[Congressional Record Volume 149, Number 172 (Sunday, November 23, 2003)]
[Senate]
[Pages S15652-S15663]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CORZINE:
  S. 1935. A bill to amend the Public Health Service Act to require 
employers to offer health care coverage for all employees, to amend the 
Social Security Act to guarantee comprehensive health care coverage for 
all children born after 2001, and for other purposes; to the Committee 
on Finance.
  Mr. CORZINE. Mr. President, I rise today to introduce legislation on 
an issue that is of utmost importance to me, to the State of New 
Jersey, and to our Nation: providing universal access to health 
insurance.

[[Page S15653]]

  This is an issue I talked about incessantly during my campaign, 
because I strongly believe it is a national outrage that we are the 
only industrial society on earth that does not insure the health of all 
its people.
  I begin with a basic premise. Health care is a basic right, and 
neither the government nor the private sector is doing enough to secure 
that right for everyone.
  Unfortunately, as I have traveled across the State of New Jersey, I 
have talked to many men and women who lay awake nights trying to figure 
out how to care for loved ones. I've met people who work two jobs to 
support their family, and end up taking their kids to the emergency 
room when they're sick because they are unable to afford preventive 
care and timely treatment for their children.
  In 2002, more than 43 million Americans--or a staggering 17 percent 
of the total nonelderly population--were uninsured. In my State of New 
Jersey, 1.1 million citizens lack health insurance.
  The number of uninsured grew steadily throughout the 1990's until 
1999, when modest increases in employer coverage due to the robust 
economy, coupled with expansion and improved enrollment in the State 
Children's Health Insurance Program (CHIP), led to the first decline in 
the number of uninsured in over a decade. Unfortunately, the number of 
uninsured is on the rise again, as State budget deficits have forced 
deep cuts in public health programs and as unemployment has risen.
  Unemployment, however, is not the leading cause of being uninsured. 
In fact, more than eighty percent of the uninsured--four out of five 
Americans--are in working families. Seventy-two percent live in 
households with a full-time worker, and 11 percent live with a part-
time worker. Low-wage workers are at greater risk of being uninsured, 
as are unskilled laborers, service workers, and those employed in small 
businesses.
  The consequences of our Nation's significant uninsured population are 
devastating for our health and our economy.
  The uninsured are significantly more likely to delay or forego needed 
care and are less likely to receive preventive care.
  Delaying or not receiving treatment can lead to more serious illness 
and avoidable health problems, which in turn results in unnecessary and 
costly hospitalizations. For example, the uninsured are more likely 
than those with insurance to be hospitalized for conditions that could 
have been avoided, such as pneumonia and uncontrolled diabetes. In 
addition, the uninsured with various forms of cancer are more likely to 
be diagnosed with late stage cancer.
  Indeed, my own State of New Jersey struggles to deal with the costs 
of charity care provided to the uninsured. In 2002, New Jersey 
hospitals provided $624 million in charity care to the uninsured and 
underinsured, but were only reimbursed for $381 million of these costs.
  In sum, health insurance coverage matters. It matters to families who 
don't receive adequate care, and it matters to communities. We ignore 
the issue of the uninsured at our peril and at a great cost to the 
quality of life--and to the very life--of our citizens. That is why 
today I am introducing legislation that will provide universal access 
to health care for all Americans. My legislation, the Universal Secure 
Access to (USA) Health Care Act has several components:
  First, we must cover all children. Despite the success of the CHIP 
program, over nine million children are still uninsured. These children 
are less likely to have immunizations and receive less preventive care, 
which often results in health problems later in life and also leads to 
poor school performance. The millions of uninsured children cannot 
control whether they have health care coverage, and it is a measure of 
the failure of our politics that we do not take care of our children.
  My proposal, modeled on legislation introduced by Senator 
Rockefeller, would create a MediKids program that would provide 
universal health insurance for children up to age 23 through a new 
federal program modeled after Medicare, but with benefits tailored 
toward the needs of children.
  Maintaining the health of our children is critical to the future of 
our country. Indeed, it is clear that providing health care coverage to 
children impacts more than just their health--it impacts their ability 
to learn, their ability to thrive, and their ability to become 
productive members of society. MediKids simplifies the confusing array 
of health insurance assistance programs for children today and 
guarantees them coverage until adulthood.
  The next step is to demand that the private sector do its part. Under 
my bill, large employers would be required to provide health coverage 
for all their workers. A minimum wage in America should include with it 
minimum benefits, among them health insurance. But unfortunately, the 
current system puts the responsible employer who provides health 
insurance at a disadvantage relative to the employers who do not. When 
employers fail to cover employees, society pays their share of the bill 
at the emergency room. In fact, the universal health care delivered in 
the emergency rooms of our community hospitals is the most expensive 
and short-sighted approach to address the problem of the uninsured 
Americans.

  Under my bill, small businesses, the self-employed and unemployed 
would be able to buy coverage in the Federal Employee Health Benefit 
Program. If it is good enough for Senators, it is good enough for 
America. Those who are between the ages of 55 and 64 would be able to 
buy-in to the Medicare program. My legislation would provide tax 
credits to the self-employed to assist them in purchasing health 
insurance and would allow them to buy into the FEHBP program. But 
although I am passionate about universal access to health care, I 
realize we can't get there yet. Not because the popular will is not 
there, but because the political will isn't.
  Therefore I believe we can and should be doing all that we can to 
make incremental progress. So I support incremental changes, starting 
with the most vulnerable populations, and building on Medicaid and 
CHIP, success public programs. That is why I am a strong supporter of 
the Family Care proposal, which would cover the parents of children 
already enrolled in the CHIP program.
  I was also pleased to be an original cosponsor of Senator Bingaman's 
bipartisan legislation, the Start Healthy, Stay Healthy Act, which 
would expand coverage for children and pregnant women. It is based on 
the common sense principle that children deserve to start life healthy 
and stay healthy.
  Health professionals agree that one of the best ways to ensure the 
birth of a healthy baby is to ensure adequate prenatal care. Yet as a 
Nation, we do far too little to provide this type of care. This is 
evident by the stark statistics on the subject: the United States ranks 
27th in infant mortality and 21st in material mortality--the worst 
among developed nations. The statistics in New Jersey are equally 
stark: New Jersey ranks an abysmal 44th among the States in the 
percentage of mothers receiving adequate prenatal care, 34th in low 
birth weights, and 12th in infant mortality rates.
  Specifically, this important legislation would allow States to cover 
prenatal care services for women up to 185 percent of the Federal 
poverty level through the Children's Health Insurance (CHIP) Program. 
It would also allow States to extend coverage to children under the 
CHIP program through age 20, and would increase CHIP funding by $2.65 
billion over four years.
  I often say that we are not a Nation of equal outcomes, but we should 
be a Nation of equal beginnings.
  Until we give all Americans access to health care, however, we cannot 
live up to that promise.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1935

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

     SECTION 1. SHORT TITLE; FINDINGS.

       (a) Short Title.--This Act may be cited as the ``Universal 
     Secure Access to Health Care Act of 2003''.
       (b) Findings.--
       (1) In 2002, 43,600,000 Americans, nearly 17.2 percent of 
     the total nonelderly population, were uninsured.

[[Page S15654]]

       (2) The number of uninsured has grown by nearly 10,000,000 
     over the past decade.
       (3) While 61 percent of Americans receive health insurance 
     coverage through their employers, millions of Americans lack 
     access to such coverage either because their employer does 
     not offer such coverage or the employer cannot afford to pay 
     for such coverage.
       (4) Today, fewer Americans have health insurance through 
     their employment to cover themselves and their dependents 
     than 10 years ago.
       (5) Eighty-two percent of the individuals that are 
     uninsured in the United States are in working families.
       (6) Low-wage workers have more difficulty obtaining 
     affordable health care coverage since such workers are less 
     likely than high-wage workers to have such coverage offered 
     as a benefit by an employer, and prohibitive premiums for 
     individually purchased coverage often prevents such workers 
     from purchasing such coverage independently.
       (7) The consequences of our nation's significant uninsured 
     population are devastating.
       (8) The uninsured are significantly more likely to delay or 
     forego needed health care.
       (9) The uninsured are less likely to receive preventive 
     health care.
       (10) Delaying or foregoing health care treatment when such 
     treatment is needed can produce unnecessarily dire and 
     expensive results. More severe health care conditions may 
     arise and more expensive health care treatments, such as 
     costly hospitalizations, may be necessary even though such 
     conditions or treatments could have been avoided by the 
     initial provision of adequate and timely health care. The 
     uninsured, for example, are more likely to be hospitalized 
     for conditions that could have been avoided, such as 
     pneumonia and uncontrolled diabetes, than the insured. The 
     uninsured with various forms of cancer are also more likely 
     to be diagnosed with late stage cancer than the insured.

     SEC. 2. AMENDMENT TO THE PUBLIC HEALTH SERVICE ACT.

       The Public Health Service Act (42 U.S.C. 201 et seq.) is 
     amended by adding at the end the following:

          ``TITLE XXVIII--UNIVERSAL HEALTH INSURANCE COVERAGE

       ``Subtitle A--Employer Mandated Health Insurance Coverage

     ``SEC. 2801. EMPLOYER MANDATED HEALTH INSURANCE COVERAGE.

       ``(a) In General.--Each employer shall offer to enroll each 
     of its employees and their families in a standard health 
     benefit plan.
       ``(b) Standard Health Benefit Plan.--For purposes of this 
     title, the term `standard health benefit plan' means a plan 
     that provides benefits for health care items and services 
     that are actuarily equivalent or greater in value than the 
     benefits offered as of January 1, 2000, under the Blue Cross/
     Blue Shield Standard Option Plan provided under the Federal 
     Employees Health Benefit Program under chapter 89 of title 5, 
     United States Code.
       ``(c) Part-Time Employees.--Subsection (a) shall apply to 
     part-time employees.

     ``SEC. 2802. TYPE OF COVERAGE.

       ``(a) In General.--Each standard health benefit plan 
     offered by an employer under section 2801(a) shall conform to 
     the requirements of this section.
       ``(b) Prohibition against discrimination.--A standard 
     health benefit plan offered by an employer under section 
     2801(a) shall not establish rules for eligibility of any 
     individual to enroll under the plan or exclude or otherwise 
     limit any individual from coverage under the plan based on--
       ``(1) medical history;
       ``(2) health status;
       ``(3) a preexisting medical condition, disease, or 
     disorder; or
       ``(4) genetic information.
       ``(c) Open enrollment.--A standard health benefit plan 
     offered by an employer under section 2801(a) shall offer an 
     annual open enrollment period during which an individual may 
     change enrollment from such plan to another standard health 
     benefit plan offered by such employer.
       ``(d) Medically necessary services.--A standard health 
     benefit plan offered by an employer under section 2801(a) 
     shall, if such plan provides coverage for a certain health 
     care item or service, provide coverage for such item or 
     service if a doctor determines that such item or service is 
     medically necessary.
       ``(e) Date of initial coverage.--In the case of an employee 
     enrolled in a standard health benefit plan provided by an 
     employer under section 2801(a), the coverage under such plan 
     shall commence not later than 5 days after the day on which 
     the employee first performs an hour of service as an employee 
     of that employer. No waiting period beyond this initial 5-day 
     period may be imposed regarding such coverage.

     ``SEC. 2803. PREMIUMS.

       ``(a) In General.--Each employer shall--
       ``(1) contribute to the cost of any standard health benefit 
     plan that an employee has enrolled in in accordance with this 
     section; and
       ``(2) withhold from wages of an employee, the employee 
     share of the premium assessed for coverage under the standard 
     health benefit plan.
       ``(b) Contribution.--
       ``(1) Employer share.--
       ``(A) Full-time employees.--Each employer who has enrolled 
     an employee in a standard health benefit plan shall 
     contribute not less than 72 percent of the monthly premium 
     for such employee.
       ``(B) Part-time employees.--
       ``(i) Pro-rated portion paid.--Each employer who has 
     enrolled a part-time employee in a standard health benefit 
     plan shall pay a portion of the monthly premium for such 
     employee that is pro-rated to correspond with the number of 
     hours of work that such employee has provided during the past 
     month.
       ``(ii) Exception.--No employer contribution is required 
     under this section with respect to an employee who works less 
     than 10 hours per week.
       ``(2) Employee share.--
       ``(A) In general.--Each employee enrolled in a standard 
     health benefit plan under section 2801(a) shall pay the 
     remaining portion of the monthly premium after payment by the 
     employer as required under subsection (a).
       ``(B) Part-time employees.--An employee who is enrolled in 
     a standard health benefit plan under section 2801(a) and 
     works for such employer for not more than 30 hours and not 
     less than 10 hours per week shall be eligible for a subsidy 
     to aid such employee in paying his or her portion of the 
     monthly premium.
       ``(3) Low-income employees.--An employee who is enrolled in 
     a standard health benefit plan under section 2801(a) whose 
     family income does not exceed 250 percent of the poverty line 
     (as defined by the Office of Management and Budget, and 
     revised annually in accordance with section 673(2) of the 
     Community Services Block Grant Act (42 U.S.C. 9902(2)) as 
     applicable to a family of the size involved, shall be 
     eligible to receive a subsidy from the State as described in 
     subtitle B to aid in payment of premiums.

     ``SEC. 2804. ENFORCEMENT.

       ``(a) State ineligibility for Public Health Service Act 
     Funds.--An employer that is a State or political subdivision 
     of a State or an agency or instrumentality of a State or 
     political subdivision that does not comply with the 
     requirements of this title shall not be eligible to receive a 
     grant, contract, cooperative agreement, loan, or loan 
     guarantee under this Act.
       ``(b) Civil Penalty for private employers.--
       ``(1) In general.--Any nongovernmental employer that does 
     not comply with this title shall be subject to a civil 
     penalty of not more than 10 percent of the total amount of 
     the employer's expenditures for wages for employees in that 
     year.
       ``(2) Assessment procedure.--A civil money penalty under 
     this section shall be assessed by the Secretary and collected 
     in a civil action brought by the United States in a United 
     States district court. The Secretary shall not assess such a 
     penalty on an employer until the employer has been given 
     notice and an opportunity to present its views on such 
     charge.
       ``(3) Amount of penalty.--In determining the amount of the 
     penalty, or the amount agreed to in compromise, the Secretary 
     shall consider the gravity of the noncompliance and the 
     demonstrated good faith of the employer charged in attempting 
     to achieve rapid compliance after notification of a violation 
     of this title.

     ``SEC. 2805. DEFINITIONS.

       ``In this title:
       ``(1) Employer.--The term `employer' means, with respect to 
     a calendar year and plan year, an employer that employed an 
     average of at least 50 full-time employees on business days 
     during the preceding calendar year and employs not less than 
     50 employees on the first day of the plan year.
       ``(2) Part-time employee.--The term `part-time employee' 
     means any individual employed by an employer who works less 
     than 40 hours a week.
       ``(3) Waiting period.--The term `waiting period' means, 
     with respect to a plan and an individual who is a potential 
     beneficiary or participant in the plan, the period that must 
     pass with respect to the individual before the individual is 
     eligible to be covered for benefits under the terms of the 
     plan.noncompliance by the Secretary.

     ``SEC. 2806. EFFECTIVE DATE.

       ``This title shall take effect 2 years after the date of 
     enactment of the Universal Secure Access to Health Care Act 
     of 2003.

            ``Subtitle B--Individual and Employer Subsidies

     ``SEC. 2811. SUBSIDY PROGRAM.

       ``(a) In General.--The Secretary shall establish a Federal 
     program to award grants to States for State premium 
     assistance programs.
       ``(b) Federal Program.--
       ``(1) In general.--The Secretary shall establish a Federal 
     program that shall set all standards for administration of 
     State programs, receive applications from States for the 
     establishment of such programs, and receive reports from 
     States regarding the developments of such programs.
       ``(2) Regulations.--The Secretary shall promulgate 
     regulations specifying requirements for State programs under 
     this subtitle, including--
       ``(A) standards for determining eligibility for premium 
     assistance;
       ``(B) standards for States operating programs under this 
     subtitle which ensure that such programs are operated in a 
     uniform manner with respect to application procedures, data 
     processing systems, and such other administrative activities 
     as the Secretary determines to be necessary; and
       ``(C) standards for accepting reports regarding 
     developments of such programs.

[[Page S15655]]

       ``(3) Content.--The regulations described in paragraph (2) 
     shall require that a State program--
       ``(A) enable an individual to file an application for 
     assistance with an agency designated by the State at any 
     time, in person, by mail, or online;
       ``(B) provide for the use of an application form developed 
     by the Secretary;
       ``(C) make applications accessible at locations where 
     individuals are most likely to obtain the applications;
       ``(D) require individuals to submit revised applications to 
     reflect changes in estimated family incomes, including 
     changes in employment status of family members, during the 
     year, and the State shall revise the amount of any premium 
     assistance based on such a revised application; and
       ``(E) provide for verification of the information supplied 
     in applications under this subtitle, including examining 
     return information disclosed to the State.
       ``(4) Application.--The Secretary shall develop an 
     application form for assistance to be used by a State which 
     shall--
       ``(A) be simple in form and understandable to the average 
     individual;
       ``(B) require the provision of information necessary to 
     make a determination as to whether an individual is eligible 
     for assistance, including a declaration of estimated income 
     by the individual based, at the election of the individual--
       ``(I) on multiplying by a factor of 4 the individual's 
     family income for the 3-month period immediately preceding 
     the month in which the application is made; or
       ``(II) on estimated income for the entire year for which 
     the application is submitted; and
       ``(C) require attachment of such documentation as deemed 
     necessary by the Secretary in order to ensure eligibility for 
     assistance.
       ``(c) State Administration.--
       ``(1) In general.--A State shall have in effect a program 
     for furnishing premium assistance in accordance with this 
     subtitle.
       ``(2) Designation of State Agency.--A State may designate 
     any appropriate State agency to administer the program under 
     this subtitle.
       ``(3) Effectiveness of Eligibility.--A determination by a 
     State that an individual is eligible for premium assistance 
     shall be effective for the calendar year for which such 
     determination is made unless a revised application indicates 
     that an individual is no longer eligible for assistance.

     ``SEC. 2812. SUBSIDIES FOR LOW-INCOME WORKERS.

       ``(a) In General.--A low-income worker shall be eligible 
     for premium assistance if such worker is eligible under 
     subsection (b).
       ``(b) Eligibility.--A low-income worker is eligible for 
     premium assistance under subsection (a) if the State 
     determines that such worker has a family income which does 
     not exceed 250 percent of the poverty line (as defined by the 
     Office of Management and Budget, and revised annually in 
     accordance with section 673(2) of the Community Services 
     Block Grant Act (42 U.S.C. 9902(2)) as applicable to a family 
     of the size involved.
       ``(c) Amount of Assistance.--The amount of premium 
     assistance for a month for a low-income worker determined to 
     be eligible under subsection (b) shall be determined by the 
     Secretary.
       ``(d) Payments.--The amount of the premium assistance 
     available to a low-income worker shall be paid by the State 
     in which the individual resides directly to the standard 
     health plan in which the individual is enrolled. Payments 
     under the preceding sentence shall commence in the first 
     month during which the individual is enrolled in a standard 
     health benefit plan and determined to be eligible for premium 
     assistance under this subtitle.

     ``SEC. 2813. SUBSIDIES FOR SMALL BUSINESS EMPLOYERS.

       ``(a) In General.--A small business employer that offers to 
     enroll its employees and their families in a standard health 
     benefit plan shall be eligible for premium assistance if the 
     State determines that such employer qualifies for such 
     assistance under subsection (b).
       ``(b) Eligibility.--A small business employer is eligible 
     for premium assistance if such employer employs an average of 
     not more than 75 full-time employees on business days during 
     the preceding calendar year and employs not more than 75 
     employees on the first day of the plan year.
       ``(c) Amount of Assistance.--The amount of premium 
     assistance for a small business employer for a month shall be 
     determined by the Secretary.
       ``(d) Payments.--The amount of the premium assistance 
     available to a small business employer shall be paid by the 
     State in which the business is located directly to the 
     standard health benefit plan in which the employee of such 
     business is enrolled. Payments under the preceding sentence 
     shall commence in the first month during which the employee 
     is enrolled in a standard health benefit plan and the 
     employer is determined to be eligible for premium assistance 
     under this subtitle.

                   ``Subtitle C--Election of Coverage

     ``SEC. 2815. ELECTION OF COVERAGE.

       ``(a) In General.--A small business employer as described 
     in subsection (b) may elect to enroll its employees in--
       ``(1) a plan provided under the Federal Employees Health 
     Benefit Program under chapter 89 of title 5, United States 
     Code; or
       ``(2) the medicare program under title XVIII of the Social 
     Security Act (42 U.S.C. 1395 et seq.), if such employees are 
     not less than 50 years of age.
       ``(b) Small Business Employer.--In this section, the term 
     `small business employer' means an employer that employs an 
     average of not more than 75 full-time employees on business 
     days during the preceding calendar year and employs not more 
     than 75 employees on the first day of the plan year.

                     ``Subtitle D--Community Rating

     ``SEC. 2821. COMMUNITY RATING.

       ``(a) In General.--Each State shall establish community 
     rating areas in which standard health benefit plans shall 
     offer a standard premium in accordance with this subtitle for 
     enrollment for all eligible individuals.
       ``(b) Community Rating Areas.--
       ``(1) In general.--In accordance with this subtitle, each 
     State shall, subject to approval of the Secretary, provide 
     for the division of the State into 1 or more community rating 
     areas.
       ``(2) Revision of areas.--Each State may, subject to 
     approval of the Secretary, redraw the boundaries of such 
     community rating areas as described in paragraph (1) if such 
     revision is reasonable or necessary.
       ``(3) Multiple Areas.--With respect to a community rating 
     area--
       ``(A) no metropolitan statistical area in a State may be 
     incorporated into more than 1 such area in the State;
       ``(B) the number of individuals residing within such an 
     area may not be less than 250,000; and
       ``(C) no area incorporated in a community rating area may 
     be incorporated into another such area.
       ``(4) Nondiscrimination.--In establishing boundaries for 
     community rating areas, a State shall not directly or through 
     contractual arrangements--
       ``(A) deny or limit access to or the availability of health 
     care services, or otherwise discriminate in connection with 
     the provision of health care services; or
       ``(B) limit, segregate, or classify an individual in any 
     way which would deprive or tend to deprive such individual of 
     health care services, or otherwise adversely affect his or 
     her access to health care services;
     on the basis of race, national origin, sex, religion, 
     language, income, age, sexual orientation, disability, health 
     status, or anticipated need for health services.
       ``(5) Coordinating multiple community rating areas.--
     Nothing in this section shall be construed as preventing a 
     State from coordinating the activities of 1 or more community 
     rating areas in the State.
       ``(6) Interstate community rating areas.--Community rating 
     areas with respect to interstate areas shall be established 
     in accordance with rules established by the Secretary.
       ``(7) Coordination in multi-state areas.--One or more 
     States may coordinate their operations in contiguous 
     community rating areas. Such coordination may include, the 
     adoption of joint operating rules, contracting with standard 
     health benefit plans, enforcement activities, and 
     establishment of fee schedules for health providers.
       ``(c) Open Enrollment.--Each State, based on rules and 
     procedures established by the Secretary, shall specify a 
     uniform annual open enrollment period for each community 
     rating area during which all eligible individuals are 
     permitted the opportunity to change enrollment among the 
     standard health benefit plans offered to such individuals in 
     such area under this Act. The initial annual open enrollment 
     period shall be for a period of 90 days.
       ``(d) Standard Premium.--Each standard health benefit plan 
     shall establish within each community rating area in which 
     the plan is to be offered a standard premium for enrollment 
     of eligible individuals who seek enrollment in such plan.
       ``(e) Uniform Premiums Within Community Rating Areas.--
       ``(1) In general.--Subject to paragraphs (2) and (3), the 
     standard premium for each group health plan to which this 
     section applies shall be the same, but shall not include the 
     costs of premium processing and enrollment.
       ``(2) Application to enrollees.--
       ``(A) In general.--The premium charged for coverage in a 
     group health plan which covers eligible employees and 
     eligible individuals shall be the product of--
       ``(i) the standard premium (established under paragraph 
     (1));
       ``(ii) in the case of enrollment other than individual 
     enrollment, the family adjustment factor specified under 
     subparagraph (B); and
       ``(iii) the age adjustment factor (specified under 
     subparagraph (C)).
       ``(B) Family adjustment factor.--
       ``(i) In general.--The Secretary shall specify family 
     adjustment factors that reflect the relative actuarial costs 
     of benefit packages based on family classes of enrollment (as 
     compared with such costs for individual enrollment).
       ``(ii) Classes of enrollment.--For purposes of this 
     subtitle, there are 4 classes of enrollment:

       ``(I) Coverage only of an individual (referred to in this 
     subtitle as the `individual' enrollment or class of 
     enrollment).
       ``(II) Coverage of a married couple without children 
     (referred to in this subtitle as the `couple-only' enrollment 
     or class of enrollment).
       ``(III) Coverage of an individual and one or more children 
     (referred to in this subtitle as

[[Page S15656]]

     the `single parent' enrollment or class of enrollment).
       ``(IV) Coverage of a married couple and one or more 
     children (referred to in this subtitle as the `dual parent' 
     enrollment or class of enrollment).

       ``(iii) References to family and couple classes of 
     enrollment.--In this subtitle:

       ``(I) Family.--The terms `family enrollment' and `family 
     class of enrollment' refer to enrollment in a class of 
     enrollment described in any subclause of clause (ii) (other 
     than subclause (I)).
       ``(II) Couple.--The term `couple class of enrollment' 
     refers to enrollment in a class of enrollment described in 
     subclause (II) or (IV) of clause (ii).

       ``(iv) Spouse; married; couple.--

       ``(I) In general.--In this subtitle, the terms `spouse' and 
     `married' mean, with respect to an individual, another 
     individual who is the spouse of, or is married to, the 
     individual, as determined under applicable State law.
       ``(II) Couple.--The term `couple' means an individual and 
     the individual's spouse.

       ``(C) Age adjustment factor.--The Secretary shall specify 
     uniform age categories and maximum rating increments for age 
     adjustment factors that reflect the relative actuarial costs 
     of benefit packages among enrollees. For individuals who have 
     attained age 18 but not age 65, the highest age adjustment 
     factor may not exceed 3 times the lowest age adjustment 
     factor.''.

     SEC. 3. TAX DEDUCTION FOR SELF-EMPLOYED.

       (a) In General.--Paragraph (1) of section 162(l) of the 
     Internal Revenue Code of 1986 is amended to read as follows:
       ``(l) Allowance of deduction.--In the case of an individual 
     who is an employee within the meaning of section 401(c)(1), 
     there shall be allowed as a deduction under this section an 
     amount equal to 100 percent of the amount paid during the 
     taxable year for insurance which constitutes medical care for 
     the taxpayer, the taxpayer's spouse, and taxpayer's 
     dependents.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

     SEC. 4. ACCESS TO MEDICARE BENEFITS FOR INDIVIDUALS 62-TO-65 
                   YEARS OF AGE.

       (a) In General.--Title XVIII of the Social Security Act is 
     amended--
       (1) by redesignating section 1859 and part D as section 
     1858 and part E, respectively; and
       (2) by inserting after such section the following new part:

 ``Part D--Purchase of Medicare Benefits by Certain Individuals Age 62-
                           to-65 Years of Age

     ``SEC. 1859. PROGRAM BENEFITS; ELIGIBILITY.

       ``(a) Entitlement to Medicare Benefits for Enrolled 
     Individuals.--
       ``(1) In general.--An individual enrolled under this part 
     is entitled to the same benefits under this title as an 
     individual entitled to benefits under part A and enrolled 
     under part B.
       ``(2) Definitions.--For purposes of this part:
       ``(A) Federal or state cobra continuation provision.--The 
     term `Federal or State COBRA continuation provision' has the 
     meaning given the term `COBRA continuation provision' in 
     section 2791(d)(4) of the Public Health Service Act and 
     includes a comparable State program, as determined by the 
     Secretary.
       ``(B) Federal health insurance program defined.--The term 
     `Federal health insurance program' means any of the 
     following:
       ``(i) Medicare.--Part A or part B of this title (other than 
     by reason of this part).
       ``(ii) Medicaid.--A State plan under title XIX.
       ``(iii) FEHBP.--The Federal employees health benefit 
     program under chapter 89 of title 5, United States Code.
       ``(iv) TRICARE.--The TRICARE program (as defined in section 
     1072(7) of title 10, United States Code).
       ``(v) Active duty military.--Health benefits under title 
     10, United States Code, to an individual as a member of the 
     uniformed services of the United States.
       ``(C) Group health plan.--The term `group health plan' has 
     the meaning given such term in section 2791(a)(1) of the 
     Public Health Service Act.
       ``(b) Eligibility of Individuals Age 62-to-65 Years of 
     Age.--
       ``(1) In general.--Subject to paragraph (2), an individual 
     who meets the following requirements with respect to a month 
     is eligible to enroll under this part with respect to such 
     month:
       ``(A) Age.--As of the last day of the month, the individual 
     has attained 62 years of age, but has not attained 65 years 
     of age.
       ``(B) Medicare eligibility (but for age).--The individual 
     would be eligible for benefits under part A or part B for the 
     month if the individual were 65 years of age.
       ``(C) Not eligible for coverage under group health plans or 
     federal health insurance programs.--The individual is not 
     eligible for benefits or coverage under a Federal health 
     insurance program (as defined in subsection (a)(2)(B)) or 
     under a group health plan (other than such eligibility merely 
     through a Federal or State COBRA continuation provision) as 
     of the last day of the month involved.
       ``(2) Limitation on eligibility if terminated enrollment.--
     If an individual described in paragraph (1) enrolls under 
     this part and coverage of the individual is terminated under 
     section 1859A(d) (other than because of age), the individual 
     is not again eligible to enroll under this subsection unless 
     the following requirements are met:
       ``(A) New coverage under group health plan or federal 
     health insurance program.--After the date of termination of 
     coverage under such section, the individual obtains coverage 
     under a group health plan or under a Federal health insurance 
     program.
       ``(B) Subsequent loss of new coverage.--The individual 
     subsequently loses eligibility for the coverage described in 
     subparagraph (A) and exhausts any eligibility the individual 
     may subsequently have for coverage under a Federal or State 
     COBRA continuation provision.
       ``(3) Change in health plan eligibility does not affect 
     coverage.--In the case of an individual who is eligible for 
     and enrolls under this part under this subsection, the 
     individual's continued entitlement to benefits under this 
     part shall not be affected by the individual's subsequent 
     eligibility for benefits or coverage described in paragraph 
     (1)(C), or entitlement to such benefits or coverage.

     ``SEC. 1859A. ENROLLMENT PROCESS; COVERAGE.

       ``(a) In General.--An individual may enroll in the program 
     established under this part only in such manner and form as 
     may be prescribed by regulations, and only during an 
     enrollment period prescribed by the Secretary consistent with 
     the provisions of this section. Such regulations shall 
     provide a process under which--
       ``(1) individuals eligible to enroll as of a month are 
     permitted to pre-enroll during a prior month within an 
     enrollment period described in subsection (b); and
       ``(2) each individual seeking to enroll under section 
     1859(b) is notified, before enrolling, of the deferred 
     monthly premium amount the individual will be liable for 
     under section 1859C(b) upon attaining 65 years of age as 
     determined under section 1859B(c)(3).
       ``(b) Enrollment Periods.--
       ``(1) Individuals 62-to-65 years of age.--In the case of 
     individuals eligible to enroll under this part under section 
     1859(b)--
       ``(A) Initial enrollment period.--If the individual is 
     eligible to enroll under such section for July 2002, the 
     enrollment period shall begin on May 1, 2002, and shall end 
     on August 31, 2002. Any such enrollment before July 1, 2002, 
     is conditioned upon compliance with the conditions of 
     eligibility for July 2002.
       ``(B) Subsequent periods.--If the individual is eligible to 
     enroll under such section for a month after July 2002, the 
     enrollment period shall begin on the first day of the second 
     month before the month in which the individual first is 
     eligible to so enroll and shall end 4 months later. Any such 
     enrollment before the first day of the third month of such 
     enrollment period is conditioned upon compliance with the 
     conditions of eligibility for such third month.
       ``(2) Authority to correct for government errors.--The 
     provisions of section 1837(h) apply with respect to 
     enrollment under this part in the same manner as they apply 
     to enrollment under part B.
       ``(c) Date Coverage Begins.--
       ``(1) In general.--The period during which an individual is 
     entitled to benefits under this part shall begin as follows, 
     but in no case earlier than July 1, 2002:
       ``(A) In the case of an individual who enrolls (including 
     pre-enrolls) before the month in which the individual 
     satisfies eligibility for enrollment under section 1859, the 
     first day of such month of eligibility.
       ``(B) In the case of an individual who enrolls during or 
     after the month in which the individual first satisfies 
     eligibility for enrollment under such section, the first day 
     of the following month.
       ``(2) Authority to provide for partial months of 
     coverage.--Under regulations, the Secretary may, in the 
     Secretary's discretion, provide for coverage periods that 
     include portions of a month in order to avoid lapses of 
     coverage.
       ``(3) Limitation on payments.--No payments may be made 
     under this title with respect to the expenses of an 
     individual enrolled under this part unless such expenses were 
     incurred by such individual during a period which, with 
     respect to the individual, is a coverage period under this 
     section.
       ``(d) Termination of Coverage.--
       ``(1) In general.--An individual's coverage period under 
     this part shall continue until the individual's enrollment 
     has been terminated at the earliest of the following:
       ``(A) General provisions.--
       ``(i) Notice.--The individual files notice (in a form and 
     manner prescribed by the Secretary) that the individual no 
     longer wishes to participate in the insurance program under 
     this part.
       ``(ii) Nonpayment of premiums.--The individual fails to 
     make payment of premiums required for enrollment under this 
     part.
       ``(iii) Medicare eligibility.--The individual becomes 
     entitled to benefits under part A or enrolled under part B 
     (other than by reason of this part).
       ``(B) Termination based on age.--The individual attains 65 
     years of age.
       ``(2) Effective date of termination.--
       ``(A) Notice.--The termination of a coverage period under 
     paragraph (1)(A)(i) shall take effect at the close of the 
     month following for which the notice is filed.
       ``(B) Nonpayment of premium.--The termination of a coverage 
     period under paragraph (1)(A)(ii) shall take effect on a date 
     determined under regulations, which may be determined so as 
     to provide a grace period in

[[Page S15657]]

     which overdue premiums may be paid and coverage continued. 
     The grace period determined under the preceding sentence 
     shall not exceed 60 days; except that it may be extended for 
     an additional 30 days in any case where the Secretary 
     determines that there was good cause for failure to pay the 
     overdue premiums within such 60-day period.
       ``(C) Age or medicare eligibility.--The termination of a 
     coverage period under paragraph (1)(A)(iii) or (1)(B) shall 
     take effect as of the first day of the month in which the 
     individual attains 65 years of age or becomes entitled to 
     benefits under part A or enrolled for benefits under part B 
     (other than by reason of this part).

     ``SEC. 1859B. PREMIUMS.

       ``(a) Amount of Monthly Premiums.--
       ``(1) Base monthly premiums.--The Secretary shall, during 
     September of each year (beginning with 2001), determine the 
     following premium rates which shall apply with respect to 
     coverage provided under this title for any month in the 
     succeeding year:
       ``(A) Base monthly premium for individuals 62 years of age 
     or older.--A base monthly premium for individuals 62 years of 
     age or older is equal to \1/12\ of the base annual premium 
     rate computed under subsection (b) for each premium area.
       ``(B) Deferred monthly premiums for individuals 62 years of 
     age or older.--The Secretary shall, during September of each 
     year (beginning with 2001), determine under subsection (c) 
     the amount of deferred monthly premiums that shall apply with 
     respect to individuals who first obtain coverage under this 
     part under section 1859(b) in the succeeding year.
       ``(3) Establishment of premium areas.--For purposes of this 
     part, the term `premium area' means such an area as the 
     Secretary shall specify to carry out this part. The Secretary 
     from time to time may change the boundaries of such premium 
     areas. The Secretary shall seek to minimize the number of 
     such areas specified under this paragraph.
       ``(b) Base Annual Premium for Individuals 62 Years of Age 
     or Older.--
       ``(1) National, per capita average.--The Secretary shall 
     estimate the average, annual per capita amount that would be 
     payable under this title with respect to individuals residing 
     in the United States who meet the requirement of section 
     1859(b)(1)(A) as if all such individuals were eligible for 
     (and enrolled) under this title during the entire year (and 
     assuming that section 1862(b)(2)(A)(i) did not apply).
       ``(2) Geographic adjustment.--The Secretary shall reduce, 
     as determined appropriate, the amount determined under 
     paragraph (1) for a premium area (specified under subsection 
     (a)(3)) that has costs below the national average, in order 
     to assure participation in all areas throughout the United 
     States.
       ``(3) Base annual premium.--The base annual premium under 
     this subsection for months in a year for individuals 62 years 
     of age or older residing in a premium area is equal to the 
     average, annual per capita amount estimated under paragraph 
     (1) for the year, adjusted for such area under paragraph (2).
       ``(c) Deferred Premium Rate for Individuals 62 Years of Age 
     or Older.--The deferred premium rate for individuals with a 
     group of individuals who obtain coverage under section 
     1859(b) in a year shall be computed by the Secretary as 
     follows:
       ``(1) Estimation of national, per capita annual average 
     expenditures for enrollment group.--The Secretary shall 
     estimate the average, per capita annual amount that will be 
     paid under this part for individuals in such group during the 
     period of enrollment under section 1859(b). In making such 
     estimate for coverage beginning in a year before 2006, the 
     Secretary may base such estimate on the average, per capita 
     amount that would be payable if the program had been in 
     operation over a previous period of at least 4 years.
       ``(2) Difference between estimated expenditures and 
     estimated premiums.--Based on the characteristics of 
     individuals in such group, the Secretary shall estimate 
     during the period of coverage of the group under this part 
     under section 1859(b) the amount by which--
       ``(A) the amount estimated under paragraph (1); exceeds
       ``(B) the average, annual per capita amount of premiums 
     that will be payable for months during the year under section 
     1859C(a) for individuals in such group (including premiums 
     that would be payable if there were no terminations in 
     enrollment under clause (i) or (ii) of section 
     1859A(d)(1)(A)).
       ``(3) Actuarial computation of deferred monthly premium 
     rates.--The Secretary shall determine deferred monthly 
     premium rates for individuals in such group in a manner so 
     that--
       ``(A) the estimated actuarial value of such premiums 
     payable under section 1859C(b), is equal to
       ``(B) the estimated actuarial present value of the 
     differences described in paragraph (2).
     Such rate shall be computed for each individual in the group 
     in a manner so that the rate is based on the number of months 
     between the first month of coverage based on enrollment under 
     section 1859(b) and the month in which the individual attains 
     65 years of age.
       ``(4) Determinants of actuarial present values.--The 
     actuarial present values described in paragraph (3) shall 
     reflect--
       ``(A) the estimated probabilities of survival at ages 62 
     through 84 for individuals enrolled during the year; and
       ``(B) the estimated effective average interest rates that 
     would be earned on investments held in the trust funds under 
     this title during the period in question.

     ``SEC. 1859C. PAYMENT OF PREMIUMS.

       ``(a) Payment of Base Monthly Premium.--
       ``(1) In general.--The Secretary shall provide for payment 
     and collection of the base monthly premium, determined under 
     section 1859B(a)(1) for the age (and age cohort, if 
     applicable) of the individual involved and the premium area 
     in which the individual principally resides, in the same 
     manner as for payment of monthly premiums under section 1840, 
     except that, for purposes of applying this section, any 
     reference in such section to the Federal Supplementary 
     Medical Insurance Trust Fund is deemed a reference to the 
     Trust Fund established under section 1859D.
       ``(2) Period of payment.--In the case of an individual who 
     participates in the program established by this title, the 
     base monthly premium shall be payable for the period 
     commencing with the first month of the individual's coverage 
     period and ending with the month in which the individual's 
     coverage under this title terminates.
       ``(b) Payment of Deferred Premium for Individuals Covered 
     After Attaining Age 62.--
       ``(1) Rate of payment.--
       ``(A) In general.--In the case of an individual who is 
     covered under this part for a month pursuant to an enrollment 
     under section 1859(b), subject to subparagraph (B), the 
     individual is liable for payment of a deferred premium in 
     each month during the period described in paragraph (2) in an 
     amount equal to the full deferred monthly premium rate 
     determined for the individual under section 1859B(c).
       ``(B) Special rules for those who disenroll early.--
       ``(i) In general.--If such an individual's enrollment under 
     such section is terminated under clause (i) or (ii) of 
     section 1859A(d)(1)(A), subject to clause (ii), the amount of 
     the deferred premium otherwise established under this 
     paragraph shall be pro-rated to reflect the number of months 
     of coverage under this part under such enrollment compared to 
     the maximum number of months of coverage that the individual 
     would have had if the enrollment were not so terminated.
       ``(ii) Rounding to 12-month minimum coverage periods.--In 
     applying clause (i), the number of months of coverage (if not 
     a multiple of 12) shall be rounded to the next highest 
     multiple of 12 months, except that in no case shall this 
     clause result in a number of months of coverage exceeding the 
     maximum number of months of coverage that the individual 
     would have had if the enrollment were not so terminated.
       ``(2) Period of payment.--The period described in this 
     paragraph for an individual is the period beginning with the 
     first month in which the individual has attained 65 years of 
     age and ending with the month before the month in which the 
     individual attains 85 years of age.
       ``(3) Collection.--In the case of an individual who is 
     liable for a premium under this subsection, the amount of the 
     premium shall be collected in the same manner as the premium 
     for enrollment under such part is collected under section 
     1840, except that any reference in such section to the 
     Federal Supplementary Medical Insurance Trust Fund is deemed 
     to be a reference to the Medicare Early Access Trust Fund 
     established under section 1859D.
       ``(c) Application of Certain Provisions.--The provisions of 
     section 1840 (other than subsection (h)) shall apply to 
     premiums collected under this section in the same manner as 
     they apply to premiums collected under part B, except that 
     any reference in such section to the Federal Supplementary 
     Medical Insurance Trust Fund is deemed a reference to the 
     Trust Fund established under section 1859D.

     ``SEC. 1859D. MEDICARE EARLY ACCESS TRUST FUND.

       ``(a) Establishment of Trust Fund.--
       ``(1) In general.--There is hereby created on the books of 
     the Treasury of the United States a trust fund to be known as 
     the `Medicare Early Access Trust Fund' (in this section 
     referred to as the `Trust Fund'). The Trust Fund shall 
     consist of such gifts and bequests as may be made as provided 
     in section 201(i)(1) and such amounts as may be deposited in, 
     or appropriated to, such fund as provided in this title.
       ``(2) Premiums.--Premiums collected under section 1859B 
     shall be transferred to the Trust Fund.
       ``(b) Incorporation of Provisions.--
       ``(1) In general.--Subject to paragraph (2), subsections 
     (b) through (i) of section 1841 shall apply with respect to 
     the Trust Fund and this title in the same manner as they 
     apply with respect to the Federal Supplementary Medical 
     Insurance Trust Fund and part B, respectively.
       ``(2) Miscellaneous references.--In applying provisions of 
     section 1841 under paragraph (1)--
       ``(A) any reference in such section to `this part' is 
     construed to refer to this part D;
       ``(B) any reference in section 1841(h) to section 1840(d) 
     and in section 1841(i) to sections 1840(b)(1) and 1842(g) are 
     deemed references to comparable authority exercised under 
     this part; and

[[Page S15658]]

       ``(C) payments may be made under section 1841(g) to the 
     trust funds under sections 1817 and 1841 as reimbursement to 
     such funds for payments they made for benefits provided under 
     this part.

     ``SEC. 1859E. OVERSIGHT AND ACCOUNTABILITY.

       ``(a) Through Annual Reports of Trustees.--The Board of 
     Trustees of the Medicare Early Access Trust Fund under 
     section 1859D(b)(1) shall report on an annual basis to 
     Congress concerning the status of the Trust Fund and the need 
     for adjustments in the program under this part to maintain 
     financial solvency of the program under this part.
       ``(b) Periodic GAO Reports.--The Comptroller General of the 
     United States shall periodically submit to Congress reports 
     on the adequacy of the financing of coverage provided under 
     this part. The Comptroller General shall include in such 
     report such recommendations for adjustments in such financing 
     and coverage as the Comptroller General deems appropriate in 
     order to maintain financial solvency of the program under 
     this part.

     ``SEC. 1859F. ADMINISTRATION AND MISCELLANEOUS.

       ``(a) Treatment for Purposes of this Title.--Except as 
     otherwise provided in this part--
       ``(1) an individual enrolled under this part shall be 
     treated for purposes of this title as though the individual 
     was entitled to benefits under part A and enrolled under part 
     B; and
       ``(2) benefits described in section 1859 shall be payable 
     under this title to such an individual in the same manner as 
     if such individual was so entitled and enrolled.
       ``(b) Not Treated as Medicare Program for Purposes of 
     Medicaid Program.--For purposes of applying title XIX 
     (including the provision of medicare cost-sharing assistance 
     under such title), an individual who is enrolled under this 
     part shall not be treated as being entitled to benefits under 
     this title.
       ``(c) Not Treated as Medicare Program for Purposes of COBRA 
     Continuation Provisions.--In applying a COBRA continuation 
     provision (as defined in section 2791(d)(4) of the Public 
     Health Service Act), any reference to an entitlement to 
     benefits under this title shall not be construed to include 
     entitlement to benefits under this title pursuant to the 
     operation of this part.''.
       (b) Conforming Amendments to Social Security Act 
     Provisions.--
       (1) Section 201(i)(1) of the Social Security Act (42 U.S.C. 
     401(i)(1)) is amended by striking ``or the Federal 
     Supplementary Medical Insurance Trust Fund'' and inserting 
     ``the Federal Supplementary Medical Insurance Trust Fund, and 
     the Medicare Early Access Trust Fund''.
       (2) Section 201(g)(1)(A) of such Act (42 U.S.C. 
     401(g)(1)(A)) is amended by striking ``and the Federal 
     Supplementary Medical Insurance Trust Fund established by 
     title XVIII'' and inserting ``, the Federal Supplementary 
     Medical Insurance Trust Fund, and the Medicare Early Access 
     Trust Fund established by title XVIII''.
       (3) Section 1820(i) of such Act (42 U.S.C. 1395i-4(i)) is 
     amended by striking ``part D'' and inserting ``part E''.
       (4) Part C of title XVIII of such Act is amended--
       (A) in section 1851(a)(2)(B) (42 U.S.C. 1395w-21(a)(2)(B)), 
     by striking ``1859(b)(3)'' and inserting ``1858(b)(3)'';
       (B) in section 1851(a)(2)(C) (42 U.S.C. 1395w-21(a)(2)(C)), 
     by striking ``1859(b)(2)'' and inserting ``1858(b)(2)'';
       (C) in section 1852(a)(1) (42 U.S.C. 1395w-22(a)(1)), by 
     striking ``1859(b)(3)'' and inserting ``1858(b)(3)'';
       (D) in section 1852(a)(3)(B)(ii) (42 U.S.C. 1395w-
     22(a)(3)(B)(ii)), by striking ``1859(b)(2)(B)'' and inserting 
     ``1858(b)(2)(B)'';
       (E) in section 1853(a)(1)(A) (42 U.S.C. 1395w-23(a)(1)(A)), 
     by striking ``1859(e)(4)'' and inserting ``1858(e)(4)''; and
       (F) in section 1853(a)(3)(D) (42 U.S.C. 1395w-23(a)(3)(D)), 
     by striking ``1859(e)(4)'' and inserting ``1858(e)(4)''.
       (5) Section 1853(c) of such Act (42 U.S.C. 1395w-23(c)) is 
     amended--
       (A) in paragraph (1), by striking ``and (7)'' and inserting 
     ``, (7), and (8)'', and
       (B) by adding at the end the following:
       ``(8) Adjustment for early access.--In applying this 
     subsection with respect to individuals entitled to benefits 
     under part D, the Secretary shall provide for an appropriate 
     adjustment in the Medicare+Choice capitation rate as may be 
     appropriate to reflect differences between the population 
     served under such part and the population under parts A and 
     B.''.
       (c) Other Conforming Amendments.--
       (1) Section 138(b)(4) of the Internal Revenue Code of 1986 
     is amended by striking ``1859(b)(3)'' and inserting 
     ``1858(b)(3)''.
       (2)(A) Section 602(2)(D)(ii) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1162(2)) is amended by 
     inserting ``(not including an individual who is so entitled 
     pursuant to enrollment under section 1859A)'' after ``Social 
     Security Act''.
       (B) Section 2202(2)(D)(ii) of the Public Health Service Act 
     (42 U.S.C. 300bb-2(2)(D)(ii)) is amended by inserting ``(not 
     including an individual who is so entitled pursuant to 
     enrollment under section 1859A)'' after ``Social Security 
     Act''.
       (C) Section 4980B(f)(2)(B)(i)(V) of the Internal Revenue 
     Code of 1986 is amended by inserting ``(not including an 
     individual who is so entitled pursuant to enrollment under 
     section 1859A)'' after ``Social Security Act''.

     SEC. 5. ACCESS TO MEDICARE BENEFITS FOR DISPLACED WORKERS 55-
                   TO-62 YEARS OF AGE.

       (a) Eligibility.--Section 1859 of the Social Security Act, 
     as inserted by section 4(a)(2), is amended by adding at the 
     end the following new subsection:
       ``(c) Displaced Workers and Spouses.--
       ``(1) Displaced workers.--Subject to paragraph (3), an 
     individual who meets the following requirements with respect 
     to a month is eligible to enroll under this part with respect 
     to such month:
       ``(A) Age.--As of the last day of the month, the individual 
     has attained 55 years of age, but has not attained 62 years 
     of age.
       ``(B) Medicare eligibility (but for age).--The individual 
     would be eligible for benefits under part A or B for the 
     month if the individual were 65 years of age.
       ``(C) Loss of employment-based coverage.--
       ``(i) Eligible for unemployment compensation.--The 
     individual meets the requirements relating to period of 
     covered employment and conditions of separation from 
     employment to be eligible for unemployment compensation (as 
     defined in section 85(b) of the Internal Revenue Code of 
     1986), based on a separation from employment occurring on or 
     after January 1, 2001. The previous sentence shall not be 
     construed as requiring the individual to be receiving such 
     unemployment compensation.
       ``(ii) Loss of employment-based coverage.--Immediately 
     before the time of such separation of employment, the 
     individual was covered under a group health plan on the basis 
     of such employment, and, because of such loss, is no longer 
     eligible for coverage under such plan (including such 
     eligibility based on the application of a Federal or State 
     COBRA continuation provision) as of the last day of the month 
     involved.
       ``(iii) Previous creditable coverage for at least 1 year.--
     As of the date on which the individual loses coverage 
     described in clause (ii), the aggregate of the periods of 
     creditable coverage (as determined under section 2701(c) of 
     the Public Health Service Act) is 12 months or longer.
       ``(D) Exhaustion of available cobra continuation 
     benefits.--
       ``(i) In general.--In the case of an individual described 
     in clause (ii) for a month described in clause (iii)--

       ``(I) the individual (or spouse) elected coverage described 
     in clause (ii); and
       ``(II) the individual (or spouse) has continued such 
     coverage for all months described in clause (iii) in which 
     the individual (or spouse) is eligible for such coverage.

       ``(ii) Individuals to whom cobra continuation coverage made 
     available.--An individual described in this clause is an 
     individual--

       ``(I) who was offered coverage under a Federal or State 
     COBRA continuation provision at the time of loss of coverage 
     eligibility described in subparagraph (C)(ii); or
       ``(II) whose spouse was offered such coverage in a manner 
     that permitted coverage of the individual at such time.

       ``(iii) Months of possible cobra continuation coverage.--A 
     month described in this clause is a month for which an 
     individual described in clause (ii) could have had coverage 
     described in such clause as of the last day of the month if 
     the individual (or the spouse of the individual, as the case 
     may be) had elected such coverage on a timely basis.
       ``(E) Not eligible for coverage under federal health 
     insurance program or group health plans.--The individual is 
     not eligible for benefits or coverage under a Federal health 
     insurance program or under a group health plan (whether on 
     the basis of the individual's employment or employment of the 
     individual's spouse) as of the last day of the month 
     involved.
       ``(2) Spouse of displaced worker.--Subject to paragraph 
     (3), an individual who meets the following requirements with 
     respect to a month is eligible to enroll under this part with 
     respect to such month:
       ``(A) Age.--As of the last day of the month, the individual 
     has not attained 62 years of age.
       ``(B) Married to displaced worker.--The individual is the 
     spouse of an individual at the time the individual enrolls 
     under this part under paragraph (1) and loses coverage 
     described in paragraph (1)(C)(ii) because the individual's 
     spouse lost such coverage.
       ``(C) Medicare eligibility (but for age); exhaustion of any 
     cobra continuation coverage; and not eligible for coverage 
     under federal health insurance program or group health 
     plan.--The individual meets the requirements of subparagraphs 
     (B), (D), and (E) of paragraph (1).
       ``(3) Change in health plan eligibility affects continued 
     eligibility.--For provision that terminates enrollment under 
     this section in the case of an individual who becomes 
     eligible for coverage under a group health plan or under a 
     Federal health insurance program, see section 1859A(d)(1)(C).
       ``(4) Reenrollment permitted.--Nothing in this subsection 
     shall be construed as preventing an individual who, after 
     enrolling under this subsection, terminates such 
     enrollment from subsequently reenrolling under this 
     subsection if the individual is eligible to enroll under 
     this subsection at that time.''.
       (b) Enrollment.--Section 1859A of such Act, as so inserted, 
     is amended--
       (1) in subsection (a), by striking ``and'' at the end of 
     paragraph (1), by striking the period at the end of paragraph 
     (2) and inserting ``; and'', and by adding at the end the 
     following new paragraph:
       ``(3) individuals whose coverage under this part would 
     terminate because of subsection

[[Page S15659]]

     (d)(1)(B)(ii) are provided notice and an opportunity to 
     continue enrollment in accordance with section 
     1859E(c)(1).'';
       (2) in subsection (b), by inserting after Notwithstanding 
     any other provision of law, (1) the following:
       ``(2) Displaced workers and spouses.--In the case of 
     individuals eligible to enroll under this part under section 
     1859(c), the following rules apply:
       ``(A) Initial enrollment period.--If the individual is 
     first eligible to enroll under such section for July 2005, 
     the enrollment period shall begin on May 1, 2002, and shall 
     end on August 31, 2002. Any such enrollment before July 1, 
     2002, is conditioned upon compliance with the conditions of 
     eligibility for July 2002.
       ``(B) Subsequent periods.--If the individual is eligible to 
     enroll under such section for a month after July 2002, the 
     enrollment period based on such eligibility shall begin on 
     the first day of the second month before the month in which 
     the individual first is eligible to so enroll (or reenroll) 
     and shall end 4 months later.'';
       (3) in subsection (d)(1), by amending subparagraph (B) to 
     read as follows:
       ``(B) Termination based on age.--
       ``(i) At age 65.--Subject to clause (ii), the individual 
     attains 65 years of age.
       ``(ii) At age 62 for displaced workers and spouses.--In the 
     case of an individual enrolled under this part pursuant to 
     section 1859(c), subject to subsection (a)(1), the individual 
     attains 62 years of age.'';
       (4) in subsection (d)(1), by adding at the end the 
     following new subparagraph:
       ``(C) Obtaining access to employment-based coverage or 
     federal health insurance program for individuals under 62 
     years of age.--In the case of an individual who has not 
     attained 62 years of age, the individual is covered (or 
     eligible for coverage) as a participant or beneficiary under 
     a group health plan or under a Federal health insurance 
     program.'';
       (5) in subsection (d)(2), by amending subparagraph (C) to 
     read as follows:
       ``(C) Age or medicare eligibility.--
       ``(i) In general.--The termination of a coverage period 
     under paragraph (1)(A)(iii) or (1)(B)(i) shall take effect as 
     of the first day of the month in which the individual attains 
     65 years of age or becomes entitled to benefits under part A 
     or enrolled for benefits under part B.
       ``(ii) Displaced workers.--The termination of a coverage 
     period under paragraph (1)(B)(ii) shall take effect as of the 
     first day of the month in which the individual attains 62 
     years of age, unless the individual has enrolled under this 
     part pursuant to section 1859(b) and section 1859E(c)(1).''; 
     and
       (6) in subsection (d)(2), by adding at the end the 
     following new subparagraph:
       ``(D) Access to coverage.--The termination of a coverage 
     period under paragraph (1)(C) shall take effect on the date 
     on which the individual is eligible to begin a period of 
     creditable coverage (as defined in section 2701(c) of the 
     Public Health Service Act) under a group health plan or under 
     a Federal health insurance program.''.
       (c) Premiums.--Section 1859B of such Act, as so inserted, 
     is amended--
       (1) in subsection (a)(1), by adding at the end the 
     following:
       ``(B) Base monthly premium for individuals under 62 years 
     of age.--A base monthly premium for individuals under 62 
     years of age, equal to \1/12\ of the base annual premium rate 
     computed under subsection (d)(3) for each premium area and 
     age cohort.''; and
       (2) by adding at the end the following new subsection:
       ``(d) Base Monthly Premium for Individuals Under 62 Years 
     of Age.--
       ``(1) National, per capita average for age groups.--
       ``(A) Estimate of amount.--The Secretary shall estimate the 
     average, annual per capita amount that would be payable under 
     this title with respect to individuals residing in the United 
     States who meet the requirement of section 1859(c)(1)(A) 
     within each of the age cohorts established under subparagraph 
     (B) as if all such individuals within such cohort were 
     eligible for (and enrolled) under this title during the 
     entire year (and assuming that section 1862(b)(2)(A)(i) did 
     not apply).
       ``(B) Age cohorts.--For purposes of subparagraph (A), the 
     Secretary shall establish separate age cohorts in 5-year age 
     increments for individuals who have not attained 60 years of 
     age and a separate cohort for individuals who have attained 
     60 years of age.
       ``(2) Geographic adjustment.--The Secretary shall adjust 
     the amount determined under paragraph (1)(A) for each premium 
     area (specified under subsection (a)(3)) in the same manner 
     and to the same extent as the Secretary provides for 
     adjustments under subsection (b)(2).
       ``(3) Base annual premium.--The base annual premium under 
     this subsection for months in a year for individuals in an 
     age cohort under paragraph (1)(B) in a premium area is equal 
     to 165 percent of the average, annual per capita amount 
     estimated under paragraph (1) for the age cohort and year, 
     adjusted for such area under paragraph (2).
       ``(4) Pro-ration of premiums to reflect coverage during a 
     part of a month.--If the Secretary provides for coverage of 
     portions of a month under section 1859A(c)(2), the Secretary 
     shall pro-rate the premiums attributable to such coverage 
     under this section to reflect the portion of the month so 
     covered.''.
       (d) Administrative Provisions.--Section 1859F of such Act, 
     as so inserted, is amended by adding at the end the 
     following:
       ``(d) Additional Administrative Provisions.--
       ``(1) Process for continued enrollment of displaced workers 
     who attain 62 years of age.--The Secretary shall provide a 
     process for the continuation of enrollment of individuals 
     whose enrollment under section 1859(c) would be terminated 
     upon attaining 62 years of age. Under such process such 
     individuals shall be provided appropriate and timely notice 
     before the date of such termination and of the requirement to 
     enroll under this part pursuant to section 1859(b) in order 
     to continue entitlement to benefits under this title after 
     attaining 62 years of age.
       ``(2) Arrangements with states for determinations relating 
     to unemployment compensation eligibility.--The Secretary may 
     provide for appropriate arrangements with States for the 
     determination of whether individuals in the State meet or 
     would meet the requirements of section 1859(c)(1)(C)(i).''.
       (e) Conforming Amendment to Heading to Part.--The heading 
     of part D of title XVIII of the Social Security Act, as so 
     inserted, is amended by striking ``62'' and inserting ``55''.

     SEC. 6. PROVISIONS TO MAKE FEHBP COVERAGE AVAILABLE FOR THE 
                   SELF-EMPLOYED.

       Chapter 89 of title 5, United States Code, is amended by 
     adding at the end the following:

     ``Sec. 8915. Expanded access to coverage for the self-
       employed

       ``(a) The Office of Personnel Management (referred to in 
     this section as the `Office') shall administer a health 
     insurance program for eligible individuals who are non-
     Federal employees in accordance with this section.
       ``(b) The term `eligible individual' means a self-employed 
     individual as defined in section 401(c)(1) of the Internal 
     Revenue Code of 1986.
       ``(c) The Office shall prescribe regulations to apply the 
     provisions of this chapter to the greatest extent practicable 
     to eligible individuals covered under this section.
       ``(c) In no event shall the enactment of this section 
     result in--
       ``(1) any increase in the level of individual or Government 
     contributions required under this chapter, including 
     copayments or deductibles;
       ``(2) any decrease in the types of benefits offered under 
     this chapter; or
       ``(3) any other change that would adversely affect the 
     coverage afforded under this chapter to employees and 
     annuitants and members of family under this chapter.
       ``(d) The Office shall develop methods to facilitate 
     enrollment under this section, including the use of the 
     Internet.
       ``(e) The Office may enter into contracts for the 
     performance of appropriate administrative functions under 
     this chapter.
       ``(f) Each contract entered into under section 8902 shall 
     require a carrier to offer to eligible individuals under this 
     chapter, throughout each term for which the contract remains 
     effective, the same benefits (subject to the same maximums, 
     limitations, exclusions, and other similar terms or 
     conditions) as would be offered under such contract or 
     applicable health benefits plan to employees, annuitants, and 
     members of family.
       ``(g)(1) The Office may waive the requirements of this 
     section, if the Office determines, based on a petition 
     submitted by a carrier that--
       ``(A) the carrier is unable to offer the applicable health 
     benefits plan because of a limitation in the capacity of the 
     plan to deliver services or assure financial solvency;
       ``(B) the applicable health benefits plan is not sponsored 
     by a carrier licensed under applicable State law; or
       ``(C) bona fide enrollment restrictions make the 
     application of this chapter inappropriate, including 
     restrictions common to plans which are limited to individuals 
     having a past or current employment relationship with a 
     particular agency or other authority of the Government.
       ``(2) The Office may require a petition under this 
     subsection to include--
       ``(A) a description of the efforts the carrier proposes to 
     take in order to offer the applicable health benefits plan 
     under this chapter; and
       ``(B) the proposed date for offering such a health benefits 
     plan.
       ``(3) A waiver under this section may be for any period 
     determined by the Office. The Office may grant subsequent 
     waivers under this section.
       ``(h) The Office shall provide for the implementation of 
     procedures to provide for an annual open enrollment period 
     during which eligible individuals may enroll with a plan or 
     contract for coverage under this section.
       ``(i) Except as the Office may by regulation prescribe, any 
     reference to this chapter (or any requirement of this 
     chapter), made in any provision of law, shall not be 
     considered to include this section (or any requirement of 
     this section).
       ``(j) This section shall take effect on the date of 
     enactment of this section and shall apply to contracts that 
     take effect with respect to calendar year 2002 and each 
     calendar year thereafter.''.

     SEC. 7. MEDIKIDS HEALTH INSURANCE.

       (a) Benefits for all Children Born After 2002.--
       (1) In general.--The Social Security Act is amended by 
     adding at the end the following:

                     ``TITLE XXII--MEDIKIDS PROGRAM

     ``SEC. 2201. ELIGIBILITY.

       ``(a) Eligibility of Individuals Born After December 31, 
     2002; All Children

[[Page S15660]]

     Under 23 Years of Age in Sixth Year.--An individual who meets 
     the following requirements with respect to a month is 
     eligible to enroll under this title with respect to such 
     month:
       ``(1) Age.--
       ``(A) First year.--During the first year in which this 
     title is effective, the individual has not attained 6 years 
     of age.
       ``(B) Second year.--During the second year in which this 
     title is effective, the individual has not attained 11 years 
     of age.
       ``(C) Third year.--During the third year in which this 
     title is effective, the individual has not attained 16 years 
     of age.
       ``(D) Fourth year.--During the fourth year in which this 
     title is effective, the individual has not attained 21 years 
     of age.
       ``(E) Fifth and subsequent years.--During the fifth year in 
     which this title is effective and each subsequent year, the 
     individual has not attained 23 years of age.
       ``(2) Citizenship.--The individual is a citizen or national 
     of the United States or is permanently residing in the United 
     States under color of law.
       ``(b) Enrollment Process.--An individual may enroll in the 
     program established under this title only in such manner and 
     form as may be prescribed by regulations, and only during an 
     enrollment period prescribed by the Secretary consistent with 
     the provisions of this section. Such regulations shall 
     provide a process under which--
       ``(1) individuals who are born in the United States after 
     December 31, 2002, are deemed to be enrolled at the time of 
     birth and a parent or guardian of such an individual is 
     permitted to pre-enroll in the month prior to the expected 
     month of birth;
       ``(2) individuals who are born outside the United States 
     after such date and who become eligible to enroll by virtue 
     of immigration into (or an adjustment of immigration status 
     in) the United States are deemed enrolled at the time of 
     entry or adjustment of status;
       ``(3) eligible individuals may otherwise be enrolled at 
     such other times and manner as the Secretary shall specify, 
     including the use of outstationed eligibility sites as 
     described in section 1902(a)(55)(A) and the use of 
     presumptive eligibility provisions like those described in 
     section 1920A; and
       ``(4) at the time of automatic enrollment of a child, the 
     Secretary provides for issuance to a parent or custodian of 
     the individual a card evidencing coverage under this title 
     and for a description of such coverage.

     The provisions of section 1837(h) apply with respect to 
     enrollment under this title in the same manner as they apply 
     to enrollment under part B of title XVIII.
       ``(c) Date Coverage Begins.--
       ``(1) In general.--The period during which an individual is 
     entitled to benefits under this title shall begin as follows, 
     but in no case earlier than January 1, 2003:
       ``(A) In the case of an individual who is enrolled under 
     paragraph (1) or (2) of subsection (b), the date of birth or 
     date of obtaining appropriate citizenship or immigration 
     status, as the case may be.
       ``(B) In the case of an another individual who enrolls 
     (including pre-enrolls) before the month in which the 
     individual satisfies eligibility for enrollment under 
     subsection (a), the first day of such month of eligibility.
       ``(C) In the case of an another individual who enrolls 
     during or after the month in which the individual first 
     satisfies eligibility for enrollment under such subsection, 
     the first day of the following month.
       ``(2) Authority to provide for partial months of 
     coverage.--Under regulations, the Secretary may, in the 
     Secretary's discretion, provide for coverage periods that 
     include portions of a month in order to avoid lapses of 
     coverage.
       ``(3) Limitation on payments.--No payments may be made 
     under this title with respect to the expenses of an 
     individual enrolled under this title unless such expenses 
     were incurred by such individual during a period which, with 
     respect to the individual, is a coverage period under this 
     section.
       ``(d) Expiration of Eligibility.--An individual's coverage 
     period under this part shall continue until the individual's 
     enrollment has been terminated because the individual no 
     longer meets the requirements of subsection (a) (whether 
     because of age or change in immigration status).
       ``(e) Entitlement to MediKids Benefits for Enrolled 
     Individuals.--An individual enrolled under this section is 
     entitled to the benefits described in section 2202.
       ``(f) Low-Income Information.--At the time of enrollment of 
     a child under this title, the Secretary shall make an inquiry 
     as to whether or not the family income of the family that 
     includes the child is less than 150 percent of the poverty 
     line for a family of the size involved. If the family income 
     is below such level, the Secretary shall encode in the 
     identification card issued in connection with eligibility 
     under this title a code indicating such fact. The Secretary 
     also shall provide for a toll-free telephone line at which 
     providers can verify whether or not such a child is in a 
     family the income of which is below such level.
       ``(g) Construction.--Nothing in this title shall be 
     construed as requiring (or preventing) an individual who is 
     enrolled under this section from seeking medical assistance 
     under a State medicaid plan under title XIX or child health 
     assistance under a State child health plan under title XXI.

     ``SEC. 2202. BENEFITS.

       ``(a) Secretarial Specification of Benefit Package.--
       ``(1) In general.--The Secretary shall specify the benefits 
     to be made available under this title consistent with the 
     provisions of this section and in a manner designed to meet 
     the health needs of enrollees.
       ``(2) Updating.--The Secretary shall update the 
     specification of benefits over time to ensure the inclusion 
     of age-appropriate benefits to reflect the enrollee 
     population.
       ``(3) Annual updating.--The Secretary shall establish 
     procedures for the annual review and updating of such 
     benefits to account for changes in medical practice, new 
     information from medical research, and other relevant 
     developments in health science.
       ``(4) Input.--The Secretary shall seek the input of the 
     pediatric community in specifying and updating such benefits.
       ``(5) Limitation on updating.--In no case shall updating of 
     benefits under this subsection result in a failure to provide 
     benefits required under subsection (b).
       ``(b) Inclusion of Certain Benefits.--
       ``(1) Medicare core benefits.--Such benefits shall include 
     (to the extent consistent with other provisions of this 
     section) at least the same benefits (including coverage, 
     access, availability, duration, and beneficiary rights) that 
     are available under parts A and B of title XVIII.
       ``(2) All required medicaid benefits.--Such benefits shall 
     also include all items and services for which medical 
     assistance is required to be provided under section 
     1902(a)(10)(A) to individuals described in such section, 
     including early and periodic screening, diagnostic services, 
     and treatment services.
       ``(3) Inclusion of prescription drugs.--Such benefits also 
     shall include (as specified by the Secretary) prescription 
     drugs and biologicals.
       ``(4) Cost-sharing.--
       ``(A) In general.--Subject to subparagraph (B), such 
     benefits also shall include the cost-sharing (in the form of 
     deductibles, coinsurance, and copayments) applicable under 
     title XVIII with respect to comparable items and services, 
     except that no cost-sharing shall be imposed with respect to 
     early and periodic screening and diagnostic services included 
     under paragraph (2).
       ``(B) No cost-sharing for lowest income children.--Such 
     benefits shall not include any cost-sharing for children in 
     families the income of which (as determined for purposes of 
     section 1905(p)) does not exceed 150 percent of the official 
     income poverty line (referred to in such section) applicable 
     to a family of the size involved.
       ``(C) Refundable credit for cost-sharing for other low-
     income children.--For a refundable credit for cost-sharing in 
     the case of children in certain families, see section 35 of 
     the Internal Revenue Code of 1986.
       ``(c) Payment Schedule.--The Secretary, with the assistance 
     of the Medicare Payment Advisory Commission, shall develop 
     and implement a payment schedule for benefits covered under 
     this title. To the extent feasible, such payment schedule 
     shall be consistent with comparable payment schedules and 
     reimbursement methodologies applied under parts A and B of 
     title XVIII.
       ``(d) Input.--The Secretary shall specify such benefits and 
     payment schedules only after obtaining input from appropriate 
     child health providers and experts.
       ``(e) Enrollment in Health Plans.--The Secretary shall 
     provide for the offering of benefits under this title through 
     enrollment in a health benefit plan that meets the same (or 
     similar) requirements as the requirements that apply to 
     Medicare+Choice plans under part C of title XVIII. In the 
     case of individuals enrolled under this title in such a plan, 
     the Medicare+Choice capitation rate described in section 
     1853(c) shall be adjusted in an appropriate manner to reflect 
     differences between the population served under this title 
     and the population under title XVIII.

     ``SEC. 2203. PREMIUMS.

       ``(a) Amount of Monthly Premiums.--
       ``(1) In general.--The Secretary shall, during September of 
     each year (beginning with 2002), establish a monthly MediKids 
     premium. Subject to paragraph (2), the monthly MediKids 
     premium for a year is equal to \1/12\ of the annual premium 
     rate computed under subsection (b).
       ``(2) Elimination of monthly premium for demonstration of 
     equivalent coverage (including coverage under low-income 
     programs).--The amount of the monthly premium imposed under 
     this section for an individual for a month shall be zero in 
     the case of an individual who demonstrates to the 
     satisfaction of the Secretary that the individual has basic 
     health insurance coverage for that month. For purposes of the 
     previous sentence enrollment in a medicaid plan under title 
     XIX, a State child health insurance plan under title XXI, or 
     under the medicare program under title XVIII is deemed to 
     constitute basic health insurance coverage described in such 
     sentence.
       ``(b) Annual Premium.--
       ``(1) National, per capita average.--The Secretary shall 
     estimate the average, annual per capita amount that would be 
     payable under this title with respect to individuals residing 
     in the United States who meet the requirement of section 
     2201(a)(1) as if all such individuals were eligible for (and 
     enrolled) under this title during the entire year (and 
     assuming that section 1862(b)(2)(A)(i) did not apply).
       ``(2) Annual premium.--Subject to subsection (d), the 
     annual premium under this

[[Page S15661]]

     subsection for months in a year is equal to 25 percent of the 
     average, annual per capita amount estimated under paragraph 
     (1) for the year.
       ``(c) Payment of Monthly Premium.--
       ``(1) Period of payment.--In the case of an individual who 
     participates in the program established by this title, 
     subject to subsection (d), the monthly premium shall be 
     payable for the period commencing with the first month of the 
     individual's coverage period and ending with the month in 
     which the individual's coverage under this title terminates.
       ``(2) Collection through tax return.--For provisions 
     providing for the payment of monthly premiums under this 
     subsection, see section 59B of the Internal Revenue Code of 
     1986.
       ``(3) Protections against fraud and abuse.--The Secretary 
     shall develop, in coordination with States and other health 
     insurance issuers, administrative systems to ensure that 
     claims which are submitted to more than one payor are 
     coordinated and duplicate payments are not made.
       ``(d) Reduction in Premium for Certain Low-Income 
     Families.--For provisions reducing the premium under this 
     section for certain low-income families, see section 59B(c) 
     of the Internal Revenue Code of 1986.

     ``SEC. 2204. MEDIKIDS TRUST FUND.

       ``(a) Establishment of Trust Fund.--
       ``(1) In general.--There is hereby created on the books of 
     the Treasury of the United States a trust fund to be known as 
     the `MediKids Trust Fund' (in this section referred to as the 
     `Trust Fund'). The Trust Fund shall consist of such gifts and 
     bequests as may be made as provided in section 201(i)(1) and 
     such amounts as may be deposited in, or appropriated to, such 
     fund as provided in this title.
       ``(2) Premiums.--Premiums collected under section 2203 
     shall be transferred to the Trust Fund.
       ``(b) Incorporation of Provisions.--
       ``(1) In general.--Subject to paragraph (2), subsections 
     (b) through (i) of section 1841 shall apply with respect to 
     the Trust Fund and this title in the same manner as they 
     apply with respect to the Federal Supplementary Medical 
     Insurance Trust Fund and part B, respectively.
       ``(2) Miscellaneous references.--In applying provisions of 
     section 1841 under paragraph (1)--
       ``(A) any reference in such section to `this part' is 
     construed to refer to title XXII;
       ``(B) any reference in section 1841(h) to section 1840(d) 
     and in section 1841(i) to sections 1840(b)(1) and 1842(g) are 
     deemed references to comparable authority exercised under 
     this title;
       ``(C) payments may be made under section 1841(g) to the 
     Trust Funds under sections 1817 and 1841 as reimbursement to 
     such funds for payments they made for benefits provided under 
     this title; and
       ``(D) the Board of Trustees of the MediKids Trust Fund 
     shall be the same as the Board of Trustees of the Federal 
     Supplementary Medical Insurance Trust Fund.

     ``SEC. 2205. OVERSIGHT AND ACCOUNTABILITY.

       ``(a) Through Annual Reports of Trustees.--The Board of 
     Trustees of the MediKids Trust Fund under section 2204(b)(1) 
     shall report on an annual basis to Congress concerning the 
     status of the Trust Fund and the need for adjustments in the 
     program under this title to maintain financial solvency of 
     the program under this title.
       ``(b) Periodic GAO Reports.--The Comptroller General of the 
     United States shall periodically submit to Congress reports 
     on the adequacy of the financing of coverage provided under 
     this title. The Comptroller General shall include in such 
     report such recommendations for adjustments in such financing 
     and coverage as the Comptroller General deems appropriate in 
     order to maintain financial solvency of the program under 
     this title.

     ``SEC. 2206. INCLUSION OF CARE COORDINATION SERVICES.

       ``(a) In General.--
       ``(1) Program authority.--The Secretary, beginning in 2003, 
     may implement a care coordination services program in 
     accordance with the provisions of this section under which, 
     in appropriate circumstances, eligible individuals may elect 
     to have health care services covered under this title managed 
     and coordinated by a designated care coordinator.
       ``(2) Administration by contract.--The Secretary may 
     administer the program under this section through a contract 
     with an appropriate program administrator.
       ``(3) Coverage.--Care coordination services furnished in 
     accordance with this section shall be treated under this 
     title as if they were included in the definition of medical 
     and other health services under section 1861(s) and benefits 
     shall be available under this title with respect to such 
     services without the application of any deductible or 
     coinsurance.
       ``(b) Eligibility Criteria; Identification and Notification 
     of Eligible Individuals.--
       ``(1) Individual eligibility criteria.--The Secretary shall 
     specify criteria to be used in making a determination as to 
     whether an individual may appropriately be enrolled in the 
     care coordination services program under this section, which 
     shall include at least a finding by the Secretary that for 
     cohorts of individuals with characteristics identified by the 
     Secretary, professional management and coordination of care 
     can reasonably be expected to improve processes or outcomes 
     of health care and to reduce aggregate costs to the programs 
     under this title.
       ``(2) Procedures to facilitate enrollment.--The Secretary 
     shall develop and implement procedures designed to facilitate 
     enrollment of eligible individuals in the program under this 
     section.
       ``(c) Enrollment of Individuals.--
       ``(1) Secretary's determination of eligibility.--The 
     Secretary shall determine the eligibility for services under 
     this section of individuals who are enrolled in the program 
     under this section and who make application for such services 
     in such form and manner as the Secretary may prescribe.
       ``(2) Enrollment period.--
       ``(A) Effective date and duration.--Enrollment of an 
     individual in the program under this section shall be 
     effective as of the first day of the month following the 
     month in which the Secretary approves the individual's 
     application under paragraph (1), shall remain in effect for 
     one month (or such longer period as the Secretary may 
     specify), and shall be automatically renewed for additional 
     periods, unless terminated in accordance with such procedures 
     as the Secretary shall establish by regulation. Such 
     procedures shall permit an individual to disenroll for cause 
     at any time and without cause at re-enrollment intervals.
       ``(B) Limitation on reenrollment.--The Secretary may 
     establish limits on an individual's eligibility to reenroll 
     in the program under this section if the individual has 
     disenrolled from the program more than once during a 
     specified time period.
       ``(d) Program.--The care coordination services program 
     under this section shall include the following elements:
       ``(1) Basic care coordination services.--
       ``(A) In general.--Subject to the cost-effectiveness 
     criteria specified in subsection (b)(1), except as otherwise 
     provided in this section, enrolled individuals shall receive 
     services described in section 1905(t)(1) and may receive 
     additional items and services as described in subparagraph 
     (B).
       ``(B) Additional benefits.--The Secretary may specify 
     additional benefits for which payment would not otherwise be 
     made under this title that may be available to individuals 
     enrolled in the program under this section (subject to an 
     assessment by the care coordinator of an individual's 
     circumstance and need for such benefits) in order to 
     encourage enrollment in, or to improve the effectiveness of, 
     such program.
       ``(2) Care coordination requirement.--Notwithstanding any 
     other provision of this title, the Secretary may provide that 
     an individual enrolled in the program under this section may 
     be entitled to payment under this title for any specified 
     health care items or services only if the items or services 
     have been furnished by the care coordinator, or coordinated 
     through the care coordination services program. Under such 
     provision, the Secretary shall prescribe exceptions for 
     emergency medical services as described in section 
     1852(d)(3), and other exceptions determined by the Secretary 
     for the delivery of timely and needed care.
       ``(e) Care Coordinators.--
       ``(1) Conditions of participation.--In order to be 
     qualified to furnish care coordination services under this 
     section, an individual or entity shall--
       ``(A) be a health care professional or entity (which may 
     include physicians, physician group practices, or other 
     health care professionals or entities the Secretary may find 
     appropriate) meeting such conditions as the Secretary may 
     specify;
       ``(B) have entered into a care coordination agreement; and
       ``(C) meet such criteria as the Secretary may establish 
     (which may include experience in the provision of care 
     coordination or primary care physician's services).
       ``(2) Agreement term; payment.--
       ``(A) Duration and renewal.--A care coordination agreement 
     under this subsection shall be for one year and may be 
     renewed if the Secretary is satisfied that the care 
     coordinator continues to meet the conditions of participation 
     specified in paragraph (1).
       ``(B) Payment for services.--The Secretary may negotiate or 
     otherwise establish payment terms and rates for services 
     described in subsection (d)(1).
       ``(C) Liability.--Case coordinators shall be subject to 
     liability for actual health damages which may be suffered by 
     recipients as a result of the care coordinator's decisions, 
     failure or delay in making decisions, or other actions as a 
     care coordinator.
       ``(D) Terms.--In addition to such other terms as the 
     Secretary may require, an agreement under this section shall 
     include the terms specified in subparagraphs (A) through (C) 
     of section 1905(t)(3).

     ``SEC. 2207. ADMINISTRATION AND MISCELLANEOUS.

       ``(a) In General.--Except as otherwise provided in this 
     title--
       ``(1) the Secretary shall enter into appropriate contracts 
     with providers of services, other health care providers, 
     carriers, and fiscal intermediaries, taking into account the 
     types of contracts used under title XVIII with respect to 
     such entities, to administer the program under this title;
       ``(2) individuals enrolled under this title shall be 
     treated for purposes of title XVIII as though the individual 
     were entitled to benefits under part A and enrolled under 
     part B of such title;
       ``(3) benefits described in section 2202 that are payable 
     under this title to such individuals shall be paid in a 
     manner specified by

[[Page S15662]]

     the Secretary (taking into account, and based to the greatest 
     extent practicable upon, the manner in which they are 
     provided under title XVIII);
       ``(4) provider participation agreements under title XVIII 
     shall apply to enrollees and benefits under this title in the 
     same manner as they apply to enrollees and benefits under 
     title XVIII; and
       ``(5) individuals entitled to benefits under this title may 
     elect to receive such benefits under health plans in a 
     manner, specified by the Secretary, similar to the manner 
     provided under part C of title XVIII.
       ``(b) Coordination With Medicaid and SCHIP.--
     Notwithstanding any other provision of law, individuals 
     entitled to benefits for items and services under this title 
     who also qualify for benefits under title XIX or XXI or any 
     other Federally funded program may continue to qualify and 
     obtain benefits under such other title or program, and in 
     such case such an individual shall elect either--
       ``(1) such other title or program to be primary payor to 
     benefits under this title, in which case no benefits shall be 
     payable under this title and the monthly premium under 
     section 2203 shall be zero; or
       ``(2) benefits under this title shall be primary payor to 
     benefits provided under such program or title, in which case 
     the Secretary shall enter into agreements with States as may 
     be appropriate to provide that, in the case of such 
     individuals, the benefits under titles XIX and XXI or such 
     other program (including reduction of cost-sharing) are 
     provided on a `wrap-around' basis to the benefits under this 
     title.''.
       (2) Conforming amendments to social security act 
     provisions.--
       (A) Section 201(i)(1) of the Social Security Act (42 U.S.C. 
     401(i)(1)) is amended by striking ``or the Federal 
     Supplementary Medical Insurance Trust Fund'' and inserting 
     ``the Federal Supplementary Medical Insurance Trust Fund, and 
     the MediKids Trust Fund''.
       (B) Section 201(g)(1)(A) of such Act (42 U.S.C. 
     401(g)(1)(A)) is amended by striking `` and the Federal 
     Supplementary Medical Insurance Trust Fund established by 
     title XVIII'' and inserting ``, the Federal Supplementary 
     Medical Insurance Trust Fund, and the MediKids Trust Fund 
     established by title XVIII''.
       (C) Section 1853(c) of such Act (42 U.S.C. 1395w-23(c)) is 
     amended--
       (i) in paragraph (1), by striking ``or (7)'' and inserting 
     ``, (7), or (8)'', and
       (ii) by adding at the end the following:
       ``(8) Adjustment for medikids.--In applying this subsection 
     with respect to individuals entitled to benefits under title 
     XXII, the Secretary shall provide for an appropriate 
     adjustment in the Medicare+Choice capitation rate as may be 
     appropriate to reflect differences between the population 
     served under such title and the population under parts A and 
     B.''.
       (3) Maintenance of medicaid eligibility and benefits for 
     children.--
       (A) In general.--In order for a State to continue to be 
     eligible for payments under section 1903(a) of the Social 
     Security Act (42 U.S.C. 1396b(a))--
       (i) the State may not reduce standards of eligibility, or 
     benefits, provided under its State medicaid plan under title 
     XIX of the Social Security Act or under its State child 
     health plan under title XXI of such Act for individuals under 
     23 years of age below such standards of eligibility, and 
     benefits, in effect on the date of the enactment of this Act; 
     and
       (ii) the State shall demonstrate to the satisfaction of the 
     Secretary of Health and Human Services that any savings in 
     State expenditures under title XIX or XXI of the Social 
     Security Act that results from children from enrolling under 
     title XXII of such Act shall be used in a manner that 
     improves services to beneficiaries under title XIX of such 
     Act, such as through increases in provider payment rates, 
     expansion of eligibility, improved nurse and nurse aide 
     staffing and improved inspections of nursing facilities, and 
     coverage of additional services.
       (B) Medikids as primary payor.--In applying title XIX of 
     the Social Security Act, the MediKids program under title 
     XXII of such Act shall be treated as a primary payor in cases 
     in which the election described in section 2207(b)(2) of such 
     Act, as added by subsection (a), has been made.
       (4) Expansion of MedPAC membership to 19.--
       (A) In general.--Section 1805(c) of the Social Security Act 
     (42 U.S.C. 1395b-6(c)) is amended--
       (i) in paragraph (1), by striking ``17'' and inserting 
     ``19''; and
       (ii) in paragraph (2)(B), by inserting ``experts in 
     children's health,'' after ``other health professionals,''.
       (B) Initial terms of additional members.--
       (i) In general.--For purposes of staggering the initial 
     terms of members of the Medicare Payment Advisory Commission 
     under section 1805(c)(3) of the Social Security Act (42 
     U.S.C. 1395b-6(c)(3)), the initial terms of the 2 additional 
     members of the Commission provided for by the amendment under 
     subsection (a)(1) are as follows:

       (I) One member shall be appointed for 1 year.
       (II) One member shall be appointed for 2 years.

       (ii) Commencement of terms.--Such terms shall begin on 
     January 1, 2002.
       (b) Medikids Premium.--
       (1) In general.--Subchapter A of chapter 1 of the Internal 
     Revenue Code of 1986 (relating to determination of tax 
     liability) is amended by adding at the end the following new 
     part:

                     ``PART VIII--MEDIKIDS PREMIUM

``Sec. 59B. MediKids premium.

     ``SEC. 59B. MEDIKIDS PREMIUM.

       ``(a) Imposition of Tax.--In the case of an individual to 
     whom this section applies, there is hereby imposed (in 
     addition to any other tax imposed by this subtitle) a 
     MediKids premium for the taxable year.
       ``(b) Individuals Subject to Premium.--
       ``(1) In general.--This section shall apply to an 
     individual if the taxpayer has a MediKid at any time during 
     the taxable year.
       ``(2) Medikid.--For purposes of this section, the term 
     `MediKid' means, with respect to a taxpayer, any individual 
     with respect to whom the taxpayer is required to pay a 
     premium under section 2203(c) of the Social Security Act for 
     any month of the taxable year.
       ``(c) Amount of Premium.--For purposes of this section, the 
     MediKids premium for a taxable year is the sum of the monthly 
     premiums under section 2203 of the Social Security Act for 
     months in the taxable year.
       ``(d) Exceptions Based on Adjusted Gross Income.--
       ``(1) Exemption for very low-income taxpayers.--
       ``(A) In general.--No premium shall be imposed by this 
     section on any taxpayer having an adjusted gross income not 
     in excess of the exemption amount.
       ``(B) Exemption amount.--For purposes of this paragraph, 
     the exemption amount is--
       ``(i) $17,415 in the case of a taxpayer having 1 MediKid,
       ``(ii) $21,945 in the case of a taxpayer having 2 MediKids,
       ``(iii) $26,475 in the case of a taxpayer having 3 
     MediKids, and
       ``(iv) $31,005 in the case of a taxpayer having 4 or more 
     MediKids.
       ``(C) Phaseout of exemption.--In the case of a taxpayer 
     having an adjusted gross income which exceeds the exemption 
     amount but does not exceed twice the exemption amount, the 
     premium shall be the amount which bears the same ratio to the 
     premium which would (but for this subparagraph) apply to the 
     taxpayer as such excess bears to the exemption amount.
       ``(D) Inflation adjustment of exemption amounts.--In the 
     case of any taxable year beginning in a calendar year after 
     2001, each dollar amount contained in subparagraph (C) shall 
     be increased by an amount equal to the product of--
       ``(i) such dollar amount, and
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2000' 
     for `calendar year 1992' in subparagraph (B) thereof.

     If any increase determined under the preceding sentence is 
     not a multiple of $50, such increase shall be rounded to the 
     nearest multiple of $50.
       ``(2) Premium limited to 5 percent of adjusted gross 
     income.--In no event shall any taxpayer be required to pay a 
     premium under this section in excess of an amount equal to 5 
     percent of the taxpayer's adjusted gross income.
       ``(e) Coordination With Other Provisions.--
       ``(1) Not treated as medical expense.--For purposes of this 
     chapter, any premium paid under this section shall not be 
     treated as expense for medical care.
       ``(2) Not treated as tax for certain purposes.--The premium 
     paid under this section shall not be treated as a tax imposed 
     by this chapter for purposes of determining--
       ``(A) the amount of any credit allowable under this 
     chapter, or
       ``(B) the amount of the minimum tax imposed by section 55.
       ``(3) Treatment under subtitle f.--For purposes of subtitle 
     F, the premium paid under this section shall be treated as if 
     it were a tax imposed by section 1.''.
       (2) Technical amendments.--
       (A) Subsection (a) of section 6012 of such Code is amended 
     by inserting after paragraph (9) the following new paragraph:
       ``(10) Every individual liable for a premium under section 
     59B.''.
       (B) The table of parts for subchapter A of chapter 1 of 
     such Code is amended by adding at the end the following new 
     item:

``Part VIII. MediKids premium.''.

       (3) Effective date.--The amendments made by this subsection 
     shall apply to months beginning after December 2002, in 
     taxable years ending after such date.
       (c) Refundable Credit for Cost-Sharing Expenses Under 
     Medikids Program.--
       (1) 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 35 as 
     section 36 and by inserting after section 34 the following 
     new section:

     ``SEC. 35. COST-SHARING EXPENSES UNDER MEDIKIDS PROGRAM.

       ``(a) Allowance of Credit.--In the case of an individual 
     who has a MediKid (as defined in section 59B) at any time 
     during the taxable year, there shall be allowed as a credit 
     against the tax imposed by this subtitle an amount equal to 
     50 percent of the amount paid by the taxpayer during the 
     taxable year as cost-sharing under section 2202(b)(4) of the 
     Social Security Act.

[[Page S15663]]

       ``(b) Limitation Based on Adjusted Gross Income.--The 
     amount of the credit which would (but for this subsection) be 
     allowed under this section for the taxable year shall be 
     reduced (but not below zero) by an amount which bears the 
     same ratio to such amount of credit as the excess of the 
     taxpayer's adjusted gross income for such taxable year over 
     the exemption amount (as defined in section 59B(d)) bears to 
     such exemption amount.''.
       (2) Technical amendments.--
       (A) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting before the period ``or 
     from section 35 of such Code''.
       (B) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 of such Code is amended by striking 
     the last item and inserting the following new items:

``Sec. 35. Cost-sharing expenses under MediKids program.
``Sec. 36. Overpayments of tax.''.

       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2002.
       (d) Report on Long-Term Revenues.--Within 1 year after the 
     date of enactment of this Act, the Secretary of the Treasury 
     shall propose a gradual schedule of progressive tax changes 
     to fund the program under title XXII of the Social Security 
     Act, as the number of enrollees grows in the out-years.

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