[House Report 111-443]
[From the U.S. Government Publishing Office]


111th Congress 
2d Session             HOUSE OF REPRESENTATIVES        Report
                                                       111-443
_______________________________________________________________________

                                     



 
                     THE RECONCILIATION ACT OF 2010

                               ----------                              

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                              to accompany

                               H.R. 4872

  A BILL TO PROVIDE FOR RECONCILIATION PURSUANT TO SECTION 202 OF THE 
        CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 2010

                             together with

                             MINORITY VIEWS




                               Volume II
                            Division II-III

 March 17, 2010.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed
               THE RECONCILIATION ACT OF 2010--VOLUME II
For Sale by the Superintendent of Documents, U.S. Government Printing Office
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111th Congress 
 2d Session             HOUSE OF REPRESENTATIVES                 Report
                                                                111-443
_______________________________________________________________________

                                     


                     THE RECONCILIATION ACT OF 2010

                               __________

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET

                        HOUSE OF REPRESENTATIVES

                              to accompany

                               H.R. 4872

  A BILL TO PROVIDE FOR RECONCILIATION PURSUANT TO SECTION 202 OF THE 
        CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 2010

                             together with

                             MINORITY VIEWS




                               Volume II

                            Division II-III

 March 17, 2010.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed
                        COMMITTEE ON THE BUDGET

             JOHN M. SPRATT, Jr., South Carolina, Chairman
ALLYSON Y. SCHWARTZ, Pennsylvania    PAUL RYAN, Wisconsin,
MARCY KAPTUR, Ohio                     Ranking Minority Member
XAVIER BECERRA, California           JEB HENSARLING, Texas
LLOYD DOGGETT, Texas                 SCOTT GARRETT, New Jersey
EARL BLUMENAUER, Oregon              MARIO DIAZ-BALART, Florida
MARION BERRY, Arkansas               MICHAEL K. SIMPSON, Idaho
ALLEN BOYD, Florida                  PATRICK T. McHENRY, North Carolina
JAMES P. McGOVERN, Massachusetts     CONNIE MACK, Florida
NIKI TSONGAS, Massachusetts          JOHN CAMPBELL, California
BOB ETHERIDGE, North Carolina        JIM JORDAN, Ohio
BETTY McCOLLUM, Minnesota            CYNTHIA M. LUMMIS, Wyoming
JOHN A. YARMUTH, Kentucky            STEVE AUSTRIA, Ohio
ROBERT E. ANDREWS, New Jersey        ROBERT B. ADERHOLT, Alabama
ROSA L. DeLAURO, Connecticut,        DEVIN NUNES, California
CHET EDWARDS, Texas                  GREGG HARPER, Mississippi
ROBERT C. ``BOBBY'' SCOTT, Virginia  ROBERT E. LATTA, Ohio
JAMES R. LANGEVIN, Rhode Island
RICK LARSEN, Washington
TIMOTHY H. BISHOP, New York
GWEN MOORE, Wisconsin
GERALD E. CONNOLLY, Virginia
KURT SCHRADER, Oregon
DENNIS MOORE, Kansas

                           Professional Staff

            Thomas S. Kahn, Staff Director and Chief Counsel
                 Austin Smythe, Minority Staff Director


                            C O N T E N T S

                              ----------                              

                               Volume II

                                                                   Page
Division II--Committee on Education and Labor: Health Care Reform   897
Division III--Committee on Eduacation and Labor: Investing in 
  Education......................................................  1089
Miscellaneous House Report Requirements..........................  1299



                              DIVISION II

                         LETTER OF TRANSMITTAL

                              ----------                              

                          House of Representatives,
                          Committee on Education and Labor,
                                  Washington, DC, October 13, 2009.
Hon. John M. Spratt, Jr.,
Chairman, Committee on the Budget, Cannon House Office Building, 
        Washington, DC.
    Dear Chairman Spratt, With this correspondence and its 
attachment, I am transmitting the Health Care Reform portion of 
the recommendations of the Committee on Education and Labor to 
your Committee pursuant to Section 202 of S. Con. Res. 13, the 
Concurrent Resolution on the Budget for Fiscal Year 2010.
    Pursuant to Section 202(a)(3) of S. Con. Res. 13, on July 
17, 2009, the Committee on Education and Labor voted 26-22 to, 
inter alia, authorize the Chairman to transmit H.R. 3200, 
America's Affordable Health Choices Act, with an amendment in 
the nature of a substitute, to the Committee on Budget in 
compliance with Section 310 of the Congressional Budget Act of 
1974, as its recommendations related to the Health Care Reform 
portion of its instructions.
    Accordingly, attached please find the Committee's report, 
containing the reported bill and other materials, for your use 
in preparing a reconciliation bill to be reported to the House 
pursuant to S. Con. Res. 13.
    If you have any questions, please contact my Committee 
staff. Thank you for your attention.
            Sincerely,
                                             George Miller,
                                                         Chairman.2



111th Congress                                            Rept. 111-299
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 3

======================================================================




            AMERICA'S AFFORDABLE HEALTH CHOICES ACT OF 2009

                                _______
                                

October 14, 2009.--Committed to the Committee of the Whole House on the 
             State of the Union, and ordered to be printed.

                                _______
                                

 Mr. George Miller of California, from the Committee on Education and 
                     Labor, submitted the following

                              R E P O R T

                             together with

                    MINORITY AND SUPPLEMENTAL VIEWS

                        [To accompany H.R. 3200]

  The Committee on Education and Labor, to whom was referred 
the bill (H.R. 3200) to provide affordable, quality health care 
for all Americans and reduce the growth in health care 
spending, and for other purposes, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

  The amendment is as follows:
  Strike all after the enacting clause (other than sections 161 
through 163, 322, and 323 and title IV of division A, division 
B, section 2002 and titles I through IV of division C, and 
subtitles A, B, C, and E of title V of division C) and insert 
the following:

SECTION 1. SHORT TITLE; TABLE OF DIVISIONS, TITLES, AND SUBTITLES.

  (a) Table of Divisions, Titles, and Subtitles.--This Act is divided 
into divisions, titles, and subtitles as follows:

               DIVISION A--AFFORDABLE HEALTH CARE CHOICES

TITLE I--PROTECTIONS AND STANDARDS FOR QUALIFIED HEALTH BENEFITS PLANS
Subtitle A--General Standards
Subtitle B--Standards Guaranteeing Access to Affordable Coverage
Subtitle C--Standards Guaranteeing Access to Essential Benefits
Subtitle D--Additional Consumer Protections
Subtitle E--Governance
Subtitle F--Relation to other requirements; Miscellaneous
Subtitle G--Early Investments
TITLE II--HEALTH INSURANCE EXCHANGE AND RELATED PROVISIONS
Subtitle A--Health Insurance Exchange
Subtitle B--Public health insurance option
Subtitle C--Individual Affordability Credits
Subtitle D--State innovation
TITLE III--SHARED RESPONSIBILITY
Subtitle A--Individual responsibility
Subtitle B--Employer Responsibility

             [For division B--See text of introduced bill]

          DIVISION C--PUBLIC HEALTH AND WORKFORCE DEVELOPMENT

[For titles I through IV of division C, see text of introduced bill.]
TITLE V--OTHER PROVISIONS
[For subtitles A , B, and C of title V, see text of introduced bill.]
Subtitle D--Grants for comprehensive programs to provide education to 
nurses and create a pipeline to nursing
[For subtitle E of title V, see text of introduced bill.]
Subtitle F--Standards for accessibility to medical equipment for 
individuals with disabilities.
Subtitle G--Other grant programs
Subtitle H--Long-term care and family caregiver support
Subtitle I--Online resources
  (b) Short Title.--This Act may be cited as the ``America's Affordable 
Health Choices Act of 2009''.

               DIVISION A--AFFORDABLE HEALTH CARE CHOICES

SEC. 100. PURPOSE; TABLE OF CONTENTS OF DIVISION; GENERAL DEFINITIONS.

  (a) Purpose.--
          (1) In general.--The purpose of this division is to provide 
        affordable, quality health care for all Americans and reduce 
        the growth in health care spending.
          (2) Building on current system.--This division achieves this 
        purpose by building on what works in today's health care 
        system, while repairing the aspects that are broken.
          (3) Insurance reforms.--This division--
                  (A) enacts strong insurance market reforms;
                  (B) creates a new Health Insurance Exchange, with a 
                public health insurance option alongside private plans;
                  (C) includes sliding scale affordability credits; and
                  (D) initiates shared responsibility among workers, 
                employers, and the government;
        so that all Americans have coverage of essential health 
        benefits.
          (4) Health delivery reform.--This division institutes health 
        delivery system reforms both to increase quality and to reduce 
        growth in health spending so that health care becomes more 
        affordable for businesses, families, and government.
  (b) Table of Contents of Division.--The table of contents of this 
division is as follows:

Sec. 100. Purpose; table of contents of division; general definitions.

 TITLE I--PROTECTIONS AND STANDARDS FOR QUALIFIED HEALTH BENEFITS PLANS

                     Subtitle A--General Standards

Sec. 101. Requirements reforming health insurance marketplace.
Sec. 102. Protecting the choice to keep current coverage.

    Subtitle B--Standards Guaranteeing Access to Affordable Coverage

Sec. 111. Prohibiting pre-existing condition exclusions.
Sec. 112. Guaranteed issue and renewal for insured plans.
Sec. 113. Insurance rating rules.
Sec. 114. Nondiscrimination in benefits; parity in mental health and 
substance abuse disorder benefits.
Sec. 115. Ensuring adequacy of provider networks.
Sec. 116. Ensuring value and lower premiums.
Sec. 117. Consistency of costs and coverage under qualified health 
benefits plans during plan year.

    Subtitle C--Standards Guaranteeing Access to Essential Benefits

Sec. 121. Coverage of essential benefits package.
Sec. 122. Essential benefits package defined.
Sec. 123. Health Benefits Advisory Committee.
Sec. 124. Process for adoption of recommendations; adoption of benefit 
standards.
Sec. 125. Prohibition of discrimination in health care services based 
on religious or spiritual content.

              Subtitle D--Additional Consumer Protections

Sec. 131. Requiring fair marketing practices by health insurers.
Sec. 132. Requiring fair grievance and appeals mechanisms.
Sec. 133. Requiring information transparency and plan disclosure.
Sec. 134. Application to qualified health benefits plans not offered 
through the Health Insurance Exchange.
Sec. 135. Timely payment of claims.
Sec. 136. Standardized rules for coordination and subrogation of 
benefits.
Sec. 137. Application of administrative simplification.
Sec. 138. Records relative to prescription information.

                         Subtitle E--Governance

Sec. 141. Health Choices Administration; Health Choices Commissioner.
Sec. 142. Duties and authority of Commissioner.
Sec. 143. Consultation and coordination.
Sec. 144.  Health Insurance Ombudsman.

       Subtitle F--Relation to Other Requirements; Miscellaneous

Sec. 151. Relation to other requirements.
Sec. 152. Prohibiting discrimination in health care.
Sec. 153. Whistleblower protection.
Sec. 154. Construction regarding collective bargaining.
Sec. 155. Severability.
Sec. 156. Rule of construction regarding Hawaii Prepaid Health Care 
Act.
Sec. 157. Increasing meaningful use of electronic health records.
Sec. 158. Private right of contract with health care providers.

                     Subtitle G--Early Investments

[For sections 161-163. See text of introduced bill.]
Sec. 164. Reinsurance program for retirees.
Sec. 165. Prohibition against post-retirement reductions of retiree 
health benefits by group health plans.
Sec. 166. Limitations on preexisting condition exclusions in group 
health plans in advance of applicability of new prohibition of 
preexisting condition exclusions.
Sec. 167. Extension of COBRA continuation coverage.

       TITLE II--HEALTH INSURANCE EXCHANGE AND RELATED PROVISIONS

                 Subtitle A--Health Insurance Exchange

Sec. 201. Establishment of Health Insurance Exchange; outline of 
duties; definitions.
Sec. 202. Exchange-eligible individuals and employers.
Sec. 203. Benefits package levels.
Sec. 204. Contracts for the offering of Exchange-participating health 
benefits plans.
Sec. 205. Outreach and enrollment of Exchange-eligible individuals and 
employers in Exchange-participating health benefits plan.
Sec. 206. Other functions.
Sec. 207. Health Insurance Exchange Trust Fund.
Sec. 208. Optional operation of State-based health insurance exchanges.
Sec. 209. Participation of small employer benefit arrangements.

               Subtitle B--Public Health Insurance Option

Sec. 221. Establishment and administration of a public health insurance 
option as an Exchange-qualified health benefits plan.
Sec. 222. Premiums and financing.
Sec. 223. Payment rates for items and services.
Sec. 224. Modernized payment initiatives and delivery system reform.
Sec. 225. Provider participation.
Sec. 226. Application of fraud and abuse provisions.
Sec. 227. Sense of the House regarding enrollment of Members in the 
public option.

              Subtitle C--Individual Affordability Credits

Sec. 241. Availability through Health Insurance Exchange.
Sec. 242. Affordable credit eligible individual.
Sec. 243. Affordable premium credit.
Sec. 244. Affordability cost-sharing credit.
Sec. 245. Income determinations.
Sec. 246. No Federal payment for undocumented aliens.

                      Subtitle D--State Innovation

Sec. 251. Waiver of ERISA limitation; application instead of state 
single payer system.
Sec. 252. Requirements.
Sec. 253. Definitions.

                    TITLE III--SHARED RESPONSIBILITY

                 Subtitle A--Individual Responsibility

Sec. 301. Individual responsibility.

                  Subtitle B--Employer Responsibility

           Part 1--Health Coverage Participation Requirements

Sec. 311. Health coverage participation requirements.
Sec. 312. Employer responsibility to contribute towards employee and 
dependent coverage.
Sec. 313. Employer contributions in lieu of coverage.
Sec. 314. Authority related to improper steering.

   Part 2--Satisfaction of Health Coverage Participation Requirements

Sec. 321. Satisfaction of health coverage participation requirements 
under the Employee Retirement Income Security Act of 1974.
Sec. 324. Additional rules relating to health coverage participation 
requirements.

              [FOR TITLE IV, SEE TEXT OF INTRODUCED BILL.]

  (c) General Definitions.--Except as otherwise provided, in this 
division:
          (1) Acceptable coverage.--The term ``acceptable coverage'' 
        has the meaning given such term in section 202(d)(2).
          (2) Basic plan.--The term ``basic plan'' has the meaning 
        given such term in section 203(c).
          (3) Commissioner.--The term ``Commissioner'' means the Health 
        Choices Commissioner established under section 141.
          (4) Cost-sharing.--The term ``cost-sharing'' includes 
        deductibles, coinsurance, copayments, and similar charges but 
        does not include premiums or any network payment differential 
        for covered services or spending for non-covered services.
          (5) Dependent.--The term ``dependent'' has the meaning given 
        such term by the Commissioner and includes a spouse.
          (6) Employment-based health plan.--The term ``employment-
        based health plan''--
                  (A) means a group health plan (as defined in section 
                733(a)(1) of the Employee Retirement Income Security 
                Act of 1974);
                  (B) includes such a plan that is the following:
                          (i) Federal, state, and tribal governmental 
                        plans.--A governmental plan (as defined in 
                        section 3(32) of the Employee Retirement Income 
                        Security Act of 1974), including a health 
                        benefits plan offered under chapter 89 of title 
                        5, United States Code; or
                          (ii) Church plans.--A church plan (as defined 
                        in section 3(33) of the Employee Retirement 
                        Income Security Act of 1974); and
                  (C) excludes coverage described in section 
                202(d)(2)(E) (relating to TRICARE).
          (7) Enhanced plan.--The term ``enhanced plan'' has the 
        meaning given such term in section 203(c).
          (8) Essential benefits package.--The term ``essential 
        benefits package'' is defined in section 122(a).
          (9) Family.--The term ``family'' means an individual and 
        includes the individual's dependents.
          (10) Federal poverty level; fpl.--The terms ``Federal poverty 
        level'' and ``FPL'' have the meaning given the term ``poverty 
        line'' in section 673(2) of the Community Services Block Grant 
        Act (42 U.S.C. 9902(2)), including any revision required by 
        such section.
          (11) Health benefits plan.--The terms ``health benefits 
        plan'' means health insurance coverage and an employment-based 
        health plan and includes the public health insurance option.
          (12) Health insurance coverage; health insurance issuer.--The 
        terms ``health insurance coverage'' and ``health insurance 
        issuer'' have the meanings given such terms in section 2791 of 
        the Public Health Service Act.
          (13) Health insurance exchange.--The term ``Health Insurance 
        Exchange'' means the Health Insurance Exchange established 
        under section 201.
          (14) Medicaid.--The term ``Medicaid'' means a State plan 
        under title XIX of the Social Security Act (whether or not the 
        plan is operating under a waiver under section 1115 of such 
        Act).
          (15) Medicare.--The term ``Medicare'' means the health 
        insurance programs under title XVIII of the Social Security 
        Act.
          (16) Plan sponsor.--The term ``plan sponsor'' has the meaning 
        given such term in section 3(16)(B) of the Employee Retirement 
        Income Security Act of 1974.
          (17) Plan year.--The term ``plan year'' means--
                  (A) with respect to an employment-based health plan, 
                a plan year as specified under such plan; or
                  (B) with respect to a health benefits plan other than 
                an employment-based health plan, a 12-month period as 
                specified by the Commissioner.
          (18) Premium plan; premium-plus plan.--The terms ``premium 
        plan'' and ``premium-plus plan'' have the meanings given such 
        terms in section 203(c).
          (19) QHBP offering entity.--The terms ``QHBP offering 
        entity'' means, with respect to a health benefits plan that 
        is--
                  (A) a group health plan (as defined, subject to 
                subsection (d), in section 733(a)(1) of the Employee 
                Retirement Income Security Act of 1974), the plan 
                sponsor in relation to such group health plan, except 
                that, in the case of a plan maintained jointly by 1 or 
                more employers and 1 or more employee organizations and 
                with respect to which an employer is the primary source 
                of financing, such term means such employer;
                  (B) health insurance coverage, the health insurance 
                issuer offering the coverage;
                  (C) the public health insurance option, the Secretary 
                of Health and Human Services;
                  (D) a non-Federal governmental plan (as defined in 
                section 2791(d) of the Public Health Service Act), the 
                State or political subdivision of a State (or agency or 
                instrumentality of such State or subdivision) which 
                establishes or maintains such plan; or
                  (E) a Federal governmental plan (as defined in 
                section 2791(d) of the Public Health Service Act), the 
                appropriate Federal official.
          (20) Qualified health benefits plan.--The term ``qualified 
        health benefits plan'' means a health benefits plan that meets 
        the requirements for such a plan under title I and includes the 
        public health insurance option.
          (21) Public health insurance option.--The term ``public 
        health insurance option'' means the public health insurance 
        option as provided under subtitle B of title II.
          (22) Service area; premium rating area.--The terms ``service 
        area'' and ``premium rating area'' mean with respect to health 
        insurance coverage--
                  (A) offered other than through the Health Insurance 
                Exchange, such an area as established by the QHBP 
                offering entity of such coverage in accordance with 
                applicable State law; and
                  (B) offered through the Health Insurance Exchange, 
                such an area as established by such entity in 
                accordance with applicable State law and applicable 
                rules of the Commissioner for Exchange-participating 
                health benefits plans.
          (23) State.--The term ``State'' means the 50 States and the 
        District of Columbia.
          (24) State medicaid agency.--The term ``State Medicaid 
        agency'' means, with respect to a Medicaid plan, the single 
        State agency responsible for administering such plan under 
        title XIX of the Social Security Act.
          (25) Y1, y2, etc..--The terms ``Y1'' , ``Y2'', ``Y3'', 
        ``Y4'', ``Y5'', and similar subsequently numbered terms, mean 
        2013 and subsequent years, respectively.
          (26) Employee premium.--The term ``employee premium'' does 
        not include a collectively bargained premium in the case of a 
        group health plan (as defined in section 733(a)(1) of the 
        Employee Retirement Income Security Act of 1974) that is a 
        multiemployer plan (as defined in section 3(37) of such Act).

 TITLE I--PROTECTIONS AND STANDARDS FOR QUALIFIED HEALTH BENEFITS PLANS

                     Subtitle A--General Standards

SEC. 101. REQUIREMENTS REFORMING HEALTH INSURANCE MARKETPLACE.

  (a) Purpose.--The purpose of this title is to establish standards to 
ensure that new health insurance coverage and employment-based health 
plans that are offered meet standards guaranteeing access to affordable 
coverage, essential benefits, and other consumer protections.
  (b) Requirements for Qualified Health Benefits Plans.--On or after 
the first day of Y1, a health benefits plan shall not be a qualified 
health benefits plan under this division unless the plan meets the 
applicable requirements of the following subtitles for the type of plan 
and plan year involved:
          (1) Subtitle B (relating to affordable coverage).
          (2) Subtitle C (relating to essential benefits).
          (3) Subtitle D (relating to consumer protection).
  (c) Terminology.--In this division:
          (1) Enrollment in employment-based health plans.--An 
        individual shall be treated as being ``enrolled'' in an 
        employment-based health plan if the individual is a participant 
        or beneficiary (as such terms are defined in section 3(7) and 
        3(8), respectively, of the Employee Retirement Income Security 
        Act of 1974) in such plan.
          (2) Individual and group health insurance coverage.--The 
        terms ``individual health insurance coverage'' and ``group 
        health insurance coverage'' mean health insurance coverage 
        offered in the individual market or large or small group 
        market, respectively, as defined in section 2791 of the Public 
        Health Service Act.
  (d) Sense of Congress on Health Care Needs of United States 
Territories.--It is the sense of the Congress that the reforms made by 
H.R. 3200, as introduced, must be strengthened to meaningfully address 
the health care needs of residents of American Samoa, the Commonwealth 
of the Northern Mariana Islands, Guam, Puerto Rico, and the United 
States Virgin Islands and Congress is committed to working with the 
representatives of these territories to ensure that residents of these 
territories have access to high-quality and affordable health care in 
such a way that best serves their unique needs.

SEC. 102. PROTECTING THE CHOICE TO KEEP CURRENT COVERAGE.

  (a) Grandfathered Health Insurance Coverage Defined.--Subject to the 
succeeding provisions of this section, for purposes of establishing 
acceptable coverage under this division, the term ``grandfathered 
health insurance coverage'' means individual health insurance coverage 
that is offered and in force and effect before the first day of Y1 if 
the following conditions are met:
          (1) Limitation on new enrollment.--
                  (A) In general.--Except as provided in this 
                paragraph, the individual health insurance issuer 
                offering such coverage does not enroll any individual 
                in such coverage if the first effective date of 
                coverage is on or after the first day of Y1.
                  (B) Dependent coverage permitted.--Subparagraph (A) 
                shall not affect the subsequent enrollment of a 
                dependent of an individual who is covered as of such 
                first day.
          (2) Limitation on changes in terms or conditions.--Subject to 
        paragraph (3) and except as required by law, the issuer does 
        not change any of its terms or conditions, including benefits 
        and cost-sharing, from those in effect as of the day before the 
        first day of Y1.
          (3) Restrictions on premium increases.--The issuer cannot 
        vary the percentage increase in the premium for a risk group of 
        enrollees in specific grandfathered health insurance coverage 
        without changing the premium for all enrollees in the same risk 
        group at the same rate, as specified by the Commissioner.
  (b) Grace Period for Current Employment-based Health Plans.--
          (1) Grace period.--
                  (A) In general.--The Commissioner shall establish a 
                grace period whereby, for plan years beginning after 
                the end of the 5-year period beginning with Y1, an 
                employment-based health plan in operation as of the day 
                before the first day of Y1 must meet the same 
                requirements as apply to a qualified health benefits 
                plan under section 101, including the essential benefit 
                package requirement under section 121.
                  (B) Exception for limited benefits plans.--
                Subparagraph (A) shall not apply to an employment-based 
                health plan in which the coverage consists only of one 
                or more of the following:
                          (i) Any coverage described in section 
                        3001(a)(1)(B)(ii)(IV) of division B of the 
                        American Recovery and Reinvestment Act of 2009 
                        (PL 111-5).
                          (ii) Excepted benefits (as defined in section 
                        733(c) of the Employee Retirement Income 
                        Security Act of 1974), including coverage under 
                        a specified disease or illness policy described 
                        in paragraph (3)(A) of such section.
                          (iii) Such other limited benefits as the 
                        Commissioner may specify.
                In no case shall an employment-based health plan in 
                which the coverage consists only of one or more of the 
                coverage or benefits described in clauses (i) through 
                (iii) be treated as acceptable coverage under this 
                division
          (2) Transitional treatment as acceptable coverage.--During 
        the grace period specified in paragraph (1)(A), an employment-
        based health plan that is described in such paragraph shall be 
        treated as acceptable coverage under this division.
          (3) Exception for consumer-directed health plans and 
        arrangements.--In the case of a group health plan which 
        consists of a consumer-directed health plan or arrangement 
        (including a high deductible health plan, within the meaning of 
        section 223(c)(2) of the Internal Revenue Code of 1986), such 
        group health plan shall be treated as acceptable coverage under 
        a current group health plan for purposes of this division.
  (c) Limitation on Individual Health Insurance Coverage.--
          (1) In general.--Individual health insurance coverage that is 
        not grandfathered health insurance coverage under subsection 
        (a) may only be offered on or after the first day of Y1 as an 
        Exchange-participating health benefits plan.
          (2) Separate, excepted coverage permitted.--Excepted benefits 
        (as defined in section 2791(c) of the Public Health Service 
        Act) are not included within the definition of health insurance 
        coverage. Nothing in paragraph (1) shall prevent the offering, 
        other than through the Health Insurance Exchange, of excepted 
        benefits so long as it is offered and priced separately from 
        health insurance coverage.

    Subtitle B--Standards Guaranteeing Access to Affordable Coverage

SEC. 111. PROHIBITING PRE-EXISTING CONDITION EXCLUSIONS.

  A qualified health benefits plan may not impose any pre-existing 
condition exclusion (as defined in section 2701(b)(1)(A) of the Public 
Health Service Act) or otherwise impose any limit or condition on the 
coverage under the plan with respect to an individual or dependent 
based on any health status-related factors (as defined in section 
2791(d)(9) of the Public Health Service Act) in relation to the 
individual or dependent.

SEC. 112. GUARANTEED ISSUE AND RENEWAL FOR INSURED PLANS.

  The requirements of sections 2711 (other than subsections (c) and 
(e)) and 2712 (other than paragraphs (3), and (6) of subsection (b) and 
subsection (e)) of the Public Health Service Act, relating to 
guaranteed availability and renewability of health insurance coverage, 
shall apply to individuals and employers in all individual and group 
health insurance coverage, whether offered to individuals or employers 
through the Health Insurance Exchange, through any employment-based 
health plan, or otherwise, in the same manner as such sections apply to 
employers and health insurance coverage offered in the small group 
market, except that such section 2712(b)(1) shall apply only if, before 
nonrenewal or discontinuation of coverage, the issuer has provided the 
enrollee with notice of non-payment of premiums and there is a grace 
period during which the enrollees has an opportunity to correct such 
nonpayment. Rescissions of such coverage shall be prohibited except in 
cases of fraud as defined in sections 2712(b)(2) of such Act.

SEC. 113. INSURANCE RATING RULES.

  (a) In General.--The premium rate charged for an insured qualified 
health benefits plan may not vary except as follows:
          (1) Limited age variation permitted.--By age (within such age 
        categories as the Commissioner shall specify) so long as the 
        ratio of the highest such premium to the lowest such premium 
        does not exceed the ratio of 2 to 1.
          (2) By area.--By premium rating area (as permitted by State 
        insurance regulators or, in the case of Exchange-participating 
        health benefits plans, as specified by the Commissioner in 
        consultation with such regulators).
          (3) By family enrollment.--By family enrollment (such as 
        variations within categories and compositions of families) so 
        long as the ratio of the premium for family enrollment (or 
        enrollments) to the premium for individual enrollment is 
        uniform, as specified under State law and consistent with rules 
        of the Commissioner.
  (b) Study and Reports.--
          (1) Study.--The Commissioner, in coordination with the 
        Secretary of Health and Human Services and the Secretary of 
        Labor, shall conduct a study of the large group insured and 
        self-insured employer health care markets. Such study shall 
        examine the following:
                  (A) The types of employers by key characteristics, 
                including size, that purchase insured products versus 
                those that self-insure.
                  (B) The similarities and differences between typical 
                insured and self-insured health plans.
                  (C) The financial solvency and capital reserve levels 
                of employers that self-insure by employer size.
                  (D) The risk of self-insured employers not being able 
                to pay obligations or otherwise becoming financially 
                insolvent.
                  (E) The extent to which rating rules are likely to 
                cause adverse selection in the large group market or to 
                encourage small and mid size employers to self-insure
          (2) Reports.--Not later than 18 months after the date of the 
        enactment of this Act, the Commissioner shall submit to 
        Congress and the applicable agencies a report on the study 
        conducted under paragraph (1). Such report shall include any 
        recommendations the Commissioner deems appropriate to ensure 
        that the law does not provide incentives for small and mid-size 
        employers to self-insure or create adverse selection in the 
        risk pools of large group insurers and self-insured employers. 
        Not later than 18 months after the first day of Y1, the 
        Commissioner shall submit to Congress and the applicable 
        agencies an updated report on such study, including updates on 
        such recommendations.

SEC. 114. NONDISCRIMINATION IN BENEFITS; PARITY IN MENTAL HEALTH AND 
                    SUBSTANCE ABUSE DISORDER BENEFITS.

  (a) Nondiscrimination in Benefits.--A qualified health benefits plan 
shall comply with standards established by the Commissioner to prohibit 
discrimination in health benefits or benefit structures for qualified 
health benefits plans, building from sections 702 of Employee 
Retirement Income Security Act of 1974, 2702 of the Public Health 
Service Act, and section 9802 of the Internal Revenue Code of 1986.
  (b) Parity in Mental Health and Substance Abuse Disorder Benefits.--
To the extent such provisions are not superceded by or inconsistent 
with subtitle C, the provisions of section 2705 (other than subsections 
(a)(1), (a)(2), and (c)) of section 2705 of the Public Health Service 
Act shall apply to a qualified health benefits plan, regardless of 
whether it is offered in the individual or group market, in the same 
manner as such provisions apply to health insurance coverage offered in 
the large group market.

SEC. 115. ENSURING ADEQUACY OF PROVIDER NETWORKS.

  (a) In General.--A qualified health benefits plan that uses a 
provider network for items and services shall meet such standards 
respecting provider networks as the Commissioner may establish to 
assure the adequacy of such networks in ensuring enrollee access to 
such items and services and transparency in the cost-sharing 
differentials between in-network coverage and out-of-network coverage.
  (b) Internet Access to Information.--A qualified health benefits plan 
that uses a provider network shall provide a current listing of all 
providers in its network on its website and such data shall be 
available on the Health Insurance Exchange website as a `click through' 
from the basic information on that plan. The Commissioner shall also 
establish an on-line system whereby an individual may select by name 
any medical provider (as defined by the Commissioner) and be informed 
of the plan or plans with which that provider is contracting.
  (c) Provider Network Defined.--In this division, the term ``provider 
network'' means the providers with respect to which covered benefits, 
treatments, and services are available under a health benefits plan.

SEC. 116. ENSURING VALUE AND LOWER PREMIUMS.

  The QHBP offering entity shall provide that for any plan year in 
which a qualified health benefits plan that the entity offers has a 
medical loss ratio (expressed as a percentage) that is less than a 
percentage (not less than 85 percent) specified by the Commissioner, 
the QHBP offering entity offering such plan shall provide for rebates 
to enrollees of payment sufficient to meet such loss ratio. The 
Commissioner shall establish a uniform definition of medical loss ratio 
and methodology for determining how to calculate the medical loss 
ratio. Such methodology shall be designed to take into account the 
special circumstances of smaller and newer plans.

SEC. 117. CONSISTENCY OF COSTS AND COVERAGE UNDER QUALIFIED HEALTH 
                    BENEFITS PLANS DURING PLAN YEAR.

  In the case of health insurance coverage offered under a qualified 
health benefits plan, the coverage and cost of coverage may not be 
changed during the course of a plan year except to increase coverage to 
the enrollee or to lower costs to the enrollee.

    Subtitle C--Standards Guaranteeing Access to Essential Benefits

SEC. 121. COVERAGE OF ESSENTIAL BENEFITS PACKAGE.

  (a) In General.--A qualified health benefits plan shall provide 
coverage that at least meets the benefit standards adopted under 
section 124 for the essential benefits package described in section 122 
for the plan year involved.
  (b) Choice of Coverage.--
          (1) Non-exchange-participating health benefits plans.--In the 
        case of a qualified health benefits plan that is not an 
        Exchange-participating health benefits plan, such plan may 
        offer such coverage in addition to the essential benefits 
        package as the QHBP offering entity may specify.
          (2) Exchange-participating health benefits plans.--In the 
        case of an Exchange-participating health benefits plan, such 
        plan is required under section 203 to provide specified levels 
        of benefits and, in the case of a plan offering a premium-plus 
        level of benefits, provide additional benefits.
          (3) Continuation of offering of separate excepted benefits 
        coverage.--Nothing in this division shall be construed as 
        affecting the offering of health benefits in the form of 
        excepted benefits (described in section 102(b)(1)(B)(ii)) if 
        such benefits are offered under a separate policy, contract, or 
        certificate of insurance.
  (c) No Restrictions on Coverage Unrelated to Clinical 
Appropriateness.--A qualified health benefits plan may not impose any 
restriction (other than cost-sharing) unrelated to clinical 
appropriateness on the coverage of the health care items and services.

SEC. 122. ESSENTIAL BENEFITS PACKAGE DEFINED.

  (a) In General.--In this division, the term ``essential benefits 
package'' means health benefits coverage, consistent with standards 
adopted under section 124 to ensure the provision of quality health 
care and financial security, that--
          (1) provides payment for the items and services described in 
        subsection (b) in accordance with generally accepted standards 
        of medical or other appropriate clinical or professional 
        practice;
          (2) limits cost-sharing for such covered health care items 
        and services in accordance with such benefit standards, 
        consistent with subsection (c);
          (3) does not impose any annual or lifetime limit on the 
        coverage of covered health care items and services;
          (4) complies with section 115(a) (relating to network 
        adequacy); and
          (5) is equivalent, as certified by Office of the Actuary of 
        the Centers for Medicare & Medicaid Services, to the average 
        prevailing employer-sponsored coverage.
  (b) Minimum Services to Be Covered.--The items and services described 
in this subsection are the following:
          (1) Hospitalization.
          (2) Outpatient hospital and outpatient clinic services, 
        including emergency department services.
          (3) Professional services of physicians and other health 
        professionals.
          (4) Such services, equipment, and supplies incident to the 
        services of a physician's or a health professional's delivery 
        of care in institutional settings, physician offices, patients' 
        homes or place of residence, or other settings, as appropriate.
          (5) Prescription drugs.
          (6) Rehabilitative and habilitative services.
          (7) Mental health and substance use disorder services.
          (8) Preventive services, including those services recommended 
        with a grade of A or B by the Task Force on Clinical Preventive 
        Services and including mental health and substance abuse 
        services recommended by the Task Force on Clinical Preventive 
        Services and those mental health and substance abuse services 
        with compelling research or evidence, including Screening, 
        Brief Intervention and Referral to Treatment (SBIRT), and those 
        vaccines recommended for use by the Director of the Centers for 
        Disease Control and Prevention.
          (9) Maternity care.
          (10) Well baby and well child care and early and periodic 
        screening, diagnostic, and treatment services (as defined in 
        section 1905(r) of the Social Security Act) at least for 
        children under 21 years of age.
          (11) Durable medical equipment, prosthetics, orthotics and 
        related supplies.
  (c) Requirements Relating to Cost-sharing and Minimum Actuarial 
Value.--
          (1) No cost-sharing for preventive services.--There shall be 
        no cost-sharing under the essential benefits package for 
        preventive items and services (as specified under the benefit 
        standards), including well baby and well child care.
          (2) Annual limitation.--
                  (A) Annual limitation.--The cost-sharing incurred 
                under the essential benefits package with respect to an 
                individual (or family) for a year does not exceed the 
                applicable level specified in subparagraph (B).
                  (B) Applicable level.--The applicable level specified 
                in this subparagraph for Y1 is $5,000 for an individual 
                and $10,000 for a family. Such levels shall be 
                increased (rounded to the nearest $100) for each 
                subsequent year by the annual percentage increase in 
                the Consumer Price Index (United States city average) 
                applicable to such year.
                  (C) Use of copayments.--In establishing cost-sharing 
                levels for basic, enhanced, and premium plans under 
                this subsection, the Secretary shall, to the maximum 
                extent possible, use only copayments and not 
                coinsurance.
          (3) Minimum actuarial value.--
                  (A) In general.--The cost-sharing under the essential 
                benefits package shall be designed to provide a level 
                of coverage that is designed to provide benefits that 
                are actuarially equivalent to approximately 70 percent 
                of the full actuarial value of the benefits provided 
                under the reference benefits package described in 
                subparagraph (B).
                  (B) Reference benefits package described.--The 
                reference benefits package described in this 
                subparagraph is the essential benefits package if there 
                were no cost-sharing imposed.

SEC. 123. HEALTH BENEFITS ADVISORY COMMITTEE.

  (a) Establishment.--
          (1) In general.--There is established a private-public 
        advisory committee which shall be a panel of medical and other 
        experts to be known as the Health Benefits Advisory Committee 
        to recommend covered benefits and essential, enhanced, and 
        premium plans.
          (2) Chair.--The Surgeon General shall be a member and the 
        chair of the Health Benefits Advisory Committee.
          (3) Membership.--The Health Benefits Advisory Committee shall 
        be composed of the following members, in addition to the 
        Surgeon General:
                  (A) 9 members who are not Federal employees or 
                officers and who are appointed by the President.
                  (B) 9 members who are not Federal employees or 
                officers and who are appointed by the Comptroller 
                General of the United States in a manner similar to the 
                manner in which the Comptroller General appoints 
                members to the Medicare Payment Advisory Commission 
                under section 1805(c) of the Social Security Act.
                  (C) Such even number of members (not to exceed 8) who 
                are Federal employees and officers, as the President 
                may appoint.
        The membership of the Committee shall include one or more 
        experts in scientific evidence and clinical practice of 
        integrative health care services. Such initial appointments 
        shall be made not later than 60 days after the date of the 
        enactment of this Act.
          (4) Terms.--Each member of the Health Benefits Advisory 
        Committee shall serve a 3-year term on the Committee, except 
        that the terms of the initial members shall be adjusted in 
        order to provide for a staggered term of appointment for all 
        such members.
          (5) Participation.--The membership of the Health Benefits 
        Advisory Committee shall at least reflect providers, employers, 
        labor, health insurance issuers, experts in health care 
        financing and delivery, experts in racial and ethnic 
        disparities, experts in care for those with disabilities, 
        representatives of relevant governmental agencies. and at least 
        one practicing physician or other health professional and an 
        expert on children's health and shall represent a balance among 
        various sectors of the health care system so that no single 
        sector unduly influences the recommendations of such Committee. 
        The membership of the Committee shall also include educated 
        patients, consumer advocates, or both, who shall include 
        persons who represent individuals affected by a specific 
        disease or medical condition, are knowledgeable about the 
        health care system, and have received training regarding 
        health, medical, and scientific matters.
  (b) Duties.--
          (1) Recommendations on benefit standards.--The Health 
        Benefits Advisory Committee shall recommend to the Secretary of 
        Health and Human Services (in this subtitle referred to as the 
        ``Secretary'') benefit standards (as defined in paragraph (4)), 
        and periodic updates to such standards. In developing such 
        recommendations, the Committee shall--
                  (A) take into account innovation in health care,
                  (B) consider how such standards could reduce health 
                disparities,
                  (C) take into account integrative health care 
                services, and
                  (D) take into account typical multiemployer plan 
                benefit structures and the impact of the essential 
                benefit package on such plans.
          (2) Deadline.--The Health Benefits Advisory Committee shall 
        recommend initial benefit standards to the Secretary not later 
        than 1 year after the date of the enactment of this Act.
          (3) State input.--The Health Benefits Advisory Committee 
        shall examine the health coverage laws and benefits of each 
        State in developing recommendations under this subsection and 
        may incorporate such coverage and benefits as the Committee 
        determines to be appropriate and consistent with this Act. The 
        Health Benefits Advisory Committee shall also seek input from 
        the States and consider recommendations on how to ensure that 
        the quality of health coverage does not decline in any State.
          (4) Public input.--The Health Benefits Advisory Committee 
        shall allow for public input as a part of developing 
        recommendations under this subsection.
          (5) Benefit standards defined.--In this subtitle, the term 
        ``benefit standards'' means standards respecting--
                  (A) the essential benefits package described in 
                section 122, including categories of covered 
                treatments, items and services within benefit classes, 
                and cost-sharing; and
                  (B) the cost-sharing levels for enhanced plans and 
                premium plans (as provided under section 203(c)) 
                consistent with paragraph (5).
          (6) Levels of cost-sharing for enhanced and premium plans.--
                  (A) Enhanced plan.--The level of cost-sharing for 
                enhanced plans shall be designed so that such plans 
                have benefits that are actuarially equivalent to 
                approximately 85 percent of the actuarial value of the 
                benefits provided under the reference benefits package 
                described in section 122(c)(3)(B).
                  (B) Premium plan.--The level of cost-sharing for 
                premium plans shall be designed so that such plans have 
                benefits that are actuarially equivalent to 
                approximately 95 percent of the actuarial value of the 
                benefits provided under the reference benefits package 
                described in section 122(c)(3)(B).
          (7) Recommendations of integrative health care services task 
        force.--
                  (A) Inclusion in committee's recommendations.--The 
                Health Benefits Advisory Committee shall include in its 
                recommendations under paragraph (1) the recommendations 
                made by the Integrative Health Care Services Task Force 
                established under subparagraph (B).
                  (B) Establishment of task force.--The Health Benefits 
                Advisory Committee shall establish an Integrative 
                Health Care Services Task Force. Such Task Force shall 
                consist of 5 experts with expertise in research in, and 
                practice of, integrative health care. Such experts 
                shall be appointed by the Committee from among experts 
                nominated by the Secretary, in consultation with the 
                National Center for Complementary and Alternative 
                Medicine at the National Institutes of Health. The duty 
                of the Task Force shall be to make recommendations to 
                the Committee on evidence-based, clinically effective, 
                and safe integrative care services.
  (c) Operations.--
          (1) Per diem pay.--Each member of the Health Benefits 
        Advisory Committee shall receive travel expenses, including per 
        diem in accordance with applicable provisions under subchapter 
        I of chapter 57 of title 5, United States Code, and shall 
        otherwise serve without additional pay.
          (2) Members not treated as federal employees.--Members of the 
        Health Benefits Advisory Committee shall not be considered 
        employees of the Federal government solely by reason of any 
        service on the Committee.
          (3) Application of faca.--The Federal Advisory Committee Act 
        (5 U.S.C. App.), other than section 14, shall apply to the 
        Health Benefits Advisory Committee.
  (d) Publication.--The Secretary shall provide for publication in the 
Federal Register and the posting on the Internet website of the 
Department of Health and Human Services of all recommendations made by 
the Health Benefits Advisory Committee under this section.

SEC. 124. PROCESS FOR ADOPTION OF RECOMMENDATIONS; ADOPTION OF BENEFIT 
                    STANDARDS.

  (a) Process for Adoption of Recommendations.--
          (1) Review of recommended standards.--Not later than 45 days 
        after the date of receipt of benefit standards recommended 
        under section 123 (including such standards as modified under 
        paragraph (2)(B)), the Secretary shall review such standards 
        and shall determine whether to propose adoption of such 
        standards as a package.
          (2) Determination to adopt standards.--If the Secretary 
        determines--
                  (A) to propose adoption of benefit standards so 
                recommended as a package, the Secretary shall, by 
                regulation under section 553 of title 5, United States 
                Code, propose adoption such standards; or
                  (B) not to propose adoption of such standards as a 
                package, the Secretary shall notify the Health Benefits 
                Advisory Committee in writing of such determination and 
                the reasons for not proposing the adoption of such 
                recommendation and provide the Committee with a further 
                opportunity to modify its previous recommendations and 
                submit new recommendations to the Secretary on a timely 
                basis.
          (3) Contingency.--If, because of the application of paragraph 
        (2)(B), the Secretary would otherwise be unable to propose 
        initial adoption of such recommended standards by the deadline 
        specified in subsection (b)(1), the Secretary shall, by 
        regulation under section 553 of title 5, United States Code, 
        propose adoption of initial benefit standards by such deadline.
          (4) Publication.--The Secretary shall provide for publication 
        in the Federal Register of all determinations made by the 
        Secretary under this subsection.
  (b) Adoption of Standards.--
          (1) Initial standards.--Not later than 18 months after the 
        date of the enactment of this Act, the Secretary shall, through 
        the rulemaking process consistent with subsection (a), adopt an 
        initial set of benefit standards.
          (2) Periodic updating standards.--Under subsection (a), the 
        Secretary shall provide for the periodic updating of the 
        benefit standards previously adopted under this section.
          (3) Requirement.--The Secretary may not adopt any benefit 
        standards for an essential benefits package or for level of 
        cost-sharing that are inconsistent with the requirements for 
        such a package or level under sections 122 and 123(b)(5).

SEC. 125 PROHIBITION OF DISCRIMINATION IN HEALTH CARE SERVICES BASED ON 
                    RELIGIOUS OR SPIRITUAL CONTENT.

  Neither the Commissioner nor any health insurance issuer offering 
health insurance coverage through the Exchange shall discriminate in 
approving or covering a health care service on the basis of its 
religious or spiritual content if expenditures for such a health care 
service are allowable as a deduction under 213(d) of the Internal 
Revenue Code of 1986, as in effect on January 1, 2009.

              Subtitle D--Additional Consumer Protections

SEC. 131. REQUIRING FAIR MARKETING PRACTICES BY HEALTH INSURERS.

  The Commissioner shall establish uniform marketing standards that all 
insured QHBP offering entities shall meet.

SEC. 132. REQUIRING FAIR GRIEVANCE AND APPEALS MECHANISMS.

  (a) In General.--A QHBP offering entity shall provide for timely 
grievance and appeals mechanisms that the Commissioner shall establish.
  (b) Internal Claims and Appeals Process.--Under a qualified health 
benefits plan the QHBP offering entity shall provide an internal claims 
and appeals process that initially incorporates the claims and appeals 
procedures (including urgent claims) set forth at section 2560.503-1 of 
title 29, Code of Federal Regulations, as published on November 21, 
2000 (65 Fed. Reg. 70246) and shall update such process in accordance 
with any standards that the Commissioner may establish.
  (c) External Review Process.--
          (1) In general.--The Commissioner shall establish an external 
        review process (including procedures for expedited reviews of 
        urgent claims) that provides for an impartial, independent, and 
        de novo review of denied claims under this division.
          (2) Requiring fair grievance and appeals mechanisms.--A 
        determination made, with respect to a qualified health benefits 
        plan offered by a QHBP offering entity, under the external 
        review process established under this subsection shall be 
        binding on the plan and the entity.
  (d) Construction.--Nothing in this section shall be construed as 
affecting the availability of judicial review under State law for 
adverse decisions under subsection (b) or (c), subject to section 151.

SEC. 133. REQUIRING INFORMATION TRANSPARENCY AND PLAN DISCLOSURE.

  (a) Accurate and Timely Disclosure.--
          (1) In general.--A qualified health benefits plan shall 
        comply with standards established by the Commissioner for the 
        accurate and timely disclosure of plan documents, plan terms 
        and conditions, claims payment policies and practices, periodic 
        financial disclosure, data on enrollment, data on 
        disenrollment, data on the number of claims denials, data on 
        rating practices, information on cost-sharing and payments with 
        respect to any out-of-network coverage, and other information 
        as determined appropriate by the Commissioner. The Commissioner 
        shall require that such disclosure be provided in plain 
        language.
          (2) Plain language.--In this subsection, the term ``plain 
        language'' means language that the intended audience, including 
        individuals with limited English proficiency, can readily 
        understand and use because that language is clean, concise, 
        well-organized, and follows other best practices of plain 
        language writing.
          (3) Guidance.--The Commissioner shall develop and issue 
        guidance on best practices of plain language writing.
  (b) Contracting Reimbursement.--A qualified health benefits plan 
shall comply with standards established by the Commissioner to ensure 
transparency to each health care provider relating to reimbursement 
arrangements between such plan and such provider.
  (c) Advance Notice of Plan Changes.--A change in a qualified health 
benefits plan shall not be made without such reasonable and timely 
advance notice to enrollees of such change.
  (d) Identification of Providers Trained and Accredited in Integrative 
Medicine.--A qualified health benefit plan shall include in the 
disclosure required under subsection (a) identification to enrollees of 
any providers of services under the plan that are trained and 
accredited in integrative health medicine.

SEC. 134. APPLICATION TO QUALIFIED HEALTH BENEFITS PLANS NOT OFFERED 
                    THROUGH THE HEALTH INSURANCE EXCHANGE.

  The requirements of the previous provisions of this subtitle shall 
apply to qualified health benefits plans that are not being offered 
through the Health Insurance Exchange only to the extent specified by 
the Commissioner.

SEC. 135. TIMELY PAYMENT OF CLAIMS.

  A QHBP offering entity shall comply with the requirements of section 
1857(f) of the Social Security Act with respect to a qualified health 
benefits plan it offers in the same manner an Medicare Advantage 
organization is required to comply with such requirements with respect 
to a Medicare Advantage plan it offers under part C of Medicare.

SEC. 136. STANDARDIZED RULES FOR COORDINATION AND SUBROGATION OF 
                    BENEFITS.

  The Commissioner shall establish standards for the coordination and 
subrogation of benefits and reimbursement of payments in cases 
involving individuals and multiple plan coverage.

SEC. 137. APPLICATION OF ADMINISTRATIVE SIMPLIFICATION.

  A QHBP offering entity is required to comply with standards for 
electronic financial and administrative transactions under section 
1173A of the Social Security Act, added by section 163(a).

SEC. 138. RECORDS RELATIVE TO PRESCRIPTION INFORMATION.

  (a) In General.--A qualified health benefits plan shall ensure that 
its records relative to prescription information containing patient 
identifiable and prescriber-identifiable data are maintained in 
accordance with this section.''
  (b) Requirements.--
          (1) In general.--Records described in subsection (a) may not 
        be licensed, transferred, used, or sold by any pharmacy 
        benefits manager, insurance company, electronic transmission 
        intermediary, retail, mail order, or Internet pharmacy or other 
        similar entity, for any commercial purpose, except for the 
        limited purposes of--
                  (A) pharmacy reimbursement;
                  (B) formulary compliance;
                  (C) care management;
                  (D) utilization review by a health care provider, the 
                patient's insurance provider or the agent of either;
                  (E) health care research; or
                  (F) as otherwise provided by law.
          (2) Commercial purpose.--For purposes of paragraph (1), the 
        term ``commercial purpose'' includes, but is not limited to, 
        advertising, marketing, promotion, or any activity that could 
        be used to influence sales or market share of a pharmaceutical 
        product, influence or evaluate the prescribing behavior of an 
        individual health care professional, or evaluate the 
        effectiveness of a professional pharmaceutical detailing sales 
        force.
  (c) Construction.--
          (1) Permitted practices.--Nothing in this section shall 
        prohibit--
                  (A) the dispensing of prescription medications to a 
                patient or to the patient's authorized representative;
                  (B) the transmission of prescription information 
                between an authorized prescriber and a licensed 
                pharmacy;
                  (C) the transfer of prescription information between 
                licensed pharmacies;
                  (D) the transfer of prescription records that may 
                occur in the event a pharmacy ownership is changed or 
                transferred;
                  (E) care management educational communications 
                provided to a patient about the patient's health 
                condition, adherence to a prescribed course of therapy, 
                or other information about the drug being dispensed, 
                treatment options, or clinical trials.
          (2) De-identified data.--Nothing in this section shall 
        prohibit the collection, use, transfer, or sale of patient and 
        prescriber de-identified data by zip code, geographic region, 
        or medical specialty for commercial purposes.

                         Subtitle E--Governance

SEC. 141. HEALTH CHOICES ADMINISTRATION; HEALTH CHOICES COMMISSIONER.

  (a) In General.--There is hereby established, as an independent 
agency in the executive branch of the Government, a Health Choices 
Administration (in this division referred to as the 
``Administration'').
  (b) Commissioner.--
          (1) In general.--The Administration shall be headed by a 
        Health Choices Commissioner (in this division referred to as 
        the ``Commissioner'') who shall be appointed by the President, 
        by and with the advice and consent of the Senate.
          (2) Compensation; etc.--The provisions of paragraphs (2), (5) 
        and (7) of subsection (a) (relating to compensation, terms, 
        general powers, rulemaking, and delegation) of section 702 of 
        the Social Security Act (42 U.S.C. 902) shall apply to the 
        Commissioner and the Administration in the same manner as such 
        provisions apply to the Commissioner of Social Security and the 
        Social Security Administration.

SEC. 142. DUTIES AND AUTHORITY OF COMMISSIONER.

  (a) Duties.--The Commissioner is responsible for carrying out the 
following functions under this division:
          (1) Qualified plan standards.--The establishment of qualified 
        health benefits plan standards under this title, including the 
        enforcement of such standards in coordination with State 
        insurance regulators and the Secretaries of Labor and the 
        Treasury.
          (2) Health insurance exchange.--The establishment and 
        operation of a Health Insurance Exchange under subtitle A of 
        title II.
          (3) Individual affordability credits.--The administration of 
        individual affordability credits under subtitle C of title II, 
        including determination of eligibility for such credits.
          (4) Additional functions.--Such additional functions as may 
        be specified in this division.
  (b) Promoting Accountability.--
          (1) In general.--The Commissioner shall undertake activities 
        in accordance with this subtitle to promote accountability of 
        QHBP offering entities in meeting Federal health insurance 
        requirements, regardless of whether such accountability is with 
        respect to qualified health benefits plans offered through the 
        Health Insurance Exchange or outside of such Exchange.
          (2) Compliance examination and audits.--
                  (A) In general.--The commissioner shall, in 
                coordination with States, conduct audits of qualified 
                health benefits plan compliance with Federal 
                requirements.   Such audits may include random 
                compliance audits and targeted audits in response to 
                complaints or other suspected non-compliance.
                  (B) Recoupment of costs in connection with 
                examination and audits.--The Commissioner is authorized 
                to recoup from qualified health benefits plans 
                reimbursement for the costs of such examinations and 
                audit of such QHBP offering entities.
  (c) Data Collection.--The Commissioner shall collect data for 
purposes of carrying out the Commissioner's duties, including for 
purposes of promoting quality and value, protecting consumers, and 
addressing disparities in health and health care and may share such 
data with the Secretary of Health and Human Services.
  (d) Sanctions Authority.--
          (1) In general.--In the case that the Commissioner determines 
        that a QHBP offering entity violates a requirement of this 
        title, the Commissioner may, in coordination with State 
        insurance regulators and the Secretary of Labor, provide, in 
        addition to any other remedies authorized by law, for any of 
        the remedies described in paragraph (2).
          (2) Remedies.--The remedies described in this paragraph, with 
        respect to a qualified health benefits plan offered by a QHBP 
        offering entity, are--
                  (A) civil money penalties of not more than the amount 
                that would be applicable under similar circumstances 
                for similar violations under section 1857(g) of the 
                Social Security Act;
                  (B) suspension of enrollment of individuals under 
                such plan after the date the Commissioner notifies the 
                entity of a determination under paragraph (1) and until 
                the Commissioner is satisfied that the basis for such 
                determination has been corrected and is not likely to 
                recur;
                  (C) in the case of an Exchange-participating health 
                benefits plan, suspension of payment to the entity 
                under the Health Insurance Exchange for individuals 
                enrolled in such plan after the date the Commissioner 
                notifies the entity of a determination under paragraph 
                (1) and until the Secretary is satisfied that the basis 
                for such determination has been corrected and is not 
                likely to recur; or
                  (D) working with State insurance regulators to 
                terminate plans for repeated failure by the offering 
                entity to meet the requirements of this title.
  (e) Standard Definitions of Insurance and Medical Terms.--The 
Commissioner shall provide for the development of standards for the 
definitions of terms used in health insurance coverage, including 
insurance-related terms.
  (f) Efficiency in Administration.--The Commissioner shall issue 
regulations for the effective and efficient administration of the 
Health Insurance Exchange and affordability credits under subtitle C, 
including, with respect to the determination of eligibility for 
affordability credits, the use of personnel who are employed in 
accordance with the requirements of title 5, United States Code, to 
carry out the duties of the Commissioner or, in the case of sections 
208 and 241(b)(2), the use of State personnel who are employed in 
accordance with standards prescribed by the Office of Personnel 
Management pursuant to section 208 of the Intergovernmental Personnel 
Act of 1970 (42 U.S.C. 4728).

SEC. 143. CONSULTATION AND COORDINATION.

  (a) Consultation.--In carrying out the Commissioner's duties under 
this division, the Commissioner, as appropriate, shall consult with at 
least with the following:
          (1) The National Association of Insurance Commissioners, 
        State attorneys general, and State insurance regulators, 
        including concerning the standards for insured qualified health 
        benefits plans under this title and enforcement of such 
        standards.
          (2) Appropriate State agencies, specifically concerning the 
        administration of individual affordability credits under 
        subtitle C of title II and the offering of Exchange-
        participating health benefits plans, to Medicaid eligible 
        individuals under subtitle A of such title.
          (3) Other appropriate Federal agencies.
          (4) Indian tribes and tribal organizations.
          (5) The National Association of Insurance Commissioners for 
        purposes of using model guidelines established by such 
        association for purposes of subtitles B and D.
  (b) Coordination.--
          (1) In general.--In carrying out the functions of the 
        Commissioner, including with respect to the enforcement of the 
        provisions of this division, the Commissioner shall work in 
        coordination with existing Federal and State entities to the 
        maximum extent feasible consistent with this division and in a 
        manner that prevents conflicts of interest in duties and 
        ensures effective enforcement.
          (2) Uniform standards.--The Commissioner, in coordination 
        with such entities, shall seek to achieve uniform standards 
        that adequately protect consumers in a manner that does not 
        unreasonably affect employers and insurers.

SEC. 144. HEALTH INSURANCE OMBUDSMAN.

  (a) In General.--The Commissioner shall appoint within the Health 
Choices Administration a Qualified Health Benefits Plan Ombudsman who 
shall have expertise and experience in the fields of health care and 
education of (and assistance to) individuals.
  (b) Duties.--The Qualified Health Benefits Plan Ombudsman shall, in a 
linguistically appropriate manner--
          (1) receive complaints, grievances, and requests for 
        information submitted by individuals;
          (2) provide assistance with respect to complaints, 
        grievances, and requests referred to in paragraph (1), 
        including--
                  (A) helping individuals determine the relevant 
                information needed to seek an appeal of a decision or 
                determination;
                  (B) assistance to such individuals with any problems 
                arising from disenrollment from such a plan;
                  (C) assistance to such individuals in choosing a 
                qualified health benefits plan in which to enroll; and
                  (D) assistance to such individuals in presenting 
                information under subtitle C (relating to affordability 
                credits);
          (3) consult with educated patients and consumer advocates 
        (described in section 123(a)(5)); and
          (4) submit annual reports to Congress and the Commissioner 
        that describe the activities of the Ombudsman and that include 
        such recommendations for improvement in the administration of 
        this division as the Ombudsman determines appropriate. The 
        Ombudsman shall not serve as an advocate for any increases in 
        payments or new coverage of services, but may identify issues 
        and problems in payment or coverage policies.

       Subtitle F--Relation to Other Requirements; Miscellaneous

SEC. 151. RELATION TO OTHER REQUIREMENTS.

  (a) Coverage Not Offered Through Exchange.--
          (1) In general.--In the case of health insurance coverage not 
        offered through the Health Insurance Exchange (whether or not 
        offered in connection with an employment-based health plan), 
        and in the case of employment-based health plans, the 
        requirements of this title do not supercede any requirements 
        applicable under titles XXII and XXVII of the Public Health 
        Service Act, parts 6 and 7 of subtitle B of title I of the 
        Employee Retirement Income Security Act of 1974, or State law, 
        except insofar as such requirements prevent the application of 
        a requirement of this division, as determined by the 
        Commissioner.
          (2) Construction.--Nothing in paragraph (1) shall be 
        construed as affecting the application of section 514 of the 
        Employee Retirement Income Security Act of 1974.
  (b) Coverage Offered Through Exchange.--
          (1) In general.--In the case of health insurance coverage 
        offered through the Health Insurance Exchange--
                  (A) the requirements of this title do not supercede 
                any requirements (including requirements relating to 
                genetic information nondiscrimination and mental 
                health) applicable under title XXVII of the Public 
                Health Service Act or under State law, except insofar 
                as such requirements prevent the application of a 
                requirement of this division, as determined by the 
                Commissioner; and
                  (B) individual rights and remedies under State laws 
                shall apply.
          (2) Construction.--In the case of coverage described in 
        paragraph (1), nothing in such paragraph shall be construed as 
        preventing the application of rights and remedies under State 
        laws with respect to any requirement referred to in paragraph 
        (1)(A).

SEC. 152. PROHIBITING DISCRIMINATION IN HEALTH CARE.

  (a) In General.--Except as otherwise explicitly permitted by this Act 
and by subsequent regulations consistent with this Act, all health care 
and related services (including insurance coverage and public health 
activities) covered by this Act shall be provided without regard to 
personal characteristics extraneous to the provision of high quality 
health care or related services.
  (b) Implementation.--To implement the requirement set forth in 
subsection (a), the Secretary of Health and Human Services shall, not 
later than 18 months after the date of the enactment of this Act, 
promulgate such regulations as are necessary or appropriate to insure 
that all health care and related services (including insurance coverage 
and public health activities) covered by this Act are provided (whether 
directly or through contractual, licensing, or other arrangements) 
without regard to personal characteristics extraneous to the provision 
of high quality health care or related services.

SEC. 153. WHISTLEBLOWER PROTECTION.

  (a) Retaliation Prohibited.--No employer may discharge any employee 
or otherwise discriminate against any employee with respect to his 
compensation, terms, conditions, or other privileges of employment 
because the employee (or any person acting pursuant to a request of the 
employee)--
          (1) provided, caused to be provided, or is about to provide 
        or cause to be provided to the employer, the Federal 
        Government, or the attorney general of a State information 
        relating to any violation of, or any act or omission the 
        employee reasonably believes to be a violation of any provision 
        of this Act or any order, rule, or regulation promulgated under 
        this Act;
          (2) testified or is about to testify in a proceeding 
        concerning such violation;
          (3) assisted or participated or is about to assist or 
        participate in such a proceeding; or
          (4) objected to, or refused to participate in, any activity, 
        policy, practice, or assigned task that the employee (or other 
        such person) reasonably believed to be in violation of any 
        provision of this Act or any order, rule, or regulation 
        promulgated under this Act.
  (b) Enforcement Action.--An employee covered by this section who 
alleges discrimination by an employer in violation of subsection (a) 
may bring an action governed by the rules, procedures, legal burdens of 
proof, and remedies set forth in section 40(b) of the Consumer Product 
Safety Act (15 U.S.C. 2087(b)).
  (c) Employer Defined.--As used in this section, the term ``employer'' 
means any person (including one or more individuals, partnerships, 
associations, corporations, trusts, professional membership 
organization including a certification, disciplinary, or other 
professional body, unincorporated organizations, nongovernmental 
organizations, or trustees) engaged in profit or nonprofit business or 
industry whose activities are governed by this Act, and any agent, 
contractor, subcontractor, grantee, or consultant of such person.
  (d) Rule of Construction.--The rule of construction set forth in 
section 20109(h) of title 49, United States Code, shall also apply to 
this section.

SEC. 154. CONSTRUCTION REGARDING COLLECTIVE BARGAINING.

  Nothing in this division shall be construed to alter or supercede any 
statutory or other obligation to engage in collective bargaining over 
the terms and conditions of employment related to health care.

SEC. 155. SEVERABILITY.

  If any provision of this Act, or any application of such provision to 
any person or circumstance, is held to be unconstitutional, the 
remainder of the provisions of this Act and the application of the 
provision to any other person or circumstance shall not be affected.

SEC. 156. RULE OF CONSTRUCTION REGARDING HAWAII PREPAID HEALTH CARE 
                    ACT.

  (a) In General.--Subject to this section--
          (1) nothing in this division (or an amendment made by this 
        division) shall be construed to modify or limit the application 
        of the exemption for the Hawaii Prepaid Health Care Act (Haw. 
        Rev. Stat. Sec. Sec.  393-1 et seq.) as provided for under 
        section 514(b)(5) of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1144(b)(5)), and such exemption shall 
        also apply with respect to the provisions of this division, and
          (2) for purposes of this division (and the amendments made by 
        this division), coverage provided pursuant to the Hawaii 
        Prepaid Health Care Act shall be treated as a qualified health 
        benefits plan providing acceptable coverage so long as the 
        Secretary of Labor determines that such coverage for employees 
        (taking into account the benefits and the cost to employees for 
        such benefits) is substantially equivalent to or greater than 
        the coverage provided for employees pursuant to the essential 
        benefits package.
  (b) Coordination With State Law of Hawaii.--The Commissioner shall, 
based on ongoing consultation with the appropriate officials of the 
State of Hawaii, make adjustments to rules and regulations of the 
Commissioner under this division as may be necessary, as determined by 
the Commissioner, to most effectively coordinate the provisions of this 
division with the provisions of the Hawaii Prepaid Health Care Act, 
taking into account any changes made from time to time to the Hawaii 
Prepaid Health Care Act and related laws of such State.

SEC. 157. INCREASING MEANINGFUL USE OF ELECTRONIC HEALTH RECORDS.

  (a) Study.--The Commissioner shall conduct a study on methods that 
QHBP offering entities can use to encourage increased meaningful use of 
electronic health records by health care providers, including--
          (1) qualified health benefits plans offering higher 
        reimbursement rates for such meaningful use; and
          (2) promoting the use by health care providers of low-cost 
        available electronic health record software packages, such as 
        software made available to health care providers by the 
        Veterans Administration.
  (b) Report.--Not later than 2 years after the date of the enactment 
of this Act, the Commissioner shall submit to the Congress a report 
containing--
          (1) the results of the study under subsection (a); and
          (2) recommendations concerning whether qualified health 
        benefits plans should increase reimbursement rates to health 
        care providers to increase meaningful use of electronic health 
        records by such providers.
  (c) Requirements.--
          (1) In general.--Not later than one year after the date the 
        report is submitted to the Congress under subsection (b), if, 
        under subsection (b)(2), the Commissioner recommends increased 
        reimbursement rates, the Commissioner shall require that 
        qualified health benefits plans increase reimbursement rates 
        for health care providers that show meaningful use of 
        electronic health records.
          (2) Cost limitation.--An increase in rates under paragraph 
        (1) shall not result in any increase in affordability premium 
        or cost-sharing credits under subtitle C of title II of this 
        division.

SEC. 158. PRIVATE RIGHT OF CONTRACT WITH HEALTH CARE PROVIDERS.

  Nothing in this Act shall be construed to preclude any participant or 
beneficiary in a group health plan from entering into any contract or 
arrangement for health care with any health care provider.

                     Subtitle G--Early Investments

SEC. 161-163. [FOR SECTIONS 161 THROUGH 163, SEE THE TEXT OF H.R.3200, 
                    AS INTRODUCED.]

SEC. 164. REINSURANCE PROGRAM FOR RETIREES.

  (a) Establishment.--
          (1) In general.--Not later than 90 days after the date of the 
        enactment of this Act, the Secretary of Health and Human 
        Services shall establish a temporary reinsurance program (in 
        this section referred to as the ``reinsurance program'') to 
        provide reimbursement to assist participating employment-based 
        plans with the cost of providing health benefits to retirees 
        and to eligible spouses, surviving spouses and dependents of 
        such retirees.
          (2) Definitions.--For purposes of this section:
                  (A) The term ``eligible employment-based plan'' means 
                a group health benefits plan that--
                          (i) is maintained by one or more employers, 
                        former employers or employee associations, or a 
                        voluntary employees' beneficiary association, 
                        or a committee or board of individuals 
                        appointed to administer such plan, and
                          (ii) provides health benefits to retirees.
                  (B) The term ``health benefits'' means medical, 
                surgical, hospital, prescription drug, and such other 
                benefits as shall be determined by the Secretary, 
                whether self-funded or delivered through the purchase 
                of insurance or otherwise.
                  (C) The term ``participating employment-based plan'' 
                means an eligible employment-based plan that is 
                participating in the reinsurance program.
                  (D) The term ``retiree'' means, with respect to a 
                participating employment-benefit plan, an individual 
                who--
                          (i) is 55 years of age or older;
                          (ii) is not eligible for coverage under title 
                        XVIII of the Social Security Act; and
                          (iii) is not an active employee of an 
                        employer maintaining the plan or of any 
                        employer that makes or has made substantial 
                        contributions to fund such plan.
                  (E) The term ``Secretary'' means Secretary of Health 
                and Human Services.
  (b) Participation.--To be eligible to participate in the reinsurance 
program, an eligible employment-based plan shall submit to the 
Secretary an application for participation in the program, at such 
time, in such manner, and containing such information as the Secretary 
shall require.
  (c) Payment.--
          (1) Submission of claims.--
                  (A) In general.--Under the reinsurance program, a 
                participating employment-based plan shall submit claims 
                for reimbursement to the Secretary which shall contain 
                documentation of the actual costs of the items and 
                services for which each claim is being submitted.
                  (B) Basis for claims.--Each claim submitted under 
                subparagraph (A) shall be based on the actual amount 
                expended by the participating employment-based plan 
                involved within the plan year for the appropriate 
                employment based health benefits provided to a retiree 
                or to the spouse, surviving spouse, or dependent of a 
                retiree. In determining the amount of any claim for 
                purposes of this subsection, the participating 
                employment-based plan shall take into account any 
                negotiated price concessions (such as discounts, direct 
                or indirect subsidies, rebates, and direct or indirect 
                remunerations) obtained by such plan with respect to 
                such health benefits. For purposes of calculating the 
                amount of any claim, the costs paid by the retiree or 
                by the spouse, surviving spouse, or dependent of the 
                retiree in the form of deductibles, co-payments, and 
                co-insurance shall be included along with the amounts 
                paid by the participating employment-based plan.
          (2) Program payments and limit.--If the Secretary determines 
        that a participating employment-based plan has submitted a 
        valid claim under paragraph (1), the Secretary shall reimburse 
        such plan for 80 percent of that portion of the costs 
        attributable to such claim that exceeds $15,000, but is less 
        than $90,000. Such amounts shall be adjusted each year based on 
        the percentage increase in the medical care component of the 
        Consumer Price Index (rounded to the nearest multiple of 
        $1,000) for the year involved.
          (3) Use of payments.--Amounts paid to a participating 
        employment-based plan under this subsection shall be used to 
        lower the costs borne directly by the participants and 
        beneficiaries for health benefits provided under such plan in 
        the form of premiums, co-payments, deductibles, co-insurance, 
        or other out-of-pocket costs. Such payments shall not be used 
        to reduce the costs of an employer maintaining the 
        participating employment-based plan. The Secretary shall 
        develop a mechanism to monitor the appropriate use of such 
        payments by such plans.
          (4) Appeals and program protections.--The Secretary shall 
        establish--
                  (A) an appeals process to permit participating 
                employment-based plans to appeal a determination of the 
                Secretary with respect to claims submitted under this 
                section; and
                  (B) procedures to protect against fraud, waste, and 
                abuse under the program.
          (5) Audits.--The Secretary shall conduct annual audits of 
        claims data submitted by participating employment-based plans 
        under this section to ensure that they are in compliance with 
        the requirements of this section.
  (d) Retiree Reserve Trust Fund.--
          (1) Establishment.--
                  (A) In general.--There is established in the Treasury 
                of the United States a trust fund to be known as the 
                ``Retiree Reserve Trust Fund'' (referred to in this 
                section as the ``Trust Fund''), that shall consist of 
                such amounts as may be appropriated or credited to the 
                Trust Fund as provided for in this subsection to enable 
                the Secretary to carry out the reinsurance program. 
                Such amounts shall remain available until expended.
                  (B) Funding.--There are hereby appropriated to the 
                Trust Fund, out of any moneys in the Treasury not 
                otherwise appropriated, an amount requested by the 
                Secretary as necessary to carry out this section, 
                except that the total of all such amounts requested 
                shall not exceed $10,000,000,000.
                  (C) Appropriations from the trust fund.--
                          (i) In general.--Amounts in the Trust Fund 
                        are appropriated to provide funding to carry 
                        out the reinsurance program and shall be used 
                        to carry out such program.
                          (ii) Budgetary implications.--Amounts 
                        appropriated under clause (i), and outlays 
                        flowing from such appropriations, shall not be 
                        taken into account for purposes of any budget 
                        enforcement procedures including allocations 
                        under section 302(a) and (b) of the Balanced 
                        Budget and Emergency Deficit Control Act and 
                        budget resolutions for fiscal years during 
                        which appropriations are made from the Trust 
                        Fund.
                          (iii) Limitation to available funds.--The 
                        Secretary has the authority to stop taking 
                        applications for participation in the program 
                        or take such other steps in reducing 
                        expenditures under the reinsurance program in 
                        order to ensure that expenditures under the 
                        reinsurance program do not exceed the funds 
                        available under this subsection.

SEC. 165. PROHIBITION AGAINST POST-RETIREMENT REDUCTIONS OF RETIREE 
                    HEALTH BENEFITS BY GROUP HEALTH PLANS.

  (a) In General.--Part 7 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 is amended by inserting after 
section 714 the following new section:

``SEC. 715. PROTECTION AGAINST POST-RETIREMENT REDUCTION OF RETIREE 
                    HEALTH BENEFITS.

  ``(a) In General.--Every group health plan shall contain a provision 
which expressly bars the plan, or any fiduciary of the plan, from 
reducing the benefits provided under the plan to a retired participant, 
or beneficiary of such participant, if such reduction affects the 
benefits provided to the participant or beneficiary as of the date the 
participant retired for purposes of the plan and such reduction occurs 
after the participant's retirement unless such reduction is also made 
with respect to active participants.
  ``(b) No Reduction.--Notwithstanding that a group health plan 
described in subsection (a) may contain a provision reserving the 
general power to amend or terminate the plan or a provision 
specifically authorizing the plan to make post-retirement reductions in 
retiree health benefits, it shall be prohibited for any group health 
plan, whether through amendment or otherwise, to reduce the benefits 
provided to a retired participant or his or her beneficiary under the 
terms of the plan if such reduction of benefits occurs after the date 
the participant retired for purposes of the plan and reduces benefits 
that were provided to the participant, or his or her beneficiary, as of 
the date the participant retired unless such reduction is also made 
with respect to active participants.''.
  (b) Conforming Amendment.--The table of contents in section 1 of such 
Act is amended by inserting after the item relating to section 714 the 
following new item:

``Sec. 715. Protection against post-retirement reduction of retiree 
health benefits.''.
  (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 166. LIMITATIONS ON PREEXISTING CONDITION EXCLUSIONS IN GROUP 
                    HEALTH PLANS IN ADVANCE OF APPLICABILITY OF NEW 
                    PROHIBITION OF PREEXISTING CONDITION EXCLUSIONS.

  (a) Amendments to the Employee Retirement Income Security Act of 
1974.--
          (1) Reduction in look-back period.--Section 701(a)(1) of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1181(a)(1)) is amended by striking ``6-month period'' and 
        inserting ``30-day period''.
          (2) Reduction in permitted preexisting condition limitation 
        period.--Section 701(a)(2) of such Act (29 U.S.C. 1181(a)(2)) 
        is amended by striking ``12 months'' and inserting ``3 
        months'', and by striking ``18 months'' and inserting ``9 
        months''.
          (3) Inapplicability of interim limitations upon applicability 
        of total prohibition of exclusion.--Section 701 of such Act 
        shall cease to be effective in the case of any group health 
        plan as of the date on which such plan becomes subject to the 
        requirements of section 111 of this Act (relating to 
        prohibiting preexisting condition exclusions).
  (b) Effective Date.--
          (1) In general.--Except as provided in subparagraph (B), the 
        amendments made by paragraphs (1) and (2) of subsection (a) 
        shall apply with respect to group health plans for plan years 
        beginning after the end of the 6th calendar month following the 
        date of the enactment of this Act.
          (2) Special rule for collective bargaining agreements.--In 
        the case of a group health plan maintained pursuant to one or 
        more collective bargaining agreements between employee 
        representatives and one or more employers ratified before the 
        date of the enactment of this Act, the amendments made by 
        paragraphs (1) and (2) of subsection (a) shall not apply to 
        plan years beginning before the earlier of--
                  (A) the date on which the last of the collective 
                bargaining agreements relating to the plan terminates 
                (determined without regard to any extension thereof 
                agreed to after the date of the enactment of this Act), 
                or
                  (B) 3 years after the date of the enactment of this 
                Act.
        For purposes of subparagraph (A), any plan amendment made 
        pursuant to a collective bargaining agreement relating to the 
        plan which amends the plan solely to conform to any requirement 
        added by the amendments made by paragraphs (1) and (2) of 
        subsection (a) shall not be treated as a termination of such 
        collective bargaining agreement.

SEC. 167. EXTENSION OF COBRA CONTINUATION COVERAGE.

  (a) Extension of Current Periods of Continuation Coverage.--
          (1) In general.--In the case of any individual who is, under 
        a COBRA continuation coverage provision, covered under COBRA 
        continuation coverage on or after the date of the enactment of 
        this Act, the required period of any such coverage which has 
        not subsequently terminated under the terms of such provision 
        for any reason other than the expiration of a period of a 
        specified number of months shall, notwithstanding such 
        provision and subject to subsection (b), extend to the earlier 
        of the date on which such individual becomes eligible for 
        coverage under an employment-based health plan or the date on 
        which such individual becomes eligible for health insurance 
        coverage through the Health Insurance Exchange (or a State-
        based Health Insurance Exchange operating in a State or group 
        of States).
          (2) Notice.--As soon as practicable after the date of the 
        enactment of this Act, the Secretary of Labor, in consultation 
        with the Secretary of the Treasury and the Secretary of Health 
        and Human Services, shall, in consultation with administrators 
        of the group health plans (or other entities) that provide or 
        administer the COBRA continuation coverage involved, provide 
        rules setting forth the form and manner in which prompt notice 
        to individuals of the continued availability of COBRA 
        continuation coverage to such individuals under paragraph (1).
  (b) Continued Effect of Other Terminating Events.--Notwithstanding 
subsection (a), any required period of COBRA continuation coverage 
which is extended under such subsection shall terminate upon the 
occurrence, prior to the date of termination otherwise provided in such 
subsection, of any terminating event specified in the applicable 
continuation coverage provision other than the expiration of a period 
of a specified number of months.
  (c) Access to State Health Benefits Risk Pools.--This section shall 
supersede any provision of the law of a State or political subdivision 
thereof to the extent that such provision has the effect of limiting or 
precluding access by a qualified beneficiary whose COBRA continuation 
coverage has been extended under this section to a State health 
benefits risk pool recognized by the Commissioner for purposes of this 
section solely by reason of the extension of such coverage beyond the 
date on which such coverage otherwise would have expired.
  (d) Definitions.--For purposes of this section--
          (1) COBRA continuation coverage.--The term ``COBRA 
        continuation coverage'' means continuation coverage provided 
        pursuant to part 6 of subtitle B of title I of the Employee 
        Retirement Income Security Act of 1974 (other than under 
        section 609), title XXII of the Public Health Service Act, 
        section 4980B of the Internal Revenue Code of 1986 (other than 
        subsection (f)(1) of such section insofar as it relates to 
        pediatric vaccines), or section 905a of title 5, United States 
        Code, or under a State program that provides comparable 
        continuation coverage. Such term does not include coverage 
        under a health flexible spending arrangement under a cafeteria 
        plan within the meaning of section 125 of the Internal Revenue 
        Code of 1986.
          (2) COBRA continuation provision.--The term ``COBRA 
        continuation provision'' means the provisions of law described 
        in paragraph (1).

       TITLE II--HEALTH INSURANCE EXCHANGE AND RELATED PROVISIONS

                 Subtitle A--Health Insurance Exchange

SEC. 201. ESTABLISHMENT OF HEALTH INSURANCE EXCHANGE; OUTLINE OF 
                    DUTIES; DEFINITIONS.

  (a) Establishment.--There is established within the Health Choices 
Administration and under the direction of the Commissioner a Health 
Insurance Exchange in order to facilitate access of individuals and 
employers, through a transparent process, to a variety of choices of 
affordable, quality health insurance coverage, including a public 
health insurance option.
  (b) Outline of Duties of Commissioner.--In accordance with this 
subtitle and in coordination with appropriate Federal and State 
officials as provided under section 143(b), the Commissioner shall--
          (1) under section 204 establish standards for, accept bids 
        from, and negotiate and enter into contracts with, QHBP 
        offering entities for the offering of health benefits plans 
        through the Health Insurance Exchange, with different levels of 
        benefits required under section 203, and including with respect 
        to oversight and enforcement;
          (2) under section 205 facilitate outreach and enrollment in 
        such plans of Exchange-eligible individuals and employers 
        described in section 202; and
          (3) conduct such activities related to the Health Insurance 
        Exchange as required, including establishment of a risk pooling 
        mechanism under section 206 and consumer protections under 
        subtitle D of title I.
  (c) Exchange-participating Health Benefits Plan Defined.--In this 
division, the term ``Exchange-participating health benefits plan'' 
means a qualified health benefits plan that is offered through the 
Health Insurance Exchange.

SEC. 202. EXCHANGE-ELIGIBLE INDIVIDUALS AND EMPLOYERS.

  (a) Access to Coverage.--In accordance with this section, all 
individuals are eligible to obtain coverage through enrollment in an 
Exchange-participating health benefits plan offered through the Health 
Insurance Exchange unless such individuals are enrolled in another 
qualified health benefits plan or other acceptable coverage.
  (b) Definitions.--In this division:
          (1) Exchange-eligible individual.--The term ``Exchange-
        eligible individual'' means an individual who is eligible under 
        this section to be enrolled through the Health Insurance 
        Exchange in an Exchange-participating health benefits plan and, 
        with respect to family coverage, includes dependents of such 
        individual.
          (2) Exchange-eligible employer.--The term ``Exchange-eligible 
        employer'' means an employer that is eligible under this 
        section to enroll through the Health Insurance Exchange 
        employees of the employer (and their dependents) in Exchange-
        eligible health benefits plans.
          (3) Employment-related definitions.--The terms ``employer'', 
        ``employee'', ``full-time employee'', and ``part-time 
        employee'' have the meanings given such terms by the 
        Commissioner for purposes of this division.
  (c) Transition.--Individuals and employers shall only be eligible to 
enroll or participate in the Health Insurance Exchange in accordance 
with the following transition schedule:
          (1) First year.--In Y1 (as defined in section 100(c))--
                  (A) individuals described in subsection (d)(1), 
                including individuals described in paragraphs (3), (4), 
                and (5) of subsection (d); and
                  (B) smallest employers described in subsection 
                (e)(1).
          (2) Second year.--In Y2--
                  (A) individuals and employers described in paragraph 
                (1); and
                  (B) smaller employers described in subsection (e)(2).
          (3)  Third year.--In Y3--
                  (A) individuals and employers described in paragraph 
                (2);
                  (B) larger employers described in subsection (e)(3); 
                and
                  (C) largest employers as permitted by the 
                Commissioner under subsection (e)(4).
          (4) Fourth and subsequent years.--In Y4 and subsequent 
        years--
                  (A) individuals and employers described in paragraph 
                (3); and
                  (B) largest employers as permitted by the 
                Commissioner under subsection (e)(4).
  (d) Individuals.--
          (1) Individual described.--Subject to the succeeding 
        provisions of this subsection, an individual described in this 
        paragraph is an individual who--
                  (A) is not enrolled in coverage described in 
                subparagraphs (C) through (F) of paragraph (2); and
                  (B) is not enrolled in coverage as a full-time 
                employee (or as a dependent of such an employee) under 
                a group health plan if the coverage and an employer 
                contribution under the plan meet the requirements of 
                section 312.
        For purposes of subparagraph (B), in the case of an individual 
        who is self-employed, who has at least 1 employee, and who 
        meets the requirements of section 312, such individual shall be 
        deemed a full-time employee described in such subparagraph.
          (2) Acceptable coverage.--For purposes of this division, the 
        term ``acceptable coverage'' means any of the following:
                  (A) Qualified health benefits plan coverage.--
                Coverage under a qualified health benefits plan.
                  (B) Grandfathered health insurance coverage; coverage 
                under current group health plan.--Coverage under a 
                grandfathered health insurance coverage (as defined in 
                subsection (a) of section 102) or under a current group 
                health plan (described in subsection (b) of such 
                section).
                  (C) Medicare.--Coverage under part A of title XVIII 
                of the Social Security Act.
                  (D) Medicaid.--Coverage for medical assistance under 
                title XIX of the Social Security Act, excluding such 
                coverage that is only available because of the 
                application of subsection (u), (z), or (aa) of section 
                1902 of such Act
                  (E) Members of the armed forces and dependents 
                (including tricare).--Coverage under chapter 55 of 
                title 10, United States Code, including similar 
                coverage furnished under section 1781 of title 38 of 
                such Code.
                  (F) VA.--Coverage under the veteran's health care 
                program under chapter 17 of title 38, United States 
                Code, but only if the coverage for the individual 
                involved is determined by the Commissioner in 
                coordination with the Secretary of Treasury to be not 
                less than a level specified by the Commissioner and 
                Secretary of Veteran's Affairs, in coordination with 
                the Secretary of Treasury, based on the individual's 
                priority for services as provided under section 1705(a) 
                of such title.
                  (G) Other coverage.--Such other health benefits 
                coverage, such as a State health benefits risk pool, as 
                the Commissioner, in coordination with the Secretary of 
                the Treasury, recognizes for purposes of this 
                paragraph.
        The Commissioner shall make determinations under this paragraph 
        in coordination with the Secretary of the Treasury.
          (3) Treatment of certain non-traditional medicaid eligible 
        individuals.--An individual who is a non-traditional Medicaid 
        eligible individual (as defined in section 205(e)(4)(C)) in a 
        State may be an Exchange-eligible individual if the individual 
        was enrolled in a qualified health benefits plan, grandfathered 
        health insurance coverage, or current group health plan during 
        the 6 months before the individual became a non-traditional 
        Medicaid eligible individual. During the period in which such 
        an individual has chosen to enroll in an Exchange-participating 
        health benefits plan, the individual is not also eligible for 
        medical assistance under Medicaid.
          (4) Continuing eligibility permitted.--
                  (A) In general.--Except as provided in subparagraph 
                (B), once an individual qualifies as an Exchange-
                eligible individual under this subsection (including as 
                an employee or dependent of an employee of an Exchange-
                eligible employer) and enrolls under an Exchange-
                participating health benefits plan through the Health 
                Insurance Exchange, the individual shall continue to be 
                treated as an Exchange-eligible individual until the 
                individual is no longer enrolled with an Exchange-
                participating health benefits plan.
                  (B) Exceptions.--
                          (i) In general.--Subparagraph (A) shall not 
                        apply to an individual once the individual 
                        becomes eligible for coverage--
                                  (I) under part A of the Medicare 
                                program;
                                  (II) under the Medicaid program as a 
                                Medicaid eligible individual, except as 
                                permitted under paragraph (3) or clause 
                                (ii); or
                                  (III) in such other circumstances as 
                                the Commissioner may provide.
                          (ii) Transition period.--In the case 
                        described in clause (i)(II), the Commissioner 
                        shall permit the individual to continue 
                        treatment under subparagraph (A) until such 
                        limited time as the Commissioner determines it 
                        is administratively feasible, consistent with 
                        minimizing disruption in the individual's 
                        access to health care.
          (5) Adversely affected retiree health benefits group 
        participants and beneficiaries.--
                  (A) In general.--Beginning in Y1, an individual who 
                is a participant or beneficiary in an adversely 
                affected retiree health benefits group who does not 
                have coverage described in paragraph (2)(C) is an 
                Exchange eligible individual, whether or not such an 
                individual has other acceptable coverage.
                  (B) Adverage affected retiree health benefit group 
                defined.--In this paragraph, the term ``adversely 
                affected retiree health benefits group'' means the 
                retired participants and their beneficiaries of a group 
                health plan that cancelled or substantially reduced the 
                amount, type, level, or form of health benefit or 
                option provided prior January 1, 2008.
  (e) Employers.--
          (1)  Smallest employers.--Subject to paragraph (5), smallest 
        employers described in this paragraph are employers with 15 or 
        fewer employees.
          (2) Smaller employers.--Subject to paragraph (5), smaller 
        employers described in this paragraph are employers that are 
        not smallest employers described in paragraph (1) and that have 
        25 or fewer employees.
          (3) Larger employers.--Subject to paragraph (5), larger 
        employers described in this paragraph are employers that are 
        not smallest employers described in paragraph (1) or smaller 
        employers described in paragraph (2) and that have 50 or fewer 
        employees.
          (4) Largest employers.--
                  (A) In general.--Beginning with Y3, the Commissioner 
                may permit employers not described in paragraphs (1) 
                (2), or (3) to be Exchange-eligible employers.
                  (B) Phase-in.--In applying subparagraph (A), the 
                Commissioner may phase-in the application of such 
                subparagraph based on the number of full-time employees 
                of an employer and such other considerations as the 
                Commissioner deems appropriate.
          (5) Continuing eligibility.--Once an employer is permitted to 
        be an Exchange-eligible employer under this subsection and 
        enrolls employees through the Health Insurance Exchange, the 
        employer shall continue to be treated as an Exchange-eligible 
        employer for each subsequent plan year regardless of the number 
        of employees involved unless and until the employer meets the 
        requirement of section 311(a) through paragraph (1) of such 
        section by offering a group health plan and not through 
        offering Exchange-participating health benefits plan.
          (6) Employer participation and contributions.--
                  (A) Satisfaction of employer responsibility.--For any 
                year in which an employer is an Exchange-eligible 
                employer, such employer may meet the requirements of 
                section 312 with respect to employees of such employer 
                by offering such employees the option of enrolling with 
                Exchange-participating health benefits plans through 
                the Health Insurance Exchange consistent with the 
                provisions of subtitle B of title III.
                  (B) Employee choice.--Any employee offered Exchange-
                participating health benefits plans by the employer of 
                such employee under subparagraph (A) may choose 
                coverage under any such plan. That choice includes, 
                with respect to family coverage, coverage of the 
                dependents of such employee.
          (7) Affiliated groups.--Any employer which is part of a group 
        of employers who are treated as a single employer under 
        subsection (b), (c), (m), or (o) of section 414 of the Internal 
        Revenue Code of 1986 shall be treated, for purposes of this 
        subtitle, as a single employer.
          (8) Other counting rules.--The Commissioner shall establish 
        rules relating to how employees are counted for purposes of 
        carrying out this subsection.
          (9) Treatment of multiemployer plans.--The plan sponsor of a 
        group health plan (as defined in section 733(a) of the Employee 
        Retirement Income Security Act of 1974) that is multiemployer 
        plan (as defined in section 3(37) of such Act) may obtain 
        health insurance coverage with respect to participants in the 
        plan through the Exchange to the same extent as an employer not 
        described in paragraph (1) or (2) is permitted by the 
        Commissioner to obtain health insurance coverage through the 
        Exchange as an Exchange-eligible employer
  (f) Special Situation Authority.--The Commissioner shall have the 
authority to establish such rules as may be necessary to deal with 
special situations with regard to uninsured individuals and employers 
participating as Exchange-eligible individuals and employers, such as 
transition periods for individuals and employers who gain, or lose, 
Exchange-eligible participation status, and to establish grace periods 
for premium payment.
  (g) Surveys of Individuals and Employers.--The Commissioner shall 
provide for periodic surveys of Exchange-eligible individuals and 
employers concerning satisfaction of such individuals and employers 
with the Health Insurance Exchange and Exchange-participating health 
benefits plans.
  (h) Exchange Access Study.--
          (1) In general.--The Commissioner shall conduct a study of 
        access to the Health Insurance Exchange for individuals and for 
        employers, including individuals and employers who are not 
        eligible and enrolled in Exchange-participating health benefits 
        plans. The goal of the study is to determine if there are 
        significant groups and types of individuals and employers who 
        are not Exchange eligible individuals or employers, but who 
        would have improved benefits and affordability if made eligible 
        for coverage in the Exchange.
          (2) Items included in study.--Such study also shall examine--
                  (A) the terms, conditions, and affordability of group 
                health coverage offered by employers and QHBP offering 
                entities outside of the Exchange compared to Exchange-
                participating health benefits plans; and
                  (B) the affordability-test standard for access of 
                certain employed individuals to coverage in the Health 
                Insurance Exchange.
          (3) Report.--Not later than January 1 of Y3, in Y6, and 
        thereafter, the Commissioner shall submit to Congress on the 
        study conducted under this subsection and shall include in such 
        report recommendations regarding changes in standards for 
        Exchange eligibility for for individuals and employers.

SEC. 203. BENEFITS PACKAGE LEVELS.

  (a) In General.--The Commissioner shall specify the benefits to be 
made available under Exchange-participating health benefits plans 
during each plan year, consistent with subtitle C of title I and this 
section.
  (b) Limitation on Health Benefits Plans Offered by Offering 
Entities.--The Commissioner may not enter into a contract with a QHBP 
offering entity under section 204(c) for the offering of an Exchange-
participating health benefits plan in a service area unless the 
following requirements are met:
          (1) Required offering of basic plan.--The entity offers only 
        one basic plan for such service area.
          (2) Optional offering of enhanced plan.--If and only if the 
        entity offers a basic plan for such service area, the entity 
        may offer one enhanced plan for such area.
          (3) Optional offering of premium plan.--If and only if the 
        entity offers an enhanced plan for such service area, the 
        entity may offer one premium plan for such area.
          (4) Optional offering of premium-plus plans.--If and only if 
        the entity offers a premium plan for such service area, the 
        entity may offer one or more premium-plus plans for such area.
All such plans may be offered under a single contract with the 
Commissioner.
  (c) Specification of Benefit Levels for Plans.--
          (1) In general.--The Commissioner shall establish the 
        following standards consistent with this subsection and title 
        I:
                  (A) Basic, enhanced, and premium plans.--Standards 
                for 3 levels of Exchange-participating health benefits 
                plans: basic, enhanced, and premium (in this division 
                referred to as a ``basic plan'', ``enhanced plan'', and 
                ``premium plan'', respectively).
                  (B) Premium-plus plan benefits.--Standards for 
                additional benefits that may be offered, consistent 
                with this subsection and subtitle C of title I, under a 
                premium plan (such a plan with additional benefits 
                referred to in this division as a ``premium-plus 
                plan'') .
          (2) Basic plan.--
                  (A) In general.--A basic plan shall offer the 
                essential benefits package required under title I for a 
                qualified health benefits plan.
                  (B) Tiered cost-sharing for affordable credit 
                eligible individuals.--In the case of an affordable 
                credit eligible individual (as defined in section 
                242(a)(1)) enrolled in an Exchange-participating health 
                benefits plan, the benefits under a basic plan are 
                modified to provide for the reduced cost-sharing for 
                the income tier applicable to the individual under 
                section 244(c).
          (3) Enhanced plan.--A enhanced plan shall offer, in addition 
        to the level of benefits under the basic plan, a lower level of 
        cost-sharing as provided under title I consistent with section 
        123(b)(5)(A).
          (4) Premium plan.--A premium plan shall offer, in addition to 
        the level of benefits under the basic plan, a lower level of 
        cost-sharing as provided under title I consistent with section 
        123(b)(5)(B).
          (5) Premium-plus plan.--A premium-plus plan is a premium plan 
        that also provides additional benefits, such as adult oral 
        health and vision care, approved by the Commissioner. The 
        portion of the premium that is attributable to such additional 
        benefits shall be separately specified.
          (6) Range of permissible variation in cost-sharing.--The 
        Commissioner shall establish a permissible range of variation 
        of cost-sharing for each basic, enhanced, and premium plan, 
        except with respect to any benefit for which there is no cost-
        sharing permitted under the essential benefits package. Such 
        variation shall permit a variation of not more than plus (or 
        minus) 10 percent in cost-sharing with respect to each benefit 
        category specified under section 122.
  (d) Treatment of State Benefit Mandates.--Insofar as a State requires 
a health insurance issuer offering health insurance coverage to include 
benefits beyond the essential benefits package, such requirement shall 
continue to apply to an Exchange-participating health benefits plan, if 
the State has entered into an arrangement satisfactory to the 
Commissioner to reimburse the Commissioner for the amount of any net 
increase in affordability premium credits under subtitle C as a result 
of an increase in premium in basic plans as a result of application of 
such requirement.

SEC. 204. CONTRACTS FOR THE OFFERING OF EXCHANGE-PARTICIPATING HEALTH 
                    BENEFITS PLANS.

  (a) Contracting Duties.--In carrying out section 201(b)(1) and 
consistent with this subtitle:
          (1) Offering entity and plan standards.--The Commissioner 
        shall--
                  (A) establish standards necessary to implement the 
                requirements of this title and title I for--
                          (i) QHBP offering entities for the offering 
                        of an Exchange-participating health benefits 
                        plan; and
                          (ii) for Exchange-participating health 
                        benefits plans; and
                  (B) certify QHBP offering entities and qualified 
                health benefits plans as meeting such standards and 
                requirements of this title and title I for purposes of 
                this subtitle.
          (2) Soliciting and negotiating bids; contracts.--The 
        Commissioner shall--
                  (A) solicit bids from QHBP offering entities for the 
                offering of Exchange-participating health benefits 
                plans;
                  (B) based upon a review of such bids, negotiate with 
                such entities for the offering of such plans; and
                  (C) enter into contracts with such entities for the 
                offering of such plans through the Health Insurance 
                Exchange under terms (consistent with this title) 
                negotiated between the Commissioner and such entities.
          (3) FAR not applicable.--The provisions of the Federal 
        Acquisition Regulation shall not apply to contracts between the 
        Commissioner and QHBP offering entities for the offering of 
        Exchange-participating health benefits plans under this title.
  (b) Standards for QHBP Offering Entities to Offer Exchange-
participating Health Benefits Plans.--The standards established under 
subsection (a)(1)(A) shall require that, in order for a QHBP offering 
entity to offer an Exchange-participating health benefits plan, the 
entity must meet the following requirements:
          (1) Licensed.--The entity shall be licensed to offer health 
        insurance coverage under State law for each State in which it 
        is offering such coverage.
          (2) Data reporting.--The entity shall provide for the 
        reporting of such information as the Commissioner may specify, 
        including information necessary to administer the risk pooling 
        mechanism described in section 206(b) and information to 
        address disparities in health and health care.
          (3) Implementing affordability credits.--The entity shall 
        provide for implementation of the affordability credits 
        provided for enrollees under subtitle C, including the 
        reduction in cost-sharing under section 244(c).
          (4) Enrollment.--The entity shall accept all enrollments 
        under this subtitle, subject to such exceptions (such as 
        capacity limitations) in accordance with the requirements under 
        title I for a qualified health benefits plan. The entity shall 
        notify the Commissioner if the entity projects or anticipates 
        reaching such a capacity limitation that would result in a 
        limitation in enrollment.
          (5) Risk pooling participation.--The entity shall participate 
        in such risk pooling mechanism as the Commissioner establishes 
        under section 206(b).
          (6) Essential community providers.--With respect to the basic 
        plan offered by the entity, the entity shall contract for 
        outpatient services with covered entities (as defined in 
        section 340B(a)(4) of the Public Health Service Act, as in 
        effect as of July 1, 2009). The Commissioner shall specify the 
        extent to which and manner in which the previous sentence shall 
        apply in the case of a basic plan with respect to which the 
        Commissioner determines provides substantially all benefits 
        through a health maintenance organization, as defined in 
        section 2791(b)(3) of the Public Health Service Act.
          (7) Culturally and linguistically appropriate services and 
        communications.--The entity shall provide for culturally and 
        linguistically appropriate communication and health services.
          (8) Additional requirements.--The entity shall comply with 
        other applicable requirements of this title, as specified by 
        the Commissioner, which shall include standards regarding 
        billing and collection practices for premiums and related grace 
        periods and which may include standards to ensure that the 
        entity does not use coercive practices to force providers not 
        to contract with other entities offering coverage through the 
        Health Insurance Exchange.
  (c) Contracts.--
          (1) Bid application.--To be eligible to enter into a contract 
        under this section, a QHBP offering entity shall submit to the 
        Commissioner a bid at such time, in such manner, and containing 
        such information as the Commissioner may require.
          (2) Term.--Each contract with a QHBP offering entity under 
        this section shall be for a term of not less than one year, but 
        may be made automatically renewable from term to term in the 
        absence of notice of termination by either party.
          (3) Enforcement of network adequacy.--In the case of a health 
        benefits plan of a QHBP offering entity that uses a provider 
        network, the contract under this section with the entity shall 
        provide that if--
                  (A) the Commissioner determines that such provider 
                network does not meet such standards as the 
                Commissioner shall establish under section 115; and
                  (B) an individual enrolled in such plan receives an 
                item or service from a provider that is not within such 
                network;
        then any cost-sharing for such item or service shall be equal 
        to the amount of such cost-sharing that would be imposed if 
        such item or service was furnished by a provider within such 
        network.
          (4) Oversight and enforcement responsibilities.--The 
        Commissioner shall establish processes, in coordination with 
        State insurance regulators, to oversee, monitor, and enforce 
        applicable requirements of this title with respect to QHBP 
        offering entities offering Exchange-participating health 
        benefits plans and such plans, including the marketing of such 
        plans. Such processes shall include the following:
                  (A) Grievance and complaint mechanisms.--The 
                Commissioner shall establish, in coordination with 
                State insurance regulators, a process under which 
                Exchange-eligible individuals and employers may file 
                complaints concerning violations of such standards.
                  (B) Enforcement.--In carrying out authorities under 
                this division relating to the Health Insurance 
                Exchange, the Commissioner may impose one or more of 
                the intermediate sanctions described in section 142(c).
                  (C) Termination.--
                          (i) In general.--The Commissioner may 
                        terminate a contract with a QHBP offering 
                        entity under this section for the offering of 
                        an Exchange-participating health benefits plan 
                        if such entity fails to comply with the 
                        applicable requirements of this title. Any 
                        determination by the Commissioner to terminate 
                        a contract shall be made in accordance with 
                        formal investigation and compliance procedures 
                        established by the Commissioner under which--
                                  (I) the Commissioner provides the 
                                entity with the reasonable opportunity 
                                to develop and implement a corrective 
                                action plan to correct the deficiencies 
                                that were the basis of the 
                                Commissioner's determination; and
                                  (II) the Commissioner provides the 
                                entity with reasonable notice and 
                                opportunity for hearing (including the 
                                right to appeal an initial decision) 
                                before terminating the contract.
                          (ii) Exception for imminent and serious risk 
                        to health.--Clause (i) shall not apply if the 
                        Commissioner determines that a delay in 
                        termination, resulting from compliance with the 
                        procedures specified in such clause prior to 
                        termination, would pose an imminent and serious 
                        risk to the health of individuals enrolled 
                        under the qualified health benefits plan of the 
                        QHBP offering entity.
                  (D) Construction.--Nothing in this subsection shall 
                be construed as preventing the application of other 
                sanctions under subtitle E of title I with respect to 
                an entity for a violation of such a requirement.

SEC. 205. OUTREACH AND ENROLLMENT OF EXCHANGE-ELIGIBLE INDIVIDUALS AND 
                    EMPLOYERS IN EXCHANGE-PARTICIPATING HEALTH BENEFITS 
                    PLAN.

  (a) In General.--
          (1) Outreach.--The Commissioner shall conduct outreach 
        activities consistent with subsection (c), including through 
        use of appropriate entities as described in paragraph (4) of 
        such subsection, to inform and educate individuals and 
        employers about the Health Insurance Exchange and Exchange-
        participating health benefits plan options. Such outreach shall 
        include outreach specific to vulnerable populations, such as 
        children, individuals with disabilities, individuals with 
        mental illness, and individuals with other cognitive 
        impairments.
          (2) Eligibility.--The Commissioner shall make timely 
        determinations of whether individuals and employers are 
        Exchange-eligible individuals and employers (as defined in 
        section 202).
          (3) Enrollment.--The Commissioner shall establish and carry 
        out an enrollment process for Exchange-eligible individuals and 
        employers, including at community locations, in accordance with 
        subsection (b).
  (b) Enrollment Process.--
          (1) In general.--The Commissioner shall establish a process 
        consistent with this title for enrollments in Exchange-
        participating health benefits plans. Such process shall provide 
        for enrollment through means such as the mail, by telephone, 
        electronically, and in person.
          (2) Enrollment periods.--
                  (A) Open enrollment period.--The Commissioner shall 
                establish an annual open enrollment period during which 
                an Exchange-eligible individual or employer may elect 
                to enroll in an Exchange-participating health benefits 
                plan for the following plan year and an enrollment 
                period for affordability credits under subtitle C. Such 
                periods shall be during September through November of 
                each year, or such other time that would maximize 
                timeliness of income verification for purposes of such 
                subtitle. The open enrollment period shall not be less 
                than 30 days.
                  (B) Special enrollment.--The Commissioner shall also 
                provide for special enrollment periods to take into 
                account special circumstances of individuals and 
                employers, such as an individual who--
                          (i) loses acceptable coverage;
                          (ii) experiences a change in marital or other 
                        dependent status;
                          (iii) moves outside the service area of the 
                        Exchange-participating health benefits plan in 
                        which the individual is enrolled; or
                          (iv) experiences a significant change in 
                        income.
                  (C) Enrollment information.--The Commissioner shall 
                provide for the broad dissemination of information to 
                prospective enrollees on the enrollment process, 
                including before each open enrollment period. In 
                carrying out the previous sentence, the Commissioner 
                may work with other appropriate entities to facilitate 
                such provision of information.
          (3) Automatic enrollment for non-medicaid eligible 
        individuals.--
                  (A) In general.--The Commissioner shall provide for a 
                process under which individuals who are Exchange-
                eligible individuals described in subparagraph (B) are 
                automatically enrolled under an appropriate Exchange-
                participating health benefits plan. Such process may 
                involve a random assignment or some other form of 
                assignment that takes into account the health care 
                providers used by the individual involved or such other 
                relevant factors as the Commissioner may specify.
                  (B) Subsidized individuals described.--An individual 
                described in this subparagraph is an Exchange-eligible 
                individual who is either of the following:
                          (i) Affordability credit eligible 
                        individuals.--The individual--
                                  (I) has applied for, and been 
                                determined eligible for, affordability 
                                credits under subtitle C;
                                  (II) has not opted out from receiving 
                                such affordability credit; and
                                  (III) does not otherwise enroll in 
                                another Exchange-participating health 
                                benefits plan.
                          (ii) Individuals enrolled in a terminated 
                        plan.--The individual is enrolled in an 
                        Exchange-participating health benefits plan 
                        that is terminated (during or at the end of a 
                        plan year) and who does not otherwise enroll in 
                        another Exchange-participating health benefits 
                        plan.
          (4) Direct payment of premiums to plans.--Under the 
        enrollment process, individuals enrolled in an Exchange-
        partcipating health benefits plan shall pay such plans 
        directly, and not through the Commissioner or the Health 
        Insurance Exchange.
  (c) Coverage Information and Assistance.--
          (1) Coverage information.--The Commissioner shall provide for 
        the broad dissemination of information on Exchange-
        participating health benefits plans offered under this title. 
        Such information shall be provided in a comparative manner, and 
        shall include information on benefits, premiums, cost-sharing, 
        quality, provider networks, and consumer satisfaction.
          (2) Consumer assistance with choice.--To provide assistance 
        to Exchange-eligible individuals and employers, the 
        Commissioner shall--
                  (A) provide for the operation of a toll-free 
                telephone hotline to respond to requests for assistance 
                and maintain an Internet website through which 
                individuals may obtain information on coverage under 
                Exchange-participating health benefits plans and file 
                complaints;
                  (B) develop and disseminate information to Exchange-
                eligible enrollees on their rights and 
                responsibilities;
                  (C) assist Exchange-eligible individuals in selecting 
                Exchange-participating health benefits plans and 
                obtaining benefits through such plans; and
                  (D) ensure that the Internet website described in 
                subparagraph (A) and the information described in 
                subparagraph (B) is developed using plain language (as 
                defined in section 133(a)(2)).
          (3) Use of other entities.--In carrying out this subsection, 
        the Commissioner may work with other appropriate entities to 
        facilitate the dissemination of information under this 
        subsection and to provide assistance as described in paragraph 
        (2).
  (d) Special Duties Related to Medicaid and CHIP.--
          (1) Coverage for certain newborns.--
                  (A) In general.--In the case of a child born in the 
                United States who at the time of birth is not otherwise 
                covered under acceptable coverage, for the period of 
                time beginning on the date of birth and ending on the 
                date the child otherwise is covered under acceptable 
                coverage (or, if earlier, the end of the month in which 
                the 60-day period, beginning on the date of birth, 
                ends), the child shall be deemed--
                          (i) to be a non-traditional Medicaid eligible 
                        individual (as defined in subsection (e)(5)) 
                        for purposes of this division and Medicaid; and
                          (ii) to have elected to enroll in Medicaid 
                        through the application of paragraph (3).
                  (B) Extended treatment as traditional medicaid 
                eligible individual.--In the case of a child described 
                in subparagraph (A) who at the end of the period 
                referred to in such subparagraph is not otherwise 
                covered under acceptable coverage, the child shall be 
                deemed (until such time as the child obtains such 
                coverage or the State otherwise makes a determination 
                of the child's eligibility for medical assistance under 
                its Medicaid plan pursuant to section 1943(c)(1) of the 
                Social Security Act) to be a traditional Medicaid 
                eligible individual described in section 1902(l)(1)(B) 
                of such Act.
          (2) CHIP transition.--A child who, as of the day before the 
        first day of Y1, is eligible for child health assistance under 
        title XXI of the Social Security Act (including a child 
        receiving coverage under an arrangement described in section 
        2101(a)(2) of such Act) is deemed as of such first day to be an 
        Exchange-eligible individual unless the individual is a 
        traditional Medicaid eligible individual as of such day.
          (3) Automatic enrollment of medicaid eligible individuals 
        into medicaid.--The Commissioner shall provide for a process 
        under which an individual who is described in section 202(d)(3) 
        and has not elected to enroll in an Exchange-participating 
        health benefits plan is automatically enrolled under Medicaid.
          (4) Notifications.--The Commissioner shall notify each State 
        in Y1 and for purposes of section 1902(gg)(1) of the Social 
        Security Act (as added by section 1703(a)) whether the Health 
        Insurance Exchange can support enrollment of children described 
        in paragraph (2) in such State in such year.
  (e) Medicaid Coverage for Medicaid Eligible Individuals.--
          (1) In general.--
                  (A) Choice for limited exchange-eligible 
                individuals.--As part of the enrollment process under 
                subsection (b), the Commissioner shall provide the 
                option, in the case of an Exchange-eligible individual 
                described in section 202(d)(3), for the individual to 
                elect to enroll under Medicaid instead of under an 
                Exchange-participating health benefits plan. Such an 
                individual may change such election during an 
                enrollment period under subsection (b)(2).
                  (B) Medicaid enrollment obligation.--An Exchange 
                eligible individual may apply, in the manner described 
                in section 241(b)(1), for a determination of whether 
                the individual is a Medicaid-eligible individual. If 
                the individual is determined to be so eligible, the 
                Commissioner, through the Medicaid memorandum of 
                understanding, shall provide for the enrollment of the 
                individual under the State Medicaid plan in accordance 
                with the Medicaid memorandum of understanding under 
                paragraph (4). In the case of such an enrollment, the 
                State shall provide for the same periodic 
                redetermination of eligibility under Medicaid as would 
                otherwise apply if the individual had directly applied 
                for medical assistance to the State Medicaid agency.
          (2) Non-traditional medicaid eligible individuals.--In the 
        case of a non-traditional Medicaid eligible individual 
        described in section 202(d)(3) who elects to enroll under 
        Medicaid under paragraph (1)(A), the Commissioner shall provide 
        for the enrollment of the individual under the State Medicaid 
        plan in accordance with the Medicaid memorandum of 
        understanding under paragraph (4).
          (3) Coordinated enrollment with state through memorandum of 
        understanding.--The Commissioner, in consultation with the 
        Secretary of Health and Human Services, shall enter into a 
        memorandum of understanding with each State (each in this 
        division referred to as a ``Medicaid memorandum of 
        understanding'') with respect to coordinating enrollment of 
        individuals in Exchange-participating health benefits plans and 
        under the State's Medicaid program consistent with this section 
        and to otherwise coordinate the implementation of the 
        provisions of this division with respect to the Medicaid 
        program. Such memorandum shall permit the exchange of 
        information consistent with the limitations described in 
        section 1902(a)(7) of the Social Security Act. Nothing in this 
        section shall be construed as permitting such memorandum to 
        modify or vitiate any requirement of a State Medicaid plan.
          (4) Medicaid eligible individuals.--For purposes of this 
        division:
                  (A) Medicaid eligible individual.--The term 
                ``Medicaid eligible individual'' means an individual 
                who is eligible for medical assistance under Medicaid.
                  (B) Traditional medicaid eligible individual.--The 
                term ``traditional Medicaid eligible individual'' means 
                a Medicaid eligible individual other than an individual 
                who is--
                          (i) a Medicaid eligible individual by reason 
                        of the application of subclause (VIII) of 
                        section 1902(a)(10)(A)(i) of the Social 
                        Security Act; or
                          (ii) a childless adult not described in 
                        section 1902(a)(10)(A) or (C) of such Act (as 
                        in effect as of the day before the date of the 
                        enactment of this Act).
                  (C) Non-traditional medicaid eligible individual.--
                The term ``non-traditional Medicaid eligible 
                individual'' means a Medicaid eligible individual who 
                is not a traditional Medicaid eligible individual.
  (f) Effective Culturally and Linguistically Appropriate 
Communication.--In carrying out this section, the Commissioner shall 
establish effective methods for communicating in plain language and a 
culturally and linguistically appropriate manner.

SEC. 206. OTHER FUNCTIONS.

  (a) Coordination of Affordability Credits.--The Commissioner shall 
coordinate the distribution of affordability premium and cost-sharing 
credits under subtitle C to QHBP offering entities offering Exchange-
participating health benefits plans.
  (b) Coordination of Risk Pooling.--The Commissioner shall establish a 
mechanism whereby there is an adjustment made of the premium amounts 
payable among QHBP offering entities offering Exchange-participating 
health benefits plans of premiums collected for such plans that takes 
into account (in a manner specified by the Commissioner) the 
differences in the risk characteristics of individuals and employers 
enrolled under the different Exchange-participating health benefits 
plans offered by such entities so as to minimize the impact of adverse 
selection of enrollees among the plans offered by such entities.
  (c) Special Inspector General for the Health Insurance Exchange.--
          (1) Establishment; appointment.--There is hereby established 
        the Office of the Special Inspector General for the Health 
        Insurance Exchange, to be headed by a Special Inspector General 
        for the Health Insurance Exchange (in this subsection referred 
        to as the ``Special Inspector General'') to be appointed by the 
        President, by and with the advice and consent of the Senate. 
        The nomination of an individual as Special Inspector General 
        shall be made as soon as practicable after the establishment of 
        the program under this subtitle.
          (2) Duties.--The Special Inspector General shall--
                  (A) conduct, supervise, and coordinate audits, 
                evaluations and investigations of the Health Insurance 
                Exchange to protect the integrity of the Health 
                Insurance Exchange, as well as the health and welfare 
                of participants in the Exchange;
                  (B) report both to the Commissioner and to the 
                Congress regarding program and management problems and 
                recommendations to correct them;
                  (C) have other duties (described in paragraphs (2) 
                and (3) of section 121 of division A of Public Law 110-
                343) in relation to the duties described in the 
                previous subparagraphs; and
                  (D) have the authorities provided in section 6 of the 
                Inspector General Act of 1978 in carrying out duties 
                under this paragraph.
          (3) Application of other special inspector general 
        provisions.--The provisions of subsections (b) (other than 
        paragraphs (1) and (3)), (d) (other than paragraph (1)), and 
        (e) of section 121 of division A of the Emergency Economic 
        Stabilization Act of 2009 (Public Law 110-343) shall apply to 
        the Special Inspector General under this subsection in the same 
        manner as such provisions apply to the Special Inspector 
        General under such section.
          (4) Reports.--Not later than one year after the confirmation 
        of the Special Inspector General, and annually thereafter, the 
        Special Inspector General shall submit to the appropriate 
        committees of Congress a report summarizing the activities of 
        the Special Inspector General during the one year period ending 
        on the date such report is submitted.
          (5) Termination.--The Office of the Special Inspector General 
        shall terminate five years after the date of the enactment of 
        this Act.
  (d)  Assistance for Small Employers.--
          (1) In general.--The Commissioner, in consultation with the 
        Small Business Administration, shall establish and carry out a 
        program to provide to small employers counseling and technical 
        assistance with respect to the provision of health insurance to 
        employees of such employers through the Health Insurance 
        Exchange.
          (2) Duties.--The program established under paragraph (1) 
        shall include the following services:
                  (A) Educational activities to increase awareness of 
                the Health Insurance Exchange and available small 
                employer health plan options.
                  (B) Distribution of information to small employers 
                with respect to the enrollment and selection process 
                for health plans available under the Health Insurance 
                Exchange, including standardized comparative 
                information on the health plans available under the 
                Health Insurance Exchange.
                  (C) Distribution of information to small employers 
                with respect to available affordability credits or 
                other financial assistance.
                  (D) Referrals to appropriate entities of complaints 
                and questions relating to the Health Insurance 
                Exchange.
                  (E) Enrollment and plan selection assistance for 
                employers with respect to the Health Insurance 
                Exchange.
                  (F) Responses to questions relating to the Health 
                Insurance Exchange and the program established under 
                paragraph (1).
          (3) Authority to provide services directly or by contract.--
        The Commissioner may provide services under paragraph (2) 
        directly or by contract with nonprofit entities that the 
        Commissioner determines capable of carrying out such services.
          (4) Small employer defined.--In this subsection, the term 
        ``small employer'' means an employer with less than 100 
        employees.

SEC. 207. HEALTH INSURANCE EXCHANGE TRUST FUND.

  (a) Establishment of Health Insurance Exchange Trust Fund.--There is 
created within the Treasury of the United States a trust fund to be 
known as the ``Health Insurance Exchange Trust Fund'' (in this section 
referred to as the ``Trust Fund''), consisting of such amounts as may 
be appropriated or credited to the Trust Fund under this section or any 
other provision of law.
  (b) Payments From Trust Fund.--The Commissioner shall pay from time 
to time from the Trust Fund such amounts as the Commissioner determines 
are necessary to make payments to operate the Health Insurance 
Exchange, including payments under subtitle C (relating to 
affordability credits).
  (c) Transfers to Trust Fund.--
          (1) Dedicated payments.--There is hereby appropriated to the 
        Trust Fund amounts equivalent to the following:
                  (A) Taxes on individuals not obtaining acceptable 
                coverage.--The amounts received in the Treasury under 
                section 59B of the Internal Revenue Code of 1986 
                (relating to requirement of health insurance coverage 
                for individuals).
                  (B) Employment taxes on employers not providing 
                acceptable coverage.--The amounts received in the 
                Treasury under section 3111(c) of the Internal Revenue 
                Code of 1986 (relating to employers electing to not 
                provide health benefits).
                  (C) Excise tax on failures to meet certain health 
                coverage requirements.--The amounts received in the 
                Treasury under section 4980H(b) (relating to excise tax 
                with respect to failure to meet health coverage 
                participation requirements).
          (2) Appropriations to cover government contributions.--There 
        are hereby appropriated, out of any moneys in the Treasury not 
        otherwise appropriated, to the Trust Fund, an amount equivalent 
        to the amount of payments made from the Trust Fund under 
        subsection (b) plus such amounts as are necessary reduced by 
        the amounts deposited under paragraph (1).
  (d) Application of Certain Rules.--Rules similar to the rules of 
subchapter B of chapter 98 of the Internal Revenue Code of 1986 shall 
apply with respect to the Trust Fund.

SEC. 208. OPTIONAL OPERATION OF STATE-BASED HEALTH INSURANCE EXCHANGES.

  (a) In General.--If--
          (1) a State (or group of States, subject to the approval of 
        the Commissioner) applies to the Commissioner for approval of a 
        State-based Health Insurance Exchange to operate in the State 
        (or group of States); and
          (2) the Commissioner approves such State-based Health 
        Insurance Exchange,
then, subject to subsections (c) and (d), the State-based Health 
Insurance Exchange shall operate, instead of the Health Insurance 
Exchange, with respect to such State (or group of States). The 
Commissioner shall approve a State-based Health Insurance Exchange if 
it meets the requirements for approval under subsection (b).
  (b) Requirements for Approval.--The Commissioner may not approve a 
State-based Health Insurance Exchange under this section unless the 
following requirements are met:
          (1) The State-based Health Insurance Exchange must 
        demonstrate the capacity to and provide assurances satisfactory 
        to the Commissioner that the State-based Health Insurance 
        Exchange will carry out the functions specified for the Health 
        Insurance Exchange in the State (or States) involved, 
        including--
                  (A) negotiating and contracting with QHBP offering 
                entities for the offering of Exchange-participating 
                health benefits plan, which satisfy the standards and 
                requirements of this title and title I;
                  (B) enrolling Exchange-eligible individuals and 
                employers in such State in such plans;
                  (C) the establishment of sufficient local offices to 
                meet the needs of Exchange-eligible individuals and 
                employers;
                  (D) administering affordability credits under 
                subtitle B using the same methodologies (and at least 
                the same income verification methods) as would 
                otherwise apply under such subtitle and at a cost to 
                the Federal Government which does exceed the cost to 
                the Federal Government if this section did not apply; 
                and
                  (E) enforcement activities consistent with federal 
                requirements.
          (2) There is no more than one Health Insurance Exchange 
        operating with respect to any one State.
          (3) The State provides assurances satisfactory to the 
        Commissioner that approval of such an Exchange will not result 
        in any net increase in expenditures to the Federal Government.
          (4) The State provides for reporting of such information as 
        the Commissioner determines and assurances satisfactory to the 
        Commissioner that it will vigorously enforce violations of 
        applicable requirements.
          (5) Such other requirements as the Commissioner may specify.
  (c) Ceasing Operation.--
          (1) In general.--A State-based Health Insurance Exchange may, 
        at the option of each State involved, and only after providing 
        timely and reasonable notice to the Commissioner, cease 
        operation as such an Exchange, in which case the Health 
        Insurance Exchange shall operate, instead of such State-based 
        Health Insurance Exchange, with respect to such State (or 
        States).
          (2) Termination; health insurance exchange resumption of 
        functions.--The Commissioner may terminate the approval (for 
        some or all functions) of a State-based Health Insurance 
        Exchange under this section if the Commissioner determines that 
        such Exchange no longer meets the requirements of subsection 
        (b) or is no longer capable of carrying out such functions in 
        accordance with the requirements of this subtitle. In lieu of 
        terminating such approval, the Commissioner may temporarily 
        assume some or all functions of the State-based Health 
        Insurance Exchange until such time as the Commissioner 
        determines the State-based Health Insurance Exchange meets such 
        requirements of subsection (b) and is capable of carrying out 
        such functions in accordance with the requirements of this 
        subtitle.
          (3) Effectiveness.--The ceasing or termination of a State-
        based Health Insurance Exchange under this subsection shall be 
        effective in such time and manner as the Commissioner shall 
        specify.
  (d) Retention of Authority.--
          (1) Authority retained.--Enforcement authorities of the 
        Commissioner shall be retained by the Commissioner.
          (2) Discretion to retain additional authority.--The 
        Commissioner may specify functions of the Health Insurance 
        Exchange that--
                  (A) may not be performed by a State-based Health 
                Insurance Exchange under this section; or
                  (B) may be performed by the Commissioner and by such 
                a State-based Health Insurance Exchange.
  (e) References.--In the case of a State-based Health Insurance 
Exchange, except as the Commissioner may otherwise specify under 
subsection (d), any references in this subtitle to the Health Insurance 
Exchange or to the Commissioner in the area in which the State-based 
Health Insurance Exchange operates shall be deemed a reference to the 
State-based Health Insurance Exchange and the head of such Exchange, 
respectively.
  (f) Funding.--In the case of a State-based Health Insurance Exchange, 
there shall be assistance provided for the operation of such Exchange 
in the form of a matching grant with a State share of expenditures 
required.

SEC. 209. PARTICIPATION OF SMALL EMPLOYER BENEFIT ARRANGEMENTS.

  (a) In General.--The Commissioner may enter into contracts with small 
employer benefit arrangements to provide consumer information, 
outreach, and assistance in the enrollment of small employers (and 
their employees) who are members of such an arrangement under Exchange 
participating health benefits plans.
  (b) Small Employer Benefit Arrangement Defined.--In this section, the 
term ``small employer benefit arrangement'' means a not-for-profit 
agricultural or other cooperative that--
          (1) consists solely of its members and is operated for the 
        primary purpose of providing affordable employee benefits to 
        its members;
          (2) only has as members small employers in the same industry 
        or line of business;
          (3) has no member that has more than a 5 percent voting 
        interest in the cooperative; and
          (4) is governed by a board of directors elected by its 
        members.

               Subtitle B--Public Health Insurance Option

SEC. 221. ESTABLISHMENT AND ADMINISTRATION OF A PUBLIC HEALTH INSURANCE 
                    OPTION AS AN EXCHANGE-QUALIFIED HEALTH BENEFITS 
                    PLAN.

  (a) Establishment.--For years beginning with Y1, the Secretary of 
Health and Human Services (in this subtitle referred to as the 
``Secretary'') shall provide for the offering of an Exchange-
participating health benefits plan (in this division referred to as the 
``public health insurance option'') that ensures choice, competition, 
and stability of affordable, high quality coverage throughout the 
United States in accordance with this subtitle. In designing the 
option, the Secretary's primary responsibility is to create a low-cost 
plan without comprimising quality or access to care.
  (b) Offering as an Exchange-participating Health Benefits Plan.--
          (1) Exclusive to the exchange.--The public health insurance 
        option shall only be made available through the Health 
        Insurance Exchange.
          (2) Ensuring a level playing field.--Consistent with this 
        subtitle, the public health insurance option shall comply with 
        requirements that are applicable under this title to an 
        Exchange-participating health benefits plan, including 
        requirements related to benefits, benefit levels, provider 
        networks, notices, consumer protections, and cost sharing.
          (3) Provision of benefit levels.--The public health insurance 
        option--
                  (A) shall offer basic, enhanced, and premium plans; 
                and
                  (B) may offer premium-plus plans.
  (c) Administrative Contracting.--The Secretary may enter into 
contracts for the purpose of performing administrative functions 
(including functions described in subsection (a)(4) of section 1874A of 
the Social Security Act) with respect to the public health insurance 
option in the same manner as the Secretary may enter into contracts 
under subsection (a)(1) of such section. The Secretary has the same 
authority with respect to the public health insurance option as the 
Secretary has under subsections (a)(1) and (b) of section 1874A of the 
Social Security Act with respect to title XVIII of such Act. Contracts 
under this subsection shall not involve the transfer of insurance risk 
to such entity.
  (d) Ombudsman.--The Secretary shall establish an office of the 
ombudsman for the public health insurance option which shall have 
duties with respect to the public health insurance option similar to 
the duties of the Medicare Beneficiary Ombudsman under section 
1808(c)(2) of the Social Security Act.
  (e) Data Collection.--The Secretary shall collect such data as may be 
required to establish premiums and payment rates for the public health 
insurance option and for other purposes under this subtitle, including 
to improve quality and to reduce disparities in health and health care 
based on race, ethnicity, primary language, sex, sexual orientation, 
gender identity, disability, socioeconomic status, rural, urban, or 
other geographic setting, and any other population or subpopulation as 
determined appropriate by the Secretary, but only if the data 
collection is conducted on a voluntary basis and consistent with the 
standards, including privacy protections, established pursuant to 
section 1709 of the Public Health Service Act.
  (f) Treatment of Public Health Insurance Option.--With respect to the 
public health insurance option, the Secretary shall be treated as a 
QHBP offering entity offering an Exchange-participating health benefits 
plan.
  (g) Access to Federal Courts.--The provisions of Medicare (and 
related provisions of title II of the Social Security Act) relating to 
access of Medicare beneficiaries to Federal courts for the enforcement 
of rights under Medicare, including with respect to amounts in 
controversy, shall apply to the public health insurance option and 
individuals enrolled under such option under this title in the same 
manner as such provisions apply to Medicare and Medicare beneficiaries.

SEC. 222. PREMIUMS AND FINANCING.

  (a) Establishment of Premiums.--
          (1) In general.--The Secretary shall establish 
        geographically-adjusted premium rates for the public health 
        insurance option in a manner--
                  (A) that complies with the premium rules established 
                by the Commissioner under section 113 for Exchange-
                participating health benefit plans; and
                  (B) at a level sufficient to fully finance the costs 
                of--
                          (i) health benefits provided by the public 
                        health insurance option; and
                          (ii) administrative costs related to 
                        operating the public health insurance option.
          (2) Contingency margin.--In establishing premium rates under 
        paragraph (1), the Secretary shall include an appropriate 
        amount for a contingency margin.
  (b) Account.--
          (1) Establishment.--There is established in the Treasury of 
        the United States an Account for the receipts and disbursements 
        attributable to the operation of the public health insurance 
        option, including the start-up funding under paragraph (2). 
        Section 1854(g) of the Social Security Act shall apply to 
        receipts described in the previous sentence in the same manner 
        as such section applies to payments or premiums described in 
        such section.
          (2) Start-up funding.--
                  (A) In general.--In order to provide for the 
                establishment of the public health insurance option 
                there is hereby appropriated to the Secretary, out of 
                any funds in the Treasury not otherwise appropriated, 
                $2,000,000,000. In order to provide for initial claims 
                reserves before the collection of premiums, there is 
                hereby appropriated to the Secretary, out of any funds 
                in the Treasury not otherwise appropriated, such sums 
                as necessary to cover 90 days worth of claims reserves 
                based on projected enrollment.
                  (B) Amortization of start-up funding.--The Secretary 
                shall provide for the repayment of the startup funding 
                provided under subparagraph (A) to the Treasury in an 
                amortized manner over the 10-year period beginning with 
                Y1.
                  (C) Limitation on funding.--Nothing in this section 
                shall be construed as authorizing any additional 
                appropriations to the Account, other than such amounts 
                as are otherwise provided with respect to other 
                Exchange-participating health benefits plans.

SEC. 223. PAYMENT RATES FOR ITEMS AND SERVICES.

  (a) Rates Established by Secretary.--
          (1) In general.--The Secretary shall establish payment rates 
        for the public health insurance option for services and health 
        care providers consistent with this section and may change such 
        payment rates in accordance with section 224.
          (2) Initial payment rules.--
                  (A) In general.--Except as provided in subparagraph 
                (B) and subsection (b)(1), during Y1, Y2, and Y3, the 
                Secretary shall base the payment rates under this 
                section for services and providers described in 
                paragraph (1) on the payment rates for similar services 
                and providers under parts A and B of Medicare.
                  (B) Exceptions.--
                          (i) Practitioners' services.--Payment rates 
                        for practitioners' services otherwise 
                        established under the fee schedule under 
                        section 1848 of the Social Security Act shall 
                        be applied without regard to the provisions 
                        under subsection (f) of such section and the 
                        update under subsection (d)(4) under such 
                        section for a year as applied under this 
                        paragraph shall be not less than 1 percent.
                          (ii) Adjustments.--The Secretary may 
                        determine the extent to which Medicare 
                        adjustments applicable to base payment rates 
                        under parts A and B of Medicare shall apply 
                        under this subtitle.
          (3) For new services.--The Secretary shall modify payment 
        rates described in paragraph (2) in order to accommodate 
        payments for services, such as well-child visits, that are not 
        otherwise covered under Medicare.
          (4) Prescription drugs.--Payment rates under this section for 
        prescription drugs that are not paid for under part A or part B 
        of Medicare shall be at rates negotiated by the Secretary.
  (b) Incentives for Participating Providers.--
          (1) Initial incentive period.--
                  (A) In general.--The Secretary shall provide, in the 
                case of services described in subparagraph (B) 
                furnished during Y1, Y2, and Y3, for payment rates that 
                are 5 percent greater than the rates established under 
                subsection (a).
                  (B) Services described.--The services described in 
                this subparagraph are items and professional services, 
                under the public health insurance option by a physician 
                or other health care practitioner who participates in 
                both Medicare and the public health insurance option.
                  (C) Special rules.--A pediatrician and any other 
                health care practitioner who is a type of practitioner 
                that does not typically participate in Medicare (as 
                determined by the Secretary) shall also be eligible for 
                the increased payment rates under subparagraph (A).
          (2) Subsequent periods.-- Beginning with Y4 and for 
        subsequent years, the Secretary shall continue to use an 
        administrative process to set such rates in order to promote 
        payment accuracy, to ensure adequate beneficiary access to 
        providers, and to promote affordablility and the efficient 
        delivery of medical care consistent with section 221(a). Such 
        rates shall not be set at levels expected to increase overall 
        medical costs under the option beyond what would be expected if 
        the process under subsection (a)(2) and paragraph (1) of this 
        subsection were continued.
          (3) Establishment of a provider network.--Health care 
        providers participating under Medicare are participating 
        providers in the public health insurance option unless they opt 
        out in a process established by the Secretary.
  (c) Administrative Process for Setting Rates.--Chapter 5 of title 5, 
United States Code shall apply to the process for the initial 
establishment of payment rates under this section but not to the 
specific methodology for establishing such rates or the calculation of 
such rates.
  (d) Construction.--Nothing in this subtitle shall be construed as 
limiting the Secretary's authority to correct for payments that are 
excessive or deficient, taking into account the provisions of section 
221(a) and the amounts paid for similar health care providers and 
services under other Exchange-participating health benefits plans.
  (e) Construction.--Nothing in this subtitle shall be construed as 
affecting the authority of the Secretary to establish payment rates, 
including payments to provide for the more efficient delivery of 
services, such as the initiatives provided for under section 224.
  (f) Limitations on Review.--There shall be no administrative or 
judicial review of a payment rate or methodology established under this 
section or under section 224.

SEC. 224. MODERNIZED PAYMENT INITIATIVES AND DELIVERY SYSTEM REFORM.

  (a) In General.--For plan years beginning with Y1, the Secretary may 
utilize innovative payment mechanisms and policies to determine 
payments for items and services under the public health insurance 
option. The payment mechanisms and policies under this section may 
include patient-centered medical home and other care management 
payments, accountable care organizations, value-based purchasing, 
bundling of services, differential payment rates, performance or 
utilization based payments, partial capitation, and direct contracting 
with providers.
  (b) Requirements for Innovative Payments.--The Secretary shall design 
and implement the payment mechanisms and policies under this section in 
a manner that--
          (1) seeks to--
                  (A) improve health outcomes;
                  (B) reduce health disparities (including racial, 
                ethnic, and other disparities);
                  (C) provide efficent and affordable care;
                  (D) address geographic variation in the provision of 
                health services; or
                  (E) prevent or manage chronic illness; and
          (2) promotes care that is integrated, patient-centered, 
        quality, and efficient.
  (c) Encouraging the Use of High Value Services.--To the extent 
allowed by the benefit standards applied to all Exchange-participating 
health benefits plans, the public health insurance option may modify 
cost sharing and payment rates to encourage the use of services that 
promote health and value.
  (d) Non-uniformity Permitted.--Nothing in this subtitle shall prevent 
the Secretary from varying payments based on different payment 
structure models (such as accountable care organizations and medical 
homes) under the public health insurance option for different 
geographic areas.

SEC. 225. PROVIDER PARTICIPATION.

  (a) In General.--The Secretary shall establish conditions of 
participation for health care providers under the public health 
insurance option.
  (b) Licensure or Certification.--The Secretary shall not allow a 
health care provider to participate in the public health insurance 
option unless such provider is appropriately licensed, certified, or 
otherwise permitted to practice under State law.
  (c) Payment Terms for Providers.--
          (1) Physicians.--The Secretary shall provide for the annual 
        participation of physicians under the public health insurance 
        option, for which payment may be made for services furnished 
        during the year, in one of 2 classes:
                  (A) Preferred physicians.--Those physicians who agree 
                to accept the payment rate established under section 
                223 (without regard to cost-sharing) as the payment in 
                full.
                  (B) Participating, non-preferred physicians.--Those 
                physicians who agree not to impose charges (in relation 
                to the payment rate described in section 223 for such 
                physicians) that exceed the ratio permitted under 
                section 1848(g)(2)(C) of the Social Security Act.
          (2) Other providers.--The Secretary shall provide for the 
        participation (on an annual or other basis specified by the 
        Secretary) of health care providers (other than physicians) 
        under the public health insurance option under which payment 
        shall only be available if the provider agrees to accept the 
        payment rate established under section 223 (without regard to 
        cost-sharing) as the payment in full.
  (d) Exclusion of Certain Providers.--The Secretary shall exclude from 
participation under the public health insurance option a health care 
provider that is excluded from participation in a Federal health care 
program (as defined in section 1128B(f) of the Social Security Act).

SEC. 226. APPLICATION OF FRAUD AND ABUSE PROVISIONS.

  Provisions of law (other than criminal law provisions) identified by 
the Secretary by regulation, in consultation with the Inspector General 
of the Department of Health and Human Services, that impose sanctions 
with respect to waste, fraud, and abuse under Medicare, such as the 
False Claims Act (31 U.S.C. 3729 et seq.), shall also apply to the 
public health insurance option.

SEC. 227. SENSE OF THE HOUSE REGARDING ENROLLMENT OF MEMBERS IN THE 
                    PUBLIC OPTION.

  It is the sense of the House of Representatives that Members who vote 
in favor of the establishment of a public, Federal Government run 
health insurance option, and senior members of the President's 
administration, are urged to forgo their right to participate in the 
Federal Employees Health Benefits Program (FEHBP) and agree to enroll 
under that public option.

              Subtitle C--Individual Affordability Credits

SEC. 241. AVAILABILITY THROUGH HEALTH INSURANCE EXCHANGE.

  (a) In General.--Subject to the succeeding provisions of this 
subtitle, in the case of an affordable credit eligible individual 
enrolled in an Exchange-participating health benefits plan--
          (1) the individual shall be eligible for, in accordance with 
        this subtitle, affordability credits consisting of--
                  (A) an affordability premium credit under section 243 
                to be applied against the premium for the Exchange-
                participating health benefits plan in which the 
                individual is enrolled; and
                  (B) an affordability cost-sharing credit under 
                section 244 to be applied as a reduction of the cost-
                sharing otherwise applicable to such plan; and
          (2) the Commissioner shall pay the QHBP offering entity that 
        offers such plan from the Health Insurance Exchange Trust Fund 
        the aggregate amount of affordability credits for all 
        affordable credit eligible individuals enrolled in such plan.
  (b) Application.--
          (1) In general.--An Exchange eligible individual may apply to 
        the Commissioner through the Health Insurance Exchange or 
        through another entity under an arrangement made with the 
        Commissioner, in a form and manner specified by the 
        Commissioner. The Commissioner through the Health Insurance 
        Exchange or through another public entity under an arrangement 
        made with the Commissioner shall make a determination as to 
        eligibility of an individual for affordability credits under 
        this subtitle.The Commissioner shall establish a process 
        whereby, on the basis of information otherwise available, 
        individuals may be deemed to be affordable credit eligible 
        individuals. In carrying this subtitle, the Commissioner shall 
        establish effective methods that ensure that individuals with 
        limited English proficiency are able to apply for affordability 
        credits.
          (2) Use of state medicaid agencies.--If the Commissioner 
        determines that a State Medicaid agency has the capacity to 
        make a determination of eligibility for affordability credits 
        under this subtitle and under the same standards as used by the 
        Commissioner, under the Medicaid memorandum of understanding 
        (as defined in section 205(c)(4))--
                  (A) the State Medicaid agency is authorized to 
                conduct such determinations for any Exchange-eligible 
                individual who requests such a determination; and
                  (B) the Commissioner shall reimburse the State 
                Medicaid agency for the costs of conducting such 
                determinations.
          (3) Medicaid screen and enroll obligation.--In the case of an 
        application made under paragraph (1), there shall be a 
        determination of whether the individual is a Medicaid-eligible 
        individual. If the individual is determined to be so eligible, 
        the Commissioner, through the Medicaid memorandum of 
        understanding, shall provide for the enrollment of the 
        individual under the State Medicaid plan in accordance with the 
        Medicaid memorandum of understanding. In the case of such an 
        enrollment, the State shall provide for the same periodic 
        redetermination of eligibility under Medicaid as would 
        otherwise apply if the individual had directly applied for 
        medical assistance to the State Medicaid agency.
  (c) Use of Affordability Credits.--
          (1) In general.--In Y1 and Y2 an affordable credit eligible 
        individual may use an affordability credit only with respect to 
        a basic plan.
          (2) Flexibility in plan enrollment authorized.--Beginning 
        with Y3, the Commissioner shall establish a process to allow an 
        affordability credit to be used for enrollees in enhanced or 
        premium plans. In the case of an affordable credit eligible 
        individual who enrolls in an enhanced or premium plan, the 
        individual shall be responsible for any difference between the 
        premium for such plan and the affordable credit amount 
        otherwise applicable if the individual had enrolled in a basic 
        plan.
  (d) Access to Data.--In carrying out this subtitle, the Commissioner 
shall request from the Secretary of the Treasury consistent with 
section 6103 of the Internal Revenue Code of 1986 such information as 
may be required to carry out this subtitle.
  (e) No Cash Rebates.--In no case shall an affordable credit eligible 
individual receive any cash payment as a result of the application of 
this subtitle.

SEC. 242. AFFORDABLE CREDIT ELIGIBLE INDIVIDUAL.

  (a) Definition.--
          (1) In general.--For purposes of this division, the term 
        ``affordable credit eligible individual'' means, subject to 
        subsection (b), an individual who is lawfully present in a 
        State in the United States (other than as a nonimmigrant 
        described in a subparagraph (excluding subparagraphs (K), (T), 
        (U), and (V)) of section 101(a)(15) of the Immigration and 
        Nationality Act)--
                  (A) who is enrolled under an Exchange-participating 
                health benefits plan and is not enrolled under such 
                plan as an employee (or dependent of an employee) 
                through an employer qualified health benefits plan that 
                meets the requirements of section 312;
                  (B) with family income below 400 percent of the 
                Federal poverty level for a family of the size 
                involved; and
                  (C) who is not a Medicaid eligible individual, other 
                than an individual described in section 202(d)(3) or an 
                individual during a transition period under section 
                202(d)(4)(B)(ii).
          (2) Treatment of family.--Except as the Commissioner may 
        otherwise provide, members of the same family who are 
        affordable credit eligible individuals shall be treated as a 
        single affordable credit individual eligible for the applicable 
        credit for such a family under this subtitle.
  (b) Limitations on Employee and Dependent Disqualification.--
          (1) In general.--Subject to paragraph (2), the term 
        ``affordable credit eligible individual'' does not include a 
        full-time employee of an employer if the employer offers the 
        employee coverage (for the employee and dependents) as a full-
        time employee under a group health plan if the coverage and 
        employer contribution under the plan meet the requirements of 
        section 312.
          (2) Exceptions.--
                  (A) For certain family circumstances.--The 
                Commissioner shall establish such exceptions and 
                special rules in the case described in paragraph (1) as 
                may be appropriate in the case of a divorced or 
                separated individual or such a dependent of an employee 
                who would otherwise be an affordable credit eligible 
                individual.
                  (B) For unaffordable employer coverage.--For years 
                beginning with Y2, in the case of full-time employees 
                for which the cost of the employee premium (plus, to 
                the extent specified by the Commissioner, out-of-pocket 
                cost-sharing for such year or the preceding year) for 
                coverage under a group health plan would exceed 11 
                percent of current family income (determined by the 
                Commissioner on the basis of verifiable documentation 
                and without regard to section 245), paragraph (1) shall 
                not apply.
  (c) Income Defined.--
          (1) In general.--In this title, the term ``income'' means 
        modified adjusted gross income (as defined in section 59B of 
        the Internal Revenue Code of 1986).
          (2) Study of income disregards.--The Commissioner shall 
        conduct a study that examines the application of income 
        disregards for purposes of this subtitle. Not later than the 
        first day of Y2, the Commissioner shall submit to Congress a 
        report on such study and shall include such recommendations as 
        the Commissioner determines appropriate.
  (d) Clarification of Treatment of Affordability Credits.--
Affordabilty credits under this subtitle shall not be treated, for 
purposes of title IV of the Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996, to be a benefit provided under 
section 403 of such title.

SEC. 243. AFFORDABLE PREMIUM CREDIT.

  (a) In General.--The affordability premium credit under this section 
for an affordable credit eligible individual enrolled in an Exchange-
participating health benefits plan is in an amount equal to the amount 
(if any) by which the premium for the plan (or, if less, the reference 
premium amount specified in subsection (c)), exceeds the affordable 
premium amount specified in subsection (b) for the individual.
  (b) Affordable Premium Amount.--
          (1) In general.--The affordable premium amount specified in 
        this subsection for an individual for monthly premium in a plan 
        year shall be equal to \1/12\ of the product of--
                  (A) the premium percentage limit specified in 
                paragraph (2) for the individual based upon the 
                individual's family income for the plan year; and
                  (B) the individual's family income for such plan 
                year.
          (2) Premium percentage limits based on table.--The 
        Commissioner shall establish premium percentage limits so that 
        for individuals whose family income is within an income tier 
        specified in the table in subsection (d) such percentage limits 
        shall increase, on a sliding scale in a linear manner, from the 
        initial premium percentage to the final premium percentage 
        specified in such table for such income tier.
  (c) Reference Premium Amount.--The reference premium amount specified 
in this subsection for a plan year for an individual in a premium 
rating area is equal to the average premium for the 3 basic plans in 
the area for the plan year with the lowest premium levels. In computing 
such amount the Commissioner may exclude plans with extremely limited 
enrollments.
  (d) Table of Premium Percentage Limits and Actuarial Value 
Percentages Based on Income Tier.--
          (1) In general.--For purposes of this subtitle, the table 
        specified in this subsection is as follows:


   In the case of family income
 (expressed as a percent of FPL)      The initial premium         The final premium        The actuarial value
within the following income tier:       percentage is--            percentage is--           percentage is--

133% through 150%                  1.5%                       3%                        97%
150% through 200%                  3%                         5%                        93%
200% through 250%                  5%                         7%                        85%
250% through 300%                  7%                         9%                        78%
300% through 350%                  9%                         10%                       72%
350% through 400%                  10%                        11%                 70%


          (2) Special rules.--For purposes of applying the table under 
        paragraph (1)--
                  (A) For lowest level of income.--In the case of an 
                individual with income that does not exceed 133 percent 
                of FPL, the individual shall be considered to have 
                income that is 133% of FPL.
                  (B) Application of higher actuarial value percentage 
                at tier transition points.--If two actuarial value 
                percentages may be determined with respect to an 
                individual, the actuarial value percentage shall be the 
                higher of such percentages.

SEC. 244. AFFORDABILITY COST-SHARING CREDIT.

  (a) In General.--The affordability cost-sharing credit under this 
section for an affordable credit eligible individual enrolled in an 
Exchange-participating health benefits plan is in the form of the cost-
sharing reduction described in subsection (b) provided under this 
section for the income tier in which the individual is classified based 
on the individual's family income.
  (b) Cost-sharing Reductions.--The Commissioner shall specify a 
reduction in cost-sharing amounts and the annual limitation on cost-
sharing specified in section 122(c)(2)(B) under a basic plan for each 
income tier specified in the table under section 243(d), with respect 
to a year, in a manner so that, as estimated by the Commissioner, the 
actuarial value of the coverage with such reduced cost-sharing amounts 
(and the reduced annual cost-sharing limit) is equal to the actuarial 
value percentage (specified in the table under section 243(d) for the 
income tier involved) of the full actuarial value if there were no 
cost-sharing imposed under the plan.
  (c) Determination and Payment of Cost-sharing Affordability Credit.--
In the case of an affordable credit eligible individual in a tier 
enrolled in an Exchange-participating health benefits plan offered by a 
QHBP offering entity, the Commissioner shall provide for payment to the 
offering entity of an amount equivalent to the increased actuarial 
value of the benefits under the plan provided under section 
203(c)(2)(B) resulting from the reduction in cost-sharing described in 
subsection (b).

SEC. 245. INCOME DETERMINATIONS.

  (a) In General.--In applying this subtitle for an affordability 
credit for an individual for a plan year, the individual's income shall 
be the income (as defined in section 242(c)) for the individual for the 
most recent taxable year (as determined in accordance with rules of the 
Commissioner). The Federal poverty level applied shall be such level in 
effect as of the date of the application.
  (b) Program Integrity; Income Verification Procedures.--
          (1) Program integrity.--The Commissioner shall take such 
        steps as may be appropriate to ensure the accuracy of 
        determinations and redeterminations under this subtitle.
          (2) Income verification.--
                  (A) In general.--Upon an initial application of an 
                individual for an affordability credit under this 
                subtitle (or in applying section 242(b)) or upon an 
                application for a change in the affordability credit 
                based upon a significant change in family income 
                described in subparagraph (A)--
                          (i) the Commissioner shall request from the 
                        Secretary of the Treasury the disclosure to the 
                        Commissioner of such information as may be 
                        permitted to verify the information contained 
                        in such application; and
                          (ii) the Commissioner shall use the 
                        information so disclosed to verify such 
                        information.
                  (B) Alternative procedures.--The Commissioner shall 
                establish procedures for the verification of income for 
                purposes of this subtitle if no income tax return is 
                available for the most recent completed tax year.
  (c) Special Rules.--
          (1) Changes in income as a percent of fpl.--In the case that 
        an individual's income (expressed as a percentage of the 
        Federal poverty level for a family of the size involved) for a 
        plan year is expected (in a manner specified by the 
        Commissioner) to be significantly different from the income (as 
        so expressed) used under subsection (a), the Commissioner shall 
        establish rules requiring an individual to report, consistent 
        with the mechanism established under paragraph (2), significant 
        changes in such income (including a significant change in 
        family composition) to the Commissioner and requiring the 
        substitution of such income for the income otherwise 
        applicable.
          (2) Reporting of significant changes in income.--The 
        Commissioner shall establish rules under which an individual 
        determined to be an affordable credit eligible individual would 
        be required to inform the Commissioner when there is a 
        significant change in the family income of the individual 
        (expressed as a percentage of the FPL for a family of the size 
        involved) and of the information regarding such change. Such 
        mechanism shall provide for guidelines that specify the 
        circumstances that qualify as a significant change, the 
        verifiable information required to document such a change, and 
        the process for submission of such information. If the 
        Commissioner receives new information from an individual 
        regarding the family income of the individual,the Commissioner 
        shall provide for a redetermination of the individual's 
        eligibility to be an affordable credit eligible individual.
          (3) Transition for chip.--In the case of a child described in 
        section 202(d)(2), the Commissioner shall establish rules under 
        which the family income of the child is deemed to be no greater 
        than the family income of the child as most recently determined 
        before Y1 by the State under title XXI of the Social Security 
        Act.
          (4) Study of geographic variation in application of fpl.--The 
        Commissioner shall examine the feasibility and implication of 
        adjusting the application of the Federal poverty level under 
        this subtitle for different geographic areas so as to reflect 
        the variations in cost-of-living among different areas within 
        the United States. If the Commissioner determines that an 
        adjustment is feasible, the study should include a methodology 
        to make such an adjustment. Not later than the first day of Y2, 
        the Commissioner shall submit to Congress a report on such 
        study and shall include such recommendations as the 
        Commissioner determines appropriate.
  (d) Penalties for Misrepresentation.--In the case of an individual 
intentionally misrepresents family income or the individual fails 
(without regard to intent) to disclose to the Commissioner a 
significant change in family income under subsection (c) in a manner 
that results in the individual becoming an affordable credit eligible 
individual when the individual is not or in the amount of the 
affordability credit exceeding the correct amount--
          (1) the individual is liable for repayment of the amount of 
        the improper affordability credit; ;and
          (2) in the case of such an intentional misrepresentation or 
        other egregious circumstances specified by the Commissioner, 
        the Commissioner may impose an additional penalty.

SEC. 246. NO FEDERAL PAYMENT FOR UNDOCUMENTED ALIENS.

  Nothing in this subtitle shall allow Federal payments for 
affordability credits on behalf of individuals who are not lawfully 
present in the United States.

                      Subtitle D--State Innovation

SEC. 251. WAIVER OF ERISA LIMITATION; APPLICATION INSTEAD OF STATE 
                    SINGLE PAYER SYSTEM.

  (a) In General.--A State may request from the Secretary, and the 
Secretary must grant except under extraordinary circumstances, a waiver 
of application of section 514 of the Employee Retirement Income 
Security Act of 1974 with respect to a state single payer system 
enacted into law by such State that would be structured and operate in 
a manner consistent with this subtitle. The Secretary shall provide for 
the revocation of any waiver granted under this section upon a 
determination made by the Secretary that the requirements of the 
preceding sentence are no longer being met.
  (b) Effect of Waiver.--During any period for which a waiver under 
subsection (a) is in effect--
          (1) the provisions of section 514 of the Employee Retirement 
        Income Security Act of 1974 shall not apply with respect to the 
        State single payer system; and
          (2) the State single payer system shall operate in the State 
        instead of the public health insurance option or the National 
        Health Exchange.
  (c) Construction.--Nothing in this subtitle shall be construed to 
limit or otherwise affect the transfer and allocation under this Act of 
funds to States with single payer systems.

SEC. 252. REQUIREMENTS.

  A State single payer system shall--
          (1) ) provide benefits that meet or exceed the standards of 
        coverage and quality of care set forth in this Act; and
          (2) ensure that the cost to the Federal Government resulting 
        from the waiver granted under section 261 is neither 
        substantially greater nor substantially less than would have 
        been the case in the absence of such waiver, except that:
                  (A) the State may seek and benefit from planning and 
                start-up funds with respect to the system; and
                  (B) nothing in this paragraph shall be construed to 
                preclude allowance for normal variations in population 
                demographics, health status, and other factors 
                exogenous to the health care system that may affect 
                differences in costs.

SEC. 253. DEFINITIONS.

  (a) State Single Payer System.--The term ``State single payer 
system'' means, in connection with a State, a non-profit program of the 
State for providing health care--
          (1) in which a single agency of the State is responsible for 
        financing health care benefits for all residents of the State 
        and for the administration or supervision of the administration 
        of the program;
          (2) under which private insurance duplicating the benefits 
        provided in the single payer program is prohibited;
          (3) which provides comprehensive health benefits to all 
        residents of the State, and provides measures to assure free 
        choice of providers for covered services, to promote quality, 
        and to help resolve complaints and disputes between consumers 
        and providers; and
          (4) under which participation by health maintenance 
        organizations is limited to non-profit health maintenance 
        organizations that own their own delivery facilities and employ 
        physicians on salary, and funding is limited to services that 
        the health maintenance organizations actually deliver; and
          (5) which may be maintained by such State together one or 
        more other States in a geographic region.
  (b) Secretary.--The term ``Secretary'' means the Secretary of Labor, 
acting in consultation with the Secretary of Health and Human Services.

                    TITLE III--SHARED RESPONSIBILITY

                 Subtitle A--Individual Responsibility

SEC. 301. INDIVIDUAL RESPONSIBILITY.

  For an individual's responsibility to obtain acceptable coverage, see 
section 59B of the Internal Revenue Code of 1986 (as added by section 
401 of this Act).

                  Subtitle B--Employer Responsibility

           PART 1--HEALTH COVERAGE PARTICIPATION REQUIREMENTS

SEC. 311. HEALTH COVERAGE PARTICIPATION REQUIREMENTS.

  (a) In General.--An employer meets the requirements of this section 
if such employer does all of the following:
          (1) Offer of coverage.--The employer offers each employee 
        individual and family coverage under a qualified health 
        benefits plan (or under a current employment-based health plan 
        (within the meaning of section 102(b))) in accordance with 
        section 312.
          (2) Contribution towards coverage.--If an employee accepts 
        such offer of coverage, the employer makes timely contributions 
        towards such coverage in accordance with section 312.
          (3) Contribution in lieu of coverage.--Beginning with Y2, if 
        an employee declines such offer but otherwise obtains coverage 
        in an Exchange-participating health benefits plan (other than 
        by reason of being covered by family coverage as a spouse or 
        dependent of the primary insured), the employer shall make a 
        timely contribution to the Health Insurance Exchange with 
        respect to each such employee in accordance with section 313.
  (b)  Hardship Exemption.--Notwithstanding any other provision of this 
part, an employer may, in a form and manner which shall be prescribed 
by the Secretary, apply to the Secretary for a waiver from the health 
coverage participation requirements of this part for any 2-year period. 
The Secretary shall grant the waiver within 30 days after submission of 
the application if the application reasonably demonstrates to the 
Secretary that meeting the requirements of this part would result in 
job losses that would negatively impact the employer or the community 
in which the employer is located.

SEC. 312. EMPLOYER RESPONSIBILITY TO CONTRIBUTE TOWARDS EMPLOYEE AND 
                    DEPENDENT COVERAGE.

  (a) In General.--An employer meets the requirements of this section 
with respect to an employee if the following requirements are met:
          (1) Offering of coverage.--The employer offers the coverage 
        described in section 311(1) either through an Exchange-
        participating health benefits plan or other than through such a 
        plan.
          (2) Employer required contribution.--The employer timely pays 
        to the issuer of such coverage an amount not less than the 
        employer required contribution specified in subsection (b) for 
        such coverage.
          (3) Provision of information.--The employer provides the 
        Health Choices Commissioner, the Secretary of Labor, the 
        Secretary of Health and Human Services, and the Secretary of 
        the Treasury, as applicable, with such information as the 
        Commissioner may require to ascertain compliance with the 
        requirements of this section.
          (4) Autoenrollment of employees.--The employer provides for 
        autoenrollment of the employee in accordance with subsection 
        (c).
  (b) Reduction of Employee Premiums Through Minimum Employer 
Contribution.--
          (1) Full-time employees.--The minimum employer contribution 
        described in this subsection for coverage of a full-time 
        employee (and, if any, the employee's spouse and qualifying 
        children (as defined in section 152(c) of the Internal Revenue 
        Code of 1986) under a qualified health benefits plan (or 
        current employment-based health plan) is equal to--
                  (A) in case of individual coverage, not less than 
                72.5 percent of the applicable premium (as defined in 
                section 4980B(f)(4) of such Code, subject to paragraph 
                (2)) of the lowest cost plan offered by the employer 
                that is a qualified health benefits plan (or is such 
                current employment-based health plan); and
                  (B) in the case of family coverage which includes 
                coverage of such spouse and children, not less 65 
                percent of such applicable premium of such lowest cost 
                plan.
          (2) Applicable premium for exchange coverage.--In this 
        subtitle, the amount of the applicable premium of the lowest 
        cost plan with respect to coverage of an employee under an 
        Exchange-participating health benefits plan is the reference 
        premium amount under section 243(c) for individual coverage 
        (or, if elected, family coverage) for the premium rating area 
        in which the individual or family resides.
          (3) Minimum employer contribution for employees other than 
        full-time employees.--In the case of coverage for an employee 
        who is not a full-time employee, the amount of the minimum 
        employer contribution under this subsection shall be a 
        proportion (as determined in accordance with rules of the 
        Health Choices Commissioner, the Secretary of Labor, the 
        Secretary of Health and Human Services, and the Secretary of 
        the Treasury, as applicable) of the minimum employer 
        contribution under this subsection with respect to a full-time 
        employee that reflects the proportion of--
                  (A) the average weekly hours of employment of the 
                employee by the employer, to
                  (B) the minimum weekly hours specified by the 
                Commissioner for an employee to be a full-time 
                employee.
          (4) Salary reductions not treated as employer 
        contributions.--For purposes of this section, any contribution 
        on behalf of an employee with respect to which there is a 
        corresponding reduction in the compensation of the employee 
        shall not be treated as an amount paid by the employer.
  (c) Automatic Enrollment for Employer Sponsored Health Benefits.--
          (1) In general.--The requirement of this subsection with 
        respect to an employer and an employee is that the employer 
        automatically enroll suchs employee into the employment-based 
        health benefits plan for individual coverage under the plan 
        option with the lowest applicable employee premium.
          (2) Opt-out.--In no case may an employer automatically enroll 
        an employee in a plan under paragraph (1) if such employee 
        makes an affirmative election to opt out of such plan or to 
        elect coverage under an employment-based health benefits plan 
        offered by such employer. An employer shall provide an employee 
        with a 30-day period to make such an affirmative election 
        before the employer may automatically enroll the employee in 
        such a plan.
          (3) Notice requirements.--
                  (A) In general.--Each employer described in paragraph 
                (1) who automatically enrolls an employee into a plan 
                as described in such paragraph shall provide the 
                employees, within a reasonable period before the 
                beginning of each plan year (or, in the case of new 
                employees, within a reasonable period before the end of 
                the enrollment period for such a new employee), written 
                notice of the employees' rights and obligations 
                relating to the automatic enrollment requirement under 
                such paragraph. Such notice must be comprehensive and 
                understood by the average employee to whom the 
                automatic enrollment requirement applies.
                  (B) Inclusion of specific information.--The written 
                notice under subparagraph (A) must explain an 
                employee's right to opt out of being automatically 
                enrolled in a plan and in the case that more than one 
                level of benefits or employee premium level is offered 
                by the employer involved, the notice must explain which 
                level of benefits and employee premium level the 
                employee will be automatically enrolled in the absence 
                of an affirmative election by the employee.

SEC. 313. EMPLOYER CONTRIBUTIONS IN LIEU OF COVERAGE.

  (a) In General.--A contribution is made in accordance with this 
section with respect to an employee if such contribution is equal to an 
amount equal to 8 percent of the average wages paid by the employer 
during the period of enrollment (determined by taking into account all 
employees of the employer and in such manner as the Commissioner 
provides, including rules providing for the appropriate aggregation of 
related employers). Any such contribution--
          (1) shall be paid to the Health Choices Commissioner for 
        deposit into the Health Insurance Exchange Trust Fund, and
          (2) shall not be applied against the premium of the employee 
        under the Exchange-participating health benefits plan in which 
        the employee is enrolled.
  (b) Special Rules for Small Employers.--
          (1) In general.--In the case of any employer who is a small 
        employer for any calendar year, subsection (a) shall be applied 
        by substituting the applicable percentage determined in 
        accordance with the following table for ``8 percent'':


If the annual payroll of such employer   The applicable percentage is:
 for the preceding calendar year:
  Does not exceed $250,000.............  0 percent
  Exceeds $250,000, but does not exceed  2 percent
   $300,000.
  Exceeds $300,000, but does not exceed  4 percent
   $350,000.
  Exceeds $350,000, but does not exceed  6 percent
   $400,000.


          (2) Small employer.--For purposes of this subsection, the 
        term ``small employer'' means any employer for any calendar 
        year if the annual payroll of such employer for the preceding 
        calendar year does not exceed $400,000.
          (3) Annual payroll.--For purposes of this paragraph, the term 
        ``annual payroll'' means, with respect to any employer for any 
        calendar year, the aggregate wages paid by the employer during 
        such calendar year.
          (4) Aggregation rules.--Related employers and predecessors 
        shall be treated as a single employer for purposes of this 
        subsection.

SEC. 314. AUTHORITY RELATED TO IMPROPER STEERING.

  The Health Choices Commissioner (in coordination with the Secretary 
of Labor, the Secretary of Health and Human Services, and the Secretary 
of the Treasury) shall have authority to set standards for determining 
whether employers or insurers are undertaking any actions to affect the 
risk pool within the Health Insurance Exchange by inducing individuals 
to decline coverage under a qualified health benefits plan (or current 
employment-based health plan (within the meaning of section 102(b)) 
offered by the employer and instead to enroll in an Exchange-
participating health benefits plan. An employer violating such 
standards shall be treated as not meeting the requirements of this 
section.

   PART 2--SATISFACTION OF HEALTH COVERAGE PARTICIPATION REQUIREMENTS

SEC. 321. SATISFACTION OF HEALTH COVERAGE PARTICIPATION REQUIREMENTS 
                    UNDER THE EMPLOYEE RETIREMENT INCOME SECURITY ACT 
                    OF 1974.

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

     ``PART 8--NATIONAL HEALTH COVERAGE PARTICIPATION REQUIREMENTS

``SEC. 801. ELECTION OF EMPLOYER TO BE SUBJECT TO NATIONAL HEALTH 
                    COVERAGE PARTICIPATION REQUIREMENTS.

  ``(a) In General.--An employer may make an election with the 
Secretary to be subject to the health coverage participation 
requirements.
  ``(b) Time and Manner.--An election under subsection (a) may be made 
at such time and in such form and manner as the Secretary may 
prescribe.

``SEC. 802. TREATMENT OF COVERAGE RESULTING FROM ELECTION.

  ``(a) In General.--If an employer makes an election to the Secretary 
under section 801--
          ``(1) such election shall be treated as the establishment and 
        maintenance of a group health plan (as defined in section 
        733(a)) for purposes of this title, subject to section 151 of 
        the America's Affordable Health Choices Act of 2009, and
          ``(2) the health coverage participation requirements shall be 
        deemed to be included as terms and conditions of such plan.
  ``(b) Periodic Investigations to Discover Noncompliance.--The 
Secretary shall regularly audit a representative sampling of employers 
and group health plans and conduct investigations and other activities 
under section 504 with respect to such sampling of plans so as to 
discover noncompliance with the health coverage participation 
requirements in connection with such plans. The Secretary shall 
communicate findings of noncompliance made by the Secretary under this 
subsection to the Secretary of the Treasury and the Health Choices 
Commissioner. The Secretary shall take such timely enforcement action 
as appropriate to achieve compliance.
  ``(c) Recordkeeping.--To facilitate the audits described in 
subsection (b), the Secretary shall promulgate recordkeeping 
requirements for employers to account for both employees of the 
employer and individuals whom the employer has not treated as employees 
of the employer but with whom the employer, in the course of the trade 
or business in which the employer is engaged, has engaged for the 
performance of labor or services.

``SEC. 803. HEALTH COVERAGE PARTICIPATION REQUIREMENTS.

  ``For purposes of this part, the term `health coverage participation 
requirements' means the requirements of part 1 of subtitle B of title 
III of division A of America's Affordable Health Choices Act of 2009 
(as in effect on the date of the enactment of such Act).

``SEC. 804. RULES FOR APPLYING REQUIREMENTS.

  ``(a) Affiliated Groups.--In the case of any employer which is part 
of a group of employers who are treated as a single employer under 
subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue 
Code of 1986, the election under section 801 shall be made by such 
employer as the Secretary may provide. Any such election, once made, 
shall apply to all members of such group.
  ``(b) Separate Elections.--Under regulations prescribed by the 
Secretary, separate elections may be made under section 801 with 
respect to--
          ``(1) separate lines of business, and
          ``(2) full-time employees and employees who are not full-time 
        employees.

``SEC. 805. TERMINATION OF ELECTION IN CASES OF SUBSTANTIAL 
                    NONCOMPLIANCE.

  ``The Secretary may terminate the election of any employer under 
section 801 if the Secretary (in coordination with the Health Choices 
Commissioner) determines that such employer is in substantial 
noncompliance with the health coverage participation requirements and 
shall refer any such determination to the Secretary of the Treasury as 
appropriate.

``SEC. 806. REGULATIONS.

  ``The Secretary may promulgate such regulations as may be necessary 
or appropriate to carry out the provisions of this part, in accordance 
with section 324(a) of the America's Affordable Health Choices Act of 
2009. The Secretary may promulgate any interim final rules as the 
Secretary determines are appropriate to carry out this part.''.
  (b) Enforcement of Health Coverage Participation Requirements.--
Section 502 of such Act (29 U.S.C. 1132) is amended--
          (1) in subsection (a)(6), by striking ``paragraph'' and all 
        that follows through ``subsection (c)'' and inserting 
        ``paragraph (2), (4), (5), (6), (7), (8), (9), (10), or (11) of 
        subsection (c)''; and
          (2) in subsection (c), by redesignating the second paragraph 
        (10) as paragraph (12) and by inserting after the first 
        paragraph (10) the following new paragraph:
          ``(11) Health coverage participation requirements.--
                  ``(A) Civil penalties.--In the case of any employer 
                who fails (during any period with respect to which an 
                election under section 801(a) is in effect) to satisfy 
                the health coverage participation requirements with 
                respect to any employee, the Secretary may assess a 
                civil penalty against the employer of $100 for each day 
                in the period beginning on the date such failure first 
                occurs and ending on the date such failure is 
                corrected.
                  ``(B) Health coverage participation requirements.--
                For purposes of this paragraph, the term `health 
                coverage participation requirements' has the meaning 
                provided in section 803.
                  ``(C) Limitations on amount of penalty.--
                          ``(i) Penalty not to apply where failure not 
                        discovered exercising reasonable diligence.--No 
                        penalty shall be assessed under subparagraph 
                        (A) with respect to any failure during any 
                        period for which it is established to the 
                        satisfaction of the Secretary that the employer 
                        did not know, or exercising reasonable 
                        diligence would not have known, that such 
                        failure existed.
                          ``(ii) Penalty not to apply to failures 
                        corrected within 30 days.--No penalty shall be 
                        assessed under subparagraph (A) with respect to 
                        any failure if--
                                  ``(I) such failure was due to 
                                reasonable cause and not to willful 
                                neglect, and
                                  ``(II) such failure is corrected 
                                during the 30-day period beginning on 
                                the 1st date that the employer knew, or 
                                exercising reasonable diligence would 
                                have known, that such failure existed.
                          ``(iii) Overall limitation for unintentional 
                        failures.--In the case of failures which are 
                        due to reasonable cause and not to willful 
                        neglect, the penalty assessed under 
                        subparagraph (A) for failures during any 1-year 
                        period shall not exceed the amount equal to the 
                        lesser of--
                                  ``(I) 10 percent of the aggregate 
                                amount paid or incurred by the employer 
                                (or predecessor employer) during the 
                                preceding 1-year period for group 
                                health plans, or
                                  ``(II) $500,000.
                  ``(D) Advance notification of failure prior to 
                assessment.--Before a reasonable time prior to the 
                assessment of any penalty under this paragraph with 
                respect to any failure by an employer, the Secretary 
                shall inform the employer in writing of such failure 
                and shall provide the employer information regarding 
                efforts and procedures which may be undertaken by the 
                employer to correct such failure.
                  ``(E) Coordination with excise tax.--Under 
                regulations prescribed in accordance with section 324 
                of the America's Affordable Health Choices Act of 2009, 
                the Secretary and the Secretary of the Treasury shall 
                coordinate the assessment of penalties under this 
                section in connection with failures to satisfy health 
                coverage participation requirements with the imposition 
                of excise taxes on such failures under section 4980H(b) 
                of the Internal Revenue Code of 1986 so as to avoid 
                duplication of penalties with respect to such failures.
                  ``(F) Deposit of penalty collected.--Any amount of 
                penalty collected under this paragraph shall be 
                deposited as miscellaneous receipts in the Treasury of 
                the United States.''.
  (c) Clerical Amendments.--The table of contents in section 1 of such 
Act is amended by inserting after the item relating to section 734 the 
following new items:

     ``Part 8--National Health Coverage Participation Requirements

``Sec. 801. Election of employer to be subject to national health 
coverage participation requirements.
``Sec. 802. Treatment of coverage resulting from election.
``Sec. 803. Health coverage participation requirements.
``Sec. 804. Rules for applying requirements.
``Sec. 805. Termination of election in cases of substantial 
noncompliance.
``Sec. 806. Regulations.''.

  (d) Effective Date.--The amendments made by this section shall apply 
to periods beginning after December 31, 2012.

  [For sections 322 and 323, see text of bill as introduced on June 14, 
2009.]

SEC. 324. ADDITIONAL RULES RELATING TO HEALTH COVERAGE PARTICIPATION 
                    REQUIREMENTS.

  (a) Assuring Coordination.--The officers consisting of the Secretary 
of Labor, the Secretary of the Treasury, the Secretary of Health and 
Human Services, and the Health Choices Commissioner shall ensure, 
through the execution of an interagency memorandum of understanding 
among such officers, that--
          (1) regulations, rulings, and interpretations issued by such 
        officers relating to the same matter over which two or more of 
        such officers have responsibility under subpart B of part 6 of 
        subtitle B of title I of the Employee Retirement Income 
        Security Act of 1974, section 4980H of the Internal Revenue 
        Code of 1986, and section 2793 of the Public Health Service Act 
        are administered so as to have the same effect at all times; 
        and
          (2) coordination of policies relating to enforcing the same 
        requirements through such officers in order to have a 
        coordinated enforcement strategy that avoids duplication of 
        enforcement efforts and assigns priorities in enforcement.
  (b) Multiemployer Plans.--In the case of a group health plan that is 
a multiemployer plan (as defined in section 3(37) of the Employee 
Retirement Income Security Act of 1974), the regulations prescribed in 
accordance with subsection (a) by the officers referred to in 
subsection (a) shall provide for the application of the health coverage 
participation requirements to the plan sponsor and contributing 
sponsors of such plan.

             DIVISION B--MEDICARE AND MEDICAID IMPROVEMENTS

  [For division B, see text of bill as introduced on July 14, 2009.]

          DIVISION C--PUBLIC HEALTH AND WORKFORCE DEVELOPMENT

SEC. 2001. TABLE OF CONTENTS; REFERENCES.

  (a) Table of Contents.--The table of contents of this division is as 
follows:

Sec. 2001. Table of contents; references.
[For section 2002, see text of introduced bill.]

    [FOR TEXT OF TITLES I THROUGH IV, SEE TEXT OF INTRODUCED BILL.]

                       TITLE V--OTHER PROVISIONS

       [For Subtitles A, B, and C, See Text of Introduced Bill.]

 Subtitle D--Grants for Comprehensive Programs to Provide Education to 
                Nurses and Create a Pipeline to Nursing

             [For Subtitle E, See Text of Introduced Bill.]

Sec. 2531. Establishment of grant program.

   Subtitle F--Standards for Accessibility to Medical Equipment for 
                     Individuals With Disabilities.

Sec. 2541. Access for individuals with disabilities.

                    Subtitle G--Other Grant Programs

Sec. 2551. Reducing student-to-school nurse ratios.
Sec. 2552. Wellness program grants.
Sec. 2553. Health professions training for diversity programs.

        Subtitle H--Long-term Care and Family Caregiver Support

Sec. 2561. Long-term care and family caregiver support.

                      Subtitle I--Online Resources

Sec. 2571. Web site on health care labor market and related educational 
and training opportunities.
Sec. 2572. Online health workforce training programs.

  (b) References.--Except as otherwise specified, whenever in this 
division an amendment is expressed in terms of an amendment to a 
section or other provision, the reference shall be considered to be 
made to a section or other provision of the Public Health Service Act 
(42 U.S.C. 201 et seq.).

  [For section 2002 and titles I through IV of division C, see text of 
bill as introduced on July 14, 2009.]

                       TITLE V--OTHER PROVISIONS

  [For subtitles A through C of title V of division C, see text of bill 
as introduced on July 14, 2009.]

 Subtitle D--Grants for Comprehensive Programs to Provide Education to 
                Nurses and Create a Pipeline to Nursing

SEC. 2531. ESTABLISHMENT OF GRANT PROGRAM.

  (a) Purposes.--It is the purpose of this section to authorize grants 
to--
          (1) address the projected shortage of nurses by funding 
        comprehensive programs to create a career ladder to nursing 
        (including Certified Nurse Assistants, Licensed Practical 
        Nurses, Licensed Vocational Nurses, and Registered Nurses) for 
        incumbent ancillary health care workers;
          (2) increase the capacity for educating nurses by increasing 
        both nurse faculty and clinical opportunities through 
        collaborative programs between staff nurse organizations, 
        health care providers, and accredited schools of nursing; and
          (3) provide training programs through education and training 
        organizations jointly administered by health care providers and 
        health care labor organizations or other organizations 
        representing staff nurses and frontline health care workers, 
        working in collaboration with accredited schools of nursing and 
        academic institutions.
  (b) Grants.--Not later than 6 months after the date of the enactment 
of this Act, the Secretary of Labor (referred to in this section as the 
``Secretary'') shall establish a partnership grant program to award 
grants to eligible entities to carry out comprehensive programs to 
provide education to nurses and create a pipeline to nursing for 
incumbent ancillary health care workers who wish to advance their 
careers, and to otherwise carry out the purposes of this section.
  (c) Eligibility.--To be eligible for a grant under this section, an 
entity shall be--
          (1) a health care entity that is jointly administered by a 
        health care employer and a labor union representing the health 
        care employees of the employer and that carries out activities 
        using labor management training funds as provided for under 
        section 302(c)(6) of the Labor Management Relations Act, 1947 
        (29 U.S.C. 186(c)(6));
          (2) an entity that operates a training program that is 
        jointly administered by--
                  (A) one or more health care providers or facilities, 
                or a trade association of health care providers; and
                  (B) one or more organizations which represent the 
                interests of direct care health care workers or staff 
                nurses and in which the direct care health care workers 
                or staff nurses have direct input as to the leadership 
                of the organization;
          (3) a State training partnership program that consists of 
        nonprofit organizations that include equal participation from 
        industry, including public or private employers, and labor 
        organizations including joint labor-management training 
        programs, and which may include representatives from local 
        governments, worker investment agency one-stop career centers, 
        community-based organizations, community colleges, and 
        accredited schools of nursing; or
          (4) a school of nursing (as defined in section 801 of the 
        Public Health Service Act (42 U.S.C. 296)).
  (d) Additional Requirements for Health Care Employer Described in 
Subsection (c).--To be eligible for a grant under this section, a 
health care employer described in subsection (c) shall demonstrate that 
it--
          (1) has an established program within their facility to 
        encourage the retention of existing nurses;
          (2) provides wages and benefits to its nurses that are 
        competitive for its market or that have been collectively 
        bargained with a labor organization; and
          (3) supports programs funded under this section through 1 or 
        more of the following:
                  (A) The provision of paid leave time and continued 
                health coverage to incumbent health care workers to 
                allow their participation in nursing career ladder 
                programs, including certified nurse assistants, 
                licensed practical nurses, licensed vocational nurses, 
                and registered nurses.
                  (B) Contributions to a joint labor-management 
                training fund which administers the program involved.
                  (C) The provision of paid release time, incentive 
                compensation, or continued health coverage to staff 
                nurses who desire to work full- or part-time in a 
                faculty position.
                  (D) The provision of paid release time for staff 
                nurses to enable them to obtain a bachelor of science 
                in nursing degree, other advanced nursing degrees, 
                specialty training, or certification program.
                  (E) The payment of tuition assistance which is 
                managed by a joint labor-management training fund or 
                other jointly administered program.
  (e) Other Requirements.--
          (1) Matching requirement.--
                  (A) In general.--The Secretary may not make a grant 
                under this section unless the applicant involved 
                agrees, with respect to the costs to be incurred by the 
                applicant in carrying out the program under the grant, 
                to make available non-Federal contributions (in cash or 
                in kind under subparagraph (B)) toward such costs in an 
                amount equal to not less than $1 for each $1 of Federal 
                funds provided in the grant. Such contributions may be 
                made directly or through donations from public or 
                private entities, or may be provided through the cash 
                equivalent of paid release time provided to incumbent 
                worker students.
                  (B) Determination of amount of non-federal 
                contribution.--Non-Federal contributions required in 
                subparagraph (A) may be in cash or in kind (including 
                paid release time), fairly evaluated, including 
                equipment or services (and excluding indirect or 
                overhead costs). Amounts provided by the Federal 
                Government, or services assisted or subsidized to any 
                significant extent by the Federal Government, may not 
                be included in determining the amount of such non-
                Federal contributions.
          (2) Required collaboration.--Entities carrying out or 
        overseeing programs carried out with assistance provided under 
        this section shall demonstrate collaboration with accredited 
        schools of nursing which may include community colleges and 
        other academic institutions providing associate, bachelor's, or 
        advanced nursing degree programs or specialty training or 
        certification programs.
  (f) Use of Funds.--Amounts awarded to an entity under a grant under 
this section shall be used for the following:
          (1) To carry out programs that provide education and training 
        to establish nursing career ladders to educate incumbent health 
        care workers to become nurses (including certified nurse 
        assistants, licensed practical nurses, licensed vocational 
        nurses, and registered nurses). Such programs shall include one 
        or more of the following:
                  (A) Preparing incumbent workers to return to the 
                classroom through English-as-a-second language 
                education, GED education, pre-college counseling, 
                college preparation classes, and support with entry 
                level college classes that are a prerequisite to 
                nursing.
                  (B) Providing tuition assistance with preference for 
                dedicated cohort classes in community colleges, 
                universities, accredited schools of nursing with 
                supportive services including tutoring and counseling.
                  (C) Providing assistance in preparing for and meeting 
                all nursing licensure tests and requirements.
                  (D) Carrying out orientation and mentorship programs 
                that assist newly graduated nurses in adjusting to 
                working at the bedside to ensure their retention 
                postgraduation, and ongoing programs to support nurse 
                retention.
                  (E) Providing stipends for release time and continued 
                health care coverage to enable incumbent health care 
                workers to participate in these programs.
          (2) To carry out programs that assist nurses in obtaining 
        advanced degrees and completing specialty training or 
        certification programs and to establish incentives for nurses 
        to assume nurse faculty positions on a part-time or full-time 
        basis. Such programs shall include one or more of the 
        following:
                  (A) Increasing the pool of nurses with advanced 
                degrees who are interested in teaching by funding 
                programs that enable incumbent nurses to return to 
                school.
                  (B) Establishing incentives for advanced degree 
                bedside nurses who wish to teach in nursing programs so 
                they can obtain a leave from their bedside position to 
                assume a full- or part-time position as adjunct or 
                full-time faculty without the loss of salary or 
                benefits.
                  (C) Collaboration with accredited schools of nursing 
                which may include community colleges and other academic 
                institutions providing associate, bachelor's, or 
                advanced nursing degree programs, or specialty training 
                or certification programs, for nurses to carry out 
                innovative nursing programs which meet the needs of 
                bedside nursing and health care providers.
  (g) Preference.--In awarding grants under this section the Secretary 
shall give preference to programs that--
          (1) provide for improving nurse retention;
          (2) provide for improving the diversity of the new nurse 
        graduates to reflect changes in the demographics of the patient 
        population;
          (3) provide for improving the quality of nursing education to 
        improve patient care and safety;
          (4) have demonstrated success in upgrading incumbent health 
        care workers to become nurses or which have established 
        effective programs or pilots to increase nurse faculty; or
          (5) are modeled after or affiliated with such programs 
        described in paragraph (4).
  (h) Evaluation.--
          (1) Program evaluations.--An entity that receives a grant 
        under this section shall annually evaluate, and submit to the 
        Secretary a report on, the activities carried out under the 
        grant and the outcomes of such activities. Such outcomes may 
        include--
                  (A) an increased number of incumbent workers entering 
                an accredited school of nursing and in the pipeline for 
                nursing programs;
                  (B) an increasing number of graduating nurses and 
                improved nurse graduation and licensure rates;
                  (C) improved nurse retention;
                  (D) an increase in the number of staff nurses at the 
                health care facility involved;
                  (E) an increase in the number of nurses with advanced 
                degrees in nursing;
                  (F) an increase in the number of nurse faculty;
                  (G) improved measures of patient quality (which may 
                include staffing ratios of nurses, patient satisfaction 
                rates, patient safety measures); and
                  (H) an increase in the diversity of new nurse 
                graduates relative to the patient population.
          (2) General report.--Not later than 2 years after the date of 
        the enactment of this Act, and annually thereafter, the 
        Secretary of Labor shall, using data and information from the 
        reports received under paragraph (1), submit to the Congress a 
        report concerning the overall effectiveness of the grant 
        program carried out under this section.
  (i) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section such sums as may be necessary.

  [For subtitle E of title V of division C, see text of bill as 
introduced on July 14, 2009.]

   Subtitle F--Standards for Accessibility to Medical Equipment for 
                     Individuals With Disabilities.

SEC. 2541. ACCESS FOR INDIVIDUALS WITH DISABILITIES.

  Title V of the Rehabilitation Act of 1973 (29 U.S.C. 791 et seq.) is 
amended by adding at the end of the following:

``SEC. 510. STANDARDS FOR ACCESSIBILITY OF MEDICAL DIAGNOSTIC 
                    EQUIPMENT.

  ``(a) Standards.--Not later than 9 months after the date of enactment 
of the America's Affordable Health Choices Act of 2009, the 
Architectural and Transportation Barriers Compliance Board shall issue 
guidelines setting forth the minimum technical criteria for medical 
diagnostic equipment used in (or in conjunction with) physician's 
offices, clinics, emergency rooms, hospitals, and other medical 
settings. The guidelines shall ensure that such equipment is accessible 
to, and usable by, individuals with disabilities, including provisions 
to ensure independent entry to, use of, and exit from the equipment by 
such individuals to the maximum extent possible.
  ``(b) Medical Diagnostic Equipment Covered.--The guidelines issued 
under subsection (a) for medical diagnostic equipment shall apply to 
equipment that includes examination tables, examination chairs 
(including chairs used for eye examinations or procedures, and dental 
examinations or procedures), weight scales, mammography equipment, x-
ray machines, and other equipment commonly used for diagnostic or 
examination purposes by health professionals.
  ``(c) Interim Standards.--Until the date on which final regulations 
are issued under subsection (d), purchases of examination tables, 
weight scales, and mammography equipment and used in (or in conjunction 
with) medical settings described in subsection (a), shall adhere to the 
following interim accessibility requirements:
          ``(1) Examination tables shall be height-adjustable between a 
        range of at least 18 inches to 37 inches.
          ``(2) Weight scales shall be capable of weighing individuals 
        who remain seated in a wheelchair or other personal mobility 
        aid.
          ``(3) Mammography machines and equipment shall be capable of 
        being used by individuals in a standing, seated, or recumbent 
        position, including individuals who remain seated in a 
        wheelchair or other personal mobility aid.
  ``(d) Regulations.--Not later than 6 months after the date of the 
issuance of the guidelines under subsection (a), each appropriate 
Federal agency authorized to promulgate regulations under this Act or 
under the Americans with Disabilities Act shall--
          ``(1) prescribe regulations in an accessible format as 
        necessary to carry out the provisions of such Act and section 
        504 of this Act that include accessibility standards that are 
        consistent with the guidelines issued under subsection (a); and
          ``(2) ensure that health care providers and health care plans 
        covered by the America's Affordable Health Choices Act of 2009 
        meet the requirements of the Americans with Disabilities Act 
        and section 504, including provisions ensuring that individuals 
        with disabilities receive equal access to all aspects of the 
        health care delivery system.
  ``(e) Review and Amend.--The Architectural and Transportation 
Barriers Compliance Board shall periodically review and, as 
appropriate, amend the guidelines as prescribed under subsection (a). 
Not later than 6 months after the date of the issuance of such revised 
guidelines, revised regulations consistent with such guidelines shall 
be promulgated in an accessible format by the appropriate Federal 
agencies described in subsection (d).''.

                    Subtitle G--Other Grant Programs

SEC. 2551. REDUCING STUDENT-TO-SCHOOL NURSE RATIOS.

  (a) Demonstration Grants.--
          (1) In general.--The Secretary of Education, in consultation 
        with the Secretary of Health and Human Services and the 
        Director of the Centers for Disease Control and Prevention, may 
        make demonstration grants to eligible local education agencies 
        for the purpose of reducing the student-to-school nurse ratio 
        in public elementary and secondary schools.
          (2) Special consideration.--In awarding grants under this 
        section, the Secretary of Education shall give special 
        consideration to applications submitted by high-need local 
        educational agencies that demonstrate the greatest need for new 
        or additional nursing services among children in the public 
        elementary and secondary schools served by the agency, in part 
        by providing information on current ratios of students to 
        school nurses.
          (3) Matching funds.--The Secretary of Education may require 
        recipients of grants under this subsection to provide matching 
        funds from non-Federal sources, and shall permit the recipients 
        to match funds in whole or in part with in-kind contributions.
  (b) Report.--Not later than 24 months after the date on which 
assistance is first made available to local educational agencies under 
this section, the Secretary of Education shall submit to the Congress a 
report on the results of the demonstration grant program carried out 
under this section, including an evaluation of the effectiveness of the 
program in improving the student-to-school nurse ratios described in 
subsection (a) and an evaluation of the impact of any resulting 
enhanced health of students on learning.
  (c) Definitions.--For purposes of this section:
          (1) The terms ``elementary school'', ``local educational 
        agency'', and ``secondary school'' have the meanings given to 
        those terms in section 9101 of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 7801).
          (2) The term ``eligible local educational agency'' means a 
        local educational agency in which the student-to-school nurse 
        ratio in the public elementary and secondary schools served by 
        the agency is 750 or more students to every school nurse.
          (3) The term ``high-need local educational agency'' means a 
        local educational agency--
                  (A) that serves not fewer than 10,000 children from 
                families with incomes below the poverty line; or
                  (B) for which not less than 20 percent of the 
                children served by the agency are from families with 
                incomes below the poverty line.
          (4) The term ``nurse'' means a licensed nurse, as defined 
        under State law.
  (d) Authorization of Appropriations.--To carry out this section, 
there are authorized to be appropriated such sums as may be necessary 
for each of the fiscal years 2010 through 2014.

SEC. 2552. WELLNESS PROGRAM GRANTS.

  (a) Allowance of Grant.--
          (1) In general.--For purposes of this section, the Secretary 
        of Labor shall award wellness grants as determined under this 
        section. Wellness program grants shall be awarded to qualified 
        employers for any plan year in an amount equal to 50 percent of 
        the costs paid or incurred by the employer in connection with a 
        qualified wellness program during the plan year. For purposes 
        of the preceding sentence, in the case of any qualified 
        wellness program offered as part of an employment-based health 
        plan, only costs attributable to the qualified wellness program 
        and not to the health plan, or health insurance coverage 
        offered in connection with such a plan, may be taken into 
        account.
          (2) Limitation.--The amount of the grant allowed under 
        paragraph (1) for any plan year shall not exceed the sum of--
                  (A) the product of $200 and the number of employees 
                of the employer not in excess of 200 employees; plus
                  (B) the product of $100 and the number of employees 
                of the employer in excess of 200 employees.
        The wellness grants awarded to an employer under this section 
        shall be for up to 3 years and shall not exceed $50,000.
  (b) Qualified Wellness Program.--For purposes of this section:
          (1) Qualified wellness program.--The term ``qualified 
        wellness program'' means a program that --
                  (A) includes any 3 wellness components described in 
                subsection (c); and
                  (B) is be certified by the Secretary of Labor, in 
                coordination with the Health Choices Commissioner and 
                the Director of the Center for Disease Control and 
                Prevention, as a qualified wellness program under this 
                section.
          (2) Programs must be consistent with research and best 
        practices.--
                  (A) In general.--The Secretary of Labor shall not 
                certify a program as a qualified wellness program 
                unless the program--
                          (i) is newly established or in existence on 
                        the date of enactment of this Act but not yet 
                        meeting the requirements of this section;
                          (ii) is consistent with evidenced-based 
                        researched and best practices, as identified by 
                        persons with expertise in employer health 
                        promotion and wellness programs;
                          (iii) includes multiple, evidenced-based 
                        strategies which are based on the existing and 
                        emerging research and careful scientific 
                        reviews, including the Guide to Community 
                        Preventative Services, the Guide to Clinical 
                        Preventative Services, and the National 
                        Registry for Effective Programs, and
                          (iv) includes strategies which focus on 
                        prevention and support for employee populations 
                        at risk of poor health outcomes.
                  (B) Periodic updating and review.--The Secretary of 
                Labor, in consultation with other appropriate agencies 
                shall establish procedures for periodic review, 
                evaluation, and update of the programs under this 
                subsection.
          (3) Health literacy/accessibility.--The Secretary of Labor 
        shall, as part of the certification process: --
                  (A) ensure that employers make the programs 
                culturally competent. physically and programmatically 
                accessible (including for individuals with 
                disabilities), and appropriate to the health literacy 
                needs of the employees covered by the programs;
                  (B) require a health literacy component to provide 
                special assistance and materials to employees with low 
                literacy skills, limited English and from under-served 
                populations; and
                  (C) require the Secretary of Labor, in consultation 
                with Secretary of Health and Human Services, to compile 
                and disseminate to employer health plans info on model 
                health literacy curricula, instructional programs, and 
                effective intervention strategies.
  (c) Wellness Program Components.--For purposes of this section, the 
wellness program components described in this subsection are the 
following:
          (1) Health awareness component.--A health awareness component 
        which provides for the following:
                  (A) Health education.--The dissemination of health 
                information which addresses the specific needs and 
                health risks of employees.
                  (B) Health screenings.--The opportunity for periodic 
                screenings for health problems and referrals for 
                appropriate follow up measures.
          (2) Employee engagement component.--An employee engagement 
        component which provides for the active engagement of employees 
        in worksite wellness programs through worksite assessments and 
        program planning, onsite delivery, evaluation, and improvement 
        efforts.
          (3) Behavioral change component.--A behavioral change 
        component which provides for altering employee lifestyles to 
        encourage healthy living through counseling, seminars, on-line 
        programs, or self-help materials which provide technical 
        assistance and problem solving skills. such component may 
        include programs relating to--
                  (A) tobacco use;
                  (B) obesity;
                  (C) stress management;
                  (D) physical fitness;
                  (E) nutrition;
                  (F) substance abuse;
                  (G) depression; and
                  (H) mental health promotion (including anxiety).
          (4) Supportive environment component.--A supportive 
        environment component which includes the following:
                  (A) On-site policies.--Policies and services at the 
                worksite which promote a healthy lifestyle, including 
                policies relating to--
                          (i) tobacco use at the worksite;
                          (ii) the nutrition of food available at the 
                        worksite through cafeterias and vending 
                        options;
                          (iii) minimizing stress and promoting 
                        positive mental health in the workplace; and
                          (iv) the encouragement of physical activity 
                        before, during, and after work hours.
  (d) Participation Requirement.--No grant shall be allowed under 
subsection (a) unless the Secretary of Labor in consultation with other 
appropriate agencies, certifies, as a part of any certification 
described in subsection (b), that each wellness program component of 
the qualified wellness program--
          (1) shall be available to all employees of the employer;
          (2) shall not mandate participation by employees; and
          (3) shall not require participation by individual employees 
        as a condition to obtain a premium discount, rebate, deductible 
        reduction, or other financial reward.
  (e) Privacy Protections.--Any employee health information collected 
through participation in an employer wellness program shall be 
confidential and available only to appropriately trained health 
professions as defined by the Secretary of Labor. Employers or 
employees of the employer sponsoring a wellness program shall have no 
access to employee health data. All entities offering employer-
sponsored wellness programs shall be considered ``business associates'' 
pursuant to the American Reinvestment and Recovery Act and must comply 
with privacy protections restricting the release of personal medical 
information.
  (f) Definitions and Special Rules.--For purposes of this section:
          (1) Qualified employer.--The term ``qualified employer'' 
        means an employer that offers a qualified health benefits plan 
        to every employee (including each employee required to be 
        offered coverage under a qualified health benefits plan under 
        subtitle B of title III of division A), and meets the health 
        coverage participation requirements as defined in section 312.
          (2) Certain costs not included.--Costs paid or incurred by an 
        employer for food or health insurance shall not be taken into 
        account under subsection (a).
  (g) Outreach.--
          (1) In general.--The Secretary of the Labor, in conjunction 
        with other appropriate agencies and members of the business 
        community, shall institute an outreach program to inform 
        businesses about the availability of the wellness program grant 
        as well as to educate businesses on how to develop programs 
        according to recognized and promising practices and on how to 
        measure the success of implemented programs.
  (h) Effective Date.--This section shall take effect on January 1, 
2013.
  (i) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to carry out this section.

SEC. 2553. HEALTH PROFESSIONS TRAINING FOR DIVERSITY PROGRAMS.

  Section 171 of the Workforce Investment Act of 1998 (29 U.S.C. 2916) 
is amended by adding at the end the following:
  ``(f) Health Professions Training for Diversity Program.--
          ``(1) In general.--The Secretary shall make available 20 
        grants of no more than $1,000,000 annually to nonprofit 
        organizations for the purposes of providing workforce 
        development training program for those who are currently 
        employed in the health care workforce.
          ``(2) Eligibility.--For the purposes of providing assistance 
        and services under the program established in this subsection, 
        grants are to be awarded to Area Health Education Centers or 
        similar nonprofit organizations involved in the development and 
        implementation of health care workforce development programs 
        and that--
                  ``(A) have a formal affiliation with a hospital or 
                community health center, and institution of higher 
                education as defined by section 101 of the Higher 
                Education Act of 1965;
                  ``(B) have a history of providing program services to 
                minority populations; and
                  ``(C) provide workforce development programs to low-
                income persons, veterans, or urban and rural 
                underserved communities.''.

        Subtitle H--Long-term Care and Family Caregiver Support

SEC. 2561. LONG-TERM CARE AND FAMILY CAREGIVER SUPPORT.

  (a) Amendments to the Older Americans Act of 1965.--
          (1) Promotion of direct care workforce.--Section 202(b)(1) of 
        the Older Americans Act of 1965 (42 U.S.C. 3012(b)(1)) is 
        amended by inserting before the semicolon the following: ``, 
        and, in carrying out the purposes of this paragraph, shall make 
        recommendations to other Federal entities regarding appropriate 
        and effective means of identifying, promoting, and implementing 
        investments in the direct care workforce necessary to meet the 
        growing demand for long-term health services and supports and 
        assisting States in developing a comprehensive state workforce 
        development plans with respect to such workforce including 
        efforts to systematically assess, track, and report on 
        workforce adequacy and capacity''.
          (2) Personal care attendant workforce advisory panel.--
        Section 202 of such Act (42 U.S.C. 3012) is amended by adding 
        at the end the following new subsection:
  ``(g)(1) The Assistant Secretary shall establish a Personal Care 
Attendant Workforce Advisory Panel and pilot program to improve working 
conditions and training for long term care workers, including home 
health aides, certified nurse aides, and personal care attendants.
  ``(2) The Panel shall include representatives from--
          ``(A) relevant health care agencies and facilities (including 
        personal or home care agencies, home health care agencies, 
        nursing homes and residential care facilities);
          ``(B) the disability community;
          ``(C) the nursing community;
          ``(D) direct care workers (which may include unions and 
        national organizations);
          ``(E) older individuals and family caregivers;
          ``(F) State and federal health care entities; and
          ``(G) experts in workforce development and adult learning.
  ``(3) Within one year after the establishment of the Panel, the Panel 
shall submit a report to the Assistant Secretary articulating core 
competencies for eligible personal or home care aides necessary to 
successfully provide long-term services and supports to eligible 
consumers, as well as recommended training curricula and resources.
  ``(4) Within 180 days after receipt by the Assistant Secretary of the 
report under paragraph (3), the Assistant Secretary shall establish a 
3-year demonstration program in 4 states to pilot and evaluate the 
effectiveness of the competencies articulated by the Panel and the 
training curricula and training methods recommended by the Panel.
  ``(5) Not later than 1 year after the completion of the demonstration 
program under paragraph (4), the Assistant Secretary shall submit to 
each House of the Congress a report containing the results of the 
evaluations by the Assistant Secretary pursuant to paragraph (4), 
together with such recommendations for legislation or administrative 
action as the Assistant Secretary determines appropriate.''.
  (b) Authorization of Additional Appropriations for the Family 
Caregiver Support Program Under the Older Americans Act of 1965.--
Section 303(e)(2) of the Older Americans Act of 1965 (42 U.S.C. 
3023(e)(2)) is amended by striking ``$173,000,000'' and all that 
follows through ``2011'', and inserting ``and $250,000,000 for each of 
the fiscal years 2010, 2011, and 2012''.
  (c) Authorization of Additional Appropriations for the National 
Clearinghouse for Long-Term Care Information.--There is authorized to 
be appropriated $10,000,000 for each of the fiscal years 2010, 2011, 
and 2012 for the operation of the National Clearinghouse for Long-Term 
Care Information established by the Secretary of Health and Human 
Services under section 6021(d) of Public Law 109-171.

                      Subtitle I--Online Resources

SEC. 2571. WEB SITE ON HEALTH CARE LABOR MARKET AND RELATED EDUCATIONAL 
                    AND TRAINING OPPORTUNITIES.

  (a) In General.--The Secretary of Labor, in consultation with the 
National Center for Health Workforce Analysis, shall establish and 
maintain a Web site to serve as a comprehensive source of information, 
searchable by workforce region, on the health care labor market and 
related educational and training opportunities.
  (b) Contents.--The Web site maintained under this section shall 
include the following:
          (1) Information on the types of jobs that are currently or 
        are projected to be in high demand in the health care field, 
        including--
                  (A) salary information; and
                  (B) training requirements, such as requirements for 
                educational credentials, licensure, or certification.
          (2) Information on training and educational opportunities 
        within each region for the type jobs described in paragraph 
        (1), including by--
                  (A) type of provider or program (such as public, 
                private nonprofit, or private for-profit);
                  (B) duration;
                  (C) cost (such as tuition, fees, books, laboratory 
                expenses, and other mandatory costs);
                  (D) performance outcomes (such as graduation rates, 
                job placement, average salary, job retention, and wage 
                progression);
                  (E) Federal financial aid participation;
                  (F) average graduate loan debt;
                  (G) student loan default rates;
                  (H) average institutional grant aid provided;
                  (I) Federal and State accreditation information; and
                  (J) other information determined by the Secretary.
          (3) A mechanism for searching and comparing training and 
        educational options for specific health care occupations to 
        facilitate informed career and education choices.
          (4) Financial aid information, including with respect to loan 
        forgiveness, loan cancellation, loan repayment, stipends, 
        scholarships, and grants or other assistance authorized by this 
        Act or other Federal or State programs.
  (c) Public Accessibility.--The Web site maintained under this section 
shall--
          (1) be publicly accessible;
          (2) be user friendly and convey information in a manner that 
        is easily understandable; and
          (3) be in English and the second most prevalent language 
        spoken based on the latest Census information.

SEC. 2572. ONLINE HEALTH WORKFORCE TRAINING PROGRAMS.

  Section 171 of the Workforce Investment Act of 1998 (29 U.S.C. 2916) 
(as amended by section 2553) is further amended by adding at the end 
the following:
  ``(g) Online Health Workforce Training Program.--
          ``(1) Grant program.--
                  ``(A) In general.--The Secretary shall award National 
                Health Workforce Online Training Grants on a 
                competitive basis to eligible entities to enable such 
                entities to carry out training for individuals to 
                attain or advance in health care occupations. An entity 
                may leverage such grant with other Federal, State, 
                local, and private resources, in order to expand the 
                participation of businesses, employees, and individuals 
                in such training programs.
                  ``(B) Eligibility.--In order to receive a grant under 
                the program established under this paragraph--
                          ``(i) an entity shall be an educational 
                        institution, community-based organization, non-
                        profit organization, workforce investment 
                        board, or local or county government; and
                          ``(ii) an entity shall provide online 
                        workforce training for individuals seeking to 
                        attain or advance in health care occupations, 
                        including nursing, nursing assistants, 
                        dentistry, pharmacy, health care management and 
                        administration, public health, health 
                        information systems analysis, medical 
                        assistants, and other health care practitioner 
                        and support occupations.
                  ``(C) Priority.--Priority in awarding grants under 
                this paragraph shall be given to entities that--
                          ``(i) have demonstrated experience in 
                        implementing and operating online worker skills 
                        training and education programs;
                          ``(ii) have demonstrated experience 
                        coordinating activities, where appropriate, 
                        with the workforce investment system; and
                          ``(iii) conduct training for occupations with 
                        national or local shortages.
                  ``(D) Data collection.--Grantees under this paragraph 
                shall collect and report information on--
                          ``(i) the number of participants;
                          ``(ii) the services received by the 
                        participants;
                          ``(iii) program completion rates;
                          ``(iv) factors determined as significantly 
                        interfering with program participation or 
                        completion;
                          ``(v) the rate of job placement; and
                          ``(vi) other information as determined as 
                        needed by the Secretary.
                  ``(E) Outreach.--Grantees under this paragraph shall 
                conduct outreach activities to disseminate information 
                about their program and results to workforce investment 
                boards, local governments, educational institutions, 
                and other workforce training organizations.
                  ``(F) Performance levels.--The Secretary shall 
                establish indicators of performance that will be used 
                to evaluate the performance of grantees under this 
                paragraph in carrying out the activities described in 
                this paragraph. The Secretary shall negotiate and reach 
                agreement with each grantee regarding the levels of 
                performance expected to be achieved by the grantee on 
                the indicators of performance.
                  ``(G) Authorization of appropriations.--There are 
                authorized to be appropriated to the Secretary to carry 
                out this subsection $50,000,000 for fiscal years 2011 
                through 2020.
          ``(2) Online health professions training program 
        clearinghouse.--
                  ``(A) Description of grant.--The Secretary shall 
                award one grant to an eligible postsecondary 
                educational institution to provide the services 
                described in this paragraph.
                  ``(B) Eligibility.--To be eligible to receive a grant 
                under this paragraph, a postsecondary educational 
                institution shall--
                          ``(i) have demonstrated the ability to 
                        disseminate research on best practices for 
                        implementing workforce investment programs; and
                          ``(ii) be a national leader in producing 
                        cutting-edge research on technology related to 
                        workforce investment systems under subtitle B.
                  ``(C) Services.--The postsecondary educational 
                institution that receives a grant under this paragraph 
                shall use such grant--
                          ``(i) to provide technical assistance to 
                        entities that receive grants under paragraph 
                        (1);
                          ``(ii) to collect and nationally disseminate 
                        the data gathered by entities that receive 
                        grants under paragraph (1); and
                          ``(iii) to disseminate the best practices 
                        identified by the National Health Workforce 
                        Online Training Grant Program to other 
                        workforce training organizations.
                  ``(D) Authorization of appropriations.--There are 
                authorized to be appropriated to the Secretary to carry 
                out this subsection $1,000,000 for fiscal years 2011 
                through 2020.''.

                               I. Purpose

    The U.S. health care system is on an unsustainable course. 
Between 1999 and 2008, health insurance premiums more than 
doubled as wages largely stagnated.\1\ Over the past two 
decades, the cost of the average family health insurance policy 
has steadily drained larger and larger portions of families' 
income. In the United States, at least 47 million individuals 
are uninsured and millions more are underinsured.\2\ Even 
having insurance does not guarantee health care security, as 
families are forced to fight insurance companies that regularly 
deny coverage or delay treatment. In more than half of the 
medical bankruptcies filed, the household was insured.\3\ 
Rising health care costs have had a negative impact on 
business, especially small employers.\4\ Over just the last 15 
years, the percentage of small businesses offering health 
insurance dropped from 61 percent to 38 percent.\5\ The number 
of uninsured Americans is expected to hit 61 million by 
2020.\6\ In no uncertain terms, the U.S. health care system is 
in crisis and has been for some time. Reform is needed. 
Inaction is not an option.
---------------------------------------------------------------------------
    \1\Jacob Hacker, Testimony before the Committee on Education and 
Labor Committee, ``The Tri-Committee Draft for Health Care Reform,'' 
(hereinafter Hacker)(Jun. 23, 2009) at 2.
    \2\Alliance for Health Care Reform, ``Health Care Coverage in 
America: Understanding the Issues and Proposed Solutions.'' (Mar. 
2008).
    \3\Id.
    \4\U.S. Department of Health and Human Services, ``Helping the 
Bottom Line: Health Reform and Small Business,'' Prepared by Meena 
Seshamani, Director of Policy Analysis, Office of Health Reform, 
available at: http:\\www.healthreform.gov/reports/helpbottomline/
helpbottomline.pdf.
    \5\National Small Business Association, ``2008 NSBA Small & Mid-
Sized Business Survey,'' Table at 14, available at: 
http:\\www.nsba.biz/docs/2008bizsurvey.pdf.
    \6\The Commonwealth Fund Commission on a High Performance Health 
System, ``The Path to a High Performance U.S. Health System: A 2020 
Vision and the Policies to Pave the Way,'' Exhibit ES-2: Trend in the 
Number of Uninsured, 2009-2020 Under Current Law and Path Proposal, 
February 2009, available at: http:\\www.commonwealthfund.org//media/
Files/Publications/Fund%20Report/2009/Feb/
The%20Path%20to%20a%20High%20Performance%20US%20Health%20System/
1237_Commission_path_high_perform_US_hlt_sys_WEB_rev_03052009.pdf.
---------------------------------------------------------------------------
    H.R. 3200, America's Affordable Health Choices Act, adopts 
the health care reform principles outlined by President Barack 
Obama. Specifically, the bill preserves and strengthens the 
employer-based health care system, includes protections for 
small businesses, creates a health insurance marketplace where 
individuals can choose between private insurance and the public 
health insurance option, ensures low and middle income 
Americans have access to affordability credits to help offset 
the costs of insurance and saves over $500 billion in future 
health outlays of Medicare and Medicaid through reforms to the 
system.
    Together, these critical reforms are fundamental to the 
long-term health and security of this country.

    II. Committee Action Including Legislative History and Votes in 
                               Committee


                          LEGISLATIVE HISTORY

    For more than 70 years, Congress and Presidents have 
attempted to reform the nation's health care system, most 
recently under President Clinton in 1993-94. The election of 
the Democratic majority in Congress in 2006 and President Obama 
in 2008 have led to renewed efforts toward national health care 
reform. The legislative history described in this report is 
limited to legislative action beginning in the 110th Congress.

                       110TH CONGRESS (2007-2008)

                HEARINGS IN THE HOUSE OF REPRESENTATIVES

Committee on Education and Labor

    On March 15, 2007, the Subcommittee on Health, Employment, 
Labor and Pensions of the Committee of Education and Labor held 
a hearing entitled ``Examining Innovative Approaches to 
Covering the Uninsured Through Employer-Provided Health 
Benefits.'' The panel included: Joan Alker, Deputy Executive 
Director, Center for Children and Families; Brian England, 
Owner, British American Auto Repair Columbia; Andrew Webber, 
President and Chief Executive Officer, National Business 
Coalition on Health; and Linda Blumberg, Ph.D., Economist and 
Principal Research Associate, Urban Institute.
    On May 22, 2007, the Subcommittee on Health, Employment, 
Labor and Pensions of the Committee of Education and Labor held 
a hearing entitled ``Health Care Reform: Recommendations to 
Improve Coordination of Federal and State Initiatives.'' The 
panel included: Congressman John Tierney (D-MA); Congressman 
Tom Price (R-GA); Congresswoman Tammy Baldwin (D-WI); Mila 
Kofman, J.D., Associate Research Professor, Health Policy 
Institute, Georgetown University; John Colmers, Secretary, 
State of Maryland Department of Health and Mental Hygiene; 
Steven Goldman, Commissioner, New Jersey Department of Banking 
and Insurance; John Morrison, Auditor and Commissioner, Montana 
Insurance and Securities; Amy Moore, Partner, Covington & 
Burling, LLP; and Kevin Covert, Board Member, American Benefits 
Council.
    On September 25, 2008, the Committee on Education and Labor 
held a hearing entitled ``Safeguarding Retiree Health 
Benefits.'' The panel included: C. William Jones, Chairman, 
ProtectSeniors.org; Bill Kadereit, President, National Retiree 
Legislative Network; David Lillie, Retiree, Raytheon Missile 
Systems; Scott Macey, Senior Vice President and Director of 
Government Affairs, Aon Consulting, Inc; Norman Stein, Douglas 
Arant Professor of Law, University of Alabama; and Dale 
Yamanoto, President and Founder, Red Quill Consulting.

Committee on Energy & Commerce

    On September 18, 2008, the Subcommittee on Health of the 
Committee on Energy and Commerce held a hearing entitled 
``America's Need for Health Reform.'' The panel included: 
Ronald E. Bachman, F.S.A., M.A.A.A., Senior Fellow, Center for 
Health Transformation; Governor Jon S. Corzine, State of New 
Jersey; Karen Davis, President, The Commonwealth Fund; 
Elizabeth Edwards, Senior Fellow, Center for American Progress; 
William J. Fox, F.S.A., M.A.A.A., Principal and Consulting 
Actuary, Milliman Inc.; E.J. ``Ned'' Holland, Jr., Senior Vice 
President, Human Resources and Communication, EMBARQ; Patricia 
Owen, President/Founder, FACES DaySpa; Stephen T. Parente, 
Ph.D., Director, Medical Industry Leadership Institute, and 
Associate Professor of Finance, Carlson School of Management, 
University of Minnesota; and Karen Pollitz, M.P.P., Research 
Professor, Health Policy Institute, Georgetown University.

Committee on Ways and Means

    On November 17, 2007, the Subcommittee on Income Security 
and Family Support in the Committee on Ways and Means held a 
hearing entitled ``Impact of Gaps in Health Coverage on Income 
Security.'' The panel included: Sherena Johnson, former foster 
youth, Morrow, GA; Sara R. Collins, Ph.D., Assistant Vice 
President, Program on the Future of Health Insurance, 
Commonwealth Fund; Ron Pollack, Founding Executive Director, 
Families USA; Bruce Lesley, President, First Focus; and Brian 
J. Gottlob, Senior Fellow, Milton and Rose D. Friedman 
Foundation, Indianapolis, IN.
    On April 15, 2008, the Subcommittee on Health in the 
Committee on Ways and Means held a two-panel hearing entitled 
``Instability of Health Coverage in America.'' The first panel 
included former Senator Dave Durenberger (R-MN). The second 
panel included: Diane Rowland, Sc.D., Executive Vice President, 
Kaiser Family Foundation; John Z. Ayanian, M.D., Professor of 
Medicine and Health Care Policy, Harvard Medical School; 
Michael O'Grady, Senior Fellow, National Opinion Research 
Center, University of Chicago; Stan Brock, Founder and 
Volunteer Director of Operations, Remote Area Medical, 
Knoxville, TN; and Stephen Finan, Associate Director of Policy, 
American Cancer Society.
    On May 14, 2008, the Subcommittee on Health in the 
Committee on Ways and Means held a hearing entitled ``Health 
Savings Accounts and Consumer Driven Health Care: Cost 
Containment or Cost-Shift.'' The panel included: John F. 
Dicken, Health Care Director, U.S. Government Accountability 
Office (GAO); Michael E. Chernew, Ph.D., Professor of Health 
Care Policy, Harvard Medical School; Linda J. Blumberg, Ph.D., 
Principal Research Associate, Urban Institute; Judy Waxman, 
Vice President and Director of Health and Reproductive Rights, 
National Women's Law Center; and Wayne Sensor, CEO, Alegent 
Health.
    On June 10, 2008, the Subcommittee on Health in the 
Committee on Ways and Means held a two-panel hearing entitled 
``Addressing Disparities in Health and Healthcare: Issues for 
Reform.'' The first panel included: Delegate Donna M. 
Christensen (D-USVI); former Congresswoman Hilda L. Solis (D-
CA); Delegate Madeleine Z. Bordallo (D-GU); and Congressman 
Jerry Moran (R-KS). The second panel included: Marsha Little-
Blanton, Dr.P.H., Senior Advisor on Race, Ethnicity and 
Healthcare, Kaiser Family Foundation; Mohammed Akhter, M.D., 
M.P.H., Executive Director, National Medical Association; Deena 
Jang, J.D., Policy Director, Asian and Pacific Islander 
American Health Forum; Anthony B. Iton, M.D., J.D., M.P.H., 
Director of Public Health and Health Officer, Alameda County, 
CA; Sally Satel, M.D., Resident Scholar, American Enterprise 
Institute; and Michael A. Rodriguez, M.D., M.P.H., Associate 
Professor and Vice Chair of Research, Department of Family 
Medicine, University of California, Los Angeles.
    On September 11, 2008, the Subcommittee on Health in the 
Committee on Ways and Means held a hearing entitled ``Reforming 
Medicare's Physician Payment System.'' The panel included: 
Bruce C. Vladeck, Ph.D., Senior Health Policy Advisor and 
Executive Director of Health Sciences, Ernst & Young, LLP; Gail 
Wilensky, Ph.D., Senior Fellow, Project Hope; Nancy H. Nielsen, 
M.D., Ph.D., President, American Medical Association; and 
Donald M. Crane, President and Chief Executive Officer, 
California Association of Physician Groups.
    On September 23, 2008, the Subcommittee on Health in the 
Committee on Ways and Means held a hearing entitled the 
``Health of the Private Health Insurance Market.'' The panel 
included: Karen Davis, President, Commonwealth Fund; Bruce 
Bodaken, Chairman and Chief Executive Officer, Blue Shield of 
California; Roger Feldman, Ph.D., Blue Cross Professor of 
Health Insurance, University of Minnesota; and Mila Kofman, 
Superintendent of Insurance, Maine Bureau of Insurance.

                         HEARINGS IN THE SENATE

Committee on Health, Education, Labor and Pension

    On January 10, 2007, the Senate Health, Education, Labor 
and Pensions (HELP) Committee held a hearing entitled ``Health 
Care Coverage and Access.'' The panel included: Peter Meade, 
Executive Vice President, Blue Cross Blue Shield of 
Massachusetts; John McDonough, Executive Director, Health Care 
for All; Karen Davis, President, Commonwealth Fund; Andy Stern, 
President, SEIU; Debra Ness, President, National Partnership 
for Women and Families; Larry Burton, Executive Vice President, 
Business Roundtable; Peter Harbage, New America Foundation; 
Joseph Antos, Wilson H. Taylor Scholar in Health Care and 
Retirement Policy, American Enterprise Institute; John Goodman, 
President, National Center for Policy Analysis; and Pat 
Vredevoogd Combs, National Association of Realtors, and owner, 
Coldwell-Banker-AJS Realty.
    On February 12, 2008, the Senate HELP Committee held a 
hearing entitled ``Addressing Healthcare Workforce Issues for 
the Future.'' The panel included: A. Bruce Steinwald, Director, 
Healthcare GAO; Kevin Grumbach, M.D., Director, Center for 
California Health Workforce Studies, University of California 
San Francisco, and Chair, Department of Family and Community 
Medicine; Roderick S. Hooker, Ph.D., P.A., Director of 
Research, Rheumatology Section, Medical Service Department of 
Veterans Affairs, Dallas VA Medical Center; Edward S. Salsberg, 
M.P.A., Director, Center for Workforce Studies, Association of 
American Medical Colleges; James Q. Swift, D.D.S., Board 
President, American Dental Education Association; Bruce 
Auerbach, M.D., President Elect, Massachusetts Medical Society, 
and Vice President and Chief of Emergency Medicine, Sturdy 
Memorial Hospital; Beth Landon, M.H.A., M.B.A., Director, 
Alaska Center for Rural Health, University of Alaska; Jennifer 
Laurent, M.S., FNP-BC, President, Vermont Nurse Practitioner 
Association; and John E. Maupin, Jr., D.D.S., M.B.A., 
President, Morehouse School of Medicine.

Committee on Finance

    On March 14, 2007, the Senate Committee on Finance held a 
hearing entitled ``Course for Health Care Reform: Moving Toward 
Universal Coverage.'' The panel included: James J. Mongan, 
M.D., President and Chief Executive Officer, Partners 
HealthCare; Stuart H. Altman, Ph.D., Dean, Sol C. Chaikin 
Professor of National Health Policy, The Heller School for 
Social Policy and Management, Brandeis University; John Sheils, 
Vice President, The Lewin Group; and Richard G. Frank, Ph.D., 
Vice Chair, Citizens' Health Care Working Group.
    On May 6, 2008, the Senate Committee on Finance held a 
hearing entitled ``Seizing the New Opportunity for Health 
Reform.'' The panel included the Honorable Tommy Thompson and 
the Honorable Donna Shalala, both former Secretaries of Health 
and Human Services.
    On June 3, 2008, the Senate Committee on Finance held a 
hearing entitled ``Rising Costs, Low Quality in Health Care: 
The Necessity for Reform.'' The panel included: Paul B. 
Ginsburg, Ph.D., President, Center for Studying Health System 
Change; Elizabeth McGlynn, Ph.D., Associate Director, RAND 
Health, and Distinguished Chair in Health Quality; Arlene Holt 
Baker, Executive Vice President, AFL-CIO; and Felicia Fields, 
Group Vice President, Human Resources and Corporate Services, 
Ford Motor Company.
    On June 10, 2008, the Senate Committee on Finance held a 
hearing entitled ``47 Million and Counting: Why the Health Care 
Marketplace is Broken.'' The panel included: Lisa Kelly, cancer 
patient; Raymond Arth, President and CEO, Phoenix Faucets; Ron 
Williams, Chairman and Chief Executive Officer, Aetna, Inc.; 
and Mark Hall, Professor of Law and Public Health, Wake Forest 
University School of Law and School of Medicine.
    On September 9, 2008, the Senate Committee on Finance held 
a hearing entitled ``Improving Health Care Quality: An Integral 
Step Toward Health Reform.'' The panel included: Peter V. Lee, 
J.D., Executive Director of National Health Policy, Pacific 
Business Group on Health; Samuel Nussbaum, M.D., Executive Vice 
President for Clinical Health Policy and Chief Medical Officer, 
WellPoint, Inc.; Gregory Schoen, M.D., Regional Medical 
Director, Fairview Northland Health Services; Kevin B. Weiss, 
M.D., President and CEO, American Board of Medical Specialties; 
and William L. Roper, M.D., M.P.H., Dean, School of Medicine, 
University of North Carolina (UNC), and Vice Chancellor for 
Medical Affairs and CEO, UNC Health Care System.
    On September 23, 2008, the Senate Committee on Finance held 
a hearing entitled ``Covering the Uninsured: Making Health 
Insurance Markets Work.'' The panel included: John Bertko, 
F.S.A., M.A.A.A., Adjunct Staff, The RAND Corporation, and 
Former Chief Actuary, Humana, Inc., Flagstaff, AZ; Andrew 
Dreyfuss, Executive Vice President, Health Care Services, Blue 
Cross Blue Shield of Massachusetts; Pam MacEwan, Executive Vice 
President, Public Affairs and Governance, Group Health 
Cooperative; and Kim Holland, State of Oklahoma Insurance 
Commissioner.
    On November 19, 2008, the Senate Committee on Finance held 
a hearing entitled ``Health Care Reform: An Economic 
Perspective.'' The panel included: Ivan G. Seidenberg, Chairman 
and Chief Executive Officer, Verizon Communications, Inc.; Andy 
Stern, President, SEIU; Uwe E. Reinhardt, Ph.D., James Madison 
Professor of Political Economy, Woodrow Wilson School of Public 
and International Affairs, Princeton University; and Amitabh 
Chandra, Ph.D., Assistant Professor of Public Policy, John F. 
Kennedy School of Government, Harvard University.

                       111TH CONGRESS (2009-2010)

                HEARINGS IN THE HOUSE OF REPRESENTATIVES

Committee on Education and Labor

    On March 10, 2009, the Subcommittee on Health, Employment, 
Labor and Pensions of the Committee of Education and Labor held 
a panel entitled ``Strengthening Employer-Based Health Care.'' 
The panel included: Mark Derbyshire, Small Business Owner; 
Bruce Pyenson, Principal and Consulting Actuary, Milliman, 
Inc.; John Sheridan, CEO, Cooper University Hospital; Kenneth 
Thorpe, Chair of the Health Policy and Management Department, 
Emory University; E. Neil Trautwein, Vice President, Employee 
Benefits Counsel, National Retail Federation; and Jim Winkler, 
Health Management Practice Leader, Hewitt Associates.
    On April 23, 2009, the Subcommittee on Health, Employment, 
Labor and Pensions of the Committee of Education and Labor held 
a panel entitled ``Ways to Reduce the Cost of Health Insurance 
for Employers, Employees and their Families.'' The panel 
included: Karen Davenport, Director of Health Policy, Center 
for American Progress; David Himmelstein, Associate Professor 
of Medicine, Harvard University; Michael Langan, Principal, 
Towers Perrin; William Oemichan, President and CEO, Cooperative 
Network; Ron Pollack, Executive Director, FamiliesUSA; Janet 
Trautwein, Executive Vice President and CEO, National 
Association of Health Underwriters; and William Vaughn, Senior 
Health Policy Analyst, Consumers Union.
    On June 10, 2009, the Subcommittee on Health, Employment, 
Labor and Pensions of the Committee of Education and Labor held 
a hearing entitled ``Examining the Single Payer Health Care 
Option.'' The panel included: Congressman John Conyers, Jr. (D-
MI); Marcia Angell, M.D., Senior Lecturer in Social Medicine, 
Harvard Medical School; David Gratzer, Senior Fellow, Manhattan 
Institute; Geri Jenkins, R.N., Co-President, California Nurses 
Association/National Nurses Organizing Committee; and Walter 
Tsou M.D., M.P.H., National Board Advisor, Physicians for a 
National Health Program.

Committee on Energy & Commerce

    On March 10, 2009, the Subcommittee on Health of the 
Committee on Energy and Commerce held a hearing entitled 
``Making Health Care Work for American Families: Designing a 
High Performing Healthcare System.'' The panel included: Doug 
Elmendorf, Director, Congressional Budget Office; Glenn 
Hackbarth, Chairman, Medicare Payment Advisory Commission; Jack 
C. Ebeler, Vice Chair, Committee on Health Insurance Status and 
Its Consequences, Institute of Medicine; Alan Levine, 
Secretary, Louisiana Department of Health and Hospitals; Atul 
Gawande, M.D., Associate Professor of Surgery, Harvard Medical 
School, and Associate Professor, Department of Health Policy 
and Management, Harvard School of Public Health; and M. Todd 
Williamson, M.D., President, Medical Association of Georgia 
Policy Studies.
    On March 17, 2009, the Subcommittee on Health of the 
Committee on Energy and Commerce held a hearing entitled 
``Making Health Care Work for American Families: Ensuring 
Affordable Coverage.'' The panel included: Uwe E. Reinhardt, 
Ph.D., Professor of Political Economy, Economics and Public 
Affairs, Princeton University; Sally C. Pipes, B.A., President 
and Chief Executive Officer, Pacific Research Institute; Judy 
Feder, Ph.D., Senior Fellow, Center for American Progress 
Action Fund; Mila Kofman, J.D., Superintendent of Insurance, 
State of Maine Bureau of Insurance; Jon Kingsdale, Ph.D., 
Executive Director, Commonwealth Health Insurance Connector 
Authority, MA; Karen Pollitz, M.P.P., Research Professor, 
Health Policy Institute, Georgetown University; Katherine 
Baicker, Ph.D., Professor of Health Economics, Harvard School 
of Public Health; and Edmund F. Haislmaier, B.A., Senior 
Research Fellow, Center for Health, Heritage Foundation.
    On March 24, 2009, the Subcommittee on Health of the 
Committee on Energy and Commerce held a hearing entitled 
``Making Health Care Work for American Families: Improving 
Access to Care.'' The panel included: Brian D. Smedley, Ph.D., 
Vice President and Director, Health Policy Institute, Joint 
Center for Political and Economic Studies; Michael John 
Kitchell, M.D., President-Elect, Iowa Medical Society, 
McFarland Clinic PC; Michael A. Sitorius, M.D., Professor and 
Chairman, Department of Family Medicine, University of Nebraska 
Medical Center; Risa Lavizzo-Mourey, M.D., M.B.A., President 
and CEO, Robert Wood Johnson Foundation; Fitzhugh Mullan, M.D., 
Murdock Head Professor of Medicine and Health Policy, Professor 
of Pediatrics, George Washington University; Jeffrey P. Harris, 
M.D., F.A.C.P., President, American College of Physicians; 
James R. Bean, M.D., President, American Association of 
Neurological Surgeons; and Diane Rowland, Sc.D., Executive 
Director, Kaiser Commission on Medicaid and the Uninsured.
    On March 27, 2009, the Subcommittee on Health of the 
Committee on Energy and Commerce held a hearing entitled 
``Making Health Care Work for American Families: The Role of 
Public Health.'' The panel included: E. Besser, M.D., Acting 
Director, CDC, and Acting Administrator, Agency for Toxic 
Substances and Disease Registry; Jonathan E. Fielding, M.D., 
M.P.H., Chair, Task Force on Community Preventive Services, and 
Director, L.A. County Department of Public Health and County 
Health Officer; Heather Howard, J.D., Commissioner, New Jersey 
Department of Health and Senior Services; David Satcher, M.D., 
Ph.D., Former U.S. Surgeon General, and Director, Satcher 
Health Leadership Institute, Morehouse School of Medicine; 
Barbara Spivak, M.D., President, Mt. Auburn Cambridge 
Independent Practice Association, Inc.; Devon Herrick, Ph.D., 
Senior Fellow, National Center for Policy Analysis; and Jeffrey 
Levi, Ph.D., Executive Director, Trust for Americas Health.
    On April 2, 2009, the Subcommittee on Health of the 
Committee on Energy and Commerce held a hearing entitled 
``Making Health Care Work for American Families: Saving Money, 
Saving Lives.'' The panel included: Jonathan Skinner, Ph.D., 
Professor of Economics, Dartmouth Institute for Health Policy 
and Clinical Practice; Christine K. Cassel, M.D., President and 
CEO, American Board of Internal Medicine and ABIM Foundation; 
John Goodman, Ph.D., President and CEO, National Center for 
Policy Analysis; Bruce Sigsbee, M.D., M.S., President Elect, 
American Academy of Neurology, and Medical Director, Pen Bay 
Physicians and Associates; Dennis Smith, M.P.A., Senior 
Research Fellow in Health Care Reform, Heritage Foundation; 
Jerry Avorn, M.D., Professor of Medicine, Harvard Medical 
School; Paul Ginsburg, Ph.D., President, Center for Studying 
Health System Change; Regina Herzlinger, Ph.D., Professor of 
Business Administration, Harvard Business School; Ronald 
Bachman, F.S.A., M.A.A.A., Senior Fellow, Center for Health 
Transformation; and Diane Archer, J.D., Director, Health Care 
Project, Institute for America's Future.
    On June 16, 2009, the Subcommittee on Oversight and 
Investigation of the Committee on Energy and Commerce held a 
hearing entitled ``Termination of Individual Health Policies by 
Insurance Companies.'' The panel included: Don Hamm, CEO, 
Assurant Health; Richard Collins, CEO, Golden Rule Insurance 
Company, UnitedHealth Group; Brian A. Sassi, President and CEO, 
Consumer Business, WellPoint, Inc.; Karen Pollitz, M.P.P., 
Research Professor, Health Policy Institute, Georgetown 
University; Robin Beaton, Policyholder; Wittney Horton, 
Policyholder; and Peggy Raddatz, Relative of Policyholder.

Committee on Ways & Means

    On March 11, 2009, the Committee on Ways and Means held a 
hearing entitled ``Expanding Coverage, Improving Quality and 
Controlling Costs.'' The panel included: John Z. Ayanian, M.D., 
M.P.P., on behalf of the Institute of Medicine Committee on 
Health Insurance Status and Its Consequences; Karen Davis, 
President, Commonwealth Fund; and John M. Pickering, Principal, 
Consulting Actuary, Milliman, Inc.
    On March 17, 2009, the Subcommittee on Health in the 
Committee on Ways and Means held a hearing entitled ``MedPAC's 
Annual March Report to the Congress on Medicare Payment 
Policy.'' The panel featured Glenn M. Hackbarth, Chairman, 
Medicare Payment Advisory Commission.
    On April 1, 2009, the Committee of Ways and Means held a 
hearing entitled ``Reforming the Health Care Delivery System.'' 
The hearing consisted of two panels. The first panel included: 
Glenn M. Hackbarth, Chairman, Medicare Payment Advisory 
Commission; Elliot S. Fisher, M.D., M.P.H., Director, 
Population Health and Policy, Dartmouth Institute for Health 
Policy and Clinical Practice, and Professor of Medicine and 
Community and Family Medicine, Dartmouth Medical School; and 
Robert A. Berenson, M.D., Senior Fellow, Urban Institute. The 
second panel included: Glenn D. Steele, Jr., M.D., Ph.D., 
President and CMO, Geisinger Health System; L. Allen Dobson, 
Jr., M.D., F.A.A.F.P., Vice President for Clinical Practice 
Development, Carolinas Health System; and Brent C. James, M.D., 
M.Stat., Chief Quality Officer and Chief Medical Officer, 
Institute for Health Care Delivery Research, Intermountain 
Healthcare.
    On April 22, 2009, the Committee on Ways and Means held a 
hearing entitled ``Insurance Market Reforms.'' The panel 
included: Uwe E. Reinhardt, Ph.D., James Madison Professor of 
Political Economy and Professor of Economics and Public 
Affairs, Princeton University; William Vaughn, Senior Policy 
Analyst, Consumers Union; William D. Hobson, Jr., M.S., 
President and CEO, Watts Healthcare Corporation; David Borris, 
Owner, Hel's Kitchen Catering, Northbrook, Ill.; Kenneth L. 
Sperling, Global Health Management Leader, Hewitt Associates, 
on behalf of National Coalition on Benefits; and Linda 
Blumberg, Ph.D., Principal Research Associate, Urban Institute.
    On April 29, 2009, the Committee on Ways and Means held a 
hearing entitled ``Employer Sponsored Insurance.'' The panel 
included: Elise Gould, Ph.D., M.P.Aff., Director of Health 
Policy Research, Economic Policy Institute; J. Randal 
MacDonald, Senior Vice President for Human Resources, IBM 
Corporation; Kelly Conklin, Owner, Foley-Waite Associates; 
Denny Dennis, Senior Research Fellow, NFIB Research Foundation; 
John Shells, Senior Vice President, Lewin Group; and Gerald 
Shea, Special Assistant to the President, AFL-CIO.
    On May 6, 2009, the Committee on Ways and Means held a 
hearing on ``Health Care Reform'' with Kathleen Sebelius, the 
Secretary for Health and Human Services.

                         HEARINGS IN THE SENATE

Committee on Health, Education, Labor and Pensions

    On January 29, 2009, the Senate HELP Committee held a 
hearing entitled ``Crossing the Quality Chasm in Health 
Reform.'' The panel included: Nancy Davenport-Ennis, CEO, 
National Patient Advocate Foundation; Karen Davis, President, 
Commonwealth Fund; Rhonda Robinson-Beale, M.D., Chief Medical 
Officer, Optum Health Behavioral Solutions, Golden Valley, MN; 
Elizabeth Teisberg, Ph.D., Associate Professor, University of 
Virginia's Darden School of Business; and Christine K. Cassel, 
M.D., President, American Board of Internal Medicine.
    On February 23, 2009, the Senate HELP Committee held a 
hearing entitled ``Principles of Integrative Health: A Path to 
Health Care Reform.'' The panel included: Cathy Baase, M.D., 
Global Director Health Services, Dow Chemical Company; Robert 
M. Duggan, M.A., M.Ac., President, Tai Sophia Institute; James 
S. Gordon, M.D., Founder and Director, Center for Mind-Body 
Medicine; Wayne B. Jonas, M.D., President, Samueli Institute; 
Sister Charlotte Rose Kerr, R.S.M., R.N., B.S.N., M.P.H., 
M.Ac., Practitioner and Professor Emeritus, Tai Sophia 
Institute; Mary Jo Kreitzer, Ph.D., R.N., Founder and Director, 
University of Minnesota Center for Spirituality & Healing; 
Herbert Benson, M.D., Director Emeritus, Benson-Henry Institute 
for Mind Body Medicine, Massachusetts General Hospital; Brian 
M. Berman, M.D., Director, Center for Integrative Medicine, 
University of Maryland School of Medicine; Susan Hartnoll 
Berman, Executive Director, Institute for Integrative Health; 
Ron Z. Goetzel, Ph.D., Research Professor and Director, 
Institute for Health and Productivity Studies, Rollins School 
of Public Health, Emory University; Kathi J. Kemper, M.D., 
M.P.H., F.A.A.P., Caryl J. Guth Chair for Complementary and 
Integrative Medicine, Division of Health Sciences, Wake Forest 
University; and Simon Mills, Project Lead, United Kingdom 
Department of Health project: Integrated Self Care in Family 
Practice.
    On February 24, 2009, the Senate HELP Committee held a 
hearing entitled ``Addressing Underinsurance in National Health 
Reform.'' The panel included: Cathy Schoen, M.S., Senior Vice 
President, Commonwealth Fund; Gail Shearer, M.S., Director of 
Health Policy Analysis, Consumers Union; Diane Rowland, D.Sc., 
Executive Vice President, Henry J. Kaiser Family Foundation, 
and Executive Director, Kaiser Commission on Medicaid and the 
Uninsured; and Grace-Marie Turner, President, Galen Institute.
    On March 24, 2009, the Senate HELP Committee held a hearing 
entitled ``Addressing Insurance Market Reform in National 
Health Reform.'' The panel included: Janet Trautwein, Executive 
Vice President and CEO, National Association of Health 
Underwriters; Ronald A. Williams, M.S., Chairman and Chief 
Executive Officer, Aetna, Inc.; Karen Pollitz, M.P.P., Research 
Professor, Health Policy Institute, Georgetown University; 
Karen Ignagni, M.B.A., President and CEO, America's Health 
Insurance Plans; Len Nichols, Ph.D., Director, Health Policy 
Program, New America Foundation; Katherine Baicker, Ph.D., 
Professor of Health Economics, Department of Health Policy and 
Management, Harvard School of Public Health; and Sandy Praeger, 
Health Insurance Commissioner, State of Kansas.
    On April 28, 2009, the Senate HELP Committee held a hearing 
entitled ``Learning from the States: Individual State 
Experiences with Health Care Reform Coverage Initiatives in the 
Context of National Reform.'' The panel included: Jon 
Kingsdale, Ph.D., Executive Director, Commonwealth Health 
Insurance Connector Authority, MA; Susan Besio, Director, 
Office of Vermont Health Access, State of Vermont Human 
Services Agency; Harry Chen, M.D., Emergency Room Physician and 
Board Member, Vermont Program for Quality in Health Care; Brent 
James, Executive Director, IHC Institute for Health Care 
Delivery Research, Intermountain Health Care, Inc.; Honorable 
David Clark (R), Majority Leader, Utah House of 
Representatives; Ruth Liu, Senior Director for Health Policy, 
Legal and Government Relations, Kaiser Permanente; and Eileen 
McAnneny, Senior Vice-President of Government Affairs and 
Associate General Counsel, Associated Industries of 
Massachusetts.
    On April 30, 2009, the Senate HELP Committee held a hearing 
entitled ``Primary Health Care Access Reform: Community Health 
Centers and the National Health Service Corps.'' The panel 
included: Cynthia Bascetta, Director of Health Care, GAO; Dan 
Hawkins, Senior Vice President, National Association of 
Community Health Centers; Fitzhugh Mullan, M.D., Murdock Head 
Professor of Medicine and Health Policy, George Washington 
University School of Public Health; Caswell A. Evans, Jr., 
D.D.S, M.P.H., Associate Dean for Prevention and Public Health 
Sciences, University of Illinois at Chicago College of 
Dentistry; Yvonne Davis, Board Member, Community Health Center; 
John Matthew, M.D., Health Center, Plainfield, VT; and Lisa 
Nichols, Executive Director, Midtown Community Center, Ogden, 
UT.
    On June 11, 2009, the Senate HELP Committee held a two-
panel hearing entitled ``Health Care Reform.'' The first panel 
included: Margaret Flowers, M.D., Maryland Co-Chair, Physicians 
for a National Health Program; Ron Williams, CEO, Aetna, Inc; 
Randel Johnson, Vice President for Labor, Immigration, and 
Employee Benefits, U.S. Chamber of Commerce; William Dennis, 
Senior Research Fellow, National Federation of Independent 
Business; Mary Andrus, Co-Chair of the Health Care Taskforce, 
Consortium for Citizens with Disabilities; Samantha Rosman, 
M.D., Board of Trustees, American Medical Association; Ray 
Scheppach, Ph.D., Executive Director, National Governors' 
Association; Gerald Shea, Special Assistant to the President, 
AFL-CIO; Dennis Rivera, Chair, SEIU Healthcare; Katherine 
Baicker, Ph.D., Professor of Health Economics, Harvard School 
of Public Health; Jonathan Gruber, Ph.D., Associate Head, MIT 
Department of Economics; Janet Trautwein, Executive Vice-
President and CEO, National Association of Health Underwriters; 
Sandy Praeger, Kansas Insurance Commissioner; Scott Gottlieb, 
M.D., Resident Fellow, American Enterprise Institute; and Steve 
Burd, President and CEO, Safeway, Inc. The second panel 
included: Gary Raskob, Ph.D., Dean, University of Oklahoma 
College of Public Health; Jeffrey Levi, Ph.D., Executive 
Director, Trust for America's Health; Fay Raines, Ph.D., 
President, American Association of Colleges of Nursing; Wayne 
Jonas, M.D., President and CEO, Samueli Institute; Delos 
Cosgrove, M.D., CEO, Cleveland Clinic; Brent James, M.D., 
M.Stat., Executive Director, Institute for Health Care Delivery 
Research, Intermountain Health Care, Inc.; Charles Kahn, 
M.P.H., President, Federation of American Hospitals; John 
Rother, J.D., Executive Vice President for Policy and Strategy, 
AARP; and Judith Palfrey, M.D., President-Elect, American 
Academy of Pediatric.

Committee on Finance

    On February 25, 2009, the Senate Committee on Finance held 
a hearing entitled ``Scoring Health Care Reform: CBO's Budget 
Options'' with Douglas Elmendorf, Ph.D., Director of the 
Congressional Budget Office.
    On March 12, 2009, the Senate Committee on Finance held a 
hearing entitled ``Workforce Issues in Health Care Reform: 
Assessing the Present and Preparing for the Future.'' The panel 
included: David C. Goodman, M.D., M.S., Director of the Center 
for Health Policy Research, Dartmouth College; Allan H. Goroll, 
M.D., M.A.C.P., Professor of Medicine, Harvard Medical School; 
Fitzhugh Mullan, M.D., Murdock Head Professor of Medicine and 
Health Policy, George Washington University; and Steven A. 
Wartman, M.D., Ph.D., M.A.C.P., President and CEO, Association 
of Academic Health Centers.
    On March 25, 2009, the Senate Committee on Finance held a 
hearing entitled ``The Role of Long-Term Care in Health 
Reform.'' The panel included: Judy Feder, Ph.D., Senior Fellow, 
Center for American Progress Action Fund; Raymond C. Scheppach, 
Ph.D., Executive Director, National Governors Association; 
Dennis G. Smith, Senior Research Fellow in Health Care Reform, 
Heritage Foundation; and Joshua M. Wiener, Ph.D., Senior 
Fellow, RTI International.
    On April 21, 2009, the Senate Committee on Finance held a 
hearing entitled ``Reforming America's Health Care Delivery 
System.'' The panel included: Allan M. Korn, M.D., Senior Vice 
President, Chief Medical Officer, Office of Clinical Affairs, 
Blue Cross Blue Shield Association; Glenn M. Hackbarth, J.D., 
Chairman, Medicare Payment Advisory Commission; Peter V. Lee, 
J.D., Executive Director of National Health Policy, Pacific 
Business Group on Health; Mark B. McClellan, M.D., Director, 
Engelberg Center for Health Care Reform, Brookings Institute; 
Lewis Morris, J.D., Chief Counsel to the Inspector General, 
Office of Counsel to the Inspector General; Mary D. Naylor, 
Ph.D., F.A.A.N., R.N., Marian S. Ware Professor in Gerontology, 
University of Pennsylvania School of Nursing; Debra Ness, 
President, National Partnership for Women and Families; Frank 
G. Opelka, M.D., F.A.C.S., Vice Chancellor for Clinical Affairs 
and Professor of Surgery, Office of the Chancellor, Louisiana 
State University Health Science Center; Glenn Steele, Jr., 
M.D., Ph.D., President, Geisinger Health System; John Tooker, 
M.D., M.B.A., F.A.C.P., Executive Vice President and Chief 
Executive Officer, American College of Physicians; Richard J. 
Umbdenstock, F.A.C.H.E., President and CEO, American Hospital 
Association; Ron Williams, Chairman and CEO, Aetna, Inc.; and 
Paul J. Diaz, J.D., President and CEO, Kindred Healthcare, Inc.
    On May 5, 2009, the Senate Committee on Finance held a 
hearing entitled ``Expanding Health Care Coverage.'' The panel 
included: Stuart M. Butler, Ph.D., Vice President, Domestic and 
Economic Policy Studies, Heritage Foundation; John Castellani, 
President, Business Roundtable; Gary Claxton, Vice President 
and Director, Health Care Marketplace Project, Henry J. Kaiser 
Family Foundation; Donald A. Danner, President and CEO, 
National Federation of Independent Business; Jennie Chin 
Hansen, R.N., M.S., F.A.A.N., President, AARP; Karen Ignagni, 
President and CEO, America's Health Insurance Plan; R. Bruce 
Josten, Executive Vice President, Government Affairs, U.S. 
Chamber of Commerce; Len Nichols, Ph.D., Director, Health 
Policy Program, New America Foundation; Ron Pollack, J.D., 
Executive Director, Families USA; Sandy Praeger, Chair, Health 
Insurance and Managed Care Committee, National Association of 
Insurance Commissioners; Sara Rosenbaum, J.D., Chair, 
Department of Health Policy, George Washington School of Public 
Health and Health Services; Diane Rowland, Sc.D., Executive 
Vice President, Henry J. Kaiser Family Foundation; Raymond C. 
Scheppach, Ph.D., Executive Director, National Governors 
Association; Scott Serota, President and Chief Executive 
Officer, Blue Cross and Blue Shield Association; and Andy 
Stern, President, SEIU.
    On May 12, 2009, the Senate Committee on Finance held a 
hearing entitled ``Financing Comprehensive Health Care 
Reform.'' The panel included: Stuart H. Altman, Ph.D., Sol C. 
Chaikin Professor of National Health Policy, Heller School for 
Social Policy and Management, Brandeis University; Joseph R. 
Antos, Ph.D., Wilson H. Taylor Scholar in Health Care and 
Retirement Policy, American Enterprise Institute; Katherine 
Baicker, Ph.D., Professor of Health Economics, Harvard School 
of Public Health; Leonard Burman, Ph.D., Director, Tax Policy 
Center, Urban Institute; Robert Greenstein, Ph.D., Executive 
Director, Center on Budget and Policy Priorities; Jonathan 
Gruber, Ph.D., Professor of Economics, Massachusetts Institute 
of Technology; Michael F. Jacobson, Ph.D., Executive Director, 
Center for Science in the Public Interest; James A. Klein, 
President, American Benefits Council; Edward Kleinbard, Chief 
of Staff, Joint Committee on Taxation; Gerald M. Shea, Special 
Assistant to the President, AFL-CIO; John Sheils, Senior Vice 
President, Lewin Group; Gail Wilensky, Ph.D., Senior Fellow, 
Project HOPE; and Steven Wojcik, Vice President of Public 
Policy, National Business Group on Health.

 INTRODUCTION AND CONSIDERATION OF AMERICA'S AFFORDABLE HEALTH CHOICES 
                             ACT, H.R. 3200

    On June 19, 2009, Congressman George Miller (D-CA), along 
with Congressmen Henry Waxman (D-CA), Charles Rangel (D-NY) and 
John Dingell (D-MI) released the Tri-Committee draft proposal 
for health care reform.

Committee on Education & Labor Consideration of the Tri-Committee Draft 
        Proposal for Health Care Reform

    On June 23, 2009, the House Education and Labor Committee 
held a hearing to discuss the draft proposal for health care 
reform that was jointly developed by the House Ways and Means, 
Energy and Commerce, and Education and Labor Committees. The 
draft was designed to achieve President Obama's goals of 
controlling health care cost, preserving health care choices, 
and ensuring quality, affordable health care for all Americans. 
The hearing entitled ``The Tri-Committee Draft Proposal for 
Health Care Reform'' consisted of three panels. The first panel 
included: Christina Romer, Ph.D., Chair, Council of Economic 
Advisers, Office of the President; Ron Pollack, Founding 
Executive Director, Families USA; Gerald Shea, Special 
Assistant to the President, AFL-CIO; Paul J. Speranza, Senior 
Vice President, General Counsel and Secretary, Wegmans Food 
Markets, Inc.; Jacob Hacker, Ph.D., Professor and Co-Director, 
Berkeley Center on Health, Economic, and Family Security, 
University of California Berkeley; Michael J. Stapley, 
President and Chief Executive Officer, Deseret Mutual; John 
Arensmeyer, Chief Executive Officer, Small Business Majority; 
and Fran Visco, President, National Breast Cancer Coalition. 
The second panel included: Karen Pollitz, Research Professor 
and Project Director, Health Policy Institute, Georgetown 
University; Celia Wcislo, Assistant Division Director, SEIU; 
James A. Klein, President, American Benefits Council; William 
Vaughan, Senior Health Policy Analyst, Consumers Union; Robert 
E. Moffit, Ph.D., Director, Center for Health Policy Studies, 
Heritage Foundation; ReShonda Young, Small Business Owner, 
Alpha Express, Inc. on behalf of the Main Street Alliance; and 
Fitzhugh Mullan, M.D., Murdock Head Professor of Medicine and 
Health Policy, George Washington University.

Committee on Energy & Commerce Consideration of the Tri-Committee Draft 
        Proposal for Health Care Reform

    On June 23, 2009, the Subcommittee on Health of the 
Committee on Energy and Commerce held a hearing entitled 
``Comprehensive Health Reform Discussion, Day 1.'' The panel 
included: Richard Kirsch, National Campaign Manager, Health 
Care for America Now; Ralph G. Neas, Chief Executive Officer, 
National Coalition on Health Care; Stephen T. Parente, Ph.D., 
Director, Medical Industry Leadership Institute; Marian Wright 
Edelman, President, Children's Defense Fund; Jennie Chin 
Hansen, President, AARP; David L. Shern, Ph.D., President and 
Chief Executive Officer, Mental Health America; Erik Novak, 
M.D., Orthopedic Surgeon, Patients United Now; Shona Robertson-
Holmes, Patient at Mayo Clinic; Jeffrey Levi, Ph.D., Executive 
Director, Trust for America's Health; Brian D. Smedley, Ph.D., 
Vice President and Director, Health Policy Institute, Joint 
Center for Political and Economic Studies; and Mark Kestner, 
M.D., Chief Medical Officer, Alegent Health.
    On June 24, 2009, the Subcommittee on Health of the 
Committee on Energy and Commerce held a three-panel hearing 
entitled ``Comprehensive Health Reform Discussion, Day 2.'' The 
first panel on single-payer health care included: Sidney M. 
Wolfe, M.D., Director, Health Research Group at Public Citizen; 
Steffie Woolhandler, M.D., Associate Professor of Medicine, 
Harvard Medical School, and Co-Founder, Physicians for a 
National Health Program; and John C. Goodman, Ph.D., President 
and CEO, National Center for Policy Analysis. The second panel 
on state, local and tribal views included: the Honorable 
Michael O. Leavitt, Former Secretary, U.S. Department of Health 
and Human Services; the Honorable Joseph Vitale (D), Chairman, 
Committee on Health, Human Services, and Senior Citizens, New 
Jersey State Senate; W. Ron Allen, Chairman, Jamestown 
S'Klallam Tribe; the Honorable Jay Webber (R), New Jersey State 
Assembly; Raymond C. Scheppach, Ph.D., Executive Director, 
National Governors Association; Robert S. Freeman, Deputy 
Executive Director, CenCal Health, California Association of 
Health Insuring Organizations; and Ron Pollack, Executive 
Director, Families USA. The third panel on drug and device 
manufacturer views included: Thomas Miller, CEO, Workflow and 
Solutions Division, Siemens Medical Solutions, USA; Kathleen 
Buto, Vice President for Health Policy, Johnson & Johnson; 
William Vaughan, Senior Health Policy Analyst, Consumers Union; 
Scott Gottlieb, M.D., Resident Fellow, American Enterprise 
Institute; and A. Kelly, Senior Vice President, Government 
Affairs and Public Policy, National Association of Chain Drug 
Stores.
    On June 25, 2009, the Subcommittee on Health of the 
Committee on Energy and Commerce held a four-panel hearing 
entitled ``Comprehensive Health Reform Discussion, Day 3.'' The 
first panel on Medicare payment included Glenn M. Hackbarth, 
Chair of the Medicare Payment Advisory Commission, and the 
Honorable Daniel R. Levinson, Inspector General of the U.S. 
Department of Health and Human Services. The second panel on 
doctor, nurse, hospital, and other provider views included: Ted 
D. Epperly, M.D., President, American Academy of Family 
Physicians; M. Todd Williamson, M.D., President, Medical 
Association of Georgia; Karl J. Ulrich, M.D., Clinic President 
and CEO, Marshfield Clinic; Janet Wright, M.D., Vice President, 
Science and Quality, American College of Cardiology; Kathleen 
M. White, Ph.D., Chair, Congress on Nursing Practice and 
Economics, American Nurses Association; Patricia Gabow, M.D., 
Chief Executive Officer, Denver Health and Hospital Authority, 
National Association of Public Hospitals; Dan Hawkins, Senior 
Vice President, Public Policy and Research, National 
Association of Community Health Centers; Bruce T. Roberts, 
R.Ph., Executive Vice President and CEO, National Community 
Pharmacists Association; Bruce Yarwood, President and CEO, 
American Health Care Association; and Alissa Fox, Senior Vice 
President, Office of Policy and Representation, Blue Cross Blue 
Shield Association. The third panel on employer and employee 
views included: Kelly Conklin, Owner, Foley-Waite Custom 
Woodworking, Main Street Alliance; John Arensmeyer, Founder and 
CEO, Small Business Majority; Gerald M. Shea, Special Assistant 
to the President, AFL-CIO; Dennis Rivera, Health Care Chair, 
SEIU; John Castellani, President, Business Roundtable Institute 
for Corporate Ethics; John Sheils, Senior Vice President, Lewin 
Group; and Martin Reiser, Manager of Government Policy, Xerox 
Corporation, National Coalition on Benefits. The fourth panel 
on insurers' views included: Howard A. Kahn, Chief Executive 
Officer, L.A. Care Health Plan; Karen Pollitz, M.P.P., Research 
Professor, Health Policy Institute, Georgetown University; 
Karen Ignagni, President and CEO, America's Health Insurance 
Plans; and Janet Trautwein, Executive Vice President and CEO, 
National Association of Health Underwriters.

Committee on Ways & Means Consideration of the Tri-Committee Draft 
        Proposal for Health Care Reform

    On June 24, 2009, the Committee on Ways and Means had a 
hearing entitled ``Health Reform in the 21st Century: Proposals 
to Reform the Health System.'' The hearing consisted of three 
panels. The first panel included: Karen Pollitz, Policy 
Director, Health Policy Institute, Georgetown Public Policy 
Institute; John F. Holahan, Ph.D., Director, Health Policy 
Research Center, Urban Institute; and David Gratzer, M.D., 
Senior Fellow, Manhattan Institute for Policy Research. The 
second panel included: Richard Kirsch, National Campaign 
Manager, Health Care for America NOW; Mike Draper, Owner, 
SMASH; Peter V. Lee, Executive Director for National Health 
Policy, Pacific Business Group on Health; Gerald Shea, Special 
Assistant to the President, AFL-CIO; Jennie Chin Hansen, 
President, AARP; and Randel K. Johnson, Senior Vice President, 
Labor, Immigration and Employee Benefits, U.S. Chamber of 
Commerce. The third panel included: Dan Baxter, Medical 
Director, William F. Ryan Community Health Network, NY; Ted 
Epperly, M.D., President, American Academy of Family 
Physicians; Donna Policastro, Executive Director, Rhode Island 
State Nurses Association on behalf of the American Nurses 
Association; Chip Kahn, President, Federation of American 
Hospitals; Larry Minnix, President and CEO, American 
Association of Homes and Services for the Aging; Ronald 
Williams, Chairman and CEO, Aetna, Inc.; and Richard Warner, 
M.D., Member, Kansas Medical Society House of Delegates, AMA 
Alternate Delegate, and past President, Kansas Medical Society.

Introduction of America's Affordable Health Choices Act, H.R. 3200

    On July 15, 2009, after taking into consideration comments 
on the discussion draft from a very wide range of voices, 
Chairmen George Miller, Henry Waxman, Charles Rangel, and 
Congressman John Dingell introduced America's Affordable Health 
Choices Act, H.R. 3200. The bill seeks to control rising health 
care costs, strengthen the employer-based health care system, 
and ensure that all Americans have access to quality and 
affordable health care coverage.

Committee on Education & Labor Mark-up of H.R. 3200

    The Full Committee met on July 15-17, 2009 to mark up H.R. 
3200. The Committee passed by voice vote an amendment in the 
nature of a substitute offered by Chairman George Miller (D-
CA). There were 42 other amendments offered and debated. Of the 
amendments offered, 20 passed, 17 failed, 4 were withdrawn, and 
one was ruled not germane.

America's Affordable Health Choices Act of 2009

    H.R. 3200 was reported favorably to the House with an 
amendment in the nature of a substitute. By a vote of 26-22, 
the Committee authorized the Chairman to transmit the bill, 
with an amendment in the nature of a substitute, to the 
Committee on the Budget in compliance with section 310 of the 
Congressional Budget Act of 1974 as the first part of the 
Committee's recommendations, pursuant to the reconciliation 
instruction in S. Con Res. 13.
    The Miller amendment in the nature of a substitute contains 
the following modifications to H.R. 3200:
    Recognizes the unique structures of multi-employer plans 
and how they interact with the Health Insurance Exchange (HIE). 
In Section 100(26), the health care contributions of 
multiemployer plans are to be treated as employer 
contributions. Section 123(b)(1)(D) directs the Health Benefits 
Advisory Committee to take into consideration the unique nature 
of the multiemployer plans in recommending the essential 
benefits package. Lastly, Section 202(e)(8) makes clear that 
multiemployer plans shall be treated as large employers in 
regard to joining the HIE.
    The Miller substitute also creates a new subsection (b) in 
Section 115 that requires qualified health benefits plans to 
make provider information available to consumers by publishing 
current listings of all providers within a plan network on 
their website. Amends the bill in Section 116 to provide that 
the medical loss ratio for qualified health benefits plans must 
be at least 85 percent.
    Creates Section 117 to prohibit insurance companies from 
changing the coverage or costs of a health plan mid-year except 
if the costs are lowered and/or the coverage is increased.
    Specifically includes in the essential benefits package 
``durable medical equipment, prosthetics, orthotics, and 
supplies.'' (DMEPOS) The Committee is aware that Section 122 
(4) related to coverage of ``services, equipment, and supplies 
incident to the services of a physician's or a health 
professional's delivery of care in . . . patients' homes or 
places of residence'' encompasses coverage of such devices and 
related services, but opted to clarify that these are 
considered essential benefits. By separately listing the 
category of DMEPOS as an essential benefit, the Committee 
intends to underscore the importance of coverage for these 
devices and related services.
    Amends sections 122 and 133 to include three provisions 
related to integrative medicine: to require that the membership 
of the Health Benefits Advisory Committee include one or more 
integrative medicine providers; establish an Integrative Health 
Care Service Task Force that is to be comprised of five experts 
in integrative health care; and, ensure that HIE enrollees are 
provided with information to identify integrative medicine 
providers who are trained and accredited.
    Establishes Section 138 to ban the sales of physician 
prescribing data to the pharmaceutical industry when the 
physician serves patients enrolled in a qualified health 
benefit plan.
    Amends Section 202(d) to include that retirees who are 
participants or beneficiaries in an adversely affected health 
benefits group and are not enrolled in Medicare, are to be 
considered Exchange eligible individuals and may enter into the 
HIE in 2013, the first year of operation. Also limits post-
retirement reductions of retiree health benefits by group 
health plans in Section 165.
    Creates a new provision, Section 209, to allow small 
employer benefit arrangements, which are defined as not-for-
profit agricultural or other industry cooperatives, to work 
with the Commissioner to assist in the enrollment of small 
employers and their employees in the HIE. The small employer 
benefit arrangements are to operate for the primary purpose of 
providing affordable employee benefits to its members; that 
only consists of member employers that are in the same industry 
or line of business; ensure that no member has more than five 
percent voting interest in the cooperative, and are to be 
governed by a board of directors elected by its members.
    Adds an additional condition for providers eligible to 
participate in the public health insurance option in Section 
225(b) by permitting providers, such as Christian Science 
practitioners, who are ``otherwise permitted to practice under 
state law'' to also participate in the public health insurance 
option.
    Amends the affordability standard for access to the HIE in 
Section 242(b)(2)(B) by giving the Commissioner the authority 
to permit individuals and families who have received an 
employer offer of health care coverage to qualify for the HIE 
in Y2 of operation if their premium and cost sharing is greater 
than 11 percent of family income.
    Inserts language to protect against the misclassification 
of workers for purposes of the provisions within H.R. 3200. The 
language requires the Secretary of Labor to promulgate record-
keeping requirements for both employees and certain individuals 
performing work for an employer but whom the employer has not 
treated as employees. The content and scope of these record-
keeping requirements (both in terms of what data is needed and 
what non-employee individuals are covered) should be designed 
to assist the Secretary in the audits she performs to determine 
noncompliance with the bill's health coverage participation 
requirements.
    Requires the development of standards for accessible 
equipment, and requires relevant agencies to ensure that all 
entities covered by the legislation meet the requirements of 
the Americans with Disabilities Act and Section 504 of the 
Rehabilitation Act. The Committee recognizes that a critical 
component of providing health care to many individuals with 
disabilities is ensuring that diagnostic and treatment 
equipment is accessible to those with impairments which impede 
use of standard equipment. Inaccessible medical equipment often 
prevents people with disabilities from receiving the basic care 
others take for granted, such as getting weighed, preventative 
dental care, mammograms, pelvic exams, x-rays, physical 
examinations, colonoscopies, and vision screenings.
    Subtitle F of Division C adds a new provision to reduce the 
student-to-school nurse ratio. Section 2551 makes available 
demonstration grants to eligible local education agencies with 
the purpose of reducing the student-to-school nurse ratio in 
public elementary and secondary schools with special 
consideration given to high-need local educational agencies who 
demonstrate the greatest need for new or additional nursing 
services by providing information on the current ratios of 
students to school nurses.
    The last modification within the Miller substitute 
recognizes the importance of preventive approaches to health 
and wellness. Section 2552 authorizes the Secretary of Labor to 
offer incentives to employers who establish qualified wellness 
programs for their employees. The Committee believes these 
small grants will assist in improving the health of our 
nation's workforce and will reduce employer healthcare costs. 
Participating employers must offer the programs to all 
employees and cannot mandate participation nor use 
participation as a condition to receive any financial 
incentive.

                   AMENDMENTS CONSIDERED IN COMMITTEE

    The amendment offered by Representative Courtney (D-CT) 
amends Section 111 of the Miller substitute. The amendment 
reduces the pre-existing condition ``look-back'' period from 
six months to 30 days and shortens the amount of time during 
which a provider can exclude coverage for pre-existing 
conditions, during the period prior to the bill's effective 
date for the total prohibition on pre-existing condition 
exclusions. The amendment was passed by voice vote.
    The Representative Kline (R-MN) amendment would have struck 
Titles I and II of Division A which would include striking the 
protections and standards for qualified health benefits plans 
and also the HIE. The Kline amendment would have also struck 
Sections 311, 312, 313, 314, 321 and 324 which include striking 
employer mandate requirements and requirements for employer 
health coverage participation under ERISA. The amendment was 
defeated by a roll call vote of 19-29.
    The amendment offered by Representative Titus (D-NV) would 
increase the size of small businesses that can choose to enter 
the HIE. It specifies that in 2013 (Y1), the size of businesses 
eligible for the HIE would increase from 10 to 15; in 2014 
(Y2), the size of businesses eligible for the HIE would 
increase from 20 to 25; and, in 2015 (Y3), the Commissioner 
must allow additional small businesses to enter the HIE and 
would set the minimum size for an eligible small business as 
one with 50 employees or less. The amendment passed by a roll 
call vote of 29-19.
    The amendment offered by Representative Scott (D-VA) would 
add early periodic screening, diagnosis, and treatment (EPSDT) 
benefits to children up to age 21 to be included in the 
essential benefits package (Section 122(b)(10)). The amendment 
passed by a roll call vote of 32-17.
    The amendment offered by Representative Thompson (R-PA) 
would have struck Subtitle A of Title II of Division A, i.e., 
the HIE. The amendment was defeated by a roll call vote of 19-
29.
    The amendment offered by Representative Roe (R-TN) would 
have struck Subtitle B of Title II of Division A, i.e., the 
public health insurance option. The amendment was defeated by a 
roll call vote of 19-29.
    The amendment offered by Representative Davis (D-CA) would 
instruct the Health Benefits Advisory Committee to examine 
current state laws and to seek input from the states as it 
forms its recommendations for the federal benefits standards by 
inserting the aforementioned after paragraph (2) in Section 
123(b). The amendment was passed by voice vote.
    The amendment offered by Representative Guthrie (R-KY) 
would have struck Sections 311, 312, 313, 314, 321 and 324, 
i.e., the employer mandate requirements and requirements for 
employer health coverage participation under ERISA. The 
amendment was defeated by a roll call vote of 19-28.
    The second amendment offered by Representative Davis (D-CA) 
would end the current COBRA eligibility limit and allow those 
currently enrolled in COBRA to keep their insurance until they 
find another job offering coverage or until they become 
eligible to participate in the HIE. This amendment would be 
inserted after Subtitle G of Title I of Division A. The 
amendment was passed by voice vote.
    The amendment offered by Representative Biggert (R-IL) and 
Representative Price (R-GA) would have struck Section 102(b) 
and inserted that any group health plan operating under ERISA 
would be treated as already meeting the requirements of a 
qualified health benefits plan as listed in Title I. The 
amendment was defeated by a roll call vote of 18-29.
    The amendment offered by Representative Fudge (D-OH) and 
Representative Titus (D-NV) would help small employers select 
health plans. The amendment would require the Commissioner, in 
consultation with the Small Business Administration, to 
establish and carry out a program to provide health insurance 
counseling and technical assistance to small employers who 
provide their employees health care through the HIE. The 
amendment was passed by a roll call vote of 28-18.
    The amendment offered by Representative Wilson (R-SC) would 
exclude TRICARE from the definition of employment-based health 
care. The amendment was passed by voice vote.
    The amendment offered by Representative Hare (D-IL) would 
make a technical change in the Miller amendment regarding 
``small employer benefit associations.'' The amendment would 
strike ``association(s)'' and instead insert 
``arrangement(s).'' The amendment was passed by voice vote.
    The amendment offered by Representative Kline (R-MN) would 
have added to the end of Section 311 a provision to exempt 
employers from having to offer or maintain qualified health 
insurance coverage if an employer-initiated referendum calling 
for such an exemption was passed by a majority of employees. 
The amendment was defeated by a roll call vote of 18-28.
    The amendment offered by Representative Hirono (D-HI) would 
maintain Hawaii's Prepaid Health Care Act exemption under 
ERISA, including with respect to the provisions of H.R. 3200, 
where such state statute ensures health care benefits 
equivalent to or greater than those benefits that would be 
guaranteed by H.R. 3200. The amendment was passed by voice 
vote.
    The amendment offered by Representative Hoekstra (R-MI) 
would have suspended Sections 311, 312, 313, and 314, which 
pertain to H.R. 3200's employer mandate, in the event that the 
national unemployment rate as announced monthly by the Bureau 
of Labor Statistics at the Department of Labor equals or exceed 
eight percent for two consecutive months. The amendment was 
defeated by voice vote.
    The amendment offered by Representative Kucinich (D-OH) 
would create an ERISA waiver to permit States to enact single 
payer laws. The Department of Labor would determine whether the 
State plan meets certain requirements to obtain the waiver. The 
amendment was passed by a roll call vote of 27-19 with one 
member passing on the vote.
    The amendment offered by Representative Hunter (R-CA) would 
create a two-year employer hardship exemption that waives an 
employer's obligation to provide coverage or pay a penalty. The 
amendment was passed by voice vote.
    The second amendment offered by Representative Kucinich (D-
OH) would have limited the total compensation of insurance 
company executives to not exceed the compensation of the 
President of the United States. The amendment was withdrawn and 
no further action was taken on it.
    The amendment offered by Mr. McClintock (R-CA) would have 
required that 30 days after H.R. 3200's enactment, the Director 
of the Office of Management and Budget submit a report to the 
House of Representatives determining whether Sections 311, 312, 
313, 314, 321, and 324 are deficit neutral for the applicable 
period of ten fiscal years. The report would be annually 
conducted prior at the end of each fiscal year and if a section 
was found to not be deficit neutral, then it would be suspended 
for two years following that fiscal year. The amendment was 
defeated by a roll call vote of 19-28.
    The en bloc amendment offered by Representative Holt (D-
NJ), incorporating proposals by Representatives Loebsack, Wu, 
Courtney, Altmire, and Tonko, would add workforce development 
provisions for long-term care workers; add training for health 
care jobs for vulnerable populations; expand and clarify that 
mental health and substance abuse preventative services are 
covered in the essential benefits package; and create a health 
care labor market website and an online health professional 
training grant program. The amendment was passed by voice vote.
    The amendment offered by Representative Biggert (R-IL) 
would have established an annual report on the average waiting 
period for minimum health services and if an increase of five 
percent or more was reported, then Sections 311, 312, 313, 314, 
321, and 324 would not apply in the following year. The 
amendment was withdrawn and no further action was taken on it.
    The amendment offered by Representative Polis (D-CO) would 
expand the characteristics outlined in Section 221(e) on data 
collection to include race, ethnicity, primary language, sex, 
sexual orientation, gender identity, disability, socioeconomic 
status, rural, urban, or other geographic setting, and any 
other population or subpopulation as determined appropriate by 
the Secretary. The amendment was passed by voice vote.
    The amendment offered by Representative McMorris Rodgers 
(R-WA) would have prohibited any tax increases to families with 
an income of $250,000 or less. The amendment was ruled not 
germane as outside the jurisdiction of the Committee.
    The amendment offered by Representative Sablan (NMI), 
Representative Pierluisi (PR), and Representative Clarke (D-NY) 
would add to H.R. 3200 a Sense of Congress stating that the 
final bill must meaningfully address the health care needs of 
the territories. The amendment was passed by voice vote.
    The second amendment offered by Representative Kline (R-MN) 
would have prohibited any provision in H.R. 3200 from the 
application of state law remedies in connection to group health 
plans, maintaining that section 502 of ERISA will continue to 
supersede state law. The amendment was defeated by a roll call 
vote of 19-28.
    The amendment offered by Representative Sestak (D-PA) would 
require the presence of patient representatives on the Health 
Benefits Advisory Committee. It is the intent of the Committee 
that such educated patients or consumer advocates be free of 
conflicts of interest with any provider, insurer, or other 
interest in the health sector. The amendment was passed by 
voice vote.
    The amendment offered by Representative Price (R-GA) would 
have created a waiver that would exempt States from enacting 
Subtitle B in Title III if a State health plan was enacted into 
law by the legislature of that State. The amendment was 
defeated by a roll call vote of 19-28.
    The amendment offered by Representative Wu (D-OR) and 
Representative Altmire (D-PA) would require the Health Choices 
Commissioner to study how to increase the meaningful use of 
electronic health records and then use the results of that 
study to potentially require higher reimbursement rates for 
providers that use health information technology. The amendment 
was passed by voice vote.
    The amendment offered by Representative Souder (R-IN) would 
have prohibited any provision in H.R. 3200 from requiring a 
group health plan to provide coverage for abortion or access to 
an abortion. The amendment was defeated by roll call vote of 
19-29.
    The second amendment offered by Representative Souder (R-
IN) would require that no funds appropriated under Titles I-III 
be used for abortion or to cover any part of the costs of any 
health benefits plan that includes coverage of abortion, except 
in the case where a woman suffers from a physical disorder, 
physical injury, or physical illness. The amendment was 
defeated by a roll call vote of 19-29.
    The second amendment offered by Representative Biggert (R-
IL) would prohibit the Commissioner or any health insurance 
issuer offering health insurance coverage through the HIE from 
discriminating against approving or covering health care 
services based on religious or spiritual content if 
expenditures for such a health care service are allowable under 
213(d) of the Internal Revenue Code of 1986. The amendment was 
passed by voice vote.
    The second amendment offered by Representative Price (R-GA) 
would prohibit any provision in H.R. 3200 to be construed to 
preclude any participant or beneficiary in a group health plan 
from entering into any contract or arrangement for health care 
with any health care provider. The amendment was passed by 
voice vote.
    The second amendment offered by Representative Hoekstra (R-
MI) would have designated a ``health care sharing ministry'' as 
an ``employer'' and the members of such a ministry would be 
designated as ``employees.'' The amendment was withdrawn and no 
further action was taken on it.
    The amendment offered by Representative Petri (R-WI) would 
permit group consumer directed health plans and arrangements 
(including a high deductible health plan with the meaning of 
section 223(c)(2) of the IRS Code) to be treated as acceptable 
coverage consistent with other employer group health plans 
subject to the grace period until Y5. The amendment was amended 
by unanimous consent to ensure that this exception was not 
permanent and passed by voice vote.
    The amendment offered by Representative McKeon (R-CA) would 
have created a new title at the end of Division A titled Title 
IV--Small Business Health Fairness. This title would include 
rules governing association health plans; clarification of 
treatment of single employer arrangements; enforcement 
provisions related to association health plans; and other 
provisions related to association health plans. The amendment 
was defeated by a roll call vote of 21-27.
    The amendment offered by Representative Castle (R-DE) would 
have allowed variation in cost-sharing and premiums charged by 
the qualified health benefits plans dependent upon participant 
participation in employer prevention and wellness programs. The 
amendment was withdrawn and no further action was taken on it.
    The second amendment offered by Representative Wilson (R-
SC) would add to H.R. 3200 a Sense of the House of 
Representatives that any members who vote in support of the 
public health insurance option are urged to forgo their right 
to participate in the FEHBP and enroll under the public option. 
The amendment was passed by voice vote.
    The third amendment offered by Representative Price (R-GA) 
would have established provisions for defined contribution 
health plans. The amendment was defeated by a roll call vote of 
19-29.
    The fourth amendment offered by Representative Price (R-GA) 
would have struck the physician billing language in Section 
225(c). The amendment was defeated by a roll call vote of 19-
29.
    The second amendment offered by Representative McMorris 
Rodgers (R-WA) would have exempted plans established and 
maintained by Indian tribal governments. The amendment was 
defeated by voice vote.

Committee on Ways & Means Mark-up of H.R. 3200

    On July 16, 2009, the Committee on Ways and Means met to 
mark-up H.R. 3200, America's Affordable Health Choices Act and 
reported the bill as amended by a vote of 23-18.

Committee on Energy & Commerce Mark-up of H.R. 3200

    Beginning on July 16, 2009, the Committee on Energy and 
Commerce met to mark-up H.R. 3200, America's Affordable Health 
Choices Act. In addition to July 16, 2009, the Committee 
considered H.R. 3200 on July 17, 20, 30 and 31. The Committee 
reported the bill as amended by a vote of 31-28.

       SENATE CONSIDERATION OF THE AFFORDABLE HEALTH CHOICES ACT

    Beginning on June 17, 2009 the HELP Committee met to mark-
up the Affordable Health Choices Act. The Committee reported 
the bill as amended on July 15, 2009 by a vote of 13-10.

                        III. Summary of the Bill

    America's Affordable Health Choices Act makes critical 
reforms to this nation's broken health care system. It will 
lower costs, preserve choice, and expand access to quality, 
affordable care. To protect families struggling with health 
care costs and inadequate coverage, the bill ensures that 
health insurance companies can no longer compete based on risk 
selection. By prohibiting rate increases based on pre-existing 
conditions, gender and occupation, the bill requires that 
insurance companies instead compete based on quality and 
efficiency. In addition, H.R. 3200 will lower the cost of 
health care by eliminating co-pays and deductibles for 
preventive care, capping annual out-of-pocket expenses, 
prohibiting lifetime limits, and allowing the uninsured, part-
time workers, and employees of some small businesses to obtain 
group rates by purchasing health care through the HIE.
    H.R. 3200 will expand choice of health insurance, 
especially in many parts of the country where families have 
very limited choices because of the nature of the insurance 
market. The HIE will serve as an organized and transparent 
``marketplace for the purchase of health insurance''\7\ where 
individuals and employees (phased-in over time) can shop and 
compare health insurance options. To participate in the HIE, 
insurers will be required to meet the insurance market reforms 
and consumer protections and offer the essential benefits 
package established by the new independent benefits advisory 
committee. Individuals and families under 400 percent of 
poverty who qualify for affordability credits will be able to 
use that money in the HIE to help offset the costs of their 
health care coverage.
---------------------------------------------------------------------------
    \7\Linda Blumberg and Karen Pollitz, Health Insurance Exchanges: 
Organizing Health Insurance Marketplaces to Promote Health Reform 
Goals, the Urban Institute & Robert Wood Johnson Foundation (April 
2009).
---------------------------------------------------------------------------
    One health insurance choice within the HIE will be the 
public health insurance option. The public option will be 
required to operate on the same level as private insurance 
companies, adhering to the same market reforms and consumer 
protections, and it will be required to be financed from its 
premiums. Rates will vary geographically just as private 
insurers do. The public plan option will be able to utilize 
payment rates similar to Medicare with provider rates at 
Medicare plus 5 percent. However, beginning in Y4 the Secretary 
will have the authority to use an administrative process to set 
rates (at levels that do not increase costs) in order to 
promote payment accuracy and the delivery of affordable and 
efficient care.
    The inclusion of a public option in the HIE will help to 
rein in the costs of health insurance while preserving access. 
At all times, the Secretary retains the authority to utilize 
innovative payment mechanisms and policies to improve health 
outcomes, reduce health disparities, and promote quality and 
integrated care. Furthermore, the public option will represent 
choice in many communities where one insurer dominates the 
market. Consequently, the public health insurance option has 
the ability to increase competition and control costs. However, 
no one, including employers who put their employees into the 
HIE, can place or force anyone into the public option. The 
decision to enroll in a private plan or the public option is 
always left to individuals and families to decide for 
themselves.
    H.R. 3200 is built upon the premise of shared 
responsibility among individuals, employers and the government, 
so that everyone contributes and has access to affordable, 
quality health care. America's Affordable Health Choices Act 
gives employers the choice to either offer health insurance or 
pay a percentage of payroll for their employees to go into the 
HIE.
    Beginning in 2013, employers ``playing'' will be required 
to offer health coverage to all of their full-time employees 
and contribute 72.5 percent of the premium for an individual 
and 65 percent for a family premium. For part-time workers, 
employers will have the choice to either offer health coverage 
on a pro rata basis or pay the required penalty. There will be 
no minimum benefit requirement for existing employer-sponsored 
health plans until the end of 2018. At that time, employers who 
``play'' will be required to offer coverage that is no less 
than the minimum benefit level within the Exchange and must 
include the insurance market reforms.
    Employers may also choose to ``pay'' instead of play. A 
``pay'' employer would be required to make a contribution equal 
to 8 percent of their payroll to the HIE. However, recognizing 
the difficulties small businesses face, the bill includes a 
number of provisions to help small employers. For example, H.R. 
3200 exempts employers with payrolls of $250,000 or less from 
the pay or play requirements. For employers with payroll 
between $250,000 and $400,000 the contribution amount phases-up 
from 2 to 8 percent so that only employers with payrolls 
greater than $400,000 will pay the full 8 percent.
    Whether obtaining coverage through an employer, a spouse or 
the HIE, H.R. 3200 requires that individuals either enroll in 
health care coverage or pay 2.5 percent of their adjusted gross 
income capped at the total cost of the average cost premium 
offered in the HIE. Recognizing that high health care costs 
prevent many Americans from securing health care coverage, H.R. 
3200 provides for affordability credits to help eligible low- 
and middle-income individuals and families purchase coverage in 
the HIE. In addition, for those who can demonstrate that they 
are unable to afford health insurance, the Health Choices 
Commissioner (Commissioner) retains the authority to develop 
and grant hardship waivers.
    The affordability credits provided for under the bill will 
be available to individuals and families with incomes between 
133 to 400 percent of the federal poverty level. Medicaid will 
be expanded so that anyone below 133 percent of poverty will be 
Medicaid eligible and that expansion will be fully federally 
financed. Employees who are offered health insurance through an 
employer will be unable to go into the HIE and receive 
affordability credits unless that employer coverage is deemed 
unaffordable. An unaffordable employer offer is one where the 
employees' share of the premium and cost sharing are more than 
11 percent of family income.
    Finally, as millions of Americans gain coverage, 
investments in the health care workforce are critical to 
ensuring all Americans have access to needed care. H.R. 3200 
includes significant investments to help train more primary 
care and public health physicians as well as nurses. It puts 
into place incentives to encourage more people to become 
doctors and nurses (particularly in rural areas). Some of the 
workforce provisions include: (1) increased funding for the 
National Health Service Corp.; (2) expanded scholarships and 
loans for health professionals who work in shortage professions 
and areas; (3) steps to increase physician training outside of 
the hospital and redistribute unfilled graduate medical 
education residency slots so that more primary care physicians 
can be trained; and (4) grants through the Department of Labor 
to help train and retain nurses.

                          IV. Committee Views

    The Committee on Education and Labor of the 111th Congress 
is committed to containing the cost of health care and ensuring 
that every American has access to affordable, quality health 
care coverage. H.R. 3200 includes critical reforms to the 
health care system that are needed to reduce surging premium 
and health care costs that families, businesses and governments 
are struggling to afford. The bill cuts over a half trillion 
dollars from the health care system, ensures that no one is 
ever one illness away from bankruptcy and creates a system 
where 97 percent of Americans will have health care coverage by 
2015.

                                Overview

    Health care reform is a critical issue in this country. 
There are 47 million people in the United States without health 
care coverage and almost nine million of them are children.\8\ 
Meanwhile, health care costs are rising for nearly everyone. 
The United States spends over $2.4 trillion--more than 18 
percent of GDP--on health care services and products--far more 
than other industrialized countries.\9\ In addition, health 
care costs continue to grow faster than the economy as a whole, 
and individuals and families are burdened by the weight of 
these escalating expenses. Yet, for all this spending, the 
United States' scores are average or worse on many key 
indicators of health care quality. Health care reform is 
critical to restoring prosperity for our nation's families and 
H.R. 3200 will ensure that coverage is truly affordable and 
dependable for hard-working Americans.
---------------------------------------------------------------------------
    \8\Supra note 2.
    \9\National Coalition on Health Care, ``Facts on the Cost of Health 
Insurance and Health Care,'' (2007), available at: http:\\www.nchc.org/
facts/cost.shtml
---------------------------------------------------------------------------

The Uninsured

    The number of uninsured persons in the United States 
continues to grow, from 44.8 million in 2005 to 47.0 million in 
2006. The percentage of uninsured is also rising, from 15.3 
percent of the total population in 2005 to 15.8 percent in 
2006.\10\
---------------------------------------------------------------------------
    \10\U.S. Census Bureau, ``Health Insurance Coverage: 2006--
Highlights.'' (Aug. 27, 2007), available at: http:\\www.census.gov/
hhes/www/hlthins/hlthin06/hlth06asc.html
---------------------------------------------------------------------------
    More than two-thirds of the uninsured live in a household 
with one full-time worker. These increasing numbers can be 
attributed to the rising cost of health care, a decline in 
manufacturing jobs and an increase in workers employed in the 
service industries and small businesses, which are less likely 
to provide insurance.\11\ Roughly two-thirds of Americans 
without health insurance have incomes 200 percent below the 
federal poverty level--or approximately $44,000 for a family of 
four.\12\ Not surprisingly, those in households with annual 
incomes below $25,000 are even less likely to be insured. In 
2006, twenty-five percent of these Americans were uninsured in 
comparison to 16 percent of the total population.\13\
---------------------------------------------------------------------------
    \11\Robert Pear. ``Without Health Benefits, a Good Life Turns 
Fragile,'' N.Y. Times (Mar. 5, 2007).
    \12\Kaiser Family Foundation, ``The Uninsured: A Primer,'' (Oct. 
2008). http:\\www.kff.org/uninsured/upload/7451-04.pdf.
    \13\Carmen DeNavas-Walt, Bernadette D. Proctor and Jessica Smith, 
``Income, Poverty, and Health Insurance Coverage in the United States: 
2006'' Current Population Reports (2006) at 60-233. See also, U.S. 
Department of Commerce, Economics and Statistics Administration, August 
2007.
---------------------------------------------------------------------------
    Approximately 162 million non-elderly workers and their 
dependents received health coverage through their employment-
based health plans.\14\ However, millions of other working 
Americans are unable to participate in an employer-sponsored 
plan, either because the employer does not offer coverage or 
the employee is not eligible under the plan. In 2005, 20 
percent of ``wage and salary'' workers had an employer that did 
not offer any coverage to their workers. And 18 percent were 
not eligible for the health plan that was offered by their 
employer.\15\ For example, some firms do not offer coverage to 
part-time employees and some do not offer coverage to workers 
who have been employed for less than a specific amount of time.
---------------------------------------------------------------------------
    \14\Elise Gould, ``The Erosion of Employer-Sponsored Health 
Insurance,'' Economic Policy Institute (Oct. 8, 2008).
    \15\Supra note 9.
---------------------------------------------------------------------------
    While employer-sponsored plans still remain the dominant 
source of health coverage for most Americans, the percentage of 
people obtaining health coverage through these plans has been 
steadily shrinking. For example, 60 percent of employers 
offered benefits in 2007, compared with 69 percent in 2000. 
Most of this decline can be attributed to the decline in small 
businesses (less than 200 workers) offering coverage.\16\ Among 
firms with less than 10 workers, the offer rate dropped from 57 
percent in 2000 to 45 percent in 2007.\17\ For employers who 
have stopped offering coverage, almost three out of four say 
that premiums are too expensive.\18\
---------------------------------------------------------------------------
    \16\Kaiser Commission on Medicaid and the Uninsured, ``2007 
Employer Health Benefits Survey--Summary of Findings,'' (Sept. 2007) at 
29, available at: http:\\www.kff.org/insurance/7672/index.cfm
    \17\Paul Fronstin. ``Sources of Health Insurance and 
Characteristics of the Uninsured: Analysis of the March 2007 Current 
Population Survey.'' Employee Benefit Research Institute, October 2007.
    \18\Kaiser Family Foundation/HRET, ``Employer Health Benefits 2007 
Annual Survey.'' (Sept. 2007).
---------------------------------------------------------------------------

Unaffordable Health Care Coverage

    Employers and workers alike are increasingly concerned 
about the rising costs of health care and insurance. Premiums 
for employer-sponsored health coverage are rising much faster 
than workers' earnings and inflation. Between spring 2006 and 
spring 2007, premiums for coverage offered by employers across 
the United States increased by 6.1 percent--more than twice the 
growth in the Consumer Price Index (CPI). The average annual 
cost of employer-sponsored health insurance was nearing $13,000 
in 2008. In response to these steady premium hikes, many 
companies are asking their employees to cover some of the new 
costs. For instance, workers taking single coverage through an 
employer paid 12 percent more for their coverage in 2007 than 
in 2006. Premiums for a family of four paid by workers 
increased by 10 percent from 2006 to 2007.\19\
---------------------------------------------------------------------------
    \19\Id.
---------------------------------------------------------------------------
    These increases are of great concern, and more and more 
workers believe that they may not be able to afford their share 
of the cost of coverage. In a recent poll by the Pew Research 
Center,\20\ forty-four percent of workers surveyed say that 
affording health insurance is difficult or very difficult. In 
addition, almost three out of four uninsured workers who chose 
not to participate in their employer's health plan in 2002 said 
the plan was too costly. Workers also know that if they lose 
their job, they are likely to lose access to affordable health 
care coverage.
---------------------------------------------------------------------------
    \20\Pew Research Center for the People and the Press poll, 
conducted January 9-13, 2008, available at: http:\\people-press.org/
reports/dispaly.php3?ReportID= 395.
---------------------------------------------------------------------------
    In addition, among those employers that offer benefits, a 
large percentage of firms report that in the next year not only 
are they very or somewhat likely to increase the amount workers 
contribute to premiums (45 percent), but they will also 
increase deductible amounts (37 percent), office visit cost 
sharing (42 percent) or the amount that employees have to pay 
for prescription drugs (41 percent).\21\
---------------------------------------------------------------------------
    \21\Supra note 16.
---------------------------------------------------------------------------
    The problem of being ``underinsured'' has also become 
increasingly relevant. One recent study estimated that 29 
percent of individuals who have insurance are ``underinsured'' 
and have coverage that is inadequate to secure them access to 
needed care or protect again catastrophic medical bills.\22\
---------------------------------------------------------------------------
    \22\Consumer Reports, ``Health Insurance: CR Investigates Health 
Care,'' September 2007, available at: http:\\www.consumerreports.org/
cro/health-fitness/health-care/health-insurance-9-07/overview/
0709_2/37/21/17/42/62/3_2/54/6x-02/32/69/4
---------------------------------------------------------------------------
    The Commonwealth Fund found that 25 million adults who had 
health coverage in 2007 were underinsured\23\--a 60 percent 
increase from the 16 million Americans who were underinsured in 
2003.\24\ Another study found that while 16 percent of adults 
spent more than 10 percent of their family income on health 
care service in 1996. By 2003 the proportion of adults bearing 
these health-related ``catastrophic financial burdens'' had 
increased to 19 percent to about 49 million individuals.\25\ 
Another study found that financial burdens had increased to the 
point that private health insurance coverage no longer provided 
adequate financial protection for low-income families.\26\
---------------------------------------------------------------------------
    \23\According to the Commonwealth Fund study, families are 
identified as underinsured if they had out-of-pocket medical spending 
that absorbed at least 10 percent of family income, or for low-income 
adults (200 percent below the federal poverty level), medical spending 
consumed at least 5 percent of family income.
    \24\Cathy Schoen et al, ``How Many are Underinsured? Trends Among 
U.S. Adults, 2003 and 2007,'' Health Affairs 27 no. 4 (2008).
    \25\J. Banthin and D. Bernard, ``Changes in Financial Burdens for 
Health Care: National Estimates for the Population Younger than 65 
Years, 1996 to 2003,'' JAMA (2006).
    \26\J. Banthin, P. Cunningham and D. Bernard. ``Financial Burdens 
of Health Care, 2001-2004,'' Health Affairs 27, no.1 (2008) at 188-195.
---------------------------------------------------------------------------
    In addition, many families have little room within their 
family budgets for large or unexpected out-of-pocket health 
care expenses. In 2003, an estimated 77 million Americans--
nearly two out of five adults--had difficulty paying medical 
bills.\27\ Even working age adults who were continually insured 
had problems paying their medical bills and carried medical 
debt as a result. Nearly half of all bankruptcies in the United 
States are related, in part, to health care expenses. And of 
those facing medical bankruptcies, roughly three-quarters had 
health insurance at the onset of their bankrupting illness.\28\
---------------------------------------------------------------------------
    \27\Michelle M. Doty, Jennifer N. Edwards, and Alyssa L. Holmgren, 
``Seeing Red: Americans Driven into Debt by Medical Bills,'' The 
Commonwealth Fund (Aug. 2005).
    \28\David Himmelstein, Elizabeth Warren, D. Thorne, and S. 
Woolhandler, ``Illness and Injury as Contributors to Bankruptcy,'' 
Health Affairs (2005).
---------------------------------------------------------------------------
    The risk of being underinsured or experiencing financial 
problems due to health spending varies not only by family 
income, but also by health status. According to Judy Feder, 
Senior Fellow at the Center for American Progress, ``health 
care affordability is particularly elusive for individuals with 
chronic illness and other conditions that require on-going, 
often costly, medical care.''\29\ Individuals who are older and 
have chronic conditions such as diabetes, heart disease, or 
arthritis, or have experienced a stroke, are more likely to 
spend a high proportion of their income on health expenses. If 
these individuals do not have an employer-sponsored health 
plan, or if they lose this coverage, their ability to purchase 
coverage in the non-group market is limited at best. The non-
group market systematically denies coverage, limits benefits, 
and charges excessive premiums to individuals with pre-existing 
conditions or those who are perceived to be at high-risk. 
Ironically, the people who are more likely to become sick--the 
very population that insurance is supposed to protect--are also 
more likely to be underinsured and face grave financial 
problems.
---------------------------------------------------------------------------
    \29\Judy Feder, Testimony before the Committee on Energy and 
Commerce Committee (hereinafter Feder) (Mar. 17, 2009).
---------------------------------------------------------------------------

The Consequences of being Uninsured or Underinsured

    Being uninsured makes it more likely that a person will not 
receive adequate medical care. Individuals without insurance 
often go without or delay care, and the care they do receive is 
likely to be lower quality than the care received by insured 
individuals. An estimated 18,000 to 22,000 Americans die each 
year because they do not have health coverage.\30\ The length 
of time a person goes without health insurance also makes a 
difference--people who are uninsured for at least a year report 
being in worse health than those uninsured for a shorter period 
of time.\31\ Finally, lack of coverage and coverage stability 
is particularly burdensome on the seriously and chronically 
ill, whose care is often delayed or denied when they cannot 
pay.\32\
---------------------------------------------------------------------------
    \30\``Insuring America's Health: Principles and Recommendations,'' 
Institute of Medicine (Jan. 14, 2004).
    \31\Id.
    \32\Institute of Medicine, ``Care Without Coverage: Too Little, Too 
Late'' (May 2002), available at: http:\\www.iom.edu/Object.File/Master/
4/160/Uninsured2FINAL.pdf
---------------------------------------------------------------------------

       HEALTH CARE COSTS AND SPENDING: THE COST OF DOING NOTHING

    H.R. 3200 ensures quality and affordable health care 
choices for all Americans while also controlling costs in a 
system in which costs have spiraled out of control. The United 
States spends over $2.4 trillion on health care each year.\33\ 
As noted earlier, health care expenditures in the United States 
constitute approximately 18 percent of the current Gross 
Domestic Product (GDP).\34\ If health care costs continue to 
grow at historical rates, the share of GDP devoted to health 
care in the United States is projected to reach 34 percent by 
2040.\35\
---------------------------------------------------------------------------
    \33\Supra note 9.
    \34\Executive Office of the President, Council of Economic 
Advisors, ``The Economic Case for Health Care Reform,'' available at 
http:\\www.whitehouse.gov/administration/eop/cea/
TheEconomicCaseforHealthCareReform/ (June 2009).
    \35\Id.
---------------------------------------------------------------------------

International Comparisons

    The United States devotes a far larger share of GDP to 
health care spending more than two times per person on health 
care than any other OECD (Organization for Economic Co-
operation and Development) country.\36\ While health care 
expenditures in the United States are about 18 percent of 
GDP\37\ the OECD reports that the next highest country was 
Switzerland--with 11.3 percent--and in most other high-income 
countries, the share was less than 10 percent.\38\
---------------------------------------------------------------------------
    \36\Marcia Angell Testimony before the Committee on Education and 
Labor Committee (hereinafter Angell) (Jun. 10, 2009).
    \37\Supra note 34.
    \38\Id.
---------------------------------------------------------------------------
    Despite outpacing other countries with investments in 
health care, the U.S. fails to produce better health outcomes 
in fundamental ways. OECD data shows that life expectancy in 
the United States is lower than in any other high-income 
country, as well as in many middle-income countries.\39\ 
Similarly, the infant mortality rate in the United States is 
substantially higher than that of other developed countries. 
While many factors other than health care expenditures may 
affect life expectancy and infant mortality rates--for example, 
demographics, lifestyle behaviors, income inequality, non-
health disparities, and measurement differences across 
countries\40\--the Council of Economic Advisors (CEA) has 
concluded that ``the fact that the United States lags behind 
lower spending countries is strongly suggestive of substantial 
inefficiency in our current system.''\41\ Indeed, according to 
estimates by the CEA based on the spending and outcomes in 
other countries, efficiency improvements in the U.S. health 
care system potentially could free up resources equal to 5 
percent of U.S. GDP.\42\
---------------------------------------------------------------------------
    \39\Id.
    \40\Robert Wood Johnson Foundation, Commission to Build a Healthier 
America, ``Beyond Health Care: New Directions to a Healthier America'' 
(Apr. 2009).
    \41\Supra note 34.
    \42\Id.
---------------------------------------------------------------------------
    Analyzing health care spending over time, the CEA also 
notes that while health care spending has increased in other 
countries as well, the spending by the U.S. has not yielded the 
same outcomes as other countries. In 1970, the United States 
devoted only a moderately higher fraction of GDP to health care 
than other high-income countries, whereas in 2009 the United 
States spends dramatically more.\43\ Yet, during that same 
period, life expectancy has actually risen less in the United 
States than in other countries.\44\ This data suggests that 
much of the increased U.S. spending is inefficient.\45\
---------------------------------------------------------------------------
    \43\Id.
    \44\Garber, Alan M., and J. Skinner, ``Is American Health Care 
Uniquely Inefficient?'' Journal of Economic Perspectives (2008) at 27-
50.
    \45\Supra note 34.
---------------------------------------------------------------------------

Cost of the Uninsured

    While the U.S. health care system currently leaves 47 
million Americans uninsured\46\ and approximately 25 million 
underinsured,\47\ the CEA projects that the number of uninsured 
could increase to 72 million by 2040.\48\ Such increases in the 
numbers of uninsured people will create additional 
uncompensated care costs, which include costs incurred by 
hospitals and physicians for the charity care they provide to 
the uninsured as well as bad debt such as unpaid bills.\49\ 
Both the federal government and state governments use tax 
revenues to pay health care providers for a portion of these 
costs through programs such as Disproportionate Share Hospital 
(DSH) payments and grants to Community Health Centers.\50\ In 
2008, total government spending to reimburse uncompensated care 
costs incurred by medical providers was approximately $42.9 
billion.\51\ The CEA projects that if the U.S. does not slow 
the real growth rate of health spending and a subsequent rise 
in the uninsured, the real annual tax burden of uncompensated 
care for an average family of four will rise from $627 in 2008 
to $1,652 (in 2008 dollars) by 2030.\52\
---------------------------------------------------------------------------
    \46\National Coalition on Health Care, available at: www.nchc.org/
facts/cost.shtml (2009).
    \47\``How Many Are Underinsured? Trends Among U.S. Adults, 2003 and 
2007,'' Commonwealth Fund (2008)
    \48\Supra note 34.
    \49\American Hospital Association, ``Uncompensated Hospital Care 
Fact Sheet'' (Nov. 2005), available at http:\\www.aha.org/aha/content/
2005/pdf/0511 UncompensatedCareFactSheet.pdf.
    \50\Hadley, Jack, J. Holahan, T. Coughlin, and D. Miller. 
``Covering the Uninsured in 2008: Current Costs, Sources of Payment, 
and Incremental Costs,'' Health Affairs (2008).
    \51\Id.
    \52\Supra note 34.
---------------------------------------------------------------------------

Costs to Individuals and Families

    As the cost of health care skyrockets, families and 
employers offering health insurance struggle to absorb the 
increased costs. In 2008, employer-based premiums increased by 
5 percent. That growth was even greater for small firms. On 
average, they incurred a premium increase of 5.5 percent, and, 
for those with 24 or fewer workers, their respective increase 
was 6.8 percent.\53\ Much of the increase in health care costs 
has been shifted onto workers. In 2008, the average annual 
premium for a family of four was $12,700, and workers 
contributed approximately $3,400 of that total which was 12 
percent more than the year before. Workers are now paying 
$1,600 more for family coverage than they did 10 years ago.\54\ 
Over the last decade, health care costs have risen on average 
four times faster than workers' earnings.\55\
---------------------------------------------------------------------------
    \53\The Henry J. Kaiser Family Foundation. Employee Health 
Benefits: 2008 Annual Survey, (Sept. 2008).
    \54\Angell.
    \55\See, National Coalition on Health Care, available at: 
www.nchc.org/facts/cost.shtml (2009).
---------------------------------------------------------------------------
    These dramatic increases in health care costs have serious 
implications for American households. Some economists believe 
that, over the long run, workers pay for the rising cost of 
health insurance through lower wages.\56\ To illustrate this 
relationship, the CEA has analyzed historical and projected 
average annual total compensation (measured in 2008 dollars), 
which includes wages as well as non-wage benefits such as 
health insurance.\57\ Their analysis indicates that health 
insurance premiums are growing more rapidly than total 
compensation in percentage terms, and as a result, an 
increasing share of total compensation that a worker receives 
goes to cover health insurance premiums.\58\ Moreover, the CEA 
notes that households with employer-sponsored health insurance 
could also be affected by rapid cost growth as employers shift 
to less generous plans with higher annual deductibles.\59\ It 
is important to note, however, that the wage stagnation 
experienced by workers over recent decades cannot be attributed 
solely to rising health care costs. For example, low-wage 
workers have experienced real wage declines in recent years 
despite few such workers having access to or participating in 
employment-based health insurance coverage.\60\ More economic 
dynamics are at work in the wage squeeze on workers, but rising 
health costs contribute to the downward pressure.
---------------------------------------------------------------------------
    \56\Pauly, Mark V., ``Health Benefits at Work: An Economic and 
Political Analysis of Employment-Based Health Insurance'' (1998).
    \57\Supra note 34 (relying on the 1996 to 2006 Medical Expenditure 
Panel Survey-Insurance Component).
    \58\Id.
    \59\Id.
    \60\Economic Policy Institute, ``Increasing Health Costs Can't 
Explain Earnings Dip for Low-Wage Workers,'' Economic Snapshot (April 
12, 2006).
---------------------------------------------------------------------------

H.R. 3200 Will Increase Standards of Living and Create New Jobs

    By slowing the growth in health care costs, standards of 
living will improve and resources will be freed to improve and 
expand the health care system. The CEA projects that slowing 
growth by 1.5 percentage points per year will save a family 
$2,600 by 2020.\61\ By 2030 that savings would be increased to 
nearly $10,000.\62\
---------------------------------------------------------------------------
    \61\Supra note 34.
    \62\Id.
---------------------------------------------------------------------------
    Furthermore, the CEA estimates that the coverage expansions 
that will result from health reform will produce a net benefit 
of approximately $100 billion a year, or about two-thirds of a 
percent of GDP.\63\ According to its analysis, health care 
reform will lower the unemployment rate in the United States 
and could add as many as 500,000 jobs on an annual basis.\64\ 
By producing a more healthy and productive workforce, health 
care reform will improve standards of living and help 
strengthen the U.S. economy.
---------------------------------------------------------------------------
    \63\Id.
    \64\Id.
---------------------------------------------------------------------------

Shared Responsibility & Employment-Based Health Care Insurance

    In order to control costs and expand access to quality 
affordable health care, everyone must be covered and employers, 
individuals and the government must share in this 
responsibility. Consistent with the minimum wage and overtime 
laws, H.R. 3200 creates a fundamental right to a minimum level 
of health care contribution and/or coverage through an 
employer. As noted earlier, two-thirds of Americans receive 
health coverage through an employer, and H.R. 3200 builds upon 
the current employer-based system by implementing a `pay or 
play' requirement.
    The employer responsibility to provide and/or contribute to 
the health care of its workers will stabilize the employer-
based health care system. Because the Employee Retirement 
Income Security Act of 1974 (ERISA) currently contains no 
requirement that an employer offer employee benefits, employers 
who do not offer health insurance to their workers gain an 
unfair economic advantage relative to those employers who do 
provide coverage, and millions of hard-working Americans and 
their families are left without health insurance. It is a 
vicious cycle because these uninsured workers turn to emergency 
rooms for health care which in turn increases costs for 
employers and families with health insurance. It is estimated 
that in 2008 premiums were about 8 percent or $1,100 higher due 
to this hidden cost shift.\65\
---------------------------------------------------------------------------
    \65\Ben Furnas and Peter Harbage, ``The Cost Shift from the 
Uninsured,'' The Center for American Progress (Mar. 2009).
---------------------------------------------------------------------------

Strengthening the Employer-Based System

    Millions of employers voluntarily decide to offer health 
benefits because it is in their economic interest. Employers 
are not taxed on their contributions to employees' health care, 
and these costs are deductible as a business expense.\66\ In 
addition, large employers can offer health care coverage at a 
much lower cost because they can negotiate with insurers and 
have a larger pool of employees to spread the risk. 
Furthermore, employers recognize that investments in health 
care can produce gains in employee health which means fewer 
missed days, higher productivity and better overall job 
satisfaction.
---------------------------------------------------------------------------
    \66\Paul Ginsburg, ``Employment-Based Health Benefits Under 
Universal Coverage,'' Health Affairs (May/June 2008) at 675.
---------------------------------------------------------------------------
    Despite the incentives to offer health coverage, 
skyrocketing health care costs make it difficult for employers, 
particularly small businesses, to offer comprehensive health 
insurance. As noted earlier, while approximately 63 percent of 
the under-65 population and their dependents have insurance 
through employment,\67\ the number of employers offering health 
care coverage has been declining over the last decade. The 
number of people getting health coverage through an employer 
dropped by 3 million between 2000 and 2007,\68\ largely due to 
increasing costs. In addition, the Center for American Progress 
projects that as a result of layoffs, approximately 14,000 
Americans lose their employer-sponsored coverage each day.\69\ 
Overall, since 1999 premiums have increased 120 percent and at 
a rate that is on average four times faster than workers' 
earnings.\70\
---------------------------------------------------------------------------
    \67\Supra note 10.
    \68\Id.
    \69\Center for American Progress (Feb. 2009), available at: 
http:\\www.americanprogressaction.org/issues/2009/03/health--
losses.html.
    \70\National Coalition on Health Care, ``Health Insurance Costs,'' 
(2009), available at: www.nchc.org/facts/cost.shtml
---------------------------------------------------------------------------
    However, even without an employer shared responsibility 
requirement, 86 percent of employers surveyed report that they 
will continue offering health care despite increasing 
costs.\71\ Many of these employers are large ones who use 
health care benefits as a means to recruit and retain 
employees. Health care benefits are ``highly valued by 
employees, and risk-averse employers may be reluctant to take 
advantage of the option of dropping coverage'' even though they 
can currently do so.\72\
---------------------------------------------------------------------------
    \71\Supra note 61.
    \72\Hacker at 10.
---------------------------------------------------------------------------
    H.R. 3200 generally will not change what many employers are 
already doing. Beginning in 2013, the bill requires employers 
already offering health insurance to make an offer to all full-
time employees and contribute 72.5 percent of the cost toward 
an individual policy and 65 percent toward a family policy. 
Today, employers on average contribute 83 percent toward the 
coverage of individual premiums and 71 percent toward the 
coverage of family premiums.\73\
---------------------------------------------------------------------------
    \73\``Employee Benefits in the United States, March 2008,'' Bureau 
of Labor Statistics (Aug. 7, 2008).
---------------------------------------------------------------------------
    The second phase of requirements under H.R. 3200 for 
existing employer health plans does not take effect until the 
end of 2018. At that time, in addition to making the required 
contribution amount, every employer-sponsored health plan will 
have to, at a minimum meet the essential benefit standards 
defined by the benefits committee, as well as satisfy the 
insurance reform standards specified in the bill. Employer 
health insurance plans will be required to be equivalent to no 
less than 70 percent of the actuarial value minus the cost 
sharing components of the essential benefit package. The 
majority of employers already meet this standard. According to 
the Congressional Research Service, the typical employer-
sponsored PPO has an estimated actuarial value between 80-84 
percent, while the typical employer-sponsored health savings 
account (HSA) and a qualified high deductible health plan 
(HDHP) has an estimated actuarial value of 76 percent, 
excluding contributions by an employer.\74\
---------------------------------------------------------------------------
    \74\Chris Peterson, ``Setting and Valuing Health Insurance 
Benefits,'' Congressional Research Service (May 29, 2009) at 3-4.
---------------------------------------------------------------------------
    While many employer plans already meet the bill's 
requirements, there are some notable omissions. For example, 10 
percent of employer plans do not offer mental health and 
substance use disorder benefits and many include caps on 
lifetime limits and out of pocket expenses. In these cases, 
employers will have over 8 years to modify their plans and meet 
the requirements. Finally, H.R. 3200 extends the same benefit 
and insurance reform standards in all new employer and HIE 
plans, so that individuals and families have access in either 
case to affordable quality health coverage.

Protecting Small Business

    For small business, health reform ``is their number one 
need.''\75\ Forty-percent report that high costs have a 
``negative effect on other parts of their business, such as 
high employee turnover or preventing business growth.''\76\ 
According to the Small Business Majority, a non-profit 
independent group representing 27 million small businesses, 
small businesses spend 18 percent more than large employers for 
health care coverage.\77\ The result is that in 2008, the 
percent of firms offering health insurance with three to nine 
employees dropped from 57 percent to 49 percent.\78\
---------------------------------------------------------------------------
    \75\John Arensmeyer, Testimony before the Committee on Education 
and Labor Committee, ``The Tri-Committee Draft for Health Care 
Reform,'' (hereinafter Arensmeyer)(Jun. 23, 2009) at 1.
    \76\Taking the Pulse on Main Street, ``Small Businesses, Health 
Insurance and Priorities for Reform (Jan. 2009).
    \77\Arensmeyer at 2.
    \78\Id.
---------------------------------------------------------------------------
    Small businesses have small purchasing pools and one of the 
biggest obstacles they face in securing affordable health 
coverage is the lack of bargaining power they have against the 
insurance companies. In addition, the administrative costs paid 
by small businesses can be up to 27 percent of premiums to pay 
for marketing and paperwork costs and underwriting.\79\
---------------------------------------------------------------------------
    \79\``The Economic Impact of Healthcare Reform on Small Business,'' 
Small Business Majority (Jun. 11, 2009) .
---------------------------------------------------------------------------
    LaShonda Young, a small business owner, testified to the 
Committee about the problems she has had in seeking coverage 
for her forty employees. She received eight bids and each was 
from the same insurance company. She testified her experience 
isn't unique, as there are only one or two health insurers in 
her area.\80\ She went on to testify that, ``it's been years 
since we've been able to afford group health insurance . . . we 
got quotes from a couple of different places, [the] quotes came 
in at about 13 percent of payroll. [We're] willing to pay our 
fair share but we just couldn't afford 13 percent . . . ''\81\ 
Even if she was able to afford the coverage, she knew that it 
wouldn't cover the pre-existing conditions of her employees for 
up to 18 months and there was no guarantee the costs would 
remain stable.\82\ As a result, small employers like Young are 
looking to other ways to help their employees find coverage on 
their own. Young testified that her company offers small 
stipends to employees to buy insurance on their own.
---------------------------------------------------------------------------
    \80\LaShonda Young, Testimony before the Committee on Education and 
Labor Committee, ``The Tri-Committee Draft for Health Care Reform,'' 
(hereinafter Young)(Jun. 23, 2009) at 2.
    \81\Young at 2.
    \82\Id.
---------------------------------------------------------------------------
    High health care costs also present an enormous obstacle 
for those trying to start or maintain a new business. While 
small businesses have traditionally played an essential role 
during prior economic recoveries, the high cost of health care 
is deterring entrepreneurs from starting a business in the 
first place. Louise Hardaway started her own business near 
Nashville, Tennessee. When attempting to get health care 
insurance she was quoted $12,800 a month to cover herself, her 
husband, business partner, and her business partner's spouse 
and child. Due to her inability to find affordable health care 
coverage Ms. Hardaway went out of business and went to work for 
another company where she could get health care.\83\
---------------------------------------------------------------------------
    \83\Simona Covel, ``Sick and Getting Sicker,'' Wall St. Journal 
(Jul. 23, 2009).
---------------------------------------------------------------------------
    Recognizing the economic reality for many small businesses, 
in addition to driving down health care costs overall, H.R. 
3200 contains numerous provisions such as tax credits and 
access to the HIE to help these employers provide coverage and 
alleviate their costs. In addition, the bill exempts employers 
from the pay or play requirement if they have payrolls of 
$250,000 or less. For employers with payrolls above $250,000 
who choose not to offer coverage and would rather pay a 
penalty, that penalty is phased-up so that only employers with 
payrolls over $400,000 must pay the 8 percent penalty.
    The Small Business Majority reports that small businesses, 
workers and the economy stand to save billions of dollars with 
the enactment of health care reform.\84\ Absent health care 
reform small businesses will spend $2.4 trillion in health care 
costs over the next ten years. With health reform, small 
businesses will save 36 percent of those costs, as much as $855 
billion. Without health reform, small businesses stand to lose 
$52.1 billion in profits due to high health care costs over the 
next ten years. Health reform will decrease these losses and 
save $29.2 billion. Reduced health care costs will allow 
employers to reinvest in their business and their workers. 
Without health reform, individuals working for small businesses 
could lose up to $834 billion in lost wages as employers pass 
increased health care costs onto their employees over the next 
ten years. Health reform could save workers over $300 billion 
over the next ten years.\85\ Reduced health care costs will 
allow employers to reinvest in their business and their 
workers.
---------------------------------------------------------------------------
    \84\Supra note 76.
    \85\Id.
---------------------------------------------------------------------------

        THE HEALTH INSURANCE EXCHANGE WILL HELP SMALL EMPLOYERS

    H.R. 3200 creates a health insurance exchange (HIE) for the 
uninsured and employees of small businesses to purchase health 
insurance in the initial years after enactment. Due to the 
disadvantages small businesses face when trying to purchase 
health care coverage on their own, both proponents and 
opponents of the bill believe that a health insurance exchange 
is essential for small business: ``a broad, well-functioning 
marketplace offering consistency, fairness and healthy 
competition will vastly improve the availability and 
affordability of coverage to small businesses and the self-
employed.''\86\ Furthermore, it ``can be a vehicle that 
facilitates and monitors the movement of the system toward 
achievements of many national health care reform goals.'' 
Eighty-percent of small business owners in a recent state 
survey stated they favor a health insurance pool that they can 
put their employees into to buy coverage.\87\
---------------------------------------------------------------------------
    \86\Arensmeyer at 4.
    \87\Id.
---------------------------------------------------------------------------
    A health insurance exchange is an organized marketplace 
where individuals and some employers can go to purchase health 
insurance. The HIE is advantageous to those looking to purchase 
insurance because it provides transparency when individuals and 
families shop for their health insurance. Currently, insurers 
are regulated by a patchwork of state laws. Beyond licensing 
requirements to sell insurance, private health insurance 
companies and health maintenance organizations (HMO) operate 
with considerable autonomy. The result is that policies can 
vary greatly and many policies leave people underinsured.
    The robust HIE will not only organize the marketplace but 
also include insurance reforms and consumer protections, 
administer affordability credits, and provide people with 
choice of plans. The HIE will require that insurers, both 
private and public, adhere to the same rules. To help consumers 
make educated decisions the Commissioner will conduct outreach 
and provide assistance to consumers. The Commissioner will 
ensure that information is readily available in plain language 
and is provided in a culturally and linguistically appropriate 
manner. Furthermore, qualified health benefits plans (QHBP) 
including those participating in the HIE will be required to 
comply with transparency requirements established by the 
Commissioner, including the accurate and timely disclosure of 
plan documents, plan terms and conditions, as well as 
information on cost-sharing and payments with respect to out-
of-network coverage, claims denials and other information to 
help educate consumers.
    In addition to monitoring and streamlining the insurance 
industry, the HIE will play a significant role in containing 
health care costs. Health care costs are comprised of both the 
underlying costs of providing health care services as well as 
the administrative costs related to the provisions of 
coverage.\88\ The HIE will require participating plans to offer 
standardized benefit packages which will increase the ability 
to compare plans and ``reinforce incentives for insurers to 
price premiums as competitively as possible.''\89\ Lower cost 
plans in the HIE will help those employers who ``play'' by 
putting their employees into HIE because they will be 
responsible for a set contribution amount regardless of the 
plan an employee choose.\90\ Furthermore, the affordability 
credits available to individuals in the HIE who do not enter 
the exchange with an employer contribution are tied to the 
average of the lowest three plans which will then incentivize 
individuals to choose low-cost plans. By the same token, 
insurers will be incentivized to offer low-cost plans in order 
to get more business.\91\
---------------------------------------------------------------------------
    \88\Linda Bloomberg and Karen Pollitz, ``Health Insurance 
Exchanges: Organizing Health Insurance Marketplaces to Promote Health 
Reform Goals'' (Apr. 2009).
    \89\Id.
    \90\However, an employer is always permitted to contribute an 
amount greater than the minimum should it choose.
    \91\Id.
---------------------------------------------------------------------------

Access & Cost Containment Through A Public Health Insurance Option

    The inclusion of a strong public health insurance option in 
the HIE will save over one hundred billion dollars and provide 
choice to millions of consumers who currently have little or no 
choice when looking for a health plan. Its inclusion in the HIE 
will promote value and innovation in the private health 
insurance industry by increasing competition. The result is 
that the public option will lower costs for consumers across 
the private market.
    The public health insurance option will provide access to 
meaningful choice, something many Americans have never had when 
searching for a health plan. Many areas only have one or two 
dominant insurance options that control the market and thus 
have no downward pressure on costs.\92\Furthermore, ``it is 
often in [these insurers'] interest to pay higher rates to key 
doctors and hospitals because they can pass on these costs to 
individuals and employers.''\93\ For insurers trying to enter a 
market, this practice makes it difficult for them to compete 
and reduce costs.
---------------------------------------------------------------------------
    \92\Hacker at 5.
    \93\Id.
---------------------------------------------------------------------------
    While the public option will be subject to the same 
standards as private plans, the public option can use 
administrative efficiencies to control costs. On average, 
private insurance overhead was about 11.7 percent of premiums 
which is significantly higher when compared to public insurers 
(Medicare is estimated at 3.6 percent and Medicaid at 6.8 
percent).\94\ In addition, because the public option is a 
health plan available nationwide it will have a broad reach and 
be able to obtain larger volume discounts and will not operate 
for profit.\95\ Accordingly, the public option in H.R. 3200 
will serve as a ``benchmark for private plans, a backup to 
allow consumers access to a good plan with broad access to 
providers in all parts of the country, and to serve as a cost-
control backstop.''\96\
---------------------------------------------------------------------------
    \94\John Holahan and Linda Blumberg, ``Can a Public Insurance Plan 
Increase Competition and Lower the Costs of Health Reform,'' Urban 
Institute (2009).
    \95\Hacker at 7.
    \96\Id.
---------------------------------------------------------------------------
    Ultimately, it will be up to consumers in the HIE to decide 
whether to enroll in the public option or a private plan. H.R. 
3200 intends to create a level playing field for both to 
compete. Consumers will be able to compare what each plan 
offers--private plans or the public option--and decide which 
plan serves them and their families best.\97\
---------------------------------------------------------------------------
    \97\Id.
---------------------------------------------------------------------------

Ensuring Access to Health Care Through Insurance Market Reforms

    Comprehensive insurance reforms are another critical 
element of health reform. Guaranteeing access to health care 
and protecting against medical debt largely depends on 
implementing comprehensive insurance reforms. About ``20 
percent of the population accounts for 80 percent of health 
spending;'' the ``sickest one-percent accounting for nearly 
one-quarter of health expenditures.''\98\ This uneven 
distribution of medical care creates incentives for insurance 
companies to avoid risk altogether rather than trying to spread 
it among the insured population.\99\ As a result, health 
insurers--particularly in the individual market--have adopted 
discriminatory, but not illegal, practices to cherry-pick 
healthy people and to weed out those who are not as 
healthy.\100\ These practices include: denying health coverage 
based on pre-existing conditions or medical history,\101\ even 
minor ones; charging higher, and often unaffordable, rates 
based on one's health; excluding pre-existing medical 
conditions from coverage; charging different premiums based on 
gender;\102\ and rescinding policies after claims are made 
based on an assertion that an insured's original application 
was incomplete.\103\ In addition, while ``state and federal 
laws give individuals the right to renew their health insurance 
coverage, guaranteed renewability provides no protection 
against rate increases.''\104\
---------------------------------------------------------------------------
    \98\Karen Pollitz, testimony before the Committee on Energy and 
Commerce, Subcommittee on Health (hereinafter Pollitz) (Mar. 17, 2009).
    \99\Linda Blumberg, testimony before the Committee on Ways And 
Means (April 22, 2009).
    \100\Mila Kofman, testimony before the Committee on Energy and 
Commerce, Subcommittee on ealth (hereinafter Koffman)(Mar. 17, 2009); 
Blumberg, supra 94.
    \101\See Fran Visco, testimony before the Committee on Education 
and Labor (June 22, 2009). Ms Visco testifying on behalf of the 
National Breast Coalition, stressed how no insurance or inadequate 
insurance has had a devastating effect on women diagnosed with breast 
cancer.
    \102\A 2008 report by the National Women's Law Center examined 
individual insurance policies in 47 states and the District of Columbia 
and found that most of the states engage in a practice called ``gender 
rating'' where insurance companies arbitrarily charge women and men 
different rates for individual insurance premiums. Specifically, they 
found that women under 55 are charged more for health insurance than 
men (at age 25, 4% to 45% more; at age 40, 4 to 48% more). In addition, 
the report discovered that the vast majority of individual policies do 
not cover maternity leave, and in 9 states and the District of 
Columbia, insurers can reject survivors of domestic violence and those 
who have had C-sections. See: Nowhere to Turn: How the Individual 
Insurance Market Fails Women, National Women's Law Center (2008).
    \103\Id, Pollitz, supra 98.
    \104\Id.
---------------------------------------------------------------------------
    Discrimination based on health, gender and other factors 
has severe economic consequences for those who have been unable 
to find affordable health coverage and for those who have 
coverage, but are under-insured.\105\ As noted earlier, these 
practices have resulted in about 57 million Americans having 
debt because of medical bills,\106\ and over 42 million of that 
number has some sort of medical coverage.\107\ Medical debt is 
now the leading cause of personal bankruptcy.\108\
---------------------------------------------------------------------------
    \105\Id; Pollitz, supra 98. While 47 million Americans have no 
health insurance at all, almost as many are underinsured.
    \106\Pollitz, supra 98, testified that ``when out-of-pocket 
spending for medical bills (not including premiums) exceeds just 2.5% 
of family income, patients become burdened by medical debt, face 
barriers to accessing care, and have problems paying other bills.''
    \107\Pollitz, supra 98.
    \108\David U. Himmelstein, Deborah Thorne, Elizabeth Warren, 
Steffie Woolhandler, Medical Bankruptcy in the United States, 2007, The 
American Journal of Medicine (2009) at 3, finding that in 2007, 62.1% 
of all bankruptcies in the United States were medical, compared with 8 
percent in 2001. See also: Pollitz, supra 98; Kofman, supra 100, both 
of whom testified that most medical bankruptcies are filed by insured 
people.
---------------------------------------------------------------------------
    A key element to health reform is to prohibit risk 
selection practices and to support those factors based on 
quality and efficiency. Where states have prohibited these 
discriminatory practices, consumers have benefitted. For 
example, since 1993, Maine requires insurers to provide health 
insurance to individuals or small businesses on a ``guarantee 
issue'' basis. In addition, it also has an ``adjusted community 
rating'' so that prices for policies are set based on ``the 
collective claims experience of anyone with a policy'' and not 
on any one individual's medical history.\109\
---------------------------------------------------------------------------
    \109\Kofman, supra 100.
---------------------------------------------------------------------------
    H.R. 3200 includes insurance market reforms ending 
discriminatory practices conducted by insurance companies. 
These reforms will apply both inside and outside the HIE to end 
the discriminatory practices currently practiced by insurance 
companies. The bill requires that all policies be sold on a 
guaranteed issue basis; prohibits insurers from excluding 
coverage based on pre-existing conditions; and prohibits 
insurers from charging higher rates based on health status, 
gender, or other factors. It would allow premiums to vary based 
only on age (no more than 2:1),\110\ geography and family size. 
In addition, the bill prohibits lifetime and annual limits on 
benefits so that families no longer face bankruptcy as a result 
of a serious medical illness.
---------------------------------------------------------------------------
    \110\Pollitz, supra 98, testified that age is ``a strong proxy for 
health status.''
---------------------------------------------------------------------------

                STRENGTHENING THE HEALTH CARE WORKFORCE

    As millions of new people gain access to health care 
coverage, H.R. 3200 recognizes that significant investments in 
the health care workforce are needed. There is mounting 
evidence that the nationwide healthcare workforce shortage is 
accelerating. The Health Resources and Services Administration, 
within the Department of Health and Human Services, reported in 
January of this year that twenty states were experiencing 
scarcities of physicians and nurses.\111\ In particular, 
dramatic shortages in the health care workforce are seen in 
primary care and nursing.
---------------------------------------------------------------------------
    \111\See, http:\\newsroom.hrsa.gov/insidehrsa/jan2009
---------------------------------------------------------------------------
    Indeed, demand for primary care physicians outpaces supply 
more than in other specialty group.\112\ Specifically, the 
Association of American Medical Colleges (AAMC) estimates that 
primary care accounts for 37 percent of the total projected 
shortage in 2025.\113\ Primary care physicians are leaving the 
practice of medicine sooner than other physician specialties at 
the same time that fewer medical students and residents are 
choosing to make the practice of general internal medicine and 
primary care their central career goal.\114\ For many students, 
the costs of medical education are so high that they feel 
compelled to specialize in more lucrative subspecialties in 
order to manage their debt.\115\
---------------------------------------------------------------------------
    \112\``The Complexities of Physician Supply and Demand: Projections 
Through 2025,'' Association of American Medical Colleges (AAMC) (Nov. 
2008).
    \113\Id.
    \114\Lipner RS, Bylsma WH. Arnold GK, Fortna GS, Tooker J. Cassel 
CK. Who is maintaining certification in internal medicine-and why? A 
national survey 10 years after initial certification. Ann Intern Med. 
(2005)
    \115\Pear, Robert. ``Shortage of Doctors an Obstacle to Obama 
Goals.'' The NY Times (Apr. 26, 2009).
---------------------------------------------------------------------------
    While registered nurses constitute the largest single 
healthcare profession in the United States, there is a 
worsening nursing shortage.\116\ In 2000, the national supply 
of full time registered nurses was estimated at 1.89 million 
while the demand was estimated at 2 million, a shortage of 
110,000 nurses.\117\ Studies published in both The New England 
Journal of Medicine and The Journal of the American Medical 
Association confirms that the shortage of registered nurses is 
influencing the delivery of health care in the United States 
and negatively affecting patient outcomes.\118\
---------------------------------------------------------------------------
    \116\See, Henry J. Kaiser Family Foundation, ``Addressing the 
Nursing Shortage'' (Jun. 2008).
    \117\Id.
    \118\Id.
---------------------------------------------------------------------------
    The current nursing shortage is a product of several trends 
including: a diminishing pipeline of new students to nursing, a 
decline in RN earnings relative to other career options, an 
aging nursing workforce, low job satisfaction and poor working 
conditions that contribute to high attrition rates.\119\ 
Compounding these problems is the fact that nursing colleges 
and universities across the country are struggling to expand 
enrollment to meet the rising demand for nursing care. 
According to an American Association of Colleges of Nursing 
report, nursing schools turned away 49,948 qualified applicants 
from baccalaureate and graduate nursing programs in 2008 due to 
insufficient number of faculty, clinical sites, classroom 
space, clinical preceptors, and budget constraints.\120\
---------------------------------------------------------------------------
    \119\Id.
    \120\See, American Association of Colleges of Nursing, ``Enrollment 
and Graduations in Baccalaureate and Graduate programs in Nursing 
(2008-2009), available at: www.acne.nche.edu/IDS.
---------------------------------------------------------------------------
    The shortage of health care workers in this country 
disproportionately impacts those Americans residing in rural 
areas. The National Health Service Corps (NHSC) was established 
in the Emergency Health Personnel Act of 1970 (P.L. 91-623) to 
improve the distribution of health workers in underserved rural 
areas by providing scholarship support to students in qualified 
medical professions in exchange for a period of service in a 
Health Professional Shortage Area (HPSA).
    Administered by the Health Resources and Services 
Administration, in 2008, 14,000 students applied to the program 
for financial assistance. However, the Agency was only budgeted 
to grant one of every seven requests.\121\
---------------------------------------------------------------------------
    \121\See, http:\\newsroom.hrsa.gov/insidersa/jan2009.
---------------------------------------------------------------------------
    H.R. 3200 includes significant investments in the health 
care workforce to directly address the shortages outlined. The 
legislation provides resources to help train more primary care 
physicians as well as registered nurses. It puts into place 
incentives to encourage more people to become doctors and 
nurses, particularly in rural areas. Specifically, the bill 
increases funding for the National Health Service Corps in 
order to expand scholarships and loans for health professionals 
that work in shortage professions and areas. In addition, it 
creates an advisory committee on health workforce evaluation to 
assess the adequacy and appropriateness of the health 
workforce, and to make recommendations to the Secretary of 
Health and Human Services on federal workforce policies to 
ensure the health workforce is meeting the nation's needs.

                   V. Section-by-Section Summary\122\

---------------------------------------------------------------------------
    \122\This section-by-section summary is based in part on a summary 
initially prepared by the Congressional Research Service elaborated 
upon to reflect the views of the Committee.
---------------------------------------------------------------------------

                               Division I


 Title I--Protections and Standards for Qualified Health Benefits Plans


                     Subtitle A--General Standards


Sec. 100. Purpose; Table of Contents of Division; General Definitions

            Purpose
    The purpose of this division is to provide affordable, 
quality health care for all Americans and reduce the growth in 
health care spending. In addition, this division achieves this 
purpose by building on what works in today's health care 
system, while repairing the aspects that are broken. Insurance 
reforms that this division encompasses are:
           Enacting insurance market reforms
           Creating a new Health Insurance Exchange, 
        with a public health insurance option alongside private 
        plans
           Including sliding scale affordability 
        credits
           Initiating shared responsibility among 
        workers, employers, and the government
    This division institutes health delivery system reforms 
both to increase quality and to reduce growth in health 
spending so that health care becomes more affordable for 
businesses, families, and government.
            General Definitions (Created within this Act)
     Acceptable Coverage--qualified health benefits 
plan coverage, coverage under a grandfathered health insurance 
coverage or current group health plan, Medicare Part A, 
Medicaid, Military Health System, coverage under Veteran's 
Health Care Program (VA), and other coverage's the Secretary of 
HHS in coordination with the Health Choices Commissioner sees 
fit.
     Basic Plan--a plan that offers the essential 
benefits package's minimum requirements to be a qualified 
health benefits plan.
     Cost-sharing--includes deductibles, coinsurance, 
copayments, and similar charges but does not include premiums 
or any network payment differential for covered services or 
spending for non-covered services.
      Employment-Based Health Plan--the term given to 
group health plans (as defined in section 733(a)(1) of ERISA--
(as an employee welfare benefit plan to the extent that plan 
provides medical care to employees or their dependents, either 
directly, through insurance or otherwise)), and is comprised of 
federal and state government plans, tribal plans and church 
plans. Following an amendment at Committee, this term was also 
defined as excluding TRICARE.
      Enhanced Plan--a plan that offers, in addition to 
the level of benefits under a basic plan, a lower level of 
cost-sharing equivalent to approximately 85 percent of the 
actuarial value of the benefits provided.
     Essential Benefits Package--health benefits 
coverage, consistent with the standards set forth by the 
Secretary no later than 18 months after enactment of this bill.
     Health Benefits Plan--health insurance coverage 
and a group health plan, including the public health insurance 
option.
     Health Insurance Exchange--created by this bill to 
facilitate access of individuals and employers, through a 
transparent process, to a variety of choices of affordable, 
quality health insurance coverage, including a public health 
insurance option.
     Premium Plan--a plan that offers, in addition to 
the level of benefits under a basic plan, a lower level of 
cost-sharing equivalent to approximately 95 percent of the 
actuarial value of the benefits provided.
     Premium Plus Plan--a premium plan that also offers 
additional benefits, such as oral health and vision care, all 
of which is approved by the Commissioner.
     Qualified Health Benefits Plan (QHBP)--a health 
benefits plan that meets the requirements set forth in Title I 
(by the Secretary) including the public health insurance 
option.
     QHBP Offering Entity--an entity can be any of the 
following: a health benefits plan (that is a group health plan) 
in which the employer is the main source of financing, health 
insurance coverage which the insurance issuer is offering the 
coverage, the public health insurance option, a non-federal 
government plan established by the State or political 
subdivision of a State, and a federal government plan.
     Public Health Insurance Option--a public plan 
(only available through the Health Insurance Exchange) with 
payment rates established by the Secretary. The public option 
would be required to offer basic, enhanced, and premium plans, 
and would be allowed to offer premium-plus plans. Payment rates 
for prescription drugs not covered by Medicare part A or B will 
be covered by the public option at prices negotiated by the 
Secretary.
     Service Area, Premium Rating Area--with respect to 
health insurance coverage: (1) if not within the Health 
Insurance Exchange, an area established by a QHBP offering 
entity of such coverage in accordance with applicable state law 
or (2) within the Health Insurance Exchange, an area 
established by such entity in accordance with state law and 
applicable rules set forth by the Commissioner for exchange-
participating health benefits plans.
     ``State''--given term for purposes of the Medicaid 
program, but only includes the 50 states and the District of 
Columbia.
     Y1, Y2, etc.--2013, 2014, etc.

Sec. 101. Requirements Reforming Health Insurance Marketplace

            Current Law
    Regulation of the private health insurance market is 
primarily done at the state level. State regulatory authority 
is broad in scope and includes requirements related to the 
issuance and renewal of coverage, benefits, rating, consumer 
protections, and other issues. Federal regulation of the 
private market is more narrow in scope and applicable mostly to 
employer-sponsored health insurance (i.e., through the Employee 
Retirement Income Security Act of 1974 (ERISA)).
            Proposed Law
    This provision would require ``qualified health benefits 
plans'' (QHBPs) to meet the new federal health insurance 
standards specified in Subtitles B (relating to affordable 
coverage), C (relating to essential benefits) and D (relating 
to consumer protection) of Title I. The section also provides 
terminology for the phrases ``enrollment in employment-based 
health plans;'' and ``individual and group health insurance 
coverage.''
    This provision also includes a Sense of Congress that the 
final bill must meaningfully address the health care needs of 
the territories.

Sec. 102. Protecting the Choice to Keep Current Coverage

            Current Law
    See description under Sec. 101.
            Proposed Law
    ``Grandfathered health insurance coverage'' would be 
defined as individual health insurance coverage that is in 
effect before the first day of 2013, as long as the insurance 
carrier does not (1) enroll new individuals on or after the 
first day of 2013 (would not affect subsequent enrollment of a 
dependent); (2) change any terms or conditions of the 
individual coverage, except as required by law; and (3) vary 
the percentage increase in premiums for a risk group of 
enrollees without changing the premium for all enrollees in the 
same risk group at the same rate, as specified by the 
Commissioner. The Commissioner would establish a five-year 
grace period beginning in 2013 for existing group health plans 
to transition to the new federal health insurance standards 
applied to QHBPs. The grace period would not apply to limited 
benefits plans specified in the provision, such as dental only, 
vision only, flexible spending arrangements, and others.
    Individual health insurance coverage that is not 
grandfathered, may only be offered after the first day of 2013 
as an Exchange-plan. Excepted benefits (e.g., accident or 
disability insurance) could be offered as long as they are 
offered and priced separately from health insurance coverage. 
New group health plans would have to comply with this Act on 
2013.
    For purposes of the individual mandate (established under 
title III of Division A), an individual would be required to 
have ``acceptable coverage.'' In order for an individual health 
insurance policy to be considered acceptable coverage, the 
policy would be either grandfathered health insurance coverage 
or offered through the HIE (established under title II of 
Division A) or otherwise deemed or determined to be acceptable 
coverage under the bill. Group health coverage, including group 
health coverage consisting of a consumer-directed plan, 
provided during the grace period would be considered acceptable 
coverage.
    Section 102(b)(3), providing an exception for treating 
consumer-directed health plans and arrangements as acceptable 
coverage, was added by an amendment which originally called for 
a ``permanent'' exception. The word ``permanent'' was dropped 
from the amendment by unanimous consent, as Members of the 
Committee agreed that such exception for treating consumer-
directed health plans as acceptable coverage should only be 
effective during the five-year grace period, not permanently.

    Subtitle B--Standards Guaranteeing Access to Affordable Coverage


Sec. 111. Prohibiting Pre-Existing Condition Exclusions

            Current Law
    The Health Insurance Portability and Accountability Act of 
1996 (HIPAA), which amended ERISA, limits the duration that 
issuers in the group market may exclude coverage for pre-
existing health conditions for ``HIPAA eligible'' individuals, 
among other provisions. Group plans may impose pre-existing 
condition exclusions for no longer than 12 months (18 months in 
the case of a late enrollee), and must decrease that exclusion 
period by the number of months an enrollee had prior 
``creditable coverage.'' HIPAA outright prohibits issuers in 
the individual market from excluding coverage for pre-existing 
conditions for HIPAA eligibles.
    All states require health issuers to reduce the period of 
time when coverage for pre-existing health conditions may be 
excluded, in compliance with HIPAA. As of January 2009 in the 
small group market, 21 states had pre-existing condition 
exclusion rules that provided consumer protection above the 
federal standard. And as of December 2008 in the individual 
market, 42 states limit the period of time when coverage for 
pre-existing health conditions may be excluded for non-HIPAA 
eligible enrollees in that market.
            Proposed Law
    This provision would create a uniform minimum standard 
prohibiting a qualified health benefits plan from excluding 
coverage for pre-existing health conditions, or otherwise 
limiting or conditioning such coverage with respect to an 
individual or dependent based on any health status-related 
factors. Such factors include health status, medical condition 
(including both physical and mental illnesses), claims 
experience, receipt of health care, medical history, genetic 
information, evidence of insurability (including conditions 
arising out of acts of domestic violence) and disability.

Sec. 112. Guaranteed Issue and Renewal for Insured Plans

            Current Law
    HIPAA requires that coverage sold to small groups (2-50 
employees) must be sold on a guaranteed issue basis. That is, 
the issuer must accept every small employer that applies for 
coverage. (Guaranteed issue rules do not address premiums.) 
HIPAA also guarantees that each issuer in the individual market 
make at least two policies available (``guaranteed 
availability'') to all HIPAA eligible individuals. In addition, 
HIPAA guarantees renewal or continuation of group coverage at 
the option of the plan sponsor (e.g., employer) and individual 
coverage at the option of the individual, with some exceptions. 
Insurers may not renew coverage under specified circumstances, 
such as nonpayment of premiums or fraud.
    All states require issuers to offer policies to firms with 
2-50 workers on a guaranteed issue basis, in compliance with 
HIPAA. As of January 2009 in the small group market, 13 states 
also require issuers to offer policies on a guaranteed issue 
basis to self-employed ``groups of one.'' And as of December 
2008 in the individual market, 15 states require issuers to 
offer some or all of their insurance products on a guaranteed 
issue basis to non-HIPAA eligible individuals.
            Proposed Law
    This provision would require issuers to offer all health 
insurance coverage on a guaranteed issue and renewal basis 
beginning in 2013, whether offered through the HIE (established 
under Subtitle A of Title II), through any employment-based 
health plan, or otherwise. Rescissions of coverage would be 
prohibited, except in cases of fraud.

Sec. 113. Insurance Rating Rules

            Current Law
    There are no federal rating rules applicable to the private 
health insurance market. Most states currently impose rating 
rules on insurance carriers in the small group and individual 
markets. Existing state rating rules restrict an insurer's 
ability to price insurance policies according to the risk of 
the person or group seeking coverage, and vary from state to 
state. Such restrictions may specify the case characteristics 
(or risk factors) that may or may not be considered when 
setting a premium, such as age. The spectrum of existing state 
rating limitations ranges from pure community rating, to 
adjusted (or modified) community rating, to rate bands, to no 
restrictions. Pure community rating means that premiums cannot 
vary based on any characteristic related to a person's or 
group's risk, including health. Adjusted community rating means 
that premiums cannot vary based on health, but may vary based 
on other key risk factors, such as gender. Rate bands allow 
premium variation based on health, but such variation is 
limited according to a range specified by the state. Moreover, 
both adjusted community rating and rate bands allow premium 
variation based on any other permitted case characteristic, 
such as industry. And for each characteristic, the state 
typically specifies the amount of allowable variation. As of 
January 2009 in the small group market, one state has pure 
community rating rules, eleven have adjusted community rating 
rules, and 35 have rate bands. As of December 2008 in the 
individual market, two states have pure community rating rules, 
five have adjusted community rating rules, and eleven have rate 
bands.
    There are no federally-established rating areas in the 
private health insurance market. However, some states have 
enacted rating rules in the individual and small group markets 
that include geographic location as a factor on which premiums 
may vary. In these cases, the state has established rating 
areas. Typically, states use counties or zip codes to define 
those areas.
            Proposed Law
    This provision would impose new federal rating rules on 
qualified health benefits plans. QHBP premiums would vary only 
by age (by no more than a 2:1 ratio within age categories 
specified by the Commissioner (established under Sec. 141)), 
premium rating area (as permitted by state regulators or, in 
the case of an Exchange plan, as specified by the 
Commissioner), and family enrollment (as specified under State 
law and consistent with Commissioner rules).
    The Commissioner, in coordination with the Secretaries of 
Health and Human Services (HHS) and Labor, would conduct a 
study of the large group market to examine (1) characteristics 
of employers who purchase fully-insured health insurance 
products and employers who self-fund health benefits, including 
characteristics related to bearing risk and solvency, and (2) 
the extent to which rating rules cause adverse selection in the 
large group market or encourage small and mid-size employers to 
self-insure health benefits. The Commissioner would submit this 
report to Congress and the applicable agencies no later than 18 
months after enactment, and include any recommendations to 
ensure that the law does not provide incentives for small and 
mid-size employers to self-insure or create adverse selection 
in the risk pools of large group insurers and self-insured 
employers.

Sec. 114. Nondiscrimination in Benefits

            Current Law
    HIPAA established federal rules regarding non-
discrimination based on health status-related factors. It 
prohibits group issuers from establishing rules for eligibility 
and premium contributions based on health status-related 
factors. Those factors include health status, medical condition 
(including both physical and mental illnesses), claims 
experience, receipt of health care, medical history, genetic 
information, evidence of insurability (including conditions 
arising out of acts of domestic violence) and disability. In 
addition, the Genetic Information Nondiscrimination Act of 2008 
prohibits issuers in the individual health insurance market 
from establishing eligibility rules (including continued 
eligibility) based on an individual's genetic information, and 
the Paul Wellstone and Pete Domenici Mental Health Parity and 
Addiction Equity Act of 2008 establishes that if an employer 
provides mental health benefits there must be parity with 
physical health benefits.
            Proposed Law
    This provision would require QHBPs to comply with non-
discrimination standards regarding health benefits or benefit 
structures established by the Commissioner, building on 
existing federal non-discrimination rules in ERISA, the Public 
Health Service Act (PHSA), and the Internal Revenue Code of 
1986. Existing mental health parity rules, apply to QHBPs, 
regardless of whether coverage is offered in the individual or 
group market.

Sec. 115. Ensuring Adequacy of Provider Networks

            Current Law
    HIPAA established special rules for network plans. It 
allows small group issuers to (1) limit the employers that 
apply for coverage to those firms with eligible individuals who 
live or work in the network service area, and (2) deny coverage 
to small employers if the issuer demonstrates (if required) to 
the State that it has limited provider capacity due to 
obligations to existing enrollees and it is applying this 
decision uniformly without regard to claims experience or 
health status-related factors. HIPAA also prohibits a small 
group issuer that has denied coverage in any service area to 
offer small group coverage in that area for 180 days after the 
denial.
            Proposed Law
    This provision would require QHBPs that use provider 
networks to meet provider network standards that may be 
established by the Commissioner to ensure the adequacy of 
networks, and transparency in the cost-sharing differences 
between in- and out-of-network coverage. The term ``provider 
network'' means the providers with respect to covered benefits, 
treatments, and services available under a health benefit plan.

Sec. 116. Ensuring Value and Lower Premiums

            Current Law
    Medical loss ratio is the share of total premium revenue 
spent on medical claims. Medigap insurance policies are private 
supplemental health care policies that Medicare beneficiaries 
can purchase to help cover some items, services, and cost 
sharing not covered under Medicare. Medigap plans are required 
to have a minimum medical loss ratio of 65 percent for 
individual policies and 75 percent for group policies. In 
addition, most states impose medical loss ratios or related 
requirements on insurers in the individual and/or small group 
health insurance markets.
            Proposed Law
    This provision would require a QHBP to comply with a 
medical loss ratio standard to be determined by the 
Commissioner but not less than 85 percent. For any QHBP that 
does not meet such a standard, it would be required to provide 
rebates to enrollees, in a manner specified by the 
Commissioner, in sufficient amounts to meet such a loss ratio. 
To establish the medical loss ratio standard, the Commissioner 
would build on the definition and methodology, developed by the 
HHS Secretary under Section 161, for determining how to 
calculate such a ratio. The methodology would set the highest 
ratio possible to ensure adequate QHBP participation, 
competition both in and out of the HIE, and value for consumers 
so that their premium contributions are used for medical 
claims.

Sec. 117. Consistency of costs and coverage under qualified health 
        benefits plans during plan year

    This provision would prohibit insurance companies from 
changing the coverage or costs of a health plan mid-year except 
if the costs are lowered and/or the coverage is increased.

    Subtitle C--Standards Guaranteeing Access to Essential Benefits


Sec. 121. Coverage of Essential Benefits Package

            Current Law
    There are limited federal benefit mandates for health 
insurance. These standards were added to the Health Insurance 
Portability and Accountability Act of 1996 (HIPAA), and are 
described in the discussion of Section 122, below.
            Proposed Law
    This provision would require a ``qualified health benefits 
plans (QHBP)'' to cover at least an ``essential benefit 
package.'' QHBPs could be offered in or outside of an Exchange. 
QHBPs offered outside of an Exchange would be allowed to offer 
additional benefits beyond those specified in the essential 
benefits package. For QHBPs offered through the Exchange, a 
plan offering a premium-plus level of benefits (established 
under Section 203) could provide additional benefits.
    The requirements under Division A would not affect the 
offering of limited-purpose benefit plans, including policies 
covering dental or vision treatment, long-term care, Medicare 
supplement policies, workers' compensation, and other similar 
benefits, if such benefit plans are offered under a separate 
policy, contract, or certificate of insurance.
    A QHBP would not be allowed to impose coverage restrictions 
(except cost sharing) unrelated to the clinical appropriateness 
of the health care items and services.

Sec. 122. Essential Benefit Package Defined

            Current Law
    Federally mandated benefits. Laws are found in the Employee 
Retirement Income Security Act (ERISA--covering employer-
sponsored plans), the Public Health Service Act (PHSA--covering 
insurance plans and state and local government plans), and the 
Internal Revenue Code (IRC--covers Church plans in certain 
circumstances).
    Those mandates include:
     The Paul Wellstone and Pete Domenici Mental Health 
Parity and Addiction Equity Act of 2008 established that 
employers who offer mental health and substance use disorder 
benefits must offer them in an equal manner as physical health 
benefits are offered. The Newborns' and Mothers' Health 
Protection Act of 1996 (NMHPA) requires plans that offer 
maternity coverage to pay for at least a 48-hour hospital stay 
following childbirth (96-hour stay in the case of a cesarean 
section).
     The Women's Health and Cancer Rights Act of 1998 
contains protections for patients who elect breast 
reconstruction in connection with a mastectomy. For plan 
participants and beneficiaries receiving benefits in connection 
with a mastectomy, plans offering coverage for a mastectomy 
must also cover reconstructive surgery and other benefits 
related to a mastectomy.
     The Genetic Information Nondiscrimination Act of 
2008 (GINA) prohibits discrimination based on genetic 
information by health insurers and employers. GINA strengthens 
and clarifies existing HIPAA nondiscrimination and portability 
provisions. Broadly, GINA prohibits health insurers from 
engaging in three practices: (1) using genetic information 
about an individual to adjust a group plan's premiums, or, in 
the case of individual plans, to deny coverage, adjust 
premiums, or impose a preexisting condition exclusion; (2) 
requiring or requesting genetic testing; and (3) requesting, 
requiring, or purchasing genetic information for underwriting 
purposes.
     Michelle's Law ensures that dependent post 
secondary education students who take a medically necessary 
leave of absence do not lose health insurance coverage. The law 
provides that a group health plan may not terminate a college 
student's health coverage simply because the student takes a 
medically necessary leave of absence from school or changes to 
part-time status. The leave of absence must be medically 
necessary, begin while the student is suffering from a serious 
illness or injury and would otherwise result in a loss of 
coverage.
    Similarly, the Advisory Committee on Immunization Practices 
(ACIP), administered by the Centers for Disease Control and 
Prevention (CDC), reviews scientific evidence and makes 
recommendations to the Secretary and the CDC Director for the 
routine administration of vaccines to children, adolescents, 
and adults in the U.S. civilian population. The ACIP is not 
explicitly authorized; rather, it is based in general 
authorities of the Secretary in Titles II and III of the PHSA.
            Proposed Law
    This provision would require the essential benefits package 
to cover specified items and services, limit cost sharing, 
prohibit annual and lifetime limits on covered services, ensure 
the adequacy of provider networks, and be equivalent (as 
certified by the Office of the Actuary of the Centers for 
Medicare and Medicaid Services) to the average prevailing 
employer-sponsored coverage.
    The essential benefits package would be required to cover 
the following items and services:
           Hospitalization;
           Outpatient hospital and clinic services, 
        including emergency department services;
           Services of physicians and other health 
        professionals;
           Services, equipment, and supplies incident 
        to the services of a physician or health professional 
        in appropriate settings;
           Prescription drugs;
           Rehabilitative and ``habilitative'' services 
        (i.e., services to maintain the physical, intellectual, 
        emotional, and social functioning of developmentally 
        delayed individuals);
           Mental health and substance use disorder 
        services;
           Preventive services, include those graded 
        ``A'' or ``B'' by the Task Force on Clinical and 
        Preventive Services, as well as certain other substance 
        abuse and mental health services, and those vaccines 
        recommended by the Director of the CDC;
           Maternity care;
           Well baby and well child care and oral 
        health, vision, and hearing services, equipment, and 
        supplies, as defined under Section 1905(r) of the 
        Social Security Act, for those under age 21; and
           Durable medical equipment, prosthetics, 
        orthotics and related supplies.
    The Committee recognizes that historically, insurers have 
not covered medical services addressing a range of women's 
health needs, resulting in high out-of-pocket costs for medical 
services, such as maternity care and preventive screenings. 
Women have a variety of essential health needs throughout their 
lifetimes. Therefore, the Committee intends that the bill 
require the basic benefits package include the full range of 
medical services for women's unique health needs, at all stages 
of life, including, but not limited to, maternity care, 
preventive screenings such as mammograms, annual gynecological 
exams, diagnostic, routine care, and recommended treatments.
    The Committee believes that medically necessary evidence-
based behavioral intervention services, including those 
provided to individuals with autism, are included within the 
ambit of section 122(b) of the bill.
    The essential benefits package would be subject to various 
requirements concerning cost-sharing. The package would be 
required to provide preventive items and services without cost-
sharing. The annual out-of-pocket limit in 2013 would be $5,000 
for an individual and $10,000 for a family. These limits would 
be annually adjusted for inflation using the Consumer Price 
Index (CPI). To the extent possible, the Commissioner would 
establish cost-sharing levels using copayments (a flat dollar 
fee) and not coinsurance (a percentage fee). Cost-sharing would 
result in coverage equal to approximately 70 percent of the 
actuarial value of the benefits if there were no cost-sharing 
imposed.

Sec. 123. Health Benefits Advisory Committee

            Current Law
    None.
            Proposed Law
    A Health Benefits Advisory Committee (HBAC) would be 
established to recommend covered benefits and the essential, 
enhanced, and premium plans. The HBAC would be chaired by the 
Surgeon General. The HBAC membership would be comprised of
           Nine members, appointed by the President, 
        who are neither federal employees nor officers;
           Nine members, appointed by the Comptroller 
        General, who are neither federal employees nor 
        officers; and
           An even number, up to eight members, 
        appointed by the President, who are federal employees 
        and officers.
    The initial appointments would be made within 60 days of 
enactment. Each HBAC member would serve a three-year term, 
except the terms of the initial appointments would be adjusted 
to provide for staggered years of appointment. The members 
would reflect the interests of the many diverse groups of 
stakeholders so that no single interest would unduly influence 
the HBAC's recommendations. At a minimum, committee membership 
would reflect educated patients or consumer advocates, 
providers, employers, labor, health insurance issuers, experts 
in health care and delivery, experts in health disparities, and 
government agencies. In addition, at least one HBAC member 
would be a practicing physician or health professional, and 
another member would be an expert on children's health. At 
least one member must be an expert on the scientific evidence 
and clinical practice of integrative medicine.
    The HBAC's recommendations to the Secretary on the 
essential benefits package (as defined in Section 122), cost-
sharing levels for the enhanced plans and premium plans (as 
defined in Section 203), and periodic updates of the package 
would be required to incorporate innovation in health care. The 
HBAC members would also consider how the package would reduce 
health disparities, would take into account integrative 
medicine, and would allow for public input as part of 
developing its recommendations. The HBAC's initial benefit 
recommendations must be made to the Secretary within one year 
of enactment.
    In developing standards for the enhanced and premium plans, 
the HBAC would be required to calculate cost-sharing such that 
the enhanced plan would have benefits that are actuarially 
equivalent to about 85 percent of the actuarial value of the 
benefits provided in the essential benefits package, and the 
premium plans would have benefits that are actuarially 
equivalent to about 95 percent of the actuarial value of the 
benefits provided in the essential benefits package.
    The Committee intends that, in developing its 
recommendations regarding benefit standards, the Health 
Benefits Advisory Committee shall take into account the special 
characteristics of group health plans that are multiemployer 
plans as defined in section 3(37) of the Employee Retirement 
Income Security Act and the impact of the recommendations on 
such plans. Among the special characteristics to be considered 
is that these plans are funded, and their costs borne, by the 
workers who tradeoff wages for employer contributions, that a 
plan's income fluctuates with the availability of covered work, 
and that workers are equally represented on the plans' boards 
of trustees who design the rules and benefit programs.
    HBAC members would serve without pay, but would receive 
federal travel expenses, including per diem expenses. In 
addition, the HBAC would be subject to the Federal Advisory 
Committee Act although the members would not become Federal 
employees.
    The Secretary would be required to publish all 
recommendations developed pursuant to this Section in the 
Federal Register and on the HHS website.
    Following an amendment at Committee, this provision would 
also instruct the Health Benefits Advisory Committee to examine 
current state laws and to seek input from the states as it 
forms its recommendations for the federal benefits standards.

Sec. 124. Process for Adoption of Recommendations; Adoption of Benefit 
        Standards

            Current Law
    None.
            Proposed Law
    This Section proposes a timeline by which the Secretary 
must choose whether to adopt the recommendations of the HBAC 
established under Section 123 of this bill. Within 45 days of 
receiving the HBAC's recommendations regarding the essential 
benefits package, the Secretary would be required either to 
adopt the benefit standards as written or not adopt the benefit 
standards, notify the HBAC of the reasons for this decision, 
and provide an opportunity for the HBAC to revise and resubmit 
its recommendations.
    The Secretary would be required to adopt an initial set of 
benefit standards within 18 months of enactment either by 
adopting the recommendations (and any revisions) of the HBAC, 
or absent that, by proposing an initial set of benefit 
standards.
    The Secretary would be required to publish all 
determinations under this Section in the Federal Register.
    The Secretary would be required to periodically update the 
benefit standards. However, an essential benefits package that 
does not meet the essential benefits requirements specified in 
Section 122 could not be adopted.

Sec. 125. Prohibition of Discrimination in Health Care Services Based 
        on Religious or Spiritual Content

    This provision would prohibit the Commissioner or any 
health insurance issuer offering health insurance coverage 
through the HIE from discriminating against approving or 
covering health care services based on religious or spiritual 
content if expenditures for such a health care service are 
allowable under 213(d) of the Internal Revenue Code of 1986.

              Subtitle D--Additional Consumer Protections


Sec. 131. Requiring Fair Marketing Practices by Health Insurers

            Current Law
    States have established varying marketing standards to 
prohibit insurers from marketing their insurance products only 
to healthy risks.
            Proposed Law
    This provision would require the Commissioner to establish 
uniform marketing standards for QHBPs.

Sec. 132. Requiring Fair Grievance and Appeals Mechanisms

            Current Law
    ERISA does mandate compliance to certain standards if an 
employer chooses to offer health benefits, such as procedures 
for appealing denied benefit claims. The Department of Labor 
has issued regulations for plan internal appeal processes but 
does not provide for external appeals other than through 
judicial review. In addition, as of February 2008, 44 states 
and the District of Columbia mandate the independent review of 
benefit denials by an entity outside of the health plan 
(``external review''). The Supreme Court has upheld the 
application of state external review laws to ERISA covered 
plans.
            Proposed Law
    This provision would require QHBPs to provide for a uniform 
timely grievance and appeals mechanisms as established by the 
Commissioner. QHBPs would provide an internal claims and 
appeals process that initially incorporates the claims and 
appeals procedures (including urgent claims) promulgated by the 
Labor Department and published in the Code of Federal 
Regulations on November 21, 2000 (65 Fed. Reg. 70246). Such a 
process would be updated in accordance with any relevant 
standards that may be established by the Commissioner. The 
Commissioner would establish standards for an external review 
process (including expedited review of urgent claims), and any 
determination made with respect to a QHBP under an external 
review process would be binding. Aggrieved individuals would 
have state law rights and remedies to appeal adverse QHBP 
decisions.

Sec. 133. Requiring Information Transparency and Plan Disclosure

            Current Law
    ERISA requires applicable health plans (as well as other 
``welfare benefit'' plans) to disclose and report certain plan 
information to enrollees and regulators. For example, plan 
administrators must provide to enrollees a written summary plan 
description (SPD) which contains the terms of the plan and the 
benefits offered, including any material modifications, and the 
SPD must be written in a manner that can be understood by the 
average enrollee. Certain plans must file an annual report with 
the Department of Labor, containing information about the 
operation, funding, assets, and investments of those plans.
            Proposed Law
    This provision would require QHBPs to comply with 
disclosure standards established by the Commissioner concerning 
plan terms and conditions, claims payment policies, plan 
finances, claims denials, and other information as determined 
appropriate by the Commissioner. One specified disclosure 
requirement would be a list of health care providers under the 
plan trained and accredited in integrative medicine. The 
Commissioner would require such disclosure to be provided in 
plain language. QHBPs would be required to comply with 
standards established by the Commissioner to ensure 
transparency regarding reimbursements between the plan and 
health care providers. A change in a QHBP could not be made 
without reasonable and timely advance notice to enrollees about 
the change.

Sec. 134. Application to Qualified Health Benefits Plans Not Offered 
        Through the Health Insurance Exchange

            Current Law
    None.
            Proposed Law
    The Committee intends that the Commissioner may make any or 
all of the requirements of Subtitle D applicable to qualified 
health benefits plans outside of the HIE if the Commissioner 
determines that such an extension is necessary to accomplish 
the fundamental purposes of this Act. The Commissioner may make 
the requirements applicable to only health insurance issuers, 
and not to self-funded plans or to multiemployer plans based 
upon the Commissioner's determination that such plans satisfy 
the consumer protections provided for in this Act.

Sec. 135. Timely Payment of Claims

            Current Law
    Under Medicare Advantage (MA), private health plans are 
paid a per-person amount to provide all Medicare-covered 
benefits (except hospice) to beneficiaries who enroll in their 
plan. MA plans include health maintenance organizations and 
private fee-for-service (PFFS) plans. MA PFFS plans are 
required to pay 95 percent of ``clean claims'' within 30 days 
of receipt. The Centers for Medicare and Medicaid Services 
(CMS) defines a clean claim as a claim that has no defect or 
impropriety, and is submitted with all the required 
documentation. The 30-day rule also applies to claims submitted 
to any MA organization by a provider who does not have a 
written contract with the plan. MA organizations are required 
to pay interest on clean claims that are not paid within 30 
days. All other claims from non-contracted providers must be 
paid within 60 days. MA organizations that do contract with 
providers (i.e., HMOs and PPOs) must include a prompt payment 
provision in their contracts.
            Proposed Law
    This provision would require QHBPs to comply with the 
prompt pay requirements applicable to Medicare Advantage plans.

Sec. 136. Standardized Rules for Coordination and Subrogation of 
        Benefits

            Current Law
    While there are no federal statutes specifying primary and 
secondary payment rules for multiple insurers in the private 
market, the Medicare statutes can be cited as providing an 
example. Section 1862(b) of the Social Security Act authorizes 
the Medicare Secondary Payer (MSP) program, which identifies 
specific conditions under which another party pays first and 
Medicare is only responsible for qualified secondary payments. 
The statute authorizes several methods to identify cases when 
an insurer other than Medicare is the primary payer and to 
facilitate recoveries when incorrect Medicare payments have 
been made. Under certain conditions, the law makes Medicare the 
secondary payer to insurance plans and programs for 
beneficiaries covered through (1) a group health plan based on 
either their own or a spouse's current employment; (2) auto and 
other liability insurance; (3) no-fault liability insurance; 
and (4) workers' compensation situations, including the Black 
Lung program. The purpose of the MSP program is to shift costs 
from Medicare to private sources of payment, thus reducing 
Medicare expenditures. Additionally, the Medicare statutes 
exclude Medicare coverage for items and services paid for 
directly or indirectly by a government entity, subject to 
certain limitations. This includes the Department of Veterans 
Affairs, among others.
    The states have long established rules on coordination of 
benefits and subrogation of claims but in recent years, health 
plans have challenged aspects of the traditional rules leading 
to confusion and uncertainty in this area.
            Proposed Law
    The Commissioner would establish standards for the 
coordination of benefits and reimbursement of payments in cases 
involving individual and multiple plan coverage.

Sec. 137. Application of Administrative Simplification

            Current Law
    To support the growth of electronic record keeping and 
claims processing, HIPAA's Administrative Simplification 
provisions instructed the Secretary to adopt electronic format 
and data standards for several routine administrative and 
financial transactions between health care providers and health 
plans/payers. The standards apply to health care providers (who 
transmit any health information in electronic form in 
connection with a HIPAA-specified transaction), health plans, 
and health care clearinghouses. Although providers have made 
significant progress in streamlining administrative processes, 
much work remains to achieve uniforms claims and billing 
processes.
            Proposed Law
    This provision would require QHBP offering entities (as 
defined in the bill) to comply with the new administrative 
simplification standards adopted under Sec. 163 (discussed 
below).

Sec. 138. Records Relative to Prescription Information

    This provision would ban the sales of physician prescribing 
habits to the pharmaceutical industry when the physician serves 
patients enrolled in a qualified health benefit plan.

                         Subtitle E--Governance


Sec. 141. Health Choices Administration; Health Choices Commissioner

            Current Law
    No specific provision in federal law.
            Proposed Law
    This provision would establish an independent agency in the 
Executive Branch of the United States called the Health Choices 
Administration, ``Administration.'' The Administration would be 
headed by a Health Choices Commissioner, ``Commissioner,'' who 
would be appointed by the President, by advice and consent of 
the Senate. Section 702 of the Social Security Act (detailing 
compensation, terms, general powers, rule-making, and 
delegation as applied to the Commissioner of Social Security 
and the Social Security Administration) would apply to the 
Commissioner.

Sec. 142. Duties and Authority of Commissioner

            Current Law
    None.
            Proposed Law
    This provision would make the Commissioner responsible for 
carrying out the following functions:
     Qualified Plan Standards--Establishing qualified 
health benefits plan (``QHBP'') standards, including the 
enforcement of such standards in coordination with State 
insurance regulators and the Secretaries of Labor and the 
Treasury.
     Health Insurance Exchange--Establishing and 
operating the Health Insurance Exchange.
     Individual Affordability Credits--Administering 
individual affordability credits, including the determination 
of eligibility for such credits.
     Promoting Accountability--Undertaking activities 
in accordance with this section to promote accountability of 
QHBP offering entities in meeting Federal health insurance 
requirements, regardless of whether such accountability is with 
respect to qualified health benefits plans offered through or 
outside the Health Insurance Exchange.
     Compliance Examination and Audits--coordinating 
with States to conduct audits of qualified health benefits plan 
compliance with Federal requirements. These audits would 
include random compliance audits and targeted audits in 
response to complaints or other suspected non-compliance.
     Recoupment of Costs in Connection with Examination 
and Audits--authorizing to recoup from qualified health 
benefits plans reimbursement for costs of such examinations and 
audit of such QHBP offering entities.
     Data Collection--Collecting data for the purposes 
of carrying out the Commissioner's duties, including promoting 
quality, value, protecting consumers and addressing disparities 
in health care; the commissioner may share such data with 
Secretary of Health and Human Services. The Committee believes 
populations who experience disparities in health care include 
people with disabilities.
     Sanctions Authority--Providing any of the 
following remedies (in addition to any other authorized by law) 
in coordination with State insurance regulators and the 
Secretary of Labor if it is determined that a QHBP offering 
entity violates a requirement:
          1. Civil money penalties of not more than the amount 
        applicable under similar circumstances for similar 
        violations under Medicare;
          2. Suspension of plan enrollment of individuals under 
        such plan after the date the Commissioner notifies the 
        entity of a decision, until the Commissioner is 
        satisfied with rectification;
          3. In the case of an Exchange-participating health 
        benefits plan, suspension of payment under the Health 
        Insurance Exchange for individuals enrolled in the plan 
        after the date the Commissioner notifies the entity of 
        such decision and until the Commissioner is satisfied 
        with corrective action; or
          4. Work with State insurance regulators to terminate 
        plans for repeated failure by the QHBP offering entity 
        to meet this title's requirements.
    Standard Definitions of Insurance and Medical Terms--
providing the development of standards for defining terms used 
in health insurance coverage, including insurance-related 
terms.

Sec. 143. Consultation and Coordination

            Current Law
    None.
            Proposed Law
    The Commissioner, as appropriate, would be required to 
consult with, at a minimum, the National Association of 
Insurance Commissioners, State attorneys general, and State 
insurance regulators concerning the standards and enforcement 
for insured qualified health benefits plans described in this 
title. Concurrently, the Commissioner would be required to 
consult with, at a minimum, Indian tribes and tribal 
organizations, appropriate federal agencies, and appropriate 
State agencies concerning affordability credits and the 
offering of Exchange-participating health benefits plans 
(including Medicaid concerning standards for insured qualified 
health benefits plans).

Sec. 144. Health Insurance Ombudsman

            Current Law
    The Department of Health and Human Services receives 
various complaint handling and client-assistance ombudsmen 
including:
    Long-term Care Ombudsman--mandated by Older Americans Act 
of 1965, consists of 1,000 paid and 14,000 volunteers who 
identify, investigate, and resolve complaints made by, or on 
the behalf, of residents. They have a blend of federal and 
state oversight.
    Medicare Beneficiary Ombudsman--Created by the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 
(P.L. 108-173), it is intended to ensure those eligible for 
Medicare have reliable and current information about their 
benefits, rights and protections under the Medicare program, 
and the procedures for getting problems and disputes resolved. 
The Ombudsman is to aid Medicare recipients in filing appeals 
if their insurance did not pay proper amounts for their medical 
services or those services were denied.
    State Health Insurance Ombudsman--Several states (VT, MN, 
and IL to name a few) have created State health insurance 
ombudsmen, with the core responsibilities of rectifying 
concerns encompassing access to care, billing problems, and 
access to health insurance. The ombudsman provides information 
on state and federal programs that may be available, explains 
continuation rights under an existing health plan, provides 
help on how to shop for health insurance, and assists in 
appealing decisions made by their health insurance.
            Proposed Law
    The Commissioner would appoint within the Health Choices 
Administration a Qualified Health Benefits Ombudsman (with 
experience and expertise in the fields of health care and 
education). The Ombudsman would be required to perform the 
following duties:
     Receive and provide assistance with complaints, 
grievances, and requests for information submitted by 
individuals. The assistance would be provided more specifically 
in instances such as helping individuals determine relevant 
information for an appeal, assisting with any problems arising 
from disenrollment, choosing a qualified health benefits plan 
to enroll, and presenting information relevant to affordability 
credits.
     Submit annual reports to Congress and the 
Commissioner describing the activities of the Ombudsman, 
including recommendations for improvement in the Administration 
of this Division, as determined appropriate. The Ombudsman 
would not serve as an advocate for any increases in payments or 
new coverage of services, but would identify issues and 
problems in payment or coverage policies.

       Subtitle F--Relation to Other Requirements; Miscellaneous


Sec. 151. Relation to Other Requirements

            Current Law
    None.
            Proposed Law
     Coverage Not Offered Through the Exchange--The 
requirements of this provision would not supersede specified 
provisions of federal and state laws with respect to the health 
insurance coverage not offered through the Health Insurance 
Exchange (whether or not offered in connection with an 
employment-based health plan).
     Coverage Offered Through the Exchange--The 
requirements under this title would not supersede any 
requirements relating to genetic information non-discrimination 
and mental health for such health insurance coverage (as long 
as those related do not prevent the application of requirements 
detailed in this division; as determined by the Commissioner). 
Concurrently, individual rights and remedies under State laws 
would apply. Nothing in this paragraph would be construed as 
preventing the application of rights and remedies under State 
laws.

Sec. 152. Prohibiting Discrimination in Health Care

            Current Law
    HIPAA established federal rules regarding non-
discrimination based on health status-related factors. It 
prohibits group issuers from establishing rules for eligibility 
and premium contributions based on health status-related 
factors. Those factors include health status, medical condition 
(including both physical and mental illnesses), claims 
experience, receipt of health care, medical history, genetic 
information, evidence of insurability (including conditions 
arising out of acts of domestic violence) and disability. In 
addition, the Genetic Information Nondiscrimination Act of 2008 
(GINA, P.L. 110-233) prohibits issuers in the individual health 
insurance market from establishing eligibility rules (including 
continued eligibility) based on an individual's genetic 
information. The Paul Wellstone and Pete Domenici Mental Health 
Parity and Addiction Equity Act of 2008 establishes parity by 
requiring an employer offering mental health and substance use 
disorder benefits in an equal manner as physical health 
benefits are offered.
    In addition, Title VI of the Civil Rights Act of 1964 
prohibits discrimination by the recipients of federal funds, 
which includes many hospitals, clinics and social service 
agencies. However, the Civil Rights Act's link to the receipt 
of federal funds has insulated many insurance companies from 
any obligation to comply with nondiscrimination protections.
            Proposed Law
    Unless explicitly permitted within this Act and subsequent 
related regulations, all health care and related services, 
(including insurance coverage and public health activities) 
covered by this Act would be provided regardless of personal 
characteristics extraneous to the provision of high quality 
health care or related services.
    Within 18 months of enactment, the Secretary would be 
required to ensure that all health care and related services 
would be provided without regard for extraneous personal 
characteristics.

Sec. 153. Whistleblower Protection

            Current Law
    None.
            Proposed Law
    No employer may discharge any employee (or otherwise 
discriminate against) with respect to his compensation, terms, 
conditions, or other privileges of employment because the 
employee (or an individual acting at the request of the 
employee):
     Provides or causes to provide to the employer, 
Federal Government, the attorney general of a relevant State, 
information relating to any violation of, or any act or 
omission the employee reasonably believes to be a violation of 
any provision, order, rule, or regulation promulgated under 
this Act.
     Testifies or is about to testify in a proceeding 
concerning such violation.
     Assists, participates or about to assist and 
participate in such a proceeding.
     Objects to, or refused to participate in any 
activity, policy, practice, or assigned task that the employee 
reasonably believes to be in violation of any provision, order, 
rule and regulation promulgated under this Act.
    Enforcement Action--An employee covered by this section who 
alleges discrimination by an employer in violation may bring an 
action governed by the rules, procedures, legal burden of 
proof, and remedies detailed in section 40(b) of the Consumer 
Product Safety Act.
    Employer Defined--The term employer in this section means 
any person (including one or more individuals, partnerships, 
associations, corporations, trusts, professional membership 
organization including a certification, disciplinary, or other 
professional body, unincorporated organizations, 
nongovernmental organizations, or trustees) engaged in profit 
or nonprofit business or industry whose activities are governed 
by this Act, and any agent, contractor, subcontractor, grantee, 
or consultant of such person.
    Rule of Construction--The rule of construction set forth 
concerning employee protections in the United States Code would 
apply to this section.

Sec. 154. Construction Regarding Collective Bargaining

            Current Law
    None.
            Proposed Law
    Nothing in this division may be construed to alter or 
supersede any statutory or other obligation to engage in 
collective bargaining over the terms and conditions of 
employment related to health care. This rule of construction 
clarifies that long-standing principles of law continue to 
apply in the context of this health reform legislation. Where a 
new law sets mandatory minimum labor standards, the parties in 
a collective bargaining relationship must abide by such 
standards. Where, however, a new law leaves some discretion to 
an employer with regard to how to achieve compliance, which 
this bill indeed does on many levels, an employer with 
collective bargaining obligations may not make unilateral 
changes to the terms and conditions of employment but must 
bargain with the employees' bargaining representative over 
those matters.\123\
---------------------------------------------------------------------------
    \123\See, e.g., Murphy Oil USA, 286 N.L.R.B. 1039, 1042 (1987); 
Standard Candy Co., 147 N.L.R.B. 1070, 1073 (1964); Fort Halifax 
Packing Co. v. Coyne, 482 U.S. 1, 20 (1987).
---------------------------------------------------------------------------

Sec. 155. Severability

            Current Law
    None.
            Proposed Law
    If any provision of this Act, or the application thereof 
towards any person or circumstance, is held unconstitutional, 
the application of the remaining provisions would not be 
affected.

Sec. 156. Rule of Construction Regarding Hawaii Prepaid Health Care Act

    Added with an amendment at Committee, this provision would 
maintain Hawaii's Prepaid Health Care Act exemption under 
ERISA, including with respect to the provisions of H.R. 3200, 
where such state statute ensures health care benefits 
equivalent to or greater than those benefits that would be 
guaranteed by H.R. 3200.

Sec. 157. Increasing Meaningful Use of Electronic Health Records

    This provision would require the Health Choices 
Commissioner to study how to increase the meaningful use of 
electronic health records and then use the results of that 
study to potentially require higher reimbursement rates for 
providers that use health information technology.

Sec. 158. Private Right of Contract with Health Care Providers

    This provision forbids any other provision in this bill 
from being construed to preclude any participant or beneficiary 
in a group health plan from entering into any contract or 
arrangement for health care with any health care provider.

                     Subtitle G--Early Investments


Sec. 161. Ensuring Value and Lower Premiums

    The Committee did not exercise jurisdiction over this 
provision.

Sec. 162. Ending Health Insurance Rescission Abuse

    The Committee did not exercise jurisdiction over this 
provision.

Sec. 163. Administrative Simplification

    The Committee did not exercise jurisdiction over this 
provision.

Sec. 164. Reinsurance Program for Retirees

            Current Law
    No current law.
            Proposed Law
    No later than 90 days after enactment, the Secretary would 
establish a temporary reinsurance program, to provide 
reimbursement to assist participating private or public sector 
employment-based plans with the cost of providing health 
benefits to eligible retirees who are 55 and older and their 
dependents, including eligible and surviving spouses. Such 
plans include voluntary employee benefit associations (VEBAs) 
and multi-employer plans covering retirees. Health benefits 
would be required to include medical, surgical, hospital, 
prescription drug, and other benefits determined by the 
Secretary. An eligible employment-based plan would submit an 
application to the Secretary, as required. A participating 
employment-based program would submit claims for reimbursement 
to the Secretary, documenting the actual cost of items and 
services for each claim. Each claim would be based on the 
actual amount expended by the participant. The participating 
employment-based plan would take into account any negotiated 
price concessions, such as discounts, subsidies, and rebates. 
The cost of deductibles and cost-sharing would be included in 
the cost of the claim, along with the amounts paid by the plan. 
For any valid claim, the Secretary would reimburse the plan for 
80 percent of the portion of costs above $15,000 and below 
$90,000. This amount would be adjusted annually based on the 
percent increase in the medical care component of the Consumer 
Price Index, rounded to the nearest multiple of $1,000. Amounts 
paid to a participating employment-based plan would be used to 
lower cost directly to participants and beneficiaries in the 
form of premiums, co-payments, deductible, co-insurance, or 
other out-of-pocket costs, but would not be used to reduce the 
costs of an employer maintaining the employment-based plan. The 
Secretary would establish an appeals process for denied claims, 
procedures to protect against fraud, waste, and abuse, and 
would conduct annual audits of claims date.
    The Retiree Reserve Trust Fund would be established, 
consisting of such amounts as appropriated or credited to the 
Fund to enable the Secretary to carry out the reinsurance 
program. The Secretary could request such sums as necessary to 
carry out this section, not to exceed $10 billion. Amounts 
appropriated and outlays from such appropriation would not be 
taken into account for purpose of any budget enforcement 
procedures, thus exempting the Fund from the framework of the 
budget resolution and the points of order which enforce that 
framework. The Secretary would have the authority to stop 
taking applications or take other steps to reduce expenditures 
to ensure that expenditures did not exceed available funds.

Sec. 165. Prohibition Against Post-Retirement Reductions of Retiree 
        Health Benefits by Group Health Plans

    This provision would prohibit group health plans from 
reducing retirees' health benefits after those retirees have 
retired, unless the reduction is also made to benefits for 
active participants.

Sec. 166. Limitations on Preexisting Condition Exclusions in Group 
        Health Plans in Advance of Applicability of New Prohibition of 
        Preexisting Condition Exclusions

    This provision would require that the limit on pre-existing 
conditions exclusions in the insurance market start immediately 
at the bill's passage instead of 2013 as the introduced version 
of H.R. 3200 instructs. The permitted ``look back'' period is 
reduced from six months to 30 days, and the amount of time 
during which a provider can exclude coverage for pre-existing 
conditions is shortened.

Sec. 167. Extension of COBRA Continuation Coverage

    This section was added by amendment at Committee. This 
provision would end the current COBRA eligibility limit and 
allow those currently enrolled in COBRA to keep their insurance 
until they find another job offering coverage or until they 
become eligible to participate in the HIE.

       Title II--Health Insurance Exchange and Related Provisions


                 Subtitle A--Health Insurance Exchange

            Current Law
    No specific provision in federal law.
            Proposed Law
    Text.

Sec. 201. Establishment of Health Insurance Exchange; Outline of 
        Duties; Definitions

    A Health Insurance Exchange, ``Exchange'' would be 
established to facilitate access of individuals and employers 
to a variety of choices of affordable, quality health insurance 
coverage, including a public health insurance plan option. The 
HIE would exist within the Health Choices Administration under 
the direction of the Health Choices Commissioner (described 
above in Sections 141 and 142). As described in greater detail 
in the following sections, regarding the Exchange, the 
Commissioner would (1) establish standards for, accept bids 
from, and negotiate and enter into contracts with entities 
seeking to offer qualified health benefits plans (QHBPs) 
through the Exchange, (2) facilitate outreach and enrollment of 
Exchange-eligible individuals and employers, and (3) conduct 
appropriate activities related to the Exchange, including 
establishment of a risk pooling mechanism and consumer 
protections.

Sec. 202. Exchange-eligible Individuals and Employers

    Beginning in 2013, all individuals generally would be 
eligible to obtain coverage through the Exchange, unless they 
were enrolled in the following (as determined by the 
Commissioner, in coordination with the Treasury Secretary):
           a group plan through a full-time employee 
        (including a self-employed person with at least one 
        employee) for which the employer makes an adequate 
        contribution (described below in Section 312),
           Medicare,
           Medicaid (except in certain cases, discussed 
        below), or
           military and VA coverage.
    Except for the Medicaid exception, individuals would lose 
eligibility for Exchange coverage once they become eligible for 
Medicare Part A, Medicaid (although in this case, the 
Commissioner could permit continued Exchange eligibility for 
such limited time as the Commissioner determines it is 
administratively feasible and consistent with minimizing 
disruption in the individual's access to health care), and 
other circumstances as the Commissioner provides. Besides those 
cases, once individuals enroll in an Exchange plan, they would 
continue to be eligible until they are no longer enrolled.
    Exchange-eligible employers could meet the requirements of 
the employer responsibility (Section 312) by offering and 
contributing adequately toward employees' enrollment through 
the Exchange. Those employees would be able to choose any of 
the available Exchange plans. Once employers are Exchange 
eligible and enroll their employees through the Exchange, they 
would continue to be Exchange eligible, unless they decided to 
then offer their own qualified health benefits plan(s).
    In 2013, employers with 15 or fewer employees would be 
Exchange-eligible. In 2014, employers with 25 or fewer 
employees would be Exchange-eligible. Beginning in 2015, 
employers with 50 or fewer employees would be Exchange-
eligible, however the Commissioner could permit employers 
larger than 50 to participate in the Exchange. These additional 
employers could be phased in or made eligible based on the 
number of full-time employees or other considerations the 
Commissioner deems appropriate. (``Employer'' and other 
employment-related definitions would be defined by the 
Commissioner.)
    The Committee intends that if and when the Commissioner 
permits ``larger employers'' to become Exchange-eligible 
employers, the Commissioner will also permit a multiemployer 
plan (as defined in section 3(37) of the Employee Retirement 
Income Security Act) itself to become an Exchange-eligible 
employer on behalf of its contributing employers as if it were 
one employer.
    The Commissioner would have the authority to establish 
rules to deal with special situations with regard to uninsured 
individuals participating as Exchange-eligible individuals and 
employers, such as transition periods for individuals and 
employers who gain, or lose, Exchange-eligible participation 
status, and to establish grace periods for premium payment.
    The Commissioner would be required to provide for periodic 
surveys of Exchange-eligible individuals and employers 
concerning their satisfaction with the Exchange and its plans.
    The Commissioner would conduct an Exchange Access Study--a 
study of access to the Health Insurance Exchange for 
individuals and for employers, including individuals and 
employers who are not eligible and enrolled in HIE plans. The 
goal of the study would be to determine if there are 
significant groups and types of individuals and employers who 
are not Exchange eligible but who would have improved benefits 
and affordability if made eligible. The study also would 
examine the terms, conditions, and affordability of group 
health coverage offered by employers and QHBP-offering insurers 
outside of the Exchange compared to Exchange-participating 
health benefits plans, as well as the affordability-test 
standard for access of certain employed individuals to coverage 
in the Health Insurance Exchange. The Commissioner would submit 
the study to Congress by January 1 of 2015, 2018, and 
thereafter, and would include in the report recommendations 
regarding changes in standards for Exchange eligibility for 
individuals and employers.
    This provision would also give the Commissioner authority 
to define terms such as ``employer'' and ``employee'' for 
purposes of this division. The Commissioner should take care 
that such definitions minimize incentives to misclassify 
workers as non-employees. Moreover, the Commissioner should 
take into consideration any special employer or industry 
organizational structures such as ``employers of record'' in 
the home health industry and hour of service calculations for 
airline personnel in the airline industry in light of relevant 
federal rules and industry practices when defining these 
employment terms.

Sec. 203. Benefits Package Levels

    The Commissioner would specify the benefits to be made 
available under HIE plans during each plan year, consistent 
with this section and Sections 121-134 above. The Commissioner 
could not enter into a contract with an entity wanting to offer 
coverage through the Exchange in a service area(s), unless the 
following requirements are met:
     The entity offers only one Basic plan in the 
service area.
     The entity may offer one Enhanced plan in the 
service area.
     If the entity offers an Enhanced plan in a service 
area, the entity may offer one Premium plan for the area.
     If the entity offers a Premium plan for a service 
area, the entity may offer one or more Premium-Plus plans for 
the area.
    All such plans could be offered under a single contract 
with the Commissioner.
    Consistent with the standards in Sections 101-164 above, 
the Commissioner would also establish the following standards 
for the three primary levels of Exchange plans--Basic, 
Enhanced, and Premium--and for additional benefits that may be 
offered in a Premium-Plus plan. Besides offering the essential 
benefits package (Section 122 above) for a QHBP, Basic plan 
benefit packages would be modified to provide for reduced cost-
sharing for individuals eligible for the ``affordability cost-
sharing credit,'' described below in Section 244. Excluding the 
credit, the benefit package of a Basic plan would have an 
actuarial value representing payment for approximately 70 
percent of all the covered items and services in the essential 
benefits package (Section 122 above). Enhanced plans would have 
lower cost-sharing than Basic plans, representing approximately 
85 percent of the actuarial value of all the covered items and 
services in the essential benefits package. Premium plans would 
have lower cost-sharing than Enhanced plans, representing 
approximately 95 percent of the actuarial value of all the 
covered items and services in the essential benefits package. 
Premium-Plus plans would be Premium plans that also provide 
additional benefits, such as adult oral health and vision care, 
approved by the Commissioner. The portion of the premium that 
is attributable to such additional benefits would be separately 
specified.
    The Commissioner would establish a permissible range of 
variation of cost-sharing for the Basic, Enhanced and Premium 
plans. Such variation would permit variations up to 10 percent 
in cost-sharing with respect to several benefit categories 
(Section 122).
    If a state requires health insurers to offer benefits 
beyond the essential benefits package, such requirements would 
continue to apply to Exchange plans, but only if the state has 
entered into an arrangement satisfactory to the Commissioner to 
reimburse the Commissioner for the amount of any resulting net 
increase in affordability premium credits (Section 243).

Sec. 204. Contracts for the Offering of Exchange-participating Health 
        Benefits Plans

    The Commissioner would establish standards, described 
below, for Exchange-participating entities and their health 
benefits plans. The Commissioner would certify entities and 
plans if the standards are met. The Commissioner would solicit 
and review bids from QHBP-offering entities for offering 
Exchange plans, negotiate with the entities, and enter into 
contracts with the entities for offering plans through the 
Exchange under terms negotiated between the Exchange and the 
entities.
    The Federal Acquisition Regulation (the principal set of 
rules that govern the contracting process for the federal 
government) would not apply to contracts between the 
Commissioner and QHBP-offering entities for offering Exchange 
plans.
    The standards for Exchange-participating entities would 
consist of the following requirements:
     The entity must be licensed or otherwise permitted 
to offer health insurance coverage under state law for each 
state in which it offers coverage.
     The entity must provide for reporting data/
information specified by the Commissioner, including 
information necessary to administer the risk pooling mechanism 
in Section 206 and information to address disparities in health 
and health care.
     The entity must provide for implementation of the 
affordability credits provided for enrollees (described in 
Sections 241-246 below).
     The entity must accept all applicable enrollment 
via the Exchange, subject to such exceptions (such as capacity 
limitations) in accordance with the federal requirements for 
QHBPs (discussed under Title I), and would notify the 
Commissioner if it projects or anticipates reaching a capacity 
that would result in a limitation in enrollment.
     The entity must participate in the pooling 
mechanism as established by the Commissioner (described in 
Section 206 below).
     Regarding the Basic plan offered by the entity, 
the entity must contract for outpatient services with certain 
federally supported health care providers. The Commissioner 
would also specify how this requirement would apply to Health 
Maintenance Organizations (HMOs).
     The entity must provide culturally and 
linguistically appropriate communication and health services.
     The entity must comply with other applicable 
requirements of this title specified by the Commissioner, which 
would include standards regarding billing and collection 
practices for premiums and grace periods and which may include 
standards to ensure that the entity does not use coercive 
practices to force providers not to contract with other 
entities offering coverage through the Exchange.
    For the contracting process, entities' bids would have to 
contain the information required by the Commissioner. Contracts 
would last at least one year, but could be automatically 
renewed in the absence of notice of termination by either 
party. The contract would provide that if the Commissioner 
determines that a plan's provider network is not adequate, then 
the cost-sharing charged to a person who received out-of-
network care would be the same as if the care had been provided 
in-network.
    In coordination with state insurance regulators, the 
Commissioner would establish processes to oversee, monitor, and 
enforce applicable requirements on Exchange-participating 
entities and QHBPs, including plan marketing. In conjunction 
with state insurance regulators, the Commissioner would 
establish a process for individuals and employers to file 
complaints concerning violations. The Commissioner could 
terminate a contract with an entity if it fails to comply with 
the requirements of this title; the Commissioner could also 
impose one or more intermediate sanctions.
    Any determination by the Commissioner to terminate a 
contract would be made in accordance with formal investigation 
and compliance procedures established by the Commissioner under 
which (a) the Commissioner provides the entity with the 
reasonable opportunity to develop and implement a corrective 
action plan to correct the deficiencies that were the basis of 
the Commissioner's determination; and (b) the Commissioner 
provides the entity with reasonable notice and opportunity for 
hearing (including the right to appeal an initial decision) 
before terminating the contract. However, these procedures need 
not apply if the Commissioner determined that a delay in 
termination would pose an imminent and serious risk to the 
health of individuals enrolled under the plan.

Sec. 205. Outreach and Enrollment of Exchange-eligible Individuals and 
        Employers in Exchange-participating Health Benefits Plan

    Outreach. The Commissioner would conduct outreach 
activities to inform and educate individuals and employers 
about the Exchange and its participating health plans. Such 
outreach would include outreach specific to vulnerable 
populations, such as children, individuals with disabilities, 
individuals with mental illness, and individuals with other 
cognitive impairments. The Commissioner's required outreach 
activities would include the following:
     broadly disseminate information on Exchange-
participating plans, provided in a comparative manner and 
including information on benefits, premiums, cost-sharing, 
quality, provider networks, and consumer satisfaction;
     provide assistance to Exchange-eligible 
individuals and employers via a toll-free telephone hotline and 
an Internet website;
     develop and disseminate information to Exchange-
eligible enrollees on their rights and responsibilities;
     assist Exchange-eligible individuals in selecting 
plans and obtaining benefits; and
     ensure the information is developed using plain 
language (described in Section 133 above).
    Enrollment. The Commissioner would be required to make 
timely determinations of whether individuals and employers are 
eligible for Exchange coverage and to establish and carry out 
an enrollment process, including at community locations. 
Enrollment would be permitted by mail, telephone, 
electronically, or in person.
    Open enrollment for individuals and employers to enroll in 
an Exchange plan and affordability credits (described in 
Sections 241-245 below) would be at least 30 days and would be 
during September through November of each year before benefits 
would begin, or such other time that would maximize the 
timeliness of income verification. However, the Commissioner 
would also provide for special enrollment periods to take into 
account special circumstances of individuals and employers, 
such as an individual who loses acceptable coverage, 
experiences a change in marital or other dependent status, 
moves outside the plan's service area, or experiences a 
significant change in income. The Commissioner, potentially 
with other appropriate entities, would be required to broadly 
disseminate information on the enrollment process, including 
before each enrollment period.
    The Commissioner would establish a process to automatically 
enroll the following individuals into an appropriate Exchange 
plan (potentially involving a random assignment or some other 
form of assignment that takes into account the health care 
providers used by the individual, or such other relevant 
factors specified by the Commissioner):
           those who have applied for affordability 
        credits, been determined eligible, have not opted out 
        from receiving such credit, and do not enroll in 
        another Exchange plan; and
           those enrolled in an Exchange plan that is 
        terminated (during or at the end of a plan year) who do 
        not enroll in another Exchange plan.
    Under the enrollment process, individuals enrolled in an 
Exchange plan would pay such plans directly, not through the 
Commissioner or the Exchange.
    Special provisions apply to newborns born in the United 
States without acceptable coverage at birth. Until other 
acceptable coverage begins, the child would be considered a 
non-traditional Medicaid-eligible individual (for whom the 
state would be paid 100 percent federal reimbursement) and 
would be deemed as having elected Medicaid coverage. This 
coverage would end no later than the end of the month 60 days 
after the child's birth; at the end of that period, if the 
child still does not have acceptable coverage, the child is 
deemed a traditional Medicaid-eligible individual, for whom the 
state receives the regular Medicaid federal matching rate.
    As of the day before the first day of 2013, CHIP-eligible 
children, including targeted low-income children in a Medicaid-
expansion CHIP program, would be deemed to be Exchange 
eligible. The Commissioner would notify each state in 2013 
whether the Exchange could support enrollment of these 
children.
    A ``traditional Medicaid eligible individual'' is a 
Medicaid-eligible individual excluding (1) those who are 
eligible because of the expansion of Medicaid in Section 1701 
of this legislation to individuals up to 133\1/3\ percent FPL 
and (2) a childless adult who would not otherwise be classified 
as categorically needy (as per current Medicaid statute, 
Section 1902(a)(10)(A)) or medically needy (as per current 
Medicaid statute, Section 1902(a)(10)(C)) as in effect as of 
the day before the date of enactment of this Act. A ``non-
traditional Medicaid-eligible individual'' is a Medicaid-
eligible individual who is not a traditional Medicaid-eligible 
individual. Section 202 of the legislation includes provisions 
so that a non-traditional Medicaid eligible individual could be 
Exchange-eligible if the individual was enrolled in a qualified 
health benefits plan, grandfathered health insurance coverage, 
or current group health plan during the six months before the 
individual became a non-traditional Medicaid eligible 
individual. Under this section, the Commissioner would provide 
these individuals with the option to enroll in Medicaid rather 
than an Exchange plan and to change that election during open 
enrollment periods described earlier in this section. The 
Commissioner would provide for a process to automatically 
enroll these individuals into Medicaid if they have not elected 
to enroll in any Exchange plan.
    An Exchange-eligible individual could apply for a Medicaid-
eligibility determination. If the individual is determined to 
be eligible, the Commissioner would provide for the 
individual's enrollment under the state Medicaid plan in 
accordance with the Medicaid memorandum of understanding. In 
the case of such an enrollment, the state would provide for the 
same periodic redetermination of eligibility under Medicaid 
that would apply if the individual had directly applied to the 
state Medicaid agency. The legislation would require the 
Commissioner, in consultation with the HHS Secretary, to enter 
into a memorandum of understanding with each state with respect 
to coordinating enrollment of individuals in Exchange plans and 
under state Medicaid programs, and to otherwise coordinate the 
implementation of these provisions with respect to the Medicaid 
program. This memorandum would permit the exchange of 
information consistent with limitations specified in Medicaid 
statute with respect to providing safeguards that restrict the 
use or disclosure of information concerning applicants and 
recipients to purposes directly connected with the 
administration of the state Medicaid plan, and at state option, 
the exchange of information necessary to verify eligibility for 
other federal programs (e.g., for free and reduced price school 
lunches). None of these provisions could be construed as 
permitting such memorandum to modify or vitiate any requirement 
of a state Medicaid plan.
    In carrying out this section, the Commissioner would 
establish effective methods for communicating in plain language 
and a culturally and linguistically appropriate manner.

Sec. 206. Other Functions

    The Commissioner would be required to coordinate the 
distribution of affordability premium and cost-sharing credits 
(described below in Sections 243-244) to the Exchange plans. 
The Commissioner would also be required to establish a risk-
pooling mechanism, to adjust premium payments to Exchange plans 
to take into account (in a manner specified by the 
Commissioner) the differences in the risk characteristics of 
individuals and employers enrolled under the Exchange plans.
    An Office of the Special Inspector General for the Exchange 
would be established, headed by a Special Inspector General 
appointed by the President and confirmed by the Senate. The 
Special Inspector General's nomination would be made as soon as 
practicable after the establishment of the Exchange.
    The duties of the Special Inspector General would consist 
of the following:
           conduct, supervise, and coordinate audits, 
        evaluations and investigations of the Health Insurance 
        Exchange to protect the integrity of the Exchange as 
        well as the health and welfare of participants in the 
        Exchange;
           report both to the Commissioner and to the 
        Congress regarding program and management problems and 
        recommendations to correct them;
           related to the duties above, have other 
        duties described as applying to the Special Inspector 
        General of the Troubled Asset Relief Program (TARP), 
        per paragraphs (2) and (3) of Section 121 of P.L. 110-
        343; and
           in carrying out these duties, have the 
        authorities of inspectors general in Section 6 of the 
        Inspector General Act of 1978.
    Other provisions of the TARP Special Inspector General 
would also be applied, regarding the basis of the Special 
Inspector General's appointment, how s/he might be removed, 
his/her salary, and available personnel, facilities and other 
resources.
    Not later than one year after the confirmation of the 
Special Inspector General, and annually thereafter, the Special 
Inspector General would submit to the appropriate committees of 
Congress a report summarizing the activities of the Special 
Inspector General during the one year period ending on the date 
the report is submitted.
    The Office of the Special Inspector General would terminate 
five years after the date of the enactment of this Act.
    Following an amendment at Committee, this provision would 
also require the Commissioner, in consultation with the Small 
Business Administration, to establish and carry out a program 
to provide health insurance counseling and technical assistance 
to small employers who provide their employees health care 
through the HIE.

Sec. 207. Health Insurance Exchange Trust Fund

    A ``Health Insurance Exchange Trust Fund'' would be created 
within the U.S. Treasury, consisting of such amounts as may be 
appropriated or credited to the fund. The Commissioner would 
pay from the Trust Fund amounts as determined necessary to make 
payments to operate the Exchange, including affordability 
credits.
    Dedicated payments to the Trust Fund would include the 
following:
           tax on individuals not obtaining acceptable 
        coverage (Section 401);
           tax on employers electing to not provide 
        health benefits (Section 412); and
           tax on employers who fail to satisfy health 
        coverage participation requirements (Section 411).
    Such additional sums as necessary would be appropriated. 
General provisions in the Internal Revenue Code regarding 
federal government trust funds would apply.

Sec. 208. Optional Operation of State-based Health Insurance Exchanges

    If a state (or group of states, subject to the 
Commissioner's approval) applied to the Commissioner for 
approval of a state-based Health Insurance Exchange, and if the 
Commissioner approves such state-based Exchange, then the 
state-based Exchange would operate instead of the federal 
Exchange in that state(s).
    The Commissioner could not approve a state-based Exchange 
unless the following requirements were met (and would be 
required to approve it if the conditions were met):
     The state-based Exchange must demonstrate the 
capacity to and provide assurances satisfactory to the 
Commissioner that it could carry out the functions specified 
for the federal Exchange in the state(s) including:
           negotiating and contracting with qualified 
        plans;
           enrolling Exchange-eligible individuals and 
        employers in plans;
           establishing sufficient local offices to 
        meet the needs of Exchange-eligible individuals and 
        employers;
           administering premium and cost-sharing 
        credits (described below in Sections 241-246) using the 
        same methodologies, and at least the same income 
        verification methods, as would otherwise apply and at a 
        cost to the federal government that is not greater than 
        what would otherwise apply; and
           enforcement activities consistent with 
        federal requirements.
     There is no more than one Exchange in operation in 
any one state.
     The state provides assurances satisfactory to the 
Commissioner that approval of such an Exchange would not result 
in any net increase in expenditures to the federal government.
     The State provides for reporting of such 
information as the Commissioner determines and assurances 
satisfactory to the Commissioner that it will vigorously 
enforce violations of applicable requirements.
     Such other requirements as the Commissioner may 
specify.
    A state-based Exchange could, at the option of the state, 
and only after providing timely and reasonable notice to the 
Commissioner, cease operation. In this case, the federal 
Exchange would be operational in the state(s).
    The Commissioner could terminate the approval (for some or 
all functions) of a state-based Exchange if the Commissioner 
determined that it no longer met the requirements listed above 
or was no longer capable of carrying out such functions. In 
lieu of terminating the state-based Exchange's approval, the 
Commissioner could temporarily assume some or all functions of 
the state-based Exchange until the Commissioner determined that 
it met the applicable requirements and was capable of carrying 
out those functions. The ceasing or termination of a state-
based Exchange would be effective in such time and manner as 
the Commissioner would specify.
    Enforcement authorities of the Commissioner would be 
retained by the Commissioner. The Commissioner could specify 
functions of the federal Exchange that may not be performed by 
a state-based Exchange or that could be performed by both the 
Commissioner and the state-based Exchange.
    In the case of a state-based Exchange, except as the 
Commissioner may otherwise specify, any references to the 
``Exchange'' or to the ``Commissioner'' in the area in which 
the state-based Exchange operates would be deemed a reference 
to the state-based Exchange and the head of that Exchange.
    In the case of a state-based Exchange, funding assistance 
would be provided for its operation in the form of a matching 
grant, with a state share of expenditures required.

Sec. 209. Participation of Small Employer Benefit Arrangements

    This provision would allow the Commissioner to enter into 
contracts with small business co-ops operating a small business 
benefit arrangement to facilitate their participation in the 
HIE.

               Subtitle B--Public Health Insurance Option


Sec. 221. Establishment and Administration of a Public Health Insurance 
        Option As An Exchange-Qualified Health Benefits Plan

            Current Law
    Medicare is an example of a federal public health insurance 
program for the aged and disabled. Under Medicare, Congress and 
the Department of Health and Human Services (HHS), Centers for 
Medicare and Medicaid Services (CMS) determine many parameters 
of the program including eligibility rules, financing 
(including determination of payroll taxes, and premiums), 
required benefits, payments to health care providers, and cost 
sharing amounts.
            Proposed Law
    The provision would require the Secretary of Health and 
Human Services (Secretary) to provide for the offering of a 
public health insurance option through the Exchange starting 
2013. The Secretary would be required to ensure that the public 
option provided choice, competition and stability of 
affordable, high quality coverage throughout the United States. 
The Secretary's primary responsibility would be to create a 
low-cost plan without compromising quality or access to care.
    The public option would only be available through the 
Health Insurance Exchange. The public option would be required 
to comply with requirements applicable to Exchange-
participating health benefit plans, including requirements 
related to benefits, benefit levels, provider networks, 
notices, consumer protections, and cost sharing. The public 
option would be required to offer basic, enhanced, and premium 
plans, and would be allowed to offer premium-plus plans.
    The Secretary would be allowed to enter into contracts for 
the administration of the public option in the same manner as 
the Secretary is allowed to enter into contracts for the 
administration of the Medicare program. These administrative 
functions include, subject to restrictions, determination of 
payment amounts, making payments, beneficiary education and 
assistance, provider consultative services, communication with 
providers, and provider education and technical assistance. The 
Secretary would have the same authority to enter into contracts 
for the public option, as the Secretary has with respect to the 
Medicare program. The provision would prohibit contracts that 
involve the transfer of insurance risk.
    The Secretary would be required to establish an office of 
the ombudsman for the public health insurance option which 
would have duties similar to those of the Medicare Beneficiary 
Ombudsman.
    The Secretary would be required to collect data necessary 
to establish premiums and payment rates and for other purposes, 
including improving quality and reducing disparities in health 
care based on race, ethnicity, primary language, sex, sexual 
orientation, gender identity, disability, socioeconomic status, 
rural, urban, or other geographic setting, and any other 
population or subpopulation as determined appropriate by the 
Secretary. Such data collection would be on a voluntary basis 
and consistent with certain privacy standards.
    With respect to the public health insurance option, the 
Secretary would be treated as an entity offering a Quality 
Health Benefit Plan through the Exchange.
    The provisions relating to access to Federal courts for 
enforcement of rights under Medicare would apply to the public 
option and individuals enrolled under the public option in the 
same manner that they apply to Medicare and Medicare 
beneficiaries.

Sec. 222. Premiums and Financing

            Current Law
    No current law.
            Proposed Law
    The Secretary would be required to establish 
geographically-adjusted premiums for the public option in a 
manner that complies with the premium rules established by the 
Commissioner for Exchange-participating health benefit plans 
and at a level sufficient to fully finance the cost of health 
benefits and administration for the public option. Premiums 
would be required to include an appropriate amount for a 
contingency margin.
    The provision would establish an account in the Treasury 
for receipts and disbursements attributable to the public 
option, including start-up funding. The start-up funding would 
be equal to the sum of $2 billion for the establishment of the 
public option, and such sums as may be necessary to cover 90 
days worth of reserves based on projected enrollment. These 
amounts would be authorized to be appropriated to the Secretary 
out of any funds in the Treasury not otherwise appropriated. 
The Secretary would be required to provide for repayment of the 
start-up funding in an amortized manner over a 10 year period 
starting in 2013. The provision specifies that nothing in this 
section could be construed as authorizing any additional 
appropriations to the account, other than amounts otherwise 
provided with respect to other Exchange-participating plans. As 
under the Medicare Advantage program, states would be 
prohibited from imposing a premium tax or similar tax with 
respect to the public option.

Sec. 223. Payment Rates for Items and Services

            Current Law
    No current law.
            Proposed Law
    The Secretary would be required to establish payment rates 
for services and health care providers under the public option.
    In general, during the first three years of the public 
option, the Secretary would be required to base payment rates 
on the rates for similar services and providers under Medicare. 
For services furnished in 2013, 2014 and 2015, physicians and 
other health care practitioners who participate in both 
Medicare and the public option would receive payment rates 5% 
greater than rates otherwise established by the Secretary for 
items and professional services. Pediatricians and other 
practitioners who do not typically participate in Medicare--as 
determined by the Secretary--would also be eligible for the 
increased payment rates. Beginning in 2016, the Secretary would 
be required to continue to use an administrative process to set 
payment rates to promote payment accuracy, to ensure adequate 
beneficiary access to providers, and to promote affordability 
and the efficient delivery of health care. The Secretary would 
be prohibited from setting rates at levels expected to increase 
overall medical costs for the public option beyond what would 
be expected if Medicare rates (plus the 5% addition) were to 
continue.
    The provision specifies that nothing would prevent the use 
of innovative payment methodologies such as those described in 
Section 224 in connection with the negotiation of payment 
rates. As introduced and reported, H.R. 3200 would allow the 
Secretary discretion to establish a prescription drug 
formulary, and use other methods, including those used by 
private sector pharmacy benefit managers, to reduce 
prescription drug costs under the public health insurance 
option, and the Committee expects that the Secretary would 
implement such a formulary.
    Health care providers participating in Medicare would be 
participating providers in the public health insurance option 
unless they opted out in a process established by the 
Secretary.
    The provision would prohibit administrative or judicial 
review of a payment rate or methodology established under this 
section, or Section 224.

Sec. 224. Modernized Payment Initiatives and Delivery System Reform

            Current Law
    No current law.
            Proposed Law
    Beginning in the first year of the public option, the 
Secretary would be given the authority to use innovative 
payment mechanisms and policies to determine payments for items 
and services under the public option. The payment mechanisms 
and policies may include the following: patient-centered 
medical home, other care management payments, accountable care 
organizations, value-based purchasing, bundling of services, 
differential payment rates, performance or utilization based 
payments, partial capitation, and direct contracting with 
providers. The Secretary would be required to design and 
implement the payment mechanisms and policies in a way that 
promotes care that is integrated, patient-centered, efficient 
and of quality, and that seeks to either (a) improve health 
outcomes, (b) reduce health disparities, (c) address geographic 
variation in the provision of health services, (d) prevent or 
manage chronic illness, or (e) provide efficient and affordable 
care. To the extent allowed under the rules for Exchange-
participating plans, the provision would allow cost sharing and 
payment rates under the public option to be modified to 
encourage the use of services that promote health and value. 
The provision specifies that nothing in the subtitle would 
prevent the Secretary from varying payments based on different 
payment structure models for different geographic areas.

Sec. 225. Provider Participation

            Current Law
    No current law
            Proposed Law
    The Secretary would be required to establish conditions of 
participation for health care providers under the public 
option. The Secretary would be prohibited from allowing a 
health care provider to participate unless appropriately 
licensed or certified under State law. A health care provider 
that was excluded from participation in a Federal health care 
program (as defined in Section 1128(f) of the Social Security 
Act), would be prohibited from participating under the public 
option.
    Annually, the Secretary would be required to provide for 
physicians to participate in the public plan in one of two 
classes: (a) preferred physician, or (b) participating, non-
preferred physician. A preferred physician would be one who 
agreed to accept the established rate as payment in full. A 
participating non-preferred physician would be one who could 
balance bill-impose charges that exceed the charges that may be 
imposed for such items and services (in relation to the payment 
rate for such items and services under Medicare). The 
participating non-preferred physician would agree not to impose 
charges that exceed 115 percent of the amount established under 
Sec. 223 (consisting of the Medicare rate and the 5 percent 
addition). The Secretary would be required to provide for the 
participation of non-physician providers. Non-physician 
providers would only be allowed to participate if they accepted 
the established rates as payment in full.

Sec. 226. Application of Fraud and Abuse Provisions

            Current Law
    Title XVIII of the SSA, the Medicare statutes, requires 
activities that prevent, detect, investigate and prosecute 
health care fraud and abuse. In general, initiatives designed 
to fight fraud, waste, and abuse are considered program 
integrity activities. Program integrity is considered a 
component of the effective and efficient administration of 
government programs, which are entrusted with ensuring that 
taxpayer dollars are spent wisely. Efforts to ensure Medicare 
program integrity encompass a wide range of activities and 
require coordination among multiple private and public 
entities. This includes processes directed at reducing payment 
errors to Medicare providers, as well as activities to prevent, 
detect, investigate, and ultimately prosecute health care fraud 
and abuse.
            Proposed Law
    The provisions of law (other than criminal law) identified 
by the Secretary by regulation, in consultation with the 
Inspector General, that impose sanctions with respect to waste, 
fraud, and abuse under Medicare would also apply to the public 
health insurance option.

Sec. 227. Sense of the House Regarding Enrollment of Members in the 
        Public Option

    This provision would create a Sense of the House of 
Representatives that any members who vote in support of the 
public health insurance option are urged to forgo their right 
to participate in the FEHBP and enroll under the public option.

              Subtitle C--Individual Affordability Credits


Sec. 241. Availability Through Health Insurance Exchange

            Current Law
    None.
            Proposed Law
    This provision would provide premium and cost-sharing 
credits to ``affordable credit eligible individuals'' (defined 
in Section 242) for certain individuals enrolled in coverage 
through the Exchange. The Commissioner would pay each QHBP 
participating in the Exchange the aggregate amount of credits 
for all eligible individuals enrolled in that plan.
    An Exchange-eligible individual could apply to the 
Commissioner, through the Exchange or another entity under an 
arrangement made with the Commissioner, in a form and manner 
specified by the Commissioner. The Commissioner, through the 
Health Insurance Exchange or through another public entity 
under an arrangement made with the Commissioner, would make a 
determination as to eligibility of an individual for 
affordability credits. The Commissioner would establish a 
process whereby, on the basis of information otherwise 
available, individuals may be deemed eligible for credits. The 
Commissioner would also establish effective methods that ensure 
that individuals with limited English proficiency are able to 
apply for affordability credits.
    If the Commissioner determines that a state Medicaid agency 
has the capacity to make a determination of eligibility for 
affordability credits under the same standards as used by the 
Commissioner, under the Medicaid memorandum of understanding 
(described above in Section 205), the state Medicaid agency is 
authorized to conduct such determinations for any Exchange-
eligible individual who requests such a determination, and the 
Commissioner would reimburse the state Medicaid agency for the 
costs of conducting such determinations.
    In addition, there would be a Medicaid screen-and-enroll 
obligation, that when individuals apply for affordability 
credits, a determination would be made as to whether they are 
eligible for Medicaid. If they are determined eligible for 
Medicaid, the Commissioner, through the Medicaid memorandum of 
understanding, would provide for their enrollment under the 
state Medicaid plan, and the state would provide for the same 
periodic redetermination of eligibility under Medicaid as would 
otherwise apply.
    During the first two years of implementation, credits would 
be allowed for coverage under a Basic plan only. Beginning in 
the third year, credits would be allowed for coverage under 
Enhanced or Premium plans by a process established by the 
Commissioner. The individual would be responsible for any 
difference between the premium for an Enhanced or Premium plan 
and the credit amount based on a Basic plan applicable to that 
enrollee.
    The Commissioner would be authorized to request from the 
Treasury Secretary information that may be required to carry 
out this subtitle (regarding individual affordability credits), 
consistent with existing rules regarding confidentiality and 
disclosure of tax return information. Individuals who are 
eligible to receive credits would not receive them in the form 
of cash payments.

Sec. 242. Affordable Credit Eligible Individual

            Current Law
    None.
            Proposed Law
    This provision would define an ``affordable credit eligible 
individual'' as an individual who (1) is lawfully present in a 
state in the United States (other than those lawfully present 
as non-immigrants, with some exceptions), (2) is enrolled in an 
Exchange plan and is not enrolled through an employer plan that 
meets the employer responsibility to contribute toward employee 
and dependent coverage (described below in Section 312), (3) 
has family income below 400 percent FPL, and (4) who is not a 
Medicaid-eligible individual (other than some exceptions 
described above in Section 202). Family members who are 
eligible for credits will be treated as a single affordable 
credit eligible individual.
    Credits would not be available to full-time employees of an 
employer offering coverage consistent with the employer 
contribution rules described in Section 312. The Commissioner 
would make exceptions to this rule for divorced or separated 
individuals, or dependents of employees who would otherwise be 
eligible for credits. Exceptions would also be made, beginning 
in 2014, for full-time employees whose premium and cost sharing 
costs under a group health plan exceed 11 percent of family 
income.
    Income would be defined as ``modified adjusted gross 
income'' (MAGI), per the new 59B of the Internal Revenue Code, 
added in Sec. 401. The Commissioner would conduct a study to 
examine the application of income disregards for the purposes 
of the affordability credits. The Commissioner would submit a 
report to Congress of such a study, including recommendations 
as the Commissioner determines appropriate. Affordability 
credits would not be treated as a federal means-tested public 
benefit for eligibility purposes for qualified aliens under the 
Personal Responsibility and Work Opportunity Reconciliation Act 
of 1996.

Sec. 243. Affordable Premium Credit

            Current Law
    None.
            Proposed Law
    This section would establish the rules for determining the 
amount of the premium credit provided to eligible individuals 
enrolled in an Exchange plan. The ``affordability premium 
credit'' would be an amount equal to the lesser of (1) the 
amount by which the enrollee's premium exceeds a specified 
level that is considered affordable (``affordable premium 
amount''), or (2) the amount by which the ``reference premium'' 
(the average premium of the three least expensive Basic plans 
in the individual's premium rating area) exceeds the 
``affordable premium amount.'' In calculating the reference 
premium, the Commissioner may exclude plans with extremely 
limited enrollments.
    The affordable premium credit amount would be calculated on 
a monthly basis, based on the following table, to limit 
individuals' premium payments to a percentage of family income 
(MAGI) relative to the poverty level, as specified in the table 
below.

------------------------------------------------------------------------
                                                        Premium payment
             Federal poverty level (FPL)                  limit, as a
                                                       percent of income
------------------------------------------------------------------------
133% or less.........................................               1.5%
150%.................................................                 3%
200%.................................................                 5%
250%.................................................                 7%
300%.................................................                 9%
350%.................................................                10%
400%.................................................                11%
------------------------------------------------------------------------

    The Commissioner would establish premium percentage limits 
so that for individuals whose family income is between the 
income tiers specified in the table, the percentage limits 
would increase on a linear sliding scale.

Sec. 244. Affordability Cost-Sharing Credit

            Current Law
    None.
            Proposed Law
    The affordability cost-sharing credit under this section 
would be available to those enrolled in an Exchange plan whose 
income is less than 400 percent FPL. The Commissioner would 
specify reductions in cost-sharing amounts and the annual 
limitation (out-of-pocket maximum) on cost-sharing under a 
Basic plan so that the average percentage of covered benefits 
paid by the plan (as estimated by the Commissioner) is equal to 
the percentages (actuarial values) in the table for each income 
tier.

------------------------------------------------------------------------
                                                        Actuarial value
             Federal poverty level (FPL)                   percentage
------------------------------------------------------------------------
150% or less.........................................                97%
200%.................................................                93%
250%.................................................                85%
300%.................................................                78%
350%.................................................                72%
400%.................................................                70%
------------------------------------------------------------------------

    The Commissioner would provide payments to QHBP-offering 
entities in an amount equivalent to the increased actuarial 
value of benefits resulting from the cost-sharing reductions.

Sec. 245. Income Determinations

            Current Law
    None.
            Proposed Law
    This provision would use an individual's adjusted gross 
income in the most recent taxable year for determination of a 
credit under this Subtitle. The Commissioner would take steps 
as may be appropriate to ensure the accuracy of determinations 
and redeterminations under this subtitle. The Commissioner 
would request information from the Treasury Secretary as may be 
permitted to verify income information submitted in 
applications for credits. The Commissioner would establish 
procedures for verification of income if no tax return is 
available for the most recent completed tax year. The 
Commissioner would establish special rules for cases when an 
individual's income is expected (in a manner specified by the 
Commissioner) to be significantly different from the income 
submitted for application for and determination of a credit. 
The Commissioner would establish rules under which an 
individual would be required to inform the Commissioner when 
there is a significant change in income. Such mechanism would 
provide for guidelines that specify the circumstances that 
qualify as a significant change, the verifiable information 
required to document such a change, and the process for 
submission of such information. If the Commissioner receives 
new information from an individual regarding the family income 
of the individual, the Commissioner would provide for a 
redetermination of the individual's eligibility to be an 
affordable credit eligible individual.
    For a CHIP-eligible child deemed to be eligible for 
coverage through the Exchange, during the first year of 
implementation the Commissioner would establish rules under 
which family income of the child is deemed to be no greater 
than the family income of that child as most recently 
determined by the State under CHIP. The Commissioner would 
examine the feasibility and implication of adjusting the 
application of the federal poverty level in this Subtitle to 
take into account geographic differences, in order to reflect 
cost-of-living variations across the country. The Commissioner 
would submit a report to Congress, no later than the first day 
of the second year of implementation, on such a study and make 
recommendations as appropriate. An individual who intentionally 
misrepresents family income or fails to disclose to the 
Commissioner a significant change in family income would be 
liable for repayment of any improperly received credit and, in 
the case of intentional misrepresentation, may be required to 
pay an additional penalty as imposed by the Commissioner.

Sec. 246. No Federal Payment for Undocumented Aliens

            Current Law
    None
            Proposed Law
    No credits would be given to individuals who are not 
lawfully present in the country.

                      Subtitle D--State Innovation


Sec. 251. Waiver of ERISA Limitation; Application Instead of State 
        Single Payer System

    Added by an amendment at Committee, this provision would 
create an ERISA waiver to permit States to enact single payer 
laws. The Department of Labor would determine whether the State 
plan meets certain requirements to obtain the waiver. With such 
a waiver, a state single payer system would operate in lieu of 
the HIE in such state.

                    Title III--Shared Responsibility


                 Subtitle A--Individual Responsibility


Sec. 301. Individual Responsibility

    The Committee did not exercise jurisdiction over this 
section.

                  Subtitle B--Employer Responsibility


Sec. 311. Health Coverage Participation Requirements,

Sec. 312. Employer Responsibility to Contribute Towards Employee and 
        Dependent Coverage,

Sec. 313. Employer Contributions in Lieu of Coverage,

Sec. 314. Authority Related to Improper Steering,

Sec. 321. Satisfaction of Health Coverage Participation Requirements 
        under the Employee Retirement Income Security Act of 1974,

Sec. 322. Satisfaction of Health Coverage Participation Requirements 
        under the Internal Revenue Code of 1986,

Sec. 323. Satisfaction of Health Coverage Participation Requirements 
        under the Public Health Service Act, and

Sec. 324. Additional rules relating to health coverage participation 
        requirements

            Current Law
    There is no federal requirement that employers offer health 
insurance coverage to employees or their families. As with 
other compensation, the cost of employer-provided health 
coverage is a deductible business expense under section 162 of 
the Code. In addition, employer-provided health insurance 
coverage is generally not included in an employee's gross 
income.
    ERISA\124\ preempts state law relating to certain employer-
sponsored health plans. While ERISA specifically provides that 
its preemption rule does not exempt or relieve any person from 
any State law which regulates insurance, ERISA also provides 
that an employee benefit plan is not deemed to be engaged in 
the business of insurance for purposes of any State law 
regulating insurance companies or insurance contracts. As a 
result of this ERISA preemption, the courts have held that 
self-insured employer-sponsored health plans cannot be 
regulated under State insurance law.
---------------------------------------------------------------------------
    \124\Pub. L. No. 93-406
---------------------------------------------------------------------------
    While ERISA does not require an employer to offer health 
benefits, it does require compliance with a few limited 
standards if an employer chooses to offer health benefits, 
mainly compliance with plan fiduciary standards, reporting and 
disclosure requirements, and procedures for appealing denied 
benefit claims. ERISA was amended (as well as the Public Health 
Service Act and the Internal Revenue Code) in the Consolidated 
Omnibus Budget Reconciliation Act of 1985 (COBRA)\125\ and the 
Health Insurance Portability and Accountability Act of 1996 
(``HIPAA'')\126\, adding other Federal requirements for health 
plans, including rules for health care continuation coverage, 
limitations on exclusions from coverage based on preexisting 
conditions, and a few benefit requirements such as minimum 
hospital stay requirements for mothers following the birth of a 
child.
---------------------------------------------------------------------------
    \125\Pub. L. No. 99-272.
    \126\Pub. L. No. 104-191.
---------------------------------------------------------------------------
            Proposed Law

Section 311. Health Coverage Participation Requirements

    Section 311 of the bill sets forth the basic requirement 
for an employer to offer individual and family health care 
coverage, to make timely contributions to such coverage when 
accepted by the employee, and to make contributions to the HIE 
in lieu of such coverage when the employee declines the 
coverage but obtains coverage from an HIE plan.
    Additionally, employers that meet certain economic hardship 
qualifications could apply for a two-year employer hardship 
exemption that waives an employer's obligation to provide 
coverage required by this bill. The Secretary shall develop 
rules on the form and manner of such exemption applications and 
should take a robust approach to collecting information from an 
employer applicant and determining how significant and 
unavoidable such claimed hardship is. For example, employers 
should not be allowed to game or abuse this exemption through 
timed outlays, like executive bonuses, in order to create a 
balance sheet designed to demonstrate hardship when it comes to 
complying with health coverage requirements. The Committee 
expects the Secretary to require adequate documentation of the 
employer's financial circumstances to demonstrate whether it 
qualifies for this exemption.

Section 312. Employer Responsibility to Contribute towards Employee and 
        Dependent Coverage

    Section 312 specifies the minimum contribution amounts an 
employer must make to satisfy the coverage requirements for 
full-time and non-full-time employees. An employer may not 
satisfy the minimum contribution requirement through a salary 
reduction arrangement with the employee. This section also 
provides rules for the automatic enrollment of employees into 
employer plans and how employees may opt out of such automatic 
enrollment.
    Employers offering health benefit plans would be required 
to offer individual and family coverage under a qualified 
health benefits plan (or certain grandfathered health insurance 
plans)\127\ and to make contributions to help discharge the 
coverage costs of employees enrolled in the employer-provided 
plan. For full time employees, the employer would be required 
to contribute at least 72.5 percent of the lowest cost plan 
offered by the employer which meets the requirements of the 
essential benefits package\128\ (65 percent for eligible 
employees electing family coverage). For part time employees, 
the contribution amount from the employer would be a fraction 
of the minimum contributions made for full time employees, with 
such fraction being equal to a ratio of the average weekly 
hours worked by the employee compared to the minimum weekly 
hours specified by the Health Choices Commissioner. Employers 
would be required to provide information to the Secretaries of 
Labor, Health and Human Services, and the Treasury, to assist 
the Secretaries with ascertaining compliance with the 
proposal's requirements.
---------------------------------------------------------------------------
    \127\For a plan to be a ``qualified health benefits plan'' it would 
need to meet certain minimum coverage requirements, but it need not be 
offered through the Exchange.
    \128\The essential benefits package would include certain specified 
limits on required cost sharing, would ban annual or lifetime limit on 
covered health care items or services and certain specified minimum 
services, and would impose certain requirements as to network adequacy 
as determined by the Health Choices Commissioner.
---------------------------------------------------------------------------

Sec. 313. Employer Contributions in Lieu of Coverage

    Employers that elect not to provide eligible health benefit 
plans to their employees would be subject to a contribution to 
the Health Insurance Exchange Trust Fund equal to 8 percent of 
wages (as defined in section 3121 for purposes of FICA). There 
is a special rule for an employer who is considered a small 
employer, defined as any employer with an annual payroll for 
the preceding calendar year which does not exceed $400,000.
    Employers with payrolls that do not exceed $250,000 would 
be exempt. Employers with payrolls that exceed $250,000 but do 
not exceed $300,000 would be subject to a contribution equal to 
2 percent of wages; employers with payrolls that exceed 
$300,000 but do not exceed $350,000 would be subject to a 
contribution of 4 percent of wages; and employers with an 
annual payroll that exceeds $350,000 but do not exceed $400,000 
would be subject to a contribution of 6 percent of wages.
    Related employers and predecessors would be treated as a 
single employer for purposes of determining whether an employer 
qualifies for the special rule for small employers.

Section 314. Authority related to improper steering

    The Health Choices Commissioner (in coordination with the 
Secretaries of Labor, Health and Human Services, and the 
Treasury) would have the authority to set standards for 
determining whether employers were undertaking any actions to 
affect the risk pool within the Health Insurance exchange by 
inducing employees to enroll in Exchange-participating health 
plans rather than in employer-provided plans. An employer found 
to be violating these standards would be treated as not meeting 
the coverage requirements.

Section 321. Satisfaction of Health Coverage Participation Requirements 
        under the Employee Retirement Income Security Act of 1974

    Section 321 amends ERISA and sets forth the requirements 
for an employer to satisfy the health coverage participation 
requirements under the bill.

Elections

    Under the proposal, employers would be required to make an 
affirmative election regarding whether to offer health benefit 
plans to employees. Those employers electing to offer health 
benefit plans would be required to have their plans meet 
certain minimum coverage requirements. Employers choosing not 
to offer health benefit plans, or that offered plans that did 
not meet the proposal's qualification requirements, would be 
subject to additional taxes or penalties. Employers with 
payrolls of $250,000 or less would be exempt from the pay or 
play requirements.
    The Secretaries of Labor, Health and Human Services, and 
the Treasury, would prescribe coordinated rules for employer 
elections regarding coverage, including rules for the time, 
manner and form of elections, and the treatment of affiliated 
groups of employers, separate lines of business, and full 
versus part time employees.\129\ Subject to Section 151, 
employers electing to offer health benefit plans would be 
treated as having established and maintained a group health 
plan for purposes of ERISA and the Public Health Service Act 
(``PHSA''),\130\ and the proposal's health coverage 
participation requirements would be deemed to be part of the 
terms and conditions of the employer-provided plan.
---------------------------------------------------------------------------
    \129\The Commissioner and Secretaries would also be required to 
issue regulations applying the proposal's requirements to multiemployer 
plans (as defined in section 3(37) of ERISA).
    \130\42. U.S.C. 6A.
---------------------------------------------------------------------------
    Employers would be required to provide verification of 
their compliance with the proposal's health coverage 
participation requirement to the Health Choices Commissioner 
and to the Secretaries of Labor, Health and Human Services, and 
the Treasury.

Aggregation Rules

    For affiliated groups of employers, the identity of the 
employer would generally be determined by applying the employer 
aggregation rules in section 414(b), (c), (m), and (o).\131\ 
The same election would apply to all employers in the 
aggregated group. Employers would be able to make separate 
elections for employees in separate lines of business, or for 
full time employees and part time employees.
---------------------------------------------------------------------------
    \131\Section 414(b) provides that, for specified employee benefit 
purposes, all employees of all corporations which are members of a 
controlled group of corporations are treated as employed by a single 
employer. There is a similar rule in section 414(c) under which all 
employees of trades or businesses (whether or not incorporated) which 
are under common control are treated under regulations as employed by a 
single employer, and, in section 414(m), under which employees of an 
affiliated service group (as defined in that section) are treated as 
employed by a single employer. Section 414(o) authorizes the Treasury 
to issue regulations to prevent avoidance of the certain requirements 
under section 414(m).
---------------------------------------------------------------------------

Noncompliance with Coverage Requirements

    Employers who elected to provide coverage but whose health 
benefit plans failed to meet the proposal's minimum health 
coverage participation requirements would be subject to 
penalties of $100 per day for each employee to whom the failure 
applied.\132\ The penalties would not apply to (1) periods 
during which an employer used reasonable diligence but did not 
discover any failures, and (2) failures that were corrected 
within 30 days of discovery (but only if such failures were due 
to reasonable cause and not willful neglect). Penalties imposed 
on employers for unintentional failures (i.e., due to 
reasonable cause and not to willful neglect) would be limited 
to the lesser of: 10 percent of the aggregate amount paid or 
incurred by the employer during the preceding taxable year for 
group health plans, or $500,000.
---------------------------------------------------------------------------
    \132\The proposal would permit the penalties to be assessed through 
an excise tax or a civil penalty under ERISA or PHSA. Penalties for any 
particular failure would not be duplicated, however. The Secretary of 
Labor or Health and Human Services, as appropriate, would be required 
to give advance written notification of failure to employers prior to 
the assessment of a penalty. The Secretary of Health and Human Services 
would be able to bring civil actions in Federal court to collect civil 
penalties assessed under PHSA.
---------------------------------------------------------------------------
    The Secretaries would also be able to terminate an 
employer's election (and thus subject them to the required 
contribution imposed on employers that do not offer coverage) 
if it was determined that the employer was substantially 
noncompliant with health coverage participation requirements.
    The Secretary of Labor would be required to conduct 
periodic audits of employers in order to discover noncompliance 
with health coverage participation requirements. The Secretary 
of the Treasury and the Health Choices Commissioner would be 
informed of audit results.
    To facilitate such audits, especially with respect to the 
problem of employers misclassifying employees as independent 
contractors, the Secretary of Labor would be authorized to 
issue regulations that would require employers to keep records 
on both employees and certain claimed independent contractors. 
The Secretary should craft such recordkeeping requirements to 
assist in uncovering and remedying any misclassification of 
workers.

Sec. 322 Satisfaction of Health Coverage Participation Requirements 
        under the Internal Revenue Code

    The Committee did not exercise jurisdiction over this 
section.

Sec. 323. Satisfaction of Health Coverage Participation Requirements 
        under the Public Health Service Act

    The Committee did not exercise jurisdiction over this 
section.

Sec. 324. Additional Rules Relating to Health Coverage Participation 
        Requirements

    The Health Choices Commissioner and the Secretaries of 
Labor, Health and Human Services, and the Treasury would be 
required to execute an interagency memorandum of understanding 
to ensure coordination with respect to regulations, rulings, 
interpretations, and enforcement of the proposal.

         TITLE IV--AMENDMENTS TO INTERNAL REVENUE CODE OF 1986

    The Committee does not have jurisdiction over Title IV of 
Division A.

             Division B--Medicare and Medicaid Improvements

    The Committee does not have jurisdiction over Division B.

          Division C--Public Health and Workforce Development

    The Committee has jurisdiction over certain provisions in 
Division C, summarized below.

Sec. 2502. Establishment of Grant Program

            Current Law
    PHSA Section 831 establishes a Nurse Education, Practice, 
and Retention Grants program. Under this program, the Secretary 
may award grants or enter into contracts with a school of 
nursing, health care facility, or a partnership of the two, to 
respond to the nursing shortage and increase the number of 
registered nurses in specific priority areas, as described. 
Funds may be used to promote career advancement for nurses. 
Appropriations authority for this grant program expired at the 
end of FY2007.
            Proposed Law
    This provision would establish a new partnership grant 
program, administered by the Secretary of Labor, to provide 
matching grants for nursing training programs that aim to 
increase the number and skill levels of nurses, and expand 
nurse training capacity, in order to address projected nursing 
shortages. The Secretary of Labor would be required to 
establish this partnership grant program within six months of 
enactment.
    Eligible entities would be: (1) a health care entity that 
is jointly administered by a health care employer and a labor 
union representing that organization's health care employees, 
and that carries out activities using training funds as 
provided under Section 302(c)(6) of the Labor Management 
Relations Act (relating to funds paid by an employer to a trust 
fund established by a union to provide specified benefits or 
defray the costs of apprenticeship or training programs); (2) 
an entity that operates a training program jointly administered 
by one or more health care providers, facilities, or a trade 
association of health care providers; and by organizations that 
represent the interests of direct care health care workers or 
staff nurses, and include their leadership input; or (3) a 
State training partnership program that consists of non-profit 
organizations that have equal participation from industry 
(including both public and private employers) and labor 
organizations (including joint labor-management training 
programs), which may include representatives from local 
governments, worker investment agency one-stop career centers, 
community-based organizations, community colleges, and 
accredited schools of nursing. Eligible entities would be 
required to submit an appropriate application to the Secretary 
of Labor.
    An eligible entity that is a health care employer would 
also be required to demonstrate that it: (1) has an established 
nursing retention program; (2) provides nursing wages and 
benefits that are competitive for its market or that have been 
collectively bargained with a labor organization; and (3) 
provides support for employees participating in the training 
program through one or more specified means, including paid 
leave time, or contributions to a training fund, among others.
    The Secretary of Labor would be prohibited from awarding 
grants unless the applicant agrees to provide non-Federal 
matching funds that are equal to or no less than one dollar for 
each Federal dollar received. Matching funds could be secured 
from donations or provided through the cash equivalent of paid 
release time provided to incumbent worker students 
participating in educational programs. In addition, eligible 
entities would be required to demonstrate collaboration with 
accredited schools of nursing.
    Awardees would be required to use funds to create training 
programs to allow incumbent health care workers to become 
nurses, to provide for the advanced training of nurses, or 
both. In each case, a number of specified program components 
would be required.
    In making awards, the Secretary of Labor would be required 
to give preference to programs that improve nurse retention; 
that improve the diversity of nursing graduates; that improve 
the quality of nursing education; that have demonstrated 
success for transitioning health care workers into nursing or 
have established pilot programs to increase nurse faculty; or 
that are modeled after or affiliated with established 
transitioning and pilot programs mentioned above.
    Awardees would be required annually to submit an evaluation 
to the Secretary of Labor, which must include a description of 
the grantee's activities and an evaluation of program outcomes. 
Several outcomes that may be reported are specified.
    The Secretary of Labor would be required, within two years 
of enactment and annually thereafter, to report to Congress on 
the overall effectiveness of the grant programs carried out 
under this provision. This provision would authorize to be 
appropriated such sums as may be necessary to carry out the 
partnership grant program.

   Subtitle F--Standards for Accessibility to Medical Equipment for 
                     Individuals with Disabilities


Sec. 2541. Access for Individuals with Disabilities

    This provision would require the development of standards 
for accessible equipment, and require relevant agencies to 
ensure that all entities covered by the legislation meet the 
requirements of the Americans with Disabilities Act and Section 
504 of the Rehabilitation Act.

                    Subtitle G--Other Grant Programs


Sec. 2551. Reducing Student-to-School Nurse Ratios

    This provision would make available demonstration grants to 
eligible local education agencies with the purpose to reduce 
the student-to-school nurse ratio in public elementary and 
secondary schools with special consideration given to high-need 
local educational agencies who demonstrate the greatest need 
for new or additional nursing services by providing information 
on the current ratios of students to school nurses.

Sec. 2552. Wellness Program Grants

    This provision would authorize the Secretary of Labor to 
offer incentives to employers who establish qualified wellness 
programs for their employees. Participating employers must 
offer the programs to all employees and cannot mandate 
participation nor use participation as a condition to receive 
any financial incentive. The Committee recognizes the success 
of workplace wellness programs in promoting health and well-
being and in reducing medical expenditures. The Committee urges 
the Secretary to promote both public and private workplace 
wellness programs.

Sec. 2553. Health Professions Training for Diversity Programs

    This provision would authorize the Secretary of Labor to 
make grants to certain health care workforce development 
programs, particularly those focused on low-income persons, 
veterans, or rural or urban underserved populations.

        Subtitle H--Long-Term Care and Family Caregiver Support


Sec. 2561. Long-Term Care and Family Caregiver Support

    This provision would establish an advisory panel and a 
pilot program focused on improving the working conditions and 
training for the long-term care workforce.

                      Subtitle I--Online Resources


Sec. 2571. Web Site on Health Care Labor Market and Related Educational 
        and Training Opportunities

    This provision would require the Secretary of Labor to 
establish a web site that would serve as a clearinghouse of 
information on the health care labor market, including 
educational and training opportunities and financial aid 
information.

Sec. 2572. Online Health Workforce Training Programs

    This provision would establish a grant program with the 
Secretary of Labor to award grants to qualifying entities 
providing health care workers with online training.

                     VI. Explanation of Amendments

    The Amendment in the Nature of a Substitute and amendments 
thereof are explained in the body of this report.

           VII. Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1, the Congressional 
Accountability Act, requires a description of the application 
of this bill to the legislative branch. The Committee has 
determined that the bill would apply to the legislative branch 
and its employees in the same way it would apply to employers 
and employees in the private sector.

                   VIII. Regulatory Impact Statement

    The Committee has determined that H.R. 3200 provides for a 
new Health Insurance Exchange, in which participation is 
voluntary, and that such Exchange will be governed by a new 
Health Choices Administration which will establish, among other 
things, standards for what constitutes a qualified health 
benefit plan. With several exceptions for other acceptable 
coverage, employers and individuals will be required to 
maintain coverage via a qualified health benefit plan or pay a 
fee for not doing so. This new health care policy 
infrastructure will have the impact of ensuring that 97% of 
Americans have meaningful health insurance coverage and reduce 
the cost of providing such coverage for both employers and 
individuals.

                     IX. Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandates Reform Act, P.L. 104-4) requires a statement of 
whether the provisions of the reported bill include unfunded 
mandates. The Committee anticipates that this issue will be 
addressed in a CBO cost estimate letter for the bill when it 
proceeds to consideration on the House floor, following the 
merger of the three versions of the bill reported by the three 
committees of jurisdiction.

                          X. Earmark Statement

    H.R. 3200 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9(d), 9(e) or 9(f) of rule XXI.

                             XI. Roll Call



    XII. Statement of Oversight Findings and Recommendations of the 
                               Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the rules of the House of Representatives, 
the Committee's oversight findings and recommendations are 
reflected in the body of this report.

            XIII. New Budget Authority and CBO Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the House of Representatives and section 308(a) of the 
Congressional Budget Act of 1974 and with respect to 
requirements of 3(c)(3) of rule XIII of the House of 
Representatives and section 402 of the Congressional Budget Act 
of 1974, the Committee anticipates that a CBO cost estimate 
letter on H.R. 3200 will address these issues when the bill 
proceeds to consideration on the House floor. CBO is unable to 
provide a cost estimate prior to the reconciliation of the 
versions of the bill as amended and reported by the three 
committees of jurisdiction.

       XIV. Statement of General Performance Goals and Objectives

    In accordance with clause 3(c) of House rule XIII, the goal 
of H.R. 3200 is to increase access to affordable quality health 
coverage and contain costs.

                 XV. Constitutional Authority Statement

    Under clause 3(d)(1) of rule XIII of the Rules of the House 
of Representatives, the Committee must include a statement 
citing the specific powers granted to Congress in the 
Constitution to enact the law proposed by H.R. 3200. The 
amendments and new law made by this bill are within Congress' 
authority under Article I, Section 8, Clauses 1, 3, and 18 of 
the Constitution.

                        XVI. Committee Estimate

    Clause 3(d)(2) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison of the 
costs that would be incurred in carrying out H.R. 3200.
    The Committee anticipates that, as noted earlier, a CBO 
cost estimate will address these issues when the bill proceeds 
to consideration on the House floor.

      XVII. Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, 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, existing law in which no change is 
proposed is shown in roman):

            EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974


                   SHORT TITLE AND TABLE OF CONTENTS

  Section 1. This Act may be cited as the ``Employee Retirement 
Income Security Act of 1974''.

                            TABLE OF CONTENTS

     * * * * * * *

             TITLE I--PROTECTION OF EMPLOYEE BENEFIT RIGHTS

     * * * * * * *

                    Subtitle B--Regulatory Provisions

     * * * * * * *

                 Part 7--Group Health Plan Requirements

     * * * * * * *

                      Subpart B--Other Requirements

     * * * * * * *
Sec. 715. Protection against post-retirement reduction of retiree health 
          benefits.
     * * * * * * *

       Part 8--National Health Coverage Participation Requirements

Sec. 801. Election of employer to be subject to national health coverage 
          participation requirements.
Sec. 802. Treatment of coverage resulting from election.
Sec. 803. Health coverage participation requirements.
Sec. 804. Rules for applying requirements.
Sec. 805. Termination of election in cases of substantial noncompliance.
Sec. 806. Regulations.
     * * * * * * *

TITLE I--PROTECTION OF EMPLOYEE BENEFIT RIGHTS

           *       *       *       *       *       *       *


Subtitle B--Regulatory Provisions

           *       *       *       *       *       *       *


Part 5--Administration and Enforcement

           *       *       *       *       *       *       *


                           CIVIL ENFORCEMENT

  Sec. 502. (a) A civil action may be brought--
          (1) * * *

           *       *       *       *       *       *       *

          (6) by the Secretary to collect any civil penalty 
        under [paragraph (2), (4), (5), (6), (7), (8), or (9) 
        of subsection (c)] paragraph (2), (4), (5), (6), (7), 
        (8), (9), (10), or (11) of subsection (c) or under 
        subsection (i) or (l);

           *       *       *       *       *       *       *

  (c)(1) * * *

           *       *       *       *       *       *       *

  (11) Health coverage participation requirements.--
          (A) Civil penalties.--In the case of any employer who 
        fails (during any period with respect to which an 
        election under section 801(a) is in effect) to satisfy 
        the health coverage participation requirements with 
        respect to any employee, the Secretary may assess a 
        civil penalty against the employer of $100 for each day 
        in the period beginning on the date such failure first 
        occurs and ending on the date such failure is 
        corrected.
          (B) Health coverage participation requirements.--For 
        purposes of this paragraph, the term ``health coverage 
        participation requirements'' has the meaning provided 
        in section 803.
          (C) Limitations on amount of penalty.--
                  (i) Penalty not to apply where failure not 
                discovered exercising reasonable diligence.--No 
                penalty shall be assessed under subparagraph 
                (A) with respect to any failure during any 
                period for which it is established to the 
                satisfaction of the Secretary that the employer 
                did not know, or exercising reasonable 
                diligence would not have known, that such 
                failure existed.
                  (ii) Penalty not to apply to failures 
                corrected within 30 days.--No penalty shall be 
                assessed under subparagraph (A) with respect to 
                any failure if--
                          (I) such failure was due to 
                        reasonable cause and not to willful 
                        neglect, and
                          (II) such failure is corrected during 
                        the 30-day period beginning on the 1st 
                        date that the employer knew, or 
                        exercising reasonable diligence would 
                        have known, that such failure existed.
                  (iii) Overall limitation for unintentional 
                failures.--In the case of failures which are 
                due to reasonable cause and not to willful 
                neglect, the penalty assessed under 
                subparagraph (A) for failures during any 1-year 
                period shall not exceed the amount equal to the 
                lesser of--
                          (I) 10 percent of the aggregate 
                        amount paid or incurred by the employer 
                        (or predecessor employer) during the 
                        preceding 1-year period for group 
                        health plans, or
                          (II) $500,000.
          (D) Advance notification of failure prior to 
        assessment.--Before a reasonable time prior to the 
        assessment of any penalty under this paragraph with 
        respect to any failure by an employer, the Secretary 
        shall inform the employer in writing of such failure 
        and shall provide the employer information regarding 
        efforts and procedures which may be undertaken by the 
        employer to correct such failure.
          (E) Coordination with excise tax.--Under regulations 
        prescribed in accordance with section 324 of the 
        America's Affordable Health Choices Act of 2009, the 
        Secretary and the Secretary of the Treasury shall 
        coordinate the assessment of penalties under this 
        section in connection with failures to satisfy health 
        coverage participation requirements with the imposition 
        of excise taxes on such failures under section 4980H(b) 
        of the Internal Revenue Code of 1986 so as to avoid 
        duplication of penalties with respect to such failures.
          (F) Deposit of penalty collected.--Any amount of 
        penalty collected under this paragraph shall be 
        deposited as miscellaneous receipts in the Treasury of 
        the United States.
  [(10)] (12) The Secretary and the Secretary of Health and 
Human Services shall maintain such ongoing consultation as may 
be necessary and appropriate to coordinate enforcement under 
this subsection with enforcement under section 1144(c)(8) of 
the Social Security Act.

           *       *       *       *       *       *       *


                 Part 7--Group Health Plan Requirements

     Subpart A--Requirements Relating to Portability, Access, and 
                              Renewability

SEC. 701. INCREASED PORTABILITY THROUGH LIMITATION ON PREEXISTING 
                    CONDITION EXCLUSIONS.

  (a) Limitation on Preexisting Condition Exclusion Period; 
Crediting for Periods of Previous Coverage.--Subject to 
subsection (d), a group health plan, and a health insurance 
issuer offering group health insurance coverage, may, with 
respect to a participant or beneficiary, impose a preexisting 
condition exclusion only if--
          (1) such exclusion relates to a condition (whether 
        physical or mental), regardless of the cause of the 
        condition, for which medical advice, diagnosis, care, 
        or treatment was recommended or received within the [6-
        month period] 30-day period ending on the enrollment 
        date;
          (2) such exclusion extends for a period of not more 
        than [12 months] 3 months (or [18 months] 9 months in 
        the case of a late enrollee) after the enrollment date; 
        and

           *       *       *       *       *       *       *


Subpart B--Other Requirements

           *       *       *       *       *       *       *


SEC. 715. PROTECTION AGAINST POST-RETIREMENT REDUCTION OF RETIREE 
                    HEALTH BENEFITS.

  (a) In General.--Every group health plan shall contain a 
provision which expressly bars the plan, or any fiduciary of 
the plan, from reducing the benefits provided under the plan to 
a retired participant, or beneficiary of such participant, if 
such reduction affects the benefits provided to the participant 
or beneficiary as of the date the participant retired for 
purposes of the plan and such reduction occurs after the 
participant's retirement unless such reduction is also made 
with respect to active participants.
  (b) No Reduction.--Notwithstanding that a group health plan 
described in subsection (a) may contain a provision reserving 
the general power to amend or terminate the plan or a provision 
specifically authorizing the plan to make post-retirement 
reductions in retiree health benefits, it shall be prohibited 
for any group health plan, whether through amendment or 
otherwise, to reduce the benefits provided to a retired 
participant or his or her beneficiary under the terms of the 
plan if such reduction of benefits occurs after the date the 
participant retired for purposes of the plan and reduces 
benefits that were provided to the participant, or his or her 
beneficiary, as of the date the participant retired unless such 
reduction is also made with respect to active participants.

           *       *       *       *       *       *       *


      PART 8--NATIONAL HEALTH COVERAGE PARTICIPATION REQUIREMENTS

SEC. 801. ELECTION OF EMPLOYER TO BE SUBJECT TO NATIONAL HEALTH 
                    COVERAGE PARTICIPATION REQUIREMENTS.

  (a) In General.--An employer may make an election with the 
Secretary to be subject to the health coverage participation 
requirements.
  (b) Time and Manner.--An election under subsection (a) may be 
made at such time and in such form and manner as the Secretary 
may prescribe.

SEC. 802. TREATMENT OF COVERAGE RESULTING FROM ELECTION.

  (a) In General.--If an employer makes an election to the 
Secretary under section 801--
          (1) such election shall be treated as the 
        establishment and maintenance of a group health plan 
        (as defined in section 733(a)) for purposes of this 
        title, subject to section 151 of the America's 
        Affordable Health Choices Act of 2009, and
          (2) the health coverage participation requirements 
        shall be deemed to be included as terms and conditions 
        of such plan.
  (b) Periodic Investigations to Discover Noncompliance.--The 
Secretary shall regularly audit a representative sampling of 
employers and group health plans and conduct investigations and 
other activities under section 504 with respect to such 
sampling of plans so as to discover noncompliance with the 
health coverage participation requirements in connection with 
such plans. The Secretary shall communicate findings of 
noncompliance made by the Secretary under this subsection to 
the Secretary of the Treasury and the Health Choices 
Commissioner. The Secretary shall take such timely enforcement 
action as appropriate to achieve compliance.
  (c) Recordkeeping.--To facilitate the audits described in 
subsection (b), the Secretary shall promulgate recordkeeping 
requirements for employers to account for both employees of the 
employer and individuals whom the employer has not treated as 
employees of the employer but with whom the employer, in the 
course of the trade or business in which the employer is 
engaged, has engaged for the performance of labor or services.

SEC. 803. HEALTH COVERAGE PARTICIPATION REQUIREMENTS.

  For purposes of this part, the term ``health coverage 
participation requirements'' means the requirements of part 1 
of subtitle B of title III of division A of America's 
Affordable Health Choices Act of 2009 (as in effect on the date 
of the enactment of such Act).

SEC. 804. RULES FOR APPLYING REQUIREMENTS.

  (a) Affiliated Groups.--In the case of any employer which is 
part of a group of employers who are treated as a single 
employer under subsection (b), (c), (m), or (o) of section 414 
of the Internal Revenue Code of 1986, the election under 
section 801 shall be made by such employer as the Secretary may 
provide. Any such election, once made, shall apply to all 
members of such group.
  (b) Separate Elections.--Under regulations prescribed by the 
Secretary, separate elections may be made under section 801 
with respect to--
          (1) separate lines of business, and
          (2) full-time employees and employees who are not 
        full-time employees.

SEC. 805. TERMINATION OF ELECTION IN CASES OF SUBSTANTIAL 
                    NONCOMPLIANCE.

  The Secretary may terminate the election of any employer 
under section 801 if the Secretary (in coordination with the 
Health Choices Commissioner) determines that such employer is 
in substantial noncompliance with the health coverage 
participation requirements and shall refer any such 
determination to the Secretary of the Treasury as appropriate.

SEC. 806. REGULATIONS.

  The Secretary may promulgate such regulations as may be 
necessary or appropriate to carry out the provisions of this 
part, in accordance with section 324(a) of the America's 
Affordable Health Choices Act of 2009. The Secretary may 
promulgate any interim final rules as the Secretary determines 
are appropriate to carry out this part.

           *       *       *       *       *       *       *

                              ----------                              


                       REHABILITATION ACT OF 1973



           *       *       *       *       *       *       *
TITLE V--RIGHTS AND ADVOCACY

           *       *       *       *       *       *       *


SEC. 510. STANDARDS FOR ACCESSIBILITY OF MEDICAL DIAGNOSTIC EQUIPMENT.

  (a) Standards.--Not later than 9 months after the date of 
enactment of the America's Affordable Health Choices Act of 
2009, the Architectural and Transportation Barriers Compliance 
Board shall issue guidelines setting forth the minimum 
technical criteria for medical diagnostic equipment used in (or 
in conjunction with) physician's offices, clinics, emergency 
rooms, hospitals, and other medical settings. The guidelines 
shall ensure that such equipment is accessible to, and usable 
by, individuals with disabilities, including provisions to 
ensure independent entry to, use of, and exit from the 
equipment by such individuals to the maximum extent possible.
  (b) Medical Diagnostic Equipment Covered.--The guidelines 
issued under subsection (a) for medical diagnostic equipment 
shall apply to equipment that includes examination tables, 
examination chairs (including chairs used for eye examinations 
or procedures, and dental examinations or procedures), weight 
scales, mammography equipment, x-ray machines, and other 
equipment commonly used for diagnostic or examination purposes 
by health professionals.
  (c) Interim Standards.--Until the date on which final 
regulations are issued under subsection (d), purchases of 
examination tables, weight scales, and mammography equipment 
and used in (or in conjunction with) medical settings described 
in subsection (a), shall adhere to the following interim 
accessibility requirements:
          (1) Examination tables shall be height-adjustable 
        between a range of at least 18 inches to 37 inches.
          (2) Weight scales shall be capable of weighing 
        individuals who remain seated in a wheelchair or other 
        personal mobility aid.
          (3) Mammography machines and equipment shall be 
        capable of being used by individuals in a standing, 
        seated, or recumbent position, including individuals 
        who remain seated in a wheelchair or other personal 
        mobility aid.
  (d) Regulations.--Not later than 6 months after the date of 
the issuance of the guidelines under subsection (a), each 
appropriate Federal agency authorized to promulgate regulations 
under this Act or under the Americans with Disabilities Act 
shall--
          (1) prescribe regulations in an accessible format as 
        necessary to carry out the provisions of such Act and 
        section 504 of this Act that include accessibility 
        standards that are consistent with the guidelines 
        issued under subsection (a); and
          (2) ensure that health care providers and health care 
        plans covered by the America's Affordable Health 
        Choices Act of 2009 meet the requirements of the 
        Americans with Disabilities Act and section 504, 
        including provisions ensuring that individuals with 
        disabilities receive equal access to all aspects of the 
        health care delivery system.
  (e) Review and Amend.--The Architectural and Transportation 
Barriers Compliance Board shall periodically review and, as 
appropriate, amend the guidelines as prescribed under 
subsection (a). Not later than 6 months after the date of the 
issuance of such revised guidelines, revised regulations 
consistent with such guidelines shall be promulgated in an 
accessible format by the appropriate Federal agencies described 
in subsection (d).

           *       *       *       *       *       *       *

                              ----------                              


                    WORKFORCE INVESTMENT ACT OF 1998



           *       *       *       *       *       *       *
TITLE I--WORKFORCE INVESTMENT SYSTEMS

           *       *       *       *       *       *       *


Subtitle D--National Programs

           *       *       *       *       *       *       *


SEC. 171. DEMONSTRATION, PILOT, MULTISERVICE, RESEARCH, AND MULTISTATE 
                    PROJECTS.

  (a) * * *

           *       *       *       *       *       *       *

  (f) Health Professions Training for Diversity Program.--
          (1) In general.--The Secretary shall make available 
        20 grants of no more than $1,000,000 annually to 
        nonprofit organizations for the purposes of providing 
        workforce development training program for those who 
        are currently employed in the health care workforce.
          (2) Eligibility.--For the purposes of providing 
        assistance and services under the program established 
        in this subsection, grants are to be awarded to Area 
        Health Education Centers or similar nonprofit 
        organizations involved in the development and 
        implementation of health care workforce development 
        programs and that--
                  (A) have a formal affiliation with a hospital 
                or community health center, and institution of 
                higher education as defined by section 101 of 
                the Higher Education Act of 1965;
                  (B) have a history of providing program 
                services to minority populations; and
                  (C) provide workforce development programs to 
                low-income persons, veterans, or urban and 
                rural underserved communities.
  (g) Online Health Workforce Training Program.--
          (1) Grant program.--
                  (A) In general.--The Secretary shall award 
                National Health Workforce Online Training 
                Grants on a competitive basis to eligible 
                entities to enable such entities to carry out 
                training for individuals to attain or advance 
                in health care occupations. An entity may 
                leverage such grant with other Federal, State, 
                local, and private resources, in order to 
                expand the participation of businesses, 
                employees, and individuals in such training 
                programs.
                  (B) Eligibility.--In order to receive a grant 
                under the program established under this 
                paragraph--
                          (i) an entity shall be an educational 
                        institution, community-based 
                        organization, non-profit organization, 
                        workforce investment board, or local or 
                        county government; and
                          (ii) an entity shall provide online 
                        workforce training for individuals 
                        seeking to attain or advance in health 
                        care occupations, including nursing, 
                        nursing assistants, dentistry, 
                        pharmacy, health care management and 
                        administration, public health, health 
                        information systems analysis, medical 
                        assistants, and other health care 
                        practitioner and support occupations.
                  (C) Priority.--Priority in awarding grants 
                under this paragraph shall be given to entities 
                that--
                          (i) have demonstrated experience in 
                        implementing and operating online 
                        worker skills training and education 
                        programs;
                          (ii) have demonstrated experience 
                        coordinating activities, where 
                        appropriate, with the workforce 
                        investment system; and
                          (iii) conduct training for 
                        occupations with national or local 
                        shortages.
                  (D) Data collection.--Grantees under this 
                paragraph shall collect and report information 
                on--
                          (i) the number of participants;
                          (ii) the services received by the 
                        participants;
                          (iii) program completion rates;
                          (iv) factors determined as 
                        significantly interfering with program 
                        participation or completion;
                          (v) the rate of job placement; and
                          (vi) other information as determined 
                        as needed by the Secretary.
                  (E) Outreach.--Grantees under this paragraph 
                shall conduct outreach activities to 
                disseminate information about their program and 
                results to workforce investment boards, local 
                governments, educational institutions, and 
                other workforce training organizations.
                  (F) Performance levels.--The Secretary shall 
                establish indicators of performance that will 
                be used to evaluate the performance of grantees 
                under this paragraph in carrying out the 
                activities described in this paragraph. The 
                Secretary shall negotiate and reach agreement 
                with each grantee regarding the levels of 
                performance expected to be achieved by the 
                grantee on the indicators of performance.
                  (G) Authorization of appropriations.--There 
                are authorized to be appropriated to the 
                Secretary to carry out this subsection 
                $50,000,000 for fiscal years 2011 through 2020.
          (2) Online health professions training program 
        clearinghouse.--
                  (A) Description of grant.--The Secretary 
                shall award one grant to an eligible 
                postsecondary educational institution to 
                provide the services described in this 
                paragraph.
                  (B) Eligibility.--To be eligible to receive a 
                grant under this paragraph, a postsecondary 
                educational institution shall--
                          (i) have demonstrated the ability to 
                        disseminate research on best practices 
                        for implementing workforce investment 
                        programs; and
                          (ii) be a national leader in 
                        producing cutting-edge research on 
                        technology related to workforce 
                        investment systems under subtitle B.
                  (C) Services.--The postsecondary educational 
                institution that receives a grant under this 
                paragraph shall use such grant--
                          (i) to provide technical assistance 
                        to entities that receive grants under 
                        paragraph (1);
                          (ii) to collect and nationally 
                        disseminate the data gathered by 
                        entities that receive grants under 
                        paragraph (1); and
                          (iii) to disseminate the best 
                        practices identified by the National 
                        Health Workforce Online Training Grant 
                        Program to other workforce training 
                        organizations.
                  (D) Authorization of appropriations.--There 
                are authorized to be appropriated to the 
                Secretary to carry out this subsection 
                $1,000,000 for fiscal years 2011 through 2020.

           *       *       *       *       *       *       *

                              ----------                              


                      OLDER AMERICANS ACT OF 1965



           *       *       *       *       *       *       *
TITLE II--ADMINISTRATION ON AGING

           *       *       *       *       *       *       *


                    FUNCTIONS OF ASSISTANT SECRETARY

  Sec. 202. (a) * * *
  (b) To promote the development and implementation of 
comprehensive, coordinated systems at Federal, State, and local 
levels that enable older individuals to receive long-term care 
in home and community-based settings, in a manner responsive to 
the needs and preferences of older individuals and their family 
caregivers, the Assistant Secretary shall, consistent with the 
applicable provisions of this title--
          (1) collaborate, coordinate, and consult with other 
        Federal entities responsible for formulating and 
        implementing programs, benefits, and services related 
        to providing long-term care, and may make grants, 
        contracts, and cooperative agreements with funds 
        received from other Federal entities, and, in carrying 
        out the purposes of this paragraph, shall make 
        recommendations to other Federal entities regarding 
        appropriate and effective means of identifying, 
        promoting, and implementing investments in the direct 
        care workforce necessary to meet the growing demand for 
        long-term health services and supports and assisting 
        States in developing a comprehensive state workforce 
        development plans with respect to such workforce 
        including efforts to systematically assess, track, and 
        report on workforce adequacy and capacity;

           *       *       *       *       *       *       *

  (g)(1) The Assistant Secretary shall establish a Personal 
Care Attendant Workforce Advisory Panel and pilot program to 
improve working conditions and training for long term care 
workers, including home health aides, certified nurse aides, 
and personal care attendants.
  (2) The Panel shall include representatives from--
          (A) relevant health care agencies and facilities 
        (including personal or home care agencies, home health 
        care agencies, nursing homes and residential care 
        facilities);
          (B) the disability community;
          (C) the nursing community;
          (D) direct care workers (which may include unions and 
        national organizations);
          (E) older individuals and family caregivers;
          (F) State and federal health care entities; and
          (G) experts in workforce development and adult 
        learning.
  (3) Within one year after the establishment of the Panel, the 
Panel shall submit a report to the Assistant Secretary 
articulating core competencies for eligible personal or home 
care aides necessary to successfully provide long-term services 
and supports to eligible consumers, as well as recommended 
training curricula and resources.
  (4) Within 180 days after receipt by the Assistant Secretary 
of the report under paragraph (3), the Assistant Secretary 
shall establish a 3-year demonstration program in 4 states to 
pilot and evaluate the effectiveness of the competencies 
articulated by the Panel and the training curricula and 
training methods recommended by the Panel.
  (5) Not later than 1 year after the completion of the 
demonstration program under paragraph (4), the Assistant 
Secretary shall submit to each House of the Congress a report 
containing the results of the evaluations by the Assistant 
Secretary pursuant to paragraph (4), together with such 
recommendations for legislation or administrative action as the 
Assistant Secretary determines appropriate.

           *       *       *       *       *       *       *


      TITLE III--GRANTS FOR STATE AND COMMUNITY PROGRAMS ON AGING

Part A--General Provisions

           *       *       *       *       *       *       *


             AUTHORIZATION OF APPROPRIATIONS; USES OF FUNDS

  Sec. 303. (a) * * *

           *       *       *       *       *       *       *

  (e)(1) * * *
  (2) There are authorized to be appropriated to carry out part 
E (relating to family caregiver support) $166,500,000 for 
fiscal year 2008, [$173,000,000 for fiscal year 2009, 
$180,000,000 for fiscal year 2010, and $187,000,000 for fiscal 
year 2011] and $250,000,000 for each of the fiscal years 2010, 
2011, and 2012.

           *       *       *       *       *       *       *


                    XVIII. Committee Correspondence

    None.

                          XIX. Minority Views

                                ------                                


                             MINORITY VIEWS

Introduction
    Committee Republicans agree that health care reform 
legislation should make health care more affordable, improve 
quality, and reduce the number of uninsured Americans. As 
policymakers, we should be doing all that we can to make 
positive reforms to the health care system that would use 
private markets to lower the cost of health care insurance; 
improve affordability and accessibility for both employers and 
employees; give employers and employees the tools they need to 
encourage healthier behavior; change health care provider 
reimbursement structures to reward high-quality results; and 
address the long-term solvency of existing entitlement 
programs, like Medicare and Medicaid.
    Considering that the majority of Americans obtain health 
insurance coverage through their employers, the employment-
based system plays a central role in the delivery of health 
care. Recognizing the importance of employment-based health 
coverage, Committee Republicans have led efforts in recent 
years to lower the cost and increase the affordability of 
employment-based health coverage. Committee Republicans 
continue to support efforts to assist employers and employees 
in obtaining cost-effective, high quality coverage.
    In assessing health care reform legislation, Committee 
Republicans bear in mind a number of important principles. 
Foremost, reform efforts should allow individuals who are 
satisfied with their current coverage to keep it, and give 
Americans the freedom to choose the health plans and medical 
providers that best fit their needs. Second, reforms should 
make quality health care coverage affordable and accessible for 
every American, regardless of pre-existing health conditions. 
Third, we must guard against a new government-run health care 
plan that would eliminate the health coverage that more than 
100 million Americans currently receive through their job, or 
limit their choice of doctors and medical treatment options. 
Fourth, reform efforts must ensure that medical decisions are 
made by patients and doctors, not government bureaucrats. 
Finally, reforms must improve Americans' lives through 
effective prevention, wellness, and disease management 
programs, while developing new treatments and cures for life-
threatening diseases.
    Measured against these principles, H.R. 3200, as reported 
from the Committee on Education and Labor, wholly fails to meet 
the mark. For these reasons, and as set forth more fully below, 
Committee Republicans oppose the bill.
H.R. 3200, Procedural History
    On the afternoon of Friday, June 19, 2009, House Democrats 
circulated the ``TriCommittee Draft Proposal for Health Care 
Reform,'' an 852-page health care plan crafted behind closed 
doors by the Democrat Chairmen of three House committees with 
jurisdiction over health care issues. The draft proposal was 
not formally introduced or assigned a legislative bill number. 
There were vast shortcomings and gaps in the draft proposal, 
including the lack of a cost estimate and the absence of 
several key provisions, including specific financing 
mechanisms. House Republicans were denied the opportunity to 
provide meaningful input on the ``draft proposal,'' and met for 
the first time with Committee Democrats only two days before 
the proposal was publicly circulated.
    On Tuesday, June 23, 2009, the Committee on Education and 
Labor held a hearing on the draft proposal. Although Committee 
Republicans and invited witnesses provided valuable commentary, 
the short time frame for review and the significant gaps in the 
draft proposal hindered the ability to comprehensively analyze 
the Democrat health care reform plan prior to the hearing on 
June 23.
    Thereafter, on July 14, 2009, House Democrat Leaders 
formally introduced their health care reform bill, H.R. 3200, 
the ``America's Affordable Health Choices Act of 2009.'' The 
introduced bill totaled 1,017 pages (an increase of 165 pages) 
and contained numerous technical and substantive changes. No 
formal estimate of the cost of H.R. 3200 has been provided; 
rather, prior to the Committee's consideration of the bill a 
``preliminary,'' incomplete score of H.R. 3200 prepared by the 
Congressional Budget Office (CBO) was provided. This 
``preliminary'' analysis was not based on H.R. 3200, but rather 
on ``technical specifications'' of the June 19 TriCommittee 
draft proposal that were provided to CBO by House Democrats.
    On the afternoon of July 15, 2009, the full Committee on 
Education and Labor commenced its markup of H.R. 3200 with 
Member opening statements. Late on that same afternoon, 
Committee Republicans were provided with the Chairman's 
Amendment in the Nature of a Substitute, which totaled 1,040 
pages (adding another 23 pages) and contained further 
substantive changes to H.R. 3200. Not one hearing was held on 
the Democrat-generated health care reform provisions of H.R. 
3200, or on the Chairman's Amendment in the Nature of a 
Substitute. On the morning of July 17, 2009, after 
consideration of 42 amendments, the Committee completed its 
consideration of H.R. 3200, and the bill was ordered favorably 
reported to the House of Representatives by a vote of 26-22. 
Three Democrats joined with all Committee Republicans in 
opposing the bill.
General Concerns Regarding H.R. 3200
    Committee Republicans are concerned about the inexplicable 
rush to legislate on this important issue. The changes 
contemplated by H.R. 3200 will significantly impact more than 
one-sixth of the American economy, yet House Democrats drafted 
the partisan bill behind closed doors and without any 
meaningful participation by Republicans and even many 
Democrats. Committee Republicans have not been provided with an 
adequate amount of time to fully analyze the complex provisions 
of H.R. 3200. Further, we expect that the bill will change yet 
again following consideration by the three House Committees of 
jurisdiction, and prior to consideration by the full House, if 
it should occur. However, our review to date reveals numerous 
and significant policy concerns.
    In general, Committee Republicans are concerned that H.R. 
3200 fails to address the problems in the U.S. health care 
system, and in fact will only serve to exacerbate these 
problems through the adoption of misguided and historically 
ineffective policies. Moreover, the bill's true cost is 
unknown, but will likely be excessive. The cost will likely 
exceed $1.3 trillion over ten years, and the latest CBO 
estimate indicates that the bill will add more than $239 
billion to the federal deficit over a ten-year period. More 
troubling is the fact that under H.R. 3200, the federal 
government starts collecting new taxes and revenues within a 
year or two of enactment, but implementation of many of the 
programs (i.e., the creation of a new federal bureaucracy and 
insurance coverage subsidies) is delayed, which artificially 
lowers the ``cost'' of the legislation under consideration by 
CBO. Further, in the later years of the CBO ten-year estimate, 
the costs of the program significantly outstrip new revenues, 
meaning the true costs of the Democrat legislation are much 
higher over the long term (i.e., beyond CBO's limited ten-year 
period). This is a cost the country cannot afford to bear.
    The specific problems of the bill are numerous. For 
instance, Democrats attempt to pay for some of the cost through 
significantly higher taxes on individuals and businesses, with 
small business owners (those who create the majority of 
American jobs) appearing to shoulder a disproportionate share 
of the burden. It creates a massive new federal bureaucracy 
with unprecedented powers to determine ``acceptable'' health 
care coverage, and tax those who fail to comply with the bill's 
numerous legal mandates. The bill essentially eliminates 
current state-based private markets for health insurance. H.R. 
3200 creates a ``public health insurance option'' (i.e., 
government-run health insurance plan) controlled by the new 
federal bureaucracy that is based on the flawed Medicare 
payment structure, and will undermine the private health 
insurance coverage currently enjoyed by millions of Americans. 
H.R. 3200 does little, if anything, to change the flawed health 
care delivery and payment structure, which is critical to 
control health care costs, increase affordability, and make 
coverage more accessible to Americans. The goal of H.R. 3200 
appears to be nothing less than centralization of the country's 
health care sector in the federal government. It should be 
rejected.

Concerns Relating to ERISA Group Health Plans

    The 1,040-page bill is divided into three separate 
Divisions: Division A, entitled ``Affordable Health Care 
Choices''; Division B, ``Medicare and Medicaid Improvements''; 
and Division C, ``Public Health and Workforce Development''. 
The Committee on Education and Labor maintains jurisdiction 
over much of Division A, and a portion of Division C. 
Considering this Committee's jurisdiction over the Employee 
Retirement Income and Security Act of 1974 (ERISA) and the 
provision of employer-sponsored group health coverage, this 
Committee's consideration of H.R. 3200 focused primarily on 
Division A.
    Division A of H.R. 3200 contains several controversial 
Democrat proposals, including the establishment of a new 
federal bureaucracy which would be charged with defining 
``acceptable'' health benefits, creating and regulating a new 
national health insurance exchange, distributing massive new 
federal subsidies for low and middle-income individuals to 
purchase ``acceptable'' health insurance through the exchange, 
and regulating the provision of insurance nationally. Also, 
Division A contains a provision creating a new government-run 
health insurance plan option, which would be a federally-
created and administered government-run insurance plan based on 
Medicare, allegedly designed to ``compete'' with private 
insurance plans.
    Democrats attempt to pay for this new bureaucracy through a 
number of new tax provisions that affect all Americans. For 
instance, H.R. 3200 institutes a new mandate on every 
individual to obtain ``acceptable'' coverage or pay a 2.5 
percent tax. It creates a ``pay or play'' mandate on virtually 
all employers to provide ``acceptable'' insurance coverage or 
pay a new 8 percent payroll tax to the federal government. The 
introduced bill also provides some details left out of the June 
19 Tri-Committee draft proposal, such as a provision exempting 
only the very smallest businesses, and new tax increases that 
are intended to pay for this massive new federal entitlement 
program. Many of the new taxes set forth in H.R. 3200 
disproportionately impact small businesses and small business 
owners. Even so, Democrats' attempt to pay for the cost of this 
legislation falls far short as the bill's costs increase 
substantially over time and will likely result in at least a 
$239 billion increase in the federal deficit.\1\ The 
overwhelming cost of the Democrat bill, and its bevy of new 
taxes, has raised significant concerns among many Americans. 
Committee Republicans believe that the bill creates a massive 
new federal bureaucracy and places significant new liabilities 
and tax burdens on all Americans and virtually all American 
employers, even those that are not profitable, which will 
likely have a negative impact on future economic growth.
---------------------------------------------------------------------------
    \1\See, letter from Douglas W. Elmendorf, Director, Congressional 
Budget Office, to the Honorable George Miller, Chairman, Committee on 
Education and Labor, dated July 17, 2009. The letter provides a 
preliminary analysis by the CBO and the Joint Committee on Taxation of 
H.R. 3200, as introduced on July 14, 2009, and does not reflect any 
modifications or amendments made after that date.
---------------------------------------------------------------------------
            Employer ``Pay or Play'' Mandate
    Over 160 million people, or about 62 percent of the 
population under age 65, obtain health care insurance from 
their employers. Despite rising costs, this number has remained 
relatively consistent over the past decade, and most employees 
are happy with the coverage they receive from their employers. 
One of the primary reasons for the success of the employer-
sponsored system is the ERISA-based regulatory structure that 
generally allows multi-state employers to voluntarily offer 
uniform health benefits to their employees, irrespective of 
location, by freeing the employer-sponsored plan from 
regulation by the states. Under the current ERISA structure, 
many employers gain administrative efficiencies and voluntarily 
design health plans tailored to the needs of their employees 
and families. This has permitted the private sector to develop 
innovative benefit designs and payment policies to control 
health care costs and improve quality.
    As reported, H.R. 3200 imposes an unprecedented new tax on 
virtually all employers. Specifically, Title III, Subtitle B, 
``Employer Responsibility,'' mandates that all employers offer 
``acceptable'' coverage under a ``qualified health benefits 
plan'' to each of their employees, or pay an 8 percent payroll 
tax to the federal government.\2\ The ``acceptable'' coverage 
will be designed and determined by the new Health Benefits 
Advisory Committee and the Health Choices Commissioner. Section 
312 provides that for full-time employees, employers have to 
contribute at least 72.5 percent of the applicable premium of 
the lowest cost plan for individuals, and 65 percent of the 
applicable premium of the lowest cost plan for family coverage. 
The mandate is also extended to part-time employees, but the 
bill fails to specify who is a part-time employee and leaves it 
to the federal government to define this term and create new 
employer contribution rules for such employees. In a provision 
only trial lawyers could like, the bill subjects ERISA group 
health plans to state court lawsuits. Finally, under Section 
321, employers will be subjected to fines of up to $500,000 in 
the event they are found to be in noncompliance with the Act's 
onerous new mandates.
---------------------------------------------------------------------------
    \2\The only exception to the mandate considered by the Committee 
was a sliding scale wage tax in Section 313, exempting only the very 
smallest employers with annual payrolls of less than $250,000, and 
limiting the payroll tax for companies with payroll of less than 
$400,000 annually. Under Section 313, employers with a payroll of less 
than $250,000 are not subject to any payroll tax. Companies with 
payrolls of $250,000 to less than $300,000 are subject to a 2 percent 
payroll tax; $300,000 to under $350,000 at 4 percent; and employers 
with payroll of $350,000 to less than $400,000 are taxed at 6 percent. 
Companies with payroll of more than $400,000 are taxed the full eight 
percent.
---------------------------------------------------------------------------
    The new taxes on employers pose multiple problems, and have 
been the subject of much commentary from the representatives of 
those employers who will be directly impacted by the Democrats' 
new tax plan. For example, in a letter dated July 9, 2009 to 
Chairman Miller and Ranking Member Kline, Steve Pfister, the 
Senior Vice President of the National Retail Federation stated:

          Employer mandates of any kind amount to a tax on 
        jobs. We can think of few more dangerous steps to take 
        in the middle of a recession. We need to add new jobs, 
        not exacerbate the near double-digit unemployment 
        numbers. We cannot afford to have new and existing jobs 
        priced out of our collective reach because of mandated 
        health coverage.

    In a July 15, 2009 general letter, Susan Eckerly, Senior 
Vice President of Public Policy for the National Federation of 
Independent Business (NFIB), stated that the NFIB, the nation's 
leading small business advocacy organization, opposed H.R. 3200 
because of the inclusion of an employer mandate. Ms. Eckerly 
stated, in part:

          Research shows an employer mandate could cost 1.6 
        million jobs with more than 1 million of those jobs 
        lost in the small business sector. The approach fails 
        to increase affordability and, instead, devastates the 
        economy--with the greatest impact being levied on the 
        low-income community who will pay through depressed 
        wages and lost jobs. . . . As if the mandate alone 
        isn't destructive enough, the legislation uses perhaps 
        the most egregious penalty of all--a payroll tax--as 
        the penalty for those who cannot meet the obligations 
        laid out in the bill. A payroll tax is particularly 
        regressive because employers pay it regardless of 
        whether or not their business is profitable. . . . The 
        legislation even punishes employers who are currently 
        providing insurance to their employees, but don't meet 
        the premium contribution requirements in the bill 
        (72.5% for individuals and 65% for family plans).

    In a letter dated July 15, 2009 to Chairman Miller and 
Ranking Member Kline, R. Bruce Josten, Executive Vice 
President, Government Affairs for the United States Chamber of 
Commerce, expressed opposition to the employer mandate. Mr. 
Josten stated:

          the bill contains a job-killing employer mandate and 
        accompanying 8 percent payroll tax. Attempts to carve 
        out some small businesses will not prevent the adverse 
        economic consequences of this provision.

    The Majority claims that H.R. 3200 will save money and 
create new jobs. These assertions ignore the analysis of CBO 
which indicates that the pending legislation adds at least $239 
billion to the federal deficit over ten years, with that number 
likely to grow substantially in the following decade. Further, 
CBO has not found that H.R. 3200 controls or reduces underlying 
systemic health care costs, which is essential to making care 
and coverage more affordable. Finally, as reflected in the 
comments above, the new taxes on all employers will slow 
economic growth and stunt new job creation, particularly among 
those employers who struggle to reach or maintain 
profitability.
    Finally, some Committee and House Democrats have expressed 
serious reservations regarding the onerous requirements on 
employers. For example, in a letter dated July 9, 2009 from the 
fiscally conservative Blue Dog Coalition to Speaker Nancy 
Pelosi and Majority Leader Steny Hoyer, forty ``Blue Dog'' 
Democrats stated that ``any additional requirements for 
employers must be carefully considered and done so within the 
context of what is currently offered. Small business owners and 
their employees lack coverage because of high and unstable 
costs--not because of an unwillingness to provide or purchase 
it. We cannot support a bill that further exacerbates the 
challenges faced by small businesses.''\3\
---------------------------------------------------------------------------
    \3\See, letter from ``Democratic Blue Dog Coalition'' to The 
Honorable Nancy Pelosi, Speaker, and The Honorable Steny Hoyer, 
Majority Leader, dated July 9, 2009. The letter, signed by forty 
Democrat Members of Congress, stated their belief that the tri-
committee health care reform proposal ``lacks a number of elements 
essential to preserving what works and fixing what is broken'' in the 
health care system, and that legislation must include provisions to 
ensure deficit neutrality, delivery system reform, small business 
protections, rural health equity, and bipartisanship.
---------------------------------------------------------------------------
    Committee Republicans believe that the employer ``pay or 
play'' mandate is simply flawed policy that will destroy the 
voluntary, employer-sponsored ERISA health benefits structure, 
limit future flexibility to design affordable health plans, 
increase costs and cause significant job losses, and depress 
wage growth, especially for low-income Americans. This mandate 
would be especially hard on smaller or mid-sized firms that may 
not be eligible for an exemption, and who may struggle to reach 
and maintain profitability. Further, the proposed tax penalty 
percentage (eight percent for most employers) could increase in 
the future at the whim of Congress, especially if the federal 
government needs additional revenues to cover shortfalls in 
this massive new entitlement program, potentially increasing 
the burdens on employers.
    In addition, numerous structural components of the proposed 
mandate are problematic for employers and the current ERISA 
structure. In the fifth year of the exchange, employers whose 
workers choose coverage through an exchange will be forced to 
pay the eight percent tax to finance their workers' exchange 
policy, even if they provide coverage to their employees. This 
will certainly place increasing pressure on employer group 
health plans in the form of adverse risk selection, since 
employees could leave the group health plan for the exchange 
and shrink the size of the group plan's pool of participants. 
Many employers may simply choose to drop coverage and pay the 
tax, rather than administer and pay for an increasingly 
inefficient group health plan.
    Further, under the Democrat bill, there is no way of 
knowing whether the coverage currently enjoyed by tens of 
millions of employees and their families, including health 
savings accounts used in conjunction with high deductible 
health plans (HSA/HDHP), will meet the future ``acceptable'' 
benefit and employer contribution requirements. For example, an 
HSA/HDHP individual plan with an actuarial value of 69 percent 
will not meet the requirements of this bill. Employers would 
have to change this benefit to comply with the new mandates, or 
the individual employee could face the individual tax for non-
compliance.\4\ Also, employers who contribute less than the 
statutory amounts (72.5 percent and 65 percent for individual 
and family coverage, respectively) will have to change or be 
subjected to a new tax. This could cause some employers to drop 
coverage altogether.
---------------------------------------------------------------------------
    \4\See, H.R. 3200, Sections 301, 401, July 14, 2009, regarding the 
new tax on individuals who fail to obtain acceptable insurance 
coverage.
---------------------------------------------------------------------------
    Clearly, the employer ``pay or play'' provisions are 
designed to make it more difficult for employers to offer 
ERISA-based group health plan coverage, and direct more 
employees and their families to the new federal health 
insurance exchange and its government plan, Medicare-based, 
option. Contrary to Democrat political rhetoric, there is a 
substantial likelihood that employees who like their current 
coverage will not be able to keep it.
    For these reasons, Committee Republicans object to the 
employer ``pay or play'' mandate in H.R. 3200.
            Impact on ERISA Preemption and Remedies
    Under current law, the ERISA regulatory structure preempts 
employers and group health plans from liability under state 
law. This has resulted in significant administrative savings 
and contributes to the ability of employers and group health 
plans to offer high quality, affordable health insurance 
coverage to more than 130 million Americans.
    The Tri-Committee bill raises serious questions and 
concerns regarding the continued viability of the current ERISA 
regulatory structure, and whether H.R. 3200 exposes employers 
and group health plans to new liabilities for claim decisions. 
Under current law, group health plans are required to comply 
with the requirements of ERISA, and any disputes are governed 
and resolved under its provisions. This ensures that employers, 
who may provide health insurance coverage for workers in all 50 
states, must comply with the federal law only, which permits 
the delivery of uniform benefits and saves administrative 
costs. They cannot be sued in state courts, under different 
laws.
    The bill appears to change this by creating two different 
penalty regimes inside the new insurance exchanges; for group 
health plans and their beneficiaries, there would be varied and 
unlimited penalties set forth under 50 different state laws. To 
the extent that group health plans are permitted to purchase 
through the insurance exchanges, they will be subjected to 
potentially expansive new state court liabilities.
    At the same time that they are subjecting private plans to 
a patchwork of state laws, Democrats chose to apply a uniform 
federal scheme similar to Medicare to the government-run health 
insurance plan. This would provide an unfair financial 
advantage to the government-run health plan since, unlike ERISA 
group health plans, the government-run plan would not have to 
face lawsuits and comply with up to 50 different sets of state 
laws.
    Two groups appear to benefit from this proposed structure: 
trial lawyers and the government bureaucrats running the 
government-run health plan. Further, ERISA group health plans 
would face significant new liabilities and costs which would 
likely cause them to drop coverage altogether, accelerating the 
movement from private, employer-sponsored health insurance to a 
government-run plan.
    For these reasons, Committee Republicans object to new 
liabilities imposed on ERISA employers and group health plans 
in H.R. 3200.
            The New Federal Bureaucracy and the Government-Run Health 
                    Plan
    Committee Republicans are concerned that H.R. 3200 creates 
a massive new federal health insurance bureaucracy, the 
``Health Choices Administration,'' that would create a ``one-
size-fits-all'' standard for health coverage and vest 
unprecedented control with one individual, the new ``Health 
Choices Commissioner.'' This new Commissioner would be charged 
with governing the national exchange, enforcing insurance plan 
standards, distributing taxpayer subsidies, and fining non-
compliant individuals, plans and employers. This structure 
would restrict the sale of insurance outside of the exchange, 
and ultimately would eviscerate private insurance markets over 
time.
    Under H.R. 3200, the Department of Health and Human 
Services (HHS) will be charged with creating a public health 
insurance option that would only be available in a national 
health insurance exchange. Although the plan would have to 
comply with requirements on private, exchange-available plans, 
the exchange would have no power under the bill to reject, 
sanction or terminate the government option run by HHS. 
Further, the government plan would be subject to lawsuit only 
in federal courts; this differs substantially from private 
plans, including employer-sponsored group health plans 
currently regulated under the federal ERISA law, which would be 
subject to state court lawsuits (raising the costs for private 
plans).
    With respect to government-plan funding, ``start-up'' funds 
in the amount of $2 billion in taxpayer money would be provided 
from the Treasury. Although the plan's premium rates would be 
required to cover the cost of the benefits and administration, 
going forward there is no requirement that the government plan 
maintain a certain ``reserve'' level, similar to those required 
of state-based private insurance companies. This could give the 
government plan a potentially significant competitive advantage 
over private insurers.
    Importantly, the government plan would be based on the 
failed Medicare payment structure. Specifically, the plan would 
pay Medicare rates for at least the first three years, with 
Medicare-participating physicians getting a five percent bonus 
for the first three years. The problems with this structure are 
numerous. First, Medicare pays on a fee-for-service basis, 
which rewards those providers that increase the volume of 
medical services, as opposed to those providers that limit 
utilization and provide high quality care. The Medicare 
reimbursement structure is historically inflexible when it 
comes to designing and implementing more innovative policies 
and reimbursement structures. Private innovations, like paying 
for health care provider performance, and the adoption of 
prevention and wellness programs, are exceedingly difficult to 
duplicate in the Medicare structure given that it is a 
government-administered program which is highly resistant to 
change.
    Second, government health entitlement programs, like 
Medicare and Medicaid, routinely underpay health care 
providers, resulting in a cost-shift to private plans and 
private payers. This was confirmed in the testimony of a New 
Jersey hospital executive at a hearing before the Subcommittee 
on Health, Education, Labor and Pensions in March 2009. 
Reliance on existing Medicare payment rates, with minor 
adjustments, will, according to an estimate by The Lewin Group, 
an independent consulting company, significantly underpay 
health care providers, compensating them at rates 20-30 percent 
below what private plans pay for the same services. Even if 
adjustments are made to lower the underpayment rates, by 
design, the government-run plan will underpay providers to 
reduce premium costs, in order to increase enrollment and 
crowd-out private insurers. This inherent cost advantage built 
into the government plan created by H.R. 3200 will result in a 
government plan with artificially low premiums, which will 
likely have a negative impact on health care quality.
    These concerns were expressed in a letter from 13 health 
care providers and associations, including the Mayo Clinic, in 
a letter dated July 16, 2009 to Representative Ron Kind (D-WI). 
Specifically, these groups expressed concern that:

          . . . a public plan option with rates based on 
        Medicare rates will have a severe negative impact on 
        our facilities. Today, many providers suffer great 
        financial losses associated with treating Medicare 
        patients. For example, several of the systems that have 
        signed onto this letter lost hundreds of millions of 
        dollars under Medicare last year. These rates are 
        making it increasingly difficult for us to continue to 
        treat Medicare patients. The implementation of a public 
        plan with similar rates will create a financial result 
        that will be unsustainable for even the nation's most 
        efficient, high quality providers, eventually driving 
        them out of the market. In addition, should a public 
        plan with inadequate rates be enacted, we will be 
        forced to shift additional costs to private payers, 
        which will ultimately lead to increased costs for 
        employers who maintain insurance for their employees. 
        We believe all Americans must have guaranteed portable 
        health insurance, but it is critical that we not lose 
        sight of the need to ensure adequate and equitable 
        reimbursement.

    The results of a government-run health insurance plan are 
undeniable. Although Democrats argue the purpose of the 
government plan is to increase competition, it will have the 
exact opposite effect. Considering that the government plan 
will possess certain advantages (discussed above) it will not, 
by design, compete fairly with private insurance and group 
health plans. Studies of the effect of a government plan option 
indicate that there will be movement from private insurance 
coverage to a government-run plan which would concentrate 
control of health care with the government, which already 
controls almost half of the country's health care spending. For 
example, CBO analyses provided to the Committee on July 14 and 
July 17 indicate movement of individuals from private coverage 
to the government plan. In a June 2009 study, The Lewin Group 
found that a government plan open to all, and based on 
Medicare-level reimbursement rates, would result in almost 114 
million Americans losing their current private insurance 
coverage because of movement toward an artificially cheaper, 
benefit-rich government plan.\5\ Simply put, the availability 
of a government plan will create a cycle of increasing costs 
for those with private plans, forcing employers to drop 
coverage and pushing more workers into the government plan.
---------------------------------------------------------------------------
    \5\See, The Impact of the House Health Reform Legislation on 
Coverage and Provider Incomes, Testimony of John Sheils, Vice 
President, The Lewin Group, before the Energy and Commerce Committee, 
U.S. House of Representatives, June 25, 2009. http://www.lewin.com/
content/publications/June25TestimonyUpdateJul09.pdf.
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    The new federal health care bureaucracy, with its myriad 
rules for private plans and government-run insurance option, 
will ultimately decrease the competitiveness of private 
insurance and group health plans, essentially resulting in a 
government takeover of the health care system. The government's 
track record on health care is not one to be duplicated; the 
Medicaid program does not pay for the full cost of medical 
care, is routinely underfunded, and places a substantial burden 
on states. The Democrat answer in H.R. 3200 is to increase 
Medicaid eligibility to 133 percent of the federal poverty 
level, which would exacerbate health care provider 
underpayments, create a new entitlement mentality, and 
substantially increase the federal government's Medicaid 
payments in perpetuity. Medicare underpays health care 
providers, is an outdated and inflexible benefit design, and 
has unfunded obligations totaling $37.8 trillion. The House 
Democrat answer is not to first fix Medicare but to create a 
new federal entitlement program for those under 65 based on 
Medicare, spend more than $1.3 trillion, and raise taxes on 
Americans. These policies do nothing to control existing health 
care costs, and only serve to worsen the nation's long-term 
fiscal outlook while removing decisions from the hands of 
doctors and patients and placing them in the hands of 
Washington bureaucrats.
    Clearly, if Americans like their current coverage and the 
quality of their health care, it will be in jeopardy under the 
Democrats' plan as set forth in H.R. 3200.
            Republican Alternative
    Committee Republicans agree that the health care system is 
in dire need of reform and stand ready to work with Committee 
Democrats to forge a truly bipartisan compromise. However, 
Committee Republicans believe the policies contained in H.R. 
3200, which seek to expand health care insurance coverage at 
great cost without first addressing and controlling underlying 
health care costs and provider shortages, are doomed to fail.
    Republicans agree with Democrats that the problem of the 
uninsured must be addressed. The Majority notes that 47 million 
individuals are uninsured; however, this population is not 
homogenous. According to a report released by the Congressional 
Research Service on September 14, 2009, approximately 20 
percent of the uninsured are non-citizens. Further, 
approximately 10 million more individuals may already be 
eligible for existing government insurance programs, but are 
not enrolled, and many millions more are young or voluntarily 
choose to go without coverage. Rather than creating a massive 
new federal entitlement program, Republicans believe underlying 
costs must be addressed in order to make coverage more 
affordable and accessible, with implementation of targeted 
approaches to address the specific characteristics of the 
uninsured population.
    The first step to lower health care costs is to address 
overspending in the current system.\6\ To lower costs, 
Committee Republicans would consider: changes to the tax code 
to permit individuals to share some of the same advantages as 
those with employer-sponsored coverage; promote incentives to 
save for future health care costs; promote meaningful medical 
liability reforms to reduce costly and unnecessary defensive 
medicine practices; provide existing government programs with 
additional authority and resources to stop fraud and abuse; and 
permit small business to band together to offer health 
insurance at lower costs.
---------------------------------------------------------------------------
    \6\In testimony before the Senate Health, Education, Labor and 
Pensions Committee on July 16, 2009, 030 Director Douglas Elmendorf 
stated that all of the Democrat proposals reviewed to date, including 
H.R. 3200, do little, if anything, to control health care costs.
---------------------------------------------------------------------------
    Republicans and Democrats agree that small businesses face 
unique and difficult challenges in securing affordable health 
insurance coverage. Yet the Democrat response to this challenge 
is to construct an elaborate new federal bureaucracy and 
entitlement program, with the imposition of massive new taxes, 
administrative requirements and penalties on all but the very 
smallest employers, Republicans have tirelessly advocated for 
targeted, less costly measures to address the specific problems 
confronting small businesses--small business, or association, 
health plans constitutes one such measure that can be enacted 
immediately and would permit small businesses to band together 
to pool their purchasing power and enjoy the same benefits as 
larger employers.
    Additionally, Committee Republicans support policies that 
would provide employers with greater flexibility to promote 
prevention and wellness programs, and financially reward 
employees who seek to achieve or maintain a healthy weight, 
quit smoking, and better manage chronic diseases like diabetes. 
Changing payment structures to reward high quality care, rather 
than volume of medical services, and increasing care 
coordination, can also help control health care costs. Further, 
before creating another federal entitlement program and adding 
to the federal deficit, Committee Republicans believe it is 
necessary to address the long-term fiscal solvency of existing 
federal entitlement programs.
    Committee Republicans would also seek to expand access by 
strengthening employer-sponsored coverage to millions of people 
who are already eligible, encourage states to create or modify 
programs to guarantee all Americans have access to affordable 
coverage regardless of pre-existing medical conditions, promote 
policies to increase portability of coverage regardless of 
employment status, and help employers offer coverage by 
reducing administrative costs through a small business tax 
credit.
    In short, Committee Republicans support policies that 
promote individual behavior and responsibility for health care 
and coverage decisions, and maintain the doctor-patient 
relationship, while keeping the federal government out of the 
business of dictating health care coverage requirements or 
favoring a government-insurance model over private coverage. 
Committee Republicans remain willing to work with Democrats in 
developing a compromise bipartisan health care reform bill.
            Republican Amendments
    Committee Republicans offered twenty-six amendments during 
the Committee's consideration of H.R. 3200 on July 16 and 17. 
Republican amendments attempted to highlight significant 
concerns with H.R. 3200 and improve some of the more troubling 
provisions of the bill. In general, Committee Republicans 
offered solutions to the health care crisis, and expressed 
significant concerns regarding: the significant cost of H.R. 
3200; the adverse impact on the economy, workers, families and 
small businesses; the government takeover of the health care 
system; the fact that under H.R. 3200 those who like their 
coverage won't be able to keep it; preservation of the doctor-
patient relationship; and opposition to likely rationing of 
medical care under the Democrat proposal.
    Specifically, Committee Republicans offered amendments 
intended to:
           Strike provisions creating the new ``Health 
        Choices Administration;''
           Strike provisions creating the national 
        health insurance exchange;
           Strike the employer ``pay or play'' mandate;
           Strike the government-run insurance plan;
           Ensure that the coverage provided by ERISA 
        group health plans, now and in the future, would be 
        preserved under the plan;
           Ensure deficit neutrality;
           Suspend the bill where the national 
        unemployment rate exceeded 8% in two consecutive 
        months;
           Preserve the protective remedies of ERISA 
        for ERISA-governed plans;
           Prevent mandated coverage of abortion 
        services;
           Prohibit federal funding for abortion 
        services under the bill;
           Prohibit any tax increase on American 
        families with annual incomes under $250,000;
           Provide employers and employees with greater 
        flexibility to promote prevention and wellness 
        programs, which are proven to increase personal 
        responsibility and lower health care costs;\7\
---------------------------------------------------------------------------
    \7\Specifically, Republicans offered an amendment to permit 
employers to vary employees' health insurance premiums by up to 50 
percent to encourage participation in health promotion and disease 
prevention programs. Current law already permits variations up to 20 
percent. Employer-based prevention and wellness programs have a proven-
track record of improving employee health and lowering health care 
expenses and insurance coverage premiums. See, Paul Speranza, Jr., 
Testimony before the Committee on Education and Labor, ``The Tri-
Committee Draft for Health Care Reform'' (June 23, 2009) at 3-4. This 
amendment was voluntarily withdrawn in the hope that the Majority would 
work with Republicans to adopt this common-sense provision; Republicans 
continue to urge that this provision be included in any reform 
legislation.
---------------------------------------------------------------------------
           Permit consumer-directed health plans to 
        remain viable options;\8\ and
---------------------------------------------------------------------------
    \8\During this Committee's consideration of H.R. 3200, Republicans 
introduced an amendment to permanently grandfather consumer-directed 
health plans and arrangements, so that millions of individuals could 
continue to save for future health care needs and benefit from this 
coverage. The Majority rejected this amendment, which highlights the 
fact that if you like your current coverage, you will not be able to 
keep it under H.R. 3200.
---------------------------------------------------------------------------
           Permit small businesses to pool together to 
        purchase health insurance through Association Health 
        Plans.
    Each of these amendments was rejected, by and large on a 
party-line basis.
    Although some amendments were adopted in an attempt to 
improve the legislation,\9\ many attempts to amend and improve 
a flawed bill were rejected. Committee Republicans are 
concerned that the bill remains fundamentally flawed; 
nevertheless, Committee Republicans continue to stand ready to 
work with Committee Democrats to draft and enact bipartisan 
health care reform legislation.
---------------------------------------------------------------------------
    \9\A limited number of amendments were adopted. For example, the 
Committee accepted language to exclude TRICARE (the Department of 
Defense's civilian healthcare program for active and retired military 
personnel) from the provisions of the bill; to express the sense of 
Congress that Members who vote for the bill enroll in the new 
government-run plan; to ensure non-discrimination for spiritual care; 
and to maintain the private right to contract for medical services.
---------------------------------------------------------------------------

Conclusion

    Committee Republicans support the voluntary, private health 
care system and meaningful reforms to that structure, while 
opposing measures that would serve to increase federal 
government control over the health care system. Committee 
Republicans are also committed to ensuring that the costs of 
health care reform efforts do not add to the federal deficit or 
result in higher taxes, which will have the effect of 
restricting American economic growth. The goal of controlling 
health care spending is not accomplished by adding more than 
$1.3 trillion in new spending to America's health care bill. 
While perhaps well-intentioned, H.R. 3200 is not an acceptable 
health care reform bill. For all of the foregoing reasons, we 
respectfully oppose enactment of H.R. 3200 as reported from the 
Committee on Education and Labor.

                                   John Kline.
                                   Cathy McMorris Rodgers.
                                   Thomas E. Petri.
                                   Tom Price.
                                   Howard P. ``Buck'' McKeon.
                                   Rob Bishop (UT).
                                   Peter Hoekstra.
                                   Brett Guthrie.
                                   Michael N. Castle.
                                   Bill Cassidy.
                                   Mark E. Souder.
                                   Tom McClintock.
                                   Vernon J. Ehlers.
                                   Duncan D. Hunter.
                                   Judy Biggert.
                                   David P. Roe.
                                   Todd Russell Platts.
                                   Glenn Thompson.
                                   Joe Wilson.

             SUPPLEMENTAL VIEWS OF THE HONORABLE TOM PRICE

    Over the course of nearly a quarter century as a physician, 
I cared for thousands of patients. And caring for each and 
every one of them was a privilege. So when I left the practice 
of medicine to shape public policy and the health care delivery 
system of this nation, I did so clinging to a steadfast 
aspiration to achieve full access to affordable, quality health 
care for all Americans, while preserving the patient-doctor 
relationship without governmental interference.
    Relying on my experiences as a physician, I can attest to 
how current federal laws and incentives retard access to health 
care and often put a bureaucrat in between a patient, his 
family, and their doctor. The tax code institutes a third-party 
health care model making it difficult for those to gain 
coverage outside of an employer or government entity. And the 
federal health care programs that do exist dictate to patients 
which doctors they may see and how frequently, and which 
procedures or tests doctors may or may not order or provide.
    H.R. 3200, America's Affordable Health Choices Act of 2009, 
marks the latest attempt to fundamentally alter our health care 
financing and delivery structure. This measure, however, is a 
transformational piece of legislation intended to erode 
personal and private decision-making while further 
institutionalizing the very errors of current federal health 
care laws and programs. The end result will be a system built 
on penalties, mandates, rationing, and bureaucracy--all of 
which are fundamental threats to quality care. For example:
     Sec. 102 of H.R. 3200 grandfathers out health 
insurance coverage on the individual market. Issuers of 
existing coverage may not enroll new individuals, alter 
benefits and cost-sharing, and increase premiums. These plans 
will no longer be available.
     Sec. 123 of H.R. 3200 creates the Health Benefits 
Advisory Committee, a new panel to recommend covered benefit 
standards, including treatments, items and services, and cost-
sharing. The Committee is comprised primarily of either 
political appointees or federal bureaucrats, and these are the 
folks who will be making these critical decisions.
     Sec. 141 of H.R. 3200 creates the Health Choices 
Administration, a new federal agency charged with establishing 
the Health Insurance Exchange. The Administration is the final 
arbitrator of what is a qualified health benefits plan (i.e. 
``acceptable'') under the exchange and is charged with 
enforcement.
     Sec. 301 and Sec. 401 of H.R. 3200 impose a 
``personal responsibility'' on every American to obtain 
``acceptable'' health insurance coverage or face a tax of 2.5 
percent on gross income.
     Sec. 313 and Sec. 412 of H.R. 3200 impose a tax of 
eight percent of average wages paid on employers. Providing 
health care to employees is no longer a voluntary benefit and 
only the smallest businesses are exempt.
     Sec. 221 of H.R. 3200 creates a public health 
insurance option, available through the Health Insurance 
Exchange, to ``compete'' against privately run health insurance 
coverage. Independent analysis by both the Congressional Budget 
Office and the Lewin Group has concluded that millions of 
Americans would lose their existing coverage as a result of 
this government-run plan.
    Certainly, the status quo is unacceptable. Yet, a true 
health care reform package empowers patients first; it builds 
on what is working and fixes what is flawed without disrupting 
or destroying quality care; it does not ingrain what is broken 
and scraps what works.
    Before consideration of H.R. 3200, a bipartisan, 
fundamental rethinking of this nation's health care delivery 
system could have been possible if reform focused on a patient-
centered approach and championed personal ownership and 
coverage over government control. Further, any effort needed to 
embrace the same health care principles most Americans embrace: 
accessibility, affordability, choices, innovation, quality and 
responsiveness.
    As the leader of a group of conservative Republicans in the 
House of Representatives faithfully committed to these 
principles and the implementation of reform, I introduced H.R. 
3400, the Empowering Patients First Act. It represents the 
possibility of a new patient-centered era in American health 
care without putting the government in charge.
    For starters, the measure ensures all Americans have access 
to affordable coverage through a series of tax credits, 
deductions, and tax equity. It makes it feasible for 
individuals to pick any health care plan, not just what is 
offered by the government or at work, meaning that no matter 
who is paying the bill, patients own and control their own 
health plan. This puts Americans in a position whereby 
insurance companies are responsive to them rather than a third-
party.
    There is portability to maintain coverage if someone 
changes jobs or moves across state lines. To establish a viable 
marketplace, barriers are knocked down so coverage can be 
purchased across state lines.
    And since one cannot be serious about reform without 
addressing the medical liability crisis, the Empowering 
Patients First Act provides for the creation of specialized 
health care courts relying on the expertise of medical 
specialty societies to relieve upward pressure on medical 
costs.
    This same commitment to principles and reform by dedicated 
Republicans inspired my personal efforts during the mark up of 
the America's Affordable Health Choices Act of 2009 before the 
Committee on Education and Labor. Yet every attempt to offer 
common sense amendments was defeated by Committee Democrats on 
near party line votes. For example:
           An amendment to ensure current coverage 
        provided by employer-sponsored group plans would be 
        considered a qualified health benefits plan. Rejecting 
        the amendment flies in the face of ``If you like what 
        you have, you can keep it,'' and restricts access to 
        existing, affordable plans. (Amendment #11, defeated 
        18-29).
           An amendment to permit states a waiver out 
        of Division A of the Act, which contains the new health 
        care bureaucracies, the individual and employer 
        mandates, and the public health insurance option. 
        Various states have already taken innovative steps to 
        adopt comprehensive health care reform. (Amendment #29, 
        defeated 19-28)
           An amendment to enable employers to 
        contribute to a worker's account and permit that worker 
        to purchase insurance coverage of his choice. 
        (Amendment #40, defeated 19-29)
           An amendment to eliminate the ``tiered'' 
        payment structure for ``preferred'' and ``non-
        preferred'' physicians who participate in the public 
        health insurance option. Without it, the existing 
        provision forces health care providers to accept 
        payments mandated by the federal government which are 
        well below the actual cost and would likely result in 
        the deterioration of quality care. (Amendment #41, 
        defeated 19-29)
    In the end, the America's Affordable Health Choices Act of 
2009 rejects the health care principles most Americans embrace 
and embodies the go-it-alone attitude that House Democrats 
embarked on from the beginning. House Republicans were never 
consulted or brought into the process. In fact, more than 70 
percent of amendments offered by Republicans for final 
consideration in the mark up of the Committee on Education and 
Labor were defeated on near party line votes.
    It is why the end product is so terribly flawed and, if 
adopted, Congress will end up revisiting soon thereafter to 
correct many of its faults. It is with the sentiments outlined 
here that I oppose this legislation, and ask all House 
Republicans to do the same.

                                                         Tom Price.
                              DIVISION III

                         LETTER OF TRANSMITTAL

                              ----------                              

                          House of Representatives,
                          Committee on Education and Labor,
                                   Washington, DC, October 7, 2009.
Hon. John M. Spratt, Jr.,
Chairman, Committee on the Budget, Cannon House Office Building, 
        Washington, DC.
    Dear Chairman Spratt, With this correspondence and its 
attachment, I am transmitting the Investing in Education 
portion of the recommendations of the Committee on Education 
and Labor to your Committee pursuant to Section 202 of S. Con. 
Res. 13, the Concurrent Resolution on the Budget for Fiscal 
Year 2010.
    Pursuant to Section 202 (b) of S. Con. Res. 13, on July 21, 
2009, the Committee on Education and Labor voted 30-17 to, 
inter alia, authorize the Chairman to transmit H.R. 3221, 
Student Aid and Fiscal Responsibility Act of 2009, with an 
amendment in the nature of a substitute, to the Committee on 
Budget in compliance with Section 310 of the Congressional 
Budget Act of 1974, as its recommendations related to the 
Investing in Education portion of its instructions.
    Accordingly, attached please find the Committee's report, 
containing the reported bill and other materials, for your use 
in preparing a reconciliation bill to be reported to the House 
pursuant to S. Con. Res. 13.
    If you have any questions, please contact my Committee 
staff. Thank you for your attention.
            Sincerely,
                                             George Miller,
                                                         Chairman.2
111th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    111-232

======================================================================




           STUDENT AID AND FISCAL RESPONSIBILITY ACT OF 2009

                                _______
                                

 July 27, 2009.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. George Miller of California, from the Committee on Education and 
                     Labor, submitted the following

                              R E P O R T

                             together with

                    SUPPLEMENTAL AND MINORITY VIEWS

                        [To accompany H.R. 3221]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Education and Labor, to whom was referred 
the bill (H.R. 3221) to amend the Higher Education Act of 1965, 
and for other purposes, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Student Aid and Fiscal Responsibility 
Act of 2009''.

SEC. 2. TABLE OF CONTENTS.

  The table of contents is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. References.

              TITLE I--INVESTING IN STUDENTS AND FAMILIES

          Subtitle A--Increasing College Access and Completion

Sec. 101. Federal Pell Grants.
Sec. 102. College Access and Completion Innovation Fund.
Sec. 103. Investment in historically Black colleges and universities 
and other minority-serving institutions.
Sec. 104. Investment in cooperative education.
Sec. 105. Loan forgiveness for servicemembers activated for duty.
Sec. 106. Veterans Educational Equity Supplemental Grant Program.

         Subtitle B--Student Financial Aid Form Simplification

Sec. 121. General effective date.
Sec. 122. Treatment of assets in need analysis.
Sec. 123. Changes to total income; aid eligibility.

                     TITLE II--STUDENT LOAN REFORM

                    Subtitle A--Stafford Loan Reform

Sec. 201. Federal Family Education Loan appropriations.
Sec. 202. Scope and duration of Federal loan insurance program.
Sec. 203. Applicable interest rates.
Sec. 204. Federal payments to reduce student interest costs.
Sec. 205. Federal PLUS Loans.
Sec. 206. Federal Consolidation Loan.
Sec. 207. Unsubsidized Stafford loans for middle-income borrowers.
Sec. 208. Loan repayment for civil legal assistance attorneys.
Sec. 209. Special allowances.
Sec. 210. Revised special allowance calculation.
Sec. 211. Origination of Direct Loans at institutions located outside 
the United States.
Sec. 212. Agreements with institutions.
Sec. 213. Terms and conditions of loans.
Sec. 214. Contracts.
Sec. 215. Interest rates.

                    Subtitle B--Perkins Loan Reform

Sec. 221. Federal Direct Perkins Loans terms and conditions.
Sec. 222. Authorization of appropriations.
Sec. 223. Allocation of funds.
Sec. 224. Federal Direct Perkins Loan allocation.
Sec. 225. Agreements with institutions of higher education.
Sec. 226. Student loan information by eligible institutions.
Sec. 227. Terms of loans.
Sec. 228. Distribution of assets from student loan funds.
Sec. 229. Implementation of non-title IV revenue requirement.
Sec. 230. Administrative expenses.

            TITLE III--MODERNIZATION, RENOVATION, AND REPAIR

             Subtitle A--Elementary and Secondary Education

Sec. 301. Definitions.

 Chapter 1--Grants for Modernization, Renovation, or Repair of Public 
                           School Facilities

Sec. 311. Purpose.
Sec. 312. Allocation of funds.
Sec. 313. Allowable uses of funds.
Sec. 314. Priority projects.

 Chapter 2--Supplemental Grants for Louisiana, Mississippi, and Alabama

Sec. 321. Purpose.
Sec. 322. Allocation to local educational agencies.
Sec. 323. Allowable uses of funds.

                     Chapter 3--General Provisions

Sec. 331. Impermissible uses of funds.
Sec. 332. Supplement, not supplant.
Sec. 333. Prohibition regarding State aid.
Sec. 334. Maintenance of effort.
Sec. 335. Special rule on contracting.
Sec. 336. Use of American iron, steel, and manufactured goods.
Sec. 337. Labor standards.
Sec. 338. Charter schools.
Sec. 339. Green schools.
Sec. 340. Reporting.
Sec. 341. Special rules.
Sec. 342. Promotion of employment experiences.
Sec. 343. Advisory Council on Green, High-Performing Public School 
Facilities.
Sec. 344. Education regarding projects.
Sec. 345. Availability of funds.

                      Subtitle B--Higher Education

Sec. 351. Federal assistance for community college modernization and 
construction.

                TITLE IV--EARLY LEARNING CHALLENGE FUND

Sec. 401. Purpose.
Sec. 402. Programs authorized.
Sec. 403. Quality pathways grants.
Sec. 404. Development grants.
Sec. 405. Research and evaluation.
Sec. 406. Reporting requirements.
Sec. 407. Construction.
Sec. 408. Definitions.
Sec. 409. Availability of funds.

                TITLE V--AMERICAN GRADUATION INITIATIVE

Sec. 501. Authorization and appropriation.
Sec. 502. Definitions; grant priority.
Sec. 503. Grants to eligible entities for community college reform.
Sec. 504. Grants to eligible States for community college programs.
Sec. 505. National activities.

SEC. 3. REFERENCES.

  Except as otherwise expressly provided, whenever in this Act an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Higher Education Act of 
1965 (20 U.S.C. 1001 et seq.).

              TITLE I--INVESTING IN STUDENTS AND FAMILIES

          Subtitle A--Increasing College Access and Completion

SEC. 101. FEDERAL PELL GRANTS.

  (a) Amount of Grants.--Section 401(b) (20 U.S.C. 1070a(b)) is 
amended--
          (1) by amending paragraph (2)(A) to read as follows:
                  ``(A) The amount of the Federal Pell Grant for a 
                student eligible under this part shall be--
                          ``(i) the maximum Federal Pell Grant, as 
                        specified in the last enacted appropriation Act 
                        applicable to that award year, plus
                          ``(ii) the amount of the increase calculated 
                        under paragraph (8)(B) for that year, less
                          ``(iii) an amount equal to the amount 
                        determined to be the expected family 
                        contribution with respect to that student for 
                        that year.''; and
          (2) by amending paragraph (8), as amended by the Higher 
        Education Opportunity Act (Public Law 110-315), to read as 
        follows:
          ``(8) Additional funds.--
                  ``(A) In general.--There are authorized to be 
                appropriated, and there are appropriated, to carry out 
                subparagraph (B) of this paragraph (in addition to any 
                other amounts appropriated to carry out this section 
                and out of any money in the Treasury not otherwise 
                appropriated) the following amounts--
                          ``(i) $2,030,000,000 for fiscal year 2008;
                          ``(ii) $2,733,000,000 for fiscal year 2009; 
                        and
                          ``(iii) such sums as may be necessary for 
                        fiscal year 2010 and each subsequent fiscal 
                        year to provide the amount of increase of the 
                        maximum Federal Pell Grant required by clauses 
                        (ii) and (iii) of subparagraph (B).
                  ``(B) Increase in federal pell grants.--The amounts 
                made available pursuant to subparagraph (A) shall be 
                used to increase the amount of the maximum Federal Pell 
                Grant for which a student shall be eligible during an 
                award year, as specified in the last enacted 
                appropriation Act applicable to that award year, by--
                          ``(i) $490 for each of the award years 2008-
                        2009 and 2009-2010;
                          ``(ii) $690 for the award year 2010-2011; and
                          ``(iii) the amount determined under 
                        subparagraph (C) for each succeeding award 
                        year.
                  ``(C) Inflation-adjusted amounts.--
                          ``(i) Award year 2011-2012.--For award year 
                        2011-2012, the amount determined under this 
                        subparagraph for purposes of subparagraph 
                        (B)(iii) shall be equal to--
                                  ``(I) $5,550 or the total maximum 
                                Federal Pell Grant for the preceding 
                                award year (as determined under clause 
                                (iv)(II)), whichever is greater, 
                                increased by a percentage equal to the 
                                annual adjustment percentage for award 
                                year 2011-2012; reduced by
                                  ``(II) $4,860 or the maximum Federal 
                                Pell Grant for which a student was 
                                eligible for the preceding award year, 
                                as specified in the last enacted 
                                appropriation Act applicable to that 
                                year, whichever is greater; and
                                  ``(III) rounded to the nearest $5.
                          ``(ii) Subsequent award years.--For award 
                        year 2012-2013 and each of the subsequent award 
                        years, the amount determined under this 
                        subparagraph for purposes of subparagraph 
                        (B)(iii) shall be equal to--
                                  ``(I) the total maximum Federal Pell 
                                Grant for the preceding award year (as 
                                determined under clause (iv)(II)), 
                                increased by a percentage equal to the 
                                annual adjustment percentage for the 
                                award year for which the amount under 
                                this subparagraph is being determined; 
                                reduced by
                                  ``(II) $4,860 or the maximum Federal 
                                Pell Grant for which a student was 
                                eligible for the preceding award year, 
                                as specified in the last enacted 
                                appropriation Act applicable to that 
                                year, whichever is greater; and
                                  ``(III) rounded to the nearest $5.
                          ``(iii) Limitation on decreases.--
                        Notwithstanding clauses (i) and (ii), if the 
                        amount determined under clause (i) or (ii) for 
                        an award year is less than the amount 
                        determined under this paragraph for the 
                        preceding award year, the amount determined 
                        under such clause for such award year shall be 
                        the amount determined under this paragraph for 
                        the preceding award year.
                          ``(iv) Definitions.--For purposes of this 
                        subparagraph--
                                  ``(I) the term `annual adjustment 
                                percentage' as it applies to an award 
                                year is equal to the sum of--
                                          ``(aa) the estimated 
                                        percentage change in the 
                                        Consumer Price Index (as 
                                        determined by the Secretary, 
                                        using the definition in section 
                                        478(f)) for the most recent 
                                        calendar year ending prior to 
                                        the beginning of that award 
                                        year; and
                                          ``(bb) one percentage point; 
                                        and
                                  ``(II) the term `total maximum 
                                Federal Pell Grant' as it applies to a 
                                preceding award year is equal to the 
                                sum of--
                                          ``(aa) the maximum Federal 
                                        Pell Grant for which a student 
                                        is eligible during an award 
                                        year, as specified in the last 
                                        enacted appropriation Act 
                                        applicable to that preceding 
                                        award year; and
                                          ``(bb) the amount of the 
                                        increase in the maximum Federal 
                                        Pell Grant required by this 
                                        paragraph for that preceding 
                                        award year.
                  ``(D) Program requirements and operations otherwise 
                unaffected.--Except as provided in subparagraphs (B) 
                and (C), nothing in this paragraph shall be construed 
                to alter the requirements and operations of the Federal 
                Pell Grant Program as authorized under this section, or 
                to authorize the imposition of additional requirements 
                or operations for the determination and allocation of 
                Federal Pell Grants under this section.
                  ``(E) Availability of funds.--The amounts made 
                available by subparagraph (A) for any fiscal year shall 
                be available beginning on October 1 of that fiscal 
                year, and shall remain available through September 30 
                of the succeeding fiscal year.''.
  (b) Conforming Amendments.--Title IV (20 U.S.C. 1070 et seq.) is 
further amended--
          (1) in section 401(b)(6), as amended by the Higher Education 
        Opportunity Act (Public Law 110-315), by striking ``the grant 
        level specified in the appropriate Appropriation Act for this 
        subpart for such year'' and inserting ``the Federal Pell Grant 
        amount, determined under paragraph (2)(A), for which a student 
        is eligible during such award year'';
          (2) in section 402D(d)(1), by striking ``exceed the maximum 
        appropriated Pell Grant'' and inserting ``exceed the Federal 
        Pell Grant amount, determined under section 401(b)(2)(A), for 
        which a student is eligible'';
          (3) in section 435(a)(5)(A)(i)(I), by striking ``one-half the 
        maximum Federal Pell Grant award for which a student would be 
        eligible'' and inserting ``one-half the Federal Pell Grant 
        amount, determined under section 401(b)(2)(A), for which a 
        student would be eligible'';
          (4) in section 483(e)(3)(ii), by striking ``based on the 
        maximum Federal Pell Grant award at the time of application'' 
        and inserting ``based on the Federal Pell Grant amount, 
        determined under section 401(b)(2)(A), for which a student is 
        eligible at the time of application'';
          (5) in section 485E(b)(1)(A), by striking ``of such students' 
        potential eligibility for a maximum Federal Pell Grant under 
        subpart 1 of part A'' and inserting ``of such students' 
        potential eligibility for the Federal Pell Grant amount, 
        determined under section 401(b)(2)(A), for which the student 
        would be eligible''; and
          (6) in section 894(f)(2)(C)(ii)(I), by striking ``the maximum 
        Federal Pell Grant for each award year'' and inserting ``the 
        Federal Pell Grant amount, determined under section 
        401(b)(2)(A), for which a student may be eligible for each 
        award year''.
  (c) Effective Date.--The amendments made by subsections (a) and (b) 
of this section shall take effect on July 1, 2010.

SEC. 102. COLLEGE ACCESS AND COMPLETION INNOVATION FUND.

  (a) Header.--Part E of title VII (20 U.S.C. 1141 et seq.) is amended 
by striking the header of such part and inserting the following:

       ``PART E--COLLEGE ACCESS AND COMPLETION INNOVATION FUND''.

  (b) Purpose.--Part E of title VII (20 U.S.C. 1141 et seq.) is further 
amended by inserting before section 781 the following:

``SEC. 780. PURPOSES.

  ``The purposes of this part are--
          ``(1) to promote innovation in postsecondary education 
        practices and policies by institutions of higher education, 
        States, and nonprofit organizations to improve student success, 
        completion, and post-completion employment, particularly for 
        students from groups that are underrepresented in postsecondary 
        education; and
          ``(2) to assist States in developing longitudinal data 
        systems, common metrics, and reporting systems to enhance the 
        quality and availability of information about student success, 
        completion, and post-completion employment.''.
  (c) Authorization and Appropriation.--Section 781(a) (20 U.S.C. 
1141(a)) is amended to read as follows:
  ``(a) Authorization and Appropriation.--
          ``(1) In general.--There are authorized to be appropriated, 
        and there are appropriated, to carry out this part (in addition 
        to any other amounts appropriated to carry out this part and 
        out of any money in the Treasury not otherwise appropriated), 
        $600,000,000 for each of the fiscal years 2010 through 2014.
          ``(2) Allocations.--Of the amount appropriated for any fiscal 
        year under paragraph (1)--
                  ``(A) 25 percent shall be made available to carry out 
                section 781;
                  ``(B) 50 percent shall be made available to carry out 
                section 782;
                  ``(C) 23 percent shall be made available to carry out 
                section 783; and
                  ``(D) 2 percent shall be made available to carry out 
                section 784.''.
  (d) State Grants and Grants to Eligible Entities.--Part E of title 
VII (20 U.S.C. 1141 et seq.) is further amended by adding at the end 
the following:

``SEC. 782. STATE INNOVATION COMPLETION GRANTS.

  ``(a) Program Authorization.--From the amount appropriated under 
section 781(a)(2)(B) to carry out this section, the Secretary shall 
award grants to States on a competitive basis to promote student 
persistence in, and completion of, postsecondary education.
  ``(b) Federal Share; Non-Federal Share.--
          ``(1) Federal share.--The amount of the Federal share under 
        this section for a fiscal year shall be equal to \2/3\ of the 
        costs of the activities and services described in subsection 
        (d)(1) that are carried out under the grant.
          ``(2) Non-federal share.--The amount of the non-Federal share 
        under this section shall be equal to \1/3\ of the costs of the 
        activities and services described in subsection (d)(1). The 
        non-Federal share may be in cash or in kind, and may be 
        provided from State resources, contributions from private 
        organizations, or both.
          ``(3) Supplement, not supplant.--The Federal and non-Federal 
        shares required by this paragraph shall be used to supplement, 
        and not supplant, State and private resources that would 
        otherwise be expended to carry out activities and services to 
        promote student persistence in and completion of postsecondary 
        education.
  ``(c) Application and Selection.--
          ``(1) Application requirements.--For each fiscal year for 
        which a State desires to receive a grant under this section, 
        the State agency with jurisdiction over higher education, or 
        another agency designated by the Governor or chief executive of 
        the State to administer the grant program under this section, 
        shall submit an application to the Secretary at such time, in 
        such manner, and containing such information as the Secretary 
        may require. Such application shall include--
                  ``(A) a description of the State's capacity to 
                administer the grant under this section;
                  ``(B) a description of the State's plans for using 
                the grant funds for activities described in subsection 
                (d)(1), including plans for how the State will make 
                special efforts to provide benefits to students in the 
                State who are from groups that are underrepresented in 
                postsecondary education;
                  ``(C) a description of how the State will provide for 
                the non-Federal share from State resources, private 
                contributions, or both;
                  ``(D) a description of--
                          ``(i) the administrative system that the 
                        State has in place to administer the activities 
                        and services described in subsection (d)(1); or
                          ``(ii) the plan to develop such 
                        administrative system;
                  ``(E) a description of the data system the State has 
                or will have in place to measure the performance and 
                progress toward the State's goals included in the 
                Access and Completion Plan submitted, or that will be 
                submitted, under paragraph (2)(A); and
                  ``(F) the assurances under paragraph (2).
          ``(2) State assurances.--The assurances required in paragraph 
        (1)(F) shall include an assurance of each of the following:
                  ``(A) That the State will submit, not later than July 
                1, 2011, an Access and Completion Plan to increase the 
                State's rate of persistence in and completion of 
                postsecondary education. Such plan shall include--
                          ``(i) the State's annual and long-term 
                        quantifiable goals with respect to--
                                  ``(I) the rates of postsecondary 
                                enrollment, persistence, and 
                                completion, disaggregated by income, 
                                race, ethnicity, sex, disability, and 
                                age of students;
                                  ``(II) closing gaps in enrollment, 
                                persistence, and completion rates for 
                                students from groups that are 
                                underrepresented in postsecondary 
                                education;
                                  ``(III) targeting education and 
                                training programs to address labor 
                                market needs in the State, as such 
                                needs are determined by the State, or 
                                the State in coordination with the 
                                State public employment service, the 
                                State workforce investment board, or 
                                industry or sector partnerships in the 
                                State; and
                                  ``(IV) improving coordination between 
                                two-year and four-year institutions of 
                                higher education in the State, 
                                including supporting comprehensive 
                                articulation agreements between such 
                                institutions; and
                          ``(ii) the State's plan to develop an 
                        interoperable statewide longitudinal data 
                        system that--
                                  ``(I) can be linked to other data 
                                systems, as applicable, including 
                                elementary and secondary education and 
                                workforce data systems;
                                  ``(II) will collect, maintain, 
                                disaggregate (by institution, income, 
                                race, ethnicity, sex, disability, and 
                                age of students), and analyze 
                                postsecondary education and workforce 
                                information, including--
                                          ``(aa) postsecondary 
                                        education enrollment, 
                                        persistence, and completion 
                                        information;
                                          ``(bb) post-completion 
                                        employment outcomes of students 
                                        who enrolled in postsecondary 
                                        programs and training programs 
                                        offered by eligible training 
                                        providers under the Workforce 
                                        Investment Act of 1998 (29 
                                        U.S.C. 2801 et seq.);
                                          ``(cc) postsecondary 
                                        education and employment 
                                        outcomes of students who move 
                                        out of the State; and
                                          ``(dd) postsecondary 
                                        instructional workforce 
                                        information; and
                                  ``(III) makes the information 
                                described in subclause (I) available to 
                                the general public in a manner that is 
                                transparent and user-friendly.
                  ``(B) That the State has a comprehensive planning or 
                policy formulation process with respect to increasing 
                postsecondary enrollment, persistence, and completion 
                that--
                          ``(i) encourages coordination between the 
                        State administration of grants under this 
                        section and similar State programs;
                          ``(ii) encourages State policies that are 
                        designed to improve rates of enrollment and 
                        persistence in, and completion of, 
                        postsecondary education for all categories of 
                        institutions of higher education described in 
                        section 132(d) in the State;
                          ``(iii) considers the postsecondary education 
                        needs of students from groups that are 
                        underrepresented in postsecondary education;
                          ``(iv) considers the resources of public and 
                        private institutions of higher education, 
                        organizations, and agencies within the State 
                        that are capable of providing access to 
                        postsecondary education opportunities within 
                        the State; and
                          ``(v) provides for direct, equitable, and 
                        active participation in the comprehensive 
                        planning or policy formulation process or 
                        processes, through membership on State planning 
                        commissions, State advisory councils, or other 
                        State entities established by the State and 
                        consistent with State law, by representatives 
                        of--
                                  ``(I) institutions of higher 
                                education, including at least one 
                                member from a junior or community 
                                college (as defined in section 312(f));
                                  ``(II) students;
                                  ``(III) other providers of 
                                postsecondary education services 
                                (including organizations providing 
                                access to such services);
                                  ``(IV) the general public in the 
                                State; and
                                  ``(V) postsecondary education faculty 
                                members, including at least one faculty 
                                member whose primary responsibilities 
                                are teaching and scholarship.
                  ``(C) That the State will incorporate policies and 
                practices that, through the activities funded under 
                this section, are determined to be effective in 
                improving rates of postsecondary education enrollment, 
                persistence, and completion into the future 
                postsecondary education policies and practices of the 
                State to ensure that the benefits achieved through the 
                activities funded under this section continue beyond 
                the period of the grant.
                  ``(D) That the State will participate in the 
                evaluation required under section 784.
          ``(3) Subgrants to nonprofit organizations.--A State 
        receiving a payment under this section may elect to make a 
        subgrant to one or more nonprofit organizations in the State, 
        including agencies with agreements with the Secretary under 
        subsections (b) and (c) of section 428 on the date of the 
        enactment of the Student Aid and Fiscal Responsibility Act of 
        2009, or a partnership of such organizations, to carry out 
        activities and services described in subsection (d)(1), if the 
        nonprofit organization or partnership--
                  ``(A) was in existence on the day before the date of 
                the enactment of the Student Aid and Fiscal 
                Responsibility Act of 2009; and
                  ``(B) as of such day, was participating in activities 
                and services related to promoting persistence in, and 
                completion of, postsecondary education, such as the 
                activities and services described in subsection (d)(1).
          ``(4) Priority.--In awarding grants under this section, the 
        Secretary shall give priority to States that enter into a 
        partnership with one of the following entities to carry out the 
        activities and services described in subsection (d)(1):
                  ``(A) A philanthropic organization, as such term is 
                defined in section 781(i)(1).
                  ``(B) An agency with an agreement with the Secretary 
                under subsections (b) and (c) of section 428 on the 
                date of the enactment of Student Aid and Fiscal 
                Responsibility Act of 2009.
  ``(d) Uses of Funds.--
          ``(1) Authorized uses.--A State receiving a grant under this 
        section shall use the grant funds to--
                  ``(A) provide programs in such State that increase 
                persistence in, and completion of, postsecondary 
                education, which may include--
                          ``(i) assisting institutions of higher 
                        education in providing financial literacy, 
                        education, and counseling to enrolled students;
                          ``(ii) assisting students enrolled in an 
                        institution of higher education to reduce the 
                        amount of loan debt incurred by such students;
                          ``(iii) providing grants to students 
                        described in section 415A(a)(1), in accordance 
                        with the terms of that section; and
                          ``(iv) carrying out the activities described 
                        in section 415E(a); and
                  ``(B) support the development and implementation of a 
                statewide longitudinal data system, as described in 
                subsection (c)(2)(A)(ii).
          ``(2) Prohibited uses.--Funds made available under this 
        section shall not be used to promote any lender's loans.
          ``(3) Restrictions on use of funds.--A State--
                  ``(A) shall use not less than \1/3\ of the sum of the 
                Federal and non-Federal share used for paragraph (1)(A) 
                on activities that benefit students enrolled in junior 
                or community colleges (as defined in section 312(f)), 
                two-year public institutions, or two-year programs of 
                instruction at four-year public institutions;
                  ``(B) may use not more than 10 percent of the sum of 
                the Federal and non-Federal share under this section 
                for activities described in paragraph (1)(B); and
                  ``(C) may use not more than 6 percent of the sum of 
                the Federal and non-Federal share under this section 
                for administrative purposes relating to the grant under 
                this section.
  ``(e) Annual Report.--Each State receiving a grant under this section 
shall submit to the Secretary an annual report on--
          ``(1) the activities and services described in subsection 
        (d)(1) that are carried out with such grant;
          ``(2) the effectiveness of such activities and services in 
        increasing postsecondary persistence and completion, as 
        determined by measurable progress in achieving the State's 
        goals for persistence and completion described in the Access 
        and Completion Plan submitted by the State under subsection 
        (c)(2)(A), if such plan has been submitted; and
          ``(3) any other information or assessments the Secretary may 
        require.
  ``(f) Definitions.--In this section:
          ``(1) Industry or sector partnership.--The term `industry or 
        sector partnership' means a workforce collaborative that 
        organizes key stakeholders in a targeted industry cluster into 
        a working group that focuses on the human capital needs of a 
        targeted industry cluster and that includes, at the appropriate 
        stage of development of the partnership--
                  ``(A) representatives of multiple firms or employers 
                (including workers) in a targeted industry cluster, 
                including small- and medium-sized employers when 
                practicable;
                  ``(B) 1 or more representatives of State labor 
                organizations, central labor coalitions, or other labor 
                organizations;
                  ``(C) 1 or more representatives of local workforce 
                investment boards;
                  ``(D) 1 or more representatives of postsecondary 
                educational institutions or other training providers; 
                and
                  ``(E) 1 or more representatives of State workforce 
                agencies or other entities providing employment 
                services.
          ``(2) State public employment service.--The term `State 
        public employment service' has the meaning given such term in 
        section 502(a)(9) of the Student Aid and Fiscal Responsibility 
        Act of 2009.
          ``(3) State workforce investment board; local workforce 
        investment board.--The terms `State workforce investment board' 
        and `local workforce investment board' have the meanings given 
        such terms in section 502(a)(10) of the Student Aid and Fiscal 
        Responsibility Act of 2009.

``SEC. 783. INNOVATION IN COLLEGE ACCESS AND COMPLETION NATIONAL 
                    ACTIVITIES.

  ``(a) Programs Authorized.--From the amount appropriated under 
section 781(a)(2)(C) to carry out this section, the Secretary shall 
award grants, on a competitive basis, to eligible entities in 
accordance with this section to conduct innovative programs that 
advance knowledge about, and adoption of, policies and practices that 
increase the number of individuals with postsecondary degrees or 
certificates.
  ``(b) Eligible Entities.--The Secretary is authorized to award grants 
under subsection (a) to--
          ``(1) institutions of higher education;
          ``(2) States;
          ``(3) nonprofit organizations with demonstrated experience in 
        the operation of programs to increase postsecondary completion;
          ``(4) philanthropic organizations (as such term is defined in 
        section 781(i)(1));
          ``(5) entities receiving a grant under chapter 1 of subpart 2 
        of part A of title IV; and
          ``(6) consortia of any of the entities described in 
        paragraphs (1) through (5).
  ``(c) Innovation Grants.--
          ``(1) Minimum award.--A grant awarded under subsection (a) 
        shall be not less than $1,000,000.
          ``(2) Grants uses.--The Secretary's authority to award grants 
        under subsection (a) includes--
                  ``(A) the authority to award to an eligible entity a 
                grant in an amount equal to all or part of the amount 
                of funds received by such entity from philanthropic 
                organizations (as such term is defined in section 
                781(i)(1)) to conduct innovative programs that advance 
                knowledge about, and adoption of, policies and 
                practices that increase the number of individuals with 
                postsecondary degrees or certificates; and
                  ``(B) the authority to award an eligible entity a 
                grant to develop 2-year programs that provide 
                supplemental grant or loan benefits to students that--
                          ``(i) are designed to improve student 
                        outcomes, including degree completion, 
                        graduation without student loan debt, and post-
                        completion employment;
                          ``(ii) are in addition to the student 
                        financial aid available under title IV of this 
                        Act; and
                          ``(iii) do not result in the reduction of the 
                        amount of that aid or any other student 
                        financial aid for which a student is otherwise 
                        eligible under Federal law.
          ``(3) Application.--To be eligible to receive a grant under 
        subsection (a), an eligible entity shall submit an application 
        at such time, in such manner, and containing such information 
        as the Secretary shall require.
          ``(4) Priorities.--In awarding grants under subsection (a), 
        the Secretary shall give priority to applications that--
                  ``(A) are from an eligible entity with demonstrated 
                experience in serving students from groups that are 
                underrepresented in postsecondary education, including 
                institutions of higher education that are eligible for 
                assistance under title III or V, or are from a 
                consortium that includes an eligible entity with such 
                experience;
                  ``(B) are from an eligible entity that is a public 
                institution of higher education that does not 
                predominantly provide an educational program for which 
                it awards a bachelor's degree (or an equivalent 
                degree), or from a consortium that includes at least 
                one such institution;
                  ``(C) include activities to increase degree or 
                certificate completion in the fields of science, 
                technology, engineering, and mathematics, including 
                preparation for, or entry into, postbaccaluareate 
                study, especially for women and other groups of 
                students who are underrepresented in such fields;
                  ``(D) are from an eligible entity that is a 
                philanthropic organization with the primary purpose of 
                providing scholarships and support services to students 
                from groups that are underrepresented in postsecondary 
                education, or are from a consortium that includes such 
                an organization; or
                  ``(E) are from an eligible entity that encourages 
                partnerships between institutions of higher education 
                with high degree-completion rates and institutions of 
                higher education with low degree-completion rates from 
                the same category of institutions described in section 
                132(d) to facilitate the sharing of information 
                relating to, and the implementation of, best practices 
                for increasing postsecondary completion.
          ``(5) Technical assistance.--The Secretary may reserve up to 
        $5,000,000 per year to award grants and contracts to provide 
        technical assistance to eligible entities receiving a grant 
        under subsection (a), including technical assistance on the 
        evaluation conducted in accordance with section 784 and 
        establishing networks of eligible entities receiving grants 
        under such subsection.
  ``(d) Reports.--
          ``(1) Annual reports by entities.--Each eligible entity 
        receiving a grant under subsection (a) shall submit to the 
        Secretary an annual report on--
                  ``(A) the effectiveness of the program carried out 
                with such grant in increasing postsecondary completion, 
                as determined by measurable progress in achieving the 
                goals of the program, as described in the application 
                for such grant; and
                  ``(B) any other information or assessments the 
                Secretary may require.
          ``(2) Annual report to congress.--The Secretary shall submit 
        to the authorizing committees an annual report on grants 
        awarded under subsection (a), including--
                  ``(A) the amount awarded to each eligible entity 
                receiving a grant under such subsection; and
                  ``(B) a description of the activities conducted by 
                each such eligible entity.

``SEC. 784. EVALUATION.

  ``From the amount appropriated under section 781(a)(2)(D), the 
Director of the Institute of Education Sciences shall evaluate the 
programs funded under this part. Not later than January 30, 2016, the 
Director shall issue a final report on such evaluation to the 
authorizing committees and the Secretary, and shall make such report 
available to the public.

``SEC. 785. VETERANS RESOURCE OFFICER GRANTS.

  ``(a) Program Authorized.--The Secretary shall award grants, on a 
competitive basis, to eligible institutions of higher education to hire 
a Veterans Resource Officer to increase the college completion rates 
for veterans enrolled at such institutions.
  ``(b) Definitions.--In this section:
          ``(1) Eligible institution of higher education.--The term 
        `eligible institution of higher education' means an institution 
        of higher education that has an enrollment of at least 100 
        full-time equivalent students who are veterans.
          ``(2) Full-time equivalent students.--The term `full-time 
        equivalent students' has the meaning given such term in section 
        312(e).
          ``(3) Veteran.--The term `veteran' has the meaning give such 
        term in section 480(c).
  ``(c) Application.--To be eligible to receive a grant under this 
section, an eligible institution of higher education shall submit an 
application at such time, in such manner, and containing such 
information as the Secretary shall require.
  ``(d) Uses of Funds.--
          ``(1) In general.--An eligible institution of higher 
        education receiving a grant under this section shall use such 
        grant to hire 1 or 2 Veterans Resource Officers (in the case of 
        an institution that has an enrollment of at least 200 full-time 
        equivalent students who are veterans) to serve in the office of 
        campus programs, or a similar office, at such institution and 
        carry out the activities described in paragraph (2).
          ``(2) Activities.--A Veterans Resource Officer shall carry 
        out activities at an eligible institution of higher education 
        to help increase the completion rates for veterans enrolled at 
        such institution, which shall include the following activities:
                  ``(A) Serving as a link between student veterans and 
                the staff of the institution.
                  ``(B) Serving as a link between student veterans and 
                local facilities of the Department of Veterans Affairs.
                  ``(C) Organizing and advising student veterans 
                organization.
                  ``(D) Organizing veterans oriented group functions 
                and events.
                  ``(E) Maintaining newsletters and listserves to 
                distribute news and information to all student 
                veterans.
                  ``(F) Organizing new student veterans campus 
                orientation.
                  ``(G) Ensuring that the Department of Veterans 
                Affairs certifying official at such institution is 
                properly trained.
          ``(3) Priority.--To the extent practicable, each institution 
        described in paragraph (1) shall give priority to hiring a 
        veteran to serve as a Veterans Resource Officer.
  ``(e) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section such sums as may be necessary 
for fiscal year 2010 and each succeeding fiscal year.''.

SEC. 103. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND UNIVERSITIES 
                    AND OTHER MINORITY-SERVING INSTITUTIONS.

  Section 371 (20 U.S.C. 1067q) is amended--
          (1) in subsection (a)--
                  (A) in paragraph (2), by striking ``section 502'' and 
                inserting ``section 502(a)'';;
                  (B) in paragraph (3), by striking ``section 316'' and 
                inserting ``section 316(b)'';
                  (C) in paragraph (5), by striking ``in subsection 
                (c)'' and inserting ``in section 318(b)'';
                  (D) in paragraph (6), by striking ``in subsection 
                (c)'' and inserting ``in section 320(b)''; and
                  (E) in paragraph (7), by striking ``in subsection 
                (c)'' and inserting ``in section 319(b)'';
          (2) in subsection (b)--
                  (A) in paragraph (1)(A), by striking ``$255,000,000'' 
                and all that follows and inserting ``$255,000,000 for 
                each of the fiscal years 2008 through 2019.''; and
                  (B) by amending paragraph (2)(B) to read as follows:
                  ``(B) Stem and articulation programs.--From the 
                amount made available for allocation under this 
                subparagraph by subparagraph (A)(i) for any fiscal 
                year--
                          ``(i) 90 percent shall be available for 
                        Hispanic-serving institutions for activities 
                        described in sections 503 and 513, with a 
                        priority given to applications that propose--
                                  ``(I) to increase the number of 
                                Hispanic and other low-income students 
                                attaining degrees in the fields of 
                                science, technology, engineering, or 
                                mathematics; and
                                  ``(II) to develop model transfer and 
                                articulation agreements between 2-year 
                                Hispanic-serving institutions and 4-
                                year institutions in such fields; and
                          ``(ii) 10 percent shall be available for 
                        grants under section 355.'';
                  (C) in paragraph (2)(C)(ii), by striking ``and shall 
                be available for a competitive'' and all that follows 
                and inserting ``and shall be made available as grants 
                under section 318 and allotted among such institutions 
                under section 318(e), treating such amount, plus the 
                amount appropriated for such fiscal year in a regular 
                or supplemental appropriation Act to carry out section 
                318, as the amount appropriated to carry out section 
                318 for purposes of allotments under section 318(e)''; 
                and
                  (D) in paragraph (2)(D)--
                          (i) in clause (iii), by striking ``for 
                        activities described in section 311(c)'' and 
                        inserting ``and shall be made available as 
                        grants under section 320, treating such 
                        $5,000,000 as part of the amount appropriated 
                        for such fiscal year in a regular or 
                        supplemental appropriation Act to carry out 
                        such section and using such $5,000,000 for 
                        purposes described in subsection (c) of such 
                        section''; and
                          (ii) in clause (iv), by striking ``described 
                        in subsection (a)(7)--'' and all that follows 
                        and inserting ``and shall be made available as 
                        grants under section 319, treating such 
                        $5,000,000 as part of the amount appropriated 
                        for such fiscal year in a regular or 
                        supplemental appropriation Act to carry out 
                        such section and using such $5,000,000 for 
                        purposes described in subsection (c) of such 
                        section''; and
          (3) by striking subsection (c).

SEC. 104. INVESTMENT IN COOPERATIVE EDUCATION.

  There are authorized to be appropriated, and there are appropriated, 
to carry out part N of title VIII of the Higher Education Act of 1965 
(20 U.S.C. 1161n) (in addition to any other amounts appropriated to 
carry out such part and out of any money in the Treasury not otherwise 
appropriated), $10,000,000 for fiscal year 2010.

SEC. 105. LOAN FORGIVENESS FOR SERVICEMEMBERS ACTIVATED FOR DUTY.

  (a) In General.--Section 484B(b)(2) (20 U.S.C. 1091b(b)(2)) is 
amended by adding at the end the following:
                  ``(F) Tuition relief for students called to military 
                service.--
                          ``(i) Waiver of repayment by students called 
                        to military service.--In addition to the 
                        waivers authorized by subparagraphs (D) and 
                        (E), the Secretary shall waive the amounts that 
                        students are required to return under this 
                        section if the withdrawals on which the returns 
                        are based are withdrawals necessitated by 
                        reason of service in the uniformed services.
                          ``(ii) Loan forgiveness authorized.--Whenever 
                        a student's withdrawal from an institution of 
                        higher education is necessitated by reason of 
                        service in the uniformed services, the 
                        Secretary shall, with respect to the payment 
                        period or period of enrollment for which such 
                        student did not receive academic credit as a 
                        result of such withdrawal, carry out a 
                        program--
                                  ``(I) through the holder of the loan, 
                                to assume the obligation to repay--
                                          ``(aa) the outstanding 
                                        principle and accrued interest 
                                        on any loan assistance awarded 
                                        to the student under part B 
                                        (including to a parent on 
                                        behalf of the student under 
                                        section 428B) for such payment 
                                        period or period of enrollment; 
                                        minus
                                          ``(bb) any amount of such 
                                        loan assistance returned by the 
                                        institution in accordance with 
                                        paragraph (1) of this 
                                        subsection for such payment 
                                        period or period of enrollment; 
                                        and
                                  ``(II) to cancel--
                                          ``(aa) the outstanding 
                                        principle and accrued interest 
                                        on the loan assistance awarded 
                                        to the student under part D or 
                                        E (including a Federal Direct 
                                        PLUS loan awarded to a parent 
                                        on behalf of the student) for 
                                        such payment period or period 
                                        of enrollment; minus
                                          ``(bb) any amount of such 
                                        loan assistance returned by the 
                                        institution in accordance with 
                                        paragraph (1) of this 
                                        subsection for such payment 
                                        period or period of enrollment.
                          ``(iii) Reimbursement for cancellation of 
                        perkins loans.--The Secretary shall pay to each 
                        institution for each fiscal year an amount 
                        equal to the aggregate of the amounts of 
                        Federal Perkins loans in such institutions's 
                        student loan fund which are cancelled pursuant 
                        to clause (iii)(II) for such fiscal year, minus 
                        an amount equal to the aggregate of the amounts 
                        of any such loans so canceled which were made 
                        from Federal capital contributions to its 
                        student loan fund provided by the Secretary 
                        under section 468. None of the funds 
                        appropriated pursuant to section 461(b) shall 
                        be available for payments pursuant to this 
                        paragraph. To the extent feasible, the 
                        Secretary shall pay the amounts for which any 
                        institution qualifies under this paragraph not 
                        later than 3 months after the institution files 
                        an institutional application for campus-based 
                        funds.
                          ``(iv) Loan eligibility and limits for 
                        students.--Any amounts that are returned by an 
                        institution in accordance with paragraph (1), 
                        or forgiven or waived by the Secretary under 
                        this subparagraph, with respect to a payment 
                        period or period of enrollment for which a 
                        student did not receive academic credit as a 
                        result of withdrawal necessitated by reason of 
                        service in the uniformed services, shall not be 
                        included in the calculation of the student's 
                        annual or aggregate loan limits for assistance 
                        under this title, or otherwise affect the 
                        student's eligibility for grants or loans under 
                        this title.
                          ``(v) Definition.--In this subparagraph, the 
                        term `service in the uniformed services' has 
                        the meaning given such term in section 
                        484C(a).''.
  (b) Effective Date.--
          (1) In general.--The amendments made by this section shall 
        take effect for periods of service in the uniformed services 
        beginning after the date of the enactment of this Act.
          (2) Definition.--In this paragraph, the term ``period of 
        service in the uniformed services'' means the period beginning 
        30 days prior to the date a student is required to report to 
        service in the uniformed services (as defined in section 
        484C(a) of the Higher Education Act of 1965 (20 U.S.C. 
        1091c(a)) and ending when such student returns from such 
        service.

SEC. 106. VETERANS EDUCATIONAL EQUITY SUPPLEMENTAL GRANT PROGRAM.

  (a) Veterans Educational Equity Supplemental Grant Program.--Subpart 
1 of part A of title IV (20 U.S.C. 1070a et seq.) is amended by adding 
at the end the following:

``SEC. 401B. VETERANS EDUCATIONAL EQUITY SUPPLEMENTAL GRANT PROGRAM.

  ``(a) Veterans Educational Equity Supplemental Grants Authorized.--
The Secretary shall award a grant to each eligible student, in an 
amount determined in accordance with subsection (c), to assist such 
student with paying the cost of tuition incurred by the student for a 
program of education at an institution of higher education.
  ``(b) Definitions.--In this section--
          ``(1) Eligible student.--The term `eligible student' means a 
        student who--
                  ``(A) is a covered individual, as such term is 
                defined in section 3311(b) of title 38, United States 
                Code;
                  ``(B) is enrolled at an institution of higher 
                education that--
                          ``(i) is not a public institution of higher 
                        education; and
                          ``(ii) is located in a State with a zero, or 
                        very low, maximum tuition charge per credit 
                        hour compared to the maximum tuition charge per 
                        credit hour in all other States, as determined 
                        by the Secretary of Veterans Affairs (based on 
                        the determinations of maximum tuition charged 
                        per credit hour in each State for the purposes 
                        of chapter 33 of title 38, United States Code); 
                        and
                  ``(C) is eligible for educational assistance for an 
                academic year, and will receive an amount of such 
                assistance for such year for fees charged the 
                individual that is less than the maximum amount of such 
                assistance available for fees charged for such year in 
                such State.
          ``(2) Educational assistance.--The term `educational 
        assistance' means the amount of educational assistance from the 
        Secretary of Veterans Affairs an eligible student receives or 
        will receive under section 3313(c)(1)(A) of title 38, United 
        States Code, or a similar amount of such assistance under 
        paragraphs (2) through (7) of such section 3313(c).
  ``(c) Grant Amount.--A grant to an eligible student under this 
section be equal to an amount that is--
          ``(1) the maximum amount of educational assistance for fees 
        charged that the eligible student would receive, in accordance 
        with section 3313(c) of title 38, United States Code, if such 
        student attended the public institution of higher education in 
        the State in which the eligible student is enrolled that has 
        the highest fees charged to an individual for a year in such 
        State (as determined by the Secretary of Veterans Affairs for 
        the purposes of chapter 33 of such title 38), less
          ``(2) the educational assistance the eligible student will 
        receive, in accordance with such section, for fees charged to 
        the student for such year at the institution of higher 
        education at which the student is enrolled.
  ``(d) Uses of Funds.--An eligible student who receives a grant under 
this section shall use such grant to pay tuition incurred by the 
student for a program of education at an institution of higher 
education.
  ``(e) Notification.--The Secretary, in coordination with Secretary of 
Veterans Affairs, shall establish a system of notification to ensure 
the timely delivery to each eligible student of--
          ``(1) educational assistance received by the student; and
          ``(2) grants awarded to the student under this section.
  ``(f) Authorization and Appropriation.--There are authorized to be 
appropriated, and there are appropriated, such sums as may be necessary 
to carry out this section (in addition to any other amounts 
appropriated to carry out this section and out of any money in the 
Treasury not otherwise appropriated).''.
  (b) Conforming Amendment.--The header for subpart 1 of part A of 
title IV (20 U.S.C. 1070a et seq.) is amended by inserting ``; Veterans 
Educational Equity Supplemental Grants'' after ``Pell Grants''.

         Subtitle B--Student Financial Aid Form Simplification

SEC. 121. GENERAL EFFECTIVE DATE.

  Except as otherwise provided in this subtitle, amendments made by 
this subtitle shall be effective with respect to determinations of need 
for assistance under title IV of the Higher Education Act of 1965 (20 
U.S.C. 1070 et seq.) for award years beginning on or after July 1, 
2011.

SEC. 122. TREATMENT OF ASSETS IN NEED ANALYSIS.

  (a) Amount of Need.--Section 471 (20 U.S.C. 1087kk) is amended--
          (1) by striking ``Except'' and inserting the following:
  ``(a) In General.--Except'';
          (2) by inserting ``and subject to subsection (b)'' after 
        ``therein''; and
          (3) by adding at the end the following:
  ``(b) Asset Cap for Need-based Aid.--Notwithstanding any other 
provision of this title, a student shall not be eligible to receive a 
Federal Pell Grant, a Federal Direct Stafford Loan, or work assistance 
under this title if--
          ``(1) in the case of a dependent student, the combined net 
        assets of the student and the student's parents are equal to an 
        amount greater than $150,000 (or a successor amount prescribed 
        by the Secretary under section 478(c)); or
          ``(2) in the case of an independent student, the net assets 
        of the student (and the student's spouse, if applicable) are 
        equal to an amount greater than $150,000 (or a successor amount 
        prescribed by the Secretary under section 478(c)).''.
  (b) Data Elements.--Section 474(b) (20 U.S.C. 1087nn(b)) is amended--
          (1) by striking paragraph (4); and
          (2) by redesignating paragraphs (5), (6), and (7) as 
        paragraphs (4), (5), and (6), respectively.
  (c) Dependent Students.--Section 475 (20 U.S.C. 1087oo) is amended--
          (1) in subsection (a)--
                  (A) in paragraph (1)--
                          (i) by striking ``adjusted''; and
                          (ii) by inserting ``and'' after the 
                        semicolon;
                  (B) in paragraph (2), by striking ``; and'' and 
                inserting a period; and
                  (C) by striking paragraph (3);
          (2) in subsection (b)--
                  (A) in the header, by striking ``Adjusted'';
                  (B) in the matter preceding paragraph (1), by 
                striking ``adjusted'';
                  (C) by striking paragraph (1);
                  (D) by redesignating paragraphs (2) and (3) as 
                paragraphs (1) and (2), respectively;
                  (E) in paragraph (1) (as redesignated by subparagraph 
                (D) of this paragraph), by striking ``adjusted''; and
                  (F) in paragraph (2) (as redesignated by subparagraph 
                (D) of this paragraph), by striking ``paragraph (2)'' 
                and inserting ``paragraph (1)'';
          (3) by repealing subsection (d);
          (4) in subsection (e)--
                  (A) by striking ``The adjusted available'' and 
                inserting ``The available'';
                  (B) by striking ``to as `AAI')'' and inserting ``to 
                as `AI')'';
                  (C) by striking ``From Adjusted Available Income 
                (AAI)'' and inserting ``From Available Income (AI)''; 
                and
                  (D) in the table--
                          (i) by striking ``If AAI'' and inserting ``If 
                        AI''; and
                          (ii) by striking ``of AAI'' each place it 
                        appears and inserting ``of AI'';
          (5) in subsection (f)--
                  (A) by striking ``and assets'' each place it appears;
                  (B) in paragraph (2)(B), by striking ``or assets''; 
                and
                  (C) in paragraph (3)--
                          (i) by striking ``are taken into'' and 
                        inserting ``is taken into''; and
                          (ii) by striking ``adjusted'';
          (6) in subsection (g)(6), by striking ``exceeds the sum of'' 
        and all that follows and inserting ``exceeds the parents' total 
        income (as defined in section 480)'';
          (7) by repealing subsection (h); and
          (8) in subsection (i), by striking ``adjusted'' each place it 
        appears.
  (d) Family Contribution for Independent Students Without Dependents 
Other Than a Spouse.--Section 476 (20 U.S.C. 1087pp) is amended--
          (1) in subsection (a)--
                  (A) by striking paragraph (1);
                  (B) by redesignating paragraphs (2) and (3) as 
                paragraphs (1) and (2), respectively;
                  (C) in paragraph (1) (as redesignated by subparagraph 
                (B)), by striking ``the sum resulting under paragraph 
                (1)'' and inserting ``the family's contribution from 
                available income (determined in accordance with 
                subsection (b))''; and
                  (D) in paragraph (2)(A) (as redesignated by 
                subparagraph (B)), by striking ``paragraph (2)'' and 
                inserting ``paragraph (1)'';
          (2) by repealing subsection (c); and
          (3) in subsection (d)--
                  (A) by striking ``and assets''; and
                  (B) by striking ``or assets''.
  (e) Family Contribution for Independent Students With Dependents 
Other Than a Spouse.--Section 477 (20 U.S.C. 1087qq) is amended--
          (1) in subsection (a)--
                  (A) by striking paragraph (1);
                  (B) by redesignating paragraphs (2), (3), and (4) as 
                paragraphs (1), (2), and (3), respectively;
                  (C) in paragraph (1) (as redesignated by subparagraph 
                (B)), by striking ``such adjusted available income'' 
                and inserting ``the family's available income 
                (determined in accordance with subsection (b))'';
                  (D) in paragraph (2) (as redesignated by subparagraph 
                (B)), by striking ``paragraph (2)'' and inserting 
                ``paragraph (1)''; and
                  (E) in paragraph (3)(A) (as redesignated by 
                subparagraph (B)), by striking ``paragraph (3)'' and 
                inserting ``paragraph (2)'';
          (2) by repealing subsection (c); and
          (3) in subsection (d)--
                  (A) by striking ``The adjusted available'' and 
                inserting ``The available'';
                  (B) by striking ``to as `AAI')'' and inserting ``to 
                as `AI')'';
                  (C) by striking ``From Adjusted Available Income 
                (AAI)'' and inserting ``From Available Income (AI)''; 
                and
                  (D) in the table--
                          (i) by striking ``If AAI'' and inserting ``If 
                        AI''; and
                          (ii) by striking ``of AAI'' each place it 
                        appears and inserting ``of AI''; and
                  (E) in subsection (e)--
                          (i) by striking ``and assets''; and
                          (ii) by striking ``or assets''.
  (f) Regulations; Updated Tables.--Section 478 (20 U.S.C. 1087rr) is 
amended--
          (1) in subsection (a), by inserting ``or amounts, as the case 
        may be,'' after ``tables'' each place the term appears;
          (2) by amending subsection (c) to read as follows:
  ``(c) Asset Cap for Need-based Aid.--For each award year after award 
year 2011-2012, the Secretary shall publish in the Federal Register a 
revised net asset cap for the purposes of section 471(b). Such revised 
cap shall be determined by increasing the dollar amount in such section 
by a percentage equal to the estimated percentage change in the 
Consumer Price Index (as determined by the Secretary) between December 
2010 and the December preceding the beginning of such award year, and 
rounding the result to the nearest $5.'';
          (3) by repealing subsection (d); and
          (4) in subsection (e), by striking ``adjusted'' both places 
        it appears.

SEC. 123. CHANGES TO TOTAL INCOME; AID ELIGIBILITY.

  (a) Definition of Untaxed Income and Benefits.--Section 480(b)(1) (20 
U.S.C. 1087vv(b)(1)), as amended by the Higher Education Opportunity 
Act (Public Law 110-315), is amended--
          (1) by striking subparagraphs (A), (B), (C), (E), (F), and 
        (I);
          (2) by redesignating subparagraphs (D), (G), and (H) as 
        subparagraphs (A), (B), and (C), respectively;
          (3) in subparagraph (B) (as redesignated by paragraph (2)), 
        by inserting ``and'' after the semicolon; and
          (4) in subparagraph (C) (as redesignated by paragraph (2)), 
        by striking ``; and'' and inserting a period.
  (b) Definition of Assets.--Section 480(f)(2) (20 U.S.C. 1087vv(f)(2)) 
is amended--
          (1) by striking ``or'' at the end of subparagraph (B);
          (2) by striking the period at the end of subparagraph (C) and 
        inserting ``; or''; and
          (3) by adding at the end the following:
                  ``(D) an employee pension benefit plan (as defined in 
                section 3(2) of the Employee Retirement Income Security 
                Act of 1974 (29 U.S.C. 1002(2))).''.
  (c) Financial Administrator Discretion.--Section 479A(b) (20 U.S.C. 
1087tt) is amended in the subsection heading, by striking ``to 
Assets''.
  (d) Suspension of Eligibility for Drug-related Offenses.--Section 
484(r)(1) (20 U.S.C. 1091(r)(1)) is amended to read as follows:
          ``(1) In general.--A student who is convicted of any offense 
        under any Federal or State law involving the sale of a 
        controlled substance for conduct that occurred during a period 
        of enrollment for which the student was receiving any grant, 
        loan, or work assistance under this title shall not be eligible 
        to receive any grant, loan, or work assistance under this title 
        from the date of that conviction for the period of time 
        specified in the following subparagraphs:
                  ``(A) For a first offense, the period of 
                ineligibility shall be 2 years.
                  ``(B) For a second offense, the period of 
                ineligibility shall be indefinite.''.

                     TITLE II--STUDENT LOAN REFORM

                    Subtitle A--Stafford Loan Reform

SEC. 201. FEDERAL FAMILY EDUCATION LOAN APPROPRIATIONS.

  Section 421 (20 U.S.C. 1071) is amended--
          (1) in subsection (b), in the matter following paragraph (6), 
        by inserting ``, except that no sums may be expended after June 
        30, 2010, with respect to loans under this part for which the 
        first disbursement would be made after such date'' after 
        ``expended''; and
          (2) by adding at the end the following new subsection:
  ``(d) Termination of Authority To Make or Insure New Loans.--
Notwithstanding paragraphs (1) through (6) of subsection (b) or any 
other provision of law--
          ``(1) no new loans (including consolidation loans) may be 
        made or insured under this part after June 30, 2010; and
          ``(2) no funds are authorized to be appropriated, or may be 
        expended, under this Act or any other Act to make or insure 
        loans under this part (including consolidation loans) for which 
        the first disbursement would be made after June 30, 2010,
except as expressly authorized by an Act of Congress enacted after the 
date of enactment of Student Aid and Fiscal Responsibility Act of 
2009.''.

SEC. 202. SCOPE AND DURATION OF FEDERAL LOAN INSURANCE PROGRAM.

  Section 424(a) (20 U.S.C. 1074(a)) is amended by striking ``September 
30, 1976,'' and all that follows and inserting ``September 30, 1976, 
for each of the succeeding fiscal years ending prior to October 1, 
2009, and for the period from October 1, 2009, to June 30, 2010, for 
loans first disbursed on or before June 30, 2010.''.

SEC. 203. APPLICABLE INTEREST RATES.

  Section 427A(l) (20 U.S.C. 1077a(l)) is amended--
          (1) in paragraph (1), by inserting ``and before July 1, 
        2010,'' after ``July 1, 2006,'';
          (2) in paragraph (2), by inserting ``and before July 1, 
        2010,'' after ``July 1, 2006,'';
          (3) in paragraph (3), by inserting ``and that was disbursed 
        before July 1, 2010,'' after ``July 1, 2006,''; and
          (4) in paragraph (4)--
                  (A) in the matter preceding subparagraph (A), by 
                striking ``July 1, 2012'' and inserting ``July 1, 
                2010''; and
                  (B) by repealing subparagraphs (D) and (E).

SEC. 204. FEDERAL PAYMENTS TO REDUCE STUDENT INTEREST COSTS.

  (a) Higher Education Act of 1965.--Section 428 (20 U.S.C. 1078) is 
amended--
          (1) in subsection (a)--
                  (A) in paragraph (1), in the matter preceding 
                subparagraph (A), by inserting ``for which the first 
                disbursement is made before July 1, 2010, and'' after 
                ``eligible institution''; and
                  (B) in paragraph (5), by striking ``September 30, 
                2014,'' and all that follows through the period and 
                inserting ``June 30, 2010.'';
          (2) in subsection (b)(1)--
                  (A) in subparagraph (G)(ii), by inserting ``and 
                before July 1, 2010,'' after ``July 1, 2006,''; and
                  (B) in subparagraph (H)(ii), by inserting ``and that 
                are first disbursed before July 1, 2010,'' after ``July 
                1, 2006,'';
          (3) in subsection (f)(1)(A)(ii)--
                  (A) by striking ``during fiscal years beginning''; 
                and
                  (B) by inserting ``and first disbursed before July 1, 
                2010,'' after ``October 1, 2003,''; and
          (4) in subsection (j)(1), by inserting ``, before July 1, 
        2010,'' after ``section 435(d)(1)(D) of this Act shall''.
  (b) College Cost Reduction and Access Act.--Section 303 of the 
College Cost Reduction and Access Act (Public Law 110-84) is repealed.

SEC. 205. FEDERAL PLUS LOANS.

  Section 428B(a)(1) (20 U.S.C. 1078-2(a)(1)) is amended by striking 
``A graduate'' and inserting ``Prior to July 1, 2010, a graduate''.

SEC. 206. FEDERAL CONSOLIDATION LOAN.

  (a) Amendments.--Section 428C (20 U.S.C. 1078-3) is amended--
          (1) in subsection (a)--
                  (A) by amending paragraph (3)(B)(i)(V) to read as 
                follows:
                          ``(V) an individual who has a consolidation 
                        loan under this section and does not have a 
                        consolidation loan under section 455(g) may 
                        obtain a subsequent consolidation loan under 
                        section 455(g).''; and
                  (B) in paragraph (4)(A), by inserting ``, and first 
                disbursed before July 1, 2010'' after ``under this 
                part'';
          (2) in subsection (b)--
                  (A) in paragraph (1)(E), by inserting before the 
                semicolon ``, and before July 1, 2010'' and
                  (B) in paragraph (5), by striking ``In the event 
                that'' and inserting ``If, before July 1, 2010,'';
          (3) in subsection (c)(1)--
                  (A) in subparagraph (A)(ii), by inserting ``and that 
                is disbursed before July 1, 2010,'' after ``2006,''; 
                and
                  (B) in subparagraph (C), by inserting ``and first 
                disbursed before July 1, 2010,'' after ``1994,''; and
          (4) in subsection (e), by striking ``September 30, 2014.'' 
        and inserting ``June 30, 2010. No loan may be made under this 
        section for which the first disbursement would be on or after 
        July 1, 2010.''.
  (b) Effective Date.--The amendments made by subsection (a)(1)(A) 
shall be effective at the close of June 30, 2010.

SEC. 207. UNSUBSIDIZED STAFFORD LOANS FOR MIDDLE-INCOME BORROWERS.

  Section 428H (20 U.S.C. 1078-8) is amended--
          (1) in subsection (a), by inserting ``that are first 
        disbursed before July 1, 2010,'' after ``under this part'';
          (2) in subsection (b)--
                  (A) by striking ``Any student'' and inserting ``Prior 
                to July 1, 2010, any student''; and
                  (B) by inserting ``for which the first disbursement 
                is made before such date'' after ``unsubsidized Federal 
                Stafford Loan''; and
          (3) in subsection (h), by inserting ``and that are first 
        disbursed before July 1, 2010,'' after ``July 1, 2006,''.

SEC. 208. LOAN REPAYMENT FOR CIVIL LEGAL ASSISTANCE ATTORNEYS.

  Section 428L(b)(2)(A) (20 U.S.C. 1078-12(b)(2)(A)) is amended--
          (1) by amending clause (i) to read as follows:
                          ``(i) subject to clause (ii)--
                                  ``(I) a loan made, insured, or 
                                guaranteed under this part, and that is 
                                first disbursed before July 1, 2010; or
                                  ``(II) a loan made under part D or 
                                part E; and''; and
          (2) in clause (ii)--
                  (A) by striking ``428C or 455(g)'' and inserting 
                ``428C, that is disbursed before July 1, 2010, or 
                section 455(g)''; and
                  (B) in subclause (II), by inserting ``for which the 
                first disbursement is made before July 1, 2010,'' after 
                ``or 428H''.

SEC. 209. SPECIAL ALLOWANCES.

  Section 438 (20 U.S.C. 1087-1) is amended--
          (1) in subsection (b)(2)(I)--
                  (A) in the header, by inserting ``, and before july 
                1, 2010'' after ``2000'';
                  (B) in clause (i), by inserting ``and before July 1, 
                2010,'' after ``2000,'';
                  (C) in clause (ii)(II), by inserting ``and before 
                July 1, 2010,'' after ``2006,'';
                  (D) in clause (iii), by inserting ``and before July 
                1, 2010,'' after ``2000,'';
                  (E) in clause (iv), by inserting ``and that is 
                disbursed before July 1, 2010,'' after ``2000,'';
                  (F) in clause (v)(I), by inserting ``and before July 
                1, 2010,'' after ``2006,''; and
                  (G) in clause (vi)--
                          (i) in the header, by inserting ``, and 
                        before july 1, 2010'' after ``2007''; and
                          (ii) in the matter preceding subclause (I), 
                        by inserting ``and before July 1, 2010,'' after 
                        ``2007,'';
          (2) in subsection (c)--
                  (A) in paragraph (2)(B)--
                          (i) in clause (iii), by inserting ``and'' 
                        after the semicolon;
                          (ii) in clause (iv), by striking ``; and'' 
                        and inserting a period; and
                          (iii) by striking clause (v); and
                  (B) in paragraph (6), by inserting ``and first 
                disbursed before July 1, 2010,'' after ``1992,''; and
          (3) in subsection (d)(2)(B), by inserting ``, and before July 
        1, 2010'' after ``2007''.

SEC. 210. REVISED SPECIAL ALLOWANCE CALCULATION.

  (a) Revised Calculation Rule.--Section 438(b)(2)(I) of the Higher 
Education Act of 1965 (20 U.S.C. 1087-1(b)(2)(I)) is amended by adding 
at the end the following new clause:
                          ``(vii) Revised calculation rule to reflect 
                        financial market conditions.--
                                  ``(I) Calculation based on libor.--
                                For the calendar quarter beginning on 
                                October 1, 2009, and each subsequent 
                                calendar quarter, in computing the 
                                special allowance paid pursuant to this 
                                subsection with respect to loans 
                                described in subclause (II), clause 
                                (i)(I) of this subparagraph shall be 
                                applied by substituting `of the 1-month 
                                London Inter Bank Offered Rate (LIBOR) 
                                for United States dollars in effect for 
                                each of the days in such quarter as 
                                compiled and released by the British 
                                Bankers Association' for `of the quotes 
                                of the 3-month commercial paper 
                                (financial) rates in effect for each of 
                                the days in such quarter as reported by 
                                the Federal Reserve in Publication H-15 
                                (or its successor) for such 3-month 
                                period'.
                                  ``(II) Loans eligible for libor-based 
                                calculation.--The special allowance 
                                paid pursuant to this subsection shall 
                                be calculated as described in subclause 
                                (I) with respect to special allowance 
                                payments for the 3-month period ending 
                                December 31, 2009, and each succeeding 
                                3-month period, on loans for which the 
                                first disbursement is made--
                                          ``(aa) on or after the date 
                                        of enactment of the Student Aid 
                                        and Fiscal Responsibility Act 
                                        of 2009, and before July 1, 
                                        2010; and
                                          ``(bb) on or after January 1, 
                                        2000, and before the date of 
                                        enactment of the Student Aid 
                                        and Fiscal Responsibility Act 
                                        of 2009, if, not later than the 
                                        last day of the second full 
                                        fiscal quarter after the date 
                                        of enactment of such Act, the 
                                        holder of the loan 
                                        affirmatively and permanently 
                                        waives all contractual, 
                                        statutory or other legal rights 
                                        to a special allowance paid 
                                        pursuant to this subsection 
                                        that is calculated using the 
                                        formula in effect at the time 
                                        the loans were first disbursed.
                                  ``(III) Terms of waiver.--A waiver 
                                pursuant to subclause (II)(bb) shall--
                                          ``(aa) be applicable to all 
                                        loans described in such 
                                        subclause that are held under 
                                        any lender identification 
                                        number associated with the 
                                        holder (pursuant to section 
                                        487B); and
                                          ``(bb) apply with respect to 
                                        all future calculations of the 
                                        special allowance on loans 
                                        described in such subclause 
                                        that are held on the date of 
                                        such waiver or that are 
                                        acquired by the holder after 
                                        such date.
                                  ``(IV) Participant's yield.--For the 
                                calendar quarter beginning on October 
                                1, 2009, and each subsequent calendar 
                                quarter, the Secretary's participant 
                                yield in any loan for which the first 
                                disbursement is made on or after 
                                January 1, 2000, and before October 1, 
                                2009, and that is held by a lender that 
                                has sold any participation interest in 
                                such loan to the Secretary shall be 
                                determined by using the LIBOR-based 
                                rate described in subclause (I) as the 
                                substitute rate (for the commercial 
                                paper rate) referred to in the 
                                participation agreement between the 
                                Secretary and such lender.'';
  (b) Conforming Amendment.--Section 438(b)(2)(I) (20 U.S.C. 1087-
1(b)(2)(I)) is further amended--
          (1) in clause (i)(II), by striking ``such average bond 
        equivalent rate'' and inserting ``the rate determined under 
        subclause (I)''; and
          (2) in clause (v)(III) by striking ``(iv), and (vi)'' and 
        inserting ``(iv), (vi), and (vii)''.

SEC. 211. ORIGINATION OF DIRECT LOANS AT INSTITUTIONS LOCATED OUTSIDE 
                    THE UNITED STATES.

  (a) Loans for Students Attending Institutions Located Outside the 
United States.--Section 452 (20 U.S.C. 1087b) is amended by adding at 
the end the following:
  ``(d) Institutions Located Outside the United States.--Loan funds for 
students (and parents of students) attending institutions located 
outside the United States shall be disbursed through a financial 
institution located in the United States and designated by the 
Secretary to serve as the agent of such institutions with respect to 
the receipt of the disbursements of such loan funds and the transfer of 
such funds to such institutions. To be eligible to receive funds under 
this part, an otherwise eligible institution located outside the United 
States shall make arrangements, subject to regulations by the 
Secretary, with the agent designated by the Secretary under this 
subsection to receive funds under this part.''.
  (b) Conforming Amendments.--
          (1) Amendments.--Section 102 (20 U.S.C. 1002), as amended by 
        section 102 of the Higher Education Opportunity Act (Public Law 
        110-315) and section 101 of Public Law 111-39, is amended--
                  (A) by striking ``part B'' each place it appears and 
                inserting ``part D'';
                  (B) in subsection (a)(1)(C), by inserting ``, 
                consistent with the requirements of section 452(d)'' 
                before the period at the end; and
                  (C) in subsection (a)(2)(A)--
                          (i) in the matter preceding clause (i), by 
                        striking ``made, insured, or guaranteed'' and 
                        inserting ``made''; and
                          (ii) in clause (iii)--
                                  (I) in subclause (III), by striking 
                                ``only Federal Stafford'' and all that 
                                follows through ``section 428B'' and 
                                inserting ``only Federal Direct 
                                Stafford Loans under section 
                                455(a)(2)(A), Federal Direct 
                                Unsubsidized Stafford Loans under 
                                section 455(a)(2)(D), or Federal Direct 
                                PLUS Loans under section 
                                455(a)(2)(B)''; and
                                  (II) in subclause (V), by striking 
                                ``a Federal Stafford'' and all that 
                                follows through ``section 428B'' and 
                                inserting ``a Federal Direct Stafford 
                                Loan under section 455(a)(2)(A), a 
                                Federal Direct Unsubsidized Stafford 
                                Loan under section 455(a)(2)(D), or a 
                                Federal Direct PLUS Loan under section 
                                455(a)(2)(B)''.
          (2) Effective date.--The amendments made by subparagraph (C) 
        of paragraph (1) shall be effective on July 1, 2010, as if 
        enacted as part of section 102(a)(1) of the Higher Education 
        Opportunity Act (Public Law 110-315).

SEC. 212. AGREEMENTS WITH INSTITUTIONS.

  Section 454 (20 U.S.C. 1087d) is amended--
          (1) in subsection (a), by striking paragraph (4) and 
        redesignating the succeeding paragraphs accordingly; and
          (2) in subsection (b)(2), by striking ``(5), (6), and (7)'' 
        and inserting ``(5), and (6)''.

SEC. 213. TERMS AND CONDITIONS OF LOANS.

  (a) Amendments.--Section 455 (20 U.S.C. 1087e) is amended--
          (1) in subsection (a)(1), by inserting ``, and first 
        disbursed on June 30, 2010,'' before ``under sections 428''; 
        and
          (2) in subsection (g)--
                  (A) by inserting ``, including any loan made under 
                part B and first disbursed before July 1, 2010'' after 
                ``section 428C(a)(4)''; and
                  (B) by striking the third sentence.
  (b) Effective Date.--The amendment made by subsection (a)(1) shall 
apply with respect to loans first disbursed under part D of title IV of 
the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.) on or after 
July 1, 2010.

SEC. 214. CONTRACTS.

  Section 456 (20 U.S.C. 1087f) is amended--
          (1) in subsection (a)--
                  (A) in paragraph (1)--
                          (i) in the header, by striking ``In general'' 
                        and inserting ``Awarding of contracts'';
                          (ii) by striking ``The Secretary'' and 
                        inserting the following:
                  ``(A) In general.--The Secretary''; and
                          (iii) by adding at the end the following:
                  ``(B) Awarding contracts for servicing loans.--The 
                Secretary shall, if practicable, award multiple 
                contracts, through a competitive bidding process, to 
                entities, including eligible not-for-profit servicers, 
                to service loans originated under this part. The 
                competitive bidding process shall take into account 
                price, servicing capacity, and capability, and may take 
                into account the capacity and capability to provide 
                default aversion activities and outreach services.
                  ``(C) Job retention incentive payment.--(i) In a 
                contract with an entity under subparagraph (B) for the 
                servicing of loans, the Secretary shall provide a job 
                retention incentive payment, in an amount and manner 
                determined by the Secretary, if such entity agrees to 
                give priority for hiring for positions created as a 
                result of such a contract to those geographical 
                locations at which the entity performed student loan 
                origination or servicing activities under the Federal 
                Family Education Loan Program as of the date of 
                enactment of the Student Aid and Fiscal Responsibility 
                Act of 2009.
                  ``(ii) In determining the allocation of loans to be 
                serviced by an entity awarded such a contract, the 
                Secretary shall consider the retention of highly 
                qualified employees of such entity a positive factor in 
                determining such allocation.'';
                  (B) in paragraph (2)--
                          (i) in the first sentence, by inserting ``, 
                        including eligible not-for-profit servicers,'' 
                        after ``The entities'';
                          (ii) by amending the third sentence to read 
                        as follows: ``The entities with which the 
                        Secretary may enter into such contracts shall 
                        include, where practicable, agencies with 
                        agreements with the Secretary under sections 
                        428(b) and (c) on the date of the enactment of 
                        the Student Aid and Fiscal Responsibility Act 
                        of 2009, and eligible not-for-profit servicers, 
                        if such agencies or servicers meet the 
                        qualifications as determined by the Secretary 
                        under this subsection and if those agencies or 
                        servicers have such experience and demonstrated 
                        effectiveness.''; and
                          (iii) by striking the last sentence and 
                        inserting the following: ``In awarding 
                        contracts to such State agencies, and such 
                        eligible not-for-profit servicers, the 
                        Secretary shall, to the extent practicable and 
                        consistent with the purposes of this part, give 
                        special consideration to State agencies and 
                        such servicers with a history of high quality 
                        performance and demonstrated integrity in 
                        conducting operations with institutions of 
                        higher education and the Secretary.'';
                  (C) by redesignating paragraph (3) as paragraph (4), 
                and by inserting in such paragraph ``, or of any 
                eligible not-for-profit servicer to enter into an 
                agreement for the purposes of this section as a member 
                of a consortium of such entities'' before the period at 
                the end; and
                  (D) by inserting after paragraph (2) the following 
                new paragraph:
          ``(3) Servicing by eligible not-for-profit servicers.--
                  ``(A) In general.--Notwithstanding any other 
                provision of this section, in each State where one or 
                more eligible not-for-profit servicer has its principal 
                place of business, the Secretary shall contract with 
                each such servicer to service loans originated under 
                this part on behalf of borrowers attending institutions 
                located within such State, provided that the servicer 
                demonstrates that it meets the standards for servicing 
                Federal assets and providing quality service and agrees 
                to service the loans at a competitive market rate, as 
                determined by the Secretary. In determining such a 
                competitive market rate, the Secretary may take into 
                account the volume of loans serviced by the servicer. 
                Contracts awarded under this paragraph shall be subject 
                to the same requirements for quality, performance, and 
                accountability as contracts awarded under paragraph (2) 
                for similar activities.
                  ``(B) Allocations.--(i) One servicer.--In the case of 
                a State with only one eligible not-for-profit servicer 
                with a contract described in subparagraph (A), the 
                Secretary shall, at a minimum, allocate to such 
                servicer, on an annual basis and subject to such 
                contract, the servicing rights for the lesser of--
                          ``(I) the loans of 100,000 borrowers 
                        (including borrowers who borrowed loans in a 
                        prior year that were serviced by the servicer) 
                        attending institutions located within the 
                        State; or
                          ``(II) the loans of all the borrowers 
                        attending institutions located within the 
                        State.
                  ``(ii) Multiple servicers.--In the case of a State 
                with more than one eligible not-for-profit servicer 
                with a contract described in subparagraph (A), the 
                Secretary shall, at a minimum, allocate to each such 
                servicer, on an annual basis and subject to such 
                contract, the servicing rights for the lesser of--
                          ``(I) the loans of 100,000 borrowers 
                        (including borrowers who borrowed loans in a 
                        prior year that were serviced by the servicer) 
                        attending institutions located within the 
                        State; or
                          ``(II) an equal share of the loans of all 
                        borrowers attending institutions located within 
                        the State, except the Secretary shall adjust 
                        such shares as necessary to ensure that the 
                        loans of any single borrower remain with a 
                        single servicer.
                  ``(iii) Additional allocation.--The Secretary may 
                allocate additional servicing rights to an eligible 
                not-for-profit servicer based on the performance of 
                such servicer, as determined by the Secretary, 
                including performance in the areas of customer service 
                and default aversion.
                  ``(C) Multiple loans.--Notwithstanding the 
                allocations required by subparagraph (B), the Secretary 
                may transfer loans among servicers who are awarded 
                contracts to service loans pursuant to this section to 
                ensure that the loans of any single borrower remain 
                with a single servicer.''; and
          (2) by adding at the end the following:
  ``(c) Report to Congress.--Not later than 3 years after the date of 
the enactment of the Student Aid and Fiscal Responsibility Act of 2009, 
the Secretary shall prepare and submit to the authorizing committees, a 
report evaluating the performance of all eligible not-for-profit 
servicers awarded a contract under this section to service loans 
originated under this part. Such report shall give consideration to--
          ``(1) customer satisfaction of borrowers and institutions 
        with respect to the loan servicing provided by the servicers;
          ``(2) compliance with applicable regulations by the 
        servicers; and
          ``(3) the effectiveness of default aversion activities, and 
        outreach services (if any), provided by the servicers.
  ``(d) Definitions.--In this section:
          ``(1) Default aversion activities.--The term `default 
        aversion activities' means activities that are directly related 
        to providing collection assistance to the Secretary on a 
        delinquent loan, prior to the loan being legally in a default 
        status, including due diligence activities required pursuant to 
        regulations.
          ``(2) Eligible not-for-profit servicer.--
                  ``(A) In general.--The term `eligible not-for-profit 
                servicer' means an entity that, on the date of 
                enactment of the Student Aid and Fiscal Responsibility 
                Act of 2009--
                          ``(i) meets the definition of an eligible 
                        not-for-profit holder under section 435(p), 
                        except that such term does not include eligible 
                        lenders described in paragraph (1)(D) of such 
                        section;
                          ``(ii) notwithstanding clause (i), is the 
                        sole beneficial owner of a loan for which the 
                        special allowance rate is calculated under 
                        section 438(b)(2)(I)(vi)(II) because the loan 
                        is held by an eligible lender trustee that is 
                        an eligible not-for-profit holder as defined 
                        under section 435(p)(1)(D); or
                          ``(iii) is an affiliated entity of an 
                        eligible not-for-profit servicer described in 
                        clause (i) or (ii) that--
                                  ``(I) directly employs, or will 
                                directly employ (on or before the date 
                                the entity begins servicing loans under 
                                a contract awarded by the Secretary 
                                pursuant to subsection (a)(3)(A)), the 
                                majority of individuals who perform 
                                student loan servicing functions; and
                                  ``(II) on such date of enactment, was 
                                performing, or had entered into a 
                                contract with a third party servicer 
                                (as such term is defined in section 
                                481(c)) who was performing, student 
                                loan servicing functions for loans made 
                                under part B of this title.
                  ``(B) Affiliated entity.--For the purposes of 
                subparagraph (A), the term `affiliated entity' means an 
                entity contracted to perform services for an eligible 
                not-for-profit servicer that--
                          ``(i) is a nonprofit entity or is wholly 
                        owned by a nonprofit entity; and
                          ``(ii) is not owned or controlled, in whole 
                        or in part, by--
                                  ``(I) a for-profit entity; or
                                  ``(II) an entity having its principal 
                                place of business in another State.
          ``(3) Outreach services.--The term `outreach services' means 
        programs offered to students and families, including programs 
        delivered in coordination with institutions of higher education 
        that--
                  ``(A) encourage--
                          ``(i) students to attend and complete a 
                        degree or certification program at an 
                        institution of higher education; and
                          ``(ii) students and families to obtain 
                        financial aid, but minimize the borrowing of 
                        education loans; and
                  ``(B) deliver financial literacy and counseling 
                tools.''.

SEC. 215. INTEREST RATES.

  Section 455(b)(7) (20 U.S.C. 1087e(b)(7)) is amended by adding at the 
end the following new subparagraph:
                  ``(E) Reduced rates for undergraduate fdsl on and 
                after july 1, 2012.--Notwithstanding the preceding 
                paragraphs of this subsection and subparagraph (A) of 
                this paragraph, for Federal Direct Stafford Loans made 
                to undergraduate students for which the first 
                disbursement is made on or after July 1, 2012, the 
                applicable rate of interest shall, during any 12-month 
                period beginning on July 1 and ending on June 30, be 
                determined on the preceding June 1 and be equal to--
                          ``(i) the bond equivalent rate of 91-day 
                        Treasury bills auctioned at the final auction 
                        held prior to such June 1; plus
                          ``(ii) 2.5 percent,
                except that such rate shall not exceed 6.8 percent.''.

                    Subtitle B--Perkins Loan Reform

SEC. 221. FEDERAL DIRECT PERKINS LOANS TERMS AND CONDITIONS.

  Part D of title IV (20 U.S.C. 1087a et seq.) is amended by inserting 
after section 455 the following new section:

``SEC. 455A. FEDERAL DIRECT PERKINS LOANS.

  ``(a) Designation of Loans.--Loans made to borrowers under this 
section shall be known as `Federal Direct Perkins Loans'.
  ``(b) In General.--It is the purpose of this section to authorize 
loans to be awarded by institutions of higher education through 
agreements established under section 463(f). Unless otherwise specified 
in this section, all terms and conditions and other requirements 
applicable to Federal Direct Unsubsidized Stafford loans established 
under section 455(a)(2)(D) shall apply to loans made pursuant to this 
section.
  ``(c) Eligible Borrowers.--Any student meeting the requirements for 
student eligibility under section 464(b) (including graduate and 
professional students as defined in regulations promulgated by the 
Secretary) shall be eligible to borrow a Federal Direct Perkins Loan, 
provided the student attends an eligible institution with an agreement 
with the Secretary under section 463(f), and the institution uses its 
authority under that agreement to award the student a loan.
  ``(d) Loan Limits.--The annual and aggregate limits for loans under 
this section shall be the same as those established under section 464, 
and aggregate limits shall include loans made by institutions under 
agreements under section 463(a).
  ``(e) Applicable Rates of Interest.--Loans made pursuant to this 
section shall bear interest, on the unpaid balance of the loan, at the 
rate of 5 percent per year.''.

SEC. 222. AUTHORIZATION OF APPROPRIATIONS.

  Section 461 (20 U.S.C. 1087aa) is amended--
          (1) in subsection (a), by inserting ``, before July 1, 
        2010,'' after ``The Secretary shall'';
          (2) in subsection (b)--
                  (A) in paragraph (1)--
                          (i) by striking ``(1) For the purpose'' and 
                        inserting ``For the purpose''; and
                          (ii) by striking ``and for each of the five 
                        succeeding fiscal years''; and
                  (B) by striking paragraph (2); and
          (3) by striking subsection (c).

SEC. 223. ALLOCATION OF FUNDS.

  Section 462 (20 U.S.C. 1087bb) is amended--
          (1) in subsection (a)(1), by striking ``From'' and inserting 
        ``For any fiscal year before fiscal year 2010, from''; and
          (2) in subsection (i)(1), by striking ``for any fiscal 
        year,'' and inserting ``for any fiscal year before fiscal year 
        2010,''.

SEC. 224. FEDERAL DIRECT PERKINS LOAN ALLOCATION.

  Part E of title IV is further amended by inserting after section 462 
(20 U.S.C. 1087bb) the following:

``SEC. 462A. FEDERAL DIRECT PERKINS LOAN ALLOCATION.

  ``(a) Purposes.--The purposes of this section are--
          ``(1) to allocate, among eligible and participating 
        institutions (as such terms are defined in this section), the 
        authority to make Federal Direct Perkins Loans under section 
        455A with a portion of the annual loan authority described in 
        subsection (b); and
          ``(2) to make funds available, in accordance with section 
        452, to each participating institution from a portion of the 
        annual loan authority described in subsection (b), in an amount 
        not to exceed the sum of an institution's allocation of funds 
        under subparagraphs (A), (B), and (C) of subsection (b)(1) to 
        enable each such institution to make Federal Direct Perkins 
        Loans to eligible students at the institution.
  ``(b) Available Direct Perkins Annual Loan Authority.--
          ``(1) Availability and allocations.--There are hereby made 
        available, from funds made available for loans made under part 
        D, not to exceed $6,000,000,000 of annual loan authority for 
        award year 2010-2011 and each succeeding award year, to be 
        allocated as follows:
                  ``(A) The Secretary shall allocate not more than \1/
                2\ of such funds for each award year by allocating to 
                each participating institution an amount equal to the 
                adjusted self-help need amount of the institution, as 
                determined in accordance with subsection (c) for such 
                award year.
                  ``(B) The Secretary shall allocate not more than \1/
                4\ of such funds for each award year by allocating to 
                each participating institution an amount equal to the 
                low tuition incentive amount of the institution, as 
                determined in accordance with subsection (d).
                  ``(C) The Secretary shall allocate not more than \1/
                4\ of such funds for each award year by allocating to 
                each participating institution an amount which bears 
                the same ratio to the funds allocated under this 
                subparagraph as the ratio determined in accordance with 
                subsection (e) for the calculation of the Federal Pell 
                Grant and degree recipient amount of the institution.
          ``(2) No funds to non-participating institutions.--The 
        Secretary shall not make funds available under this subsection 
        to any eligible institution that is not a participating 
        institution. The adjusted self-help need amount (determined in 
        accordance with subsection (c)) of an eligible institution that 
        is not a participating institution shall not be made available 
        to any other institution.
  ``(c) Adjusted Self-help Need Amount.--For the purposes of subsection 
(b)(1)(A), the Secretary shall calculate the adjusted self-help need 
amount of each eligible institution for an award year as follows:
          ``(1) Use of base self-help need amounts.--
                  ``(A) In general.--Except as provided in paragraphs 
                (2), (3), and (4), the adjusted self-help need amount 
                of each eligible institution shall be the institution's 
                base self-help need amount, which is the sum of--
                          ``(i) the self-help need of the institution's 
                        eligible undergraduate students for such award 
                        year; and
                          ``(ii) the self-help need of the 
                        institution's eligible graduate and 
                        professional students for such award year.
                  ``(B) Undergraduate student self-help need.--To 
                determine the self-help need of an institution's 
                eligible undergraduate students, the Secretary shall 
                determine the sum of each eligible undergraduate 
                student's average cost of attendance for the second 
                preceding award year less each such student's expected 
                family contribution (computed in accordance with part 
                F) for the second preceding award year, except that, 
                for each such eligible undergraduate student, the 
                amount computed by such subtraction shall not be less 
                than zero or more than the lesser of--
                          ``(i) 25 percent of the average cost of 
                        attendance with respect to such eligible 
                        student; or
                          ``(ii) $5,500.
                  ``(C) Graduate and professional student self-help 
                need.--To determine the self-help need of an 
                institution's eligible graduate and professional 
                students, the Secretary shall determine the sum of each 
                eligible graduate and professional student's average 
                cost of attendance for the second preceding award year 
                less each such student's expected family contribution 
                (computed in accordance with part F) for such second 
                preceding award year, except that, for each such 
                eligible graduate and professional student, the amount 
                computed by such subtraction shall not be less than 
                zero or more than $8,000.
          ``(2) Ratable reduction adjustments.--If the sum of the base 
        self-help need amounts of all eligible institutions for an 
        award year as determined under paragraph (1) exceeds \1/2\ of 
        the annual loan authority under subsection (b) for such award 
        year, the Secretary shall ratably reduce the base self-help 
        need amounts of all eligible institutions until the sum of such 
        amounts is equal to the amount that is \1/2\ of the annual loan 
        authority under subsection (b).
          ``(3) Required minimum amount.--Notwithstanding paragraph 
        (2), the adjusted self-help need amount of each eligible 
        institution shall not be less than the average of the 
        institution's total principal amount of loans made under this 
        part for each of the 5 most recent award years.
          ``(4) Additional adjustments.--If the Secretary determines 
        that a ratable reduction under paragraph (2) results in the 
        adjusted self-help need amount of any eligible institution 
        being reduced below the minimum amount required under paragraph 
        (3), the Secretary shall--
                  ``(A) for each institution for which the minimum 
                amount under paragraph (3) is not satisfied, increase 
                the adjusted self-help need amount to the amount of the 
                required minimum under such subparagraph; and
                  ``(B) ratably reduce the adjusted self-help need 
                amounts of all eligible institutions not described in 
                subparagraph (A) until the sum of the adjusted self-
                help need amounts of all eligible institutions is equal 
                to the amount that is \1/2\ of the annual loan 
                authority under subsection (b).
  ``(d) Low Tuition Incentive Amount.--
          ``(1) In general.--For purposes of subsection (b)(1)(B), the 
        Secretary shall determine the low tuition incentive amount for 
        each participating institution for each award year, by 
        calculating for each such institution the sum of--
                  ``(A) the total amount, if any (but not less than 
                zero), by which--
                          ``(i) the average tuition and required fees 
                        for the institution's sector for the second 
                        preceding award year; exceeds
                          ``(ii) the tuition and required fees for the 
                        second preceding award year for each 
                        undergraduate and graduate student attending 
                        the institution who had financial need (as 
                        determined under part F); plus
                  ``(B) the total amount, if any (but not less than 
                zero), by which--
                          ``(i) the total amount for the second 
                        preceding award year of non-Federal grant aid 
                        provided to meet the financial need of all 
                        undergraduate students attending the 
                        institution (as determined without regard to 
                        financial aid not received under this title); 
                        exceeds
                          ``(ii) the total amount for the second 
                        preceding award year, if any, by which--
                                  ``(I) the tuition and required fees 
                                of each such student with such 
                                financial need; exceeds
                                  ``(II) the average tuition and 
                                required fees for the institution's 
                                sector.
          ``(2) Ratable reduction.--If the sum of the low tuition 
        incentive amounts of all participating institutions for an 
        award year as determined under paragraph (1) exceeds \1/4\ of 
        the annual loan authority under subsection (b) for such award 
        year, the Secretary shall ratably reduce the low tuition 
        incentive amounts of all participating institutions until the 
        sum of such amounts is equal to the amount that is \1/4\ of the 
        annual loan authority under subsection (b).
  ``(e) Federal Pell Grant and Degree Recipient Amount.--For purposes 
of subsection (b)(1)(C), the Secretary shall determine the Federal Pell 
Grant and degree recipient amount for each participating institution 
for each award year, by calculating for each such institution the ratio 
of--
          ``(1) the number of students who, during the most recent year 
        for which data are available, obtained an associate's degree or 
        other postsecondary degree from such participating institution 
        and, prior to obtaining such degree, received a Federal Pell 
        Grant for attendance at any institution of higher education; to
          ``(2) the sum of the number of students who, during the most 
        recent year for which data are available, obtained an 
        associate's degree or other postsecondary degree from each 
        participating institution and, prior to obtaining such degree, 
        received a Federal Pell Grant for attendance at any institution 
        of higher education.
  ``(f) Definitions.--As used in this section:
          ``(1) Annual loan authority.--The term `annual loan 
        authority' means the total original principal amount of loans 
        that may be allocated and made available for an award year to 
        make Federal Direct Perkins Loans under section 455A.
          ``(2) Average cost of attendance.--
                  ``(A) In general.--The term `average cost of 
                attendance' means the average of the attendance costs 
                for undergraduate students and for graduate and 
                professional students, respectively, for the second 
                preceding award year which shall include--
                          ``(i) tuition and required fees determined in 
                        accordance with subparagraph (B);
                          ``(ii) standard living expenses determined in 
                        accordance with subparagraph (C); and
                          ``(iii) books and supplies determined in 
                        accordance with subparagraph (D).
                  ``(B) Tuition and required fees.--The average 
                undergraduate and graduate and professional tuition and 
                required fees described in subparagraph (A)(i) shall be 
                computed on the basis of information reported by the 
                institution to the Secretary, which shall include--
                          ``(i) total revenue received by the 
                        institution from undergraduate and graduate and 
                        professional students, respectively, for 
                        tuition and required fees for the second 
                        preceding award year; and
                          ``(ii) the institution's full-time equivalent 
                        enrollment of undergraduate and graduate and 
                        professional students, respectively, for such 
                        second preceding award year.
                  ``(C) Standard living expenses.--The standard living 
                expense described in subparagraph (A)(ii) is equal to 
                the allowance, determined by an institution, for room 
                and board costs incurred by a student, as computed in 
                accordance with part F for the second preceding award 
                year.
                  ``(D) Books and supplies.--The allowance for books 
                and supplies described in subparagraph (A)(iii) is 
                equal to the allowance, determined by an institution, 
                for books, supplies, transportation, and miscellaneous 
                personal expenses, including a reasonable allowance for 
                the documented rental or purchase of a personal 
                computer, as computed in accordance with part F for the 
                second preceding award year.
          ``(3) Average tuition and required fees for the institution's 
        sector.--The term `average tuition and required fees for the 
        institution's sector' shall be determined by the Secretary for 
        each of the categories described in section 132(d).
          ``(4) Eligible institution.--The term `eligible institution' 
        means an institution of higher education that participates in 
        the Federal Direct Stafford Loan Program.
          ``(5) Participating institution.--The term `participating 
        institution' means an institution of higher education that has 
        an agreement under section 463(f).
          ``(6) Sector.--The term `sector' means each of the categories 
        described in section 132(d).''.

SEC. 225. AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION.

  (a) Amendments.--Section 463 (20 U.S.C. 1087cc) is amended--
          (1) in subsection (a)--
                  (A) in the heading, by inserting ``for Loans Made 
                Before July 1, 2010'' after ``Agreements'';
                  (B) in paragraph (3)(A), by inserting ``before July 
                1, 2010'' after ``students'';
                  (C) in paragraph (4), by striking ``thereon--'' and 
                all that follows and inserting ``thereon, if the 
                institution has failed to maintain an acceptable 
                collection record with respect to such loan, as 
                determined by the Secretary in accordance with criteria 
                established by regulation, the Secretary may require 
                the institution to assign such note or agreement to the 
                Secretary, without recompense;''; and
                  (D) in paragraph (5), by striking ``and the Secretary 
                shall apportion'' and all that follows through ``in 
                accordance with section 462'' and inserting ``and the 
                Secretary shall return a portion of funds from loan 
                repayments to the institution as specified in section 
                466(b)'';
          (2) by amending subsection (b) to read as follows:
  ``(b) Administrative Expenses.--An institution that has entered into 
an agreement under subsection (a) shall be entitled, for each fiscal 
year during which it services student loans from a student loan fund 
established under such agreement, to a payment in lieu of reimbursement 
for its expenses in servicing student loans made before July 1, 2010. 
Such payment shall be equal to 0.50 percent of the outstanding 
principal and interest balance of such loans being serviced by the 
institution as of September 30 of each fiscal year.''; and
          (3) by adding at the end the following:
  ``(f) Contents of Agreements for Loans Made on or After July 1, 
2010.--An agreement with any institution of higher education that 
elects to participate in the Federal Direct Perkins Loan program under 
section 455A shall provide--
          ``(1) for the establishment and maintenance of a Direct 
        Perkins Loan program at the institution under which the 
        institution shall use loan authority allocated under section 
        462A to make loans to eligible students attending the 
        institution;
          ``(2) that the institution, unless otherwise specified in 
        this subsection, shall operate the program consistent with the 
        requirements of agreements established under section 454;
          ``(3) that the institution will pay matching funds, 
        quarterly, in an amount agreed to by the institution and the 
        Secretary, to an escrow account approved by the Secretary, for 
        the purpose of providing loan benefits to borrowers;
          ``(4) that if the institution fails to meet the requirements 
        of paragraph (3), the Secretary shall suspend or terminate the 
        institution's eligibility to make Federal Direct Perkins Loans 
        under section 455A until such time as the Secretary determines, 
        in accordance with section 498, that the institution has met 
        the requirements of such paragraph; and
          ``(5) that if the institution ceases to be an eligible 
        institution within the meaning of section 435(a) by reason of 
        having a cohort default rate that exceeds the threshold 
        percentage specified paragraph (2) of such section, the 
        Secretary shall suspend or terminate the institution's 
        eligibility to make Federal Direct Perkins Loans under section 
        455A unless and until the institution would qualify for a 
        resumption of eligible institution status under such 
        section.''.
  (b) Effective Date.--The amendments made by paragraph (2) of 
subsection (a) shall take effect on October 1, 2010.

SEC. 226. STUDENT LOAN INFORMATION BY ELIGIBLE INSTITUTIONS.

  Section 463A (20 U.S.C. 1087cc-1) is amended--
          (1) in subsection (a), by striking ``Each institution'' and 
        inserting ``For loans made before July 1, 2010, each 
        institution''; and
          (2) in subsection (b), by striking ``Each institution'' and 
        inserting ``For loans made before July 1, 2010, each 
        institution''.

SEC. 227. TERMS OF LOANS.

  (a) Section 464 (20 U.S.C. 1087dd) is amended--
          (1) in subsection (a)(1), by striking ``section 463'' and 
        inserting ``section 463(a)'';
          (2) in subsection (b)(1), by inserting ``made before July 1, 
        2010,'' after ``A loan'';
          (3) in subsection (c)--
                  (A) in paragraph (1), by inserting ``made before July 
                1, 2010,'' after ``a loan'';
                  (B) in paragraph (2)--
                          (i) in subparagraph (A), by inserting ``made 
                        before July 1, 2010,'' after ``any loan''; and
                          (ii) in subparagraph (B), by inserting ``made 
                        before July 1, 2010,'' after ``any loan'';
                  (C) in paragraph (3)(B), by inserting ``for a loan 
                made before July 1, 2010,'' after ``during the 
                repayment period'';
                  (D) in paragraph (4), by inserting ``before July 1, 
                2010,'' after ``for a loan made'';
                  (E) in paragraph (5), by striking ``The institution'' 
                and inserting ``For loans made before July 1, 2010, the 
                institution''; and
                  (F) in paragraph (6), by inserting ``made before July 
                1, 2010,'' after ``of loans'';
          (4) in subsection (d), by inserting ``made before July 1, 
        2010,'' before ``from the student loan fund'';
          (5) in subsection (e), by inserting ``with respect to loans 
        made before July 1, 2010, and'' before ``as documented in 
        accordance with paragraph (2),'';
          (6) by repealing subsection (f);
          (7) in subsection (g)(1), by inserting ``and before July 1, 
        2010,'' after ``January 1, 1986,'';
          (8) in subsection (h)--
                  (A) in paragraph (1)(A) by inserting ``before July 1, 
                2010,'' after ``made under this part''; and
                  (B) in paragraph (2), by inserting ``before July 1, 
                2010,'' after ``under this part''; and
          (9) in subsection (j)(1), by inserting ``before July 1, 
        2010,'' after ``under this part''.

SEC. 228. DISTRIBUTION OF ASSETS FROM STUDENT LOAN FUNDS.

  (a) Section 465 (20 U.S.C. 1087ee) is amended--
          (1) in subsection (a), by inserting ``and before July 1, 
        2010,'' after ``June 30, 1972,''; and
          (2) by amending subsection (b) to read as follows:
  ``(b) Reimbursement for Cancellations.--
          ``(1) Assigned loans.--In the case of loans made under this 
        part before July 1, 2010, and that are assigned to the 
        Secretary, the Secretary shall, from amounts repaid each 
        quarter on assigned Perkins Loans made before July 1, 2010, pay 
        to each institution for each quarter an amount equal to--
                  ``(A) the aggregate of the amounts of loans from its 
                student loan fund that are canceled pursuant to this 
                section for such quarter, minus
                  ``(B) an amount equal to the aggregate of the amounts 
                of any such loans so canceled that were made from 
                Federal capital contributions to its student loan fund.
          ``(2) Retained loans.--In the case of loans made under this 
        part before July 1, 2010, and that are retained by the 
        institution for servicing, the institution shall deduct from 
        loan repayments owed to the Secretary under section 466, an 
        amount equal to--
                  ``(A) the aggregate of the amounts of loans from its 
                student loan fund that are canceled pursuant to this 
                section for such quarter, minus
                  ``(B) an amount equal to the aggregate of the amounts 
                of any such loans so canceled that were made from 
                Federal capital contributions to its student loan 
                fund.''.
  (b) Section 466 (20 U.S.C. 1087ff) is amended to read as follows:

``SEC. 466. DISTRIBUTION OF ASSETS FROM STUDENT LOAN FUNDS.

  ``(a) Capital Distribution.--Beginning July 1, 2010, there shall be a 
capital distribution of the balance of the student loan fund 
established under this part by each institution of higher education as 
follows:
          ``(1) For the quarter beginning July 1, 2010, the Secretary 
        shall first be paid, no later than September 30, 2010, an 
        amount that bears the same ratio to the cash balance in such 
        fund at the close of June 30, 2010, as the total amount of the 
        Federal capital contributions to such fund by the Secretary 
        under this part bears to--
                  ``(A) the sum of such Federal contributions and the 
                institution's capital contributions to such fund, less
                  ``(B) an amount equal to--
                          ``(i) the institution's outstanding 
                        administrative costs as calculated under 
                        section 463(b),
                          ``(ii) outstanding charges assessed under 
                        section 464(c)(1)(H), and
                          ``(iii) outstanding loan cancellation costs 
                        incurred under section 465.
          ``(2) At the end of each quarter subsequent to the quarter 
        ending September 30, 2010, the Secretary shall first be paid an 
        amount that bears the same ratio to the cash balance in such 
        fund at the close of the preceding quarter, as the total amount 
        of the Federal capital contributions to such fund by the 
        Secretary under this part bears to--
                  ``(A) the sum of such Federal contributions and the 
                institution's capital contributions to such fund, less
                  ``(B) an amount equal to--
                          ``(i) the institution's administrative costs 
                        incurred for that quarter as calculated under 
                        section 463(b),
                          ``(ii) charges assessed for that quarter 
                        under section 464(c)(1)(H), and
                          ``(iii) loan cancellation costs incurred for 
                        that quarter under section 465.
          ``(3)(A) The Secretary shall calculate the amounts due to the 
        Secretary under paragraph (1) (adjusted in accordance with 
        subparagraph (B), as appropriate) and paragraph (2) and shall 
        promptly inform the institution of such calculated amounts.
          ``(B) In the event that, prior to the date of enactment of 
        the Student Aid and Fiscal Responsibility Act of 2009, an 
        institution made a short-term, interest-free loan to the 
        institution's student loan fund established under this part in 
        anticipation of collections or receipt of Federal capital 
        contributions, and the institution demonstrates to the 
        Secretary, on or before June 30, 2010, that such loan will 
        still be outstanding after June 30, 2010, the Secretary shall 
        subtract the amount of such outstanding loan from the cash 
        balance of the institution's student loan fund that is used to 
        calculate the amount due to the Secretary under paragraph (1). 
        An adjustment of an amount due to the Secretary under this 
        subparagraph shall be made by the Secretary on a case-by-case 
        basis.
          ``(4) Any remaining balance at the end of a quarter after a 
        payment under paragraph (1) or (2) shall be retained by the 
        institution for use at its discretion. Any balance so retained 
        shall be withdrawn from the student loan fund and shall not be 
        counted in calculating amounts owed to the Secretary for 
        subsequent quarters.
          ``(5) Each institution shall make the quarterly payments to 
        the Secretary described in paragraph (2) until all outstanding 
        Federal Perkins Loans at that institution have been assigned to 
        the Secretary and there are no funds remaining in the 
        institution's student loan fund.
          ``(6) In the event that the institution's administrative 
        costs, charges, and cancellation costs described in paragraph 
        (2) for a quarter exceed the amount owed to the Secretary under 
        paragraphs (1) and (2) for that quarter, no payment shall be 
        due to the Secretary from the institution for that quarter and 
        the Secretary shall pay the institution, from funds realized 
        from the collection of assigned Federal Perkins Loans made 
        before July 1, 2010, an amount that, when combined with the 
        amount retained by the institution under paragraphs (1) and 
        (2), equals the full amount of such administrative costs, 
        charges, and cancellation costs.
  ``(b) Assignment of Outstanding Loans.--Beginning July 1, 2010, an 
institution of higher education may assign all outstanding loans made 
under this part before July 1, 2010, to the Secretary, consistent with 
the requirements of section 463(a)(5). In collecting loans so assigned, 
the Secretary shall pay an institution an amount that constitutes the 
same fraction of such collections as the fraction of the cash balance 
that the institution retains under subsection (a)(2), but determining 
such fraction without regard to subparagraph (B)(i) of such 
subsection.''.

SEC. 229. IMPLEMENTATION OF NON-TITLE IV REVENUE REQUIREMENT.

  (a) Amendments.--Section 487(d) (20 U.S.C. 1094(d)) is amended--
          (1) in paragraph (1)(E), by striking ``July 1, 2011'' and 
        inserting ``July 1, 2012'';
          (2) in paragraph (1)(F)--
                  (A) by redesignating clauses (iii), (iv), and (v) as 
                clauses (iv), (v), and (vi), respectively; and
                  (B) by inserting after clause (ii) the following new 
                clause:
                          ``(iii) for the period beginning July 1, 
                        2010, and ending July 1, 2012, the amount of 
                        funds the institution received from loans 
                        disbursed under section 455A;'';.
          (3) in paragraph (2)(A), by striking ``two consecutive'' and 
        inserting ``three consecutive''; and
          (4) in paragraph (2)(B)--
                  (A) by striking ``any institutional fiscal year'' and 
                inserting ``two consecutive institutional fiscal 
                years'';
                  (B) by striking ``the two institutional fiscal years 
                after the institutional fiscal year'' and inserting 
                ``the institutional fiscal year after the second 
                consecutive institutional fiscal year''; and
                  (C) by striking ``two consecutive'' in clause (ii) of 
                such paragraph and inserting ``three consecutive''.
  (b) Temporary Effect.--The amendments made by paragraphs (3) and (4) 
of subsection (a)--
          (1) shall take effect on the date of enactment of this Act; 
        and
          (2) shall cease to be effective on July 1, 2012.

SEC. 230. ADMINISTRATIVE EXPENSES.

  Section 489(a) (20 U.S.C. 1096(a)) is amended--
          (1) in the second sentence, by striking ``or under part E of 
        this title''; and
          (2) in the third sentence--
                  (A) by inserting ``and'' after ``subpart 3 of part 
                A,''; and
                  (B) by striking ``compensation of students,'' and all 
                that follows through the period and inserting 
                ``compensation of students.''.

            TITLE III--MODERNIZATION, RENOVATION, AND REPAIR

             Subtitle A--Elementary and Secondary Education

SEC. 301. DEFINITIONS.

  In this subtitle:
          (1) The term ``Bureau-funded school'' has the meaning given 
        such term in section 1141 of the Education Amendments of 1978 
        (25 U.S.C. 2021).
          (2) The term ``charter school'' has the meaning given such 
        term in section 5210 of the Elementary and Secondary Education 
        Act of 1965 (20 U.S.C. 7221i).
          (3) The term ``CHPS Criteria'' means the green building 
        rating program developed by the Collaborative for High 
        Performance Schools.
          (4) The term ``Energy Star'' means the Energy Star program of 
        the United States Department of Energy and the United States 
        Environmental Protection Agency.
          (5) The term ``Green Globes'' means the Green Building 
        Initiative environmental design and rating system referred to 
        as Green Globes.
          (6) The term ``LEED Green Building Rating System'' means the 
        United States Green Building Council Leadership in Energy and 
        Environmental Design green building rating standard referred to 
        as LEED Green Building Rating System.
          (7) The term ``local educational agency''--
                  (A) has the meaning given such term in section 9101 
                of the Elementary and Secondary Education Act of 1965 
                (20 U.S.C. 7801);
                  (B) includes any public charter school that 
                constitutes a local educational agency under State law; 
                and
                  (C) includes the Recovery School District of 
                Louisiana.
          (8) The term ``outlying area''--
                  (A) means the United States Virgin Islands, Guam, 
                American Samoa, and the Commonwealth of the Northern 
                Mariana Islands; and
                  (B) includes the Republic of Palau.
          (9) The term ``public school facilities'' means existing 
        public elementary or secondary school facilities, including 
        public charter school facilities and other existing facilities 
        planned for adaptive reuse as public charter school facilities.
          (10) The term ``Secretary'' means the Secretary of Education.
          (11) The term ``State'' means each of the 50 States, the 
        District of Columbia, and the Commonwealth of Puerto Rico.

 CHAPTER 1--GRANTS FOR MODERNIZATION, RENOVATION, OR REPAIR OF PUBLIC 
                           SCHOOL FACILITIES

SEC. 311. PURPOSE.

  Grants under this chapter shall be for the purpose of modernizing, 
renovating, or repairing public school facilities (including early 
learning facilities, as appropriate), based on the need of the 
facilities for such improvements, to ensure that public school 
facilities are safe, healthy, high-performing, and technologically up-
to-date.

SEC. 312. ALLOCATION OF FUNDS.

  (a) Reservation.--
          (1) In general.--From the amount appropriated to carry out 
        this chapter for each fiscal year pursuant to section 345(a), 
        the Secretary shall reserve 2 percent of such amount, 
        consistent with the purpose described in section 311--
                  (A) to provide assistance to the outlying areas; and
                  (B) for payments to the Secretary of the Interior to 
                provide assistance to Bureau-funded schools.
          (2) Use of reserved funds.--In each fiscal year, the amount 
        reserved under paragraph (1) shall be divided between the uses 
        described in subparagraphs (A) and (B) of such paragraph in the 
        same proportion as the amount reserved under section 1121(a) of 
        the Elementary and Secondary Education Act of 1965 (20 U.S.C. 
        6331(a)) is divided between the uses described in paragraphs 
        (1) and (2) of such section 1121(a) in such fiscal year.
          (3) Distressed areas and natural disasters.--From the amount 
        appropriated to carry out this chapter for each fiscal year 
        pursuant to section 345(a), the Secretary shall reserve 5 
        percent of such amount for grants to--
                  (A) local educational agencies serving geographic 
                areas with significant economic distress, to be used 
                consistent with the purpose described in section 311 
                and the allowable uses of funds described in section 
                313; and
                  (B) local educational agencies serving geographic 
                areas recovering from a natural disaster, to be used 
                consistent with the purpose described in section 321 
                and the allowable uses of funds described in section 
                323.
  (b) Allocation to States.--
          (1) State-by-state allocation.--Of the amount appropriated to 
        carry out this chapter for each fiscal year pursuant to section 
        345(a), and not reserved under subsection (a), each State shall 
        be allocated an amount in proportion to the amount received by 
        all local educational agencies in the State under part A of 
        title I of the Elementary and Secondary Education Act of 1965 
        (20 U.S.C. 6311 et seq.) for the previous fiscal year relative 
        to the total amount received by all local educational agencies 
        in every State under such part for such fiscal year.
          (2) State administration.--A State may reserve up to 1 
        percent of its allocation under paragraph (1) to carry out its 
        responsibilities under this chapter, which include--
                  (A) providing technical assistance to local 
                educational agencies;
                  (B) developing an online, publicly searchable 
                database that includes an inventory of public school 
                facilities in the State, including for each such 
                facility, its design, condition, modernization, 
                renovation and repair needs, utilization, energy use, 
                and carbon footprint; and
                  (C) creating voluntary guidelines for high-performing 
                school buildings, including guidelines concerning the 
                following:
                          (i) Site location, storm water management, 
                        outdoor surfaces, outdoor lighting, and 
                        transportation, including public transit and 
                        pedestrian and bicycle accessability.
                          (ii) Outdoor water systems, landscaping to 
                        minimize water use, including elimination of 
                        irrigation systems for landscaping, and indoor 
                        water use reduction.
                          (iii) Energy efficiency (including minimum 
                        and superior standards, such as for heating, 
                        ventilation, and air conditioning systems), use 
                        of alternative energy sources, commissioning, 
                        and training.
                          (iv) Use of durable, sustainable materials 
                        and waste reduction.
                          (v) Indoor environmental quality, such as day 
                        lighting in classrooms, lighting quality, 
                        indoor air quality (including with reference to 
                        reducing the incidence and effects of asthma 
                        and other respiratory illnesses), acoustics, 
                        and thermal comfort.
                          (vi) Operations and management, such as use 
                        of energy-efficient equipment, indoor 
                        environmental management plan, maintenance 
                        plan, and pest management.
          (3) Grants to local educational agencies.--From the amount 
        allocated to a State under paragraph (1), each eligible local 
        educational agency in the State shall receive an amount in 
        proportion to the amount received by such local educational 
        agency under part A of title I of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 6311 et seq.) for the previous 
        fiscal year relative to the total amount received by all local 
        educational agencies in the State under such part for such 
        fiscal year, except that no local educational agency that 
        received funds under such part for such fiscal year shall 
        receive a grant of less than $5,000 in any fiscal year under 
        this chapter.
          (4) Special rule.--Section 1122(c)(3) of the Elementary and 
        Secondary Education Act of 1965 (20 U.S.C. 6332(c)(3)) shall 
        not apply to paragraph (1) or (3).
  (c) Special Rules.--
          (1) Distributions by secretary.--The Secretary shall make and 
        distribute the reservations and allocations described in 
        subsections (a) and (b) not later than 120 days after an 
        appropriation of funds for this chapter is made.
          (2) Distributions by states.--A State shall make and 
        distribute the allocations described in subsection (b)(3) 
        within 90 days of receiving such funds from the Secretary.

SEC. 313. ALLOWABLE USES OF FUNDS.

  A local educational agency receiving a grant under this chapter shall 
use the grant for modernization, renovation, or repair of public school 
facilities (including early learning facilities, as appropriate), 
including--
          (1) repair, replacement, or installation of roofs, including 
        extensive, intensive or semi-intensive green roofs, electrical 
        wiring, water supply and plumbing systems, sewage systems, 
        storm water runoff systems, lighting systems, building 
        envelope, windows, ceilings, flooring, or doors, including 
        security doors;
          (2) repair, replacement, or installation of heating, 
        ventilation, or air conditioning systems, including insulation, 
        and conducting indoor air quality assessments;
          (3) compliance with fire, health, seismic, and safety codes, 
        including professional installation of fire and life safety 
        alarms, and modernizations, renovations, and repairs that 
        ensure that schools are prepared for emergencies, such as 
        improving building infrastructure to accommodate security 
        measures and installing or upgrading technology to ensure that 
        schools are able to respond to emergencies such as acts of 
        terrorism, campus violence, and natural disasters;
          (4) retrofitting necessary to increase the energy efficiency 
        and water efficiency of public school facilities;
          (5) modifications necessary to make facilities accessible in 
        compliance with the Americans with Disabilities Act of 1990 (42 
        U.S.C. 12101 et seq.) and section 504 of the Rehabilitation Act 
        of 1973 (29 U.S.C. 794);
          (6) abatement, removal, or interim controls of asbestos, 
        polychlorinated biphenyls, mold, mildew, lead-based hazards, 
        including lead-based paint hazards, or a proven carcinogen;
          (7) measures designed to reduce or eliminate human exposure 
        to classroom noise and environmental noise pollution;
          (8) modernization, renovation, or repair necessary to reduce 
        the consumption of coal, electricity, land, natural gas, oil, 
        or water;
          (9) installation or upgrading of educational technology 
        infrastructure;
          (10) modernization, renovation, or repair of science and 
        engineering laboratories, libraries, and career and technical 
        education facilities, and improvements to building 
        infrastructure to accommodate bicycle and pedestrian access;
          (11) installation or upgrading of renewable energy generation 
        and heating systems, including solar, photovoltaic, wind, 
        biomass (including wood pellet and woody biomass), waste-to-
        energy, and solar-thermal and geothermal systems, and for 
        energy audits;
          (12) measures designed to reduce or eliminate human exposure 
        to airborne particles such as dust, sand, and pollens;
          (13) creating greenhouses, gardens (including trees), and 
        other facilities for environmental, scientific, or other 
        educational purposes, or to produce energy savings;
          (14) modernizing, renovating, or repairing physical education 
        facilities for students, including upgrading or installing 
        recreational structures made from post-consumer recovered 
        materials in accordance with the comprehensive procurement 
        guidelines prepared by the Administrator of the Environmental 
        Protection Agency under section 6002(e) of the Solid Waste 
        Disposal Act (42 U.S.C. 6962(e));
          (15) other modernization, renovation, or repair of public 
        school facilities to--
                  (A) improve teachers' ability to teach and students' 
                ability to learn;
                  (B) ensure the health and safety of students and 
                staff;
                  (C) make them more energy efficient; or
                  (D) reduce class size; and
          (16) required environmental remediation related to 
        modernization, renovation, or repair described in paragraphs 
        (1) through (15).

SEC. 314. PRIORITY PROJECTS.

  In selecting a project under section 313, a local educational agency 
may give priority to projects involving the abatement, removal, or 
interim controls of asbestos, polychlorinated biphenyls, mold, mildew, 
lead-based hazards, including lead-based paint hazards, or a proven 
carcinogen.

 CHAPTER 2--SUPPLEMENTAL GRANTS FOR LOUISIANA, MISSISSIPPI, AND ALABAMA

SEC. 321. PURPOSE.

  Grants under this chapter shall be for the purpose of modernizing, 
renovating, repairing, or constructing public school facilities, 
including, where applicable, early learning facilities, based on the 
need for such improvements or construction, to ensure that public 
school facilities are safe, healthy, high-performing, and 
technologically up-to-date.

SEC. 322. ALLOCATION TO LOCAL EDUCATIONAL AGENCIES.

  (a) In General.--Of the amount appropriated to carry out this chapter 
for each fiscal year pursuant to section 345(b), the Secretary shall 
allocate to local educational agencies in Louisiana, Mississippi, and 
Alabama an amount equal to the infrastructure damage inflicted on 
public school facilities in each such district by Hurricane Katrina or 
Hurricane Rita in 2005 relative to the total of such infrastructure 
damage so inflicted in all such districts, combined.
  (b) Distribution by Secretary.--The Secretary shall determine and 
distribute the allocations described in subsection (a) not later than 
120 days after an appropriation of funds for this chapter is made.

SEC. 323. ALLOWABLE USES OF FUNDS.

  A local educational agency receiving a grant under this chapter shall 
use the grant for one or more of the activities described in section 
313, except that an agency receiving a grant under this chapter also 
may use the grant for the construction of new public school facilities.

                     CHAPTER 3--GENERAL PROVISIONS

SEC. 331. IMPERMISSIBLE USES OF FUNDS.

  No funds received under this subtitle may be used for--
          (1) payment of maintenance costs, including routine repairs 
        classified as current expenditures under State or local law;
          (2) stadiums or other facilities primarily used for athletic 
        contests or exhibitions or other events for which admission is 
        charged to the general public;
          (3) improvement or construction of facilities the purpose of 
        which is not the education of children, including central 
        office administration or operations or logistical support 
        facilities; or
          (4) purchasing carbon offsets.

SEC. 332. SUPPLEMENT, NOT SUPPLANT.

  A local educational agency receiving a grant under this subtitle 
shall use such Federal funds only to supplement and not supplant the 
amount of funds that would, in the absence of such Federal funds, be 
available for modernization, renovation, repair, and construction of 
public school facilities.

SEC. 333. PROHIBITION REGARDING STATE AID.

  A State shall not take into consideration payments under this 
subtitle in determining the eligibility of any local educational agency 
in that State for State aid, or the amount of State aid, with respect 
to free public education of children.

SEC. 334. MAINTENANCE OF EFFORT.

  (a) In General.--A local educational agency may receive a grant under 
this subtitle for any fiscal year only if either the combined fiscal 
effort per student or the aggregate expenditures of the agency and the 
State involved with respect to the provision of free public education 
by the agency for the preceding fiscal year was not less than 90 
percent of the combined fiscal effort or aggregate expenditures for the 
second preceding fiscal year.
  (b) Reduction in Case of Failure To Meet Maintenance of Effort 
Requirement.--
          (1) In general.--The State educational agency shall reduce 
        the amount of a local educational agency's grant in any fiscal 
        year in the exact proportion by which a local educational 
        agency fails to meet the requirement of subsection (a) by 
        falling below 90 percent of both the combined fiscal effort per 
        student and aggregate expenditures (using the measure most 
        favorable to the local agency).
          (2) Special rule.--No such lesser amount shall be used for 
        computing the effort required under subsection (a) for 
        subsequent years.
  (c) Waiver.--The Secretary shall waive the requirements of this 
section if the Secretary determines that a waiver would be equitable 
due to--
          (1) exceptional or uncontrollable circumstances, such as a 
        natural disaster; or
          (2) a precipitous decline in the financial resources of the 
        local educational agency.

SEC. 335. SPECIAL RULE ON CONTRACTING.

  Each local educational agency receiving a grant under this subtitle 
shall ensure that, if the agency carries out modernization, renovation, 
repair, or construction through a contract, the process for any such 
contract ensures the maximum number of qualified bidders, including 
local, small, minority, and women- and veteran-owned businesses, 
through full and open competition.

SEC. 336. USE OF AMERICAN IRON, STEEL, AND MANUFACTURED GOODS.

  (a) In General.--None of the funds appropriated or otherwise made 
available by this subtitle may be used for a project for the 
modernization, renovation, repair, or construction of a public school 
facility unless all of the iron, steel, and manufactured goods used in 
the project are produced in the United States.
  (b) Exceptions.--Subsection (a) shall not apply in any case or 
category of cases in which the Secretary finds that--
          (1) applying subsection (a) would be inconsistent with the 
        public interest;
          (2) iron, steel, and the relevant manufactured goods are not 
        produced in the United States in sufficient and reasonably 
        available quantities and of a satisfactory quality; or
          (3) inclusion of iron, steel, and manufactured goods produced 
        in the United States will increase the cost of the overall 
        project by more than 25 percent.
  (c) Publication of Justification.--If the Secretary determines that 
it is necessary to waive the application of subsection (a) based on a 
finding under subsection (b), the Secretary shall publish in the 
Federal Register a detailed written justification of the determination.
  (d) Construction.--This section shall be applied in a manner 
consistent with United States obligations under international 
agreements.

SEC. 337. LABOR STANDARDS.

  The grant programs under this subtitle are applicable programs (as 
that term is defined in section 400 of the General Education Provisions 
Act (20 U.S.C. 1221)) subject to section 439 of such Act (20 U.S.C. 
1232b).

SEC. 338. CHARTER SCHOOLS.

  (a) In General.--A local educational agency receiving an allocation 
under this subtitle shall reserve an amount of that allocation for 
charter schools within its jurisdiction for modernization, renovation, 
repair, and construction of charter school facilities.
  (b) Determination of Reserved Amount.--The amount to be reserved by a 
local educational agency under subsection (a) shall be determined based 
on the combined percentage of students counted under section 1113(a)(5) 
of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 
6313(a)(5)) in the schools of the agency who--
          (1) are enrolled in charter schools; and
          (2) the local educational agency, in consultation with the 
        authorized public chartering agency, expects to be enrolled, 
        during the year with respect to which the reservation is made, 
        in charter schools that are scheduled to commence operation 
        during such year.
  (c) School Share.--Individual charter schools shall receive a share 
of the amount reserved under subsection (a) based on the need of each 
school for modernization, renovation, repair, or construction, as 
determined by the local educational agency in consultation with charter 
school administrators.
  (d) Excess Funds.--After the consultation described in subsection 
(c), if the local educational agency determines that the amount of 
funds reserved under subsection (a) exceeds the modernization, 
renovation, repair, and construction needs of charter schools within 
the local educational agency's jurisdiction, the agency may use the 
excess funds for other public school facility modernization, 
renovation, repair, or construction consistent with this subtitle and 
is not required to carry over such funds to the following fiscal year 
for use for charter schools.

SEC. 339. GREEN SCHOOLS.

  (a) In General.--Of the funds appropriated for a given fiscal year 
and made available to a local educational agency to carry out this 
subtitle, the local educational agency shall use not less than the 
applicable percentage (described in subsection (b)) of such funds for 
public school modernization, renovation, repair, or construction that 
are certified, verified, or consistent with any applicable provisions 
of--
          (1) the LEED Green Building Rating System;
          (2) Energy Star;
          (3) the CHPS Criteria;
          (4) Green Globes; or
          (5) an equivalent program adopted by the State, or another 
        jurisdiction with authority over the local educational agency, 
        that includes a verifiable method to demonstrate compliance 
        with such program.
  (b) Applicable Percentages.--The applicable percentage described in 
subsection (a) is--
          (1) for funds appropriated in fiscal year 2010, 50 percent; 
        and
          (2) for funds appropriated in fiscal year 2011, 75 percent.
  (c) Rule of Construction.--Nothing in this section shall be construed 
to prohibit a local educational agency from using sustainable, domestic 
hardwood lumber as ascertained through the forest inventory and 
analysis program of the Forest Service of the Department of Agriculture 
under the Forest and Rangeland Renewable Resources Research Act of 1978 
(16 U.S.C. 1641 et seq.) for public school modernization, renovation, 
repairs, or construction.
  (d) Technical Assistance.--The Secretary, in consultation with the 
Secretary of Energy and the Administrator of the Environmental 
Protection Agency, shall provide outreach and technical assistance to 
States and local educational agencies concerning the best practices in 
school modernization, renovation, repair, and construction, including 
those related to student academic achievement, student and staff 
health, energy efficiency, and environmental protection.

SEC. 340. REPORTING.

  (a) Reports by Local Educational Agencies.--Local educational 
agencies receiving a grant under this subtitle shall annually compile a 
report describing the projects for which such funds were used, 
including--
          (1) the number and identity of public schools in the agency, 
        including the number of charter schools, and for each school, 
        the total number of students, and the number of students 
        counted under section 1113(a)(5) of the Elementary and 
        Secondary Education Act of 1965 (20 U.S.C. 6313(a)(5));
          (2) the total amount of funds received by the local 
        educational agency under this subtitle, and for each public 
        school in the agency, including each charter school, the amount 
        of such funds expended, and the types of modernization, 
        renovation, repair, or construction projects for which such 
        funds were used;
          (3) the number of students impacted by such projects, 
        including the number of students so impacted who are counted 
        under section 1113(a)(5) of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 6313(a)(5));
          (4) the number of public schools in the agency with a metro-
        centric locale code of 41, 42, or 43 as determined by the 
        National Center for Education Statistics and the percentage of 
        funds received by the agency under chapter 1 or chapter 2 of 
        this subtitle that were used for projects at such schools;
          (5) the number of public schools in the agency that are 
        eligible for schoolwide programs under section 1114 of the 
        Elementary and Secondary Education Act of 1965 (20 U.S.C. 6314) 
        and the percentage of funds received by the agency under 
        chapter 1 or chapter 2 of this subtitle that were used for 
        projects at such schools;
          (6) for each project--
                  (A) the cost;
                  (B) the standard described in section 339(a) with 
                which the use of the funds complied or, if the use of 
                funds did not comply with a standard described in 
                section 339(a), the reason such funds were not able to 
                be used in compliance with such standards and the 
                agency's efforts to use such funds in an 
                environmentally sound manner; and
                  (C) any demonstrable or expected benefits as a result 
                of the project (such as energy savings, improved indoor 
                environmental quality, student and staff health, 
                including the reduction of the incidence and effects of 
                asthma and other respiratory illnesses, and improved 
                climate for teaching and learning); and
          (7) the total number and amount of contracts awarded, and the 
        number and amount of contracts awarded to local, small, 
        minority, women, and veteran-owned businesses.
  (b) Availability of Reports.--A local educational agency shall--
          (1) submit the report described in subsection (a) to the 
        State educational agency, which shall compile such information 
        and report it annually to the Secretary; and
          (2) make the report described in subsection (a) publicly 
        available, including on the agency's website.
  (c) Reports by Secretary.--Not later than March 31 of each fiscal 
year, the Secretary shall submit to the Committee on Education and 
Labor of the House of Representatives and the Committee on Health, 
Education, Labor and Pensions of the Senate, and make available on the 
Department of Education's website, a report on grants made under this 
subtitle, including the information from the reports described in 
subsection (b)(1).

SEC. 341. SPECIAL RULES.

  Notwithstanding any other provision of this subtitle, none of the 
funds authorized by this subtitle may be--
          (1) used to employ workers in violation of section 274A of 
        the Immigration and Nationality Act (8 U.S.C. 1324a); or
          (2) distributed to a local educational agency that does not 
        have a policy that requires a criminal background check on all 
        employees of the agency.

SEC. 342. PROMOTION OF EMPLOYMENT EXPERIENCES.

  The Secretary of Education, in consultation with the Secretary of 
Labor, shall work with recipients of funds under this subtitle to 
promote appropriate opportunities to gain employment experience working 
on modernization, renovation, repair, and construction projects funded 
under this subtitle for--
          (1) participants in a YouthBuild program (as defined in 
        section 173A of the Workforce Investment Act of 1998 (29 U.S.C. 
        2918a));
          (2) individuals enrolled in the Job Corps program carried out 
        under subtitle C of title I of the Workforce Investment Act of 
        1998 (29 U.S.C. 2881 et seq.);
          (3) individuals enrolled in a junior or community college (as 
        defined in section 312(f) of the Higher Education Act of 1965 
        (20 U.S.C. 1088(f))) certificate or degree program relating to 
        projects described in section 339(a); and
          (4) participants in preapprenticeship programs that have 
        direct linkages with apprenticeship programs that are 
        registered with the Department of Labor or a State 
        Apprenticeship Agency under the National Apprenticeship Act of 
        1937 (29 U.S.C. 50 et seq.).

SEC. 343. ADVISORY COUNCIL ON GREEN, HIGH-PERFORMING PUBLIC SCHOOL 
                    FACILITIES.

  (a) Establishment of Advisory Council.--The Secretary shall establish 
an advisory council to be known as the ``Advisory Council on Green, 
High-Performing Public School Facilities'' (in this section referred to 
as the ``Advisory Council'') which shall be composed of--
          (1) appropriate officials from the Department of Education;
          (2) representatives of the academic, architectural, business, 
        education, engineering, environmental, labor, and scientific 
        communities; and
          (3) such other representatives as the Secretary deems 
        appropriate.
  (b) Duties of Advisory Council.--
          (1) Advisory duties.--The Advisory Council shall advise the 
        Secretary on the impact of green, high-performing schools, on--
                  (A) teaching and learning;
                  (B) health;
                  (C) energy costs;
                  (D) environmental impact; and
                  (E) other areas that the Secretary and the Advisory 
                Council deem appropriate.
          (2) Other duties.--The Advisory Council shall assist the 
        Secretary in--
                  (A) making recommendations on Federal policies to 
                increase the number of green, high-performing schools;
                  (B) identifying Federal policies that are barriers to 
                helping States and local educational agencies make 
                green, high-performing schools;
                  (C) providing technical assistance and outreach to 
                States and local educational agencies under section 
                339(d); and
                  (D) providing the Secretary such other assistance as 
                the Secretary deems appropriate.
  (c) Consultation.--In carrying out its duties under subsection (b), 
the Advisory Council shall consult with the Chair of the Council on 
Environmental Quality and the heads of appropriate Federal agencies, 
including the Secretary of Commerce, the Secretary of Energy, the 
Secretary of Health and Human Services, the Secretary of Labor, the 
Administrator of the Environmental Protection Agency, and the 
Administrator of the General Services Administration (through the 
Office of Federal High-Performance Green Buildings).

SEC. 344. EDUCATION REGARDING PROJECTS.

  A local educational agency receiving funds under this subtitle may 
encourage schools at which projects are undertaken with such funds to 
educate students about the project, including, as appropriate, the 
functioning of the project and its environmental, energy, 
sustainability, and other benefits.

SEC. 345. AVAILABILITY OF FUNDS.

  (a) Chapter 1.--There are authorized to be appropriated, and there 
are appropriated, to carry out chapter 1 of this subtitle (in addition 
to any other amounts appropriated to carry out such chapter and out of 
any money in the Treasury not otherwise appropriated), $2,020,000,000 
for each of fiscal years 2010 and 2011.
  (b) Chapter 2.--There are authorized to be appropriated, and there 
are appropriated, to carry out chapter 2 of this subtitle (in addition 
to any other amounts appropriated to carry out such chapter and out of 
any money in the Treasury not otherwise appropriated), $30,000,000 for 
each of fiscal years 2010 and 2011.
  (c) Prohibition on Earmarks.--None of the funds appropriated under 
this section may be used for a Congressional earmark as defined in 
clause 9(d) of rule XXI of the Rules of the House of Representatives.

                      Subtitle B--Higher Education

SEC. 351. FEDERAL ASSISTANCE FOR COMMUNITY COLLEGE MODERNIZATION AND 
                    CONSTRUCTION.

  (a) In General.--
          (1) Grant program.--From the amounts made available under 
        subsection (i), the Secretary shall award grants to States for 
        the purposes of constructing new community college facilities 
        and modernizing, renovating, and repairing existing community 
        college facilities. Grants awarded under this section shall be 
        used by a State for one or more of the following:
                  (A) To reduce financing costs of loans for new 
                construction, modernization, renovation, or repair 
                projects at community colleges (such as paying interest 
                or points on such loans).
                  (B) To provide matching funds for a community college 
                capital campaign to attract private donations of funds 
                for new construction, modernization, renovation, or 
                repair projects at the community college.
                  (C) To capitalize a revolving loan fund to finance 
                new construction, modernization, renovation, and repair 
                projects at community colleges.
          (2) Allocation.--
                  (A) Determination of available amount.--The Secretary 
                shall determine the amount available for allocation to 
                each State by determining the amount equal to the total 
                number of students in the State who are enrolled in 
                community colleges and who are pursuing a degree or 
                certificate that is not a bachelor's, master's, 
                professional, or other advanced degree, relative to the 
                total number of such students in all States, combined.
                  (B) Allocation.--The Secretary shall allocate to each 
                State selected by the Secretary to receive a grant 
                under this section an amount equal to the amount 
                determined to be available for allocation to such State 
                under subparagraph (A), less any portion of that amount 
                that is subject to a limitation under paragraph (3).
                  (C) Reallocation.--Amounts not allocated under this 
                section to a State because--
                          (i) the State did not submit an application 
                        under subsection (b);
                          (ii) the State submitted an application that 
                        the Secretary determined did not meet the 
                        requirements of such subsection; or
                          (iii) the State is subject to a limitation 
                        under paragraph (3) that prevents the State 
                        from using a portion of the allocation,
                shall be proportionately reallocated under this 
                paragraph to the States that are not described in 
                clause (i), (ii), or (iii) of this subparagraph.
          (3) Grant amount limitations.--A grant awarded to a State 
        under this section--
                  (A) to reduce financing costs of loans for new 
                construction, modernization, renovation, or repair 
                projects at community colleges under paragraph (1)(A) 
                shall be for an amount that is not more than 25 percent 
                of the total principal amount of the loans for which 
                financing costs are being reduced; and
                  (B) to provide matching funds for a community college 
                capital campaign under paragraph (1)(B) shall be for an 
                amount that is not more than 25 percent of the total 
                amount of the private donations of funds raised through 
                such campaign over the duration of such campaign, as 
                such duration is determined by the State in the 
                application submitted under subsection (b).
          (4) Supplement, not supplant.--Funds made available under 
        this section shall be used to supplement, and not supplant, 
        other Federal, State, and local funds that would otherwise be 
        expended to construct new community college facilities or 
        modernize, renovate, or repair existing community college 
        facilities.
  (b) Application.--A State that desires to receive a grant under this 
section shall submit an application to the Secretary at such time, in 
such manner, and containing such information and assurances as the 
Secretary may require. Such application shall include a certification 
by the State that the funds provided under this section for the 
construction of new community college facilities and the modernization, 
renovation, and repair of existing community college facilities will 
improve instruction at such colleges and will improve the ability of 
such colleges to educate and train students to meet the workforce needs 
of employers in the State.
  (c) Use of Funds by Community Colleges.--
          (1) Permissible uses of funds.--Funds made available to 
        community colleges through a loan described in subsection 
        (a)(1)(A), a capital campaign described in subsection 
        (a)(1)(B), or a loan from a revolving loan fund described in 
        subsection (a)(1)(C) shall be used only for the construction, 
        modernization, renovation, or repair of community college 
        facilities that are primarily used for instruction, research, 
        or student housing, which may include any of the following:
                  (A) Repair, replacement, or installation of roofs, 
                including extensive, intensive, or semi-intensive green 
                roofs, electrical wiring, water supply and plumbing 
                systems, sewage systems, storm water runoff systems, 
                lighting systems, building envelope, windows, ceilings, 
                flooring, or doors, including security doors.
                  (B) Repair, replacement, or installation of heating, 
                ventilation, or air conditioning systems, including 
                insulation, and conducting indoor air quality 
                assessments.
                  (C) Compliance with fire, health, seismic, and safety 
                codes, including professional installation of fire and 
                life safety alarms, and modernizations, renovations, 
                and repairs that ensure that the community college's 
                facilities are prepared for emergencies, such as 
                improving building infrastructure to accommodate 
                security measures and installing or upgrading 
                technology to ensure that the community college is able 
                to respond to emergencies such as acts of terrorism, 
                campus violence, and natural disasters.
                  (D) Retrofitting necessary to increase the energy 
                efficiency of the community college's facilities.
                  (E) Modifications necessary to make facilities 
                accessible in compliance with the Americans with 
                Disabilities Act of 1990 (42 U.S.C. 12101 et seq.) and 
                section 504 of the Rehabilitation Act of 1973 (29 
                U.S.C. 794).
                  (F) Abatement, removal, or interim controls of 
                asbestos, polychlorinated biphenyls, mold, mildew, or 
                lead-based hazards, including lead-based paint hazards 
                from the community college's facilities.
                  (G) Modernization, renovation, or repair necessary to 
                reduce the consumption of coal, electricity, land, 
                natural gas, oil, or water.
                  (H) Modernization, renovation, and repair relating to 
                improving science and engineering laboratories, 
                libraries, or instructional facilities.
                  (I) Installation or upgrading of educational 
                technology infrastructure.
                  (J) Installation or upgrading of renewable energy 
                generation and heating systems, including solar, 
                photovoltaic, wind, biomass (including wood pellet and 
                woody biomass), waste-to-energy, solar-thermal and 
                geothermal systems, and energy audits.
                  (K) Other modernization, renovation, or repair 
                projects that are primarily for instruction, research, 
                or student housing.
                  (L) Required environmental remediation related to 
                modernization, renovation, or repair described in 
                subparagraphs (A) through (K).
          (2) Green school requirement.--A community college receiving 
        assistance through a loan described in subsection (a)(1)(A), a 
        capital campaign described in subsection (a)(1)(B), or a loan 
        from a revolving loan fund described in subsection (a)(1)(C) 
        shall use not less than 50 percent of such assistance to carry 
        out projects for construction, modernization, renovation, or 
        repair that are certified, verified, or consistent with the 
        applicable provisions of--
                  (A) the LEED Green Building Rating System;
                  (B) Energy Star;
                  (C) the CHPS Criteria, as applicable;
                  (D) Green Globes; or
                  (E) an equivalent program adopted by the State or the 
                State higher education agency that includes a 
                verifiable method to demonstrate compliance with such 
                program.
          (3) Prohibited uses of funds.--
                  (A) In general.--No funds awarded under this section 
                may be used for--
                          (i) payment of maintenance costs;
                          (ii) construction, modernization, renovation, 
                        or repair of stadiums or other facilities 
                        primarily used for athletic contests or 
                        exhibitions or other events for which admission 
                        is charged to the general public; or
                          (iii) construction, modernization, 
                        renovation, or repair of facilities--
                                  (I) used for sectarian instruction, 
                                religious worship, or a school or 
                                department of divinity; or
                                  (II) in which a substantial portion 
                                of the functions of the facilities are 
                                subsumed in a religious mission.
                  (B) Four-year institutions.--No funds awarded to a 
                four-year public institution of higher education under 
                this section may be used for any facility, service, or 
                program of the institution that is not available to 
                students who are pursuing a degree or certificate that 
                is not a bachelor's, master's, professional, or other 
                advanced degree.
  (d) Application of GEPA.--The grant program authorized in this 
section is an applicable program (as that term is defined in section 
400 of the General Education Provisions Act (20 U.S.C. 1221)) subject 
to section 439 of such Act (20 U.S.C. 1232b). The Secretary shall, 
notwithstanding section 437 of such Act (20 U.S.C. 1232) and section 
553 of title 5, United States Code, establish such program rules as may 
be necessary to implement such grant program by notice in the Federal 
Register.
  (e) Concurrent Funding.--Funds made available under this section 
shall not be used to assist any community college that receives funding 
for the construction, modernization, renovation, and repair of 
facilities under any other program under this Act, the Higher Education 
Act of 1965, or the American Recovery and Reinvestment Act of 2009.
  (f) Reports by the States.--Each State that receives a grant under 
this section shall, not later than September 30, 2012, and annually 
thereafter for each fiscal year in which the State expends funds 
received under this section, submit to the Secretary a report that 
includes--
          (1) a description the projects for which the grant funding 
        was, or will be, used;
          (2) a list of the community colleges that have received, or 
        will receive, assistance from the grant through a loan 
        described in subsection (a)(1)(A), a capital campaign described 
        in subsection (a)(1)(B), or a loan from a revolving loan fund 
        described in subsection (a)(1)(C); and
          (3) a description of the amount and nature of the assistance 
        provided to each such college.
  (g) Report by the Secretary.--The Secretary shall submit to the 
authorizing committees (as defined in section 103 of the Higher 
Education Act of 1965) an annual report on the grants made under this 
section, including the information described in subsection (f).
  (h) Definitions.--
          (1) Community college.--As used in this section, the term 
        ``community college'' means--
                  (A) a junior or community college, as such term is 
                defined in section 312(f) of the Higher Education Act 
                of 1965 (20 U.S.C. 1085(f)); or
                  (B) a four-year public institution of higher 
                education (as defined in section 101 of the Higher 
                Education Act of 1965) that awards a significant number 
                of degrees and certificates that are not--
                          (i) bachelor's degrees (or an equivalent); or
                          (ii) master's, professional, or other 
                        advanced degrees.
          (2) CHPS criteria.--The term ``CHPS Criteria'' means the 
        green building rating program developed by the Collaborative 
        for High Performance Schools.
          (3) Energy star.--The term ``Energy Star'' means the Energy 
        Star program of the United States Department of Energy and the 
        United States Environmental Protection Agency.
          (4) Green globes.--The term ``Green Globes'' means the Green 
        Building Initiative environmental design and rating system 
        referred to as Green Globes.
          (5) Leed green building rating system.--The term ``LEED Green 
        Building Rating System'' means the United States Green Building 
        Council Leadership in Energy and Environmental Design green 
        building rating standard referred to as the LEED Green Building 
        Rating System.
          (6) Secretary.--The term ``Secretary'' means the Secretary of 
        Education.
          (7) State.--The term ``State'' has the meaning given such 
        term in section 103 of the Higher Education Act of 1965 (20 
        U.S.C. 1003).
  (i) Availability of Funds.--There are authorized to be appropriated, 
and there are appropriated, to carry out this section (in addition to 
any other amounts appropriated to carry out this section and out of any 
money in the Treasury not otherwise appropriated), $2,500,000,000 for 
fiscal year 2011, which shall remain available until expended.

                TITLE IV--EARLY LEARNING CHALLENGE FUND

SEC. 401. PURPOSE.

  The purpose of this title is to provide grants on a competitive basis 
to States for the following:
          (1) To promote standards reform of State early learning 
        programs serving children from birth through age 5 in order to 
        support the healthy development and improve the school 
        readiness outcomes of young children.
          (2) To establish a high standard of quality in early learning 
        programs that integrates appropriate early learning and 
        development standards across early learning settings.
          (3) To fund and implement quality initiatives that improve 
        the skills and effectiveness of early learning providers, and 
        improve the quality of existing early learning programs, in 
        order to increase the number of disadvantaged children who 
        participate in comprehensive and high-quality early learning 
        programs.
          (4) To ensure that a greater number of disadvantaged children 
        enter kindergarten with the cognitive, social, emotional, and 
        physical skills and abilities needed to be successful in 
        school.
          (5) To increase parents' abilities to access comprehensive 
        and high quality early learning programs across settings for 
        their children.

SEC. 402. PROGRAMS AUTHORIZED.

  (a) Quality Pathways Grants.--The Secretary shall use funds made 
available to carry out this title for a fiscal year to award grants on 
a competitive basis to States in accordance with section 403.
  (b) Development Grants.--The Secretary shall use funds made available 
to carry out this title for a fiscal year to award grants in accordance 
with section 404 on a competitive basis to States that demonstrate a 
commitment to establishing a system of early learning that will include 
the components described in section 403(c)(3) but are not--
          (1) eligible to be awarded a grant under subsection (a); or
          (2) are not awarded such a grant after application.
  (c) Reservations of Federal Funds.--
          (1) Research, evaluation, and administration.--From the 
        amount made available to carry out this title for a fiscal 
        year, the Secretary--
                  (A) shall reserve up to 2 percent jointly to 
                administer this title with the Secretary of Health and 
                Human Services; and
                  (B) shall reserve up to 3 percent to carry out 
                activities under section 405.
          (2) Tribal school readiness planning demonstration.--After 
        making the reservations under paragraph (1), the Secretary 
        shall reserve 0.25 percent for a competitive grant program for 
        Indian tribes to develop and implement school readiness plans 
        that--
                  (A) are coordinated with local educational agencies 
                serving children who are members of the tribe; and
                  (B) include American Indian and Alaska Native Head 
                Start and Early Head Start programs, tribal child care 
                programs, Indian Health Service programs, and other 
                tribal programs serving children.
          (3) Quality pathways grants.--
                  (A) In general.--From the amount made available to 
                carry out this title for a fiscal year and not reserved 
                under paragraph (1) or (2), the Secretary shall reserve 
                a percent (which shall be not greater than 65 percent 
                for fiscal years 2010 through 2012 and not greater than 
                85 percent for fiscal year 2013 and each succeeding 
                fiscal year) determined under subparagraph (B) to carry 
                out subsection (a).
                  (B) Determination of amount.--In determining the 
                amount to reserve under subparagraph (A), the 
                Secretary, consistent with section 403(e), shall take 
                into account the following:
                          (i) The total number of States determined by 
                        the Secretary to qualify for receipt of a grant 
                        under this title for the year.
                          (ii) The number of children under age 5 from 
                        low-income families in each State with an 
                        approved application under section 403 for the 
                        year.
                  (C) Reallocation.--For fiscal year 2013 and 
                subsequent fiscal years, the Secretary may reallocate 
                funds allocated for development grants under subsection 
                (b) for the purpose of providing additional grants 
                under subsection (a), if the Secretary determines that 
                there is an insufficient number of applications that 
                meet the requirements for a grant under subsection (b).
  (d) State Applications.--In applying for a grant under this title, a 
State--
          (1) shall designate a State-level entity for administration 
        of the grant;
          (2) shall coordinate proposed activities with the State 
        Advisory Council on Early Childhood Education and Care 
        (established pursuant to section 642B(b)(1)(A) of the Head 
        Start Act (42 U.S.C. 9837b(b)(1)(A))) and shall incorporate 
        plans and recommendations from such Council in the application, 
        where applicable; and
          (3) otherwise shall submit the application to the Secretary 
        at such time, in such manner, and containing such information 
        as the Secretary may reasonably require.
  (e) Priority in Awarding Grants.--In awarding grants under this 
title, the Secretary shall give priority to States--
          (1) whose applications contain assurances that the State will 
        use, in part, funds reserved under section 658G of the Child 
        Care and Development Block Grant Act of 1990 (42 U.S.C. 9858e) 
        for activities described in section 403(f);
          (2) that will commit to dedicating a significant increase, in 
        comparison to recent fiscal years, in State expenditures on 
        early learning programs and services; and
          (3) that demonstrate efforts to build public-private 
        partnerships designed to accomplish the purposes of this title.
  (f) Maintenance of Effort.--
          (1) In general.--With respect to each period for which a 
        State is awarded a grant under this title, the aggregate 
        expenditures by the State and its political subdivisions on 
        early learning programs and services shall be not less than the 
        level of the expenditures for such programs and services by the 
        State and its political subdivisions for fiscal year 2006.
          (2) State expenditures.--For purposes of paragraph (1), 
        expenditures by the State on early learning programs and 
        services shall include, at a minimum, the following:
                  (A) State matching and maintenance of effort funds 
                for the Child Care and Development Block Grant Act of 
                1990 (42 U.S.C. 9858 et seq.).
                  (B) State matching funds for the State Advisory 
                Council on Early Childhood Education and Care 
                (established pursuant to section 642B(b)(1)(A) of the 
                Head Start Act (42 U.S.C. 9837b(b)(1)(A))).
                  (C) State expenditures on public pre-kindergarten, 
                Head Start (including Early Head Start), and other 
                State early learning programs and services dedicated to 
                children (including State expenditures under part C of 
                the Individuals with Disabilities Education Act (20 
                U.S.C. 1431 et seq.)).
  (g) Prohibitions on Use of Funds.--Funds under this title may not be 
used for any of the following:
          (1) Assessments that provide rewards or sanctions for 
        individual children or teachers.
          (2) A single assessment used as the primary or sole method 
        for assessing program effectiveness.
          (3) Evaluating children other than for--
                  (A) improving instruction or classroom environment;
                  (B) targeting professional development;
                  (C) determining the need for health, mental health, 
                disability, or family support services;
                  (D) informing the quality improvement process at the 
                State level;
                  (E) program evaluation for the purposes of program 
                improvement and parent information; or
                  (F) research conducted as part of the national 
                evaluation required by section 405(2).
  (h) Federal Administration.--
          (1) In general.--With respect to this title, the Secretary 
        shall bear responsibility for obligating and disbursing funds 
        and ensuring compliance with applicable laws and administrative 
        requirements, subject to paragraph (2).
          (2) Interagency agreement.--The Secretary of Education and 
        the Secretary of Health and Human Services shall jointly 
        administer this title on such terms as such secretaries shall 
        set forth in an interagency agreement.

SEC. 403. QUALITY PATHWAYS GRANTS.

  (a) Grant Period.--Grants under section 402(a)--
          (1) may be awarded for a period not to exceed 5 years; and
          (2) may be renewed, subject to approval by the Secretary, and 
        based on the State's progress in--
                  (A) increasing the percentage of disadvantaged 
                children in each age group (infants, toddlers, and 
                preschoolers) who participate in high-quality early 
                learning programs;
                  (B) increasing the number of high-quality early 
                learning programs in low-income communities;
                  (C) implementing an early learning system that 
                includes the components described in subsection (c)(3); 
                and
                  (D) incorporating the findings and recommendations 
                reported by the commission established under section 
                405(1) into the State system of early learning.
  (b) Matching Requirement.--
          (1) In general.--Subject to subsection (g), to be eligible to 
        receive a grant under section 402(a), a State shall contribute 
        to the activities assisted under the grant non-Federal matching 
        funds in an amount equal to not less than the applicable 
        percent of the amount of the grant.
          (2) Applicable percent.--For purposes of paragraph (1), the 
        applicable percent means--
                  (A) 10 percent in the first fiscal year of the grant;
                  (B) 10 percent in the second fiscal year of the 
                grant;
                  (C) 15 percent in the third fiscal year of the grant; 
                and
                  (D) 20 percent in the fourth fiscal year of the grant 
                and subsequent fiscal years.
          (3) Non-federal funds.--A State may use the following to 
        satisfy the requirement of paragraph (1):
                  (A) Cash.
                  (B) In-kind contributions for the acquisition, 
                construction, or improvement of early learning program 
                facilities serving disadvantaged children.
                  (C) Technical assistance related to subparagraph (B).
          (4) Private contributions.--Private contributions made as 
        part of public-private partnerships to increase the number of 
        low-income children in high-quality early learning programs in 
        a State may be used by the State to satisfy the requirement of 
        paragraph (1).
          (5) Financial hardship waiver.--The Secretary may waive or 
        reduce the non-Federal share of a State that has submitted an 
        application for a grant under section 402(a) if the State 
        demonstrates a need for such waiver or reduction due to extreme 
        financial hardship, as defined by the Secretary by regulation.
  (c) State Applications.--In order to be considered for a grant under 
section 402(a), a State's application under section 402(d) shall 
include the following:
          (1) A description of how the State will use the grant to 
        implement quality initiatives to improve early learning 
        programs serving disadvantaged children from birth to age 5 to 
        lead to a greater percentage of such children participating in 
        higher quality early learning programs.
          (2) A description of the goals and benchmarks the State will 
        establish to lead to a greater percentage of disadvantaged 
        children participating in higher quality early learning 
        programs to improve school readiness outcomes, including an 
        established baseline of the number of disadvantaged children in 
        high-quality early learning programs.
          (3) A description of how the State will implement a 
        governance structure and a system of early learning programs 
        and services that includes the following components:
                  (A) Not later than 12 months after receiving notice 
                of an award of the grant, complete State early learning 
                and development standards that include social and 
                emotional, cognitive, and physical development domains, 
                and approaches to learning that are developmentally 
                appropriate (including culturally and linguistically 
                appropriate) for all children.
                  (B) A process to ensure that State early learning and 
                development standards are integrated into the 
                instructional and programmatic practices of early 
                learning programs and services, including services 
                provided to children under section 619 and part C of 
                the Individuals with Disabilities Education Act (20 
                U.S.C. 1419, 1431 et seq.).
                  (C) A program rating system that builds on licensing 
                requirements, as appropriate, and other State 
                regulatory standards and that--
                          (i) is designed to improve quality and 
                        effectiveness across different types of early 
                        learning settings;
                          (ii) integrates evidence-based program 
                        quality standards that reflect standard levels 
                        of quality and has progressively higher levels 
                        of program quality;
                          (iii) integrates the State's early learning 
                        and development standards for the purpose of 
                        improving instructional and programmatic 
                        practices;
                          (iv) addresses quality and effective 
                        inclusion of children with disabilities or 
                        developmental delays across different types of 
                        early learning settings;
                          (v) addresses staff qualifications and 
                        professional development;
                          (vi) provides financial incentives and other 
                        supports to help programs meet and sustain 
                        higher levels of quality;
                          (vii) includes mechanisms for evaluating how 
                        programs are meeting those standards and 
                        progressively higher levels of quality; and
                          (viii) includes a mechanism for public 
                        awareness and understanding of the program 
                        rating system, including rating levels of 
                        individual programs.
                  (D) A system of program review and monitoring that is 
                designed to rate providers using the system described 
                in subparagraph (C) and to assess and improve 
                programmatic practices, instructional practices, and 
                classroom environment.
                  (E) A process to support early learning programs 
                integrating instructional and programmatic practices 
                that--
                          (i) include developmentally appropriate 
                        (including culturally and linguistically 
                        appropriate), ongoing, classroom-based 
                        instructional assessments for each domain of 
                        child development and learning (including 
                        social and emotional, cognitive, and physical 
                        development domains and approaches to learning) 
                        to guide and improve instructional practice, 
                        professional development of staff, and 
                        services; and
                          (ii) are aligned with the curricula used in 
                        the early learning program and with the State 
                        early learning and development standards or the 
                        Head Start Child Outcomes Framework (as 
                        described in the Head Start Act), as 
                        applicable.
                  (F) Minimum preservice early childhood development 
                and education training requirements for providers in 
                early learning programs.
                  (G) A comprehensive plan for supporting the 
                professional preparation and the ongoing professional 
                development of an effective, well-compensated early 
                learning workforce, which plan includes training and 
                education that is sustained, intensive, and classroom-
                focused and leads toward a credential or degree and is 
                tied to improved compensation.
                  (H) An outreach strategy to promote understanding by 
                parents and families of--
                          (i) how to support their child's early 
                        development and learning;
                          (ii) the State's program rating system, as 
                        described in subparagraph (C); and
                          (iii) the rating of the program in which 
                        their child is enrolled.
                  (I) A coordinated system to facilitate screening, 
                referral, and provision of services related to health, 
                mental health, disability, and family support for 
                children participating in early learning programs.
                  (J) A process for evaluating school readiness in 
                children that reflects all of the major domains of 
                development, and that is used to guide practice and 
                improve early learning programs.
                  (K) A coordinated data infrastructure that 
                facilitates--
                          (i) uniform data collection about the quality 
                        of early learning programs, essential 
                        information about the children and families 
                        that participate in such programs, and the 
                        qualifications and compensation of the early 
                        learning workforce in such programs; and
                          (ii) alignment and interoperability between 
                        the data system for early learning programs for 
                        children and data systems for elementary and 
                        secondary education.
          (4) A description of how the funds provided under the grant 
        will be targeted to prioritize increasing the number and 
        percentage of low-income children in high-quality early 
        learning programs, including children--
                  (A) in each age group (infants, toddlers, and 
                preschoolers);
                  (B) with developmental delays and disabilities;
                  (C) with limited English proficiency; and
                  (D) living in rural areas.
          (5) An assurance that the grant will be used to improve the 
        quality of early learning programs across a range of types of 
        settings and providers of such programs.
          (6) A description of the steps the State will take to make 
        progress toward including all center-based child care programs, 
        family child care programs, State-funded prekindergarten, Head 
        Start programs, and other early learning programs, such as 
        those funded under title I of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 6301 et seq.) or receiving 
        funds under section 619 or part C of the Individuals with 
        Disabilities Education Act (20 U.S.C. 1419, 1431 et seq.) in 
        the State program rating system described in paragraph (3)(C).
          (7) An assurance that the State, not later than 18 months 
        after receiving notice of an award of the grant, will conduct 
        an analysis of the alignment of the State's early learning and 
        development standards with--
                  (A) appropriate academic content standards for grades 
                kindergarten through 3; and
                  (B) elements of program quality standards for early 
                learning programs.
          (8) An assurance that the grant will be used only to 
        supplement, and not to supplant, Federal, State, and local 
        funds otherwise available to support existing early learning 
        programs and services.
          (9) A description of any disparity by age group (infants, 
        toddlers, and preschoolers) of available high-quality early 
        learning programs in low-income communities and the steps the 
        State will take to decrease such disparity, if applicable.
          (10) A description of how the State early learning and 
        development standards will address the needs of children with 
        limited English proficiency, including by incorporating 
        benchmarks related to English language development.
          (11) A description of how the State's professional 
        development plan will prepare the early learning workforce to 
        support the early learning needs of children with limited 
        English proficiency.
          (12) A description of how the State will improve interagency 
        collaboration and coordinate the purposes of this title with 
        the activities funded under--
                  (A) section 658G of the Child Care and Development 
                Block Grant Act of 1990 (42 U.S.C. 9858e);
                  (B) section 619 and part C of the Individuals with 
                Disabilities Education Act (20 U.S.C. 1419, 1431 et 
                seq.);
                  (C) title I of the Elementary and Secondary Education 
                Act of 1965 (20 U.S.C. 6301 et seq.);
                  (D) State-funded pre-kindergarten programs (where 
                applicable);
                  (E) Head Start programs; and
                  (F) other early childhood programs and services.
          (13) A description of how the State's early learning 
        policies, including child care policies, facilitate access to 
        high-quality early learning programs for children from low-
        income families.
          (14) An assurance that the State will continue to participate 
        in part C of the Individuals with Disabilities Education Act 
        (20 U.S.C. 1431 et seq.) for the duration of the grant.
  (d) Criteria Used in Awarding Grants.--In awarding grants under 
section 402(a), the Secretary shall evaluate the applications, and 
award grants under such section on a competitive basis, based on--
          (1) the quality of the application submitted pursuant to 
        section 402(d);
          (2) the priority factors described in section 402(e);
          (3) evidence of significant progress in establishing a system 
        of early learning for children that includes the components 
        described in subsection (c)(3); and
          (4) the State's capacity to fully complete implementation of 
        such a system.
  (e) Criterion Used in Determining Amount of Award.--In determining 
the amount to award a State under section 402(a), the Secretary shall 
take into account--
          (1) the proportion of children under age 5 from low-income 
        families in the State relative to such proportion in other 
        States; and
          (2) the State plan and capacity to implement the criteria 
        described in paragraphs (3) and (4) of subsection (d).
  (f) State Uses of Funds.--
          (1) In general.--A State receiving a grant under section 
        402(a) shall use the grant as follows:
                  (A) Not less than 65 percent of the grant amount 
                shall be used for two or more of the following 
                activities to improve the quality of early learning 
                programs serving disadvantaged children:
                          (i) Initiatives that improve the credentials 
                        of early learning providers and are tied to 
                        increased compensation.
                          (ii) Initiatives that help early learning 
                        programs meet and sustain higher program 
                        quality standards, such as--
                                  (I) improving the ratio of early 
                                learning provider to children in early 
                                learning settings;
                                  (II) reducing group size;
                                  (III) improving the qualifications of 
                                early learning providers; and
                                  (IV) supporting effective education 
                                and training for early learning 
                                providers.
                          (iii) Implementing classroom observation 
                        assessments and data-driven decisions (which 
                        may include implementation of a research-based 
                        prevention and intervention framework designed 
                        to build social competence and prevent 
                        challenging behaviors) tied to activities that 
                        improve instructional practices, programmatic 
                        practices, or classroom environment and promote 
                        school readiness.
                          (iv) Providing financial incentives to early 
                        learning programs--
                                  (I) for undertaking quality 
                                improvements that promote healthy 
                                development and school readiness; and
                                  (II) maintaining quality improvements 
                                that promote healthy development and 
                                school readiness.
                          (v) Integrating State early learning and 
                        development standards into instructional and 
                        programmatic practices in early learning 
                        programs.
                          (vi) Providing high-quality, sustained, 
                        intensive, and classroom-focused professional 
                        development that improves the knowledge and 
                        skills of early learning providers, including 
                        professional development related to meeting the 
                        needs of diverse populations.
                          (vii) Building the capacity of early learning 
                        programs and communities to promote the 
                        understanding of parents and families of the 
                        State's early learning system and the rating of 
                        the program in which their child is enrolled 
                        and to encourage the active involvement and 
                        engagement of parents and families in the 
                        learning and development of their children.
                          (viii) Building the capacity of early 
                        learning programs and communities to facilitate 
                        screening, referral, and provision of services 
                        related to health, mental health, disability, 
                        and family support for children participating 
                        in early learning programs.
                          (ix) Other innovative activities, proposed by 
                        the State and approved in advance by the 
                        Secretary that are--
                                  (I) based on successful practices;
                                  (II) designed to improve the quality 
                                of early learning programs and 
                                services; and
                                  (III) advance the system components 
                                described in subsection (c)(3).
                  (B) The remainder of the grant amount may be used for 
                one or more of the following:
                          (i) Implementation or enhancement of the 
                        State's data system described in subsection 
                        (c)(3)(K), including interoperability across 
                        agencies serving children, and unique child and 
                        program identifiers.
                          (ii) Enhancement of the State's oversight 
                        system for early learning programs, including 
                        the implementation of a program rating system.
                          (iii) The development and implementation of 
                        measures of school readiness of children that 
                        reflect all of the major domains of child 
                        development and that inform the quality 
                        improvement process.
          (2) Priority.--A State receiving a grant under section 402(a) 
        shall use the grant so as to prioritize improving the quality 
        of early learning programs serving children from low-income 
        families.
  (g) Special Rule.--
          (1) In general.--Beginning with the second fiscal year of a 
        grant under section 402(a), a State with respect to which the 
        Secretary certifies that the State has made sufficient progress 
        in implementing the requirements of the grant may apply to the 
        Secretary to reserve up to 25 percent of the amount of the 
        grant to expand access for children from low-income families to 
        the highest quality early learning programs that offer full-day 
        services, except that the State must agree to contribute for 
        such purpose non-Federal matching funds in an amount equal to 
        not less than 20 percent of the amount reserved under this 
        subsection. One-half of such non-Federal matching funds may be 
        provided by a private entity.
          (2) Non-federal funds.--A State may use the following to 
        satisfy the matching requirement of paragraph (1):
                  (A) Cash.
                  (B) In-kind contributions for the acquisition, 
                construction, or improvement of early learning program 
                facilities serving disadvantaged children.
                  (C) Technical assistance related to subparagraph (B).
          (3) Financial hardship waiver.--The Secretary may waive or 
        reduce the non-Federal share of a State under paragraph (1) if 
        the State demonstrates a need for such waiver or reduction due 
        to extreme financial hardship, as defined by the Secretary by 
        regulation.
  (h) Improvement Plan.--If the Secretary determines that a State 
receiving a grant under section 402(a) is encountering barriers to 
reaching goals described in subsection (c)(2), the State shall develop 
a plan for improvement in consultation with, and subject to approval 
by, the Secretary.

SEC. 404. DEVELOPMENT GRANTS.

  (a) Grant Period.--Grants under section 402(b) may be awarded for a 
period not to exceed 3 years, and may not be renewed.
  (b) State Uses of Funds.--
          (1) In general.--A State receiving a grant under section 
        402(b) shall use the grant to undertake activities to develop 
        the early learning system components described in section 
        403(c)(3) and that will allow a State to become eligible and 
        competitive for a grant described in section 402(a).
          (2) Priority.--A State receiving a grant under section 402(b) 
        shall use the grant so as to prioritize improving the quality 
        of early learning programs serving low-income children.
  (c) Matching Requirement.--
          (1) In general.--To be eligible to receive a grant under 
        section 402(b), a State shall contribute to the activities 
        assisted under the grant non-Federal matching funds in an 
        amount equal to not less than the applicable percent of the 
        amount of the grant.
          (2) Applicable percent.--For purposes of paragraph (1), the 
        applicable percent means--
                  (A) 20 percent in the first fiscal year of the grant;
                  (B) 25 percent in the second fiscal year of the 
                grant; and
                  (C) 30 percent in the third fiscal year of the grant.
          (3) Non-federal funds.--A State may use the following to 
        satisfy the requirement of paragraph (1):
                  (A) Cash.
                  (B) In-kind contributions for the acquisition, 
                construction, or improvement of early learning program 
                facilities serving disadvantaged children.
                  (C) Technical assistance related to subparagraph (B).
          (4) Private contributions.--Private contributions made as 
        part of public-private partnerships to increase the number of 
        low-income children in high-quality early learning programs in 
        a State may be used by the State to satisfy the requirement of 
        paragraph (1).
          (5) Financial hardship waiver.--The Secretary may waive or 
        reduce the non-Federal share of a State that has submitted an 
        application for a grant under section 402(b) if the State 
        demonstrates a need for such waiver or reduction due to extreme 
        financial hardship, as defined by the Secretary by regulation.

SEC. 405. RESEARCH AND EVALUATION.

  From funds reserved under section 402(c)(1), the Secretary of 
Education and the Secretary of Health and Human Services, acting 
jointly, shall carry out the following activities:
          (1) Establishing a national commission whose duties shall 
        include--
                  (A) reviewing the status of State and Federal early 
                learning program quality standards and early learning 
                and development standards;
                  (B) recommending benchmarks for program quality 
                standards and early learning and development standards, 
                including taking into consideration the school 
                readiness needs of children with limited English 
                proficiency; and
                  (C) reporting to the Secretaries of Education and 
                Health and Human Services not later than 2 years after 
                the date of the enactment of this Act on the 
                commission's findings and recommendations.
          (2) Conducting a national evaluation of the grants made under 
        this title through the Institute of Education Science in 
        collaboration with the appropriate research divisions within 
        the Department of Health and Human Services.
          (3) Supporting a research collaborative among the Institute 
        of Education Sciences, the National Institute of Child Health 
        and Human Development, the Office of Planning, Research, and 
        Evaluation within the Administration for Children and Families 
        in the Department of Health and Human Services, and, as 
        appropriate, other Federal entities to support research on 
        early learning that can inform improved State and other 
        standards and licensing requirements and improved child 
        outcomes, which collaborative shall--
                  (A) biennially prepare and publish for public comment 
                a detailed research plan;
                  (B) support early learning research activities that 
                could include determining--
                          (i) the characteristics of early learning 
                        programs that produce positive developmental 
                        outcomes for children;
                          (ii) the effects of program quality standards 
                        on child outcomes;
                          (iii) the relationships between specific 
                        interventions and types of child and family 
                        outcomes;
                          (iv) the effectiveness of early learning 
                        provider training in raising program quality 
                        and improving child outcomes;
                          (v) the effectiveness of professional 
                        development strategies in raising program 
                        quality and improving child outcomes; and
                          (vi) how to improve the school readiness 
                        outcomes of children with limited English 
                        proficiency, special needs, and homeless 
                        children, including evaluation of professional 
                        development programs for working with such 
                        children; and
                  (C) disseminate relevant research findings and best 
                practices.
          (4) Evaluating barriers to improving the quality of early 
        learning programs serving low-income children, including 
        evaluating barriers to successful interagency collaboration and 
        coordination, by conducting a review of the statewide strategic 
        reports developed by the State Advisory Councils on Early Care 
        and Education and other relevant reports, reporting the 
        findings of such review to Congress, and disseminating relevant 
        research findings and best practices.

SEC. 406. REPORTING REQUIREMENTS.

  (a) Reports to Congress.--For each year in which funding is provided 
under this title, the Secretary shall submit an annual report to the 
Committee on Education and Labor of the House of Representatives and 
the Committee on Health, Education, Labor and Pensions of the Senate on 
the activities carried out under this title, including, at a minimum, 
information on the following:
          (1) The activities undertaken by States to increase the 
        availability of high-quality early learning programs.
          (2) The number of children in high-quality early learning 
        programs, and the change from the prior year, disaggregated by 
        State, age, and race.
          (3) The number of early learning providers enrolled, with 
        assistance from funds under this title, in a program to obtain 
        a credential or degree in early childhood education and the 
        settings in which such providers work.
          (4) A summary of State progress in implementing a system of 
        early learning with the components described in section 
        403(c)(3).
          (5) A summary of the research activities being conducted 
        under section 405 and the findings of such research.
  (b) Reports to Secretary.--Each State that receives a grant under 
this title shall submit to the Secretary an annual report that 
includes, at a minimum, information on the activities carried out by 
the State under this title, including the following:
          (1) The progress on fully implementing and integrating into a 
        system of early learning each of the components described in 
        section 403(c)(3).
          (2) The State's progress in meeting its goals for increasing 
        the number of disadvantaged children participating in high-
        quality early learning programs, disaggregated by child age.
          (3) The number and percentage of disadvantaged children 
        participating in early learning programs at each level of 
        quality, disaggregated by race, family income, child age, 
        disability, and limited English proficiency status.
          (4) The number of providers participating in the State 
        quality rating system, disaggregated by setting, rating, and 
        the number of high-quality providers available in low-income 
        communities.
          (5) Information on how the funds provided under this title 
        were used to increase the availability of high-quality early 
        learning programs for each age group, disaggregated by race and 
        limited English proficient status, to the maximum extent 
        practicable.
          (6) Information on professional development and training 
        expenditures, including--
                  (A) the number of early learning providers engaged in 
                such activities; and
                  (B) the number of early learning providers enrolled 
                in programs to obtain a credential or degree in early 
                childhood education, disaggregated by the type of 
                credential and degree.
          (7) The change in the number and percentage of early learning 
        providers with appropriate credentials or degrees in early 
        childhood education, including the change in compensation given 
        to such providers, in comparison to the prior fiscal year, 
        disaggregated by early learning setting and the type of 
        credential or degree.
          (8) In the case of a State receiving a grant under section 
        402(a), the percentage of children receiving assistance under 
        the Child Care and Development Block Grant Act of 1990 (42 
        U.S.C. 9858 et seq.) who participate in the highest quality 
        early learning programs, disaggregated by program setting and 
        child age.
          (9) Barriers to expanding access to high-quality early 
        learning programs for disadvantaged children.

SEC. 407. CONSTRUCTION.

  Nothing in this title--
          (1) shall be construed to require a child to participate in 
        an early learning program; or
          (2) shall be used to deny entry to kindergarten for any 
        individual if the individual is legally eligible, as defined by 
        State or local law.

SEC. 408. DEFINITIONS.

  For purposes of this title:
          (1) Child.--The term ``child'' refers to an individual from 
        birth through the day the individual enters kindergarten.
          (2) Disadvantaged.--The term ``disadvantaged'', when used 
        with respect to a child, means a child whose family income is 
        described in section 658P(4)(B) of the Child Care and 
        Development Block Grant Act of 1990 (42 U.S.C. 9858n(4)(B)).
          (3) Indian tribe.--The term ``Indian tribe'' has the meaning 
        given such term in section 637 of the Head Start Act (42 U.S.C. 
        9832).
          (4) Limited english proficient.--The term ``limited English 
        proficient'' has the meaning given such term in section 637 of 
        the Head Start Act (42 U.S.C. 9832).
          (5) Secretary.--The term ``Secretary'' means the Secretary of 
        Education.
          (6) State.--The term ``State'' has the meaning given such 
        term in section 9101 of the Elementary and Secondary Education 
        Act of 1965 (20 U.S.C. 7801).

SEC. 409. AVAILABILITY OF FUNDS.

  There are authorized to be appropriated, and there are appropriated, 
to carry out this title (in addition to any other amounts appropriated 
to carry out this title and out of any money in the Treasury not 
otherwise appropriated) $1,000,000,000 for each of fiscal years 2010 
through 2017.

                TITLE V--AMERICAN GRADUATION INITIATIVE

SEC. 501. AUTHORIZATION AND APPROPRIATION.

  (a) Authorization and Appropriation.--There are authorized to be 
appropriated, and there are appropriated, to carry out this title (in 
addition to any other amounts appropriated to carry out this title and 
out of any money in the Treasury not otherwise appropriated), 
$730,000,000 for each of the fiscal years 2010 through 2013, and 
$680,000,000 for each of the fiscal years 2014 through 2019.
  (b) Allocations.--Of the amount appropriated under subsection (a)--
          (1) $630,000,000 shall be made available for each of the 
        fiscal years 2010 through 2013 to carry out section 503;
          (2) $630,000,000 shall be made available for each of the 
        fiscal years 2014 through 2019 to carry out section 504;
          (3) $50,000,000 shall be made available for each of the 
        fiscal years 2010 through 2019 to carry out subsection (a) of 
        section 505; and
          (4) $50,000,000 shall be made available for each of the 
        fiscal years 2010 through 2013 to carry out subsections (b) and 
        (c) of section 505.
  (c) Responsibility.--
          (1) In general.--With respect to sections 503 and 504, the 
        Secretary of Education shall bear the responsibility for 
        obligating and disbursing funds under such sections and 
        ensuring compliance with applicable law and administrative 
        requirements, subject to paragraph (2).
          (2) Interagency agreement.--The Secretary of Education and 
        the Secretary of Labor shall jointly administer sections 503 
        and 504 on such terms as such Secretaries shall set forth in an 
        interagency agreement.

SEC. 502. DEFINITIONS; GRANT PRIORITY.

  (a) Definitions.--In this title:
          (1) Area career and technical education school.--The term 
        ``area career and technical education school'' has the meaning 
        given such term in section 3 of the Carl D. Perkins Career and 
        Technical Education Act of 2006 (20 U.S.C. 2302).
          (2) Community college.--The term ``community college'' means 
        a public institution of higher education at which the highest 
        degree that is predominantly awarded to students is an 
        associate's degree.
          (3) Eligible entity.--The term ``eligible entity'' means--
                  (A) a community college or community college 
                district;
                  (B) an area career and technical education school;
                  (C) a public four-year institution of higher 
                education that--
                          (i) offers two-year degrees;
                          (ii) will use funds provided under this 
                        section for activities at the certificate and 
                        associate degree levels; and
                          (iii) is not reasonably close, as determined 
                        by the Secretary, to a community college;
                  (D) a public four-year institution of higher 
                education that is in partnership with an eligible 
                entity described in subparagraph (A), (B), or (C);
                  (E) a State that--
                          (i) is in compliance with section 137 of the 
                        Higher Education Act of 1965 (20 U.S.C. 1015f);
                          (ii) has an articulation agreement pursuant 
                        to section 486A of such Act (20 U.S.C. 1093a); 
                        and
                          (iii) is in partnership with an eligible 
                        entity described in subparagraph (A), (B), (C), 
                        or (D); or
                  (F) a consortium of at least 2 entities described in 
                subparagraphs (A) through (E).
          (4) Industry or sector partnership.--The term ``industry or 
        sector partnership'' has the meaning given such term in section 
        782(f) of the Higher Education Act of 1965.
          (5) Institution of higher education.--The term ``institution 
        of higher education'' has the meaning given such term in 
        section 101 of the Higher Education Act of 1965 (20 U.S.C. 
        1001).
          (6) Philanthropic organization.--The term ``philanthropic 
        organization'' has the meaning given such term in section 
        781(i) of the Higher Education Act of 1965 (20 U.S.C. 1141(i)).
          (7) Secretary.--The term ``Secretary'' means the Secretary of 
        Education.
          (8) State.--The term ``State'' has the meaning given such 
        term in section 103 of the Higher Education Act of 1965 (20 
        U.S.C. 1003).
          (9) State public employment service.--The term ``State public 
        employment service'' refers to a State public employment 
        service established under the Wagner-Peyser Act (29 U.S.C. 49 
        et seq.).
          (10) State workforce investment board; local workforce 
        investment board.--The terms ``State workforce investment 
        board'' and ``local workforce investment board'' refer to a 
        State workforce investment board established under section 111 
        of the Workforce Investment Act (29 U.S.C. 2821) and a local 
        workforce investment board established under section 117 of 
        such Act (29 U.S.C. 2832), respectively.
          (11) Supportive services.--The term ``supportive services'' 
        has the meaning given such term in section 101(46) of the 
        Workforce Investment Act of 1998 (29 U.S.C. 2801(46)).
  (b) Grant Priority.--In addition to any grant priorities established 
under any other provision of this title, the Secretary, in awarding 
grants under this title, shall give priority to applications focused on 
serving low-income, nontraditional students who do not have a 
bachelor's degree, and who have one or more of the following 
characteristics:
          (1) Are the first generation in their family to attend 
        college.
          (2) Have delayed enrollment in college.
          (3) Have dependents.
          (4) Are independent students.
          (5) Work at least 25 hours per week.
          (6) Are out-of-school youth without a high school diploma.

SEC. 503. GRANTS TO ELIGIBLE ENTITIES FOR COMMUNITY COLLEGE REFORM.

  (a) Program Authorization.--
          (1) Grants authorized.--
                  (A) In general.--Subject to paragraph (2), from the 
                amount appropriated to carry out this section, the 
                Secretary, in coordination with the Secretary of Labor, 
                shall award grants to eligible entities, on a 
                competitive basis, to establish and support programs 
                described in subparagraph (B) at eligible entities 
                described in subparagraphs (A) through (D) of section 
                502(a)(3).
                  (B) Programs.--The programs to be established and 
                supported with grants under subparagraph (A) (and 
                carried out through activities described in subsection 
                (f)) shall be programs--
                          (i) that are--
                                  (I) innovative programs; or
                                  (II) programs of demonstrated 
                                effectiveness, based on the evaluations 
                                of similar programs funded by the 
                                Department of Education or the 
                                Department of Labor, or other research 
                                of similar programs; and
                          (ii) that lead to the completion of a 
                        postsecondary degree, certificate, or industry-
                        recognized credential leading to a skilled 
                        occupation in a high-demand industry.
          (2) Limitation.--For each fiscal year for which funds are 
        appropriated to carry out this section, the aggregate amount of 
        the grants awarded to eligible entities that are States, or 
        consortia that include a State, shall be not more than 50 
        percent of the total amount appropriated under section 
        501(b)(1) for such fiscal year.
          (3) Prohibition.--The Secretary shall not award a grant to an 
        eligible entity for the same activities that are being 
        supported by other Federal funds.
  (b) Grant Duration and Amount.--
          (1) Duration.--A grant under this section shall be awarded to 
        an eligible entity for a 4-year period, except that if the 
        Secretary determines that the eligible entity has not made 
        demonstrable progress in achieving the benchmarks developed 
        pursuant to subsection (g) by the end of the third year of such 
        grant period, no further grant funds shall be made available to 
        the entity after the date of such determination.
          (2) Amount.--The minimum amount of a total grant award under 
        this section over the 4-year period of the award shall be 
        $750,000.
  (c) Priority.--In awarding grants under this section, the Secretary 
shall give priority to eligible entities that--
          (1) enter into partnerships with--
                  (A) philanthropic or research organizations with 
                expertise in meeting the goals of this section;
                  (B) businesses or industry or sector partnerships 
                that--
                          (i) design and implement programs described 
                        in subsection (a)(1)(B);
                          (ii) pay a portion of the costs of such 
                        programs; and
                          (iii) agree to collaborate with one or more 
                        eligible entities to hire individuals who have 
                        completed a particular postsecondary degree, 
                        certificate, or credential program; or
                  (C) labor organizations that provide technical 
                expertise for occupationally specific education 
                necessary for an industry-recognized credential leading 
                to a skilled occupation in a high-demand industry; or
          (2) are institutions of higher education eligible for 
        assistance under title III or V of the Higher Education Act of 
        1965, or consortia that include such an institution.
  (d) Federal and Non-Federal Share; Supplement, Not Supplant.--
          (1) Federal share.--The amount of the Federal share under 
        this section for a fiscal year shall be not greater than \1/2\ 
        of the costs of the programs, services, and policies described 
        in subsection (f) that are carried out under the grant.
          (2) Non-federal share.--
                  (A) In general.--The amount of the non-Federal share 
                under this section for a fiscal year shall be not less 
                than \1/2\ of the costs of the programs, services, and 
                policies described in subsection (f) that are carried 
                out under the grant. The non-Federal share may be in 
                cash or in kind, and may be provided from State 
                resources, local resources, contributions from private 
                organizations, or a combination thereof.
                  (B) Financial hardship waiver.--The Secretary may 
                waive or reduce the non-Federal share of an eligible 
                entity that has submitted an application under this 
                section if the entity demonstrates a need for such 
                waiver or reduction due to extreme financial hardship, 
                as defined by the Secretary by regulation.
          (3) Supplement, not supplant.--The Federal and non-Federal 
        shares required by this section shall be used to supplement, 
        and not supplant, State and private resources that would 
        otherwise be expended to establish and support programs 
        described in subsection (a)(1)(B) at eligible entities.
  (e) Application.--An eligible entity seeking to receive a grant under 
this section shall submit to the Secretary an application at such time, 
in such manner, and containing such information as the Secretary may 
require. Such application shall describe the programs under subsection 
(a)(1)(B) that the eligible entity will carry out using the grant 
funds, (including the programs, services, and policies under subsection 
(f)), including--
          (1) the goals of such programs, services, and policies;
          (2) how the eligible entity will allocate grant funds for 
        such programs, services, and policies;
          (3) how such programs, services, and policies, and the 
        resources of the eligible entity, will enable the eligible 
        entity to meet the benchmarks developed pursuant to subsection 
        (g), and how the eligible entity will track and report the 
        entity's progress in reaching such benchmarks;
          (4) how the eligible entity will use such programs, services, 
        and policies to establish quantifiable targets for improving 
        graduation rates and employment-related outcomes;
          (5) how the eligible entity will serve high-need populations 
        through such programs, services, and policies;
          (6) how the eligible entity will partner with industry or 
        sector partnerships in the State, the State public employment 
        service, and State or local workforce investment boards in 
        carrying out such programs, services, and policies;
          (7) an assurance that the eligible entity will share 
        information with the Learning and Earning Research Center 
        established under section 505(b), once such Center is 
        established;
          (8) an assurance that the eligible entity will participate in 
        the evaluation of such programs, services, and policies under 
        subsection (i); and
          (9) the potential for such programs, services, and policies 
        to be replicated at other institutions of higher education.
  (f) Uses of Funds.--An eligible entity receiving a grant under this 
section shall use the grant funds to carry out the programs described 
in subsection (a)(1)(B), which shall include at least 2 of the 
following activities:
          (1) Developing and implementing policies and programs to 
        expand opportunities for students at eligible entities 
        described in subparagraphs (A) through (D) of section 502(a)(3) 
        to earn bachelor's degrees by--
                  (A) facilitating the transfer of academic credits 
                between institutions of higher education, including the 
                transfer of academic credits for courses in the same 
                field of study; and
                  (B) expanding articulation agreements and guaranteed 
                transfer agreements between such institutions, 
                including through common course numbering and general 
                core curriculum.
          (2) Expanding, enhancing, or creating academic programs or 
        training programs, which shall be carried out with industry or 
        sector partnerships or in partnership with employers and may 
        include other relevant partners, that provide relevant job-
        skill training (including apprenticeships and worksite learning 
        and training opportunities) for skilled occupations in high-
        demand industries.
          (3) Providing student support services, including--
                  (A) intensive career and academic advising;
                  (B) labor market information and job counseling; and
                  (C) transitional job support, supportive services, or 
                assistance in connecting students with community 
                resources.
          (4) Creating workforce programs that provide a sequence of 
        education and occupational training that leads to industry-
        recognized credentials, including programs that--
                  (A) blend basic skills and occupational training that 
                lead to industry-recognized credentials;
                  (B) integrate developmental education curricula and 
                instruction with for-credit coursework toward degree or 
                certificate pathways; or
                  (C) advance individuals on a career path toward high-
                wage occupations in high-demand industries.
          (5) Building or enhancing linkages, including the development 
        of dual enrollment programs and early college high schools, 
        between--
                  (A) secondary education or adult education programs 
                (including programs established under the Carl D. 
                Perkins Career and Technical Education Act of 2006 and 
                title II of the Workforce Investment Act of 1998 (29 
                U.S.C. 9201 et seq.)); and
                  (B) eligible entities described in subparagraphs (A) 
                through (D) of section 502(a)(3).
          (6) Implementing other innovative programs, services, and 
        policies designed to--
                  (A) increase postsecondary degree, certificate, and 
                industry-recognized credential completion rates, 
                particularly with respect to groups underrepresented in 
                higher education, at eligible entities described in 
                subparagraphs (A) through (D) of section 502(a)(3); and
                  (B) increase the provision of training for students 
                to enter skilled occupations in high-demand industries.
          (7) Improving the timeliness of the process for creating 
        degree, certificate, and industry-recognized credential 
        programs at eligible entities described in subparagraphs (A) 
        through (D) of section 502(a)(3) that--
                  (A) reflect and respond to regional labor market 
                developments and trends;
                  (B) effectively address the workforce needs of 
                employers in the State; and
                  (C) are designed in consultation with such employers.
  (g) Benchmarks.--
          (1) In general.--Each eligible entity receiving a grant under 
        this section shall develop quantifiable benchmarks on the 
        following indicators (where applicable), to be approved by the 
        Secretary:
                  (A) Closing gaps in enrollment and completion rates 
                for--
                          (i) groups underrepresented in higher 
                        education; and
                          (ii) groups of students enrolled at the 
                        eligible entity (or at an institution of higher 
                        education under the jurisdiction of the 
                        eligible entity, in the case of an entity that 
                        is not an institution) who have the lowest 
                        enrollment and completion rates.
                  (B) Addressing local and regional workforce needs.
                  (C) Establishing articulation agreements between two-
                year and four-year public institutions of higher 
                education within a State.
                  (D) Improving comprehensive employment and 
                educational outcomes for postsecondary education and 
                training programs, including--
                          (i) student persistence from one academic 
                        year to the following academic year;
                          (ii) the number of credits students earn 
                        toward a certificate or an associate's degree;
                          (iii) the number of students in developmental 
                        education courses who subsequently enroll in 
                        credit bearing coursework;
                          (iv) transfer of general education credits 
                        between institutions of higher education, as 
                        applicable;
                          (v) completion of industry-recognized 
                        credentials or associate's degrees to work in 
                        skilled occupations in high-demand industries;
                          (vi) transfers to four-year institutions of 
                        higher education; and
                          (vii) job placement related to skills 
                        training or associate's degree completion.
          (2) Report.--The eligible entity receiving such a grant shall 
        annually measure and report to the Secretary the progress of 
        the entity in achieving the benchmarks developed pursuant to 
        paragraph (1).
  (h) Provision of Transfer of Credit Information in Community College 
Course Schedules.--To the maximum extent practicable, each community 
college receiving a grant under this section shall include in each 
electronic and printed publication of the college's course schedule, in 
a manner of the college's choosing, for each course listed in the 
college's course schedule, whether such course is transferable for 
credit toward the completion of a 4-year baccalaureate degree at a 
public institution of higher education in the State in which the 
college is located.
  (i) Evaluation.--The Secretary shall allocate not more than two 
percent of the funds appropriated under section 501(b)(1) to the 
Institute of Education Sciences to conduct evaluations, ending not 
later than January 30, 2014, that--
          (1) assess the effectiveness of the grant programs carried 
        out by each eligible entity receiving such a grant in--
                  (A) improving postsecondary education completion 
                rates (disaggregated by age, race, ethnicity, sex, 
                income, and disability);
                  (B) improving employment-related outcomes for 
                students served by such programs;
                  (C) serving high-need populations; and
                  (D) building or enhancing working partnerships with 
                the State public employment service or State or local 
                workforce investment boards; and
          (2) include any other information or assessments the 
        Secretary may require.
  (j) Report.--The Secretary shall submit to the Committee on Health, 
Education, Labor, and Pensions of the Senate and the Committee on 
Education and Labor of the House of Representatives an annual report on 
grants awarded under this section, including--
          (1) the amount awarded to each eligible entity under this 
        section;
          (2) a description of the activities conducted by each 
        eligible entity receiving a grant under this section; and
          (3) a summary of the results of the evaluations submitted to 
        the Secretary under subsection (i) and the progress each 
        eligible entity made toward achieving the benchmarks developed 
        under subsection (g).

SEC. 504. GRANTS TO ELIGIBLE STATES FOR COMMUNITY COLLEGE PROGRAMS.

  (a) Program Authorization.--From the amount appropriated to carry out 
this section, the Secretary, in coordination with the Secretary of 
Labor, shall award grants to eligible States, on a competitive basis, 
to implement the systematic reform of community colleges located in the 
State by carrying out programs, services, and policies that 
demonstrated effectiveness under the evaluation described in section 
503(i).
  (b) Eligible State.--In this section, the term ``eligible State'' 
means a State that demonstrates to the Secretary in the application 
submitted pursuant to subsection (e) that the State--
          (1) has a plan under section 782 of the Higher Education Act 
        of 1965 to increase the State's rate of persistence in and 
        completion of postsecondary education that takes into 
        consideration and involves community colleges located in such 
        State;
          (2) has a statewide longitudinal data system that includes 
        data with respect to community colleges;
          (3) has an articulation agreement pursuant to section 486A of 
        the Higher Education Act of 1965 (20 U.S.C. 1093a);
          (4) is in compliance with section 137 of such Act (20 U.S.C. 
        1015f); and
          (5) meets any other requirements the Secretary may require.
  (c) Grant Duration; Renewal.--A grant awarded under this section 
shall be awarded to an eligible State for a 6-year period, except that 
if the Secretary determines that the eligible State has not made 
demonstrable progress in achieving the benchmarks developed pursuant to 
subsection (g) by the end of the third year of the grant period, no 
further grant funds shall be made available to the entity after the 
date of such determination.
  (d) Federal and Non-Federal Share; Supplement, Not Supplant.--
          (1) Federal share.--The amount of the Federal share under 
        this section for a fiscal year shall be not greater than \1/2\ 
        of the costs of the reform described in subsection (f) that is 
        carried out with the grant.
          (2) Non-federal share.--
                  (A) In general.--The amount of the Non-Federal share 
                under this section for a fiscal year shall be not less 
                than \1/2\ of the costs of the reform described in 
                subsection (f) that is carried out with the grant. The 
                non-Federal share may be in cash or in kind, and may be 
                provided from State resources, local resources, 
                contributions from private organizations, or a 
                combination thereof.
                  (B) Financial hardship waiver.--The Secretary may 
                waive or reduce the non-Federal share of an eligible 
                State that has submitted an application under this 
                section if the State demonstrates a need for such 
                waiver or reduction due to extreme financial hardship, 
                as defined by the Secretary by regulation.
          (3) Supplement, not supplant.--The Federal and non-Federal 
        share required by this section shall be used to supplement, and 
        not supplant, State and private resources that would otherwise 
        be expended to carry out the systematic reform of community 
        colleges in a State.
  (e) Application.--An eligible State desiring to receive a grant under 
this section shall submit to the Secretary an application at such time, 
in such manner, and containing such information as the Secretary may 
require. Such application shall describe the programs, service, and 
policies to be used by the State to achieve the systematic reform 
described in subsection (f), including--
          (1) the goals of such programs, services, and policies;
          (2) how the State will allocate grant funds to carry out such 
        programs, services, and policies, including identifying any 
        State or private entity that will administer such programs, 
        services, and policies;
          (3) how such programs, services, and policies will enable the 
        State to--
                  (A) meet the benchmarks developed pursuant to 
                subsection (g), and how the State will track and report 
                the State's progress in reaching such benchmarks; and
                  (B) benefit students attending all community colleges 
                within the State;
          (4) how the State will use such programs, services, and 
        policies to establish quantifiable targets for improving 
        graduation rates and employment-related outcomes;
          (5) how the State will serve high-need populations through 
        such programs, services, and policies;
          (6) how the State will partner with the State public 
        employment service and State or local workforce investment 
        boards in carrying out such programs, services, and policies;
          (7) how the State will evaluate such programs, services, and 
        policies, which may include participation in national 
        evaluations; and
          (8) how the State will involve community colleges and 
        community college faculty in the planning, implementation, and 
        evaluation of such programs, services, and policies.
  (f) Uses of Funds.--An eligible State receiving a grant under this 
section shall use the grant funds to implement the systematic reform of 
community colleges located in the State by carrying out programs, 
services, and policies that the Secretary has determined to have 
demonstrated effectiveness based on the results of the evaluation 
described in section 503(i). States shall allocate not less than 90 
percent of such grant funds to community colleges within the State.
  (g) Benchmarks.--
          (1) In general.--Each eligible State receiving a grant under 
        this section shall, in consultation with the Secretary, develop 
        quantifiable benchmarks on the indicators identified in section 
        503(f)(1).
          (2) Progress.--An eligible State receiving such a grant shall 
        annually measure and report to the Secretary progress in 
        achieving the benchmarks developed pursuant to paragraph (1).
  (h) Report.--
          (1) Reports to the secretary.--Each eligible State receiving 
        a grant under this section shall annually submit to the 
        Secretary and the Secretary of Labor a report on such grant, 
        including--
                  (A) a description of the systematic reform carried 
                out by the State using such grant; and
                  (B) the outcome of such reform, including the State's 
                progress in achieving the benchmarks developed under 
                subsection (g).
          (2) Reports to congress.--Not later than 6 months after the 
        end of the grant period, the Secretary shall submit to the 
        Committee on Health, Education, Labor, and Pensions of the 
        Senate and the Committee on Education and Labor of the House of 
        Representatives a summary of the reports submitted under 
        paragraph (1) with respect to such grant period.
  (i) Sense of Congress.--It is the sense of Congress that--
          (1) community colleges play an important role in preparing 
        and training students seeking to enter the workforce;
          (2) it is vital that all States have access to the resources 
        and assistance needed to compete for grants authorized under 
        this section; and
          (3) in executing the grant program authorized under this 
        section, the Secretary will make available any and all 
        assistance, guidance, and support to States seeking to compete 
        for grants authorized under this section and will work to 
        ensure that such grants are distributed in a fair and equitable 
        manner.

SEC. 505. NATIONAL ACTIVITIES.

  (a) Open Online Education.--From the amount appropriated to carry out 
this section, the Secretary is authorized to make competitive grants 
to, or enter into contracts with, institutions of higher education, 
philanthropic organizations, and other appropriate entities to develop, 
evaluate, and disseminate freely-available high-quality online 
training, high school courses, and postsecondary education courses. 
Entities receiving funds under this subsection shall ensure that 
electronic and information technology activities meet the access 
standards established under section 508 of the Rehabilitation Act of 
1973 (29 U.S.C. 794d).
  (b) Learning and Earning Research Center.--
          (1) In general.--From the amount appropriated to carry out 
        this section, the Director of the Institute of Education 
        Sciences is authorized to award a grant to, or enter into a 
        contract with, an organization with demonstrated expertise in 
        the research and evaluation of community colleges to establish 
        and operate the Learning and Earning Research Center (in this 
        section referred to as the ``Center'').
          (2) Grant term.--The grant or contract awarded under this 
        section shall be awarded for a period of not more than 4 years.
          (3) Board.--The Center shall have an independent advisory 
        board of 9 individuals who--
                  (A) are appointed by the Secretary, based on 
                recommendations from the organization receiving the 
                grant or contract under this section; and
                  (B) who have demonstrated expertise in--
                          (i) data collection;
                          (ii) data analysis; and
                          (iii) econometrics, postsecondary education, 
                        and workforce development research.
          (4) Center activities.--The Center shall--
                  (A) develop--
                          (i) peer-reviewed metrics to help consumers 
                        make sound education and training choices, and 
                        to help students, workers, schools, businesses, 
                        researchers, and policymakers assess the 
                        effectiveness of community colleges, and 
                        courses of study at such colleges, in meeting 
                        education and employment objectives and serving 
                        groups that are underrepresented in 
                        postsecondary education;
                          (ii) common metrics and data elements to 
                        measure the education and employment outcomes 
                        of students attending community colleges;
                  (B) coordinate with the Institute of Education 
                Sciences and States receiving a grant under subsection 
                (c) to develop--
                          (i) standardized data elements, definitions, 
                        and data-sharing protocols to make it possible 
                        for data systems related to postsecondary 
                        education to be linked and interoperable, and 
                        for best practices to be shared among States;
                          (ii) standards and processes for facilitating 
                        sharing of data in a manner that safeguards 
                        student privacy; and
                  (C) develop and make widely available materials 
                analyzing best practices and research on successful 
                postsecondary education and training efforts;
                  (D) make the data and metrics developed pursuant to 
                subparagraph (A) available to the public in a 
                transparent, user-friendly format that is accessible to 
                individuals with disabilities; and
                  (E) consult with representatives from States with 
                respect to the activities of the Center.
  (c) State Systems.--
          (1) In general.--From the amount appropriated to carry out 
        this section, the Secretary is authorized to award grants to 
        States or consortia of States to establish cooperative 
        agreements to develop, implement, and expand interoperable 
        statewide longitudinal data systems that--
                  (A) collect, maintain, disaggregate (by institution, 
                income, race, ethnicity, sex, disability, and age), and 
                analyze student data from community colleges, including 
                data on the programs of study and education and 
                employment outcomes for particular students, tracked 
                over time; and
                  (B) can be linked to other data systems, as 
                applicable, including elementary and secondary 
                education and workforce data systems.
          (2) Supplement, not supplant.--Funds appropriated to carry 
        out this subsection shall be used to supplement, and not 
        supplant, other Federal and State resources that would 
        otherwise be expended to carry out statewide longitudinal data 
        systems, including funding appropriated for State Longitudinal 
        Data Systems in the American Recovery and Reinvestment Act of 
        2009 (Public Law 111-5; 123 Stat. 115).
          (3) Privacy and access to data.--
                  (A) In general.--Each State or consortia that 
                receives a grant under this subsection or any other 
                provision of this Act shall implement measures to--
                          (i) ensure that the statewide longitudinal 
                        data system under this subsection and any other 
                        data system the State or consortia is operating 
                        for the purposes of this Act meet the 
                        requirements of section 444 of the General 
                        Education Provisions Act (20 U.S.C. 1232g) 
                        (commonly known as the ``Family Educational 
                        Rights and Privacy Act of 1974'');
                          (ii) limit the use of information in any such 
                        data system by governmental agencies in the 
                        State, including State agencies, State 
                        educational authorities, local educational 
                        agencies, community colleges, and institutions 
                        of higher education, to education and workforce 
                        related activities under this Act or education 
                        and workforce related activities otherwise 
                        permitted by Federal or State law;
                          (iii) prohibit the disclosure of personally 
                        identifiable information except as permitted 
                        under section 444 of the General Education 
                        Provisions Act and any additional limitations 
                        set forth in State law;
                          (iv) keep an accurate accounting of the date, 
                        nature, and purpose of each disclosure of 
                        personally identifiable information in any such 
                        data system, a description of the information 
                        disclosed, and the name and address of the 
                        person, agency, institution, or entity to whom 
                        the disclosure is made, which accounting shall 
                        be made available on request to parents of any 
                        student whose information has been disclosed;
                          (v) notwithstanding section 444 of the 
                        General Education Provisions Act, require any 
                        non-governmental party obtaining personally 
                        identifiable information to sign a data use 
                        agreement prior to disclosure that--
                                  (I) prohibits the party from further 
                                disclosing the information;
                                  (II) prohibits the party from using 
                                the information for any purpose other 
                                than the purpose specified in the 
                                agreement; and
                                  (III) requires the party to destroy 
                                the information when the purpose for 
                                which the disclosure was made is 
                                accomplished;
                          (vi) maintain adequate security measures to 
                        ensure the confidentiality and integrity of any 
                        such data system, such as protecting a student 
                        record from identification by a unique 
                        identifier;
                          (vii) where rights are provided to parents 
                        under this clause, provide those rights to the 
                        student instead of the parent if the student 
                        has reached the age of 18 or is enrolled in a 
                        postsecondary educational institution; and
                          (viii) ensure adequate enforcement of the 
                        requirements of this paragraph.
                  (B) Use of unique identifiers.--It shall be unlawful 
                for any Federal, State, or local governmental agency 
                to--
                          (i) use the unique identifiers employed in 
                        such data systems for any purpose other than as 
                        authorized by Federal or State law; or
                          (ii) deny any individual any right, benefit, 
                        or privilege provided by law because of such 
                        individual's refusal to disclose the 
                        individual's unique identifier.
  (d) Report.--The Secretary shall submit to the Committee on Health, 
Education, Labor, and Pensions of the Senate and the Committee on 
Education and Labor of the House of Representatives an annual report on 
the amounts awarded to entities receiving grants or contracts under 
this section, and the activities carried out by such entities under 
such grants and contracts.

                               I. Purpose

    The purpose of H.R. 3221, the Student Aid and Fiscal 
Responsibility Act of 2009 is to reform the federal student 
loan program, provide for modernization, renovation and repair 
of public school facilities, enhance early learning, and 
strengthen community colleges.

                          II. Committee Action


                             110TH CONGRESS

Committee on Education and Labor Hearing: ``Investing in Early 
        Education: Paths To Improving Children's Success''

    On January 23, 2008, the Committee on Education and Labor 
held a hearing in Washington, D.C., entitled ``Investing in 
Early Education: Paths to Improving Children's Success.'' The 
hearing examined the need for expanding access to affordable 
high-quality early education opportunities through federal 
investments as part of improving student success in elementary 
school and beyond. Panelists testified to the science of early 
brain development and the experiences in the first five years 
of life that foster healthy development and academic success, 
the research on high quality pre-kindergarten, the state and 
local challenges to building a high quality early learning 
system, and the business community's interest in investing in 
early childhood education. The following witnesses testified 
before the Committee: Deborah Phillips, Ph.D., Professor of 
Psychology Georgetown University, Washington, D.C.; Kathleen 
Priestley, Early Education Coordinator for the City of Orange 
School District, Orange, NJ; Elisabeth Chun, Executive 
Director, Good Beginnings Alliance, Honolulu, Hawaii; Charles 
Kolb, President, Committee on Economic Development, Washington, 
D.C., Eric Karolak, Ph.D., Executive Director, Early Care and 
Education Consortium, Washington, D.C.; Ron Haskins, Ph.D., 
Senior Fellow, Economic Studies, Brookings Institution, 
Washington, D.C.

Full Committee hearing on ``Modern Public School Facilities: Investing 
        in the Future''

    On Wednesday, February 13, 2008, the Committee on Education 
and Labor held a hearing in Washington, D.C., on ``Modern 
Public School Facilities: Investing in the Future.'' The 
purpose of the hearing was to highlight the poor quality of 
public school buildings frequently found throughout the United 
States, particularly in low-income areas, and the importance of 
federal investment in public school buildings.

Introduction of the ``21st Century High-Performing Public School 
        Facilities Act''

    On Thursday, July 12, 2007, Representatives Ben Chandler 
(D-KY), George Miller (D-CA), and Dale Kildee (D-MI) introduced 
H.R. 3021, the 21st Century High-Performing Public School 
Facilities Act, a bill to direct the Secretary of Education to 
make grants and low-interest loans to local educational 
agencies for the construction, modernization, or repair of 
public kindergarten, elementary, and secondary educational 
facilities, and for other purposes. The House of 
Representatives passed H.R. 3021 by a vote of 250-164 with all 
Democrats present and 27 Republicans voting in favor. The bill 
was referred to the Senate Committee on Health, Education, 
Labor and Pensions.

Related legislative action

    On September 26, 2008, the House passed H.R. 7110, the Job 
Creation and Unemployment Relief Act of 2008, introduced by 
Representative David Obey (D-WI), Chairman of the 
Appropriations Committee. H.R. 7110 appropriated $3 billion for 
public school modernization, renovation and repair, essentially 
as described in Title I of H.R. 3021.
    On January 28, 2009, at the beginning of the 111th 
Congress, the House passed H.R. 1, the American Recovery and 
Reinvestment Act, also introduced by Chairman Obey. H.R. 1 
appropriated $14 billion for public school modernization, 
renovation and repair, again, essentially as described in Title 
I of H.R. 3021. On February 12, 2009, the House passed the 
Conference Report on H.R. 1, which did not include dedicated 
funds for public school modernization, renovation and repair. 
However, Title XIV of the Conference Report, the State Fiscal 
Stabilization Fund, included $48.6 billion for states and local 
educational agencies, of which public school modernization, 
renovation and repair (including modernization, renovation and 
repair that complies with a recognized green building 
standards) is an authorized use.

                             111TH CONGRESS

Committee on Education and Labor Hearing: ``The Importance of Early 
        Childhood Development.''

    On March 17, 2009, the Committee on Education and Labor 
held a hearing in Washington, D.C., entitled ``The Importance 
of Early Childhood Development.'' The hearing examined the 
well-being of young children, the needs of children and 
families, and state efforts to undertake comprehensive birth to 
age five approaches to support early learning and development. 
Panelists testified regarding the high-cost of quality early 
education and that often the children who would benefit from 
these high-quality early childhood opportunities are the least 
likely to access such services. Panelists underscored state and 
local resources challenges to building high quality early 
learning systems, emphasizing the proven success seen in some 
localities when such infrastructures have been established and 
the important role private organizations and community 
interests play in the continued struggle to provide high-
quality early childhood opportunities. The following witnesses 
testified before the Committee: Harriet Meyer, President, Ounce 
of Prevention Fund, Chicago, IL; Jessie Rasmussen, Vice 
President, Buffett Early Childhood Fund, Omaha, NE; James 
Redmon, Executive Director, Kansas Children's Cabinet and Trust 
Fund, Topeka, KS; Holly Robinson, Ph.D, Commissioner, Georgia 
Department of Early Care and Learning, Atlanta, GA; Don Soifer, 
Executive Vice President, Lexington Institute, Arlington, VA; 
Helene Stebbins, Project Coordinator, National Center on 
Children in Poverty, New York, NY.

Subcommittee on Early Childhood, Elementary, and Secondary Education 
        hearing: ``Improving Early Childhood Development Policies and 
        Practices''

    On March 19, 2009, the Subcommittee on Early Childhood, 
Elementary and Secondary Education held a hearing in 
Washington, D.C. entitled, ``Improving Early Childhood 
Development Policies and Practices.'' The hearing discussed 
barriers families face in accessing quality early education and 
development programs, and state and other efforts to address 
such issues. The panelists discussed state and local efforts to 
improve birth to age five learning opportunities, such as state 
efforts to maintain quality control standards, efforts to reach 
the most at risk families and children, as well as programs to 
provide scholarship supports and wage supplements to improve 
the workforce of educators. Witnesses underscored the barriers 
states, local communities, and disadvantaged children and 
families face in developing and accessing such programs. The 
following witnesses testified before the Subcommittee: Harriet 
Dichter, Deputy Secretary, Office of Child Development and 
Early Learning, Harrisburg, PA; Sue Russell, President, Child 
Care Services Association, Chapel Hill, NC; Gina Adams, Senior 
Fellow, Urban Institute, Center on Labor, Human Services and 
Population, Washington, D.C.; Lillian Lowery, Ph.D., Secretary, 
Delaware Department of Education, Dover, DE.

The ``21st Century Green High-Performing Public School Facilities Act''

    On Thursday, April 30, 2009, Representatives Ben Chandler 
(D-KY), George Miller (D-CA), Dale Kildee (D-MI), and Dave 
Loebsack (D-IA) introduced H.R. 2187, the 21st Century Green 
High-Performing Public School Facilities Act. This bill, which 
is very similar to H.R. 3021, directs the Secretary of 
Education to make grants to local educational agencies for the 
modernization, renovation, or repair of public early learning, 
kindergarten, elementary, and secondary educational facilities, 
and for other purposes.\1\ On Wednesday, May 6, 2009, the 
Committee considered H.R. 2187 in legislative session, and 
reported the bill favorably, as amended, to the House of 
Representatives by a vote of 31-14. The House of 
Representatives passed H.R. 2187 by a vote of 275-155 with 24 
Republicans voting in favor. The bill was referred to the 
Senate Committee on Health, Education, Labor and Pensions.
---------------------------------------------------------------------------
    \1\Other original cosponsors of the bill include: Representatives 
Robert E. Andrews, Joe Courtney, Raul M. Grijalva, Phil Hare, Mazie K. 
Hirono, Rush Holt, Pedro R. Pierluisi, Jared Polis, Gregorio Sablan, 
John F. Tierney, Paul D. Tonko, Lynn C. Woolsey, and David Wu.
---------------------------------------------------------------------------

Full committee hearing on ``The Obama Administration's Education 
        Agenda''

    On Wednesday, May 20, 2009, the Committee on Education and 
Labor held a hearing in Washington, D.C. on the Obama 
Administration's Education Agenda. Education Secretary, Arne 
Duncan, testified before the House Education and Labor 
Committee about President Obama's agenda for transforming 
American education. The purpose of the hearing was to highlight 
the President's budget proposal for early education, K-12 
education, and higher education.

Full committee hearing on ``Increasing Student Aid through Loan 
        Reform''

    On Thursday, May 21, 2009, the Committee on Education and 
Labor held a hearing entitled ``Increasing Student Aid through 
Loan Reform.'' The purpose of the hearing was to discuss 
proposals to reform the student aid system to ensure that 
Federal student aid is efficient, reliable, and meaningful for 
our nation's students and families and to identify ways to use 
reform efforts to increase benefits to students, especially 
through increased grant aid. The following witnesses testified 
before the Committee: Robert Shireman, Deputy Under Secretary, 
U.S. Department of Education; Anna M. Griswold, Assistant Vice 
President for Undergraduate Education and Executive Director 
for Student Aid, The Pennsylvania State University; John (Jack) 
F. Remondi, Vice Chairman and Chief Financial Officer, Sallie 
Mae; Dr. Charles Reed, Chancellor, The California State 
University; and Rene Drouin, President and CEO, New Hampshire 
Higher Education Assistance Foundation (NHHEAF); Dr. Richard 
Vetter, Professor of Economics, Ohio University; and 
Christopher Chapman, President and Chief Executive Officer, 
Access Group.

Introduction of the Student Aid and Fiscal Responsibility Act

    On Wednesday, July 15, 2009, Chairman George Miller, along 
with Representatives Robert E. Andrews (D-NJ), Bishop (D-NY), 
Courtney (D-CT), Davis (D-CA), Eshoo (D-CA), Fudge (D-OH), 
Grijalva (D-AZ), Hare (D-IL), Hinojosa (D-TX), Hirono (D-HI), 
Holt (D-NJ), Kildee (D-MI), Kucinich (D-OH), Loebsack (D-IA), 
Payne (D-NJ), Sablan (D-MP), Scott (D-VA), Sestak (D-PA), Shea-
Porter (D-NH), Tierney (D-MA), Woolsey (D-CA), Wu (D-OR) 
introduced H.R. 3221, the Student Aid and Fiscal Responsibility 
Act of 2009, a bill to amend the Higher Education Act of 1965, 
and for other purposes.

Full committee markup of H.R. 3221

    On Tuesday, July 21, 2009, the Committee on Education and 
Labor considered H.R. 3221 in legislative session, and reported 
the bill favorably, as amended, to the House of 
Representatives, by a vote of 30-17. Chairman Miller offered an 
amendment in the nature of a substitute.
    The amendment in the nature of a substitute contained minor 
technical changes and the following changes to H.R. 3221:
           Strikes language in section 215, from the 
        introduced bill that would have eliminated graduate 
        student eligibility for the Subsidized Stafford loan 
        program;
           Strikes section 123, which amended the 
        Social Security Allowances in the federal needs 
        analysis formula;
           Reduces funding for K-12 modernization, 
        renovation, and repair from $5 billion over two years 
        to $4.1 billion over two years (for chapter 1 of 
        subtitle III there are authorized $2,020,000,000 for 
        each of fiscal years 2010 and 2011 and for chapter 2 of 
        subtitle III $30,000,000 for each of fiscal years 2010 
        and 2011);
           Changes the variable rate for Subsidized 
        Stafford loans from the introduced bill level of the 
        91-day T-bill +2.3 percent to the 91-day T-bill plus 
        2.5 percent;
           Encourages the Secretary of Education, in 
        consultation with the Secretary of Labor to work with 
        recipients of K-12 modernization, renovation, and 
        repair funds to promote appropriate pre-apprenticeship 
        opportunities;
           In Title IV (Early Learning Challenge Fund)
                   Changes funding from $1 billion 
                per year for 10 years to $1 billion per year 
                for 8 years.
                   Changes the 2% set-aside for 
                Federal administration to a cap.
                   Changes the 3% set-aside for 
                Federal research activities to a cap.
                   Changes Maintenance of Effort 
                requirements from FY 2009 to FY 2006.
                  Changes state match related to 
                expanding access from 50% to 20%.
                   Includes provisions to ensure 
                state plans adequately address the needs of 
                children with limited English proficiency.
                   Allows in-kind contributions for 
                facilities development, including technical 
                assistance, to be counted toward state match.
           In Title V (American Graduation Initiative):
                   Directs the Secretary of 
                Education, in consultation with the Secretary 
                of Labor, to promote opportunities for 
                participants in pre-apprenticeship programs to 
                gain employment experience
                   Modifies the definition of 
                eligible institutions to only include 4-year 
                public institutions that offer two-year 
                degrees, use funds for associate degree and 
                certificate level activities, and that are not 
                located near a community college, allowing for 
                the participation of all public 4-year 
                institutions to participate in partnership with 
                community colleges;
                   Allows in-kind contributions for 
                facilities development (including technical 
                assistance) to be counted toward state match; 
                and
           Adds a privacy provision that covers the 
        bill, limiting the use of information in the state-wide 
        data systems to use by governmental agencies in the 
        state and for those education and workforce activities 
        authorized by the bill, or otherwise permitted by 
        federal or state law.

                        III. Summary of the Bill


                                PURPOSE

    The purpose of H.R. 3221, the Student Aid and Fiscal 
Responsibility Act of 2009, is to provide for reconciliation 
pursuant to S. Con. Res. 13, the concurrent resolution on the 
budget for fiscal year 2010, to invest in students and 
families; increase college access and completion rates; invest 
in elementary and secondary school and community college 
modernization, renovation and repair projects; and invest early 
learning.

Increased funding for Pell grant scholarships

    The Student Aid and Fiscal Responsibility Act of 2009 will 
provide mandatory funds to reach the President's goal of a 
maximum Pell Grant award of $5,550 in 2010. In future years, 
the maximum award would automatically increase by an amount 
equivalent to the Consumer Price Index (CPI) plus 1%. At this 
rate, the Pell maximum is estimated to increase to $6,900 by 
2019. This legislation will build on the mandatory investment 
in Pell enacted as in the College Cost Reduction and Access Act 
of 2007 and set the maximum awards on an increasing trajectory.

 


Increasing College Access and Completion

    In addition to increasing funding for Pell Grant 
scholarships, this legislation establishes the College Access & 
Completion Innovation Fund. The purpose of this fund is to: (a) 
continue college access activities that are currently funded 
through College Access Challenge Grant (or Section 781 of the 
Higher Education Act of 1965) and from student loan proceeds to 
state agencies and nonprofit organizations; (b) promote state 
higher education planning, innovation, and systems of data and 
accountability; (c) support innovation through national 
activities to expand college access and increase degrees and 
certificate completion rates; and (d) conduct rigorous 
evaluation of the funded programs.
    Additionally, the Fund will provide competitive grants to 
States to establish programs that increase financial literacy 
and encourage college completion. Funding under this program 
can be used to develop state-wide access and completion plans 
and statewide data systems. Priority will be given to States 
partnering with philanthropic organizations or state and non-
profit guaranty agencies to carry out grant activities. 
Additionally, 1/3 of the state funds must be used for 
activities that benefit students enrolled at junior or 
community colleges, two-year public institutions, or two-year 
programs of instruction at four-year public institutions.
    The Access and Completion Innovation Fund would also 
provide funding directly from the Secretary to institutions and 
organizations working toward closing gaps in attainment and 
completion, as well as provide the opportunity to develop two-
year programs providing supplemental financial aid in a way 
that would improve student outcomes while not reducing other 
available aid. Priorities for these grants will go towards 
entities or consortia with proven experience in serving 
populations traditionally underrepresented in higher education 
or those that have this goal as a primary purpose, to those 
public institutions that do not predominantly award bachelor's 
degrees, and to those that include activities aimed at 
increasing STEM degree or certificate production. Also, the 
Secretary shall give priority to partnerships between 
institutions with high-degree production rates and those with 
low-degree production rates, in order to facilitate the 
transfer of best practices for increasing completion.
    Each entity receiving a grant under this section will be 
required to provide an annual report assessing their measurable 
progress in reaching the completion goals outlined in their 
initial grant plan submitted to the Secretary. The Secretary 
may also require additional evaluation standards as he 
determines are necessary. Furthermore, the Director of the 
Institute for Education Sciences will conduct a rigorous 
evaluation of all projects funded under this section in order 
to learn from these innovation projects in a tangible way that 
is useful for all entities engaged in this work.

Investing in Historically Black Colleges and Universities and Minority-
        Serving Institutions

    H.R. 3221 invests in Historically Black Colleges and 
Universities (HBCUs), Hispanic Serving Institutions (HSIs), 
Predominately Black Institutions (PBIs), Tribal Colleges and 
Universities (TCUs), Alaska Native and Native Hawaiian 
Institutions, institutions serving Asian American and Pacific 
Islanders and Native American non tribal serving institutions 
to ensure that students attending these institutions will not 
only enter college, but remain and graduate.

Student financial aid form simplification

    This legislation further simplifies the Free Application 
for Federal Student Aid (FAFSA) by reducing the number of 
questions that a family must answer to determine a student's 
financial aid eligibility. H.R. 3221 builds on the important 
work of the Congress in the Higher Education Opportunity Act, 
Pub.L. No. 110-315, by taking FAFSA simplification to the next 
important step: eliminating from the needs analysis the 
financial data not available from the applicant's tax form. The 
goal of FAFSA simplification is to make it possible to complete 
the financial aid application with nothing more than a copy of 
IRS Form 1040 or through importing data from the IRS. Under 
this legislation, the only applicants who would need to provide 
additional financial information are those who choose to do so 
to reduce their reported income in certain circumstances.
    H.R. 3221 would allow the Department to replace the six 
current asset questions with a single ``yes/no'' question that 
most applicants will be able to answer easily. Additionally, 
H.R. 3221 eliminates several items that applicants are asked to 
add to their income, such as child support payments received, 
military and clergy living allowances, and untaxed disability 
support. The only items remaining that are not on the tax form 
are items that applicants are allowed to subtract from their 
incomes. These include combat pay, child support payments made, 
and scholarship aid that had been included as income on the tax 
form.

Stafford loan reform

    This legislation will move all institutions of higher 
education in the country to the Direct Lending program by 2010, 
saving the federal government and taxpayers $87 billion dollars 
over the next 10 years. These savings will be used to reinvest 
in expanding educational opportunities for students and 
families and paying down the federal deficit. While the 
legislation directs the government to originate all student 
loans, it also ensures that there is a role for private 
industry in providing loan servicing. Moreover, it will ensure 
that State and local non-profit agencies, that meet quality and 
pricing standards, will participate in servicing through a 
minimum volume allocation of the loans of 100,000 borrowers. 
These reforms mean that student borrowers will have a reliable 
stream of funding to finance their college education, and can 
rely on quality loan servicing during repayment.

Student loan interest rates

    This legislation will make interest rates on subsidized 
student loans for undergraduate borrowers variable with a cap 
of 6.8 percent, beginning in 2012. The variable interest rate 
will be based on the 91-day T-bill plus 2.5 percent. This 
change will continue Congress's investment in keeping interest 
rates low for needy students and families by ensuring that 
students and families benefit from low market interest rates 
and protecting them during periods of high market interest 
rates. At current CBO estimates for interest rates on the 91-
day T-bill, the interest rate for federal subsidized Stafford 
loans would be 6.3 percent through 2015.

Revised special allowance calculation on existing federal loans

    Under current law, the government pays private sector 
lenders a subsidy known as the Special Allowance Payment (SAP), 
which is calculated based on a lender's cost of borrowing 
money. The index used as a proxy for the lender's cost of money 
is the 90-Day Commercial Paper rate (CP), which Congress 
intended to serve as a market-based measure. Credit market 
dislocations and the Federal Reserve's intervention in the 
capital markets has had a significant and unintended effect on 
CP rates. This title provides lenders the option of having 
their SAP payments calculated based on the 1-Month LIBOR rate, 
rather than the 90-Day Commercial Paper rate. Such a change 
will provide lenders with greater predictability in the 
underlying index, as well as ensure that the index reflects a 
market-based rate as Congress had intended.

Perkins reform

    H.R. 3221 reforms the Perkins loan program by providing 
participating schools an allotment of lending authority to make 
Perkins loans to students on their campuses. The funding for 
loans will be provided through the Direct Loan program, rather 
than through revolving loan funds at each school. This 
legislation maintains key features of the current Perkins 
program, including the discretion afforded financial aid 
officers in targeting Perkins loans to financially-needy 
students. It will greatly increase the number of campuses 
participating in the program and ensure that students' loans 
will retain the current interest rate of 5 percent. Six billion 
dollars in lending authority will be allocated to schools that 
wish to participate in the new Perkins Program: half of the 
funds will be allocated to institutions based on the unmet 
financial need among an institution's students, while the other 
half will be allocated to institutions based on the extent to 
which institutions provide low tuition or high levels of non-
Federal aid, as well as on the number of Pell grant recipients 
that graduate from the institution. As current Perkins Loan 
borrowers repay their loans, schools would remit the Federal 
share of those payments to the Department of Education. Schools 
would retain their own share of the revolving funds, as well as 
amounts sufficient to cover the costs of the various Perkins 
Loan forgiveness provisions.

Modernization, renovation, and repair of elementary and secondary 
        education public school facilities

    This legislation provides $4.1 billion to elementary and 
secondary schools over the next two fiscal years for 
modernization, renovation, and repair projects that create 
healthier, safer, and more energy-efficient teaching and 
learning climates. Title III, chapter 1 of H.R. 3221 
appropriates $2.02 billion for fiscal years 2010 and 2011 for 
school facilities. The bill ensures that school districts 
around the country will receive funds for much needed public 
school modernization, renovation, and repair projects to 
improve the teaching and learning climate, student and staff 
health, and safety, energy efficiency, and the environment. The 
bill directs the Secretary to reserve two percent of funds 
appropriated for chapter 1 for each fiscal year for assistance 
to the outlying areas and for payments to the Secretary of the 
Interior for assistance to Bureau-funded schools. The bill 
further directs the Secretary to reserve five percent of funds 
appropriated for chapter 1 for each fiscal year for assistance 
to local educational agencies serving geographic areas with 
significant economic distress and those recovering from a 
natural disaster.
    H.R. 3221 allocates to each State the same percentage of 
funds that the State receives under Title I, Part A of the 
Elementary and Secondary Education Act and allocates within 
States the same percentage to each school district that the 
school district receives under such part (except that no such 
school district will receive less than $5,000).
    The bill allows States to reserve one percent of their 
chapter 1 allocation for technical assistance and to develop a 
plan to create an online, publicly searchable statewide 
database of public school facility design, condition, 
modernization, renovation and repair needs, usage, utilization, 
energy use, and carbon footprint, and create voluntary 
guidelines for high-performing public school buildings.
    Funds under chapter 1 may be used for public school 
modernization, renovation, and repair, including repair to 
roofs, electrical, plumbing, sewage, stormwater runoff and 
lighting systems, heating, ventilation, and air-conditioning 
systems, windows, floors, ceilings, doors, including insulation 
and indoor air quality assessments. Funds may also be used to 
bring schools into compliance with fire, health, seismic and 
safety codes, including modernizations, renovations, and 
repairs that ensure that schools are prepared for emergencies. 
Funds may be used to comply with the Americans with 
Disabilities Act of 1990 and section 504 of the Rehabilitation 
Act of 1973. Additional uses include abatement, removal, or 
interim controls of asbestos, polychlorinated biphenyls, mold, 
or mildew; reduction of human exposure to lead-based hazards; 
reduction of classroom noise and environmental noise pollution; 
modernization, renovation, or repair to reduce the consumption 
of coal, electricity, land, natural gas, oil, or water; 
upgrading or installing educational technology infrastructure; 
modernization, renovation, or repairs of laboratory facilities, 
libraries, and career and technical education facilities; 
renewable energy generation and energy audits; other 
modernizations, renovations, or repairs that improve the 
teaching and learning climate, ensure the health and safety of 
students and staff, or make schools more energy efficient; or 
reduce class size; and required environmental remediation 
related to modernizations, renovations, or repairs described 
above.
    H.R. 3221 requires that funds be used for projects that 
meet one of four widely recognized green standards (Leadership 
in Energy and Environmental Design (LEED) Green Building Rating 
System, Energy Star, Collaborative for High Performance 
Schools, or Green Globes) or an equivalent State or local 
standard, which must include a verifiable method to demonstrate 
compliance. School districts must use the green requirement for 
a percentage of the funds (fifty percent in 2010 and seventy-
five percent in 2011) for projects that meet one of the green 
standards described above.
    In chapter 2, the bill provides $30 million for each of 
fiscal years 2010 and 2011 for public schools in the Gulf 
region in response to damages from Hurricane Katrina or 
Hurricane Rita. These funds are to be used for the same 
purposes as chapter 1 funds, but also may be used for new 
construction.
    The bill includes provisions to require local educational 
agencies to ensure that the bid process for any projects 
carried out through a contract ensures the maximum number of 
qualified bidders, including local, small, minority, women- and 
veteran-owned businesses, through full and open competition. 
Also, Davis-Bacon labor law protections apply to all funds 
received under this subtitle.
    The bill requires school districts to report publicly on 
educational, energy, and environmental benefits of projects, 
compliance with the green requirement, and the percentage of 
funds used for projects at low-income, charter and rural 
schools. States must compile these reports and submit them to 
the Secretary who shall, in turn, report to the House Committee 
on Education and Labor and the Senate Committee on Health, 
Education, Labor, and Pensions.
    The legislation requires the Secretary of Education, in 
consultation with the Secretary of Energy and Administrator of 
the Environmental Protection Agency, to disseminate best 
practices in school modernization, renovation, repair and 
construction of school facilities and to provide technical 
assistance to States and school districts concerning such best 
practices.
    The bill encourages the Secretary of Education, in 
consultation with the Secretary of Labor, to promote 
appropriate opportunities for participants in YouthBuild, Job 
Corps, junior or community college degree, or pre-
apprenticeship programs.
    H.R. 3221 establishes the Advisory Council on Green, High-
Performing Public School Facilities to advise the Secretary on 
the impact of green, high-performing schools on teaching and 
learning, health, energy costs, environmental impact, and other 
areas. Finally, the bill allows local educational agencies to 
encourage schools where modernization, renovation, or repair 
projects are undertaken to educate students about the project, 
including, as appropriate, the functioning of the project and 
its environmental, energy, sustainability, and other benefits.

Community college modernization and construction

    This legislation will authorize the Secretary to award 
grants to States to leverage and provide funds for the 
construction of new community college facilities, and the 
modernization, renovation, and repair of existing community 
college facilities necessary to improve instruction and better 
meet employer needs. Federal funds may be used to reduce the 
financing costs of construction projects (such as through the 
purchase of bond insurance or buying down interest rates on 
loans), providing matching funds to attract private donations 
of funds as part of a capital fundraising campaign, or 
capitalizing a revolving loan fund that a state could use, in 
turn, to make loans to community colleges to finance new 
construction or modernization projects. The legislation ensures 
that funding is used for facilities that are primarily used for 
instruction, research, or student housing and requires half of 
the funds be used for projects that meet green building 
standards.

Early Learning Challenge Fund

    The purpose of Title IV of H.R. 3221 is to fund competitive 
grants to states that will leverage standards reform and fund 
quality initiatives that will increase the number of 
disadvantaged children in high quality early learning programs 
and ensure more children reach kindergarten with the skills 
they need to succeed in school and in life.
    Funds are reserved for the joint administration of this 
title by the Secretary of Education and the Secretary of Health 
and Human Services. The Secretary of Education shall bear 
responsibility for obligating and disbursing funds and ensuring 
compliance with applicable law and administrative requirements, 
subject to an interagency agreement set forth by the 
secretaries that shall make clear the specific nature of this 
joint administration.
    This legislation provides $1 billion in each fiscal year 
from 2010 through 2017 for the Early Learning Challenge Fund. 
Up to 2 percent is reserved for Federal administration of the 
Fund and up to 3 percent is reserved for the national research 
activities described in section 405. One-quarter of one percent 
is reserved for a competitive grant program for Indian tribes 
to develop and implement school readiness plans. Of the 
remainder, the Secretary shall reserve up to 65% for Quality 
Pathway Grants in fiscal years 2010 through 2012, and the 
Secretary shall reserve up to 85 percent for Quality Pathway 
Grants in subsequent fiscal years. The remainder shall be 
allocated for Development Grants. For fiscal year 2013 and 
subsequent fiscal years, the Secretary has discretion to 
reallocate funds allocated for Development Grants to Quality 
Pathway Grants if needed based on the number and quality of 
applicants. Aggregate expenditures by the State and its 
political subdivisions on early learning programs and services 
may not be less than the level of expenditures for such 
programs and services for fiscal year 2006.

Quality Pathways Grants

    In awarding grants, the Secretary shall give priority to 
States that will use some or all of the funds allocated to them 
under the quality set-aside of the Child Care and Development 
Block Grant for the activities described in this Title. 
Priority is also provided for States that will commit to 
dedicating significant increases in coming years in State 
expenditures on early learning programs and services and to 
states that demonstrate efforts to build public-private 
partnerships that are designed to accomplish the purposes of 
this title.
    To be considered for a Quality Pathways Grant a State must 
submit an application to the Secretary that includes specific 
criteria. Among these criteria includes a description of the 
goals and benchmarks, including a baseline, the State will 
establish to lead to a greater percentage of disadvantaged 
children participating in higher quality early learning 
programs. In addition, States must include a description of how 
their system of early learning programs and services will 
include the following key components: not later than 12 months 
after receiving notice of an award of a grant, early learning 
and development standards that are developmentally appropriate 
for children birth through age 5, and include social, 
emotional, cognitive, and psychical development, and approaches 
to learning; a process to ensure State early learning and 
development standards are integrated into the instructional and 
programmatic practices of early learning programs and services; 
a program rating system; an oversight system for the program 
rating system; a process to support early learning programs 
integrating instructional and programmatic practices that 
include ongoing classroom based instructional assessments and 
are aligned with the curricula and early learning and 
development standards; a comprehensive plan for professional 
development of an effective and well-compensated early learning 
workforce; outreach strategy to parents and families; a 
coordinated system to facilitate screening, referral, and 
provision of services related to health, mental health, 
disability, and family support; a process for evaluating school 
readiness in children used to guide practice and improve 
programs, and a coordinated data infrastructure.
    The Secretary shall evaluate applications for Quality 
Pathways Grants based on the quality of the application, the 
priority factors, evidence of significant progress in 
establishing a system of early learning that includes the 
described key components, and the State's capacity to fully 
implement such a system.
    States awarded a Quality Pathways Grant must use at least 
65 percent of the grant for two or more of the following 
activities in order to improve the quality of early learning 
programs serving disadvantaged children: initiatives that 
improve the credentials and compensation of early learning 
providers; initiatives that help early learning programs meet 
and sustain higher program quality standards; implementing 
classroom observation assessments and data-driven decisions 
tied to activities that improve programmatic practices; 
financial incentives to early learning programs for undertaking 
and maintaining quality improvements; integrating State early 
learning and development standards into instructional and 
programmatic practices; providing high quality, sustained, 
intensive, and classroom-focused professional development; 
building the capacity of early learning programs and 
communities to promote the understanding by parents and 
families of their children's learning and development and of 
the State's early learning system; building the capacity of 
early learning programs and communities to facilitate 
screening, referral, and provision of services related to 
health, mental health, disability, and family support; and 
other innovative activities approved in advance by the 
Secretary. The remainder of the grant may be used for one or 
more of the following: implementation or enhancement of the 
state's data system; enhancement of the state's oversight 
system; and development and implementation of measures of 
school readiness that inform the quality improvement process. 
States must use the grant such that they prioritize improving 
the quality of early learning programs serving children from 
low-income families.
    A State awarded a Quality Pathways Grants that has made 
sufficient progress implementing the requirements of the grant, 
may apply to the Secretary to reserve up to 25 percent of the 
grant to directly expand access for children from low-income 
families to the highest quality early learning programs that 
offer full-day services. States must contribute a 20 percent 
match for these funds, one half of which may be provided by a 
private entity. The Secretary may waive or reduce the State 
match if the State demonstrates a need due to extreme financial 
hardship.
    States awarded a Quality Pathways Grant must contribute 
matching funds in the amount of 10 percent in each of the first 
two fiscal years, 15 percent in the third fiscal year, and 20 
percent in subsequent fiscal years. Private contributions made 
as part of a public-private partnership designed to increase 
the number of low-income children in high-quality programs may 
be considered in meeting the state match. In addition, in-kind 
contributions for the acquisition, construction, or improvement 
of early learning program facilities serving disadvantaged 
children may be used to satisfy the State match. The Secretary 
may waive or reduce the State match if the State demonstrates a 
need due to extreme financial hardship.

Development Grants

    To be considered for a Development Grant, a State must 
submit an application that designates a State-level entity for 
administration of the grant, coordinate proposed activities 
with the State Advisory Council on Early Childhood Education 
and Care (created under the Head Start Act), and provide other 
information as required by the Secretary. Grants shall be 
awarded on a competitive basis to States that demonstrate a 
commitment to establishing a system of early learning that will 
include the key component described in the legislation. A State 
may receive a Development Grant for 3 years but the grant is 
not renewable.
    The Secretary shall give priority to States who will use 
some or all of the funds allocated to them under the quality 
set-aside of the Child Care and Development Block Grant for the 
activities described in this Title. Priority is also given to 
states that will commit to dedicating significant increases in 
coming years in State expenditures on early learning programs 
and services and to states that demonstrate efforts to build 
public-private partnerships that are designed to accomplish the 
purposes of this title. States receiving a Development Grant 
shall use the award to undertake activities to develop the 
early learning system components described in the legislation 
and that will allow a State to become eligible and competitive 
for a Quality Pathways Grant. States must use the grant such 
that they prioritize improving the quality of early learning 
programs serving children from low-income families.
    States awarded a Development Grant must contribute matching 
funds in the amount of 20 percent in the first fiscal year, 25 
percent in the second fiscal year, and 30 percent in the third. 
Private contributions made as part of a public-private 
partnership designed to increase the number of low-income 
children in high-quality programs may be considered in meeting 
the state match. In addition, in-kind contributions for the 
acquisition, construction, or improvement of early learning 
program facilities serving disadvantaged children may be used 
to satisfy the State match. The Secretary may waive or reduce 
the State match if the State demonstrates a need due to extreme 
financial hardship.

Research and evaluation

    The Secretary of Education and the Secretary of Health and 
Human Services are required to carry out four research and 
evaluation activities: (1) establish a national commission to 
review early learning program quality standards and early 
learning and development standards and recommend benchmarks 
within 2 years; (2) conduct a national evaluation of the grants 
made under this title; (3) support a research collaborative 
that supports research on early learning and informs improved 
child outcomes; and (4) review the strategic reports of the 
State Advisory Councils on Early Care and Education and report 
and disseminate on barriers to improving access to high quality 
early learning programs.

Reporting requirements

    The legislation requires the Secretary to provide annual 
reports to the Committee on Education and Labor of the U.S. 
House of Representatives and the Health, Education, Labor, and 
Pensions Committee of the Senate regarding the activities 
carried out under this title. The legislation also requires 
States receiving grants under this Title to submit annual 
reports to the Secretary on the activities carried out by the 
State and includes a list of information that must be included 
in the reports.

Prohibitions and special rules

    This legislation clarifies that all references to early 
learning programs in the Title reflect voluntary participation 
by a child in an early learning program. No provision may be 
construed to be requiring mandatory participation by a child in 
an early learning program. It additionally clarifies that no 
provision in this Title should be construed to deny entry to 
kindergarten for a child who is legally eligible as defined by 
State or local law. The legislation also includes rules 
regarding how funds provided under this Title may be used for 
assessment and evaluation.

Leading the world in graduation by 2020 through investing in community 
        college education and workforce training

    This legislation establishes the Community College 
Challenge Grant Program, which was recently proposed by 
President Obama. The legislation authorizes grants to support 
innovative pilot programs and policies that will increase the 
number of associate degree, certificate, and industry-
recognized credentials, including activities that promote the 
transfer of credits from 2-year to 4-year institutions.
    The first phase of the program will provide competitive 
grants to institutions and states proposing to implement 
comprehensive reforms within the community college system to 
promote job readiness, academic success and degree completion, 
and strengthen ties to employers. This will facilitate access 
to and enable success in community colleges, especially for 
adult learners seeking to build the skills needed to secure a 
good job in a high-growth sector of the economy.
    The second phase of the program will look to states to draw 
on lessons learned from the first phase and to systematize and 
sustain the reforms in the community colleges in their states. 
In order to compete for these reform dollars, states must have 
an education plan to increase persistence and completion of 
postsecondary education as well as a statewide longitudinal 
data system that includes all segments of education, including 
community colleges.
    Online courses provide flexibility important to students 
and workers who may juggle multiple commitments, including 
family and work or those who live in rural areas without access 
to traditional systems of higher education. This legislation 
provides competitive grants to develop high quality, rigorously 
evaluated, open web-based high school and college-level 
courses, which would be available for free, on an open-source 
basis, to students, teachers, schools, and companies to help 
students gain knowledge, skills, and credentials.
    H.R. 3221 provides grants to States for the development of 
common data systems to help students, institutions, and states 
make well-informed decisions to achieve their educational and 
employment goals.

Privacy provision

    This legislation includes a privacy provision that limits 
the use of information in the statewide data systems to use by 
governmental agencies in the state and for those education and 
workforce activities authorized by this bill or otherwise 
permitted by federal or state law.

                          IV. Committee Views

    The Committee believes that H.R. 3221, The Student Aid and 
Fiscal Responsibility Act represents a historic investment in 
higher education and expands high-quality educational 
opportunities to all Americans. This legislation will give the 
Congress the opportunity to create the kind of country and the 
kind of future that we all envision for our children.
    In his first address to Congress on February 24, 2009, 
President Obama set a laudable goal for this nation, by saying:

          . . . And so tonight, I ask every American to commit 
        to at least one year or more of higher education or 
        career training. This can be community college or a 
        four-year school; vocational training or an 
        apprenticeship. But whatever the training may be, every 
        American will need to get more than a high school 
        diploma. And dropping out of high school is no longer 
        an option. It's not just quitting on yourself, it's 
        quitting on your country--and this country needs and 
        values the talents of every American. That is why we 
        will provide the support necessary for you to complete 
        college and meet a new goal: by 2020, America will once 
        again have the highest proportion of college graduates 
        in the world.\2\
---------------------------------------------------------------------------
    \2\http://www.whitehouse.gov/the_press_office/remarks-of-president-
barack-obama-address-to-joint-session-of-congress/

The Committee agrees, and H.R. 3221 will help us reach this 
goal by making college more affordable and accessible.
    The Committee believes that this legislation makes critical 
investments in our nation's postsecondary education students. 
It will invest in the Pell Grant scholarship award, simplify 
the FAFSA form to make it easier to apply for federal student 
aid, and build on the Congress' efforts to make interest rates 
on loans affordable. Further, the legislation will provide more 
students with access to low-cost Perkins loans by expanding the 
program to many more campuses and strengthen minority-serving 
institutions and programs that will help retain and graduate 
students.
    Further, the legislation makes an unprecedented $10 billion 
investment in our community colleges. The Committee believes 
that our nation's community colleges are essential to driving 
economic recovery and that they provide an important low-cost 
option for postsecondary education for many individuals. This 
legislation will address our nation's economic crisis by 
ensuring that there is adequate support and training to build a 
21st century workforce by strengthening partnerships among 
community colleges, businesses and job training programs that 
will align community college curricula with the needs of high-
wage, high-demand industries.
    H.R. 3221 will also ensure that every student can learn in 
a safe, energy-efficient and modern environment by renovating 
and repairing our nation's schools--a measure that this 
Committee and the House have already supported.
    The legislation provides important investments in our 
children by providing $1 billion per year to help ensure that 
the next generation of children can enter kindergarten with the 
skills they need to succeed in school. It will transform early 
learning programs and improve the school readiness outcomes of 
children by insisting upon real change in state standards and 
practices. And, it will support states that are ready to expect 
more from their early learning programs than just basic health 
and safety and are looking to undertake major reform and demand 
results. It will build an effective and well-compensated early 
childhood workforce, integrate key quality standards, improve 
instructional practices, and better support parents in the 
early education of their children.
    The Committee believes that these important reforms should 
be paid for without increasing our nation's deficit. This 
legislation is completely paid for by making necessary changes 
to the federal student loan programs. The Committee strongly 
believes that the reforms in this legislation will result in a 
stronger, more reliable, and more efficient student loan 
system. H.R. 3221 proposes to convert all new federal student 
loans to the Direct Loan program starting in July 2010. 
Students will have access to the low-cost loans they need, in 
any economy. H.R. 3221 will also upgrade the customer service 
borrowers receive when repaying their loans. Rather than force 
private industry out of the system, the legislation will 
maintain jobs and a role for lenders and non-profits by 
allowing them to compete for contracts to service these loans. 
This simple change will save $87 billion over the next ten 
years.
    Finally, as part of the Committee's efforts to secure a 
stronger future for our children and the country they will 
inherit, this legislation will direct $10 billion of these 
savings to pay down the country's deficit.

                   INVESTING IN STUDENTS AND FAMILIES

Significantly increasing the pell grant award

    The Committee believes boosting the nation's investment in 
the Pell Grant program is essential to ensuring access and 
making college more affordable for students and families. Since 
its inception in 1972, the Pell Grant scholarship has opened 
the door to postsecondary education for millions of low- and 
moderate-income students. However, over the last several years, 
the purchasing power of the Pell Grant has declined. Today, the 
maximum Pell Grant covers only one third of the average price 
of attendance at a public four-year institution compared to 
more than two-thirds in 1980.
    In the last three years, the Congress has renewed its 
commitment to the purchasing power of the Pell Grant award. 
Both this Committee and the Committee on Appropriations have 
made significant investments in increasing the maximum award; 
increasing the award by 32 percent since 2006.
    The Committee believes that a continued investment in the 
Pell program is paramount to ensuring that all students who 
choose to attend postsecondary education, regardless of income, 
are able to pursue their academic goals. This legislation 
builds on the recent investments by ensuring that the maximum 
Pell grant award continues to increase with the cost of living 
and setting increases in the maximum award to the Consumer 
Price Index plus 1 percentage point. Under this bill, the 
maximum award is estimated to rise from $5,350 in the 2010-2011 
academic year to $6,900 in the 2019-2020 academic year.
    This change will not only dramatically increase the maximum 
Pell award, but will put the Pell grant on a trajectory that 
students and families can count on. The Committee believes that 
Federal programs should ensure that students and families can 
begin to plan for college, including how to pay for college 
costs, years before entering into college. By indexing the 
maximum award to the cost of living, students and families will 
be able to project an estimated Pell grant award years prior to 
entering college- and important planning tool.
    Finally, this investment will not only ensure that eligible 
students receive a higher grant award, but that more students 
will be eligible for the grant. Coupled with recent changes in 
the needs analysis formula passed by the Congress in the 
College Cost Reduction and Access Act and the Higher Education 
Opportunity Act, the increased award provided for in this 
legislation will ensure that more students will have access to 
postsecondary education.

Increasing postsecondary access and completion

    The United States has long been a global leader in 
postsecondary education, but recently our advantage has 
slipped. According to the OECD, while the U.S. ranks 7th in 
terms of the percentage of 18-24 year olds enrolled in college, 
we rank 15th in terms of the number of certificates and degrees 
awarded. Further, only about half of all college students 
graduate within six years; for low-income students, the 
completion rate is closer to 25 percent. These facts are 
especially troubling considering the economic returns of having 
a college education have increased dramatically over the last 
30 years. In 1973, a college graduate with no further schooling 
earned 46 percent more per hour than a high school graduate. In 
2007, the differential was 77 percent. According to a recent 
report by the Council of Economic Advisors, the jobs of 
tomorrow will require at least some postsecondary training. The 
Committee believes that there is a great need to prepare, 
encourage, and support our nation's students in their pursuit 
of a higher education to ensure that they not only have the 
access to postsecondary education, but that they enroll in and 
complete their programs of study.
    The Committee believes that states, institutions of higher 
education, non-profit philanthropic organizations, and other 
organizations with experience in college access and completion 
are critical partners in ensuring that students have access to 
high-quality and affordable higher education and that they 
succeed and complete their education. This legislation actively 
engages these partners by encouraging innovative efforts at the 
state and local levels to ensure that President Obama's goal of 
greatly increasing our nation's college graduates is realized.
    This legislation seeks to increase postsecondary access and 
success for all students, but especially for underserved 
populations. The Committee encourages States to focus efforts 
on students from groups that are underrepresented in higher 
education to address the inequities between groups of students 
and ensure that all Americans, regardless of race or income, 
have the opportunity to succeed. References in the legislation 
to ``students from groups that are under-represented in 
postsecondary education'' and ``high-need populations'' 
includes, but is not limited to, nontraditional students (as 
defined in the Higher Education Opportunity Act of 2008), 
students from groups defined as special populations under the 
Carl D. Perkins Career and Technical Education Act of 2006, and 
groups underrepresented both in postsecondary education overall 
and in certain degree, certificate or credential programs. All 
outcome reporting should be disaggregated by gender, race, 
ethnicity, age and special population category.
    It is the intent of the Committee that the states receiving 
grants under the State Innovation and Completion Fund may 
distribute those funds to entities that work with borrowers to 
avoid delinquency and default, provide assistance with entrance 
and exit student loan counseling to borrowers and assistance to 
borrowers in selecting a loan repayment plan and in applying 
for any loan cancellation, forgiveness, deferment or 
forbearance to which the borrower may be eligible.
    A number of states have already begun initiatives to 
implement new practices aimed at increasing degree and 
certificate production; this funding would further support such 
innovation, allowing states to capitalize on other funding in 
collaboration with federal funds. It is the intent of the 
Committee that states may not, however, use this funding to 
decrease or otherwise supplant other funding dedicated to 
postsecondary education.
    The Committee encourages the Secretary of Education to 
prioritize under the Innovation in College Access and 
Completion National Activities program, program approaches that 
advance knowledge about, and adoption of, policies and 
practices that increase the number of students prepared to 
successfully pursue, enter and successfully complete 
postsecondary degrees or certificates as described in sections 
801 and 403 of the Higher Education Act.

Continuing historic investments in Historically Black Colleges and 
        Universities, and Hispanic-Serving Institutions, Tribal 
        Colleges, Alaska Native and Native-Hawaiian serving 
        institutions, Predominately Black Institutions, and Asian 
        American and Pacific Islander serving intuitions, and Native 
        American serving institutions

    Historically Black Colleges and Universities, Hispanic-
Serving Institutions, Tribal Colleges, Alaska and Hawaiian 
Native, Predominately Black Institutions, institutions serving 
Asian American and Pacific Islanders, and institutions serving 
Native Americans are critical to the nation's economic and 
social well-being. As the growth in the nation's population 
increasingly reflects the diversity of the students at these 
institutions, the Committee believes that this mandatory 
funding is an investment in our future. By educating the 
nation's emerging majority populations, these institutions 
represent the vanguard of the country's potential and promise 
and should be appropriately supported.
    This Committee first recognized the need for significant 
investment in these institutions with the passage of the 
College Cost Reduction and Access Act two years ago. This 
legislation continues this important investment for the next 
ten years; recognizing the continued critical role that these 
institutions have to serve.
    The importance of these unique institutions is underscored 
by the fact that they provide postsecondary educational 
opportunities specifically tailored to students who 
traditionally have been denied access to adequately funded 
elementary and secondary schools, especially low-income, 
educationally disadvantaged students. Additionally, a high 
proportion of students attending these institutions are the 
first in their family to attend college.

FAFSA simplification

    The Committee believes the current application for federal 
student aid is complicated and burdensome, asking students and 
their families to answer as many as 153 questions, many of 
which have little or no impact on the amount of financial aid 
that students receive. The length and difficulty of the 
application process can undermine efforts to increase college 
enrollment with student aid. The implications of this lengthy 
and difficult application process on current and potential 
students can be profound. One analysis by the American Council 
on Education found that there are 1.5 million enrolled students 
who are likely eligible for Pell grants (and other federal 
student aid) but fail to apply, due in part to the complicated 
aid application.
    The Committee recognizes recent work by the Department of 
Education, the Internal Revenue Service, and others in the 
Administration. With the authority provided by Congress in the 
Higher Education and Opportunity Act, the Secretary Duncan has 
already announced some significant steps to improve the web-
based application process for many students through improved 
use of skip-logic. In addition, the Education and Treasury 
Departments have announced that they will give those who apply 
during the relevant academic year to import data from their 
income tax filings from the IRS, further simplifying the 
process.
    With these changes, every applicant will find the process 
substantially easier to navigate and complete, a small number 
will find their financial aid awards increased, and no one will 
see aid reductions The Committee encourages the Department of 
Education to make use of its authority to start the FAFSA 
process earlier, so that students can apply at the beginning of 
their senior year in high school. Having early, real 
information about financial aid can affect low income students' 
college plans. As it stands, students receive financial aid 
information after they apply to and are accepted to college, 
too late for many students and families to make changes to 
their enrollment plans. Earlier, more accurate information will 
help students and families plan for affordable college options, 
helping to reduce student debt in the long term. This strategy 
is only effective if it starts no later than the fall of the 
senior year of high school.

                          STUDENT LOAN REFORM

    Students and families have become increasingly reliant on 
the federal student loan programs to help finance their 
postsecondary education. As a result, the Committee is 
committed to ensuring that every eligible student and family 
can access these loans so critical toward helping pay today's 
college costs. The turmoil in the U.S. credit markets has 
shown, however, that the federally guaranteed student loan 
program is an unreliable source of funds for students and 
families. Over the past year, this program has become dependent 
not only on the Federal guarantee of borrower repayment and 
taxpayer subsidies paid to financial institutions, but also 
dependent on the Federal Government for the very loan capital 
provided to borrowers. On the other hand, despite the stresses 
in the credit markets, students and families continued to 
access Federal student loans under the Direct Loan Program with 
no interruptions. Moreover, costs to the taxpayers of the 
Direct Loan Program are significantly less than those of the 
federally guaranteed program. The Committee believes that 
prudence dictates the time has come to end the entitlements for 
financial institutions that lend to students and instead take 
full advantage of the Direct Loan Program's low-cost and stable 
source of capital so students are ensured access to loans. By 
relying on competitive, private-sector entities to service 
loans, students and families can be provided with high-quality 
services. This new approach, consistent with the President's 
vision, will save $87 billion over the next 10 years. In 
addition to this reform, the Committee believes it is also time 
to modernize and expand the Perkins Loan Program so that more 
colleges can participate and more students can receive access 
to greater aid.

Instability of the Federal Family Education Loan Program

    The federally guaranteed loan program, known as the Federal 
Family Education Loan Program (FFELP), has become unstable and 
unreliable and can no longer be depended upon to ensure 
students' and families' access to Federal student loans. Over 
the past year, turmoil in the U.S. credit markets has made it 
impossible for many lenders, and difficult for others, to 
secure private capital with which to make student loans. As a 
result, many lenders that once participated in the FFELP have 
pulled out of the program and are no longer making loans.
    In April 2008, the Committee passed the Ensuring Continued 
Access to Student Loans Act of 2008, which was enacted into law 
the following month (Public Law No: 110-227). The Act provided 
the Secretary of Education with the authority to help fund the 
Federal student loans made by financial institutions to 
students and families, or to buy Federal student loans from 
financial institutions, upon a determination that there was an 
inadequate availability of loan capital to meet the demand for 
loans. The Act further required that any purchase by the 
Secretary be revenue-neutral or beneficial to the Federal 
Government.
    Throughout 2008 and 2009, the Department of Education 
established several support programs to provide FFELP lenders 
with capital, who in turn used the capital to make loans to 
students and families. The reliance by FFELP lenders on the 
Department's support programs has been startling. As of July 
22, 2009, the Department has purchased over $14.6 billion in 
Federal student loans put up for sale by FFELP lenders. 
Moreover, the Department has funded an additional $31.2 billion 
of the loans made by FFELP lenders during the 2008-2009 school 
year.
    Clearly, the FFELP has become dependent on taxpayer funds 
to make loans to students and families. Overall, the Department 
of Education has financed over 60 percent of the 2008-2009 
FFELP loan volume to date. When combined with Direct Loans, 
Education has financed over 70 percent of all Federal student 
loans made during the 2008-2009 school year.

William D. Ford Direct Loan Program

    Established in 1993, the Direct Loan Program provides loans 
directly to students, through the student's school, with loan 
capital secured from the U.S. Treasury. As a result, the Direct 
Loan Program has been insulated from the turmoil in the credit 
markets, and loans to students and families have flowed without 
interruptions or the need for any back-stop measures similar to 
what was required for the FFELP.
    Over the course of the last year, the growth in the Direct 
Loan Program has increased significantly. The number of schools 
that have moved to the Direct Loan Program has increased by 
over 45 percent, from 1,186 in school year 2007-2008 to over 
1,700 in 2008-2009. Over the same time period, the number of 
loans disbursed under the Direct Loan Program increased by 66 
percent, from 3.2 million to 5.3 million; and the overall 
amount of loans made under the program increased by 60 percent, 
from $13.8 billion to over $22 billion.
    To participate in the Direct Loan Program, all schools must 
first be eligible and certified by the Department of Education. 
Once eligible and certified for the Direct Loan Program, the 
school must send an e-mail request to the Department to 
actively participate in the Direct Loan Program. Once approved 
and in order to begin processing Direct Loans and transmit and 
receive Direct Loan data electronically, the school must set up 
an electronic email account to exchange information with the 
Department as well as a bank account with the Department to 
receive the federal funding that is used to provide Direct Loan 
proceeds to borrowers. To a large degree, many schools, in 
particular those that disburse Pell Grants to students, are 
already familiar with the Department's information technology 
systems that are used to provide Direct Loans to students. The 
Department's ``Common Origination and Disbursement (COD)'' 
system is used to deliver both Pell Grant funds and Direct Loan 
funds to schools.
    Schools that have recently transitioned to the Direct Loan 
Program have reported high levels of satisfaction with the 
program. In a June 2009 survey of schools that recently 
transitioned, the National Association of Student Financial Aid 
Administrators found that 80 percent of the schools surveyed 
found making the switch to the Direct Loan Program was easy. In 
addition, 84 percent of the schools reported that the 
Department of Education was helpful in providing assistance for 
the conversion. Moreover, 80 percent of the schools reported 
that they were able to convert to the Direct Loan Program 
within four months.

Providing for a stable, reliable, and efficient student loan program

    Now more than ever, Americans need affordable, quality 
education opportunities to help make our economy strong and 
competitive again. The Committee believes this can be 
accomplished, in part, by implementing the President's proposal 
to move all schools in the country to the Direct Loan program 
by 2010, thereby saving the federal government and taxpayers 
$87 billion dollars over the next 10 years. While the 
legislation directs the Government to originate all student 
loans, it also ensures that there is a role for private 
industry in providing loan servicing. Moreover, it will ensure 
that state and local non-profit agencies, that meet quality and 
pricing standards, will participate in servicing student loans 
through a minimum volume allocation of the loans of 100,000 
borrowers. These reforms mean that student borrowers will have 
a reliable stream of funding to finance their college 
education, and can rely on quality loan servicing during 
repayment. The legislation does not force private industry out 
of the system. Rather, the legislation will maintain the jobs 
of, and a role for, lenders and nonprofits by allowing them to 
compete for contracts that service student loans on an expanded 
basis. For example, the Department of Education has already let 
major contracts to four large FFELP industry participants to 
help service those loans that FFELP lenders found necessary to 
sell to the government as a result of the problems in the 
credit markets.

Reforming and reinvigorating the Perkins Loan Program

    The Committee believes the Perkins Loan Program should be 
reformed so that more loans can be made available to students 
on more campuses across the country. Currently, Perkins loans 
are awarded to students by schools from institutional revolving 
funds, which are comprised of Federal capital contributions, 
institutional matching funds, and student repayments on 
outstanding loans. However, no new Federal capital 
contributions have been appropriated since 2004, leaving many 
schools and their students without access to low-interest 
loans. The legislation will modernize and expand the Perkins 
Loan program so more colleges can participate and more students 
can receive access to low-cost loans to help pay postsecondary 
expenses.

                 MODERNIZATION, RENOVATION, AND REPAIR

    The Committee believes that Title III of H.R. 3221 
addresses a number of important issues--the quality of our 
nation's public school facilities, student achievement, the 
state of the economy, and the state of the environment. The 
Committee believes that these issues are interrelated and that 
each represents a critical national concern.
    President Obama and Congress have already endorsed these 
principles by making green school modernization, renovation and 
repair part of an allowable use of funds under the state fiscal 
stabilization fund in H.R. 1, the American Recovery and 
Reinvestment Act. The Committee believes H.R. 3221 is a 
critical next step in this effort because it is important to 
provide funds specifically dedicated to this purpose. Prior to 
ARRA, and with the exception of funding through the Impact Aid 
program and through the Department of the Interior for Indian 
schools, direct federal support for school construction has 
been virtually non-existent since fiscal year 2001 when 
Congress appropriated $1.2 billion primarily for emergency 
school repair and renovation.
    The demand for new and renovated public school facilities 
is unprecedented in our nation's history.\3\ A briefing paper 
delivered at an Economic Policy Institute forum, Investing in 
U.S. Infrastructure, in April 2009, called for $140 billion in 
federal funds for capital outlays for low-income school 
districts and an ongoing federal role in such funding 
comparable to the current federal share of education operations 
funding (approximately 10 percent) in order to bring these 
districts up to parity with the highest income districts. The 
paper argued that such funding is necessary to ensure that 
``the nation's public schools are healthy, safe, 
environmentally sound, and built . . . to support a high-
quality education.''\4\
---------------------------------------------------------------------------
    \3\Testimony of Kathleen J. Moore, Director, School Facilities 
Planning Division, California Department of Education, Hearing, U.S. 
House of Representatives, Committee on Education and Labor, Modern 
Public School Facilities: Investing in the Future, February 13, 2008 
(http://edlabor.house.gov/testimony/2008-02-13-KathleenMoore.pdf).
    \4\Good Buildings, Better Schools, Filardo, M., Economic Policy 
Institute Briefing Paper, April 29, 2008.
---------------------------------------------------------------------------

Need and disparity

    The most recent comprehensive estimates of the national 
need for school construction and renovation were made in 1995 
($112 billion, U.S. General Accounting Office\5\ (GAO)\6\), 
2000 ($127 billion, National Center for Education Statistics\7\ 
(NCES)), 2001 ($322 billion, National Education Association\8\ 
(NEA)), and 2008 ($254.6 billion, American Federation of 
Teachers (AFT))\9\.
---------------------------------------------------------------------------
    \5\Condition of America's Schools, Government Accounting Office, 
1995 (GAO/HEHS-95-61).
    \6\In 2004, the General Accounting Office was renamed the 
Government Accountability Office. The Committee will use ``GAO'' to 
refer to both.
    \7\Condition of America's Public School Facilities: 1999, National 
Center for Education Statistics.
    \8\Modernizing Our Schools: What Will It Cost?, National Education 
Association, 2000.
    \9\Building Minds, Minding Buildings: School Infrastructure Funding 
Need, A state-by-state assessment and an analysis of recent court 
cases: 2008, American Federation of Teachers.
---------------------------------------------------------------------------
    Several studies highlight the inadequacy of school 
facilities. In 2009, the American Society of Civil Engineers, 
on its national infrastructure report card, gave America's 
public schools a D.\10\ A 2005 survey of school principals by 
NCES found that fifty-two percent of schools had no science 
laboratories, thirty percent had no art rooms, nineteen percent 
had no music rooms, and seventeen percent had no gymnasium.\11\ 
A 2004 NCES report found that one school in three had temporary 
buildings as the primary learning space for at least 160 
students, and that in one in five schools, teachers routinely 
had to use a building's common areas for instructional 
purposes.\12\
---------------------------------------------------------------------------
    \10\http://www.infrastructurereportcard.org/fact-sheet/schools.
    \11\Public School Principals Report on Their School Facilities: 
Fall 2005, Institute of Education Sciences, National Center for 
Education Statistics.
    \12\Characteristics of Schools, Districts, Teachers, Principals, 
and School Libraries in the United States 2003-2004, Schools and 
Staffing Survey, National Center for Education Statistics.
---------------------------------------------------------------------------
    Disparities in the condition of our schools are also well-
documented. In 1996, GAO reported, in a follow-up to an earlier 
study, that on every measure--inadequate buildings or building 
features, unsatisfactory environmental conditions, etc.--the 
same subgroups--schools in central cities, western states, and 
schools serving higher percentages of minority or low-income 
students--reported having more significant problems.\13\
---------------------------------------------------------------------------
    \13\America's Schools Report Differing Conditions, Government 
Accounting Office, 1996 (GAO/HEHS-96-103).
---------------------------------------------------------------------------
    In 2006, a report by Building Educational Success Together 
(BEST) concluded that the GAO and NEA estimates ``grossly 
underestimated'' the need for school improvements, and 
concurred with the 1996 GAO finding that facilities in low-
income and minority-serving areas tended to be in significantly 
worse condition. The report also concluded that despite 
significant State and local expenditures on school construction 
and renovation from 1996-2004, ``there continue to be millions 
of students in substandard and crowded school conditions.''\14\
---------------------------------------------------------------------------
    \14\Growth and Disparity: A Decade of U.S. Public School 
Construction, Building Educational Success Together, 2006.
---------------------------------------------------------------------------
    It is the Committee's intent that funds authorized by this 
bill be used to ensure that all children have access to a high-
quality public school facility. The Committee recognizes that 
facility quality disparity is most likely to occur in low-
income areas. Accordingly, the Committee encourages local 
educational agencies to take care to ensure that the needs of 
low-income and rural schools are addressed by giving priority 
to schools where modernization, renovation, and repair will 
most benefit students, teachers, and other staff and ensuring 
that the schools are safe, healthy, conducive to teaching and 
learning, energy efficient, and environmentally sound.

Green Schools

    A 2006 report concludes that a green school (1) uses one-
third percent less energy than a conventional school; (2) 
reduces harmful carbon dioxide emissions by forty percent, 
which helps reduce global climate change; (3) uses thirty 
percent less water; (4) has better lighting and temperature 
controls, which promotes higher student achievement; and (5) 
has a more comfortable indoor environment, improved ventilation 
and indoor air quality, which result in short-term ($96,760 per 
year) and long-term savings as a result of green building.\15\ 
The average national school construction cost is $150 per 
square foot; building green adds only $3 per square foot. 
According to the study, the long-term savings from green 
buildings are $70 per square foot.\16\
---------------------------------------------------------------------------
    \15\Greening America's Schools, Kats, G., 2006
    \16\Ibid.
---------------------------------------------------------------------------
    The Committee believes that green building can serve a 
number of purposes. Such building will directly benefit both 
the larger environment and the indoor environment. The 
Committee further believes that green building will improve the 
ability of teachers to teach and students to learn as well as 
the health of students, teachers, and other school staff.
    The Committee believes that a critical component of the 
success of this bill will be local educational agencies' 
knowledge of best practices in school construction, 
modernization, renovation, and repair as they relate to green 
building.
    The bill directs States to develop state-level voluntary 
guidelines for high-performing school buildings. The Committee 
encourages States, in developing the energy efficiency 
components of such guidelines, to look for direction to the 
definition of such plans in H.R. 579, the School Building 
Enhancement Act, introduced by Representative Rush Holt. That 
bill defines such plans as including standards for school 
building design, construction, and renovation; and proposals 
for the systematic improvement (including benchmarks and 
timelines) of environmental conditions in and around schools 
throughout the State. H.R. 579 also encourages purchasing 
environmentally preferable products for instruction and 
maintenance, increasing the use of alternative energy fuels in 
school buses, and maximizing transportation choices for 
students, staff, and other members of the community.
    In addition to the voluntary state guidelines for high-
performing school buildings required in the bill, the Committee 
encourages states to establish voluntary guidelines concerning 
performance monitoring, use of Energy Star equipment, 
alternative fuels buses, anti-idling measures, and other 
measures the state believes will contribute to high-performing 
schools.
    The Committee encourages the Secretary, in carrying out the 
Department's technical assistance responsibilities under H.R. 
3221, as amended, to examine the Illinois Resource Guide for 
Healthy, High-Performing School Buildings. The recommendations 
and information in the guide are intended to provide school 
administrators, school boards and other community members with 
guidance to make informed decisions about health and energy 
efficiency issues important to schools. The guide's objective 
is to promote long-term thinking and to ensure that school 
buildings are compatible with the goals of improving learning 
environments, reducing operating costs, supporting health and 
safety, and protecting our natural environment.\17\
---------------------------------------------------------------------------
    \17\For a discussion of a case study in building a modern, green 
school, see, Testimony of Mary Cullinane, Director, Innovation and 
Business Development Team, Microsoft Corporation, Hearing, U.S. House 
of Representatives, Committee on Education and Labor, Modern Public 
School Facilities: Investing in the Future, February 13, 2008 (http://
edlabor.house.gov/testimony/2008-02-13-MaryCullinane.pdf).
---------------------------------------------------------------------------

Impact on teaching and learning

    The Committee believes that while equity alone justifies 
federal support for local educational agencies to ensure that 
every child has access to a high-quality public school 
facility, such support also is essential to closing the 
achievement gap. The Committee believes that the relationship 
between the quality of school facilities and student 
achievement and teacher performance and retention are 
positively intertwined.\18\ Research demonstrates that better 
school facilities result in improved student achievement and 
teacher recruitment and retention. The physical condition of 
schools also affects student and teacher health.
---------------------------------------------------------------------------
    \18\See, e.g., Testimony of Judi Caddick, Teacher, Memorial Junior 
High School, Illinois Education Association, Lansing, Illinois, 
Hearing, U.S. House of Representatives, Committee on Education and 
Labor, Modern Public School Facilities: Investing in the Future, 
February 13, 2008 (http://edlabor.house.gov/testimony/2008-02-13-
JudiCaddick.pdf).
---------------------------------------------------------------------------
    According to a 2004 report by the 21st Century School Fund, 
inadequate school facilities can result in alienated students, 
low staff morale, high teacher attrition, the inability to 
provide specialized curricula, reduced learning time, 
distractions from learning, reduced ability to meet special 
needs, lack of technological proficiency, health problems for 
students and staff, safety hazards, and less supervision of 
student behavior.\19\
---------------------------------------------------------------------------
    \19\For Generations to Come, 21st Century School Fund, 2004.
---------------------------------------------------------------------------
    It is the Committee's intent that local educational 
agencies use funds provided under this subtitle for the 
installation or upgrading of educational technology 
infrastructure such as wiring and other projects, including 
energy efficient improvements, to bring school facilities 
technologically up-to-date.
    In its 2005 survey, NCES noted that a key reason for school 
construction and renovation is student and teacher safety, but 
that building quality also affects the context for learning, 
such that lighting, noise reduction, air quality and other 
factors can affect student achievement and behavior. NCES 
further noted that building quality affects teacher retention--
forty percent of teachers who transferred schools and thirty-
nine percent who left teaching cited the need for significant 
school repairs as a source of their dissatisfaction.\20\ NCES 
found that one-third of school principals cited at least one 
environmental factor\21\ as interfering with their ability to 
deliver instruction.
---------------------------------------------------------------------------
    \20\Another study finding a relationship between facility quality 
and teacher retention is The Effects of School Facility Quality on 
Teacher Retention in Urban School Districts, Buckley, J., Schneider, 
M., and Shang, Y., 2004.
    \21\Those factors include: air conditioning, size/configuration of 
rooms, acoustics or noise control, ventilation, heating, physical 
condition, indoor air quality, natural lighting, artificial lighting.
---------------------------------------------------------------------------
    The Committee encourages school districts that undertake 
projects to reduce or eliminate human exposure to classroom 
noise and environmental noise pollution, and the Secretary, in 
providing technical assistance concerning reducing background 
noise and reverberation in classrooms, to consider the American 
National Standards Institute (ANSI) approved Standard S12.60-
2002, [Acoustical Performance Criteria, Design Requirements, 
and Guidelines for School].

Impact on health

    A 2004 study mandated by the Elementary and Secondary 
Education Act of 1965, as amended by the No Child Left Behind 
Act, and funded by the Department of Education found that 
``overall evidence suggests that poor environments in schools, 
due primarily to the effects of indoor pollutants, adversely 
affect the health, performance, and attendance of students.'' 
Specifically, the study found that indoor environmental quality 
can influence health outcomes, which may, in turn, influence 
student and teacher performance directly and indirectly.\22\ 
The study cites the 1995 GAO finding that thirty percent of 
schools reported unsatisfactory ventilation.
---------------------------------------------------------------------------
    \22\A Summary of Scientific Findings on Adverse Effects of Indoor 
Environments on Students' Health, Academic Performance and Attendance, 
U.S. Department of Education, Policy and Program Studies Service, 2004.
---------------------------------------------------------------------------
    The Centers for Disease Control advises that asthma 
accounts for more than fourteen million missed school days per 
year.\23\ A 2006 report by the American Federation of Teachers 
concludes that ``[p]oor air quality in schools contributes to 
students' asthma, absences due to illness, difficulty 
concentrating, and lower achievement.''\24\
---------------------------------------------------------------------------
    \23\http://www.cdc.gov/asthma/children.htm.
    \24\Building Minds, Minding Buildings, American Federation of 
Teachers, 2006.
---------------------------------------------------------------------------
    The Committee further recognizes that although lead solder 
with more than 0.2 percent lead and plumbing fixtures with more 
than eight percent lead were banned in 1987, such products 
remain in schools across the country. The Environmental 
Protection Agency and the Centers for Disease Control both have 
concluded that there is no safe level of exposure to lead. 
Exposure to lead early in life has been linked to cognitive 
deficits, attention deficits, and extremely aggressive 
behavior.

Impact on community

    According to the 2006 BEST study, the difference between 
good and poor quality facilities also affects the communities 
in which they are located. School quality has a direct, 
positive impact on residential property values and can improve 
a community's ability to attract businesses and workers.\25\ 
This point also is supported by Representative Bob Etheridge's 
testimony at the February 13, 2008, Committee hearing on this 
issue.\26\
---------------------------------------------------------------------------
    \25\Growth and Disparity: A Decade of U.S. Public School 
Construction, Building Educational Success Together, 2006.
    \26\Testimony of Representative Bob Etheridge, Hearing, U.S. House 
of Representatives, Committee on Education and Labor, Modern Public 
School Facilities: Investing in the Future, February 13, 2008 (http://
edlabor.house.gov/testimony/2008-02-13-BobEtheridge.pdf.
---------------------------------------------------------------------------
    The BEST study also concluded that investments in school 
facilities bring money into local economies through job 
creation and supply purchases and can help revitalize 
distressed neighborhoods. The Committee is persuaded by these 
findings and expects that this bill will produce positive 
results in our communities.

Impact on economy

    Direct federal investment in school construction and 
renovation could provide an immediate boost to our economy and 
generate jobs. Federal funding for the modernization, 
renovation, or repair of school facilities could be spent 
quickly and efficiently to address the loss of 1.3 million jobs 
in the construction industry over the last year and a half.\27\
---------------------------------------------------------------------------
    \27\See http://www.bls.gov/news.release/empsit.nr0.htm.
---------------------------------------------------------------------------

Hurricanes Katrina and Rita

    H.R. 3221 provides additional support for Gulf Coast 
schools still recovering from damage caused by Hurricanes 
Katrina and Rita. The Gulf region, primarily New Orleans, has 
hundreds of millions of dollars in unmet school modernization, 
renovation, repair and construction need, including as a result 
of Hurricanes Katrina and Rita. Prior to Hurricanes Katrina and 
Rita, the Recovery School District of Louisiana (RSD) already 
had a deferred maintenance infrastructure deficit of 
approximately $1 billion. The hurricanes caused an additional 
$800 million in damage to the district's schools. The funding 
from this bill will help the district, and others in the Gulf 
region, meet these important and timely needs as they continue 
to recover from the hurricanes.\28\
---------------------------------------------------------------------------
    \28\See also Testimony of Paul Vallas, Superintendent, Louisiana 
Recovery School District, Hearing, U.S. House of Representatives, 
Committee on Education and Labor, Modern Public School Facilities: 
Investing in the Future, February 13, 2008 (http://edlabor.house.gov/
testimony/2008-02-13-PaulVallas.pdf).
---------------------------------------------------------------------------

Davis-Bacon

    Under the bill, the construction, modernization, repair, 
and renovation projects paid for, in whole or in part, with the 
grants made available by this legislation are subject to Davis-
Bacon prevailing wage requirements. Davis-Bacon prevailing wage 
rules ensure that taxpayer dollars are not used to undercut 
local wage rates. These rules require contractors to pay the 
local prevailing wage to their employees.
    Davis-Bacon requirements will help control costs, ensure 
higher quality work, and improve safety. Studies have shown 
that, where prevailing wages are not required, contractors 
compete on the basis of labor costs, frequently resulting in 
poor construction quality as well as substantial cost and time 
overruns due to cheaper workers' lower levels of skill, 
productivity, and training.\29\ Where prevailing wages are 
paid, higher rates of productivity, safety, and building 
quality more than offset the cost of higher wages. For example, 
one study by the Mechanical Electrical Sheet Metal Alliance, 
focusing on highway and bridge construction, found that workers 
who were paid more than double the wage of low-wage workers 
were able to build 74.4 more miles of highway and 32.8 more 
miles of bridges for $557 million less.
---------------------------------------------------------------------------
    \29\See generally, Peter Philips, ``Square Foot Construction Costs 
for Newly Constructed State and Local Schools, Offices and Warehouses 
in Nine Southwestern and Intermountain States 1992-1994'' Prepared for 
the Legislative Education Study Committee of the New Mexico State 
Legislature, September 6, 1996.
---------------------------------------------------------------------------
    Davis-Bacon requirements help save federal, State, and 
local revenue. By creating family supporting jobs in local 
communities that do not drive workers' wages down, these 
requirements ease the burden on public programs and provide 
support for more economic activity. Studies have found that 
repeal of local prevailing wage laws results in lower incomes, 
loss of sales tax revenues, and a general loss of economic 
activity.\30\ These are precisely the types of effects the 
Committee intends to avoid by providing federal assistance to 
local communities consistent with Davis-Bacon.
---------------------------------------------------------------------------
    \30\Michael P. Kelsay et al., ``The Adverse Economic Impact from 
Repeal of the Prevailing Wage Law in Missouri,'' Council for Promoting 
American Business, January 2004.
---------------------------------------------------------------------------
    For the reasons stated above, the Committee believes 
passage of this bill will provide significant educational 
benefits for our nation's students, health benefits for 
students, teachers, and others who work in our schools, 
financial benefits for schools resulting from energy savings, 
economic benefits for hundreds of thousands of American workers 
and their families, and environmental benefits.

                EARLY LEARNING CHALLENGE FUND (TITLE IV)

    Over the past several decades, research on the brain and on 
child development has established that learning begins at birth 
and that the first five years of life have a lasting effect on 
children's learning, health, and behavior. During the first 
three years of life alone, the brain goes through its most 
dramatic development: children learn to walk, speak, reason, 
talk, learn, trust, and to interact with others.\31\ This 
developmental period is enormously consequential, laying the 
foundation for a child's cognitive, social, emotional, and 
physical development.\32\ It can be a time when a child 
experiences supportive and consistent relationships with 
parents and other caregivers that fosters healthy development 
and teaches children to trust others and their own abilities, 
or it can be a time when children fail to receive the 
supportive relationships and early learning opportunities their 
growing brains need, setting a course that can take years to 
remediate.
---------------------------------------------------------------------------
    \31\Submitted Testimony, Matthew Melmed, Submitted to the Committee 
on Education and Labor, U.S. House of Representatives Hearing 
``Investing in Early Education: Paths to Improving Children's 
Success,'' January 23, 2008.
    \32\National Research Council and Institute of Medicine (2000). 
From Neurons to Neighborhoods: The Science of Early Child Development. 
Jack P. Shonkoff and Deborah A. Phillips, Eds. Washington, D.C.: 
National Academy Press.
---------------------------------------------------------------------------
    As a result, the early years present an important 
opportunity for policymakers. By investing in programs that 
support families in their efforts to get their children off to 
a good start, we can prevent problems from developing that are 
more difficult and costly to address later in life. The 
Committee strongly believes that improving access to high-
quality early learning programs is an integral component of 
comprehensive school reform and is essential to ensuring 
America can compete in the global economy in the decades to 
come. The Early Learning Challenge Fund capitalizes on the 
importance of these early years by creating an investment that 
will leverage standards reform and fund initiatives that 
together will increase the availability of high-quality early 
learning programs for disadvantaged children from birth through 
age 5 so that all children can fulfill their potential. The 
Committee appreciates President Obama's recognition of the 
importance of early childhood to lifelong success and looks 
forward to working with the President to ensure that all 
children receive the early learning opportunities they need to 
thrive.
    Nearly 12 million children under age 5, including 6 million 
children under age 3 are regularly cared for by someone other 
than their parents.\33\ Child care is usually a family's 
highest or second highest budget item. Many families struggle 
to find and afford high quality early learning programs for 
young children. Unfortunately, the quality of early learning 
settings varies greatly, and despite some progress, early 
learning programs are held to inconsistent standards among and 
within states. Large national evaluations of child care find 
the average quality to be mediocre.\34\ and child care costs 
are frequently a family's highest expense or second highest 
family expense after housing.\35\ Center-based child care for 
one child costs between $3,000 and $13,000 per year, putting it 
out of reach for many working families.\36\ Therefore, it can 
be very difficult for families to find the kind of high quality 
early learning programs that appropriately support their 
child's development or that have the standards needed to help 
close the achievement gap.\37\ The Committee believes that 
without significant new public investment in the quality of 
early learning programs, many children will be unable to attain 
the benefit from early learning programs that would otherwise 
help them arrive at kindergarten ready to succeed.
---------------------------------------------------------------------------
    \33\Iruka, I. U., and Carver, P. R. (2006). Initial Results From 
the 2005 NHES Early Childhood Program Participation Survey (NCES 2006-
075). U.S. Department of Education. Washington, DC: National Center for 
Education Statistics.
    \34\Cost, Quality, and Outcomes Study Team. (1995). Cost, quality, 
and child outcomes in child care centers: Key findings and 
recommendations. Young Children, 50, 40-44; Peisner-Feinberg, E. S., 
Burchinal, M. R., Clifford, R. M., Culkin, M.L., Howes, C., Kagan, S. 
L., Yazejian, N., Byler, P., Rustici, J., & Zelazo, J. (1999). The 
children of the cost, quality, and outcomes study go to school: 
Executive summary. Chapel Hill: University of North Carolina at Chapel 
Hill, Frank Porter Graham Child Development Center.
    \35\Parents and the High Price of Care (2009). National Association 
of Child Care Resource and Referral Agencies. http://www.naccrra.org/
docs/reports/price_report/Price_Report_2009_execsumm.pdf.
    \36\Ibid.
    \37\Cost, Quality, and Outcomes Study Team. (1995). Cost, quality, 
and child outcomes in child care centers: Key findings and 
recommendations. Young Children, 50, 40-44; Peisner-Feinberg, E. S., 
Burchinal, M. R., Clifford, R. M., Culkin, M.L., Howes, C., Kagan, S. 
L., Yazejian, N., Byler, P., Rustici, J., & Zelazo, J. (1999). The 
children of the cost, quality, and outcomes study go to school: 
Executive summary. Chapel Hill: University of North Carolina at Chapel 
Hill, Frank Porter Graham Child Development Center.
---------------------------------------------------------------------------
    The long-lasting benefits of high quality early learning 
programs are well documented, and these programs are of 
particular benefit to disadvantaged children. High quality 
programs improve academic achievement, reduce the need for 
special education, increase employment and earnings, lower 
rates of teen pregnancy, reduce crime and delinquency, and 
ultimately increase our global competitiveness.\38\ Yet despite 
our understanding of the importance of quality early learning 
environments and the benefits that accrue when we provide 
children with high quality early learning opportunities, far 
too many of our children spend their time in settings that do 
not adequately support their development. The early childhood 
system has inconsistent standards among and within States, 
which often lack adequate resources to ensure that programs are 
of high quality and that children enter kindergarten ready to 
succeed. Fewer than half of States require centers to encourage 
parent involvement and thirteen State pre-kindergarten programs 
do not require any site visits to monitor compliance with 
standards. Additionally, twenty States do not require child 
care providers to have even a high school degree. Currently, no 
single State implements all the quality components of a model 
early learning system, though States and programs have made 
significant progress over the last twenty years in improving 
their early childhood systems.
---------------------------------------------------------------------------
    \38\E.g., Currie, J., & Thomas, D. (1995). Does Head Start Make a 
Difference? The American Economic Review, Vol. 85(3), 341-364. U.S. 
Department of Health & Human Services, Administration for Children & 
Families (2001). Head Start FACES: Longitudinal Findings on Program 
Performance, Third Progress Report. Washington, D.C.
---------------------------------------------------------------------------
    The Committee contends that given the importance of the 
first five years of life, substantially more investment in 
early childhood is necessary for all of America's children to 
have the opportunity to succeed and if America is to compete in 
the global economy. The graph below reflects the striking 
mismatch between the importance of investing early and the 
level of public investment in early childhood.\39\
---------------------------------------------------------------------------
    \39\Bruner, C., Goldberg, J., & Kot, V. (1999). The ABC's of early 
childhood: Trends, information, and evidence for use in developing an 
early childhood system of care and education.


    The Early Learning Challenge Fund is a bold and wise 
investment that recognizes the importance of quality and will 
support and advance State reforms that improve the quality of 
early learning programs across all settings for all children 
from birth through age 5, and particularly for low-income 
children. This landmark initiative will challenge States to 
develop effective, innovative models that promote high 
standards of quality. The Fund will also increase the 
transparency of what early learning programs are providing and 
how children are doing so that parents can hold states 
accountable for their choices and so parents can expect more 
for their children. High quality comprehensive early learning 
systems, starting at birth, will go a long way toward 
eliminating achievement gaps and providing children with the 
resources, skills, and tools they need to arrive at school 
ready for success. The years prior to kindergarten are about 
the most significant in shaping a child's foundation for 
learning and school success--and the Early Learning Challenge 
Fund will ensure that our investments reflect the importance of 
those early years.

The achievement gap

    The achievement gap that exists in elementary school and 
beyond begins before children enter kindergarten.\40\\41\ For 
example, the Early Childhood Longitudinal Study (ECLS) 
conducted by the National Center for Education Statistics found 
4 year olds from families living below the poverty line are 
already 18 months behind their peers.\42\ Moreover, of 4 year 
old children from families in the lowest 20 percent of 
socioeconomic status, 40.1 percent were proficient in numbers 
and shapes, of children from families in the middle 60 percent 
of socioeconomic status, 65.3 percent were proficient in 
numbers and shapes, and of children from families in the 
highest 20 percent socioeconomic status group, 87.1 percent 
were proficient in numbers and shapes.\43\ The achievement gap 
at kindergarten entry between students from more affluent 
families and those from middle and lower income families is 
also abundantly clear in this graph using additional data from 
the ECLS study.\44\

    \40\Lee, J., Grigg, W., and Dion, G. (2007). The Nation's Report 
Card: Mathematics 2007. National Assessment for Educational Progress. 
Can be accessed at: http:
//nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2007494; Lee, J., Grigg, W., 
and Donahue, P. (2007). The Nation's Report Card: Reading 2007. 
National Assessment for Educational Progress. Can be accessed at: 
http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2007496
    \41\Lee, V.E., and Burkam, D.T. (2002). Inequality at the Starting 
Gate: Social Background Differences in Achievement as Children Begin 
School. Economic Policy Institute: Washington DC.
    \42\Klein, L.G., & Knitzer, J. (2007). Promoting Effective Early 
Learning: What Every Policymaker and Educator Should Know. National 
Center on Children and Poverty. Columbia University.
    \43\Jacobson Chernoff, J., Flanagan, K. D., McPhee, C., and Park, 
J. (2007). Preschool: First Findings From the Preschool Follow-up of 
the Early Childhood Longitudinal Study, Birth Cohort (ECLS-B) (NCES 
2008-025). National Center for Education Statistics, Institute of 
Education Sciences, U.S. Department of Education. Washington, DC.
    \44\Source: U.S. Department of Education, National Center for 
Education Statistics, Early Childhood Longitudinal Study, Kindergarten 
Class of 1998-99, Fall 1998. 



    Unfortunately, children who enter kindergarten behind their 
peers have a difficult time catching up.\45\ The Committee 
strongly believes that effective investments to minimize the 
achievement gap prior to school entry benefits children, 
schools, and our nation, and that high quality state-funded 
preschool has significant potential to help accomplish this 
goal.
---------------------------------------------------------------------------
    \45\Entwisle, D. R. (1995). The role of schools in sustaining 
benefits of early childhood programs. The Future of Children, 5, 133-
144.
---------------------------------------------------------------------------

Cost effectiveness of high quality early learning programs

    The Committee believes that the cost-benefits of Title IV 
of H.R. 3221 make it a sound public investment. Acclaimed 
economists like Art Rolnick of the Minneapolis Federal Reserve 
and Nobel Laureate and University of Chicago professor James 
Heckman, conclude that early childhood interventions are among 
the best investments we can make for ensuring that all children 
become productive citizens and securing our long-term economic 
prosperity. ``Ability gaps between disadvantaged and other 
children open up early and children who start ahead keep 
accelerating past their peers, widening the gap,'' wrote James 
Heckman and Dimitriy Masterov in The Productivity Argument for 
Investing in Young Children. ``[Early learning] programs are 
likely to generate substantial savings to society and to 
promote higher economic growth by improving the skills of the 
workforce.'' Nobel Laureate James Heckman points out that 
``skill begets skill'' and concludes the longer we wait to 
intervene in a child's life, the more difficult it is to be 
effective and the more costly it is for society.\46\ By 
reducing the need for grade retention, reducing the need for 
special education services, increasing academic success, 
reducing juvenile crime, and creating a more qualified and 
competitive workforce, high quality early learning programs 
will ultimately save more in public funding than they cost to 
support.
---------------------------------------------------------------------------
    \46\Heckman, J. (May 2006). Keynote speech at the National Summit 
on America's Children. U.S. House of Representatives, Washington, DC.
---------------------------------------------------------------------------

The Early Learning Challenge Fund

    The Early Learning Challenge Funds challenges Governors to 
develop new approaches to raising the bar across State early 
learning settings. It will promote standards reform of State 
early learning programs serving children from birth through age 
5 in order to support healthy development and improve the 
school readiness outcomes of young children. By leveraging 
standards reform and funding quality initiatives, it will 
ensure more disadvantaged children participate in high-quality 
early learning programs that meet their developmental needs and 
help them arrive at kindergarten ready to succeed.
    The Early Learning Challenge Fund creates an incentive for 
States to develop an early learning system that integrate 8 key 
components:
     Early Learning and Development Standards that lead 
to school readiness and are integrated with programmatic and 
instructional practices.
     Quality Rating System that is evidence-based and 
structured with progressive levels of quality that target funds 
and provide transparent goals for program improvement.
     Program review and oversight that is applied 
across all programs and settings and is focused on components 
of quality related to school readiness.
     Comprehensive professional development system that 
can prepare an effective and well-qualified workforce of early 
educators, including supporting appropriate levels of training, 
education, credentials, and compensation.
     Support to parents and families so they are 
engaged and supported in their child's early learning.
     Coordinated systems to facilitate screening and 
referrals for health, mental health, disability and family 
support.
     A coordinated data infrastructure to collect 
essential information on where young children spend their time 
and the quality of the programs that serve them.
     An age- and developmentally-appropriate curriculum 
and assessment system for early learning programs that is used 
to support best practices, improve school readiness.
    Quality Pathways grants will be awarded to high-capacity 
States pursuing models of reform and excellence in early 
learning settings for children from birth through age 5. 
Innovative plans that already reflect significant progress 
toward establishing the core eight elements needed to improve 
quality and learning outcomes for children will be rewarded. 
States must develop data systems that will provide transparency 
on the number of children in high quality settings and require 
States to make progress increasing the number of children, in 
each age group, in The Committee emphasizes that state 
applications must demonstrate that improvements to the early 
learning system must address settings for infants, toddlers, 
and preschoolers. A state whose primary or sole focus is on 
improving the quality of early learning settings for 4-year-
olds would not be meeting the expectations of this grant. 
Moreover, in reviewing applications, the Committee intends the 
Secretary to recognize that states need to strive to support 
high quality full-day early learning programs because of their 
importance in meeting the needs of working families as well as 
meeting the needs of children. In addition, though the 
allowable use of funds in the legislation
    Development grants will be awarded to States that show 
promise for strengthening and expanding their early learning 
system but who need additional assistance to launch a 
comprehensive standards-based system. Development grants are 
not renewable because the Committee believes that if States 
implement them effectively, States will have positioned 
themselves to be competitive for a Quality Pathways Grant after 
three years.
    The Committee believes the Early Learning Challenge Grants 
will transform early learning programs and practices and become 
an integral part of a larger effort to reform education in this 
country.

Early Learning and Development Standards

    The Committee believes Early Learning and Development 
Standards reform is essential to the effort to improve early 
learning program quality and child outcomes. Accordingly, 
States receiving a Quality Pathway grant have 12 months to 
complete early learning and development standards that are 
developmentally, culturally, and linguistically appropriate for 
all children from until kindergarten entry. To adequately 
support child development and school readiness, these standards 
must address all domains of children's development and 
learning, including social, emotional, cognitive, and physical 
development and approaches to learning. States with standards 
that do not cover all these domains appropriate for infants, 
toddlers, and preschoolers must revise their standards 
accordingly. In addition, States receiving Quality Pathways 
grants have 18 months to conduct an analysis of alignment 
between their early learning and development standards with 
their program quality standards and with their kindergarten-
grade 3 academic content standards. It is critical that this 
alignment reflect the development progression of how children 
learn and develop the requisite skills as they move forward 
through the early grades. It is important this analysis ensure 
the breadth (language, literacy, math, social, emotional, 
approaches to learning, science, creative arts, and physical 
development) and depth (emphasis within each standard). The 
Committee believes it is then critical for states to support 
the integration of these standards into early learning program 
practices.

Children with disabilities

    Over the past decade, the number of identified children 
with disabilities and developmental delays under the age of 
five has grown substantially, represented by a 70 percent 
increase in infants and toddlers with disabilities and a 45 
percent increase in preschool children with disabilities. Under 
the Individuals with Disabilities Education Act, young children 
with disabilities are to be supported in natural settings (the 
least restrictive environment), including provision of 
specialized services in childcare programs, Head Start Centers, 
preschools, pre-K classrooms and other early learning settings. 
The Department of Education reports that a majority of states 
are making progress in serving children with disabilities in 
inclusive programs, with 36 states and territories serving 50 
percent or more of their preschoolers with disabilities in 
these general early learning programs.
    The Early Learning Challenge Fund requires states to 
address the needs of young children with disabilities as part 
of their broader early learning system and quality improvement 
activities. The Committee intends for States to develop early 
learning and development standards appropriate for all 
children, including children with disabilities. The Committee 
encourages states to consider the principles of Universal 
Design for Learning in developing such standards in order to 
meet this requirement. States should also address, as part of 
their plans to improve the capacity of the early learning 
workforce, how professional development activities will prepare 
all teachers to work with young children with disabilities. The 
Committee notes the legislation intends to hold states 
accountable for including the needs of young children with 
disabilities in their comprehensive plans as well as in 
improving the school readiness outcomes of these children.

Children with limited English proficiency

    Children with limited English proficiency account for a 
growing and significant share of children enrolled in schools 
and early learning programs. In some parts of the county, more 
than 50 percent of the preschool population comes from non-
English speaking homes.\47\ As a group, these students lag 
behind their peers in educational attainment and achievement. 
It is estimated that children with limited English proficiency 
entering kindergarten know 5,000 fewer words than their English 
speaking peers.\48\ As these students progress through the 
elementary grades, challenges with English proficiency and 
these vocabulary gaps will impact their ability to master 
higher order literacy skills, such as reading comprehension and 
writing, and challenging academic content. Therefore, there is 
an urgent need to design and implement early learning programs 
that provide these children with experiences that prepare them 
to achieve at high levels and become fluent in English. The 
Committee contends these efforts must be driven by empirical 
findings rather than ideology and language politics. In the 
last decade, advances in research regarding how young children 
with limited English proficiency acquire a second language 
provide useful guidance for policy development and the 
implementation of effective classroom practices for these 
children.\49\
---------------------------------------------------------------------------
    \47\Espinsoa, Linda, ``Challenging Common Myths About Young English 
Language Learners,'' Foundation for Child Development, January 2008.
    \48\Betty Hart and Todd R. Risley, Meaningful Differences in the 
Everyday Experience of Young American Children (Baltimore: Paul H. 
Brookes Co., Inc., 1995).
    \49\``Challenging Common Myths About Young English Language 
Learners,'' Foundation for Child Development, op.cit.
---------------------------------------------------------------------------
    The Early Learning Challenge Fund requires states to 
address the needs of young children with limited English 
proficiency as part of their broader quality improvement 
activities. States should address, as part of their plans to 
improve the capacity of the early learning teacher workforce, 
how professional development activities will prepare all 
teachers to work with young children with limited English 
proficiency. The Committee urges the research activities 
carried out under this Title to adequately examine how the 
school readiness outcomes of this population can be adequately 
addressed and improved. The Committee notes the legislation 
intends to hold states accountable for including the needs of 
young children with limited English proficiency in their 
comprehensive plans as well as in improving the school 
readiness outcomes of these children.

Voluntary participation in early learning programs

    The Committee notes that nothing in this legislation 
requires a child to participate in an early learning program.

Facilities

    The Committee notes that the supply of suitable spaces to 
house early childhood programs has not kept pace with the 
growth of the sector, and the shortage is especially severe in 
low-income communities--both urban and rural. For example, 
according to a 2007 report by the Advancement Project, 
California's Preschool Space Challenge, California currently 
lacks preschool-suitable spaces for approximately 117,000 or 21 
percent of its four year olds, with most of the deficit 
occurring in low-income communities. Because the Committee 
acknowledges the need for high-quality early learning program 
facilities to support the ultimate goal of preparing children 
to be ready to learn when they enter kindergarten. The bill 
provides that in-kind contributions for facilities development, 
including technical assistance, may be counted toward the State 
match. In-kind contributions that could be used for this 
purpose include the provision of lien-free land, structures or 
leased space, no-interest loans, revolving lines of credit, 
construction materials, and labor, in accordance with the 
Department of Education regulations at 34 CFR 74.23.

Child care licensing

    States cannot improve early childhood education for all 
ages without addressing basic health and safety requirements in 
child care programs. This should include minimum health and 
safety standards, pre-requisite training related to these 
health and safety standards and child development, and regular 
monitoring and inspections. The Committee expects to address 
these and other key licensing issues in the reauthorization of 
the Child Care and Development Block Grant so that states will 
receive further support and guidance to improve upon these 
areas and that children can be safe and healthy when out of 
their parents' care.

                     AMERICAN GRADUATION INITIATIVE

    The Committee believes that community colleges are the 
backbone of our Nation's educational and workforce systems, 
providing post-secondary education and job training to millions 
of Americans and serving as the critical pipeline to 
postsecondary education, job training, and economic vitality.
    Nearly 12 million students are enrolled at the more than 
1,000 community colleges across the country. These include 
students who are taking for-credit classes as well as those 
pursuing apprenticeships, taking developmental courses or 
career-prep courses, or taking basic core vocational education 
or general education courses necessary to further their 
education and achieve their career goals. Community colleges 
are essential to strengthening the middle class and providing 
the skilled workers necessary to meet our nation's economic and 
social challenges. For future workers, community colleges will 
be vital--the Bureau of Labor Statistics projects that 
occupations requiring an associate's degree or postsecondary 
vocational credentials will experience faster growth than those 
requiring a bachelor's degree. For dislocated workers, 
community colleges are similarly critical--research indicates 
that displaced workers who attend a community college 
substantially increase their long-term earnings, particularly 
if the classes are related to high-growth industries. These 
successes are in part due to the flexible nature of community 
colleges. They are able to work with employers and the private 
sector to address workforce shortages and create tailored 
training, partnerships, and apprentice programs for specific 
occupations. Community colleges lead the way in preparing 
graduates in the fields of green technology, healthcare, 
teaching, information technology and clean energy technology--
some of the fastest growing fields in America--and the world. 
Yet they are bursting at the seams, heavily under-resourced, 
and lack incentives to innovate.
    The Committee believes that America's ability to remain 
true to our highest ideals--and to maintain our leadership in 
the global economy--depends on our ability to transform our 
higher education system to provide the relevant knowledge and 
skills necessary to compete in a new and changing world. 
Economic progress and educational achievement go hand in hand. 
And in today's economy, access to higher education institutions 
and success in post-secondary education is no longer just a 
pathway to opportunity--it is a prerequisite.
    To address these and other overarching concerns, H.R. 3221 
includes provisions to increase innovation at community 
colleges, encourage states to be active participants in 
systematic community college reform, develop and make available 
free high-quality online education and training courses, and 
ensure that educational and employment outcomes are measured 
and shared within and among states and with the public.
    Further, it is the intent of the Committee that the states 
and entities receiving grants under the American Graduation 
Initiative should be encouraged to find innovative ways to 
address the needs of students and workers. This can include, 
but is not limited to the following: adapting college offerings 
to the schedules and needs of working students, such as 
creating evening, weekend, modular, compressed, or distance 
learning formats; augmenting programs and services, including 
providing specialized assessments and learning tools, 
streamlined registration processes, and specialized job 
placement counseling, for vulnerable populations, including 
disabled veterans and ex-offenders; enrolling students in 
learning communities; and other relevant innovations. The 
Committee encourages the design and implementation of 
innovative ways to improve retention in and completion of 
developmental education courses, including but not limited to 
enrolling students in cohorts; accelerating course content; 
integrating remediation and college-level curricula and 
instruction; dual enrolling students in remediation and 
college-level courses; tutoring; providing counseling and other 
supportive services; and giving small, material incentives for 
attendance and performance.
    Use of grants in this section are intended to prepare 
students for employment in skilled occupations in high-demand 
industries, and the Committee encourages entities to create 
programs that aim to close the gaps in enrollment for groups 
underrepresented in particular programs and occupations.
    In establishing benchmarks and evaluating the use funds, 
Congress intends the Secretary to consider the employment of 
underrepresented populations in nontraditional occupations for 
their gender as defined in the Carl D. Perkins Career and 
Technical Education Act of 2006. The evaluation should consider 
earnings relative to economic self-sufficiency, a standard of 
economic independence calculated or commissioned by the state 
which considers the income needs of families by family size, 
the number and ages of children in the family and sub-state 
geographical considerations.
    The Committee intends for entities developing, evaluating 
and disseminating high-quality online training, high school 
courses, and postsecondary education courses must ensure that 
these electronic materials are accessible to individuals with 
disabilities by meeting the access standards established by the 
U.S. Access Board.

                     V. Section-by-Section Analysis


              Title I--Investing in Students and Families


          SUBTITLE A--INCREASING COLLEGE ACCESS AND COMPLETION

Section 101. Federal Pell Grants

    The Student Aid and Fiscal Responsibility Act of 2009 
amends the Higher Education Act to include mandatory funding 
for the Pell Grant. This provides additional mandatory funding 
to augment funds appropriated to increase the federal maximum 
Pell Grant award by the change in the Consumer Price Index plus 
one percent.
    The mandatory component of the funding is determined by 
inflating the previous year's total and subtracting the maximum 
award provided for in the appropriations act for the previous 
year or $4860, whichever is greater.

Section 102. College Access and Completion Innovation Fund

    This section of the bill amends Part E of Title VII of the 
Higher Education Act to include two additional areas of grant 
activity for States, institutions of higher education, non-
profit organizations and guaranty agencies designed to improve 
post-secondary student success, completion, and post-completion 
employment, particularly for students from underrepresented 
backgrounds.
    The section authorizes and appropriates $600 million 
dollars for each fiscal year 2010 through 2014 for the three 
types of grants in Part E. Of the funds, 25% will be used for 
the College Access Challenge Grants under section 781, 50% will 
be used for State Innovation and Completion Grants under 
section 782, 23% will be used for Innovation in College Access 
and Completion National Activities Grants, and 2% will be used 
to evaluate the outcome of grants administered under Part E.
    State Innovation and Completion Grants will be awarded 
annually on a competitive basis to States meeting the 
application requirements set forth in the bill. States are 
required to provide assurances that they will develop and 
submit a statewide Access and Completion Plan, engaging key 
education stakeholders in the state, to increase the State's 
rate of persistence in and completion of postsecondary 
education. The State is authorized to provide subgrants to non-
profit organizations and guaranty agencies for assistance in 
carrying out the State grant. Priority is given to states who 
partner with philanthropic organizations or guaranty agencies. 
At least one-third of the State program (including both federal 
and non-federal shares) must be used for activities benefiting 
students at two-year institutions, no more than 10% of funds 
shall be used for development and implementation of statewide 
longitudinal data systems, and no more than 6% of funds can be 
used for administrative purposes relating to the grant.
    Under the Innovation in College Access and Completion 
National Activities grants, higher education institutions, non-
profit organizations, philanthropic organizations, guaranty 
agencies, and States are eligible to apply for grants awarded 
on a competitive basis for not less than $1,000,000. Grant 
funds may be used for innovative programs, policies, and 
services that increase the number of individuals with 
postsecondary degrees or certificates.

Section 103. Investment in historically black colleges and universities 
        and other minority-serving institutions

    This section amends section 371(b) of the higher Education 
Act by extending funding for programs under this section 
created under the College Cost Reduction Act for programs at 
historically black colleges and universities and other 
minority-serving institutions through 2014, including programs 
that help low-income students attain degrees in the fields of 
science, technology, engineering or mathematics by the 
following annual amounts: $100 million to Hispanic Serving 
Institutions including $10 million for community partnerships, 
$85 million to Historically Black Colleges and Universities, 
$15 million to Predominantly Black Institutions, $30 million to 
Tribal Colleges and Universities, $15 million to Alaska, 
Hawaiian Native Institutions, $5 million to Asian American and 
Pacific Islander Institutions, and $5 million to Native 
American non-tribal serving institutions.

Section 104. Investment in cooperative education

    This section provides $10 million for fiscal year 2010 for 
cooperative education programs pursuant to Part N of Title VIII 
of the Higher Education Act.

         SUBTITLE B--STUDENT FINANCIAL AID FORM SIMPLIFICATION

Section 121. General effective date

    This section specifies that changes to the federal needs 
analysis pursuant to this subtitle will take effect of the 
award year beginning on or after July 1, 2011.

Section 122. Treatment of assets in need analysis

    This section amends section 471 of the Higher Education Act 
by excluding the consideration of parental and student assets 
in the federal needs analysis formula that determines student 
aid eligibility for families with incomes below $150,000. 
Creates an asset cap for need-based aid above which a student 
is ineligible for need-based grants, loans, or work assistance. 
The asset cap is indexed for inflation. The section also makes 
conforming changes.

Section 123. Changes to total income; aid eligibility

    This section amends the definition of total income to 
streamline consideration of untaxed income and benefits to 
exclude: child support, workman's compensation, veteran's 
benefits, living allowances for military and clergy, non-
parental cash support, and other untaxed income and benefits. 
The section also amends the suspension of eligibility for drug-
related offenses related to exclude students convicted of 
possession of a controlled substance.

                     Title II--Student Loan Reform


                    SUBTITLE A--STAFFORD LOAN REFORM

Section 201. Federal Family Education Loan appropriations

    This section terminates the authority to make or insure any 
additional loans in the Federal Family Education Loan program 
after June 30, 2010.

Section 202. Scope and duration of Federal loan insurance program

    This section is a conforming amendment with regard to the 
termination of the FFEL program, limiting Federal insurance to 
those loans in the Federal Family Education Loan program for 
loans first disbursed prior to July 1, 2010.

Section 203. Applicable interest rates

    This section makes a conforming amendment with regard to 
the termination of the FFEL program limiting interest rate 
applicability to Stafford, Consolidation, and PLUS loans to 
those loans made before July 1, 2010.

Section 204. Federal payments to reduce student interest costs

    This section makes a conforming amendment with regard to 
the termination of the FFEL program by limiting subsidy 
payments to lenders for those loans for which the first 
disbursement is made before July 1, 2010.

Section 205. Federal PLUS loans

    This section makes a conforming change with regard to the 
termination of the FFEL program for federal PLUS loans by 
prohibiting further FFEL origination of loans after July 1, 
2010.

Section 206. Federal consolidation loans

    This section makes conforming changes with regard to the 
termination of FFEL program for federal consolidation loans by 
allowing borrowers who have a consolidated FFEL loan to 
subsequently consolidate into the Direct Lending program.

Section 207. Unsubsidized Stafford loans for middle-income borrowers

    This section makes conforming changes with regard to the 
termination of the FFEL program for Unsubsidized Stafford loans 
by prohibiting further FFEL origination of loans after July 1, 
2010.

Section 208. Loan repayment for civil legal assistance attorneys

    This section makes conforming changes with regard to the 
termination of the FFEL program for loans eligible for 
repayment for civil legal assistance attorneys, to FFEL loans 
first disbursed before July 1, 2010 and maintains eligibility 
for loan repayment in the Direct Lending program.

Section 209. Special allowances

    This section makes conforming changes with regard to the 
termination of the FFEL program by limiting special allowance 
payments to lenders under the FFEL program to loans first 
disbursed before July 1, 2010.

Section 210. Revised special allowance calculation

    This section changes the underlying index for the 
calculation of special allowance payments to lenders for loans 
first disbursed on or after January 1, 2000 and before July 1, 
2010 under the FFEL program from commercial paper (CP) to the 
1-month London Inter Bank Offered Rate (LIBOR).

Section 211. Origination of Direct Loans at institutions located 
        outside of the United States

    This section provides for the origination of federal Direct 
Loans at institutions located outside of the United States, 
through a financial institution designated by the Secretary.

Section 212. Agreements with institutions

    This section makes conforming technical changes with regard 
to the termination of the FFEL program for Department of 
Education agreements with Direct Lending institutions.

Section 213. Terms and conditions of loans

    This section makes conforming technical changes with regard 
to the termination of the FFEL program to clarify the terms and 
conditions of Direct Loans.

Section 214. Contracts

    This section directs the Secretary to award contracts for 
servicing loans through a competitive bidding process to 
eligible non-profit servicers for federal Direct Loans. The 
section provides for a minimum allocation to eligible servicers 
of the lesser of 100,000 borrowers or the loans of all the 
borrowers in a State. In the case of multiple servicers, the 
Secretary shall allocate each servicer the lesser of the loans 
of 100,000 borrowers or equal shares of the loans of all 
borrowers in the state. The section also ensures that borrowers 
with multiple loans remain with a single servicer. Non-profit 
servicers must meet quality and pricing standards set by the 
Secretary.

Section 215. Interest rates

    This section changes, beginning on July 1, 2012, the 
interest rate on Subsidized Stafford loans for undergraduates 
from a fixed rate to a variable rate with a cap of 6.8%. The 
variable rate is calculated on the basis of the 91-day Treasury 
bill plus 2.5%.

                    SUBTITLE B--PERKINS LOAN REFORM

Section 221. Federal Direct Perkins Loans terms and conditions

    This section amends Part D of Title IV, adding in a new 
section 455A creating Federal Direct Perkins Loans. The section 
authorizes institutions to award Perkins loans to students 
pursuant to an agreement with the Secretary. The section aligns 
the Perkins loan program with the terms, conditions, and 
requirements of the federal Direct Unsubsidized Stafford loan, 
with the exception of a lower applicable interest rate of 5%.

Section 222. Authorization of appropriations

    This section makes a conforming change to sunset the 
discretionary allocation of additional Perkins funds through 
the current Perkins loan program to loans made prior to July 1, 
2010.

Section 223. Allocation of funds

    This section makes a conforming change to the allocation of 
funds under section 462 of the current Perkins loan program to 
sunset the program by fiscal year 2010.

Section 224. Federal Direct Perkins Loan allocation

    This section establishes an annual Direct Perkins loan 
authority for the annual issuance of up to $6 billion from 
funds under Part D beginning with the 2010-2011 award year. For 
each award year, 50% of funds are allocated to institutions on 
the basis of the adjusted self-help need amount of the 
institution. The adjusted self-help need amount is determined 
by each eligible undergraduate student's average cost of 
attendance less each undergraduate student's expected family 
contribution, plus each eligible graduate or professional 
student's average cost of attendance less each graduate or 
professional student's expected family contribution. For 
undergraduate students the amount of self-help need cannot 
exceed 25% of the average cost of attendance or $5,500 and for 
graduate and professional students it cannot exceed $8,000.
    Of the remaining 50% of funds: 25% of the funds are awarded 
on the basis of a low tuition incentive, and 25% of the funds 
are allocated to institutions based on the number of students 
that graduate who are federal Pell Grant recipients. The 
calculation of the low tuition incentive is based on the amount 
by which the institution's tuition and fees is below the 
average tuition and fees for its sector, plus the amount by 
which the non Federal grant aid provided by the institution to 
needy students drives them below the average tuition and fees 
for the institution's sector. The calculation of the Pell Grant 
incentive is determined by the ratio of Pell grant recipients 
to Pell grant recipients who complete a postsecondary degree.
    If the institution's base self-help need amount exceeds 50% 
of the loan authority under this section, the base amounts of 
the eligible institutions is ratably reduced. There is also a 
corresponding ratable reduction that applies to the low tuition 
incentive and the Pell Grant incentive.
    Participants of the current Perkins loan program are 
guaranteed to receive no less than the average of the 
institution's total principal amount of loans for each of the 
five most recent award years.

Section 225. Agreements with institutions of higher education

    This section describes the nature of the agreement between 
the Secretary and the institution with regard to participation 
in the Federal Direct Perkins Loan program. Specific 
requirements include that the institution will: establish and 
maintain the program, operate the program consistent with their 
requirements under the Federal Direct Loan program, and pay an 
institutional match to be determined by the Secretary.

Section 226. Student loan information by eligible institution

    This section makes conforming changes to limit the 
disclosure requirements of institutions participating in the 
current Perkins loan program to Perkins loans made before July 
1, 2010.

Section 227. Terms of loans

    This section makes conforming changes to sunset the terms 
and conditions of Perkins loans made before July 1, 2010.

Section 228. Distribution of assets from student loan funds

    This section recalls the federal capital contribution to 
the Perkins loan revolving funds at participating institutions 
minus the cost of student loan cancellations pursuant to the 
terms of the current program and administrative costs. The 
institution's contribution is also paid back to the 
institution.

Section 229. Administrative expenses

    This section makes conforming changes to sunset the 
administrative expense payments by the Secretary under Part E 
for the current Perkins loan program.

            Title III--Modernization, Renovation, and Repair


             SUBTITLE A--ELEMENTARY AND SECONDARY EDUCATION

Section 301. Definitions

    Includes definitions of Bureau-funded school, charter 
school, CHPS Criteria, Energy Star, Green Globes, LEED Green 
Building Rating System, local educational agency, outlying 
area, public school facilities, Secretary, and State.

 CHAPTER 1--GRANTS FOR MODERNIZATION, RENOVATION, OR REPAIR OF PUBLIC 
                           SCHOOL FACILITIES

Section 311. Purpose

    Indicates the purpose of grants under chapter 1 is for 
modernizing, renovating, or repairing public school facilities 
to ensure that public school facilities are safe, healthy, 
high-performing, and technologically up-to-date.

Section 312. Allocation of funds

    Directs the Secretary to reserve two percent of funds 
appropriated for chapter 1 for each fiscal year for assistance 
to the outlying areas and for payments to the Secretary of the 
Interior for assistance to Bureau-funded schools and requires 
that such funds be distributed between the outlying areas and 
the Department of the Interior for schools in outlying areas 
and Bureau of Indian Education-funded schools in the same 
proportion as the amount reserved under section 1121(a) of the 
Elementary and Secondary Education Act. Directs the Secretary 
to reserve five percent of funds appropriated for chapter 1 for 
each fiscal year for assistance to local educational agencies 
serving geographic areas with significant economic distress and 
those recovering from a natural disaster. Allows each State to 
reserve up to one percent of funds appropriated for chapter 1 
for each fiscal year to provide technical assistance, to 
develop a plan to create an online, publicly searchable 
statewide database of public school facility design, condition, 
modernization, renovation and repair needs, usage, utilization, 
energy use, and carbon footprint, and create voluntary 
guidelines for high-performing public school buildings.
    Allocates to each State the same percentage of funds 
appropriated under Title I of this Act that the State receives 
under Title I, Part A of the Elementary and Secondary Education 
Act of 1965. Within each State, allocates to each local 
educational agency the same percentage of funds appropriated 
under Title I of this Act that the agency receives under Title 
I, Part A of the Elementary and Secondary Education Act of 
1965.
    Requires the Secretary, in determining State and local 
allocations, to take into account the hold-harmless provisions 
of Title I, Part A of the Elementary and Secondary Education 
Act of 1965.
    Requires the Secretary to distribute funds to States within 
one hundred twenty days of the Department's appropriation and 
requires States to distribute funds to local educational 
agencies within ninety days of having received them from the 
Secretary.

Section 313. Allowable use of funds

    Describes the types of public school modernizations, 
renovations, and repairs that are allowable uses of funds under 
chapter 1, including repair to roofs, electrical, plumbing, 
sewage, stormwater runoff, lighting systems, building envelope, 
heating, ventilation, and air-conditioning systems, windows, 
floors, ceilings, doors, including insulation and indoor air 
quality assessments. Funds may also be used to bring schools 
into compliance with fire, health, seismic and safety codes, 
including modernizations, renovations, and repairs that ensure 
that schools are prepared for emergencies. Funds may be used 
for retrofitting that will increase the energy efficiency of 
public school facilities and for modifications necessary to 
comply with the Americans with Disabilities Act of 1990 and 
section 504 of the Rehabilitation Act of 1973. Additional uses 
contemplated by the bill include, abatement, removal, or 
interim controls of asbestos, polychlorinated biphenyls, mold, 
or mildew; reduction of human exposure to lead-based hazards or 
proven carcinogens; reduction of classroom noise and 
environmental noise pollution; modernization, renovation, or 
repair to reduce the consumption of coal, electricity, land, 
natural gas, oil, or water; upgrading or installing educational 
technology infrastructure; modernization, renovation, or 
repairs of laboratory facilities, libraries, career and 
technical education facilities, and improvements to building 
infrastructure to accommodate bicycle and pedestrian access; 
renewable energy generation, heating systems and energy audits; 
measures designed to reduce or eliminate human exposure to 
airborne particles; creating greenhouses, gardens, and other 
facilities for environmental scientific, or other educational 
purposes, or to produce energy savings; modernizing, 
renovating, or repairing physical education facilities and 
recreational structures for students, other modernizations, 
renovations, or repairs that improve the teaching and learning 
climate, ensure the health and safety of students and staff, or 
make schools more energy efficient; or reduce class size; and 
required environmental remediation related to modernizations, 
renovations, or repairs described above.

Section 314. Priority projects

    Allows local educational agencies to give priority to 
projects involving the abatement, removal, or interim controls 
of asbestos, polychlorinated biphenyls, mold, mildew, lead-
based hazards, including lead-based paint hazards, or a proven 
carcinogen.

 CHAPTER 2--SUPPLEMENTAL GRANTS FOR LOUISIANA, MISSISSIPPI, AND ALABAMA

Section 321. Purpose

    Indicates the purpose of grants under chapter 2 is for 
modernizing, renovating, repairing, or constructing public 
early learning, kindergarten, elementary, and secondary 
educational facilities to address needs caused by damage 
resulting from Hurricane Katrina or Hurricane Rita.

Section 322. Allocation to local educational agencies

    Directs the Secretary to allocate funds to local 
educational agencies in Louisiana, Mississippi, and Alabama 
based on the infrastructure damage caused as a result of 
Hurricane Katrina or Hurricane Rita.
    Requires the Secretary to distribute funds to local 
educational agencies within one hundred twenty days of an 
appropriation of funds.

Section 323. Allowable use of funds

    Includes the same list of allowable uses of funds as 
section 313, but also allows local educational agencies to use 
chapter 2 funds for construction of new facilities.

                     CHAPTER 3--GENERAL PROVISIONS

Section 331. Impermissible uses of funds

    Prohibits funds received under this Act from being used for 
payment of maintenance costs and stadiums or similar facilities 
whose primary use is for athletic contests or exhibitions for 
which admission is charged to the general public. Also 
prohibits the improvement or construction of facilities whose 
purpose is not the education of students, such as 
administrative facilities and the purchase of carbon offsets.

Section 332. Supplement, not supplant

    Requires local educational agencies receiving funds under 
this Act to use such funds to supplement, and not supplant, 
funds that otherwise would be used for the same purposes.

Section 333. Prohibition regarding State aid

    Prohibits a State from taking payments under this Act into 
consideration when determining the eligibility, or amount of, 
State aid for any local educational agencies.

Section 334. Maintenance of effort

    Allows only local educational agencies with at least a 
ninety percent maintenance of effort with respect to the 
provision of a free public education from the previous fiscal 
year to receive funds under this Act.

Section 335. Special rule on contracting

    Requires a local educational agency that receives funds 
under this Act and that carries out projects through a contract 
to ensure that the bidding process consist of the maximum 
number of qualified bidders, including local, small, minority, 
women- and veteran-owned businesses, through full and open 
competition.

Section 336. Use of American iron, steel, and manufactured goods

    Requires that all of the iron, steel, and manufactured 
goods used in projects under this Act are produced in the 
United States unless the Secretary finds that the use of these 
products is inconsistent with the public interest, the products 
are not produced in sufficient quantities or of satisfactory 
quality, or the use of such products will increase the overall 
cost of the project by more than 25 percent. If the Secretary 
waives this provision due to a circumstance described above, 
the Secretary must public a detailed written justification of 
the determination in the Federal Register. This section must be 
applied in a manner that is consistent with international 
agreements.

Section 337. Labor standards

    States that the Davis-Bacon labor law provisions apply to 
any funds received under this Act.

Section 338. Charter schools

    Requires that charter schools receive a portion of a local 
educational agency's funds under this Act, based on the 
percentage of low income students in the local educational 
agency served by charter schools and that local educational 
agencies consult with charter schools to determine individual 
school's needs for renovation, modernization, and repair. 
Allows local educational agencies to use excess funds for other 
public school facility modernization, renovation, repair, or 
construction if, after consulting with charter school 
administrators, the local educational agency determines that 
the amount reserved exceeds the needs of charter schools within 
the agency.

Section 339. Green schools

    Requires local educational agencies receiving funds under 
this subtitle to use at least half of such funds appropriated 
in fiscal year 2010 and seventy five percent of funds 
appropriated in fiscal year 2011 for public school 
modernizations, renovations, repairs, or construction that meet 
specified ``green'' standards, including equivalent standards 
adopted by the State or local authority with jurisdiction over 
the agency, which must include a verifiable method to 
demonstrate compliance.
    Clarifies that nothing under Sec. 339 shall be construed to 
prohibit a local educational agency from using sustainable, 
domestic hardwood lumber for public school modernization, 
renovation, repairs, or construction.
    Requires the Secretary, in consultation with the Secretary 
of Energy and the Administrator of the Environmental Protection 
Agency, to provide outreach and technical assistance to States 
and local educational agencies concerning best practices in 
school modernization, renovation, and repair, including those 
related to student academic achievement, student and staff 
health, energy efficiency, and environmental protection.

Section 340. Reporting

    Describes the reporting requirements applicable to local 
educational agencies, States, and the Secretary, and requires 
local educational agencies to make their reports publicly 
available, including on their website.

Section 341. Special rules

    Prohibits funds under this subtitle from being used to 
employ workers in violation of section 274A of the Immigration 
and Nationality Act and from being distributed to a local 
educational agency that does not have a policy that requires a 
criminal background check on all employees of the agency.

Section 342. Promotion of employment experiences

    Directs the Secretary, in consultation with the Secretary 
of Labor, to promote appropriate opportunities for participants 
in the Youthbuild program, individuals enrolled in the Job 
Corps program, individuals enrolled in a junior or community 
college certificate or degree program related to sec 339(a), 
and participants in preapprenticeship programs that have direct 
linkages with apprenticeship programs that are registered with 
the Department of Labor or a State Apprenticeship Agency under 
the National Apprenticeship Act of 1937 to gain employment 
experience through projects under this subtitle.

Section 343. Advisory Council on Green, High-Performing Public School 
        Facilities

    Establishes the Advisory Council on Green, High-Performing 
Public School Facilities to advise the Secretary on the impact 
of green, high-performing schools on teaching and learning, 
health, energy costs, environmental impact, and other areas.

Section 344. Education regarding projects

    Allows local educational agencies to encourage schools 
where modernization, renovation, or repair projects are 
undertaken to educate students about the project, including, as 
appropriate, the functioning of the project and its 
environmental, energy, sustainability, and other benefits.

Section 345. Availability of funds

    Authorizes to be appropriated and appropriates for chapter 
1 $2,020,000,000 for each of fiscal years 2010 and 2011. 
Authorizes to be appropriated and appropriates for chapter 2 
$30,000,000 for each of fiscal years 2010 and 2011.

                      SUBTITLE B--HIGHER EDUCATION

Section 351. Federal assistance for community college modernization

    This section establishes a federal grant program for 
community college modernization, repair, and construction. 
Grants are awarded to states for one of the following uses: to 
reduce financing costs of loans, to provide matching funds for 
capital campaigns, or to provide capital to a revolving loan 
fund, for new construction modernization, renovation, or repair 
projects at community colleges. Community colleges can use 
funds for the construction, modernization, renovation, or 
repair of community college facilities that are primarily used 
for instruction, research, or student housing including: 
heating and air conditioning systems, emergency preparedness, 
increasing energy efficiency, expanding accessibility of 
facilities for Americans with Disabilities Act compliance, 
removal or abatement of asbestos or lead-based paint, 
technology upgrades, or renewable energy generation. Requires 
local educational agencies receiving funds under this subtitle 
to use at least half of such funds appropriated for community 
college modernizations, renovations, repairs, or construction 
that meet specified ``green'' standards, including equivalent 
standards adopted by the State or local authority with 
jurisdiction over the agency, which must include a verifiable 
method to demonstrate compliance.

                Title IV--Early Learning Challenge Fund


Section 401. Purpose

    Sets forth five purposes to the title.

Section 402. Programs authorized

    Reserves up to 2 percent of funds for joint administration 
of the title by the Secretary of Education and up to 3 percent 
for research activities described in section 405. Authorizes 
.25 percent for a competitive grant program to Indian tribes to 
develop and implement school readiness plans. After these 
reservations, reserves up to 65 percent for fiscal years 2010 
through 2012 and up to 85 percent for subsequent fiscal years 
for Quality Pathways Grants. The remainder is reserved for 
Development Grants. Lists priority criteria for awarding 
competitive grants and state maintenance of effort 
requirements. Describes the federal administration of the grant 
program and includes a list of a prohibition on the use of 
funds.

Section 403. Quality pathways grants

    Describes the quality pathways grants, including the grant 
period, the Secretary's criteria for awarding grants and 
determining amount of the award, as well as criteria for 
renewal, and the state matching requirement. Explains the 
required contents of State applications and the allowable uses 
of funds. Includes special rule allowing 25% of funds from a 
Quality Pathways grant to be used to expand access under 
certain conditions. Includes an improvement plan for states 
encountering barriers to reaching their goals.

Section 404. Development grants

    Describes the development grants, including the grant 
period, the use of funds, and the matching requirement.

Section 405. Research and evaluation

    From funds reserved in section 402, requires the Secretary 
of education and the Secretary of Health and Human Services to 
act jointly to carry out 4 activities: (1) establish a national 
commission to review and provide recommendations regarding 
early learning program standards and early learning and 
development standards; (2) conduct a national evaluation of the 
grants made under the title; (3) support a research 
collaborative to support research that can inform improved 
child outcomes; (4) review strategic reports by the State 
Advisory Councils on Early Care and Education and disseminate 
best practices.

Section 406. Reporting requirements

    Requires the Secretary of Education to submit an annual 
report to the Committee on Education and Labor of the U.S. 
House of Representatives and the Health, Education, Labor, and 
Pensions Committee of the U.S. Senate and describes the 
contents of such report. Requires States receiving grants under 
this title to submit annual reports to the Secretary of 
Education and describes the contents of such report.

Section 407. Construction

    Includes two rules of construction regarding interpretation 
of the provisions of the title.

Section 408. Definitions

    Includes definitions for the term `child', `disadvantaged', 
`Indian tribe', `Limited English Proficient', `Secretary', and 
`State'.

Sec. 409. Availability of Funds

    Provides $1 billion for each of fiscal years 2010 through 
2017.

                Title V--American Graduation Initiative


Section 501. Authorization and appropriation

    This section authorizes and appropriates $730 million for 
each fiscal year 2010 through 2013 and $680 million for each 
fiscal year 2014 through 2019 for the American Graduation 
Initiative. For fiscal years 2010 through 2013: $630 million is 
available for the Community College Challenge grant program, 
$50 million is available for open online education, and $50 
million is available for the Learning and Earning Research 
Center and grants to states for data systems. For fiscal years 
2014 through 2019: $630 million is available for grants to 
States for community college programs and $50 million is 
available for open online education.
    Sections 503 and 504 will be jointly administered by the 
Secretary of Education and the Secretary of Labor pursuant to 
an interagency agreement, with the Secretary of Education 
having primary responsibility for obligating and disbursing 
funds and ensuring compliance with applicable law and 
administrative requirements.

Section 502. Definitions

    This section defines eligible entities and the following 
terms: area career and technical education school, institution 
of higher education, community college, philanthropic 
organization, State, State Public Employment Service, State 
Workforce Investment Board, Local Workforce Investment Board, 
and supportive services. Eligible entities include: community 
colleges and community college districts; area and career 
technical education schools; public four-year institutions that 
offer two-year degrees, use funds for activities at the 
associate degree and certificate levels, and is not reasonably 
close to a community college; States and higher education 
institutions in partnership with one of the above four eligible 
entities; and consortia of at least two of the above entities.

Section 503. Grants to eligible entities for community college reform

    This section authorizes the Secretary of Education, in 
coordination with the Secretary of Labor to award competitive 
grants to community colleges, area career and technical 
colleges, public four-year institutions offering two-year 
degrees, States or public four-year institutions partnering 
with community colleges, or consortia of the above entities.
    Grants awarded are for innovative programs, or programs of 
demonstrated effectiveness, that lead to the completion of a 
postsecondary degree, certificate, or industry-recognized 
credential leading to a skilled occupation in a high-demand 
industry. Grants are awarded for a four-year period. The 
Secretary is authorized to terminate a grant in the third year 
if the eligible entity has not made demonstrable progress in 
achieving agreed upon benchmarks. If such a determination is 
made, no further grant funds will be awarded. The minimum grant 
award is $750,000. Priority is given to eligible entities 
partnering philanthropic organizations, businesses, and labor 
organizations for defined purposes. Eligible entities seeking a 
grant must submit a detailed application to the Secretary.
    Requires a non-federal match for federal dollars to cover 
50% of the cost of the programs, services, and policies under 
the grant. The non-federal portion of the match can be in cash 
or in kind, and can be provided from States, local resources, 
and/or private organizations. A hardship waiver may be granted 
by the Secretary pursuant to Department regulations.
    Eligible entities receiving a grant must use grant funds to 
carry out two of the following activities: facilitating 
transfer of credit and articulation agreements; expanding, 
enhancing, or creating academic or training programs in 
partnership with employers; providing student and worker 
support services; creating workforce programs leading to 
industry-recognized credentials; building or enhancing linkages 
including the development of dual enrollment programs and early 
college high schools; and other innovative programs to increase 
completion and the provision of training for students to enter 
skilled occupations.
    Requires eligible entities receiving a grant to develop and 
annually measure and report quantifiable benchmarks approved by 
the Secretary on the following indicators as applicable: 
closing gaps in enrollment and completion rates; addressing 
local and regional workforce needs; and improving educational 
and employment outcomes for education and training programs.
    This section also authorizes the Secretary to allocate up 
to 2% of funds to direct the Institute of Education Sciences to 
conduct evaluations to determine the effectiveness of grant 
programs carried out by eligible entities receiving a grant. 
Evaluations must conclude prior to January 30, 2014.
    The Secretary is required to annually submit a report to 
the Committee on Health, Education, Labor, and Pensions of the 
Senate and Labor and the Senate and the Committee on Education 
and Labor of the House of Representatives.

Section 504. Grants to eligible States for community college programs

    This section authorizes the Secretary of Education, in 
coordination with the Secretary of Labor to award competitive 
grants to States to implement systematic reform of community 
colleges located in the State by carrying out programs, 
policies, and services that have demonstrated effectiveness 
resulting from the evaluation in section 503.
    In order to be eligible for a grant under this section a 
State must: have an access and completion plan under section 
782 of the Higher Education Act of 1965, have an interoperable 
statewide longitudinal data system including community college 
data, have an articulation agreement pursuant to section 486A 
of the Higher Education Act of 1965, and is in compliance with 
section 137 of the Higher Education Act of 1965. Eligible 
States seeking a grant must submit a detailed application to 
the Secretary.
    Grants are awarded for a six-year period. The Secretary is 
authorized to terminate a grant in the third year if the 
eligible entity has not made demonstrable progress in achieving 
agreed upon benchmarks. If such a determination is made, no 
further grant funds will be awarded.
    Requires a non-federal match for federal dollars to cover 
50% of the cost of the programs, services, and policies under 
the grant. The non-federal portion of the match can be in cash 
or in kind, and can be provided from States, local resources, 
and/or private organizations. A hardship waiver may be granted 
by the Secretary pursuant to Department regulations.
    Requires eligible entities receiving a grant to develop and 
annually measure and report quantifiable benchmarks approved by 
the Secretary on the following indicators as applicable: 
closing gapes in enrollment and completion rates; addressing 
local and regional workforce needs; and improving educational 
and employment outcomes for education and training programs.
    States must submit an annual report to the Secretary of 
Education and the Secretary of Labor detailing the description 
and outcome of the systematic reform carried out under the 
grant.
    The Secretary is required to submit a report not later than 
six months following the end of the grant period.

Section 505. National activities

    This section authorizes the Secretary to make competitive 
grants or contract with institutions of higher education, 
philanthropic organizations, or other appropriate entities to 
develop, evaluate, and disseminate freely-available high-
quality online training, high school courses, and postsecondary 
education courses.
    This section also authorizes the Director of the Institute 
of Education Sciences to award a grant or contract with an 
organization with demonstrated expertise in research and 
evaluation of community colleges to establish and operate a 
Learning and Earning Center. The grant or contract is 
authorized for four years. Creates an advisory board appointed 
by the Secretary. Authorized activities for the center include: 
the development of common education and training metrics and 
creating standardized data elements and data-sharing protocol.
    Authorizes the Secretary to award grant to States and 
consortia of States to establish cooperative agreements to 
develop, implement, and expand interoperable statewide 
longitudinal data systems.
    Requires compliance with defined privacy and access to data 
provisions made applicable to the entire Act.
    The Secretary is required to annually submit a report to 
the Committee on Health, Education, Labor, and Pensions of the 
Senate and Labor and the Senate and the Committee on Education 
and Labor of the House of Representatives detailing the amounts 
awarded to entities and activities carried out pursuant to such 
grants or contracts.

                     VI. Explanation of Amendments

    The Committee considered and adopted the following 
amendments:
     Chairman Miller (D-CA) offered an amendment in the 
nature of a substitute which is explained in the body of this 
report.
     Representative Lynn Woolsey (D-CA) offered an 
amendment that requires the Secretary to give priority to grant 
applications for the Community College Initiative that focus on 
serving low-income, non-traditional students. The amendment was 
adopted by voice vote.
     Representative Susan Davis (D-CA) offered an 
amendment to provide loan forgiveness for loans incurred during 
the academic term in which a service member is activated. The 
amendment was adopted by voice vote.
     Representative Howard ``Buck'' McKeon (R-CA) 
offered an amendment that requires the Secretary, in 
coordination with the Secretary of Veterans Affairs, to provide 
supplemental grants to eligible veterans whose educational 
costs are not covered by the G.I. bill. The amendment was 
adopted by voice vote.
     Representative Ruben Hinojosa (D-TX) offered an 
amendment to extend mandatory funding to Historically Black 
Colleges and Universities (HBCUs) and Minority Serving 
Institutions (MSIs) for programs to provide training in the 
areas of science, technology, engineering and mathematics 
through 2019. The amendment was adopted by voice vote.
     Representatives Dennis Kucinich (D-OH) and Phil 
Hare (D-IL) offered an amendment that requires States to report 
to the Secretary on barriers to expanding access to early 
learning programs to disadvantaged children. The amendment was 
adopted by voice vote.
     Representatives David Loebsack (D-IA) and Marcia 
Fudge (D-OH) offered an amendment to encourage greater 
connections among States, community colleges, and industry/
sector partnerships to strengthen core industries, create jobs, 
and train the workforce to fulfill those jobs. The amendment 
was adopted by voice vote.
     Representative Mazie Hirono (D-HI) offered an 
amendment to require state applications for Quality Pathway 
grants to address quality and effective inclusion of children 
with disabilities in early learning settings in state program 
rating systems. The amendment was adopted by voice vote.
     Representative Hare offered an amendment to 
clarify that States may use Early Learning Challenge grants to 
implement prevention strategies designed to build social 
competence and prevent challenging behaviors as an allowable 
use of funds. The amendment was adopted by voice vote.
     Representative Joe Courtney (D-CT) offered an 
amendment that it is a sense of the Congress that State 
grantees in the American Graduation Initiative distribute 
resources for community colleges across the State. The 
amendment was adopted by voice vote.
     Representative Jared Polis (D-CO) offered an 
amendment to allow eligible community colleges to use American 
Graduation Initiative grants to redesign and create new 
programs that address emerging needs of the workplace. The 
amendment was adopted by voice vote.
     Representatives Polis and Paul Tonko (D-NY) 
offered an amendment to add grants designed to increase 
certificate completion in the STEM fields for women and other 
disadvantaged group as a priority for the Secretary in issuing 
Innovation Grants. The amendment was adopted by voice vote.
     Representatives Polis and Hirono offered an 
amendment to require the research collaborative established 
under title IV of the bill to evaluate barriers to improving 
the quality of early learning programs for disadvantaged 
children. The amendment was adopted by voice vote.
     Representative Tonko offered two amendments:
           The first amendment adds water efficiency as 
        an allowable use of funds for K-12 modernization, 
        renovation, and repair, and provides that federal 
        funding for community college modernization and 
        construction supplement, and not supplant, other 
        funding for those purposes.
           The second amendment establishes a 
        competitive grant program for eligible institutions of 
        higher education to hire a Veterans Resource Officer to 
        increase college completion rates for veterans.
    Both amendments were adopted by voice vote.
     Representative Robert Andrews offered an amendment 
to amend the 90-10 rule to provide temporary relief to 
proprietary institutions by: extending the number of 
consecutive years an institution may fail to meet the 90-10 
requirement from two to three, before becoming ineligible to 
participate in Title IV programs; extending the period of time 
during which an institution may count the increase in student 
loan limits as non-title IV revenue; and exempting Federal 
Direct Perkins Loans made between July 1, 2010 through July 1, 
2010 from the 90-10 revenue calculation. The amendment was 
adopted by a vote of 42 to 5.
     Representatives Pedro Pierluisi (D-PR) and 
Gregorio Sablan (D-MP) offered an amendment to ensure that 
Puerto Rico, the District of Columbia, Guam, American Samoa, 
the United States Virgin Islands, the Commonwealth of the 
Northern Mariana, and the Freely Associated States are 
eligible, on the same terms as the states, for modernization 
and construction grants for community colleges under the 
American Graduation Initiative. The amendment was adopted by 
voice vote.

           VII. Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1, the Congressional 
Accountability Act, requires a description of the application 
of this bill to the legislative branch. H.R. 3221, as amended, 
will reform the federal student loan program, provide for 
modernization, renovation and repair of public school 
facilities, enhance early learning, and strengthen community 
colleges. The bill does not prevent legislative branch 
employees' coverage under this legislation.

                    VIII. Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandates Reform Act, P.L. 104-4) requires a statement of 
whether the provisions of the reported bill include unfunded 
mandates. H.R. 3221 contains no intergovernmental or private-
sector mandates as defined by the Unfunded Mandates Reform Act 
(UMRA).

                         IX. Earmark Statement

    H.R. 3221 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clauses 9(d), 9(e) or 9(f) of rule XXI of the House of 
Representatives.

                              X. Roll Call



    XI. Statement of Oversight Findings and Recommendations of the 
                               Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Committee's oversight findings and recommendations are 
reflected in the body of this report.

            XII. New Budget Authority and CBO Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the House of Representatives and section 308(a) of the 
Congressional Budget Act of 1974 and with respect to 
requirements of 3(c)(3) of rule XIII of the House of 
Representatives and section 402 of the Congressional Budget Act 
of 1974, the Committee expects to receive an estimate for H.R. 
3221 from the Director of the Congressional Budget Office:

                                     U.S. Congress,
                                Congressional Budget Office
                                  Washington, DC, January 24, 2009.
Hon. George Miller,
Chairman, Committee on Education and Labor,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3221, the Student 
Aid and Fiscal Responsibility Act of 2009.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Deborah 
Kalcevic and Justin Humphrey.
            Sincerely,
                                    Douglas W. Elmendorf, Director.
    Enclosure.

H.R. 3221--Student Aid and Fiscal Responsibility Act of 2009

    Summary: H.R. 3221 would amend the Higher Education Act of 
1965, which authorizes most federal postsecondary education 
programs. It would prohibit new federally guaranteed loans from 
being made under the Federal Family Education Loan (FFEL) 
Program and would increase direct spending for the Federal Pell 
Grant Program and other programs.
    The elimination of guaranteed student loans would lead to a 
comparable increase in direct lending by the government. The 
estimated subsidy cost shown in the budget is lower for the 
direct student loan program than for the FFEL program. Thus, 
enacting the bill would yield net budgetary savings for 
shifting new lending from the guaranteed loan program to the 
direct loan program.
    On balance, CBO estimates that enacting H.R. 3221 would 
reduce direct spending by $13.3 billion over the 2009-2013 
period and $7.8 billion over the 2009-2019 period. Assuming 
appropriation of the necessary amounts, implementing the bill 
would increase discretionary spending by at least $13.5 billion 
over the 2009-2019 period. (That estimate reflects the bulk of 
the likely discretionary costs under H.R. 3221; but CBO has not 
completed a comprehensive estimate of all effects that would be 
subject to appropriation action.) Enacting H.R. 3221 would not 
affect revenues.
    H.R. 3221 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
impact of H.R. 3221 on spending is shown in Table 1. The costs 
of this legislation fall within budget functions 500 
(education, training, employment, and social services) and 700 
(veterans benefits and services).

                        TABLE 1.--ESTIMATED BUDGETARY IMPACT OF H.R. 3221, THE STUDENT AID AND FISCAL RESPONSIBILITY ACT OF 2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         By fiscal year, in billions of dollars--
                                ------------------------------------------------------------------------------------------------------------------------
                                   2009     2010     2011     2012     2013     2014     2015     2016     2017     2018     2019   2009-2014  2009-2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING
 
Federal Student Loan Programs:a
    Estimated Budget Authority.      -0.2    -6.1    -14.1    -12.2     -8.7     -8.4     -8.0     -7.9     -7.6     -7.8     -8.1     -49.8      -89.2
    Estimated Outlays..........      -0.3    -3.8     -9.6    -11.3     -8.2     -7.5     -7.0     -6.8     -6.7     -6.7     -6.9     -40.7      -74.8
Federal Pell Grant Program:
    Estimated Budget Authority.       0       0.1      1.9      0.8      6.7      3.6      4.0      5.2      6.4      8.1      9.9      13.0       46.7
    Estimated Outlays..........       0         *      0.6      1.6      2.4      5.8      3.7      4.3      5.5      6.9      8.6      10.4       39.4
Other Programs:
    Estimated Budget Authority.       0       4.7      7.3      2.8      2.8      2.7      2.1      2.1      2.2      1.2      1.2      20.3       29.0
    Estimated Outlays..........       0       0.6      3.7      5.0      4.2      3.4      2.6      2.3      2.2      2.1      1.5      16.9       27.6
Total Changes:
    Estimated Budget Authority.      -0.2    -1.3     -4.9     -8.7      0.7     -2.2     -1.8     -0.5      1.0      1.5      3.0     -16.5      -13.4
    Estimated Outlays..........      -0.3    -3.1     -5.3     -4.6     -1.7      1.6     -0.7     -0.2      1.0      2.3      3.1     -13.3       -7.8
 
                                                      CHANGES IN SPENDING SUBJECT TO APPROPRIATIONb
 
Estimated Authorization Level..       0       0.1      0.8      0.9      1.1      1.3      1.5      1.8      2.1      2.4      2.6       4.3       14.8
Estimated Outlays..............       0       0.1      0.4      0.9      1.0      1.2      1.5      1.7      2.0      2.2      2.5       3.6      13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
aIncluding the Federal Perkins Loan Program.
bCBO has not completed an estimate of all discretionary spending under H.R. 3221; the estimates shown here represent the bulk of the bill's
  discretionary costs.
 
Notes: Components may not add to totals because of rounding; * = less than S50 million.

    Basis of estimate: As required under the Federal Credit 
Reform Act of 1990 (FCRA), most of the costs of the federal 
student loan programs are estimated on a net-present-value 
basis. Under credit reform, the present value of all loan-
related cash flows is calculated by discounting those expected 
cash flows to the year of disbursement, using the rates for 
comparable maturities on U.S. Treasury borrowing. (For example, 
the cash flow for a one-year loan is discounted using the 
Treasury rate for a one-year zero-coupon note.) The costs for 
the federal administration of student loans are estimated on a 
cash basis. For this estimate, CBO assumes the bill will be 
enacted by October 1, 2009, and that the necessary funds will 
be appropriated for all discretionary programs.

Direct spending

    H.R. 3221 would amend the federal student loan programs 
(including the Federal Perkins Loan Program) and the Federal 
Pell Grant Program and would amend or create several other 
programs. Those changes would decrease net direct spending by 
$13.3 billion over the 2009-2014 period and $7.8 billion over 
the 2009-2019 period.
    Federal Student Loan Programs. H.R. 3221 would make several 
changes to the federal student loan programs, including the 
Federal Perkins Loan Program. As shown in Table 2, CBO 
estimates that, on net, those changes would reduce federal 
costs by $40.7 billion over five years and $74.8 billion over 
10 years. The major changes that affect direct spending 
include:
           Eliminating new guaranteed student loans 
        under the FFEL program and thus shifting those loans to 
        the William D. Ford Federal Direct Student Loan 
        program--saving an estimated $86.8 billion over the 
        2010-2019 period;
           Reducing interest rates on subsidized 
        student loans to undergraduate borrowers--at a cost of 
        $3.2 billion over the 2012-2019 period;
           Interactions between the FFEL and direct 
        loan program and various other program changes--
        resulting in a net cost of $7.5 billion over the 2009-
        2019 period; and
           Speeding up the phase-out of the current 
        Perkins loan program and establishing a new Perkins 
        loan program in its place--for a net cost of $1.3 
        billion over the 2010-2019 period.

                                                                TABLE 2.--SUMMARY OF CHANGES IN THE FEDERAL STUDENT LOAN PROGRAMS
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           By fiscal year, in billions of dollars--
                                                             -----------------------------------------------------------------------------------------------------------------------------------
                                                                2009      2010      2011      2012      2013      2014      2015      2016      2017      2018      2019    2009-2014  2009-2019
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   CHANGES IN DIRECT SPENDING
 
Eliminate new lending in the FFEL Program:
    Estimated Budget Authority..............................       0        -4.8     -13.3     -12.2     -11.2     -10.5     -10.2     -10.2     -10.1     -10.3     -10.7      -52.1     -103.5
    Estimated Outlays.......................................       0        -2.6      -8.9     -11.0     -10.0      -9.4      -9.0      -8.9      -8.9      -9.0      -9.3      -41.8      -86.8
Reduce borrower interest rates:
    Estimated Budget Authority..............................       0         0         0         *         0.5       0.5       0.5       0.5       0.6       0.6       0.6        1.1        3.9
    Estimated Outlays.......................................       0         0         0         *         0.3       0.5       0.5       0.5       0.5       0.5       0.5        0.8        3.2
Interactions and other changes:
    Estimated Budget Authority..............................      -0.2       *         *         0.6       1.2       1.2       1.2       1.2       1.3       1.3       1.4        2.7        9.1
    Estimated Outlays.......................................      -0.3       *         *         0.4       0.8       1.0       1.0       1.1       1.1       1.1       1.2        2.0        7.5
Subtotal, FFEL and Direct Loans:
    Estimated Budget Authority..............................      -0.2      -4.8     -13.3     -11.6      -9.5      -8.8      -8.5      -8.4      -8.3      -8.4      -8.7      -48.3      -90.6
    Estimated Outlays.......................................      -0.3      -2.6      -8.9     -10.6      -8.9      -7.9      -7.5      -7.4      -7.3      -7.3      -7.6      -39.0      -76.1
Federal Perkins Loans:
    Estimated Budget Authority..............................       0        -1.3      -0.8      -0.6       0.7       0.4       0.5       0.6       0.6       0.6       0.6       -1.6        1.4
    Estimated Outlays.......................................       0        -1.2      -0.8      -0.7       0.7       0.3       0.5       0.5       0.6       0.6       0.6       -1.6        1.3
Total, All Federal Student Loans:
    Estimated Budget Authority..............................      -0.2      -6.1     -14.1     -12.2      -8.7      -8.4      -8.0      -7.9      -7.6      -7.8      -8.1      -49.8      -89.2
    Estimated Outlays.......................................      -0.3      -3.8      -9.6     -11.3      -8.2      -7.5      -7.0      -6.8      -6.7      -6.7      -6.9      -40.7      -74.8 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Components may not add to totals because of rounding; * between -$50 million and $50 million.

    Eliminate new lending in the FFEL Program. Under current 
law, the federal government provides federal loans to borrowers 
through two separate programs. In the FFEL Program (guaranteed 
loans), private lenders originate loans to postsecondary 
students and the federal government makes payments to these 
lenders, guarantees them against significant loss in the case 
of default, and provides funds to guaranty agencies to help 
administer those loans. In the direct loan program, the federal 
government serves as the lender.
    Beginning in July 2010, the bill would prohibit new 
guaranteed loans under the FFEL Program; which under current 
law, CBO estimates will account for about $705 billion in 
loans--70 percent of all loan volume--over the next 10 years. 
Under the prohibition in the bill, CBO expects that volume 
would shift to the direct loan program. CBO estimates that the 
subsidy rates for direct loans are, on average, about 10 to 20 
percentage points lower than for guaranteed loans. (The subsidy 
rate reflects the present value cost for each dollar the 
government loans or guarantees.) Because of that difference in 
subsidy rates, CBO estimates that prohibiting new guaranteed 
loans--with the replacement of those loans by direct student 
loans--would lower federal budget costs by $41.8 billion over 
2010-2014 period and by $86.8 billion over the 2010-2019 
period. Consistent with the accounting required under FCRA, 
most of those estimated savings represent the changes in 
present-value estimates for the switch from guarantees to 
direct loans for each year over that period.
    About $7 billion of the projected savings over the 2010-
2019 period reflect forgone administrative costs in the FFEL 
Program. The increased loan volume in the direct loan program 
would require additional funds for administering and servicing 
those loans, but those costs are classified as discretionary 
spending and discussed below under the heading ``Spending 
Subject to Appropriation.''
    Reduce Borrower Interest Rates. The bill would change the 
interest rate on subsidized loans for undergraduate borrowers 
beginning in July 2012. Under current law, the borrower rate on 
those student loans is scheduled to increase from 3.4 percent 
to 6.8 percent on July 1, 2012. Under the bill, the borrower 
rate would switch to a variable-rate formula. The rate charged 
would be equal to the 91-day Treasury bill rate (calculated as 
if it were equivalent to a bond) plus 2.5 percentage points, 
and would be adjusted annually each July. Because the rate 
would be capped at 6.8 percent, borrowers would never pay an 
interest rate higher than the 6.8 percent they would pay under 
current law, but would have some probability of paying a lower 
interest rate, depending on future Treasury rates.
    Taking into account the one-sided aspect of the new 
interest rate calculation and the historical volatility of 
rates on short-term Treasury borrowing, CBO estimates that 
changing the interest rate to a capped variable rate would cost 
$0.8 billion over the 2010-2014 period and $3.2 billion over 
the 2010-2019 period.
    Interactions and Other Changes. Other changes to the 
student loan programs and interactions between different 
sections of the bill would reduce net savings by $7.5 billion 
over the 2009-2019 period. Those changes are detailed below:
           CBO estimated the effects of each section of 
        the bill independently of all other sections and then 
        calculated the interaction between provisions for the 
        bill as a whole. For H.R. 3221, CBO estimates that the 
        interactive effects would reduce net savings by $7.6 
        billion over the 2009-2019 period.
     Beginning July 1, 2010, borrowers who currently 
have a guaranteed consolidation loan but do not also have a 
direct consolidation loan would be able to refinance their 
guaranteed consolidation loan into a direct loan. Under current 
law, consolidation loans are not permitted to be refinanced. 
Because of the difference in subsidy rates, CBO estimates this 
change would lower direct spending by an estimated $250 million 
in 2009.
     Beginning in July 2011, the bill would:
          1. Exclude the assets and most untaxed income of both 
        students and parents currently included in calculating 
        eligibility for need-based aid. CBO estimates this 
        would cost $120 million over the 2011-2019 period; and
          2. Allow student who have been convicted of 
        possession of illegal drug while receiving financial 
        aid to receive student aid. CBO estimates this would 
        cost $24 million over the 2011-2019 period. Both of 
        these provisions would also affect the Pell grant 
        program, and those costs are discussed below.
     H.R. 3221 would forgive federal loans for members 
of the uniformed services who do not receive academic credit 
because they must withdraw from school for reasons of military 
service. CBO estimates this provision would increase direct 
spending by $21 million over the 2010-2019 period.
     In October 2009, for loans first originated in 
January 2000 and after, the bill would allow lenders to make a 
one-time, permanent choice to change the underlying rate on 
which the yields are based for both outstanding and new 
guaranteed student loans. Under current law, the yield rates 
are based on the bond equivalency rate of the three-month 
Commercial Paper rate with various add-ons depending on the 
type of loan and the loan status. The bill would allow lenders, 
within a specified period of time, to change that rate to the 
one-month London Interbank Offered Rate (LIBOR), calculated as 
if it were equivalent to a bond. CBO estimates that this change 
would have a negligible impact on spending.
    Perkins Loan Program. H.R. 3221 also would amend the 
current Federal Perkins Loan Program, under which some 1,700 
colleges and universities use revolving funds to make student 
loans. (Schools loan about $1 billion a year to students from 
those revolving funds.) Over 80 percent of the capital in those 
revolving funds came from the federal government. Under current 
law in October 2012, schools must begin returning the 
government's share of those funds to the Treasury. Under H.R. 
3221, schools would begin the return of federal capital in July 
2010. The bill would allow schools to retain amounts for 
administrative expenses and other fees, thus slightly reducing 
expected receipts.
    The bill would establish a new Federal Perkins Loan Program 
in July 2010; the interest rate would be 5 percent and students 
would face the same terms and conditions as with unsubsidized 
direct loans under the direct loan program. (Borrowing limits 
would be similar to the existing Perkins Loan Program.) The new 
loans would be disbursed through school financial aid offices 
to borrowers who met the new financial need requirements. A 
maximum of $6 billion in new loans could be made each year.
    CBO estimates that, on net, these changes to the Perkins 
Loan Program would reduce direct spending by $1.6 billion over 
the 2010-2014 and increase direct spending by $1.3 billion over 
the 2010-2019 period.
    Federal Pell Grant Program. H.R. 3221 also would amend the 
current structure of the Federal Pell Grant Program and 
formulas for determining eligibility under that program. As 
shown in Table 3, CBO estimates these changes would increase 
direct spending by $10.4 billion over the 2010-2014 period and 
by $39.4 billion over the 2010-2019 period. (Some of these 
changes also would affect discretionary spending in the Pell 
grant program. Those changes are discussed below under 
``Spending Subject to Appropriation.'')

                                                  TABLE 3. ESTIMATED MANDATORY SPENDING FOR PELL GRANTS
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in billions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                             2009    2010    2011    2012    2013    2014    2015    2016    2017    2018    2019   2009-2014  2009-2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING
 
Amend the Current Mandatory Award:
    Estimated Budget Authority............       0     0.1     1.9     0.7     6.7     3.5     3.9     5.1     6.3     7.9     9.7      13.0       45.8
    Estimated Outlays.....................       0       *     0.6     1.6     2.4     5.8     3.6     4.2     5.4     6.7     8.4      10.3       38.7
Other Changes:
    Estimated Budget Authority............       0       *       *       *       *       *     0.1     0.1     0.2     0.2     0.2       0.1        0.9
    Estimated Outlays.....................       0       *       *       *       *       *     0.1     0.1     0.1     0.2     0.2         *        0.7
Total Changes:
    Estimated Budget Authority............       0     0.1     1.9     0.8     6.7     3.6     4.0     5.2     6.4     8.1     9.9      13.0       46.7
    Estimated Outlays.....................       0       *     0.6     1.6     2.4     5.8     3.7     4.3     5.5     6.9     8.6      10.4      39.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Components may not add to totals because of rounding; * = between -$50 million and $50 million.

    Mandatory Spending for Pell grants. Under current law, the 
Pell grant program is funded from both discretionary and 
mandatory sources. An annual appropriation sets the maximum 
award level for which students are eligible and a mandatory 
account provides additional funding to students eligible for 
the discretionary program. The amount of the additional 
mandatory award is determined by the amount of budget authority 
directly appropriated in the Higher Education Act. In 2009, CBO 
estimates that discretionary costs for the Pell grant program 
will be $22.8 billion with additional mandatory spending equal 
to $2.7 billion.
    H.R. 3221 would permanently amend the calculation of 
mandatory funding for Pell grants beginning in fiscal year 
2011. For each year, the bill would appropriate such sums as 
may be necessary to increase the mandatory award from the 
previous year. The increase in the mandatory award would be 
determined by inflating the previous year's total award level 
by the change in the Consumer Price Index plus one percentage 
point and then subtracting out the previous year's 
discretionary award level or $4,860 (whichever is greater). The 
base level of the award would continue to be set in an annual 
appropriations act. For 2010, the mandatory award level is set 
at $690.
    As shown in Table 4, starting with the most recent 
appropriations act (for the 2009-2010 academic year) which 
specifies an award level of $4,860, CBO estimates the mandatory 
award would grow from $690 in 2010 to $2,040 in 2019. If an 
appropriations act were to set the discretionary maximum award 
at a level greater than $4,860, it would raise the amount of 
the mandatory award in each successive year, and increase 
overall costs.

                                         TABLE 4. ESTIMATED MAXIMUM AWARD LEVELS FOR PELL GRANTS UNDER H.R. 3221
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               By fiscal year, in dollars--
                                                                 ---------------------------------------------------------------------------------------
                                                                   2009    2010    2011    2012    2013    2014    2015    2016    2017    2018    2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   MAXIMUM AWARD LEVEL
 
Discretionary award level.......................................   4,860   4,860   4,860   4,860   4,860   4,860   4,860   4,860   4,860   4,860   4,860
Additional mandatory award levela...............................     490     690     825     950   1,065   1,180   1,315   1,475   1,660   1,850   2,040
    Total.......................................................   5,350   5,550   5,865   5,810   5,925   6,040   6,175   6,335   6,520   6,710  6,900
--------------------------------------------------------------------------------------------------------------------------------------------------------
aThe mandatory add-on of $690 for fiscal year 2010 is stated in current law.

    Other Changes to Pell grants. In addition, CBO estimates 
that changes to the eligibility and needs analysis formulas 
(described above) and to programs whose funding is tied to Pell 
grants would, on net, increase direct spending by $0.7 billion 
over the 2010-2019 period.
    Other Federal Programs. H.R. 3221 would amend or create 
several mandatory grant programs that would provide education-
related funding to a wide variety of entities. As shown in 
Table 5, CBO estimates that these programs would increase 
direct spending by $16.9 billion over the 2010-2014 period and 
by $27.6 billion over the 2010-2019 period. In particular:
     H.R. 3221 would appropriate $8.0 billion for the 
Early Learning Challenge Fund--$1.0 billion a year for 2010 
through 2017. Based on the spending patterns of similar 
programs, CBO estimates this provision would increase direct 
spending by $7.9 billion over the 2010-2019 period.
     For fiscal years 2010 through 2019, H.R. 3221 
would appropriate a total of $7.0 billion for grants to states 
and institutions of higher education to undertake systemic 
reform of community colleges. CBO estimates this provision 
would increase direct spending by $6.1 billion over the next 10 
years.
     The bill would appropriate $2.5 billion in 2011 to 
renovate and modernize facilities for community colleges. Based 
on the spending patterns of similar programs, CBO estimates 
this provision would increase direct spending by $2.5 billion 
over the 2011-2019 period.
     The bill would appropriate $2.1 billion in 2010 
and 2011 to renovate and modernize facilities for elementary 
and secondary schools (K-12). Based on the spending patterns of 
similar programs, CBO estimates this provision would increase 
direct spending by $4.1 billion over the 2101-2019 period.
     The bill would appropriate $3.0 billion for the 
College Access and Completion Innovation Fund. Based on the 
spending patterns of similar programs, CBO estimates these 
provisions would increase direct spending by $3.0 billion over 
the 2010-2019 period.
     H.R. 3221 would extend through 2019 the current 
direct appropriation of $255 million per year for grants to 
Historically Black Colleges and Universities and Minority 
Serving Institutions that expires in 2009 under current law. 
CBO estimates this provision would increase direct spending by 
$2.2 billion over the next 10 years.
    In addition, the bill would amend an existing program for 
providing education benefits to veterans (as described below).

                                                                   TABLE 5. OTHER MANDATORY SPENDING PROGRAMS UNDER H.R. 3221
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           By fiscal year, in billions of dollars--
                                                             -----------------------------------------------------------------------------------------------------------------------------------
                                                               2009     2010      2011      2012      2013      2014      2015      2016      2017      2018      2019     2009-2014   2009-2019
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   CHANGES IN DIRECT SPENDING
Early Childhood Education:
    Budget Authority........................................       0       1.0       1.0       1.0       1.0       1.0       1.0       1.0       1.0       0         0           5.0         8.0
    Estimated Outlays.......................................       0       0.1       0.7       0.9       1.0       1.0       1.0       1.0       1.0       1.0       0.3         3.7         7.9
Community College Reform:
    Budget Authority........................................       0       0.7       0.7       0.7       0.7       0.7       0.7       0.7       0.7       0.7       0.7         3.6         7.0
    Estimated Outlays.......................................       0       *         0.5       0.6       0.7       0.7       0.7       0.7       0.7       0.7       0.7         2.6         6.1
Community College Grants:
    Budget Authority........................................       0       0         2.5       0         0         0         0         0         0         0         0           2.5         2.5
    Estimated Outlays.......................................       0       0         0.6       1.0       0.5       0.4       0         0         0         0         0           2.5         2.5
Modernization and Renovation (K-12):
    Budget Authority........................................       0       2.1       2.1       0         0         0         0         0         0         0         0           4.1         4.1
    Estimated Outlays.......................................       0       0.3       1.1       1.5       0.9       0.2       *         0         0         0         0           4.1         4.1
College Access Completion: Innovation Fund
    Budget Authority........................................       0       0.6       0.6       0.6       0.6       0.6       0         0         0         0         0           3.0         3.0
    Estimated Outlays.......................................       0       0.1       0.5       0.6       0.6       0.6       0.5       0.1       *         *         0           2.4         3.0
HBCU and MSI Funding:
    Budget Authority........................................       0       0.3       0.3       0.3       0.3       0.3       0.3       0.3       0.3       0.3       0.3         1.3         2.6
    Estimated Outlays.......................................       0       *         0.1       0.2       0.3       0.3       0.3       0.3       0.3       0.3       0.3         0.9         2.2
Supplemental Education Grants for Veteransa:
    Estimated Budget Authority..............................       0       0.1       0.1       0.2       0.2       0.2       0.2       0.2       0.2       0.2       0.2         0.8         1.9
    Estimated Outlays.......................................       0       0.1       0.1       0.2       0.2       0.2       0.2       0.2       0.2       0.2       0.2         0.8         1.9
Cooperative Education:
    Estimated Budget Authority..............................       0       *         0         0         0         0         0         0         0         0         0             *           *
    Estimated Outlays.......................................       0       *         *         *         *         0         0         0         0         0         0             *           *
    Total:
        Estimated Budget Authority..........................       0       4.7       7.3       2.8       2.8       2.7       2.1       2.1       2.2       1.2       1.2        20.3        29.0
        Estimated Outlays...................................       0       0.6       3.7       5.0       4.2       3.4       2.6       2.3       2.2       2.1       1.5        16.9        27.6
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
aFunding for Supplemental Education Grants for Veterans affects direct spending at both the Departments of Education and Veterans Affairs. The effects on outlays for each department is as
  follows:


 
                                                               2009     2010      2011      2012      2013      2014      2015      2016      2017      2018      2019     2009-2014   2009-2019
 
Department of Education.....................................       0       0.1       0.2       0.3       0.3       0.3       0.3       0.3       0.3       0.4       0.4         1.2         2.9
Department of Veterans Affairs..............................       0       *        -0.1      -0.1      -0.1      -0.1      -0.1      -0.1      -0.1      -0.1      -0.1        -0.4        -1.1
 
Notes: Components may not add to totals because of rounding; * = less than $50 million; HBCU = Historically Black Colleges and Universities; MSI = Minority Serving Institutions.

    Supplemental Education Grants for Veterans. Section 106 
would require the Department of Education to create a 
supplemental grant program for certain veterans who are 
eligible for education benefits under the Post-9/11 GI Bill. 
Under the new GI Bill, the highest amount of in-state tuition 
charged at a public institution in a given state constitutes 
the maximum tuition benefit that the Department of Veterans 
Affairs (VA) can pay in that state. In addition, VA will pay 
for student fees up to the highest amount charged in that 
state. Under the proposed grant program, supplemental funding 
would be available to veterans attending private colleges and 
universities in states where the benefit amount for tuition is 
low compared to other states. The dollar amount of each grant 
would equal the difference between the highest fees charged at 
a public institution in the state where the individual is 
attending school and the fees charged at the private 
institution the individual is attending.
    Based on information from VA, CBO estimates that 
approximately 25,000 veterans would be eligible for those 
grants each year and that the average value of the grants would 
grow from about $9,000 in 2010 to $14,000 in 2019. Thus, CBO 
estimates that the grant program would increase direct spending 
by the Department of Education by $2.9 billion over the 2010-
2019 period.
    That increase in spending would be partially offset by 
reduced spending by VA. Under the Post-9/11 GI Bill, veterans 
attending schools participating in the Yellow Ribbon Program 
are eligible to receive an additional contribution from VA 
(which is matched by the school) to help cover the cost of 
tuition and fees at more expensive schools. The grant program 
in the bill would cover much of the cost of high tuition and 
fees for eligible veterans at private institutions, decreasing 
the amount that VA would pay as a matching contribution for the 
Yellow Ribbon Program. Under the bill, CBO estimates that 
direct spending by VA would decrease by $1.1 billion over the 
2010-2019 period. On net, CBO estimates that this proposal 
would increase direct spending for veterans education benefits 
by $1.9 billion over the 2010-2019 period.

Spending subject to appropriation

    H.R. 3221 also would make several changes to discretionary 
spending. CBO has not completed an estimate of all the effects 
on discretionary spending under the bill, but we have estimated 
the bulk of such costs. The biggest increases in discretionary 
spending would stem from changes to the direct loan and Pell 
grant programs.
    Administration of Direct Loans. As mentioned above, most of 
the costs for administering loans in the FFEL Program are 
mandatory, while administrative costs in the direct loan 
program are mostly discretionary. Based on information about 
contracts for administering the FFEL program and consistent 
with projected loan volume, CBO estimates that eliminating new 
lending in the FFEL program and shifting the projected volume 
to the direct loan program would increase discretionary 
spending for administrative costs by $7.2 billion over the 
2010-2019 period.
    Federal Pell Grant Program. In 2009, CBO estimates that the 
discretionary costs for Pell grants will total about $22.8 
billion. CBO estimates that implementing H.R. 3221 would 
increase discretionary spending for the Pell grants by $6.3 
billion over the 2010-2019 period, subject to appropriation of 
the necessary amounts. Those increased costs stem mostly from 
changes made to the needs analysis formulas and eligibility 
calculations, which are described in greater detail under the 
subheading ``Federal Student Loan Programs'' in the ``Direct 
Spending'' section.
    Intergovernmental and private-sector impact: H.R. 3221 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. Institutions of higher education and public 
school systems would benefit from grants authorized under the 
bill. Any costs or requirements associated with those grant 
programs would be incurred voluntarily as conditions of federal 
assistance.
    Estimate prepared by: Federal Costs: Federal Student Loan 
and Grant Programs: Deborah Kalcevic and Justin Humphrey; 
Veterans Education Programs: Camille Woodland; Impact on State, 
Local, and Tribal Governments: Burke Doherty; Impact on the 
Private Sector: Nabeel Alsalam.
    Estimate approved by: Peter H. Fontaine, Assistant Director 
for Budget Analysis.

      XIII. Statement of General Performance Goals and Objectives

    In accordance with clause 3(c) of rule XIII of the House of 
Representatives, the goal of H.R. 3221 is to reform the federal 
student loan program, provide for modernization, renovation and 
repair of public school facilities, enhance early learning, and 
strengthen community colleges. The Committee expects the 
Secretary of Education to comply with H.R. 3221 and implement 
the changes to the law in accordance with these stated goals.

                XIV. Constitutional Authority Statement

    Under clause 3(d)(1) of rule XIII of the House of 
Representatives, the Committee must include a statement citing 
the specific powers granted to Congress in the Constitution to 
enact the law proposed by H.R. 3221. The Committee believes 
that the amendments made by this bill are within Congress' 
authority under Article I, section 8, clause 1 of the U.S. 
Constitution.

                         XV. Committee Estimate

    Clause 3(d)(2) of rule XIII of the House of Representatives 
requires an estimate and a comparison of the costs that would 
be incurred in carrying out H.R. 3221. The Committee expects to 
file, in the appropriate place, the cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 402 of the Congressional Budget Act upon receipt.

       XVI. Changes in Existing Law Made by the Bill, as Reproted

    In compliance with clause 3(e) of rule XIII of the House of 
Representatives, 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, existing law in which no change is proposed is shown in 
roman):

                      HIGHER EDUCATION ACT OF 1965




           *       *       *       *       *       *       *
                      TITLE I--GENERAL PROVISIONS

PART A--DEFINITIONS

           *       *       *       *       *       *       *


SEC. 102. DEFINITION OF INSTITUTION OF HIGHER EDUCATION FOR PURPOSES OF 
                    TITLE IV PROGRAMS.

  (a) Definition of Institution of Higher Education for 
Purposes of Title IV Programs.--
          (1) Inclusion of additional institutions.--Subject to 
        paragraphs (2) through (4) of this subsection, the term 
        ``institution of higher education'' for purposes of 
        title IV includes, in addition to the institutions 
        covered by the definition in section 101--
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) only for the purposes of [part B] part D 
                of title IV, an institution outside the United 
                States that is comparable to an institution of 
                higher education as defined in section 101 and 
                that has been approved by the Secretary for the 
                purpose of [part B] part D of title IV, 
                consistent with the requirements of section 
                452(d).

  [Note: Paragraph (2) reflects amendments made by this bill to such 
clause as amended by the Higher Education Opportunity Act, effective on 
                             July 1, 2012.]

          (2) Institutions outside the united states.--
                  (A) In general.--For the purpose of 
                qualifying as an institution under paragraph 
                (1)(C), the Secretary shall establish criteria 
                by regulation for the approval of institutions 
                outside the United States and for the 
                determination that such institutions are 
                comparable to an institution of higher 
                education as defined in section 101 (except 
                that a graduate medical school, nursing school, 
                or a veterinary school, located outside the 
                United States shall not be required to meet the 
                requirements of section 101(a)(4)). Such 
                criteria shall include a requirement that a 
                student attending such school outside the 
                United States is ineligible for loans [made, 
                insured, or guaranteed] made under [part B] 
                part D of title IV unless--
                          (i) except as provided in 
                        subparagraph (B)(iii)(IV), in the case 
                        of a graduate medical school located 
                        outside the United States--
                                  (I)(aa) at least 60 percent 
                                of those enrolled in, and at 
                                least 60 percent of the 
                                graduates of, the graduate 
                                medical school outside the 
                                United States were not persons 
                                described in section 484(a)(5) 
                                in the year preceding the year 
                                for which a student is seeking 
                                a loan under [part B ] part D 
                                of title IV; and
                                  (bb) at least 75 percent of 
                                the individuals who were 
                                students or graduates of the 
                                graduate medical school outside 
                                the United States or Canada 
                                (both nationals of the United 
                                States and others) taking the 
                                examinations administered by 
                                the Educational Commission for 
                                Foreign Medical Graduates 
                                received a passing score in the 
                                year preceding the year for 
                                which a student is seeking a 
                                loan under [part B] part D of 
                                title IV; or

           *       *       *       *       *       *       *

                          (iii) in the case of a nursing school 
                        located outside of the United States--
                                  (I) * * *

           *       *       *       *       *       *       *

                                  (III) the nursing school 
                                certifies [only Federal 
                                Stafford Loans under section 
                                428, unsubsidized Federal 
                                Stafford Loans under section 
                                428H, or Federal PLUS loans 
                                under section 428B] only 
                                Federal Direct Stafford Loans 
                                under section 455(a)(2)(A), 
                                Federal Direct Unsubsidized 
                                Stafford Loans under section 
                                455(a)(2)(D), or Federal Direct 
                                PLUS Loans under section 
                                455(a)(2)(B) for students 
                                attending the institution;

           *       *       *       *       *       *       *

                                  (V) not less than 75 percent 
                                of the individuals who were 
                                students or graduates of the 
                                nursing school, and who took 
                                the National Council Licensure 
                                Examination for Registered 
                                Nurses in the year preceding 
                                the year for which the 
                                institution is certifying [a 
                                Federal Stafford Loan under 
                                section 428, an unsubsidized 
                                Federal Stafford Loan under 
                                section 428H, or a Federal PLUS 
                                loan under section 428B] a 
                                Federal Direct Stafford Loan 
                                under section 455(a)(2)(A), a 
                                Federal Direct Unsubsidized 
                                Stafford Loan under section 
                                455(a)(2)(D), or a Federal 
                                Direct PLUS Loan under section 
                                455(a)(2)(B), received a 
                                passing score on such 
                                examination.
                  (B) Advisory panel.--
                          (i)  * * *

           *       *       *       *       *       *       *

                          (iii) Report.--
                                  (I) In general.--Not later 
                                than 1 year after the date of 
                                enactment of the Higher 
                                Education Opportunity Act, the 
                                advisory panel described in 
                                clause (i) shall submit a 
                                report to the Secretary and to 
                                the authorizing committees 
                                recommending eligibility 
                                criteria for participation in 
                                the loan programs under [part 
                                B] part D of title IV for 
                                graduate medical schools that--
                                          (aa)  * * *

           *       *       *       *       *       *       *

                                  (III) Minimum eligibility 
                                requirement.--In the 
                                recommendations described in 
                                subclause (II), the criteria 
                                described in subparagraph 
                                (A)(i)(I)(bb), as amended by 
                                section 102(b) of the Higher 
                                Education Opportunity Act, 
                                shall be a minimum eligibility 
                                requirement for a graduate 
                                medical school described in 
                                subclause (I) to participate in 
                                the loan programs under [part 
                                B] part D of title IV.
                                  (IV) Authority.--The 
                                Secretary may--
                                          (aa) not earlier than 
                                        180 days after the 
                                        submission of the 
                                        report described in 
                                        subclause (I), issue 
                                        proposed regulations 
                                        establishing criteria 
                                        for the eligibility of 
                                        graduate medical 
                                        schools described in 
                                        such subclause to 
                                        participate in the loan 
                                        programs under [part B] 
                                        part D of title IV 
                                        based on the 
                                        recommendations of such 
                                        report; and

           *       *       *       *       *       *       *

                  (C) Failure to release information.--The 
                failure of an institution outside the United 
                States to provide, release, or authorize 
                release to the Secretary of such information as 
                may be required by subparagraph (A) shall 
                render such institution ineligible for the 
                purpose of [part B] part D of title IV.
                  (D) Special rule.--If, pursuant to this 
                paragraph, an institution loses eligibility to 
                participate in the programs under title IV, 
                then a student enrolled at such institution 
                may, notwithstanding such loss of eligibility, 
                continue to be eligible to receive a loan under 
                [part B] part D of title IV while attending 
                such institution for the academic year 
                succeeding the academic year in which such loss 
                of eligibility occurred.

           *       *       *       *       *       *       *


TITLE III--INSTITUTIONAL AID

           *       *       *       *       *       *       *


PART F--STRENGTHENING HISTORICALLY BLACK COLLEGES AND UNIVERSITIES AND 
                  OTHER MINORITY-SERVING INSTITUTIONS

SEC. 371. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND UNIVERSITIES 
                    AND OTHER MINORITY-SERVING INSTITUTIONS.

  (a) Eligible Institution.--An institution of higher education 
is eligible to receive funds from the amounts made available 
under this section if such institution is--
          (1) * * *
          (2) a Hispanic-serving institution (as defined in 
        [section 502] section 502(a) (20 U.S.C. 1101a));
          (3) a Tribal College or University (as defined in 
        [section 316] section 316(b) (20 U.S.C. 1059c));

           *       *       *       *       *       *       *

          (5) a Predominantly Black Institution (as defined [in 
        subsection (c)] in section 318(b));
          (6) an Asian American and Native American Pacific 
        Islander-serving institution (as defined [in subsection 
        (c)] in section 320(b)); or
          (7) a Native American-serving nontribal institution 
        (as defined [in subsection (c)] in section 319(b)).
  (b) New Investment of Funds.--
          (1) In general.--
                  (A) Provision of funds.--There shall be 
                available to the Secretary to carry out this 
                section, from funds in the Treasury not 
                otherwise appropriated, [$255,000,000 for each 
                of the fiscal years 2008 and 2009. The 
                authority to award grants under this section 
                shall expire at the end of fiscal year 2009.] 
                $255,000,000 for each of the fiscal years 2008 
                through 2019.

           *       *       *       *       *       *       *

          (2) Allocation and allotment.--
                  (A) * * *
                  [(B) HSI stem and articulation programs.--The 
                amount made available for allocation under this 
                subparagraph by subparagraph (A)(i) for any 
                fiscal year shall be available for Hispanic-
                serving Institutions for activities described 
                in section 503, with a priority given to 
                applications that propose--
                          [(i) to increase the number of 
                        Hispanic and other low income students 
                        attaining degrees in the fields of 
                        science, technology, engineering, or 
                        mathematics; and
                          [(ii) to develop model transfer and 
                        articulation agreements between 2-year 
                        Hispanic-serving institutions and 4-
                        year institutions in such fields.]
                  (B) Stem and articulation programs.--From the 
                amount made available for allocation under this 
                subparagraph by subparagraph (A)(i) for any 
                fiscal year--
                          (i) 90 percent shall be available for 
                        Hispanic-serving institutions for 
                        activities described in sections 503 
                        and 513, with a priority given to 
                        applications that propose--
                                  (I) to increase the number of 
                                Hispanic and other low-income 
                                students attaining degrees in 
                                the fields of science, 
                                technology, engineering, or 
                                mathematics; and
                                  (II) to develop model 
                                transfer and articulation 
                                agreements between 2-year 
                                Hispanic-serving institutions 
                                and 4-year institutions in such 
                                fields; and
                          (ii) 10 percent shall be available 
                        for grants under section 355.
                  (C) Allocation and allotment hbcus and 
                pbis.--From the amount made available for 
                allocation under this subparagraph by 
                subparagraph (A)(ii) for any fiscal year--
                          (i) * * *
                          (ii) 15 percent shall be available to 
                        eligible institutions described in 
                        subsection (a)(5) [and shall be 
                        available for a competitive grant 
                        program to award 25 grants of $600,000 
                        annually for programs in any of the 
                        following areas:
                                  [(I) science, technology, 
                                engineering, or mathematics 
                                (STEM);
                                  [(II) health education;
                                  [(III) internationalization 
                                or globalization;
                                  [(IV) teacher preparation; or
                                  [(V) improving educational 
                                outcomes of African American 
                                males.] and shall be made 
                                available as grants under 
                                section 318 and allotted among 
                                such institutions under section 
                                318(e), treating such amount, 
                                plus the amount appropriated 
                                for such fiscal year in a 
                                regular or supplemental 
                                appropriation Act to carry out 
                                section 318, as the amount 
                                appropriated to carry out 
                                section 318 for purposes of 
                                allotments under section 318(e)
                  (D) Allocation and allotment to other 
                minority-serving institutions.--From the amount 
                made available for allocation under this 
                subparagraph by subparagraph (A)(iii) for any 
                fiscal year--
                          (i) * * *

           *       *       *       *       *       *       *

                          (iii) $5,000,000 for such fiscal year 
                        shall be available to eligible 
                        institutions described in subsection 
                        (a)(6) [for activities described in 
                        section 311(c)] and shall be made 
                        available as grants under section 320, 
                        treating such $5,000,000 as part of the 
                        amount appropriated for such fiscal 
                        year in a regular or supplemental 
                        appropriation Act to carry out such 
                        section and using such $5,000,000 for 
                        purposes described in subsection (c) of 
                        such section; and
                          (iv) $5,000,000 for such fiscal year 
                        shall be available to eligible 
                        institutions [described in subsection 
                        (a)(7)--
                                  [(I) to plan, develop, 
                                undertake, and carry out 
                                activities to improve and 
                                expand such institutions' 
                                capacity to serve Native 
                                Americans, which may include--
                                          [(aa) the purchase, 
                                        rental, or lease of 
                                        scientific or 
                                        laboratory equipment 
                                        for educational 
                                        purposes, including 
                                        instructional and 
                                        research purposes;
                                          [(bb) renovation and 
                                        improvement in 
                                        classroom, library, 
                                        laboratory, and other 
                                        instructional 
                                        facilities;
                                          [(cc) support of 
                                        faculty exchanges, 
                                        faculty development, 
                                        and faculty fellowships 
                                        to assist faculty in 
                                        attaining advanced 
                                        degrees in the 
                                        faculty's field of 
                                        instruction;
                                          [(dd) curriculum 
                                        development and 
                                        academic instruction;
                                          [(ee) the purchase of 
                                        library books, 
                                        periodicals, microfilm, 
                                        and other educational 
                                        materials;
                                          [(ff) funds and 
                                        administrative 
                                        management, and 
                                        acquisition of 
                                        equipment for use in 
                                        strengthening funds 
                                        management;
                                          [(gg) the joint use 
                                        of facilities such as 
                                        laboratories and 
                                        libraries; and
                                          [(hh) academic 
                                        tutoring and counseling 
                                        programs and student 
                                        support services; and
                                  [(II) to which the Secretary, 
                                to the extent possible and 
                                consistent with a competitive 
                                process under which such grants 
                                are awarded, allocates funds 
                                under this clause to ensure 
                                maximum and equitable 
                                distribution among all such 
                                eligible institutions.] and 
                                shall be made available as 
                                grants under section 319, 
                                treating such $5,000,000 as 
                                part of the amount appropriated 
                                for such fiscal year in a 
                                regular or supplemental 
                                appropriation Act to carry out 
                                such section and using such 
                                $5,000,000 for purposes 
                                described in subsection (c) of 
                                such section
  [(c) Definitions.--
          [(1) Asian american.--The term ``Asian American'' has 
        the meaning given the term ``Asian'' in the Office of 
        Management and Budget's Standards for Maintaining, 
        Collecting, and Presenting Federal Data on Race and 
        Ethnicity as published on October 30, 1997 (62 Fed. 
        Reg. 58789).
          [(2) Asian american and native american pacific 
        islander-serving institution.--The term ``Asian 
        American and Native American Pacific Islander-serving 
        institution'' means an institution of higher education 
        that--
                  [(A) is an eligible institution under section 
                312(b); and
                  [(B) at the time of application, has an 
                enrollment of undergraduate students that is at 
                least 10 percent Asian American and Native 
                American Pacific Islander students.
          [(3) Enrollment of needy students.--The term 
        ``enrollment of needy students'' means the enrollment 
        at an institution of higher education with respect to 
        which not less than 50 percent of the undergraduate 
        students enrolled in an academic program leading to a 
        degree--
                  [(A) in the second fiscal year preceding the 
                fiscal year for which the determination is 
                made, were Federal Pell Grant recipients for 
                such year;
                  [(B) come from families that receive benefits 
                under a means-tested Federal benefit program 
                (as defined in paragraph (5));
                  [(C) attended a public or nonprofit private 
                secondary school--
                          [(i) that is in the school district 
                        of a local educational agency that was 
                        eligible for assistance under part A of 
                        title I of the Elementary and Secondary 
                        Education Act of 1965 for any year 
                        during which the student attended such 
                        secondary school; and
                          [(ii) which for the purpose of this 
                        paragraph and for that year was 
                        determined by the Secretary (pursuant 
                        to regulations and after consultation 
                        with the State educational agency of 
                        the State in which the school is 
                        located) to be a school in which the 
                        enrollment of children counted under a 
                        measure of poverty described in section 
                        1113(a)(5) of such Act exceeds 30 
                        percent of the total enrollment of such 
                        school; or
                  [(D) are first-generation college students 
                (as that term is defined in section 402A(h)), 
                and a majority of such first-generation college 
                students are low-income individuals.
          [(4) Low-income individual.--The term ``low-income 
        individual'' has the meaning given such term in section 
        402A(h).
          [(5) Means-tested federal benefit program.--The term 
        ``means-tested Federal benefit program'' means a 
        program of the Federal Government, other than a program 
        under title IV, in which eligibility for the programs' 
        benefits or the amount of such benefits are determined 
        on the basis of income or resources of the individual 
        or family seeking the benefit.
          [(6) Native american.--The term ``Native American'' 
        means an individual who is of a tribe, people, or 
        culture that is indigenous to the United States.
          [(7) Native american pacific islander.--The term 
        ``Native American Pacific Islander'' means any 
        descendant of the aboriginal people of any island in 
        the Pacific Ocean that is a territory or possession of 
        the United States.
          [(8) Native american-serving nontribal institution.--
        The term ``Native American-serving nontribal 
        institution'' means an institution of higher education 
        that--
                  [(A) at the time of application--
                          [(i) has an enrollment of 
                        undergraduate students that is not less 
                        than 10 percent Native American 
                        students; and
                          [(ii) is not a Tribal College or 
                        University (as defined in section 316); 
                        and
                  [(B) submits to the Secretary such enrollment 
                data as may be necessary to demonstrate that 
                the institution is described in subparagraph 
                (A), along with such other information and data 
                as the Secretary may by regulation require.
          [(9) Predominantly black institution.--The term 
        ``Predominantly Black institution'' means an 
        institution of higher education that--
                  [(A) has an enrollment of needy students as 
                defined by paragraph (3);
                  [(B) has an average educational and general 
                expenditure which is low, per full-time 
                equivalent undergraduate student in comparison 
                with the average educational and general 
                expenditure per full-time equivalent 
                undergraduate student of institutions of higher 
                education that offer similar instruction, 
                except that the Secretary may apply the waiver 
                requirements described in section 392(b) to 
                this subparagraph in the same manner as the 
                Secretary applies the waiver requirements to 
                section 312(b)(1)(B);
                  [(C) has an enrollment of undergraduate 
                students--
                          [(i) that is at least 40 percent 
                        Black American students;
                          [(ii) that is at least 1,000 
                        undergraduate students;
                          [(iii) of which not less than 50 
                        percent of the undergraduate students 
                        enrolled at the institution are low-
                        income individuals or first-generation 
                        college students (as that term is 
                        defined in section 402A(h)); and
                          [(iv) of which not less than 50 
                        percent of the undergraduate students 
                        are enrolled in an educational program 
                        leading to a bachelor's or associate's 
                        degree that the institution is licensed 
                        to award by the State in which the 
                        institution is located;
                  [(D) is legally authorized to provide, and 
                provides within the State, an educational 
                program for which the institution of higher 
                education awards a bachelor's degree, or in the 
                case of a junior or community college, an 
                associate's degree;
                  [(E) is accredited by a nationally recognized 
                accrediting agency or association determined by 
                the Secretary to be a reliable authority as to 
                the quality of training offered, or is, 
                according to such an agency or association, 
                making reasonable progress toward 
                accreditation; and
                  [(F) is not receiving assistance under--
                          [(i) part B;
                          [(ii) part A of title V; or
                          [(iii) an annual authorization of 
                        appropriations under the Act of March 
                        2, 1867 (14 Stat. 438; 20 U.S.C. 123).]

           *       *       *       *       *       *       *


                      TITLE IV--STUDENT ASSISTANCE

  PART A--GRANTS TO STUDENTS IN ATTENDANCE AT INSTITUTIONS OF HIGHER 
EDUCATION

           *       *       *       *       *       *       *


      Subpart 1--Federal Pell Grants; Veterans Educational Equity 
                          Supplemental Grants

SEC. 401. FEDERAL PELL GRANTS: AMOUNT AND DETERMINATIONS; APPLICATIONS.

  (a) * * *
  (b) Purpose and Amount of Grants.--(1) * * *
  (2)[(A) The amount of the Federal Pell Grant for a student 
eligible under this part shall be--
          [(i) $6,000 for academic year 2009-2010;
          [(ii) $6,400 for academic year 2010-2011;
          [(iii) $6,800 for academic year 2011-2012;
          [(iv) $7,200 for academic year 2012-2013;
          [(v) $7,600 for academic year 2013-2014; and
          [(vi) $8,000 for academic year 2014-2015,
less an amount equal to the amount determined to be the 
expected family contribution with respect to that student for 
that year.]
  (A) The amount of the Federal Pell Grant for a student 
eligible under this part shall be--
                  (i) the maximum Federal Pell Grant, as 
                specified in the last enacted appropriation Act 
                applicable to that award year, plus
                  (ii) the amount of the increase calculated 
                under paragraph (8)(B) for that year, less
                  (iii) an amount equal to the amount 
                determined to be the expected family 
                contribution with respect to that student for 
                that year.

           *       *       *       *       *       *       *

  (6) Notwithstanding any other provision of this subpart, the 
Secretary shall allow the amount of the Federal Pell Grant to 
be exceeded for students participating in a program of study 
abroad approved for credit by the institution at which the 
student is enrolled when the reasonable costs of such program 
are greater than the cost of attendance at the student's home 
institution, except that the amount of such Federal Pell Grant 
in any fiscal year shall not exceed [the grant level specified 
in the appropriate Appropriation Act for this subpart for such 
year] the Federal Pell Grant amount, determined under paragraph 
(2)(A), for which a student is eligible during such award year. 
If the preceding sentence applies, the financial aid 
administrator at the home institution may use the cost of the 
study abroad program, rather than the home institution's cost, 
to determine the cost of attendance of the student.

           *       *       *       *       *       *       *

  [(8) Additional funds.--
          [(A) In general.--There are authorized to be 
        appropriated, and there are appropriated, to carry out 
        subparagraph (B) of this paragraph (in addition to any 
        other amounts appropriated to carry out this section 
        and out of any money in the Treasury not otherwise 
        appropriated) the following amounts--
                  [(i) $2,030,000,000 for fiscal year 2008;
                  [(ii) $2,090,000,000 for fiscal year 2009;
                  [(iii) $3,030,000,000 for fiscal year 2010;
                  [(iv) $3,090,000,000 for fiscal year 2011;
                  [(v) $5,050,000,000 for fiscal year 2012;
                  [(vi) $105,000,000 for fiscal year 2013;
                  [(vii) $4,305,000,000 for fiscal year 2014;
                  [(viii) $4,400,000,000 for fiscal year 2015;
                  [(ix) $4,600,000,000 for fiscal year 2016; 
                and
                  [(x) $4,900,000,000 for fiscal year 2017.
          [(B) Increase in federal pell grants.--The amounts 
        made available pursuant to subparagraph (A) of this 
        paragraph shall be used to increase the amount of the 
        maximum Federal Pell Grant for which a student shall be 
        eligible during an award year, as specified in the last 
        enacted appropriation Act applicable to that award 
        year, by--
                  [(i) $490 for each of the award years 2008-
                2009 and 2009-2010;
                  [(ii) $690 for each of the award years 2010-
                2011 and 2011-2012; and
                  [(iii) $1,090 for award year 2012-2013.
          [(C) Eligibility.--The Secretary shall only award an 
        increased amount of a Federal Pell Grant under this 
        section for any award year pursuant to the provisions 
        of this paragraph to students who qualify for a Federal 
        Pell Grant award under the maximum grant award enacted 
        in the annual appropriation Act for such award year 
        without regard to the provisions of this paragraph.
          [(D) Program requirements and operations otherwise 
        unaffected.--Except as provided in subparagraphs (B) 
        and (C), nothing in this paragraph shall be construed 
        to alter the requirements and operations of the Federal 
        Pell Grant Program as authorized under this section, or 
        authorize the imposition of additional requirements or 
        operations for the determination and allocation of 
        Federal Pell Grants under this section.
          [(E) Ratable increases and decreases.--The amounts 
        specified in subparagraph (B) shall be ratably 
        increased or decreased to the extent that funds 
        available under subparagraph (A) exceed or are less 
        than (respectively) the amount required to provide the 
        amounts specified in subparagraph (B).
          [(F) Availability of funds.--The amounts made 
        available by subparagraph (A) for any fiscal year shall 
        be available beginning on October 1 of that fiscal 
        year, and shall remain available through September 30 
        of the succeeding fiscal year.]
  (8) Additional funds.--
          (A) In general.--There are authorized to be 
        appropriated, and there are appropriated, to carry out 
        subparagraph (B) of this paragraph (in addition to any 
        other amounts appropriated to carry out this section 
        and out of any money in the Treasury not otherwise 
        appropriated) the following amounts--
                  (i) $2,030,000,000 for fiscal year 2008;
                  (ii) $2,733,000,000 for fiscal year 2009; and
                  (iii) such sums as may be necessary for 
                fiscal year 2010 and each subsequent fiscal 
                year to provide the amount of increase of the 
                maximum Federal Pell Grant required by clauses 
                (ii) and (iii) of subparagraph (B).
          (B) Increase in federal pell grants.--The amounts 
        made available pursuant to subparagraph (A) shall be 
        used to increase the amount of the maximum Federal Pell 
        Grant for which a student shall be eligible during an 
        award year, as specified in the last enacted 
        appropriation Act applicable to that award year, by--
                  (i) $490 for each of the award years 2008-
                2009 and 2009-2010;
                  (ii) $690 for the award year 2010-2011; and
                  (iii) the amount determined under 
                subparagraph (C) for each succeeding award 
                year.
          (C) Inflation-adjusted amounts.--
                  (i) Award year 2011-2012.--For award year 
                2011-2012, the amount determined under this 
                subparagraph for purposes of subparagraph 
                (B)(iii) shall be equal to--
                          (I) $5,550 or the total maximum 
                        Federal Pell Grant for the preceding 
                        award year (as determined under clause 
                        (iv)(II)), whichever is greater, 
                        increased by a percentage equal to the 
                        annual adjustment percentage for award 
                        year 2011-2012; reduced by
                          (II) $4,860 or the maximum Federal 
                        Pell Grant for which a student was 
                        eligible for the preceding award year, 
                        as specified in the last enacted 
                        appropriation Act applicable to that 
                        year, whichever is greater; and
                          (III) rounded to the nearest $5.
                  (ii) Subsequent award years.--For award year 
                2012-2013 and each of the subsequent award 
                years, the amount determined under this 
                subparagraph for purposes of subparagraph 
                (B)(iii) shall be equal to--
                          (I) the total maximum Federal Pell 
                        Grant for the preceding award year (as 
                        determined under clause (iv)(II)), 
                        increased by a percentage equal to the 
                        annual adjustment percentage for the 
                        award year for which the amount under 
                        this subparagraph is being determined; 
                        reduced by
                          (II) $4,860 or the maximum Federal 
                        Pell Grant for which a student was 
                        eligible for the preceding award year, 
                        as specified in the last enacted 
                        appropriation Act applicable to that 
                        year, whichever is greater; and
                          (III) rounded to the nearest $5.
                  (iii) Limitation on decreases.--
                Notwithstanding clauses (i) and (ii), if the 
                amount determined under clause (i) or (ii) for 
                an award year is less than the amount 
                determined under this paragraph for the 
                preceding award year, the amount determined 
                under such clause for such award year shall be 
                the amount determined under this paragraph for 
                the preceding award year.
                  (iv) Definitions.--For purposes of this 
                subparagraph--
                          (I) the term ``annual adjustment 
                        percentage'' as it applies to an award 
                        year is equal to the sum of--
                                  (aa) the estimated percentage 
                                change in the Consumer Price 
                                Index (as determined by the 
                                Secretary, using the definition 
                                in section 478(f)) for the most 
                                recent calendar year ending 
                                prior to the beginning of that 
                                award year; and
                                  (bb) one percentage point; 
                                and
                          (II) the term ``total maximum Federal 
                        Pell Grant'' as it applies to a 
                        preceding award year is equal to the 
                        sum of--
                                  (aa) the maximum Federal Pell 
                                Grant for which a student is 
                                eligible during an award year, 
                                as specified in the last 
                                enacted appropriation Act 
                                applicable to that preceding 
                                award year; and
                                  (bb) the amount of the 
                                increase in the maximum Federal 
                                Pell Grant required by this 
                                paragraph for that preceding 
                                award year.
          (D) Program requirements and operations otherwise 
        unaffected.--Except as provided in subparagraphs (B) 
        and (C), nothing in this paragraph shall be construed 
        to alter the requirements and operations of the Federal 
        Pell Grant Program as authorized under this section, or 
        to authorize the imposition of additional requirements 
        or operations for the determination and allocation of 
        Federal Pell Grants under this section.
          (E) Availability of funds.--The amounts made 
        available by subparagraph (A) for any fiscal year shall 
        be available beginning on October 1 of that fiscal 
        year, and shall remain available through September 30 
        of the succeeding fiscal year.

           *       *       *       *       *       *       *


SEC. 401B. VETERANS EDUCATIONAL EQUITY SUPPLEMENTAL GRANT PROGRAM.

  (a) Veterans Educational Equity Supplemental Grants 
Authorized.--The Secretary shall award a grant to each eligible 
student, in an amount determined in accordance with subsection 
(c), to assist such student with paying the cost of tuition 
incurred by the student for a program of education at an 
institution of higher education.
  (b) Definitions.--In this section--
          (1) Eligible student.--The term ``eligible student'' 
        means a student who--
                  (A) is a covered individual, as such term is 
                defined in section 3311(b) of title 38, United 
                States Code;
                  (B) is enrolled at an institution of higher 
                education that--
                          (i) is not a public institution of 
                        higher education; and
                          (ii) is located in a State with a 
                        zero, or very low, maximum tuition 
                        charge per credit hour compared to the 
                        maximum tuition charge per credit hour 
                        in all other States, as determined by 
                        the Secretary of Veterans Affairs 
                        (based on the determinations of maximum 
                        tuition charged per credit hour in each 
                        State for the purposes of chapter 33 of 
                        title 38, United States Code); and
                  (C) is eligible for educational assistance 
                for an academic year, and will receive an 
                amount of such assistance for such year for 
                fees charged the individual that is less than 
                the maximum amount of such assistance available 
                for fees charged for such year in such State.
          (2) Educational assistance.--The term ``educational 
        assistance'' means the amount of educational assistance 
        from the Secretary of Veterans Affairs an eligible 
        student receives or will receive under section 
        3313(c)(1)(A) of title 38, United States Code, or a 
        similar amount of such assistance under paragraphs (2) 
        through (7) of such section 3313(c).
  (c) Grant Amount.--A grant to an eligible student under this 
section be equal to an amount that is--
          (1) the maximum amount of educational assistance for 
        fees charged that the eligible student would receive, 
        in accordance with section 3313(c) of title 38, United 
        States Code, if such student attended the public 
        institution of higher education in the State in which 
        the eligible student is enrolled that has the highest 
        fees charged to an individual for a year in such State 
        (as determined by the Secretary of Veterans Affairs for 
        the purposes of chapter 33 of such title 38), less
          (2) the educational assistance the eligible student 
        will receive, in accordance with such section, for fees 
        charged to the student for such year at the institution 
        of higher education at which the student is enrolled.
  (d) Uses of Funds.--An eligible student who receives a grant 
under this section shall use such grant to pay tuition incurred 
by the student for a program of education at an institution of 
higher education.
  (e) Notification.--The Secretary, in coordination with 
Secretary of Veterans Affairs, shall establish a system of 
notification to ensure the timely delivery to each eligible 
student of--
          (1) educational assistance received by the student; 
        and
          (2) grants awarded to the student under this section.
  (f) Authorization and Appropriation.--There are authorized to 
be appropriated, and there are appropriated, such sums as may 
be necessary to carry out this section (in addition to any 
other amounts appropriated to carry out this section and out of 
any money in the Treasury not otherwise appropriated).

    Subpart 2--Federal Early Outreach and Student Services Programs

CHAPTER 1--FEDERAL TRIO PROGRAMS

           *       *       *       *       *       *       *


SEC. 402D. STUDENT SUPPORT SERVICES.

  (a) * * *

           *       *       *       *       *       *       *

  (d) Special Rule.--
          (1) Use for student aid.--A recipient of a grant that 
        undertakes any of the permissible services identified 
        in subsection (c) may, in addition, use such funds to 
        provide grant aid to students. A grant provided under 
        this paragraph shall not [exceed the maximum 
        appropriated Pell Grant] exceed the Federal Pell Grant 
        amount, determined under section 401(b)(2)(A), for 
        which a student is eligible or, be less than the 
        minimum appropriated Pell Grant, for the current 
        academic year. In making grants to students under this 
        subsection, an institution shall ensure that adequate 
        consultation takes place between the student support 
        service program office and the institution's financial 
        aid office.

           *       *       *       *       *       *       *


             PART B--FEDERAL FAMILY EDUCATION LOAN PROGRAM

SEC. 421. STATEMENT OF PURPOSE; NONDISCRIMINATION; AND APPROPRIATIONS 
                    AUTHORIZED.

  (a) * * *
  (b) Authorization of Appropriations.--For the purpose of 
carrying out this part--
          (1) * * *

           *       *       *       *       *       *       *

Sums appropriated under paragraphs (1), (2), (4), and (5) of 
this subsection shall remain available until expended, except 
that no sums may be expended after June 30, 2010, with respect 
to loans under this part for which the first disbursement would 
be made after such date. No additional sums are authorized to 
be appropriated under paragraph (3) or (4) of this subsection 
by reason of the reenactment of such paragraphs by the Higher 
Education Amendments of 1986.

           *       *       *       *       *       *       *

  (d) Termination of Authority To Make or Insure New Loans.--
Notwithstanding paragraphs (1) through (6) of subsection (b) or 
any other provision of law--
          (1) no new loans (including consolidation loans) may 
        be made or insured under this part after June 30, 2010; 
        and
          (2) no funds are authorized to be appropriated, or 
        may be expended, under this Act or any other Act to 
        make or insure loans under this part (including 
        consolidation loans) for which the first disbursement 
        would be made after June 30, 2010,
except as expressly authorized by an Act of Congress enacted 
after the date of enactment of Student Aid and Fiscal 
Responsibility Act of 2009.

           *       *       *       *       *       *       *


SEC. 424. SCOPE AND DURATION OF FEDERAL LOAN INSURANCE PROGRAM.

  (a) Limitations on Amounts of Loans Covered by Federal 
Insurance.--The total principal amount of new loans made and 
installments paid pursuant to lines of credit (as defined in 
section 435) to students covered by Federal loan insurance 
under this part shall not exceed $2,000,000,000 for the period 
from July 1, 1976, to [September 30, 1976, and for each of the 
succeeding fiscal years ending prior to October 1, 2014. 
Thereafter, Federal loan insurance pursuant to this part may be 
granted only for loans made (or for loan installments paid 
pursuant to lines of credit) to enable students, who have 
obtained prior loans insured under this part, to continue or 
complete their educational program; but no insurance may be 
granted for any loan made or installment paid after September 
30, 2018.] September 30, 1976, for each of the succeeding 
fiscal years ending prior to October 1, 2009, and for the 
period from October 1, 2009, to June 30, 2010, for loans first 
disbursed on or before June 30, 2010.

           *       *       *       *       *       *       *


SEC. 427A. APPLICABLE INTEREST RATES.

  (a) * * *

           *       *       *       *       *       *       *

  (l) Interest Rates for New Loans on or After July 1, 2006.--
          (1) In general.--Notwithstanding subsection (h), with 
        respect to any loan made, insured, or guaranteed under 
        this part (other than a loan made pursuant to section 
        428B or 428C) for which the first disbursement is made 
        on or after July 1, 2006, and before July 1, 2010, the 
        applicable rate of interest shall be 6.8 percent on the 
        unpaid principal balance of the loan.
          (2) PLUS loans.--Notwithstanding subsection (h), with 
        respect to any loan under section 428B for which the 
        first disbursement is made on or after July 1, 2006, 
        and before July 1, 2010, the applicable rate of 
        interest shall be 8.5 percent on the unpaid principal 
        balance of the loan.
          (3) Consolidation loans.--With respect to any 
        consolidation loan under section 428C for which the 
        application is received by an eligible lender on or 
        after July 1, 2006, and that was disbursed before July 
        1, 2010, the applicable rate of interest shall be at an 
        annual rate on the unpaid principal balance of the loan 
        that is equal to the lesser of--
                  (A) * * *

           *       *       *       *       *       *       *

          (4) Reduced rates for undergraduate subsidized 
        loans.--Notwithstanding subsection (h) and paragraph 
        (1) of this subsection, with respect to any loan to an 
        undergraduate student made, insured, or guaranteed 
        under this part (other than a loan made pursuant to 
        section 428B, 428C, or 428H) for which the first 
        disbursement is made on or after July 1, 2006, and 
        before July 1, [2012] 2010, the applicable rate of 
        interest shall be as follows:
                  (A)  * * *

           *       *       *       *       *       *       *

                  [(D) For a loan for which the first 
                disbursement is made on or after July 1, 2010, 
                and before July 1, 2011, 4.5 percent on the 
                unpaid principal balance of the loan.
                  [(E) For a loan for which the first 
                disbursement is made on or after July 1, 2011, 
                and before July 1, 2012, 3.4 percent on the 
                unpaid principal balance of the loan.]

           *       *       *       *       *       *       *


SEC. 428. FEDERAL PAYMENTS TO REDUCE STUDENT INTEREST COSTS.

  (a) Federal Interest Subsidies.--
          (1) Types of loans that qualify.--Each student who 
        has received a loan for study at an eligible 
        institution for which the first disbursement is made 
        before July 1, 2010, and--
                  (A) * * *

           *       *       *       *       *       *       *

          (5) Duration of authority to make interest subsidized 
        loans.--The period referred to in subparagraph (B) of 
        paragraph (1) of this subsection shall begin on the 
        date of enactment of this Act and end at the close of 
        [September 30, 2014, except that, in the case of a loan 
        made or insured under a student loan or loan insurance 
        program to enable a student who has obtained a prior 
        loan made or insured under such program to continue his 
        or her education program, such period shall end at the 
        close of September 30, 2018.] June 30, 2010.

           *       *       *       *       *       *       *

  (b) Insurance Program Agreements To Qualify Loans for 
Interest Subsidies.--
          (1) Requirements of insurance program.--Any State or 
        any nonprofit private institution or organization may 
        enter into an agreement with the Secretary for the 
        purpose of entitling students who receive loans which 
        are insured under a student loan insurance program of 
        that State, institution, or organization to have made 
        on their behalf the payments provided for in subsection 
        (a) if the Secretary determines that the student loan 
        insurance program--
                  (A) * * *

           *       *       *       *       *       *       *

                  (G) insures 98 percent of the unpaid 
                principal of loans insured under the program, 
                except that--
                          (i) * * *
                          (ii) for any loan for which the first 
                        disbursement of principal is made on or 
                        after July 1, 2006, and before July 1, 
                        2010, the preceding provisions of this 
                        subparagraph shall be applied by 
                        substituting ``97 percent'' for ``98 
                        percent''; and

           *       *       *       *       *       *       *

                  (H) provides--
                          (i) * * *
                          (ii) for loans for which the date of 
                        guarantee of principal is on or after 
                        July 1, 2006, and that are first 
                        disbursed before July 1, 2010, for the 
                        collection, and the deposit into the 
                        Federal Student Loan Reserve Fund under 
                        section 422A of a Federal default fee 
                        of an amount equal to 1.0 percent of 
                        the principal amount of the loan, which 
                        fee shall be collected either by 
                        deduction from the proceeds of the loan 
                        or by payment from other non-Federal 
                        sources, and ensures that the proceeds 
                        of the Federal default fee will not be 
                        used for incentive payments to lenders;

           *       *       *       *       *       *       *

  (f) Payments of Certain Costs.--
          (1) Payment for certain activities.--
                  (A) In general.--The Secretary--
                          (i) * * *
                          (ii) for loans originated [during 
                        fiscal years beginning] on or after 
                        October 1, 2003, and first disbursed 
                        before July 1, 2010, and in accordance 
                        with the provisions of this paragraph, 
                        shall, except as provided in 
                        subparagraph (C), pay to each guaranty 
                        agency, a loan processing and issuance 
                        fee equal to 0.40 percent of the total 
                        principal amount of the loans on which 
                        insurance was issued under this part 
                        during such fiscal year by such agency.

           *       *       *       *       *       *       *

  (j) Lenders-of-last-resort.--
          (1) General requirement.--In each State, the guaranty 
        agency or an eligible lender in the State described in 
        section 435(d)(1)(D) of this Act shall, before July 1, 
        2010, make loans directly, or through an agreement with 
        an eligible lender or lenders, to eligible students and 
        parents who are otherwise unable to obtain loans under 
        this part (except for consolidation loans under section 
        428C) or who attend an institution of higher education 
        in the State that is designated under paragraph (4). 
        Loans made under this subsection shall not exceed the 
        amount of the need of the borrower, as determined under 
        subsection (a)(2)(B), nor be less than $200. No loan 
        under section 428, 428B, or 428H that is made pursuant 
        to this subsection shall be made with interest rates, 
        origination or default fees, or other terms and 
        conditions that are more favorable to the borrower than 
        the maximum interest rates, origination or default 
        fees, or other terms and conditions applicable to that 
        type of loan under this part. The guaranty agency shall 
        consider the request of any eligible lender, as defined 
        under section 435(d)(1)(A) of this Act, to serve as the 
        lender-of-last-resort pursuant to this subsection.

           *       *       *       *       *       *       *


SEC. 428B. FEDERAL PLUS LOANS.

  (a) Authority To Borrow.--
          (1) Authority and eligibility.--[A graduate] Prior to 
        July 1, 2010, a graduate or professional student or the 
        parents of a dependent student shall be eligible to 
        borrow funds under this section in amounts specified in 
        subsection (b), if--
                  (A) * * *

           *       *       *       *       *       *       *


SEC. 428C. FEDERAL CONSOLIDATION LOANS.

  (a) Agreements With Eligible Lenders.--
          (1) * * *

           *       *       *       *       *       *       *

          (3) Definition of eligible borrower.--(A) * * *
          (B)(i) An individual's status as an eligible borrower 
        under this section or under section 455(g) terminates 
        under both sections upon receipt of a consolidation 
        loan under this section or under section 455(g), except 
        that--
                  (I) * * *

           *       *       *       *       *       *       *

                  [(V) an individual may obtain a subsequent 
                consolidation loan under section 455(g) only--
                          [(aa) for the purposes of obtaining 
                        income contingent repayment or income-
                        based repayment, and only if the loan 
                        has been submitted to the guaranty 
                        agency for default aversion or if the 
                        loan is already in default;
                          [(bb) for the purposes of using the 
                        public service loan forgiveness program 
                        under section 455(m); or
                          [(cc) for the purpose of using the no 
                        accrual of interest for active duty 
                        service members benefit offered under 
                        section 455(o).]
                          (V) an individual who has a 
                        consolidation loan under this section 
                        and does not have a consolidation loan 
                        under section 455(g) may obtain a 
                        subsequent consolidation loan under 
                        section 455(g).
          (4) Definition of eligible student loans.--For the 
        purpose of paragraph (1), the term ``eligible student 
        loans'' means loans--
                  (A) made, insured, or guaranteed under this 
                part, and first disbursed before July 1, 2010, 
                including loans on which the borrower has 
                defaulted (but has made arrangements to repay 
                the obligation on the defaulted loans 
                satisfactory to the Secretary or guaranty 
                agency, whichever insured the loans);

           *       *       *       *       *       *       *

  (b) Contents of Agreements, Certificates of Insurance, and 
Loan Notes.--
          (1) Agreements with lenders.--Any lender described in 
        subparagraph (A), (B), or (C) of subsection (a)(1) who 
        wishes to make consolidation loans under this section 
        shall enter into an agreement with the Secretary or a 
        guaranty agency which provides--
                  (A) * * *

           *       *       *       *       *       *       *

                  (E) that the lender shall offer an income-
                sensitive repayment schedule, established by 
                the lender in accordance with the regulations 
                promulgated by the Secretary, to the borrower 
                of any consolidation loan made by the lender on 
                or after July 1, 1994, and before July 1, 2010;

           *       *       *       *       *       *       *

          (5) Direct loans.--[In the event that] If, before 
        July 1, 2010, a borrower is unable to obtain a 
        consolidation loan from a lender with an agreement 
        under subsection (a)(1), or is unable to obtain a 
        consolidation loan with income-sensitive repayment 
        terms or income-based repayment terms acceptable to the 
        borrower from such a lender, or chooses to obtain a 
        consolidation loan for the purposes of using the public 
        service loan forgiveness program offered under section 
        455(m), the Secretary shall offer any such borrower who 
        applies for it, a Federal Direct Consolidation loan. In 
        addition, in the event that a borrower chooses to 
        obtain a consolidation loan for the purposes of using 
        the no accrual of interest for active duty service 
        members program offered under section 455(o), the 
        Secretary shall offer a Federal Direct Consolidation 
        loan to any such borrower who applies for participation 
        in such program. A direct consolidation loan offered 
        under this paragraph shall, as requested by the 
        borrower, be repaid either pursuant to income 
        contingent repayment under part D of this title, 
        pursuant to income-based repayment under section 493C, 
        or pursuant to any other repayment provision under this 
        section, except that if a borrower intends to be 
        eligible to use the public service loan forgiveness 
        program under section 455(m), such loan shall be repaid 
        using one of the repayment options described in section 
        455(m)(1)(A). The Secretary shall not offer such loans 
        if, in the Secretary's judgment, the Department of 
        Education does not have the necessary origination and 
        servicing arrangements in place for such loans.

           *       *       *       *       *       *       *

  (c) Payment of Principal and Interest.--
          (1) Interest rate.--(A) Notwithstanding subparagraphs 
        (B) and (C), with respect to any loan made under this 
        section for which the application is received by an 
        eligible lender--
                  (i) * * *
                  (ii) on or after July 1, 2006, and that is 
                disbursed before July 1, 2010, the applicable 
                interest rate shall be determined under section 
                427A(l)(3).

           *       *       *       *       *       *       *

          (C) A consolidation loan made on or after July 1, 
        1994, and first disbursed before July 1, 2010, shall 
        bear interest at an annual rate on the unpaid principal 
        balance of the loan that is equal to the weighted 
        average of the interest rates on the loans 
        consolidated, rounded upward to the nearest whole 
        percent.

           *       *       *       *       *       *       *

  (e) Termination of Authority.--The authority to make loans 
under this section expires at the close of [September 30, 
2014.] June 30, 2010. No loan may be made under this section 
for which the first disbursement would be on or after July 1, 
2010. Nothing in this section shall be construed to authorize 
the Secretary to promulgate rules or regulations governing the 
terms or conditions of the agreements and certificates under 
subsection (b). Loans made under this section which are insured 
by the Secretary shall be considered to be new loans made to 
students for the purpose of section 424(a).

           *       *       *       *       *       *       *


SEC. 428H. UNSUBSIDIZED STAFFORD LOANS FOR MIDDLE-INCOME BORROWERS.

  (a) In General.--It is the purpose of this section to 
authorize insured loans under this part that are first 
disbursed before July 1, 2010, for borrowers who do not qualify 
for Federal interest subsidy payments under section 428 of this 
Act. Except as provided in this section, all terms and 
conditions for Federal Stafford loans established under section 
428 shall apply to loans made pursuant to this section.
  (b) Eligible Borrowers.--[Any student] Prior to July 1, 2010, 
any student meeting the requirements for student eligibility 
under section 484 (including graduate and professional students 
as defined in regulations promulgated by the Secretary) shall 
be entitled to borrow an unsubsidized Federal Stafford Loan for 
which the first disbursement is made before such date if the 
eligible institution at which the student has been accepted for 
enrollment, or at which the student is in attendance, has--
          (1) * * *

           *       *       *       *       *       *       *

  (h) Insurance Premium.--Each State or nonprofit private 
institution or organization having an agreement with the 
Secretary under section 428(b)(1) may charge a borrower under 
this section an insurance premium equal to not more than 1.0 
percent of the principal amount of the loan, if such premium 
will not be used for incentive payments to lenders. Effective 
for loans for which the date of guarantee of principal is on or 
after July 1, 2006, and that are first disbursed before July 1, 
2010, in lieu of the insurance premium authorized under the 
preceding sentence, each State or nonprofit private institution 
or organization having an agreement with the Secretary under 
section 428(b)(1) shall collect and deposit into the Federal 
Student Loan Reserve Fund under section 422A, a Federal default 
fee of an amount equal to 1.0 percent of the principal amount 
of the loan, which fee shall be collected either by deduction 
from the proceeds of the loan or by payment from other non-
Federal sources. The Federal default fee shall not be used for 
incentive payments to lenders.

           *       *       *       *       *       *       *


SEC. 428L. LOAN REPAYMENT FOR CIVIL LEGAL ASSISTANCE ATTORNEYS.

  (a) * * *
  (b) Definitions.--In this section:
          (1) * * *
          (2) Student loan.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the term ``student loan'' 
                means--
                          [(i) subject to clause (ii), a loan 
                        made, insured, or guaranteed under this 
                        part, part D, or part E; and]
                          (i) subject to clause (ii)--
                                  (I) a loan made, insured, or 
                                guaranteed under this part, and 
                                that is first disbursed before 
                                July 1, 2010; or
                                  (II) a loan made under part D 
                                or part E; and
                          (ii) a loan made under section [428C 
                        or 455(g)] 428C, that is disbursed 
                        before July 1, 2010, or section 455(g), 
                        to the extent that such loan was used 
                        to repay--
                                  (I) * * *
                                  (II) a loan made under 
                                section 428, 428B, or 428H for 
                                which the first disbursement is 
                                made before July 1, 2010,; or

           *       *       *       *       *       *       *


SEC. 435. DEFINITIONS FOR STUDENT LOAN INSURANCE PROGRAM.

  As used in this part:
  (a) Eligible Institution.--
          (1) * * *

           *       *       *       *       *       *       *

          (5) Definition of mitigating circumstances.--(A) For 
        purposes of this subsection, an institution of higher 
        education shall be treated as having exceptional 
        mitigating circumstances that make application of 
        paragraph (2) inequitable, and that provide for 
        regulatory relief under paragraph (3), if such 
        institution, in the opinion of an independent auditor, 
        meets the following criteria:
                  (i) For a 12-month period that ended during 
                the 6 months immediately preceding the fiscal 
                year for which the cohort of borrowers used to 
                calculate the institution's cohort default rate 
                is determined, at least two-thirds of the 
                students enrolled on at least a half-time basis 
                at the institution--
                          (I) are eligible to receive a Federal 
                        Pell Grant award that is at least equal 
                        to [one-half the maximum Federal Pell 
                        Grant award for which a student would 
                        be eligible] one-half the Federal Pell 
                        Grant amount, determined under section 
                        401(b)(2)(A), for which a student would 
                        be eligible based on the student's 
                        enrollment status; or

           *       *       *       *       *       *       *


SEC. 438. SPECIAL ALLOWANCES.

  (a) * * *
  (b) Computation and Payment.--
          (1) * * *
          (2) Rate of special allowance.--(A) * * *

           *       *       *       *       *       *       *

          (I) Loans disbursed on or after january 1, 2000, and 
        before july 1, 2010.--
                  (i) In general.--Notwithstanding 
                subparagraphs (G) and (H), but subject to 
                paragraph (4) and the following clauses of this 
                subparagraph, and except as provided in 
                subparagraph (B), the special allowance paid 
                pursuant to this subsection on loans for which 
                the first disbursement is made on or after 
                January 1, 2000, and before July 1, 2010, shall 
                be computed--
                          (I) * * *
                          (II) by subtracting the applicable 
                        interest rates on such loans from [such 
                        average bond equivalent rate] the rate 
                        determined under subclause (I);

           *       *       *       *       *       *       *

                  (ii) In school and grace period.--In the case 
                of any loan--
                          (I) * * *
                          (II) for which the first disbursement 
                        is made on or after July 1, 2006, and 
                        before July 1, 2010, and for which the 
                        applicable rate of interest is 
                        described in section section 427A(l)(1) 
                        or (l)(4), but only with respect to 
                        (aa) periods prior to the beginning of 
                        the repayment period of the loan; or 
                        (bb) during the periods in which 
                        principal need not be paid (whether or 
                        not such principal is in fact paid) by 
                        reason of a provision described in 
                        section 427(a)(2)(C) or 428(b)(1)(M);
                clause (i)(III) of this subparagraph shall be 
                applied by substituting ``1.74 percent'' for 
                ``2.34 percent''.
                  (iii) PLUS loans.--In the case of any loan 
                for which the first disbursement is made on or 
                after January 1, 2000, and before July 1, 2010, 
                and for which the applicable rate of interest 
                is described in section 427A(k)(3) or (l)(2), 
                clause (i)(III) of this subparagraph shall be 
                applied by substituting ``2.64 percent'' for 
                ``2.34 percent''.
                  (iv) Consolidation loans.--In the case of any 
                consolidation loan for which the application is 
                received by an eligible lender on or after 
                January 1, 2000, and that is disbursed before 
                July 1, 2010, and for which the applicable 
                interest rate is determined under section 
                427A(k)(4) or (l)(3), clause (i)(III) of this 
                subparagraph shall be applied by substituting 
                ``2.64 percent'' for ``2.34 percent''.
                  (v) Recapture of excess interest.--
                          (I) Excess credited.--With respect to 
                        a loan on which the applicable interest 
                        rate is determined under subsection (k) 
                        or (l) of section 427A and for which 
                        the first disbursement of principal is 
                        made on or after April 1, 2006, and 
                        before July 1, 2010, if the applicable 
                        interest rate for any 3-month period 
                        exceeds the special allowance support 
                        level applicable to such loan under 
                        this subparagraph for such period, then 
                        an adjustment shall be made by 
                        calculating the excess interest in the 
                        amount computed under subclause (II) of 
                        this clause, and by crediting the 
                        excess interest to the Government not 
                        less often than annually.

           *       *       *       *       *       *       *

                          (III) Special allowance support 
                        level.--For purposes of this clause, 
                        the term ``special allowance support 
                        level'' means, for any loan, a number 
                        expressed as a percentage equal to the 
                        sum of the rates determined under 
                        subclauses (I) and (III) of clause (i), 
                        and applying any substitution rules 
                        applicable to such loan under clauses 
                        (ii), (iii), [(iv), and (vi)] (iv), 
                        (vi), and (vii) in determining such 
                        sum.
                  (vi) Reduction for loans disbursed on or 
                after october 1, 2007, and before july 1, 
                2010.--With respect to a loan on which the 
                applicable interest rate is determined under 
                section 427A(l) and for which the first 
                disbursement of principal is made on or after 
                October 1, 2007, and before July 1, 2010, the 
                special allowance payment computed pursuant to 
                this subparagraph shall be computed--
                          (I) * * *

           *       *       *       *       *       *       *

                  (vii) Revised calculation rule to reflect 
                financial market conditions.--
                          (I) Calculation based on libor.--For 
                        the calendar quarter beginning on 
                        October 1, 2009, and each subsequent 
                        calendar quarter, in computing the 
                        special allowance paid pursuant to this 
                        subsection with respect to loans 
                        described in subclause (II), clause 
                        (i)(I) of this subparagraph shall be 
                        applied by substituting ``of the 1-
                        month London Inter Bank Offered Rate 
                        (LIBOR) for United States dollars in 
                        effect for each of the days in such 
                        quarter as compiled and released by the 
                        British Bankers Association'' for ``of 
                        the quotes of the 3-month commercial 
                        paper (financial) rates in effect for 
                        each of the days in such quarter as 
                        reported by the Federal Reserve in 
                        Publication H-15 (or its successor) for 
                        such 3-month period''.
                          (II) Loans eligible for libor-based 
                        calculation.--The special allowance 
                        paid pursuant to this subsection shall 
                        be calculated as described in subclause 
                        (I) with respect to special allowance 
                        payments for the 3-month period ending 
                        December 31, 2009, and each succeeding 
                        3-month period, on loans for which the 
                        first disbursement is made--
                                  (aa) on or after the date of 
                                enactment of the Student Aid 
                                and Fiscal Responsibility Act 
                                of 2009, and before July 1, 
                                2010; and
                                  (bb) on or after January 1, 
                                2000, and before the date of 
                                enactment of the Student Aid 
                                and Fiscal Responsibility Act 
                                of 2009, if, not later than the 
                                last day of the second full 
                                fiscal quarter after the date 
                                of enactment of such Act, the 
                                holder of the loan 
                                affirmatively and permanently 
                                waives all contractual, 
                                statutory or other legal rights 
                                to a special allowance paid 
                                pursuant to this subsection 
                                that is calculated using the 
                                formula in effect at the time 
                                the loans were first disbursed.
                          (III) Terms of waiver.--A waiver 
                        pursuant to subclause (II)(bb) shall--
                                  (aa) be applicable to all 
                                loans described in such 
                                subclause that are held under 
                                any lender identification 
                                number associated with the 
                                holder (pursuant to section 
                                487B); and
                                  (bb) apply with respect to 
                                all future calculations of the 
                                special allowance on loans 
                                described in such subclause 
                                that are held on the date of 
                                such waiver or that are 
                                acquired by the holder after 
                                such date.
                          (IV) Participant's yield.--For the 
                        calendar quarter beginning on October 
                        1, 2009, and each subsequent calendar 
                        quarter, the Secretary's participant 
                        yield in any loan for which the first 
                        disbursement is made on or after 
                        January 1, 2000, and before October 1, 
                        2009, and that is held by a lender that 
                        has sold any participation interest in 
                        such loan to the Secretary shall be 
                        determined by using the LIBOR-based 
                        rate described in subclause (I) as the 
                        substitute rate (for the commercial 
                        paper rate) referred to in the 
                        participation agreement between the 
                        Secretary and such lender.

           *       *       *       *       *       *       *

  (c) Origination Fees From Students.--
          (1) * * *
          (2) Amount of origination fees.--
                  (A) * * *
                  (B) Subsequent reductions.--Subparagraph (A) 
                shall be applied to loans made under this part 
                (other than loans made under sections 428C and 
                439(o))--
                          (i) * * *

           *       *       *       *       *       *       *

                          (iii) by substituting ``1.0 percent'' 
                        for ``3.0 percent'' with respect to 
                        loans for which the first disbursement 
                        of principal is made on or after July 
                        1, 2008, and before July 1, 2009; and
                          (iv) by substituting ``0.5 percent'' 
                        for ``3.0 percent'' with respect to 
                        loans for which the first disbursement 
                        of principal is made on or after July 
                        1, 2009, and before July 1, 2010[; 
                        and].
                          [(v) by substituting ``0.0 percent'' 
                        for ``3.0 percent'' with respect to 
                        loans for which the first disbursement 
                        of principal is made on or after July 
                        1, 2010.]

           *       *       *       *       *       *       *

          (6) SLS And plus loans.--With respect to any loans 
        made under section 428A or 428B on or after October 1, 
        1992, and first disbursed before July 1, 2010, each 
        eligible lender under this part shall charge the 
        borrower an origination fee of 3.0 percent of the 
        principal amount of the loan, to be deducted 
        proportionately from each installment payment of the 
        proceeds of the loan prior to payments to the borrower.

           *       *       *       *       *       *       *

  (d) Loan Fees From Lenders.--
          (1) * * *
          (2) Amount of loan fees.--The amount of the loan fee 
        which shall be deducted under paragraph (1), but which 
        may not be collected from the borrower, shall be equal 
        to--
                  (A) * * *
                  (B) 1.0 percent of the principal amount of 
                the loan with respect to any loan under this 
                part for which the first disbursement was made 
                on or after October 1, 2007, and before July 1, 
                2010.

           *       *       *       *       *       *       *


PART D--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM

           *       *       *       *       *       *       *


SEC. 452. FUNDS FOR ORIGINATION OF DIRECT STUDENT LOANS.

  (a) * * *

           *       *       *       *       *       *       *

  (d) Institutions Located Outside the United States.--Loan 
funds for students (and parents of students) attending 
institutions located outside the United States shall be 
disbursed through a financial institution located in the United 
States and designated by the Secretary to serve as the agent of 
such institutions with respect to the receipt of the 
disbursements of such loan funds and the transfer of such funds 
to such institutions. To be eligible to receive funds under 
this part, an otherwise eligible institution located outside 
the United States shall make arrangements, subject to 
regulations by the Secretary, with the agent designated by the 
Secretary under this subsection to receive funds under this 
part.

           *       *       *       *       *       *       *


SEC. 454. AGREEMENTS WITH INSTITUTIONS.

  (a) Participation Agreements.--An agreement with any 
institution of higher education for participation in the direct 
student loan program under this part shall--
          (1) * * *

           *       *       *       *       *       *       *

          [(4) provide that students at the institution and 
        their parents (with respect to such students) will be 
        eligible to participate in the programs under part B of 
        this title at the discretion of the Secretary for the 
        period during which such institution participates in 
        the direct student loan program under this part, except 
        that a student or parent may not receive loans under 
        both this part and part B for the same period of 
        enrollment;]
          [(5)] (4) provide for the implementation of a quality 
        assurance system, as established by the Secretary and 
        developed in consultation with institutions of higher 
        education, to ensure that the institution is complying 
        with program requirements and meeting program 
        objectives;
          [(6)] (5) provide that the institution will not 
        charge any fees of any kind, however described, to 
        student or parent borrowers for origination activities 
        or the provision of any information necessary for a 
        student or parent to receive a loan under this part, or 
        any benefits associated with such loan; and
          [(7)] (6) include such other provisions as the 
        Secretary determines are necessary to protect the 
        interests of the United States and to promote the 
        purposes of this part.
  (b) Origination.--An agreement with any institution of higher 
education, or consortia thereof, for the origination of loans 
under this part shall--
          (1) * * *
          (2) include provisions established by the Secretary 
        that are similar to the participation agreement 
        provisions described in paragraphs (1)(E)(ii), (2), 
        (3), (4), [(5), (6), and (7)] (5), and (6) of 
        subsection (a), as modified to relate to the 
        origination of loans by the institution or consortium;

           *       *       *       *       *       *       *


SEC. 455. TERMS AND CONDITIONS OF LOANS.

  (a) In General.--
          (1) Parallel terms, conditions, benefits, and 
        amounts.--Unless otherwise specified in this part, 
        loans made to borrowers under this part shall have the 
        same terms, conditions, and benefits, and be available 
        in the same amounts, as loans made to borrowers, and 
        first disbursed on June 30, 2010, under sections 428, 
        428B, 428C, and 428H of this title.

           *       *       *       *       *       *       *

  (b) Interest Rate.--
          (1) * * *

           *       *       *       *       *       *       *

          (7) Interest rate provision for new loans on or after 
        july 1, 2006.--
                  (A) * * *

           *       *       *       *       *       *       *

                  (E) Reduced rates for undergraduate fdsl on 
                and after july 1, 2012.--Notwithstanding the 
                preceding paragraphs of this subsection and 
                subparagraph (A) of this paragraph, for Federal 
                Direct Stafford Loans made to undergraduate 
                students for which the first disbursement is 
                made on or after July 1, 2012, the applicable 
                rate of interest shall, during any 12-month 
                period beginning on July 1 and ending on June 
                30, be determined on the preceding June 1 and 
                be equal to--
                          (i) the bond equivalent rate of 91-
                        day Treasury bills auctioned at the 
                        final auction held prior to such June 
                        1; plus
                          (ii) 2.5 percent,
                except that such rate shall not exceed 6.8 
                percent.

           *       *       *       *       *       *       *

  (g) Federal Direct Consolidation Loans.--A borrower of a loan 
made under this part may consolidate such loan with the loans 
described in section 428C(a)(4), including any loan made under 
part B and first disbursed before July 1, 2010. To be eligible 
for a consolidation loan under this part, a borrower shall meet 
the eligibility criteria set forth in section 428C(a)(3). [The 
Secretary, upon application for such a loan, shall comply with 
the requirements applicable to a lender under section 
428C(b)(1)(G).]

           *       *       *       *       *       *       *


SEC. 455A. FEDERAL DIRECT PERKINS LOANS.

  (a) Designation of Loans.--Loans made to borrowers under this 
section shall be known as ``Federal Direct Perkins Loans''.
  (b) In General.--It is the purpose of this section to 
authorize loans to be awarded by institutions of higher 
education through agreements established under section 463(f). 
Unless otherwise specified in this section, all terms and 
conditions and other requirements applicable to Federal Direct 
Unsubsidized Stafford loans established under section 
455(a)(2)(D) shall apply to loans made pursuant to this 
section.
  (c) Eligible Borrowers.--Any student meeting the requirements 
for student eligibility under section 464(b) (including 
graduate and professional students as defined in regulations 
promulgated by the Secretary) shall be eligible to borrow a 
Federal Direct Perkins Loan, provided the student attends an 
eligible institution with an agreement with the Secretary under 
section 463(f), and the institution uses its authority under 
that agreement to award the student a loan.
  (d) Loan Limits.--The annual and aggregate limits for loans 
under this section shall be the same as those established under 
section 464, and aggregate limits shall include loans made by 
institutions under agreements under section 463(a).
  (e) Applicable Rates of Interest.--Loans made pursuant to 
this section shall bear interest, on the unpaid balance of the 
loan, at the rate of 5 percent per year.

SEC. 456. CONTRACTS.

  (a) Contracts for Supplies and Services.--
          (1) [In general.--The Secretary] Awarding of 
        contracts.--
                  (A) In general.--The Secretary shall, to the 
                extent practicable, award contracts for 
                origination, servicing, and collection 
                described in subsection (b). In awarding such 
                contracts, the Secretary shall ensure that such 
                services and supplies are provided at 
                competitive prices.
                  (B) Awarding contracts for servicing loans.--
                The Secretary shall, if practicable, award 
                multiple contracts, through a competitive 
                bidding process, to entities, including 
                eligible not-for-profit servicers, to service 
                loans originated under this part. The 
                competitive bidding process shall take into 
                account price, servicing capacity, and 
                capability, and may take into account the 
                capacity and capability to provide default 
                aversion activities and outreach services.
                  (C) Job retention incentive payment.--(i) In 
                a contract with an entity under subparagraph 
                (B) for the servicing of loans, the Secretary 
                shall provide a job retention incentive 
                payment, in an amount and manner determined by 
                the Secretary, if such entity agrees to give 
                priority for hiring for positions created as a 
                result of such a contract to those geographical 
                locations at which the entity performed student 
                loan origination or servicing activities under 
                the Federal Family Education Loan Program as of 
                the date of enactment of the Student Aid and 
                Fiscal Responsibility Act of 2009.
                  (ii) In determining the allocation of loans 
                to be serviced by an entity awarded such a 
                contract, the Secretary shall consider the 
                retention of highly qualified employees of such 
                entity a positive factor in determining such 
                allocation.
          (2) Entities.--The entities, including eligible not-
        for-profit servicers, with which the Secretary may 
        enter into contracts shall include only entities which 
        the Secretary determines are qualified to provide such 
        services and supplies and will comply with the 
        procedures applicable to the award of such contracts. 
        In the case of awarding contracts for the origination, 
        servicing, and collection of loans under this part, the 
        Secretary shall enter into contracts only with entities 
        that have extensive and relevant experience and 
        demonstrated effectiveness. [The entities with which 
        the Secretary may enter into such contracts shall 
        include, where practicable, agencies with agreements 
        with the Secretary under sections 428(b) and (c), if 
        such agencies meet the qualifications as determined by 
        the Secretary under this subsection and if those 
        agencies have such experience and demonstrated 
        effectiveness. In awarding contracts to such State 
        agencies, the Secretary shall, to the extent 
        practicable and consistent with the purposes of this 
        part, give special consideration to State agencies with 
        a history of high quality performance to perform 
        services for institutions of higher education within 
        their State.] The entities with which the Secretary may 
        enter into such contracts shall include, where 
        practicable, agencies with agreements with the 
        Secretary under sections 428(b) and (c) on the date of 
        the enactment of the Student Aid and Fiscal 
        Responsibility Act of 2009, and eligible not-for-profit 
        servicers, if such agencies or servicers meet the 
        qualifications as determined by the Secretary under 
        this subsection and if those agencies or servicers have 
        such experience and demonstrated effectiveness. In 
        awarding contracts to such State agencies, and such 
        eligible not-for-profit servicers, the Secretary shall, 
        to the extent practicable and consistent with the 
        purposes of this part, give special consideration to 
        State agencies and such servicers with a history of 
        high quality performance and demonstrated integrity in 
        conducting operations with institutions of higher 
        education and the Secretary.
          (3) Servicing by eligible not-for-profit servicers.--
                  (A) In general.--Notwithstanding any other 
                provision of this section, in each State where 
                one or more eligible not-for-profit servicer 
                has its principal place of business, the 
                Secretary shall contract with each such 
                servicer to service loans originated under this 
                part on behalf of borrowers attending 
                institutions located within such State, 
                provided that the servicer demonstrates that it 
                meets the standards for servicing Federal 
                assets and providing quality service and agrees 
                to service the loans at a competitive market 
                rate, as determined by the Secretary. In 
                determining such a competitive market rate, the 
                Secretary may take into account the volume of 
                loans serviced by the servicer. Contracts 
                awarded under this paragraph shall be subject 
                to the same requirements for quality, 
                performance, and accountability as contracts 
                awarded under paragraph (2) for similar 
                activities.
                  (B) Allocations.--(i) One servicer.--In the 
                case of a State with only one eligible not-for-
                profit servicer with a contract described in 
                subparagraph (A), the Secretary shall, at a 
                minimum, allocate to such servicer, on an 
                annual basis and subject to such contract, the 
                servicing rights for the lesser of--
                          (I) the loans of 100,000 borrowers 
                        (including borrowers who borrowed loans 
                        in a prior year that were serviced by 
                        the servicer) attending institutions 
                        located within the State; or
                          (II) the loans of all the borrowers 
                        attending institutions located within 
                        the State.
                  (ii) Multiple servicers.--In the case of a 
                State with more than one eligible not-for-
                profit servicer with a contract described in 
                subparagraph (A), the Secretary shall, at a 
                minimum, allocate to each such servicer, on an 
                annual basis and subject to such contract, the 
                servicing rights for the lesser of--
                          (I) the loans of 100,000 borrowers 
                        (including borrowers who borrowed loans 
                        in a prior year that were serviced by 
                        the servicer) attending institutions 
                        located within the State; or
                          (II) an equal share of the loans of 
                        all borrowers attending institutions 
                        located within the State, except the 
                        Secretary shall adjust such shares as 
                        necessary to ensure that the loans of 
                        any single borrower remain with a 
                        single servicer.
                  (iii) Additional allocation.--The Secretary 
                may allocate additional servicing rights to an 
                eligible not-for-profit servicer based on the 
                performance of such servicer, as determined by 
                the Secretary, including performance in the 
                areas of customer service and default aversion.
                  (C) Multiple loans.--Notwithstanding the 
                allocations required by subparagraph (B), the 
                Secretary may transfer loans among servicers 
                who are awarded contracts to service loans 
                pursuant to this section to ensure that the 
                loans of any single borrower remain with a 
                single servicer.
          [(3)] (4) Rule of construction.--Nothing in this 
        section shall be construed as a limitation of the 
        authority of any State agency to enter into an 
        agreement for the purposes of this section as a member 
        of a consortium of State agencies, or of any eligible 
        not-for-profit servicer to enter into an agreement for 
        the purposes of this section as a member of a 
        consortium of such entities.

           *       *       *       *       *       *       *

  (c) Report to Congress.--Not later than 3 years after the 
date of the enactment of the Student Aid and Fiscal 
Responsibility Act of 2009, the Secretary shall prepare and 
submit to the authorizing committees, a report evaluating the 
performance of all eligible not-for-profit servicers awarded a 
contract under this section to service loans originated under 
this part. Such report shall give consideration to--
          (1) customer satisfaction of borrowers and 
        institutions with respect to the loan servicing 
        provided by the servicers;
          (2) compliance with applicable regulations by the 
        servicers; and
          (3) the effectiveness of default aversion activities, 
        and outreach services (if any), provided by the 
        servicers.
  (d) Definitions.--In this section:
          (1) Default aversion activities.--The term ``default 
        aversion activities'' means activities that are 
        directly related to providing collection assistance to 
        the Secretary on a delinquent loan, prior to the loan 
        being legally in a default status, including due 
        diligence activities required pursuant to regulations.
          (2) Eligible not-for-profit servicer.--
                  (A) In general.--The term ``eligible not-for-
                profit servicer'' means an entity that, on the 
                date of enactment of the Student Aid and Fiscal 
                Responsibility Act of 2009--
                          (i) meets the definition of an 
                        eligible not-for-profit holder under 
                        section 435(p), except that such term 
                        does not include eligible lenders 
                        described in paragraph (1)(D) of such 
                        section;
                          (ii) notwithstanding clause (i), is 
                        the sole beneficial owner of a loan for 
                        which the special allowance rate is 
                        calculated under section 
                        438(b)(2)(I)(vi)(II) because the loan 
                        is held by an eligible lender trustee 
                        that is an eligible not-for-profit 
                        holder as defined under section 
                        435(p)(1)(D); or
                          (iii) is an affiliated entity of an 
                        eligible not-for-profit servicer 
                        described in clause (i) or (ii) that--
                                  (I) directly employs, or will 
                                directly employ (on or before 
                                the date the entity begins 
                                servicing loans under a 
                                contract awarded by the 
                                Secretary pursuant to 
                                subsection (a)(3)(A)), the 
                                majority of individuals who 
                                perform student loan servicing 
                                functions; and
                                  (II) on such date of 
                                enactment, was performing, or 
                                had entered into a contract 
                                with a third party servicer (as 
                                such term is defined in section 
                                481(c)) who was performing, 
                                student loan servicing 
                                functions for loans made under 
                                part B of this title.
                  (B) Affiliated entity.--For the purposes of 
                subparagraph (A), the term ``affiliated 
                entity'' means an entity contracted to perform 
                services for an eligible not-for-profit 
                servicer that--
                          (i) is a nonprofit entity or is 
                        wholly owned by a nonprofit entity; and
                          (ii) is not owned or controlled, in 
                        whole or in part, by--
                                  (I) a for-profit entity; or
                                  (II) an entity having its 
                                principal place of business in 
                                another State.
          (3) Outreach services.--The term ``outreach 
        services'' means programs offered to students and 
        families, including programs delivered in coordination 
        with institutions of higher education that--
                  (A) encourage--
                          (i) students to attend and complete a 
                        degree or certification program at an 
                        institution of higher education; and
                          (ii) students and families to obtain 
                        financial aid, but minimize the 
                        borrowing of education loans; and
                  (B) deliver financial literacy and counseling 
                tools.

           *       *       *       *       *       *       *


                     PART E--FEDERAL PERKINS LOANS

SEC. 461. APPROPRIATIONS AUTHORIZED.

  (a) Program Authority.--The Secretary shall, before July 1, 
2010, carry out a program of stimulating and assisting in the 
establishment and maintenance of funds at institutions of 
higher education for the making of low-interest loans to 
students in need thereof to pursue their courses of study in 
such institutions or while engaged in programs of study abroad 
approved for credit by such institutions. Loans made under this 
part shall be known as ``Federal Perkins Loans''.
  (b) Authorization of Appropriations.--[(1) For the purpose] 
For the purpose of enabling the Secretary to make contributions 
to student loan funds established under this part, there are 
authorized to be appropriated $300,000,000 for fiscal year 2009 
[and for each of the five succeeding fiscal years].
  [(2) In addition to the funds authorized under paragraph (1), 
there are hereby authorized to be appropriated such sums for 
fiscal year 2015 and each of the 5 succeeding fiscal years as 
may be necessary to enable students who have received loans for 
academic years ending prior to October 1, 2015, to continue or 
complete courses of study.
  [(c) Use of Appropriations.--Any sums appropriated pursuant 
to subsection (b) for any fiscal year shall be available for 
apportionment pursuant to section 462 and for payments of 
Federal capital contributions therefrom to institutions of 
higher education which have agreements with the Secretary under 
section 463. Such Federal capital contributions and all 
contributions from such institutions shall be used for the 
establishment, expansion, and maintenance of student loan 
funds.]

SEC. 462. ALLOCATION OF FUNDS.

  (a) Allocation Based on Previous Allocation.--(1) [From] For 
any fiscal year before fiscal year 2010, from the amount 
appropriated pursuant to section 461(b) for each fiscal year, 
the Secretary shall first allocate to each eligible institution 
an amount equal to--
          (A) * * *

           *       *       *       *       *       *       *

  (i) Reallocation of Excess Allocations.--
          (1) In general.--(A) If an institution of higher 
        education returns to the Secretary any portion of the 
        sums allocated to such institution under this section 
        [for any fiscal year,] for any fiscal year before 
        fiscal year 2010, the Secretary shall reallocate 80 
        percent of such returned portions to participating 
        institutions in an amount not to exceed such 
        participating institution's excess eligible amounts as 
        determined under paragraph (2).

           *       *       *       *       *       *       *


SEC. 462A. FEDERAL DIRECT PERKINS LOAN ALLOCATION.

  (a) Purposes.--The purposes of this section are--
          (1) to allocate, among eligible and participating 
        institutions (as such terms are defined in this 
        section), the authority to make Federal Direct Perkins 
        Loans under section 455A with a portion of the annual 
        loan authority described in subsection (b); and
          (2) to make funds available, in accordance with 
        section 452, to each participating institution from a 
        portion of the annual loan authority described in 
        subsection (b), in an amount not to exceed the sum of 
        an institution's allocation of funds under 
        subparagraphs (A), (B), and (C) of subsection (b)(1) to 
        enable each such institution to make Federal Direct 
        Perkins Loans to eligible students at the institution.
  (b) Available Direct Perkins Annual Loan Authority.--
          (1) Availability and allocations.--There are hereby 
        made available, from funds made available for loans 
        made under part D, not to exceed $6,000,000,000 of 
        annual loan authority for award year 2010-2011 and each 
        succeeding award year, to be allocated as follows:
                  (A) The Secretary shall allocate not more 
                than \1/2\ of such funds for each award year by 
                allocating to each participating institution an 
                amount equal to the adjusted self-help need 
                amount of the institution, as determined in 
                accordance with subsection (c) for such award 
                year.
                  (B) The Secretary shall allocate not more 
                than \1/4\ of such funds for each award year by 
                allocating to each participating institution an 
                amount equal to the low tuition incentive 
                amount of the institution, as determined in 
                accordance with subsection (d).
                  (C) The Secretary shall allocate not more 
                than \1/4\ of such funds for each award year by 
                allocating to each participating institution an 
                amount which bears the same ratio to the funds 
                allocated under this subparagraph as the ratio 
                determined in accordance with subsection (e) 
                for the calculation of the Federal Pell Grant 
                and degree recipient amount of the institution.
          (2) No funds to non-participating institutions.--The 
        Secretary shall not make funds available under this 
        subsection to any eligible institution that is not a 
        participating institution. The adjusted self-help need 
        amount (determined in accordance with subsection (c)) 
        of an eligible institution that is not a participating 
        institution shall not be made available to any other 
        institution.
  (c) Adjusted Self-Help Need Amount.--For the purposes of 
subsection (b)(1)(A), the Secretary shall calculate the 
adjusted self-help need amount of each eligible institution for 
an award year as follows:
          (1) Use of base self-help need amounts.--
                  (A) In general.--Except as provided in 
                paragraphs (2), (3), and (4), the adjusted 
                self-help need amount of each eligible 
                institution shall be the institution's base 
                self-help need amount, which is the sum of--
                          (i) the self-help need of the 
                        institution's eligible undergraduate 
                        students for such award year; and
                          (ii) the self-help need of the 
                        institution's eligible graduate and 
                        professional students for such award 
                        year.
                  (B) Undergraduate student self-help need.--To 
                determine the self-help need of an 
                institution's eligible undergraduate students, 
                the Secretary shall determine the sum of each 
                eligible undergraduate student's average cost 
                of attendance for the second preceding award 
                year less each such student's expected family 
                contribution (computed in accordance with part 
                F) for the second preceding award year, except 
                that, for each such eligible undergraduate 
                student, the amount computed by such 
                subtraction shall not be less than zero or more 
                than the lesser of--
                          (i) 25 percent of the average cost of 
                        attendance with respect to such 
                        eligible student; or
                          (ii) $5,500.
                  (C) Graduate and professional student self-
                help need.--To determine the self-help need of 
                an institution's eligible graduate and 
                professional students, the Secretary shall 
                determine the sum of each eligible graduate and 
                professional student's average cost of 
                attendance for the second preceding award year 
                less each such student's expected family 
                contribution (computed in accordance with part 
                F) for such second preceding award year, except 
                that, for each such eligible graduate and 
                professional student, the amount computed by 
                such subtraction shall not be less than zero or 
                more than $8,000.
          (2) Ratable reduction adjustments.--If the sum of the 
        base self-help need amounts of all eligible 
        institutions for an award year as determined under 
        paragraph (1) exceeds \1/2\ of the annual loan 
        authority under subsection (b) for such award year, the 
        Secretary shall ratably reduce the base self-help need 
        amounts of all eligible institutions until the sum of 
        such amounts is equal to the amount that is \1/2\ of 
        the annual loan authority under subsection (b).
          (3) Required minimum amount.--Notwithstanding 
        paragraph (2), the adjusted self-help need amount of 
        each eligible institution shall not be less than the 
        average of the institution's total principal amount of 
        loans made under this part for each of the 5 most 
        recent award years.
          (4) Additional adjustments.--If the Secretary 
        determines that a ratable reduction under paragraph (2) 
        results in the adjusted self-help need amount of any 
        eligible institution being reduced below the minimum 
        amount required under paragraph (3), the Secretary 
        shall--
                  (A) for each institution for which the 
                minimum amount under paragraph (3) is not 
                satisfied, increase the adjusted self-help need 
                amount to the amount of the required minimum 
                under such subparagraph; and
                  (B) ratably reduce the adjusted self-help 
                need amounts of all eligible institutions not 
                described in subparagraph (A) until the sum of 
                the adjusted self-help need amounts of all 
                eligible institutions is equal to the amount 
                that is \1/2\ of the annual loan authority 
                under subsection (b).
  (d) Low Tuition Incentive Amount.--
          (1) In general.--For purposes of subsection 
        (b)(1)(B), the Secretary shall determine the low 
        tuition incentive amount for each participating 
        institution for each award year, by calculating for 
        each such institution the sum of--
                  (A) the total amount, if any (but not less 
                than zero), by which--
                          (i) the average tuition and required 
                        fees for the institution's sector for 
                        the second preceding award year; 
                        exceeds
                          (ii) the tuition and required fees 
                        for the second preceding award year for 
                        each undergraduate and graduate student 
                        attending the institution who had 
                        financial need (as determined under 
                        part F); plus
                  (B) the total amount, if any (but not less 
                than zero), by which--
                          (i) the total amount for the second 
                        preceding award year of non-Federal 
                        grant aid provided to meet the 
                        financial need of all undergraduate 
                        students attending the institution (as 
                        determined without regard to financial 
                        aid not received under this title); 
                        exceeds
                          (ii) the total amount for the second 
                        preceding award year, if any, by 
                        which--
                                  (I) the tuition and required 
                                fees of each such student with 
                                such financial need; exceeds
                                  (II) the average tuition and 
                                required fees for the 
                                institution's sector.
          (2) Ratable reduction.--If the sum of the low tuition 
        incentive amounts of all participating institutions for 
        an award year as determined under paragraph (1) exceeds 
        \1/4\ of the annual loan authority under subsection (b) 
        for such award year, the Secretary shall ratably reduce 
        the low tuition incentive amounts of all participating 
        institutions until the sum of such amounts is equal to 
        the amount that is \1/4\ of the annual loan authority 
        under subsection (b).
  (e) Federal Pell Grant and Degree Recipient Amount.--For 
purposes of subsection (b)(1)(C), the Secretary shall determine 
the Federal Pell Grant and degree recipient amount for each 
participating institution for each award year, by calculating 
for each such institution the ratio of--
          (1) the number of students who, during the most 
        recent year for which data are available, obtained an 
        associate's degree or other postsecondary degree from 
        such participating institution and, prior to obtaining 
        such degree, received a Federal Pell Grant for 
        attendance at any institution of higher education; to
          (2) the sum of the number of students who, during the 
        most recent year for which data are available, obtained 
        an associate's degree or other postsecondary degree 
        from each participating institution and, prior to 
        obtaining such degree, received a Federal Pell Grant 
        for attendance at any institution of higher education.
  (f) Definitions.--As used in this section:
          (1) Annual loan authority.--The term ``annual loan 
        authority'' means the total original principal amount 
        of loans that may be allocated and made available for 
        an award year to make Federal Direct Perkins Loans 
        under section 455A.
          (2) Average cost of attendance.--
                  (A) In general.--The term ``average cost of 
                attendance'' means the average of the 
                attendance costs for undergraduate students and 
                for graduate and professional students, 
                respectively, for the second preceding award 
                year which shall include--
                          (i) tuition and required fees 
                        determined in accordance with 
                        subparagraph (B);
                          (ii) standard living expenses 
                        determined in accordance with 
                        subparagraph (C); and
                          (iii) books and supplies determined 
                        in accordance with subparagraph (D).
                  (B) Tuition and required fees.--The average 
                undergraduate and graduate and professional 
                tuition and required fees described in 
                subparagraph (A)(i) shall be computed on the 
                basis of information reported by the 
                institution to the Secretary, which shall 
                include--
                          (i) total revenue received by the 
                        institution from undergraduate and 
                        graduate and professional students, 
                        respectively, for tuition and required 
                        fees for the second preceding award 
                        year; and
                          (ii) the institution's full-time 
                        equivalent enrollment of undergraduate 
                        and graduate and professional students, 
                        respectively, for such second preceding 
                        award year.
                  (C) Standard living expenses.--The standard 
                living expense described in subparagraph 
                (A)(ii) is equal to the allowance, determined 
                by an institution, for room and board costs 
                incurred by a student, as computed in 
                accordance with part F for the second preceding 
                award year.
                  (D) Books and supplies.--The allowance for 
                books and supplies described in subparagraph 
                (A)(iii) is equal to the allowance, determined 
                by an institution, for books, supplies, 
                transportation, and miscellaneous personal 
                expenses, including a reasonable allowance for 
                the documented rental or purchase of a personal 
                computer, as computed in accordance with part F 
                for the second preceding award year.
          (3) Average tuition and required fees for the 
        institution's sector.--The term ``average tuition and 
        required fees for the institution's sector'' shall be 
        determined by the Secretary for each of the categories 
        described in section 132(d).
          (4) Eligible institution.--The term ``eligible 
        institution'' means an institution of higher education 
        that participates in the Federal Direct Stafford Loan 
        Program.
          (5) Participating institution.--The term 
        ``participating institution'' means an institution of 
        higher education that has an agreement under section 
        463(f).
          (6) Sector.--The term ``sector'' means each of the 
        categories described in section 132(d).

SEC. 463. AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION.

  (a) Contents of Agreements for Loans Made Before July 1, 
2010.--An agreement with any institution of higher education 
for the payment of Federal capital contributions under this 
part shall--
          (1) * * *

           *       *       *       *       *       *       *

          (3) provide that such student loan fund shall be used 
        only for--
                  (A) loans to students before July 1, 2010, in 
                accordance with the provisions of this part;

           *       *       *       *       *       *       *

          (4) provide that where a note or written agreement 
        evidencing a loan has been in default despite due 
        diligence on the part of the institution in attempting 
        collection [thereon--
                  [(A) if the institution has knowingly failed 
                to maintain an acceptable collection record 
                with respect to such loan, as determined by the 
                Secretary in accordance with criteria 
                established by regulation, the Secretary may--
                          [(i) require the institution to 
                        assign such note or agreement to the 
                        Secretary, without recompense; and
                          [(ii) apportion any sums collected on 
                        such a loan, less an amount not to 
                        exceed 30 percent of any sums collected 
                        to cover the Secretary's collection 
                        costs, among other institutions in 
                        accordance with section 462; or
                  [(B) if the institution is not one described 
                in subparagraph (A), the Secretary may allow 
                such institution to refer such note or 
                agreement to the Secretary, without recompense, 
                except that, once every six months, any sums 
                collected on such a loan (less an amount not to 
                exceed 30 percent of any such sums collected to 
                cover the Secretary's collection costs) shall 
                be repaid to such institution and treated as an 
                additional capital contribution under section 
                462;] thereon, if the institution has failed to 
                maintain an acceptable collection record with 
                respect to such loan, as determined by the 
                Secretary in accordance with criteria 
                established by regulation, the Secretary may 
                require the institution to assign such note or 
                agreement to the Secretary, without recompense;
          (5) provide that, if an institution of higher 
        education determines not to service and collect student 
        loans made available from funds under this part, the 
        institution will assign, at the beginning of the 
        repayment period, notes or evidence of obligations of 
        student loans made from such funds to the Secretary 
        [and the Secretary shall apportion any sums collected 
        on such notes or obligations (less an amount not to 
        exceed 30 percent of any such sums collected to cover 
        that Secretary's collection costs) among other 
        institutions in accordance with section 462] and the 
        Secretary shall return a portion of funds from loan 
        repayments to the institution as specified in section 
        466(b);

           *       *       *       *       *       *       *

  [(b) Administrative Expenses.--An institution which has 
entered into an agreement under subsection (a) shall be 
entitled, for each fiscal year during which it makes student 
loans from a student loan fund established under such 
agreement, to a payment in lieu of reimbursement for its 
expenses in administering its student loan program under this 
part during such year. Such payment shall be made in accordance 
with section 489.]
  (b) Administrative Expenses.--An institution that has entered 
into an agreement under subsection (a) shall be entitled, for 
each fiscal year during which it services student loans from a 
student loan fund established under such agreement, to a 
payment in lieu of reimbursement for its expenses in servicing 
student loans made before July 1, 2010. Such payment shall be 
equal to 0.50 percent of the outstanding principal and interest 
balance of such loans being serviced by the institution as of 
September 30 of each fiscal year.

           *       *       *       *       *       *       *

  (f) Contents of Agreements for Loans Made on or After July 1, 
2010.--An agreement with any institution of higher education 
that elects to participate in the Federal Direct Perkins Loan 
program under section 455A shall provide--
          (1) for the establishment and maintenance of a Direct 
        Perkins Loan program at the institution under which the 
        institution shall use loan authority allocated under 
        section 462A to make loans to eligible students 
        attending the institution;
          (2) that the institution, unless otherwise specified 
        in this subsection, shall operate the program 
        consistent with the requirements of agreements 
        established under section 454;
          (3) that the institution will pay matching funds, 
        quarterly, in an amount agreed to by the institution 
        and the Secretary, to an escrow account approved by the 
        Secretary, for the purpose of providing loan benefits 
        to borrowers;
          (4) that if the institution fails to meet the 
        requirements of paragraph (3), the Secretary shall 
        suspend or terminate the institution's eligibility to 
        make Federal Direct Perkins Loans under section 455A 
        until such time as the Secretary determines, in 
        accordance with section 498, that the institution has 
        met the requirements of such paragraph; and
          (5) that if the institution ceases to be an eligible 
        institution within the meaning of section 435(a) by 
        reason of having a cohort default rate that exceeds the 
        threshold percentage specified paragraph (2) of such 
        section, the Secretary shall suspend or terminate the 
        institution's eligibility to make Federal Direct 
        Perkins Loans under section 455A unless and until the 
        institution would qualify for a resumption of eligible 
        institution status under such section.

SEC. 463A. STUDENT LOAN INFORMATION BY ELIGIBLE INSTITUTIONS.

  (a) Disclosure Required Prior to Disbursement.--[Each 
institution] For loans made before July 1, 2010, each 
institution of higher education, in order to carry out the 
provisions of section 463(a)(8), shall, at or prior to the time 
such institution makes a loan to a student borrower which is 
made under this part, provide thorough and adequate loan 
information on such loan to the student borrower. Any 
disclosure required by this subsection may be made by an 
institution of higher education as part of the written 
application material provided to the borrower, or as part of 
the promissory note evidencing the loan, or on a separate 
written form provided to the borrower. The disclosures shall 
include--
          (1) * * *

           *       *       *       *       *       *       *

  (b) Disclosure Required Prior to Repayment.--[Each 
institution] For loans made before July 1, 2010, each 
institution of higher education shall enter into an agreement 
with the Secretary under which the institution will, prior to 
the start of the repayment period of the student borrower on 
loans made under this part, disclose to the student borrower 
the information required under this subsection. Any disclosure 
required by this subsection may be made by an institution of 
higher education either in a promissory note evidencing the 
loan or loans or in a written statement provided to the 
borrower. The disclosures shall include--
          (1) * * *

           *       *       *       *       *       *       *


SEC. 464. TERMS OF LOANS.

  (a) Terms and Conditions.--(1) Loans from any student loan 
fund established pursuant to an agreement under section 463(a) 
to any student by any institution shall, subject to such 
conditions, limitations, and requirements as the Secretary 
shall prescribe by regulation, be made on such terms and 
conditions as the institution may determine.

           *       *       *       *       *       *       *

  (b) Demonstration of Need and Eligibility Required.--(1) A 
loan made before July 1, 2010, from a student loan fund 
assisted under this part may be made only to a student who 
demonstrates financial need in accordance with part F of this 
title, who meets the requirements of section 484, and who 
provides the institution with the student's drivers license 
number, if any, at the time of application for the loan. A 
student who is in default on a loan under this part shall not 
be eligible for an additional loan under this part unless such 
loan meets one of the conditions for exclusion under section 
462(g)(1)(E).

           *       *       *       *       *       *       *

  (c) Contents of Loan Agreement.--(1) Any agreement between an 
institution and a student for a loan made before July 1, 2010, 
from a student loan fund assisted under this part--
          (A)  * * *

           *       *       *       *       *       *       *

  (2)(A) No repayment of principal of, or interest on, any loan 
made before July 1, 2010, from a student loan fund assisted 
under this part shall be required during any period--
          (i) * * *

           *       *       *       *       *       *       *

  (B) No repayment of principal of, or interest on, any loan 
made before July 1, 2010, for any period described in 
subparagraph (A) shall begin until 6 months after the 
completion of such period.

           *       *       *       *       *       *       *

  (3)(A) * * *
  (B) Pursuant to uniform criteria established by the 
Secretary, the repayment period for any student borrower who 
during the repayment period for a loan made before July 1, 
2010, is a low-income individual may be extended for a period 
not to exceed 10 years and the repayment schedule may be 
adjusted to reflect the income of that individual.
  (4) The repayment period for a loan made before July 1, 2010, 
under this part shall begin on the day immediately following 
the expiration of the period, specified in paragraph (1)(A), 
after the student ceases to carry the required academic 
workload, unless the borrower requests and is granted a 
repayment schedule that provides for repayment to commence at 
an earlier point in time, and shall exclude any period of 
authorized deferment, forbearance, or cancellation.
  (5) [The institution] For loans made before July 1, 2010, the 
institution may elect--
          (A) * * *

           *       *       *       *       *       *       *

  (6) Requests for deferment of repayment of loans made before 
July 1, 2010, under this part by students engaged in graduate 
or post-graduate fellowship-supported study (such as pursuant 
to a Fulbright grant) outside the United States shall be 
approved until completion of the period of the fellowship.

           *       *       *       *       *       *       *

  (d) Availability of Loan Fund to All Eligible Students.--An 
agreement under this part for payment of Federal capital 
contributions shall include provisions designed to make loans 
made before July 1, 2010, from the student loan fund 
established pursuant to such agreement reasonably available (to 
the extent of the available funds in such fund) to all eligible 
students in such institutions in need thereof.
  (e) Forbearance.--(1) The Secretary shall ensure that, with 
respect to loans made before July 1, 2010, and as documented in 
accordance with paragraph (2), an institution of higher 
education shall grant a borrower forbearance of principal and 
interest or principal only, renewable at 12-month intervals for 
a period not to exceed 3 years, on such terms as are otherwise 
consistent with the regulations issued by the Secretary and 
agreed upon in writing by the parties to the loan, if--
          (A)  * * *

           *       *       *       *       *       *       *

  [(f) Special Repayment Rule Authority.--(1) Subject to such 
restrictions as the Secretary may prescribe to protect the 
interest of the United States, in order to encourage repayment 
of loans made under this part which are in default, the 
Secretary may, in the agreement entered into under this part, 
authorize an institution of higher education to compromise on 
the repayment of such defaulted loans in accordance with 
paragraph (2). The Federal share of the compromise repayment 
shall bear the same relation to the institution's share of such 
compromise repayment as the Federal capital contribution to the 
institution's loan fund under this part bears to the 
institution's capital contribution to such fund.
  [(2) No compromise repayment of a defaulted loan as 
authorized by paragraph (1) may be made unless the student 
borrower pays--
          [(A) 90 percent of the loan under this part;
          [(B) the interest due on such loan; and
          [(C) any collection fees due on such loan;
in a lump sum payment.]
  (g) Discharge.--
          (1) In general.--If a student borrower who received a 
        loan made under this part on or after January 1, 1986, 
        and before July 1, 2010, is unable to complete the 
        program in which such student is enrolled due to the 
        closure of the institution, then the Secretary shall 
        discharge the borrower's liability on the loan 
        (including the interest and collection fees) and shall 
        subsequently pursue any claim available to such 
        borrower against the institution and the institution's 
        affiliates and principals, or settle the loan 
        obligation pursuant to the financial responsibility 
        standards described in section 498(c).

           *       *       *       *       *       *       *

  (h) Rehabilitation of Loans.--
          (1) Rehabilitation.--
                  (A) In general.--If the borrower of a loan 
                made under this part before July 1, 2010, who 
                has defaulted on the loan makes 9 on-time, 
                consecutive, monthly payments of amounts owed 
                on the loan, as determined by the institution, 
                or by the Secretary in the case of a loan held 
                by the Secretary, the loan shall be considered 
                rehabilitated, and the institution that made 
                that loan (or the Secretary, in the case of a 
                loan held by the Secretary) shall request that 
                any consumer reporting agency to which the 
                default was reported remove the default from 
                the borrower's credit history.

           *       *       *       *       *       *       *

          (2) Restoration of eligibility.--If the borrower of a 
        loan made under this part before July 1, 2010, who has 
        defaulted on that loan makes 6 ontime, consecutive, 
        monthly payments of amounts owed on such loan, the 
        borrower's eligibility for grant, loan, or work 
        assistance under this title shall be restored to the 
        extent that the borrower is otherwise eligible. A 
        borrower only once may obtain the benefit of this 
        paragraph with respect to restored eligibility.

           *       *       *       *       *       *       *

  (j) Armed Forces Student Loan Interest Payment Program.--
          (1) Authority.--Using funds received by transfer to 
        the Secretary under section 2174 of title 10, United 
        States Code, for the payment of interest on a loan made 
        under this part before July 1, 2010, to a member of the 
        Armed Forces, the Secretary shall pay the interest on 
        the loan as due for a period not in excess of 36 
        consecutive months. The Secretary may not pay interest 
        on such a loan out of any funds other than funds that 
        have been so transferred.

           *       *       *       *       *       *       *


SEC. 465. CANCELLATION OF LOANS FOR CERTAIN PUBLIC SERVICE.

  (a) Cancellation of Percentage of Debt Based on Years of 
Qualifying Service.--(1) The percent specified in paragraph (3) 
of this subsection of the total amount of any loan made after 
June 30, 1972, and before July 1, 2010, from a student loan 
fund assisted under this part shall be canceled for each 
complete year of service after such date by the borrower under 
circumstances described in paragraph (2).

           *       *       *       *       *       *       *

  [(b) Reimbursement for Cancellation.--The Secretary shall pay 
to each institution for each fiscal year an amount equal to the 
aggregate of the amounts of loans from its student loan fund 
which are canceled pursuant to this section for such year, 
minus an amount equal to the aggregate of the amounts of any 
such loans so canceled which were made from Federal capital 
contributions to its student loan fund provided by the 
Secretary under section 468. None of the funds appropriated 
pursuant to section 461(b) shall be available for payments 
pursuant to this subsection. To the extent feasible, the 
Secretary shall pay the amounts for which any institution 
qualifies under this subsection not later than 3 months after 
the institution files an institutional application for campus-
based funds.]
  (b) Reimbursement for Cancellations.--
          (1) Assigned loans.--In the case of loans made under 
        this part before July 1, 2010, and that are assigned to 
        the Secretary, the Secretary shall, from amounts repaid 
        each quarter on assigned Perkins Loans made before July 
        1, 2010, pay to each institution for each quarter an 
        amount equal to--
                  (A) the aggregate of the amounts of loans 
                from its student loan fund that are canceled 
                pursuant to this section for such quarter, 
                minus
                  (B) an amount equal to the aggregate of the 
                amounts of any such loans so canceled that were 
                made from Federal capital contributions to its 
                student loan fund.
          (2) Retained loans.--In the case of loans made under 
        this part before July 1, 2010, and that are retained by 
        the institution for servicing, the institution shall 
        deduct from loan repayments owed to the Secretary under 
        section 466, an amount equal to--
                  (A) the aggregate of the amounts of loans 
                from its student loan fund that are canceled 
                pursuant to this section for such quarter, 
                minus
                  (B) an amount equal to the aggregate of the 
                amounts of any such loans so canceled that were 
                made from Federal capital contributions to its 
                student loan fund.

           *       *       *       *       *       *       *


[SEC. 466. DISTRIBUTION OF ASSETS FROM STUDENT LOAN FUNDS.

  [(a) In General.--After September 30, 2003, and not later 
than March 31, 2004, there shall be a capital distribution of 
the balance of the student loan fund established under this 
part by each institution of higher education as follows:
          [(1) The Secretary shall first be paid an amount 
        which bears the same ratio to the balance in such fund 
        at the close of September 30, 2003, as the total amount 
        of the Federal capital contributions to such fund by 
        the Secretary under this part bears to the sum of such 
        Federal contributions and the institution's capital 
        contributions to such fund.
          [(2) The remainder of such balance shall be paid to 
        the institution.
  [(b) Distribution of Late Collections.--After October 1, 
2012, each institution with which the Secretary has made an 
agreement under this part, shall pay to the Secretary the same 
proportionate share of amounts received by this institution 
after September 30, 2003, in payment of principal and interest 
on student loans made from the student loan fund established 
pursuant to such agreement (which amount shall be determined 
after deduction of any costs of litigation incurred in 
collection of the principal or interest on loans from the fund 
and not already reimbursed from the fund or from such payments 
of principal or interest), as was determined for the Secretary 
under subsection (a).
  [(c) Distribution of Excess Capital.--(1) Upon a finding by 
the institution or the Secretary prior to October 1, 2004, that 
the liquid assets of a student loan fund established pursuant 
to an agreement under this part exceed the amount required for 
loans or otherwise in the foreseeable future, and upon notice 
to such institution or to the Secretary, as the case may be, 
there shall be, subject to such limitations as may be included 
in regulations of the Secretary or in such agreement, a capital 
distribution from such fund. Such capital distribution shall be 
made as follows:
          [(A) The Secretary shall first be paid an amount 
        which bears the same ratio to the total to be 
        distributed as the Federal capital contributions by the 
        Secretary to the student loan fund prior to such 
        distribution bear to the sum of such Federal capital 
        contributions and the capital contributions to the fund 
        made by the institution.
          [(B) The remainder of the capital distribution shall 
        be paid to the institution.
  [(2) No finding that the liquid assets of a student loan fund 
established under this part exceed the amount required under 
paragraph (1) may be made prior to a date which is 2 years 
after the date on which the institution of higher education 
received the funds from such institution's allocation under 
section 462.]

SEC. 466. DISTRIBUTION OF ASSETS FROM STUDENT LOAN FUNDS.

  (a) Capital Distribution.--Beginning July 1, 2010, there 
shall be a capital distribution of the balance of the student 
loan fund established under this part by each institution of 
higher education as follows:
          (1) For the quarter beginning July 1, 2010, the 
        Secretary shall first be paid, no later than September 
        30, 2010, an amount that bears the same ratio to the 
        cash balance in such fund at the close of June 30, 
        2010, as the total amount of the Federal capital 
        contributions to such fund by the Secretary under this 
        part bears to--
                  (A) the sum of such Federal contributions and 
                the institution's capital contributions to such 
                fund, less
                  (B) an amount equal to--
                          (i) the institution's outstanding 
                        administrative costs as calculated 
                        under section 463(b),
                          (ii) outstanding charges assessed 
                        under section 464(c)(1)(H), and
                          (iii) outstanding loan cancellation 
                        costs incurred under section 465.
          (2) At the end of each quarter subsequent to the 
        quarter ending September 30, 2010, the Secretary shall 
        first be paid an amount that bears the same ratio to 
        the cash balance in such fund at the close of the 
        preceding quarter, as the total amount of the Federal 
        capital contributions to such fund by the Secretary 
        under this part bears to--
                  (A) the sum of such Federal contributions and 
                the institution's capital contributions to such 
                fund, less
                  (B) an amount equal to--
                          (i) the institution's administrative 
                        costs incurred for that quarter as 
                        calculated under section 463(b),
                          (ii) charges assessed for that 
                        quarter under section 464(c)(1)(H), and
                          (iii) loan cancellation costs 
                        incurred for that quarter under section 
                        465.
          (3)(A) The Secretary shall calculate the amounts due 
        to the Secretary under paragraph (1) (adjusted in 
        accordance with subparagraph (B), as appropriate) and 
        paragraph (2) and shall promptly inform the institution 
        of such calculated amounts.
          (B) In the event that, prior to the date of enactment 
        of the Student Aid and Fiscal Responsibility Act of 
        2009, an institution made a short-term, interest-free 
        loan to the institution's student loan fund established 
        under this part in anticipation of collections or 
        receipt of Federal capital contributions, and the 
        institution demonstrates to the Secretary, on or before 
        June 30, 2010, that such loan will still be outstanding 
        after June 30, 2010, the Secretary shall subtract the 
        amount of such outstanding loan from the cash balance 
        of the institution's student loan fund that is used to 
        calculate the amount due to the Secretary under 
        paragraph (1). An adjustment of an amount due to the 
        Secretary under this subparagraph shall be made by the 
        Secretary on a case-by-case basis.
          (4) Any remaining balance at the end of a quarter 
        after a payment under paragraph (1) or (2) shall be 
        retained by the institution for use at its discretion. 
        Any balance so retained shall be withdrawn from the 
        student loan fund and shall not be counted in 
        calculating amounts owed to the Secretary for 
        subsequent quarters.
          (5) Each institution shall make the quarterly 
        payments to the Secretary described in paragraph (2) 
        until all outstanding Federal Perkins Loans at that 
        institution have been assigned to the Secretary and 
        there are no funds remaining in the institution's 
        student loan fund.
          (6) In the event that the institution's 
        administrative costs, charges, and cancellation costs 
        described in paragraph (2) for a quarter exceed the 
        amount owed to the Secretary under paragraphs (1) and 
        (2) for that quarter, no payment shall be due to the 
        Secretary from the institution for that quarter and the 
        Secretary shall pay the institution, from funds 
        realized from the collection of assigned Federal 
        Perkins Loans made before July 1, 2010, an amount that, 
        when combined with the amount retained by the 
        institution under paragraphs (1) and (2), equals the 
        full amount of such administrative costs, charges, and 
        cancellation costs.
  (b) Assignment of Outstanding Loans.--Beginning July 1, 2010, 
an institution of higher education may assign all outstanding 
loans made under this part before July 1, 2010, to the 
Secretary, consistent with the requirements of section 
463(a)(5). In collecting loans so assigned, the Secretary shall 
pay an institution an amount that constitutes the same fraction 
of such collections as the fraction of the cash balance that 
the institution retains under subsection (a)(2), but 
determining such fraction without regard to subparagraph (B)(i) 
of such subsection.

           *       *       *       *       *       *       *


                         PART F--NEED ANALYSIS

SEC. 471. AMOUNT OF NEED.

  [Except] (a) In General.--Except as otherwise provided 
therein and subject to subsection (b), the amount of need of 
any student for financial assistance under this title (except 
subparts 1 or 2 of part A) is equal to--
          (1) * * *

           *       *       *       *       *       *       *

  (b) Asset Cap for Need-Based Aid.--Notwithstanding any other 
provision of this title, a student shall not be eligible to 
receive a Federal Pell Grant, a Federal Direct Stafford Loan, 
or work assistance under this title if--
          (1) in the case of a dependent student, the combined 
        net assets of the student and the student's parents are 
        equal to an amount greater than $150,000 (or a 
        successor amount prescribed by the Secretary under 
        section 478(c)); or
          (2) in the case of an independent student, the net 
        assets of the student (and the student's spouse, if 
        applicable) are equal to an amount greater than 
        $150,000 (or a successor amount prescribed by the 
        Secretary under section 478(c)).

           *       *       *       *       *       *       *


SEC. 474. DETERMINATION OF EXPECTED FAMILY CONTRIBUTION; DATA ELEMENTS.

  (a) * * *
  (b) Data Elements.--The following data elements are 
considered in determining the expected family contribution:
          (1) * * *

           *       *       *       *       *       *       *

          [(4) the net assets of (A) the student and the 
        student's spouse, and (B) the student and the student's 
        parents, in the case of a dependent student;]
          [(5)] (4) the marital status of the student;
          [(6)] (5) the age of the older parent, in the case of 
        a dependent student, and the student; and
          [(7)] (6) the additional expenses incurred (A) in the 
        case of a dependent student, when both parents of the 
        student are employed or when the family is headed by a 
        single parent who is employed, or (B) in the case of an 
        independent student, when the student is married and 
        the student's spouse is employed, or when the employed 
        student qualifies as a surviving spouse or as a head of 
        a household under section 2 of the Internal Revenue 
        Code of 1986.

SEC. 475. FAMILY CONTRIBUTION FOR DEPENDENT STUDENTS.

  (a) Computation of Expected Family Contribution.--For each 
dependent student, the expected family contribution is equal to 
the sum of--
          (1) the parents' contribution from [adjusted] 
        available income (determined in accordance with 
        subsection (b)); and
          (2) the student contribution from available income 
        (determined in accordance with subsection (g))[; and].
          [(3) the student contribution from assets (determined 
        in accordance with subsection (h)).]
  (b) Parents' Contribution From [Adjusted] Available Income.--
The parents' contribution from [adjusted] available income is 
equal to the amount determined by--
          [(1) computing adjusted available income by adding--
                  [(A) the parents' available income 
                (determined in accordance with subsection (c)); 
                and
                  [(B) the parents' contribution from assets 
                (determined in accordance with subsection 
                (d));]
          [(2)] (1) assessing such [adjusted] available income 
        in accordance with the assessment schedule set forth in 
        subsection (e); and
          [(3)] (2) dividing the assessment resulting under 
        paragraph [(2] (1)) by the number of the family 
        members, excluding the student's parents, who are 
        enrolled or accepted for enrollment, on at least a 
        half-time basis, in a degree, certificate, or other 
        program leading to a recognized educational credential 
        at an institution of higher education that is an 
        eligible institution in accordance with the provisions 
        of section 487 during the award period for which 
        assistance under this title is requested;

           *       *       *       *       *       *       *

  [(d) Parents' Contribution From Assets.--
          [(1) In general.--The parents' contribution from 
        assets is equal to--
                  [(A) the parental net worth (determined in 
                accordance with paragraph (2)); minus
                  [(B) the education savings and asset 
                protection allowance (determined in accordance 
                with paragraph (3)); multiplied by
                  [(C) the asset conversion rate (determined in 
                accordance with paragraph (4)), except that the 
                result shall not be less than zero.
          [(2) Parental net worth.--The parental net worth is 
        calculated by adding--
                  [(A) the current balance of checking and 
                savings accounts and cash on hand;
                  [(B) the net value of investments and real 
                estate, excluding the net value of the 
                principal place of residence; and
                  [(C) the adjusted net worth of a business or 
                farm, computed on the basis of the net worth of 
                such business or farm (hereafter in this 
                subsection referred to as ``NW''), determined 
                in accordance with the following table (or a 
                successor table prescribed by the Secretary 
                under section 478), except as provided under 
                section 480(f):

                [Adjusted Net Worth of a Business or Farm
------------------------------------------------------------------------
 If the net worth of a business or farm
                  is--                   Then the adjusted net worth is:
------------------------------------------------------------------------
Less than $1...........................  $0
$1-$75,000.............................  40 percent of NW
$75,001-$225,000.......................  $30,000 plus 50 percent of NW
                                          over $75,000
$225,001-$375,000......................  $105,000 plus 60 percent of NW
                                          over $225,000
$375,001 or more.......................  $195,000 plus 100 percent of NW
                                          over $375,000
------------------------------------------------------------------------

          [(3) Education savings and asset protection 
        allowance.--The education savings and asset protection 
        allowance is calculated according to the following 
        table (or a successor table prescribed by the Secretary 
        under section 478):

   [Education Savings and Asset Protection Allowances for Families and
                                Students
------------------------------------------------------------------------
                                              And there are
   If the age of the oldest    -----------------------------------------
          parent is--               two parents           one parent
------------------------------------------------------------------------
                         then the allowance is--
                                ...................  ...................
25 or less....................          $ 0                   $0
26............................          2,200                1,600
27............................          4,300                3,200
28............................          6,500                4,700
29............................          8,600                6,300
30............................         10,800                7,900
31............................         13,000                9,500
32............................         15,100               11,100
33............................         17,300               12,600
34............................         19,400               14,200
35............................         21,600               15,800
36............................         23,800               17,400
37............................         25,900               19,000
38............................         28,100               20,500
39............................         30,200               22,100
40............................         32,400               23,700
41............................         33,300               24,100
42............................         34,100               24,700
43............................         35,000               25,200
44............................         35,700               25,800
45............................         36,600               26,300
46............................         37,600               26,900
47............................         38,800               27,600
48............................         39,800               28,200
49............................         40,800               28,800
50............................         41,800               29,500
51............................         43,200               30,200
52............................         44,300               31,100
53............................         45,700               31,800
54............................         47,100               32,600
55............................         48,300               33,400
56............................         49,800               34,400
57............................         51,300               35,200
58............................         52,900               36,200
59............................         54,800               37,200
60............................         56,500               38,100
61............................         58,500               39,200
62............................         60,300               40,300
63............................         62,400               41,500
64............................         64,600               42,800
65 or more....................         66,800               44,000
------------------------------------------------------------------------

          [(4) Asset conversion rate.--The asset conversion 
        rate is 12 percent.]
  (e) Assessment Schedule.--The [adjusted] available income (as 
determined under subsection (b)(1) and hereafter in this 
subsection referred to as [``AAI''] ``AI'') is assessed 
according to the following table (or a successor table 
prescribed by the Secretary under section 478):

     Parents' Assessment [From Adjusted Available Income (AAI)] From
                          Available Income (AI)
------------------------------------------------------------------------
            If [AAI] AI is--                 Then the assessment is--
------------------------------------------------------------------------
Less than -$3,409......................  -$750
-$3,409 to $9,400......................  22% of [AAI] AI
$9,401 to $11,800......................  $2,068 + 25% of [AAI] AI over
                                          $9,400
$11,801 to $14,200.....................  $2,668 + 29% of [AAI] AI over
                                          $11,800
$14,201 to $16,600.....................  $3,364 + 34% of [AAI] AI over
                                          $14,200
$16,601 to $19,000.....................  $4,180 + 40% of [AAI] AI over
                                          $16,600
$19,001 or more........................  $5,140 + 47% of [AAI] AI over
                                          $19,000
------------------------------------------------------------------------

  (f) Computations in Case of Separation, Divorce, Remarriage, 
or Death.--
          (1) Divorced or separated parents.--Parental income 
        [and assets] for a student whose parents are divorced 
        or separated is determined under the following 
        procedures:
                  (A) Include only the income [and assets] of 
                the parent with whom the student resided for 
                the greater portion of the 12-month period 
                preceding the date of the application.
                  (B) If the preceding criterion does not 
                apply, include only the income [and assets] of 
                the parent who provided the greater portion of 
                the student's support for the 12-month period 
                preceding the date of application.
                  (C) If neither of the preceding criteria 
                apply, include only the income [and assets] of 
                the parent who provided the greater support 
                during the most recent calendar year for which 
                parental support was provided.
          (2) Death of a parent.--Parental income [and assets] 
        in the case of the death of any parent is determined as 
        follows:
                  (A) If either of the parents has died, the 
                student shall include only the income [and 
                assets] of the surviving parent.
                  (B) If both parents have died, the student 
                shall not report any parental income [or 
                assets].
          (3) Remarried parents.--If a parent whose income [and 
        assets are] is taken into account under paragraph (1) 
        of this subsection, or if a parent who is a widow or 
        widower and whose income is taken into account under 
        paragraph (2) of this subsection, has remarried, the 
        income of that parent's spouse shall be included in 
        determining the parent's [adjusted] available income 
        only if--
                  (A) * * *

           *       *       *       *       *       *       *

  (g) Student Contribution From Available Income.--
          (1)  * * *.--

           *       *       *       *       *       *       *

          (6) Allowance for parents' negative available 
        income.--The allowance for parents' negative available 
        income is the amount, if any, by which the sum of the 
        amounts deducted under subparagraphs (A) through (F) of 
        subsection (c)(1) [exceeds the sum of the parents' 
        total income (as defined in section 480) and the 
        parents' contribution from assets (as determined in 
        accordance with subsection (d)).] exceeds the parents' 
        total income (as defined in section 480)

           *       *       *       *       *       *       *

  [(h) Student Contribution From Assets.--The student 
contribution from assets is determined by calculating the net 
assets of the student and multiplying such amount by 20 
percent, except that the result shall not be less than zero.]
  (i) Adjustments to Parents' Contribution for Enrollment 
Periods Other Than 9 Months For Purposes Other Than Subpart 2 
of Part A of This Title.--For periods of enrollment other than 
9 months, the parents' contribution from [adjusted] available 
income (as determined under subsection (b)) is determined as 
follows for purposes other than subpart 2 of part A of this 
title:
          (1) For periods of enrollment less than 9 months, the 
        parents' contribution from [adjusted] available income 
        is divided by 9 and the result multiplied by the number 
        of months enrolled.
          (2) For periods of enrollment greater than 9 months--
                  (A) the parents' [adjusted] available income 
                (determined in accordance with subsection 
                (b)(1)) is increased by the difference between 
                the income protection allowance (determined in 
                accordance with subsection (c)(4)) for a family 
                of four and a family of five, each with one 
                child in college;
                  (B) the resulting revised parents' [adjusted] 
                available income is assessed according to 
                subsection (e) and [adjusted] according to 
                subsection (b)(3) to determine a revised 
                parents' contribution from [adjusted] available 
                income;
                  (C) the original parents' contribution from 
                [adjusted] available income is subtracted from 
                the revised parents' contribution from 
                [adjusted] available income, and the result is 
                divided by 12 to determine the monthly 
                adjustment amount; and
                  (D) the original parents' contribution from 
                [adjusted] available income is increased by the 
                product of the monthly adjustment amount 
                multiplied by the number of months greater than 
                9 for which the student will be enrolled.

           *       *       *       *       *       *       *


SEC. 476. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS WITHOUT 
                    DEPENDENTS OTHER THAN A SPOUSE.

  (a) Computation of Expected Family Contribution.--For each 
independent student without dependents other than a spouse, the 
expected family contribution is determined by--
          [(1) adding--
                  [(A) the family's contribution from available 
                income (determined in accordance with 
                subsection (b)); and
                  [(B) the family's contribution from assets 
                (determined in accordance with subsection 
                (c));]
          [(2)] (1) dividing [the sum resulting under paragraph 
        (1)] the family's contribution from available income 
        (determined in accordance with subsection (b)) by the 
        number of students who are enrolled or accepted for 
        enrollment, on at least a half-time basis, in a degree, 
        certificate, or other program leading to a recognized 
        educational credential at an institution of higher 
        education that is an eligible institution in accordance 
        with the provisions of section 487 during the award 
        period for which assistance under this title is 
        requested; and
          [(3)] (2) for periods of enrollment of less than 9 
        months, for purposes other than subpart 2 of part A--
                  (A) dividing the quotient resulting under 
                paragraph [(2)] (1) by 9; and

           *       *       *       *       *       *       *

  [(c) Family Contribution From Assets.--
          [(1) In general.--The family's contribution from 
        assets is equal to--
                  [(A) the family's net worth (determined in 
                accordance with paragraph (2)); minus
                  [(B) the asset protection allowance 
                (determined in accordance with paragraph (3)); 
                multiplied by
                  [(C) the asset conversion rate (determined in 
                accordance with paragraph (4));
        except that the family's contribution from assets shall 
        not be less than zero.
          [(2) Family's net worth.--The family's net worth is 
        calculated by adding--
                  [(A) the current balance of checking and 
                savings accounts and cash on hand;
                  [(B) the net value of investments and real 
                estate, excluding the net value in the 
                principal place of residence; and
                  [(C) the adjusted net worth of a business or 
                farm, computed on the basis of the net worth of 
                such business or farm (hereafter referred to as 
                ``NW''), determined in accordance with the 
                following table (or a successor table 
                prescribed by the Secretary under section 478), 
                except as provided under section 480(f):

                [Adjusted Net Worth of a Business or Farm
------------------------------------------------------------------------
 If the net worth of a business or farm  Then the adjusted net worth is--
                  is--
------------------------------------------------------------------------
Less than $1...........................  $0
$1-$75,000.............................  40 percent of NW
$75,001-$225,000.......................  $30,000 plus 50 percent of NW
                                          over $75,000
$225,001-$375,000......................  $105,000 plus 60 percent of NW
                                          over $225,000
$375,001 or more.......................  $195,000 plus 100 percent of NW
                                          over $375,000
------------------------------------------------------------------------

          [(3) Asset protection allowance.--The asset 
        protection allowance is calculated according to the 
        following table (or a successor table prescribed by the 
        Secretary under section 478):

         [Asset Protection Allowances for Families and Students
------------------------------------------------------------------------
                                                     And the student is
          If the age of the student is--           ---------------------
                                                     married     single
------------------------------------------------------------------------
                         then the allowance is--
                                                    .........  .........
25 or less........................................     $ 0         $0
26................................................     2,200      1,600
27................................................     4,300      3,200
28................................................     6,500      4,700
29................................................     8,600      6,300
30................................................    10,800      7,900
31................................................    13,000      9,500
32................................................    15,100     11,100
33................................................    17,300     12,600
34................................................    19,400     14,200
35................................................    21,600     15,800
36................................................    23,800     17,400
37................................................    25,900     19,000
38................................................    28,100     20,500
39................................................    30,200     22,100
40................................................    32,400     23,700
41................................................    33,300     24,100
42................................................    34,100     24,700
43................................................    35,000     25,200
44................................................    35,700     25,800
45................................................    36,600     26,300
46................................................    37,600     26,900
47................................................    38,800     27,600
48................................................    39,800     28,200
49................................................    40,800     28,800
50................................................    41,800     29,500
51................................................    43,200     30,200
52................................................    44,300     31,100
53................................................    45,700     31,800
54................................................    47,100     32,600
55................................................    48,300     33,400
56................................................    49,800     34,400
57................................................    51,300     35,200
58................................................    52,900     36,200
59................................................    54,800     37,200
60................................................    56,500     38,100
61................................................    58,500     39,200
62................................................    60,300     40,300
63................................................    62,400     41,500
64................................................    64,600     42,800
65 or more........................................    66,800     44,000
------------------------------------------------------------------------

          [(4) Asset conversion rate.--The asset conversion 
        rate is 20 percent.]
  (d) Computations in Case of Separation, Divorce, or Death.--
In the case of a student who is divorced or separated, or whose 
spouse has died, the spouse's income [and assets] shall not be 
considered in determining the family's contribution from income 
[or assets].

SEC. 477. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS WITH DEPENDENTS 
                    OTHER THAN A SPOUSE.

  (a) Computation of Expected Family Contribution.--For each 
independent student with dependents other than a spouse, the 
expected family contribution is equal to the amount determined 
by--
          [(1) computing adjusted available income by adding--
                  [(A) the family's available income 
                (determined in accordance with subsection (b)); 
                and
                  [(B) the family's contribution from assets 
                (determined in accordance with subsection 
                (c));]
          [(2)] (1) assessing [such adjusted available income] 
        the family's available income (determined in accordance 
        with subsection (b)) in accordance with an assessment 
        schedule set forth in subsection (d);
          [(3)] (2) dividing the assessment resulting under 
        paragraph [(2)] (1) by the number of family members who 
        are enrolled or accepted for enrollment, on at least a 
        half-time basis, in a degree, certificate, or other 
        program leading to a recognized educational credential 
        at an institution of higher education that is an 
        eligible institution in accordance with the provisions 
        of section 487 during the award period for which 
        assistance under this title is requested; and
          [(4)] (3) for periods of enrollment of less than 9 
        months, for purposes other than subpart 2 of part A--
                  (A) dividing the quotient resulting under 
                paragraph [(3)] (2) by 9; and

           *       *       *       *       *       *       *

  [(c) Family's Contribution From Assets.--
          [(1) In general.--The family's contribution from 
        assets is equal to--
                  [(A) the family net worth (determined in 
                accordance with paragraph (2)); minus
                  [(B) the asset protection allowance 
                (determined in accordance with paragraph (3)); 
                multiplied by
                  [(C) the asset conversion rate (determined in 
                accordance with paragraph (4)), except that the 
                result shall not be less than zero.
          [(2) Family net worth.--The family net worth is 
        calculated by adding--
                  [(A) the current balance of checking and 
                savings accounts and cash on hand;
                  [(B) the net value of investments and real 
                estate, excluding the net value in the 
                principal place of residence; and
                  [(C) the adjusted net worth of a business or 
                farm, computed on the basis of the net worth of 
                such business or farm (hereafter referred to as 
                ``NW''), determined in accordance with the 
                following table (or a successor table 
                prescribed by the Secretary under section 478), 
                except as provided under section 480(f):

                [Adjusted Net Worth of a Business or Farm
------------------------------------------------------------------------
 If the net worth of a business or farm  Then the adjusted net worth is--
                  is--
------------------------------------------------------------------------
Less than $1...........................  $0
$1-$75,000.............................  40 percent of NW
$75,001-$225,000.......................  $30,000 plus 50 percent of NW
                                          over $75,000
$225,001-$375,000......................  $105,000 plus 60 percent of NW
                                          over $225,000
$375,001 or more.......................  $195,000 plus 100 percent of NW
                                          over $375,000
------------------------------------------------------------------------

          [(3) Asset protection allowance.--The asset 
        protection allowance is calculated according to the 
        following table (or a successor table prescribed by the 
        Secretary under section 478):

         [Asset Protection Allowances for Families and Students
------------------------------------------------------------------------
                                                     And the student is
          If the age of the student is--           ---------------------
                                                     married     single
------------------------------------------------------------------------
                         then the allowance is--
                                                    .........  .........
25 or less........................................     $ 0         $0
26................................................     2,200      1,600
27................................................     4,300      3,200
28................................................     6,500      4,700
29................................................     8,600      6,300
30................................................    10,800      7,900
31................................................    13,000      9,500
32................................................    15,100     11,100
33................................................    17,300     12,600
34................................................    19,400     14,200
35................................................    21,600     15,800
36................................................    23,800     17,400
37................................................    25,900     19,000
38................................................    28,100     20,500
39................................................    30,200     22,100
40................................................    32,400     23,700
41................................................    33,300     24,100
42................................................    34,100     24,700
43................................................    35,000     25,200
44................................................    35,700     25,800
45................................................    36,600     26,300
46................................................    37,600     26,900
47................................................    38,800     27,600
48................................................    39,800     28,200
49................................................    40,800     28,800
50................................................    41,800     29,500
51................................................    43,200     30,200
52................................................    44,300     31,100
53................................................    45,700     31,800
54................................................    47,100     32,600
55................................................    48,300     33,400
56................................................    49,800     34,400
57................................................    51,300     35,200
58................................................    52,900     36,200
59................................................    54,800     37,200
60................................................    56,500     38,100
61................................................    58,500     39,200
62................................................    60,300     40,300
63................................................    62,400     41,500
64................................................    64,600     42,800
65 or more........................................    66,800     44,000
------------------------------------------------------------------------

          [(4) Asset conversion rate.--The asset conversion 
        rate is 7 percent.]
  (d) Assessment Schedule.--The [adjusted] available income (as 
determined under subsection (a)(1) and hereafter referred to as 
[``AAI''] ``AI'') is assessed according to the following table 
(or a successor table prescribed by the Secretary under section 
478):

 Assessment [From Adjusted Available Income (AAI)] From Available Income
                                  (AI)
------------------------------------------------------------------------
            If [AAI] AI is--                 Then the assessment is--
------------------------------------------------------------------------
Less than -$3,409......................  -$750
-$3,409 to $9,400......................  22% of [AAI] AI
$9,401 to $11,800......................  $2,068 + 25% of [AAI] AI over
                                          $9,400
$11,801 to $14,200.....................  $2,668 + 29% of [AAI] AI over
                                          $11,800
$14,201 to $16,600.....................  $3,364 + 34% of [AAI] AI over
                                          $14,200
$16,601 to $19,000.....................  $4,180 + 40% of [AAI] AI over
                                          $16,600
$19,001 or more........................  $5,140 + 47% of [AAI] AI over
                                          $19,000
------------------------------------------------------------------------

  (e) Computations in Case of Separation, Divorce, or Death.--
In the case of a student who is divorced or separated, or whose 
spouse has died, the spouse's income [and assets] shall not be 
considered in determining the family's available income [or 
assets].

SEC. 478. REGULATIONS; UPDATED TABLES.

  (a) Authority To Prescribe Regulations Restricted.--(1) 
Notwithstanding any other provision of law, the Secretary shall 
not have the authority to prescribe regulations to carry out 
this part except--
          (A) to prescribe updated tables or amounts, as the 
        case may be, in accordance with subsections (b) through 
        (h) of this section; or
          (B) to propose modifications in the need analysis 
        methodology required by this part.
  (2) Any regulation proposed by the Secretary that (A) updates 
tables or amounts, as the case may be, in a manner that does 
not comply with subsections (b) through (h) of this section, or 
(B) that proposes modifications under paragraph (1)(B) of this 
subsection, shall not be effective unless approved by joint 
resolution of the Congress by May 1 following the date such 
regulations are published in the Federal Register in accordance 
with section 482. If the Congress fails to approve such 
regulations by such May 1, the Secretary shall publish in the 
Federal Register in accordance with section 482 updated tables 
or amounts, as the case may be, for the applicable award year 
that are prescribed in accordance with subsections (b) through 
(h) of this section.

           *       *       *       *       *       *       *

  [(c) Adjusted Net Worth of a Farm or Business.--For each 
award year after award year 1993-1994, the Secretary shall 
publish in the Federal Register a revised table of adjusted net 
worth of a farm or business for purposes of sections 
475(d)(2)(C), 476(c)(2)(C), and 477(c)(2)(C). Such revised 
table shall be developed--
          [(1) by increasing each dollar amount that refers to 
        net worth of a farm or business by a percentage equal 
        to the estimated percentage increase in the Consumer 
        Price Index (as determined by the Secretary) between 
        December 1992 and the December next preceding the 
        beginning of such award year, and rounding the result 
        to the nearest $5,000; and
          [(2) by adjusting the dollar amounts ``$30,000'', 
        ``$105,000'', and ``$195,000'' to reflect the changes 
        made pursuant to paragraph (1).
  [(d) Education Savings and Asset Protection Allowance.--For 
each award year after award year 1993-1994, the Secretary shall 
publish in the Federal Register a revised table of allowances 
for the purpose of sections 475(d)(3), 476(c)(3), and 
477(c)(3). Such revised table shall be developed by determining 
the present value cost, rounded to the nearest $100, of an 
annuity that would provide, for each age cohort of 40 and 
above, a supplemental income at age 65 (adjusted for inflation) 
equal to the difference between the moderate family income (as 
most recently determined by the Bureau of Labor Statistics), 
and the current average social security retirement benefits. 
For each age cohort below 40, the allowance shall be computed 
by decreasing the allowance for age 40, as updated, by one-
fifteenth for each year of age below age 40 and rounding the 
result to the nearest $100. In making such determinations--
          [(1) inflation shall be presumed to be 6 percent per 
        year;
          [(2) the rate of return of an annuity shall be 
        presumed to be 8 percent; and
          [(3) the sales commission on an annuity shall be 
        presumed to be 6 percent.]
  (c) Asset Cap for Need-Based Aid.--For each award year after 
award year 2011-2012, the Secretary shall publish in the 
Federal Register a revised net asset cap for the purposes of 
section 471(b). Such revised cap shall be determined by 
increasing the dollar amount in such section by a percentage 
equal to the estimated percentage change in the Consumer Price 
Index (as determined by the Secretary) between December 2010 
and the December preceding the beginning of such award year, 
and rounding the result to the nearest $5.
  (e) Assessment Schedules and Rates.--For each award year 
after award year 1993-1994, the Secretary shall publish in the 
Federal Register a revised table of assessments from [adjusted] 
available income for the purpose of sections 475(e) and 477(d). 
Such revised table shall be developed--
          (1) by increasing each dollar amount that refers to 
        [adjusted] available income by a percentage equal to 
        the estimated percentage increase in the Consumer Price 
        Index (as determined by the Secretary) between December 
        1992 and the December next preceding the beginning of 
        such academic year, rounded to the nearest $100; and
          (2) by adjusting the other dollar amounts to reflect 
        the changes made pursuant to paragraph (1).

           *       *       *       *       *       *       *


SEC. 479A. DISCRETION OF STUDENT FINANCIAL AID ADMINISTRATORS.

  (a) * * *
  (b) Adjustments [to Assets] Taken Into Account.--A student 
financial aid administrator shall be considered to be making a 
necessary adjustment in accordance with subsection (a) if--
          (1) * * *

           *       *       *       *       *       *       *


SEC. 480. DEFINITIONS.

  As used in this part:
  (a) * * *

[Note: Paragraph (1) of subsection (b) reflects amendments made by this 
 bill to such paragraph as amended by the Higher Education Opportunity 
                    Act, effective on July 1, 2010.]

  (b) Untaxed Income and Benefits.--
          (1) The term ``untaxed income and benefits'' means--
                  [(A) child support received;
                  [(B) workman's compensation;
                  [(C) veteran's benefits such as death 
                pension, dependency, and indemnity 
                compensation, but excluding veterans' education 
                benefits as defined in subsection (c);]
                  [(D)] (A) interest on tax-free bonds;
                  [(E) housing, food, and other allowances 
                (excluding rent subsidies for low-income 
                housing) for military, clergy, and others 
                (including cash payments and cash value of 
                benefits), except that the value of on-base 
                military housing or the value of basic 
                allowance for housing determined under section 
                403(b) of title 37, United States Code, 
                received by the parents, in the case of a 
                dependent student, or the student or student's 
                spouse, in the case of an independent student, 
                shall be excluded;
                  [(F) cash support or any money paid on the 
                student`s behalf, except, for dependent 
                students, funds provided by the student's 
                parents;]
                  [(G)] (B) untaxed portion of pensions; and
                  [(H)] (C) payments to individual retirement 
                accounts and Keogh accounts excluded from 
                income for Federal income tax purposes[; and].
                  [(I) any other untaxed income and benefits, 
                such as Black Lung Benefits, Refugee 
                Assistance, or railroad retirement benefits, or 
                benefits received through participation in 
                employment and training activities under title 
                I of the Workforce Investment Act of 1998 (29 
                U.S.C. 2801 et seq.).]

           *       *       *       *       *       *       *

  (f) Assets.--(1) * * *
  (2) With respect to determinations of need under this title, 
other than for subpart 4 of part A, the term ``assets'' shall 
not include the net value of--
          (A) * * *
          (B) a family farm on which the family resides; [or]
          (C) a small business with not more than 100 full-time 
        or full-time equivalent employees (or any part of such 
        a small business) that is owned and controlled by the 
        family[.]; or
          (D) an employee pension benefit plan (as defined in 
        section 3(2) of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1002(2))).

           *       *       *       *       *       *       *


   PART G--GENERAL PROVISIONS RELATING TO STUDENT ASSISTANCE PROGRAMS

SEC. 483. FORMS AND REGULATIONS.

  (a)  * * *.--

           *       *       *       *       *       *       *

  (e) Early Application and Estimated Award Demonstration 
Program.--
          (1) * * *

           *       *       *       *       *       *       *

          (3) Early application and estimated award.--For all 
        dependent students selected for participation in the 
        demonstration program who submit a completed FAFSA, or, 
        as appropriate, an EZ FAFSA, two years prior to the 
        year such students plan to enroll in an institution of 
        higher education, the Secretary shall, not later than 
        one year prior to the year of such planned enrollment--
                  (A) provide each student who completes an 
                early application with an estimated 
                determination of such student's--
                          (i)  * * *
                          (ii) Federal Pell Grant award for the 
                        first such year, based on the maximum 
                        Federal Pell Grant award at the time of 
                        application; and

           *       *       *       *       *       *       *


SEC. 484. STUDENT ELIGIBILITY. .

  (a) * * *

           *       *       *       *       *       *       *

  (r) Suspension of Eligibility for Drug-Related Offenses.--
          [(1) In general.--A student who is convicted of any 
        offense under any Federal or State law involving the 
        possession or sale of a controlled substance for 
        conduct that occurred during a period of enrollment for 
        which the student was receiving any grant, loan, or 
        work assistance under this title shall not be eligible 
        to receive any grant, loan, or work assistance under 
        this title from the date of that conviction for the 
        period of time specified in the following table:

[If convicted of an offense involving: 
  The possession of   con-..............................................
  trolled substance:Ineligibility period is: ...........................
  First offense.....1 year .............................................
  Second offense....2 years ............................................
  Third offense.....Indefinite. ........................................
  The sale of a cont olled..............................................
  substance:........Ineligibility period is: ...........................
  First offense.....2 years ............................................
  Second offense....Indefinite.]........................................
          (1) In general.--A student who is convicted of any 
        offense under any Federal or State law involving the 
        sale of a controlled substance for conduct that 
        occurred during a period of enrollment for which the 
        student was receiving any grant, loan, or work 
        assistance under this title shall not be eligible to 
        receive any grant, loan, or work assistance under this 
        title from the date of that conviction for the period 
        of time specified in the following subparagraphs:
                  (A) For a first offense, the period of 
                ineligibility shall be 2 years.
                  (B) For a second offense, the period of 
                ineligibility shall be indefinite.

           *       *       *       *       *       *       *


SEC. 484B. INSTITUTIONAL REFUNDS.

  (a) * * *
  (b) Return of Title IV Program Funds.--
          (1) * * *
          (2) Responsibility of the student.--
                  (A) * * *

           *       *       *       *       *       *       *

                  (F) Tuition relief for students called to 
                military service.--
                          (i) Waiver of repayment by students 
                        called to military service.--In 
                        addition to the waivers authorized by 
                        subparagraphs (D) and (E), the 
                        Secretary shall waive the amounts that 
                        students are required to return under 
                        this section if the withdrawals on 
                        which the returns are based are 
                        withdrawals necessitated by reason of 
                        service in the uniformed services.
                          (ii) Loan forgiveness authorized.--
                        Whenever a student's withdrawal from an 
                        institution of higher education is 
                        necessitated by reason of service in 
                        the uniformed services, the Secretary 
                        shall, with respect to the payment 
                        period or period of enrollment for 
                        which such student did not receive 
                        academic credit as a result of such 
                        withdrawal, carry out a program--
                                  (I) through the holder of the 
                                loan, to assume the obligation 
                                to repay--
                                          (aa) the outstanding 
                                        principle and accrued 
                                        interest on any loan 
                                        assistance awarded to 
                                        the student under part 
                                        B (including to a 
                                        parent on behalf of the 
                                        student under section 
                                        428B) for such payment 
                                        period or period of 
                                        enrollment; minus
                                          (bb) any amount of 
                                        such loan assistance 
                                        returned by the 
                                        institution in 
                                        accordance with 
                                        paragraph (1) of this 
                                        subsection for such 
                                        payment period or 
                                        period of enrollment; 
                                        and
                                  (II) to cancel--
                                          (aa) the outstanding 
                                        principle and accrued 
                                        interest on the loan 
                                        assistance awarded to 
                                        the student under part 
                                        D or E (including a 
                                        Federal Direct PLUS 
                                        loan awarded to a 
                                        parent on behalf of the 
                                        student) for such 
                                        payment period or 
                                        period of enrollment; 
                                        minus
                                          (bb) any amount of 
                                        such loan assistance 
                                        returned by the 
                                        institution in 
                                        accordance with 
                                        paragraph (1) of this 
                                        subsection for such 
                                        payment period or 
                                        period of enrollment.
                          (iii) Reimbursement for cancellation 
                        of perkins loans.--The Secretary shall 
                        pay to each institution for each fiscal 
                        year an amount equal to the aggregate 
                        of the amounts of Federal Perkins loans 
                        in such institutions's student loan 
                        fund which are cancelled pursuant to 
                        clause (iii)(II) for such fiscal year, 
                        minus an amount equal to the aggregate 
                        of the amounts of any such loans so 
                        canceled which were made from Federal 
                        capital contributions to its student 
                        loan fund provided by the Secretary 
                        under section 468. None of the funds 
                        appropriated pursuant to section 461(b) 
                        shall be available for payments 
                        pursuant to this paragraph. To the 
                        extent feasible, the Secretary shall 
                        pay the amounts for which any 
                        institution qualifies under this 
                        paragraph not later than 3 months after 
                        the institution files an institutional 
                        application for campus-based funds.
                          (iv) Loan eligibility and limits for 
                        students.--Any amounts that are 
                        returned by an institution in 
                        accordance with paragraph (1), or 
                        forgiven or waived by the Secretary 
                        under this subparagraph, with respect 
                        to a payment period or period of 
                        enrollment for which a student did not 
                        receive academic credit as a result of 
                        withdrawal necessitated by reason of 
                        service in the uniformed services, 
                        shall not be included in the 
                        calculation of the student's annual or 
                        aggregate loan limits for assistance 
                        under this title, or otherwise affect 
                        the student's eligibility for grants or 
                        loans under this title.
                          (v) Definition.--In this 
                        subparagraph, the term ``service in the 
                        uniformed services'' has the meaning 
                        given such term in section 484C(a).

           *       *       *       *       *       *       *


SEC. 485E. EARLY AWARENESS OF FINANCIAL AID ELIGIBILITY.

  (a) * * *
  (b) Communication of Availability of Aid and Aid 
Eligibility.--
          (1) Students who receive benefits.--The Secretary 
        shall--
                  (A) make special efforts to notify students 
                who receive or are eligible to receive benefits 
                under a Federal means-tested benefit program 
                (including the supplemental nutrition 
                assistance program under the Food and Nutrition 
                Act of 2008 (7 U.S.C. 2011 et seq.)), or 
                another such benefit program as determined by 
                the Secretary, [of such students' potential 
                eligibility for a maximum Federal Pell Grant 
                under subpart 1 of part A] of such students' 
                potential eligibility for the Federal Pell 
                Grant amount, determined under section 
                401(b)(2)(A), for which the student would be 
                eligible; and

           *       *       *       *       *       *       *


SEC. 487. PROGRAM PARTICIPATION AGREEMENTS.

  (a) * * *

           *       *       *       *       *       *       *

  (d) Implementation of Non-Title IV Revenue Requirement.--
          (1) Calculation.--In making calculations under 
        subsection (a)(24), a proprietary institution of higher 
        education shall--
                  (A) * * *

           *       *       *       *       *       *       *

                  (E) in the case of each student who receives 
                a loan on or after July 1, 2008, and prior to 
                [July 1, 2011] July 1, 2012, that is authorized 
                under section 428H or that is a Federal Direct 
                Unsubsidized Stafford Loan, treat as revenue 
                received by the institution from sources other 
                than funds received under this title, the 
                amount by which the disbursement of such loan 
                received by the institution exceeds the limit 
                on such loan in effect on the day before the 
                date of enactment of the Ensuring Continued 
                Access to Student Loans Act of 2008; and
                  (F) exclude from revenues--
                          (i) * * *

           *       *       *       *       *       *       *

                          (iii) for the period beginning July 
                        1, 2010, and ending July 1, 2012, the 
                        amount of funds the institution 
                        received from loans disbursed under 
                        section 455A;
                          [(iii)] (iv) the amount of funds 
                        provided by the institution as matching 
                        funds for a program under this title;
                          [(iv)] (v) the amount of funds 
                        provided by the institution for a 
                        program under this title that are 
                        required to be refunded or returned; 
                        and
                          [(v)] (vi) the amount charged for 
                        books, supplies, and equipment, unless 
                        the institution includes that amount as 
                        tuition, fees, or other institutional 
                        charges.
          (2) Sanctions.--
                  (A) Ineligibility.--A proprietary institution 
                of higher education that fails to meet a 
                requirement of subsection (a)(24) for [two 
                consecutive] three consecutive institutional 
                fiscal years shall be ineligible to participate 
                in the programs authorized by this title for a 
                period of not less than two institutional 
                fiscal years. To regain eligibility to 
                participate in the programs authorized by this 
                title, a proprietary institution of higher 
                education shall demonstrate compliance with all 
                eligibility and certification requirements 
                under section 498 for a minimum of two 
                institutional fiscal years after the 
                institutional fiscal year in which the 
                institution became ineligible.
                  (B) Additional enforcement.--In addition to 
                such other means of enforcing the requirements 
                of this title as may be available to the 
                Secretary, if a proprietary institution of 
                higher education fails to meet a requirement of 
                subsection (a)(24) for [any institutional 
                fiscal year] two consecutive institutional 
                fiscal years, then the institution's 
                eligibility to participate in the programs 
                authorized by this title becomes provisional 
                for [the two institutional fiscal years after 
                the institutional fiscal year] the 
                institutional fiscal year after the second 
                consecutive institutional fiscal year in which 
                the institution failed to meet the requirement 
                of subsection (a)(24), except that such 
                provisional eligibility shall terminate--
                          (i) * * *
                          (ii) in the case that the Secretary 
                        determines that the institution failed 
                        to meet a requirement of subsection 
                        (a)(24) for [two consecutive] three 
                        consecutive institutional fiscal years, 
                        on the date the institution is 
                        determined ineligible in accordance 
                        with subparagraph (A).

           *       *       *       *       *       *       *


SEC. 489. ADMINISTRATIVE EXPENSES.

  (a) Amount of Payments.--From the sums appropriated for any 
fiscal year for the purpose of the program authorized under 
subpart 1 of part A, the Secretary shall reserve such sums as 
may be necessary to pay to each institution with which he has 
an agreement under section 487, an amount equal to $5 for each 
student at that institution who receives assistance under 
subpart 1 of part A. In addition, an institution which has 
entered into an agreement with the Secretary under subpart 3 of 
part A or part C, of this title [or under part E of this title] 
shall be entitled for each fiscal year which such institution 
disburses funds to eligible students under any such part to a 
payment for the purpose set forth in subsection (b). The 
payment for a fiscal year shall be payable from each such 
allotment by payment in accordance with regulations of the 
Secretary and shall be equal to 5 percent of the institution's 
first $2,750,000 of expenditures plus 4 percent of the 
institution's expenditures greater than $2,750,000 and less 
than $5,500,000, plus 3 percent of the institution's 
expenditures in excess of $5,500,000 during the fiscal year 
from the sum of its grants to students under subpart 3 of part 
A, and its expenditures during such fiscal year under part C 
for [compensation of students, and the principal amount of 
loans made during such fiscal year from its student loan fund 
established under part E, excluding the principal amount of any 
such loans which the institution has referred under section 
463(a)(4)(B).] compensation of students. In addition, the 
Secretary shall provide for payment to each institution of 
higher education an amount equal to 100 percent of the costs 
incurred by the institution in implementing and operating the 
immigration status verification system under section 484(g).

           *       *       *       *       *       *       *


TITLE VII--GRADUATE AND POSTSECONDARY IMPROVEMENT PROGRAMS

           *       *       *       *       *       *       *


            [PART E--COLLEGE ACCESS CHALLENGE GRANT PROGRAM]

         PART E--COLLEGE ACCESS AND COMPLETION INNOVATION FUND

SEC. 780. PURPOSES.

  The purposes of this part are--
          (1) to promote innovation in postsecondary education 
        practices and policies by institutions of higher 
        education, States, and nonprofit organizations to 
        improve student success, completion, and post-
        completion employment, particularly for students from 
        groups that are underrepresented in postsecondary 
        education; and
          (2) to assist States in developing longitudinal data 
        systems, common metrics, and reporting systems to 
        enhance the quality and availability of information 
        about student success, completion, and post-completion 
        employment.

SEC. 781. COLLEGE ACCESS CHALLENGE GRANT PROGRAM.

  [(a) Authorization and Appropriation.--There are authorized 
to be appropriated, and there are appropriated, to carry out 
this section $66,000,000 for each of the fiscal years 2008 and 
2009. In addition to the amount authorized and appropriated 
under the preceding sentence, there are authorized to be 
appropriated to carry out this section such sums as may be 
necessary for fiscal year 2009 and each of the five succeeding 
fiscal years.]
  (a) Authorization and Appropriation.--
          (1) In general.--There are authorized to be 
        appropriated, and there are appropriated, to carry out 
        this part (in addition to any other amounts 
        appropriated to carry out this part and out of any 
        money in the Treasury not otherwise appropriated), 
        $600,000,000 for each of the fiscal years 2010 through 
        2014.
          (2) Allocations.--Of the amount appropriated for any 
        fiscal year under paragraph (1)--
                  (A) 25 percent shall be made available to 
                carry out section 781;
                  (B) 50 percent shall be made available to 
                carry out section 782;
                  (C) 23 percent shall be made available to 
                carry out section 783; and
                  (D) 2 percent shall be made available to 
                carry out section 784.

           *       *       *       *       *       *       *


SEC. 782. STATE INNOVATION COMPLETION GRANTS.

  (a) Program Authorization.--From the amount appropriated 
under section 781(a)(2)(B) to carry out this section, the 
Secretary shall award grants to States on a competitive basis 
to promote student persistence in, and completion of, 
postsecondary education.
  (b) Federal Share; Non-Federal Share.--
          (1) Federal share.--The amount of the Federal share 
        under this section for a fiscal year shall be equal to 
        \2/3\ of the costs of the activities and services 
        described in subsection (d)(1) that are carried out 
        under the grant.
          (2) Non-federal share.--The amount of the non-Federal 
        share under this section shall be equal to \1/3\ of the 
        costs of the activities and services described in 
        subsection (d)(1). The non-Federal share may be in cash 
        or in kind, and may be provided from State resources, 
        contributions from private organizations, or both.
          (3) Supplement, not supplant.--The Federal and non-
        Federal shares required by this paragraph shall be used 
        to supplement, and not supplant, State and private 
        resources that would otherwise be expended to carry out 
        activities and services to promote student persistence 
        in and completion of postsecondary education.
  (c) Application and Selection.--
          (1) Application requirements.--For each fiscal year 
        for which a State desires to receive a grant under this 
        section, the State agency with jurisdiction over higher 
        education, or another agency designated by the Governor 
        or chief executive of the State to administer the grant 
        program under this section, shall submit an application 
        to the Secretary at such time, in such manner, and 
        containing such information as the Secretary may 
        require. Such application shall include--
                  (A) a description of the State's capacity to 
                administer the grant under this section;
                  (B) a description of the State's plans for 
                using the grant funds for activities described 
                in subsection (d)(1), including plans for how 
                the State will make special efforts to provide 
                benefits to students in the State who are from 
                groups that are underrepresented in 
                postsecondary education;
                  (C) a description of how the State will 
                provide for the non-Federal share from State 
                resources, private contributions, or both;
                  (D) a description of--
                          (i) the administrative system that 
                        the State has in place to administer 
                        the activities and services described 
                        in subsection (d)(1); or
                          (ii) the plan to develop such 
                        administrative system;
                  (E) a description of the data system the 
                State has or will have in place to measure the 
                performance and progress toward the State's 
                goals included in the Access and Completion 
                Plan submitted, or that will be submitted, 
                under paragraph (2)(A); and
                  (F) the assurances under paragraph (2).
          (2) State assurances.--The assurances required in 
        paragraph (1)(F) shall include an assurance of each of 
        the following:
                  (A) That the State will submit, not later 
                than July 1, 2011, an Access and Completion 
                Plan to increase the State's rate of 
                persistence in and completion of postsecondary 
                education. Such plan shall include--
                          (i) the State's annual and long-term 
                        quantifiable goals with respect to--
                                  (I) the rates of 
                                postsecondary enrollment, 
                                persistence, and completion, 
                                disaggregated by income, race, 
                                ethnicity, sex, disability, and 
                                age of students;
                                  (II) closing gaps in 
                                enrollment, persistence, and 
                                completion rates for students 
                                from groups that are 
                                underrepresented in 
                                postsecondary education;
                                  (III) targeting education and 
                                training programs to address 
                                labor market needs in the 
                                State, as such needs are 
                                determined by the State, or the 
                                State in coordination with the 
                                State public employment 
                                service, the State workforce 
                                investment board, or industry 
                                or sector partnerships in the 
                                State; and
                                  (IV) improving coordination 
                                between two-year and four-year 
                                institutions of higher 
                                education in the State, 
                                including supporting 
                                comprehensive articulation 
                                agreements between such 
                                institutions; and
                          (ii) the State's plan to develop an 
                        interoperable statewide longitudinal 
                        data system that--
                                  (I) can be linked to other 
                                data systems, as applicable, 
                                including elementary and 
                                secondary education and 
                                workforce data systems;
                                  (II) will collect, maintain, 
                                disaggregate (by institution, 
                                income, race, ethnicity, sex, 
                                disability, and age of 
                                students), and analyze 
                                postsecondary education and 
                                workforce information, 
                                including--
                                          (aa) postsecondary 
                                        education enrollment, 
                                        persistence, and 
                                        completion information;
                                          (bb) post-completion 
                                        employment outcomes of 
                                        students who enrolled 
                                        in postsecondary 
                                        programs and training 
                                        programs offered by 
                                        eligible training 
                                        providers under the 
                                        Workforce Investment 
                                        Act of 1998 (29 U.S.C. 
                                        2801 et seq.);
                                          (cc) postsecondary 
                                        education and 
                                        employment outcomes of 
                                        students who move out 
                                        of the State; and
                                          (dd) postsecondary 
                                        instructional workforce 
                                        information; and
                                  (III) makes the information 
                                described in subclause (I) 
                                available to the general public 
                                in a manner that is transparent 
                                and user-friendly.
                  (B) That the State has a comprehensive 
                planning or policy formulation process with 
                respect to increasing postsecondary enrollment, 
                persistence, and completion that--
                          (i) encourages coordination between 
                        the State administration of grants 
                        under this section and similar State 
                        programs;
                          (ii) encourages State policies that 
                        are designed to improve rates of 
                        enrollment and persistence in, and 
                        completion of, postsecondary education 
                        for all categories of institutions of 
                        higher education described in section 
                        132(d) in the State;
                          (iii) considers the postsecondary 
                        education needs of students from groups 
                        that are underrepresented in 
                        postsecondary education;
                          (iv) considers the resources of 
                        public and private institutions of 
                        higher education, organizations, and 
                        agencies within the State that are 
                        capable of providing access to 
                        postsecondary education opportunities 
                        within the State; and
                          (v) provides for direct, equitable, 
                        and active participation in the 
                        comprehensive planning or policy 
                        formulation process or processes, 
                        through membership on State planning 
                        commissions, State advisory councils, 
                        or other State entities established by 
                        the State and consistent with State 
                        law, by representatives of--
                                  (I) institutions of higher 
                                education, including at least 
                                one member from a junior or 
                                community college (as defined 
                                in section 312(f));
                                  (II) students;
                                  (III) other providers of 
                                postsecondary education 
                                services (including 
                                organizations providing access 
                                to such services);
                                  (IV) the general public in 
                                the State; and
                                  (V) postsecondary education 
                                faculty members, including at 
                                least one faculty member whose 
                                primary responsibilities are 
                                teaching and scholarship.
                  (C) That the State will incorporate policies 
                and practices that, through the activities 
                funded under this section, are determined to be 
                effective in improving rates of postsecondary 
                education enrollment, persistence, and 
                completion into the future postsecondary 
                education policies and practices of the State 
                to ensure that the benefits achieved through 
                the activities funded under this section 
                continue beyond the period of the grant.
                  (D) That the State will participate in the 
                evaluation required under section 784.
          (3) Subgrants to nonprofit organizations.--A State 
        receiving a payment under this section may elect to 
        make a subgrant to one or more nonprofit organizations 
        in the State, including agencies with agreements with 
        the Secretary under subsections (b) and (c) of section 
        428 on the date of the enactment of the Student Aid and 
        Fiscal Responsibility Act of 2009, or a partnership of 
        such organizations, to carry out activities and 
        services described in subsection (d)(1), if the 
        nonprofit organization or partnership--
                  (A) was in existence on the day before the 
                date of the enactment of the Student Aid and 
                Fiscal Responsibility Act of 2009; and
                  (B) as of such day, was participating in 
                activities and services related to promoting 
                persistence in, and completion of, 
                postsecondary education, such as the activities 
                and services described in subsection (d)(1).
          (4) Priority.--In awarding grants under this section, 
        the Secretary shall give priority to States that enter 
        into a partnership with one of the following entities 
        to carry out the activities and services described in 
        subsection (d)(1):
                  (A) A philanthropic organization, as such 
                term is defined in section 781(i)(1).
                  (B) An agency with an agreement with the 
                Secretary under subsections (b) and (c) of 
                section 428 on the date of the enactment of 
                Student Aid and Fiscal Responsibility Act of 
                2009.
  (d) Uses of Funds.--
          (1) Authorized uses.--A State receiving a grant under 
        this section shall use the grant funds to--
                  (A) provide programs in such State that 
                increase persistence in, and completion of, 
                postsecondary education, which may include--
                          (i) assisting institutions of higher 
                        education in providing financial 
                        literacy, education, and counseling to 
                        enrolled students;
                          (ii) assisting students enrolled in 
                        an institution of higher education to 
                        reduce the amount of loan debt incurred 
                        by such students;
                          (iii) providing grants to students 
                        described in section 415A(a)(1), in 
                        accordance with the terms of that 
                        section; and
                          (iv) carrying out the activities 
                        described in section 415E(a); and
                  (B) support the development and 
                implementation of a statewide longitudinal data 
                system, as described in subsection 
                (c)(2)(A)(ii).
          (2) Prohibited uses.--Funds made available under this 
        section shall not be used to promote any lender's 
        loans.
          (3) Restrictions on use of funds.--A State--
                  (A) shall use not less than \1/3\ of the sum 
                of the Federal and non-Federal share used for 
                paragraph (1)(A) on activities that benefit 
                students enrolled in junior or community 
                colleges (as defined in section 312(f)), two-
                year public institutions, or two-year programs 
                of instruction at four-year public 
                institutions;
                  (B) may use not more than 10 percent of the 
                sum of the Federal and non-Federal share under 
                this section for activities described in 
                paragraph (1)(B); and
                  (C) may use not more than 6 percent of the 
                sum of the Federal and non-Federal share under 
                this section for administrative purposes 
                relating to the grant under this section.
  (e) Annual Report.--Each State receiving a grant under this 
section shall submit to the Secretary an annual report on--
          (1) the activities and services described in 
        subsection (d)(1) that are carried out with such grant;
          (2) the effectiveness of such activities and services 
        in increasing postsecondary persistence and completion, 
        as determined by measurable progress in achieving the 
        State's goals for persistence and completion described 
        in the Access and Completion Plan submitted by the 
        State under subsection (c)(2)(A), if such plan has been 
        submitted; and
          (3) any other information or assessments the 
        Secretary may require.
  (f) Definitions.--In this section:
          (1) Industry or sector partnership.--The term 
        ``industry or sector partnership'' means a workforce 
        collaborative that organizes key stakeholders in a 
        targeted industry cluster into a working group that 
        focuses on the human capital needs of a targeted 
        industry cluster and that includes, at the appropriate 
        stage of development of the partnership--
                  (A) representatives of multiple firms or 
                employers (including workers) in a targeted 
                industry cluster, including small- and medium-
                sized employers when practicable;
                  (B) 1 or more representatives of State labor 
                organizations, central labor coalitions, or 
                other labor organizations;
                  (C) 1 or more representatives of local 
                workforce investment boards;
                  (D) 1 or more representatives of 
                postsecondary educational institutions or other 
                training providers; and
                  (E) 1 or more representatives of State 
                workforce agencies or other entities providing 
                employment services.
          (2) State public employment service.--The term 
        ``State public employment service'' has the meaning 
        given such term in section 502(a)(9) of the Student Aid 
        and Fiscal Responsibility Act of 2009.
          (3) State workforce investment board; local workforce 
        investment board.--The terms ``State workforce 
        investment board'' and ``local workforce investment 
        board'' have the meanings given such terms in section 
        502(a)(10) of the Student Aid and Fiscal Responsibility 
        Act of 2009.

SEC. 783. INNOVATION IN COLLEGE ACCESS AND COMPLETION NATIONAL 
                    ACTIVITIES.

  (a) Programs Authorized.--From the amount appropriated under 
section 781(a)(2)(C) to carry out this section, the Secretary 
shall award grants, on a competitive basis, to eligible 
entities in accordance with this section to conduct innovative 
programs that advance knowledge about, and adoption of, 
policies and practices that increase the number of individuals 
with postsecondary degrees or certificates.
  (b) Eligible Entities.--The Secretary is authorized to award 
grants under subsection (a) to--
          (1) institutions of higher education;
          (2) States;
          (3) nonprofit organizations with demonstrated 
        experience in the operation of programs to increase 
        postsecondary completion;
          (4) philanthropic organizations (as such term is 
        defined in section 781(i)(1));
          (5) entities receiving a grant under chapter 1 of 
        subpart 2 of part A of title IV; and
          (6) consortia of any of the entities described in 
        paragraphs (1) through (5).
  (c) Innovation Grants.--
          (1) Minimum award.--A grant awarded under subsection 
        (a) shall be not less than $1,000,000.
          (2) Grants uses.--The Secretary's authority to award 
        grants under subsection (a) includes--
                  (A) the authority to award to an eligible 
                entity a grant in an amount equal to all or 
                part of the amount of funds received by such 
                entity from philanthropic organizations (as 
                such term is defined in section 781(i)(1)) to 
                conduct innovative programs that advance 
                knowledge about, and adoption of, policies and 
                practices that increase the number of 
                individuals with postsecondary degrees or 
                certificates; and
                  (B) the authority to award an eligible entity 
                a grant to develop 2-year programs that provide 
                supplemental grant or loan benefits to students 
                that--
                          (i) are designed to improve student 
                        outcomes, including degree completion, 
                        graduation without student loan debt, 
                        and post-completion employment;
                          (ii) are in addition to the student 
                        financial aid available under title IV 
                        of this Act; and
                          (iii) do not result in the reduction 
                        of the amount of that aid or any other 
                        student financial aid for which a 
                        student is otherwise eligible under 
                        Federal law.
          (3) Application.--To be eligible to receive a grant 
        under subsection (a), an eligible entity shall submit 
        an application at such time, in such manner, and 
        containing such information as the Secretary shall 
        require.
          (4) Priorities.--In awarding grants under subsection 
        (a), the Secretary shall give priority to applications 
        that--
                  (A) are from an eligible entity with 
                demonstrated experience in serving students 
                from groups that are underrepresented in 
                postsecondary education, including institutions 
                of higher education that are eligible for 
                assistance under title III or V, or are from a 
                consortium that includes an eligible entity 
                with such experience;
                  (B) are from an eligible entity that is a 
                public institution of higher education that 
                does not predominantly provide an educational 
                program for which it awards a bachelor's degree 
                (or an equivalent degree), or from a consortium 
                that includes at least one such institution;
                  (C) include activities to increase degree or 
                certificate completion in the fields of 
                science, technology, engineering, and 
                mathematics, including preparation for, or 
                entry into, postbaccaluareate study, especially 
                for women and other groups of students who are 
                underrepresented in such fields;
                  (D) are from an eligible entity that is a 
                philanthropic organization with the primary 
                purpose of providing scholarships and support 
                services to students from groups that are 
                underrepresented in postsecondary education, or 
                are from a consortium that includes such an 
                organization; or
                  (E) are from an eligible entity that 
                encourages partnerships between institutions of 
                higher education with high degree-completion 
                rates and institutions of higher education with 
                low degree-completion rates from the same 
                category of institutions described in section 
                132(d) to facilitate the sharing of information 
                relating to, and the implementation of, best 
                practices for increasing postsecondary 
                completion.
          (5) Technical assistance.--The Secretary may reserve 
        up to $5,000,000 per year to award grants and contracts 
        to provide technical assistance to eligible entities 
        receiving a grant under subsection (a), including 
        technical assistance on the evaluation conducted in 
        accordance with section 784 and establishing networks 
        of eligible entities receiving grants under such 
        subsection.
  (d) Reports.--
          (1) Annual reports by entities.--Each eligible entity 
        receiving a grant under subsection (a) shall submit to 
        the Secretary an annual report on--
                  (A) the effectiveness of the program carried 
                out with such grant in increasing postsecondary 
                completion, as determined by measurable 
                progress in achieving the goals of the program, 
                as described in the application for such grant; 
                and
                  (B) any other information or assessments the 
                Secretary may require.
          (2) Annual report to congress.--The Secretary shall 
        submit to the authorizing committees an annual report 
        on grants awarded under subsection (a), including--
                  (A) the amount awarded to each eligible 
                entity receiving a grant under such subsection; 
                and
                  (B) a description of the activities conducted 
                by each such eligible entity.

SEC. 784. EVALUATION.

  From the amount appropriated under section 781(a)(2)(D), the 
Director of the Institute of Education Sciences shall evaluate 
the programs funded under this part. Not later than January 30, 
2016, the Director shall issue a final report on such 
evaluation to the authorizing committees and the Secretary, and 
shall make such report available to the public.

SEC. 785. VETERANS RESOURCE OFFICER GRANTS.

  (a) Program Authorized.--The Secretary shall award grants, on 
a competitive basis, to eligible institutions of higher 
education to hire a Veterans Resource Officer to increase the 
college completion rates for veterans enrolled at such 
institutions.
  (b) Definitions.--In this section:
          (1) Eligible institution of higher education.--The 
        term ``eligible institution of higher education'' means 
        an institution of higher education that has an 
        enrollment of at least 100 full-time equivalent 
        students who are veterans.
          (2) Full-time equivalent students.--The term ``full-
        time equivalent students'' has the meaning given such 
        term in section 312(e).
          (3) Veteran.--The term ``veteran'' has the meaning 
        give such term in section 480(c).
  (c) Application.--To be eligible to receive a grant under 
this section, an eligible institution of higher education shall 
submit an application at such time, in such manner, and 
containing such information as the Secretary shall require.
  (d) Uses of Funds.--
          (1) In general.--An eligible institution of higher 
        education receiving a grant under this section shall 
        use such grant to hire 1 or 2 Veterans Resource 
        Officers (in the case of an institution that has an 
        enrollment of at least 200 full-time equivalent 
        students who are veterans) to serve in the office of 
        campus programs, or a similar office, at such 
        institution and carry out the activities described in 
        paragraph (2).
          (2) Activities.--A Veterans Resource Officer shall 
        carry out activities at an eligible institution of 
        higher education to help increase the completion rates 
        for veterans enrolled at such institution, which shall 
        include the following activities:
                  (A) Serving as a link between student 
                veterans and the staff of the institution.
                  (B) Serving as a link between student 
                veterans and local facilities of the Department 
                of Veterans Affairs.
                  (C) Organizing and advising student veterans 
                organization.
                  (D) Organizing veterans oriented group 
                functions and events.
                  (E) Maintaining newsletters and listserves to 
                distribute news and information to all student 
                veterans.
                  (F) Organizing new student veterans campus 
                orientation.
                  (G) Ensuring that the Department of Veterans 
                Affairs certifying official at such institution 
                is properly trained.
          (3) Priority.--To the extent practicable, each 
        institution described in paragraph (1) shall give 
        priority to hiring a veteran to serve as a Veterans 
        Resource Officer.
  (e) Authorization of Appropriations.--There are authorized to 
be appropriated to carry out this section such sums as may be 
necessary for fiscal year 2010 and each succeeding fiscal year.

TITLE VIII--ADDITIONAL PROGRAMS

           *       *       *       *       *       *       *


   PART Y--EARLY FEDERAL PELL GRANT COMMITMENT DEMONSTRATION PROGRAM

SEC. 894. EARLY FEDERAL PELL GRANT COMMITMENT DEMONSTRATION PROGRAM.

  (a) * * *

           *       *       *       *       *       *       *

  (f) Targeted Information Campaign.--
          (1) * * *
          (2) Plan.--Each State educational agency receiving a 
        grant under this section shall include in the 
        application submitted under subsection (c) a written 
        plan for the State educational agency proposed targeted 
        information campaign. The plan shall include the 
        following:
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) Information.--The annual provision by the 
                State educational agency to all students and 
                families participating in the demonstration 
                project of information regarding--
                          (i) * * *
                          (ii) Federal Pell Grants, including--
                                  (I) [the maximum Federal Pell 
                                Grant for each award year] the 
                                Federal Pell Grant amount, 
                                determined under section 
                                401(b)(2)(A), for which a 
                                student may be eligible for 
                                each award year;

           *       *       *       *       *       *       *

                              ----------                              


                 COLLEGE COST REDUCTION AND ACCESS ACT



           *       *       *       *       *       *       *
TITLE III--FEDERAL FAMILY EDUCATION LOAN PROGRAM

           *       *       *       *       *       *       *


[SEC. 303. REDUCTION OF LENDER INSURANCE PERCENTAGE.

  [(a) Amendment.--Subparagraph (G) of section 428(b)(1) (20 
U.S.C. 1078(b)(1)(G)) is amended to read as follows:
                  [``(G) insures 95 percent of the unpaid 
                principal of loans insured under the program, 
                except that--
                          [``(i) such program shall insure 100 
                        percent of the unpaid principal of 
                        loans made with funds advanced pursuant 
                        to section 428(j) or 439(q); and
                          [``(ii) notwithstanding the preceding 
                        provisions of this subparagraph, such 
                        program shall insure 100 percent of the 
                        unpaid principal amount of exempt 
                        claims as defined in subsection 
                        (c)(1)(G);'.
  [(b) Effective Date.--The amendment made by subsection (a) 
shall be effective on October 1, 2012, and shall apply with 
respect to loans made on or after such date.]

           *       *       *       *       *       *       *


                     XVII. Committee Correspondence

    None.

                 XVIII. Minority and Supplemental Views

                              ----------                              


   SUPPLEMENTAL VIEWS OF REPRESENTATIVES PHIL HARE AND DAVID LOEBSACK

    We support the majority views. In particular, we agree that 
our nation's community colleges are essential to driving 
economic recovery. We write separately to ensure this 
legislation provides the necessary support to all our nation's 
colleges, especially those located in remote areas of the 
country, in order to fully address the economic crisis. We 
believe the focus of the competitive grant programs authorized 
in Title V for community college reform should be to prepare 
individuals for skilled occupations that are in high-demand in 
their local area or region. Therefore, we would like to clarify 
that the Committee intends for ``high-demand industries'' to be 
defined and determined in accordance with the workforce needs 
of local and regional economies, which may differ within the 
state or between states. In order to slow down and eventually 
stop the brain drain prevalent in rural America and many other 
areas of the country, the objective is to train and educate 
individuals for skilled professions of need within their 
communities, rather than provide educational opportunities for 
individuals to then seek jobs elsewhere.
    We also agree that the focus of the grant programs should 
be on moving individuals into skilled occupations with family-
supporting wages. However, the definition of ``high-wage'' also 
varies between regions and we do not want to inadvertently 
restrict the colleges located in areas with low to moderate 
industry from accessing this grant funding. With one-quarter of 
all Americans living in rural communities, rural America 
presents the most promising area of economic growth in the 
country.
    In addition, we recognize that individuals with lower 
skills may need additional time to achieve skilled or ``high-
wage'' jobs. To address this we believe that when considering 
high-wage or skilled occupations, the Secretary and the states 
must also look at occupations that may be reasonably expected 
to lead to such high-wages or skilled occupations.
    Finally, in order to better ensure that the community 
colleges located in more remote areas of the country have the 
same access to federal funds as schools in urban centers, it is 
important that we have the data to understand where the money 
is being spent. Therefore, it is the Committee's intention for 
the Institute of Education Sciences (IES) in its evaluation of 
all the grantees who receive monies for community college 
reform to indicate whether the grantee is located in either a 
rural or urban area. The data collected from this evaluation 
would be invaluable to understanding where the grant money is 
going, what geographic regions are impacted and how we can 
better distribute resources or structure programs in the future 
to ensure that all our nation's students have access to the 
same educational and workforce opportunities.

                                   Phil Hare.
                                   Dave Loebsack.

                             MINORITY VIEWS

    Committee Republicans are committed to maintaining the 
successful and robust public-private partnership that has 
provided low-cost and easily accessible college loans to 
students well for over 40 years. We have been, and remain, 
supportive of efforts to increase the maximum Pell Grant award 
and simplify the Free Application for Federal Student Aid 
(FAFSA). However, we believe this bill takes the wrong approach 
to accomplish these goals. H.R. 3221, the so-called Student Aid 
and Fiscal Responsibility Act of 2009, turns sharply in the 
wrong direction by eliminating the Federal Family Education 
Loan (FFEL) program, spending less than half of the purported 
``savings'' on increases to Pell Grants, and raiding student 
aid to fund pet projects like school construction, early 
childhood programs, and new initiatives for community colleges.

               ANOTHER TAKEOVER BY THE FEDERAL GOVERNMENT

    Committee Republicans believe H.R. 3221 represents another 
attempt by President Obama and Congressional Democrats to 
orchestrate a federal government takeover of a private 
industry. The federal government has already succeeded in 
taking ownership of the automobile industry and controlling the 
actions of the financial industry. With this bill, the 
Department of Education, an agency intended to ensure that 
every child has the opportunity to learn, will now become one 
of the country's largest banks--originating more than $100 
billion in federal student loans in the next few years.
    In justifying this latest government takeover, Democrats 
claim the FFEL program is on ``life support'' and therefore 
must be eliminated. However, it cannot be ignored that 
Democrats have been trying to eliminate this program since 
1993, when President Clinton put into place the Direct Loan 
program. What Committee Democrats refuse to acknowledge is that 
the FFEL program has been a stable source of private capital 
for more than 40 years. Private capital has temporarily dried 
up in the FFEL program, much like it has in the rest of the 
financial services sector. Yet student lending is the only 
sector of the financial services industry being targeted for a 
permanent government takeover.
    Last Congress, the Committee worked in a bipartisan manner 
to pass H.R. 5715, the Ensuring Continued Access to Student 
Loans Act (ECASLA). This is one of the only economic 
stabilization bills that is working and is proven to save the 
federal government money. In fact, according to the President's 
fiscal year 2010 budget, this program will save the federal 
government $6.7 billion in fiscal year 2010 alone. Under 
ECASLA, the FFEL program successfully originated approximately 
$70 billion in loans and every student who needed a loan 
received one during the 2008-2009 academic year. Congress has 
passed other bills to provide liquidity to the financial 
marketplace or help stimulate the economy. Those bills, 
however, are not proving to be as successful as ECASLA and, in 
most cases have simply driven the country deeper into debt.
    Committee Democrats also fail to mention that the Direct 
Loan program was once on ``life support.'' In 1997, the program 
collapsed and was unable to make consolidation loans to 
borrowers. At that time, Congress did not seek to end the 
program. Rather, Committee Republicans led the effort to pass 
emergency legislation to bail out the Direct Loan program to 
ensure that borrowers could receive consolidation loans.
    Committee Democrats also claim the private sector is dying 
because most student loans being originated in the FFEL program 
today are being made with federal capital using the authority 
provided to the Secretary of Education in ECASLA. At the same 
time, Committee Democrats claim their plan will maintain the 
program's public-private partnership by permitting limited 
participation of certain private sector entities. However, both 
of these claims are false when the facts are examined. Despite 
the global credit crunch, there continues to be robust 
participation by the private sector under the FFEL program. 
There are still more than 1,500 active lenders willing to make 
student loans, including local lenders like the Navy Federal 
Credit Union, University Federal Credit Union, and Banc First, 
and approximately 40 percent of total FFEL loan volume is still 
being made using private capital.
    There are also another 50 private and nonprofit loan 
servicers and more than 30 guaranty agencies that provide 
valuable services in their respective states and employ more 
than 30,000 private sector workers. By comparison, the U.S. 
Department of Education currently uses one servicer for the 
entire nation. While the Department recently announced that it 
would expand this contract to four servicers--a 400% increase 
from the monopoly that it was employing until recently--this 
move is a poor representation of the public-private enterprise 
that has been effective for both students and institutions. 
Even the few private sector participants that are able to 
maintain a limited role in student lending will not be able to 
use the creative, personalized approaches available today. They 
will simply be administering a one-size-fits-all approach 
dictated by the federal government where market competition and 
effective customer service is all but eliminated.

              FFEL IS BETTER FOR STUDENTS AND INSTITUTIONS

    Committee Republicans believe H.R. 3221 ignores the voices 
of the federal student loan consumers--the students who use the 
loans and the institutions that must administer the programs. 
Institutions have made their opinions known. When President 
Clinton first created the Direct Loan program in 1993, the 
federal government paid institutions a $10 fee for each loan, 
something that is classified as an ``illegal inducement'' under 
the FFEL program, and regularly pressured college presidents to 
join the DL program. Despite all of this pressure, the Direct 
Loan program only captured a total of 34 percent of loan volume 
at its peak in 1998. Since that time, loan volume has been 
around 20 percent. There has been a slight uptick in volume 
recently due to the global economic crisis that has affected 
every financial industry, including the student loan industry. 
However, even with the crisis and increased pressure from the 
Administration and Democrats in Congress, 4,400 schools, or 72 
percent, remain in the FFEL program.
    These schools will be forced out of FFEL under the 
Democrats' plan, regardless of their wishes or ability to make 
such a conversion. In fact, the Committee heard from 
institutions as recently as the day before the mark up when a 
group of 15 financial aid advisors released their ideas for an 
alternative proposal which focused on institutional choice of 
loan delivery system, customized default prevention and 
financial literacy programs, and uninterrupted loan access for 
students and parents while still avoiding significant 
administrative and financial burdens for institutions.\1\ When 
it comes to health care, Democrats like to promise that, ``. . 
. if you like your plan, you can keep it.'' It's too bad they 
don't feel the same way about student loan programs.
---------------------------------------------------------------------------
    \1\``Reforming Federal Student Aid Programs: Focused on the 
Students We Serve''
---------------------------------------------------------------------------
    The demands of students and institutions within the FFEL 
program have sparked fierce competition among loan providers 
and servicers. The competition has led to lower prices for 
students and institutions and innovation in loan delivery, 
processing, and servicing. The competition and innovation in 
the current FFEL program has also led to repayment incentives, 
interest rate reductions, fee reductions, loan forgiveness, and 
other financial benefits for students. Loan providers also 
offer broader benefits, such as college planning services, 
financial literacy education, default aversion, and FAFSA 
assistance, among other value-added services. The innovations 
generated by competition cannot be overlooked, even by the 
Department of Education, which has followed the private 
sector's lead and put in place many of these innovations to 
improve the Direct Loan program.
    Committee Republicans have heard from colleges and 
universities that the Direct Loan program puts additional 
administrative burdens on schools. Switching from the FFEL 
program to the DL program is not as easy as flipping a switch. 
Schools must ensure that their basic software can work with the 
DL system. Many schools have ``homegrown'' software that has 
been specifically developed to run the schools'' programs. 
These institutions will have to overhaul their software systems 
since that work will not be done by a software vendor. 
Institutions will also have to notify parents and students that 
they will have to sign new loan agreements and will have to 
answer questions about the new loan products. Some 
institutions, such as graduate schools, do not have access to 
the C.O.D. system that is used for loan origination, so that 
system will need to be added and staff will need to be trained. 
Finally, websites and all financial aid materials will need to 
be updated. This does not even take into account the number of 
staff from different departments that may need to stop their 
current tasks to help with the implementation or the projects 
currently underway at the institution that will have to be 
placed on hold to undergo the systems update necessary for the 
implementation of the Direct Loan program.
    In talking to institutions that have been in and out of the 
Direct Loan program, Committee Republicans have heard that it 
could take anywhere between four and nine months for a large 
institution, with plenty of staff, to be ready to issue its 
first loan. In addition, we have heard that the cost to 
institutions of switching programs was $240,000 at one 
institution and $400,000 at another institution. Dr. Harris 
Pastides, the President of University of South Carolina, 
provided more specific details in a letter he sent. He stated,

    Because of the type of software developed specifically for 
our current computer system, our transition process is not 
simply a matter of purchasing and rapidly installing an `off 
the shelf' program. Transition to direct lending would require 
an investment of well over a million dollars and a timeline for 
implementation exceeding one year. . . .  To add the cost of 
converting our system to direct lending without any help would 
be tantamount to another budget reduction for us at this time. 
Ironically, this would increase costs and negate much of the 
positive impact of potential increases to financial aid 
generated by proposed policy improvements. (Emphasis added).\2\
---------------------------------------------------------------------------
    \2\Letter to The Honorable Joe Wilson, May 26, 2009.

Gaining eligibility for the Direct Loan program and being ready 
to operate the program on an institution-wide basis are two 
very different issues that have been ignored by Congressional 
Democrats in their zeal to nationalize the student loan 
industry.

                      FFEL IS BETTER FOR TAXPAYERS

    Not only is the FFEL program the program of choice for 
students and institutions, it is good for taxpayers, too. 
Industry participants provide the capital up front and then 
share some of the risk in case the borrower defaults. Democrats 
may scoff that FFEL providers shoulder only three percent of 
the risk, but this figure represents billions of dollars that 
the taxpayer is not on the hook for this year. It's also a 
substantial amount when you realize that, under the Direct Loan 
program, the taxpayer is on the hook for the entire amount if a 
student does not repay his or her loan. The FFEL program also 
leverages about $70 billion in private capital each year when 
the financial markets are working properly. Committee Democrats 
want to borrow that $70 billion directly from China and our 
other creditors. Driving up the national debt has long-term 
consequences, whether it is reducing our nation's credit 
rating, inadvertently driving up costs, or putting us at the 
mercy of emerging super-powers on the other side of the globe.
    Committee Democrats claim that the FFEL program simply 
provides profits to banks and that the Direct Loan program 
saves the government money. However, the facts show that the 
federal government has been receiving subsidies from lenders 
for the past several years. Since April 2006, lenders have paid 
$3.2 billion to the federal government. Additionally, while 
there are a number of factors that lead to the scoring 
differences between the two federal student loan programs. One 
undeniable factor is that a significant percentage of the 
``savings'' in the Direct Loan program are due to the 
difference between the government's low cost of borrowing funds 
and the borrower interest rate. Committee Republicans have 
concerns about the federal government serving as a profit-
making bank at the expense of low- and middle-income students.
    Committee Democrats also claim they are making good on 
their promise to lower interest rates for students in H.R. 
3221, but the facts show otherwise. At the beginning of the 
110th Congress, Democrats rushed H.R. 5, the College Student 
Relief Act, through the House. That legislation would have 
reduced interest rates on student loans by half, from 6.8 
percent to 3.4 percent, for all students. Immediately after the 
bill was introduced, Committee Democrats started to dilute 
their promise by scaling back interest rates from 6.8 percent 
to 3.4 percent over five years, but then allowing the interest 
rate to jump back up to 6.8 percent in 2012. At the time, The 
Chronicle of Higher Education reported that Democrats intended 
to make the 3.4 percent interest rate permanent in the 
future.\3\ Additionally, Inside Higher Ed reported that, 
``Democratic staffers explained that budget rules and fiscal 
realities required that compromise. They also aid that they 
fully expected to find money in the intervening years to make 
the cut permanent.''\4\ The bill was never considered in the 
Senate.
---------------------------------------------------------------------------
    \3\Burd, Stephen. ``Democrats'' Plan to Slash the Interest Rate for 
Student Loans Draws Criticism,'' The Chronicle of Higher Education, 
January 5, 2007. The article stated, ``House Democrats briefly 
considered making the interest-rate cut for only one year. Then they 
hoped to make the cut permanent as part of legislation to renew the 
Higher Education Act, the law governing most federal student-aid 
programs, which they hope to consider later this year.''
    \4\Lederman, Doug. ``Political Maneuvering on Student Loans,'' 
Inside Higher Education, January 17, 2007
---------------------------------------------------------------------------
    Through the budget reconciliation process that year, 
Democrats were able to pass H.R. 2669, the College Cost 
Reduction and Access Act--legislation to, among other things, 
reduce student loan interest rates. But it was an even more 
diluted version of their original plan and only scaled back 
interest rates from 6.8 percent to 3.4 percent over four years 
for undergraduate students receiving subsidized loans. The 
legislation retained the 2012 cliff, resulting in the overall 
bill representing a negligible benefit for most students.
    H.R. 3221 officially breaks any promises that Committee 
Democrats made to students when they committed to permanently 
lower interest rates; moreover, it ensures the federal 
government continues to make a profit off of the unnecessarily 
high level of interest being paid by students in the Direct 
Loan program. The bill changes the interest rate in 2012 to a 
variable interest rate, capped at 6.8 percent. Under this 
formula, it is projected that students will see an increase in 
their interest rates in 2012 (5.21 percent) and 2013 (6.26 
percent) and will be right back up at the 6.8 percent cap in 
2014.

                      MASSIVE ENTITLEMENT SPENDING

    Committee Democrats are not only forcing students to spend 
more under their bill, but the American taxpayers will also 
bear the brunt of almost $80 billion in entitlement spending at 
a time when the national debt is more than $11 trillion and the 
deficit is estimated to reach $1.8 trillion this year alone. 
Historically, entitlement programs such as Social Security, 
Medicare, Medicaid, or programs under the Child Nutrition Act 
were created to provide income benefits to individual citizens. 
Instead of recognizing this important policy, this bill spends 
billions of dollars in mandatory, entitlement funding on the 
Committee Democrats' favored political and policy causes.
    While millions of families are struggling to pay their 
monthly bills and are thinking about which of their expenses to 
trim, Democrats in Congress are on a huge spending spree that 
will saddle our children and grandchildren with billions of 
debt. This bill, which Committee Democrats have portrayed as 
legislation to improve college access, actually contains: $6.6 
billion for school construction--both at the elementary and 
secondary and higher education levels; $8 billion for an 
``early learning'' initiative from birth to age 5; and $7 
billion for community colleges, which may undermine our current 
job training system. There are major flaws with what the 
Democrats are proposing on school construction, early childhood 
education, and community colleges, but the larger issue is how 
they are pushing these proposals. Committee Democrats are 
putting forward a proposal to raid student aid funds and spend 
those entitlement dollars to bolster the funding of programs 
which should be within the control of the House and Senate 
Appropriations Committees in Congress.

                               CONCLUSION

    Committee Republicans are concerned that Democrats are 
rushing through a risky scheme to take over the private student 
loan industry, regardless of the negative consequences for 
students and institutions. We are also very concerned that the 
proposed bill takes the ``savings'' that will result from 
eliminating the FFEL program and uses those funds to create a 
number of new programs that are not targeted toward individuals 
but rather toward favored political constituencies and causes. 
It is for these many reasons that Committee Republicans 
strongly oppose H.R. 3221 and urge Members of Congress to 
defeat this bill.

                                   John Kline.
                                   Buck McKeon.
                                   Pete Hoekstra.
                                   Mark Souder.
                                   Joe Wilson.
                                   Cathy McMorris Rodgers.
                                   Rob Bishop.
                                   Brett Guthrie.
                                   Bill Cassidy.
                                   Tom McClintock.
                                   Duncan Hunter.
                                   David P. Roe.
                                   Glenn G.T. Thompson.
                MISCELLANEOUS HOUSE REPORT REQUIREMENTS

               Statement on Committee Oversight Findings

    Clause 3(c)(1) of rule XIII of the Rules of the House of 
Representatives requires the report of a committee on a measure 
that has been approved by the committee to contain oversight 
findings and recommendations required pursuant to clause 
(2)(b)(1) of rule X. The Committee on the Budget has examined 
its activities over the past year and has determined that there 
are no specific oversight findings on the text of the reported 
bill.

     New Budget Authority and Congressional Budget Office Estimate

    Clause 3(c)(2) and (3) of rule XIII of the Rules of the 
House of Representatives and sections 308 and 402 of the 
Congressional Budget Act require the report of a committee on a 
measure approved by the committee to include a timely submitted 
cost estimate by the Congressional Budget Office [CBO]. 
Statements regarding the CBO estimates of the legislative 
recommendations submitted by each of the authorizing committees 
are included under the appropriate titles.

         Statement on General Performance Goals and Objectives

    Clause (3)(c)(4)of rule XIII of the Rules of the House of 
Representatives requires the report of a committee on a measure 
that has been approved by the committee to include a statement 
of general performance goals and objectives, including outcome-
related goals and objectives, for which the measure authorizes 
funding. This measure is intended to reduce the deficit, and is 
reported pursuant to section 202 of S. Con. Res. 13, the 
concurrent resolution on the budget for fiscal year 2010.

                   Constitutional Authority Statement

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires each report of a committee on a public 
bill or public joint resolution contain a statement citing the 
specific powers granted to Congress in the Constitution to 
enact the law proposed by the bill or joint resolution. The 
Committee on the Budget states that its action in reporting 
this bill is derived from Article I of the Constitution, 
Section 5 (`Each House may determine the Rules of its 
Proceedings') and Section 8 (`The Congress shall have the power 
to make all Laws which shall be necessary and proper * * *').

                        Changes in Existing Law

    Clause 3 of rule XIII of the Rules of the House of 
Representatives requires each report of a committee on a public 
bill or public joint resolution contain the text of statutes 
that are proposed to be repealed and a comparative print of 
that part of the bill proposed to be amended whenever the bill 
repeals or amends any statute. The required matter is included 
in the report language for each title of the legislative 
recommendations submitted by the appropriate authorization 
committees and reported to the House by the Committee on the 
Budget.

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act of 1974 requires a statement of whether the 
provisions of the reported bill include unfunded mandates. 
Statements regarding unfunded mandates for the legislative 
recommendations submitted by each of the authorizing committees 
are included under appropriate titles.

                         Earmark Identification

    The Committee on Budget did not receive any requests for 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9 of rule XXI. Statements 
regarding earmark requests that may have been submitted to the 
authorizing committees that responded to the reconciliation 
instructions are included under the appropriate titles of this 
report.

                         Votes of the Committee

    House rule XIII, clause 3(b), requires that each committee 
report include the total number of votes cast for and against, 
and the names of members voting for and against, each recorded 
vote on a motion to report a measure or matter of a public 
nature and any amendment offered to the measure or matter.
    On March 15, 2010, the Committee met in open session with a 
quorum present and ordered reported the Reconciliation Act of 
2010 without recommendation. Following is a summary of the 
meeting and the roll call votes taken by the Committee.
    After calling the Committee to order, Chairman Spratt 
stated that under section 310 of the Congressional Budget Act 
of 1974, and pursuant to section 202 of Senate Concurrent 
Resolution 13, the concurrent resolution on the budget for 
fiscal year 2010, the Committee would consider reporting the 
reconciliation Act of 2010 to the House of Representatives 
without substantive revision.
    1. Vice Chair Schwartz moved that the Committee order 
reported to the House without recommendation the Reconciliation 
Act of 2010. The motion was agreed to by a roll call vote of 21 
ayes and 16 nays.

 
------------------------------------------------------------------------
 Name &                      Answer    Name &                    Answer
 State     Aye       No     Present    State     Aye      No     Present
------------------------------------------------------------------------
SPRATT      X                         RYAN                 X
 (SC)                                  (WI)
 (Chair                                (Ranki
 man)                                  ng)
------------------------------------------------------------------------
SCHWART     X                         HENSARL
 Z (PA)                                ING
                                       (TX)
------------------------------------------------------------------------
KAPTUR      X                         GARRETT              X
 (OH)                                  (NJ)
------------------------------------------------------------------------
BECERRA     X                         DIAZ-BA              X
 (CA)                                  LART
                                       (FL)
------------------------------------------------------------------------
DOGGETT     X                         SIMPSON              X
 (TX)                                  (ID)
------------------------------------------------------------------------
BLUMENA     X                         McHENRY              X
 UER                                   (NC)
 (OR)
------------------------------------------------------------------------
BERRY       X                         MACK                 X
 (AR)                                  (FL)
------------------------------------------------------------------------
BOYD                 X                CAMPBEL              X
 (FL)                                  L (CA)
------------------------------------------------------------------------
McGOVER     X                         JORDAN               X
 N (MA)                                (OH)
------------------------------------------------------------------------
TSONGAS     X                         LUMMIS               X
 (MA)                                  (WY)
------------------------------------------------------------------------
ETHERID     X                         AUSTRIA              X
 GE                                    (OH)
 (NC)
------------------------------------------------------------------------
McCOLLU     X                         ADERHOL              X
 M (MN)                                T (AL)
------------------------------------------------------------------------
YARMUTH     X                         NUNES                X
 (KY)                                  (CA)
------------------------------------------------------------------------
ANDREWS     X                         HARPER               X
 (NJ)                                  (MS)
------------------------------------------------------------------------
DeLAURO     X                         LATTA                X
 (CT)                                  (OH)
------------------------------------------------------------------------
EDWARDS              X                .......
 (TX)
------------------------------------------------------------------------
SCOTT       X                         .......
 (VA)
------------------------------------------------------------------------
LANGEVI     X                         .......
 N (RI)
------------------------------------------------------------------------
LARSEN      X              .........
 (WA)
------------------------------------------------------------------------
BISHOP      X              .........
 (NY)
------------------------------------------------------------------------
MOORE,      X              .........
 GWEN
 (WI)
------------------------------------------------------------------------
CONNOLL     X              .........
 Y (VA)
------------------------------------------------------------------------
SCHRADE                    .........
 R (OR)
------------------------------------------------------------------------
MOORE,      X
 DENNIS
 (KS)
------------------------------------------------------------------------

    2. A motion was offered by Representative Mack directing 
the Chairman to request that the rule for consideration of the 
Reconciliation Act of 2010 make in order an amendment to 
prohibit the use of comparative effectiveness research or other 
measures to restrict medical professionals from providing and/
or prescribing the care they believe to be medically necessary.
    The motion was not agreed to by a roll call vote of 14 ayes 
and 23 nays.

 
------------------------------------------------------------------------
 Name &                      Answer    Name &                    Answer
 State     Aye       No     Present    State     Aye      No     Present
------------------------------------------------------------------------
SPRATT               X                RYAN        X
 (SC)                                  (WI)
 (Chair                                (Ranki
 man)                                  ng)
------------------------------------------------------------------------
SCHWART              X                HENSARL
 Z (PA)                                ING
                                       (TX)
------------------------------------------------------------------------
KAPTUR               X                GARRETT     X
 (OH)                                  (NJ)
------------------------------------------------------------------------
BECERRA              X                DIAZ-BA     X
 (CA)                                  LART
                                       (FL)
------------------------------------------------------------------------
DOGGETT              X                SIMPSON     X
 (TX)                                  (ID)
------------------------------------------------------------------------
BLUMENA              X                McHENRY     X
 UER                                   (NC)
 (OR)
------------------------------------------------------------------------
BERRY                X                MACK        X
 (AR)                                  (FL)
------------------------------------------------------------------------
BOYD                 X                CAMPBEL     X
 (FL)                                  L (CA)
------------------------------------------------------------------------
McGOVER              X                JORDAN      X
 N (MA)                                (OH)
------------------------------------------------------------------------
TSONGAS              X                LUMMIS      X
 (MA)                                  (WY)
------------------------------------------------------------------------
ETHERID              X                AUSTRIA     X
 GE                                    (OH)
 (NC)
------------------------------------------------------------------------
McCOLLU              X                ADERHOL     X
 M (MN)                                T (AL)
------------------------------------------------------------------------
YARMUTH              X                NUNES       X
 (KY)                                  (CA)
------------------------------------------------------------------------
ANDREWS              X                HARPER      X
 (NJ)                                  (MS)
------------------------------------------------------------------------
DeLAURO              X                LATTA       X
 (CT)                                  (OH)
------------------------------------------------------------------------
EDWARDS              X                .......
 (TX)
------------------------------------------------------------------------
SCOTT                X                .......
 (VA)
------------------------------------------------------------------------
LANGEVI              X                .......
 N (RI)
------------------------------------------------------------------------
LARSEN               X     .........
 (WA)
------------------------------------------------------------------------
BISHOP               X     .........
 (NY)
------------------------------------------------------------------------
MOORE,               X     .........
 GWEN
 (WI)
------------------------------------------------------------------------
CONNOLL              X     .........
 Y (VA)
------------------------------------------------------------------------
SCHRADE                    .........
 R (OR)
------------------------------------------------------------------------
MOORE,               X
 DENNIS
 (KS)
------------------------------------------------------------------------

    3. A motion was offered by Representative Schwartz 
directing the Chairman to request that the rule for 
consideration of the Reconciliation Act of 2010 make in order 
an amendment to ban health insurance discrimination against 
Americans with pre-existing conditions.
    The motion was agreed to by voice vote.
    4. A motion was offered by Representative Campbell 
directing the Chairman to request that the rule for 
consideration of the Reconciliation Act of 2010 make in order 
an amendment to delay the implementation of the health reform 
legislation until Congress has enacted legislation to put the 
federal budget and United States economy on a sustainable 
fiscal path.
    The motion was not agreed to by a roll call vote of 14 ayes 
and 23 nays.

 
------------------------------------------------------------------------
 Name &                      Answer    Name &                    Answer
 State     Aye       No     Present    State     Aye      No     Present
------------------------------------------------------------------------
SPRATT               X                RYAN        X
 (SC)                                  (WI)
 (Chair                                (Ranki
 man)                                  ng)
------------------------------------------------------------------------
SCHWART              X                HENSARL     X
 Z (PA)                                ING
                                       (TX)
------------------------------------------------------------------------
KAPTUR               X                GARRETT     X
 (OH)                                  (NJ)
------------------------------------------------------------------------
BECERRA              X                DIAZ-BA     X
 (CA)                                  LART
                                       (FL)
------------------------------------------------------------------------
DOGGETT              X                SIMPSON     X
 (TX)                                  (ID)
------------------------------------------------------------------------
BLUMENA              X                McHENRY     X
 UER                                   (NC)
 (OR)
------------------------------------------------------------------------
BERRY                X                MACK        X
 (AR)                                  (FL)
------------------------------------------------------------------------
BOYD                 X                CAMPBEL     X
 (FL)                                  L (CA)
------------------------------------------------------------------------
McGOVER              X                JORDAN      X
 N (MA)                                (OH)
------------------------------------------------------------------------
TSONGAS              X                LUMMIS      X
 (MA)                                  (WY)
------------------------------------------------------------------------
ETHERID              X                AUSTRIA     X
 GE                                    (OH)
 (NC)
------------------------------------------------------------------------
McCOLLU              X                ADERHOL
 M (MN)                                T (AL)
------------------------------------------------------------------------
YARMUTH              X                NUNES       X
 (KY)                                  (CA)
------------------------------------------------------------------------
ANDREWS              X                HARPER      X
 (NJ)                                  (MS)
------------------------------------------------------------------------
DeLAURO              X                LATTA       X
 (CT)                                  (OH)
------------------------------------------------------------------------
EDWARDS              X                .......
 (TX)
------------------------------------------------------------------------
SCOTT                X                .......
 (VA)
------------------------------------------------------------------------
LANGEVI              X                .......
 N (RI)
------------------------------------------------------------------------
LARSEN               X     .........
 (WA)
------------------------------------------------------------------------
BISHOP               X     .........
 (NY)
------------------------------------------------------------------------
MOORE,               X     .........
 GWEN
 (WI)
------------------------------------------------------------------------
CONNOLL              X     .........
 Y (VA)
------------------------------------------------------------------------
SCHRADE                    .........
 R (OR)
------------------------------------------------------------------------
MOORE,               X
 DENNIS
 (KS)
------------------------------------------------------------------------

    5. A motion was offered by Representative Etheridge 
directing the Chairman to request that the rule for 
consideration of the Reconciliation Act of 2010 make in order 
an amendment to close the coverage gap (``doughnut hole '') in 
Medicare Part D and ensure expanded access to preventive care 
for Medicare beneficiaries.
    The motion was agreed to by a roll call vote of 23 ayes and 
15 nays.

 
------------------------------------------------------------------------
 Name &                      Answer    Name &                    Answer
 State     Aye       No     Present    State     Aye      No     Present
------------------------------------------------------------------------
SPRATT      X                         RYAN                 X
 (SC)                                  (WI)
 (Chair                                (Ranki
 man)                                  ng)
------------------------------------------------------------------------
SCHWART     X                         HENSARL              X
 Z (PA)                                ING
                                       (TX)
------------------------------------------------------------------------
KAPTUR      X                         GARRETT              X
 (OH)                                  (NJ)
------------------------------------------------------------------------
BECERRA     X                         DIAZ-BA              X
 (CA)                                  LART
                                       (FL)
------------------------------------------------------------------------
DOGGETT     X                         SIMPSON              X
 (TX)                                  (ID)
------------------------------------------------------------------------
BLUMENA     X                         McHENRY              X
 UER                                   (NC)
 (OR)
------------------------------------------------------------------------
BERRY       X                         MACK                 X
 (AR)                                  (FL)
------------------------------------------------------------------------
BOYD        X                         CAMPBEL              X
 (FL)                                  L (CA)
------------------------------------------------------------------------
McGOVER     X                         JORDAN               X
 N (MA)                                (OH)
------------------------------------------------------------------------
TSONGAS     X                         LUMMIS               X
 (MA)                                  (WY)
------------------------------------------------------------------------
ETHERID     X                         AUSTRIA              X
 GE                                    (OH)
 (NC)
------------------------------------------------------------------------
McCOLLU     X                         ADERHOL              X
 M (MN)                                T (AL)
------------------------------------------------------------------------
YARMUTH     X                         NUNES                X
 (KY)                                  (CA)
------------------------------------------------------------------------
ANDREWS     X                         HARPER               X
 (NJ)                                  (MS)
------------------------------------------------------------------------
DeLAURO     X                         LATTA                X
 (CT)                                  (OH)
------------------------------------------------------------------------
EDWARDS     X                         .......
 (TX)
------------------------------------------------------------------------
SCOTT       X                         .......
 (VA)
------------------------------------------------------------------------
LANGEVI     X                         .......
 N (RI)
------------------------------------------------------------------------
LARSEN      X              .........
 (WA)
------------------------------------------------------------------------
BISHOP      X              .........
 (NY)
------------------------------------------------------------------------
MOORE,      X              .........
 GWEN
 (WI)
------------------------------------------------------------------------
CONNOLL     X              .........
 Y (VA)
------------------------------------------------------------------------
SCHRADE                    .........
 R (OR)
------------------------------------------------------------------------
MOORE,      X
 DENNIS
 (KS)
------------------------------------------------------------------------

    6. A motion was offered by Representative Ryan directing 
the Chairman to request that the rule for consideration of the 
Reconciliation Act of 2010 make in order an amendment to 
prevent Medicare cuts from being used to offset or fund a new 
entitlement program, reduce new government spending in such 
legislation by that amount, and direct all Medicare savings to 
the Medicare program to make that program fiscally sustainable.
    The motion was not agreed to by a roll call vote of 17 ayes 
and 21 nays.

 
------------------------------------------------------------------------
 Name &                      Answer    Name &                    Answer
 State     Aye       No     Present    State     Aye      No     Present
------------------------------------------------------------------------
SPRATT               X                RYAN        X
 (SC)                                  (WI)
 (Chair                                (Ranki
 man)                                  ng)
------------------------------------------------------------------------
SCHWART              X                HENSARL     X
 Z (PA)                                ING
                                       (TX)
------------------------------------------------------------------------
KAPTUR               X                GARRETT     X
 (OH)                                  (NJ)
------------------------------------------------------------------------
BECERRA              X                DIAZ-BA     X
 (CA)                                  LART
                                       (FL)
------------------------------------------------------------------------
DOGGETT              X                SIMPSON     X
 (TX)                                  (ID)
------------------------------------------------------------------------
BLUMENA              X                McHENRY     X
 UER                                   (NC)
 (OR)
------------------------------------------------------------------------
BERRY                X                MACK        X
 (AR)                                  (FL)
------------------------------------------------------------------------
BOYD        X                         CAMPBEL     X
 (FL)                                  L (CA)
------------------------------------------------------------------------
McGOVER              X                JORDAN      X
 N (MA)                                (OH)
------------------------------------------------------------------------
TSONGAS              X                LUMMIS      X
 (MA)                                  (WY)
------------------------------------------------------------------------
ETHERID              X                AUSTRIA     X
 GE                                    (OH)
 (NC)
------------------------------------------------------------------------
McCOLLU              X                ADERHOL     X
 M (MN)                                T (AL)
------------------------------------------------------------------------
YARMUTH              X                NUNES       X
 (KY)                                  (CA)
------------------------------------------------------------------------
ANDREWS              X                HARPER      X
 (NJ)                                  (MS)
------------------------------------------------------------------------
DeLAURO              X                LATTA       X
 (CT)                                  (OH)
------------------------------------------------------------------------
EDWARDS     X                         .......
 (TX)
------------------------------------------------------------------------
SCOTT                X                .......
 (VA)
------------------------------------------------------------------------
LANGEVI              X                .......
 N (RI)
------------------------------------------------------------------------
LARSEN               X     .........
 (WA)
------------------------------------------------------------------------
BISHOP               X     .........
 (NY)
------------------------------------------------------------------------
MOORE,               X     .........
 GWEN
 (WI)
------------------------------------------------------------------------
CONNOLL              X     .........
 Y (VA)
------------------------------------------------------------------------
SCHRADE                    .........
 R (OR)
------------------------------------------------------------------------
MOORE,               X
 DENNIS
 (KS)
------------------------------------------------------------------------

    7. A motion was offered by Representative McCollum 
directing the Chairman to request that the rule for 
consideration of the Reconciliation Act of 2010 make in order 
an amendment to add new health insurance protections 
prohibiting annual and lifetime limits on the amount of care 
insurance covers.
    The motion was agreed to by a roll call vote of 25 ayes and 
11 nays.

 
------------------------------------------------------------------------
 Name &                      Answer    Name &                    Answer
 State     Aye       No     Present    State     Aye      No     Present
------------------------------------------------------------------------
SPRATT      X                         RYAN                 X
 (SC)                                  (WI)
 (Chair                                (Ranki
 man)                                  ng)
------------------------------------------------------------------------
SCHWART     X                         HENSARL              X
 Z (PA)                                ING
                                       (TX)
------------------------------------------------------------------------
KAPTUR      X                         GARRETT              X
 (OH)                                  (NJ)
------------------------------------------------------------------------
BECERRA                               DIAZ-BA     X
 (CA)                                  LART
                                       (FL)
------------------------------------------------------------------------
DOGGETT     X                         SIMPSON     X
 (TX)                                  (ID)
------------------------------------------------------------------------
BLUMENA     X                         McHENRY              X
 UER                                   (NC)
 (OR)
------------------------------------------------------------------------
BERRY       X                         MACK                 X
 (AR)                                  (FL)
------------------------------------------------------------------------
BOYD        X                         CAMPBEL              X
 (FL)                                  L (CA)
------------------------------------------------------------------------
McGOVER     X                         JORDAN               X
 N (MA)                                (OH)
------------------------------------------------------------------------
TSONGAS     X                         LUMMIS               X
 (MA)                                  (WY)
------------------------------------------------------------------------
ETHERID     X                         AUSTRIA              X
 GE                                    (OH)
 (NC)
------------------------------------------------------------------------
McCOLLU     X                         ADERHOL              X
 M (MN)                                T (AL)
------------------------------------------------------------------------
YARMUTH     X                         NUNES
 (KY)                                  (CA)
------------------------------------------------------------------------
ANDREWS     X                         HARPER      X
 (NJ)                                  (MS)
------------------------------------------------------------------------
DeLAURO     X                         LATTA                X
 (CT)                                  (OH)
------------------------------------------------------------------------
EDWARDS     X                         .......
 (TX)
------------------------------------------------------------------------
SCOTT       X                         .......
 (VA)
------------------------------------------------------------------------
LANGEVI     X                         .......
 N (RI)
------------------------------------------------------------------------
LARSEN      X              .........
 (WA)
------------------------------------------------------------------------
BISHOP      X              .........
 (NY)
------------------------------------------------------------------------
MOORE,      X              .........
 GWEN
 (WI)
------------------------------------------------------------------------
CONNOLL     X              .........
 Y (VA)
------------------------------------------------------------------------
SCHRADE                    .........
 R (OR)
------------------------------------------------------------------------
MOORE,      X
 DENNIS
 (KS)
------------------------------------------------------------------------

    8. A motion was offered by Representative Lummis directing 
the Chairman to request that the rule for consideration of the 
Reconciliation Act of 2010 make in order an amendment to 
prohibit the government from controlling health plan choices 
and restricting competition among health plans and delete any 
provision, including section 124 of H.R. 3590, that gives the 
Secretary of the Department of Health and Human Services and a 
new Health Benefits Advisory Committee unprecedented power to 
create and change requirements for ``acceptable coverage.''
    The motion was not agreed to by a roll call vote of 15 ayes 
and 20 nays.

 
------------------------------------------------------------------------
 Name &                      Answer    Name &                    Answer
 State     Aye       No     Present    State     Aye      No     Present
------------------------------------------------------------------------
SPRATT               X                RYAN        X
 (SC)                                  (WI)
 (Chair                                (Ranki
 man)                                  ng)
------------------------------------------------------------------------
SCHWART              X                HENSARL     X
 Z (PA)                                ING
                                       (TX)
------------------------------------------------------------------------
KAPTUR               X                GARRETT     X
 (OH)                                  (NJ)
------------------------------------------------------------------------
BECERRA                               DIAZ-BA     X
 (CA)                                  LART
                                       (FL)
------------------------------------------------------------------------
DOGGETT              X                SIMPSON     X
 (TX)                                  (ID)
------------------------------------------------------------------------
BLUMENA              X                McHENRY     X
 UER                                   (NC)
 (OR)
------------------------------------------------------------------------
BERRY                X                MACK        X
 (AR)                                  (FL)
------------------------------------------------------------------------
BOYD                 X                CAMPBEL     X
 (FL)                                  L (CA)
------------------------------------------------------------------------
McGOVER              X                JORDAN      X
 N (MA)                                (OH)
------------------------------------------------------------------------
TSONGAS              X                LUMMIS      X
 (MA)                                  (WY)
------------------------------------------------------------------------
ETHERID              X                AUSTRIA     X
 GE                                    (OH)
 (NC)
------------------------------------------------------------------------
McCOLLU              X                ADERHOL     X
 M (MN)                                T (AL)
------------------------------------------------------------------------
YARMUTH              X                NUNES       X
 (KY)                                  (CA)
------------------------------------------------------------------------
ANDREWS              X                HARPER      X
 (NJ)                                  (MS)
------------------------------------------------------------------------
DeLAURO              X                LATTA       X
 (CT)                                  (OH)
------------------------------------------------------------------------
EDWARDS              X                .......
 (TX)
------------------------------------------------------------------------
SCOTT                X                .......
 (VA)
------------------------------------------------------------------------
LANGEVI                               .......
 N (RI)
------------------------------------------------------------------------
LARSEN               X     .........
 (WA)
------------------------------------------------------------------------
BISHOP               X     .........
 (NY)
------------------------------------------------------------------------
MOORE,               X     .........
 GWEN
 (WI)
------------------------------------------------------------------------
CONNOLL              X     .........
 Y (VA)
------------------------------------------------------------------------
SCHRADE                    .........
 R (OR)
------------------------------------------------------------------------
MOORE,
 DENNIS
 (KS)
------------------------------------------------------------------------

    9. A motion was offered by Representative DeLauro directing 
the Chairman to request that the rule for consideration of the 
Reconciliation Act of 2010 make in order an amendment to create 
a Health Insurance Rate Authority to provide needed oversight 
of health insurance rates.
    The motion was agreed to by a roll call vote of 21 ayes and 
15 nays.

 
------------------------------------------------------------------------
 Name &                      Answer    Name &                    Answer
 State     Aye       No     Present    State     Aye      No     Present
------------------------------------------------------------------------
SPRATT      X                         RYAN                 X
 (SC)                                  (WI)
 (Chair                                (Ranki
 man)                                  ng)
------------------------------------------------------------------------
SCHWART     X                         HENSARL              X
 Z (PA)                                ING
                                       (TX)
------------------------------------------------------------------------
KAPTUR      X                         GARRETT              X
 (OH)                                  (NJ)
------------------------------------------------------------------------
BECERRA                               DIAZ-BA              X
 (CA)                                  LART
                                       (FL)
------------------------------------------------------------------------
DOGGETT     X                         SIMPSON              X
 (TX)                                  (ID)
------------------------------------------------------------------------
BLUMENA     X                         McHENRY              X
 UER                                   (NC)
 (OR)
------------------------------------------------------------------------
BERRY       X                         MACK                 X
 (AR)                                  (FL)
------------------------------------------------------------------------
BOYD        X                         CAMPBEL              X
 (FL)                                  L (CA)
------------------------------------------------------------------------
McGOVER     X                         JORDAN               X
 N (MA)                                (OH)
------------------------------------------------------------------------
TSONGAS     X                         LUMMIS               X
 (MA)                                  (WY)
------------------------------------------------------------------------
ETHERID     X                         AUSTRIA              X
 GE                                    (OH)
 (NC)
------------------------------------------------------------------------
McCOLLU     X                         ADERHOL              X
 M (MN)                                T (AL)
------------------------------------------------------------------------
YARMUTH     X                         NUNES                X
 (KY)                                  (CA)
------------------------------------------------------------------------
ANDREWS     X                         HARPER               X
 (NJ)                                  (MS)
------------------------------------------------------------------------
DeLAURO     X                         LATTA                X
 (CT)                                  (OH)
------------------------------------------------------------------------
EDWARDS     X                         .......
 (TX)
------------------------------------------------------------------------
SCOTT       X                         .......
 (VA)
------------------------------------------------------------------------
LANGEVI                               .......
 N (RI)
------------------------------------------------------------------------
LARSEN      X              .........
 (WA)
------------------------------------------------------------------------
BISHOP      X              .........
 (NY)
------------------------------------------------------------------------
MOORE,      X              .........
 GWEN
 (WI)
------------------------------------------------------------------------
CONNOLL     X              .........
 Y (VA)
------------------------------------------------------------------------
SCHRADE                    .........
 R (OR)
------------------------------------------------------------------------
MOORE,      X
 DENNIS
 (KS)
------------------------------------------------------------------------

    10. A motion was offered by Representative Jordan directing 
the Chairman to request that the rule for consideration of the 
Reconciliation Act of 2010 make in order an amendment to add 
the language of the amendment offered by Representative Bart 
Stupak on November 11, 2009 and numbered House Amendment 509 to 
H. R. 3962, the Affordable Health Care for America Act, to 
prohibit federal funding of abortions.
    The motion was not agreed to by a roll call vote of 17 ayes 
and 19 nays.

 
------------------------------------------------------------------------
 Name &                      Answer    Name &                    Answer
 State     Aye       No     Present    State     Aye      No     Present
------------------------------------------------------------------------
SPRATT               X                RYAN        X
 (SC)                                  (WI)
 (Chair                                (Ranki
 man)                                  ng)
------------------------------------------------------------------------
SCHWART              X                HENSARL     X
 Z (PA)                                ING
                                       (TX)
------------------------------------------------------------------------
KAPTUR      X                         GARRETT
 (OH)                                  (NJ)
------------------------------------------------------------------------
BECERRA                               DIAZ-BA     X
 (CA)                                  LART
                                       (FL)
------------------------------------------------------------------------
DOGGETT              X                SIMPSON     X
 (TX)                                  (ID)
------------------------------------------------------------------------
BLUMENA              X                McHENRY     X
 UER                                   (NC)
 (OR)
------------------------------------------------------------------------
BERRY       X                         MACK        X
 (AR)                                  (FL)
------------------------------------------------------------------------
BOYD                 X                CAMPBEL     X
 (FL)                                  L (CA)
------------------------------------------------------------------------
McGOVER              X                JORDAN      X
 N (MA)                                (OH)
------------------------------------------------------------------------
TSONGAS              X                LUMMIS      X
 (MA)                                  (WY)
------------------------------------------------------------------------
ETHERID              X                AUSTRIA     X
 GE                                    (OH)
 (NC)
------------------------------------------------------------------------
McCOLLU              X                ADERHOL     X
 M (MN)                                T (AL)
------------------------------------------------------------------------
YARMUTH              X                NUNES       X
 (KY)                                  (CA)
------------------------------------------------------------------------
ANDREWS              X                HARPER      X
 (NJ)                                  (MS)
------------------------------------------------------------------------
DeLAURO              X                LATTA       X
 (CT)                                  (OH)
------------------------------------------------------------------------
EDWARDS              X                .......
 (TX)
------------------------------------------------------------------------
SCOTT                X                .......
 (VA)
------------------------------------------------------------------------
LANGEVI     X                         .......
 N (RI)
------------------------------------------------------------------------
LARSEN               X     .........
 (WA)
------------------------------------------------------------------------
BISHOP               X     .........
 (NY)
------------------------------------------------------------------------
MOORE,               X     .........
 GWEN
 (WI)
------------------------------------------------------------------------
CONNOLL              X     .........
 Y (VA)
------------------------------------------------------------------------
SCHRADE                    .........
 R (OR)
------------------------------------------------------------------------
MOORE,               X
 DENNIS
 (KS)
------------------------------------------------------------------------

    11. A motion was offered by Representative Connolly 
directing the Chairman to request that the rule for 
consideration of the Reconciliation Act of 2010 make in order 
an amendment to ensure that comprehensive health reform reduces 
the deficit by more than $100 billion in the next ten years and 
up to one trillion dollars in the decade after 2019.
    The motion was agreed to by a voice vote.
    12. A motion was offered by Representative Garrett 
directing the Chairman to request that the rule for 
consideration of the Reconciliation Act of 2010 make in order 
an amendment that protects American jobs and families by 
striking tax increases and mandates that would hinder job 
creation and reduce workers' and families' income during a 
period of high unemployment and economic weakness.
    The motion was not agreed to by a roll call vote of 14 ayes 
and 21 nays.

 
------------------------------------------------------------------------
 Name &                      Answer    Name &                    Answer
 State     Aye       No     Present    State     Aye      No     Present
------------------------------------------------------------------------
SPRATT               X                RYAN        X
 (SC)                                  (WI)
 (Chair                                (Ranki
 man)                                  ng)
------------------------------------------------------------------------
SCHWART              X                HENSARL     X
 Z (PA)                                ING
                                       (TX)
------------------------------------------------------------------------
KAPTUR               X                GARRETT     X
 (OH)                                  (NJ)
------------------------------------------------------------------------
BECERRA              X                DIAZ-BA     X
 (CA)                                  LART
                                       (FL)
------------------------------------------------------------------------
DOGGETT              X                SIMPSON     X
 (TX)                                  (ID)
------------------------------------------------------------------------
BLUMENA              X                McHENRY     X
 UER                                   (NC)
 (OR)
------------------------------------------------------------------------
BERRY                X                MACK        X
 (AR)                                  (FL)
------------------------------------------------------------------------
BOYD                 X                CAMPBEL     X
 (FL)                                  L (CA)
------------------------------------------------------------------------
McGOVER              X                JORDAN      X
 N (MA)                                (OH)
------------------------------------------------------------------------
TSONGAS              X                LUMMIS      X
 (MA)                                  (WY)
------------------------------------------------------------------------
ETHERID              X                AUSTRIA     X
 GE                                    (OH)
 (NC)
------------------------------------------------------------------------
McCOLLU              X                ADERHOL
 M (MN)                                T (AL)
------------------------------------------------------------------------
YARMUTH              X                NUNES
 (KY)                                  (CA)
------------------------------------------------------------------------
ANDREWS              X                HARPER      X
 (NJ)                                  (MS)
------------------------------------------------------------------------
DeLAURO              X                LATTA       X
 (CT)                                  (OH)
------------------------------------------------------------------------
EDWARDS     X                         .......
 (TX)
------------------------------------------------------------------------
SCOTT                X                .......
 (VA)
------------------------------------------------------------------------
LANGEVI                               .......
 N (RI)
------------------------------------------------------------------------
LARSEN               X     .........
 (WA)
------------------------------------------------------------------------
BISHOP               X     .........
 (NY)
------------------------------------------------------------------------
MOORE,               X     .........
 GWEN
 (WI)
------------------------------------------------------------------------
CONNOLL              X     .........
 Y (VA)
------------------------------------------------------------------------
SCHRADE                    .........
 R (OR)
------------------------------------------------------------------------
MOORE,               X
 DENNIS
 (KS)
------------------------------------------------------------------------

    13. A motion was offered by Representative Boyd directing 
the Chairman to request that the rule for consideration of the 
Reconciliation Act of 2010 make in order an amendment to 
replace the relevant sections on student loan reform with the 
terms of the Student Loan Community Proposal that would not 
require the transfer of the nation's universities to the Direct 
Loan program but would continue to permit new loans to be 
originated for a fee by designated private lenders thereby 
preserving the jobs and infrastructure throughout the country 
that are currently involved in this enterprise.
    The motion was not agreed to by a roll call vote of 4 ayes 
and 32 nays.

 
------------------------------------------------------------------------
 Name &                      Answer    Name &                    Answer
 State     Aye       No     Present    State     Aye      No     Present
------------------------------------------------------------------------
SPRATT               X                RYAN                 X
 (SC)                                  (WI)
 (Chair                                (Ranki
 man)                                  ng)
------------------------------------------------------------------------
SCHWART              X                HENSARL              X
 Z (PA)                                ING
                                       (TX)
------------------------------------------------------------------------
KAPTUR               X                GARRETT              X
 (OH)                                  (NJ)
------------------------------------------------------------------------
BECERRA              X                DIAZ-BA     X
 (CA)                                  LART
                                       (FL)
------------------------------------------------------------------------
DOGGETT              X                SIMPSON              X
 (TX)                                  (ID)
------------------------------------------------------------------------
BLUMENA              X                McHENRY              X
 UER                                   (NC)
 (OR)
------------------------------------------------------------------------
BERRY                X                MACK                 X
 (AR)                                  (FL)
------------------------------------------------------------------------
BOYD        X                         CAMPBEL     X
 (FL)                                  L (CA)
------------------------------------------------------------------------
McGOVER              X                JORDAN               X
 N (MA)                                (OH)
------------------------------------------------------------------------
TSONGAS              X                LUMMIS               X
 (MA)                                  (WY)
------------------------------------------------------------------------
ETHERID              X                AUSTRIA              X
 GE                                    (OH)
 (NC)
------------------------------------------------------------------------
McCOLLU              X                ADERHOL
 M (MN)                                T (AL)
------------------------------------------------------------------------
YARMUTH              X                NUNES
 (KY)                                  (CA)
------------------------------------------------------------------------
ANDREWS              X                HARPER               X
 (NJ)                                  (MS)
------------------------------------------------------------------------
DeLAURO              X                LATTA                X
 (CT)                                  (OH)
------------------------------------------------------------------------
EDWARDS     X                         .......
 (TX)
------------------------------------------------------------------------
SCOTT                X                .......
 (VA)
------------------------------------------------------------------------
LANGEVI              X                .......
 N (RI)
------------------------------------------------------------------------
LARSEN               X     .........
 (WA)
------------------------------------------------------------------------
BISHOP               X     .........
 (NY)
------------------------------------------------------------------------
MOORE,               X     .........
 GWEN
 (WI)
------------------------------------------------------------------------
CONNOLL              X     .........
 Y (VA)
------------------------------------------------------------------------
SCHRADE                    .........
 R (OR)
------------------------------------------------------------------------
MOORE,               X
 DENNIS
 (KS)
------------------------------------------------------------------------

    14. A motion was offered by Representative Garrett 
directing the Chairman to request that the rule for 
consideration of the Reconciliation Act of 2010 make in order 
an amendment to make provisions of the health reform 
legislation contingent upon the issuance of a report by the 
Centers on Medicare and Medicaid Services Office of the Actuary 
stating that such legislation will not increase national health 
care expenditures or the federal commitment to health care and 
will succeed in bending the ``health care cost curve'' downward 
by lowering the projection of such expenditures.
    The motion was not agreed to by a roll call vote of 13 ayes 
and 23 nays.

 
------------------------------------------------------------------------
 Name &                      Answer    Name &                    Answer
 State     Aye       No     Present    State     Aye      No     Present
------------------------------------------------------------------------
SPRATT               X                RYAN        X
 (SC)                                  (WI)
 (Chair                                (Ranki
 man)                                  ng)
------------------------------------------------------------------------
SCHWART              X                HENSARL     X
 Z (PA)                                ING
                                       (TX)
------------------------------------------------------------------------
KAPTUR               X                GARRETT     X
 (OH)                                  (NJ)
------------------------------------------------------------------------
BECERRA              X                DIAZ-BA     X
 (CA)                                  LART
                                       (FL)
------------------------------------------------------------------------
DOGGETT              X                SIMPSON     X
 (TX)                                  (ID)
------------------------------------------------------------------------
BLUMENA              X                McHENRY     X
 UER                                   (NC)
 (OR)
------------------------------------------------------------------------
BERRY                X                MACK        X
 (AR)                                  (FL)
------------------------------------------------------------------------
BOYD                 X                CAMPBEL     X
 (FL)                                  L (CA)
------------------------------------------------------------------------
McGOVER              X                JORDAN      X
 N (MA)                                (OH)
------------------------------------------------------------------------
TSONGAS              X                LUMMIS      X
 (MA)                                  (WY)
------------------------------------------------------------------------
ETHERID              X                AUSTRIA     X
 GE                                    (OH)
 (NC)
------------------------------------------------------------------------
McCOLLU              X                ADERHOL
 M (MN)                                T (AL)
------------------------------------------------------------------------
YARMUTH              X                NUNES
 (KY)                                  (CA)
------------------------------------------------------------------------
ANDREWS              X                HARPER      X
 (NJ)                                  (MS)
------------------------------------------------------------------------
DeLAURO              X                LATTA       X
 (CT)                                  (OH)
------------------------------------------------------------------------
EDWARDS              X                .......
 (TX)
------------------------------------------------------------------------
SCOTT                X                .......
 (VA)
------------------------------------------------------------------------
LANGEVI              X                .......
 N (RI)
------------------------------------------------------------------------
LARSEN               X     .........
 (WA)
------------------------------------------------------------------------
BISHOP               X     .........
 (NY)
------------------------------------------------------------------------
MOORE,               X     .........
 GWEN
 (WI)
------------------------------------------------------------------------
CONNOLL              X     .........
 Y (VA)
------------------------------------------------------------------------
SCHRADE                    .........
 R (OR)
------------------------------------------------------------------------
MOORE,               X
 DENNIS
 (KS)
------------------------------------------------------------------------

    15. A motion was offered by Representative Bishop directing 
the Chairman to request that the rule for consideration of the 
Reconciliation Act of 2010 make in order an amendment to ensure 
that vital financial assistance is provided to more than 8 
million college students through increases in the maximum Pell 
grant without adding to the federal budget deficit.
    The motion was agreed to by a roll call vote of 22 ayes and 
15 nays.

 
------------------------------------------------------------------------
 Name &                      Answer    Name &                    Answer
 State     Aye       No     Present    State     Aye      No     Present
------------------------------------------------------------------------
SPRATT      X                         RYAN                 X
 (SC)                                  (WI)
 (Chair                                (Ranki
 man)                                  ng)
------------------------------------------------------------------------
SCHWART     X                         HENSARL              X
 Z (PA)                                ING
                                       (TX)
------------------------------------------------------------------------
KAPTUR      X                         GARRETT              X
 (OH)                                  (NJ)
------------------------------------------------------------------------
BECERRA     X                         DIAZ-BA              X
 (CA)                                  LART
                                       (FL)
------------------------------------------------------------------------
DOGGETT     X                         SIMPSON              X
 (TX)                                  (ID)
------------------------------------------------------------------------
BLUMENA     X                         McHENRY              X
 UER                                   (NC)
 (OR)
------------------------------------------------------------------------
BERRY       X                         MACK                 X
 (AR)                                  (FL)
------------------------------------------------------------------------
BOYD                 X                CAMPBEL              X
 (FL)                                  L (CA)
------------------------------------------------------------------------
McGOVER     X                         JORDAN               X
 N (MA)                                (OH)
------------------------------------------------------------------------
TSONGAS     X                         LUMMIS               X
 (MA)                                  (WY)
------------------------------------------------------------------------
ETHERID     X                         AUSTRIA              X
 GE                                    (OH)
 (NC)
------------------------------------------------------------------------
McCOLLU     X                         ADERHOL              X
 M (MN)                                T (AL)
------------------------------------------------------------------------
YARMUTH     X                         NUNES
 (KY)                                  (CA)
------------------------------------------------------------------------
ANDREWS     X                         HARPER               X
 (NJ)                                  (MS)
------------------------------------------------------------------------
DeLAURO     X                         LATTA                X
 (CT)                                  (OH)
------------------------------------------------------------------------
EDWARDS     X                         .......
 (TX)
------------------------------------------------------------------------
SCOTT       X                         .......
 (VA)
------------------------------------------------------------------------
LANGEVI     X                         .......
 N (RI)
------------------------------------------------------------------------
LARSEN      X              .........
 (WA)
------------------------------------------------------------------------
BISHOP      X              .........
 (NY)
------------------------------------------------------------------------
MOORE,      X              .........
 GWEN
 (WI)
------------------------------------------------------------------------
CONNOLL     X              .........
 Y (VA)
------------------------------------------------------------------------
SCHRADE                    .........
 R (OR)
------------------------------------------------------------------------
MOORE,      X
 DENNIS
 (KS)
------------------------------------------------------------------------

    16. A motion was offered by Representative Simpson 
directing the Chairman to request that the Rules Committee not 
make in order the Reconciliation Act of 2010 or H. R. 3590, the 
Senate-passed health care bill, until a Congressional Budget 
Office estimate of the measures relative to its March 2010 
baseline, including estimates of the budget impact of 
authorization of appropriations in such measures, and the text 
of such reconciliation legislation are made available to 
Members and the public at least 72 hours before being 
considered on the House floor and that there be separate votes 
on each measure.
    The motion was not agreed to by a roll call vote of 16 ayes 
and 21 nays.

 
------------------------------------------------------------------------
 Name &                      Answer    Name &                    Answer
 State     Aye       No     Present    State     Aye      No     Present
------------------------------------------------------------------------
SPRATT               X                RYAN        X
 (SC)                                  (WI)
 (Chair                                (Ranki
 man)                                  ng)
------------------------------------------------------------------------
SCHWART              X                HENSARL     X
 Z (PA)                                ING
                                       (TX)
------------------------------------------------------------------------
KAPTUR               X                GARRETT     X
 (OH)                                  (NJ)
------------------------------------------------------------------------
BECERRA              X                DIAZ-BA     X
 (CA)                                  LART
                                       (FL)
------------------------------------------------------------------------
DOGGETT              X                SIMPSON     X
 (TX)                                  (ID)
------------------------------------------------------------------------
BLUMENA              X                McHENRY     X
 UER                                   (NC)
 (OR)
------------------------------------------------------------------------
BERRY                X                MACK        X
 (AR)                                  (FL)
------------------------------------------------------------------------
BOYD                 X                CAMPBEL     X
 (FL)                                  L (CA)
------------------------------------------------------------------------
McGOVER              X                JORDAN      X
 N (MA)                                (OH)
------------------------------------------------------------------------
TSONGAS              X                LUMMIS      X
 (MA)                                  (WY)
------------------------------------------------------------------------
ETHERID              X                AUSTRIA     X
 GE                                    (OH)
 (NC)
------------------------------------------------------------------------
McCOLLU              X                ADERHOL     X
 M (MN)                                T (AL)
------------------------------------------------------------------------
YARMUTH              X                NUNES       X
 (KY)                                  (CA)
------------------------------------------------------------------------
ANDREWS              X                HARPER      X
 (NJ)                                  (MS)
------------------------------------------------------------------------
DeLAURO              X                LATTA       X
 (CT)                                  (OH)
------------------------------------------------------------------------
EDWARDS     X                         .......
 (TX)
------------------------------------------------------------------------
SCOTT                X                .......
 (VA)
------------------------------------------------------------------------
LANGEVI                               .......
 N (RI)
------------------------------------------------------------------------
LARSEN               X     .........
 (WA)
------------------------------------------------------------------------
BISHOP               X     .........
 (NY)
------------------------------------------------------------------------
MOORE,               X     .........
 GWEN
 (WI)
------------------------------------------------------------------------
CONNOLL              X     .........
 Y (VA)
------------------------------------------------------------------------
SCHRADE                    .........
 R (OR)
------------------------------------------------------------------------
MOORE,               X
 DENNIS
 (KS)
------------------------------------------------------------------------

    17. A motion was offered by Representative Moore (WI) 
directing the Chairman to request that the rule for 
consideration of the Reconciliation Act of 2010 make in order 
an amendment to ensure small businesses are provided with tax 
credits to support coverage for their workers, increase 
affordability tax credits to families, and reduce cost sharing 
for families with modest income.
    The motion was agreed to by a roll call vote of 21 ayes and 
14 nays.

 
------------------------------------------------------------------------
 Name &                      Answer    Name &                    Answer
 State     Aye       No     Present    State     Aye      No     Present
------------------------------------------------------------------------
SPRATT      X                         RYAN                 X
 (SC)                                  (WI)
 (Chair                                (Ranki
 man)                                  ng)
------------------------------------------------------------------------
SCHWART     X                         HENSARL              X
 Z (PA)                                ING
                                       (TX)
------------------------------------------------------------------------
KAPTUR      X                         GARRETT
 (OH)                                  (NJ)
------------------------------------------------------------------------
BECERRA     X                         DIAZ-BA              X
 (CA)                                  LART
                                       (FL)
------------------------------------------------------------------------
DOGGETT     X                         SIMPSON              X
 (TX)                                  (ID)
------------------------------------------------------------------------
BLUMENA     X                         McHENRY              X
 UER                                   (NC)
 (OR)
------------------------------------------------------------------------
BERRY                                 MACK                 X
 (AR)                                  (FL)
------------------------------------------------------------------------
BOYD        X                         CAMPBEL              X
 (FL)                                  L (CA)
------------------------------------------------------------------------
McGOVER     X                         JORDAN               X
 N (MA)                                (OH)
------------------------------------------------------------------------
TSONGAS     X                         LUMMIS               X
 (MA)                                  (WY)
------------------------------------------------------------------------
ETHERID     X                         AUSTRIA              X
 GE                                    (OH)
 (NC)
------------------------------------------------------------------------
McCOLLU     X                         ADERHOL              X
 M (MN)                                T (AL)
------------------------------------------------------------------------
YARMUTH     X                         NUNES                X
 (KY)                                  (CA)
------------------------------------------------------------------------
ANDREWS     X                         HARPER               X
 (NJ)                                  (MS)
------------------------------------------------------------------------
DeLAURO     X                         LATTA                X
 (CT)                                  (OH)
------------------------------------------------------------------------
EDWARDS     X                         .......
 (TX)
------------------------------------------------------------------------
SCOTT       X                         .......
 (VA)
------------------------------------------------------------------------
LANGEVI                               .......
 N (RI)
------------------------------------------------------------------------
LARSEN      X              .........
 (WA)
------------------------------------------------------------------------
BISHOP      X              .........
 (NY)
------------------------------------------------------------------------
MOORE,      X              .........
 GWEN
 (WI)
------------------------------------------------------------------------
CONNOLL     X              .........
 Y (VA)
------------------------------------------------------------------------
SCHRADE                    .........
 R (OR)
------------------------------------------------------------------------
MOORE,      X
 DENNIS
 (KS)
------------------------------------------------------------------------

    18. A motion was offered by Representative McHenry 
directing the Chairman to request that the rule for 
consideration of the Reconciliation Act of 2010 make in order 
an amendment to ensure that the federal mandates do not cause 
an increase in projected health care insurance premiums.
    The motion was not agreed to by a roll call vote of 16 ayes 
and 22 nays.

 
------------------------------------------------------------------------
 Name &                      Answer    Name &                    Answer
 State     Aye       No     Present    State     Aye      No     Present
------------------------------------------------------------------------
SPRATT               X                RYAN        X
 (SC)                                  (WI)
 (Chair                                (Ranki
 man)                                  ng)
------------------------------------------------------------------------
SCHWART              X                HENSARL     X
 Z (PA)                                ING
                                       (TX)
------------------------------------------------------------------------
KAPTUR               X                GARRETT     X
 (OH)                                  (NJ)
------------------------------------------------------------------------
BECERRA              X                DIAZ-BA     X
 (CA)                                  LART
                                       (FL)
------------------------------------------------------------------------
DOGGETT              X                SIMPSON     X
 (TX)                                  (ID)
------------------------------------------------------------------------
BLUMENA              X                McHENRY     X
 UER                                   (NC)
 (OR)
------------------------------------------------------------------------
BERRY                X                MACK        X
 (AR)                                  (FL)
------------------------------------------------------------------------
BOYD                 X                CAMPBEL     X
 (FL)                                  L (CA)
------------------------------------------------------------------------
McGOVER              X                JORDAN      X
 N (MA)                                (OH)
------------------------------------------------------------------------
TSONGAS              X                LUMMIS      X
 (MA)                                  (WY)
------------------------------------------------------------------------
ETHERID              X                AUSTRIA     X
 GE                                    (OH)
 (NC)
------------------------------------------------------------------------
McCOLLU              X                ADERHOL     X
 M (MN)                                T (AL)
------------------------------------------------------------------------
YARMUTH              X                NUNES       X
 (KY)                                  (CA)
------------------------------------------------------------------------
ANDREWS              X                HARPER      X
 (NJ)                                  (MS)
------------------------------------------------------------------------
DeLAURO              X                LATTA       X
 (CT)                                  (OH)
------------------------------------------------------------------------
EDWARDS     X                         .......
 (TX)
------------------------------------------------------------------------
SCOTT                X                .......
 (VA)
------------------------------------------------------------------------
LANGEVI              X                .......
 N (RI)
------------------------------------------------------------------------
LARSEN               X     .........
 (WA)
------------------------------------------------------------------------
BISHOP               X     .........
 (NY)
------------------------------------------------------------------------
MOORE,               X     .........
 GWEN
 (WI)
------------------------------------------------------------------------
CONNOLL              X     .........
 Y (VA)
------------------------------------------------------------------------
SCHRADE                    .........
 R (OR)
------------------------------------------------------------------------
MOORE,               X
 DENNIS
 (KS)
------------------------------------------------------------------------

    19. A motion was offered by Representative Tsongas 
directing the Chairman to request that the rule for 
consideration of the Reconciliation Act of 2010 make in order 
an amendment to ensure women are not denied full health 
insurance coverage or maternity coverage due to domestic 
violence, caesarian section, or pregnancy.
    The motion was agreed to by voice vote.
    20. A motion was offered by Representative Latta directing 
the Chairman to request that the rule for consideration of the 
Reconciliation Act of 2010 make in order an amendment to 
eliminate the creation or expansion of government bureaucracies 
in the health reform legislation.
    The motion was not agreed to by a roll call vote of 15 ayes 
and 23 nays.

 
------------------------------------------------------------------------
 Name &                      Answer    Name &                    Answer
 State     Aye       No     Present    State     Aye      No     Present
------------------------------------------------------------------------
SPRATT               X                RYAN        X
 (SC)                                  (WI)
 (Chair                                (Ranki
 man)                                  ng)
------------------------------------------------------------------------
SCHWART              X                HENSARL     X
 Z (PA)                                ING
                                       (TX)
------------------------------------------------------------------------
KAPTUR               X                GARRETT     X
 (OH)                                  (NJ)
------------------------------------------------------------------------
BECERRA              X                DIAZ-BA     X
 (CA)                                  LART
                                       (FL)
------------------------------------------------------------------------
DOGGETT              X                SIMPSON     X
 (TX)                                  (ID)
------------------------------------------------------------------------
BLUMENA              X                McHENRY     X
 UER                                   (NC)
 (OR)
------------------------------------------------------------------------
BERRY                X                MACK        X
 (AR)                                  (FL)
------------------------------------------------------------------------
BOYD                 X                CAMPBEL     X
 (FL)                                  L (CA)
------------------------------------------------------------------------
McGOVER              X                JORDAN      X
 N (MA)                                (OH)
------------------------------------------------------------------------
TSONGAS              X                LUMMIS      X
 (MA)                                  (WY)
------------------------------------------------------------------------
ETHERID              X                AUSTRIA     X
 GE                                    (OH)
 (NC)
------------------------------------------------------------------------
McCOLLU              X                ADERHOL     X
 M (MN)                                T (AL)
------------------------------------------------------------------------
YARMUTH              X                NUNES       X
 (KY)                                  (CA)
------------------------------------------------------------------------
ANDREWS              X                HARPER      X
 (NJ)                                  (MS)
------------------------------------------------------------------------
DeLAURO              X                LATTA       X
 (CT)                                  (OH)
------------------------------------------------------------------------
EDWARDS              X                .......
 (TX)
------------------------------------------------------------------------
SCOTT                X                .......
 (VA)
------------------------------------------------------------------------
LANGEVI              X                .......
 N (RI)
------------------------------------------------------------------------
LARSEN               X     .........
 (WA)
------------------------------------------------------------------------
BISHOP               X     .........
 (NY)
------------------------------------------------------------------------
MOORE,               X     .........
 GWEN
 (WI)
------------------------------------------------------------------------
CONNOLL              X     .........
 Y (VA)
------------------------------------------------------------------------
SCHRADE                    .........
 R (OR)
------------------------------------------------------------------------
MOORE,               X
 DENNIS
 (KS)
------------------------------------------------------------------------

    21. A motion was offered by Representative Scott directing 
the Chairman to request that the rule for consideration of the 
Reconciliation Act of 2010 make in order an amendment to 
prohibit the privatization or conversion into vouchers of 
federal benefits provided by Medicare, Medicaid, the Children's 
Health Insurance Program, TRICARE, and veterans health care.
    The motion was agreed to by voice vote.
    Chairman Spratt adjourned the Committee.

     Views of the Members of Committees Submitting Reconciliation 
                            Recommendations

    Clause 2(c) of rule XIII of the Rules of the House of 
Representatives requires each report by a committee on a public 
matter to include any additional, minority, supplemental or 
dissenting views submitted pursuant to clause 2(l) of rule XI 
by one or more members of the committee. In addition, this 
report includes such views from members of committees 
submitting reconciliation recommendations pursuant to S. Con. 
Res. 13.


                                   Paul Ryan, Ranking Member.
                                   Jeb Hensarling, Vice Ranking Member.
                                   Scott Garrett.
                                   Mario Diaz-Balart.
                                   Mike Simpson.
                                   Patrick McHenry.
                                   Connie Mack.
                                   John Campbell.
                                   Jim Jordan.
                                   Cynthia Lummis.
                                   Steve Austria.
                                   Robert B. Aderholt.
                                   Devin Nunes.
                                   Gregg Harper
                                   Bob Latta.

                                  
