[Congressional Record Volume 149, Number 68 (Thursday, May 8, 2003)]
[Senate]
[Pages S5953-S5964]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN:
  S. 1030. A bill to expand the number of individuals and families with 
health

[[Page S5954]]

insurance coverage, and for other purposes; to the Committee on 
Finance.
  Mr. BINGAMAN. Mr. President, yesterday, I introduced the first part 
of a series of proposals to protect and strengthen our nation's health 
care safety net. That bill, the ``Strengthening Our States'' or SOS Act 
of 2003,'' seeks to protect and improve the Medicaid program--a 
critical component of our country's health system. To repeat the words 
of Diane Rowland and Jim Tallon of the Kaiser Commission on Medicaid 
and the Uninsured, ``Medicaid is the glue that helps hold our health 
system together and takes on the highest-risk, sickest, and most 
expensive populations from private insurance and Medicare.
  Like a waterfront community that seeks to set up barricades against a 
rising river, defending the Medicaid program from attacks, such as the 
idea of a block grant, is a top priority.
  However, once that is assured, we must also take the next step and 
confront the fact that an estimated 41.2 million people, or almost 15 
percent of the population, was without health insurance during the 
entire year of 2001, which was an increase of 1.4 million people over 
2000.
  Moreover, the numbers in 2002 and this year have undoubtedly 
worsened. A report by the National Coalition on Health Care says, ``The 
confluence of powerful economic forces, fueled by the terrorist attacks 
on September 11, have unleashed a `perfect storm' that could increase 
dramatically the number of uninsured in the U.S.--with as many as 6 
million people in total losing their coverage in 2001 and 2002.''
  The number in New Mexico are staggering. New Mexico leads or ranks 
second only to Texas in the percentage of its citizens who are 
uninsured. In fact, New Mexico is the only state in the country with 
less than half of its population having private health insurance 
coverage.
  A rather shocking statistic, which also continues to worsen, is that 
one out of every three Hispanic citizens are uninsured. In fact, less 
than 43 percent of the Hispanic population now has employer-based 
coverage nationwide, which is in sharp comparison to the 68 percent of 
non-Hispanic whites who have employer-based coverage.
  To address this growing crisis, I have worked closely with the 
American College of Physicians since last fall on the legislative 
proposal, which I call the ``Health Coverage, Affordability, 
Responsibility, and Equity Act'' or the ``HealthCARE Act of 2003.'' The 
proposal seeks to: First, build upon programs that currently work, 
including Medicaid, employer coverage, and the private market; second, 
provide choices for uninsured individuals, states, and small businesses 
while rejecting either employer or individual mandates; third, use 
methods that have bipartisan support by borrowing the best ideas from 
Democratic and Republican proposals; and, fourth, simplify rather than 
complicate coverage.

  This is in sharp contrast, in a number of ways, to past efforts to 
create untried schemes or to impose mandates upon either businesses or 
the individual. It also seeks to bridge the divide between Democrats 
and Republicans. This has certainly not been easy to put together and 
nor will it be easy to pass. On the other hand, we have tried to start 
with the tools and principles more likely to get beyond the partisan 
divide.
  As Julie Rovner of the National Journal recently wrote, ``If 
reforming the nation's healthcare system was easy, the old saw goes, it 
would have been done long ago. But for the moment, those who care about 
the issue seem to be succeeding only in butting each other's heads. 
Republicans keep pushing market-oriented reforms while Democrats want 
to expand existing public programs. And each party continues to reject 
the other's ideas. . . .''
  The ``Health CARE Act'' seeks to break that partisan gridlock. First, 
it adopts and builds upon the notion of many Republicans to offer tax 
credits for the uninsured. As such, the bill would enact a new health 
insurance tax credit that is both refundable and advanceable to 
uninsured Americans with incomes up to 200 percent of the poverty level 
to purchase health coverage through a variety of options, including 
employer-coverage, State purchasing pools, or even the individual 
market--something pushed by a number of Republicans for many years but 
rejected by many Democrats.
  Second, the legislation expands coverage through a State option with 
Federal financial support through the Medicaid program to anyone up to 
100 percent of the poverty level. Medicaid has been a tried and tested 
program for low-income Americans over the years and is a far better and 
more viable option to people with incomes below the poverty level than 
a tax credit would be. Furthermore, few beneath the poverty level have 
the option of employer-coverage. Therefore, public programs, such as 
Medicaid, for low-income Americans makes far more sense than a tax 
credit.
  Furthermore, through the strengthened and improved state purchasing 
pools provided for in the legislation, individuals and small businesses 
would be afforded better options to get coverage with a choice of plans 
that is typically not available to them with, what we believe will be, 
lower costs due to the ability to purchase coverage as a group.
  Consequently, this approach attempts to build upon the ideas of both 
political parties, as it has both public program and tax credit aspects 
to it. Our hope is that people will see the things both parties like in 
it rather than focusing on what they do not like. In fact, we have also 
added the creation of an on-going expert health commission to make 
recommendations for further reforms and mid-course corrections in the 
future.
  This bill is introduced in the spirit of compromise. To those on the 
right, I recognize your concern about the expansion of Medicaid as not 
being as market-oriented as you might prefer, but would point out that 
tax credits are virtually unworkable and employer-sponsored coverage 
often unavailable for people below the poverty level and that Medicaid 
is largely contracted out to private health plans--the same that many 
of you are enrolled in.
  To those on the left, I recognize your concerns about tax credits and 
the potential for adverse selection with people buying coverage through 
the individual market, but I say to you that these are tax credits for 
low-income people and that we have taken steps in the legislation to 
mitigate problems that the added options in the bill create with 
respect to adverse selection. I would add that any expansion of 
coverage to people without health insurance is a good thing.
  The most important message that I hope this bill carries is that we 
must stop having the perfect be the enemy of the good. This proposal is 
certainly not perfect but we hope it makes a very good start.
  I would like to thank the American College of Physicians, or ACP, for 
their outstanding leadership and help in putting this legislation 
together. ACP has been a long-standing advocate for expanding health 
coverage and has authored landmark reports on the important role that 
health insurance has in reducing people's morbidity and mortality. In 
fact, to cite the conclusion of one of those studies, ``Lack of 
insurance contributes to the endangerment of the health of each 
uninsured American as well as the collective health of the nation.''
  I would also like to thank the many people at the Economic and Social 
Research Institute, or ERSI, on their forethought, advice, and counsel 
as we refined the proposal over the past number of months. Their non-
partisan approach and expertise have been invaluable to making the bill 
a workable and well-reasoned reality.
  It should also be noted that the ideas put forth in the bill are 
based upon much of the expert work commissioned by ESRI, funded by the 
Robert Wood Johnson Foundation, and the Task Force on the Future of 
Health Insurance, funded by the Commonwealth Fund. As a result, the 
work of a number of other experts is reflected in the legislation and 
we thank you as well.
  Among the endorsing organizations for this legislation are all of the 
leading primary care physician groups in our country. In addition to 
the American College of Physicians, the bill has been endorsed by the 
American Academy of Family Physicians, the American Academy of 
Pediatrics, and the American Geriatrics Society.
  As a practicing physician in New Mexico, Dr. Robert Strickland sums 
it up well. As he wrote in an editorial

[[Page S5955]]

published in the Albuquerque Journal about this legislation yesterday, 
``As a New Mexico internist for 31 years, I have seen many uninsured 
people go without care until it is too late for me to do much to help 
them. The HealthCARE Act offers the potential of breaking the political 
gridlock that has allowed this crisis in health care to go on for far 
too long.''
  I hope we can break the gridlock and urge my colleagues to heed the 
call of our nation's primary care doctors to support this legislation.
  I would ask unanimous consent that letters of endorsement from the 
American College of Physicians, the American Academy of Family 
Physicians, the American Academy of Pediatrics, the American Geriatrics 
Society, and Families USA, and the text of the legislation printed in 
the Record.
  There being no ojection, the material was ordered to be printed in 
the Record, as follows:


                               American College of Physicians,

                                      Washington, DC, May 8, 2003.
     Hon. Jeff Bingaman,
     U.S. Senate, 703 Senate Hart Office Building, Washington, DC.
       Dear Senator Bingaman: on behalf of the American College of 
     Physicians (ACP), I am pleased to express our strong support 
     for the Health Coverage, Affordability, Responsibility and 
     Equity Act of 2003 (HealthCARE Act of 2003). ACP is the 
     largest medical specialty society in the United States, 
     representing 115,000 doctors of internal medicine and medical 
     students.
       We very much appreciate the opportunity you have given us 
     to translate many of the ideas in ACP's proposal to provide 
     health insurance coverage to all Americans by the end of the 
     decade into the HealthCARE Act of 2003. Specifically:
       States will be given new options to extend health insurance 
     coverage to low-income working Americans, without imposing 
     unfunded mandates on financially strapped state treasuries.
       Advance, refundable tax credits will be made available to 
     uninsured working Americans with incomes up to 200 percent of 
     the federal poverty level.
       The tax credit will provide a premium subsidy equal to what 
     the Federal Government now provides to its own employees.
       Tax credit recipients will have the options of buying 
     coverage through state purchase group arrangements modeled 
     after the Federal Employees Health Benefits Program, giving 
     them the same types and variety of health plan options now 
     available only to federal employees, or from qualified non-
     group insurers.
       Small employers will have new options for obtaining 
     coverage, including having access to the variety and types of 
     health plans offered to federal employees.
       An expert advisory commission will recommend essential 
     benefits that participating health plans will be encouraged 
     to offer, as well as ways to expand coverage to those with 
     incomes above 200 percent of the federal poverty level.
       ACP is confident that this framework can succeed where 
     other health reform proposals have failed. By offering 
     incentives and choices to states, employers, and consumers, 
     instead of ``one-size-fits-all'' government mandates, the 
     HealthCARE Act has the potential of unifying, instead of 
     dividing, key stakeholders.
       The American College of Physicians commends you for your 
     leadership in introducing the HealthCARE Act of 2003, and we 
     look forward to working with you and lawmakers from both 
     political parties in getting the bill enacted into law.
           Sincerely,
                                        Munsey S. Wheby, MD, FACP,
     President.
                                  ____

                                                      May 5, 2003.
     The Hon. Jeff Bingaman,
     U.S. Senate,
     Washington, DC.
       Dear Senator Bingaman: On behalf of the 94,300 members of 
     the American Academy of Family Physicians, I commend you for 
     your outstanding leadership in the effort to assure access to 
     health care for the uninsured in this nation. The AAFP has 
     reviewed your draft legislation that would change Medicaid, 
     SCHIP and the federal income tax code to make health coverage 
     more affordable to uninsured Americans. I am pleased to 
     inform you that the AAFP supports your bill and offers you 
     our assistance in seeking its passage.
       Your legislative proposal is a wide-ranging measure that 
     would take us noticeably closer to affordable health care 
     coverage for all. For example, your bill would:
       assist states in creating purchasing pools to provide low-
     cost insurance for uninsured individuals with incomes up to 
     200 percent of the federal poverty level;
       allow small businesses to have access to these state-
     operated purchasing pools so that they can offer affordable 
     health insurance to their employees;
       provide states with the new option to offer ``need-based'' 
     eligibility for Medicaid beneficiaries;
       remove the federal cap on non-waivered SCHIP coverage; and
       offer federal income tax credits and premium subsidies for 
     those currently uninsured whose income is at or below 200 
     percent of the federal poverty level and who are ineligible 
     for Medicaid for SCHIP coverage or other insurance options.
       These and other provisions of your proposal demonstrate 
     your longstanding commitment to the health of everyone in 
     this country and we are pleased and honored to support you in 
     this effort.
           Sincerely,
                                     Warren A. Jones, M.D., FAAFP,
     Board Chair.
                                  ____



                               American Academy of Pediatrics,

                                      Washington, DC, May 7, 2003.
     Hon. Jeff Bingaman,
     U.S. Senate,
     Washington, DC.
       Dear Senator Bingaman: On behalf of the 57,000 pediatrician 
     members of the American Academy of Pediatrics (AAP), I write 
     today in support of the Health Coverage, Affordability, 
     Responsibility and Equity Act of 2003.
       The problem of the uninsured and underinsured is real and 
     growing. This legislation is an effective way to provide 
     greater access to comprehensive health care for more 
     Americans. This legislation would allow poor and near poor 
     families a variety of options for affordable and 
     comprehensive health coverage.
       The Academy especially appreciates the effort to 
     strengthen, not undermine current public programs. Currently, 
     more than 9 million children are uninsured in this country 
     and million more are uninsured for part of the year, churning 
     on and off of health coverage. Seventy percent of the 
     uninsured children are eligible for public programs but 
     unenrolled. This legislation would encourage greater 
     enrollment of these uninsured children by providing financial 
     incentives to the states to enroll and retain these children, 
     and by allowing families to unify their health coverage.
       Thank you for your leadership and commitment to our 
     nation's families and their access to quality health care. We 
     look forward to our continued work together.
           Sincerely,
                                         E. Stephen Edwards, M.D.,
     President.
                                  ____

                                      American Geriatrics Society,
                                     New York, NY, April 22, 2003.
     Hon. Jeff Bingaman
     U.S. Senate,
     Washington, DC.
       Dear Senator Bingaman: The American Geriatrics Society 
     (AGS), an organization of over 6,000 geriatricians and other 
     health professionals who are specially trained in the 
     management of care for frail, chronically ill older patients, 
     is pleased to endorse the Health CARE Act of 2003. We commend 
     you for your sponsorship of this important bill, which seeks 
     to improve health coverage for millions of uninsured 
     Americans.
       By simplifying and expanding coverage choices for uninsured 
     individuals and small businesses, your legislation represents 
     a balanced approach to confronting one of our nation's most 
     pressing problems. The consequences of having little or no 
     health insurance are well documented. People without coverage 
     are less likely to have a regular source of care, don't 
     receive recommended health screening services nor do they 
     have appropriate care management for chronic conditions. As a 
     result, uninsured patients often are sicker and are more 
     likely to die sooner than people who have health insurance. 
     Adults in late middle age are especially susceptible to 
     deteriorating health if they never had or lose their health 
     insurance coverage.
       The Health CARE Act of 2003 would improve the health of 
     million of Americans expanding their access to health 
     insurance coverage. AGS applauds your willingness to tackle 
     this complex issue and looks forward to working with you to 
     enact this bill.
           Sincerely,
                                                Jerry Johnson, MD,
     President.
                                  ____

                                                   April 28, 2003.
     Hon. Jeff Bingaman,
     U.S. Senate, 703 Hart Senate Office Building, Washington, DC 
         20510.
       Dear Senator Bingaman: Congratulations on your introduction 
     of the HealthCARE Act of 2003. Your bill is an important 
     initiative that seeks to combine good health policy with the 
     politically achievable.
       While Families USA, the national consumer health 
     organization, has historically supported expansions of public 
     programs like Medicaid and SCHIP, we recognize that different 
     approaches are necessary if we are to see the enactment of 
     major reductions in the number of uninsured. Your bill 
     adroitly combines (1) a federally financed expansion of 
     Medicaid and SCHIP to cover all those under 100 percent of 
     the federal poverty level with (2) a premium subsidy/tax 
     credit program to help those under 200 percent of poverty buy 
     into various health insurance plans. Further, it lays the 
     groundwork for an expansion of insurance to the rest of 
     society by the end of the decade.
       It is imperative that Congress act as soon as possible to 
     help the nearly one our of three non-elderly Americans who 
     are uninsured sometime during any two-year period. Federal 
     help with Medicaid is particularly urgent to counter the 
     massive cutbacks in coverage by the various states during the 
     current economic downturn. As our recent report (``Going 
     Without Health Insurance, Nearly One in Three Non-Elderly 
     Americans'') shows, the problem of the uninsured,

[[Page S5956]]

     and the adverse consequences of being uninsured, are much 
     worse than previously reported. In your State of New Mexico, 
     for example, 602,000 people--38.6 percent of the population 
     under age 65--were uninsured sometime in 2002-2002. Of that 
     number, 410,000 were uninsured for more than six months.
       Your bill would make a major reduction in these 
     unacceptable numbers. It would greatly improve the quality of 
     health and security in America, and we look forward to 
     working with you towards its enactment.
           Sincerely,
                                                Ronald F. Pollack,
                                               Executive Director.

                                S. 1030

       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 ``Health 
     Coverage, Affordability, Responsibility, and Equity Act of 
     2003''or the ``HealthCARE Act of 2003''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                TITLE I--INCREASING HEALTH CARE COVERAGE

                     Subtitle A--Medicaid and SCHIP

Sec. 101. State option to offer medicaid coverage based on need.
Sec. 102. State option to provide coverage of children under SCHIP in 
              excess of the State's allotment.

  Subtitle B--Refundable Tax Credit for Health Insurance Costs of Low-
                    Income Individuals and Families

Sec. 111. Credit for health insurance costs of certain low-income 
              individuals.
Sec. 112. Advance payment of credit for health insurance costs of 
              eligible low-income individuals.

               TITLE II--IMPROVING ACCESS TO HEALTH PLANS

Sec. 201. Definitions.
Sec. 202. Establishment of health insurance purchasing pools.
Sec. 203. Purchasing pools.
Sec. 204. Purchasing pool operators.
Sec. 205. Contracts with participating insurers.
Sec. 206. Options for health benefits coverage.
Sec. 207. Enrollment process for eligible individuals.
Sec. 208. Plan premiums.
Sec. 209. Enrollee premium share.
Sec. 210. Payments to purchasing pool operators and payments to 
              participating insurers.
Sec. 211. State-based reinsurance programs.
Sec. 212. Coverage under individual health insurance.
Sec. 213. Use of premium subsidies to unify family coverage with 
              members enrolled in medicaid and SCHIP.
Sec. 214. Coverage through employer-sponsored health insurance.
Sec. 215. Participation by small employers.
Sec. 216. Report.
Sec. 217. Authorization of appropriations.

 TITLE III--NATIONAL ADVISORY COMMISSION ON EXPANDED ACCESS TO HEALTH 
                                  CARE

Sec. 301. National Advisory Commission on Expanded Access to Health 
              Care.
Sec. 302. Congressional action.

                        TITLE IV--STATE WAIVERS

Sec. 401. State waivers.

                TITLE I--INCREASING HEALTH CARE COVERAGE

                     Subtitle A--Medicaid and SCHIP

     SEC. 101. STATE OPTION TO OFFER MEDICAID COVERAGE BASED ON 
                   NEED.

       (a) State Option.--Section 1902(a)(10)(A)(ii) of the Social 
     Security Act (42 U.S.C. 1396a) is amended--
       (1) by striking ``or'' at the end of subclause (XVII);
       (2) by adding ``or'' at the end of subclause (XVIII); and
       (3) by adding at the end the following:

       ``(XIX) who are not otherwise eligible for medical 
     assistance under this title and whose income does not exceed 
     such income level as the State may establish, expressed as a 
     percentage (not to exceed 100) of the income official poverty 
     line (as defined by the Office of Management and Budget, and 
     revised annually in accordance with section 673(2) of the 
     Omnibus Budget Reconciliation Act of 1981) applicable to a 
     family of the size involved;''.

       (b) Increased FMAP.--Section 1905 of the Social Security 
     Act (42 U.S.C. 1396d) is amended--
       (1) in the first sentence of subsection (b)--
       (A) by striking ``and (4)'' and inserting ``(4)''; and
       (B) by inserting before the period the following: ``, and 
     (5) in the case of a State that meets the conditions 
     described in paragraph (1) of subsection (x), the Federal 
     medical assistance percentage shall be equal to the need-
     based enhanced FMAP described in paragraph (2) of subsection 
     (x)''; and
       (2) by adding at the end the following:
       ``(x)(1) For purposes of clause (5) of the first sentence 
     of subsection (b), the conditions described in this 
     subsection are the following:
       ``(A) The State provides medical assistance to individuals 
     described in subsection (a)(10)(A)(ii)(XIX).
       ``(B) The State uses streamlined enrollment and outreach 
     measures to all individuals described in subparagraph (A) 
     including--
       ``(i) the same application and retention procedures (such 
     as 1-page enrollment forms and enrollment by mail) used by 
     the majority of State programs under title XXI during the 
     preceding year; and
       ``(ii) outreach efforts proportional in scope and 
     reasonably expected effectiveness to those employed by the 
     State during a comparable stage of implementation of the 
     State's program under title XXI.
       ``(C) The State applies eligibility standards and 
     methodologies under this title with respect to individuals 
     residing in the State who have not attained age 65 that are 
     not more restrictive (as determined under section 
     1902(a)(10)(C)(i)(III)) than the standards and methodologies 
     that applied under this title with respect to such 
     individuals as of July 1, 2003.
       ``(2)(A) For purposes of clause (5) of the first sentence 
     of subsection (b), the need-based enhanced FMAP for a State 
     for a fiscal year, is equal to the Federal medical assistance 
     percentage (as defined in the first sentence of subsection 
     (b)) for the State increased, subject to subparagraph (B), by 
     such percentage increase as would compensate all States for 
     the additional expenditures that would be incurred by all 
     States if the States were to provide medical assistance to 
     all individuals whose income does not exceed 100 percent of 
     the income official poverty line (as defined by the Office of 
     Management and Budget, and revised annually in accordance 
     with section 673(2) of the Omnibus Budget Reconciliation Act 
     of 1981) applicable to a family of the size involved and who 
     are eligible for such assistance only on the basis of section 
     1902(a)(10)(A)(ii)(XIX).
       ``(B) In the case of a State that provides medical 
     assistance to individuals described in section 
     1902(a)(10)(A)(ii)(XIX) but limits such assistance to 
     individuals with income at or below a percentage of the 
     income official poverty line (as defined by the Office of 
     Management and Budget, and revised annually in accordance 
     with section 673(2) of the Omnibus Budget Reconciliation Act 
     of 1981) applicable to a family of the size involved that is 
     less than 100, the Secretary shall reduce the need-based 
     enhanced FMAP otherwise determined for the State under 
     subparagraph (A) by a proportion based on the national income 
     distribution of all individuals in all States who are 
     (regardless of whether such individuals are enrolled under 
     this title) eligible for medical assistance only on the basis 
     of section 1902(a)(10)(A)(ii)(XIX).''.
       (c) Conforming Amendments.--Section 1905(a) of the Social 
     Security Act (42 U.S.C. 1396d(a)) is amended in the matter 
     preceding paragraph (1)--
       (1) by striking ``or'' at the end of clause (xii);
       (2) by adding ``or'' at the end of clause (xiii); and
       (3) by inserting after clause (xiii) the following:
       ``(xiv) individuals who are eligible for medical assistance 
     on the basis of section 1902(a)(10)(A)(ii)(XIX);''.
       (d) Effective Date.--The amendments made by this section 
     take effect on October 1, 2004, and apply to medical 
     assistance provided on or after that date, without regard to 
     whether final regulations to carry out such amendments have 
     been promulgated by such date.

     SEC. 102. STATE OPTION TO PROVIDE COVERAGE OF CHILDREN UNDER 
                   SCHIP IN EXCESS OF THE STATE'S ALLOTMENT.

       (a) In General.--Title XXI of the Social Security Act (42 
     U.S.C. 1397aa et seq.) is amended by adding at the end the 
     following:

     ``SEC. 2111. STATE OPTION TO PROVIDE COVERAGE OF CHILDREN IN 
                   EXCESS OF THE STATE'S ALLOTMENT.

       ``(a) State Option.--In the case of a State that meets the 
     condition described in subsection (b), the following shall 
     apply:
       ``(1) Notwithstanding section 2105 and without regard to 
     the State's allotment under section 2104, the Secretary shall 
     pay the State an amount for each quarter equal to the 
     enhanced FMAP of expenditures incurred in the quarter that 
     are described in section 2105(a)(1).
       ``(2) The Secretary shall reduce the State's allotment 
     under section 2104, for the first fiscal year for which the 
     State amendment described in subsection (b) applies, and for 
     each fiscal year thereafter, by an amount equal to the amount 
     that the Secretary determines the State would have expended 
     to provide child health assistance to targeted low-income 
     children during that fiscal year if that State had not 
     elected the State option to provide such assistance in 
     accordance with this section.
       ``(3) Subsections (f) and (g) of section 2104 shall not 
     apply to the State's reduced allotment (after the application 
     of paragraph (2)).
       ``(b) Condition Described.--For purposes of subsection (a), 
     the condition described in this subsection is that the State 
     has made an irrevocable election, through a plan amendment, 
     to provide child health assistance to all targeted low-income 
     children residing in the State (without regard to date of 
     application for assistance) and to cover health services 
     listed in the State plan whenever medically necessary.''.
       (b) Effective Date.--The amendment made by this section 
     takes effect on October 1, 2004, and apply to child health 
     assistance provided on or after that date, without regard to 
     whether final regulations to carry

[[Page S5957]]

     out such amendment have been promulgated by such date.

  Subtitle B--Refundable Tax Credit for Health Insurance Costs of Low-
                    Income Individuals and Families

     SEC. 111. CREDIT FOR HEALTH INSURANCE COSTS OF CERTAIN LOW-
                   INCOME INDIVIDUALS.

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

     ``SEC. 36. HEALTH INSURANCE COSTS OF ELIGIBLE LOW-INCOME 
                   INDIVIDUALS.

       ``(a) In General.--In the case of an individual, there 
     shall be allowed as a credit against the tax imposed by this 
     subtitle for the taxable year an amount equal to the 
     applicable percentage of the amount paid by the taxpayer (or 
     on behalf of the taxpayer) for coverage of the taxpayer or 
     qualifying family members under qualified health insurance 
     for eligible coverage months beginning in such taxable year.
       ``(b) Applicable Percentage.--For purposes of this 
     section--
       ``(1) In general.--Subject to paragraph (2), the term 
     `applicable percentage' means the standard Government 
     contribution (determined for full-time Federal employees 
     enrolling in coverage for which such contribution is not 
     limited by section 8906(b)(1) of title 5, United States Code) 
     for an employee enrolled in a health benefits plan under 
     chapter 89 of title 5, United States Code, for the calendar 
     year in which the taxable year begins, expressed as a 
     percentage of the total premium for such plan.
       ``(2) Increased percentage for certain taxpayers.--
       ``(A) In general.--In the case of a taxpayer whose adjusted 
     gross income for the preceding taxable year does not exceed 
     150 percent of the poverty level, the applicable percentage 
     determined under paragraph (1) shall be increased by such 
     percentage points as the Secretary determines will fully 
     compensate such an individual for the individual's limited 
     purchasing power in comparison to individuals whose adjusted 
     gross income equals the average adjusted gross income for all 
     Federal employees, to the extent that the amount of the 
     resulting increase in the credit amount for all such eligible 
     low-income individuals for the taxable year is not reasonably 
     expected to exceed the 5 percentage point dollar amount for 
     that year, as determined under subparagraph (B).
       ``(B) Determination of 5 percentage point dollar amount.--
     For purposes of subparagraph (A), the 5 percentage point 
     dollar amount for any taxable year is the product of--
       ``(i) the total number of individuals receiving credits 
     under this section for such year, and
       ``(ii) the amount equal to 5 percent of the average health 
     insurance premium amount to which such credits are applied.
       ``(C) Rule of construction.--Nothing in this paragraph 
     shall be construed to prevent the Secretary from establishing 
     more than 1 level of supplemental assistance that provides 
     greater assistance to individuals with lower income, 
     determined as a percentage of poverty.
       ``(3) Application of fehbp coverage categories to 
     determination of credit.--The percentages described in 
     paragraphs (1) and (2) shall be applied to a taxpayer 
     consistent with the coverage categories (such as self or 
     family coverage) applied with respect to a health benefits 
     plan under chapter 89 of title 5, United States Code.
       ``(c) Maximum Premium Amount.--The amount paid for 
     qualified health insurance taken into account under 
     subsection (a) for any taxable year shall not exceed an 
     amount equal to the capped premium established for the 
     applicable State under section 204(c)(10) of the Health 
     Coverage, Affordability, Responsibility, and Equity Act of 
     2003 for the calendar year in which the such taxable year 
     begins.
       ``(d) Eligible Coverage Month.--For purposes of this 
     section--
       ``(1) In general.--The term `eligible coverage month' means 
     any month if during such month the taxpayer or a qualifying 
     family member--
       ``(A) is an eligible low-income individual,
       ``(B) is covered by qualified health insurance, the premium 
     for which is paid by the taxpayer (or on behalf of the 
     taxpayer),
       ``(C) does not have other specified coverage, and
       ``(D) is not imprisoned under Federal, State, or local 
     authority.
       ``(2) Joint returns.--In the case of a joint return, the 
     requirement of paragraph (1)(A) shall be treated as met with 
     respect to any month if at least 1 spouse satisfies such 
     requirement.
       ``(e) Eligible Low-Income Individual.--For purposes of this 
     section--
       ``(1) In general.--The term `eligible low-income 
     individual' means an individual--
       ``(A) who has not attained age 65,
       ``(B) whose adjusted gross income does not exceed 200 
     percent of the poverty level,
       ``(C) who is ineligible for the medicaid program or the 
     State children's health insurance program under title XIX or 
     XXI of the Social Security Act (other than under section 1928 
     of such Act),
       ``(D) who has limited access to health insurance coverage 
     through the employer of the individual or a member of the 
     individual's family (either because the employer does not 
     offer such coverage to the individual or because the employee 
     contribution for such coverage would exceed an amount equal 
     to 5 percent of the household income of such individual, as 
     determined in accordance with paragraph (2)),
       ``(E) who applies for a credit under this section not later 
     than 60 days after receiving notice of potential eligibility 
     for such credit, under procedures established by the 
     Secretary, and
       ``(F) who resides in a State where the eligibility 
     standards and methodologies applied under the medicaid and 
     State children's health insurance programs with respect to 
     individuals residing in the State who have not attained age 
     65 are not more restrictive (as determined under section 
     1902(a)(10)(C)(i)(III) of the Social Security Act) than the 
     standards and methodologies that applied under such programs 
     with respect to such individuals as of July 1, 2003.
       ``(2) Determination of eligibility.--
       ``(A) SCHIP agency.--
       ``(i) In general.--The determination of whether an 
     individual is an eligible low-income individual for purposes 
     of this section shall be made by the State agency with 
     responsibility for determining the eligibility of individuals 
     for assistance under the State children's health insurance 
     program under title XXI of the Social Security Act.
       ``(ii) Application of screen and enroll requirements.--

       ``(I) In general.--The State agency referred to in clause 
     (i) shall ensure that individuals applying for a certificate 
     of eligibility are screened for potential eligibility under 
     the medicaid and State children's health insurance programs 
     and that individuals found through screening to be eligible 
     for assistance under such a program are enrolled for 
     assistance under the appropriate program. To the maximum 
     extent possible pursuant to State options under title XIX of 
     the Social Security Act, and notwithstanding any otherwise 
     applicable provision of, or State plan provision under, such 
     title, screening and enrollment activities described in the 
     previous sentence shall use the procedures employed by the 
     State children's health insurance program operated under 
     title XXI of the Social Security Act, if such procedures 
     differ from those ordinarily employed by the State program 
     operated under title XIX of such Act.
       ``(II) No delay of issuance of certificate.--The 
     application of the screen and enroll requirements of clause 
     (i) shall not delay the issuance of a certificate of 
     eligibility to an individual for purposes of this section. 
     The State agency referred to in clause (i) shall adopt 
     procedures to ensure than an individual issued a certificate 
     of eligibility under this paragraph who is subsequently 
     determined to be eligible for the State medicaid program 
     under title XIX of the Social Security Act or the State 
     children's health insurance program under XXI of such Act 
     shall be enrolled in the appropriate program without an 
     interruption in the individual's health insurance coverage.

       ``(B) Standards.--
       ``(i) In general.--An individual is an eligible low-income 
     individual for purposes of this section if--

       ``(I) on the basis of the individual's tax return for the 
     preceding taxable year, the individual meets the requirements 
     of paragraph (1)(B), and the individual otherwise satisfies 
     the requirements of paragraph (1), or
       ``(II) the individual is determined to satisfy the 
     requirements of paragraph (1) after the application of the 
     same eligibility methodologies as would apply for purposes of 
     determining the eligibility of an individual for assistance 
     under the State children's health insurance program under 
     title XXI of the Social Security Act.

       ``(ii) Application of schip income determination 
     methodologies.--For purposes of clause (i)(II), 
     determinations of income levels shall be made using the 
     methodologies described in that clause, to the extent such 
     methodologies for ascertaining household income differ from 
     any otherwise applicable method for determining adjusted 
     gross income or the definition of adjusted gross income.
       ``(C) Certificate of eligibility.--
       ``(i) In general.--An individual who is determined to be an 
     eligible low-income individual shall be issued a certificate 
     of eligibility by the State agency referred to in 
     subparagraph (A).
       ``(ii) Certificate amount.--Such certificate shall indicate 
     the applicable percentage of the amount paid for coverage 
     under qualified health insurance that the individual is 
     eligible for under this section (including any supplemental 
     assistance which the individual may be eligible for under 
     subsection (b)(2), unless the individual elects to not 
     receive such supplemental assistance).
       ``(iii) 12-month period of issue.--The certificate of 
     eligibility shall apply for a 12-month period from the date 
     of issue, notwithstanding any changes in household 
     circumstances following the individual's application for a 
     credit under this section or supplemental assistance.
       ``(D) Supplemental assistance.--The State agency described 
     in subparagraph (A) shall determine an individual's 
     eligibility for supplemental assistance under subsection 
     (b)(2) based on the methodologies referred to in subparagraph 
     (B)(ii).
       ``(f) Qualifying Family Member.--For purposes of this 
     section--
       ``(1) In general.--The term `qualifying family member' 
     means--
       ``(A) the taxpayer's spouse, and

[[Page S5958]]

       ``(B) any dependent of the taxpayer with respect to whom 
     the taxpayer is entitled to a deduction under section 151(c).

     Such term does not include any individual who is not an 
     eligible low-income individual under subsection (e)(1).
       ``(2) Special dependency test in case of divorced parents, 
     etc.--If paragraph (2) or (4) of section 152(e) applies to 
     any child with respect to any calendar year, in the case of 
     any taxable year beginning in such calendar year, such child 
     shall be treated as described in paragraph (1)(B) with 
     respect to the custodial parent (within the meaning of 
     section 152(e)(1)) and not with respect to the noncustodial 
     parent.
       ``(g) Qualified Health Insurance.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified health insurance' 
     means any of the following:
       ``(A) Coverage under an insurance plan participating in a 
     purchasing pool established pursuant to section 203 of the 
     Health Coverage, Affordability, Responsibility, and Equity 
     Act of 2003.
       ``(B) Coverage under individual health insurance pursuant 
     to section 212 of such Act.
       ``(C) Coverage, pursuant to section 213 of such Act, under 
     the medicaid program or the State children's health insurance 
     program if 1 or more family members qualifies for coverage 
     under such program.
       ``(D) Coverage, pursuant to section 214 of such Act, under 
     an employer-sponsored insurance plan, including--
       ``(i) coverage under a COBRA continuation provision (as 
     defined in section 9832(d)(1)),
       ``(ii) State-based continuation coverage provided under a 
     State law that requires such coverage,
       ``(iii) coverage voluntarily offered by a former employer 
     of the individual or family member; or
       ``(iv) coverage under a group health plan that is available 
     through the employment of the individual or a family member.
       ``(2) Exception.--The term `qualified health insurance' 
     shall not include--
       ``(A) a flexible spending or similar arrangement, and
       ``(B) any insurance if substantially all of its coverage is 
     of excepted benefits described in section 9832(c).
       ``(3) Definitions.--For purposes of this subsection--
       ``(A) Employer-sponsored insurance.--
       ``(i) In general.--The term `employer-sponsored insurance' 
     means any insurance which covers medical care under any 
     health plan maintained by any employer (or former employer) 
     of the taxpayer or the taxpayer's spouse.
       ``(ii) Treatment of cafeteria plans.--For purposes of 
     clause (i), the cost of coverage shall be treated as paid or 
     incurred by an employer to the extent the coverage is in lieu 
     of a right to receive cash or other qualified benefits under 
     a cafeteria plan (as defined in section 125(d)).
       ``(B) Individual health insurance.--The term `individual 
     health insurance' means any insurance which constitutes 
     medical care offered to individuals other than in connection 
     with a group health plan and does not include Federal- or 
     State-based health insurance coverage.
       ``(h) Other Specified Coverage.--For purposes of this 
     section, an individual has other specified coverage for any 
     month if, as of the first day of such month--
       ``(1) Coverage under medicare.--Such individual is entitled 
     to benefits under part A of title XVIII of the Social 
     Security Act or is enrolled under part B of such title.
       ``(2) Certain other coverage.--Such individual--
       ``(A) is enrolled in a health benefits plan under chapter 
     89 of title 5, United States Code, or
       ``(B) is entitled to receive benefits under chapter 55 of 
     title 10, United States Code.
       ``(i) Federal Poverty Level; Poverty Level; Poverty.--For 
     purposes of this section, the terms `Federal poverty level' , 
     `poverty level', and `poverty' mean the income official 
     poverty line (as defined by the Office of Management and 
     Budget, and revised annually in accordance with section 
     673(2) of the Omnibus Budget Reconciliation Act of 1981) 
     applicable to a family of the size involved.
       ``(j) Special Rules.--
       ``(1) Coordination with advance payments of credit.--With 
     respect to any taxable year, the amount which would (but for 
     this subsection) be allowed as a credit to the taxpayer under 
     subsection (a) shall be reduced (but not below zero) by the 
     aggregate amount paid on behalf of such taxpayer under 
     section 7528 for months beginning in such taxable year.
       ``(2) Coordination with other deductions.--Amounts taken 
     into account under subsection (a) shall not be taken into 
     account in determining any deduction allowed under section 
     162(l) or 213.
       ``(3) MSA distributions.--Amounts distributed from an 
     Archer MSA (as defined in section 220(d)) shall not be taken 
     into account under subsection (a).
       ``(4) Denial of credit to dependents.--No credit shall be 
     allowed under this section to any individual with respect to 
     whom a deduction under section 151 is allowable to another 
     taxpayer for a taxable year beginning in the calendar year in 
     which such individual's taxable year begins.
       ``(5) Both spouses eligible low-income individuals.--The 
     spouse of the taxpayer shall not be treated as a qualifying 
     family member for purposes of subsection (a), if--
       ``(A) the taxpayer is married at the close of the taxable 
     year,
       ``(B) the taxpayer and the taxpayer's spouse are both 
     eligible low-income individuals during the taxable year, and
       ``(C) the taxpayer files a separate return for the taxable 
     year.
       ``(6) Marital status; certain married individuals living 
     apart.--Rules similar to the rules of paragraphs (3) and (4) 
     of section 21(e) shall apply for purposes of this section.
       ``(7) Insurance which covers other individuals.--For 
     purposes of this section, rules similar to the rules of 
     section 213(d)(6) shall apply with respect to any contract 
     for qualified health insurance under which amounts are 
     payable for coverage of an individual other than the taxpayer 
     and qualifying family members.
       ``(8) Treatment of payments.--For purposes of this section:
       ``(A) Payments by secretary.--Any payment made by the 
     Secretary on behalf of any individual under section 7528 
     (relating to advance payment of credit for health insurance 
     costs of eligible low-income individuals) shall be treated as 
     having been made by the taxpayer (or on behalf of the 
     taxpayer) on the first day of the month for which such 
     payment was made.
       ``(B) Payments by taxpayer.--Any payment made by the 
     taxpayer (or on behalf of the taxpayer) for eligible coverage 
     months shall be treated as having been so made on the first 
     day of the month for which such payment was made.
       ``(9) Regulations.--
       ``(A) In general.--The Secretary, in consultation with the 
     Secretary of Health and Human Services, shall administer the 
     credit allowed under this section and shall prescribe such 
     regulations and other guidance as may be necessary or 
     appropriate to carry out this section, section 6050U, and 
     section 7528.
       ``(B) Eligibility determinations.--Such regulations shall 
     include such standards as the Secretary of Health and Human 
     Services may specify with respect to the requirements for 
     eligibility determinations under subsection (e)(2).
       ``(C) Measures to combat fraud and abuse.--Such regulations 
     shall include appropriate procedures to deter, detect, and 
     penalize fraudulent efforts to obtain a credit under this 
     section by individuals, providers of qualified health 
     insurance, and others.''.
       (b) Conforming Amendments.--
       (1) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting before the period ``, or 
     from section 36 of such Code''.
       (2) The table of sections for subpart C of part IV of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     striking the last item and inserting the following new items:

``Sec. 36. Health insurance costs of eligible low-income individuals.
``Sec. 37. Overpayments of tax.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.
       (d) Reimbursement for Administrative Costs Incurred in 
     Determining Eligibility for Credit.--
       (1) In General.--The Secretary of Health and Human Services 
     shall reimburse States for the reasonable administrative 
     costs incurred in making eligibility determinations in 
     accordance with section 36(e) of the Internal Revenue Code of 
     1986 (as added by subsection (a)). Such reimbursement shall 
     not apply to State costs required under the medicaid or State 
     children's health insurance programs.
       (2) Application.--A State desiring reimbursement under this 
     subsection shall submit an application to the Secretary of 
     Health and Human Services in such manner, at such time, and 
     containing such information as the Secretary may require.
       (3) Appropriation.--Out of any money in the Treasury of the 
     United States not otherwise appropriated, there are 
     appropriated such sums as may be necessary to carry out this 
     subsection.

     SEC. 112. ADVANCE PAYMENT OF CREDIT FOR HEALTH INSURANCE 
                   COSTS OF ELIGIBLE LOW-INCOME INDIVIDUALS.

       (a) In General.--Chapter 77 of the Internal Revenue Code of 
     1986 (relating to miscellaneous provisions) is amended by 
     adding at the end the following new section:

     ``SEC. 7528. ADVANCE PAYMENT OF CREDIT FOR HEALTH INSURANCE 
                   COSTS OF ELIGIBLE LOW-INCOME INDIVIDUALS.

       ``(a) General Rule.--Not later than August 1, 2005, the 
     Secretary shall establish a program for making payments on 
     behalf of certified individuals to providers of qualified 
     health insurance (as defined in section 36(g)) for such 
     individuals.
       ``(b) Limitation on Advance Payments During any Taxable 
     Year.--The Secretary may make payments under subsection (a) 
     only to the extent that the total amount of such payments 
     made on behalf of any individual during the taxable year is 
     not reasonably expected to exceed the applicable percentage 
     (as defined in section 36(b)) of the amount paid by the 
     taxpayer (or on behalf of the taxpayer) for coverage of the 
     taxpayer and qualifying family members under qualified health 
     insurance for eligible coverage months beginning in the 
     taxable year.
       ``(c) Certified Individual.--For purposes of this section, 
     the term `certified individual' means any individual for whom 
     a health coverage eligibility certificate is in effect.

[[Page S5959]]

       ``(d) Health Coverage Eligibility Certificate.--For 
     purposes of this section, the term `health coverage 
     eligibility certificate' means any written statement that an 
     individual is an eligible low-income individual (as defined 
     in section 36(e)) if such statement provides such information 
     as the Secretary may require for purposes of this section and 
     is issued by the State agency responsible for administering 
     the State children's health insurance program under title XXI 
     of the Social Security Act.''.
       (b) Disclosure of Return Information for Purposes of 
     Carrying Out a Program for Advance Payment of Credit for 
     Health Insurance Costs of Eligible Low-Income Individuals.--
       (1) In general.--Subsection (l) of section 6103 of the 
     Internal Revenue Code of 1986 (relating to disclosure of 
     returns and return information for purposes other than tax 
     administration) is amended by adding at the end the following 
     new paragraph:
       ``(19) Disclosure of return information for purposes of 
     carrying out a program for advance payment of credit for 
     health insurance costs of eligible low-income individuals.--
     The Secretary may disclose to providers of health insurance 
     for any certified individual (as defined in section 7528(c)) 
     return information with respect to such certified individual 
     only to the extent necessary to carry out the program 
     established by section 7528 (relating to advance payment of 
     credit for health insurance costs of eligible low-income 
     individuals).''.
       (2) Procedures and recordkeeping related to disclosures.--
     Subsection (p) of such section is amended--
       (A) in paragraph (3)(A) by striking ``or (18)'' and 
     inserting ``(18), or (19)'', and
       (B) in paragraph (4), as amended by section 202(b)(2)(B) of 
     the Trade Act of 2002 (Public Law 107-210; 116 Stat. 961), by 
     striking ``or (17)'' after ``any other person described in 
     subsection (l)(16)'' each place it appears and inserting 
     ``(18), or (19)''.
       (3) Unauthorized inspection of returns or return 
     information.--Section 7213A(a)(1)(B) of such Code is amended 
     by striking ``section 6103(n)'' and inserting ``subsection 
     (l)(18) or (19) or (n) of section 6103''.
       (c) Information Reporting.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 of the Internal Revenue Code of 1986 (relating to 
     information concerning transactions with other persons) is 
     amended by inserting after section 6050T the following new 
     section:

     ``SEC. 6050U. RETURNS RELATING TO CREDIT FOR HEALTH INSURANCE 
                   COSTS OF ELIGIBLE LOW-INCOME INDIVIDUALS.

       ``(a) Requirement of Reporting.--Every person who is 
     entitled to receive payments for any month of any calendar 
     year under section 7528 (relating to advance payment of 
     credit for health insurance costs of eligible low-income 
     individuals) with respect to any certified individual (as 
     defined in section 7528(c)) shall, at such time as the 
     Secretary may prescribe, make the return described in 
     subsection (b) with respect to each such individual.
       ``(b) Form and Manner of Returns.--A return is described in 
     this subsection if such return--
       ``(1) is in such form as the Secretary may prescribe, and
       ``(2) contains--
       ``(A) the name, address, and TIN of each individual 
     referred to in subsection (a),
       ``(B) the number of months for which amounts were entitled 
     to be received with respect to such individual under section 
     7528 (relating to advance payment of credit for health 
     insurance costs of eligible low-income individuals),
       ``(C) the amount entitled to be received for each such 
     month, and
       ``(D) such other information as the Secretary may 
     prescribe.
       ``(c) Statements To Be Furnished to Individuals With 
     Respect to Whom Information Is Required.--Every person 
     required to make a return under subsection (a) shall furnish 
     to each individual whose name is required to be set forth in 
     such return a written statement showing--
       ``(1) the name and address of the person required to make 
     such return and the phone number of the information contact 
     for such person, and
       ``(2) the information required to be shown on the return 
     with respect to such individual.

     The written statement required under the preceding sentence 
     shall be furnished on or before January 31 of the year 
     following the calendar year for which the return under 
     subsection (a) is required to be made.''.
       (2) Assessable penalties.--
       (A) Subparagraph (B) of section 6724(d)(1) of such Code 
     (relating to definitions) is amended by redesignating clauses 
     (xii) through (xviii) as clauses (xiii) through (xix), 
     respectively, and by inserting after clause (xi) the 
     following new clause:
       ``(xii) section 6050U (relating to returns relating to 
     credit for health insurance costs of eligible low-income 
     individuals),''.
       (B) Paragraph (2) of section 6724(d) of such Code is 
     amended by striking ``or'' at the end of subparagraph (AA), 
     by striking the period at the end of subparagraph (BB) and 
     inserting ``, or'', and by adding after subparagraph (BB) the 
     following new subparagraph:
       ``(CC) section 6050U (relating to returns relating to 
     credit for health insurance costs of eligible low-income 
     individuals).''.
       (d) Clerical Amendments.--
       (1) Advance payment.--The table of sections for chapter 77 
     of the Internal Revenue Code of 1986 is amended by adding at 
     the end the following new item:

``Sec. 7528. Advance payment of credit for health insurance costs of 
              eligible low-income individuals.''.

       (2) Information reporting.--The table of sections for 
     subpart B of part III of subchapter A of chapter 61 of such 
     Code is amended by inserting after the item relating to 
     section 6050T the following new item:

``Sec. 6050U. Returns relating to credit for health insurance costs of 
              eligible low-income individuals.''.

       (e) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2006.

               TITLE II--IMPROVING ACCESS TO HEALTH PLANS

     SEC. 201. DEFINITIONS.

       In this title:
       (1) Eligible individual.--The term ``eligible individual'' 
     means an individual with respect to whom a tax credit is 
     allowed under section 36 of the Internal Revenue Code of 1986 
     (as added by section 111).
       (2) Participating insurer.--The term ``participating 
     insurer'' means an entity with a contract under section 
     205(a).
       (3) Private group health insurance plan.--The term 
     ``private group health insurance plan'' means a plan offered 
     by a participating insurer that provides health benefits 
     coverage to eligible individuals and that meets the 
     requirements of this title.
       (4) Purchasing pool operator.--The term ``purchasing pool 
     operator'' means the entity designated by the State under 
     section 204.
       (5) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (6) Small employer.--The term ``small employer'' means an 
     employer with not less than 2 and not more than 100 
     employees.

     SEC. 202. ESTABLISHMENT OF HEALTH INSURANCE PURCHASING POOLS.

       There is established a program under which the Secretary 
     shall ensure that each eligible individual has the 
     opportunity to enroll, through a purchasing pool operator, in 
     a private group health insurance plan offered by a 
     participating insurer under this title.

     SEC. 203. PURCHASING POOLS.

       (a) Establishment of Purchasing Pools.--Each State 
     participating in the program under this title shall establish 
     a purchasing pool that is available to each eligible 
     individual who resides in the State.
       (b) Types of Purchasing Pools.--
       (1) In general.--A purchasing pool established under 
     subsection (a) shall be 1 of the following:
       (A) A statewide purchasing pool operated by the State.
       (B) A statewide purchasing pool operated on behalf of the 
     State by the Director of the Office of Personnel Management, 
     or the designee of such Director.
       (2) OPM operated pool.--In the case of a statewide 
     purchasing pool described in paragraph (1)(B), the Director 
     of the Office of Personnel Management or the Director's 
     designee, may limit participating insurers in such pool to 
     those described in section 205(e), except that the Director 
     or such designee shall ensure that additional private group 
     health insurance plans participate in such a pool to the 
     extent necessary to meet the requirements of section 
     204(c)(9).
       (c) State Election Process.--
       (1) In general.--Each State participating in the program 
     under this title shall notify the Secretary, not later than 
     January 4, 2005, of the type of purchasing pool that applies 
     to residents of the State.
       (2) Default choice.--If a State participating in the 
     program under this title fails to notify the Secretary of the 
     type of purchasing pool elected by the State by the date 
     described in paragraph (1), the State shall be deemed to have 
     elected the type of purchasing pool described in subsection 
     (b)(1)(B).
       (3) Change of election.--The Secretary shall establish 
     procedures under which a State participating in the program 
     under this title may change the election of the type of 
     purchasing pool applicable to residents of the State.

     SEC. 204. PURCHASING POOL OPERATORS.

       (a) Designation.--Each State shall designate a purchasing 
     pool operator that shall be responsible for operating the 
     purchasing pool established under section 203(a). A 
     purchasing pool operator may be (or, to have 1 or more of its 
     functions performed, may contract with) a private entity that 
     has entered into a contract with the State if such entity 
     meets requirements established by the Secretary for purposes 
     of the program under this title.
       (b) Operation Similar to FEHBP.--Each purchasing pool 
     operator shall operate the purchasing pool established under 
     section 203(a) in a manner that is similar to the manner in 
     which the Director of the Office of Personnel Management 
     operates the Federal employees' health benefits program under 
     chapter 89 of title 5, United States Code, including (but not 
     limited to) the performance of the specific functions 
     described in subsection (c).
       (c) Specific Functions Described.--The specific functions 
     described in this subsection include the following:
       (1) Each purchasing pool operator shall offer one-stop 
     shopping for eligible individuals to enroll for health 
     benefits coverage

[[Page S5960]]

     under private, group health insurance plans offered by 
     participating insurers.
       (2) Each purchasing pool operator shall limit participating 
     insurers to those that meet the conditions for participation 
     described in this title.
       (3) Each purchasing pool operator shall negotiate (or, in 
     the case of a purchasing pool described in section 
     203(b)(1)(B), shall negotiate or otherwise determine) bids 
     and terms of coverage with insurers.
       (4) Each purchasing pool operator shall provide eligible 
     individuals with comparative information on private group 
     health insurance plans offered by participating insurers.
       (5) Each purchasing pool operator shall assist eligible 
     individuals in enrolling with a private group health 
     insurance plan offered by a participating insurer.
       (6) Each purchasing pool operator shall collect private 
     group health insurance plan premium payments for 
     participating insurers and process such premium payments.
       (7) Each purchasing pool operator shall reconcile from year 
     to year aggregate premium payments and claims costs of 
     private group health insurance plans consistent with 
     practices under the Federal employees' health benefits 
     program under chapter 89 of title 5, United States Code.
       (8) Each purchasing pool operator shall offer customer 
     service to eligible individuals enrolled for health benefits 
     coverage under a private group health insurance plan offered 
     by a participating insurer.
       (9) Each purchasing pool operator shall ensure that each 
     eligible individual has the option of enrolling in either of 
     at least 2 benchmark or benchmark-equivalent plans with--
       (A) a premium at or below a cap established by the pool 
     operator for purposes of this title; and
       (B) coverage of essential services included in the report 
     required under section 301(e)(2), with cost-sharing 
     consistent with such report.
       (10) Each purchasing pool operator shall establish a 
     premium cap for purposes of determining the credit limitation 
     under section 36(c) of the Internal Revenue Code of 1986, as 
     added by section 111(a). The cap required under this 
     paragraph may not be less than the premium charged to Federal 
     employees by the most highly-enrolled health plan under the 
     Federal employees' health benefits program under chapter 89 
     of title 5, United States Code. If the most highly-enrolled 
     plan in that program differs for Federal enrollees in the 
     State and all Federal enrollees nationally in such plan, the 
     minimum permitted premium cap shall be the lower of such 
     premiums.

     SEC. 205. CONTRACTS WITH PARTICIPATING INSURERS.

       (a) In General.--Each purchasing pool operator shall 
     negotiate and enter into contracts for the provision of 
     health benefits coverage under the program under this title 
     with entities that meet the conditions of participation 
     described in subsection (b) and other applicable requirements 
     of this Act.
       (b) Consumer Information.--In carrying out its duty under 
     section 204(c)(4) to inform eligible individuals about 
     private group health plans, the purchasing pool operator 
     shall provide information that meets the requirements of 
     section 212(b)(2).
       (c) State Licensure.--
       (1) In general.--Subject to paragraph (2), a health plan 
     shall not be a participating insurer unless the plan has a 
     State license to provide State residents with the private 
     group coverage health insurance plans that it offers through 
     the pool.
       (2) Exception.--A pool operator may enter into a contract 
     under subsection (a) to cover pool participants through a 
     health plan without a State license described in paragraph 
     (1) if such plan is offered to Federal employees nationwide 
     and, with respect to such employees, is exempt from State 
     health insurance regulation. Nothing in this paragraph shall 
     be construed to permit coverage of pool participants through 
     such a plan except with groups, contracts, and premium rates 
     that are entirely distinct from those used for individuals 
     covered under the Federal employee's health benefits program 
     under chapter 89 of title 5, United States Code.
       (d) Additional Stop-Loss Coverage and Reinsurance.--
     Purchasing pool operators are authorized to encourage 
     participation in the program under this title, improve 
     covered benefits, reduce out-of-pocket cost-sharing, limit 
     premiums, or achieve other objectives of this Act by--
       (1) funding stop-loss coverage above levels otherwise 
     offered in the purchasing pool; or
       (2) providing or subsidizing reinsurance in addition to 
     that provided under section 211.
       (e) Participation of FEHBP Plans.--
       (1) In general.--Each entity with a contract under section 
     8902 of title 5, United States Code, shall be a participating 
     insurer unless such entity notifies the Secretary in writing 
     of its intention not to participate in the program under this 
     title prior to such time as is designated by the Secretary so 
     as to allow such decisions to be taken into account with 
     respect to eligible individuals' choice of a private group 
     health insurance plan under such program. Such participation 
     in the program under this title shall include at least the 
     covered benefits and provider networks available through such 
     an entity and shall not involve greater out-of-pocket cost-
     sharing than the plan offered by such entity pursuant to its 
     contract under section 8902 of title 5, United States Code.
       (2) No effect on fehbp coverage.--The Director of Office of 
     Personnel Management shall take such steps as are necessary 
     to ensure that each individual enrolled for health benefits 
     coverage under the program under chapter 89 of title 5, 
     United States Code, is not adversely affected by eligible 
     individuals or others enrolled for coverage under the program 
     under this title. Such steps shall include (but need not be 
     limited to) the establishment of separate risk pools, 
     separate contracts with participating insurers, and 
     separately negotiated premiums.

     SEC. 206. OPTIONS FOR HEALTH BENEFITS COVERAGE.

       (a) Scope of Health Benefits Coverage.--The health benefits 
     coverage provided to an eligible individual under a private 
     group health insurance plan offered by a participating 
     insurer shall consist of any of the following:
       (1) Benchmark coverage.--Health benefits coverage that is 
     equivalent to the benefits coverage in a benchmark benefit 
     package described in subsection (b).
       (2) Benchmark-equivalent coverage.--Health benefits 
     coverage that meets the following requirements:
       (A) Inclusion of essential services.--The coverage includes 
     each of the essential services identified by the National 
     Advisory Commission on Expanded Access to Health Care and 
     adopted by Congress under title III.
       (B) Aggregate actuarial value equivalent to benchmark 
     package.--The coverage has an aggregate actuarial value that 
     is equal to or greater than the actuarial value of one of the 
     benchmark benefit packages.
       (3) Alternative coverage.--Any other health benefits 
     coverage that the Secretary determines, upon application by a 
     State, offers health benefits coverage equivalent to or 
     greater than a plan described in and offered under section 
     8903(1) of title 5, United States Code.
       (b) Benchmark Benefit Packages.--The benchmark benefit 
     packages are as follows:
       (1) FEHBP-equivalent health benefits coverage.--The plan 
     described in and offered under chapter 89 of title 5, United 
     States Code with the highest number of enrollees under such 
     section for the year preceding the year in which the private 
     group health insurance plan is proposed to be offered.
       (2) Public program-equivalent health benefits coverage.--
     Coverage provided under the State plan approved under the 
     medicaid program under title XIX of the Social Security Act 
     or the State children's health insurance program under title 
     XXI of such Act (42 U.S.C. 1396 et seq., 1397aa et seq.) 
     (without regard to coverage provided under a waiver of the 
     requirements of either such program).
       (3) Coverage offered through hmo.--The health insurance 
     coverage plan that--
       (A) is offered by a health maintenance organization (as 
     defined in section 2791(b)(3) of the Public Health Service 
     Act (42 U.S.C. 33gg-91(b)(3))), and
       (B) has the largest insured commercial, nonmedicaid 
     enrollment of covered lives of such coverage plans offered by 
     such a health maintenance organization in the State.
       (4) State employee coverage.--The health insurance plan 
     that is offered to State employees and has the largest 
     enrollment of covered lives of any such plan.
       (5) Application of benchmark standards.--A private group 
     health plan offers benchmark benefits if, with respect to a 
     benchmark plan described in paragraph (1), (2), (3), or (4), 
     the private group health plan covers all items and services 
     offered by the benchmark plan, with out-of-pocket cost-
     sharing for such items and services that is not greater than 
     under the benchmark plan. Nothing in this title shall be 
     construed to forbid a private group health plan from offering 
     additional items and services not covered by such a benchmark 
     plan or reducing out-of-pocket cost-sharing below levels 
     applicable under such plan.

     SEC. 207. ENROLLMENT PROCESS FOR ELIGIBLE INDIVIDUALS.

       (a) In General.--The Secretary shall establish a process 
     through which an eligible individual--
       (1) may make an annual election to enroll in any private 
     group health insurance plan offered by a participating 
     insurer that has been awarded a contract under section 205(a) 
     and serves the geographic area in which the individual 
     resides, provided that such insurer's geographic area of 
     service and guaranteed issuance under this section is 
     conterminous with, or includes all of, a geographic area 
     served pursuant to an entity's contact under section 8902 of 
     title 5, United States Code; and
       (2) may make an annual election to change the election 
     under this clause.
       (b) Rules.--In establishing the process under subsection 
     (a), the Secretary shall use rules similar to the rules for 
     enrollment, disenrollment, and termination of enrollment 
     under the Federal employees health benefits program under 
     chapter 89 of title 5, United States Code, including the 
     application of the guaranteed issuance provision described in 
     subsection (c).
       (c) Guaranteed Issuance.--An eligible individual who is 
     eligible to enroll for health benefits coverage under a 
     private group health insurance plan that has been awarded a 
     contract under section 205(a) at a time during which 
     elections are accepted under this title with respect to the 
     plan shall not be denied enrollment based on any health 
     status-related factor (described in section 2702(a)(1) of the 
     Public Health Service Act (42 U.S.C. 300gg-1(a)(1))) or any 
     other factor.

[[Page S5961]]

     SEC. 208. PLAN PREMIUMS.

       (a) In General.--Each purchasing pool operator shall 
     negotiate (or, in the case of a purchasing pool operated 
     pursuant to section 203(b)(1)(B), shall otherwise determine) 
     a premium for each private group health insurance plan 
     offered by a participating insurer.
       (b) Permitted Profit Margins.--
       (1) In general.--Each premium negotiated under subsection 
     (a) may not permit a profit margin that exceeds the 
     applicable percentage (as defined in paragraph (2)).
       (2) Applicable percentage defined.--In this subsection, the 
     term ``applicable percentage'' means--
       (A) for the first 3 years that a purchasing pool is 
     operated, 2 percent;
       (B) for any subsequent year, the percentage determined by 
     the purchasing pool operator, which may not be--
       (i) less than the profit margin permitted under the Federal 
     employees health benefits program under chapter 89 of title 
     5, United States Code; or
       (ii) more than a multiple, established by the Secretary for 
     purposes of this subsection, of profit margins permitted 
     under such program.

     SEC. 209. ENROLLEE PREMIUM SHARE.

       (a) In General.--A participating insurer offering a private 
     group health insurance plan that has been awarded a contract 
     under section 205(a) in which the eligible individual is 
     enrolled may not deny, limit, or condition the coverage 
     (including out-of-pocket cost-sharing) or provision of health 
     benefits coverage or vary or increase the enrollee premium 
     share under the plan based on any health status-related 
     factor described in section 2702(a)(1) of the Public Health 
     Service Act (42 U.S.C. 300gg-1(a)(1)) or any other factor.
       (b) Risk-Adjusted Plan Payments and Premiums Charged to 
     Enrollees.--
       (1) In general.--For each private group health insurance 
     plan operated by a participating insurer, the pool operator 
     shall adjust premium payments to compensate for the 
     difference in health risk factors between plan enrollees and 
     State residents as a whole (including residents who are not 
     eligible individuals). Such adjustments shall employ risk-
     adjustment mechanisms promulgated by the Secretary.
       (2) Additional adjustments.--The pool operator shall also 
     provide additional adjustments to premium payments that 
     compensate participating insurers for the cost of keeping 
     out-of-pocket cost-sharing amounts consistent with section 
     204(c)(9)(B).
       (3) Enrollee premium costs.--The adjustments described in 
     this subsection shall not affect enrollee premium shares, 
     which shall be based on the premium that would be charged for 
     enrollees with health risk factors for State residents as a 
     whole (as described in paragraph (1)), without taking into 
     account cost-sharing adjustments under section 204(c)(9)(B).
       (c) Amount of Premium.--The amount of the enrollee premium 
     share shall be equal to premium amounts (if any) above the 
     applicable cap set pursuant to section 204(c)(10), plus 100 
     percent of the remainder minus the applicable percentage (as 
     defined in section 36(b) of the Internal Revenue Code of 
     1986, as added by section 111).

     SEC. 210. PAYMENTS TO PURCHASING POOL OPERATORS AND PAYMENTS 
                   TO PARTICIPATING INSURERS.

       The Secretary shall establish procedures for making 
     payments to each purchasing pool operator as follows:
       (1) Risk-adjustment payment.--The Secretary shall pay each 
     purchasing pool operator for the net costs of risk-adjusted 
     payments to plans under section 209(b), to the extent the sum 
     of upward adjustments exceeds the sum of downward adjustments 
     for the pool operator.
       (2) Stop-loss and reinsurance payments.--
       (A) In general.--The Secretary shall pay each purchasing 
     pool operator for the applicable percentage (as defined in 
     subparagraph (B)) of--
       (i) the costs of any stop-loss coverage funded by the 
     purchasing pool operator under section 205(d)(1); and
       (ii) any reinsurance provided in accordance with section 
     205(d)(2).
       (B) Applicable percentage defined.--In this paragraph, the 
     term ``applicable percentage'' means--
       (i) for the first 3 years that a purchasing pool is 
     operated, 100 percent;
       (ii) for the next 2 years that such purchasing pool is 
     operated, 50 percent; and
       (iii) for any subsequent year, 0 percent.
       (3) Payments necessary to keep cost-sharing within 
     applicable limits.--The Secretary shall make payments to 
     purchasing pool operators to reimburse purchasing pool 
     operators for the amount paid by such operators to 
     participating insurers necessary to keep out-of-pocket cost-
     sharing for individuals with limited ability to pay within 
     applicable limits.
       (4) Payment for administrative costs.--The Secretary shall 
     make payments to each purchasing pool operator for necessary 
     pool administrative expenses.
       (5) Payments to opm.--In the case of a purchasing pool 
     described in section 203(b)(1)(B), payments under this 
     section shall be made to the Director of the Office of 
     Personnel Management.

     SEC. 211. STATE-BASED REINSURANCE PROGRAMS.

       (a) Establishment.--The Secretary shall establish standards 
     for State-based reinsurance programs for eligible individuals 
     to guard against adverse selection and to improve the 
     functioning of the individual health insurance market.
       (b) Grants for Statewide Reinsurance Programs.--
       (1) In general.--The Secretary may award grants to States 
     for the reasonable costs incurred in providing reinsurance 
     under this section, consistent with standards developed by 
     the Secretary, for coverage offered in the individual health 
     insurance market and through State-based purchasing pools 
     described in section 203.
       (2) Limitation.--Such grants may not pay for reinsurance 
     extending beyond individuals in the top 3 percent of the 
     national health care spending distribution, as determined by 
     the Secretary.
       (3) Application.--A State desiring a grant under this 
     section shall submit an application to the Secretary in such 
     manner, at such time, and containing such information as the 
     Secretary may require.
       (4) Authorization of appropriations.--There are authorized 
     to be appropriated to the Secretary such sums as may be 
     necessary for making grants under this section.

     SEC. 212. COVERAGE UNDER INDIVIDUAL HEALTH INSURANCE.

       (a) In General.--Eligible individuals may use credits 
     allowed under the Internal Revenue Code of 1986 (including 
     supplemental assistance provided under such Code) for the 
     purchase of health insurance coverage to enroll in State-
     licensed individual health insurance meeting the conditions 
     of participation described in subsection (b).
       (b) Conditions of Participation.--The Secretary shall 
     promulgate regulations that establish the terms and 
     conditions under which an entity may participate in the 
     program under this section and that include the following:
       (1) Plan marketing.--Conditions of participation for plans 
     in the individual market (as developed by the Secretary) 
     that--
       (A) ensure that consumers receive the consumer information 
     described in paragraph (2) before selecting a plan; and
       (B) detect, deter, and penalize marketing fraud by entities 
     offering or purporting to offer individual insurance.
       (2) Consumer information.--Requirements for each entity 
     offering individual insurance to provide eligible individuals 
     with information in a uniform and easily comprehensible 
     manner that allows for informed comparisons by eligible 
     individuals and that includes information regarding the 
     health benefits coverage, costs, provider networks, quality, 
     the amount and proportion of health insurance premium 
     payments that go directly to patient care, and the plan's 
     coverage rules (including amount, duration, and scope limits) 
     and out-of-pocket cost-sharing (both inside and outside plan 
     networks) for each essential service recommended by the 
     National Advisory Commission on Expanded Access to Health 
     Care and adopted by Congress under title III (which shall be 
     prominently identified as an essential service, including by 
     reference to the Commission recommendation denoting the 
     service as essential). To the maximum extent feasible, such 
     requirements shall specify that the content and presentation 
     of the information shall be provided in the same manner as 
     similar information is presented to enrollees in the Federal 
     employees health benefits program under chapter 89 of title 
     5, United States Code.
       (3) Other conditions, including the elimination of barriers 
     to affordable coverage.--
       (A) In general.--Requirements for each entity offering 
     individual insurance to abide by conditions of participation 
     that the Secretary believes are reasonable and appropriate 
     measures to address barriers to affordable health insurance 
     coverage.
       (B) Specific conditions.--The requirements developed by the 
     Secretary under subparagraph (A) shall include (but need not 
     be limited to)--
       (i) guaranteed renewability, without premium increases 
     based on changed individual risk; and
       (ii) limits on risk rating.
       (4) Rule of construction.--Nothing in this section shall be 
     construed to authorize the Secretary to impose any 
     requirements on individual insurance, except with respect to 
     eligible individuals purchasing individual insurance using 
     advance payment of a tax credit provided under section 36 of 
     the Internal Revenue Code of 1986.

     SEC. 213. USE OF PREMIUM SUBSIDIES TO UNIFY FAMILY COVERAGE 
                   WITH MEMBERS ENROLLED IN MEDICAID AND SCHIP.

       Notwithstanding any other provision of law, the Secretary 
     shall establish procedures under which, in the case of a 
     family with 1 or more members enrolled in with a managed care 
     entity under the State medicaid program under title XIX of 
     the Social Security Act or the State children's health 
     insurance program under title XXI of such Act (42 U.S.C. 1396 
     et seq., 1397aa et seq.) and 1 or more members who are an 
     eligible individual under this title, the family shall have 
     the option to enroll all family members with the managed care 
     entity under either or both such State programs. The 
     procedures established by the Secretary shall provide that 
     premiums charged to eligible individuals for enrollment with 
     such an entity shall be based on the capitated payments 
     established for adults or children, excluding adults and 
     children who are known to be pregnant, blind, disabled, or 
     (in the case of adults) elderly, under the applicable State 
     program

[[Page S5962]]

     (except that, in the case of an eligible individual known to 
     be pregnant, premiums shall reflect capitated payments 
     established under such State program for individuals known to 
     be pregnant) plus reasonable administrative costs.

     SEC. 214. COVERAGE THROUGH EMPLOYER-SPONSORED HEALTH 
                   INSURANCE.

       (a) In General.--Eligible individuals may use credits 
     allowed under the Internal Revenue Code of 1986 and 
     supplemental assistance to enroll in coverage offered by 
     eligible employers.
       (b) Eligible Employers.--For purposes of this section, the 
     term ``eligible employers'' includes the following:
       (1) The current employer of the eligible individual or a 
     member of such individuals family.
       (2) A former employer required to offer coverage of the 
     eligible individual under a COBRA continuation provision (as 
     defined in section 9832(d)(1) of the Internal Revenue Code) 
     or a State law requiring continuation coverage; and
       (3) A former employer voluntarily offering coverage of the 
     eligible individual.
       (c) Application of Disregard of Preexisting Conditions 
     Exclusions.--Notwithstanding any other provision of law, in 
     the case of an individual who experiences a qualifying event 
     (as defined in section 603 of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1163) and who, not later than 
     6 months after such event, is determined to be an eligible 
     individual under this title, the same rules with respect to 
     preexisting conditions as apply to a nonelecting TAA-eligible 
     individual under section 605(b) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1165(b)) shall apply 
     with respect to such individual, regardless of which type of 
     qualified coverage the individual purchases.
       (d) Extension of COBRA Election Period.--Notwithstanding 
     any other provision of law, in the case of an individual who 
     experiences a qualifying event (as defined in section 603 of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1163) and who, not later than 6 months after such 
     event, is determined to be an eligible individual under this 
     title, the same rules with respect to the temporary extension 
     of a COBRA election period as apply to a nonelecting TAA-
     eligible individual under section 605(b) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1165(b)) 
     shall apply with respect to such individual.
       (e) Current Employer Coverage.--If an eligible individual 
     uses the credits allowed under the Internal Revenue Code of 
     1986 and supplemental assistance to purchase coverage from an 
     employer described in subsection (b), such credits and 
     assistance shall apply as a percentage, not of the total 
     premium amount for the eligible individual, but of the 
     employee's or former employee's share of premium payments.

     SEC. 215. PARTICIPATION BY SMALL EMPLOYERS.

       (a) In General.--Notwithstanding any other provision of 
     this title, the Secretary shall establish procedures under 
     which, during annual open enrollment periods, a small 
     employer shall have the option of purchasing group coverage 
     for employees and dependents of employees, including 
     individuals who are not otherwise eligible individuals under 
     this title, through a purchasing pool established under 
     section 203(a).
       (b) Conditions of Participation.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the same requirements that apply with respect to 
     participating insurers covering eligible low-income 
     individuals under section 203 shall apply with respect to 
     coverage offered by such insurers through a small employer.
       (2) Risk adjustment.--
       (A) Increased payments.--If employees of a small employer 
     who are not otherwise eligible individuals under this title 
     enroll in a private group health insurance plan under this 
     title and have a collective risk level that exceeds the 
     statewide average (as determined pursuant to risk adjustment 
     mechanisms developed by the Secretary consistent with section 
     209(b)(1)), the Secretary (through a pool operator) shall 
     provide participating insurers with such small employer 
     enrollment bonus payments as are necessary to compensate the 
     insurers for such increased risk. The premium charged to 
     enrollees under this section shall be the same premium that 
     is the basis of premium charges to enrollees who are eligible 
     low-income individuals.
       (B) Reduced payments.--A pool operator shall reduce 
     payments to any plan with a risk level that falls below the 
     statewide average (as so determined).
       (3) Administrative guidelines.--The Secretary shall develop 
     guidelines for pool operators to use in serving small 
     employers, which shall be modeled after existing, successful, 
     longstanding small business purchasing cooperatives, and 
     shall include administratively simple methods for small 
     employers and licensed insurance brokers to participate in 
     the program established under this title.
       (c) Information Campaign.--
       (1) In general.--The pool operator for a State shall 
     establish and conduct, directly or through 1 or more public 
     or private entities (which may include licensed insurance 
     brokers), a health insurance information program to inform 
     small employers about health coverage for employees.
       (2) Requirements.--The program established under paragraph 
     (1) shall educate small employers with respect to matters 
     that include (but are not limited to) the following:
       (A) The benefits of providing health insurance to 
     employees, including tax benefits to both the employer and 
     employees, increased productivity, and decreased employee 
     turnover.
       (B) The rights of small employers under Federal and State 
     health insurance reform laws.
       (C) Options for purchasing coverage, including (but not 
     limited to) through the State's purchasing pool operated 
     pursuant to section 203.
       (d) Grants To Help State-Based Pools Promote Small Business 
     Coverage.--
       (1) In general.--The Secretary may award grants to a pool 
     operator for the following:
       (A) The net costs of risk-adjusted payments under paragraph 
     (b)(2), to the extent the sum of upward adjustments exceeds 
     the sum of downward adjustments for the pool operator.
       (B) The reasonable cost of the information campaign under 
     subsection (c).
       (C) The pool operator's reasonable administrative costs to 
     implement this section.
       (2) Limitation.--This section shall not apply to a State's 
     pool unless sufficient grant funds have been received under 
     this subsection to implement this section on a fiscally sound 
     basis and such receipt is certified by the pool operator.
       (3) Application.--A pool operator desiring a grant under 
     this section shall submit an application to the Secretary in 
     such manner, at such time, and containing such information as 
     the Secretary may require.
       (4) Authorization of appropriations.--There are authorized 
     to be appropriated to the Secretary such sums as may be 
     necessary for making grants under this section.

     SEC. 216. REPORT.

       Not later than 1 year after the date of enactment of this 
     Act, the Secretary shall submit to Congress a report 
     containing recommendations for such legislative and 
     administrative changes as the Secretary determines are 
     appropriate to permit affinity groups related for reasons 
     other than a common employer to participate in purchasing 
     pools established under section 203.

     SEC. 217. AUTHORIZATION OF APPROPRIATIONS.

       (a) In General.--There are authorized to be appropriated, 
     such sums as may be necessary to carry out this title for 
     fiscal year 2006 and each fiscal year thereafter.
       (b) Rule of Construction.--Amounts appropriated in 
     accordance with subsection (a) shall be in addition to other 
     amounts appropriated directly under this title and nothing in 
     subsection (a) shall be construed to relieve the Secretary of 
     mandatory payment obligations required under this title.

 TITLE III--NATIONAL ADVISORY COMMISSION ON EXPANDED ACCESS TO HEALTH 
                                  CARE

     SEC. 301. NATIONAL ADVISORY COMMISSION ON EXPANDED ACCESS TO 
                   HEALTH CARE.

       (a) Establishment.--Not later than October 1, 2003, the 
     Secretary of Health and Human Services (referred to in this 
     section as the ``Secretary''), shall establish an entity to 
     be known as the National Advisory Commission on Expanded 
     Access to Health Care (referred to in this section as the 
     ``Commission'').
       (b) Appointment of Members.--
       (1) In general.--Not later than 45 days after the date of 
     enactment of this Act, the House and Senate Majority and 
     Minority Leaders shall each appoint 4 members of the 
     Commission and the Secretary shall appoint 1 member.
       (2) Criteria.--Members of the Commission shall include 
     representatives of the following:
       (A) Consumers of health insurance.
       (B) Health care professionals.
       (C) State officials.
       (D) Economists.
       (E) Health care providers.
       (F) Experts on health insurance.
       (G) Experts on expanding health care to individuals who are 
     uninsured.
       (3) Chairperson.--At the first meeting of the Commission, 
     the Commission shall select a Chairperson from among its 
     members.
       (c) Meetings.--
       (1) In general.--After the initial meeting of the 
     Commission which shall be called by the Secretary, the 
     Commission shall meet at the call of the Chairperson.
       (2)  Quorum.--A majority of the members of the Commission 
     shall constitute a quorum, but a lesser number of members may 
     hold hearings.
       (3) Supermajority voting requirement.--To approve a report 
     required under paragraph (2) or (3) of subsection (e), at 
     least 60 percent of the membership of the Commission must 
     vote in favor of such a report.
       (d) Duties.--The Commission shall--
       (1) assess the effectiveness of programs designed to expand 
     health care coverage or make health care coverage affordable 
     to the otherwise uninsured individuals through identifying 
     the accomplishments and needed improvements of each program;
       (2) make recommendations about benefits and cost-sharing to 
     be included in health care coverage for various groups, 
     taking into account--
       (A) the special health care needs of children and 
     individuals with disabilities;
       (B) the different ability of various populations to pay 
     out-of-pocket costs for services;

[[Page S5963]]

       (C) incentives for efficiency and cost-control; and
       (D) preventative care, disease management services, and 
     other factors;
       (3) recommend mechanisms to discourage individuals and 
     employers from voluntarily opting out of health insurance 
     coverage;
       (4) recommend mechanisms to expand health care coverage to 
     uninsured individuals with incomes above 200 percent of the 
     official income poverty line (as defined by the Office of 
     Management and Budget, and revised annually in accordance 
     with section 673(2) of the Omnibus Budget Reconciliation Act 
     of 1981) applicable to a family of the size involved;
       (5) recommend automatic enrollment and retention procedures 
     and other measures to increase health care coverage among 
     those eligible for assistance;
       (6) review the roles, responsibilities, and relationship 
     between Federal and State agencies with respect to health 
     care coverage and recommend improvements; and
       (7) analyze the size, effectiveness, and efficiency of 
     current tax and other subsidies for health care coverage and 
     recommend improvements.
       (e) Reports.--
       (1) Annual report.--The Commission shall submit annual 
     reports to the President and Congress addressing the matters 
     identified in subsection (d).
       (2) Biennial report.--
       (A) In general.--The Commission shall submit biennial 
     reports to the President and Congress, which shall contain--
       (i) recommendations concerning essential benefits and 
     maximum out-of-pocket cost-sharing (for the general 
     population and for individuals with limited ability to pay, 
     which shall not exceed the out-of-pocket cost-sharing 
     permitted under section 2103(e) of the Social Security Act 
     (42 U.S.C. 1397cc(e))) for the coverage options described in 
     title II; and
       (ii) proposed legislative language to implement such 
     recommendations.
       (B) Congressional action.--The legislative language 
     proposed under subparagraph (A)(ii) shall proceed to 
     immediate consideration on the floor of the House of 
     Representatives and the Senate and shall be approved or 
     rejected, without amendment, using procedures employed for 
     recommendations of military base closing commissions.
       (3) Commission report.--No later than January 15, 2007, the 
     Commission shall submit a report to the President and 
     Congress, which shall include--
       (A) recommendations on policies to provide health care 
     coverage to uninsured individuals with incomes above 200 
     percent of the official income poverty line (as defined by 
     the Office of Management and Budget, and revised annually in 
     accordance with section 673(2) of the Omnibus Budget 
     Reconciliation Act of 1981) applicable to a family of the 
     size involved;
       (B) recommendations on changes to policies enacted under 
     this Act; and
       (C) proposed legislative language to implement such 
     recommendations.
       (f) Administration.--
       (1) Powers.--
       (A) Hearings.--The Commission may hold such hearings, sit 
     and act at such times and places, take such testimony, and 
     receive such evidence as the Commission considers advisable 
     to carry out this section.
       (B) Information from federal agencies.--The Commission may 
     secure directly from any Federal department or agency such 
     information as the Commission considers necessary to carry 
     out this section. Upon request of the Chairperson of the 
     Commission, the head of such department or agency shall 
     furnish such information to the Commission.
       (C) Postal services.--The Commission may use the United 
     States mails in the same manner and under the same conditions 
     as other departments and agencies of the Federal Government.
       (D)  Gifts.--The Commission may accept, use, and dispose of 
     gifts or donations of services or property.
       (2) Compensation.--While serving on the business of the 
     Commission (including travel time), a member of the 
     Commission shall be entitled to compensation at the per diem 
     equivalent of the rate provided for level IV of the Executive 
     Schedule under section 5315 of title 5, United States Code, 
     and while so serving away from home and the member's regular 
     place of business, a member may be allowed travel expenses, 
     as authorized by the chairperson of the Commission. All 
     members of the Commission who are officers or employees of 
     the United States shall serve without compensation in 
     addition to that received for their services as officers or 
     employees of the United States.
       (3) Staff.--
       (A) In general.--The Chairperson of the Commission may, 
     without regard to the civil service laws and regulations, 
     appoint and terminate an executive director and such other 
     additional personnel as may be necessary to enable the 
     Commission to perform its duties. The employment of an 
     executive director shall be subject to confirmation by the 
     Commission.
       (B) Staff compensation.--The Chairperson of the Commission 
     may fix the compensation of the executive director and other 
     personnel without regard to chapter 51 and subchapter III of 
     chapter 53 of title 5, United States Code, relating to 
     classification of positions and General Schedule pay rates, 
     except that the rate of pay for the executive director and 
     other personnel may not exceed the rate payable for level V 
     of the Executive Schedule under section 5316 of such title.
       (C) Detail of government employees.--Any Federal Government 
     employee may be detailed to the Commission without 
     reimbursement, and such detail shall be without interruption 
     or loss of civil service status or privilege.
       (D) Procurement of temporary and intermittent services.--
     The Chairperson of the Commission may procure temporary and 
     intermittent services under section 3109(b) of title 5, 
     United States Code, at rates for individuals which do not 
     exceed the daily equivalent of the annual rate of basic pay 
     prescribed for level V of the Executive Schedule under 
     section 5316 of such title.
       (g) Termination.--Except with respect to activities in 
     connection with the ongoing biennial report required under 
     subsection (e)(2), the Commission shall terminate 90 days 
     after the date on which the Commission submits the report 
     required under subsection (e)(3).
       (h) Authorization of Appropriations.--There are authorized 
     to be appropriated, such sums as may be necessary to carry 
     out this section for fiscal year 2004 and each fiscal year 
     thereafter.

     SEC. 302. CONGRESSIONAL ACTION.

       (a) Bill Introduction.--
       (1) In general.--Any legislative language included in the 
     report required under section 301(e)(3) may be introduced as 
     a bill by request in the following manner:
       (A) House of representatives.--In the House of 
     Representatives, by the Majority Leader and the Minority 
     Leader not later than 10 days after receipt of the 
     legislative language.
       (B) Senate.--In the Senate, by the Majority Leader and the 
     Minority Leader not later than 10 days after receipt of the 
     legislative language.
       (2) Alternative by administration.--The President may 
     submit legislative language based on the recommendations of 
     the Commission and such legislative language may be 
     introduced in the manner described in paragraph (1).
       (b) Committee Consideration.--
       (1) In general.--Any legislative language submitted 
     pursuant to paragraph (1) or (2) of subsection (a) (in this 
     section referred to as ``implementing legislation'') shall be 
     referred to the appropriate committees of the House of 
     Representatives and the Senate.
       (2) Reporting.--
       (A) Committee action.--If, not later than 150 days after 
     the date on which the implementing legislation is referred to 
     a committee under paragraph (1), the committee has reported 
     the implementing legislation or has reported an original bill 
     whose subject is related to reforming the health care system, 
     or to providing access to affordable health care coverage for 
     Americans, the regular rules of the applicable House of 
     Congress shall apply to such legislation.
       (B) Discharge from committees.--
       (i) Senate.--

       (I) In general.--If the implementing legislation or an 
     original bill described in subparagraph (A) has not been 
     reported by a committee of the Senate within 180 days after 
     the date on which such legislation was referred to committee 
     under paragraph (1), it shall be in order for any Senator to 
     move to discharge the committee from further consideration of 
     such implementing legislation.
       (II) Sequential referrals.--Should a sequential referral of 
     the implementing legislation be made, the additional 
     committee has 30 days for consideration of implementing 
     legislation before the discharge motion described in 
     subclause (I) would be in order.
       (III) Procedure.--The motion described in subclause (I) 
     shall not be in order after the implementing legislation has 
     been placed on the calendar. While the motion described in 
     subclause (I) is pending, no other motions related to the 
     motion described in subclause (I) shall be in order. Debate 
     on a motion to discharge shall be limited to not more than 10 
     hours, equally divided and controlled by the Majority Leader 
     and the Minority Leader, or their designees. An amendment to 
     the motion shall not be in order, nor shall it be in order to 
     move to reconsider the vote by which the motion is agreed or 
     disagreed to.
       (IV) Exception.--If implementing language is submitted on a 
     date later than May 1 of the second session of a Congress, 
     the committee shall have 90 days to consider the implementing 
     legislation before a motion to discharge under this clause 
     would be in order.

       (ii) House of representatives.--If the implementing 
     legislation or an original bill described in subparagraph (A) 
     has not been reported out of a committee of the House of 
     Representatives within 180 days after the date on which such 
     legislation was referred to committee under paragraph (1), 
     then on any day on which the call of the calendar for motions 
     to discharge committees is in order, any member of the House 
     of Representatives may move that the committee be discharged 
     from consideration of the implementing legislation, and this 
     motion shall be considered under the same terms and 
     conditions, and if adopted the House of Representatives shall 
     follow the procedure described in subsection (c)(1).
       (c) Floor Consideration.--
       (1) Motion to proceed.--If a motion to discharge made 
     pursuant to subsection (b)(2)(B)(i) or (b)(2)(B)(ii) is 
     adopted, then, not earlier than 5 legislative days after the 
     date on which the motion to discharge is

[[Page S5964]]

     adopted, a motion may be made to proceed to the bill.
       (2) Failure of motion.--If the motion to discharge made 
     pursuant to subsection (b)(2)(B)(i) or (b)(2)(B)(ii) fails, 
     such motion may be made not more than 2 additional times, but 
     in no case more frequently than within 30 days of the 
     previous motion. Debate on each of such motions shall be 
     limited to 5 hours, equally divided.
       (3) Applicable rules.--Once the Senate is debating the 
     implementing legislation the regular rules of the Senate 
     shall apply.

                        TITLE IV--STATE WAIVERS

     SEC. 401. STATE WAIVERS.

       (a) In General.--Notwithstanding any other provision of 
     law, a State may apply to the Secretary of Health and Human 
     Services for waivers of such provisions of law as may be 
     necessary for the State to implement policies that make 
     comprehensive, affordable health coverage available for all 
     State residents, including access to essential benefits with 
     limits on cost-sharing, as provided in the most recent report 
     under section 301(e)(2).
       (b) Requirements.--In order to ensure that waivers under 
     this section benefit rather than harm health care consumers, 
     a State shall not be eligible for a waiver under this section 
     unless--
       (1) the State reasonably expects to achieve a level of 
     enrollment in coverage described in subsection (a) that is at 
     least equal to the level of coverage (taking into account the 
     number of insured individuals, covered benefits, and premium 
     and out-of-pocket costs to the consumer for such coverage) 
     that the State would have achieved if the State had fully 
     implemented the coverage options available under titles I and 
     II of this Act;
       (2) no individual who would have qualified for assistance 
     under the State medicaid program under title XIX of the 
     Social Security Act or the State children's health insurance 
     program under title XXI of such Act, as of either the date of 
     the waiver request or the date of enactment of this Act, will 
     be denied eligibility for such program, have a reduction in 
     benefits under such program, have reduced access to 
     geographically and linguistically appropriate care or 
     essential community providers, or be subject to increased 
     premiums or cost-sharing under the waiver program under this 
     section; and
       (3) the State agrees to comply with such standards or 
     guidelines as the Secretary of Health and Human Services may 
     require to ensure that the requirements of paragraphs (1) and 
     (2) are satisfied.
       (c) Federal Payments.--
       (1) In general.--The Secretary of Health and Human Services 
     shall pay a State with a waiver approved under this section 
     an amount each quarter equal to the sum of--
       (A) the Federal payments the State and residents of the 
     State (including, but not limited to, through the credit 
     allowed under section 36 of the Internal Revenue Code of 1986 
     for health insurance costs) would have received if the State 
     had exercised the coverage options under titles I and II of 
     this Act with respect to residents of the State who have not 
     attained age 65; and
       (B) the amount of any grants authorized by this Act that 
     the State would have received if the State had applied for 
     such grants.
       (2) Additional payment for medicare beneficiaries under age 
     65.--
       (A) In general.--In the case of a State that elects to 
     enroll an individual described in subparagraph (B) in 
     coverage described in subsection (a), the amount described in 
     paragraph (1) with respect to a quarter shall be increased by 
     the amount described in subparagraph (C).
       (B) Individual described.--An individual is described in 
     this subparagraph if the individual--
       (i) has not attained age 65;
       (ii) is eligible for coverage under title XVIII of the 
     Social Security Act; and
       (iii) voluntarily elects to enroll in coverage described in 
     subsection (a).
       (C) Amount described.--The amount described in this 
     subparagraph is the amount equal to the amount that the 
     Federal Government would have incurred with respect to a 
     quarter for providing coverage to an individual described in 
     subparagraph (B) under title XVIII of the Social Security Act 
     (42 U.S.C. 1395 et seq.).
       (d) Implementation Date.--No State may submit a request for 
     a waiver under this section before October 1, 2007.
                                 ______