[Congressional Record Volume 153, Number 144 (Wednesday, September 26, 2007)]
[Senate]
[Pages S12157-S12186]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           TEXT OF AMENDMENTS

                                 ______
                                 
  SA 3048. Mr. SESSIONS submitted an amendment intended to be proposed 
to amendment SA 2011 proposed by Mr. Nelson of Nebraska (for Mr. Levin) 
to the bill H.R. 1585, to authorize appropriations for fiscal year 2008 
for military activities of the Department of Defense, for military 
construction, and for defense activities of the Department of Energy, 
to prescribe military personnel strengths for such fiscal year, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the end of subtitle B of title I, add the following:

     SEC. 115. M4 CARBINE RIFLE.

       (a) Findings.--Congress makes the following findings:
       (1) The members of the Armed Forces are entitled to the 
     best individual combat weapons available in the world today.
       (2) Full and open competition in procurement is required by 
     law, and is the most effective way of selecting the best 
     individual combat weapons for the Armed Forces at the best 
     price.
       (3) The M4 carbine rifle is currently the individual weapon 
     of choice for the Army, and it is procured through a sole 
     source contract.
       (4) The M4 carbine rifle has been proven in combat and 
     meets or exceeds the existing requirements for carbines.
       (5) The Army Training and Doctrine Command is conducting a 
     full Capabilities Based Assessment (CBA) of the small arms of 
     the Army which will determine whether or not gaps exist in 
     the current capabilities of such small arms and inform 
     decisions as to whether or not a new individual weapon is 
     required to address such gaps.
       (b) Report on Capabilities Based Assessment.--Not later 
     than 90 days after the date of the enactment of this Act, the 
     Secretary of the Army shall submit to the congressional 
     defense committees a report on the Capabilities Based 
     Assessment of the small arms of the Army referred to in 
     subsection (a)(5).
       (c) Competition for New Individual Weapon.--
       (1) Competition required.--In the event the Capabilities 
     Based Assessment identifies gaps in the current capabilities 
     of the small arms of the Army and the Secretary of the Army 
     determines that a new individual weapon is required to 
     address such gaps, the Secretary shall procure the new 
     individual weapon through one or more contracts entered into 
     after full and open competition described in paragraph (2).
       (2) Full and open competition.--The full and open 
     competition described in this paragraph is full and open 
     competition among all responsible manufacturers that--
       (A) is open to all developmental item solutions and 
     nondevelopmental item (NDI) solutions; and
       (B) provides for the award of the contract or contracts 
     concerned based on selection criteria that reflect the key 
     performance parameters and attributes identified in an Army-
     approved service requirements document.
       (d) Report Required.--Not later than 120 days after the 
     date of the enactment of this Act, Secretary of Defense shall 
     submit to the congressional defense committees a report on 
     the feasibility and advisability of each of the following:
       (1) The certification of a Joint Enhanced Carbine 
     requirement that does not require commonality with existing 
     technical data.
       (2) The award of contracts for all available 
     nondevelopmental carbines in lieu of a developmental program 
     intended to meet the proposed Joint Enhanced Carbine 
     requirement.
       (3) The reprogramming of funds for the procurement of small 
     arms from the procurement of M4 Carbines to the procurement 
     of Joint Enhanced Carbines authorized only as the result of 
     competition.
       (4) The use of rapid equipping authority to procure weapons 
     under $2,000 per unit that meet service-approved 
     requirements, with such weapons being nondevelopmental items 
     selected through full and open competition.
                                 ______
                                 
  SA 3049. Mr. SANDERS (for himself, Mr. Byrd, Mr. Brown, and Mr. 
Feingold) submitted an amendment intended to be proposed to amendment 
SA 2011 proposed by Mr. Nelson of Nebraska (for Mr. Levin) to the bill 
H.R. 1585, to authorize appropriations for fiscal year 2008 for 
military activities of the Department of Defense, for military 
construction, and for defense activities of the Department of Energy, 
to prescribe military personnel strengths for such fiscal year, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the end of subtitle C of title III, add the following:

     SEC. 325. GULF WAR ILLNESSES RESEARCH.

       (a) Funding.--Of the amount authorized to be appropriated 
     by section 301(5) for operation and maintenance for Defense-
     wide activities, $15,000,000 shall be available for the Army 
     Medical Research and Materiel Command to carry out, as part 
     of its Medical Research Program required by Congress, a 
     program for Gulf War Illnesses Research.
       (b) Purpose.--The purpose of the program shall be to 
     develop diagnostic markers and treatments for the complex of 
     symptoms commonly known as ``Gulf War Illnesses (GWI)'', 
     including widespread pain, cognitive impairment, and 
     persistent fatigue in conjunction with diverse other symptoms 
     and abnormalities, that are associated with service in the 
     Southwest Asia theater of operations in the early 1990s 
     during the Persian Gulf War.
       (c) Program Activities.--
       (1) Highest priority under the program shall be afforded to 
     pilot and observational studies of treatments for the complex 
     of symptoms described in subsection (b) and comprehensive 
     clinical trials of such treatments that have demonstrated 
     effectiveness in previous past pilot and observational 
     studies.
       (2) Secondary priority under the program shall be afforded 
     to studies that identify objective markers for such complex 
     of symptoms and biological mechanisms underlying such complex 
     of symptoms that can lead to the identification and 
     development of such markers and treatments.
       (3) No study shall be funded under the program that is 
     based on psychiatric illness and psychological stress as the 
     central cause of such complex of symptoms (as is consistent 
     with current research findings).
       (d) Competitive Selection and Peer Review.--The program 
     shall be conducted using competitive selection and peer 
     review for the identification of activities having the most 
     substantial scientific merit, utilizing individuals with 
     recognized expertise in Gulf War illnesses in the design of 
     the solicitation and in the scientific and programmatic 
     review processes.
                                 ______
                                 
  SA 3050. Mr. ENSIGN submitted an amendment intended to be proposed by 
him to the bill H.R. 976, to amend the

[[Page S12158]]

XXI of the Social Security Act to reauthorize the State Children's 
Health Insurance Program, and for other purposes; which was ordered to 
lie on the table; as follows:

       At the end of section 2111 of the Social Security Act, as 
     added by section 112 of the House amendment to the text, add 
     the following:
       ``(d) Cover Kids First Implementation Requirement.--
     Notwithstanding the preceding subsections of this section, no 
     funds shall be available under this title for child health 
     assistance or other health benefits coverage that is provided 
     for any other adult other than a pregnant woman, and this 
     title shall be applied with respect to a State without regard 
     to such subsections, for each fiscal year quarter that begins 
     prior to the date on which the State demonstrates to the 
     Secretary that the State has enrolled in the State child 
     health plan at least 95 percent of the targeted low-income 
     children who reside in the State.''.
                                 ______
                                 
  SA 3051. Mr. ENSIGN submitted an amendment intended to be proposed by 
him to the bill H.R. 976, to amend the XXI of the Social Security Act 
to reauthorize the State Children's Health Insurance Program, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the end of subtitle B of title I of the House amendment 
     to the text, add the following:

     SEC. 117. COVER LOW-INCOME KIDS FIRST.

       Section 2105(c) (42 U.S.C. 1397ee(c)), as amended section 
     601(a), is amended by adding at the end the following new 
     paragraph:
       ``(13) No payments for expenditures for child health 
     assistance or health benefits coverage for individuals whose 
     gross family income exceeds 200 percent of the poverty line 
     unless at least 95 percent of eligible low-income children 
     enrolled.--Notwithstanding any other provision of this title, 
     for fiscal years beginning with fiscal year 2008, no payments 
     shall be made to a State under subsection (a)(1), or any 
     other provision of this title, for any fiscal year quarter 
     that begins prior to the date on which the State demonstrates 
     to the Secretary that the State has enrolled in the State 
     child health plan at least 95 percent of the low-income 
     children who reside in the State and are eligible for child 
     health assistance under this State child health plan with 
     respect to any expenditures for providing child health 
     assistance or health benefits coverage for any individual 
     whose gross family income exceeds 200 percent of the poverty 
     line.''.
                                 ______
                                 
  SA 3052. Mr. ENSIGN submitted an amendment intended to be proposed by 
him to the bill H.R. 976, to amend the XXI of the Social Security Act 
to reauthorize the State Children's Health Insurance Program, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the end of subtitle B of title I of the House amendment 
     to the text, add the following:

     SEC. 117. REMOVING THE INCENTIVE TO COVER CHILDREN AT HIGHER 
                   INCOME LEVELS RATHER THAN LOWER INCOME LEVELS.

       (a) Elimination of Enhanced FMAP.--Section 2105 (42 U.S.C. 
     1397ee) is amended--
       (1) in subsection (a)(1), in the matter preceding 
     subparagraph (A), by striking ``enhanced FMAP (or, in the 
     case of expenditures described in subparagraph (B), the 
     Federal medical assistance percentage (as defined in the 
     first sentence of section 1905(b)))'' and inserting ``Federal 
     medical assistance percentage'';
       (2) in subparagraph (A), by striking ``on the basis of an 
     enhanced FMAP'';
       (3) by striking subsection (b) and inserting the following:
       ``(b) Federal Medical Assistance Percentage.--The term 
     `Federal medical assistance percentage' has the meaning given 
     such term in the first sentence of section 1905(b).'';
       (4) in subsection (d)(B)(ii), by striking ``an enhanced 
     FMAP'' and inserting ``payments''; and
       (5) in subsection (g)(1)(B)(i), by striking ``the 
     additional amount'' and all that follows through the period 
     and inserting ``the Federal medical assistance percentage 
     with respect to expenditures described in clause (ii).''.
       (b) Conforming Amendments to Title XIX.--Section 1905 (42 
     U.S.C. 1396d)) is amended--
       (1) in subsection (b)--
       (A) in the first sentence by striking ``and (4)'' and all 
     that follows up to the period;
       (B) in the last sentence--
       (i) by inserting ``the Federal medical assistance 
     percentage shall apply only'' after ``Notwithstanding the 
     first sentence of this subsection,''; and
       (ii) by striking ``section 2104'' and all that follows 
     through the period and inserting ``section 2104.''; and
       (2) in subsection (u)(4), by striking ``an enhanced FMAP 
     described in section 2105(b)'' and inserting ``this 
     subsection''.
       (c) Conforming Amendments to Title XXI and the Amendments 
     Made by Other Provisions of This Act.--
       (1) Subsections (a)(2) and (b)(1) of section 2111, as added 
     by section 106(a), are each amended by striking subparagraph 
     (C).
       (2) Section 2111(b)(2)(B), as so added, is amended--
       (A) in clause (ii), by striking ``applicable percentage 
     determined under clause (iii) or (iv) for'' and inserting 
     ``Federal medical assistance percentage of'';
       (B) by striking clauses (iii) and (iv); and
       (C) by redesignating clauses (v) and (vi) as clauses (iii) 
     and (iv), respectively.
       (3) This Act shall be applied without regard to the 
     amendment to section 2105(c) made by section 110.
       (4) Section 2105(g)(4)(A), as added by section 111, is 
     amended by striking ``the additional amount'' and all that 
     follows through the period and inserting ``the Federal 
     medical assistance percentage with respect to expenditures 
     described in subparagraph (B).''.
       (5) The amendment made by paragraph (1) of section 201(b) 
     of this Act is amended to read as follows:
       ``(1) in the matter preceding subparagraph (A) (as amended 
     by section 112(a)(1)(A)), by inserting `(or, in the case of 
     expenditures described in subparagraph (D)(iv), 75 percent )' 
     after `Federal medical assistance percentage'; and''.
       (6) Section 2105(c)(9), as added by section 301(c)(1), is 
     amended by striking ``enhanced FMAP'' and inserting ``Federal 
     medical assistance percentage''.
       (7) Section 601(a)(2) of this Act is amended by striking 
     ``, rather than on the basis of an enhanced FMAP (as defined 
     in section 2105(b) of such Act)''.
       (8) Section 2105(c)(11), as added by section 602(a)(1), is 
     amended by striking ``enhanced FMAP'' and inserting ``Federal 
     medical assistance percentage''.
                                 ______
                                 
  SA 3053. Mr. ENSIGN submitted an amendment intended to be proposed by 
him to the bill H.R. 976, to amend title XXI of the Social Security Act 
to reauthorize the State Children's Health Insurance Program, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the end of subtitle B of title VI of the House amendment 
     to the text, add the following:

     SEC. 620. PERSONAL EMPOWERMENT THROUGH INDIVIDUAL 
                   RESPONSIBILITY.

       Section 2103(e) (42 U.S.C. 1397cc(e)) is amended by adding 
     at the end the following new paragraph:
       ``(5) Personal empowerment through individual 
     responsibility.--Notwithstanding the preceding provisions of 
     this subsection or any other provision of this title, for 
     fiscal years beginning with fiscal year 2008, a State shall 
     not be considered to have an approved State child health plan 
     unless the State has submitted a State plan amendment to the 
     Secretary specifying how the State will impose premiums, 
     deductibles, coinsurance, and other cost-sharing under the 
     State child health plan (regardless of whether such plan is 
     implemented under this title, title XIX, or both) for 
     populations of individuals whose family income exceeds the 
     effective income eligibility level applicable under the State 
     child health plan for that population on the date of the 
     enactment of the Children's Health Insurance Program 
     Reauthorization Act of 2007, in a manner that is consistent 
     with the authority and limitations for imposed cost-sharing 
     under section 1916A.''.
                                 ______
                                 
  SA 3054. Mr. ENSIGN submitted an amendment intended to be proposed by 
him to the bill H.R. 976, to amend title XXI of the Social Security Act 
to reauthorize the State Children's Health Insurance Program, and for 
other purposes; which was ordered to lie on the table; as follows:

       Strike clause (ii) of section 2105(c)(11)(B) of the Social 
     Security Act, as added by section 301(a) of the House 
     amendment to the text, and insert the following:
       (ii) Inclusion of high deductible health plans; exclusion 
     of flexible spending arrangements.--Such term--

       (I) includes coverage consisting of a high deductible 
     health plan (as defined in section 223(c)(2) of such Code) 
     purchased in conjunction with a health savings account (as 
     defined under section 223(d) of such Code); but
       (II) does not include coverage consisting of benefits 
     provided under a health flexible spending arrangement (as 
     defined in section 106(c)(2) of the Internal Revenue Code of 
     1986).

                                 ______
                                 
  SA 3055. Mr. ENSIGN submitted an amendment intended to be proposed by 
him to the bill H.R. 976, to amend title XXI of the Social Security Act 
to reauthorize the State Children's Health Insurance Program, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the end of title VII of the House amendment to the text, 
     add the following:

     SEC. 704. DISEASE PREVENTION AND TREATMENT RESEARCH TRUST 
                   FUND.

       (a) In General.--Subchapter A of chapter 98 of the Internal 
     Revenue Code of 1986 (relating to establishment of trust 
     funds) is amended by adding at the end the following new 
     section:

[[Page S12159]]

     ``SEC. 9511. DISEASE PREVENTION AND TREATMENT RESEARCH TRUST 
                   FUND.

       ``(a) Creation of Trust Fund.--There is established in the 
     Treasury of the United States a trust fund to be known as the 
     `Disease Prevention and Treatment Research Trust Fund', 
     consisting of such amounts as may be appropriated or credited 
     to the Disease Prevention and Treatment Research Trust Fund.
       ``(b) Transfer to Disease Prevention and Treatment Research 
     Trust Fund of Amounts Equivalent to Certain Taxes.--There are 
     hereby appropriated to the Disease Prevention and Treatment 
     Research Trust Fund amounts equivalent to the taxes received 
     in the Treasury attributable to the amendments made by 
     section 701 of the Children's Health Insurance Program 
     Reauthorization Act of 2007.
       ``(c) Expenditures From Trust Fund.--
       ``(1) In general.--Amounts in the Disease Prevention and 
     Treatment Research Trust Fund shall be available, as provided 
     by appropriation Acts, for the purposes of funding the 
     disease prevention and treatment research activities of the 
     National Institutes of Health. Amounts appropriated from the 
     Disease Prevention and Treatment Research Trust Fund shall be 
     in addition to any other funds provided by appropriation Acts 
     for the National Institutes of Health.
       ``(2) Disease prevention and treatment research 
     activities.--Disease prevention and treatment research 
     activities shall include activities relating to:
       ``(A) Cancer.--Disease prevention and treatment research in 
     this category shall include activities relating to pediatric, 
     lung, breast, ovarian, uterine, prostate, colon, rectal, 
     oral, skin, bone, kidney, liver, stomach, bladder, thyroid, 
     pancreatic, brain and nervous system, and blood-related 
     cancers, including leukemia and lymphoma. Priority in this 
     category shall be given to disease prevention and treatment 
     research into pediatric cancers.
       ``(B) Respiratory diseases.--Disease prevention and 
     treatment research in this category shall include activities 
     relating to chronic obstructive pulmonary disease, 
     tuberculosis, bronchitis, asthma, and emphysema.
       ``(C) Cardiovascular diseases.--Disease prevention and 
     treatment research in this category shall include activities 
     relating to peripheral arterial disease, heart disease, valve 
     disease, stroke, and hypertension.
       ``(D) Other diseases, conditions, and disorders.--Disease 
     prevention and treatment research in this category shall 
     include activities relating to autism, diabetes (including 
     type I diabetes, also known as juvenile diabetes, and type II 
     diabetes), muscular dystrophy, Alzheimer's disease, 
     Parkinson's disease, multiple sclerosis, amyotrophic lateral 
     sclerosis, cerebral palsy, cystic fibrosis, spinal muscular 
     atrophy, osteoporosis, human immunodeficiency virus (HIV) and 
     acquired immunodeficiency syndrome (AIDS), depression and 
     other mental health disorders, infertility, arthritis, 
     anaphylaxis, lymphedema, psoriasis, eczema, lupus, cleft lip 
     and palate, fibromyalgia, chronic fatigue and immune 
     dysfunction syndrome, alopecia areata, and sepsis.''.
       (b) Clerical Amendment.--The table of sections for 
     subchapter A of chapter 98 of the Internal Revenue Code of 
     1986 is amended by adding at the end the following new item:

``Sec. 9511. Disease Prevention and Treatment Research Trust Fund.''.
                                 ______
                                 
  SA 3056. Mr. ENSIGN submitted an amendment intended to be proposed by 
him to the bill H.R. 976, to amend title XXI of the Social Security Act 
to reauthorize the State Children's Health Insurance Program, and for 
other purposes; which was ordered to lie on the table; as follows:

       Strike section 112 of the House amendment to the text and 
     insert the following:

     SEC. 112. ELIMINATION OF COVERAGE FOR NONPREGNANT ADULTS.

       (a) Elimination of Coverage.--Title XXI (42 U.S.C. 1397aa 
     et seq.) is amended by adding at the end the following new 
     section:

     ``SEC. 2111. ELIMINATION OF COVERAGE FOR NONPREGNANT ADULTS.

       ``(a) No Coverage for Nonpregnant Childless Adults and 
     Nonpregnant Parents.--
       ``(1) Termination of coverage under applicable existing 
     waivers.--No funds shall be available under this title for 
     child health assistance or other health benefits coverage 
     that is provided for any other adult other than a pregnant 
     woman after September 30, 2007.
       ``(2) No new waivers.--Notwithstanding section 1115 or any 
     other provision of this title the Secretary shall not on or 
     after the date of the enactment of the Children's Health 
     Insurance Program Reauthorization Act of 2007, approve or 
     renew a waiver, experimental, pilot, or demonstration project 
     that would allow funds made available under this title to be 
     used to provide child health assistance or other health 
     benefits coverage for any other adult other than a pregnant 
     woman.
       ``(b) Increased Outreach and Coverage of Low-Income 
     Children.--A State that, but for the application of 
     subsections (a) and (b), would have expended funds for child 
     health assistance or other health benefits coverage for an 
     adult other than a pregnant woman after fiscal year 2007 
     shall use the funds that would have been expended for such 
     assistance or coverage to conduct outreach to, and provide 
     child health assistance for, low-income children who are 
     eligible for such assistance under the State child health 
     plan.
       ``(c) Nonapplication.--Beginning with fiscal year 2008, 
     this title shall be applied without regard to any provision 
     of this title that would be contrary to the prohibition on 
     providing child health assistance or health benefits coverage 
     for an adult other than a pregnant woman established under 
     this section.''.
       (b) Conforming Amendments.--
       (1) Section 2107(f) (42 U.S.C. 1397gg(f)) is amended--
       (A) by striking ``, the Secretary'' and inserting ``:
       ``(1) The Secretary'';
       (B) in the first sentence, by inserting ``or a nonpregnant 
     parent (as defined in section 2111(d)(2)) of a targeted low-
     income child'' before the period;
       (C) by striking the second sentence; and
       (D) by adding at the end the following new paragraph:
       ``(2) The Secretary may not approve, extend, renew, or 
     amend a waiver, experimental, pilot, or demonstration project 
     with respect to a State after the date of enactment of the 
     Children's Health Insurance Program Reauthorization Act of 
     2007 that would waive or modify the requirements of section 
     2111.''.
       (2) Section 6102(c) of the Deficit Reduction Act of 2005 
     (Public Law 109-171; 120 Stat. 131) is amended by striking 
     ``Nothing'' and inserting ``Subject to section 2111 of the 
     Social Security Act, as added by section 106(a)(1) of the 
     Children's Health Insurance Program Reauthorization Act of 
     2007, nothing''.
                                 ______
                                 
  SA 3057. Mr. MARTINEZ submitted an amendment intended to be proposed 
by him to the bill H.R. 976, to amend the XXI of the Social Security 
Act to reauthorize the State Children's Health Insurance Program, and 
for other purposes; which was ordered to lie on the table; as follows:

       In lieu of the matter proposed to be inserted to the text 
     by the House amendment to the text, insert the following:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``State Children's Health 
     Insurance Program Reauthorization Act of 2007''.

     SEC. 2. 5-YEAR SCHIP REAUTHORIZATION FOR COVERAGE OF LOW-
                   INCOME CHILDREN.

       (a) Funding.--
       (1) Increase in national appropriation.--Section 2104(a) of 
     the Social Security Act (42 U.S.C. 1397dd(a)) is amended--
       (A) in paragraph (9), by striking ``and'' at the end;
       (B) in paragraph (10), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following:
       ``(11) for each of fiscal years 2008 through 2012, 
     $7,000,000,000.''.
       (2) Continuation of additional allotments to territories at 
     fiscal year 2007 level of authority.--Section 2104(c)(4)(B) 
     of the Social Security Act (42 U.S.C. 1397dd(c)(4)(B)) is 
     amended by striking ``fiscal year 2007'' and inserting ``each 
     of fiscal years 2007 through 2012''.
       (3) Application to other schip funding for fiscal year 
     2008.--Notwithstanding any other provision of law, if funds 
     are appropriated under any law (other than this Act) to 
     provide allotments to States under title XXI of the Social 
     Security Act for all (or any portion) of fiscal year 2008--
       (A) any amounts that are so appropriated that are not so 
     allotted and obligated before the date of the enactment of 
     this Act are rescinded; and
       (B) any amount provided for such title XXI allotments to a 
     State under this Act (and the amendments made by this Act) 
     for such fiscal year shall be reduced by the amount of such 
     appropriations so allotted and obligated before such date.
       (b) No Federal Matching Payments for Coverage of 
     Individuals Whose Gross Family Income Exceeds 200 Percent of 
     the Poverty Line.--Section 2105(c) of the Social Security Act 
     (42 U.S.C. 1397ee(c)) is amended by adding at the end the 
     following new paragraph:
       ``(8) No payments for expenditures for child health 
     assistance or health benefits coverage for individuals whose 
     gross family income exceeds 200 percent of the poverty 
     line.--Notwithstanding any other provision of this title, for 
     fiscal years beginning with fiscal year 2008, no payments 
     shall be made to a State under subsection (a)(1), or any 
     other provision of this title, for any expenditures for 
     providing child health assistance or health benefits coverage 
     for any individual whose gross family income exceeds 200 
     percent of the poverty line.''.
       (c) No Federal Matching Payments for Coverage of 
     Individuals Who Are Eligible for Employer-Sponsored 
     Coverage.--
       (1) In general.--Section 2105(c) of such Act (42 U.S.C. 
     1397ee(c)), as amended by subsection (c), is amended by 
     adding at the end the following new paragraph:
       ``(9) Requirement regarding employer-sponsored coverage.--
       ``(A) In general.--No payment may be made under this title 
     with respect to an individual who is eligible for coverage 
     under qualified employer-sponsored coverage, either as an 
     individual or as part of family coverage, except with respect 
     to expenditures for providing a premium assistance subsidy 
     for such coverage in accordance with the requirements of this 
     paragraph.

[[Page S12160]]

       ``(B) Qualified employer sponsored coverage.--
       ``(i) In general.--In this paragraph, the term `qualified 
     employer sponsored coverage' means a group health plan or 
     health insurance coverage offered through an employer that 
     is--

       ``(I) substantially equivalent to the benefits coverage in 
     a benchmark benefit package described in section 2103(b) or 
     benchmark-equivalent coverage that meets the requirements of 
     section 2103(a)(2);
       ``(II) made similarly available to all of the employer's 
     employees and for which the employer makes a contribution to 
     the premium that is not less for employees receiving a 
     premium assistance subsidy under any option available under 
     the State child health plan under this title or the State 
     plan under title XIX to provide such assistance than the 
     employer contribution provided for all other employees; and
       ``(III) cost-effective, as determined under clause (ii).

       ``(ii) Cost-effectiveness.--A group health plan or health 
     insurance coverage offered through an employer shall be 
     considered to be cost-effective if--

       ``(I) the marginal premium cost to purchase family coverage 
     through the employer is less than the State cost of providing 
     child health assistance through the State child health plan 
     for all the children in the family who are targeted low-
     income children; or
       ``(II) the marginal premium cost between individual 
     coverage and purchasing family coverage through the employer 
     is not greater than 175 percent of the cost to the State to 
     provide child health assistance through the State child 
     health plan for a targeted low-income child.

       ``(iii) High deductible health plans included.--The term 
     `qualified employer sponsored coverage' includes a high 
     deductible health plan (as defined in section 223(c)(2) of 
     the Internal Revenue Code of 1986) purchased through a health 
     savings account (as defined under section 223(d) of such 
     Code).
       ``(C) Premium assistance subsidy.--
       ``(i) In general.--In this paragraph, the term `premium 
     assistance subsidy' means, with respect to a targeted low-
     income child, the amount equal to the difference between the 
     employee contribution required for enrollment only of the 
     employee under qualified employer sponsored coverage and the 
     employee contribution required for enrollment of the employee 
     and the child in such coverage, less any applicable premium 
     cost-sharing applied under the State child health plan, 
     subject to the annual aggregate cost-sharing limit applied 
     under section 2103(e)(3)(B).
       ``(ii) State payment option.--Subject to clause (iii), a 
     State may provide a premium assistance subsidy directly to an 
     employer or as reimbursement to an employee for out-of-pocket 
     expenditures.
       ``(iii) Requirement for direct payment to employee.--A 
     State shall not pay a premium assistance subsidy directly to 
     the employee, unless the State has established procedures to 
     ensure that the targeted low-income child on whose behalf 
     such payments are made are actually enrolled in the qualified 
     employer sponsored coverage.
       ``(iv) Treatment as child health assistance.--Expenditures 
     for the provision of premium assistance subsidies shall be 
     considered child health assistance described in paragraph 
     (1)(C) of subsection (a) for purposes of making payments 
     under that subsection.
       ``(v) State option to require acceptance of subsidy.--A 
     State may condition the provision of child health assistance 
     under the State child health plan for a targeted low-income 
     child on the receipt of a premium assistance subsidy for 
     enrollment in qualified employer sponsored coverage if the 
     State determines the provision of such a subsidy to be more 
     cost-effective in accordance with subparagraph (B)(ii).
       ``(vi) Not treated as income.--Notwithstanding any other 
     provision of law, a premium assistance subsidy provided in 
     accordance with this paragraph shall not be treated as income 
     to the child or the parent of the child for whom such subsidy 
     is provided.
       ``(D) No requirement to provide supplemental coverage for 
     benefits and additional cost-sharing protection provided 
     under the state child health plan.--
       ``(i) In general.--A State that elects the option to 
     provide a premium assistance subsidy under this paragraph 
     shall not be required to provide a targeted low-income child 
     enrolled in qualified employer sponsored coverage with 
     supplemental coverage for items or services that are not 
     covered, or are only partially covered, under the qualified 
     employer sponsored coverage or cost-sharing protection other 
     than the protection required under section 2103(e)(3)(B).
       ``(ii) Notice of cost-sharing requirements.--A State shall 
     provide a targeted low-income child or the parent of such a 
     child (as appropriate) who is provided with a premium 
     assistance subsidy in accordance with this paragraph with 
     notice of the cost-sharing requirements and limitations 
     imposed under the qualified employer sponsored coverage in 
     which the child is enrolled upon the enrollment of the child 
     in such coverage and annually thereafter.
       ``(iii) Record keeping requirements.--A State may require a 
     parent of a targeted low-income child that is enrolled in 
     qualified employer-sponsored coverage to bear the 
     responsibility for keeping track of out-of-pocket 
     expenditures incurred for cost-sharing imposed under such 
     coverage and to notify the State when the limit on such 
     expenditures imposed under section 2103(e)(3)(B) has been 
     reached for a year from the effective date of enrollment for 
     such year.
       ``(iv) State option for reimbursement.--A State may 
     retroactively reimburse a parent of a targeted low-income 
     child for out-of-pocket expenditures incurred after reaching 
     the 5 percent cost-sharing limitation imposed under section 
     2103(e)(3)(B) for a year.
       ``(E) 6-month waiting period required.--A State shall 
     impose at least a 6-month waiting period from the time an 
     individual is enrolled in private health insurance prior to 
     the provision of a premium assistance subsidy for a targeted 
     low-income child in accordance with this paragraph.
       ``(F) Non application of waiting period for enrollment in 
     the state medicaid plan or the state child health plan.--A 
     targeted low-income child provided a premium assistance 
     subsidy in accordance with this paragraph who loses 
     eligibility for such subsidy shall not be treated as having 
     been enrolled in private health insurance coverage for 
     purposes of applying any waiting period imposed under the 
     State child health plan or the State plan under title XIX for 
     the enrollment of the child under such plan.
       ``(G) Assurance of special enrollment period under group 
     health plans in case of eligibility for premium subsidy 
     assistance.--No payment shall be made under subsection (a) 
     for amounts expended for the provision of premium assistance 
     subsidies under this paragraph unless a State provides 
     assurances to the Secretary that the State has in effect laws 
     requiring a group health plan, a health insurance issuer 
     offering group health insurance coverage in connection with a 
     group health plan, and a self-funded health plan, to permit 
     an employee who is eligible, but not enrolled, for coverage 
     under the terms of the plan (or a child of such an employee 
     if the child is eligible, but not enrolled, for coverage 
     under such terms) to enroll for coverage under the terms of 
     the plan if the employee's child becomes eligible for a 
     premium assistance subsidy under this paragraph.
       ``(H) No effect on previously approved premium assistance 
     programs.--Nothing in this paragraph shall be construed as 
     limiting the authority of a State to offer premium assistance 
     under section 1906, a waiver described in paragraph (2)(B) or 
     (3), a waiver approved under section 1115, or other authority 
     in effect on June 28, 2007.
       ``(I) Notice of availability.--A State shall--
       ``(i) include on any application or enrollment form for 
     child health assistance a notice of the availability of 
     premium assistance subsidies for the enrollment of targeted 
     low-income children in qualified employer sponsored coverage;
       ``(ii) provide, as part of the application and enrollment 
     process under the State child health plan, information 
     describing the availability of such subsidies and how to 
     elect to obtain such a subsidy; and
       ``(iii) establish such other procedures as the State 
     determines necessary to ensure that parents are informed of 
     the availability of such subsidies under the State child 
     health plan.''.
       (2) Application to medicaid.--Section 1906 of the Social 
     Security Act (42 U.S.C. 1396e) is amended by adding at the 
     end the following new subsection:
       ``(d) The provisions of section 2105(c)(9) shall apply to a 
     child who is eligible for medical assistance under the State 
     plan in the same manner as such provisions apply to a 
     targeted low-income child under a State child health plan 
     under title XXI. Section 1902(a)(34) shall not apply to a 
     child who is provided a premium assistance subsidy under the 
     State plan in accordance with the preceding sentence.''.

     SEC. 3. GRANTS FOR OUTREACH AND ENROLLMENT.

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

     ``SEC. 2111. GRANTS TO IMPROVE OUTREACH AND ENROLLMENT.

       ``(a) Outreach and Enrollment Grants; National Campaign.--
       ``(1) In general.--From the amounts appropriated for a 
     fiscal year under subsection (f), subject to paragraph (2), 
     the Secretary shall award grants to eligible entities to 
     conduct outreach and enrollment efforts that are designed to 
     increase the enrollment and participation of eligible 
     children under this title and title XIX.
       ``(2) 10 percent set aside for national enrollment 
     campaign.--An amount equal to 10 percent of such amounts for 
     the fiscal year shall be used by the Secretary for 
     expenditures during the fiscal year to carry out a national 
     enrollment campaign in accordance with subsection (g).
       ``(b) Award of Grants.--
       ``(1) Priority for awarding.--
       ``(A) In general.--In awarding grants under subsection (a), 
     the Secretary shall give priority to eligible entities that--
       ``(i) propose to target geographic areas with high rates 
     of--

       ``(I) eligible but unenrolled children, including such 
     children who reside in rural areas; or
       ``(II) racial and ethnic minorities and health disparity 
     populations, including those proposals that address cultural 
     and linguistic barriers to enrollment; and

       ``(ii) submit the most demonstrable evidence required under 
     paragraphs (1) and (2) of subsection (c).

[[Page S12161]]

       ``(B) 10 percent set aside for outreach to indian 
     children.--An amount equal to 10 percent of the funds 
     appropriated under subsection (f) for a fiscal year shall be 
     used by the Secretary to award grants to Indian Health 
     Service providers and urban Indian organizations receiving 
     funds under title V of the Indian Health Care Improvement Act 
     (25 U.S.C. 1651 et seq.) for outreach to, and enrollment of, 
     children who are Indians.
       ``(2) 2-year availability.--A grant awarded under this 
     section for a fiscal year shall remain available for 
     expenditure through the end of the succeeding fiscal year.
       ``(c) Application.--An eligible entity that desires to 
     receive a grant under subsection (a) shall submit an 
     application to the Secretary in such form and manner, and 
     containing such information, as the Secretary may decide. 
     Such application shall include--
       ``(1) evidence demonstrating that the entity includes 
     members who have access to, and credibility with, ethnic or 
     low-income populations in the communities in which activities 
     funded under the grant are to be conducted;
       ``(2) evidence demonstrating that the entity has the 
     ability to address barriers to enrollment, such as lack of 
     awareness of eligibility, stigma concerns and punitive fears 
     associated with receipt of benefits, and other cultural 
     barriers to applying for and receiving child health 
     assistance or medical assistance;
       ``(3) specific quality or outcomes performance measures to 
     evaluate the effectiveness of activities funded by a grant 
     awarded under this section; and
       ``(4) an assurance that the eligible entity shall--
       ``(A) conduct an assessment of the effectiveness of such 
     activities against the performance measures;
       ``(B) cooperate with the collection and reporting of 
     enrollment data and other information in order for the 
     Secretary to conduct such assessments.
       ``(C) in the case of an eligible entity that is not the 
     State, provide the State with enrollment data and other 
     information as necessary for the State to make necessary 
     projections of eligible children and pregnant women.
       ``(d) Supplement, Not Supplant.--Federal funds awarded 
     under this section shall be used to supplement, not supplant, 
     non-Federal funds that are otherwise available for activities 
     funded under this section.
       ``(e) Definitions.--In this section:
       ``(1) Eligible entity.--The term `eligible entity' means 
     any of the following:
       ``(A) A State with an approved child health plan under this 
     title.
       ``(B) A local government.
       ``(C) An Indian tribe or tribal consortium, a tribal 
     organization, an urban Indian organization receiving funds 
     under title V of the Indian Health Care Improvement Act (25 
     U.S.C. 1651 et seq.), or an Indian Health Service provider.
       ``(D) A Federal health safety net organization.
       ``(E) A State, national, local, or community-based public 
     or nonprofit private organization.
       ``(F) A faith-based organization or consortia, to the 
     extent that a grant awarded to such an entity is consistent 
     with the requirements of section 1955 of the Public Health 
     Service Act (42 U.S.C. 300x-65) relating to a grant award to 
     non-governmental entities.
       ``(G) An elementary or secondary school.
       ``(H) A national, local, or community-based public or 
     nonprofit private organization, including organizations that 
     use community health workers or community-based doula 
     programs.
       ``(2) Federal health safety net organization.--The term 
     `Federal health safety net organization' means--
       ``(A) a Federally-qualified health center (as defined in 
     section 1905(l)(2)(B));
       ``(B) a hospital defined as a disproportionate share 
     hospital for purposes of section 1923;
       ``(C) a covered entity described in section 340B(a)(4) of 
     the Public Health Service Act (42 U.S.C. 256b(a)(4)); and
       ``(D) any other entity or consortium that serves children 
     under a federally-funded program, including the special 
     supplemental nutrition program for women, infants, and 
     children (WIC) established under section 17 of the Child 
     Nutrition Act of 1966 (42 U.S.C. 1786), the head start and 
     early head start programs under the Head Start Act (42 U.S.C. 
     9801 et seq.), the school lunch program established under the 
     Richard B. Russell National School Lunch Act, and an 
     elementary or secondary school.
       ``(3) Indians; indian tribe; tribal organization; urban 
     indian organization.--The terms `Indian', `Indian tribe', 
     `tribal organization', and `urban Indian organization' have 
     the meanings given such terms in section 4 of the Indian 
     Health Care Improvement Act (25 U.S.C. 1603).
       ``(4) Community health worker.--The term `community health 
     worker' means an individual who promotes health or nutrition 
     within the community in which the individual resides--
       ``(A) by serving as a liaison between communities and 
     health care agencies;
       ``(B) by providing guidance and social assistance to 
     community residents;
       ``(C) by enhancing community residents' ability to 
     effectively communicate with health care providers;
       ``(D) by providing culturally and linguistically 
     appropriate health or nutrition education;
       ``(E) by advocating for individual and community health or 
     nutrition needs; and
       ``(F) by providing referral and followup services.
       ``(f) Appropriation.--
       ``(1) In general.--There is appropriated, out of any money 
     in the Treasury not otherwise appropriated, for the purpose 
     of awarding grants under this section $100,000,000 for each 
     of fiscal years 2008 through 2012.
       ``(2) Grants in addition to other amounts paid.--Amounts 
     appropriated and paid under the authority of this section 
     shall be in addition to amounts appropriated under section 
     2104 and paid to States in accordance with section 2105, 
     including with respect to expenditures for outreach 
     activities in accordance with subsections (a)(1)(D)(iii) and 
     (c)(2)(C) of that section.
       ``(g) National Enrollment Campaign.--From the amounts made 
     available under subsection (a)(2) for a fiscal year, the 
     Secretary shall develop and implement a national enrollment 
     campaign to improve the enrollment of underserved child 
     populations in the programs established under this title and 
     title XIX. Such campaign may include--
       ``(1) the establishment of partnerships with the Secretary 
     of Education and the Secretary of Agriculture to develop 
     national campaigns to link the eligibility and enrollment 
     systems for the assistance programs each Secretary 
     administers that often serve the same children;
       ``(2) the integration of information about the programs 
     established under this title and title XIX in public health 
     awareness campaigns administered by the Secretary;
       ``(3) increased financial and technical support for 
     enrollment hotlines maintained by the Secretary to ensure 
     that all States participate in such hotlines;
       ``(4) the establishment of joint public awareness outreach 
     initiatives with the Secretary of Education and the Secretary 
     of Labor regarding the importance of health insurance to 
     building strong communities and the economy;
       ``(5) the development of special outreach materials for 
     Native Americans or for individuals with limited English 
     proficiency; and
       ``(6) such other outreach initiatives as the Secretary 
     determines would increase public awareness of the programs 
     under this title and title XIX.''.
       (b) Nonapplication of Administrative Expenditures Cap.--
     Section 2105(c)(2) of the Social Security Act (42 U.S.C. 
     1397ee(c)(2)) is amended by adding at the end the following:
       ``(C) Nonapplication to expenditures for outreach and 
     enrollment.--The limitation under subparagraph (A) shall not 
     apply with respect to expenditures for outreach activities 
     under section 2102(c)(1), or for enrollment activities, for 
     children eligible for child health assistance under the State 
     child health plan or medical assistance under the State plan 
     under title XIX.''.

     SEC. 4. EXPANSION OF CHILD HEALTH CARE INSURANCE COVERAGE 
                   THROUGH TAX FAIRNESS.

       (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. CHILD HEALTH INSURANCE COSTS.

       ``(a) In General.--In the case of an eligible taxpayer, 
     there shall be allowed as a credit against the tax imposed by 
     this subtitle an amount equal to--
       ``(1) the amount paid by the taxpayer during the taxable 
     year for qualified health insurance for any dependent child 
     of such taxpayer, plus
       ``(2) if such amount does not exceed the limitation under 
     subsection (b), an amount equal to such difference and paid 
     by the Secretary into a designated account of the taxpayer 
     for the sole benefit of such dependent child.
       ``(b) Limitations.--
       ``(1) In general.--The amount allowed as a credit under 
     subsection (a) to an eligible taxpayer for the taxable year 
     shall not exceed the sum of the monthly limitations for 
     coverage months during such taxable year for the individual 
     referred to in subsection (a) for whom such taxpayer paid 
     during the taxable year any amount for coverage under 
     qualified health insurance.
       ``(2) Monthly limitation.--The monthly limitation for an 
     individual for each coverage month of such individual during 
     the taxable year is the amount equal to \1/12\th of $1,200.
       ``(3) Coverage month.--For purposes of this subsection--
       ``(A) In general.--The term `coverage month' means, with 
     respect to an individual, any month if--
       ``(i) as of the first day of such month such individual is 
     covered by qualified health insurance, and
       ``(ii) the premium for coverage under such insurance for 
     such month is paid by an eligible taxpayer.
       ``(B) Medicare and medicaid.--Such term shall not include 
     any month with respect to an individual if, as of the first 
     day of such month, such individual--
       ``(i) is entitled to any benefits under title XVIII of the 
     Social Security Act, or
       ``(ii) is a participant in the program under title XIX or 
     XXI of such Act.
       ``(C) Certain other coverage.--Such term shall not include 
     any month during a taxable year with respect to an individual 
     if, at any

[[Page S12162]]

     time during such year, any benefit is provided to such 
     individual under--
       ``(i) chapter 89 of title 5, United States Code, or
       ``(ii) any medical care program under the Indian Health 
     Care Improvement Act.
       ``(D) Insufficient presence in united states.--Such term 
     shall not include any month during a taxable year with 
     respect to an individual if such individual is present in the 
     United States on fewer than 183 days during such year 
     (determined in accordance with section 7701(b)(7)).
       ``(c) Qualified Health Insurance.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified health insurance' 
     means insurance 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) Designated Accounts.--
       ``(1) Designated account.--For purposes of this section, 
     the term `designated account' means any specified account 
     established and maintained by the provider of an eligible 
     taxpayer's qualified health insurance--
       ``(A) which is designated by the taxpayer (in such form and 
     manner as the Secretary may provide) on the return of tax for 
     the taxable year, and
       ``(B) which, under the terms of the account, accepts the 
     payment described in subparagraph (A) on behalf of the 
     taxpayer.
       ``(2) Specified account.--For purposes of this paragraph, 
     the term `specified account' means--
       ``(A) any health savings account under section 223 or 
     Archer MSA under section 220, or
       ``(B) any health insurance reserve account.
       ``(3) Health insurance reserve account.--For purposes of 
     this subsection, the term `health insurance reserve account' 
     means a trust created or organized in the United States as a 
     health insurance reserve account exclusively for the purpose 
     of paying the qualified medical expenses (within the meaning 
     of section 223(d)(2)) of the account beneficiary (as defined 
     in section 223(d)(3)), but only if the written governing 
     instrument creating the trust meets the requirements 
     described in subparagraphs (B), (C), (D), and (E) of section 
     223(d)(1). Rules similar to the rules under subsections (g) 
     and (h) of section 408 shall apply for purposes of this 
     subparagraph.
       ``(4) Treatment of payment.--Any payment under subsection 
     (a)(2) to a designated account shall--
       ``(A) not be taken into account with respect to any dollar 
     limitation which applies with respect to contributions to 
     such account (or to tax benefits with respect to such 
     contributions),
       ``(B) be includible in the gross income of an eligible 
     taxpayer for the taxable year in which the payment is made 
     (except as provided in subparagraph (C)), and
       ``(C) be taken into account in determining any deduction or 
     exclusion from gross income in the same manner as if such 
     contribution were made by such taxpayer.
       ``(e) Eligible Taxpayer; Dependent; Child.--For purposes of 
     this section--
       ``(1) Eligible taxpayer.--The term `eligible taxpayer'means 
     any taxpayer whose income exceeds 200 percent but not 300 
     percent of the poverty level applicable to a family of the 
     size involved, as determined in accordance with criteria 
     established by the Director of the Office of Management and 
     Budget.
       ``(2) Dependent.--The term `dependent' has the meaning 
     given such term by section 152. An individual to whom section 
     152(e) applies shall be treated as a dependent of the 
     custodial parent for a coverage month unless the custodial 
     and noncustodial parent provide otherwise.
       ``(3) Child.--The term `child' means a qualifying child (as 
     defined in section 152(c).
       ``(f) Special Rules.--
       ``(1) Coordination with medical deduction, etc.--Any amount 
     paid by an eligible taxpayer for insurance to which 
     subsection (a) applies shall not be taken into account in 
     computing the amount allowable to such taxpayer as a credit 
     under section 35 or as a deduction under section 213(a) or 
     162(l).
       ``(2) 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.
       ``(3) Married couples must file joint return.--
       ``(A) In general.--If an eligible taxpayer is married at 
     the close of the taxable year, the credit shall be allowed 
     under subsection (a) only if the taxpayer and his spouse file 
     a joint return for the taxable year.
       ``(B) Marital status; certain married individuals living 
     apart.--Rules similar to the rules of paragraphs (3) and (4) 
     of section 21(e) shall apply for purposes of this paragraph.
       ``(4) Verification of coverage, etc.--No credit shall be 
     allowed under this section with respect to any individual 
     unless such individual's coverage (and such related 
     information as the Secretary may require) is verified in such 
     manner as the Secretary may prescribe.
       ``(5) Insurance which covers other individuals; treatment 
     of payments.--Rules similar to the rules of paragraphs (7) 
     and (8) of section 35(g) shall apply for purposes of this 
     section.
       ``(6) Election not to claim credit.--This section shall not 
     apply to an eligible taxpayer for any taxable year if such 
     taxpayer elects to have this section not apply for such 
     taxable year.
       ``(g) Coordination With Advance Payments.--With respect to 
     any taxable year, the amount which would (but for this 
     subsection) be allowed as a credit to an eligible taxpayer 
     under subsection (a) shall be reduced (but not below zero) by 
     the aggregate amount paid on behalf of such taxpayer under 
     section 7527A for months beginning in such taxable year.
       ``(h) Credit Included in Gross Income.--Gross income 
     includes the amount of the credit allowed to an eligible 
     taxpayer under this section.''.
       (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 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 
     such individual or any other 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 individual 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 redesignating clauses 
     (xv) through (xx) as clauses (xvi) through (xxi), 
     respectively, and by inserting after clause (xi) the 
     following new clause:
       ``(xv) section 6050W (relating to returns relating to 
     payments for qualified health insurance),''.
       (B) Paragraph (2) of section 6724(d) of such Code is 
     amended by striking the period at the end of subparagraph 
     (CC) 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.''.
       (c) Advance Payment of Credit for Purchasers of Qualified 
     Health Insurance.--
       (1) In general.--Chapter 77 of the Internal Revenue Code of 
     1986 (relating to miscellaneous provisions) is amended by 
     adding at the end the following new section:

[[Page S12163]]

     ``SEC. 7529. ADVANCE PAYMENT OF HEALTH INSURANCE CREDIT FOR 
                   PURCHASERS OF QUALIFIED HEALTH INSURANCE.

       ``(a) General Rule.--In the case of an eligible individual, 
     the Secretary shall make payments to the provider of such 
     individual's qualified health insurance equal to such 
     individual's qualified health insurance credit advance amount 
     with respect to such provider.
       ``(b) Eligible Individual.--For purposes of this section, 
     the term `eligible individual' means any individual--
       ``(1) who purchases qualified health insurance (as defined 
     in section 36(c)), and
       ``(2) for whom a qualified health insurance credit 
     eligibility certificate is in effect.
       ``(c) Qualified Health Insurance Credit Eligibility 
     Certificate.--For purposes of this section, a qualified 
     health insurance credit eligibility certificate is a 
     statement furnished by an individual to the Secretary which--
       ``(1) certifies that the individual will be eligible to 
     receive the credit provided by section 36 for the taxable 
     year,
       ``(2) estimates the amount of such credit for such taxable 
     year, and
       ``(3) provides such other information as the Secretary may 
     require for purposes of this section.
       ``(d) Qualified Health Insurance Credit Advance Amount.--
     For purposes of this section, the term `qualified health 
     insurance credit advance amount' means, with respect to any 
     provider of qualified health insurance, the Secretary's 
     estimate of the amount of credit allowable under section 36 
     to the individual for the taxable year which is attributable 
     to the insurance provided to the individual by such provider.
       ``(e) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this section.''.
       (2) Clerical amendment.--The table of sections for chapter 
     77 of such Code is amended by adding at the end the following 
     new item:

``Sec. 7529. Advance payment of health insurance credit for purchasers 
              of qualified health insurance.''.
       (d) 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 costs.
``Sec. 37. Overpayments of tax.''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2007.

     SEC. 5. LIMITATION ON EMPLOYER-PROVIDED HEALTH CARE COVERAGE.

       (a) In General.--Section 106 of the Internal Revenue Code 
     of 1986 (relating to contributions by employer to accident 
     and health plans) is amended by adding at the end the 
     following new subsection:
       ``(e) Limitation on Employer-Provided Health Care 
     Coverage.--
       ``(1) In general.--The amount of any exclusion under 
     subsection (a) for any taxable year with respect to--
       ``(A) any employer-provided coverage under an accident or 
     health plan which constitutes medical care, and
       ``(B) any employer contribution to an Archer MSA or a 
     health savings account which is treated by subsection (b) or 
     (d) as employer-provided coverage for medical expenses under 
     an accident or health plan,
     shall not exceed $20,000 per employee.
       ``(2) Medical care defined.--For purposes of paragraph (1), 
     the term `medical care' has the meaning given to such term in 
     section 213(d) determined 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.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2007.

     SEC. 6. STATE HEALTH REFORM PROJECTS.

       (a) Purpose; Establishment of State Health Care Expansion 
     and Improvement Program.--The purposes of the programs 
     approved under this section shall include, but not be limited 
     to--
       (1) achieving the goals of increased health coverage and 
     access;
       (2) ensuring that patients receive high-quality, 
     appropriate health care;
       (3) improving the efficiency of health care spending; and
       (4) testing alternative reforms, such as building on the 
     public or private health systems, or creating new systems, to 
     achieve the objectives of this Act.
       (b) Applications by States, Local Governments, and 
     Tribes.--
       (1) Entities that may apply.--
       (A) In general.--A State, in consultation with local 
     governments, Indian tribes, and Indian organizations involved 
     in the provision of health care, may apply for a State health 
     care expansion and improvement program for the entire State 
     (or for regions of the State) under paragraph (2).
       (B) Regional groups.--A regional entity consisting of more 
     than one State may apply for a multi-State health care 
     expansion and improvement program for the entire region 
     involved under paragraph (2).
       (C) Definition.--In this Act, the term ``State'' means the 
     50 States, the District of Columbia, and the Commonwealth of 
     Puerto Rico. Such term shall include a regional entity 
     described in subparagraph (B).
       (2) Submission of application.--In accordance with this 
     section, each State desiring to implement a State health care 
     expansion and improvement program may submit an application 
     to the State Health Innovation Commission under subsection 
     (c) (referred to in this section as the ``Commission'') for 
     approval.
       (3) Local government applications.--
       (A) In general.--Where a State declines to submit an 
     application under this section, a unit of local government of 
     such State, or a consortium of such units of local 
     governments, may submit an application directly to the 
     Commission for programs or projects under this subsection. 
     Such an application shall be subject to the requirements of 
     this section.
       (B) Other applications.--Subject to such additional 
     guidelines as the Secretary may prescribe, a unit of local 
     government, Indian tribe, or Indian health organization may 
     submit an application under this section, whether or not the 
     State submits such an application, if such unit of local 
     government can demonstrate unique demographic needs or a 
     significant population size that warrants a substate program 
     under this subsection.
       (c) State Health Innovation Commission.--
       (1) In general.--Within 90 days after the date of the 
     enactment of this Act, the Secretary shall establish a State 
     Health Innovation Commission that shall--
       (A) be comprised of--
       (i) the Secretary;
       (ii) four State governors to be appointed by the National 
     Governors Association on a bipartisan basis;
       (iii) two members of a State legislature to be appointed by 
     the National Conference of State Legislators on a bipartisan 
     basis;
       (iv) two county officials to be appointed by the National 
     Association of Counties on a bipartisan basis;
       (v) two mayors to be appointed by the United States 
     Conference of Mayors and the National League of Cities on a 
     joint and bipartisan basis;
       (vi) two individuals to be appointed by the Speaker of the 
     House of Representatives;
       (vii) two individuals to be appointed by the minority 
     leader of the House of Representatives;
       (viii) two individuals to be appointed by the majority 
     leader of the Senate;
       (ix) two individuals to be appointed by the minority leader 
     of the Senate; and
       (x) two individuals who are members of federally-recognized 
     Indian tribes to be appointed on a bipartisan basis by the 
     National Congress of American Indians;
       (B) upon approval of \2/3\ of the members of the 
     Commission, provide the States with a variety of reform 
     options for their applications, such as tax credit 
     approaches, expansions of public programs such as medicaid 
     and the State Children's Health Insurance Program, the 
     creation of purchasing pooling arrangements similar to the 
     Federal Employees Health Benefits Program, individual market 
     purchasing options, single risk pool or single payer systems, 
     health savings accounts, a combination of the options 
     described in this clause, or other alternatives determined 
     appropriate by the Commission, including options suggested by 
     States, Indian tribes, or the public;
       (C) establish, in collaboration with a qualified and 
     independent organization such as the Institute of Medicine, 
     minimum performance measures and goals with respect to 
     coverage, quality, and cost of State programs, as described 
     under subsection (d)(1);
       (D) conduct a thorough review of the grant application from 
     a State and carry on a dialogue with all State applicants 
     concerning possible modifications and adjustments;
       (E) submit the recommendations and legislative proposal 
     described in subsection (d)(4)(B);
       (F) be responsible for monitoring the status and progress 
     achieved under program or projects granted under this 
     section;
       (G) report to the public concerning progress made by States 
     with respect to the performance measures and goals 
     established under this Act, the periodic progress of the 
     State relative to its State performance measures and goals, 
     and the State program application procedures, by region and 
     State jurisdiction;
       (H) promote information exchange between States and the 
     Federal Government; and
       (I) be responsible for making recommendations to the 
     Secretary and the Congress, using equivalency or minimum 
     standards, for minimizing the negative effect of State 
     program on national employer groups, provider organizations, 
     and insurers because of differing State requirements under 
     the programs.
       (2) Period of appointment; representation requirements; 
     vacancies.--Members shall be appointed for a term of 5 years. 
     In appointing such members under paragraph (1)(A), the 
     designated appointing individuals shall ensure the 
     representation of urban and rural areas and an appropriate 
     geographic distribution of such members. Any vacancy in the 
     Commission shall not affect its powers, but shall be filled 
     in the same manner as the original appointment.
       (3) Chairperson, meetings.--
       (A) Chairperson.--The Commission shall select a Chairperson 
     from among its members.

[[Page S12164]]

       (B) Quorum.--A majority of the members of the Commission 
     shall constitute a quorum, but a lesser number of members may 
     hold hearings.
       (C) Meetings.--Not later than 30 days after the date on 
     which all members of the Commission have been appointed, the 
     Commission shall hold its first meeting. The Commission shall 
     meet at the call of the Chairperson.
       (4) Powers of the commission.--
       (A) Negotiations with states.--The Commission may conduct 
     detailed discussions and negotiations with States submitting 
     applications under this section, either individually or in 
     groups, to facilitate a final set of recommendations for 
     purposes of subsection (d)(4)(B). Such negotiations shall 
     include consultations with Indian tribes, and be conducted in 
     a public forum.
       (B) Hearings.--The Commission may hold such hearings, sit 
     and act at such times and places, take such testimony, and 
     receive such evidence as the Commission considers advisable 
     to carry out the purposes of this subsection.
       (C) Meetings.--In addition to other meetings the Commission 
     may hold, the Commission shall hold an annual meeting with 
     the participating States under this section for the purpose 
     of having States report progress toward the purposes in 
     subsection (a)(1) and for an exchange of information.
       (D) Information.--The Commission may secure directly from 
     any Federal department or agency such information as the 
     Commission considers necessary to carry out the provisions of 
     this subsection. Upon request of the Chairperson of the 
     Commission, the head of such department or agency shall 
     furnish such information to the Commission if the head of the 
     department or agency involved determines it appropriate.
       (E) Postal services.--The Commission may use the United 
     States mails in the same manner and under the same conditions 
     as other departments and agencies of the Federal Government.
       (5) Personnel matters.--
       (A) Compensation.--Each member of the Commission who is not 
     an officer or employee of the Federal Government or of a 
     State or local government shall be compensated at a rate 
     equal to the daily equivalent of the annual rate of basic pay 
     prescribed for level IV of the Executive Schedule under 
     section 5315 of title 5, United States Code, for each day 
     (including travel time) during which such member is engaged 
     in the performance of the duties of the Commission. All 
     members of the Commission who are officers or employees of 
     the United States shall serve without compensation in 
     addition to that received for their services as officers or 
     employees of the United States.
       (B) Travel expenses.--The members of the Commission shall 
     be allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for employees of agencies 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from their homes or regular places of 
     business in the performance of services for the Commission.
       (C) Staff.--The Chairperson of the Commission may, without 
     regard to the civil service laws and regulations, appoint and 
     terminate an executive director and such other additional 
     personnel as may be necessary to enable the Commission to 
     perform its duties. The employment of an executive director 
     shall be subject to confirmation by the Commission.
       (D) Detail of government employees.--Any Federal Government 
     employee may be detailed to the Commission without 
     reimbursement, and such detail shall be without interruption 
     or loss of civil service status or privilege.
       (E) Temporary and intermittent services.--The Chairperson 
     of the Commission may procure temporary and intermittent 
     services under section 3109(b) of title 5, United States 
     Code, at rates for individuals which do not exceed the daily 
     equivalent of the annual rate of basic pay prescribed for 
     level V of the Executive Schedule under section 5316 of such 
     title.
       (6) Funding.--For the purpose of carrying out this 
     subsection, there are authorized to be appropriated 
     $3,000,000 for fiscal year 2007 and each fiscal year 
     thereafter.
       (d) Requirements for Programs.--
       (1) State plan.--A State that seeks to receive a grant 
     under subsection (f) to operate a program under this section 
     shall prepare and submit to the Commission, as part of the 
     application under subsection (b), a State health care plan 
     that shall have as its goal improvements in coverage, quality 
     and costs. To achieve such goal, the State plan shall comply 
     with the following:
       (A) Coverage.--With respect to coverage, the State plan 
     shall--
       (i) provide and describe the manner in which the State will 
     ensure that an increased number of individuals residing 
     within the State will have expanded access to health care 
     coverage with a specific 5-year target for reduction in the 
     number of uninsured individuals through either private or 
     public program expansion, or both, in accordance with the 
     options established by the Commission;
       (ii) describe the number and percentage of current 
     uninsured individuals who will achieve coverage under the 
     State health program;
       (iii) describe the minimum benefits package that will be 
     provided to all classes of beneficiaries under the State 
     health program;
       (iv) identify Federal, State, or local and private programs 
     that currently provide health care services in the State and 
     describe how such programs could be coordinated with the 
     State health program, to the extent practicable; and
       (v) provide for improvements in the availability of 
     appropriate health care services that will increase access to 
     care in urban, rural, and frontier areas of the State with 
     medically underserved populations or where there is an 
     inadequate supply of health care providers.
       (B) Quality.--With respect to quality, the State plan 
     shall--
       (i) provide a plan to improve health care quality in the 
     State, including increasing effectiveness, efficiency, 
     timeliness, patient focused, equity while reducing health 
     disparities, and medical errors; and
       (ii) contain appropriate results-based quality indicators 
     established by the Commission that will be addressed by the 
     State as well as State-specific quality indicators.
       (C) Costs.--With respect to costs, the State plan shall--
       (i) provide that the State will develop and implement 
     systems to improve the efficiency of health care, including a 
     specific 5-year target for reducing administrative costs 
     (including paperwork burdens);
       (ii) describe the public and private sector financing to be 
     provided for the State health program;
       (iii) estimate the amount of Federal, State, and local 
     expenditures, as well as, the costs to business and 
     individuals under the State health program;
       (iv) describe how the State plan will ensure the financial 
     solvency of the State health program; and
       (v) provide that the State will prepare and submit to the 
     Secretary and the Commission such reports as the Secretary or 
     Commission may require to carry out program evaluations.
       (D) Health information technology.--With respect to health 
     information technology, the State plan shall provide 
     methodology for the appropriate use of health information 
     technology to improve infrastructure, such as improving the 
     availability of evidence-based medical and outcomes data to 
     providers and patients, as well as other health information 
     (such as electronic health records, electronic billing, and 
     electronic prescribing).
       (2) Technical assistance.--The Secretary shall, if 
     requested, provide technical assistance to States to assist 
     such States in developing applications and plans under this 
     section, including technical assistance by private sector 
     entities if determined appropriate by the Commission.
       (3) Initial review.--With respect to a State application 
     for a grant under subsection (b), the Secretary and the 
     Commission shall complete an initial review of such State 
     application within 60 days of the receipt of such 
     application, analyze the scope of the proposal, and determine 
     whether additional information is needed from the State. The 
     Commission shall advise the State within such period of the 
     need to submit additional information.
       (4) Final determination.--
       (A) In general.--Not later than 90 days after completion of 
     the initial review under paragraph (3), the Commission shall 
     determine whether to submit a State proposal to Congress for 
     approval.
       (B) Voting.--
       (i) In general.--The determination to submit a State 
     proposal to Congress under subparagraph (A) shall be approved 
     by \2/3\ of the members of the Commission who are eligible to 
     participate in such determination subject to clause (ii).
       (ii) Eligibility.--A member of the Commission shall not 
     participate in a determination under subparagraph (A) if--

       (I) in the case of a member who is a Governor, such 
     determination relates to the State of which the member is the 
     Governor; or
       (II) in the case of member not described in subclause (I), 
     such determination relates to the geographic area of a State 
     of which such member serves as a State or local official.

       (C) Submission.--Not later than 90 days prior to October 1 
     of each fiscal year, the Commission shall submit to Congress 
     a list, in the form of a legislative proposal, of the State 
     applications that the Commission recommends for approval 
     under this section.
       (D) Approval.--With respect to a fiscal year, a State 
     proposal that has been recommended under subparagraph (B) 
     shall be deemed to be approved, and subject to the 
     availability of appropriations, Federal funds shall be 
     provided to such program, unless a joint resolution has been 
     enacted disapproving such proposal as provided for in 
     subsection (e). Nothing in the preceding sentence shall be 
     construed to include the approval of State proposals that 
     involve waivers or modifications in applicable Federal law.
       (5) Program or project period.--A State program or project 
     may be approved for a period of 5 years and may be extended 
     for subsequent 5-year periods upon approval by the Commission 
     and the Secretary, based upon achievement of targets, except 
     that a shorter period may be requested by a State and granted 
     by the Secretary.
       (e) Expedited Congressional Consideration.--
       (1) Introduction and committee consideration.--

[[Page S12165]]

       (A) Introduction.--The legislative proposal submitted 
     pursuant to subsection (d)(4)(B) shall be in the form of a 
     joint resolution (in this subsection referred to as the 
     ``resolution''). Such resolution shall be introduced in the 
     House of Representatives by the Speaker, and in the Senate, 
     by the majority leader, immediately upon receipt of the 
     language and shall be referred to the appropriate committee 
     of Congress. If the resolution is not introduced in 
     accordance with the preceding sentence, the resolution may be 
     introduced in either House of Congress by any member thereof.
       (B) Committee consideration.--A resolution introduced in 
     the House of Representatives shall be referred to the 
     Committee on Ways and Means of the House of Representatives. 
     A resolution introduced in the Senate shall be referred to 
     the Committee on Finance of the Senate. Not later than 15 
     calendar days after the introduction of the resolution, the 
     committee of Congress to which the resolution was referred 
     shall report the resolution or a committee amendment thereto. 
     If the committee has not reported such resolution (or an 
     identical resolution) at the end of 15 calendar days after 
     its introduction or at the end of the first day after there 
     has been reported to the House involved a resolution, 
     whichever is earlier, such committee shall be deemed to be 
     discharged from further consideration of such reform bill and 
     such reform bill shall be placed on the appropriate calendar 
     of the House involved.
       (2) Expedited procedure.--
       (A) Consideration.--Not later than 5 days after the date on 
     which a committee has been discharged from consideration of a 
     resolution, the Speaker of the House of Representatives, or 
     the Speaker's designee, or the majority leader of the Senate, 
     or the leader's designee, shall move to proceed to the 
     consideration of the committee amendment to the resolution, 
     and if there is no such amendment, to the resolution. It 
     shall also be in order for any member of the House of 
     Representatives or the Senate, respectively, to move to 
     proceed to the consideration of the resolution at any time 
     after the conclusion of such 5-day period. All points of 
     order against the resolution (and against consideration of 
     the resolution) are waived. A motion to proceed to the 
     consideration of the resolution is highly privileged in the 
     House of Representatives and is privileged in the Senate and 
     is not debatable. The motion is not subject to amendment, to 
     a motion to postpone consideration of the resolution, or to a 
     motion to proceed to the consideration of other business. A 
     motion to reconsider the vote by which the motion to proceed 
     is agreed to or not agreed to shall not be in order. If the 
     motion to proceed is agreed to, the House of Representatives 
     or the Senate, as the case may be, shall immediately proceed 
     to consideration of the resolution without intervening 
     motion, order, or other business, and the resolution shall 
     remain the unfinished business of the House of 
     Representatives or the Senate, as the case may be, until 
     disposed of.
       (B) Consideration by other house.--If, before the passage 
     by one House of the resolution that was introduced in such 
     House, such House receives from the other House a resolution 
     as passed by such other House--
       (i) the resolution of the other House shall not be referred 
     to a committee and may only be considered for final passage 
     in the House that receives it under clause (iii);
       (ii) the procedure in the House in receipt of the 
     resolution of the other House, with respect to the resolution 
     that was introduced in the House in receipt of the resolution 
     of the other House, shall be the same as if no resolution had 
     been received from the other House; and
       (iii) notwithstanding clause (ii), the vote on final 
     passage shall be on the reform bill of the other House.
     Upon disposition of a resolution that is received by one 
     House from the other House, it shall no longer be in order to 
     consider the resolution bill that was introduced in the 
     receiving House.
       (C) Consideration in conference.--Immediately upon a final 
     passage of the resolution that results in a disagreement 
     between the two Houses of Congress with respect to the 
     resolution, conferees shall be appointed and a conference 
     convened. Not later than 10 days after the date on which 
     conferees are appointed, the conferees shall file a report 
     with the House of Representatives and the Senate resolving 
     the differences between the Houses on the resolution. 
     Notwithstanding any other rule of the House of 
     Representatives or the Senate, it shall be in order to 
     immediately consider a report of a committee of conference on 
     the resolution filed in accordance with this subclause. 
     Debate in the House of Representatives and the Senate on the 
     conference report shall be limited to 10 hours, equally 
     divided and controlled by the Speaker of the House of 
     Representatives and the minority leader of the House of 
     Representatives or their designees and the majority and 
     minority leaders of the Senate or their designees. A vote on 
     final passage of the conference report shall occur 
     immediately at the conclusion or yielding back of all time 
     for debate on the conference report.
       (3) Rules of the senate and house of representatives.--This 
     subsection is enacted by Congress--
       (A) as an exercise of the rulemaking power of the Senate 
     and House of Representatives, respectively, and is deemed to 
     be part of the rules of each House, respectively, but 
     applicable only with respect to the procedure to be followed 
     in that House in the case of a resolution, and it supersedes 
     other rules only to the extent that it is inconsistent with 
     such rules; and
       (B) with full recognition of the constitutional right of 
     either House to change the rules (so far as they relate to 
     the procedure of that House) at any time, in the same manner, 
     and to the same extent as in the case of any other rule of 
     that House.
       (4) Limitation.--The amount of Federal funds provided with 
     respect to any State proposal that is deemed approved under 
     subsection (d)(3) shall not exceed the cost provided for such 
     proposals within the concurrent resolution on the budget as 
     enacted by Congress for the fiscal year involved.
       (f) Funding.--
       (1) In general.--The Secretary shall provide a grant to a 
     State that has an application approved under subsection (b) 
     to enable such State to carry out an innovative State health 
     program in the State.
       (2) Amount of grant.--The amount of a grant provided to a 
     State under paragraph (1) shall be determined based upon the 
     recommendations of the Commission, subject to the amount 
     appropriated under subsection (k).
       (3) Performance-based funding allocation and 
     prioritization.--In awarding grants under paragraph (1), the 
     Secretary shall--
       (A) fund a diversity of approaches as provided for by the 
     Commission in subsection (c)(1)(B);
       (B) give priority to those State programs that the 
     Commission determines have the greatest opportunity to 
     succeed in providing expanded health insurance coverage and 
     in providing children, youth, and other vulnerable 
     populations with improved access to health care items and 
     services; and
       (C) link allocations to the State to the meeting of the 
     goals and performance measures relating to health care 
     coverage, quality, and health care costs established under 
     this Act through the State project application process.
       (4) Maintenance of effort.--A State, in utilizing the 
     proceeds of a grant received under paragraph (1), shall 
     maintain the expenditures of the State for health care 
     coverage purposes for the support of direct health care 
     delivery at a level equal to not less than the level of such 
     expenditures maintained by the State for the fiscal year 
     preceding the fiscal year for which the grant is received.
       (5) Report.--At the end of the 5-year period beginning on 
     the date on which the Secretary awards the first grant under 
     paragraph (1), the State Health Innovation Advisory 
     Commission established under subsection (c) shall prepare and 
     submit to the appropriate committees of Congress, a report on 
     the progress made by States receiving grants under paragraph 
     (1) in meeting the goals of expanded coverage, improved 
     quality, and cost containment through performance measures 
     established during the 5-year period of the grant. Such 
     report shall contain the recommendation of the Commission 
     concerning any future action that Congress should take 
     concerning health care reform, including whether or not to 
     extend the program established under this subsection.
       (g) Monitoring and Evaluation.--
       (1) Annual reports and participation by states.--Each State 
     that has received a program approval shall--
       (A) submit to the Commission an annual report based on the 
     period representing the respective State's fiscal year, 
     detailing compliance with the requirements established by the 
     Commission and the Secretary in the approval and in this 
     section; and
       (B) participate in the annual meeting under subsection 
     (c)(4)(B).
       (2) Evaluations by commission.--The Commission, in 
     consultation with a qualified and independent organization 
     such as the Institute of Medicine, shall prepare and submit 
     to the Committee on Finance and the Committee on Health, 
     Education, Labor, and Pensions of the Senate and the 
     Committee on Energy and Commerce, the Committee on Education 
     and Labor, and the Committee on Ways and Means of the House 
     of Representatives annual reports that shall contain--
       (A) a description of the effects of the reforms undertaken 
     in States receiving approvals under this section;
       (B) a description of the recommendations of the Commission 
     and actions taken based on these recommendations;
       (C) an evaluation of the effectiveness of such reforms in--
       (i) expanding health care coverage for State residents;
       (ii) improving the quality of health care provided in the 
     States; and
       (iii) reducing or containing health care costs in the 
     States;
       (D) recommendations regarding the advisability of 
     increasing Federal financial assistance for State ongoing or 
     future health program initiatives, including the amount and 
     source of such assistance; and
       (E) as required by the Commission or the Secretary under 
     subsection (f)(5), a periodic, independent evaluation of the 
     program.
       (h) Noncompliance.--
       (1) Corrective action plans.--If a State is not in 
     compliance with a requirement of this section, the Secretary 
     shall develop a corrective action plan for such State.
       (2) Termination.--For good cause and in consultation with 
     the Commission, the Secretary may revoke any program granted 
     under this section. Such decisions shall be subject to a 
     petition for reconsideration and

[[Page S12166]]

     appeal pursuant to regulations established by the Secretary.
       (i) Relationship to Federal Programs.--
       (1) In general.--Nothing in this Act, or in section 1115 of 
     the Social Security Act (42 U.S.C. 1315) shall be construed 
     as authorizing the Secretary, the Commission, a State, or any 
     other person or entity to alter or affect in any way the 
     provisions of title XIX of such Act (42 U.S.C. 1396 et seq.) 
     or the regulations implementing such title.
       (2) Maintenance of effort.--No payment may be made under 
     this section if the State adopts criteria for benefits, 
     income, and resource standards and methodologies for purposes 
     of determining an individual's eligibility for medical 
     assistance under the State plan under title XIX that are more 
     restrictive than those applied as of the date of enactment of 
     this Act.
       (j) Miscellaneous Provisions.--
       (1) Application of certain requirements.--
       (A) Restriction on application of preexisting condition 
     exclusions.--
       (i) In general.--Subject to subparagraph (B), a State shall 
     not permit the imposition of any preexisting condition 
     exclusion for covered benefits under a program or project 
     under this section.
       (ii) Group health plans and group health insurance 
     coverage.--If the State program or project provides for 
     benefits through payment for, or a contract with, a group 
     health plan or group health insurance coverage, the program 
     or project may permit the imposition of a preexisting 
     condition exclusion but only insofar and to the extent that 
     such exclusion is permitted under the applicable provisions 
     of part 7 of subtitle B of title I of the Employee Retirement 
     Income Security Act of 1974 and title XXVII of the Public 
     Health Service Act.
       (B) Compliance with other requirements.--Coverage offered 
     under the program or project shall comply with the 
     requirements of subpart 2 of part A of title XXVII of the 
     Public Health Service Act insofar as such requirements apply 
     with respect to a health insurance issuer that offers group 
     health insurance coverage.
       (2) Prevention of duplicative payments.--
       (A) Other health plans.--No payment shall be made to a 
     State under this section for expenditures for health 
     assistance provided for an individual to the extent that a 
     private insurer (as defined by the Secretary by regulation 
     and including a group health plan (as defined in section 
     607(1) of the Employee Retirement Income Security Act of 
     1974), a service benefit plan, and a health maintenance 
     organization) would have been obligated to provide such 
     assistance but for a provision of its insurance contract 
     which has the effect of limiting or excluding such obligation 
     because the individual is eligible for or is provided health 
     assistance under the plan.
       (B) Other federal governmental programs.--Except as 
     provided in any other provision of law, no payment shall be 
     made to a State under this section for expenditures for 
     health assistance provided for an individual to the extent 
     that payment has been made or can reasonably be expected to 
     be made promptly (as determined in accordance with 
     regulations) under any other federally operated or financed 
     health care insurance program, other than an insurance 
     program operated or financed by the Indian Health Service, as 
     identified by the Secretary. For purposes of this paragraph, 
     rules similar to the rules for overpayments under section 
     1903(d)(2) of the Social Security Act shall apply.
       (3) Application of certain general provisions.--The 
     following sections of the Social Security Act shall apply to 
     States under this section in the same manner as they apply to 
     a State under such title XIX:
       (A) Title xix provisions.--
       (i) Section 1902(a)(4)(C) (relating to conflict of interest 
     standards).
       (ii) Paragraphs (2), (16), and (17) of section 1903(i) 
     (relating to limitations on payment).
       (iii) Section 1903(w) (relating to limitations on provider 
     taxes and donations).
       (iv) Section 1920A (relating to presumptive eligibility for 
     children).
       (B) Title xi provisions.--
       (i) Section 1116 (relating to administrative and judicial 
     review), but only insofar as consistent with this title.
       (ii) Section 1124 (relating to disclosure of ownership and 
     related information).
       (iii) Section 1126 (relating to disclosure of information 
     about certain convicted individuals).
       (iv) Section 1128A (relating to civil monetary penalties).
       (v) Section 1128B(d) (relating to criminal penalties for 
     certain additional charges).
       (vi) Section 1132 (relating to periods within which claims 
     must be filed).
       (4) Relation to other laws.--
       (A) HIPAA.--Health benefits coverage provided under a State 
     program or project under this section shall be treated as 
     creditable coverage for purposes of part 7 of subtitle B of 
     title I of the Employee Retirement Income Security Act of 
     1974, title XXVII of the Public Health Service Act, and 
     subtitle K of the Internal Revenue Code of 1986.
       (B) ERISA.--Nothing in this section shall be construed as 
     affecting or modifying section 514 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1144) with respect to 
     a group health plan (as defined in section 2791(a)(1) of the 
     Public Health Service Act (42 U.S.C. 300gg-91(a)(1))).
       (k) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section, such sums as 
     may be necessary in each fiscal year. Amounts appropriated 
     for a fiscal year under this subsection and not expended may 
     be used in subsequent fiscal years to carry out this section.
                                 ______
                                 
  SA 3058. Mr. KENNEDY (for himself, Mrs. McCaskill, Mr. Lieberman, Ms. 
Mikulski, Mr. Akaka, Mr. Brown, and Mr. Dodd) submitted an amendment 
intended to be proposed to amendment SA 2011 proposed by Mr. Nelson of 
Nebraska (for Mr. Levin) to the bill H.R. 1585, to authorize 
appropriations for fiscal year 2008 for military activities of the 
Department of Defense, for military construction, and for defense 
activities of the Department of Energy, to prescribe military personnel 
strengths for such fiscal year, and for other purposes; which was 
ordered to lie on the table; as follows:

       At the end of title III, add the following:

     SEC. 358. MODIFICATION TO PUBLIC-PRIVATE COMPETITION 
                   REQUIREMENTS BEFORE CONVERSION TO CONTRACTOR 
                   PERFORMANCE.

       (a) Comparison of Retirement System Costs.--Section 
     2461(a)(1) of title 10, United States Code, is amended--
       (1) in subparagraph (F), by striking ``and'' at the end;
       (2) by redesignating subparagraph (G) as subparagraph (H); 
     and
       (3) by inserting after subparagraph (F) the following new 
     subparagraph (G):
       ``(G) requires that the contractor shall not receive an 
     advantage for a proposal that would reduce costs for the 
     Department of Defense by--
       ``(i) not making an employer-sponsored health insurance 
     plan (or payment that could be used in lieu of such a plan), 
     health savings account, or medical savings account, available 
     to the workers who are to be employed to perform the function 
     under the contract;
       ``(ii) offering to such workers an employer-sponsored 
     health benefits plan that requires the employer to contribute 
     less towards the premium or subscription share than the 
     amount that is paid by the Department of Defense for health 
     benefits for civilian employees of the Department under 
     chapter 89 of title 5; or
       ``(iii) offering to such workers a retirement benefit that, 
     in any year, costs less than the annual retirement cost 
     factor applicable to civilian employees of the Department of 
     Defense under chapter 84 of title 5; and''.
       (b) Conforming Amendments.--Such title is further amended--
       (1) by striking section 2467; and
       (2) in section 2461--
       (A) by redesignating subsections (b) through (d) as 
     subsections (c) through (e); and
       (B) by inserting after subsection (a) the following new 
     subsection (b):
       ``(b) Requirement to Consult DOD Employees.--(1) Each 
     officer or employee of the Department of Defense responsible 
     for determining under Office of Management and Budget 
     Circular A-76 whether to convert to contractor performance 
     any function of the Department of Defense--
       ``(A) shall, at least monthly during the development and 
     preparation of the performance work statement and the 
     management efficiency study used in making that 
     determination, consult with civilian employees who will be 
     affected by that determination and consider the views of such 
     employees on the development and preparation of that 
     statement and that study; and
       ``(B) may consult with such employees on other matters 
     relating to that determination.
       ``(2)(A) In the case of employees represented by a labor 
     organization accorded exclusive recognition under section 
     7111 of title 5, consultation with representatives of that 
     labor organization shall satisfy the consultation requirement 
     in paragraph (1).
       ``(B) In the case of employees other than employees 
     referred to in subparagraph (A), consultation with 
     appropriate representatives of those employees shall satisfy 
     the consultation requirement in paragraph (1).
       ``(C) The Secretary of Defense shall prescribe regulations 
     to carry out this subsection. The regulations shall include 
     provisions for the selection or designation of appropriate 
     representatives of employees referred to in subparagraph (B) 
     for purposes of consultation required by paragraph (1).''.
       (c) Technical Amendments.--Section 2461 of such title, as 
     amended by subsection (a), is further amended--
       (1) in subsection (a)(1)--
       (A) in subparagraph (B), by inserting after ``2003'' the 
     following: ``, or any successor circular''; and
       (B) in subparagraph (D), by striking ``and reliability'' 
     and inserting ``, reliability, and timeliness''; and
       (2) in subsection (c)(2), as redesignated under subsection 
     (b)(2), by inserting ``of'' after ``examination''.

     SEC. 359. BID PROTESTS BY FEDERAL EMPLOYEES IN ACTIONS UNDER 
                   OFFICE OF MANAGEMENT BUDGET CIRCULAR A-76.

       (a) Eligibility to Protest Public-Private Competitions.--
     Section 3551(2) of title 31, United States Code, is amended 
     to read as follows:
       ``(2) The term `interested party'--

[[Page S12167]]

       ``(A) with respect to a contract or a solicitation or other 
     request for offers described in paragraph (1), means an 
     actual or prospective bidder or offeror whose direct economic 
     interest would be affected by the award of the contract or by 
     failure to award the contract; and
       ``(B) with respect to a public-private competition 
     conducted under Office of Management and Budget Circular A-76 
     with respect to the performance of an activity or function of 
     a Federal agency, or a decision to convert a function 
     performed by Federal employees to private sector performance 
     without a competition under Office of Management and Budget 
     Circular A-76, includes--
       ``(i) any official who submitted the agency tender in such 
     competition; and
       ``(ii) any one individual who, for the purpose of 
     representing the Federal employees engaged in the performance 
     of the activity or function for which the public-private 
     competition is conducted in a protest under this subchapter 
     that relates to such public-private competition, has been 
     designated as the agent of the Federal employees by a 
     majority of such employees.''.
       (b) Expedited Action.--
       (1) In general.--Subchapter V of chapter 35 of such title 
     is amended by adding at the end the following new section:

     ``SEC. 3557. EXPEDITED ACTION IN PROTESTS OF PUBLIC-PRIVATE 
                   COMPETITIONS.

       ``For any protest of a public-private competition conducted 
     under Office of Management and Budget Circular A-76 with 
     respect to the performance of an activity or function of a 
     Federal agency, the Comptroller General shall administer the 
     provisions of this subchapter in the manner best suited for 
     expediting the final resolution of the protest and the final 
     action in the public-private competition.''.
       (2) Clerical amendment.--The chapter analysis at the 
     beginning of such chapter is amended by inserting after the 
     item relating to section 3556 the following new item:

``3557. Expedited action in protests of public-private competitions.''.

       (c) Right to Intervene in Civil Action.--Section 1491(b) of 
     title 28, United States Code, is amended by adding at the end 
     the following new paragraph:
       ``(5) If an interested party who is a member of the private 
     sector commences an action described in paragraph (1) with 
     respect to a public-private competition conducted under 
     Office of Management and Budget Circular A-76 regarding the 
     performance of an activity or function of a Federal agency, 
     or a decision to convert a function performed by Federal 
     employees to private sector performance without a competition 
     under Office of Management and Budget Circular A-76, then an 
     interested party described in section 3551(2)(B) of title 31 
     shall be entitled to intervene in that action.''.
       (d) Applicability.--Subparagraph (B) of section 3551(2) of 
     title 31, United States Code (as added by subsection (a)), 
     and paragraph (5) of section 1491(b) of title 28, United 
     States Code (as added by subsection (c)), shall apply to--
       (1) a protest or civil action that challenges final 
     selection of the source of performance of an activity or 
     function of a Federal agency that is made pursuant to a study 
     initiated under Office of Management and Budget Circular A-76 
     on or after January 1, 2004; and
       (2) any other protest or civil action that relates to a 
     public-private competition initiated under Office of 
     Management and Budget Circular A-76, or to a decision to 
     convert a function performed by Federal employees to private 
     sector performance without a competition under Office of 
     Management and Budget Circular A-76, on or after the date of 
     the enactment of this Act.

     SEC. 360. PUBLIC-PRIVATE COMPETITION REQUIRED BEFORE 
                   CONVERSION TO CONTRACTOR PERFORMANCE.

       (a) In General.--The Office of Federal Procurement Policy 
     Act (41 U.S.C. 403 et seq.) is amended by adding at the end 
     the following new section:

     ``SEC. 43. PUBLIC-PRIVATE COMPETITION REQUIRED BEFORE 
                   CONVERSION TO CONTRACTOR PERFORMANCE.

       ``(a) Public-Private Competition.--(1) A function of an 
     executive agency performed by 10 or more agency civilian 
     employees may not be converted, in whole or in part, to 
     performance by a contractor unless the conversion is based on 
     the results of a public-private competition that--
       ``(A) formally compares the cost of performance of the 
     function by agency civilian employees with the cost of 
     performance by a contractor;
       ``(B) creates an agency tender, including a most efficient 
     organization plan, in accordance with Office of Management 
     and Budget Circular A-76, as implemented on May 29, 2003, or 
     any successor circular;
       ``(C) includes the issuance of a solicitation;
       ``(D) determines whether the submitted offers meet the 
     needs of the executive agency with respect to factors other 
     than cost, including quality, reliability, and timeliness;
       ``(E) examines the cost of performance of the function by 
     agency civilian employees and the cost of performance of the 
     function by one or more contractors to demonstrate whether 
     converting to performance by a contractor will result in 
     savings to the Government over the life of the contract, 
     including--
       ``(i) the estimated cost to the Government (based on offers 
     received) for performance of the function by a contractor;
       ``(ii) the estimated cost to the Government for performance 
     of the function by agency civilian employees; and
       ``(iii) an estimate of all other costs and expenditures 
     that the Government would incur because of the award of such 
     a contract;
       ``(F) requires continued performance of the function by 
     agency civilian employees unless the difference in the cost 
     of performance of the function by a contractor compared to 
     the cost of performance of the function by agency civilian 
     employees would, over all performance periods required by the 
     solicitation, be equal to or exceed the lesser of--
       ``(i) 10 percent of the personnel-related costs for 
     performance of that function in the agency tender; or
       ``(ii) $10,000,000; and
       ``(G) examines the effect of performance of the function by 
     a contractor on the agency mission associated with the 
     performance of the function.
       ``(2) A function that is performed by the executive agency 
     and is reengineered, reorganized, modernized, upgraded, 
     expanded, or changed to become more efficient, but still 
     essentially provides the same service, shall not be 
     considered a new requirement.
       ``(3) In no case may a function being performed by 
     executive agency personnel be--
       ``(A) modified, reorganized, divided, or in any way changed 
     for the purpose of exempting the conversion of the function 
     from the requirements of this section; or
       ``(B) converted to performance by a contractor to 
     circumvent a civilian personnel ceiling.
       ``(b) Requirement to Consult Employees.--(1) Each civilian 
     employee of an executive agency responsible for determining 
     under Office of Management and Budget Circular A-76 whether 
     to convert to contractor performance any function of the 
     executive agency--
       ``(A) shall, at least monthly during the development and 
     preparation of the performance work statement and the 
     management efficiency study used in making that 
     determination, consult with civilian employees who will be 
     affected by that determination and consider the views of such 
     employees on the development and preparation of that 
     statement and that study; and
       ``(B) may consult with such employees on other matters 
     relating to that determination.
       ``(2)(A) In the case of employees represented by a labor 
     organization accorded exclusive recognition under section 
     7111 of title 5, consultation with representatives of that 
     labor organization shall satisfy the consultation requirement 
     in paragraph (1).
       ``(B) In the case of employees other than employees 
     referred to in subparagraph (A), consultation with 
     appropriate representatives of those employees shall satisfy 
     the consultation requirement in paragraph (1).
       ``(C) The head of each executive agency shall prescribe 
     regulations to carry out this subsection. The regulations 
     shall include provisions for the selection or designation of 
     appropriate representatives of employees referred to in 
     paragraph (2)(B) for purposes of consultation required by 
     paragraph (1).
       ``(c) Congressional Notification.--(1) Before commencing a 
     public-private competition under subsection (a), the head of 
     an executive agency shall submit to Congress a report 
     containing the following:
       ``(A) The function for which such public-private 
     competition is to be conducted.
       ``(B) The location at which the function is performed by 
     agency civilian employees.
       ``(C) The number of agency civilian employee positions 
     potentially affected.
       ``(D) The anticipated length and cost of the public-private 
     competition, and a specific identification of the budgetary 
     line item from which funds will be used to cover the cost of 
     the public-private competition.
       ``(E) A certification that a proposed performance of the 
     function by a contractor is not a result of a decision by an 
     official of an executive agency to impose predetermined 
     constraints or limitations on such employees in terms of man 
     years, end strengths, full-time equivalent positions, or 
     maximum number of employees.
       ``(2) The report required under paragraph (1) shall include 
     an examination of the potential economic effect of 
     performance of the function by a contractor on--
       ``(A) agency civilian employees who would be affected by 
     such a conversion in performance; and
       ``(B) the local community and the Government, if more than 
     50 agency civilian employees perform the function.
       ``(3)(A) A representative individual or entity at a 
     facility where a public-private competition is conducted may 
     submit to the head of the executive agency an objection to 
     the public private competition on the grounds that the report 
     required by paragraph (1) has not been submitted or that the 
     certification required by paragraph (1)(E) is not included in 
     the report submitted as a condition for the public private 
     competition. The objection shall be in writing and shall be 
     submitted within 90 days after the following date:
       ``(i) In the case of a failure to submit the report when 
     required, the date on which the representative individual or 
     an official of the representative entity authorized to pose 
     the objection first knew or should have known of that 
     failure.
       ``(ii) In the case of a failure to include the 
     certification in a submitted report, the date on which the 
     report was submitted to Congress.
       ``(B) If the head of the executive agency determines that 
     the report required by paragraph (1) was not submitted or 
     that the required certification was not included in the

[[Page S12168]]

     submitted report, the function for which the public-private 
     competition was conducted for which the objection was 
     submitted may not be the subject of a solicitation of offers 
     for, or award of, a contract until, respectively, the report 
     is submitted or a report containing the certification in full 
     compliance with the certification requirement is submitted.
       ``(d) Exemption for the Purchase of Products and Services 
     of the Blind and Other Severely Handicapped Persons.--This 
     section shall not apply to a commercial or industrial type 
     function of an executive agency that--
       ``(1) is included on the procurement list established 
     pursuant to section 2 of the Javits-Wagner-O'Day Act (41 
     U.S.C. 47); or
       ``(2) is planned to be changed to performance by a 
     qualified nonprofit agency for the blind or by a qualified 
     nonprofit agency for other severely handicapped persons in 
     accordance with that Act.
       ``(e) Inapplicability During War or Emergency.--The 
     provisions of this section shall not apply during war or 
     during a period of national emergency declared by the 
     President or Congress.''.
       (b) Clerical Amendment.--The table of sections in section 
     1(b) of such Act is amended by adding at the end the 
     following new item:

``Sec. 43. Public-private competition required before conversion to 
              contractor performance.''.

     SEC. 361. PERFORMANCE OF CERTAIN WORK BY FEDERAL GOVERNMENT 
                   EMPLOYEES.

       (a) Guidelines.--
       (1) In general.--The Under Secretary of Defense for 
     Personnel and Readiness shall prescribe guidelines and 
     procedures for ensuring that consideration is given to using 
     Federal Government employees on a regular basis for new work 
     and work that is performed under Department of Defense 
     contracts and could be performed by Federal Government 
     employees.
       (2) Criteria.--The guidelines and procedures prescribed 
     under paragraph (1) shall provide for special consideration 
     to be given to contracts that--
       (A) have been performed by Federal Government employees at 
     any time on or after October 1, 1980;
       (B) are associated with the performance of inherently 
     governmental functions;
       (C) have been performed by a contractor pursuant to a 
     contract that was awarded on a noncompetitive basis, either a 
     contract for a function once performed by Federal employees 
     that was awarded without the conduct of a public-private 
     competition or a contract that was last awarded without the 
     conduct of an actual competition between contractors; or
       (D) have been performed poorly by a contractor because of 
     excessive costs or inferior quality, as determined by a 
     contracting officer within the last five years .
       (3) Deadline for issuance of guidelines.--The Secretary of 
     Defense shall implement the guidelines required under 
     paragraph (1) by not later than 60 days after the date of the 
     enactment of this Act.
       (4) Establishment of contractor inventory.--The Secretary 
     of Defense shall establish an inventory of Department of 
     Defense contracts to determine which contracts meet the 
     criteria set forth in paragraph (2).
       (b) New Requirements.--
       (1) Limitation on requiring public-private competition.--No 
     public-private competition may be required for any Department 
     of Defense function before--
       (A) the commencement of the performance by civilian 
     employees of the Department of Defense of a new Department of 
     Defense function;
       (B) the commencement of the performance by civilian 
     employees of the Department of Defense of any Department of 
     Defense function described in subparagraphs (B) through (D) 
     of subsection (a)(2); or
       (C) the expansion of the scope of any Department of Defense 
     function performed by civilian employees of the Department of 
     Defense.
       (2) Consideration of federal government employees.--The 
     Secretary of Defense shall, to the maximum extent 
     practicable, ensure that Federal Government employees are 
     fairly considered for the performance of new requirements, 
     with special consideration given to new requirements that 
     include functions that--
       (A) are similar to functions that have been performed by 
     Federal Government employees at any time on or after October 
     1, 1980; or
       (B) are associated with the performance of inherently 
     governmental functions.
       (c) Use of Flexible Hiring Authority.--The Secretary may 
     use the flexible hiring authority available to the Secretary 
     under the National Security Personnel System, as established 
     pursuant to section 9902 of title 5, United States Code, to 
     facilitate the performance by civilian employees of the 
     Department of Defense of functions described in subsection 
     (b).
       (d) Inspector General Report.--Not later than 180 days 
     after the enactment of this Act, the Inspector General of the 
     Department of Defense shall submit to the Committees on Armed 
     Services of the Senate and the House of Representatives a 
     report on the compliance of the Secretary of Defense with the 
     requirements of this section.
       (e) Definitions.--In this section:
       (1) The term ``National Security Personnel System'' means 
     the human resources management system established under the 
     authority of section 9902 of title 5, United States Code.
       (2) The term ``inherently governmental function'' has the 
     meaning given that term in section 5 of the Federal 
     Activities Inventory Reform Act of 1998 (Public Law 105-270; 
     112 Stat. 2384; 31 U.S.C. 501 note).
       (f) Conforming Repeal.--The National Defense Authorization 
     Act for Fiscal Year 2006 (Public Law 109-163) is amended by 
     striking section 343.

     SEC. 362. RESTRICTION ON OFFICE OF MANAGEMENT AND BUDGET 
                   INFLUENCE OVER DEPARTMENT OF DEFENSE PUBLIC-
                   PRIVATE COMPETITIONS.

       (a) Restriction on Office of Management and Budget.--The 
     Office of Management and Budget may not direct or require the 
     Secretary of Defense or the Secretary of a military 
     department to prepare for, undertake, continue, or complete a 
     public-private competition or direct conversion of a 
     Department of Defense function to performance by a contractor 
     under Office of Management and Budget Circular A-76, or any 
     other successor regulation, directive, or policy.
       (b) Restriction on Secretary of Defense.--The Secretary of 
     Defense or the Secretary of a military department may not 
     prepare for, undertake, continue, or complete a public-
     private competition or direct conversion of a Department of 
     Defense function to performance by a contractor under Office 
     of Management and Budget Circular A-76, or any other 
     successor regulation, directive, or policy by reason of any 
     direction or requirement provided by the Office of Management 
     and Budget.

     SEC. 363. PUBLIC-PRIVATE COMPETITION AT END OF PERIOD 
                   SPECIFIED IN PERFORMANCE AGREEMENT NOT 
                   REQUIRED.

       Section 2461(a) of title 10, United States Code, is amended 
     by adding at the end the following new paragraph:
       ``(4) A military department or defense agency may not be 
     required to conduct a public-private competition under Office 
     of Management and Budget Circular A-76 or any other provision 
     of law at the end of the period specified in the performance 
     agreement entered into in accordance with this section for 
     any function of the Department of Defense performed by 
     Department of Defense civilian employees.''.
                                 ______
                                 
  SA 3059. Mr. ALLARD submitted an amendment intended to be proposed by 
him to the bill H.R. 976, to amend title XXI of the Social Security Act 
to reauthorize the State Children's Health Insurance Program, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. TREATMENT OF UNBORN CHILDREN.

       (a) Codification of Current Regulations.--Section 
     2110(c)(1) (42 U.S.C. 1397jj(c)(1)) is amended by striking 
     the period at the end and inserting the following: ``, and 
     includes, at the option of a State, an unborn child. For 
     purposes of the previous sentence, the term `unborn child' 
     means a member of the species Homo sapiens, at any stage of 
     development, who is carried in the womb.''.
       (b) Clarifications Regarding Coverage of Mothers.--Section 
     2103 (42 U.S.C. 1397cc) is amended by adding at the end the 
     following new subsection:
       ``(g) Clarifications Regarding Authority to Provide 
     Postpartum Services and Maternal Health Care.--Any State that 
     provides child health assistance to an unborn child under the 
     option described in section 2110(c)(1) may continue to 
     provide such assistance to the mother, as well as postpartum 
     services, through the end of the month in which the 60-day 
     period (beginning on the last day of pregnancy) ends, in the 
     same manner as such assistance and postpartum services would 
     be provided if provided under the State plan under title XIX, 
     but only if the mother would otherwise satisfy the 
     eligibility requirements that apply under the State child 
     health plan (other than with respect to age) during such 
     period.''.
                                 ______
                                 
  SA 3060. Mr. ALLARD submitted an amendment intended to be proposed by 
him to the bill H.R. 976, to amend title XXI of the Social Security Act 
to reauthorize the State Children's Health Insurance Program, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the appropriate place, add the following:

     SEC. __. STANDARDIZATION OF DETERMINATION OF FAMILY INCOME.

       (a) Eligibility Based on Gross Income.--
       (1) In general.--Section 2110 (42 U.S.C. 1397jj) is amended 
     by adding at the end the following new subsection:
       ``(d) Standardization of Determination of Family Income.--A 
     State shall determine family income for purposes of 
     determining income eligibility for child health assistance or 
     other health benefits coverage under the State child health 
     plan (or under a waiver of such plan under section 1115) 
     solely on the basis of the gross income (as defined by the 
     Secretary) of the family.''.
       (2) Prohibition on waiver of requirements.--Section 2107(f) 
     (42 U.S.C. 1397gg(f)), as amended by section 106(a)(2)(A), is 
     amended by adding at the end the following new paragraph:
       ``(3) The Secretary may not approve a waiver, experimental, 
     pilot, or demonstration project with respect to a State after 
     the

[[Page S12169]]

     date of enactment of the Children's Health Insurance Program 
     Reauthorization Act of 2007 that would waive or modify the 
     requirements of section 2110(d) (relating to determining 
     income eligibility on the basis of gross income) and 
     regulations promulgated to carry out such requirements.''.
       (b) Regulations.--Not later than 90 days after the date of 
     enactment of this Act, the Secretary shall promulgate interim 
     final regulations defining gross income for purposes of 
     section 2110(d) of the Social Security Act, as added by 
     subsection (a)(1).
       (c) Application to Current Enrollees.--The interim final 
     regulations promulgated under subsection (b) shall not be 
     used to determine the income eligibility of any individual 
     enrolled in a State child health plan under title XXI of the 
     Social Security Act on the date of enactment of this Act 
     before the date on which such eligibility of the individual 
     is required to be redetermined under the plan as in effect on 
     such date. In the case of any individual enrolled in such 
     plan on such date who, solely as a result of the application 
     of subsection (d) of section 2110 of the Social Security Act 
     (as added by subsection (a)(1))) and the regulations 
     promulgated under subsection (b), is determined to be 
     ineligible for child health assistance under the State child 
     health plan, a State may elect, subject to substitution of 
     the Federal medical assistance percentage for the enhanced 
     FMAP under section 2105(a)(1) of the Social Security Act, to 
     continue to provide the individual with such assistance for 
     so long as the individual otherwise would be eligible for 
     such assistance and the individual's family income, if 
     determined under the income and resource standards and 
     methodologies applicable under the State child health plan on 
     September 30, 2007, would not exceed the income eligibility 
     level applicable to the individual under the State child 
     health plan.
                                 ______
                                 
  SA 3061. Mr. CRAPO submitted an amendment intended to be proposed by 
him to the bill H.R. 976, to amend title XXI of the Social Security Act 
to reauthorize the State Children's Health Insurance Program, and for 
other purposes; which was ordered to lie on the table; as follows:

       Strike section 613 of the proposed House amendment to the 
     text of the Act.
                                 ______
                                 
  SA 3062. Mr. VITTER submitted an amendment intended to be proposed by 
him to the bill H.R. 976, to amend title XXI of the Social Security Act 
to reauthorize the State Children's Health Insurance Program, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:
       ``Sec.__. Exclusion from Program.
       1. No person who is not a United States citizen is eligible 
     to receive benefits in this title.
                                 ______
                                 
  SA 3063. Mr. COBURN submitted an amendment intended to be proposed by 
him to the bill H.R. 976, to amend title XXI of the Social Security Act 
to reauthorize the State Children's Health Insurance Program, and for 
other purposes; which was ordered to lie on the table; as follows:

       Strike section 301 of the House amendment to the text and 
     insert the following:

     SEC. 301. PREMIUM ASSISTANCE FOR HIGHER INCOME CHILDREN AND 
                   PREGNANT WOMEN WITH ACCESS TO EMPLOYER-
                   SPONSORED COVERAGE.

       (a) In General.--Section 2105(c) (42 U.S.C. 1397ee(c)), as 
     amended by section 211(c) is amended by adding at the end the 
     following:
       ``(11) Premium assistance.--
       ``(A) In general.--Beginning with fiscal year 2008, a State 
     may only provide child health assistance for a targeted low-
     income child or a pregnant woman whose family income exceeds 
     200 percent of the poverty line and who has access to 
     qualified employer sponsored coverage (as defined in 
     subparagraph (B)) through the provision of a premium 
     assistance subsidy in accordance with the requirements of 
     this paragraph.
       ``(B) Qualified employer sponsored coverage.--
       ``(i) In general.--In this paragraph, the term `qualified 
     employer sponsored coverage' means a group health plan or 
     health insurance coverage offered through an employer that 
     is--

       ``(I) substantially equivalent to the benefits coverage in 
     a benchmark benefit package described in section 2103(b) or 
     benchmark-equivalent coverage that meets the requirements of 
     section 2103(a)(2);
       ``(II) for which the employer contribution toward any 
     premium for such coverage is at least 50 percent (75 percent, 
     in the case of an employer with more than 50 employees);
       ``(III) made similarly available to all of the employer's 
     employees and for which the employer makes a contribution to 
     the premium that is not less for employees receiving a 
     premium assistance subsidy under any option available under 
     the State child health plan under this title or the State 
     plan under title XIX to provide such assistance than the 
     employer contribution provided for all other employees; and
       ``(IV) cost-effective, as determined under clause (ii).

       ``(ii) Cost-effectiveness.--A group health plan or health 
     insurance coverage offered through an employer shall be 
     considered to be cost-effective if--

       ``(I) the marginal premium cost to purchase family coverage 
     through the employer is less than the State cost of providing 
     child health assistance through the State child health plan 
     for all the children in the family who are targeted low-
     income children; or
       ``(II) the marginal premium cost between individual 
     coverage and purchasing family coverage through the employer 
     is not greater than 175 percent of the cost to the State to 
     provide child health assistance through the State child 
     health plan for a targeted low-income child.

       ``(iii) High deductible health plans included.--The term 
     `qualified employer sponsored coverage' includes a high 
     deductible health plan (as defined in section 223(c)(2) of 
     the Internal Revenue Code of 1986) purchased through a health 
     savings account (as defined under section 223(d) of such 
     Code).
       ``(C) Premium assistance subsidy.--
       ``(i) In general.--In this paragraph, the term `premium 
     assistance subsidy' means, with respect to a targeted low-
     income child, the amount equal to the difference between the 
     employee contribution required for enrollment only of the 
     employee under qualified employer sponsored coverage and the 
     employee contribution required for enrollment of the employee 
     and the child in such coverage, less any applicable premium 
     cost-sharing applied under the State child health plan, 
     subject to the annual aggregate cost-sharing limit applied 
     under section 2103(e)(3)(B).
       ``(ii) State payment option.--Subject to clause (iii), a 
     State may provide a premium assistance subsidy directly to an 
     employer or as reimbursement to an employee for out-of-pocket 
     expenditures.
       ``(iii) Requirement for direct payment to employee.--A 
     State shall not pay a premium assistance subsidy directly to 
     the employee, unless the State has established procedures to 
     ensure that the targeted low-income child on whose behalf 
     such payments are made are actually enrolled in the qualified 
     employer sponsored coverage.
       ``(iv) Treatment as child health assistance.--Expenditures 
     for the provision of premium assistance subsidies shall be 
     considered child health assistance described in paragraph 
     (1)(C) of subsection (a) for purposes of making payments 
     under that subsection.
       ``(v) State option to require acceptance of subsidy.--A 
     State may condition the provision of child health assistance 
     under the State child health plan for a targeted low-income 
     child on the receipt of a premium assistance subsidy for 
     enrollment in qualified employer sponsored coverage if the 
     State determines the provision of such a subsidy to be more 
     cost-effective in accordance with subparagraph (B)(ii).
       ``(vi) Not treated as income.--Notwithstanding any other 
     provision of law, a premium assistance subsidy provided in 
     accordance with this paragraph shall not be treated as income 
     to the child or the parent of the child for whom such subsidy 
     is provided.
       ``(D) No requirement to provide supplemental coverage for 
     benefits and additional cost-sharing protection provided 
     under the state child health plan.--
       ``(i) In general.--A State that elects the option to 
     provide a premium assistance subsidy under this paragraph 
     shall not be required to provide a targeted low-income child 
     enrolled in qualified employer sponsored coverage with 
     supplemental coverage for items or services that are not 
     covered, or are only partially covered, under the qualified 
     employer sponsored coverage or cost-sharing protection other 
     than the protection required under section 2103(e)(3)(B).
       ``(ii) Notice of cost-sharing requirements.--A State shall 
     provide a targeted low-income child or the parent of such a 
     child (as appropriate) who is provided with a premium 
     assistance subsidy in accordance with this paragraph with 
     notice of the cost-sharing requirements and limitations 
     imposed under the qualified employer sponsored coverage in 
     which the child is enrolled upon the enrollment of the child 
     in such coverage and annually thereafter.
       ``(iii) Record keeping requirements.--A State may require a 
     parent of a targeted low-income child that is enrolled in 
     qualified employer-sponsored coverage to bear the 
     responsibility for keeping track of out-of-pocket 
     expenditures incurred for cost-sharing imposed under such 
     coverage and to notify the State when the limit on such 
     expenditures imposed under section 2103(e)(3)(B) has been 
     reached for a year from the effective date of enrollment for 
     such year.
       ``(iv) State option for reimbursement.--A State may 
     retroactively reimburse a parent of a targeted low-income 
     child for out-of-pocket expenditures incurred after reaching 
     the 5 percent cost-sharing limitation imposed under section 
     2103(e)(3)(B) for a year.
       ``(E) 6-month waiting period required.--A State shall 
     impose at least a 6-month waiting period from the time an 
     individual is enrolled in private health insurance prior to 
     the provision of a premium assistance subsidy for a targeted 
     low-income child in accordance with this paragraph.
       ``(F) Non application of waiting period for enrollment in 
     the state medicaid plan or the state child health plan.--A 
     targeted low-income child provided a premium assistance 
     subsidy in accordance with this

[[Page S12170]]

     paragraph who loses eligibility for such subsidy shall not be 
     treated as having been enrolled in private health insurance 
     coverage for purposes of applying any waiting period imposed 
     under the State child health plan or the State plan under 
     title XIX for the enrollment of the child under such plan.
       ``(G) Assurance of special enrollment period under group 
     health plans in case of eligibility for premium subsidy 
     assistance.--No payment shall be made under subsection (a) 
     for amounts expended for the provision of premium assistance 
     subsidies under this paragraph unless a State provides 
     assurances to the Secretary that the State has in effect laws 
     requiring a group health plan, a health insurance issuer 
     offering group health insurance coverage in connection with a 
     group health plan, and a self-funded health plan, to permit 
     an employee who is eligible, but not enrolled, for coverage 
     under the terms of the plan (or a child of such an employee 
     if the child is eligible, but not enrolled, for coverage 
     under such terms) to enroll for coverage under the terms of 
     the plan if the employee's child becomes eligible for a 
     premium assistance subsidy under this paragraph.
       ``(H) No effect on previously approved premium assistance 
     programs.--Nothing in this paragraph shall be construed as 
     limiting the authority of a State to offer premium assistance 
     under section 1906, a waiver described in paragraph (2)(B) or 
     (3), a waiver approved under section 1115, or other authority 
     in effect on June 28, 2007, for targeted low-income children 
     or pregnant women whose family income does not exceed 200 
     percent of the poverty line.
       ``(I) Notice of availability.--A State shall--
       ``(i) include on any application or enrollment form for 
     child health assistance a notice of the availability of 
     premium assistance subsidies for the enrollment of targeted 
     low-income children in qualified employer sponsored coverage 
     and the requirement to provide such subsidies to the 
     individuals described in subparagraph (A);
       ``(ii) provide, as part of the application and enrollment 
     process under the State child health plan, information 
     describing the availability of such subsidies and how to 
     elect to obtain such a subsidy, or if required, to obtain 
     such subsidies; and
       ``(iii) establish such other procedures as the State 
     determines necessary to ensure that parents are informed of 
     the availability of such subsidies under the State child 
     health plan.''.
       (b) Application to Medicaid.--Section 1906 (42 U.S.C. 
     1396e) is amended by inserting after subsection (c) the 
     following:
       ``(d) The provisions of section 2105(c)(11) shall apply to 
     a child who is eligible for medical assistance under the 
     State plan in the same manner as such provisions apply to a 
     targeted low-income child under a State child health plan 
     under title XXI. Section 1902(a)(34) shall not apply to a 
     child who is provided a premium assistance subsidy under the 
     State plan in accordance with the preceding sentence.''.
                                 ______
                                 
  SA 3064. Mr. McCONNELL (for himself, Mr. Lott, Mr. Kyl, Mr. DeMint, 
Mr. Coburn, Mr. Cornyn, Mr. Bunning, Mr. Isakson, and Mr. Barrasso) 
submitted an amendment intended to be proposed to amendment SA 2011 
proposed by Mr. Nelson of Nebraska (for Mr. Levin) to the bill H.R. 
1585, to authorize appropriations for fiscal year 2008 for military 
activities of the Department of Defense, for military construction, and 
for defense activities of the Department of Energy, to prescribe 
military personnel strengths for such fiscal year, and for other 
purposes; which was ordered to lie on the table; as follows:

       On page 1, line 3, strike all after ``Section'' and insert 
     the following:

     1. SHORT TITLE; TABLE OF CONTENTS.

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

Sec. 1. Short title; table of contents.

   TITLE I--STATE CHILDREN'S HEALTH INSURANCE PROGRAM REAUTHORIZATION

Sec. 101. 5-Year reauthorization.
Sec. 102. Allotments for the 50 States and the District of Columbia 
              based on expenditures and numbers of low-income children.
Sec. 103. Limitations on matching rates for populations other than low-
              income children or pregnant women covered through a 
              section 1115 waiver.
Sec. 104. Prohibition on new section 1115 waivers for coverage of 
              adults other than pregnant women.
Sec. 105. Standardization of determination of family income.
Sec. 106. Grants for outreach and enrollment.
Sec. 107. Improved State option for offering premium assistance for 
              coverage through private plans.
Sec. 108. Treatment of unborn children.
Sec. 109. 50 percent matching rate for all Medicaid administrative 
              costs.
Sec. 110. Reduction in payments for Medicaid administrative costs to 
              prevent duplication of such costs under TANF.
Sec. 111. Effective date.

 TITLE II--HEALTH INSURANCE MARKETPLACE MODERNIZATION AND AFFORDABILITY

Sec. 200. Short title; purpose.

                Subtitle A--Small Business Health Plans

Sec. 201. Rules governing small business health plans.
Sec. 202. Cooperation between Federal and State authorities.
Sec. 203. Effective date and transitional and other rules.

                       Subtitle B--Market Relief

Sec. 211. Market relief.

        Subtitle C--Harmonization of Health Insurance Standards

Sec. 221. Health Insurance Standards Harmonization.

                   TITLE III--HEALTH SAVINGS ACCOUNTS

Sec. 301. Special rule for certain medical expenses incurred before 
              establishment of health savings account.
Sec. 302. Use of account for individual high deductible health plan 
              premiums.
Sec. 303. Exception to requirement for employers to make comparable 
              health savings account contributions.
Sec. 304. Certain health reimbursement arrangement coverage disregarded 
              coverage for health savings accounts.

                            TITLE IV--STUDY

Sec. 401. Study on tax treatment of and access to private health 
              insurance.

   TITLE I--STATE CHILDREN'S HEALTH INSURANCE PROGRAM REAUTHORIZATION

     SEC. 101. 5-YEAR REAUTHORIZATION.

       (a) Increase in National Allotment.--Section 2104(a) of the 
     Social Security Act (42 U.S.C. 1397dd(a)) is amended--
       (1) in paragraph (9), by striking ``and'' at the end;
       (2) in paragraph (10), by striking the period at the end 
     and inserting a semicolon; and
       (3) by adding at the end the following:
       ``(11) for fiscal year 2008, $7,000,000,000;
       ``(12) for fiscal year 2009, $7,200,000,000;
       ``(13) for fiscal year 2010, $7,600,000,000;
       ``(14) for fiscal year 2011, $8,300,000,000; and
       ``(15) for fiscal year 2012, $8,800,000,000.''.
       (b) Continuation of Additional Allotments to Territories.--
     Section 2104(c)(4)(B) of the Social Security Act (42 U.S.C. 
     1397dd(c)(4)(B)) is amended--
       (1) by striking ``and'' after ``2006,''; and
       (2) by inserting before the period the following: ``, 
     $56,000,000 for fiscal year 2008, $58,000,000 for fiscal year 
     2009, $61,000,000 for fiscal year 2010, $66,000,000 for 
     fiscal year 2011, and $70,000,000 for fiscal year 2012''.

     SEC. 102. ALLOTMENTS FOR THE 50 STATES AND THE DISTRICT OF 
                   COLUMBIA BASED ON EXPENDITURES AND NUMBERS OF 
                   LOW-INCOME CHILDREN.

       (a) In General.--Section 2104 of the Social Security Act 
     (42 U.S.C. 1397dd) is amended by adding at the end the 
     following new subsection:
       ``(i) Determination of Allotments for the 50 States and the 
     District of Columbia for Fiscal Years 2008 Through 2012.--
       ``(1) In general.--Notwithstanding the preceding provisions 
     of this subsection and subject to paragraph (3), the 
     Secretary shall allot to each subsection (b) State for each 
     of fiscal years 2008 through 2012,, the amount determined for 
     the fiscal year that is equal to the product of--
       ``(A) the amount available for allotment under subsection 
     (a) for the fiscal year, reduced by the amount of allotments 
     made under subsection (c) (determined without regard to 
     paragraph (4) thereof) for the fiscal year; and
       ``(B) the sum of the State allotment factors determined 
     under paragraph (2) with respect to the State and weighted in 
     accordance with subparagraph (B) of that paragraph for the 
     fiscal year.
       ``(2) State allotment factors.--
       ``(A) In general.--For purposes of paragraph (1)(B), the 
     State allotment factors are the following:
       ``(i) The ratio of the projected expenditures for targeted 
     low-income children under the State child health plan and 
     pregnant women under a waiver of such plan for the fiscal 
     year to the sum of such projected expenditures for all States 
     for the fiscal year, multiplied by the applicable percentage 
     weight assigned under subparagraph (B).
       ``(ii) The ratio of the number of low-income children who 
     have not attained age 19 with no health insurance coverage in 
     the State, as determined by the Secretary on the basis of the 
     arithmetic average of the number of such children for the 3 
     most recent Annual Social and Economic Supplements to the 
     Current Population Survey of the Bureau of the Census 
     available before the beginning of the calendar year before 
     such fiscal year begins, to the sum of the number of such 
     children determined for all States for such fiscal year, 
     multiplied by the applicable percentage weight assigned under 
     subparagraph (B).
       ``(iii) The ratio of the projected expenditures for 
     targeted low-income children under the State child health 
     plan and pregnant women under a waiver of such plan for the 
     preceding fiscal year to the sum of such projected 
     expenditures for all States for such

[[Page S12171]]

     preceding fiscal year, multiplied by the applicable 
     percentage weight assigned under subparagraph (B).
       ``(iv) The ratio of the actual expenditures for targeted 
     low-income children under the State child health plan and 
     pregnant women under a waiver of such plan for the second 
     preceding fiscal year to the sum of such actual expenditures 
     for all States for such second preceding fiscal year, 
     multiplied by the applicable percentage weight assigned under 
     subparagraph (B).
       ``(B) Assignment of weights.--For each of fiscal years 2008 
     through 2012, the following percentage weights shall be 
     applied to the ratios determined under subparagraph (A) for 
     each such fiscal year:
       ``(i) 40 percent for the ratio determined under 
     subparagraph (A)(i).
       ``(ii) 5 percent for the ratio determined under 
     subparagraph (A)(ii).
       ``(iii) 50 percent for the ratio determined under 
     subparagraph (A)(iii).
       ``(iv) 5 percent for the ratio determined under 
     subparagraph (A)(iv).
       ``(C) Determination of projected and actual expenditures.--
     For purposes of subparagraph (A):
       ``(i) Projected expenditures.--The projected expenditures 
     described in clauses (i) and (iii) of such subparagraph with 
     respect to a fiscal year shall be determined on the basis of 
     amounts reported by States to the Secretary on the May 15th 
     submission of Form CMS-37 and Form CMS-21B submitted not 
     later than June 30th of the fiscal year preceding such year.
       ``(ii) Actual expenditures.--The actual expenditures 
     described in clause (iv) of such subparagraph with respect to 
     a second preceding fiscal year shall be determined on the 
     basis of amounts reported by States to the Secretary on Form 
     CMS-64 and Form CMS-21 submitted not later than November 30 
     of the preceding fiscal year.''.
       (b) 2-Year Availability of Allotments; Expenditures Counted 
     Against Oldest Allotments.--Section 2104(e) of the Social 
     Security Act (42 U.S.C. 1397dd(e)) is amended to read as 
     follows:
       ``(e) Availability of Amounts Allotted.--
       ``(1) In general.--Except as provided in the succeeding 
     paragraphs of this subsection, amounts allotted to a State 
     pursuant to this section--
       ``(A) for each of fiscal years 1998 through 2007, shall 
     remain available for expenditure by the State through the end 
     of the second succeeding fiscal year; and
       ``(B) for each of fiscal years 2008 through 2012, shall 
     remain available for expenditure by the State only through 
     the end of the succeeding fiscal year for which such amounts 
     are allotted.
       ``(2) Elimination of redistribution of allotments not 
     expended within 3 years.--Notwithstanding subsection (f), 
     amounts allotted to a State under this section for fiscal 
     years beginning with fiscal year 2008 that remain unexpended 
     as of the end of the second succeeding fiscal year shall not 
     be redistributed to other States and shall revert to the 
     Treasury on October 1 of the third succeeding fiscal year.
       ``(3) Rule for counting expenditures against fiscal year 
     allotments.--Expenditures under the State child health plan 
     made on or after October 1, 2007, shall be counted against 
     allotments for the earliest fiscal year for which funds are 
     available for expenditure under this subsection.''.
       (c) Conforming Amendments.--
       (1) Section 2104(b)(1) of the Social Security Act (42 
     U.S.C. 1397dd(b)(1)) is amended by striking ``subsection 
     (d)'' and inserting ``the succeeding subsections of this 
     section''.
       (2) Section 2104(f) of such Act (42 U.S.C. 1397dd(f)) is 
     amended by striking ``The'' and inserting ``Subject to 
     subsection (e)(2), the''.

     SEC. 103. LIMITATIONS ON MATCHING RATES FOR POPULATIONS OTHER 
                   THAN LOW-INCOME CHILDREN OR PREGNANT WOMEN 
                   COVERED THROUGH A SECTION 1115 WAIVER.

       (a) Limitation on Payments.--Section 2105(c) of the Social 
     Security Act (42 U.S.C. 1397ee(c)) is amended by adding at 
     the end the following new paragraph:
       ``(8) Limitations on matching rate for populations other 
     than targeted low-income children or pregnant women covered 
     through a section 1115 waiver.--For child health assistance 
     or health benefits coverage furnished in any fiscal year 
     beginning with fiscal year 2008:
       ``(A) FMAP applied to payments for coverage of children or 
     pregnant women covered through a section 1115 waiver enrolled 
     in the state child health plan on the date of enactment of 
     the kids first act and whose gross family income is 
     determined to exceed the income eligibility level specified 
     for a targeted low-income child.--Notwithstanding subsections 
     (b)(1)(B) and (d) of section 2110, in the case of any 
     individual described in subsection (c) of section 105 of the 
     Kids First Act who the State elects to continue to provide 
     child health assistance for under the State child health plan 
     in accordance with the requirements of such subsection, the 
     Federal medical assistance percentage (as determined under 
     section 1905(b) without regard to clause (4) of such section) 
     shall be substituted for the enhanced FMAP under subsection 
     (a)(1) with respect to such assistance.
       ``(B) FMAP applied to payments only for nonpregnant 
     childless adults and parents and caretaker relatives enrolled 
     under a section 1115 waiver on the date of enactment of the 
     state children's health insurance program reauthorization of 
     2007.--The Federal medical assistance percentage (as 
     determined under section 1905(b) without regard to clause (4) 
     of such section) shall be substituted for the enhanced FMAP 
     under subsection (a)(1) with respect to payments for child 
     health assistance or health benefits coverage provided under 
     the State child health plan for any of the following:
       ``(i) Parents or caretaker relatives enrolled under a 
     waiver on the date of enactment of the state children's 
     health insurance program reauthorization of 2007.--A 
     nonpregnant parent or a nonpregnant caretaker relative of a 
     targeted low-income child who is enrolled in the State child 
     health plan under a waiver, experimental, pilot, or 
     demonstration project on the date of enactment of the Kids 
     First Act and whose family income does not exceed the income 
     eligibility applied under such waiver with respect to that 
     population on such date.
       ``(ii) Nonpregnant childless adults enrolled under a waiver 
     on such date.--A nonpregnant childless adult enrolled in the 
     State child health plan under a waiver, experimental, pilot, 
     or demonstration project described in section 6102(c)(3) of 
     the Deficit Reduction Act of 2005 (42 U.S.C. 1397gg note) on 
     the date of enactment of the Kids First Act and whose family 
     income does not exceed the income eligibility applied under 
     such waiver with respect to that population on such date.
       ``(iii) No replacement enrollees.--Nothing in clauses (i) 
     or (ii) shall be construed as authorizing a State to provide 
     child health assistance or health benefits coverage under a 
     waiver described in either such clause to a nonpregnant 
     parent or a nonpregnant caretaker relative of a targeted low-
     income child, or a nonpregnant childless adult, who is not 
     enrolled under the waiver on the date of enactment of the 
     Kids First Act.
       ``(C) No federal payment for any new nonpregnant adult 
     enrollees or for such enrollees who no longer satisfy income 
     eligibility requirements.--Payment shall not be made under 
     this section for child health assistance or other health 
     benefits coverage provided under the State child health plan 
     or under a waiver under section 1115 for any of the 
     following:
       ``(i) Parents or caretaker relatives under a section 1115 
     waiver approved after the date of enactment of the state 
     children's health insurance program reauthorization of 
     2007.--A nonpregnant parent or a nonpregnant caretaker 
     relative of a targeted low-income child under a waiver, 
     experimental, pilot, or demonstration project that is 
     approved on or after the date of enactment of the Kids First 
     Act.
       ``(ii) Parents, caretaker relatives, and nonpregnant 
     childless adults whose family income exceeds the income 
     eligibility level specified under a section 1115 waiver 
     approved prior to the state children's health insurance 
     program reauthorization of 2007.--Any nonpregnant parent or a 
     nonpregnant caretaker relative of a targeted low-income child 
     whose family income exceeds the income eligibility level 
     referred to in subparagraph (B)(i), and any nonpregnant 
     childless adult whose family income exceeds the income 
     eligibility level referred to in subparagraph (B)(ii).
       ``(iii) Nonpregnant childless adults, parents, or caretaker 
     relatives not enrolled under a section 1115 waiver on the 
     date of enactment of the state children's health insurance 
     program reauthorization of 2007.--Any nonpregnant parent or a 
     nonpregnant caretaker relative of a targeted low-income child 
     who is not enrolled in the State child health plan under a 
     section 1115 waiver, experimental, pilot, or demonstration 
     project referred to in subparagraph (B)(i) on the date of 
     enactment of the Kids First Act, and any nonpregnant 
     childless adult who is not enrolled in the State child health 
     plan under a section 1115 waiver, experimental, pilot, or 
     demonstration project referred to in subparagraph (B)(ii)(I) 
     on such date.
       ``(D) Definition of caretaker relative.--In this 
     subparagraph, the term `caretaker relative' has the meaning 
     given that term for purposes of carrying out section 1931.
       ``(E) Rule of construction.--Nothing in this paragraph 
     shall be construed as implying that payments for coverage of 
     populations for which the Federal medical assistance 
     percentage (as so determined) is to be substituted for the 
     enhanced FMAP under subsection (a)(1) in accordance with this 
     paragraph are to be made from funds other than the allotments 
     determined for a State under section 2104.''.
       (b) Conforming Amendment.--Section 2105(a)(1) of the Social 
     Security Act ( 42 U.S.C. 1397dd(a)(1)) is amended, in the 
     matter preceding subparagraph (A), by inserting ``or 
     subsection (c)(8)'' after ``subparagraph (B)''.

     SEC. 104. PROHIBITION ON NEW SECTION 1115 WAIVERS FOR 
                   COVERAGE OF ADULTS OTHER THAN PREGNANT WOMEN.

       (a) In General.--Section 2107(f) of the Social Security Act 
     (42 U.S.C. 1397gg(f)) is amended--
       (1) by striking ``, the Secretary'' and inserting ``:
       ``(1) The Secretary''; and
       (2) by adding at the end the following new paragraphs:
       ``(2) The Secretary may not approve, extend, renew, or 
     amend a waiver, experimental, pilot, or demonstration project 
     with

[[Page S12172]]

     respect to a State after the date of enactment of the Kids 
     First Act that would allow funds made available under this 
     title to be used to provide child health assistance or other 
     health benefits coverage for any other adult other than a 
     pregnant woman whose family income does not exceed the income 
     eligibility level specified for a targeted low-income child 
     in that State under a waiver or project approved as of such 
     date.
       ``(3) The Secretary may not approve, extend, renew, or 
     amend a waiver, experimental, pilot, or demonstration project 
     with respect to a State after the date of enactment of the 
     Kids First Act that would waive or modify the requirements of 
     section 2105(c)(8).''.
       (b) Clarification of Authority for Coverage of Pregnant 
     Women.--Section 2106 of the Social Security Act (42 U.S.C. 
     1397ff) is amended by adding at the end the following new 
     subsection:
       ``(f) No Authority to Cover Pregnant Women Through State 
     Plan.--For purposes of this title, a State may provide 
     assistance to a pregnant woman under the State child health 
     plan only--
       ``(1) by virtue of a waiver under section 1115; or
       ``(2) through the application of sections 457.10, 
     457.350(b)(2), 457.622(c)(5), and 457.626(a)(3) of title 42, 
     Code of Federal Regulations (as in effect on the date of 
     enactment of the Kids First Act).''.
       (c) Assurance of Notice to Affected Enrollees.--The 
     Secretary of Health and Human Services shall establish 
     procedures to ensure that States provide adequate public 
     notice for parents, caretaker relatives, and nonpregnant 
     childless adults whose eligibility for child health 
     assistance or health benefits coverage under a waiver under 
     section 1115 of the Social Security Act will be terminated as 
     a result of the amendments made by subsection (a), and that 
     States otherwise adhere to regulations of the Secretary 
     relating to procedures for terminating waivers under section 
     1115 of the Social Security Act.

     SEC. 105. STANDARDIZATION OF DETERMINATION OF FAMILY INCOME.

       (a) Eligibility Based on Gross Income.--
       (1) In general.--Section 2110 of the Social Security Act 
     (42 U.S.C. 1397jj) is amended by adding at the end the 
     following new subsection:
       ``(d) Standardization of Determination of Family Income.--A 
     State shall determine family income for purposes of 
     determining income eligibility for child health assistance or 
     other health benefits coverage under the State child health 
     plan (or under a waiver of such plan under section 1115) 
     solely on the basis of the gross income (as defined by the 
     Secretary) of the family.''.
       (2) Prohibition on waiver of requirements.--Section 2107(f) 
     (42 U.S.C. 1397gg(f)), as amended by section 104(a), is 
     amended by adding at the end the following new paragraph:
       ``(4) The Secretary may not approve a waiver, experimental, 
     pilot, or demonstration project with respect to a State after 
     the date of enactment of the Kids First Act that would waive 
     or modify the requirements of section 2110(d) (relating to 
     determining income eligibility on the basis of gross income) 
     and regulations promulgated to carry out such 
     requirements.''.
       (b) Regulations.--Not later than 90 days after the date of 
     enactment of this Act, the Secretary of Health and Human 
     Services shall promulgate interim final regulations defining 
     gross income for purposes of section 2110(d) of the Social 
     Security Act, as added by subsection (a).
       (c) Application to Current Enrollees.--The interim final 
     regulations promulgated under subsection (b) shall not be 
     used to determine the income eligibility of any individual 
     enrolled in a State child health plan under title XXI of the 
     Social Security Act on the date of enactment of this Act 
     before the date on which such eligibility of the individual 
     is required to be redetermined under the plan as in effect on 
     such date. In the case of any individual enrolled in such 
     plan on such date who, solely as a result of the application 
     of subsection (d) of section 2110 of the Social Security Act 
     (as added by subsection (a)) and the regulations promulgated 
     under subsection (b), is determined to be ineligible for 
     child health assistance under the State child health plan, a 
     State may elect, subject to substitution of the Federal 
     medical assistance percentage for the enhanced FMAP under 
     section 2105(c)(8)(A) of the Social Security Act (as added by 
     section 103(a)), to continue to provide the individual with 
     such assistance for so long as the individual otherwise would 
     be eligible for such assistance and the individual's family 
     income, if determined under the income and resource standards 
     and methodologies applicable under the State child health 
     plan on September 30, 2007, would not exceed the income 
     eligibility level applicable to the individual under the 
     State child health plan.

     SEC. 106. GRANTS FOR OUTREACH AND ENROLLMENT.

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

     ``SEC. 2111. GRANTS TO IMPROVE OUTREACH AND ENROLLMENT.

       ``(a) Outreach and Enrollment Grants; National Campaign.--
       ``(1) In general.--From the amounts appropriated for a 
     fiscal year under subsection (f), subject to paragraph (2), 
     the Secretary shall award grants to eligible entities to 
     conduct outreach and enrollment efforts that are designed to 
     increase the enrollment and participation of eligible 
     children under this title and title XIX.
       ``(2) 10 percent set aside for national enrollment 
     campaign.--An amount equal to 10 percent of such amounts for 
     the fiscal year shall be used by the Secretary for 
     expenditures during the fiscal year to carry out a national 
     enrollment campaign in accordance with subsection (g).
       ``(b) Award of Grants.--
       ``(1) Priority for awarding.--
       ``(A) In general.--In awarding grants under subsection (a), 
     the Secretary shall give priority to eligible entities that--
       ``(i) propose to target geographic areas with high rates 
     of--

       ``(I) eligible but unenrolled children, including such 
     children who reside in rural areas; or
       ``(II) racial and ethnic minorities and health disparity 
     populations, including those proposals that address cultural 
     and linguistic barriers to enrollment; and

       ``(ii) submit the most demonstrable evidence required under 
     paragraphs (1) and (2) of subsection (c).
       ``(B) 10 percent set aside for outreach to indian 
     children.--An amount equal to 10 percent of the funds 
     appropriated under subsection (f) for a fiscal year shall be 
     used by the Secretary to award grants to Indian Health 
     Service providers and urban Indian organizations receiving 
     funds under title V of the Indian Health Care Improvement Act 
     (25 U.S.C. 1651 et seq.) for outreach to, and enrollment of, 
     children who are Indians.
       ``(2) 2-year availability.--A grant awarded under this 
     section for a fiscal year shall remain available for 
     expenditure through the end of the succeeding fiscal year.
       ``(c) Application.--An eligible entity that desires to 
     receive a grant under subsection (a) shall submit an 
     application to the Secretary in such form and manner, and 
     containing such information, as the Secretary may decide. 
     Such application shall include--
       ``(1) evidence demonstrating that the entity includes 
     members who have access to, and credibility with, ethnic or 
     low-income populations in the communities in which activities 
     funded under the grant are to be conducted;
       ``(2) evidence demonstrating that the entity has the 
     ability to address barriers to enrollment, such as lack of 
     awareness of eligibility, stigma concerns and punitive fears 
     associated with receipt of benefits, and other cultural 
     barriers to applying for and receiving child health 
     assistance or medical assistance;
       ``(3) specific quality or outcomes performance measures to 
     evaluate the effectiveness of activities funded by a grant 
     awarded under this section; and
       ``(4) an assurance that the eligible entity shall--
       ``(A) conduct an assessment of the effectiveness of such 
     activities against the performance measures;
       ``(B) cooperate with the collection and reporting of 
     enrollment data and other information in order for the 
     Secretary to conduct such assessments.
       ``(C) in the case of an eligible entity that is not the 
     State, provide the State with enrollment data and other 
     information as necessary for the State to make necessary 
     projections of eligible children and pregnant women.
       ``(d) Supplement, Not Supplant.--Federal funds awarded 
     under this section shall be used to supplement, not supplant, 
     non-Federal funds that are otherwise available for activities 
     funded under this section.
       ``(e) Definitions.--In this section:
       ``(1) Eligible entity.--The term `eligible entity' means 
     any of the following:
       ``(A) A State with an approved child health plan under this 
     title.
       ``(B) A local government.
       ``(C) An Indian tribe or tribal consortium, a tribal 
     organization, an urban Indian organization receiving funds 
     under title V of the Indian Health Care Improvement Act (25 
     U.S.C. 1651 et seq.), or an Indian Health Service provider.
       ``(D) A Federal health safety net organization.
       ``(E) A State, national, local, or community-based public 
     or nonprofit private organization.
       ``(F) A faith-based organization or consortia, to the 
     extent that a grant awarded to such an entity is consistent 
     with the requirements of section 1955 of the Public Health 
     Service Act (42 U.S.C. 300x-65) relating to a grant award to 
     non-governmental entities.
       ``(G) An elementary or secondary school.
       ``(H) A national, local, or community-based public or 
     nonprofit private organization, including organizations that 
     use community health workers or community-based doula 
     programs.
       ``(2) Federal health safety net organization.--The term 
     `Federal health safety net organization' means--
       ``(A) a Federally-qualified health center (as defined in 
     section 1905(l)(2)(B));
       ``(B) a hospital defined as a disproportionate share 
     hospital for purposes of section 1923;
       ``(C) a covered entity described in section 340B(a)(4) of 
     the Public Health Service Act (42 U.S.C. 256b(a)(4)); and
       ``(D) any other entity or consortium that serves children 
     under a federally-funded program, including the special 
     supplemental nutrition program for women, infants, and 
     children (WIC) established under section 17 of the Child 
     Nutrition Act of 1966 (42 U.S.C.

[[Page S12173]]

     1786), the head start and early head start programs under the 
     Head Start Act (42 U.S.C. 9801 et seq.), the school lunch 
     program established under the Richard B. Russell National 
     School Lunch Act, and an elementary or secondary school.
       ``(3) Indians; indian tribe; tribal organization; urban 
     indian organization.--The terms `Indian', `Indian tribe', 
     `tribal organization', and `urban Indian organization' have 
     the meanings given such terms in section 4 of the Indian 
     Health Care Improvement Act (25 U.S.C. 1603).
       ``(4) Community health worker.--The term `community health 
     worker' means an individual who promotes health or nutrition 
     within the community in which the individual resides--
       ``(A) by serving as a liaison between communities and 
     health care agencies;
       ``(B) by providing guidance and social assistance to 
     community residents;
       ``(C) by enhancing community residents' ability to 
     effectively communicate with health care providers;
       ``(D) by providing culturally and linguistically 
     appropriate health or nutrition education;
       ``(E) by advocating for individual and community health or 
     nutrition needs; and
       ``(F) by providing referral and followup services.
       ``(f) Appropriation.--
       ``(1) In general.--There is appropriated, out of any money 
     in the Treasury not otherwise appropriated, for the purpose 
     of awarding grants under this section--
       ``(A) $100,000,000 for each of fiscal years 2008 and 2009;
       ``(B) $75,000,000 for each of fiscal years 2010 and 2011; 
     and
       ``(C) $50,000,000 for fiscal year 2012.
       ``(2) Grants in addition to other amounts paid.--Amounts 
     appropriated and paid under the authority of this section 
     shall be in addition to amounts appropriated under section 
     2104 and paid to States in accordance with section 2105, 
     including with respect to expenditures for outreach 
     activities in accordance with subsections (a)(1)(D)(iii) and 
     (c)(2)(C) of that section.
       ``(g) National Enrollment Campaign.--From the amounts made 
     available under subsection (a)(2) for a fiscal year, the 
     Secretary shall develop and implement a national enrollment 
     campaign to improve the enrollment of underserved child 
     populations in the programs established under this title and 
     title XIX. Such campaign may include--
       ``(1) the establishment of partnerships with the Secretary 
     of Education and the Secretary of Agriculture to develop 
     national campaigns to link the eligibility and enrollment 
     systems for the assistance programs each Secretary 
     administers that often serve the same children;
       ``(2) the integration of information about the programs 
     established under this title and title XIX in public health 
     awareness campaigns administered by the Secretary;
       ``(3) increased financial and technical support for 
     enrollment hotlines maintained by the Secretary to ensure 
     that all States participate in such hotlines;
       ``(4) the establishment of joint public awareness outreach 
     initiatives with the Secretary of Education and the Secretary 
     of Labor regarding the importance of health insurance to 
     building strong communities and the economy;
       ``(5) the development of special outreach materials for 
     Native Americans or for individuals with limited English 
     proficiency; and
       ``(6) such other outreach initiatives as the Secretary 
     determines would increase public awareness of the programs 
     under this title and title XIX.''.
       (b) Nonapplication of Administrative Expenditures Cap.--
     Section 2105(c)(2) of the Social Security Act (42 U.S.C. 
     1397ee(c)(2)) is amended by adding at the end the following:
       ``(C) Nonapplication to expenditures for outreach and 
     enrollment.--The limitation under subparagraph (A) shall not 
     apply with respect to expenditures for outreach activities 
     under section 2102(c)(1), or for enrollment activities, for 
     children eligible for child health assistance under the State 
     child health plan or medical assistance under the State plan 
     under title XIX.''.

     SEC. 107. IMPROVED STATE OPTION FOR OFFERING PREMIUM 
                   ASSISTANCE FOR COVERAGE THROUGH PRIVATE PLANS.

       (a) In General.--Section 2105(c) of the Social Security Act 
     (42 U.S.C. 1397ee(c)), as amended by section 103(a) is 
     amended by adding at the end the following:
       ``(9) Additional state option for offering premium 
     assistance.--
       ``(A) In general.--Subject to the succeeding provisions of 
     this paragraph, a State may elect to offer a premium 
     assistance subsidy (as defined in subparagraph (C)) for 
     qualified employer sponsored coverage (as defined in 
     subparagraph (B)) to all targeted low-income children who are 
     eligible for child health assistance under the plan and have 
     access to such coverage in accordance with the requirements 
     of this paragraph.
       ``(B) Qualified employer sponsored coverage.--
       ``(i) In general.--In this paragraph, the term `qualified 
     employer sponsored coverage' means a group health plan or 
     health insurance coverage offered through an employer that 
     is--

       ``(I) substantially equivalent to the benefits coverage in 
     a benchmark benefit package described in section 2103(b) or 
     benchmark-equivalent coverage that meets the requirements of 
     section 2103(a)(2);
       ``(II) made similarly available to all of the employer's 
     employees and for which the employer makes a contribution to 
     the premium that is not less for employees receiving a 
     premium assistance subsidy under any option available under 
     the State child health plan under this title or the State 
     plan under title XIX to provide such assistance than the 
     employer contribution provided for all other employees; and
       ``(III) cost-effective, as determined under clause (ii).

       ``(ii) Cost-effectiveness.--A group health plan or health 
     insurance coverage offered through an employer shall be 
     considered to be cost-effective if--

       ``(I) the marginal premium cost to purchase family coverage 
     through the employer is less than the State cost of providing 
     child health assistance through the State child health plan 
     for all the children in the family who are targeted low-
     income children; or
       ``(II) the marginal premium cost between individual 
     coverage and purchasing family coverage through the employer 
     is not greater than 175 percent of the cost to the State to 
     provide child health assistance through the State child 
     health plan for a targeted low-income child.

       ``(iii) High deductible health plans included.--The term 
     `qualified employer sponsored coverage' includes a high 
     deductible health plan (as defined in section 223(c)(2) of 
     the Internal Revenue Code of 1986) purchased through a health 
     savings account (as defined under section 223(d) of such 
     Code).
       ``(C) Premium assistance subsidy.--
       ``(i) In general.--In this paragraph, the term `premium 
     assistance subsidy' means, with respect to a targeted low-
     income child, the amount equal to the difference between the 
     employee contribution required for enrollment only of the 
     employee under qualified employer sponsored coverage and the 
     employee contribution required for enrollment of the employee 
     and the child in such coverage, less any applicable premium 
     cost-sharing applied under the State child health plan, 
     subject to the annual aggregate cost-sharing limit applied 
     under section 2103(e)(3)(B).
       ``(ii) State payment option.--Subject to clause (iii), a 
     State may provide a premium assistance subsidy directly to an 
     employer or as reimbursement to an employee for out-of-pocket 
     expenditures.
       ``(iii) Requirement for direct payment to employee.--A 
     State shall not pay a premium assistance subsidy directly to 
     the employee, unless the State has established procedures to 
     ensure that the targeted low-income child on whose behalf 
     such payments are made are actually enrolled in the qualified 
     employer sponsored coverage.
       ``(iv) Treatment as child health assistance.--Expenditures 
     for the provision of premium assistance subsidies shall be 
     considered child health assistance described in paragraph 
     (1)(C) of subsection (a) for purposes of making payments 
     under that subsection.
       ``(v) State option to require acceptance of subsidy.--A 
     State may condition the provision of child health assistance 
     under the State child health plan for a targeted low-income 
     child on the receipt of a premium assistance subsidy for 
     enrollment in qualified employer sponsored coverage if the 
     State determines the provision of such a subsidy to be more 
     cost-effective in accordance with subparagraph (B)(ii).
       ``(vi) Not treated as income.--Notwithstanding any other 
     provision of law, a premium assistance subsidy provided in 
     accordance with this paragraph shall not be treated as income 
     to the child or the parent of the child for whom such subsidy 
     is provided.
       ``(D) No requirement to provide supplemental coverage for 
     benefits and additional cost-sharing protection provided 
     under the state child health plan.--
       ``(i) In general.--A State that elects the option to 
     provide a premium assistance subsidy under this paragraph 
     shall not be required to provide a targeted low-income child 
     enrolled in qualified employer sponsored coverage with 
     supplemental coverage for items or services that are not 
     covered, or are only partially covered, under the qualified 
     employer sponsored coverage or cost-sharing protection other 
     than the protection required under section 2103(e)(3)(B).
       ``(ii) Notice of cost-sharing requirements.--A State shall 
     provide a targeted low-income child or the parent of such a 
     child (as appropriate) who is provided with a premium 
     assistance subsidy in accordance with this paragraph with 
     notice of the cost-sharing requirements and limitations 
     imposed under the qualified employer sponsored coverage in 
     which the child is enrolled upon the enrollment of the child 
     in such coverage and annually thereafter.
       ``(iii) Record keeping requirements.--A State may require a 
     parent of a targeted low-income child that is enrolled in 
     qualified employer-sponsored coverage to bear the 
     responsibility for keeping track of out-of-pocket 
     expenditures incurred for cost-sharing imposed under such 
     coverage and to notify the State when the limit on such 
     expenditures imposed under section 2103(e)(3)(B) has been 
     reached for a year from the effective date of enrollment for 
     such year.
       ``(iv) State option for reimbursement.--A State may 
     retroactively reimburse a parent of a targeted low-income 
     child for out-of-pocket expenditures incurred after reaching 
     the 5 percent cost-sharing limitation imposed under section 
     2103(e)(3)(B) for a year.

[[Page S12174]]

       ``(E) 6-month waiting period required.--A State shall 
     impose at least a 6-month waiting period from the time an 
     individual is enrolled in private health insurance prior to 
     the provision of a premium assistance subsidy for a targeted 
     low-income child in accordance with this paragraph.
       ``(F) Non application of waiting period for enrollment in 
     the state medicaid plan or the state child health plan.--A 
     targeted low-income child provided a premium assistance 
     subsidy in accordance with this paragraph who loses 
     eligibility for such subsidy shall not be treated as having 
     been enrolled in private health insurance coverage for 
     purposes of applying any waiting period imposed under the 
     State child health plan or the State plan under title XIX for 
     the enrollment of the child under such plan.
       ``(G) Assurance of special enrollment period under group 
     health plans in case of eligibility for premium subsidy 
     assistance.--No payment shall be made under subsection (a) 
     for amounts expended for the provision of premium assistance 
     subsidies under this paragraph unless a State provides 
     assurances to the Secretary that the State has in effect laws 
     requiring a group health plan, a health insurance issuer 
     offering group health insurance coverage in connection with a 
     group health plan, and a self-funded health plan, to permit 
     an employee who is eligible, but not enrolled, for coverage 
     under the terms of the plan (or a child of such an employee 
     if the child is eligible, but not enrolled, for coverage 
     under such terms) to enroll for coverage under the terms of 
     the plan if the employee's child becomes eligible for a 
     premium assistance subsidy under this paragraph.
       ``(H) No effect on previously approved premium assistance 
     programs.--Nothing in this paragraph shall be construed as 
     limiting the authority of a State to offer premium assistance 
     under section 1906, a waiver described in paragraph (2)(B) or 
     (3), a waiver approved under section 1115, or other authority 
     in effect on June 28, 2007.
       ``(I) Notice of availability.--A State shall--
       ``(i) include on any application or enrollment form for 
     child health assistance a notice of the availability of 
     premium assistance subsidies for the enrollment of targeted 
     low-income children in qualified employer sponsored coverage;
       ``(ii) provide, as part of the application and enrollment 
     process under the State child health plan, information 
     describing the availability of such subsidies and how to 
     elect to obtain such a subsidy; and
       ``(iii) establish such other procedures as the State 
     determines necessary to ensure that parents are informed of 
     the availability of such subsidies under the State child 
     health plan.''.
       (b) Application to Medicaid.--Section 1906 of the Social 
     Security Act (42 U.S.C. 1396e) is amended by inserting after 
     subsection (c) the following:
       ``(d) The provisions of section 2105(c)(9) shall apply to a 
     child who is eligible for medical assistance under the State 
     plan in the same manner as such provisions apply to a 
     targeted low-income child under a State child health plan 
     under title XXI. Section 1902(a)(34) shall not apply to a 
     child who is provided a premium assistance subsidy under the 
     State plan in accordance with the preceding sentence.''.

     SEC. 108. TREATMENT OF UNBORN CHILDREN.

       (a) Codification of Current Regulations.--Section 
     2110(c)(1) of the Social Security Act (42 U.S.C. 
     1397jj(c)(1)) is amended by striking the period at the end 
     and inserting the following: ``, and includes, at the option 
     of a State, an unborn child. For purposes of the previous 
     sentence, the term `unborn child' means a member of the 
     species Homo sapiens, at any stage of development, who is 
     carried in the womb.''.
       (b) Clarifications Regarding Coverage of Mothers.--Section 
     2103 of such Act (42 U.S.C. 1397cc) is amended by adding at 
     the end the following new subsection:
       ``(g) Clarifications Regarding Authority To Provide 
     Postpartum Services and Maternal Health Care.--Any State that 
     provides child health assistance to an unborn child under the 
     option described in section 2110(c)(1) may--
       ``(1) continue to provide such assistance to the mother, as 
     well as postpartum services, through the end of the month in 
     which the 60-day period (beginning on the last day of 
     pregnancy) ends; and
       ``(2) in the interest of the child to be born, have 
     flexibility in defining and providing services to benefit 
     either the mother or unborn child consistent with the health 
     of both.''.

     SEC. 109. 50 PERCENT MATCHING RATE FOR ALL MEDICAID 
                   ADMINISTRATIVE COSTS.

       Section 1903(a) of the Social Security Act (42 U.S.C. 
     1396b(a)) is amended--
       (1) by striking paragraph (2);
       (2) by redesignating paragraph (3)(E) as paragraph (2) and 
     re-locating and indenting it appropriately;
       (3) in paragraph (2), as so redesignated, by redesignating 
     clauses (i) and (ii) as subparagraphs (A) and (B), and 
     indenting them appropriately;
       (4) by striking paragraphs (3) and (4);
       (5) in paragraph (5), by striking ``which are attributable 
     to the offering, arranging, and furnishing'' and inserting 
     ``which are for the medical assistance costs of furnishing'';
       (6) by striking paragraph (6);
       (7) in paragraph (7), by striking ``subject to section 
     1919(g)(3)(B),''; and
       (8) by redesignating paragraphs (5) and (7) as paragraphs 
     (3) and (4), respectively.

     SEC. 110. REDUCTION IN PAYMENTS FOR MEDICAID ADMINISTRATIVE 
                   COSTS TO PREVENT DUPLICATION OF SUCH PAYMENTS 
                   UNDER TANF.

       Section 1903 of such Act (42 U.S.C. 1396b) is amended--
       (1) in subsection (a)(7), by striking ``section 
     1919(g)(3)(B)'' and inserting ``subsection (h)'';
       (2) in subsection (a)(2)(D) by inserting ``, subject to 
     subsection (g)(3)(C) of such section'' after ``as are 
     attributable to State activities under section 1919(g)''; and
       (3) by adding after subsection (g) the following new 
     subsection:
       ``(h) Reduction in Payments for Administrative Costs To 
     Prevent Duplication of Payments Under Title IV.--Beginning 
     with the calendar quarter commencing October 1, 2007, the 
     Secretary shall reduce the amount paid to each State under 
     subsection (a)(7) for each quarter by an amount equal to \1/
     4\ of the annualized amount determined for the Medicaid 
     program under section 16(k)(2)(B) of the Food Stamp Act of 
     1977 (7 U.S.C. 2025(k)(2)(B)).''.

     SEC. 111. EFFECTIVE DATE.

       (a) In General.--Subject to subsection (b), the amendments 
     made by this title take effect on October 1, 2007.
       (b) Delay if State Legislation Required.--In the case of a 
     State child health plan under title XXI of the Social 
     Security Act or a waiver of such plan under section 1115 of 
     such Act which the Secretary of Health and Human Services 
     determines requires State legislation (other than legislation 
     appropriating funds) in order for the plan or waiver to meet 
     the additional requirements imposed by the amendments made by 
     this title, the State child health plan or waiver shall not 
     be regarded as failing to comply with the requirements of 
     such title XXI solely on the basis of its failure to meet 
     such additional requirements before the first day of the 
     first calendar quarter beginning after the close of the first 
     regular session of the State legislature that begins after 
     the date of the enactment of this title. For purposes of the 
     previous sentence, in the case of a State that has a 2-year 
     legislative session, each year of such session shall be 
     deemed to be a separate regular session of the State 
     legislature.

 TITLE II--HEALTH INSURANCE MARKETPLACE MODERNIZATION AND AFFORDABILITY

     SEC. 200. SHORT TITLE; PURPOSE.

       (a) Short Title.--This title may be cited as the ``Health 
     Insurance Marketplace Modernization and Affordability Act of 
     2007''.
       (b) Purposes.--It is the purpose of this title to--
       (1) make more affordable health insurance options available 
     to small businesses, working families, and all Americans;
       (2) assure effective State regulatory protection of the 
     interests of health insurance consumers; and
       (3) create a more efficient and affordable health insurance 
     marketplace through collaborative development of uniform 
     regulatory standards.

                Subtitle A--Small Business Health Plans

     SEC. 201. RULES GOVERNING SMALL BUSINESS HEALTH PLANS.

       (a) In General.--Subtitle B of title I of the Employee 
     Retirement Income Security Act of 1974 is amended by adding 
     after part 7 the following new part:

         ``PART 8--RULES GOVERNING SMALL BUSINESS HEALTH PLANS

     ``SEC. 801. SMALL BUSINESS HEALTH PLANS.

       ``(a) In General.--For purposes of this part, the term 
     `small business health plan' means a fully insured group 
     health plan whose sponsor is (or is deemed under this part to 
     be) described in subsection (b).
       ``(b) Sponsorship.--The sponsor of a group health plan is 
     described in this subsection if such sponsor--
       ``(1) is organized and maintained in good faith, with a 
     constitution and bylaws specifically stating its purpose and 
     providing for periodic meetings on at least an annual basis, 
     as a bona fide trade association, a bona fide industry 
     association (including a rural electric cooperative 
     association or a rural telephone cooperative association), a 
     bona fide professional association, or a bona fide chamber of 
     commerce (or similar bona fide business association, 
     including a corporation or similar organization that operates 
     on a cooperative basis (within the meaning of section 1381 of 
     the Internal Revenue Code of 1986)), for substantial purposes 
     other than that of obtaining medical care;
       ``(2) is established as a permanent entity which receives 
     the active support of its members and requires for membership 
     payment on a periodic basis of dues or payments necessary to 
     maintain eligibility for membership;
       ``(3) does not condition membership, such dues or payments, 
     or coverage under the plan on the basis of health status-
     related factors with respect to the employees of its members 
     (or affiliated members), or the dependents of such employees, 
     and does not condition such dues or payments on the basis of 
     group health plan participation; and
       ``(4) does not condition membership on the basis of a 
     minimum group size.
     Any sponsor consisting of an association of entities which 
     meet the requirements of paragraphs (1), (2), (3), and (4) 
     shall be deemed to be a sponsor described in this subsection.

[[Page S12175]]

     ``SEC. 802. CERTIFICATION OF SMALL BUSINESS HEALTH PLANS.

       ``(a) In General.--Not later than 6 months after the date 
     of enactment of this part, the applicable authority shall 
     prescribe by interim final rule a procedure under which the 
     applicable authority shall certify small business health 
     plans which apply for certification as meeting the 
     requirements of this part.
       ``(b) Requirements Applicable to Certified Plans.--A small 
     business health plan with respect to which certification 
     under this part is in effect shall meet the applicable 
     requirements of this part, effective on the date of 
     certification (or, if later, on the date on which the plan is 
     to commence operations).
       ``(c) Requirements for Continued Certification.--The 
     applicable authority may provide by regulation for continued 
     certification of small business health plans under this part. 
     Such regulation shall provide for the revocation of a 
     certification if the applicable authority finds that the 
     small business health plan involved is failing to comply with 
     the requirements of this part.
       ``(d) Expedited and Deemed Certification.--
       ``(1) In general.--If the Secretary fails to act on an 
     application for certification under this section within 90 
     days of receipt of such application, the applying small 
     business health plan shall be deemed certified until such 
     time as the Secretary may deny for cause the application for 
     certification.
       ``(2) Civil penalty.--The Secretary may assess a civil 
     penalty against the board of trustees and plan sponsor 
     (jointly and severally) of a small business health plan that 
     is deemed certified under paragraph (1) of up to $500,000 in 
     the event the Secretary determines that the application for 
     certification of such small business health plan was 
     willfully or with gross negligence incomplete or inaccurate.

     ``SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF 
                   TRUSTEES.

       ``(a) Sponsor.--The requirements of this subsection are met 
     with respect to a small business health plan if the sponsor 
     has met (or is deemed under this part to have met) the 
     requirements of section 801(b) for a continuous period of not 
     less than 3 years ending with the date of the application for 
     certification under this part.
       ``(b) Board of Trustees.--The requirements of this 
     subsection are met with respect to a small business health 
     plan if the following requirements are met:
       ``(1) Fiscal control.--The plan is operated, pursuant to a 
     plan document, by a board of trustees which pursuant to a 
     trust agreement has complete fiscal control over the plan and 
     which is responsible for all operations of the plan.
       ``(2) Rules of operation and financial controls.--The board 
     of trustees has in effect rules of operation and financial 
     controls, based on a 3-year plan of operation, adequate to 
     carry out the terms of the plan and to meet all requirements 
     of this title applicable to the plan.
       ``(3) Rules governing relationship to participating 
     employers and to contractors.--
       ``(A) Board membership.--
       ``(i) In general.--Except as provided in clauses (ii) and 
     (iii), the members of the board of trustees are individuals 
     selected from individuals who are the owners, officers, 
     directors, or employees of the participating employers or who 
     are partners in the participating employers and actively 
     participate in the business.
       ``(ii) Limitation.--

       ``(I) General rule.--Except as provided in subclauses (II) 
     and (III), no such member is an owner, officer, director, or 
     employee of, or partner in, a contract administrator or other 
     service provider to the plan.
       ``(II) Limited exception for providers of services solely 
     on behalf of the sponsor.--Officers or employees of a sponsor 
     which is a service provider (other than a contract 
     administrator) to the plan may be members of the board if 
     they constitute not more than 25 percent of the membership of 
     the board and they do not provide services to the plan other 
     than on behalf of the sponsor.
       ``(III) Treatment of providers of medical care.--In the 
     case of a sponsor which is an association whose membership 
     consists primarily of providers of medical care, subclause 
     (I) shall not apply in the case of any service provider 
     described in subclause (I) who is a provider of medical care 
     under the plan.

       ``(iii) Certain plans excluded.--Clause (i) shall not apply 
     to a small business health plan which is in existence on the 
     date of the enactment of the Health Insurance Marketplace 
     Modernization and Affordability Act of 2007.
       ``(B) Sole authority.--The board has sole authority under 
     the plan to approve applications for participation in the 
     plan and to contract with insurers.
       ``(c) Treatment of Franchise Networks.--In the case of a 
     group health plan which is established and maintained by a 
     franchiser for a franchise network consisting of its 
     franchisees--
       ``(1) the requirements of subsection (a) and section 801(a) 
     shall be deemed met if such requirements would otherwise be 
     met if the franchiser were deemed to be the sponsor referred 
     to in section 801(b), such network were deemed to be an 
     association described in section 801(b), and each franchisee 
     were deemed to be a member (of the association and the 
     sponsor) referred to in section 801(b); and
       ``(2) the requirements of section 804(a)(1) shall be deemed 
     met.
     The Secretary may by regulation define for purposes of this 
     subsection the terms `franchiser', `franchise network', and 
     `franchisee'.

     ``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.

       ``(a) Covered Employers and Individuals.--The requirements 
     of this subsection are met with respect to a small business 
     health plan if, under the terms of the plan--
       ``(1) each participating employer must be--
       ``(A) a member of the sponsor;
       ``(B) the sponsor; or
       ``(C) an affiliated member of the sponsor, except that, in 
     the case of a sponsor which is a professional association or 
     other individual-based association, if at least one of the 
     officers, directors, or employees of an employer, or at least 
     one of the individuals who are partners in an employer and 
     who actively participates in the business, is a member or 
     such an affiliated member of the sponsor, participating 
     employers may also include such employer; and
       ``(2) all individuals commencing coverage under the plan 
     after certification under this part must be--
       ``(A) active or retired owners (including self-employed 
     individuals), officers, directors, or employees of, or 
     partners in, participating employers; or
       ``(B) the dependents of individuals described in 
     subparagraph (A).
       ``(b) Individual Market Unaffected.--The requirements of 
     this subsection are met with respect to a small business 
     health plan if, under the terms of the plan, no participating 
     employer may provide health insurance coverage in the 
     individual market for any employee not covered under the plan 
     which is similar to the coverage contemporaneously provided 
     to employees of the employer under the plan, if such 
     exclusion of the employee from coverage under the plan is 
     based on a health status-related factor with respect to the 
     employee and such employee would, but for such exclusion on 
     such basis, be eligible for coverage under the plan.
       ``(c) Prohibition of Discrimination Against Employers and 
     Employees Eligible to Participate.--The requirements of this 
     subsection are met with respect to a small business health 
     plan if--
       ``(1) under the terms of the plan, all employers meeting 
     the preceding requirements of this section are eligible to 
     qualify as participating employers for all geographically 
     available coverage options, unless, in the case of any such 
     employer, participation or contribution requirements of the 
     type referred to in section 2711 of the Public Health Service 
     Act are not met;
       ``(2) information regarding all coverage options available 
     under the plan is made readily available to any employer 
     eligible to participate; and
       ``(3) the applicable requirements of sections 701, 702, and 
     703 are met with respect to the plan.

     ``SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, 
                   CONTRIBUTION RATES, AND BENEFIT OPTIONS.

       ``(a) In General.--The requirements of this section are met 
     with respect to a small business health plan if the following 
     requirements are met:
       ``(1) Contents of governing instruments.--
       ``(A) In general.--The instruments governing the plan 
     include a written instrument, meeting the requirements of an 
     instrument required under section 402(a)(1), which--
       ``(i) provides that the board of trustees serves as the 
     named fiduciary required for plans under section 402(a)(1) 
     and serves in the capacity of a plan administrator (referred 
     to in section 3(16)(A)); and
       ``(ii) provides that the sponsor of the plan is to serve as 
     plan sponsor (referred to in section 3(16)(B)).
       ``(B) Description of material provisions.--The terms of the 
     health insurance coverage (including the terms of any 
     individual certificates that may be offered to individuals in 
     connection with such coverage) describe the material benefit 
     and rating, and other provisions set forth in this section 
     and such material provisions are included in the summary plan 
     description.
       ``(2) Contribution rates must be nondiscriminatory.--
       ``(A) In general.--The contribution rates for any 
     participating small employer shall not vary on the basis of 
     any health status-related factor in relation to employees of 
     such employer or their beneficiaries and shall not vary on 
     the basis of the type of business or industry in which such 
     employer is engaged.
       ``(B) Effect of title.--Nothing in this title or any other 
     provision of law shall be construed to preclude a health 
     insurance issuer offering health insurance coverage in 
     connection with a small business health plan, and at the 
     request of such small business health plan, from--
       ``(i) setting contribution rates for the small business 
     health plan based on the claims experience of the plan so 
     long as any variation in such rates complies with the 
     requirements of clause (ii), except that small business 
     health plans shall not be subject to paragraphs (1)(A) and 
     (3) of section 2911(b) of the Public Health Service Act; or
       ``(ii) varying contribution rates for participating 
     employers in a small business health plan in a State to the 
     extent that such rates could vary using the same methodology 
     employed in such State for regulating small group premium 
     rates, subject to the terms of

[[Page S12176]]

     part I of subtitle A of title XXIX of the Public Health 
     Service Act (relating to rating requirements), as added by 
     subtitle B of the Health Insurance Marketplace Modernization 
     and Affordability Act of 2007.
       ``(3) Exceptions regarding self-employed and large 
     employers.--
       ``(A) Self employed.--
       ``(i) In general.--Small business health plans with 
     participating employers who are self-employed individuals 
     (and their dependents) shall enroll such self-employed 
     participating employers in accordance with rating rules that 
     do not violate the rating rules for self-employed individuals 
     in the State in which such self-employed participating 
     employers are located.
       ``(ii) Guarantee issue.--Small business health plans with 
     participating employers who are self-employed individuals 
     (and their dependents) may decline to guarantee issue to such 
     participating employers in States in which guarantee issue is 
     not otherwise required for the self-employed in that State.
       ``(B) Large employers.--Small business health plans with 
     participating employers that are larger than small employers 
     (as defined in section 808(a)(10)) shall enroll such large 
     participating employers in accordance with rating rules that 
     do not violate the rating rules for large employers in the 
     State in which such large participating employers are 
     located.
       ``(4) Regulatory requirements.--Such other requirements as 
     the applicable authority determines are necessary to carry 
     out the purposes of this part, which shall be prescribed by 
     the applicable authority by regulation.
       ``(b) Ability of Small Business Health Plans to Design 
     Benefit Options.--Nothing in this part or any provision of 
     State law (as defined in section 514(c)(1)) shall be 
     construed to preclude a small business health plan or a 
     health insurance issuer offering health insurance coverage in 
     connection with a small business health plan from exercising 
     its sole discretion in selecting the specific benefits and 
     services consisting of medical care to be included as 
     benefits under such plan or coverage, except that such 
     benefits and services must meet the terms and specifications 
     of part II of subtitle A of title XXIX of the Public Health 
     Service Act (relating to lower cost plans), as added by 
     subtitle B of the Health Insurance Marketplace Modernization 
     and Affordability Act of 2007.
       ``(c) Domicile and Non-Domicile States.--
       ``(1) Domicile state.--Coverage shall be issued to a small 
     business health plan in the State in which the sponsor's 
     principal place of business is located.
       ``(2) Non-domicile states.--With respect to a State (other 
     than the domicile State) in which participating employers of 
     a small business health plan are located but in which the 
     insurer of the small business health plan in the domicile 
     State is not yet licensed, the following shall apply:
       ``(A) Temporary preemption.--If, upon the expiration of the 
     90-day period following the submission of a licensure 
     application by such insurer (that includes a certified copy 
     of an approved licensure application as submitted by such 
     insurer in the domicile State) to such State, such State has 
     not approved or denied such application, such State's health 
     insurance licensure laws shall be temporarily preempted and 
     the insurer shall be permitted to operate in such State, 
     subject to the following terms:
       ``(i) Application of non-domicile state law.--Except with 
     respect to licensure and with respect to the terms of 
     subtitle A of title XXIX of the Public Health Service Act 
     (relating to rating and benefits as added by the Health 
     Insurance Marketplace Modernization and Affordability Act of 
     2007), the laws and authority of the non-domicile State shall 
     remain in full force and effect.
       ``(ii) Revocation of preemption.--The preemption of a non-
     domicile State's health insurance licensure laws pursuant to 
     this subparagraph, shall be terminated upon the occurrence of 
     either of the following:

       ``(I) Approval or denial of application.--The approval of 
     denial of an insurer's licensure application, following the 
     laws and regulations of the non-domicile State with respect 
     to licensure.
       ``(II) Determination of material violation.--A 
     determination by a non-domicile State that an insurer 
     operating in a non-domicile State pursuant to the preemption 
     provided for in this subparagraph is in material violation of 
     the insurance laws (other than licensure and with respect to 
     the terms of subtitle A of title XXIX of the Public Health 
     Service Act (relating to rating and benefits added by the 
     Health Insurance Marketplace Modernization and Affordability 
     Act of 2007)) of such State.

       ``(B) No prohibition on promotion.--Nothing in this 
     paragraph shall be construed to prohibit a small business 
     health plan or an insurer from promoting coverage prior to 
     the expiration of the 90-day period provided for in 
     subparagraph (A), except that no enrollment or collection of 
     contributions shall occur before the expiration of such 90-
     day period.
       ``(C) Licensure.--Except with respect to the application of 
     the temporary preemption provision of this paragraph, nothing 
     in this part shall be construed to limit the requirement that 
     insurers issuing coverage to small business health plans 
     shall be licensed in each State in which the small business 
     health plans operate.
       ``(D) Servicing by licensed insurers.--Notwithstanding 
     subparagraph (C), the requirements of this subsection may 
     also be satisfied if the participating employers of a small 
     business health plan are serviced by a licensed insurer in 
     that State, even where such insurer is not the insurer of 
     such small business health plan in the State in which such 
     small business health plan is domiciled.

     ``SEC. 806. REQUIREMENTS FOR APPLICATION AND RELATED 
                   REQUIREMENTS.

       ``(a) Filing Fee.--Under the procedure prescribed pursuant 
     to section 802(a), a small business health plan shall pay to 
     the applicable authority at the time of filing an application 
     for certification under this part a filing fee in the amount 
     of $5,000, which shall be available in the case of the 
     Secretary, to the extent provided in appropriation Acts, for 
     the sole purpose of administering the certification 
     procedures applicable with respect to small business health 
     plans.
       ``(b) Information To Be Included in Application for 
     Certification.--An application for certification under this 
     part meets the requirements of this section only if it 
     includes, in a manner and form which shall be prescribed by 
     the applicable authority by regulation, at least the 
     following information:
       ``(1) Identifying information.--The names and addresses 
     of--
       ``(A) the sponsor; and
       ``(B) the members of the board of trustees of the plan.
       ``(2) States in which plan intends to do business.--The 
     States in which participants and beneficiaries under the plan 
     are to be located and the number of them expected to be 
     located in each such State.
       ``(3) Bonding requirements.--Evidence provided by the board 
     of trustees that the bonding requirements of section 412 will 
     be met as of the date of the application or (if later) 
     commencement of operations.
       ``(4) Plan documents.--A copy of the documents governing 
     the plan (including any bylaws and trust agreements), the 
     summary plan description, and other material describing the 
     benefits that will be provided to participants and 
     beneficiaries under the plan.
       ``(5) Agreements with service providers.--A copy of any 
     agreements between the plan, health insurance issuer, and 
     contract administrators and other service providers.
       ``(c) Filing Notice of Certification With States.--A 
     certification granted under this part to a small business 
     health plan shall not be effective unless written notice of 
     such certification is filed with the applicable State 
     authority of each State in which the small business health 
     plans operate.
       ``(d) Notice of Material Changes.--In the case of any small 
     business health plan certified under this part, descriptions 
     of material changes in any information which was required to 
     be submitted with the application for the certification under 
     this part shall be filed in such form and manner as shall be 
     prescribed by the applicable authority by regulation. The 
     applicable authority may require by regulation prior notice 
     of material changes with respect to specified matters which 
     might serve as the basis for suspension or revocation of the 
     certification.

     ``SEC. 807. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.

       ``A small business health plan which is or has been 
     certified under this part may terminate (upon or at any time 
     after cessation of accruals in benefit liabilities) only if 
     the board of trustees, not less than 60 days before the 
     proposed termination date--
       ``(1) provides to the participants and beneficiaries a 
     written notice of intent to terminate stating that such 
     termination is intended and the proposed termination date;
       ``(2) develops a plan for winding up the affairs of the 
     plan in connection with such termination in a manner which 
     will result in timely payment of all benefits for which the 
     plan is obligated; and
       ``(3) submits such plan in writing to the applicable 
     authority.

     Actions required under this section shall be taken in such 
     form and manner as may be prescribed by the applicable 
     authority by regulation.

     ``SEC. 808. DEFINITIONS AND RULES OF CONSTRUCTION.

       ``(a) Definitions.--For purposes of this part--
       ``(1) Affiliated member.--The term `affiliated member' 
     means, in connection with a sponsor--
       ``(A) a person who is otherwise eligible to be a member of 
     the sponsor but who elects an affiliated status with the 
     sponsor, or
       ``(B) in the case of a sponsor with members which consist 
     of associations, a person who is a member or employee of any 
     such association and elects an affiliated status with the 
     sponsor.
       ``(2) Applicable authority.--The term `applicable 
     authority' means the Secretary of Labor, except that, in 
     connection with any exercise of the Secretary's authority 
     with respect to which the Secretary is required under section 
     506(d) to consult with a State, such term means the 
     Secretary, in consultation with such State.
       ``(3) Applicable state authority.--The term `applicable 
     State authority' means, with respect to a health insurance 
     issuer in a State, the State insurance commissioner or 
     official or officials designated by the State to enforce the 
     requirements of title XXVII of the Public Health Service Act 
     for the State involved with respect to such issuer.
       ``(4) Group health plan.--The term `group health plan' has 
     the meaning provided in section 733(a)(1) (after applying 
     subsection (b) of this section).

[[Page S12177]]

       ``(5) Health insurance coverage.--The term `health 
     insurance coverage' has the meaning provided in section 
     733(b)(1), except that such term shall not include excepted 
     benefits (as defined in section 733(c)).
       ``(6) Health insurance issuer.--The term `health insurance 
     issuer' has the meaning provided in section 733(b)(2).
       ``(7) Individual market.--
       ``(A) In general.--The term `individual market' means the 
     market for health insurance coverage offered to individuals 
     other than in connection with a group health plan.
       ``(B) Treatment of very small groups.--
       ``(i) In general.--Subject to clause (ii), such term 
     includes coverage offered in connection with a group health 
     plan that has fewer than 2 participants as current employees 
     or participants described in section 732(d)(3) on the first 
     day of the plan year.
       ``(ii) State exception.--Clause (i) shall not apply in the 
     case of health insurance coverage offered in a State if such 
     State regulates the coverage described in such clause in the 
     same manner and to the same extent as coverage in the small 
     group market (as defined in section 2791(e)(5) of the Public 
     Health Service Act) is regulated by such State.
       ``(8) Medical care.--The term `medical care' has the 
     meaning provided in section 733(a)(2).
       ``(9) Participating employer.--The term `participating 
     employer' means, in connection with a small business health 
     plan, any employer, if any individual who is an employee of 
     such employer, a partner in such employer, or a self-employed 
     individual who is such employer (or any dependent, as defined 
     under the terms of the plan, of such individual) is or was 
     covered under such plan in connection with the status of such 
     individual as such an employee, partner, or self-employed 
     individual in relation to the plan.
       ``(10) Small employer.--The term `small employer' means, in 
     connection with a group health plan with respect to a plan 
     year, a small employer as defined in section 2791(e)(4).
       ``(11) Trade association and professional association.--The 
     terms `trade association' and `professional association' mean 
     an entity that meets the requirements of section 1.501(c)(6)-
     1 of title 26, Code of Federal Regulations (as in effect on 
     the date of enactment of this section).
       ``(b) Rule of Construction.--For purposes of determining 
     whether a plan, fund, or program is an employee welfare 
     benefit plan which is a small business health plan, and for 
     purposes of applying this title in connection with such plan, 
     fund, or program so determined to be such an employee welfare 
     benefit plan--
       ``(1) in the case of a partnership, the term `employer' (as 
     defined in section 3(5)) includes the partnership in relation 
     to the partners, and the term `employee' (as defined in 
     section 3(6)) includes any partner in relation to the 
     partnership; and
       ``(2) in the case of a self-employed individual, the term 
     `employer' (as defined in section 3(5)) and the term 
     `employee' (as defined in section 3(6)) shall include such 
     individual.
       ``(c) Renewal.--Notwithstanding any provision of law to the 
     contrary, a participating employer in a small business health 
     plan shall not be deemed to be a plan sponsor in applying 
     requirements relating to coverage renewal.
       ``(d) Health Savings Accounts.--Nothing in this part shall 
     be construed to inhibit the development of health savings 
     accounts pursuant to section 223 of the Internal Revenue Code 
     of 1986.''.
       (b) Conforming Amendments to Preemption Rules.--
       (1) Section 514(b)(6) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1144(b)(6)) is amended by 
     adding at the end the following new subparagraph:
       ``(E) The preceding subparagraphs of this paragraph do not 
     apply with respect to any State law in the case of a small 
     business health plan which is certified under part 8.''.
       (2) Section 514 of such Act (29 U.S.C. 1144) is amended--
       (A) in subsection (b)(4), by striking ``Subsection (a)'' 
     and inserting ``Subsections (a) and (d)'';
       (B) in subsection (b)(5), by striking ``subsection (a)'' in 
     subparagraph (A) and inserting ``subsection (a) of this 
     section and subsections (a)(2)(B) and (b) of section 805'', 
     and by striking ``subsection (a)'' in subparagraph (B) and 
     inserting ``subsection (a) of this section or subsection 
     (a)(2)(B) or (b) of section 805'';
       (C) by redesignating subsection (d) as subsection (e); and
       (D) by inserting after subsection (c) the following new 
     subsection:
       ``(d)(1) Except as provided in subsection (b)(4), the 
     provisions of this title shall supersede any and all State 
     laws insofar as they may now or hereafter preclude a health 
     insurance issuer from offering health insurance coverage in 
     connection with a small business health plan which is 
     certified under part 8.
       ``(2) In any case in which health insurance coverage of any 
     policy type is offered under a small business health plan 
     certified under part 8 to a participating employer operating 
     in such State, the provisions of this title shall supersede 
     any and all laws of such State insofar as they may establish 
     rating and benefit requirements that would otherwise apply to 
     such coverage, provided the requirements of subtitle A of 
     title XXIX of the Public Health Service Act (as added by 
     title II of the Health Insurance Marketplace Modernization 
     and Affordability Act of 2007) (concerning health plan rating 
     and benefits) are met.''.
       (c) Plan Sponsor.--Section 3(16)(B) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 102(16)(B)) 
     is amended by adding at the end the following new sentence: 
     ``Such term also includes a person serving as the sponsor of 
     a small business health plan under part 8.''.
       (d) Savings Clause.--Section 731(c) of the Employee 
     Retirement Income Security Act of 1974 is amended by 
     inserting ``or part 8'' after ``this part''.
       (e) Clerical Amendment.--The table of contents in section 1 
     of the Employee Retirement Income Security Act of 1974 is 
     amended by inserting after the item relating to section 734 
     the following new items:

         ``Part 8--Rules Governing Small Business Health Plans

``801. Small business health plans.
``802. Certification of small business health plans.
``803. Requirements relating to sponsors and boards of trustees.
``804. Participation and coverage requirements.
``805. Other requirements relating to plan documents, contribution 
              rates, and benefit options.
``806. Requirements for application and related requirements.
``807. Notice requirements for voluntary termination.
``808. Definitions and rules of construction.''.

     SEC. 202. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

       Section 506 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1136) is amended by adding at the end the 
     following new subsection:
       ``(d) Consultation With States With Respect to Small 
     Business Health Plans.--
       ``(1) Agreements with states.--The Secretary shall consult 
     with the State recognized under paragraph (2) with respect to 
     a small business health plan regarding the exercise of--
       ``(A) the Secretary's authority under sections 502 and 504 
     to enforce the requirements for certification under part 8; 
     and
       ``(B) the Secretary's authority to certify small business 
     health plans under part 8 in accordance with regulations of 
     the Secretary applicable to certification under part 8.
       ``(2) Recognition of domicile state.--In carrying out 
     paragraph (1), the Secretary shall ensure that only one State 
     will be recognized, with respect to any particular small 
     business health plan, as the State with which consultation is 
     required. In carrying out this paragraph such State shall be 
     the domicile State, as defined in section 805(c).''.

     SEC. 203. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

       (a) Effective Date.--The amendments made by this subtitle 
     shall take effect 12 months after the date of the enactment 
     of this Act. The Secretary of Labor shall first issue all 
     regulations necessary to carry out the amendments made by 
     this subtitle within 6 months after the date of the enactment 
     of this Act.
       (b) Treatment of Certain Existing Health Benefits 
     Programs.--
       (1) In general.--In any case in which, as of the date of 
     the enactment of this Act, an arrangement is maintained in a 
     State for the purpose of providing benefits consisting of 
     medical care for the employees and beneficiaries of its 
     participating employers, at least 200 participating employers 
     make contributions to such arrangement, such arrangement has 
     been in existence for at least 10 years, and such arrangement 
     is licensed under the laws of one or more States to provide 
     such benefits to its participating employers, upon the filing 
     with the applicable authority (as defined in section 
     808(a)(2) of the Employee Retirement Income Security Act of 
     1974 (as amended by this subtitle)) by the arrangement of an 
     application for certification of the arrangement under part 8 
     of subtitle B of title I of such Act--
       (A) such arrangement shall be deemed to be a group health 
     plan for purposes of title I of such Act;
       (B) the requirements of sections 801(a) and 803(a) of the 
     Employee Retirement Income Security Act of 1974 shall be 
     deemed met with respect to such arrangement;
       (C) the requirements of section 803(b) of such Act shall be 
     deemed met, if the arrangement is operated by a board of 
     trustees which--
       (i) is elected by the participating employers, with each 
     employer having one vote; and
       (ii) has complete fiscal control over the arrangement and 
     which is responsible for all operations of the arrangement;
       (D) the requirements of section 804(a) of such Act shall be 
     deemed met with respect to such arrangement; and
       (E) the arrangement may be certified by any applicable 
     authority with respect to its operations in any State only if 
     it operates in such State on the date of certification.

     The provisions of this subsection shall cease to apply with 
     respect to any such arrangement at such time after the date 
     of the enactment of this Act as the applicable requirements 
     of this subsection are not met with respect to such 
     arrangement or at such time that the arrangement provides 
     coverage to participants and beneficiaries in any State other 
     than the States in which coverage is provided on such date of 
     enactment.
       (2) Definitions.--For purposes of this subsection, the 
     terms ``group health plan'',

[[Page S12178]]

     ``medical care'', and ``participating employer'' shall have 
     the meanings provided in section 808 of the Employee 
     Retirement Income Security Act of 1974, except that the 
     reference in paragraph (7) of such section to an ``small 
     business health plan'' shall be deemed a reference to an 
     arrangement referred to in this subsection.

                       Subtitle B--Market Relief

     SEC. 211. MARKET RELIEF.

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

      ``TITLE XXX--HEALTH CARE INSURANCE MARKETPLACE MODERNIZATION

     ``SEC. 3001. GENERAL INSURANCE DEFINITIONS.

       ``In this title, the terms `health insurance coverage', 
     `health insurance issuer', `group health plan', and 
     `individual health insurance' shall have the meanings given 
     such terms in section 2791.

                      ``Subtitle A--Market Relief

                     ``PART I--RATING REQUIREMENTS

     ``SEC. 3011. DEFINITIONS.

       ``(a) General Definitions.--In this part:
       ``(1) Adopting state.--The term `adopting State' means a 
     State that, with respect to the small group market, has 
     enacted either the Model Small Group Rating Rules or, if 
     applicable to such State, the Transitional Model Small Group 
     Rating Rules, each in their entirety and as the exclusive 
     laws of the State that relate to rating in the small group 
     insurance market.
       ``(2) Applicable state authority.--The term `applicable 
     State authority' means, with respect to a health insurance 
     issuer in a State, the State insurance commissioner or 
     official or officials designated by the State to enforce the 
     insurance laws of such State.
       ``(3) Base premium rate.--The term `base premium rate' 
     means, for each class of business with respect to a rating 
     period, the lowest premium rate charged or that could have 
     been charged under a rating system for that class of business 
     by the small employer carrier to small employers with similar 
     case characteristics for health benefit plans with the same 
     or similar coverage.
       ``(4) Eligible insurer.--The term `eligible insurer' means 
     a health insurance issuer that is licensed in a State and 
     that--
       ``(A) notifies the Secretary, not later than 30 days prior 
     to the offering of coverage described in this subparagraph, 
     that the issuer intends to offer health insurance coverage 
     consistent with the Model Small Group Rating Rules or, as 
     applicable, transitional small group rating rules in a State;
       ``(B) notifies the insurance department of a nonadopting 
     State (or other State agency), not later than 30 days prior 
     to the offering of coverage described in this subparagraph, 
     that the issuer intends to offer small group health insurance 
     coverage in that State consistent with the Model Small Group 
     Rating Rules, and provides with such notice a copy of any 
     insurance policy that it intends to offer in the State, its 
     most recent annual and quarterly financial reports, and any 
     other information required to be filed with the insurance 
     department of the State (or other State agency); and
       ``(C) includes in the terms of the health insurance 
     coverage offered in nonadopting States (including in the 
     terms of any individual certificates that may be offered to 
     individuals in connection with such group health coverage) 
     and filed with the State pursuant to subparagraph (B), a 
     description in the insurer's contract of the Model Small 
     Group Rating Rules and an affirmation that such Rules are 
     included in the terms of such contract.
       ``(5) Health insurance coverage.--The term `health 
     insurance coverage' means any coverage issued in the small 
     group health insurance market, except that such term shall 
     not include excepted benefits (as defined in section 
     2791(c)).
       ``(6) Index rate.--The term `index rate' means for each 
     class of business with respect to the rating period for small 
     employers with similar case characteristics, the arithmetic 
     average of the applicable base premium rate and the 
     corresponding highest premium rate.
       ``(7)  Model small group rating rules.--The term ` Model 
     Small Group Rating Rules' means the rules set forth in 
     subsection (b).
       ``(8) Nonadopting state.--The term `nonadopting State' 
     means a State that is not an adopting State.
       ``(9) Small group insurance market.--The term `small group 
     insurance market' shall have the meaning given the term 
     `small group market' in section 2791(e)(5).
       ``(10) State law.--The term `State law' means all laws, 
     decisions, rules, regulations, or other State actions 
     (including actions by a State agency) having the effect of 
     law, of any State.
       ``(b) Definition Relating to Model Small Group Rating 
     Rules.--The term `Model Small Group Rating Rules' means 
     adapted rating rules drawn from the Adopted Small Employer 
     Health Insurance Availability Model Act of 1993 of the 
     National Association of Insurance Commissioners consisting of 
     the following:
       ``(1) Premium rates.--Premium rates for health benefit 
     plans to which this title applies shall be subject to the 
     following provisions relating to premiums:
       ``(A) Index rate.--The index rate for a rating period for 
     any class of business shall not exceed the index rate for any 
     other class of business by more than 20 percent.
       ``(B) Class of businesses.--With respect to a class of 
     business, the premium rates charged during a rating period to 
     small employers with similar case characteristics for the 
     same or similar coverage or the rates that could be charged 
     to such employers under the rating system for that class of 
     business, shall not vary from the index rate by more than 25 
     percent of the index rate under subparagraph (A).
       ``(C) Increases for new rating periods.--The percentage 
     increase in the premium rate charged to a small employer for 
     a new rating period may not exceed the sum of the following:
       ``(i) The percentage change in the new business premium 
     rate measured from the first day of the prior rating period 
     to the first day of the new rating period. In the case of a 
     health benefit plan into which the small employer carrier is 
     no longer enrolling new small employers, the small employer 
     carrier shall use the percentage change in the base premium 
     rate, except that such change shall not exceed, on a 
     percentage basis, the change in the new business premium rate 
     for the most similar health benefit plan into which the small 
     employer carrier is actively enrolling new small employers.
       ``(ii) Any adjustment, not to exceed 15 percent annually 
     and adjusted pro rata for rating periods of less then 1 year, 
     due to the claim experience, health status or duration of 
     coverage of the employees or dependents of the small employer 
     as determined from the small employer carrier's rate manual 
     for the class of business involved.
       ``(iii) Any adjustment due to change in coverage or change 
     in the case characteristics of the small employer as 
     determined from the small employer carrier's rate manual for 
     the class of business.
       ``(D) Uniform application of adjustments.--Adjustments in 
     premium rates for claim experience, health status, or 
     duration of coverage shall not be charged to individual 
     employees or dependents. Any such adjustment shall be applied 
     uniformly to the rates charged for all employees and 
     dependents of the small employer.
       ``(E) Use of industry as a case characteristic.--A small 
     employer carrier may utilize industry as a case 
     characteristic in establishing premium rates, so long as the 
     highest rate factor associated with any industry 
     classification does not exceed the lowest rate factor 
     associated with any industry classification by more than 15 
     percent.
       ``(F) Consistent application of factors.--Small employer 
     carriers shall apply rating factors, including case 
     characteristics, consistently with respect to all small 
     employers in a class of business. Rating factors shall 
     produce premiums for identical groups which differ only by 
     the amounts attributable to plan design and do not reflect 
     differences due to the nature of the groups assumed to select 
     particular health benefit plans.
       ``(G) Treatment of plans as having same rating period.--A 
     small employer carrier shall treat all health benefit plans 
     issued or renewed in the same calendar month as having the 
     same rating period.
       ``(H) Restricted network provisions.--For purposes of this 
     subsection, a health benefit plan that contains a restricted 
     network provision shall not be considered similar coverage to 
     a health benefit plan that does not contain a similar 
     provision if the restriction of benefits to network providers 
     results in substantial differences in claims costs.
       ``(I) Prohibition on use of certain case characteristics.--
     The small employer carrier shall not use case characteristics 
     other than age, gender, industry, geographic area, family 
     composition, group size, and participation in wellness 
     programs without prior approval of the applicable State 
     authority.
       ``(J) Require compliance.--Premium rates for small business 
     health benefit plans shall comply with the requirements of 
     this subsection notwithstanding any assessments paid or 
     payable by a small employer carrier as required by a State's 
     small employer carrier reinsurance program.
       ``(2) Establishment of separate class of business.--Subject 
     to paragraph (3), a small employer carrier may establish a 
     separate class of business only to reflect substantial 
     differences in expected claims experience or administrative 
     costs related to the following:
       ``(A) The small employer carrier uses more than one type of 
     system for the marketing and sale of health benefit plans to 
     small employers.
       ``(B) The small employer carrier has acquired a class of 
     business from another small employer carrier.
       ``(C) The small employer carrier provides coverage to one 
     or more association groups that meet the requirements of this 
     title.
       ``(3) Limitation.--A small employer carrier may establish 
     up to 9 separate classes of business under paragraph (2), 
     excluding those classes of business related to association 
     groups under this title.
       ``(4) Additional groupings.--The applicable State authority 
     may approve the establishment of additional distinct 
     groupings by small employer carriers upon the submission of 
     an application to the applicable State authority and a 
     finding by the applicable State authority that such action 
     would enhance the efficiency and fairness of the small 
     employer insurance marketplace.
       ``(5) Limitation on transfers.--A small employer carrier 
     shall not transfer a small employer involuntarily into or out 
     of a class of business. A small employer carrier shall not 
     offer to transfer a small employer into or out of a class of 
     business unless such offer is made to transfer all small 
     employers in the

[[Page S12179]]

     class of business without regard to case characteristics, 
     claim experience, health status or duration of coverage since 
     issue.
       ``(6) Suspension of the rules.--The applicable State 
     authority may suspend, for a specified period, the 
     application of paragraph (1) to the premium rates applicable 
     to one or more small employers included within a class of 
     business of a small employer carrier for one or more rating 
     periods upon a filing by the small employer carrier and a 
     finding by the applicable State authority either that the 
     suspension is reasonable when considering the financial 
     condition of the small employer carrier or that the 
     suspension would enhance the efficiency and fairness of the 
     marketplace for small employer health insurance.

     ``SEC. 3012. RATING RULES.

       ``(a) Implementation of Model Small Group Rating Rules.--
     Not later than 6 months after the enactment of this title, 
     the Secretary shall promulgate regulations implementing the 
     Model Small Group Rating Rules pursuant to section 3011(b).
       ``(b) Transitional Model Small Group Rating Rules.--
       ``(1) In general.--Not later than 6 months after the date 
     of enactment of this title and to the extent necessary to 
     provide for a graduated transition to the Model Small Group 
     Rating Rules, the Secretary, in consultation with the NAIC, 
     shall promulgate Transitional Model Small Group Rating Rules 
     in accordance with this subsection, which shall be applicable 
     with respect to certain non-adopting States for a period of 
     not to exceed 5 years from the date of the promulgation of 
     the Model Small Group Rating Rules pursuant to subsection 
     (a). After the expiration of such 5-year period, the 
     transitional model small group rating rules shall expire, and 
     the Model Small Group Rating Rules shall then apply with 
     respect to all non-adopting States pursuant to the provisions 
     of this part.
       ``(2) Premium variation during transition.--
       ``(A) Transition states.--During the transition period 
     described in paragraph (1), small group health insurance 
     coverage offered in a non-adopting State that had in place 
     premium rating band requirements or premium limits that 
     varied by less than 12.5 percent from the index rate within a 
     class of business on the date of enactment of this title, 
     shall not be subject to the premium variation provision of 
     section 3011(b)(1) of the Model Small Group Rating Rules and 
     shall instead be subject to the Transitional Model Small 
     Group Rating Rules as promulgated by the Secretary pursuant 
     to paragraph (1).
       ``(B) Non-transition states.--During the transition period 
     described in paragraph (1), and thereafter, small group 
     health insurance coverage offered in a non-adopting State 
     that had in place premium rating band requirements or premium 
     limits that varied by more than 12.5 percent from the index 
     rate within a class of business on the date of enactment of 
     this title, shall not be subject to the Transitional Model 
     Small Group Rating Rules as promulgated by the Secretary 
     pursuant to paragraph (1), and instead shall be subject to 
     the Model Small Group Rating Rules effective beginning with 
     the first plan year or calendar year following the 
     promulgation of such Rules, at the election of the eligible 
     insurer.
       ``(3) Transitioning of old business.--In developing the 
     transitional model small group rating rules under paragraph 
     (1), the Secretary shall, after consultation with the 
     National Association of Insurance Commissioners and 
     representatives of insurers operating in the small group 
     health insurance market, promulgate special transition 
     standards and timelines with respect to independent rating 
     classes for old and new business, to the extent reasonably 
     necessary to protect health insurance consumers and to ensure 
     a stable and fair transition for old and new market entrants.
       ``(4) Other transitional authority.--In developing the 
     Transitional Model Small Group Rating Rules under paragraph 
     (1), the Secretary shall provide for the application of the 
     Transitional Model Small Group Rating Rules in transition 
     States as the Secretary may determine necessary for a an 
     effective transition.
       ``(c) Market Re-Entry.--
       ``(1) In general.--Notwithstanding any other provision of 
     law, a health insurance issuer that has voluntarily withdrawn 
     from providing coverage in the small group market prior to 
     the date of enactment of the Health Insurance Marketplace 
     Modernization and Affordability Act of 2007 shall not be 
     excluded from re-entering such market on a date that is more 
     than 180 days after such date of enactment.
       ``(2) Termination.--The provision of this subsection shall 
     terminate on the date that is 24 months after the date of 
     enactment of the Health Insurance Marketplace Modernization 
     and Affordability Act of 2007.

     ``SEC. 3013. APPLICATION AND PREEMPTION.

       ``(a) Superseding of State Law.--
       ``(1) In general.--This part shall supersede any and all 
     State laws of a non-adopting State insofar as such State laws 
     (whether enacted prior to or after the date of enactment of 
     this subtitle) relate to rating in the small group insurance 
     market as applied to an eligible insurer, or small group 
     health insurance coverage issued by an eligible insurer, 
     including with respect to coverage issued to a small employer 
     through a small business health plan, in a State.
       ``(2) Nonadopting states.--This part shall supersede any 
     and all State laws of a nonadopting State insofar as such 
     State laws (whether enacted prior to or after the date of 
     enactment of this subtitle)--
       ``(A) prohibit an eligible insurer from offering, 
     marketing, or implementing small group health insurance 
     coverage consistent with the Model Small Group Rating Rules 
     or transitional model small group rating rules; or
       ``(B) have the effect of retaliating against or otherwise 
     punishing in any respect an eligible insurer for offering, 
     marketing, or implementing small group health insurance 
     coverage consistent with the Model Small Group Rating Rules 
     or transitional model small group rating rules.
       ``(b) Savings Clause and Construction.--
       ``(1) Nonapplication to adopting states.--Subsection (a) 
     shall not apply with respect to adopting states.
       ``(2) Nonapplication to certain insurers.--Subsection (a) 
     shall not apply with respect to insurers that do not qualify 
     as eligible insurers that offer small group health insurance 
     coverage in a nonadopting State.
       ``(3) Nonapplication where obtaining relief under state 
     law.--Subsection (a)(1) shall not supercede any State law in 
     a nonadopting State to the extent necessary to permit 
     individuals or the insurance department of the State (or 
     other State agency) to obtain relief under State law to 
     require an eligible insurer to comply with the Model Small 
     Group Rating Rules or transitional model small group rating 
     rules.
       ``(4) No effect on preemption.--In no case shall this part 
     be construed to limit or affect in any manner the preemptive 
     scope of sections 502 and 514 of the Employee Retirement 
     Income Security Act of 1974. In no case shall this part be 
     construed to create any cause of action under Federal or 
     State law or enlarge or affect any remedy available under the 
     Employee Retirement Income Security Act of 1974.
       ``(c) Effective Date.--This section shall apply, at the 
     election of the eligible insurer, beginning in the first plan 
     year or the first calendar year following the issuance of the 
     final rules by the Secretary under the Model Small Group 
     Rating Rules or, as applicable, the Transitional Model Small 
     Group Rating Rules, but in no event earlier than the date 
     that is 12 months after the date of enactment of this title.

     ``SEC. 3014. CIVIL ACTIONS AND JURISDICTION.

       ``(a) In General.--The courts of the United States shall 
     have exclusive jurisdiction over civil actions involving the 
     interpretation of this part.
       ``(b) Actions.--An eligible insurer may bring an action in 
     the district courts of the United States for injunctive or 
     other equitable relief against any officials or agents of a 
     nonadopting State in connection with any conduct or action, 
     or proposed conduct or action, by such officials or agents 
     which violates, or which would if undertaken violate, section 
     3013.
       ``(c) Direct Filing in Court of Appeals.--At the election 
     of the eligible insurer, an action may be brought under 
     subsection (b) directly in the United States Court of Appeals 
     for the circuit in which the nonadopting State is located by 
     the filing of a petition for review in such Court.
       ``(d) Expedited Review.--
       ``(1) District court.--In the case of an action brought in 
     a district court of the United States under subsection (b), 
     such court shall complete such action, including the issuance 
     of a judgment, prior to the end of the 120-day period 
     beginning on the date on which such action is filed, unless 
     all parties to such proceeding agree to an extension of such 
     period.
       ``(2) Court of appeals.--In the case of an action brought 
     directly in a United States Court of Appeal under subsection 
     (c), or in the case of an appeal of an action brought in a 
     district court under subsection (b), such Court shall 
     complete all action on the petition, including the issuance 
     of a judgment, prior to the end of the 60-day period 
     beginning on the date on which such petition is filed with 
     the Court, unless all parties to such proceeding agree to an 
     extension of such period.
       ``(e) Standard of Review.--A court in an action filed under 
     this section, shall render a judgment based on a review of 
     the merits of all questions presented in such action and 
     shall not defer to any conduct or action, or proposed conduct 
     or action, of a nonadopting State.

     ``SEC. 3015. ONGOING REVIEW.

       ``Not later than 5 years after the date on which the Model 
     Small Group Rating Rules are issued under this part, and 
     every 5 years thereafter, the Secretary, in consultation with 
     the National Association of Insurance Commissioners, shall 
     prepare and submit to the appropriate committees of Congress 
     a report that assesses the effect of the Model Small Group 
     Rating Rules on access, cost, and market functioning in the 
     small group market. Such report may, if the Secretary, in 
     consultation with the National Association of Insurance 
     Commissioners, determines such is appropriate for improving 
     access, costs, and market functioning, contain legislative 
     proposals for recommended modification to such Model Small 
     Group Rating Rules.

                      ``PART II--AFFORDABLE PLANS

     ``SEC. 3021. DEFINITIONS.

       ``In this part:
       ``(1) Adopting state.--The term `adopting State' means a 
     State that has enacted the Benefit Choice Standards in their 
     entirety

[[Page S12180]]

     and as the exclusive laws of the State that relate to 
     benefit, service, and provider mandates in the group and 
     individual insurance markets.
       ``(2) Benefit choice standards.--The term `Benefit Choice 
     Standards' means the Standards issued under section 3022.
       ``(3) Eligible insurer.--The term `eligible insurer' means 
     a health insurance issuer that is licensed in a nonadopting 
     State and that--
       ``(A) notifies the Secretary, not later than 30 days prior 
     to the offering of coverage described in this subparagraph, 
     that the issuer intends to offer health insurance coverage 
     consistent with the Benefit Choice Standards in a nonadopting 
     State;
       ``(B) notifies the insurance department of a nonadopting 
     State (or other State agency), not later than 30 days prior 
     to the offering of coverage described in this subparagraph, 
     that the issuer intends to offer health insurance coverage in 
     that State consistent with the Benefit Choice Standards, and 
     provides with such notice a copy of any insurance policy that 
     it intends to offer in the State, its most recent annual and 
     quarterly financial reports, and any other information 
     required to be filed with the insurance department of the 
     State (or other State agency) by the Secretary in 
     regulations; and
       ``(C) includes in the terms of the health insurance 
     coverage offered in nonadopting States (including in the 
     terms of any individual certificates that may be offered to 
     individuals in connection with such group health coverage) 
     and filed with the State pursuant to subparagraph (B), a 
     description in the insurer's contract of the Benefit Choice 
     Standards and that adherence to such Standards is included as 
     a term of such contract.
       ``(4) Health insurance coverage.--The term `health 
     insurance coverage' means any coverage issued in the group or 
     individual health insurance markets, except that such term 
     shall not include excepted benefits (as defined in section 
     2791(c)).
       ``(5) Nonadopting state.--The term `nonadopting State' 
     means a State that is not an adopting State.
       ``(6) Small group insurance market.--The term `small group 
     insurance market' shall have the meaning given the term 
     `small group market' in section 2791(e)(5).
       ``(7) State law.--The term `State law' means all laws, 
     decisions, rules, regulations, or other State actions 
     (including actions by a State agency) having the effect of 
     law, of any State.

     ``SEC. 3022. OFFERING AFFORDABLE PLANS.

       ``(a) Benefit Choice Options.--
       ``(1) Development.--Not later than 6 months after the date 
     of enactment of this title, the Secretary shall issue, by 
     interim final rule, Benefit Choice Standards that implement 
     the standards provided for in this part.
       ``(2) Basic options.--The Benefit Choice Standards shall 
     provide that a health insurance issuer in a State, may offer 
     a coverage plan or plan in the small group market, individual 
     market, large group market, or through a small business 
     health plan, that does not comply with one or more mandates 
     regarding covered benefits, services, or category of provider 
     as may be in effect in such State with respect to such market 
     or markets (either prior to or following the date of 
     enactment of this title), if such issuer also offers in such 
     market or markets an enhanced option as provided for in 
     paragraph (3).
       ``(3) Enhanced option.--A health insurance issuer issuing a 
     basic option as provided for in paragraph (2) shall also 
     offer to purchasers (including, with respect to a small 
     business health plan, the participating employers of such 
     plan) an enhanced option, which shall at a minimum include 
     such covered benefits, services, and categories of providers 
     as are covered by a State employee coverage plan in one of 
     the 5 most populous States as are in effect in the calendar 
     year in which such enhanced option is offered.
       ``(4) Publication of benefits.--Not later than 3 months 
     after the date of enactment of this title, and on the first 
     day of every calendar year thereafter, the Secretary shall 
     publish in the Federal Register such covered benefits, 
     services, and categories of providers covered in that 
     calendar year by the State employee coverage plans in the 5 
     most populous States.
       ``(b) Effective Dates.--
       ``(1) Small business health plans.--With respect to health 
     insurance provided to participating employers of small 
     business health plans, the requirements of this part 
     (concerning lower cost plans) shall apply beginning on the 
     date that is 12 months after the date of enactment of this 
     title.
       ``(2) Non-association coverage.--With respect to health 
     insurance provided to groups or individuals other than 
     participating employers of small business health plans, the 
     requirements of this part shall apply beginning on the date 
     that is 15 months after the date of enactment of this title.

     ``SEC. 3023. APPLICATION AND PREEMPTION.

       ``(a) Superceding of State Law.--
       ``(1) In general.--This part shall supersede any and all 
     State laws insofar as such laws relate to mandates relating 
     to covered benefits, services, or categories of provider in 
     the health insurance market as applied to an eligible 
     insurer, or health insurance coverage issued by an eligible 
     insurer, including with respect to coverage issued to a small 
     business health plan, in a nonadopting State.
       ``(2) Nonadopting states.--This part shall supersede any 
     and all State laws of a nonadopting State (whether enacted 
     prior to or after the date of enactment of this title) 
     insofar as such laws--
       ``(A) prohibit an eligible insurer from offering, 
     marketing, or implementing health insurance coverage 
     consistent with the Benefit Choice Standards, as provided for 
     in section 3022(a); or
       ``(B) have the effect of retaliating against or otherwise 
     punishing in any respect an eligible insurer for offering, 
     marketing, or implementing health insurance coverage 
     consistent with the Benefit Choice Standards.
       ``(b) Savings Clause and Construction.--
       ``(1) Nonapplication to adopting states.--Subsection (a) 
     shall not apply with respect to adopting States.
       ``(2) Nonapplication to certain insurers.--Subsection (a) 
     shall not apply with respect to insurers that do not qualify 
     as eligible insurers who offer health insurance coverage in a 
     nonadopting State.
       ``(3) Nonapplication where obtaining relief under state 
     law.--Subsection (a)(1) shall not supercede any State law of 
     a nonadopting State to the extent necessary to permit 
     individuals or the insurance department of the State (or 
     other State agency) to obtain relief under State law to 
     require an eligible insurer to comply with the Benefit Choice 
     Standards.
       ``(4) No effect on preemption.--In no case shall this part 
     be construed to limit or affect in any manner the preemptive 
     scope of sections 502 and 514 of the Employee Retirement 
     Income Security Act of 1974. In no case shall this part be 
     construed to create any cause of action under Federal or 
     State law or enlarge or affect any remedy available under the 
     Employee Retirement Income Security Act of 1974.

     ``SEC. 3024. CIVIL ACTIONS AND JURISDICTION.

       ``(a) In General.--The courts of the United States shall 
     have exclusive jurisdiction over civil actions involving the 
     interpretation of this part.
       ``(b) Actions.--An eligible insurer may bring an action in 
     the district courts of the United States for injunctive or 
     other equitable relief against any officials or agents of a 
     nonadopting State in connection with any conduct or action, 
     or proposed conduct or action, by such officials or agents 
     which violates, or which would if undertaken violate, section 
     3023.
       ``(c) Direct Filing in Court of Appeals.--At the election 
     of the eligible insurer, an action may be brought under 
     subsection (b) directly in the United States Court of Appeals 
     for the circuit in which the nonadopting State is located by 
     the filing of a petition for review in such Court.
       ``(d) Expedited Review.--
       ``(1) District court.--In the case of an action brought in 
     a district court of the United States under subsection (b), 
     such court shall complete such action, including the issuance 
     of a judgment, prior to the end of the 120-day period 
     beginning on the date on which such action is filed, unless 
     all parties to such proceeding agree to an extension of such 
     period.
       ``(2) Court of appeals.--In the case of an action brought 
     directly in a United States Court of Appeal under subsection 
     (c), or in the case of an appeal of an action brought in a 
     district court under subsection (b), such Court shall 
     complete all action on the petition, including the issuance 
     of a judgment, prior to the end of the 60-day period 
     beginning on the date on which such petition is filed with 
     the Court, unless all parties to such proceeding agree to an 
     extension of such period.
       ``(e) Standard of Review.--A court in an action filed under 
     this section, shall render a judgment based on a review of 
     the merits of all questions presented in such action and 
     shall not defer to any conduct or action, or proposed conduct 
     or action, of a nonadopting State.

     ``SEC. 3025. RULES OF CONSTRUCTION.

       ``(a) In General.--Notwithstanding any other provision of 
     Federal or State law, a health insurance issuer in an 
     adopting State or an eligible insurer in a non-adopting State 
     may amend its existing policies to be consistent with the 
     terms of this subtitle (concerning rating and benefits).
       ``(b) Health Savings Accounts.--Nothing in this subtitle 
     shall be construed to inhibit the development of health 
     savings accounts pursuant to section 223 of the Internal 
     Revenue Code of 1986.''.

        Subtitle C--Harmonization of Health Insurance Standards

     SEC. 221. HEALTH INSURANCE STANDARDS HARMONIZATION.

       Title XXIX of the Public Health Service Act (as added by 
     section 201) is amended by adding at the end the following:

                 ``Subtitle B--Standards Harmonization

     ``SEC. 3031. DEFINITIONS.

       ``In this subtitle:
       ``(1) Adopting state.--The term `adopting State' means a 
     State that has enacted the harmonized standards adopted under 
     this subtitle in their entirety and as the exclusive laws of 
     the State that relate to the harmonized standards.
       ``(2) Eligible insurer.--The term `eligible insurer' means 
     a health insurance issuer that is licensed in a nonadopting 
     State and that--
       ``(A) notifies the Secretary, not later than 30 days prior 
     to the offering of coverage described in this subparagraph, 
     that the issuer intends to offer health insurance coverage

[[Page S12181]]

     consistent with the harmonized standards in a nonadopting 
     State;
       ``(B) notifies the insurance department of a nonadopting 
     State (or other State agency), not later than 30 days prior 
     to the offering of coverage described in this subparagraph, 
     that the issuer intends to offer health insurance coverage in 
     that State consistent with the harmonized standards published 
     pursuant to section 3032(d), and provides with such notice a 
     copy of any insurance policy that it intends to offer in the 
     State, its most recent annual and quarterly financial 
     reports, and any other information required to be filed with 
     the insurance department of the State (or other State agency) 
     by the Secretary in regulations; and
       ``(C) includes in the terms of the health insurance 
     coverage offered in nonadopting States (including in the 
     terms of any individual certificates that may be offered to 
     individuals in connection with such health coverage) and 
     filed with the State pursuant to subparagraph (B), a 
     description of the harmonized standards published pursuant to 
     section 3032(g)(2) and an affirmation that such standards are 
     a term of the contract.
       ``(3) Harmonized standards.--The term `harmonized 
     standards' means the standards certified by the Secretary 
     under section 3032(d).
       ``(4) Health insurance coverage.--The term `health 
     insurance coverage' means any coverage issued in the health 
     insurance market, except that such term shall not include 
     excepted benefits (as defined in section 2791(c).
       ``(5) Nonadopting state.--The term `nonadopting State' 
     means a State that fails to enact, within 18 months of the 
     date on which the Secretary certifies the harmonized 
     standards under this subtitle, the harmonized standards in 
     their entirety and as the exclusive laws of the State that 
     relate to the harmonized standards.
       ``(6) State law.--The term `State law' means all laws, 
     decisions, rules, regulations, or other State actions 
     (including actions by a State agency) having the effect of 
     law, of any State.

     ``SEC. 3032. HARMONIZED STANDARDS.

       ``(a) Board.--
       ``(1) Establishment.--Not later than 3 months after the 
     date of enactment of this title, the Secretary, in 
     consultation with the NAIC, shall establish the Health 
     Insurance Consensus Standards Board (referred to in this 
     subtitle as the `Board') to develop recommendations that 
     harmonize inconsistent State health insurance laws in 
     accordance with the procedures described in subsection (b).
       ``(2) Composition.--
       ``(A) In general.--The Board shall be composed of the 
     following voting members to be appointed by the Secretary 
     after considering the recommendations of professional 
     organizations representing the entities and constituencies 
     described in this paragraph:
       ``(i) Four State insurance commissioners as recommended by 
     the National Association of Insurance Commissioners, of which 
     2 shall be Democrats and 2 shall be Republicans, and of which 
     one shall be designated as the chairperson and one shall be 
     designated as the vice chairperson.
       ``(ii) Four representatives of State government, two of 
     which shall be governors of States and two of which shall be 
     State legislators, and two of which shall be Democrats and 
     two of which shall be Republicans.
       ``(iii) Four representatives of health insurers, of which 
     one shall represent insurers that offer coverage in the small 
     group market, one shall represent insurers that offer 
     coverage in the large group market, one shall represent 
     insurers that offer coverage in the individual market, and 
     one shall represent carriers operating in a regional market.
       ``(iv) Two representatives of insurance agents and brokers.
       ``(v) Two independent representatives of the American 
     Academy of Actuaries who have familiarity with the actuarial 
     methods applicable to health insurance.
       ``(B) Ex officio member.--A representative of the Secretary 
     shall serve as an ex officio member of the Board.
       ``(3) Advisory panel.--The Secretary shall establish an 
     advisory panel to provide advice to the Board, and shall 
     appoint its members after considering the recommendations of 
     professional organizations representing the entities and 
     constituencies identified in this paragraph:
       ``(A) Two representatives of small business health plans.
       ``(B) Two representatives of employers, of which one shall 
     represent small employers and one shall represent large 
     employers.
       ``(C) Two representatives of consumer organizations.
       ``(D) Two representatives of health care providers.
       ``(4) Qualifications.--The membership of the Board shall 
     include individuals with national recognition for their 
     expertise in health finance and economics, actuarial science, 
     health plans, providers of health services, and other related 
     fields, who provide a mix of different professionals, broad 
     geographic representation, and a balance between urban and 
     rural representatives.
       ``(5) Ethical disclosure.--The Secretary shall establish a 
     system for public disclosure by members of the Board of 
     financial and other potential conflicts of interest relating 
     to such members. Members of the Board shall be treated as 
     employees of Congress for purposes of applying title I of the 
     Ethics in Government Act of 1978 (Public Law 95-521).
       ``(6) Director and staff.--Subject to such review as the 
     Secretary deems necessary to assure the efficient 
     administration of the Board, the chair and vice-chair of the 
     Board may--
       ``(A) employ and fix the compensation of an Executive 
     Director (subject to the approval of the Comptroller General) 
     and such other personnel as may be necessary to carry out its 
     duties (without regard to the provisions of title 5, United 
     States Code, governing appointments in the competitive 
     service);
       ``(B) seek such assistance and support as may be required 
     in the performance of its duties from appropriate Federal 
     departments and agencies;
       ``(C) enter into contracts or make other arrangements, as 
     may be necessary for the conduct of the work of the Board 
     (without regard to section 3709 of the Revised Statutes (41 
     U.S.C. 5));
       ``(D) make advance, progress, and other payments which 
     relate to the work of the Board;
       ``(E) provide transportation and subsistence for persons 
     serving without compensation; and
       ``(F) prescribe such rules as it deems necessary with 
     respect to the internal organization and operation of the 
     Board.
       ``(7) Terms.--The members of the Board shall serve for the 
     duration of the Board. Vacancies in the Board shall be filled 
     as needed in a manner consistent with the composition 
     described in paragraph (2).
       ``(b) Development of Harmonized Standards.--
       ``(1) In general.--In accordance with the process described 
     in subsection (c), the Board shall identify and recommend 
     nationally harmonized standards for each of the following 
     process categories:
       ``(A) Form filing and rate filing.--Form and rate filing 
     standards shall be established which promote speed to market 
     and include the following defined areas for States that 
     require such filings:
       ``(i) Procedures for form and rate filing pursuant to a 
     streamlined administrative filing process.
       ``(ii) Timeframes for filings to be reviewed by a State if 
     review is required before they are deemed approved.
       ``(iii) Timeframes for an eligible insurer to respond to 
     State requests following its review.
       ``(iv) A process for an eligible insurer to self-certify.
       ``(v) State development of form and rate filing templates 
     that include only non-preempted State law and Federal law 
     requirements for eligible insurers with timely updates.
       ``(vi) Procedures for the resubmission of forms and rates.
       ``(vii) Disapproval rationale of a form or rate filing 
     based on material omissions or violations of non-preempted 
     State law or Federal law with violations cited and explained.
       ``(viii) For States that may require a hearing, a rationale 
     for hearings based on violations of non-preempted State law 
     or insurer requests.
       ``(B) Market conduct review.--Market conduct review 
     standards shall be developed which provide for the following:
       ``(i) Mandatory participation in national databases.
       ``(ii) The confidentiality of examination materials.
       ``(iii) The identification of the State agency with primary 
     responsibility for examinations.
       ``(iv) Consultation and verification of complaint data with 
     the eligible insurer prior to State actions.
       ``(v) Consistency of reporting requirements with the 
     recordkeeping and administrative practices of the eligible 
     insurer.
       ``(vi) Examinations that seek to correct material errors 
     and harmful business practices rather than infrequent errors.
       ``(vii) Transparency and publishing of the State's 
     examination standards.
       ``(viii) Coordination of market conduct analysis.
       ``(ix) Coordination and nonduplication between State 
     examinations of the same eligible insurer.
       ``(x) Rationale and protocols to be met before a full 
     examination is conducted.
       ``(xi) Requirements on examiners prior to beginning 
     examinations such as budget planning and work plans.
       ``(xii) Consideration of methods to limit examiners' fees 
     such as caps, competitive bidding, or other alternatives.
       ``(xiii) Reasonable fines and penalties for material errors 
     and harmful business practices.
       ``(C) Prompt payment of claims.--The Board shall establish 
     prompt payment standards for eligible insurers based on 
     standards similar to those applicable to the Social Security 
     Act as set forth in section 1842(c)(2) of such Act (42 U.S.C. 
     1395u(c)(2)). Such prompt payment standards shall be 
     consistent with the timing and notice requirements of the 
     claims procedure rules to be specified under subparagraph 
     (D), and shall include appropriate exceptions such as for 
     fraud, nonpayment of premiums, or late submission of claims.
       ``(D) Internal review.--The Board shall establish standards 
     for claims procedures for eligible insurers that are 
     consistent with the requirements relating to initial claims 
     for benefits and appeals of claims for benefits

[[Page S12182]]

     under the Employee Retirement Income Security Act of 1974 as 
     set forth in section 503 of such Act (29 U.S.C. 1133) and the 
     regulations thereunder.
       ``(2) Recommendations.--The Board shall recommend 
     harmonized standards for each element of the categories 
     described in subparagraph (A) through (D) of paragraph (1) 
     within each such market. Notwithstanding the previous 
     sentence, the Board shall not recommend any harmonized 
     standards that disrupt, expand, or duplicate the benefit, 
     service, or provider mandate standards provided in the 
     Benefit Choice Standards pursuant to section 3022(a).
       ``(c) Process for Identifying Harmonized Standards.--
       ``(1) In general.--The Board shall develop recommendations 
     to harmonize inconsistent State insurance laws with respect 
     to each of the process categories described in subparagraphs 
     (A) through (D) of subsection (b)(1).
       ``(2) Requirements.--In adopting standards under this 
     section, the Board shall consider the following:
       ``(A) Any model acts or regulations of the National 
     Association of Insurance Commissioners in each of the process 
     categories described in subparagraphs (A) through (D) of 
     subsection (b)(1).
       ``(B) Substantially similar standards followed by a 
     plurality of States, as reflected in existing State laws, 
     relating to the specific process categories described in 
     subparagraphs (A) through (D) of subsection (b)(1).
       ``(C) Any Federal law requirement related to specific 
     process categories described in subparagraphs (A) through (D) 
     of subsection (b)(1).
       ``(D) In the case of the adoption of any standard that 
     differs substantially from those referred to in subparagraphs 
     (A), (B), or (C), the Board shall provide evidence to the 
     Secretary that such standard is necessary to protect health 
     insurance consumers or promote speed to market or 
     administrative efficiency.
       ``(E) The criteria specified in clauses (i) through (iii) 
     of subsection (d)(2)(B).
       ``(d) Recommendations and Certification by Secretary.--
       ``(1) Recommendations.--Not later than 18 months after the 
     date on which all members of the Board are selected under 
     subsection (a), the Board shall recommend to the Secretary 
     the certification of the harmonized standards identified 
     pursuant to subsection (c).
       ``(2) Certification.--
       ``(A) In general.--Not later than 120 days after receipt of 
     the Board's recommendations under paragraph (1), the 
     Secretary shall certify the recommended harmonized standards 
     as provided for in subparagraph (B), and issue such standards 
     in the form of an interim final regulation.
       ``(B) Certification process.--The Secretary shall establish 
     a process for certifying the recommended harmonized standard, 
     by category, as recommended by the Board under this section. 
     Such process shall--
       ``(i) ensure that the certified standards for a particular 
     process area achieve regulatory harmonization with respect to 
     health plans on a national basis;
       ``(ii) ensure that the approved standards are the minimum 
     necessary, with regard to substance and quantity of 
     requirements, to protect health insurance consumers and 
     maintain a competitive regulatory environment; and
       ``(iii) ensure that the approved standards will not limit 
     the range of group health plan designs and insurance 
     products, such as catastrophic coverage only plans, health 
     savings accounts, and health maintenance organizations, that 
     might otherwise be available to consumers.
       ``(3) Effective date.--The standards certified by the 
     Secretary under paragraph (2) shall be effective on the date 
     that is 18 months after the date on which the Secretary 
     certifies the harmonized standards.
       ``(e) Termination.--The Board shall terminate and be 
     dissolved after making the recommendations to the Secretary 
     pursuant to subsection (d)(1).
       ``(f) Ongoing Review.--Not earlier than 3 years after the 
     termination of the Board under subsection (e), and not 
     earlier than every 3 years thereafter, the Secretary, in 
     consultation with the National Association of Insurance 
     Commissioners and the entities and constituencies represented 
     on the Board and the Advisory Panel, shall prepare and submit 
     to the appropriate committees of Congress a report that 
     assesses the effect of the harmonized standards on access, 
     cost, and health insurance market functioning. The Secretary 
     may, based on such report and applying the process 
     established for certification under subsection (d)(2)(B), in 
     consultation with the National Association of Insurance 
     Commissioners and the entities and constituencies represented 
     on the Board and the Advisory Panel, update the harmonized 
     standards through notice and comment rulemaking.
       ``(g) Publication.--
       ``(1) Listing.--The Secretary shall maintain an up to date 
     listing of all harmonized standards certified under this 
     section on the Internet website of the Department of Health 
     and Human Services.
       ``(2) Sample contract language.--The Secretary shall 
     publish on the Internet website of the Department of Health 
     and Human Services sample contract language that incorporates 
     the harmonized standards certified under this section, which 
     may be used by insurers seeking to qualify as an eligible 
     insurer. The types of harmonized standards that shall be 
     included in sample contract language are the standards that 
     are relevant to the contractual bargain between the insurer 
     and insured.
       ``(h) State Adoption and Enforcement.--Not later than 18 
     months after the certification by the Secretary of harmonized 
     standards under this section, the States may adopt such 
     harmonized standards (and become an adopting State) and, in 
     which case, shall enforce the harmonized standards pursuant 
     to State law.

     ``SEC. 3033. APPLICATION AND PREEMPTION.

       ``(a) Superceding of State Law.--
       ``(1) In general.--The harmonized standards certified under 
     this subtitle shall supersede any and all State laws of a 
     non-adopting State insofar as such State laws relate to the 
     areas of harmonized standards as applied to an eligible 
     insurer, or health insurance coverage issued by a eligible 
     insurer, including with respect to coverage issued to a small 
     business health plan, in a nonadopting State.
       ``(2) Nonadopting states.--This subtitle shall supersede 
     any and all State laws of a nonadopting State (whether 
     enacted prior to or after the date of enactment of this 
     title) insofar as they may--
       ``(A) prohibit an eligible insurer from offering, 
     marketing, or implementing health insurance coverage 
     consistent with the harmonized standards; or
       ``(B) have the effect of retaliating against or otherwise 
     punishing in any respect an eligible insurer for offering, 
     marketing, or implementing health insurance coverage 
     consistent with the harmonized standards under this subtitle.
       ``(b) Savings Clause and Construction.--
       ``(1) Nonapplication to adopting states.--Subsection (a) 
     shall not apply with respect to adopting States.
       ``(2) Nonapplication to certain insurers.--Subsection (a) 
     shall not apply with respect to insurers that do not qualify 
     as eligible insurers who offer health insurance coverage in a 
     nonadopting State.
       ``(3) Nonapplication where obtaining relief under state 
     law.--Subsection (a)(1) shall not supercede any State law of 
     a nonadopting State to the extent necessary to permit 
     individuals or the insurance department of the State (or 
     other State agency) to obtain relief under State law to 
     require an eligible insurer to comply with the harmonized 
     standards under this subtitle.
       ``(4) No effect on preemption.--In no case shall this 
     subtitle be construed to limit or affect in any manner the 
     preemptive scope of sections 502 and 514 of the Employee 
     Retirement Income Security Act of 1974. In no case shall this 
     subtitle be construed to create any cause of action under 
     Federal or State law or enlarge or affect any remedy 
     available under the Employee Retirement Income Security Act 
     of 1974.
       ``(c) Effective Date.--This section shall apply beginning 
     on the date that is 18 months after the date on harmonized 
     standards are certified by the Secretary under this subtitle.

     ``SEC. 3034. CIVIL ACTIONS AND JURISDICTION.

       ``(a) In General.--The district courts of the United States 
     shall have exclusive jurisdiction over civil actions 
     involving the interpretation of this subtitle.
       ``(b) Actions.--An eligible insurer may bring an action in 
     the district courts of the United States for injunctive or 
     other equitable relief against any officials or agents of a 
     nonadopting State in connection with any conduct or action, 
     or proposed conduct or action, by such officials or agents 
     which violates, or which would if undertaken violate, section 
     3033.
       ``(c) Direct Filing in Court of Appeals.--At the election 
     of the eligible insurer, an action may be brought under 
     subsection (b) directly in the United States Court of Appeals 
     for the circuit in which the nonadopting State is located by 
     the filing of a petition for review in such Court.
       ``(d) Expedited Review.--
       ``(1) District court.--In the case of an action brought in 
     a district court of the United States under subsection (b), 
     such court shall complete such action, including the issuance 
     of a judgment, prior to the end of the 120-day period 
     beginning on the date on which such action is filed, unless 
     all parties to such proceeding agree to an extension of such 
     period.
       ``(2) Court of appeals.--In the case of an action brought 
     directly in a United States Court of Appeal under subsection 
     (c), or in the case of an appeal of an action brought in a 
     district court under subsection (b), such Court shall 
     complete all action on the petition, including the issuance 
     of a judgment, prior to the end of the 60-day period 
     beginning on the date on which such petition is filed with 
     the Court, unless all parties to such proceeding agree to an 
     extension of such period.
       ``(e) Standard of Review.--A court in an action filed under 
     this section, shall render a judgment based on a review of 
     the merits of all questions presented in such action and 
     shall not defer to any conduct or action, or proposed conduct 
     or action, of a nonadopting State.

     ``SEC. 3035. AUTHORIZATION OF APPROPRIATIONS; RULE OF 
                   CONSTRUCTION.

       ``(a) Authorization of Appropriations.--There are 
     authorized to be appropriated such sums as may be necessary 
     to carry out this subtitle.
       ``(b) Health Savings Accounts.--Nothing in this subtitle 
     shall be construed to inhibit the development of health 
     savings accounts pursuant to section 223 of the Internal 
     Revenue Code of 1986.''.

[[Page S12183]]

                   TITLE III--HEALTH SAVINGS ACCOUNTS

     SEC. 301. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED 
                   BEFORE ESTABLISHMENT OF HEALTH SAVINGS ACCOUNT.

       (a) In General.--Paragraph (2) of section 223(d) of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new subparagraph:
       ``(D) Certain medical expenses incurred before 
     establishment of account treated as qualified.--An expense 
     shall not fail to be treated as a qualified medical expense 
     solely because such expense was incurred before the 
     establishment of the health savings account if such expense 
     was incurred--
       ``(i) during either--

       ``(I) the taxable year in which the health savings account 
     was established, or
       ``(II) the preceding taxable year in the case of a health 
     savings account established after the taxable year in which 
     such expense was incurred but before the time prescribed by 
     law for filing the return for such taxable year (not 
     including extensions thereof), and

       ``(ii) for medical care of an individual during a period 
     that such individual was an eligible individual.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2007.

     SEC. 302. USE OF ACCOUNT FOR INDIVIDUAL HIGH DEDUCTIBLE 
                   HEALTH PLAN PREMIUMS.

       (a) In General.--Section 223(d)(2)(C) of the Internal 
     Revenue Code of 1986 (relating to exceptions) is amended by 
     striking ``or'' at the end of clause (iii), by striking the 
     period at the end of clause (iv) and inserting ``, or'', and 
     by adding at the end the following new clause:
       ``(v) a high deductible health plan, other than a group 
     health plan (as defined in section 5000(b)(1)).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2007.

     SEC. 303. EXCEPTION TO REQUIREMENT FOR EMPLOYERS TO MAKE 
                   COMPARABLE HEALTH SAVINGS ACCOUNT 
                   CONTRIBUTIONS.

       (a) Greater Employer-Provided Contributions to HSAs for 
     Chronically Ill Employees Treated as Meeting Comparability 
     Requirements.--Subsection (b) of section 4980G of the 
     Internal Revenue Code of 1986 (relating to failure of 
     employer to make comparable health savings account 
     contributions) is amended to read as follows:
       ``(b) Rules and Requirements.--
       ``(1) In general.--Except as provided in paragraph (2), 
     rules and requirements similar to the rules and requirements 
     of section 4980E shall apply for purposes of this section.
       ``(2) Treatment of employer-provided contributions to hsas 
     for chronically ill employees.--For purposes of this 
     section--
       ``(A) In general.--Any contribution by an employer to a 
     health savings account of an employee who is (or the spouse 
     or any dependent of the employee who is) a chronically ill 
     individual in an amount which is greater than a contribution 
     to a health savings account of a comparable participating 
     employee who is not a chronically ill individual shall not 
     fail to be considered a comparable contribution.
       ``(B) Nondiscrimination requirement.--Subparagraph (A) 
     shall not apply unless the excess employer contributions 
     described in subparagraph (A) are the same for all 
     chronically ill individuals who are similarly situated.
       ``(C) Chronically ill individual.--For purposes of this 
     paragraph, the term `chronically ill individual' means any 
     individual whose qualified medical expenses for any taxable 
     year are more than 50 percent greater than the average 
     qualified medical expenses of all employees of the employer 
     for such year.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2007.

     SEC. 304. CERTAIN HEALTH REIMBURSEMENT ARRANGEMENT COVERAGE 
                   DISREGARDED COVERAGE FOR HEALTH SAVINGS 
                   ACCOUNTS.

       (a) In General.--Section 223(c)(1)(B)(iii) of the Internal 
     Revenue Code of 1986 is amended by inserting ``or a health 
     reimbursement arrangement'' after ``health flexible a 
     spending arrangement''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

                            TITLE IV--STUDY

     SEC. 401. STUDY ON TAX TREATMENT OF AND ACCESS TO PRIVATE 
                   HEALTH INSURANCE.

       (a) Study.--
       (1) In general.--The Secretary of the Treasury shall study 
     various options and make recommendations--
       (A) for reforming the tax treatment of health insurance to 
     improve tax equity and increase access to private health care 
     coverage; and
       (B) for providing meaningful assistance to low-income 
     individuals and families to purchase private health 
     insurance.
       (2) Consideration of various options.--In carrying out the 
     study under paragraph (1), the Secretary of the Treasury 
     shall consider--
       (A) options which rely on changes to Federal law not 
     included in the Internal Revenue Code of 1986;
       (B) options which have a goal of minimizing Federal 
     Government outlays;
       (C) options which minimize tax increases;
       (D) at least one option which retains the Federal tax 
     exclusion for employer-provided health coverage;
       (E) at least one option which is budget neutral; and
       (F) at least one option which maintains the current 
     distribution of the Federal income tax burden.
       (b) Report.--Not later than 6 months after the date of the 
     enactment of this Act, the Secretary of the Treasury shall 
     report the results of the study and the recommendations 
     required under subsection (a) to the Committee on Finance of 
     the Senate and the Committee on Ways and Means of the House 
     of Representatives.
                                 ______
                                 
  SA 3065. Mr. DeMint submitted an amendment intended to be proposed by 
him to the bill H.R. 976, to amend title XXI of the Social Security Act 
to reauthorize the State Children's Health Insurance Program, and for 
other purposes; which was ordered to lie on the table; as follows:

       Strike section 613 of the proposed House amendment to the 
     text.
                                 ______
                                 
  SA 3066. Mr. DeMint submitted an amendment intended to be proposed by 
him to the bill H.R. 976, to amend title XXI of the Social Security Act 
to reauthorize the State Children's Health Insurance Program, and for 
other purposes; which was ordered to lie on the table; as follows:

       Strike section 615 of the House amendment to the text.
                                 ______
                                 
  SA 3067. Mrs. DOLE submitted an amendment intended to be proposed by 
her to the bill H.R. 976, to amend title XXI of the Social Security Act 
to reauthorize the State Children's Health Insurance Program, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the end of subtitle C of title VI insert the following:

     SEC. __. BUDGET POINT OF ORDER AGAINST LEGISLATION THAT 
                   RAISES EXCISE TAX RATES.

       Title III of the Congressional Budget Act of 1974 is 
     amended by adding at the end the following:


          ``POINT OF ORDER AGAINST RAISES IN EXCISE TAX RATES

       ``Sec. 316.  (a) In General.--It shall not be in order in 
     the Senate to consider any bill, resolution, amendment, 
     amendment between Houses, motion, or conference report that 
     includes a Federal excise tax rate increase which 
     disproportionately affects taxpayers with earned income of 
     less than 200 percent of the Federal poverty level, as 
     determined by the Joint Committee on Taxation. In this 
     subsection, the term `Federal excise tax rate increase' means 
     any amendment to any section in subtitle D or E of the 
     Internal Revenue Code of 1986, that imposes a new percentage 
     or amount as a rate of tax and thereby increases the amount 
     of tax imposed by any such section.
       ``(b) Supermajority Waiver and Appeal.--
       ``(1) Waiver.--This section may be waived or suspended in 
     the Senate only by an affirmative vote of three-fifths of the 
     Members, duly chosen and sworn.
       ``(2) Appeal.--An affirmative vote of three-fifths of the 
     Members of the Senate, duly chosen and sworn, shall be 
     required in the Senate to sustain an appeal of the ruling of 
     the Chair on a point of order raised under this section.''.
                                 ______
                                 
  SA 3068. Mr. REID (for Mr. Obama (for himself, Mr. Bond, Mr. 
Lieberman, Mrs. Boxer, and Mrs. McCaskill)) submitted an amendment 
intended to be proposed to amendment SA 2011 proposed by Mr. Nelson of 
Nebraska (for Mr. Levin) to the bill H.R. 1585, to authorize 
appropriations for fiscal year 2008 for military activities of the 
Department of Defense, for military construction, and for defense 
activities of the Department of Energy, to prescribe military personnel 
strengths for such fiscal year, and for other purposes; which was 
ordered to lie on the table; as follows:

       At the end of subtitle H of title V, add the following:

     SEC. 594. ADMINISTRATIVE SEPARATIONS OF MEMBERS OF THE ARMED 
                   FORCES FOR PERSONALITY DISORDER.

       (a) Clinical Review of Administrative Separations Based on 
     Personality Disorder.--
       (1) Temporary moratorium on separations of certain 
     members.--Not later than 30 days after the date of the 
     enactment of this Act, and continuing until the Secretary of 
     Defense submits to Congress the report required by subsection 
     (b) and the Comptroller General of the United States submits 
     to Congress the report required by subsection (c), a covered 
     member of the Armed Forces may not, except as provided in 
     paragraph (2), be administratively separated from the Armed 
     Forces on the basis of a personality disorder.
       (2) Clinical review of proposed separations based on 
     personality disorder.--
       (A) In general.--A covered member of the Armed Forces may 
     be administratively separated from the Armed Forces on the 
     basis of

[[Page S12184]]

     a personality disorder under this paragraph if a clinical 
     review of the case is conducted by a senior officer in the 
     office of the Surgeon General of the Armed Force concerned 
     who is a credentialed mental health provider and who is fully 
     qualified to review cases involving maladaptive behavior 
     (personality disorder), diagnosis and treatment of post-
     traumatic stress disorder, or other mental health conditions.
       (B) Purposes of review.--The purposes of the review with 
     respect to a member under subparagraph (A) are as follows:
       (i) To determine whether the diagnosis of personality order 
     in the member is correct and fully documented.
       (ii) To determine whether evidence of other mental health 
     conditions (including depression, post-traumatic stress 
     disorder, substance abuse, or traumatic brain injury) 
     resulting from service in a combat zone may exist in the 
     member which indicate that the separation of the member from 
     the Armed Forces on the basis of a personality disorder is 
     inappropriate pending diagnosis and treatment, and, if so, 
     whether initiation of medical board procedures for the member 
     is warranted.
       (b) Secretary of Defense Report on Administrative 
     Separations Based on Personality Disorder.--
       (1) Report required.--Not later than April 1, 2008, the 
     Secretary of Defense shall submit to the Committees on Armed 
     Services of the Senate and the House of Representatives a 
     report on all cases of administrative separation from the 
     Armed Forces of covered members of the Armed Forces on the 
     basis of a personality disorder.
       (2) Elements.--The report required by paragraph (1) shall 
     include the following:
       (A) A statement of the total number of cases, by Armed 
     Force, in which covered members of the Armed Forces have been 
     separated from the Armed Forces on the basis of a personality 
     disorder, and an identification of the various forms of 
     personality order forming the basis for such separations.
       (B) A statement of the total number of cases, by Armed 
     Force, in which covered members of the Armed Forces who have 
     served in Iraq and Afghanistan since October 2001 have been 
     separated from the Armed Forces on the basis of a personality 
     disorder, and the identification of the various forms of 
     personality disorder forming the basis for such separations.
       (C) A summary of the policies, by Armed Forces, controlling 
     administrative separations of members of the Armed Forces 
     based on personality disorder, and an evaluation of the 
     adequacy of such policies for ensuring that covered members 
     of the Armed Forces who may be eligible for disability 
     evaluation due to mental health conditions are not separated 
     from the Armed Forces prematurely or unjustly on the basis of 
     a personality order.
       (D) A discussion of measures being implemented to ensure 
     that members of the Armed Forces who should be evaluated for 
     disability separation or retirement due to mental health 
     conditions are not prematurely or unjustly processed for 
     separation from the Armed Forces on the basis of a 
     personality disorder, and recommendations regarding how 
     members of the Armed Forces who may have been so separated 
     from the Armed Forces should be provided with expedited 
     review by the applicable board for the correction of military 
     records.
       (c) Comptroller General Report on Policies on 
     Administrative Separation Based on Personality Disorder.--
       (1) Report required.--Not later than June 1, 2008, the 
     Comptroller General shall submit to Congress a report on the 
     policies and procedures of the Department of Defense and of 
     the military departments relating to the separation of 
     members of the Armed Forces based on a personality disorder.
       (2) Elements.--The report required by paragraph (1) shall--
       (A) include an audit of a sampling of cases to determine 
     the validity and clinical efficacy of the policies and 
     procedures referred to in paragraph (1) and the extent, if 
     any, of the divergence between the terms of such policies and 
     procedures and the implementation of such policies and 
     procedures; and
       (B) include a determination by the Comptroller General of 
     whether, and to what extent, the policies and procedures 
     referred to in paragraph (1)--
       (i) deviate from standard clinical diagnostic practices and 
     current clinical standards; and
       (ii) provide adequate safeguards aimed at ensuring that 
     members of the Armed Forces who suffer from mental health 
     conditions (including depression, post-traumatic stress 
     disorder, or traumatic brain injury) resulting from service 
     in a combat zone are not prematurely or unjustly separated 
     from the Armed Forces on the basis of a personality disorder.
       (d) Covered Member of the Armed Forces Defined.--In this 
     section, the term ``covered member of the Armed 
     Forces''includes the following:
       (1) Any member of a regular component of the Armed Forces 
     of the Armed Forces who has served in Iraq or Afghanistan 
     since October 2001.
       (2) Any member of the Selected Reserve of the Ready Reserve 
     of the Armed Forces who served on active duty in Iraq or 
     Afghanistan since October 2001.
                                 ______
                                 
  SA 3069. Mr. HATCH submitted an amendment intended to be proposed to 
amendment SA 2011 proposed by Mr. Nelson of Nebraska (for Mr. Levin) to 
the bill H.R. 1585, to authorize appropriations for fiscal year 2008 
for military activities of the Department of Defense, for military 
construction, and for defense activities of the Department of Energy, 
to prescribe military personnel strengths for such fiscal year, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the end of title XI, add the following:

     SEC. 1107. FEDERAL EMPLOYEES RETIREMENT SYSTEM AGE AND 
                   RETIREMENT TREATMENT FOR CERTAIN RETIREES OF 
                   THE ARMED FORCES.

       (a) Increase in Maximum Age Limit for Positions Subject to 
     FERS.--
       (1) In general.--Section 3307(e) of title 5, United States 
     Code, is amended--
       (A) by striking ``(e) The'' and inserting ``(e)(1) Except 
     as provided in paragraph (2), the''; and
       (B) by adding at the end the following:
       ``(2) The maximum age limit for an original appointment to 
     a position as a law enforcement officer (as defined by 
     section 8401(17)) shall be 47 years of age, in the case of an 
     individual who, before the effective date of such 
     appointment--
       ``(A) was discharged or released from active duty in the 
     armed forces under honorable conditions; and
       ``(B) was a member of the Armed Services retired for age or 
     years of service.''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall apply with respect to appointments made on or after the 
     date of the enactment of this Act.
       (b) Eligibility for Annuity.--Section 8412(d) of title 5, 
     United States Code, is amended--
       (1) in paragraph (1), by striking ``or'' at the end;
       (2) in paragraph (2), by adding ``or'' at the end; and
       (3) by inserting after paragraph (2) the following:
       ``(3) after completing 10 years of service as a law 
     enforcement officer, if such employee--
       ``(A) is originally appointed to a position as a law 
     enforcement officer after the date of enactment of the 
     National Defense Authorization Act for Fiscal Year 2008;
       ``(B) performs such 10 years of service after that original 
     appointment;
       ``(C) was discharged or released from active duty in the 
     armed forces under honorable conditions before such date of 
     appointment; and
       ``(D) was a member of the Armed Services retired for age or 
     years of service before such date of appointment, or''.
       (c) Mandatory Separation.--Section 8425(b)(1) of title 5, 
     United States Code, is amended in the first sentence by 
     inserting ``, except that a law enforcement officer eligible 
     for retirement under 8412(d)(3) shall be separated from 
     service on the last day of the month in which that employee 
     becomes 57 years of age'' before the period.
       (d) Computation of Basic Annuity.--Section 8415(d) of title 
     5, United States Code, is amended--
       (1) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively;
       (2) by striking ``The annuity'' and inserting ``(1) Except 
     as provided under paragraph (2), the annuity''
       (3) by adding at the end the following:
       ``(2) The annuity of an employee retiring under section 
     8412(d)(3) is--
       ``(A) 1 7/10 percent of that individual's average pay 
     multiplied by--
       ``(i) the 10 years of service described under section 
     8412(d)(3)(B); and
       ``(ii) so much of such individual's total service (other 
     than the 10 years of service described under clause (i) of 
     this subparagraph) as does not exceed 10 years; plus
       ``(B) 1 percent of that individual's average pay multiplied 
     by so much of such individual's total service as exceeds 20 
     years.''.
                                 ______
                                 
  SA 3070. Mr. SESSIONS submitted an amendment intended to be proposed 
to amendment SA 2011 proposed by Mr. Nelson of Nebraska (for Mr. Levin) 
to the bill H.R. 1585, to authorize appropriations for fiscal year 2008 
for military activities of the Department of Defense, for military 
construction, and for defense activities of the Department of Energy, 
to prescribe military personnel strengths for such fiscal year, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the end of subtitle B of title I, add the following:

     SEC. 115. M4 CARBINE RIFLE.

       (a) Findings.--Congress makes the following findings:
       (1) The members of the Armed Forces are entitled to the 
     best individual combat weapons available in the world today.
       (2) Full and open competition in procurement is required by 
     law, and is the most effective way of selecting the best 
     individual combat weapons for the Armed Forces at the best 
     price.
       (3) The M4 carbine rifle is currently the individual weapon 
     of choice for the Army, and it is procured through a sole 
     source contract.
       (4) The M4 carbine rifle has been proven in combat and 
     meets or exceeds the existing requirements for carbines.
       (5) The Army Training and Doctrine Command is conducting a 
     full Capabilities Based Assessment (CBA) of the small arms of 
     the Army which will determine whether or not

[[Page S12185]]

     gaps exist in the current capabilities of such small arms and 
     inform decisions as to whether or not a new individual weapon 
     is required to address such gaps.
       (b) Report on Capabilities Based Assessment.--Not later 
     than 90 days after the date of the enactment of this Act, the 
     Secretary of the Army shall submit to the congressional 
     defense committees a report on the Capabilities Based 
     Assessment of the small arms of the Army referred to in 
     subsection (a)(5).
       (c) Competition for New Individual Weapon.--
       (1) Competition required.--In the event the Capabilities 
     Based Assessment identifies gaps in the current capabilities 
     of the small arms of the Army and the Secretary of the Army 
     determines that a new individual weapon is required to 
     address such gaps, the Secretary shall procure the new 
     individual weapon through one or more contracts entered into 
     after full and open competition described in paragraph (2).
       (2) Full and open competition.--The full and open 
     competition described in this paragraph is full and open 
     competition among all responsible manufacturers that--
       (A) is open to all developmental item solutions and 
     nondevelopmental item (NDI) solutions; and
       (B) provides for the award of the contract or contracts 
     concerned based on selection criteria that reflect the key 
     performance parameters and attributes identified in an Army-
     approved service requirements document.
       (d) Report Required.--Not later than 120 days after the 
     date of the enactment of this Act, Secretary of Defense shall 
     submit to the congressional defense committees a report on 
     the feasibility and advisability of each of the following:
       (1) The certification of a Joint Enhanced Carbine 
     requirement that does not require commonality with currently 
     fielded weapons.
       (2) Contracting for a nondevelopmental carbine in lieu of a 
     developmental program intended to meet the proposed Joint 
     Enhanced Carbine requirement.
       (3) The reprogramming of funds for the procurement of small 
     arms from the procurement of M4 carbines to the procurement 
     of Joint Enhanced Carbines authorized only as the result of 
     competition.
       (4) The use of rapid equipping authority to procure weapons 
     under $2,000 per unit that meet service-approved 
     requirements, with such weapons being nondevelopmental items 
     selected through full and open competition.
                                 ______
                                 
  SA 3071. Mr. REID proposed an amendment to the bill H.R. 976, to 
amend title XXI of the Social Security Act to reauthorize the State 
Children's Health Insurance Program, and for other purposes; as 
follows:

       At the end of the amendment add the following:
       This section shall take effect 3 days after date of 
     enactment.
                                 ______
                                 
  SA 3072. Mr. REID proposed an amendment to amendment SA 3071 proposed 
by Mr. Reid to the bill H.R. 976, to amend title XXI of the Social 
Security Act to reauthorize the State Children's Health Insurance 
Program, and for other purposes; as follows:

       In the amendment strike 3 and insert 1.
                                 ______
                                 
  SA 3073. Mr. REID (for Mr. Obama (for himself and Mr. Whitehouse)) 
submitted an amendment intended to be proposed to amendment SA 2011 
proposed by Mr. Nelson of Nebraska (for Mr. Levin) to the bill H.R. 
1585, to authorize appropriations for fiscal year 2008 for military 
activities of the Department of Defense, for military construction, and 
for defense activities of the Department of Energy, to prescribe 
military strengths for such fiscal year, and for other purposes; which 
was ordered to lie on the table; as follows:

       At the end of subtitle E of title VIII, add the following:

     SEC. 876. TRANSPARENCY AND ACCOUNTABILITY IN MILITARY AND 
                   SECURITY CONTRACTING.

       (a) Reports on Iraq and Afghanistan Contracts.--Not later 
     than 90 days after the date of the enactment of this Act, the 
     Secretary of Defense, the Secretary of State, the Secretary 
     of the Interior, the Administrator of the United States 
     Agency for International Development, and the Director of 
     National Intelligence shall each submit to Congress a report 
     that contains the information, current as of the date of the 
     enactment of this Act, as follows:
       (1) The number of persons performing work in Iraq and 
     Afghanistan under contracts (and subcontracts at any tier) 
     entered into by departments and agencies of the United States 
     Government, including the Department of Defense, the 
     Department of State, the Department of the Interior, and the 
     United States Agency for International Development, 
     respectively, and a brief description of the functions 
     performed by these persons.
       (2) The companies awarded such contracts and subcontracts.
       (3) The total cost of such contracts.
       (4) A method for tracking the number of persons who have 
     been killed or wounded in performing work under such 
     contracts.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that the Secretary of Defense, the Secretary of State, the 
     Secretary of the Interior, the Administrator of the United 
     States Agency for International Development, and the Director 
     of National Intelligence should make their best efforts to 
     compile the most accurate accounting of the number of 
     civilian contractors killed or wounded in Iraq and 
     Afghanistan since October 1, 2001.
       (c) Department of Defense Report on Strategy for and 
     Appropriateness of Activities of Contractors Under Department 
     of Defense Contracts in Iraq, Afghanistan, and the Global War 
     on Terror.--Not later than 180 days after the date of the 
     enactment of this Act, the Secretary of Defense shall submit 
     to Congress a report setting forth the strategy of the 
     Department of Defense for the use of, and a description of 
     the activities being carried out by, contractors and 
     subcontractors working in Iraq and Afghanistan in support of 
     Department missions in Iraq, Afghanistan, and the Global War 
     on Terror, including its strategy for ensuring that such 
     contracts do not--
       (1) have private companies and their employees performing 
     inherently governmental functions; or
       (2) place contractors in supervisory roles over United 
     States Government personnel.
                                 ______
                                 
  SA 3074. Mr. SPECTER (for himself and Mr. Casey) submitted an 
amendment intended to be proposed by him to the joint resolution H.J. 
Res. 52, making continuing appropriations for the fiscal year 2008, and 
for other purposes; which was ordered to lie on the table; as follows:

       At the end, add the following:

     SEC. ___. TWO-YEAR EXTENSION OF THE RECLASSIFICATION OF 
                   CERTAIN HOSPITALS UNDER THE MEDICARE PROGRAM.

       (a) Extension of Tax Relief and Health Care Act 
     Provision.--
       (1) In general.--Subsection (a) of section 106 of division 
     B of the Tax Relief and Health Care Act of 2006 (42 U.S.C. 
     1395 note) is amended by striking ``September 30, 2007'' and 
     inserting ``September 30, 2009''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect as if included in the enactment of such 
     section 106.
       (b) Extension of Special Exception Reclassifications.--
     Notwithstanding any other provision of law, in the case of a 
     subsection (d) hospital (as defined for purposes of section 
     1886 of the Social Security Act (42 U.S.C. 1395ww)) with 
     respect to which a special exception reclassification of its 
     wage index for purposes of such section (made under the 
     authority of subsection (d)(5)(I)(i) of such section and 
     contained in the final rule promulgated by the Secretary of 
     Health and Human Services in the Federal Register on August 
     11, 2004 (69 Fed. Reg. 49107)) would (but for this 
     subsection) expire on September 30, 2007, such special 
     exception reclassification of such hospital shall be extended 
     through September 30, 2009. The previous sentence shall not 
     be effected in a budget-neutral manner.
                                 ______
                                 
  SA 3075. Mr. BIDEN (for himself, Mr. Graham, Mr. Casey, Mr. Sanders, 
Mr. Brown, and Mrs. Lincoln) submitted an amendment intended to be 
proposed to amendment SA 2011 proposed by Mr. Nelson of Nebraska (for 
Mr. Levin) to the bill H.R. 1585, to authorize appropriations for 
fiscal year 2008 for military activities of the Department of Defense, 
for military construction, and for defense activities of the Department 
of Energy, to prescribe military personnel strengths for such fiscal 
year, and for other purposes; which was ordered to lie on the table; as 
follows:

       At the end of subtitle C of title XV, add the following:

     SEC. 1535. IMPROVISED EXPLOSIVE DEVICE PROTECTION FOR 
                   MILITARY VEHICLES.

       (a) Procurement of Additional Mine Resistant Ambush 
     Protected Vehicles.--
       (1) Additional amount for army other procurement.--The 
     amount authorized to be appropriated by section 1501(5) for 
     other procurement for the Army is hereby increased by 
     $23,600,000,000.
       (2) Availability for procurement of additional mrap 
     vehicles.--Of the amount authorized to be appropriated by 
     section 1501(5) for other procurement for the Army, as 
     increased by paragraph (1), $23,600,000,000 may be available 
     for the procurement of 15,200 Mine Resistant Ambush Protected 
     (MRAP) Vehicles.
       (b) Report.--Not later than 30 days after the date of the 
     enactment of this Act, and every 30 days thereafter until the 
     date that is two years after the date of the enactment of 
     this Act, the Secretary of Defense shall submit to the 
     congressional defense committees a report that includes the 
     following:
       (1) The current status of efforts to procure and deploy 
     Mine Resistant Ambush Protected vehicles, including the 
     following:
       (A) The number of such vehicles procured, and the number of 
     such vehicles deployed, as of the date of such report.
       (B) Current plans for increasing the procurement and 
     deployment of such vehicles.
       (C) For each on-going contract for the procurement of such 
     vehicles, the contract delivery target for such contract.

[[Page S12186]]

       (D) For each contract described in subparagraph (C), the 
     number of such vehicles delivered under such contract as of 
     the date of such report.
       (E) A description of the obstacles or problems, if any, 
     faced by current contractors for the delivery of such 
     vehicles and by the program for procurement and deployment of 
     such vehicles in general.
       (F) Any recommendations for legislative or administrative 
     action that the Secretary considers appropriate to accelerate 
     procurement and deployment of such vehicles.
       (G) Any recommendations, including recommendations for 
     additional legislative or administrative action, that the 
     Secretary considers appropriate to enhance non-vehicle 
     protection against improvised explosive devices for members 
     of the Armed Forces.
       (2) The status of current efforts to procure and deploy 
     explosively formed penetrator protection for vehicles, 
     including the following:
       (A) The amount of such protection procured, and the amount 
     of such protection deployed, as of the date of such report.
       (B) Current plans for increasing the procurement and 
     deployment of such protection.
       (C) For each on-going contract for the procurement of such 
     protection, the contract delivery target for such contract.
       (D) For each contract described in subparagraph (C), the 
     amount of such protection delivered under such contract as of 
     the date of such report.
       (E) A description of the obstacles or problems, if any, 
     faced by current contractors for the delivery of such 
     protection and by the program for procurement and deployment 
     of such protection in general.

                          ____________________