[Congressional Record Volume 153, Number 1 (Thursday, January 4, 2007)]
[Senate]
[Pages S94-S98]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KERRY (for himself, Mr. Kennedy, Ms. Cantwell, Ms. 
        Landrieu, Mr. Lautenberg, and Mrs. Murray):
  S. 95. A bill to amend titles XIX and XXI of the Social Security Act 
to ensure that every uninsured child in America has health insurance 
coverage, and for other purposes; to the Committee on Finance.
  Mr. KERRY. Mr. President, today the first bill I am introducing in 
the 110th Congress is the Kids Come First Act, legislation that would 
ensure every child in America has health care coverage. The Kids Come 
First Act was also the first bill I introduced in the 109th Congress 
and I feel just as strongly today as I did at the beginning of the last 
Congress that insuring all children must be a top agenda item. In the 
two years since I last introduced this bill, the problem of uninsured 
children in this nation has actually worsened.
  The 110th Congress faces many challenges, from the war in Iraq to 
lobbying reform. But perhaps no issue bears more directly on the lives 
of more Americans than health care reform. Today 47 million Americans 
are uninsured, including 11 million under age 21. Health care has 
become a slow-motion Katrina that is ruining lives and bankrupting 
families all over the country. We cannot stand by as the ranks of the 
uninsured rise and American families find themselves in peril.
  A recent Census Bureau report revealed that for the first time in 
almost a decade the number of uninsured children increased. In 2005 
there were 361,000 children under the age of 18 added to the uninsured 
rolls. And the number of Americans without health care continues to 
rise.
  The Kids Come First Act calls for a Federal-State partnership to 
mandate health coverage to every child in America. The proposal makes 
the states an offer they can't refuse. The federal government will pay 
for the most expensive part: enrolling all low-income children in 
Medicaid, automatically. The states will pay to expand coverage to 
higher income children. In the end, states across the country will save 
more than $6 billion a year, and every child will have health care.
  It is totally unacceptable that, in the greatest country in the 
world, millions of children are not getting the health care they need. 
The Kids Come First Act expands coverage for children up to age of 21. 
Through expanding the programs that work, such as Medicaid and SCHIP, 
we can cover all eleven million children uninsured children.
  Insuring children improves their health and helps families cover the 
spiraling costs of insuring them. Covering all kids will reduce 
avoidable hospitalizations by 22 percent and replace expensive critical 
care with inexpensive preventative care. Also, when children get the 
medical attention they need, they pay much better attention in the 
classroom and studies show their performance improves.
  To pay for the expansion of health insurance for children, the Kids 
Come First Act includes a provision that provides the Secretary of 
Treasury with the authority to raise the highest income tax rate of 35 
percent to a rate not higher than 39.6 percent in order to offset the 
costs. Prior to the enactment of the Economic Growth and Tax Relief Act 
Reconciliation Act of 2001, the top marginal rate was 39.6 percent. 
Less than one percent of taxpayers pay the top rate and for 2007, this 
rate only affects individual with income above $349,700.
  The health care of our children is a priority that we must address 
and it can be done in a fiscally responsible manner. I will continue to 
work to find ways to offset the cost of my proposal. The wealthiest of 
all Americans do not need a tax cut when 11 million children do not 
even have health insurance. President Bush has called for this rate cut 
to be made permanent, but I believe it would be a better use of our 
resources to invest in our future by improving health care for 
children.
  Since I first introduced the Kids Come First Act in the 109th 
Congress, more than 500,000 people have shown their support for the 
bill by becoming Citizen Cosponsors and another 20,000 Americans called 
into our ``Give Voices to Our Values'' hotline to share their personal 
stories. In addition, a coalition of 24 non-profit organizations 
representing 20 million people from across the country have endorsed 
Kids Come First, including the National Association of Children's 
Hospitals, the American Academy of Pediatrics, the American Academy of 
Family Physicians, March of Dimes, the Small Business Service Bureau, 
AFL-CIO, SEIU, and AFSCME.
  It is clear that providing health care coverage for our uninsured 
children is a priority for our nation's workers, businesses, and health 
care community. They know, as I do, that further delay only results in 
graver health problems for America's children. Their future, and ours, 
depends on us doing better. I urge my colleagues to support and help 
enacting the Kids Come First Act of 2007 during this Congress.
  I ask unanimous consent that the text of the Kids Come First Act of 
2007 be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 95

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Kids Come 
     First Act of 2007''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.

    TITLE I--EXPANDED COVERAGE OF CHILDREN UNDER MEDICAID AND SCHIP

Sec. 101. State option to receive 100 percent FMAP for medical 
              assistance for children in poverty in exchange for 
              expanded coverage of children in working poor families 
              under Medicaid or SCHIP.
Sec. 102. Elimination of cap on SCHIP funding for States that expand 
              eligibility for children.

   TITLE II--STATE OPTIONS FOR INCREMENTAL CHILD COVERAGE EXPANSIONS

Sec. 201. State option to provide wrap-around SCHIP coverage to 
              children who have other health coverage.
Sec. 202. State option to enroll low-income children of State employees 
              in SCHIP.
Sec. 203. Optional coverage of legal immigrant children under Medicaid 
              and SCHIP.
Sec. 204. State option for passive renewal of eligibility for children 
              under Medicaid and SCHIP.

  TITLE III--TAX INCENTIVES FOR HEALTH INSURANCE COVERAGE OF CHILDREN

Sec. 301. Refundable credit for health insurance coverage of children.
Sec. 302. Forfeiture of personal exemption for any child not covered by 
              health insurance.

                        TITLE IV--MISCELLANEOUS

Sec. 401. Requirement for group market health insurers to offer 
              dependent coverage option for workers with children.
Sec. 402. Effective date.

                       TITLE V--REVENUE PROVISION

Sec. 501. Partial repeal of rate reduction in the highest income tax 
              bracket.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) Need for universal coverage.--
       (A) Currently, there are 9,000,000 children under the age 
     of 19 that are uninsured. One out of every 8 children are 
     uninsured while 1 in 5 Hispanic children and 1 in 7 African 
     American children are uninsured. Three-quarters, 
     approximately 6,800,000, of these children are eligible but 
     not enrolled in the Medicaid program or the State Children's 
     Health Insurance Program (SCHIP). Long-range studies found 
     that 1 in 3 children went without health insurance for all or 
     part of 2002 and 2003.
       (B) Low-income children are 3 times as likely as children 
     in higher income families to be uninsured. It is estimated 
     that 65 percent of uninsured children have at least 1 parent 
     working full time over the course of the year.
       (C) It is estimated that 50 percent of all legal immigrant 
     children in families with income that is less than 200 
     percent of the Federal poverty line are uninsured. In States 
     without programs to cover immigrant children, 57 percent of 
     noncitizen children are uninsured.

[[Page S95]]

       (D) Children in the Southern and Western parts of the 
     United States were nearly 1.7 times more likely to be 
     uninsured than children in the Northeast. In the Northeast, 
     9.4 percent of children are uninsured while in the Midwest, 
     8.3 percent are uninsured. The South's rate of uninsured 
     children is 14.3 percent while the West has an uninsured rate 
     of 13 percent.
       (E) Children's health care needs are neglected in the 
     United States. One out of every 5 children has problems 
     accessing needed care and one-quarter of young children in 
     the United States are not fully up to date on their basic 
     immunizations. One-third of children with chronic asthma do 
     not get a prescription for the necessary medications to 
     manage the disease and 1 out of every 4 children do not 
     receive annual dental exams.
       (F) Children without health insurance are twice as likely 
     as insured children to not receive any medical care in a 
     given year. According to the Centers for Disease Control and 
     Prevention, nearly \1/2\ of all uninsured children have not 
     had a well-child visit in the past year. One in 6 uninsured 
     children had a delayed or unmet medical need in the past 
     year. Minority children are less likely to receive proven 
     treatments such as prescription medications to treat chronic 
     disease.
       (G) There are 7,600,000 young adults between the ages of 19 
     and 20. In the United States, approximately 28 percent, or 
     2,100,000 individuals, of this group are uninsured.
       (H) Chronic illness and disability among children are on 
     the rise. Children most at risk for chronic illness and 
     disability are children who are most likely to be poor and 
     uninsured.
       (2) Role of the medicaid and state children's health 
     insurance programs.--
       (A) The Medicaid program and SCHIP serve as a crucial 
     health safety net for 30,000,000 children. During the recent 
     economic downturn and the highest number of uninsured 
     individuals ever recorded in the United States, the Medicaid 
     program and SCHIP offset losses in employer-sponsored 
     coverage. While the number of children living in low-income 
     families increased between 2000 and 2005, the number of 
     uninsured children fell due to the Medicaid program and 
     SCHIP.
       (B) 28,000,000 children are enrolled today in the Medicaid 
     program, accounting for \1/2\ of all enrollees and only 18 
     percent of total program costs.
       (C) The Medicaid program and SCHIP do more than just fill 
     in the gaps. Gains in public coverage have reduced the 
     percentage of low-income uninsured children by \1/3\ from 
     1997 to 2005. In addition, a study found that publicly-
     insured children are more likely to obtain medical care, 
     preventive care, and dental care than similar low-income 
     privately-insured children.
       (D) Publicly funded programs such as the Medicaid program 
     and SCHIP actually improve children's health. Children who 
     are currently insured by public programs are in better health 
     than they were a year ago. Expansion of coverage for children 
     and pregnant women under the Medicaid program and SCHIP 
     reduces rates of avoidable hospitalizations by 22 percent and 
     has been proven to reduce childhood deaths, infant mortality 
     rates, and the incidence of low birth weight.
       (E) Studies have found that children enrolled in public 
     insurance programs experienced a 68-percent improvement in 
     measures of school performance.
       (F) Despite the success of expansions in general under the 
     Medicaid program and SCHIP, due to current budget 
     constraints, many States have stopped doing aggressive 
     outreach and have raised premiums and cost-sharing 
     requirements on families under these programs. In addition, 8 
     States stopped enrollment in SCHIP for a period of time 
     between April 2003 and July 2004. As a result, SCHIP 
     enrollment fell by 200,000 children for the first time in the 
     program's history.
       (G) It is estimated that nearly 50 percent of children 
     covered through SCHIP do not remain in the program due to 
     reenrollment barriers. A recent study found that between 10 
     and 40 percent of these children are ``lost'' in the system. 
     Difficult renewal policies and reenrollment barriers make 
     seamless coverage in SCHIP unattainable. Studies indicate 
     that as many as 67 percent of children who were eligible but 
     not enrolled for SCHIP had applied for coverage but were 
     denied due to procedural issues.
       (H) While the Medicaid program and SCHIP expansions to date 
     have done much to offset what otherwise would have been a 
     significant loss of coverage among children because of 
     declining access to employer coverage, the shortcomings of 
     previous expansions, such as the failure to enroll all 
     eligible children and caps on enrollment in SCHIP because of 
     under-funding, also are clear.

    TITLE I--EXPANDED COVERAGE OF CHILDREN UNDER MEDICAID AND SCHIP

     SEC. 101. STATE OPTION TO RECEIVE 100 PERCENT FMAP FOR 
                   MEDICAL ASSISTANCE FOR CHILDREN IN POVERTY IN 
                   EXCHANGE FOR EXPANDED COVERAGE OF CHILDREN IN 
                   WORKING POOR FAMILIES UNDER MEDICAID OR SCHIP.

       (a) State Option.--Title XIX of the Social Security Act (42 
     U.S.C. 1396 et seq.) is amended by redesignating section 1939 
     as section 1940, and by inserting after section 1938 the 
     following:


 ``STATE OPTION FOR INCREASED FMAP FOR MEDICAL ASSISTANCE FOR CHILDREN 
  IN POVERTY IN EXCHANGE FOR EXPANDED COVERAGE OF CHILDREN IN WORKING 
              POOR FAMILIES UNDER THIS TITLE OR TITLE XXI

       ``Sec. 1939.  (a) 100 Percent FMAP.--
       ``(1) In general.--Notwithstanding any other provision of 
     this title, in the case of a State that, through an amendment 
     to each of its State plans under this title and title XXI (or 
     to a waiver of either such plan), agrees to satisfy the 
     conditions described in subsections (b), (c), and (d), the 
     Federal medical assistance percentage shall be 100 percent 
     with respect to the total amount expended by the State for 
     providing medical assistance under this title for each fiscal 
     year quarter beginning on or after the date described in 
     subsection (e) for children whose family income does not 
     exceed 100 percent of the poverty line.
       ``(2) Limitation on scope of application of increase.--The 
     increase in the Federal medical assistance percentage for a 
     State under this section shall apply only with respect to the 
     total amount expended for providing medical assistance under 
     this title for a fiscal year quarter for children described 
     in paragraph (1) and shall not apply with respect to--
       ``(A) any other payments made under this title, including 
     disproportionate share hospital payments described in section 
     1923;
       ``(B) payments under title IV or XXI; or
       ``(C) any payments made under this title or title XXI that 
     are based on the enhanced FMAP described in section 2105(b).
       ``(b) Eligibility Expansions.--The condition described in 
     this subsection is that the State agrees to do the following:
       ``(1) Coverage under medicaid or schip for children in 
     families whose income does not exceed 300 percent of the 
     poverty line.--
       ``(A) In general.--The State agrees to provide medical 
     assistance under this title or child health assistance under 
     title XXI to children whose family income exceeds the 
     medicaid applicable income level (as defined in section 
     2110(b)(4) but by substituting `January 1, 2007' for `March 
     31, 1997'), but does not exceed 300 percent of the poverty 
     line.
       ``(B) State option to expand coverage through subsidized 
     purchase of family coverage.--A State may elect to carry out 
     subparagraph (A) through the provision of assistance for the 
     purchase of dependent coverage under a group health plan or 
     health insurance coverage if--
       ``(i) the dependent coverage is consistent with the benefit 
     standards under this title or title XXI, as approved by the 
     Secretary; and
       ``(ii) the State provides `wrap-around' coverage under this 
     title or title XXI.
       ``(C) Deemed satisfaction for certain states.--A State 
     that, as of January 1, 2007, provides medical assistance 
     under this title or child health assistance under title XXI 
     to children whose family income is 300 percent of the poverty 
     line shall be deemed to satisfy this paragraph.
       ``(2) Coverage for children under age 21.--The State agrees 
     to define a child for purposes of this title and title XXI as 
     an individual who has not attained 21 years of age.
       ``(3) Opportunity for higher income children to purchase 
     schip coverage.--The State agrees to permit any child whose 
     family income exceeds 300 percent of the poverty line to 
     purchase full or `wrap-around' coverage under title XXI at 
     the full cost of providing such coverage, as determined by 
     the State.
       ``(4) Coverage for legal immigrant children.--The State 
     agrees to--
       ``(A) provide medical assistance under this title and child 
     health assistance under title XXI for alien children who are 
     lawfully residing in the United States (including battered 
     aliens described in section 431(c) of the Personal 
     Responsibility and Work Opportunity Reconciliation Act of 
     1996) and who are otherwise eligible for such assistance in 
     accordance with section 1903(v)(4) and 2107(e)(1)(F); and
       ``(B) not establish or enforce barriers that deter 
     applications by such aliens, including through the 
     application of the removal of the barriers described in 
     subsection (c).
       ``(c) Removal of Enrollment and Access Barriers.--The 
     condition described in this subsection is that the State 
     agrees to do the following:
       ``(1) Presumptive eligibility for children.--The State 
     agrees to--
       ``(A) provide presumptive eligibility for children under 
     this title and title XXI in accordance with section 1920A; 
     and
       ``(B) treat any items or services that are provided to an 
     uncovered child (as defined in section 2110(c)(8)) who is 
     determined ineligible for medical assistance under this title 
     as child health assistance for purposes of paying a provider 
     of such items or services, so long as such items or services 
     would be considered child health assistance for a targeted 
     low-income child under title XXI.
       ``(2) Adoption of 12-month continuous enrollment.--The 
     State agrees to provide that eligibility for assistance under 
     this title and title XXI shall not be regularly redetermined 
     more often than once every year for children.
       ``(3) Acceptance of self-declaration of income.--The State 
     agrees to permit the family of a child applying for medical 
     assistance under this title or child health assistance under 
     title XXI to declare and certify by signature under penalty 
     of perjury family income for purposes of collecting financial 
     eligibility information.
       ``(4) Adoption of acceptance of eligibility determinations 
     for other assistance programs.--The State agrees to accept

[[Page S96]]

     determinations (made within a reasonable period, as found by 
     the State, before its use for this purpose) of an 
     individual's family or household income made by a Federal or 
     State agency (or a public or private entity making such 
     determination on behalf of such agency), including the 
     agencies administering the Food Stamp Act of 1977, the 
     Richard B. Russell National School Lunch Act, and the Child 
     Nutrition Act of 1966, notwithstanding any differences in 
     budget unit, disregard, deeming, or other methodology, but 
     only if--
       ``(A) such agency has fiscal liabilities or 
     responsibilities affected or potentially affected by such 
     determinations; and
       ``(B) any information furnished by such agency pursuant to 
     this subparagraph is used solely for purposes of determining 
     eligibility for medical assistance under this title or for 
     child health assistance under title XXI.
       ``(5) No assets test.--The State agrees to not (or 
     demonstrates that it does not) apply any assets or resources 
     test for eligibility under this title or title XXI with 
     respect to children.
       ``(6) Eligibility determinations and redeterminations.--
       ``(A) In general.--The State agrees for purposes of initial 
     eligibility determinations and redeterminations of children 
     under this title and title XXI not to require a face-to-face 
     interview and to permit applications and renewals by mail, 
     telephone, and the Internet.
       ``(B) Nonduplication of information.--
       ``(i) In general.--For purposes of redeterminations of 
     eligibility for currently or previously enrolled children 
     under this title and title XXI, the State agrees to use all 
     information in its possession (including information 
     available to the State under other Federal or State programs) 
     to determine eligibility or redetermine continued eligibility 
     before seeking similar information from parents.
       ``(ii) Rule of construction.--Nothing in clause (i) shall 
     be construed as limiting any obligation of a State to provide 
     notice and a fair hearing before denying, terminating, or 
     reducing a child's coverage based on such information in the 
     possession of the State.
       ``(7) No waiting list for children under schip.--The State 
     agrees to not impose any numerical limitation, waiting list, 
     waiting period, or similar limitation on the eligibility of 
     children for child health assistance under title XXI or to 
     establish or enforce other barriers to the enrollment of 
     eligible children based on the date of their application for 
     coverage.
       ``(8) Adequate provider payment rates.--The State agrees 
     to--
       ``(A) establish payment rates for children's health care 
     providers under this title that are no less than the average 
     of payment rates for similar services for such providers 
     provided under the benchmark benefit packages described in 
     section 2103(b);
       ``(B) establish such rates in amounts that are sufficient 
     to ensure that children enrolled under this title or title 
     XXI have adequate access to comprehensive care, in accordance 
     with the requirements of section 1902(a)(30)(A); and
       ``(C) include provisions in its contracts with providers 
     under this title guaranteeing compliance with these 
     requirements.
       ``(d) Maintenance of Medicaid Eligibility Levels for 
     Children.--
       ``(1) In general.--The condition described in this 
     subsection is that the State agrees to maintain eligibility 
     income, resources, and methodologies applied under this title 
     (including under a waiver of such title or under section 
     1115) with respect to children that are no more restrictive 
     than the eligibility income, resources, and methodologies 
     applied with respect to children under this title (including 
     under such a waiver) as of January 1, 2007.
       ``(2) Rule of construction.--Nothing in this section shall 
     be construed as implying that a State does not have to comply 
     with the minimum income levels required for children under 
     section 1902(l)(2).
       ``(e) Date Described.--The date described in this 
     subsection is the date on which, with respect to a State, a 
     plan amendment that satisfies the requirements of subsections 
     (b), (c), and (d) is approved by the Secretary.
       ``(f) Definition of Poverty Line.--In this section, the 
     term `poverty line' has the meaning given that term in 
     section 2110(c)(5).''.
       (b) Conforming Amendments.--
       (1) The third sentence of section 1905(b) of the Social 
     Security Act (42 U.S.C. 1396d(b)) is amended by inserting 
     before the period the following: ``, and with respect to 
     amounts expended for medical assistance for children on or 
     after the date described in subsection (e) of section 1939, 
     in the case of a State that has, in accordance with such 
     section, an approved plan amendment under this title and 
     title XXI''.
       (2) Section 1903(f)(4) of the Social Security Act (42 
     U.S.C. 1396b(f)(4)) is amended--
       (A) in subparagraph (C), by adding ``or'' after ``section 
     1611(b)(1),''; and
       (B) by inserting after subparagraph (C), the following:
       ``(D) who would not receive such medical assistance but for 
     State electing the option under section 1939 and satisfying 
     the conditions described in subsections (b), (c), and (d) of 
     such section,''.

     SEC. 102. ELIMINATION OF CAP ON SCHIP FUNDING FOR STATES THAT 
                   EXPAND ELIGIBILITY FOR CHILDREN.

       (a) In General.--Section 2105 of the Social Security Act 
     (42 U.S.C. 1397dd) is amended by adding at the end the 
     following:
       ``(h) Guaranteed Funding for Child Health Assistance for 
     Coverage Expansion States.--
       ``(1) In general.--Only in the case of a State that has, in 
     accordance with section 1939, an approved plan amendment 
     under this title and title XIX, any payment cap that would 
     otherwise apply to the State under this title as a result of 
     having expended all allotments available for expenditure by 
     the State with respect to a fiscal year shall not apply with 
     respect to amounts expended by the State on or after the date 
     described in section 1939(e).
       ``(2) Appropriation.--There is appropriated, out of any 
     money in the Treasury not otherwise appropriated, such sums 
     as may be necessary for the purpose of paying a State 
     described in paragraph (1) for each quarter beginning on or 
     after the date described in section 1939(e), an amount equal 
     to the enhanced FMAP of expenditures described in paragraph 
     (1) and incurred during such quarter.''.
       (b) Conforming Amendments.--Section 2104 of the Social 
     Security Act (42 U.S.C. 1397dd) is amended--
       (1) in subsection (a), by inserting ``and section 2105(h)'' 
     after ``subsection (d)'';
       (2) in subsection (b)(1), by striking ``and subsection 
     (d)'' and inserting ``, subsection (d), and section 
     2105(h)''; and
       (3) in subsection (c)(1), by inserting ``and section 
     2105(h)'' after ``subsection (d)''.

   TITLE II--STATE OPTIONS FOR INCREMENTAL CHILD COVERAGE EXPANSIONS

     SEC. 201. STATE OPTION TO PROVIDE WRAP-AROUND SCHIP COVERAGE 
                   TO CHILDREN WHO HAVE OTHER HEALTH COVERAGE.

       (a) In General.--Section 2110(b) of the Social Security Act 
     (42 U.S.C. 1397jj(b)) is amended--
       (1) in paragraph (1)(C), by inserting ``, subject to 
     paragraph (5),'' after ``under title XIX or''; and
       (2) by adding at the end the following new paragraph:
       ``(5) State option to provide wrap-around coverage.--
       ``(A) In general.--A State may waive the requirement of 
     paragraph (1)(C) that a targeted low-income child may not be 
     covered under a group health plan or under health insurance 
     coverage in order to provide--
       ``(i) items or services that are not covered, or are only 
     partially covered, under such plan or coverage; or
       ``(ii) cost-sharing protection.
       ``(B) Eligibility.--In waiving such requirement, a State 
     may limit the application of the waiver to children whose 
     family income does not exceed a level specified by the State, 
     so long as the level so specified does not exceed the maximum 
     income level otherwise established for other children under 
     the State child health plan.
       ``(C) Continued application of duty to prevent substitution 
     of existing coverage.--Nothing in this paragraph shall be 
     construed as modifying the application of section 
     2102(b)(3)(C) to a State.''.
       (b) Application of Enhanced Match Under Medicaid.--Section 
     1905 of such Act (42 U.S.C. 1396d) is amended--
       (1) in subsection (b), in the fourth sentence, by striking 
     ``subsection (u)(3)'' and inserting ``, (u)(3), or (u)(4)''; 
     and
       (2) in subsection (u), by redesignating paragraph (4) as 
     paragraph (5) and by inserting after paragraph (3) the 
     following:
       ``(4) For purposes of subsection (b), the expenditures 
     described in this paragraph are expenditures for items and 
     services for children described in section 2110(b)(5).''.
       (c) Application of Secondary Payor Provisions.--Section 
     2107(e)(1) of such Act (42 U.S.C. 1397gg(e)(1)) is amended--
       (1) by redesignating subparagraphs (B) through (D) as 
     subparagraphs (C) through (E), respectively; and
       (2) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) Section 1902(a)(25) (relating to coordination of 
     benefits and secondary payor provisions) with respect to 
     children covered under a waiver described in section 
     2110(b)(5).''.

     SEC. 202. STATE OPTION TO ENROLL LOW-INCOME CHILDREN OF STATE 
                   EMPLOYEES IN SCHIP.

       Section 2110(b)(2) of the Social Security Act (42 U.S.C. 
     1397jj(b)(2)) is amended--
       (1) by redesignating subparagraphs (A) and (B) as clauses 
     (i) and (ii), respectively and realigning the left margins of 
     such clauses appropriately;
       (2) by striking ``Such term'' and inserting the following:
       ``(A) In general.--Such term''; and
       (3) by adding at the end the following:
       ``(B) State option to enroll low-income children of state 
     employees.--At the option of a State, subparagraph (A)(ii) 
     shall not apply to any low-income child who would otherwise 
     be eligible for child health assistance under this title but 
     for such subparagraph.''.

     SEC. 203. OPTIONAL COVERAGE OF LEGAL IMMIGRANT CHILDREN UNDER 
                   MEDICAID AND SCHIP.

       (a) Medicaid Program.--Section 1903(v) of the Social 
     Security Act (42 U.S.C. 1396b(v)) is amended--
       (1) in paragraph (1), by striking ``paragraph (2)'' and 
     inserting ``paragraphs (2) and (4)''; and
       (2) by adding at the end the following:
       ``(4)(A) A State may elect (in a plan amendment under this 
     title) to provide medical assistance under this title for 
     aliens--
       ``(i) who are lawfully residing in the United States 
     (including battered aliens described

[[Page S97]]

     in section 431(c) of the Personal Responsibility and Work 
     Opportunity Reconciliation Act of 1996); and
       ``(ii) who are otherwise eligible for such assistance, 
     within the eligibility category of children (as defined under 
     such plan), including optional targeted low-income children 
     described in section 1905(u)(2)(B).
       ``(B)(i) In the case of a State that has elected to provide 
     medical assistance to a category of aliens under subparagraph 
     (A), no debt shall accrue under an affidavit of support 
     against any sponsor of such an alien on the basis of 
     provision of assistance to such category and the cost of such 
     assistance shall not be considered as an unreimbursed cost.
       ``(ii) The provisions of sections 401(a), 402(b), 403, and 
     421 of the Personal Responsibility and Work Opportunity 
     Reconciliation Act of 1996 shall not apply to a State that 
     makes an election under subparagraph (A).''.
       (b) Title XXI.--Section 2107(e)(1) of the Social Security 
     Act (42 U.S.C. 1397gg(e)(1)), as amended by section 201(c), 
     is amended redesignating subparagraph (E) as subparagraph (F) 
     and by inserting after subparagraph (D) the following:
       ``(E) Section 1903(v)(4) (relating to optional coverage of 
     permanent resident alien children), but only if the State has 
     elected to apply such section to that category of children 
     under title XIX.''.

     SEC. 204. STATE OPTION FOR PASSIVE RENEWAL OF ELIGIBILITY FOR 
                   CHILDREN UNDER MEDICAID AND SCHIP.

       (a) In General.--Section 1902(l) of the Social Security Act 
     (42 U.S.C. 1396a(l)) is amended by adding at the end the 
     following:
       ``(5) Notwithstanding any other provision of this title, a 
     State may provide that an individual who has not attained 21 
     years of age who has been determined eligible for medical 
     assistance under this title shall remain eligible for medical 
     assistance until such time as the State has information 
     demonstrating that the individual is no longer so 
     eligible.''.
       (b) Application Under Title XXI.--Section 2107(e)(1) of the 
     Social Security Act (42 U.S.C. 1397gg(e)), as amended by 
     section 201(c) and 203(b), is amended--
       (1) by redesignating subparagraphs (C) through (F) as 
     subparagraphs (D) through (G), respectively; and
       (2) by inserting after subparagraph (B), the following:
       ``(C) Section 1902(l)(5) (relating to passive renewal of 
     eligibility for children).''.

  TITLE III--TAX INCENTIVES FOR HEALTH INSURANCE COVERAGE OF CHILDREN

     SEC. 301. REFUNDABLE CREDIT FOR HEALTH INSURANCE COVERAGE OF 
                   CHILDREN.

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

     ``SEC. 36. HEALTH INSURANCE COVERAGE OF CHILDREN.

       ``(a) In General.--In the case of an individual, there 
     shall be allowed as a credit against the tax imposed by this 
     subtitle an amount equal to so much of the amount paid during 
     the taxable year, not compensated for by insurance or 
     otherwise, for qualified health insurance for each dependent 
     child of the taxpayer, as exceeds 5 percent of the adjusted 
     gross income of such taxpayer for such taxable year.
       ``(b) Dependent Child.--For purposes of this section, the 
     term `dependent child' means any child (as defined in section 
     152(f)(1)) who has not attained the age of 19 as of the close 
     of the calendar year in which the taxable year of the 
     taxpayer begins and with respect to whom a deduction under 
     section 151 is allowable to the taxpayer.
       ``(c) Qualified Health Insurance.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified health insurance' 
     means insurance, either employer-provided or made available 
     under title XIX or XXI of the Social Security Act, which 
     constitutes medical care as defined in section 213(d) without 
     regard to--
       ``(A) paragraph (1)(C) thereof, and
       ``(B) so much of paragraph (1)(D) thereof as relates to 
     qualified long-term care insurance contracts.
       ``(2) Exclusion of certain other contracts.--Such term 
     shall not include insurance if a substantial portion of its 
     benefits are excepted benefits (as defined in section 
     9832(c)).
       ``(d) Medical Savings Account and Health Savings Account 
     Contributions.--
       ``(1) In general.--If a deduction would (but for paragraph 
     (2)) be allowed under section 220 or 223 to the taxpayer for 
     a payment for the taxable year to the medical savings account 
     or health savings account of an individual, subsection (a) 
     shall be applied by treating such payment as a payment for 
     qualified health insurance for such individual.
       ``(2) Denial of double benefit.--No deduction shall be 
     allowed under section 220 or 223 for that portion of the 
     payments otherwise allowable as a deduction under section 220 
     or 223 for the taxable year which is equal to the amount of 
     credit allowed for such taxable year by reason of this 
     subsection.
       ``(e) Special Rules.--
       ``(1) Determination of insurance costs.--The Secretary 
     shall provide rules for the allocation of the cost of any 
     qualified health insurance for family coverage to the 
     coverage of any dependent child under such insurance.
       ``(2) Coordination with deduction for health insurance 
     costs of self-employed individuals.--In the case of a 
     taxpayer who is eligible to deduct any amount under section 
     162(l) for the taxable year, this section shall apply only if 
     the taxpayer elects not to claim any amount as a deduction 
     under such section for such year.
       ``(3) Coordination with medical expense and high deductible 
     health plan deductions.--The amount which would (but for this 
     paragraph) be taken into account by the taxpayer under 
     section 213 or 223 for the taxable year shall be reduced by 
     the credit (if any) allowed by this section to the taxpayer 
     for such year.
       ``(4) Denial of credit to dependents.--No credit shall be 
     allowed under this section to any individual with respect to 
     whom a deduction under section 151 is allowable to another 
     taxpayer for a taxable year beginning in the calendar year in 
     which such individual's taxable year begins.
       ``(5) Denial of double benefit.--No credit shall be allowed 
     under subsection (a) if the credit under section 35 is 
     allowed and no credit shall be allowed under 35 if a credit 
     is allowed under this section.
       ``(6) Election not to claim credit.--This section shall not 
     apply to a taxpayer for any taxable year if such taxpayer 
     elects to have this section not apply for such taxable 
     year.''.
       (b) Information Reporting.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 of the Internal Revenue Code of 1986 (relating to 
     information concerning transactions with other persons) is 
     amended by inserting after section 6050V the following new 
     section:

     ``SEC. 6050W. RETURNS RELATING TO PAYMENTS FOR QUALIFIED 
                   HEALTH INSURANCE.

       ``(a) In General.--Any governmental unit or any person who, 
     in connection with a trade or business conducted by such 
     person, receives payments during any calendar year from any 
     individual for coverage of a dependent child (as defined in 
     section 36(b)) of such individual under creditable health 
     insurance, shall make the return described in subsection (b) 
     (at such time as the Secretary may by regulations prescribe) 
     with respect to each individual from whom such payments were 
     received.
       ``(b) Form and Manner of Returns.--A return is described in 
     this subsection if such return--
       ``(1) is in such form as the Secretary may prescribe, and
       ``(2) contains--
       ``(A) the name, address, and TIN of the individual from 
     whom payments described in subsection (a) were received,
       ``(B) the name, address, and TIN of each dependent child 
     (as so defined) who was provided by such person with coverage 
     under creditable health insurance by reason of such payments 
     and the period of such coverage, and
       ``(C) such other information as the Secretary may 
     reasonably prescribe.
       ``(c) Creditable Health Insurance.--For purposes of this 
     section, the term `creditable health insurance' means 
     qualified health insurance (as defined in section 36(c)).
       ``(d) Statements To Be Furnished to Individuals With 
     Respect to Whom Information Is Required.--Every person 
     required to make a return under subsection (a) shall furnish 
     to each individual whose name is required under subsection 
     (b)(2)(A) to be set forth in such return a written statement 
     showing--
       ``(1) the name and address of the person required to make 
     such return and the phone number of the information contact 
     for such person,
       ``(2) the aggregate amount of payments described in 
     subsection (a) received by the person required to make such 
     return from the individual to whom the statement is required 
     to be furnished, and
       ``(3) the information required under subsection (b)(2)(B) 
     with respect to such payments.

     The written statement required under the preceding sentence 
     shall be furnished on or before January 31 of the year 
     following the calendar year for which the return under 
     subsection (a) is required to be made.
       ``(e) Returns Which Would Be Required To Be Made by 2 or 
     More Persons.--Except to the extent provided in regulations 
     prescribed by the Secretary, in the case of any amount 
     received by any person on behalf of another person, only the 
     person first receiving such amount shall be required to make 
     the return under subsection (a).''.
       (2) Assessable penalties.--
       (A) Subparagraph (B) of section 6724(d)(1) of such Code 
     (relating to definitions) is amended by striking ``and'' at 
     the end of clause (xx) and by inserting at the end the 
     following new clause:
       ``(xxi) section 6050W (relating to returns relating to 
     payments for qualified health insurance), and''.
       (B) Paragraph (2) of section 6724(d) of such Code is 
     amended by striking ``or'' at the end of the next to last 
     subparagraph, by striking the period at the end of the last 
     subparagraph and inserting ``, or'', and by adding at the end 
     the following new subparagraph:
       ``(DD) section 6050W(d) (relating to returns relating to 
     payments for qualified health insurance).''.
       (3) Clerical amendment.--The table of sections for subpart 
     B of part III of subchapter A of chapter 61 of such Code is 
     amended by inserting after the item relating to section 6050V 
     the following new item:

``Sec. 6050W. Returns relating to payments for qualified health 
              insurance''.


[[Page S98]]


       (c) Conforming Amendments.--
       (1) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting before the period ``, or 
     from section 36 of such Code''.
       (2) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 of the Internal Revenue Code of 
     1986 is amended by striking the last item and inserting the 
     following new items:

``Sec. 36. Health insurance coverage of children
``Sec. 37. Overpayments of tax''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 302. FORFEITURE OF PERSONAL EXEMPTION FOR ANY CHILD NOT 
                   COVERED BY HEALTH INSURANCE.

       (a) In General.--Section 151(d) of the Internal Revenue 
     Code of 1986 (relating to exemption amount) is amended by 
     adding at the end the following new paragraph:
       ``(5) Reduction of exemption amount for any child not 
     covered by health insurance.--
       ``(A) In general.--Except as otherwise provided in this 
     paragraph, the exemption amount otherwise determined under 
     this subsection for any dependent child (as defined in 
     section 36(b)) for any taxable year shall be reduced by the 
     same percentage as the percentage of such taxable year during 
     which such dependent child was not covered by qualified 
     health insurance (as defined in section 36(c)).
       ``(B) Full reduction if no proof of coverage is provided.--
     For purposes of subparagraph (A), in the case of any taxpayer 
     who fails to attach to the return of tax for any taxable year 
     a copy of the statement furnished to such taxpayer under 
     section 6050W, the percentage reduction under such 
     subparagraph shall be deemed to be 100 percent.
       ``(C) Nonapplication of paragraph to taxpayers in lowest 
     tax bracket.--This paragraph shall not apply to any taxpayer 
     whose taxable income for the taxable year does not exceed the 
     initial bracket amount determined under section 
     1(i)(1)(B).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

                        TITLE IV--MISCELLANEOUS

     SEC. 401. REQUIREMENT FOR GROUP MARKET HEALTH INSURERS TO 
                   OFFER DEPENDENT COVERAGE OPTION FOR WORKERS 
                   WITH CHILDREN.

       (a) ERISA.--
       (1) In general.--Subpart B of part 7 of subtitle B of title 
     I of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1185 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 714. REQUIREMENT TO OFFER OPTION TO PURCHASE DEPENDENT 
                   COVERAGE FOR CHILDREN.

       ``(a) Requirements for Coverage.--A group health plan, and 
     a health insurance issuer providing health insurance coverage 
     in connection with a group health plan, shall offer an 
     individual who is enrolled in such coverage the option to 
     purchase dependent coverage for a child of the individual.
       ``(b) No Employer Contribution Required.--An employer shall 
     not be required to contribute to the cost of purchasing 
     dependent coverage for a child by an individual who is an 
     employee of such employer.
       ``(c) Definition of Child.--In this section, the term 
     `child' means an individual who has not attained 21 years of 
     age.''.
       (2) Clerical amendment.--The table of contents in section 1 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1001) is amended by inserting after the item relating 
     to section 713 the following:

``Sec. 714. Requirement to offer option to purchase dependent coverage 
              for children''.

       (b) Public Health Service Act.--Subpart 2 of part A of 
     title XXVII of the Public Health Service Act (42 U.S.C. 
     300gg-4 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 2707. REQUIREMENT TO OFFER OPTION TO PURCHASE 
                   DEPENDENT COVERAGE FOR CHILDREN.

       ``(a) Requirements for Coverage.--A group health plan, and 
     a health insurance issuer providing health insurance coverage 
     in connection with a group health plan, shall offer an 
     individual who is enrolled in such coverage the option to 
     purchase dependent coverage for a child of the individual.
       ``(b) No Employer Contribution Required.--An employer shall 
     not be required to contribute to the cost of purchasing 
     dependent coverage for a child by an individual who is an 
     employee of such employer.
       ``(c) Definition of Child.--In this section, the term 
     `child' means an individual who has not attained 21 years of 
     age.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to plan years beginning on or after 
     January 1, 2007.

     SEC. 402. EFFECTIVE DATE.

       Unless otherwise provided, the amendments made by this 
     title shall take effect on October 1, 2007, and shall apply 
     to child health assistance and medical assistance provided on 
     or after that date without regard to whether or not final 
     regulations to carry out such amendments have been 
     promulgated by such date.

                       TITLE V--REVENUE PROVISION

     SEC. 501. PARTIAL REPEAL OF RATE REDUCTION IN THE HIGHEST 
                   INCOME TAX BRACKET.

       Section 1(i)(2) of the Internal Revenue Code of 1986 is 
     amended by adding at the end the following flush sentence:
       
     ``In the case of taxable years beginning during calendar year 
     2007 and thereafter, the final item in the fourth column in 
     the preceding table shall be applied by substituting for 
     ``35.0%'' a rate equal to the lesser of 39.6% or the rate the 
     Secretary determines is necessary to provide sufficient 
     revenues to offset the Federal outlays required to implement 
     the provisions of, and amendments made by, the Kids Come 
     First Act of 2007.''.
                                 ______