 
     paid; and
       (2) such Indian tribe reimburses a State unemployment fund 
     for unemployment benefits paid for service attributable to 
     such tribe for such period.
                                  ____



                                  Joint Committee on Taxation,

                               Washington, DC, September 27, 1999.
     Hon. John McCain,
     United States Senate,
     Washington, DC.
       Dear Senator McCain: This letter is in response to your 
     request for an estimate of the revenue effects of the 
     ``Indian Tribal Government Unemployment Compensation Act Tax 
     Relief Amendments of 1999.''
       The proposal would treat tribal governments like State 
     governments for the purpose of defining their obligations 
     under the Federal Unemployment Tax Act (``FUTA''). 
     Specifically, tribal government employers would be exempt 
     from the Federal unemployment tax and would be authorized to 
     contribute to State unemployment funds on a reimbursement 
     basis. The proposal is assumed to be effective for services 
     performed on or after January 1, 2000.
       Because the provision affects contributions to the FUTA 
     trust fund, the Congressional Budget Office (``CBO'') 
     estimates its revenue effects. CBO estimates that the 
     provision would have the following effects for Federal fiscal 
     year budget receipts:

Fiscal years:                                                    Million
  2000........................................................      -$20
  2001........................................................       -11
  2002........................................................       -10
  2003........................................................        -9
  2004........................................................        36
  2000-2004...................................................       -14
  2000-2009...................................................       -10
 

       I hope this information is helpful to you. Please let me 
     know if we can be of further assistance in this matter.
           Sincerely,
                                                   Lindy L. Paull.

  Mr. CAMPBELL. Mr. President, today I am pleased to be joining Senator 
McCain in co-sponsoring the Indian Tribal Government Unemployment 
Compensation Act Tax Relief Amendments of 1999. If enacted, this 
legislation will modify the Federal Unemployment Tax Act of 1935 
(``FUTA'') to allow Indian tribal governments to receive the same 
unemployment compensation treatment as state and local governments.
  FUTA imposes a tax on the wages paid by employers to their employees. 
From these tax proceeds, unemployment insurance and benefits for out-
of-work citizens is provided. Under the bill introduced today, Indian 
tribal governments would be treated as state and local governments, and 
would be authorized to contribute to state unemployment funds on a 
reimbursable basis.
  The Congressional Budget Office (CBO) estimated that this bill would 
have a minimal impact, $10 million over 10 years, on the Federal 
budget.
  However, the impact that this amendment would have on Indian economic 
development is immeasurable. The development of strong tribal economies 
is fundamental for tribal self-sufficiency and self-determination.
  Private enterprise is often reluctant to do business and hire Indian 
workers if legal, tax, and regulatory regimes they face are confusing 
or unfriendly. This legislation would eliminate any confusion over the 
applicability of the FUTA tax and would create a level playing field 
for tribal governments and enhance their ability to attract and retain 
the best skilled employees.

[[Page S12640]]

  By providing equitable FUTA treatment to tribal government employers, 
this legislation will assist in the long-term growth and stability of 
tribal economies.
  I urge my colleagues to join Senator McCain and I in supporting this 
important legislation.
                                 ______
                                 
      By Mr. DOMENICI:
  S. 1727. A bill to authorize for the expansion annex of the historic 
Palace of the Governors, a public history museum located, and relating 
to the history of Hispanic and Native American culture, in the 
Southwest and for other purposes; to the Committee on Energy and 
Natural Resources.


               THE PALACE OF THE GOVERNORS EXPANSION ACT

  Mr. DOMENICI. Mr. President, in conjunction with Hispanic Heritage 
Month I am introducing the Palace of the Governors Expansion Act. The 
Palace is a symbol of Hispanic influence in the United States and truly 
shows the coming together of many cultures in the New World--the 
various Native American, Hispanic and Anglo peoples who have lived in 
the region for over four centuries.
  It is appropriate that during Hispanic Heritage Month that a bill 
should be introduced to preserve a priceless collection of Spanish 
Colonial, Iberian Colonial paintings, artifacts, maps, books, guns, 
costumes, photographs. The collection includes such historically unique 
items as the helmets and armor worn by the Don Juan Onate expedition 
conquistadors who established the first capital in the United States, 
San Juan de los Caballeros, in July of 1598. It includes the Vara 
Stick, a type of yardstick used to measure land grants and other real 
property boundaries in Dona Ana County, New Mexico.
  We have all heard of Geronimo. The Collection includes a rifle 
dropped by one of his men during a raid in the Black Range area of 
Western New Mexico.
  We have all heard of Pancho Villa. His activities in the Southwest 
come alive when viewing some of the artifacts included in the Palace of 
the Governors Collection. The Columbus, New Mexico Railway Station 
clock was shot in the pendulum, freezing for all history the moment 
that Pancho Villa's raid and invasion began. It is part of the 
collection, but you wouldn't know it because there is no room to 
display it.
  Brigadier General Stephen Watts Kearny was posted to New Mexico 
during the Mexican War. He commanded the Army of the West as they 
traveled from the Santa Fe trail to occupy the territories of New 
Mexico and California. As Kearny travelled, he carried a field desk 
which he used to write letters, diaries, orders and other historical 
documents. It is part of the collection, but you can't see it because 
there is no display space for it in the Palace of the Governors.
  Many of us have read books by D. H. Lawrence, but none of us have 
seen the note from his mother that is part of the collection.
  There are more than 800,000 other historic photographs, guns, 
costumes, maps, books and handicrafts.
  Today, where are these treasures that Teddy Roosevelt wanted to make 
part of the Smithsonian housed now?
  Where is this collection that has been designated as National 
Treasures by the National Trust for Historic preservation kept?
  In the basement of a 400 year old building.
  It is a national travesty.
  This legislation would right this wrong by authorizing funds for a 
Palace of the Governors Expansion Annex. The entire project will cost 
$32 million. The legislation authorizes a $15 million federal grant if 
the Museum can match the grant on a 50-50 basis.
  The Palace of the Governors has acquired a half block right behind 
the current Palace. Obtaining this valuable real estate is evidence of 
the ingenuity and commitment of those involved in preserving the 
collection. Real estate near Santa Fe's plaza is seldom for sale at any 
price, much less an affordable price.
  Palace of the Governors has been the center of administrative and 
cultural activity over a vast region in the Southwest since its 
construction as New Mexico's second capitol in Santa Fe by Governor 
Pedro de Peralta in 1610. The building is the oldest continuously 
occupied public building in the United States. Since its creation, the 
Museum of New Mexico has worked to protect and promote Hispanic, 
Southwest and Native American arts and crafts.
  I hope my colleagues will join me in supporting this important 
legislation saving this important collection. I ask unanimous consent 
that a copy 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. 1727

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

     SECTION 1.

       (a) Short Title.--This act may be cited as Palace of the 
     Governors Expansion Act.

     SEC. 2. CONSTRUCTION OF PALACE OF THE GOVERNORS EXPANSION.

       (a) Findings.--Congress makes the following findings:
       (1) The United States has an enriched legacy of Hispanic 
     influence in politics, government, economic development and 
     cultural expression.
       (2) The Palace of the Governors has been the center of 
     administrative and cultural activity over a vast region of 
     the Southwest since its construction as New Mexico's second 
     capitol in Santa Fe by Governor Pedro de Peralta in 1610.
       (3) The Palace of the Governors is the oldest continuously 
     occupied public building in the United States and has been 
     occupied for 390 years.
       (4) Since its creation the Museum of New Mexico has worked 
     to protect and promote Southwest, Hispanic and Native 
     American arts and crafts.
       (5) The Palace of the Governors is the history division of 
     the Museum of New Mexico and was once proposed by Teddy 
     Roosevelt to be part of the Smithsonian Museum and known as 
     the ``Smithsonian West.''
       (6) The Museum has a extensive and priceless collection of:
       (A) Spanish Colonial and Iberian Colonial paintings 
     including the Sagesser Hyde paintings on buffalo hide dating 
     back to 1706,
       (B) Pre-Columbian Art,
       (C) Historic artifacts including:
       (i) helmets and armor worn by the Don Juan Onate expedition 
     conquistadors who established the first capital in the United 
     States, San Juan de los Caballeros, in July of 1598.
       (ii) The Vara Stick used to measure land grants and other 
     real property boundaries in Dona Ana County, New Mexico.
       (iii) The Columbus, New Mexico Railway Station clock that 
     was shot, stopping the pendulum, freezing for all history the 
     moment when Pancho Villa's raid began. It marks the beginning 
     of the last invasion of the continental United States.
       (iv) the field desk of Brigadier General Stephen Watts 
     Kearny who was posted to New Mexico during the Mexican War 
     and whose Army of the West traveled the Santa Fe trail to 
     occupy the territories of New Mexico and California.
       (v) more than 800,000 other historic photographs, guns, 
     costumes, maps, books and handicrafts.
       (7) The Palace of the Governors and the Sagesser Hyde 
     paintings were designated Natural Treasures by the National 
     Trust for Historic Preservation.
       (8) The facilities both for exhibiting and storage of this 
     irreplaceable collection are so totally inadequate and 
     dangerously unsuitable that their existence is endangered and 
     their preservation is in jeopardy.
       (b) Definitions.--In this section:
       (1) Annex.--The term ``Annex'' means the Palace of the 
     Governors, Museum of New Mexico addition to be located 
     directly behind the historic Palace of the Governors building 
     at 110 Lincoln Avenue, Santa Fe, New Mexico.
       (2) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.
       (c) Construction of the Annex.--Subject to the availability 
     of appropriations, the Secretary shall award a grant to New 
     Mexico to pay for the Federal share of the costs of the final 
     design, construction, furnishing and equipping of the Palace 
     of the Governors Expansion Annex that will be located 
     directly behind the historic Palace of the Governors at 110 
     Lincoln Avenue, Santa Fe, New Mexico.
       (d) Grant Requirements.--(1) In General.--In order to 
     receive a grant awarded under subsection (c), New Mexico, 
     acting through the Office of Cultural Affairs--
       (A) shall submit to the Secretary, within 30 days of the 
     date of enactment of this section, a copy of the 
     architectural blueprints for the Palace of the Governors 
     Expansion Annex.
       (B) shall exercise due diligence to obtain an appropriation 
     from the New Mexico State Legislature for at least $8 
     million.
       (C) shall exercise due diligence to expeditiously execute a 
     memorandum of understanding recognizing that time is of the 
     essence for the construction for the Annex because 2010 marks 
     the 400th anniversary of the continuous occupation and use of 
     the Palace of the Governors.
       (2) Memorandum of understanding.--The memorandum of 
     understanding described in paragraph (1) shall provide--
       (A) the date of completion of the construction of the 
     Annex.
       (B) that Office of Cultural Affairs shall award the 
     contract for construction of the

[[Page S12641]]

     Annex in accordance with the New Mexico Procurement Code; and
       (C) that the contract for the construction of the Annex--
       (i) shall be awarded pursuant to a competitive bidding 
     process.
       (3) Federal share.--The Federal share of the costs 
     described in subsection (c) shall be 50 percent.
       (4) Non-federal share.--The non-Federal share of the costs 
     described in section (c) shall be in cash or in kind fairly 
     evaluated, including land, art and artifact collections, 
     plant, equipment, or services. The non-Federal share shall 
     include any contribution received by New Mexico for the 
     design, land acquisition, library acquisition, library 
     renovation, Palace of the Governors conservation, and 
     construction, furnishing, equipping of the Annex, or 
     donations of art collections to the Museum of New Mexico 
     prior to the date of enactment of this section. The non-
     Federal share of the costs described in subsection (c) shall 
     include the following:
       (A) cost of the land at 110 Lincoln Avenue, Sante Fe, New 
     Mexico,
       (B) Library acquisition expenditures,
       (C) Library renovation expenditures,
       (D) Palace conservation expenditures,
       (E) New Mexico Foundation and other endowments funds,
       (F) Donations of art collections or other artifacts.
       (e) Use of Funds for Construction.--Furnishing and 
     Equipment.--Subject to funds being appropriated, the funds 
     received under a grant awarded under subsection (c) shall be 
     used only for the final design, construction, management, 
     inspection, furnishing and equipment of the Annex.
       (f) Authorization of Appropriations.--Subject to funds 
     being appropriated, there is authorized to be appropriated to 
     the Secretary to carry out this section a total of 
     $15,000,000 for fiscal year 2001 and succeeding fiscal years. 
     Funds appropriated pursuant to the authority of the preceding 
     sentence shall remain available until expended but are 
     conditioned upon the New Mexico State legislature 
     appropriating at least $8 million between date of enactment 
     and 2010 and other non-federal sources providing enough 
     funds, when combined with the New Mexico State legislature 
     appropriations, to make this federal grant based on a fifty-
     fifty match.
                                 ______
                                 
      By Mr. VOINOVICH (for himself and Mr. DeWine):
  S. 1728. A bill to amend title XIX of the Social Security Act to 
remove the limit on amount of medicaid disproportionate share hospital 
payment for hospitals in Ohio; to the Committee on Finance.


            medicaid hospital payment for hospitals in ohio

  Mr. VOINOVICH. Mr. President, I rise today with my good friend and 
colleague from Ohio, Senator Mike DeWine, to introduce legislation that 
will remove the limit on the amount of federal Medicaid 
disproportionate share (DSH) payments for hospitals in Ohio. In 1993, 
Congress passed the Omnibus Budget Reconciliation Act (OBRA) in an 
effort to curb the rate of growth of federal Medicaid DSH spending to 
hospitals. Section 1923(g) of that bill placed maximum payment caps on 
hospitals. Subsequently, Congress passed the Balanced Budget Act (BBA) 
in 1997, in which Section 1923(f) placed funding caps on states. With 
the implementation of the aggregate state DSH spending limits, 
hospital-specific caps are no longer needed to assure the financial 
integrity of the program.
  I have often spoken on the floor of the Senate in support of 
federalism. When the federal government makes overly prescriptive laws 
and regulations, it can erode the ability of state governments to 
protect consumers, promote economic development, and generate the 
revenue streams that fund education, public safety, infrastructure and 
other vital services. This is especially true in the case of Medicaid. 
Hospitals that provide care to indigent patients provide an invaluable 
service to their communities, often at great expense. DSH payments are 
intended to help reimburse those expenses. Congress should allow 
individual states to administer their DSH program in a way that 
provides the most funding for the most hospitals as possible. Without 
such leeway, we are imposing what is effectively an unfunded mandate on 
the private sector--telling these hospitals to treat Medicaid and 
uninsured patients without helping them pay for it. This is not good 
policy.
  This legislation is federalism at its best. Section 1923(g) fails to 
recognize that each state implements its DSH program differently, and 
thus fails to recognize that the hospital-specific caps adversely 
affect Ohio hospitals. This legislation is budget neutral, yet it gives 
my state the flexibility to implement the Medicaid DSH program in the 
fairest and most equitable manner.
  Under Ohio's DSH program, the Hospital Care Assurance Program (HCAP), 
all necessary hospital services are provided free of charge to persons 
below the federal poverty line. Generally, under HCAP, hospitals are 
taxed and those funds are used as the state's share to draw matching 
federal Medicaid DSH funds. The total pool is then distributed back to 
hospitals based on the level of each hospital's indigent care. Ideally, 
the DSH dollars should follow the indigent patients. However, partly 
because of the hospital-specific caps that were enacted in 1993, there 
are many HCAP hospitals that are reimbursed far less than the amount 
that would actually cover their indigent care expenses. The bill will 
give Ohio the ability to implement a new formula to correct this 
inequity within Ohio's overall spending limit.
  Mr. President, Ohio deserves the authority to make health care 
decisions that are in the best interest of her citizens and their local 
hospitals. Ohio is not seeking additional federal dollars, merely the 
flexibility to allocate reimbursement funds under the DSH program where 
the funds are needed most. I urge passage of this legislation that will 
give relief to our hospitals and allow them to continue to provide 
quality care to each and every citizen in my state.
  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. 1728

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

     SECTION 1. REMOVAL OF LIMIT ON AMOUNT OF MEDICAID 
                   DISPROPORTIONATE SHARE HOSPITAL PAYMENT FOR 
                   HOSPITALS IN OHIO.

       (a) In General.--Section 1923(g)(1) of the Social Security 
     Act (42 U.S.C. 1396r-4(g)(1)) is amended--
  (1) in subparagraph (A), by striking ``A'' and inserting ``Except as 
provided in subparagraph (D), a''; and
  (2) by adding at the end the following new subparagraph:
  ``(D) Exception.--The limitations in subparagraphs (A) and (C) shall 
not apply to payments made to hospitals (other than institutions for 
mental diseases or other mental health facilities) located in Ohio.''.
  (b) Effective Date.--The amendments made by subsection (a) shall 
apply to payments and payment adjustments made to hospitals on or after 
July 1, 1999.
                                 ______
                                 
      By Mr. CAMPBELL (for himself and Mr. Allard):
  S. 1729. A bill to amend the National Trails System Act to clarify 
Federal authority relating to land acquisition from willing sellers for 
the majority of the trails, and for other purposes; to the Committee on 
Energy and Natural Resources.


             The National Trails-Willing Seller legislation

  Mr. CAMPBELL. Mr. President, today I am introducing legislation to 
amend the National Trails System Act to clarify federal authority 
relating to land acquisition from willing sellers. This bill is the 
companion to Congressman Scott McInnis' legislation. Congressman 
McInnis has been an advocate for this legislation for many years.
  There are 20 trails in the national scenic and historic trail system. 
These trails are among some of the most beautiful areas in the United 
States and are deserving of preservation. This bill will enable the 
federal government to help conserve the special resources of all of 
these congressionally designated trails, enabling everyone to enjoy the 
benefit of these trails today and for future generations of Americans 
tomorrow.
  This legislation does not appropriate any money, it only provides the 
federal government the authority to acquire lands from willing sellers. 
Once willing sellers are identified, Congress then appropriates the 
money so that the land can be purchased. It also will help to address 
the increasing development pressures that threaten the long-range 
continuity of the National Trails System.
  Currently, the federal government only has authority to buy land 
along 11 of the 20 national scenic and historic trails. This bill gives 
authority to buy

[[Page S12642]]

land from willing sellers along the other nine trails to ensure that 
the entire trail can be preserved.
  There are many unique and special historic sites along the nine 
affected scenic and historic trails. These sites have been voluntarily 
protected for several generations by responsible individual families. 
These families should have the right to sell these irreplaceable places 
of our nation's heritage to the federal government to continue their 
protection when and if they choose to do so.
  This legislation is a vehicle to help preserve part of our natural 
heritage. I urge my colleagues to support passage of this bill. I ask 
unanimous consent that the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1729

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Trails Willing Seller Act of 
     1999''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) despite commendable efforts by the State governments 
     (including political subdivisions) and private volunteer 
     trail groups to develop, operate, and maintain the national 
     scenic and national historic trails, the rate of progress 
     toward developing and completing the trails is slower than 
     anticipated;
       (2) Congress authorized several national scenic and 
     historic trails between 1978 and 1986, with restrictions 
     excluding Federal authority for land acquisition;
       (3) to develop and complete the authorized trails as 
     intended by Congress, acquisition authority to secure 
     necessary rights-of-way and historic sites and segments 
     specifically excluding condemnation authority should be 
     extended to the head of each Federal agency administering a 
     trail;
       (4) to address the problems involving multijurisdictional 
     authority over the national trails system, the head of each 
     Federal agency with jurisdiction over an individual trail--
       (A) should cooperate with appropriate officials of States 
     (including political subdivisions) and private persons with 
     an interest in the trails to complete the development of the 
     trails; and
       (B) should be granted sufficient authority to purchase land 
     from willing sellers that is critical to the completion of 
     the trails; and
       (5) land or interests in land for the authorized components 
     of the National Trails System affected by this Act should 
     only be acquired by the Federal Government only from willing 
     sellers.

     SEC. 3. ACQUISITION OF TRAILS FROM WILLING SELLERS.

       (a) Acquisition Authority.--Section 5(a) of the National 
     Trails System Act (16 U.S.C. 1244(a)) is amended--
       (1) in the fourth sentence of paragraph (11)--
       (A) by striking ``No lands or interest therein outside the 
     exterior'' and inserting ``No land or interest in land 
     outside of the exterior''; and
       (B) by inserting before the period the following: ``without 
     the consent of the owner of the land or interest''; and
       (2) in the fourth sentence of paragraph (14)--
       (A) by striking ``No lands or interests therein outside the 
     exterior'' and inserting ``No land or interest in land 
     outside of the exterior''; and
       (B) by inserting before the period the following: ``without 
     the consent of the owner of the land or interest''.
       (b) Expenditure of Funds.--Section 10(c) of the National 
     Trails System Act (16 U.S.C. 1249(c)) is amended by striking 
     subsection (c) and all that follows through the end of 
     paragraph (1) and inserting the following:
       ``(c) Expenditure of Funds.--
       ``(1) Trails.--
       ``(A) In general.--Notwithstanding any other provision of 
     law (including any other provision of this Act), except as 
     provided in subparagraph (B), no funds may be expended by the 
     Federal Government for the acquisition of any land or 
     interest in land outside of the exterior boundaries of 
     Federal land that, on the date of enactment of this 
     subparagraph, comprises--
       ``(i) the Continental Divide National Scenic Trail;
       ``(ii) the North Country National Scenic Trail;
       ``(iii) the Ice Age National Scenic Trail;
       ``(iv) the Oregon National Historic Trail;
       ``(v) the Mormon Pioneer National Historic Trail;
       ``(vi) the Lewis and Clark National Historic Trail; and
       ``(vii) the Iditarod National Historic Trail.
       ``(B) Consent of landowner.--The Federal Government may 
     acquire land or an interest in land outside the exterior 
     boundary of Federal land described in subparagraph (A) with 
     the consent of the owner of the land or interest.
       ``(2) Failure to make payment.--If the Federal Government 
     fails to make payment in accordance with a contract for sale 
     of land or an interest in land under this subsection, the 
     seller may use all remedies available under all applicable 
     law, including electing to void the sale.''.
                                 ______
                                 
      By Mr. BREAUX (for himself, Mr. Jeffords, Mr. Grassley, Mr. 
        Kerry, and Mr. Hatch):
  S. 1732. A bill to amend the Internal Revenue Code of 1986 to 
prohibit certain allocations of S corporation stock held by an employee 
stock ownership plan; to the Committee on Finance.


     prohibited allocations of s corporations stock held by an esop

 Mr. BREAUX. Mr. President, I ask that the text of the bill be 
printed in the Record.
  The bill follows:

                                S. 1732

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

     SECTION 1. PROHIBITED ALLOCATIONS OF S CORPORATIONS STOCK 
                   HELD BY AN ESOP.

       (a) In General.--Section 409 of the Internal Revenue Code 
     of 1986 (relating to qualifications for tax credit employee 
     stock ownership plans) is amended by redesignating subsection 
     (p) as subsection (q) and by inserting after subsection (o) 
     the following new subsection:
       ``(p) Prohibited Allocations of Securities in an S 
     Corporation.--
       ``(1) In general.--An employee stock ownership plan holding 
     employer securities consisting of stock in an S corporation 
     shall provide that no portion of the assets of the plan 
     attributable to (or allocable in lieu of) such employer 
     securities may, during a nonallocation year, accrue (or be 
     allocated directly or indirectly under any plan of the 
     employer meeting the requirements of section 401(a)) for the 
     benefit of any disqualified person.
       ``(2) Failure to meet requirements.--
       ``(A) In general.--If a plan fails to meet the requirements 
     of paragraph (1), the plan shall be treated as having 
     distributed to any disqualified person the amount allocated 
     to the account of such person in violation of paragraph (1) 
     at the time of such allocation.
       ``(B) Cross reference.--

  ``For excise tax relating to violations of paragraph (1) and 
ownership of synthetic equity, see section 4979A.

       ``(3) Nonallocation year.--For purposes of this 
     subsection--
       ``(A) In general.--The term `nonallocation year' means any 
     plan year of an employee stock ownership plan if, at any time 
     during such plan year--
       ``(i) such plan holds employer securities consisting of 
     stock in an S corporation, and
       ``(ii) disqualified persons own at least 50 percent of the 
     number of shares of stock in the S corporation.
       ``(B) Attribution rules.--For purposes of subparagraph 
     (A)--
       ``(i) In general.--The rules of section 318(a) shall apply 
     for purposes of determining ownership, except that--

       ``(I) in applying paragraph (1) thereof, the members of an 
     individual's family shall include members of the family 
     described in paragraph (4)(D), and
       ``(II) paragraph (4) thereof shall not apply.

       ``(ii) Deemed-owned shares.--Notwithstanding the employee 
     trust exception in section 318(a)(2)(B)(i), for purposes of 
     determining whether an individual is a disqualified person, 
     such individual shall be treated as owning deemed-owned 
     shares.
       ``(4) Disqualified person.--For purposes of this 
     subsection--
       ``(A) In general.--The term `disqualified person' means any 
     person if--
       ``(i) the aggregate number of deemed-owned shares of such 
     person and the members of such person's family is at least 20 
     percent of the number of deemed-owned shares of stock in the 
     S corporation, or
       ``(ii) in the case of a person not described in clause (i), 
     the number of deemed-owned shares of such person is at least 
     10 percent of the number of deemed-owned shares of stock in 
     such corporation.
       ``(B) Treatment of family members.--In the case of a 
     disqualified person described in subparagraph (A)(i), any 
     member of such person's family with deemed-owned shares shall 
     be treated as a disqualified person if not otherwise treated 
     as a disqualified person under subparagraph (A).
       ``(C) Deemed-owned shares.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `deemed-owned shares' means, 
     with respect to any person--

       ``(I) the stock in the S corporation constituting employer 
     securities of an employee stock ownership plan which is 
     allocated to such person under the plan, and
       ``(II) such person's share of the stock in such corporation 
     which is held by such plan but which is not allocated under 
     the plan to participants.

       ``(ii) Person's share of unallocated stock.--For purposes 
     of clause (i)(II), a person's share of unallocated S 
     corporation stock held by such plan is the amount of the 
     unallocated stock which would be allocated to such person if 
     the unallocated stock were allocated to all participants in 
     the same proportions as the most recent stock allocation 
     under the plan.
       ``(D) Member of family.--For purposes of this paragraph, 
     the term `member of the family' means, with respect to any 
     individual--
       ``(i) the spouse of the individual,

[[Page S12643]]

       ``(ii) an ancestor or lineal descendant of the individual 
     or the individual's spouse,
       ``(iii) a brother or sister of the individual or the 
     individual's spouse and any lineal descendant of the brother 
     or sister, and
       ``(iv) the spouse of any individual described in clause 
     (ii) or (iii).

     A spouse of an individual who is legally separated from such 
     individual under a decree of divorce or separate maintenance 
     shall not be treated as such individual's spouse for purposes 
     of this subparagraph.
       ``(5) Treatment of synthetic equity.--For purposes of 
     paragraphs (3) and (4), in the case of a person who owns 
     synthetic equity in the S corporation, except to the extent 
     provided in regulations, the shares of stock in such 
     corporation on which such synthetic equity is based shall be 
     treated as outstanding stock in such corporation and deemed-
     owned shares of such person if such treatment of synthetic 
     equity of 1 or more such persons results in--
       ``(A) the treatment of any person as a disqualified person, 
     or
       ``(B) the treatment of any year as a nonallocation year.

     For purposes of this paragraph, synthetic equity shall be 
     treated as owned by a person in the same manner as stock is 
     treated as owned by a person under the rules of paragraphs 
     (2) and (3) of section 318(a).
       ``(6) Definitions.--For purposes of this subsection--
       ``(A) Employee stock ownership plan.--The term `employee 
     stock ownership plan' has the meaning given such term by 
     section 4975(e)(7).
       ``(B) Employer securities.--The term `employer security' 
     has the meaning given such term by section 409(l).
       ``(C) Synthetic equity.--The term `synthetic equity' means 
     any stock option, warrant, restricted stock, deferred 
     issuance stock right, or similar interest or right that gives 
     the holder the right to acquire or receive stock of the S 
     corporation in the future. Except to the extent provided in 
     regulations, synthetic equity also includes a stock 
     appreciation right, phantom stock unit, or similar right to a 
     future cash payment based on the value of such stock or 
     appreciation in such value.
       ``(7) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this subsection.''
       (b) Coordination With Section 4975(e)(7).--The last 
     sentence of section 4975(e)(7) of such Code (defining 
     employee stock ownership plan) is amended by inserting ``, 
     section 409(p),'' after ``409(n)''.
       (c) Excise Tax.--
       (1) Application of tax.--Subsection (a) of section 4979A of 
     such Code (relating to tax on certain prohibited allocations 
     of employer securities) is amended--
       (A) by striking ``or'' at the end of paragraph (1),
       (B) by striking the period at the end of paragraph (2) and 
     inserting a comma, and
       (C) by striking all that follows paragraph (2) and 
     inserting the following:
       ``(3) there is any allocation of employer securities which 
     violates the provisions of section 409(p), or
       ``(4) any synthetic equity is owned by a disqualified 
     person in any nonallocation year,

     there is hereby imposed a tax on such allocation or ownership 
     equal to 50 percent of the amount involved.''
       (2) Liability.--Section 4979A(c) of such Code (defining 
     liability for tax) is amended to read as follows:
       ``(c) Liability for Tax.--The tax imposed by this section 
     shall be paid--
       ``(1) in the case of an allocation referred to in paragraph 
     (1) or (2) of subsection (a), by--
       ``(A) the employer sponsoring such plan, or
       ``(B) the eligible worker-owned cooperative,

     which made the written statement described in section 
     664(g)(1)(E) or in section 1042(b)(3)(B) (as the case may 
     be), and
       ``(2) in the case of an allocation or ownership referred to 
     in paragraph (3) or (4) of subsection (a), by the S 
     corporation the stock in which was so allocated or owned.''
       (3) Definitions.--Section 4979A(e) of such Code (relating 
     to definitions) is amended to read as follows:
       ``(e) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Definitions.--Except as provided in paragraph (2), 
     terms used in this section have the same respective meanings 
     as when used in sections 409 and 4978.
       ``(2) Special rules relating to tax imposed by reason of 
     paragraph (3) or (4) of subsection (a).--
       ``(A) Prohibited allocations.--The amount involved with 
     respect to any tax imposed by reason of subsection (a)(3) is 
     the amount allocated to the account of any person in 
     violation of section 408(p)(1).
       ``(B) Synthetic equity.--The amount involved with respect 
     to any tax imposed by reason of subsection (a)(4) is the 
     value of the shares on which the synthetic equity is based.
       ``(C) Special rule for prohibited allocation during first 
     nonallocation year.--For purposes of subparagraph (A), the 
     amount involved for the first nonallocation year of any 
     employee stock ownership plan shall be determined by taking 
     into account the total value of all the deemed-owned shares 
     of all disqualified persons with respect to such plan.
       ``(D) Statute of limitations.--The statutory period for the 
     assessment of any tax imposed by this section by reason of 
     paragraph (3) or (4) of subsection (a) shall not expire 
     before the date which is 3 years from the later of--
       ``(i) the allocation or ownership referred to in such 
     paragraph giving rise to such tax, or
       ``(ii) the date on which the Secretary is notified of such 
     allocation or ownership.''
       (d) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to plan years beginning after December 31, 2000.
       (2) Exception for certain plans.--In the case of any--
       (A) employee stock ownership plan established after July 
     14, 1999, or
       (B) employee stock ownership plan established on or before 
     such date if employer securities held by the plan consist of 
     stock in a corporation with respect to which an election 
     under section 1362(a) of the Internal Revenue Code of 1986 is 
     not in effect on such date,

     the amendments made by this section shall apply to plan years 
     ending after July 14, 1999.
                                 ______
                                 
      By Mr. FITZGERALD (for himself, Mr. Leahy, Mr. Lugar, Mr. Harkin, 
        and Mr. Craig):
  S. 1733. A bill to amend the Food Stamp Act of 1977 to provide for a 
national standard of interoperability and portability applicable to 
electronic food stamp benefit transactions; to the Committee on 
Agriculture, Nutrition, and Forestry.


THE ELECTRONIC BENEFIT TRANSFER INTEROPERABILITY AND PORTABILITY ACT OF 
                                  1999

  Mr. FITZGERALD. Mr. President, I rise today with my Colleagues to 
introduce the Electronic Benefit Transfer Interoperability and 
Portability Act of 1999. This legislation addresses the problem of food 
stamp beneficiaries being unable to redeem their benefits in authorized 
stores that may be located outside their state of residence.
  As you may know, Congress passed legislation in 1996 that required 
the federal government to deliver food stamp benefits electronically, 
rather than using the paper coupons. Most states have started the 
process of issuing plastic cards, very similar to ATM cards to access 
these benefits. The federal government termed this new process, 
electronic benefits transfer (EBT).
  You may have noticed a separate button on the payment terminal in 
your local supermarket with the designation ``EBT'' or a separate 
stand-alone payment terminal to handle these new transactions.
  More than half of the country has already switched from the paper 
coupons to this new EBT card. However, one significant issue is causing 
problems in the program for retailers, states and recipients. That 
issue is the inability for recipients to use their state-issued cards 
across state lines. This is especially true in communities that are 
near a state border.
  Under the old paper system, recipients could use the coupons in any 
state in the country. Under the new electronic system, that is 
currently not the case. Customers go into a food store expecting to use 
their federal benefits to purchase food and when they cannot use their 
EBT cards, they become frustrated and dissatisfied with the food stamp 
program.
  For example, under the old system, a food stamp recipient living in 
Palmyra, MO could use their food stamp coupons in their favorite 
grocery store in Quincy, IL just over the Illinois border. Similarly, a 
recipient living in Illinois could visit family in Tennessee and still 
purchase food for their children. Food stamp beneficiaries are not 
unlike the average shopper. Cross border shopping occurs for a variety 
of reasons. One reason is convenience; another equally important one is 
the cost of groceries. The supermarket industry is very competitive. 
Customers paying with every type of tender except EBT have the ability 
to shop around for the best prices. Shouldn't recipients of our 
nation's federal food assistance benefits be able to stretch their 
dollars without regard to state borders?
  Another reason is convenience. While one of my constituents may live 
in the metro east area, they might work in St. Louis. Under the current 
situation, if the only grocery store between their work and their home 
is in Missouri, the recipient cannot purchase food without traveling 
out of their way.
  The legislation I am introducing today would once again, provide for 
the portability of food assistance benefits and allow food stamp 
recipients the flexibility of shopping at locations that they choose.

[[Page S12644]]

  Interoperability works well today with ATM/Debit cards, the type of 
cards that EBT was modeled after. Consumers and merchants are confident 
that when a MAC card issued by a bank in Pittsburgh is presented, 
authorization and settlement of that transaction will work the same as 
when a Star card, issued by Bank of America in California is presented. 
This occurs regardless of where the merchant is located.
  Unfortunately, this is currently not the case with EBT cards. If 
every state operated their EBT program under a standard set of 
operating rules as this legislation requires, companies operating in 
multiple states could be more efficient, resolve any discrepancies in 
customer accounts more quickly and ultimately hold down the price of 
groceries for all consumers.
  This legislation I am introducing is very straightforward. 
Specifically, the legislation:
  Requires interoperability by October 1, 2002, with a few exceptions 
needing a waiver;
  Requires USDA to ``adopt'' the national standard used by the majority 
of the States;
  Requires USDA to pay for all interoperability costs (currently 
estimated by Benton International to be no more than a maximum of 
$500,000 annually when all states are on EBT systems or $160,000 for 
the current year), significantly less than the $20 million USDA pays 
annually to the Federal Reserve to redeem coupons;
  Requires contracts entered into after the date when the national 
standard is adopted to use the standard, and for USDA to pay the 
interoperability costs;
  Includes transitional funding for states currently using a national 
standard. Upon enactment, FNS will pay 100 percent of the costs of 
interoperability fees for current states using a national standard 
(While the interoperability pilot sponsored by NACHA is due to expire 
in September, this would allow those states and beneficiaries in states 
participating in the pilot to continue to have interoperable 
transactions beyond the pilot period without interruption.);
  Requires current contracts that are not using the national standard 
to convert at the point of a new contract;
  Includes a waiver process for current states with significant 
technological challenges to provide time to convert to the national 
standard (This is intended to cover current smart card states).
  This legislation is more about good government than it is about food 
stamps. Since 1996, the transition from paper coupons to electronic 
benefit transfer has saved the federal government a significant amount 
of money. For example, while the food stamp caseload decreased 24 
percent from fiscal year 1995 to 1998, food stamp production and 
redemption costs dropped by an impressive 39 percent. While it is 
estimated that the bill's implementation will cost the federal 
government no more than $500,000 annually, it will save at least $20 
million per year when paper coupons are a thing of the past.
  This legislation is sound public policy that enjoys bipartisan 
support. I thank my Colleagues, Senators Leahy, Lugar, Harkin and 
Craig, for joining me as co-sponsors of this bill. I would stress to my 
fellow Senators that this legislation is vitally important to every 
food stamp recipient, every state food stamp program administrator and 
every grocery store nationwide. I ask each of you to join me as co-
sponsors of this important legislation.
  I ask unanimous consent that the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1733

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Electronic Benefit Transfer 
     Interoperabilty and Portability Act of 1999''.

     SEC. 2. PURPOSES.

       The purposes of this Act are--
       (1) to protect the integrity of the food stamp program;
       (2) to ensure cost-effective portability of food stamp 
     benefits across State borders without imposing additional 
     administrative expenses for special equipment to address 
     problems relating to the portability;
       (3) to enhance the flow of interstate commerce involving 
     electronic transactions involving food stamp benefits under a 
     uniform national standard of interoperability and 
     portability; and
       (4) to eliminate the inefficiencies resulting from a 
     patchwork of State-administered systems and regulations 
     established to carry out the food stamp program

     SEC. 3. INTEROPERABILTY AND PORTABILITY OF FOOD STAMP 
                   TRANSACTIONS.

       Section 7 of the Food Stamp Act of 1977 (7 U.S.C. 2016) is 
     amended by adding at the end the following:
       ``(k) Interoperabilty and Portability of Electronic Benefit 
     Transfer Transactions.--
       ``(1) Definitions.--In this subsection:
       ``(A) Electronic benefit transfer card.--The term 
     `electronic benefit transfer card' means a card that provides 
     benefits under this Act through an electronic benefit 
     transfer service (as defined in subsection (i)(11)(A)).
       ``(B) Electronic benefit transfer contract.--The term 
     `electronic benefit transfer contract' means a contract that 
     provides for the issuance, use, or redemption of coupons in 
     the form of electronic benefit transfer cards.
       ``(C) Interoperabilty.--The term `interoperability' means a 
     system that enables a coupon issued in the form of an 
     electronic benefit transfer card to be redeemed in any State.
       ``(D) Interstate transaction.--The term `interstate 
     transaction' means a transaction that is initiated in 1 State 
     by the use of an electronic benefit transfer card that is 
     issued in another State.
       ``(E) Portability.--The term `portability' means a system 
     that enables a coupon issued in the form of an electronic 
     benefit transfer card to be used in any State by a household 
     to purchase food at a retail food store or wholesale food 
     concern approved under this Act.
       ``(F) Settling.--The term `settling' means movement, and 
     reporting such movement, of funds from an electronic benefit 
     transfer card issuer that is located in 1 State to a retail 
     food store, or wholesale food concern, that is located in 
     another State, to accomplish an interstate transaction.
       ``(G) Smart card.--The term `smart card' means an 
     intelligent benefit card described in section 17(f).
       ``(H) Switching.--The term `switching' means the routing of 
     an interstate transaction that consists of transmitting the 
     details of a transaction electronically recorded through the 
     use of an electronic benefit transfer card in 1 State to the 
     issuer of the card that is in another State.
       ``(2) Requirement.--Not later than October 1, 2002, the 
     Secretary shall ensure that systems that provide for the 
     electronic issuance, use, and redemption of coupons in the 
     form of electronic benefit transfer cards are interoperable, 
     and food stamp benefits are portable, among all States.
       ``(3) Cost.--The cost of achieving the interoperability and 
     portability required under paragraph (2) shall not be imposed 
     on any food stamp retail store, or any wholesale food 
     concern, approved to participate in the food stamp program.
       ``(4) Standards.--Not later than 120 days after the date of 
     enactment of this subsection, the Secretary shall promulgate 
     regulations that--
       ``(A) adopt a uniform national standard of interoperability 
     and portability required under paragraph (2) that is based on 
     the standard of interoperability and portability used by a 
     majority of State agencies.
       ``(B) require that any electronic benefit transfer contract 
     that is entered into 30 days or more after the regulations 
     are promulgated, by or on behalf of a State agency, provide 
     for the interoperability and portability required under 
     paragraph (2) in accordance with the national standard.
       ``(5) Exemptions--
       ``(A) Waiver.--At the request of a State agency, the 
     Secretary may provide 1 waiver to temporarily exempt, for a 
     period ending on or before the date specified under clause 
     (iii), the State agency from complying with the requirements 
     of paragraph (2), if the State agency--
       ``(i) establishes to the satisfaction of the Secretary that 
     the State agency faces unusual technological barriers to 
     achieving by October 1, 2002, the interoperability and 
     portability required under paragraph (2);
       ``(ii) demonstrates that the best interest of food stamp 
     benefit households and of the food stamp program would be 
     served by granting the waiver with respect to the electronic 
     benefit transfer system used by the State agency to 
     administer the food stamp program; and
       ``(iii) specifies a date by which the State agency will 
     achieve the interoperability and portability required under 
     paragraph (2).
       ``(B) Smart card systems.--The Secretary shall allow a 
     State agency that is using smart cards for the delivery of 
     food stamp program benefits to comply with the requirements 
     of paragraph (2) at such time after October 1, 2002, as the 
     Secretary determines that a practicable technological method 
     is available for interoperability with electronic benefit 
     transfer cards.
       ``(6) Funding.--
       ``(A) In general.--In accordance with regulations 
     promulgated by the Secretary, the Secretary shall pay 100 
     percent of the costs incurred by a State agency under this 
     Act for switching and settling interstate transactions--
       ``(i) incurred after the date of enactment of this 
     subsection and before October 1, 2002, if

[[Page S12645]]

     the State agency uses the standard of interoperability and 
     portability adopted by a majority of State agencies; and
       ``(ii) incurred after September 30, 2002, if the State 
     agency uses the uniform national standard of interoperability 
     and portability adopted under paragraph (4)(A).
       ``(B) Limitation.--The total amount paid to State agencies 
     for each fiscal year under subparagraph (A) shall not exceed 
     $500,000.''.

     SEC. 4. STUDY OF ALTERNATIVES FOR HANDLING ELECTRONIC BENEFIT 
                   TRANSACTIONS INVOLVING FOOD STAMP BENEFITS.

       Not later than 1 year after the date of enactment of this 
     Act, the Secretary of Agriculture shall study and report to 
     the Committee on Agriculture of the House of Representatives 
     and the Committee on Agriculture, Nutrition, and Forestry of 
     the Senate on alternatives for handling interstate electronic 
     benefit transactions involving food stamp benefits provided 
     under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), 
     including the feasibility and desirability of a single hub 
     for switching (as defined in section 7(k)(1) of that Act (as 
     added by section 3)).

  Mr. LEAHY. Mr. President, I am proud to join Senator Fitzgerald in 
cosponsoring the Electronic Benefit Interoperability and Portability 
Act of 1999.
  The Food Stamp Program has been critical to diminishing hunger and 
improving nutrition and health throughout our country. As the country's 
largest source of food aid, approximately 18 million people--half of 
which are children--receive food stamp benefits every month. In my home 
State of Vermont, more than 20,000 households depend on food stamps to 
help feed their families.
  In an effort to strengthen and streamline the Food Stamp Program, 
three years ago Congress mandated that every State switch to an 
Electronic Benefits Transfer system for distributing food stamp 
benefits. Operating like ATM or credit card machines at cash registers, 
EBT streamlines food stamps by eliminating the cumbersome paper system.
  The implementation of the EBT system was left up to the States, and 
nearly 40 States currently have switched to this new system. EBT has 
already demonstrated itself to be a more efficient system for 
distributing food stamp benefits, and it promises to help reduce food 
stamp fraud.
  However, three years into the implementation of EBT, a problem has 
arisen--some State EBT systems do not match up with neighboring State 
EBT systems, leaving residents of border communities unable to utilize 
their food stamp benefits across State lines. This Federal benefit 
program has always been recognized and redeemable in every State, 
irrespective of where the actual food stamps were issued.
  For some of our more rural States, the inability to access food stamp 
benefits across State lines could mean the difference between traveling 
a few miles to a grocery store in the next State to traveling an hour 
or more to the closest grocery store in one's home State. Clearly, this 
creates quite a burden.
  The bill which we are introducing today would correct this oversight 
by requiring the U.S. Department of Agriculture to adopt a national EBT 
standard, and requiring that all States be EBT interoperable by 2002.
  Vermont Commissioner of Social Welfare Jane Kitchel has voiced her 
support for this bill, as has the New England Convenience Store 
Association.
  Mr. President, I would like to thank Senator Fitzgerald for all of 
his work on this issue. I believe that this bill will help make the 
Food Stamp Program more streamlined and efficient, and I am proud to 
cosponsor this legislation.
                                 ______
                                 
      By Mr. DURBIN (for himself and Mr. Fitzgerald):
  S. 1734. A bill to authorize the Secretary of the Interior to 
contribute funds for the establishment of an interpretive center on the 
life and contributions of President Abraham Lincoln; to the Committee 
on Energy and Natural Resources.


                  abraham lincoln presidential library

 Mr. DURBIN. Mr. President, today I am pleased to be joined by 
my Illinois colleague, Senator Fitzgerald, in introducing legislation 
that would authorize an important Department of the Interior project--
the Abraham Lincoln Presidential Library in Springfield, Illinois.
  I should begin by confessing a Lincoln bias. Obviously, I'm an 
Illinoisan, but I hail from the same city, Springfield, that Abraham 
Lincoln once called home. I practiced law in an office not far from the 
historic Lincoln-Herndon Law Office. I also represented a district in 
the U.S. House of Representatives that included portions of the 
district Congressman Abraham Lincoln represented in the 30th Congress--
1847 to 1849. My home state, the ``Land of Lincoln,'' holds the former 
President in very high regard.
  Abraham Lincoln is considered to be one of our nation's greatest 
Presidents. Yet, his works and the story of his life and public service 
are spread over numerous historic sites, monuments, museums, and 
private collections of Lincoln memorabilia. The State of Illinois has a 
more than 42,000-item Lincoln Collection which contains national 
treasures such as the Gettysburg Address, the Emancipation 
Proclamation, and Lincoln's Second Inaugural Address. The Collection is 
part of the State's 12-million-item historical library, which is the 
nation's only public institution engaged in ongoing research on the 
life and legacy of Abraham Lincoln.
  Currently, 13 former Presidents, including Confederate leader 
Jefferson Davis, have presidential libraries. Our 16th President 
certainly deserves such a facility so children and people from around 
the world can learn from the excellent examples Lincoln set during his 
life and his Presidency and historians can continue to discover more 
about the man who preserved the Union.
  The Abraham Lincoln Presidential Library would serve as a state-of-
the-art, interactive library, museum, and interpretative center where 
visitors could learn about Abraham Lincoln and the events and places 
that shaped his life and the history of our country. It would also 
serve as an academic archive and research facility for scholars to 
study Illinois' collection of Lincoln documents and personal effects.
  The legislation we are introducing today would require that for every 
dollar of federal funds directed toward this project, two dollars must 
come for other non-federal sources. The State of Illinois and the City 
of Springfield have already pledged significant financial support for 
the Library. Also, it is important to note that the U.S. Department of 
the Interior is not being asked to operate or maintain the facility. 
The State of Illinois, through the Illinois Historic Preservation 
Agency, would run the day-to-day operations and handle upkeep of the 
Library.
  Mr. President, the Illinois Congressional Delegation, Illinois 
Governor George Ryan, and the City of Springfield strongly support this 
important project and this authorizing legislation. I urge my 
colleagues to join me and Senator Fitzgerald in constructing a lasting 
legacy for Abraham Lincoln.

                          ____________________