[Senate Report 108-157]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 295
108th Congress                                                   Report
                                 SENATE
 1st Session                                                    108-157
======================================================================
 
                     FAMILY OPPORTUNITY ACT OF 2003

                                _______
                                

  September 30 (legislative day, September 29), 2003.--Ordered to be 
                                printed

  Mr. Grassley, from the Committee on Finance, submitted the following

                              R E P O R T

                         [To accompany S. 622]

    The Committee on Finance, to which was referred the bill 
(S. 622) to amend title XIX of the Social Security Act to 
provide families of disabled children with the opportunity to 
purchase coverage under the Medicaid program for such children, 
and for other purposes, reports favorably thereon with an 
amendment in the nature of a substitute and refers the bill to 
the full Senate with a recommendation that the bill do pass.

                             I. BACKGROUND

    Health care research shows that children with significant 
disabilities face multiple barriers to accessing critical 
health care services. In their efforts to obtain high quality 
health care services for their child, parents with children 
with disabilities often face financial difficulties. Many are 
forced to stay impoverished, become impoverished, put their 
children in out of home placements, or simply give up custody 
of their children--so that their child can maintain eligibility 
for health coverage through Medicaid.
    Not all employer sponsored health plans or State Children's 
Health Insurance Programs (S-CHIP) cover essential services 
that children with severe disabilities need to maintain their 
health status or to prevent deterioration of their health 
status. Medicaid often provides access to more comprehensive 
services, including respite care, day treatment services, 
mental health services, personal care services, and durable 
medical equipment.
    In a health care survey of 20 States, families with special 
needs children report they are turning down jobs, turning down 
raises, refusing overtime, and are unable to save money for the 
future of their children and family--so that they can stay in 
an income bracket low enough to qualify their child for SSI 
and/or Medicaid.
    The committee bill is intended to address the two greatest 
barriers preventing families from staying together and staying 
employed: (1) Lack of access to appropriate health care 
services, and (2) lack of access to information and resources 
to help parents navigate the system.
    The sponsors of the Family Opportunity Act first introduced 
the legislation in the second session of the 106th Congress. 
The bill had wide bi-partisan support in both the House and 
Senate. By the close of the 106th Congress, the House bill, 
sponsored by Representatives Pete Sessions (R-TX) and Henry 
Waxman (D-CA), had 142 co-sponsors and the Senate bill, 
sponsored by Senators Chuck Grassley (R-IA) and Edward Kennedy 
(D-MA), had 77 co-sponsors.
    The introduction of the Family Opportunity Act (also called 
the ``Dylan Lee James Family Opportunity Act'') was motivated 
by the circumstance of individual families--the Melissa Arnold 
family and the Dylan Lee James family. Both families relied on 
Medicaid health services for their child with disabilities, and 
both families risked losing eligibility to Medicaid as a result 
of financial eligibility rules that created disincentives for 
the parents to work and/or to seek better employment 
opportunities. Sadly, Dylan Lee James, who suffered from Downs 
Syndrome, died at young age from complications.
    The FY 2001 Budget Resolution included a reserve fund for 
the Family Opportunity Act, and on July 12, 2000, the Senate 
Budget Committee held a hearing to examine the Family 
Opportunity Act. The nature of the hearing was to highlight the 
need for the Family Opportunity Act. The first panel of 
witnesses consisted of three elected representatives, including 
Senator Edward Kennedy (D-MA), Governor Mike Huckabee (R-AR), 
and Representative Pete Sessions (R-TX). The second panel 
consisted of health experts and family members, including 
William Scanlon, Ph.D., Director of Health, Education, and 
Human Services at the General Accounting Office in Washington, 
D.C.; Gordon Fay, a staff sergeant in the U.S. Air Force and a 
parent of a 9-year-old daughter with Angelman's Syndrome; 
Rebecca Eichorn, a parent of a teenager with mental health 
needs from Newberg, Oregon; Tanya Baker-McCue, a parent of a 
teenager with cystic fibrosis from Albuquerque, New Mexico; and 
Dr. David Alexander, medical director of Raymond Blank 
Children's Hospital in Des Moines, Iowa.
    The sponsors re-introduced the Family Opportunity Act in 
the 107th Congress and again achieved broad bi-partisan 
support. It was voice voted out of the Finance Committee. The 
House bill, H.R. 600, had 236 co-sponsors and the Senate bill, 
S. 321, had 75 co-sponsors.
    At the time of the Finance Committee mark up of the Family 
Opportunity Act in 108th Congress, there were 63 co-sponsors of 
the Senate bill, S. 622.
    For 3 consecutive years, the sponsors of the legislation 
have secured support from congressional budget committees. The 
FY 2003 Congressional Budget Resolution includes a $7.46 
billion budget reserve fund for the Family Opportunity Act 
legislation.

                      II. DESCRIPTION OF THE BILL

    The legislation reported by the Finance Committee consists 
of the following provisions:

Section 1. Short title

Section 2. Opportunity for families of disabled children to purchase 
        medicaid coverage for such children

                              PRESENT LAW

    (a) State Option To Allow Families of Disabled Children To 
Purchase Medicaid Coverage for Such Children.--Federal law 
establishes the categories or groups of individuals that can be 
covered under Medicaid and, in many cases, defines specific 
eligibility rules for these categories. Some groups must be 
covered under Medicaid (called mandatory groups), while others 
may be covered at state option. In general, Medicaid is 
available to low-income persons who are aged, blind or 
disabled, members of families with dependent children, and 
certain other pregnant women and children. Applicants' income 
and resources must be within certain limits, most of which are 
determined by States, again within Federal statutory 
parameters. States have considerable flexibility in defining 
countable income and assets for determining eligibility.
    For disabled children, there are several potentially 
applicable Medicaid eligibility groups, some mandatory but most 
optional. Some of these children could qualify for Medicaid 
through more than one pathway in any given State. There are 
four primary coverage groups for which disability status or 
medical need is directly related to eligibility.
    First, subject to one important exception, States are 
required to cover all children receiving Supplemental Security 
Income (SSI). Because SSI is a Federal program, income and 
resource standards do not vary by . In determining financial 
eligibility, parents' income is deemed available to 
noninstitutionalized children (but the need of household 
members is taken into account). If family income is higher than 
the SSI threshold, the child will not qualify for SSI or 
Medicaid.
    The major exception to the required coverage under Medicaid 
of SSI recipients occurs in so called ``209(b)'' States. Such 
states can apply more restrictive income and resources 
standards and/or methodologies in determining Medicaid 
eligibility than the standards applicable under SSI. States 
that offer State Supplemental Payments (SSP) may also offer 
Medicaid coverage to SSP recipients who would be eligible for 
SSI, except that their income is too high.
    Second, States may offer medically needy coverage under 
Medicaid. The medically needy are persons who fall into one of 
the other categories of eligibility (e.g., is a dependent 
child) but whose income exceeds applicable financial standards. 
Income standards for the medically needy can be no higher than 
133\1/3\ percent of the State's former Aid to Families with 
Dependent Children (AFDC) payment standard in effect on July 
16, 1996. Individuals can meet these financial criteria by 
having income that falls below the medically needy standard, or 
by incurring medical expenses that when subtracted from income, 
result in an amount that is lower than the medically needy 
income standard. Resource standards correspond to those 
applicable under SSI. Older children or those with very large 
medical expenses may qualify for medically needy coverage. 
(Other eligibility pathways for younger children are described 
below.)
    Third, States may extend Medicaid to certain disabled 
children under 18 who are living at home and who would be 
eligible for Medicaid via the SSI pathway if they were in a 
hospital, nursing facility, or intermediate care facility for 
the mentally retarded, as long as the cost of care at home is 
no more than institutional care. (This group is called the 
``Katie Beckett'' category.) The law allows States to consider 
only the child's income and resources when determining 
eligibility for this group. That is, States may ignore parents' 
income.
    Fourth, States have an option to cover persons needing home 
and community based services, if these persons would otherwise 
require institutional care covered by Medicaid. These services 
are provided under waiver programs authorized by Section 
1915(c) of Title XIX of the Social Security Act. Unlike the 
Katie Beckett option, which requires all disabled children 
within a State to be covered, such programs may be limited to 
specific geographic areas, and/or may target specific disabled 
groups and/or specific individuals within a group. States may 
apply institutional deeming rules which allow them to ignore 
parents' income in determining a child's eligibility for waiver 
services.
    Disabled children can also qualify for Medicaid via other 
eligibility pathways for which disability status and medical 
need are irrelevant. These additional pathways cover children 
at higher income levels than those applicable to most of the 
disability-related eligibility categories described above. For 
example, States are required to provide Medicaid coverage to 
children under age 6 (and pregnant women) in families with 
incomes below 133 percent of the Federal poverty level (FPL), 
and in FY2002, for children between ages 6 and 18 in families 
with income below 100 percent of FPL. States may cover infants 
under age one (and pregnant women) in families with income 
between 133 and 185 percent of FPL. Similarly, under the State 
Children's Health Insurance Program (SCHIP), States may extend 
Medicaid (or provide other health insurance) to certain 
children under age 19 who are not otherwise eligible for 
Medicaid in families with income that is above the applicable 
Medicaid standard but less than 200 percent of FPL, or in 
States that already exceed the 200 percent of FPL level for 
Medicaid children, within 50 percentage points over that 
existing level.
    (b) Interaction With Employer Sponsored Family Coverage.--
States may require Medicaid eligibles to apply for coverage in 
certain employer-sponsored group health plans (for which such 
persons are eligible) when it is cost-effective to do so. This 
requirement may be imposed as a condition of continuing 
Medicaid eligibility, except that failure of a parent to enroll 
a child must not affect the child's continuing eligibility for 
Medicaid.
    If all members of the family are not eligible for Medicaid, 
and the group health plan requires enrollment of the entire 
family, Medicaid will pay associated premiums for full family 
coverage if doing so is cost-effective. However, Medicaid will 
not pay deductibles, coinsurance or other cost-sharing for 
family members ineligible for Medicaid. Third, party liability 
rules apply to coverage in a group health plan. That is, such 
plans, not Medicaid, must pay for all covered services under 
the plan.
    Under current law, cost-effectiveness means that the 
reduction in Medicaid expenditures for Medicaid beneficiaries 
enrolled in a group health plan is likely to be greater than 
the additional costs for premiums and cost-sharing required 
under the group health plan. Group health plan means a plan of 
(or contributed to by) an employer or employee organization to 
provide health care (directly or otherwise) for employees and 
their families.
    In sum, when it is cost-effective, Medicaid pays the 
premiums and other cost-sharing under certain group health 
plans for Medicaid eligibles, as well as for Medicaid services 
not covered under the group health plan. This includes payment 
of any premium and cost-sharing amounts that exceed limits 
placed on such payments in Medicaid law.
    (c) State Option To Impose Income-Related Premiums.--
Generally, for certain eligibility categories, States may not 
impose enrollment fees, premiums or similar charges. Further, 
States are specifically prohibited from requiring payment of 
deductions, cost-sharing or similar charges for services 
furnished to persons under 18 years of age (up to age 21, or 
any reasonable subcategory of such persons between 18 and 21 
years of age, at State option).
    In certain circumstances, States may impose monthly 
premiums for enrollment in Medicaid. For example, States may 
require certain qualified severely impaired persons ages 16 and 
above who but for earnings would be eligible for SSI to pay 
premiums and other cost-sharing charges set on a sliding scale 
based on income. Further, States may require such persons with 
income between 250 to 450 percent of FPL to pay the full 
premium. However, the sum of such payments may not exceed 7.5 
percent of income.
    For other groups, States may not require prepayment of 
premiums and may not terminate eligibility due to failure to 
pay premiums, unless such failure continues for at least 60 
days. States can also waive premiums when such payments would 
cause undue hardship.

                        EXPLANATION OF PROVISION

    (a) Effective October 1, 2005, the Committee mark would add 
a new optional eligibility group for disabled children to 
Medicaid. The new group includes children under 18 years of age 
who meet the disability definition for children under the 
Supplemental Security Income (SSI) program and whose family 
income is above the financial standards for SSI but not more 
than 250 percent of FPL. States may exceed 250 percent of FPL, 
but Federal financial participation is not available for 
coverage of disabled children in families with income above 
that level.
    (b) As part of the optional Medicaid ``buy-in,'' the 
Committee mark would allow States to require parents of 
disabled children who are eligible for the newly defined 
coverage group to enroll in employer-sponsored family coverage 
under certain circumstances. Specifically, when the employer of 
a parent of a disabled child offers family coverage under a 
group health plan, the parent is eligible for such coverage, 
and the employer contributes at least 50 percent of the annual 
premium costs, States shall require participation in such 
employer-sponsored family coverage plan as a condition of 
continuing Medicaid eligibility for the targeted child under 
the proposed optional eligibility category. In addition, if 
such coverage is obtained, States may elect to have families 
pay an amount that reasonably reflects the premium contribution 
made by the parent for this coverage on behalf of the disabled 
child. States may pay any portion of a required premium for 
family coverage under an employer-sponsored plan; for families 
with income that does not exceed 250 percent of FPL, the 
Federal Government will share in the cost of these payments.
    In addition, States that use employer-sponsored family 
coverage for the new optional eligibility group must insure 
that these plans, not Medicaid, pay for all covered services 
under the plan, as is the case with all other third party 
liability situations.
    (c) The Committee mark also adds a new section to Medicaid 
law governing premiums applicable to the new optional 
eligibility group. It would allow States to require families 
with disabled children eligible for Medicaid under the new 
optional eligibility group to pay monthly premiums for 
enrollment in Medicaid on a sliding scale based on family 
income. Aggregate payments for premiums paid by families for 
employer-sponsored family coverage may not exceed 5 percent of 
income.
    Consistent with current law, States may not require 
prepayment of premiums, nor are States allowed to terminate 
eligibility of a targeted child for failure to pay premiums 
unless lack of payment continues for a minimum of 60 days 
beyond the payment due date. States may waive payment of 
premiums when such payment would cause undue hardship.
    The mark does not change current law with respect to other 
cost-sharing by beneficiaries (e.g., deductibles, co-insurance, 
co-payments), which is not permitted for children under 18 
years of age. Thus, Medicaid would pay such cost sharing 
obligations rather than the families of qualifying children 
under the new optional group.

                           REASONS FOR CHANGE

    The provisions in Section 2 of the Committee mark provide 
similar work incentives as those included in the successful 
Ticket to Work and Work Incentives Improvement Act (TWWIIA; 
P.L. 106-170), which encouraged disabled adults to enter the 
workforce without risk of losing their Medicare (Part A only) 
and Medicaid benefits.
    Before P.L. 106-170 took effect, adults who made more than 
$500 a month lost SSI eligibility and therefore became 
ineligible for Medicaid. As a result, many adults with 
disabilities were reluctant to enter into the workforce and 
purposely kept their incomes under the cap to remain eligible 
for Medicaid via the SSI pathway. TWWIIA reversed the 
disincentive to work by allowing these adults to enter the 
workforce without the threat of losing the health care they 
needed.
    Parents of children with disabilities should have the same 
opportunities as was granted to adults with disabilities 
TWWIIA. The provisions in Section 2 of the Committee mark 
provide a similar incentive to work for parents of a disabled 
child. Currently, low-income parents of severely disabled 
children who work are at risk of jeopardizing Medicaid 
eligibility for their disabled children if they have income and 
resources above the poverty level. The Committee mark allows 
parents to go to work and earn above-poverty wages while 
maintaining health care for their disabled children by 
purchasing Medicaid. Right now, in too many cases, parents are 
forced to stay poor so that they can maintain Medicaid 
eligibility for a disabled child. Specifically, by providing 
States an option to allow families with disabled children to 
``buy into'' Medicaid if the family income falls between 100 
and 250 percent of the Federal poverty level ($37,550 for a 
family of three and $45,250 for a family of four), parents can 
go back to work and increase wages without worrying about 
losing access to critical health care services for their 
disabled child. In short, parents won't have to choose between 
work and health care for their child.
    Medicaid services are important to children with 
disabilities because Medicaid offers access to medically 
necessary services such as physical therapy, mental health 
services, and customized durable medical equipment, to list a 
few. Many children with severe disabilities need these services 
in order to have a chance to grow and develop into contributing 
members of their community.
    Children with significant disabilities who come from 
families that have an annual income above the eligibility level 
for Medicaid are at risk of not receiving these medically 
necessary services unless their parents choose to remain in 
poverty or to move into poverty in order to keep Medicaid.
    The provisions in Section 2 regarding employer-sponsored 
insurance are intended to promote the take-up and utilization 
of private market insurance. For instance, a participating 
family could have private insurance through an employer and 
still need to purchase certain Medicaid services that aren't 
offered through the private plan. In this case, Medicaid serves 
as a ``wrap around'' only--meaning that if a parent has access 
to employer-sponsored insurance (ESI), the ESI coverage would 
pay first and Medicaid would cover only the cost of the 
benefits not available through the employer's plan.
    The Committee mark only provides access to Medicaid for 
children with a severe disability. The child must meet the 
level of disability required for SSI. The legislation does not 
make SSI available to additional children; the legislation 
references SSI for purposes of disability criteria.
    To be disabled under SSI, a child under age 18 must have a 
``medically determinable physical or mental impairment which 
results in marked and severe functional limitations, and which 
can be expected to result in death or which has lasted or can 
be expected to last for a continuous period of not less than 12 
months.'' Depending on the determination process, an example of 
a child who qualifies could be a child with one of the 
following disabilities or chronic conditions: cerebral palsy, 
blindness, neurologic impairments (spina bifida), 
musculoskeletal (juvenile rheumatoid arthritis or muscular 
dystrophy) incapacity, Downs Syndrome, Autism, or pervasive 
developmental disorder.

Section 3. Treatment of inpatient psychiatric hospital services for 
        individuals under 21 in home or community-based services 
        waivers

    (a) Medicaid.--

                              PRESENT LAW

    Medicaid home and community-based service (HCBS) waivers 
authorized by Section 1915(c) of Title XIX of the Social 
Security Act give States the flexibility to develop and 
implement alternatives to placing Medicaid beneficiaries in 
hospitals, nursing facilities, or intermediate care facilities 
for the mentally retarded (ICF-MRs). These waivers allow such 
individuals to be cared for in their homes and communities as 
long as the cost is no higher than that of institutional care.
    Federal regulations permit HCBS programs to serve the 
elderly, persons with physical disabilities, developmental 
disabilities, mental retardation or mental illness. States may 
also target waiver programs to persons with specific illnesses 
or conditions, such as technology-dependent children or 
individuals with AIDS.
    Services that may be provided under HCBS waiver programs 
include: case management, homemaker/home health aide services, 
personal care services, adult day health, habilitation, and 
respite care. Other services needed by waiver participants to 
avoid institutionalization, such as non-medical transportation, 
in-home support services, special communication services, minor 
home modifications, and adult day care may also be provided, 
subject to approval by Centers for Medicare and Medicaid 
Services (CMS). The law further permits day treatment or other 
partial hospitalization services, psychosocial rehabilitation, 
and clinic services for persons with chronic mental illness. 
Room and board are excluded from coverage except under limited 
circumstances.
    Under HCBS wavier programs, States may select the mix of 
services that best meets the needs of the targeted population 
to be served. Programs may be Statewide or limited to a 
specific geographic area.

                        EXPLANATION OF PROVISION

    The Committee mark adds to the list of persons eligible for 
HCBS waiver programs individuals under 21 years of age 
requiring inpatient psychiatric hospital services, effective 
for medical assistance provided on or after October 1, 2004.

                           REASON FOR CHANGE

    Home and community services are an attractive option to 
disabled and elderly individuals who prefer to receive services 
in the home or community as an alternative to institutional 
care. Additionally, many States design HCBS services as a cost-
effective approach to providing long term care health services. 
It is often less costly to provide targeted home and community 
services than it is to cover institutional care. At the present 
time, States are operating nearly 264 home and community based 
waivers.
    The provisions in Section 3(a) of the Committee mark aim to 
improve mental health parity for children with mental health 
illnesses. Under current law, States can offer home and 
community based services as an alternative to one of three 
institutional settings, including (1) hospitals, (2) nursing 
facilities, or (3) intermediate care facilities for the 
mentally retarded (ICFMRs). Current law does not allow States 
to offer home and community based services as an alternative to 
inpatient psychiatric hospitals.
    This provision corrects this omission by including 
inpatient psychiatric hospitals to the list of institutions for 
which alternative care through home and community based waivers 
may be available.
    Unfortunately, some parents have been faced with the 
impossible decision of relinquishing custody of a child to a 
State institution so that the child can get necessary, life-
saving services. This problem presents itself most often when 
the child suffers from a mental health illness. Medical and 
health care experts report on the benefits and effectiveness of 
community based care for children with serious mental health 
disorders. Residential treatments centers offer an important 
alternative to psychiatric hospitals. Improving access to 
community-based mental health services for children with 
serious mental health needs should lead to improved health 
outcomes in mental health.

Section 4. Development and support of family-to-family health 
        information centers

    (a) Maternal and Child Services Block Grant.--

                              PRESENT LAW

    Title V of the Social Security Act authorizes the Maternal 
and Child Services Block Grant program, which provides grants 
to States for improving the health of mothers and children. The 
program has three components: (1) Formula block grants to 59 
States and territories; (2) Special Projects of Regional and 
National Significance (SPRANS); and (3) Community Integrated 
Service Systems (CISS) grants.
    Activities supported under SPRANS include Maternal and 
Child Health (MCH) research, training, genetic services, 
hemophilia diagnostic and treatment centers and maternal and 
child health improvement projects that support a broad range of 
innovative strategies.
    By law, 15 percent of the amount appropriated for the 
Maternal and Child Health Block Grant Program up to $600 
million, is awarded to public and private not-for-profit 
organizations for SPRANS. SPRANS also receive 15 percent of 
funds remaining above $600 million after CISS funds are set 
aside. The CISS programs are initiated when the MCH 
appropriation exceeds $600 million. Of any amount appropriated 
over $600 million, 12.75 percent must be for CISS. The 
remaining amounts are allocated to the block grant program and 
to SPRANS.

                        EXPLANATION OF PROVISION

    The Committee mark would increase funding for SPRANS for 
the development and support of new family-to-family health 
information centers. The mark would appropriate to the 
Secretary out of any money in the Treasury not otherwise 
appropriated, for this new purpose an additional $3 million for 
FY2005; $4 million for FY2006; and $5 million for FY2007. For 
each of fiscal years 2008 and 2009, the bill authorizes to be 
appropriated to the Secretary $5 million for this purpose. 
Funds would remain available until expended.
    The family-to-family health information centers would: (1) 
Assist families of children with disabilities or special health 
care needs to make informed choices about health care so as to 
promote good treatment decisions, cost-effectiveness, and 
improved health outcomes for such children; (2) provide 
information regarding the health care needs of, and resources 
available for children with disabilities or special health care 
needs; (3) identify successful health delivery models; (4) 
develop a model for collaboration between such children and 
health professionals; (5) provide training and guidance with 
regard to the care of such children; and (6) conduct outreach 
activities to the families of such children, health 
professionals, schools, and other appropriate entities and 
individuals. The family-to-family health information centers 
would be staffed by families of children with disabilities or 
special health care needs who have expertise in Federal and 
State public and private health care systems, and health 
professionals.
    The Committee mark would require the Secretary to develop 
such centers in: (1) Not less than 25 States in FY2005; (2) not 
less than 40 States in FY2006; and (3) all States in FY2007. 
States would be defined as the 50 States and the District of 
Columbia.

                           REASON FOR CHANGE

    The family-to-family health information centers authorized 
by this provision are modeled after successful demonstration 
programs that provide important information and outreach 
centers for parents with disabled children. The complexity of 
the health care system poses challenges to even the most 
informed parent. Health information centers can guide and 
assist a parent through the maze and promote efficiency. 
Families report that they spend extraordinary amounts of time 
and energy investigating resources and coordinating their 
child's care.
    Family to family health information centers would be run by 
trained parents and professionals and would provide technical 
assistance and accurate information to otherfamilies about 
local health care programs and services. For instance, a mother of a 
newborn infant with serious medical problems could turn to one of these 
centers for guidance, such as information about local doctors who 
specialize in certain disease management, information about parent 
training courses, information about day care centers in the area that 
care for disabled infants, etc.
    The family-to-family health information centers will not 
only assist parents, but they will also provide information to 
health care insurers, providers, and purchasers. The successful 
demonstrations of these centers are proof that the medical and 
provider community rely on family members for their expertise 
in certain decision-making.

Section 5. Restoration of Medicaid eligibility for certain SSI 
        beneficiaries

    (a) Medicaid.--

                              PRESENT LAW

    Except in the case of ``209(b)'' States, States are 
required to provide Medicaid benefits to all individuals who 
are receiving Supplemental Security Income (SSI). Persons 
eligible for SSI are low-income aged, blind, and disabled 
individuals. (Under the 209(b) provision, States may apply more 
restrictive income and resources standards and/or methodologies 
for determining Medicaid eligibility than the standards under 
SSI.) For disability purposes, two groups of disabled children 
exist: Those under the age of 18 and those age 18 through 21 
(if a full time student). Eligibility for SSI is effective on 
the later of: (1) The first day of the month following the date 
the application was filed, or (2) the first day of the month 
following the date that the individual became eligible.

                        EXPLANATION OF PROVISION

    The Committee mark confers Medicaid eligibility to persons 
who are under age 21 and who are eligible for SSI, effective on 
the later of: (1) The date the application was filed, or (2) 
the date the individual became eligible for SSI.
    The Committee's provision would apply to medical assistance 
for items and services furnished on October 1, 2004.

                           REASON FOR CHANGE

    This provision addresses a technical matter that resulted 
inadvertently in previous legislation. It addresses the 
interaction between Medicaid and SSI. Most States are required 
to make Medicaid available to persons receiving SSI. Persons 
eligible for SSI are low-income, AND aged, blind, or disabled.
    Eligibility for SSI is effective on the first day of the 
month following the date the individual was determined 
eligible. Medicaid for SSI eligible individuals would therefore 
also become available on the first day of the month following 
the date the individual was determined eligible for SSI.
    An example can help to clarify: A woman has a child on 
December 3; the child is born with a disabling condition and is 
placed in a neonatal intensive care unit for 6 weeks. On 
December 4, the child's mother applies for SSI with the help of 
a hospital aide. SSI is established for the child based on the 
disability that exists on December 4. Due to the administration 
of the program, SSI would not begin until January 1, and 
therefore Medicaid would begin on Jan. 1. Under this example, 
28 days of hospital bills will likely go unpaid by the family. 
The hospital would assume the costs.
    This provision removes the arbitrary ``first date of the 
following month'' rule as it applies to Medicaid without 
changing SSI in any way. This provision allows Medicaid 
coverage to apply upon the date that SSI disability 
determination is made--which is December 4 in example above.
    This provision will assist low-income families as well as 
hospitals.
    States who are considered to be 209(b) States have more 
restrictive policies and therefore this provision does not 
apply to those States.

          III. REGULATORY IMPACT STATEMENT AND RELATED MATTERS


                          A. Regulatory Impact

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
statement concerning the regulatory impact of the Family 
Opportunity Act of 2002.

                  IMPACT ON INDIVIDUALS AND BUSINESSES

    The bill as reported would expand eligibility and benefits 
for children with disabilities under the Medicaid program. The 
mark would give States the option of providing coverage to 
certain children who meet the disability standard used in the 
Supplemental Security Income program but are ineligible for SSI 
because they do not meet that program's income or asset 
requirements. The bill would also allow States to provide home 
and community-based services to individuals under age 21 who 
need inpatient psychiatric hospital services, and would extend 
eligibility to SSI recipients under age 21 during the month 
that they apply for SSI benefits
    Specifically, Section 2(a) creates a State option to allow 
families of disabled children to purchase Medicaid coverage. 
Section 3(a) expands authority under Medicaid for the 
development of 1915(c) waivers, also known as home and 
community-based waivers. Section 4(a) provides increased 
funding under Title V of the Social Security Act for the 
development of new family-to-family health information centers. 
None of the aforementioned provisions poses a mandate on 
States; each provision provides new options for States to 
consider. If a State takes up an option, the program would be 
utilized on a voluntary basis by disabled children and their 
families. Therefore, no provision imposes any additional 
paperwork or regulatory burdens on State governments or 
individuals.
    Section 2(b) includes a provision that requires States to 
require participating parents to take up employer-sponsored 
coverage if the parent of a disabled child is offered family 
coverage under a group health plan and the employer contributes 
at least 50 percent of the annual premium costs. This 
requirement is a condition of eligibility for the participating 
parent; however, since the requirement only applies to parents 
who are offered employer-sponsored coverage, it is implicit 
that the employer is already offering employer-sponsored 
coverage to employees. Therefore, this provision does not 
impose any additional paperwork or regulatory burden on 
businesses.
    Section 2(c) establishes a new section to Medicaid law 
governing premiums applicable to the new optional eligibility 
group. It would allow States to require families with disabled 
children eligible for Medicaid under the new optional 
eligibility group to pay monthly premiums for enrollment in 
Medicaid on a sliding scale based on family income. Aggregate 
payments for premiums paid by families for employer-sponsored 
family coverage may not exceed 5 percent of income. Because 
participation in the program is voluntary, no individual is 
subject to this provision unless one opts to participate.
    Section 5(a) addresses a technical correction in Medicaid 
by conferring Medicaid and SSI eligibility to persons under age 
21 and who are eligible for SSI. This provision does not impose 
additional paperwork or regulatory burdens on businesses or 
individuals.

                       IMPACT ON PERSONAL PRIVACY

    The Committee mark permits States to provide new pathways 
for Medicaid eligibility to children with disabilities who are 
not presently eligible. To establish eligibility for coverage 
in States that take up a new option, parents of children with 
disabilities may be required to provide information regarding 
their income, their assets, and their medical condition, but 
they would not be required to provide any more information than 
presently eligible parents must provide.

                     B. Unfunded Mandates Statement

    According to the Congressional Budget Office, the bill as 
reported contains no intergovernmental or private sector 
mandates as defined by the Unfunded Mandates Reform Act (UMRA).

                           IV. BUDGET EFFECTS

    In total, the Congressional Budget Office estimates that 
enacting the bill as reported would increase mandatory spending 
(primarily for expanded Medicaid assistance) by $0 in 2004 and 
by $7.03 billion over the 2004-2013 period. CBO also estimates 
that appropriation of the authorized amounts for the health 
information centers would cost $10 million over the 2005-2010 
period. CBO estimates that total State spending for Medicaid 
would increase by $5.5 billion over the 2004-2013 period and 
that State spending for the State Children's Health Insurance 
Program (SCHIP) would decrease by $110 million over the same 
period.
    Following is the Congressional Budget Office's full 
statement on this bill:

S. 622--Family Opportunity Act of 2003

    Summary: S. 622 would expand eligibility and benefits for 
disabled children under the Medicaid program. The bill would 
give states the option of providing coverage to certain 
children who meet the disability standard used in the 
Supplemental Security Income (SSI) program but are ineligible 
for SSI because they do not meet that program's income or asset 
requirements. The bill also would allow states to provide home 
and community-based services to individuals under age 21 who 
need inpatient psychiatric hospital services, and would extend 
eligibility to SSI recipients under age 21 during the month 
that they apply for SSI benefits.
    In addition, the bill would appropriate $12 million in 
funding over the 2005-2007 period for health information 
centers for families with disabled children, and would 
authorize the appropriation of an additional $10 million for 
those centers for fiscal years 2008 and 2009.
    In total, CBO estimates that enacting S. 622 would increase 
mandatory spending (primarily for expanded Medicaid assistance) 
by $52 million in 2005 and by $7 billion over the 2004-2013 
period. The bill would not affect spending in 2004. CBO also 
estimates that appropriation of the authorized amounts for the 
health information centers would cost $10 million over the 
2008-2012 period.
    The bill contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
CBO estimates that total state spending for Medicaid would 
increase by $5.5 billion over the 2004-2013 period, and that 
state spending for the State Children's Health Insurance 
Program (SCHIP) would decrease by $110 million over the same 
period.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 622 is shown in the following table. The 
costs of this legislation fall within budget function 550 
(health).

----------------------------------------------------------------------------------------------------------------
                                                    By fiscal year, in millions of dollars--
                             -----------------------------------------------------------------------------------
                               2004   2005   2006   2007   2008   2009   2010    2011    2012    2013    2004-13
----------------------------------------------------------------------------------------------------------------
                                           CHANGES IN DIRECT SPENDING

Medicaid coverage for
 disabled children:
    Medicaid:
        Estimated budget          0      0     90    260    490    670     790     840     900     970     5,010
         authority..........
        Estimated outlays...      0      0     90    260    490    670     790     840     900     970     5,010
    State Children's Health
     Insurance Program:
        Budget authority....      0      0      0      0      0      0       0       0       0       0         0
        Estimated outlays...      0      0    -10    -25    -45    -35     -60     -60     -60      45      -250
    Medicaid interaction
     with SCHIP:
        Estimated budget          0      0      0    -10    -20    -45     -40     -50     -50     -25      -240
         authority..........
        Estimated outlays...      0      0      0    -10    -20    -45     -40     -50     -50     -25      -240
Medicaid home and community-
 based services:
    Estimated budget              0     25     90    170    230    260     295     335     375     425     2,205
     authority..............
    Estimated outlays.......      0     25     90    170    230    260     295     335     375     425     2,205
Medicaid eligibility for
 certain SSI recipients:
    Estimated budget              0     25     25     25     30     30      35      40      40      45       295
     authority..............
    Estimated outlays.......      0     25     25     25     30     30      35      40      40      45       295
Health information centers:
    Budget authority........      0      3      4      5      0      0       0       0       0       0        12
    Estimated outlays.......      0      2      3      4      2      *       *       0       0       0        12
Total changes in direct
 spending:
    Estimated budget              0     53    209    450    730    915   1,080   1,165   1,265   1,415     7,282
     authority..............
    Estimated outlays.......      0     52    198    424    687    880   1,020   1,105   1,205   1,460     7,032

                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Health information centers:
    Authorization level.....      0      0      0      0      5      5       0       0       0       0        10
    Estimated outlays.......      0      0      0      0      3      5       2       1       *       0        10
----------------------------------------------------------------------------------------------------------------
Note.--Components may not sum to totals because of rounding. * = less than $500,000.

    Basis of estimate: Enacting S. 622 would have significant 
effects on direct spending over the next 10 years, as well as a 
small effect on discretionary spending beginning in 2008.

Direct spending

    CBO estimates that S. 622 would increase direct spending by 
a total of $7 billion over the 2004-2013 period. Those costs 
would be due primarily to expanded Medicaid coverage of 
disabled children and the increased use of Medicaid home and 
community-based services.
    Medicaid Coverage for Certain Disabled Children. Section 2 
of the bill would allow state Medicaid programs to cover 
individuals under age 18 who meet the disability standard used 
for children in the SSI program but do not meet the program's 
income or asset restrictions. Eligibility would be limited to 
children with family income below a specified amount, set by 
each state, that could not exceed 250 percent of the federal 
poverty level. The parents of those children would be required 
to purchase private health insurance through their employer if 
the employer offers family coverage and subsidizes at least 50 
percent of the cost of premiums. States also would be able to 
impose premiums on a sliding sale for the Medicaid coverage. 
This provision would take effect on October 1, 2005.
    CBO estimates that this provision would lead to a net 
increase in direct spending of $4.5 billion over the 2006-2013 
period. Additional Medicaid spending for disabled children 
would cost $5.0 billion over that period, but those costs would 
be offset by savings of $0.3 billion in SCHIP and $0.2 billion 
in Medicaid because of interactions between Medicaid and SCHIP. 
The provision's effects are discussed in greater detailed 
below.
    Number of Disabled Children. CBO relied on data from the 
National Health Interview Survey (NHIS) on the number of people 
with disabilities in 1994 and population projections from the 
Social Security Administration to estimate the number of 
children that have a disability that meets the SSI standard. We 
made several adjustments to the number of children that the 
NHIS estimated had a ``specific, chronic, and life-limiting'' 
disability--the most severe definition used in the survey. We 
accounted for underreporting (the NHIS did not assess all forms 
of disability) and excluded 18-year-olds, who would not be 
eligible under the bill.
    The SSI disability standard for children is quite 
stringent, requiring a child to have a medically determinable 
condition that results in ``marked and severe functional 
limitations'' and will either last at least 12 months or result 
in death. For this reason, CBO assumed that only 90 percent of 
those children would qualify as disabled under the bill. After 
those adjustments, CBO estimated that 2.6 million children--
about 3.4 percent of U.S. children--would meet the SSI 
disability standard in fiscal year 2006, the year the provision 
would take effect.
    CBO anticipates that about 1.7 million of those children 
would be receiving Medicaid under current law, either as SSI 
recipients (who are automatically eligible for Medicaid in most 
states) or under other eligibility categories. The remaining 
900,000 children, who have a disability that meets the SSI 
standard but are not enrolled in Medicaid, form the starting 
point in estimating the number of new Medicaid recipients under 
the bill. We estimate that the number of children in this 
category would gradually decline to about 800,000 by 2013, 
mainly because of continued growth in the number of SSI 
recipients.
    Number of New Enrollees. CBO classified the disabled 
children not enrolled in Medicaid by family income and health 
insurance status using research from the NHIS, the General 
Accounting Office, the Economic and Social Research Institute, 
and other sources. (We estimate that about half of those 
children have family incomes below 250 percent of the poverty 
level and a majority of them have private health insurance.) We 
then estimated the additional Medicaid enrollment under the 
bill by making assumptions about the eligibility limits that 
participating states would set and the premium amounts that 
they would charge.
    CBO anticipates that most of the states that expand 
Medicaid coverage under the bill would set their eligibility 
limits around 200 percent of the poverty level and that only a 
minority of participating states would set their limits above 
that level. We also expect that states would require the new 
enrollees to pay premiums on a sliding scale, as allowed under 
the bill. We assume that the premiums charged would range from 
zero for families with incomes below the poverty level to 2.5 
percent of income for families with income equal to 250 percent 
of the poverty level.
    CBO estimated the number of children that would enroll 
under the bill based on research from several sources on 
participation rates in SCHIP, where premiums are commonly 
charged. (Medicaid generally does not allow states to charge 
premiums.) We assumed that the participation rate under the 
bill would be on the high end of rates found in the studies. 
Families with disabled children are less likely than SCHIP 
families to view premiums as a deterrent because disabled 
children frequently have high medical expenses.
    Overall, CBO estimates that Medicaid enrollment in 2006 
would increase by about 90,000 children on a full-year 
equivalent basis, if all states decide to provide coverage 
under the bill. (Projected state participation is discussed 
below.) After 2009, the additional enrollment would range 
between 140,000 and 150,000 annually.
    Based on research on health insurance coverage, we estimate 
that most of the additional enrollees--about 65 percent--also 
would have private health insurance from an employer that pays 
at least 50 percent of the cost of premiums. Another 15 percent 
otherwise would have private health insurance from an employer 
that pays less than 50 percent of the cost of premiums; CBO 
assumes that this group would substitute coverage under the 
bill for family coverage. The remaining 20 percent would be 
uninsured.
    Effect on the Medically Needy. In addition to new 
enrollees, the bill also would affect some children who receive 
Medicaid under current law through what is known as a 
``medically needy'' program. About 35 states currently have 
medically needy programs that allow individuals to receive 
Medicaid after first spending a specified portion of their 
income on medical expenses. CBO anticipates that some of those 
states also would cover disabled children under the bill. In 
those states, some children who now receive Medicaid through a 
medically needy program would be able to qualify under the new 
eligibility category for disabled children. Medicaid spending 
for those children would increase because the program would now 
provide benefits without first requiring the children's 
families to pay some costs themselves.
    CBO estimates that about 2,000 medically needy children in 
2006 would qualify under the new eligibility category for 
disabled children. This figure would rise to about 10,000 in 
later years. Those estimates are based on enrollment data from 
the Centers for Medicare & Medicaid Services (CMS) and reflect 
CBO's assumptions about the number of states that would provide 
Medicaid coverage under the bill.
    Per Capita Costs. CBO used two sets of per capita costs for 
newly enrolled disabled children--one for children with 
Medicaid only and another for those with both Medicaid and 
private health insurance. We estimate that the federal costs 
per full-year equivalent for children with Medicaid only would 
be about $7,300 in 2006, rising to $12,700 in 2013. For 
children with private health insurance, the Medicaid costs 
would be about $4,000 in 2006 and increase to $7,200 in 2013. 
Costs for children with private health coverage would be lower 
than for children with Medicaid only because private insurance 
would cover some costs that Medicaid would otherwise pay. Those 
estimates are based on Medicaid spending data from CMS and 
research on the value of private health insurance under the 
Federal Employees Health Benefits Program.
    As noted above, the bill also would increase Medicaid 
spending for some children who currently qualify through 
medically needy programs. CBO estimates that the additional 
federal spending for those children would be about $1,200 in 
2006 and rise to $1,900 by 2013.
    State Participation. CBO anticipates that under the bill 
states with about 10 percent of potential Medicaid costs would 
choose to cover disabled children in 2006. We expect that 
proportion to reach two-thirds by 2009 and remain at that level 
in subsequent years.
    CBO believes that state participation eventually would be 
relatively high because the bill would give states another way 
to pay for services for children who are covered by the 
Individuals with Disabilities Education Act (IDEA), which 
requires states to provide special education services to all 
eligible students. States pay most of the costs of IDEA; 
federal funding for the program is subject to appropriation and 
represents less than 20 percent of the program's total cost. 
Because the bill expands Medicaid to more disabled children, 
states would be able to use Medicaid to pay for some of the 
services, such as transportation and physical therapy, that 
states currently provide to IDEA-eligible students. Medicaid 
would be an attractive funding source because the federal 
government pays at least 50 percent of the program's total cost 
and funding for the program is open-ended (i.e., it is not 
limited by appropriation or any other programmatic cap).
    Premiums. The bill would allow states to charge premiums 
set on a sliding scale for Medicaid coverage for the newly 
eligible disabled children. Those premiums could not exceed 5 
percent of family income and would be reduced to account for 
any premiums that families would be required to pay for private 
health insurance. CBO assumes that states would impose premiums 
only on families with incomes above the federal poverty level, 
and that the maximum premium would be 2.5 percent of income for 
families with income equal to 250 percent of the federal 
poverty level. (Using current poverty guidelines, the maximum 
premium would be about $100 per month for a family of four.)
    CBO estimates that the federal share of premium receipts 
would be about $2 million in 2006 and would rise to $20 million 
by 2013. Those receipts would offset only a small portion of 
the bill's costs because premiums would be based on family 
income rather than actual costs, which would be high for the 
children covered under the bill. The share of costs offset by 
the premiums also would decline over time because family income 
is expected to grow more slowly than the costs of medical care.
    Additional Administrative Costs. CBO estimates that the 
bill would increase spending on Medicaid administrative costs 
by about $40 million in 2006, rising to $100 million by 2013. 
We anticipate that about 25 percent of those costs would be for 
eligibility determinations, claims processing, and collection 
of premiums. We assume that costs for eligibility 
determinations would be similar to those for disabled SSI 
applicants. The remainder would be administrative costs for 
disabled children that are currently paid by local school 
systems.
    Effect on SCHIP. CBO anticipates that some of the disabled 
children who would receive Medicaid under the bill would be 
enrolled in SCHIP under current law. Because children who are 
eligible for Medicaid cannot receive SCHIP, the bill would lead 
to savings in SCHIP.
    CBO estimates that about 2,000 children would lose their 
SCHIP eligibility in 2006 under the bill. That figure would 
rise to about 21,000 children by 2010, before declining 
slightly in later years. Those figures are based on the NHIS 
disability survey and account for state participation. The 
number of affected children would decline in later years 
because CBO's baseline projections assume that annual SCHIP 
funding will remain constant after 2007. (Unlike Medicaid, 
which is an open-ended entitlement program, annual funding 
levels for SCHIP are set at specific amounts.) Since we expect 
the cost of medical care to continue growing in those years, we 
assume that one of the ways that states will respond will be to 
trim enrollment.
    CBO varied the per capita savings for those children by 
type of SCHIP program. (A state can administer its SCHIP 
program either as an expansion of its Medicaid program or as a 
completely separate program.) Federal savings per capita in 
states with Medicaid expansions, which provide the 
comprehensive Medicaid package of benefits, would rise from 
$8,900 in 2006 to $15,600 in 2013. For states with separate 
programs, which provide less generous benefits, the 
corresponding savings would be $4,000 in 2006 and $6,800 in 
2013. CBO assumes that about 80 percent of affected children 
would come from states that administer their SCHIP programs 
separately from Medicaid.
    Based on those assumptions, CBO estimates that moving SCHIP 
disabled children to Medicaid would reduce SCHIP spending by 
$900 million over the 2004-2013 period. However, states would 
use some of those savings to cover other children under SCHIP, 
particularly in later years as constraints on spending grow 
tighter. On net, estimated savings would be $250 million over 
the 10-year period.
    Medicaid Interaction with SCHIP. Under current law, CBO 
expects that states will adopt a variety of measures to respond 
to the limited availability of SCHIP funds. One response--
trimming enrollment--has already been discussed. We also 
anticipate that states will react by expanding Medicaid 
eligibility and shifting some children from SCHIP to Medicaid. 
That approach would enable states to continue receiving federal 
matching funds (albeit at a less-favorable match rate) and 
avoid cutting enrollment.
    Since S. 622 would free up SCHIP funds to cover more 
nondisabled children states would not need to rely on Medicaid 
to cover those children. As a result, CBO estimates that this 
effect would lead to savings in Medicaid totaling $240 million 
over the 2004-2013 period.
    Medicaid Home and Community-Based Services. Under Medicaid, 
states can establish programs--known as 1915(c) waiver programs 
after the section of the Social Security Act that authorizes 
them--that provide coverage for home and community-based 
services for individuals who otherwise would need services in 
an institution. Current law limits eligibility for 1915(c) 
waiver programs to individuals who otherwise would need 
services in a hospital, nursing home, or intermediate care 
facility for the mentally retarded. Section 3 of the bill would 
allow 1915(c) waiver programs to cover individuals under age 21 
who would otherwise need services in an inpatient psychiatric 
hospital. This provision would take effect on October 1, 2004.
    CBO estimates that this provision would increase net 
federal spending on Medicaid by $25 million in 2005 and by $2.2 
billion over the 2004-2013 period. Spending on home and 
community-based services would increase by about $3.3 billion 
over that period, and be offset by $1.1 billion in savings on 
spending for institutional services.
    Spending on Home and Community-Based Services. CBO assumes 
that this provision would affect the same population as section 
2 of the bill--children who have a disability that meets the 
SSI standard but are not enrolled in Medicaid. Based on 
research by the General Accounting Office, CBO assumes that 
about 25 percent of those children have a mental disorder. We 
increased the number of disabled children with mental disorders 
to account for those between the ages of 18 and 20, who are 
ineligible under section 2. After those adjustments, CBO 
anticipates that the number of children potentially affected by 
the bill would be about 295,000 in 2005 and would decline to 
about 250,000 by 2013.
    CBO anticipates that this provision would increase 
enrollment in 1915(c) waiver programs by about 2,400 children 
in 2005, rising to 17,300 by 2013. About 80 percent of those 
children would be new Medicaid enrollees; the remainder would 
be existing enrollees that now receive institutional services. 
The new enrollees would ultimately be about 5 percent of the 
eligible population. Based on CMS data for current enrollees in 
1915(c) waivers, CBO estimates that the per capita costs for 
those children would be about $17,900 in 2005 and would rise to 
$35,700 by 2013.
    The additional spending for those children would represent 
only a modest increase in spending on 1915(c) waiver programs. 
The waivers are commonly use in Medicaid, partly because states 
can limit total enrollment in the programs. Based on data from 
CMS, we estimate that the number of people enrolled in 1915(c) 
waiver programs under current law will increase from about 
680,000 in 2005 to about 820,000 by 2013. During the same 
period, federal spending on those waivers will jump from $12.8 
billion to $30.8 billion. S. 622 would thus raise both the 
number of enrollees and spending in 1915(c) waiver programs by 
about 2 percent.
    Spending on Institutional Services. Using data from CMS, 
CBO estimates that under current law Medicaid covers about 
50,000 children annually in inpatient psychiatric hospitals. 
Under the bill, some of those children would be able to receive 
services in the community instead of in an institution. 
Services in an institution are extremely expensive, so the 
shift to home and community-based services for those children 
would reduce Medicaid spending.
    As noted earlier, CBO estimates that about 20 percent of 
the new enrollees in 1915(c) waivers under the bill would be 
children that previously received institutional services. 
Drawing on CMS data, we estimate that per capita savings for 
those children would rise from about $69,000 in 2005 to 
$110,000 in 2013. However, we anticipate that only 50 percent 
of those savings would be realized because some of the newly 
available capacity in psychiatric institutions would be used to 
serve additional Medicaid enrollees.
    Medicaid Eligibility for Certain SSI Recipients. Before the 
enactment of welfare reform in 1996, applications for SSI 
benefits were considered effective on the day that they were 
submitted. The welfare reform law changed the effective date of 
SSI applications to the first day of the following month and 
delayed when applicants become eligible for SSI. Since most SSI 
recipients are automatically eligible for Medicaid, the 
provision also delayed the effective date of Medicaid 
eligibility for new SSI recipients.
    Section 5 of S. 622 would restore Medicaid eligibility for 
SSI recipients under age 21 between the day they apply for 
benefits and the first day of the following month. This 
provision would take effect on October 1, 2004. CBO estimates 
that this provision would increase federal Medicaid spending by 
$25 million in 2005 and $295 million over the 2004-2013 period.
    We estimate that about 210,000 people under age 21 would 
become eligible for SSI in 2005, rising to about 220,000 by 
2013. However, we anticipate that only about a third of those 
individuals would be affected by the bill. The remainder would 
be able under current law to offset the effects of the welfare 
reform law by using other eligibility categories to receive 
Medicaid between the day they apply for SSI benefits and the 
first day of the following month.
    CBO assumes that the individuals affected by this provision 
would receive an additional two weeks of Medicaid benefits, on 
average. Based on Medicaid spending for disabled recipients, we 
estimate that the federal cost per capita of those additional 
benefits would be about $320 in 2005 and increase to about $610 
and 2013.
    Health Information Centers. Section 4 would require the 
Secretary of Health and Human Services to establish health 
information centers that provide various types of assistance to 
families with disabled children. Those services would include 
providing information on available health care resources and 
identifying successful ways to provide health care to disabled 
children. The centers would be part of the Maternal and Child 
Health grant program administered by the Health Resources and 
Services Administration.
    The bill would fund the health information centers by 
appropriating $3 million in 2005, $4 million in 2006, and $5 
million in 2007. CBO estimates that outlays from that funding 
would be $2 million in 2005 and a total of $12 million over the 
2005-2010 period. Our estimate is based on historical spending 
patterns in the Maternal and Child Health grant program.

Spending subject to appropriation

    The bill would make funding for the health information 
centers subject to appropriation in 2008 and 2009, and would 
authorize the appropriation of $5 million in each of those 
years. Assuming appropriation of the authorized amounts, CBO 
estimates that this provision would cost $10 million over the 
2008-2012 period.
    Intergovernmental and private-sector impact: The bill 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. CBO estimates that, assuming states take 
advantage of the options provided in the bill, total state 
spending for Medicaid would increase by $5.5 billion over the 
2004-2013 period, and that state spending for SCHIP would 
decrease by $110 million over the same period.
    Estimate prepared by: Federal Costs: Eric Rollins and 
Jeanne De Sa. Impact on State, Local, and Tribal Governments: 
Leo Lex. Impact on the Private Sector: Stuart Hagen.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                       V. VOTES OF THE COMMITTEE

    On September 10, 2003, a substitute for S. 622, entitled 
``The Family Opportunity Act of 2002,'' was ordered favorably 
reported by a voice vote. A quorum was present.
    No amendments were offered.

                      VI. CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of the Rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, exiting law in which no change is 
proposed is shown in roman):

SOCIAL SECURITY ACT

           *       *       *       *       *       *       *



TITLE V--MATERNAL AND CHILD HEALTH SERVICES BLOCK GRANT

           *       *       *       *       *       *       *


                    AUTHORIZATION OF APPROPRIATIONS

    Sec. 501. * * *

           *       *       *       *       *       *       *

    (c)(1)(A) For the purpose of enabling the Secretary 
(through grants, contracts, or otherwise) to provide for 
special projects of regional and national significance for the 
development and support of family-to-family health information 
centers described in paragraph (2)--
          (i) there is appropriated to the Secretary, out of 
        any money in the Treasury not otherwise appropriated--
                  (I) $3,000,000 for fiscal year 2005;
                  (II) $4,000,000 for fiscal year 2006; and
                  (III) 5,000,000 for fiscal year 2007; and
          (ii) there is authorized to be appropriated to the 
        Secretary, $5,000,000 for each of fiscal years 2008 and 
        2009.
      (B) Funds appropriated or authorized to be appropriated 
under subparagraph (a) shall--
          (i) be in addition to amounts appropriated under 
        subsection (a) and retained under section 502(a)(1) for 
        the purpose of carrying out activities described in 
        subsection (a)(2); and
          (ii) remain available until expended.
    (2) The family-to-family health information centers 
described in this paragraph are centers that--
          (A) assist families of children with disabilities or 
        special health care needs to make informed choices 
        about health care in order to promote good treatment 
        decisions, cost-effectiveness, and improved health 
        outcomes for such children;
          (B) provide information regarding the health care 
        needs of, and resources available for, children with 
        disabilities or special health care needs;
          (C) identify successful health delivery models for 
        such children;
          (D) develop with representatives of health care 
        providers, managed care organizations, health care 
        purchasers, and appropriate State agencies a model for 
        collaboration between families of such children and 
        health professionals;
          (E) provide training and guidance regarding caring 
        for such children;
          (F) conduct outreach activities to the families of 
        such children, health professionals, schools, and other 
        appropriate entities and individuals; and
          (G) are staffed by families of children with 
        disabilities or special health care needs who have 
        expertise in Federal and State public and private 
        health care systems and health professionals.
    (3) The Secretary shall develop family-to-family health 
information centers described in paragraph (2) in accordance 
with the following:
          (A) With respect to fiscal year 2004, such centers 
        shall be developed in not less than 25 States.
          (B) With respect to fiscal year 2005, such centers 
        shall be developed in not less than 40 States.
          (C) With respect to fiscal year 2006, such centers 
        shall be developed in all States.
    (4) The provisions of this title that are applicable to the 
funds made available to the Secretary under section 502(a)(1) 
apply in the same manner to funds made available to the 
Secretary under paragraph (1)(A).
    (5) For purposes of this subsection, the term ``State'' 
means each of the 50 States and the District of Columbia.

TITLE XIX--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS \1\

           *       *       *       *       *       *       *


                   STATE PLANS FOR MEDICAL ASSISTANCE

    Sec. 1902. (a) A State plan for medical assistance must--

           *       *       *       *       *       *       *

          (10) provide--
                  (A) for making medical assistance available, 
                including at least the care and services listed 
                in paragraphs (1) through (5), (17) and (21) of 
                section 1905(a), to--
                          (i) all individuals--
                                  (I) who are receiving aid or 
                                assistance under any plan of 
                                the State approved under title 
                                I, X, XIV, or XVI, or part A or 
                                part E of title IV (including 
                                individuals eligible under this 
                                title by reason of section 
                                402(a)(37), 406(h), or 473(b), 
                                or considered by the State to 
                                be receiving such aid as 
                                authorized under section 
                                482(e)(6)),
                                  (II) (aa) with respect to 
                                whom supplemental security 
                                income benefits are being paid 
                                under title XVI (or were being 
                                paid as of the date of the 
                                enactment of section 211(a) of 
                                the Personal Responsibility and 
                                Work Opportunity Reconciliation 
                                Act of 1996 (P.L. 104--193) 
                                [and] and would continue to be 
                                paid but for the enactment of 
                                that [section or who are] 
                                section), (bb) who are 
                                qualified severely impaired 
                                individuals (as defined in 
                                section 1905(q)), or (cc) who 
                                are under 21 years of age and 
                                with respect to whom 
                                supplemental security income 
                                benefits would be paid under 
                                title XVI if subparagraphs (A) 
                                and (B) of section 1611(c)(7) 
                                were applied without regard to 
                                the phrase ``the first day of 
                                the month following''.

           *       *       *       *       *       *       *

                          (ii) * * *

           *       *       *       *       *       *       *

                                  (XVII) who are independent 
                                foster care adolescents (as 
                                defined in section 1905(w)(1)), 
                                or who are within any 
                                reasonable categories of such 
                                adolescents specified by the 
                                State; [or]
                                  (XVIII) who are described in 
                                subsection (aa) (relating to 
                                certain breast or cervical 
                                cancer patients); or
                                  (XIX) who are disabled 
                                children described in 
                                subsection (cc)(1);

           *       *       *       *       *       *       *

    (cc)(1) Individuals described in this paragraph are 
individuals--
          (A) who have not attained 18 years of age;
          (B) who would be considered disabled under section 
        1614(a)(3)(C) but for having earnings or deemed income 
        or resources (as determined under title XVI for 
        children) that exceed the requirements for receipt of 
        supplemental security income benefits; and
          (C) whose family income does not exceed such income 
        level as the State establishes and does not exceed--
                  (i) 250 percent of the income official 
                poverty line (as defined by the Office of 
                Management and Budget, and revised annually in 
                accordance with section 673(2) of the Omnibus 
                Budget Reconciliation Act of 1981) applicable 
                to a family of the size involved; or
                  (ii) such higher percent of such poverty line 
                as a State may establish, except that--
                          (I) any medical assistance provided 
                        to an individual whose family income 
                        exceeds 250 percent of such poverty 
                        line may only be provided with State 
                        funds; and
                          (II) no Federal financial 
                        participation shall be provided under 
                        section 1903(a) for any medical 
                        assistance provided to such an 
                        individual.
    (2)(A) If an employer of a parent of an individual 
described in paragraph (1) offers family coverage under a group 
health plan (as defined in section 2791(a) of the Public Health 
Service Act), the State shall--
          (i) require such parent to apply for, enroll in, and 
        pay premiums for, such coverage as a condition of such 
        parent's child being or remaining eligible for medical 
        assistance under subsection (a)(10)(A)(ii)(XIX) if the 
        parent is determined eligible for such coverage and the 
        employer contributes at least 50 percent of the total 
        cost of annual premiums for such coverage; and
          (ii) if such coverage is obtained--
                  (I) subject to paragraph (2) of section 
                1916(h), reduce the premium imposed by the 
                State under that section in an amount that 
                reasonably reflects the premium contribution 
                made by the parent for private coverage on 
                behalf of a child with a disability; and
                  (II) treat such coverage as a third party 
                liability under subsection (a)(25).
      (B) In the case of a parent to which subparagraph (A) 
applies, a State, subject to paragraph (1)(C)(ii), may provide 
for payment of any portion of the annual premium for such 
family coverage that the parent is required to pay. Any 
payments made by the State under this subparagraph shall be 
considered, for purposes of section 1903(a), to be payments for 
medical assistance.

           *       *       *       *       *       *       *


                           PAYMENT TO STATES

    Sect. 1903. * * *

           *       *       *       *       *       *       *

    (f)(1)(A) * * *

           *       *       *       *       *       *       *

    (4) The limitations on payment imposed by the preceding 
provisions of this subsection shall not apply with respect to 
any amount expended by a State as medical assistance for any 
individual described in section 1902(a)(10)(A)(i)(III), , 
1902(a)(10)(A)(i)(IV), 1902(a)(10)(A)(i)(V), 
1902(a)(10)(A)(i)(VI), 1902(a)(10)(A)(i)(VII), 
1902(a)(10)(A)(ii)(IX), 1902(a)(10)(A)(ii)(X), 
1902(a)(10)(A)(ii)(XIII), 1902(a)(10)(A)(ii)(XIV), 
1902(a)(10)(A)(ii)(XV), 1902(a)(10)(A)(ii)(XVI), 
1902(a)(10)(A)(ii)(XVII), 1902(a)(10)(A)(ii)(XVIII), 
1902(a)(10)(A)(ii)(XIX), or 1905(p)(1) or for any individual--

           *       *       *       *       *       *       *


      PROVISIONS RESPECTING INAPPLICABILITY AND WAIVER OF CERTAIN 
                       REQUIREMENTS OF THIS TITLE

    Sec. 1915. * * *

           *       *       *       *       *       *       *

    (c)(1) The Secretary may by waiver provide that a State 
plan approved under this title may include as ``medical 
assistance'' under such plan payment for part or all of the 
cost of home or community-based services (other than room and 
board) approved by the Secretary which are provided pursuant to 
a written plan of care to individuals with respect to whom 
there has been a determination that but for the provision of 
such services the individuals would require the level of care 
provided in a hospital or a nursing facility or intermediate 
care facility for the mentally retarded, or would require 
inpatient psychiatric hospital services for individuals under 
age 21, the cost of which could be reimbursed under the State 
plan. For purposes of this subsection, the term ``room and 
board'' shall not include an amount established under a method 
determined by the State to reflect the portion of costs of rent 
and food attributable to an unrelated personal caregiver who is 
residing in the same household with an individual who, but for 
the assistance of such caregiver, would require admission to a 
hospital, nursing facility, or intermediate care facility for 
the mentally retarded or would require inpatient psychiatric 
hospital services for individuals under age 21.
    (2) A waiver shall not be granted under this subsection 
unless the State provides assurances satisfactory to the 
Secretary that--
          (A) necessary safeguards (including adequate 
        standards for provider participation) have been taken 
        to protect the health and welfare of individuals 
        provided services under the waiver and to assure 
        financial accountability for funds expended with 
        respect to such services;
          (B) the State will provide, with respect to 
        individuals who--
                  (i) are entitled to medical assistance for 
                inpatient hospital services, nursing facility 
                services, [or services in an intermediate care 
                facility for the mentally retarded] services in 
                an intermediate care facility for the mentally 
                retarded, or inpatient psychiatric hospital 
                services for individuals under age 21 under the 
                State plan,
                  (ii) may require such services, and
                  (iii) may be eligible for such home or 
                community-based care under such waiver,
        for an evaluation of the need for inpatient hospital 
        services, nursing facility services, [or services in an 
        intermediate care facility for the mentally retarded] 
        services in an intermediate care facility for the 
        mentally retarded, or inpatient psychiatric hospital 
        services for individuals under age 21;
          (C) such individuals who are determined to be likely 
        to require the level of care provided in a hospital, 
        nursing facility, or intermediate care facility for the 
        mentally retarded, or who are determined to be likely 
        to require inpatient psychiatric hospital services for 
        individuals under age 21, are informed of the feasible 
        alternatives, if available under the waiver, at the 
        choice of such individuals, to the provision of 
        inpatient hospital services, nursing facility services, 
        [or services in an intermediate care facility for the 
        mentally retarded] services in an intermediate care 
        facility for the mentally retarded, or inpatient 
        psychiatric hospital services for individuals under age 
        21;

           *       *       *       *       *       *       *

    (7)(A) In making estimates under paragraph (2)(D) in the 
case of a waiver that applies only to individuals with a 
particular illness or condition who are inpatients in, or who 
would require the level of care provided in, hospitals, nursing 
facilities, or intermediate care facilities for the mentally 
retarded, ``or would require inpatient psychiatric hospital 
services for individuals under age 21, the State may determine 
the average per capita expenditure that would have been made in 
a fiscal year for those individuals under the State plan 
separately from the expenditures for other individuals who are 
inpatients in, or who would require the level of care provided 
in, those respective facilities or who would require inpatient 
psychiatric hospital services for individuals under age 21.

           *       *       *       *       *       *       *


USE OF ENROLLMENT FEES, PREMIUMS, DEDUCTIONS, COST SHARING, AND SIMILAR 
                                CHARGES

    Sec. 1916. (a) Subject to [subsection (g) subsections (g) 
and (h)], the State plan shall provide that in the case of 
individuals described in subparagraph (A) or (E)(i) of section 
1902(a)(10) who are eligible under the plan--

           *       *       *       *       *       *       *

                * * * come for a year that exceeds 250 percent 
                of the income official poverty line (referred 
                to in subsection (c)(1)) applicable to a family 
                of the size involved, except that in the case 
                of such an individual who has income for a year 
                that does not exceed 450 percent of such 
                poverty line, such requirement may only apply 
                to the extent such premiums do not exceed 7.5 
                percent of such income; and
          (2) such State shall require payment of 100 percent 
        of such premiums for a year by such an individual whose 
        adjusted gross income (as defined in section 62 of the 
        Internal Revenue Code of 1986) for such year exceeds 
        $75,000, except that a State may choose to subsidize 
        such premiums by using State funds which may not be 
        federally matched under this title.
In the case of any calendar year beginning after 2000, the 
dollar amount specified in paragraph (2) shall be increased in 
accordance with the provisions of section 215(i)(2)(A)(ii).
    (h)(1) With respect to disabled children provided medical 
assistance under section 1902(a)(10)(A)(ii)(XIX), subject to 
paragraph (2) a State may (in a uniform manner for such 
children) require the families of such children to pay monthly 
premiums set on a sliding scale based on family income.
    (2) A premium requirement imposed under paragraph (1) may 
only apply to the extent that--
          (A) the aggregate amount of such premium and any 
        premium that the parent is required to pay for family 
        coverage under section 1902(cc)(2)(A)(i) does not 
        exceed 5 percent of the family's income; and
          (B) the requirement is imposed consistent with 
        section 1902(cc)(2)(A)(ii)(I).
    (3) A State shall not require prepayment of a premium 
imposed pursuant to paragraph (1) and shall not terminate 
eligibility of a child under section 1902(a)(10)(A)(ii)(XIX) 
for medical assistance under this title on the basis of failure 
to pay any such premium until such failure continues for a 
period of not less than 60 days from the date on which the 
premium became past due. The State may waive payment of any 
such premium in any case where the State determines that 
requiring such payment would create an undue hardship.

                                
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