[Congressional Record Volume 154, Number 52 (Thursday, April 3, 2008)]
[Senate]
[Pages S2445-S2448]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ROCKEFELLER (for himself, Ms. Snowe, and Mr. Kennedy):
  S. 2819. A bill to preserve access to Medicaid and the State 
Children's Health Insurance Program during an economic downturn, and 
for other purposes; to the Committee on Finance.
  Mr. ROCKEFELLER. Mr. President, I rise today with my esteemed 
colleagues--Senator Olympia Snowe of Maine and Senator Edward Kennedy 
of Massachusetts--to introduce a timely and vital piece of legislation, 
the Economic Recovery in Health Care Act of 2008. This bill will 
preserve access to health care for our most vulnerable citizens during 
this time of economic uncertainty.
  Earlier this week, Federal Reserve Chairman Ben Bernanke confirmed 
what we have all long-suspected--that the U.S. economy could be headed 
for a protracted recession. The tell-tale warning signs of recession 
have been visible in the states for at least a full quarter now. 
According to the National Governors Association, the recent economic 
downturn has left 18 States with budget shortfalls totaling $14 million 
in 2008, and 21 States project shortfalls totaling more than $32 
million in 2009. If the current downturn follows the path of most 
recessions, between 35 and 40 States will face severe budget shortfalls 
in 2009.
  As a former Governor, who survived the tough times of the 1980s, I 
can attest to the enormous budget pressures States face when the 
economy slows. State revenues often evaporate rapidly during an 
economic downturn. Unlike the Federal Government, States cannot borrow 
infinite amounts of debt from China and other countries. By law, 49 
States--including West Virginia--are required to balance their budgets 
and, in times of economic downturn, this task becomes significantly 
more difficult.
  Some of my colleagues may be wondering why health care is such a big 
deal when we have all these other problems to worry about--the mortgage 
crisis, the credit crunch, and a weak dollar. Well, I would say to my 
colleagues that we don't have to look very far for an answer to this 
very question. As we saw during the economic downturn of 2001-2003, 
decreased access to health care coverage was a huge crisis for working 
families.
  There was a huge loss in private health care coverage. Data from the 
Center for Studying Health System Change indicates that the proportion 
of the under-65 population with employer-sponsored coverage fell from 
67 percent in 2001 to 63.4 percent in 2003. After adjusting for 
population growth, this means that nearly 9 million fewer people were 
covered by employer-sponsored health insurance during the recession 
than would have been the case if coverage rates remained unchanged.
  Medicaid also didn't fare very well during the last recession. It is 
consistently the first program slated for cuts during a state budget 
squeeze. According to the Kaiser Commission on Medicaid and the 
Uninsured, between fiscal years 2002 and 2005, the loss of revenue led 
all 50 States to reduce Medicaid provider payment rates and implement 
prescription drug cost controls, 38 States to reduce Medicaid 
eligibility and 34 States to reduce benefits.
  These cuts placed a huge burden on Medicaid providers and the working 
families who depend on Medicaid to meet their health care needs. While 
Congress did ultimately respond to the last economic downturn by 
providing $20 billion in State fiscal relief in 2003, and this relief 
went a long way to preserve health care coverage for millions of 
working families, we cannot discount the fact that one million low-
income people had already lost Medicaid coverage because we waited two 
years into the recession to act.
  In response to this current downturn, state legislatures are already 
beginning to limit access to Medicaid and CHIP in preparation for the 
harsh economic times ahead. According to the Center on Budget and 
Policy Priorities, at least 10 states have implemented or are 
considering budget cuts that will reduce access to Medicaid or CHIP for 
working families. For example, Nevada has capped the State's CHIP 
program

[[Page S2446]]

at its approximate current number of enrollees. As a result, hundreds 
of children will be denied coverage. California has proposed increasing 
co-payments and premiums for children enrolled in CHIP and reducing 
CHIP dental services. I want to remind my colleagues that it was only 1 
year ago that millions across the country mourned the death of 12-year-
old Deamonte Driver, whose lack of dental care led to fatal brain 
infection.
  At least four States are cutting or proposing to cut Medicaid 
services for the elderly or disabled, or significantly increasing the 
cost of these services. For example, Maine has proposed cuts that will 
remove 7,000 mentally ill and poor adults from Medicaid; and Rhode 
Island is requiring low-income elderly people to pay more for adult 
daycare.
  Several States have proposed reductions in or delayed payments to 
providers. For example, New Jersey has proposed a reduction in funding 
for hospital charity of 15 percent, which will impact hospitals' 
ability to care for some of the State's most vulnerable residents.
  There is no question that our States are in economic peril. However, 
children don't stop getting sick just because the economy slows. 
Seniors don't suddenly stop needing long-term care services simply 
because the economy slows. Instead, the need for access to Medicaid and 
CHIP grows during times of economic uncertainty, and we must act to 
ensure that Medicaid and CHIP coverage is available when families need 
it the most.
  The Economic Recovery in Health Care Act provides the timely, 
targeted, and temporary Federal response necessary to avoid a health 
care crisis during this current economic slowdown. Our legislation 
accomplishes this objective in two ways.
  First, our bill responds to the Medicaid administrative regulations 
recently proposed by the administration, which, if allowed to go into 
effect, would further aggravate the impact of the economic downturn on 
States and working families. The Congressional Budget Office estimates 
that these regulations would reduce Federal Medicaid matching payments 
by approximately $18 billion over 5 years and $42 billion over 10 
years. However, State reports to the House Oversight Committee indicate 
that the cost shift to States could be far greater.
  Now is a time when States need greater financial support from the 
Federal Government, not less financial support and more restrictions 
that make providing quality care to those most in need nearly 
impossible.
  Our bill will preserve access to Medicaid for seniors, pregnant 
women, individuals with disabilities, and children during the economic 
downturn by temporarily extending--through April 1, 2009--the Medicaid 
moratoria on payments to public providers, graduate medical education, 
school-based services, and rehabilitative services that Congress has 
already enacted. The Economic Recovery in Health Care Act would also 
preserve access to Medicaid by delaying--through April 1, 2009--
implementation of the following additional Medicaid regulations, which 
are already in effect or scheduled to go into effect in the near 
future: targeted case management, allowable provider taxes, outpatient 
clinic and hospital services, and the Departmental Appeals Board rule. 
Our bill would also preserve access to CHIP for low-income children by 
implementing a 1-year moratorium on the August 17 CHIP guidance.
  The second major component of our legislation is targeted State 
fiscal relief. Leading economists have found that targeted State aid 
would generate increased economic activity of $1.36 for each dollar of 
cost. Our legislation provides approximately $12 billion in targeted 
State fiscal relief, equally divided between an increase in Federal 
Medicaid matching payments and targeted grants to States.
  Unlike the State fiscal relief provided in 2003 and previous fiscal 
relief proposals offered this year, each State must meet certain 
criteria in order to qualify for an increase in federal matching 
payments and the targeted grants. The criteria would be based on the 
average of State ranks in unemployment, food stamp participation, and 
foreclosures. These three economic indicators closely align with State 
budget deficits and would allow us to more appropriately target State 
fiscal relief to the States with the most need.
  I urge my colleagues to strongly support this important legislation. 
Medicaid is a Federal-State partnership, and the Federal Government 
bears the primary responsibility for ensuring that the Federal 
guarantee of health benefits is not denied to eligible working 
families, particularly during an economic downturn. With all the 
worries that working American families are currently facing, they 
should not have to add health care to their growing list of concerns.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2819

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Economic Recovery in Health 
     Care Act of 2008''.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) State and local governments are an integral part of our 
     national economic engine. They provide health care and a 
     wealth of social services to millions of Americans, 
     particularly when the economy is weak.
       (2) During the last economic downturn, the number of 
     uninsured Americans would have been millions more if Medicaid 
     and the State Children's Health Insurance Program (CHIP) had 
     not responded to the twin challenges of an economic downturn 
     and a sharp drop-off in private health insurance coverage.
       (3) In the last year, our unemployment rate has increased 
     to 5.0 percent with nearly 900,000 more Americans without 
     jobs. Because the majority of Americans get their health 
     insurance through their jobs, the loss of a job often results 
     in a simultaneous loss of health insurance coverage.
       (4) Medicaid fills the gap for working families when they 
     lose access to private coverage. For every 1 percent increase 
     in the unemployment rate, Medicaid enrollment increases by 
     2,000,000 to 3,000,000 people.
       (5) States experience enormous budget pressures when the 
     economy slows. By law, 49 States are required to balance 
     their budgets and, in times of economic downturn, this task 
     becomes significantly more difficult.
       (6) According to the National Governors Association, 18 
     States already face budget shortfalls totaling 
     $14,000,000,000 in 2008, and 21 States project shortfalls 
     totaling more than $32,000,000,000 in 2009. If the current 
     downturn follows the path of most recessions, between 35 and 
     40 States will face severe budget shortfalls in 2009.
       (7) A critical factor in helping States sustain Medicaid 
     enrollment during the last economic downturn was the 
     $20,000,000,000 in State fiscal relief that Congress enacted 
     in 2003.
       (8) Not only should Congress enact a similar State fiscal 
     relief provision in 2008, but Congress should also delay the 
     implementation of administrative regulations that would 
     reduce Federal Medicaid matching payments at a time when 
     States need greater Federal resources.
       (9) There is no question that health care is economic 
     stimulus.
       (10) Keeping Medicaid and CHIP whole shores up the safety 
     net for vulnerable working families. People who are able to 
     get the health services they need are more likely to be able 
     to continue working and contribute to the economy as it 
     recovers.
       (11) Leading economists have found that targeted State aid 
     would generate increased economic activity of $1.36 for each 
     dollar of cost. The increase in Federal dollars to States 
     generates business activity, jobs, and wages that States 
     would not otherwise see.

     SEC. 3. PRESERVING ACCESS TO MEDICAID AND CHIP DURING AN 
                   ECONOMIC DOWNTURN.

       (a) Prohibition.--Effective on the date of enactment of 
     this Act, notwithstanding any other provision of law, the 
     Secretary of Health and Human Services shall not finalize, 
     implement, enforce, or otherwise take any action to give 
     effect to the following administrative actions (or to any 
     administrative actions relating to the same subject matters 
     that are similar to the following administrative actions or 
     that reflect the same or similar policies set forth in the 
     following administrative actions) prior to April 1, 2009:
       (1) The proposed and final rule entitled ``Medicaid 
     Program; Health-Care Related Taxes'', published, 
     respectively, on March 23, 2007, on pages 13726 through 13734 
     of volume 72, Federal Register, and on February 22, 2008, on 
     pages 9685 through 9699 of volume 73, Federal Register, with 
     the exception of the proposed amendments to sections 
     433.56(a)(8) and 433.68(f)(3)(i) of title 42, Code of Federal 
     Relations.
       (2) The proposed rule entitled ``Medicaid Program; Graduate 
     Medical Education'', published on May 23, 2007, on pages 
     28930 through 28936 of volume 72, Federal Register.
       (3) The State Health Official Letter 07-001, dated August 
     17, 2007, issued by the Director of the Center for Medicaid 
     and State Operations in the Centers for Medicare & Medicaid 
     Services regarding certain requirements under the State 
     Children's Health Insurance Program (CHIP) relating to the 
     prevention of the substitution of health benefits

[[Page S2447]]

     coverage for children (commonly referred to as ``crowd-out'') 
     and the enforcement of medical support orders. Any change 
     made on or after August 17, 2007, to a Medicaid or CHIP State 
     plan or waiver to implement, conform to, or otherwise adhere 
     to the requirements or policies in such letter shall not 
     apply prior to April 1, 2009.
       (4) The proposed rule entitled ``Medicaid Program; 
     Clarification of Outpatient Clinic and Hospital Facility 
     Services definition and Upper Payment Limit'', published on 
     September 28, 2007, on pages 55158 through 55166 of volume 
     72, Federal Register.
       (5) The interim final rule entitled ``Medicaid Program; 
     Optional State Plan Case Management Services'', published on 
     December 4, 2007, on pages 68077 through 68093 of volume 72, 
     Federal Register.
       (6) The proposed rule entitled ``Revisions to Procedures 
     for the Departmental Appeals Board and Other Departmental 
     Hearings'', published on December 28, 2007, on pages 73708 
     through 73720 of volume 72, Federal Register.
       (b) Extension of Prior Moratoria.--
       (1) Moratorium relating to the cost limit for providers 
     operated by units of government and provisions to ensure the 
     integrity of federal-state financial partnership.--Section 
     7002(a)(1) of the U.S. Troop Readiness, Veterans' Care, 
     Katrina Recovery, and Iraq Accountability Appropriations Act 
     of 2007 (Public Law 110-28) is amended by striking ``the date 
     that is 1 year after the date of enactment of this Act'' and 
     inserting ``April 1, 2009''.
       (2) Moratoria relating to rehabilitation services, school-
     based administration and school-based transportation.--
     Section 206 of the Medicare, Medicaid, and SCHIP Extension 
     Act of 2007 (Public Law 110-173) is amended by striking 
     ``June 30, 2008'' and inserting ``April 1, 2009''.

     SEC. 4. TEMPORARY, TARGETED STATE FISCAL RELIEF.

       (a) Definitions.--In this section:
       (1) Round one qualifying state.--
       (A) In general.--Subject to subparagraph (B), the term 
     ``Round One Qualifying State'' means with respect to a State 
     that is 1 of the 50 States or the District of Columbia, a 
     State that has 1 of 28 highest averages of the State rankings 
     for each of the following 3 qualifying criteria, based on the 
     most recent data available as of April 1, 2008:
       (i) Reduction in employment.--The year-to-year reduction in 
     total employment, based on the average total employment for 
     the State or District in the 3 most recent months compared to 
     the average total employment for the State or District in the 
     same months a year earlier, as determined based on the most 
     recent monthly publications of the Current Employer 
     Statistics Survey of the Bureau of Labor Statistics.
       (ii) Increase in food stamps participation.--The year-to-
     year increase in food stamps participation, based on average 
     monthly participation for the State or District in the 3 most 
     recent months compared to the average monthly participation 
     for the State or District in the same months a year earlier, 
     as determined based on the most recent monthly publications 
     of Food and Nutrition Service Data of the Department of 
     Agriculture.
       (iii) Increase in the foreclosure rate.--The year-to-year 
     increase in the foreclosure rate for the State or District, 
     based on the foreclosure rate for the State or District for 
     the most recent quarter compared to the same quarter a year 
     earlier, as determined by the Mortgage Bankers Association's 
     National Delinquency Survey, as published in most recent 
     report entitled, ``Recent Foreclosure Trends Report for all 
     States''.
       (B) Commonwealths and territories included.--Such term 
     includes a commonwealth or territory specified in paragraph 
     (4).
       (2) Round two qualifying state.--The term ``Round Two 
     Qualifying State'' means a State that is 1 of the 50 States 
     or the District of Columbia and that--
       (A) has 1 of 38 highest averages of the State rankings for 
     the 3 qualifying criteria identified in clauses (i), (ii), 
     and (iii) of paragraph (1)(A), based on the most recent data 
     available as of October 1, 2008; and
       (B) is not a Round One Qualifying State.
       (3) FMAP.--The term ``FMAP'' means the Federal medical 
     assistance percentage, as defined in section 1905(b) of the 
     Social Security Act (42 U.S.C. 1396d(b)).
       (4) State.--The term ``State'' means the 50 States, the 
     District of Columbia, the Commonwealth of Puerto Rico, the 
     United States Virgin Islands, Guam, the Commonwealth of the 
     Northern Mariana Islands, and American Samoa.
       (b) Assistance for Round One Qualifying States.--
       (1) Temporary increase of medicaid fmap.--
       (A) Permitting maintenance of fiscal year 2007 fmap for 
     last 2 calendar quarters of fiscal year 2008.--Subject to 
     subparagraphs (E), (F), (G), and (H), if the FMAP determined 
     without regard to this paragraph for a Round One Qualifying 
     State for fiscal year 2008 is less than the FMAP as so 
     determined for fiscal year 2007, the FMAP for the State for 
     fiscal year 2007 shall be substituted for the State's FMAP 
     for the third and fourth calendar quarters of fiscal year 
     2008, before the application of this paragraph.
       (B) Permitting maintenance of fiscal year 2008 fmap for 
     first 3 quarters of fiscal year 2009.--Subject to 
     subparagraphs (E), (F), (G), and (H), if the FMAP determined 
     without regard to this paragraph for a Round One Qualifying 
     State for fiscal year 2009 is less than the FMAP as so 
     determined for fiscal year 2008, the FMAP for the State for 
     fiscal year 2008 shall be substituted for the State's FMAP 
     for the first, second, and third calendar quarters of fiscal 
     year 2009, before the application of this paragraph.
       (C) General 1.667 percentage points increase for last 2 
     calendar quarters of fiscal year 2008 and first 3 calendar 
     quarters of fiscal year 2009.--Subject to subparagraphs (E), 
     (F), (G), and (H), for each Round One Qualifying State for 
     the third and fourth calendar quarters of fiscal year 2008 
     and for the first, second, and third calendar quarters of 
     fiscal year 2009, the FMAP (taking into account the 
     application of subparagraphs (A) and (B)) shall be increased 
     by 1.667 percentage points.
       (D) Increase in cap on medicaid payments to territories.--
     Subject to subparagraphs (E), (F), (G), and (H), with respect 
     to the third and fourth calendar quarters of fiscal year 2008 
     and the first, second, and third calendar quarters of fiscal 
     year 2009, the amounts otherwise determined for the 
     Commonwealth of Puerto Rico, the United States Virgin 
     Islands, Guam, the Commonwealth of the Northern Mariana 
     Islands, and American Samoa under subsections (f) and (g) of 
     section 1108 of the Social Security Act (42 U.S.C. 1308) 
     shall each be increased by an amount equal to 3.334 percent 
     of such amounts.
       (E) Scope of application.--The increases in the FMAP for a 
     Round One Qualifying State and the increases in the cap 
     amounts under subparagraph (D) under this paragraph shall 
     apply only for purposes of title XIX of the Social Security 
     Act and shall not apply with respect to--
       (i) disproportionate share hospital payments described in 
     section 1923 of such Act (42 U.S.C. 1396r-4);
       (ii) payments under title IV or XXI of such Act (42 U.S.C. 
     601 et seq. and 1397aa et seq.); or
       (iii) any payments under XIX of such Act that are based on 
     the enhanced FMAP described in section 2105(b) of such Act 
     (42 U.S.C. 1397ee(b)).
       (F) State eligibility.--
       (i) In general.--Subject to clause (ii), a Round One 
     Qualifying State is eligible for an increase in its FMAP 
     under subparagraph (C) or an increase in a cap amount under 
     subparagraph (D) only if the eligibility under its State plan 
     under title XIX of the Social Security Act (including any 
     waiver under such title or under section 1115 of such Act (42 
     U.S.C. 1315)) is no more restrictive than the eligibility 
     under such plan (or waiver) as in effect on December 31, 
     2007.
       (ii) State reinstatement of eligibility permitted.--A Round 
     One Qualifying State that has restricted eligibility under 
     its State plan under title XIX of the Social Security Act 
     (including any waiver under such title or under section 1115 
     of such Act (42 U.S.C. 1315)) after December 31, 2007, is 
     eligible for an increase in its FMAP under subparagraph (C) 
     or an increase in a cap amount under subparagraph (D) in the 
     first calendar quarter (and subsequent calendar quarters) in 
     which the State has reinstated eligibility that is no more 
     restrictive than the eligibility under such plan (or waiver) 
     as in effect on December 31, 2007.
       (iii) Rule of construction.--Nothing in clause (i) or (ii) 
     shall be construed as affecting a Round One Qualifying 
     State's flexibility with respect to benefits offered under 
     the State medicaid program under title XIX of the Social 
     Security Act (42 U.S.C. 1396 et seq.) (including any waiver 
     under such title or under section 1115 of such Act (42 U.S.C. 
     1315)).
       (G) Requirement for certain states.--In the case of a Round 
     One Qualifying State that requires political subdivisions 
     within the State to contribute toward the non-Federal share 
     of expenditures under the State Medicaid plan required under 
     section 1902(a)(2) of the Social Security Act (42 U.S.C. 
     1396a(a)(2)), the Round One Qualifying State shall not 
     require that such political subdivisions pay a greater 
     percentage of the non-Federal share of such expenditures for 
     the third and fourth calendar quarters of fiscal year 2008 
     and the first, second, and third calendar quarters of fiscal 
     year 2009, than the percentage that would have been required 
     by the State under such plan on December 31, 2007.
       (H) Requirements.--A Round One Qualifying State--
       (i) may not use the additional Federal funds paid to the 
     State as a result of this paragraph for purposes of 
     increasing any reserve or rainy day fund maintained by the 
     State; and
       (ii) shall expend the additional Federal funds paid to the 
     State as a result of this paragraph within 1 year of the date 
     on which the State receives such funds.
       (2) Targeted grants to round one qualifying states.--
       (A) Appropriation.--There is authorized to be appropriated 
     and is appropriated for making payments to Round One 
     Qualifying States under this paragraph--
       (i) $2,500,000,000 for fiscal year 2008; and
       (ii) $2,500,000,000 for fiscal year 2009.
       (B) Payments.--
       (i) Fiscal year 2008.--From the amount appropriated under 
     subparagraph (A)(i) for fiscal year 2008, the Secretary of 
     the Treasury shall, not later than the later of the date that 
     is 45 days after the date of enactment of

[[Page S2448]]

     this Act or the date that a Round One Qualifying State 
     provides the certification required by subparagraph (E) for 
     fiscal year 2008, pay each such State the amount determined 
     for the State for fiscal year 2008 under subparagraph (C).
       (ii) Fiscal year 2009.--From the amount appropriated under 
     subparagraph (A)(ii) for fiscal year 2009, the Secretary of 
     the Treasury shall, not later than the later of October 1, 
     2008, or the date that a Round One Qualifying State provides 
     the certification required by subparagraph (E) for fiscal 
     year 2009, pay each such State the amount determined for the 
     State for fiscal year 2009 under subparagraph (C).
       (C) Payments based on population.--
       (i) In general.--Subject to clause (ii), the amount 
     appropriated under subparagraph (A) for each of fiscal years 
     2008 and 2009 shall be used to pay each Round One Qualifying 
     State an amount equal to the relative population proportion 
     amount described in clause (iii) for such fiscal year.
       (ii) Minimum payment.--

       (I) In general.--No Round One Qualifying State shall 
     receive a payment under this paragraph for a fiscal year that 
     is less than--

       (aa) in the case of a Round One Qualifying State that is 1 
     of the 50 States or the District of Columbia, \1/2\ of 1 
     percent of the amount appropriated for such fiscal year under 
     subsection (a); and
       (bb) in the case of the Commonwealth of Puerto Rico, the 
     United States Virgin Islands, Guam, the Commonwealth of the 
     Northern Mariana Islands, or American Samoa, \1/10\ of 1 
     percent of the amount appropriated for such fiscal year under 
     subsection (a).

       (II) Pro rata adjustments.--The Secretary of the Treasury 
     shall adjust on a pro rata basis the amount of the payments 
     to Round One Qualifying States determined under this 
     paragraph without regard to this subclause to the extent 
     necessary to comply with the requirements of subclause (I).

       (iii) Relative population proportion amount.--The relative 
     population proportion amount described in this clause is the 
     product of--

       (I) the amount described in subparagraph (A) for a fiscal 
     year; and
       (II) the relative State population proportion (as defined 
     in clause (iv)).

       (iv) Relative state population proportion defined.--For 
     purposes of clause (iii)(II), the term ``relative State 
     population proportion'' means, with respect to a Round One 
     Qualifying State, the amount equal to the quotient of--

       (I) the population of the State (as reported in the most 
     recent decennial census); and
       (II) the total population of all such States (as reported 
     in the most recent decennial census).

       (D) Use of payment.--
       (i) In general.--Subject to clause (ii), a Round One 
     Qualifying State shall use the funds provided under a payment 
     made under this paragraph for a fiscal year to--

       (I) provide essential government services;
       (II) cover the costs to the State of complying with any 
     Federal intergovernmental mandate (as defined in section 
     421(5) of the Congressional Budget Act of 1974) to the extent 
     that the mandate applies to the State, and the Federal 
     Government has not provided funds to cover the costs; or
       (III) compensate for a decline in Federal funding to the 
     State.

       (ii) Requirements.--A Round One Qualifying State--

       (I) may only use funds provided under a payment made under 
     this paragraph for types of expenditures permitted under the 
     most recently approved budget for the State;
       (II) may not use the additional Federal funds paid to the 
     State as a result of this paragraph for purposes of 
     increasing any reserve or rainy day fund maintained by the 
     State; and
       (III) shall expend the additional Federal funds paid to the 
     State as a result of this paragraph within 1 year of the date 
     on which the State receives such funds.

       (E) Certification.--In order to receive a payment under 
     this section for a fiscal year, a Round One Qualifying State 
     shall provide the Secretary of the Treasury with a 
     certification that the State's proposed uses of the funds are 
     consistent with subparagraph (D).
       (c) Assistance for Round Two Qualifying States.--
       (1) Temporary increase of medicaid fmap.--
       (A) Permitting maintenance of fiscal year 2008 fmap for 
     first 3 quarters of fiscal year 2009.--Subject to 
     subparagraph (C), if the FMAP determined without regard to 
     this paragraph for a Round Two Qualifying State for fiscal 
     year 2009 is less than the FMAP as so determined for fiscal 
     year 2008, the FMAP for the State for fiscal year 2008 shall 
     be substituted for the State's FMAP for the first, second, 
     and third calendar quarters of fiscal year 2009, before the 
     application of this paragraph.
       (B) General 1.667 percentage points increase for first 3 
     calendar quarters of fiscal year 2009.--Subject to 
     subparagraph (C), for each Round Two Qualifying State for the 
     first, second, and third calendar quarters of fiscal year 
     2009, the FMAP (taking into account the application of 
     subparagraph (A)) shall be increased by 1.667 percentage 
     points.
       (C) Application of requirements for round one qualifying 
     states.--Subparagraphs (E), (F), (G), and (H) of subsection 
     (b)(1) apply to a Round Two Qualifying State receiving an 
     increase in its FMAP under subparagraph (B) in the same 
     manner as such subparagraphs apply to a Round One Qualifying 
     State under such subsection.
       (2) Targeted grants to round two qualifying states.--
       (A) Appropriation.--There is authorized to be appropriated 
     and is appropriated for making payments to Round Two 
     Qualifying States under this paragraph, $1,000,000,000 for 
     fiscal year 2009.
       (B) Payments.--From the amount appropriated under 
     subparagraph (A) for fiscal year 2009, the Secretary of the 
     Treasury shall, not later than the later of October 1, 2008, 
     or the date that a Round Two Qualifying State provides the 
     certification required by subparagraph (E) of subsection 
     (b)(2) for fiscal year 2009, pay each such State the amount 
     determined for the State for fiscal year 2009 under 
     subparagraph (C).
       (C) Payments based on population.--
       (i) In general.--Subject to clause (ii), the amount 
     appropriated under subparagraph (A) for fiscal year 2009 
     shall be used to pay each Round Two Qualifying State an 
     amount equal to the relative population proportion amount 
     described in clause (iii) for such fiscal year.
       (ii) Minimum payment.--

       (I) In general.--No Round Two Qualifying State shall 
     receive a payment under this paragraph for fiscal year 2009 
     that is less than \1/2\ of 1 percent of the amount 
     appropriated for such fiscal year under subsection (a).
       (II) Pro rata adjustments.--The Secretary of the Treasury 
     shall adjust on a pro rata basis the amount of the payments 
     to Round Two Qualifying States determined under this 
     paragraph without regard to this subclause to the extent 
     necessary to comply with the requirements of subclause (I).

       (iii) Relative population proportion amount.--The relative 
     population proportion amount described in this clause is the 
     product of--

       (I) the amount described in subparagraph (A) for a fiscal 
     year; and
       (II) the relative State population proportion (as defined 
     in clause (iv)).

       (iv) Relative state population proportion defined.--For 
     purposes of clause (iii)(II), the term ``relative State 
     population proportion'' means, with respect to a Round Two 
     Qualifying State, the amount equal to the quotient of--

       (I) the population of the State (as reported in the most 
     recent decennial census); and
       (II) the total population of all such States (as reported 
     in the most recent decennial census).

       (D) Application of requirements for round one qualifying 
     states.--Subparagraphs (D) and (E) of subsection (b)(2) apply 
     to a Round Two Qualifying State receiving a payment under 
     subparagraph (B) in the same manner as such subparagraphs 
     apply to a Round One Qualifying State under such subsection.
       (d) Repeal.--Effective as of October 1, 2009, this section 
     is repealed.
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