To provide for certain public-private competition requirements.

TEXT OF AMENDMENTS

______

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

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

SEC. 115. M4 CARBINE RIFLE.

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

SA 3049. Mr. SANDERS (for himself, Mr. Byrd, Mr. Brown, and Mr.
Feingold) submitted an amendment intended to be proposed to amendment
SA 2011 proposed by Mr. Nelson of Nebraska (for Mr. Levin) to the bill
H.R. 1585, to authorize appropriations for fiscal year 2008 for
military activities of the Department of Defense, for military
construction, and for defense activities of the Department of Energy,
to prescribe military personnel strengths for such fiscal year, and for
other purposes; which was ordered to lie on the table; as follows:

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

SEC. 325. GULF WAR ILLNESSES RESEARCH.

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

SA 3050. Mr. ENSIGN submitted an amendment intended to be proposed by
him to the bill H.R. 976, to amend the

[[Page S12158]]

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

At the end of section 2111 of the Social Security Act, as
added by section 112 of the House amendment to the text, add
the following:
``(d) Cover Kids First Implementation Requirement.--
Notwithstanding the preceding subsections of this section, no
funds shall be available under this title for child health
assistance or other health benefits coverage that is provided
for any other adult other than a pregnant woman, and this
title shall be applied with respect to a State without regard
to such subsections, for each fiscal year quarter that begins
prior to the date on which the State demonstrates to the
Secretary that the State has enrolled in the State child
health plan at least 95 percent of the targeted low-income
children who reside in the State.''.
______

SA 3051. Mr. ENSIGN submitted an amendment intended to be proposed by
him to the bill H.R. 976, to amend the XXI of the Social Security Act
to reauthorize the State Children's Health Insurance Program, and for
other purposes; which was ordered to lie on the table; as follows:

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

SEC. 117. COVER LOW-INCOME KIDS FIRST.

Section 2105(c) (42 U.S.C. 1397ee(c)), as amended section
601(a), is amended by adding at the end the following new
paragraph:
``(13) No payments for expenditures for child health
assistance or health benefits coverage for individuals whose
gross family income exceeds 200 percent of the poverty line
unless at least 95 percent of eligible low-income children
enrolled.--Notwithstanding any other provision of this title,
for fiscal years beginning with fiscal year 2008, no payments
shall be made to a State under subsection (a)(1), or any
other provision of this title, for any fiscal year quarter
that begins prior to the date on which the State demonstrates
to the Secretary that the State has enrolled in the State
child health plan at least 95 percent of the low-income
children who reside in the State and are eligible for child
health assistance under this State child health plan with
respect to any expenditures for providing child health
assistance or health benefits coverage for any individual
whose gross family income exceeds 200 percent of the poverty
line.''.
______

SA 3052. Mr. ENSIGN submitted an amendment intended to be proposed by
him to the bill H.R. 976, to amend the XXI of the Social Security Act
to reauthorize the State Children's Health Insurance Program, and for
other purposes; which was ordered to lie on the table; as follows:

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

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

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

SA 3053. Mr. ENSIGN submitted an amendment intended to be proposed by
him to the bill H.R. 976, to amend title XXI of the Social Security Act
to reauthorize the State Children's Health Insurance Program, and for
other purposes; which was ordered to lie on the table; as follows:

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

SEC. 620. PERSONAL EMPOWERMENT THROUGH INDIVIDUAL
RESPONSIBILITY.

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

SA 3054. Mr. ENSIGN submitted an amendment intended to be proposed by
him to the bill H.R. 976, to amend title XXI of the Social Security Act
to reauthorize the State Children's Health Insurance Program, and for
other purposes; which was ordered to lie on the table; as follows:

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

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

______

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

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

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

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

[[Page S12159]]

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

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

``Sec. 9511. Disease Prevention and Treatment Research Trust Fund.''.
______

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

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

SEC. 112. ELIMINATION OF COVERAGE FOR NONPREGNANT ADULTS.

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

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

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

SA 3057. Mr. MARTINEZ submitted an amendment intended to be proposed
by him to the bill H.R. 976, to amend the XXI of the Social Security
Act to reauthorize the State Children's Health Insurance Program, and
for other purposes; which was ordered to lie on the table; as follows:

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

SECTION 1. SHORT TITLE.

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

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

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

[[Page S12160]]

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

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

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

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

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

SEC. 3. GRANTS FOR OUTREACH AND ENROLLMENT.

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

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

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

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

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

[[Page S12161]]

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

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

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

``SEC. 36. CHILD HEALTH INSURANCE COSTS.

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

[[Page S12162]]

time during such year, any benefit is provided to such
individual under--
``(i) chapter 89 of title 5, United States Code, or
``(ii) any medical care program under the Indian Health
Care Improvement Act.
``(D) Insufficient presence in united states.--Such term
shall not include any month during a taxable year with
respect to an individual if such individual is present in the
United States on fewer than 183 days during such year
(determined in accordance with section 7701(b)(7)).
``(c) Qualified Health Insurance.--For purposes of this
section--
``(1) In general.--The term `qualified health insurance'
means insurance which constitutes medical care as defined in
section 213(d) without regard to--
``(A) paragraph (1)(C) thereof, and
``(B) so much of paragraph (1)(D) thereof as relates to
qualified long-term care insurance contracts.
``(2) Exclusion of certain other contracts.--Such term
shall not include insurance if a substantial portion of its
benefits are excepted benefits (as defined in section
9832(c)).
``(d) Designated Accounts.--
``(1) Designated account.--For purposes of this section,
the term `designated account' means any specified account
established and maintained by the provider of an eligible
taxpayer's qualified health insurance--
``(A) which is designated by the taxpayer (in such form and
manner as the Secretary may provide) on the return of tax for
the taxable year, and
``(B) which, under the terms of the account, accepts the
payment described in subparagraph (A) on behalf of the
taxpayer.
``(2) Specified account.--For purposes of this paragraph,
the term `specified account' means--
``(A) any health savings account under section 223 or
Archer MSA under section 220, or
``(B) any health insurance reserve account.
``(3) Health insurance reserve account.--For purposes of
this subsection, the term `health insurance reserve account'
means a trust created or organized in the United States as a
health insurance reserve account exclusively for the purpose
of paying the qualified medical expenses (within the meaning
of section 223(d)(2)) of the account beneficiary (as defined
in section 223(d)(3)), but only if the written governing
instrument creating the trust meets the requirements
described in subparagraphs (B), (C), (D), and (E) of section
223(d)(1). Rules similar to the rules under subsections (g)
and (h) of section 408 shall apply for purposes of this
subparagraph.
``(4) Treatment of payment.--Any payment under subsection
(a)(2) to a designated account shall--
``(A) not be taken into account with respect to any dollar
limitation which applies with respect to contributions to
such account (or to tax benefits with respect to such
contributions),
``(B) be includible in the gross income of an eligible
taxpayer for the taxable year in which the payment is made
(except as provided in subparagraph (C)), and
``(C) be taken into account in determining any deduction or
exclusion from gross income in the same manner as if such
contribution were made by such taxpayer.
``(e) Eligible Taxpayer; Dependent; Child.--For purposes of
this section--
``(1) Eligible taxpayer.--The term `eligible taxpayer'means
any taxpayer whose income exceeds 200 percent but not 300
percent of the poverty level applicable to a family of the
size involved, as determined in accordance with criteria
established by the Director of the Office of Management and
Budget.
``(2) Dependent.--The term `dependent' has the meaning
given such term by section 152. An individual to whom section
152(e) applies shall be treated as a dependent of the
custodial parent for a coverage month unless the custodial
and noncustodial parent provide otherwise.
``(3) Child.--The term `child' means a qualifying child (as
defined in section 152(c).
``(f) Special Rules.--
``(1) Coordination with medical deduction, etc.--Any amount
paid by an eligible taxpayer for insurance to which
subsection (a) applies shall not be taken into account in
computing the amount allowable to such taxpayer as a credit
under section 35 or as a deduction under section 213(a) or
162(l).
``(2) Denial of credit to dependents.--No credit shall be
allowed under this section to any individual with respect to
whom a deduction under section 151 is allowable to another
taxpayer for a taxable year beginning in the calendar year in
which such individual's taxable year begins.
``(3) Married couples must file joint return.--
``(A) In general.--If an eligible taxpayer is married at
the close of the taxable year, the credit shall be allowed
under subsection (a) only if the taxpayer and his spouse file
a joint return for the taxable year.
``(B) Marital status; certain married individuals living
apart.--Rules similar to the rules of paragraphs (3) and (4)
of section 21(e) shall apply for purposes of this paragraph.
``(4) Verification of coverage, etc.--No credit shall be
allowed under this section with respect to any individual
unless such individual's coverage (and such related
information as the Secretary may require) is verified in such
manner as the Secretary may prescribe.
``(5) Insurance which covers other individuals; treatment
of payments.--Rules similar to the rules of paragraphs (7)
and (8) of section 35(g) shall apply for purposes of this
section.
``(6) Election not to claim credit.--This section shall not
apply to an eligible taxpayer for any taxable year if such
taxpayer elects to have this section not apply for such
taxable year.
``(g) Coordination With Advance Payments.--With respect to
any taxable year, the amount which would (but for this
subsection) be allowed as a credit to an eligible taxpayer
under subsection (a) shall be reduced (but not below zero) by
the aggregate amount paid on behalf of such taxpayer under
section 7527A for months beginning in such taxable year.
``(h) Credit Included in Gross Income.--Gross income
includes the amount of the credit allowed to an eligible
taxpayer under this section.''.
(b) Information Reporting.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61 of the Internal Revenue Code of 1986 (relating to
information concerning transactions with other persons) is
amended by inserting after section 6050V the following new
section:

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

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

The written statement required under the preceding sentence
shall be furnished on or before January 31 of the year
following the calendar year for which the return under
subsection (a) is required to be made.
``(e) Returns Which Would Be Required To Be Made by 2 or
More Persons.--Except to the extent provided in regulations
prescribed by the Secretary, in the case of any amount
received by any person on behalf of another person, only the
person first receiving such amount shall be required to make
the return under subsection (a).''.
(2) Assessable penalties.--
(A) Subparagraph (B) of section 6724(d)(1) of such Code
(relating to definitions) is amended by redesignating clauses
(xv) through (xx) as clauses (xvi) through (xxi),
respectively, and by inserting after clause (xi) the
following new clause:
``(xv) section 6050W (relating to returns relating to
payments for qualified health insurance),''.
(B) Paragraph (2) of section 6724(d) of such Code is
amended by striking the period at the end of subparagraph
(CC) and inserting ``, or'' and by adding at the end the
following new subparagraph:
``(DD) section 6050W(d) (relating to returns relating to
payments for qualified health insurance).''.
(3) Clerical amendment.--The table of sections for subpart
B of part III of subchapter A of chapter 61 of such Code is
amended by inserting after the item relating to section 6050V
the following new item:
``Sec. 6050W. Returns relating to payments for qualified health
insurance.''.
(c) Advance Payment of Credit for Purchasers of Qualified
Health Insurance.--
(1) In general.--Chapter 77 of the Internal Revenue Code of
1986 (relating to miscellaneous provisions) is amended by
adding at the end the following new section:

[[Page S12163]]

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

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

``Sec. 7529. Advance payment of health insurance credit for purchasers
of qualified health insurance.''.
(d) Conforming Amendments.--
(1) Paragraph (2) of section 1324(b) of title 31, United
States Code, is amended by inserting before the period ``, or
from section 36 of such Code''.
(2) The table of sections for subpart C of part IV of
subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by striking the last item and inserting the
following new items:

``Sec. 36. Health insurance costs.
``Sec. 37. Overpayments of tax.''.
(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2007.

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

(a) In General.--Section 106 of the Internal Revenue Code
of 1986 (relating to contributions by employer to accident
and health plans) is amended by adding at the end the
following new subsection:
``(e) Limitation on Employer-Provided Health Care
Coverage.--
``(1) In general.--The amount of any exclusion under
subsection (a) for any taxable year with respect to--
``(A) any employer-provided coverage under an accident or
health plan which constitutes medical care, and
``(B) any employer contribution to an Archer MSA or a
health savings account which is treated by subsection (b) or
(d) as employer-provided coverage for medical expenses under
an accident or health plan,
shall not exceed $20,000 per employee.
``(2) Medical care defined.--For purposes of paragraph (1),
the term `medical care' has the meaning given to such term in
section 213(d) determined without regard to--
``(A) paragraph (1)(C) thereof, and
``(B) so much of paragraph (1)(D) thereof as relates to
qualified long-term care insurance.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2007.

SEC. 6. STATE HEALTH REFORM PROJECTS.

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

[[Page S12164]]

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

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

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

[[Page S12165]]

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

[[Page S12166]]

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

SA 3058. Mr. KENNEDY (for himself, Mrs. McCaskill, Mr. Lieberman, Ms.
Mikulski, Mr. Akaka, Mr. Brown, and Mr. Dodd) submitted an amendment
intended to be proposed to amendment SA 2011 proposed by Mr. Nelson of
Nebraska (for Mr. Levin) to the bill H.R. 1585, to authorize
appropriations for fiscal year 2008 for military activities of the
Department of Defense, for military construction, and for defense
activities of the Department of Energy, to prescribe military personnel
strengths for such fiscal year, and for other purposes; which was
ordered to lie on the table; as follows:

At the end of title III, add the following:

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

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

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

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

[[Page S12167]]

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

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

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

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

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

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

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

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

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

[[Page S12168]]

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

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

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

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

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

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

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

Section 2461(a) of title 10, United States Code, is amended
by adding at the end the following new paragraph:
``(4) A military department or defense agency may not be
required to conduct a public-private competition under Office
of Management and Budget Circular A-76 or any other provision
of law at the end of the period specified in the performance
agreement entered into in accordance with this section for
any function of the Department of Defense performed by
Department of Defense civilian employees.''.
______

SA 3059. Mr. ALLARD submitted an amendment intended to be proposed by
him to the bill H.R. 976, to amend title XXI of the Social Security Act
to reauthorize the State Children's Health Insurance Program, and for
other purposes; which was ordered to lie on the table; as follows:

At the appropriate place, insert the following:

SEC. __. TREATMENT OF UNBORN CHILDREN.

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

SA 3060. Mr. ALLARD submitted an amendment intended to be proposed by
him to the bill H.R. 976, to amend title XXI of the Social Security Act
to reauthorize the State Children's Health Insurance Program, and for
other purposes; which was ordered to lie on the table; as follows:

At the appropriate place, add the following:

SEC. __. STANDARDIZATION OF DETERMINATION OF FAMILY INCOME.

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

[[Page S12169]]

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

SA 3061. Mr. CRAPO submitted an amendment intended to be proposed by
him to the bill H.R. 976, to amend title XXI of the Social Security Act
to reauthorize the State Children's Health Insurance Program, and for
other purposes; which was ordered to lie on the table; as follows:

Strike section 613 of the proposed House amendment to the
text of the Act.
______

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

At the appropriate place, insert the following:
``Sec.__. Exclusion from Program.
1. No person who is not a United States citizen is eligible
to receive benefits in this title.
______

SA 3063. Mr. COBURN submitted an amendment intended to be proposed by
him to the bill H.R. 976, to amend title XXI of the Social Security Act
to reauthorize the State Children's Health Insurance Program, and for
other purposes; which was ordered to lie on the table; as follows:

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

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

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

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

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

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

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

[[Page S12170]]

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

SA 3064. Mr. McCONNELL (for himself, Mr. Lott, Mr. Kyl, Mr. DeMint,
Mr. Coburn, Mr. Cornyn, Mr. Bunning, Mr. Isakson, and Mr. Barrasso)
submitted an amendment intended to be proposed to amendment SA 2011
proposed by Mr. Nelson of Nebraska (for Mr. Levin) to the bill H.R.
1585, to authorize appropriations for fiscal year 2008 for military
activities of the Department of Defense, for military construction, and
for defense activities of the Department of Energy, to prescribe
military personnel strengths for such fiscal year, and for other
purposes; which was ordered to lie on the table; as follows:

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

1. SHORT TITLE; TABLE OF CONTENTS.

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

Sec. 1. Short title; table of contents.

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

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

TITLE II--HEALTH INSURANCE MARKETPLACE MODERNIZATION AND AFFORDABILITY

Sec. 200. Short title; purpose.

Subtitle A--Small Business Health Plans

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

Subtitle B--Market Relief

Sec. 211. Market relief.

Subtitle C--Harmonization of Health Insurance Standards

Sec. 221. Health Insurance Standards Harmonization.

TITLE III--HEALTH SAVINGS ACCOUNTS

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

TITLE IV--STUDY

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

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

SEC. 101. 5-YEAR REAUTHORIZATION.

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

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

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

[[Page S12171]]

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

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

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

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

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

[[Page S12172]]

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

SEC. 105. STANDARDIZATION OF DETERMINATION OF FAMILY INCOME.

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

SEC. 106. GRANTS FOR OUTREACH AND ENROLLMENT.

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

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

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

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

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

[[Page S12173]]

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

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

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

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

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

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

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

[[Page S12174]]

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

SEC. 108. TREATMENT OF UNBORN CHILDREN.

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

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

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

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

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

SEC. 111. EFFECTIVE DATE.

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

TITLE II--HEALTH INSURANCE MARKETPLACE MODERNIZATION AND AFFORDABILITY

SEC. 200. SHORT TITLE; PURPOSE.

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

Subtitle A--Small Business Health Plans

SEC. 201. RULES GOVERNING SMALL BUSINESS HEALTH PLANS.

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

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

``SEC. 801. SMALL BUSINESS HEALTH PLANS.

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

[[Page S12175]]

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

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

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

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

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

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

``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.

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

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

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

[[Page S12176]]

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

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

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

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

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

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

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

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

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

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

[[Page S12177]]

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

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

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

SEC. 202. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

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

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

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

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

[[Page S12178]]

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

Subtitle B--Market Relief

SEC. 211. MARKET RELIEF.

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

``TITLE XXX--HEALTH CARE INSURANCE MARKETPLACE MODERNIZATION

``SEC. 3001. GENERAL INSURANCE DEFINITIONS.

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

``Subtitle A--Market Relief

``PART I--RATING REQUIREMENTS

``SEC. 3011. DEFINITIONS.

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

[[Page S12179]]

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

``SEC. 3012. RATING RULES.

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

``SEC. 3013. APPLICATION AND PREEMPTION.

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

``SEC. 3014. CIVIL ACTIONS AND JURISDICTION.

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

``SEC. 3015. ONGOING REVIEW.

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

``PART II--AFFORDABLE PLANS

``SEC. 3021. DEFINITIONS.

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

[[Page S12180]]

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

``SEC. 3022. OFFERING AFFORDABLE PLANS.

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

``SEC. 3023. APPLICATION AND PREEMPTION.

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

``SEC. 3024. CIVIL ACTIONS AND JURISDICTION.

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

``SEC. 3025. RULES OF CONSTRUCTION.

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

Subtitle C--Harmonization of Health Insurance Standards

SEC. 221. HEALTH INSURANCE STANDARDS HARMONIZATION.

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

``Subtitle B--Standards Harmonization

``SEC. 3031. DEFINITIONS.

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

[[Page S12181]]

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

``SEC. 3032. HARMONIZED STANDARDS.

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

[[Page S12182]]

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

``SEC. 3033. APPLICATION AND PREEMPTION.

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

``SEC. 3034. CIVIL ACTIONS AND JURISDICTION.

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

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

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

[[Page S12183]]

TITLE III--HEALTH SAVINGS ACCOUNTS

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

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

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

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

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

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

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

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

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

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

TITLE IV--STUDY

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

(a) Study.--
(1) In general.--The Secretary of the Treasury shall study
various options and make recommendations--
(A) for reforming the tax treatment of health insurance to
improve tax equity and increase access to private health care
coverage; and
(B) for providing meaningful assistance to low-income
individuals and families to purchase private health
insurance.
(2) Consideration of various options.--In carrying out the
study under paragraph (1), the Secretary of the Treasury
shall consider--
(A) options which rely on changes to Federal law not
included in the Internal Revenue Code of 1986;
(B) options which have a goal of minimizing Federal
Government outlays;
(C) options which minimize tax increases;
(D) at least one option which retains the Federal tax
exclusion for employer-provided health coverage;
(E) at least one option which is budget neutral; and
(F) at least one option which maintains the current
distribution of the Federal income tax burden.
(b) Report.--Not later than 6 months after the date of the
enactment of this Act, the Secretary of the Treasury shall
report the results of the study and the recommendations
required under subsection (a) to the Committee on Finance of
the Senate and the Committee on Ways and Means of the House
of Representatives.
______

SA 3065. Mr. DeMint submitted an amendment intended to be proposed by
him to the bill H.R. 976, to amend title XXI of the Social Security Act
to reauthorize the State Children's Health Insurance Program, and for
other purposes; which was ordered to lie on the table; as follows:

Strike section 613 of the proposed House amendment to the
text.
______

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

Strike section 615 of the House amendment to the text.
______

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

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

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

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

``POINT OF ORDER AGAINST RAISES IN EXCISE TAX RATES

``Sec. 316.  (a) In General.--It shall not be in order in
the Senate to consider any bill, resolution, amendment,
amendment between Houses, motion, or conference report that
includes a Federal excise tax rate increase which
disproportionately affects taxpayers with earned income of
less than 200 percent of the Federal poverty level, as
determined by the Joint Committee on Taxation. In this
subsection, the term `Federal excise tax rate increase' means
any amendment to any section in subtitle D or E of the
Internal Revenue Code of 1986, that imposes a new percentage
or amount as a rate of tax and thereby increases the amount
of tax imposed by any such section.
``(b) Supermajority Waiver and Appeal.--
``(1) Waiver.--This section may be waived or suspended in
the Senate only by an affirmative vote of three-fifths of the
Members, duly chosen and sworn.
``(2) Appeal.--An affirmative vote of three-fifths of the
Members of the Senate, duly chosen and sworn, shall be
required in the Senate to sustain an appeal of the ruling of
the Chair on a point of order raised under this section.''.
______

SA 3068. Mr. REID (for Mr. Obama (for himself, Mr. Bond, Mr.
Lieberman, Mrs. Boxer, and Mrs. McCaskill)) submitted an amendment
intended to be proposed to amendment SA 2011 proposed by Mr. Nelson of
Nebraska (for Mr. Levin) to the bill H.R. 1585, to authorize
appropriations for fiscal year 2008 for military activities of the
Department of Defense, for military construction, and for defense
activities of the Department of Energy, to prescribe military personnel
strengths for such fiscal year, and for other purposes; which was
ordered to lie on the table; as follows:

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

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

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

[[Page S12184]]

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

SA 3069. Mr. HATCH submitted an amendment intended to be proposed to
amendment SA 2011 proposed by Mr. Nelson of Nebraska (for Mr. Levin) to
the bill H.R. 1585, to authorize appropriations for fiscal year 2008
for military activities of the Department of Defense, for military
construction, and for defense activities of the Department of Energy,
to prescribe military personnel strengths for such fiscal year, and for
other purposes; which was ordered to lie on the table; as follows:

At the end of title XI, add the following:

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

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

SA 3070. Mr. SESSIONS submitted an amendment intended to be proposed
to amendment SA 2011 proposed by Mr. Nelson of Nebraska (for Mr. Levin)
to the bill H.R. 1585, to authorize appropriations for fiscal year 2008
for military activities of the Department of Defense, for military
construction, and for defense activities of the Department of Energy,
to prescribe military personnel strengths for such fiscal year, and for
other purposes; which was ordered to lie on the table; as follows:

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

SEC. 115. M4 CARBINE RIFLE.

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

[[Page S12185]]

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

SA 3071. Mr. REID proposed an amendment to the bill H.R. 976, to
amend title XXI of the Social Security Act to reauthorize the State
Children's Health Insurance Program, and for other purposes; as
follows:

At the end of the amendment add the following:
This section shall take effect 3 days after date of
enactment.
______

SA 3072. Mr. REID proposed an amendment to amendment SA 3071 proposed
by Mr. Reid to the bill H.R. 976, to amend title XXI of the Social
Security Act to reauthorize the State Children's Health Insurance
Program, and for other purposes; as follows:

In the amendment strike 3 and insert 1.
______

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

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

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

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

SA 3074. Mr. SPECTER (for himself and Mr. Casey) submitted an
amendment intended to be proposed by him to the joint resolution H.J.
Res. 52, making continuing appropriations for the fiscal year 2008, and
for other purposes; which was ordered to lie on the table; as follows:

At the end, add the following:

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

(a) Extension of Tax Relief and Health Care Act
Provision.--
(1) In general.--Subsection (a) of section 106 of division
B of the Tax Relief and Health Care Act of 2006 (42 U.S.C.
1395 note) is amended by striking ``September 30, 2007'' and
inserting ``September 30, 2009''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect as if included in the enactment of such
section 106.
(b) Extension of Special Exception Reclassifications.--
Notwithstanding any other provision of law, in the case of a
subsection (d) hospital (as defined for purposes of section
1886 of the Social Security Act (42 U.S.C. 1395ww)) with
respect to which a special exception reclassification of its
wage index for purposes of such section (made under the
authority of subsection (d)(5)(I)(i) of such section and
contained in the final rule promulgated by the Secretary of
Health and Human Services in the Federal Register on August
11, 2004 (69 Fed. Reg. 49107)) would (but for this
subsection) expire on September 30, 2007, such special
exception reclassification of such hospital shall be extended
through September 30, 2009. The previous sentence shall not
be effected in a budget-neutral manner.
______

SA 3075. Mr. BIDEN (for himself, Mr. Graham, Mr. Casey, Mr. Sanders,
Mr. Brown, and Mrs. Lincoln) submitted an amendment intended to be
proposed to amendment SA 2011 proposed by Mr. Nelson of Nebraska (for
Mr. Levin) to the bill H.R. 1585, to authorize appropriations for
fiscal year 2008 for military activities of the Department of Defense,
for military construction, and for defense activities of the Department
of Energy, to prescribe military personnel strengths for such fiscal
year, and for other purposes; which was ordered to lie on the table; as
follows:

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

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

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

[[Page S12186]]

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

____________________