S. 1225Senate109th Congress (2005-2007)In Committee

Access to Affordable Health Care Act

Legislative Activity

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SenateIntro Referral Latest Action

Read twice and referred to the Committee on Finance.

Finance Committee

June 13, 2005

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SenateIntro Referral

Introduced in Senate

June 13, 2005

SenateIntro Referral

Sponsor introductory remarks on measure. (CR S6407-6409)

June 13, 2005

SenateIntro Referral

Read twice and referred to the Committee on Finance.

Finance Committee

June 13, 2005

Floor Debate

5 members

What members said about S. 1225 on the floor

2 Republicans3 Democrats

Sen. Susan M. CollinsR-ME · Jun 13, 2005

Mr. President, I am pleased to join with my colleague from Louisiana, Senator Landrieu, in introducing the Access to Affordable Health Care Act, a comprehensive, seven-point plan that builds on the strengths of our current public programs and private health care system to make quality, affordable health care available to millions more Americans.

One of my top priorities in the Senate has been to expand access to affordable health care for all Americans. There are still far too many Americans without health insurance or with woefully inadequate coverage. As many as 45 million Americans--almost 16 percent of our population--are uninsured, and millions more are underinsured.

Health care coverage matters. The simple fact is that people with health insurance are healthier than those who are uninsured. People without health insurance are less likely to seek care when they need it, and to forgo services such as periodic check ups and preventive services. As a consequence, they are more likely to be hospitalized or require costly medical attention for conditions that could have been prevented or treated at a curable stage. Not only does this put the health of these individuals at greater risk, but it also puts additional pressure on our hospitals and emergency rooms, many of them already financially challenged.

Compared with people who have health coverage, uninsured adults are four times, and uninsured children five times, more likely to use the emergency rooms. The costs of care for these individuals are often absorbed by providers and passed on to the covered population through increased fees and insurance premiums.

Maine is in the midst of a growing health insurance crisis, with insurance premiums rising at alarming rates. Whether I am talking to a self-employed fisherman, a displaced worker, the owner of a struggling small business, or the human resource manager of a large company, the soaring costs of health insurance is a common concern.

Maine's employers are currently facing premium increases of as much as 20 percent a year. These premiums have been particularly burdensome for small businesses, the backbone of the Maine economy. Many small business owners are caught in a cost-squeeze: they know that if they pass on the premium increases to their employees, more of them will decline coverage. Yet these small businesses simply cannot afford to absorb double-digit increases in their health insurance premiums year after year.

The problem of rising costs is even more acute for individuals and families who must purchase health insurance on their own. Monthly health insurance premiums in Maine often exceed a family's mortgage payment. It is no wonder that as many as 150,000 Mainers are uninsured. Clearly, we must do more to make our health care system more efficient and health insurance more available and affordable.

The Access to Affordable Health Care Act, which we are introducing today, is a seven-point plan that combines a variety of public and private approaches to make quality health care coverage more affordable and available. The legislation's seven goals are:

No. 1. To expand access to affordable health care for small businesses;

No. 2. To make health insurance more affordable for individuals and families purchasing coverage on their own;

No. 3. To strengthen the health care safety net for those without coverage;

No. 4. To expand access to care in rural and under-served areas;

No. 5. To increase access to affordable long-term care;

No. 6. To promote healthier lifestyles;

And No. 7, to provide more equitable Medicare payments to Maine providers to reduce the Medicare shortfall, which has forced hospitals, physicians and other providers to shift costs onto other payers in the form of higher charges, which, in turn drives up health care premiums.

Let me discuss each of these seven points in more detail.

First, our legislation will help small employers cope with rising health care costs.

Since most Americans get their health insurance through the workplace, it is a common assumption that people without health insurance are unemployed. The fact is, however, that most uninsured Americans are members of families with at least one full-time worker. As many as 82 percent of Americans who do not have health insurance are in a family with a worker.

Uninsured working Americans are most often employees of small businesses. In fact, some 60 percent of uninsured workers are employed by small firms. Smaller firms generally face higher costs for health insurance than larger firms, which makes them less likely to offer coverage. Small businesses want to provide health insurance for their employees, but the cost of often just too high.

The legislation we are introducing today will help small employers cope with rising costs by providing new tax credits for small businesses to help make health insurance more affordable. It will encourage those small businesses that do not currently offer health insurance to do so and will help employers that do offer insurance to continue coverage for their employees even in the face of rising costs.

Our legislation will also help increase the clout of small businesses in

negotiating with insurers. Premiums are generally higher for small businesses because they do not have as much purchasing power as large companies, which limits their ability to bargain for lower rates. They also have higher administrative costs because they have fewer employees among whom to spread the fixed cost of a health benefits plan. Moreover, they are not as able to spread the risks of medical claims over as many employees as large firms.

Our legislation will help address these problems by authorizing Federal grants to provide start-up funding to States to assist them with the planning, development and operation of small employer purchasing cooperatives. These cooperatives will help to reduce health care costs for small employers by allowing them to band together to purchase health insurance jointly. Group purchasing cooperatives have a number of advantages for small employers. For example, the increased number of participants in the group help to lower the premium costs for all. Moreover, they decrease the risk of adverse selection and spread the cost of health care over a broader group.

The legislation would also authorize a Small Business Administration grant program for States, local governments and non-profit organizations to provide information about the benefits of health insurance to small employers, including tax benefits, increased productivity of employees, and decreased turnover. These grants would also be used to make employers aware of their current rights under State and Federal laws. While costs are clearly a problem, many small employers are not fully aware of laws that have already been enacted by both States and Federal Government to make health insurance more affordable. For example, in one survey, 57 percent of small employers did not know that they could deduct 100 percent of their health insurance premiums as a business expense.

The legislation would also create a new program to encourage innovation by awarding demonstration grants in up to 10 States conducting innovative coverage expansions, such as alternative group purchasing or pooling arrangements, individual or small group market reforms, or subsidies to employers or individuals purchasing coverage. The States have long been laboratories for reform, and they should be encouraged in the development of innovative programs that can serve as models for the Nation.

The Access to Affordable Health Care Act will also expand access to affordable health care for individuals and families.

One of the first bills I cosponsored as a Senator was legislation to establish the State Children's Health Insurance Program, S-CHIP, which provides insurance for the children of low-income parents who cannot afford health insurance, yet make too much money to qualify for Medicaid. This important program has provided affordable health insurance coverage to an estimated six million children nationwide, including almost 13,000 who are currently enrolled in the MaineCare program. Even so, nationwide, millions of qualified children have yet to be enrolled in this program, many because their parents simply don't know that they are eligible for the assistance.

Our legislation builds on the success of this program and gives States a number of new tools to increase participation. The bill authorizes new grants for States and non-profit organizations to conduct innovative outreach and enrollment efforts to ensure that all eligible children are covered. States would also have the option of covering the parents of the children who are enrolled in programs like MaineCare. States could also use funds provided through this program to help eligible working families pay their share of an employer-based health insurance plan. In short, the legislation will help ensure that the entire family receives the health care they need.

And finally, to help make health coverage more affordable for low- and middle-income individuals and families who do not have employer- provided coverage and who are not eligible for the expanded public programs, our legislation would provide an advanceable, refundable tax credit of up to $1,000 for individuals earning up to $30,000 and up to $3,000 for families earning up to $60,000. This could provide coverage for up to 6 million Americans who would otherwise be uninsured for one or more months, and will help many more working lower-income families who currently purchase private health insurance with little or no government help.

The Access to Affordable Health Insurance Act will also help to strengthen our Nation's health care safety net by doubling funding over 5 years for the Consolidated Health Centers program, which includes community, migrant, public housing and homeless health centers. These centers, which operate in underserved urban and rural communities, provide critical primary care services to millions of Americans, regardless of their ability to pay. About 20 percent of the patients treated at Maine's community health centers have no insurance coverage and many more have inadequate coverage, so these centers are a critical part of our Nation's health care safety net.

The problem of access to affordable health care services is not limited to the uninsured, but is also shared by many Americans living in rural and underserved areas where there is a serious shortage of health care providers. The Access to Affordable Health Care Act therefore calls for increased funding for the National Health Service Corps, which supports doctors, dentists, and other clinicians who serve in rural and inner city areas.

The legislation will also give the program greater flexibility by allowing National Health Service Corps participants to fulfill their commitment on a part-time basis. Current law requires all National Health Service Corps participants to serve full-time. Many rural communities, however, simply do not have enough volume to support a full-time health care practitioner. Moreover, some sites may not need a particular type of provider--for example, a dentist--on a full-time basis. Some practitioners may also find part-time service more attractive, which, in turn, could improve recruitment and retention. Our bill therefore gives the program additional flexibility to meet community needs.

Long-term care is the major catastrophic health care expense faced by older Americans today, and these costs will only increase with the aging of the baby boomers. Most Americans mistakenly believe that medicare or their private health insurance policies will cover the cost of long-term care should they develop a chronic illness or cognitive impairment like Alzheimer's Disease. Unfortunately, far too many do not discover that they do not have coverage until they are confronted with the difficult decision of placing a much-loved parent or spouse in long-term care and facing the shocking realization that they will have to cover the costs themselves.

The Access to Affordable Health Care Act will provide a tax credit for long-term care expenses of up to $3,000 to provide some help to those families struggling to provide long-term care to a loved one. It will also encourage more Americans to plan for their future long-term care needs by providing a tax deduction to help them purchase long-term care insurance.

Health insurance alone is not going to ensure good health. As noted author and physician Dr. Michael Crichton has observed, ``the future of medicine lies not in treating illness, but preventing it.'' Many of our most serious health problems are directly related to unhealthy behaviors--smoking, lack of regular exercise and poor diet. These three major risk factors alone have made Maine the state with the fourth highest death rate due to four largely preventable diseases: cardiovascular disease, cancer, chronic lung disease and diabetes. These four chronic diseases are responsible for 70 percent of the health care problems in Maine.

Our bill therefore contains a number of provisions designed to promote healthy lifestyles. An ever-expanding body of evidence shows that these kinds of investments in health promotion and prevention offer returns not only in reduced health care bills, but in longer life and increased productivity. The legislation will provide grants to States to assist small businesses wishing to establish ``worksite wellness'' programs for their employees. It would also authorize a grant program to support new and existing ``community partnerships,'' such as the Healthy Community Coalition in

Maine's Franklin County, to promote healthy lifestyles among hospitals, employers, schools and community organizations. And, it would provide funds for States to establish or expand comprehensive school health education, including, for example, physical education programs that promote lifelong physical activity, healthy food service selections, and programs that promote a healthy and safe school environment.

Finally, the Access to Affordable Health Care Act would promote greater equity in Medicare payments and help to ensure that the Medicare system rewards rather than punishes States like Maine that deliver high-quality, cost-effective Medicare services to our elderly and disabled citizens.

According to a study in the Journal of the American Medical Association, Maine ranks third in the Nation when it comes to the quality of care delivered to our Medicare beneficiaries. Yet we are 11th from the bottom when it comes to per-beneficiary Medicare spending.

The fact is that Maine's Medicare dollars are being used to subsidize higher reimbursements in other parts of the country. This simply is not fair. Medicare's reimbursement systems have historically tended to favor urban areas and failed to take the special needs of rural States into account. Ironically, Maine's low payment rates are also the result of its long history of providing high-quality, cost-effective care. In the early 1980s, Maine's lower than average costs were used to justify lower payment rates. Since then, Medicare's payment policies have only served to perpetuate the gap.

The Medicare Modernization Act of 2003 did take some significant steps toward promoting greater fairness by increasing Medicare payments to rural hospitals and by modifying geographic adjustment factors that discriminated against physicians and other providers in rural areas. The legislation we are introducing today will build on those improvements by establishing State pilot programs that reward providers of high-quality, cost efficient Medicare services. It will also establish a program to expand graduate medical education programs in rural and underserved areas of the nation.

Mr. President, the Access to Affordable Health Care Act outlines a blueprint for reform based on principles upon which I believe a bipartisan majority in Congress could agree. The plan takes significant strides toward the goal of universal health care coverage by bringing millions more Americans into the insurance system, by strengthening the health care safety net, and by addressing inequities in the Medicare system.

Sen. Susan M. CollinsR-ME · Jun 13, 2005

No. 1. To expand access to affordable health care for small businesses;

No. 2. To make health insurance more affordable for individuals and families purchasing coverage on their own;

No. 3. To strengthen the health care safety net for those without coverage;

No. 4. To expand access to care in rural and under-served areas;

No. 5. To increase access to affordable long-term care;

No. 6. To promote healthier lifestyles;

Let me discuss each of these seven points in more detail.

First, our legislation will help small employers cope with rising health care costs.

Our legislation will also help increase the clout of small businesses in

The Access to Affordable Health Care Act will also expand access to affordable health care for individuals and families.

Sen. Debbie StabenowD-MI · Jun 13, 2005

Mr. President, I am very pleased to introduce the ``Health Information Technology Act of 2005'' with my friend and colleague from Maine, Senator Snowe. This legislation will reduce costs for our…

Mr. President, I am very pleased to introduce the ``Health Information Technology Act of 2005'' with my friend and colleague from Maine, Senator Snowe. This legislation will reduce costs for our businesses, improve systems for our providers, and improve quality of care for patients.

We know we need to reduce health care costs in this country. In 2004, United States national health expenditures, known as NHEs, amounted to $1.8 trillion, or about $6,300 per person, accounting for 15.8% of our GDP. This is almost twice the average among European Union countries.

And costs are expected to continue to skyrocket. The Center for Medicare and Medicaid Services, CMS, estimates that by 2013, NHEs in the United States will reach $3.4 trillion and account for 18.8 percent of our GDP.

It is without question that the increasing cost of employer-based health insurance hurts the global competitiveness of U.S. companies. General Motors now spends more than $1,500 per vehicle on health care costs, while their non-U.S. based competitors spend as much as $1,000 less.

Our large companies certainly aren't alone in struggling to meet the health care needs of their employees--the average member of the Small Business Association of Michigan, SBAM spends nearly $8,000 per employee per year on health insurance premiums. SBAM explains very clearly one of the reasons for these high costs: ``the way in which health care information is communicated is expensive, inefficient, and many times simply does not happen.''

The members of the Health Information Technology Leadership Panel, convened pursuant to the National Coordinator for Health Information Technology's Framework for Strategic Action, recently agreed that ``increasing health care costs pose a great and growing challenge to their industries and the broader U.S. economy..''.

But it's not just the level of health care spending--at the same time that we are spending twice as much as many other countries, 45 million of our citizens lack health insurance, and a recent national study by RAND suggests that U.S. adults receive only 55 percent of recommended care.

The answer is not to cut payments or to ask patients to take less care, but to ensure the right information is where it needs to be at the time it needs to be there so that providers can give the best possible treatment and care. That will both reduce costs and improve quality of care.

However, most of our Nation's health care providers don't have access to information technology and services because it's hard enough just to keep up with their daily costs, much less to invest in something new.

And, there's another reason providers haven't been quick to adopt these systems. The nature of our health care system means that in large part the value of these technologies--through the lower costs they will achieve--accrue to the payers of health care, rather than to the providers.

The costs of necessary information not being available are great. Too often, care is duplicated like an x-ray given twice, because an emergency room doctor didn't have the results of an earlier x-ray, or the best and most appropriate care isn't given. Our health care professionals can't possibly provide the best care if they don't have complete and accurate information about the patient sitting in front of them.

Multiple studies have found that as much as $300 billion is spent each year on health care that does not improve patient outcomes on treatment that is unnecessary, inappropriate, inefficient, or ineffective.

A March 2001 Institute of Medicine, IOM, study concluded that in order to improve quality, there must be a national commitment to building an information infrastructure. An October 2003 Government Accountability Office report found that the benefits of an electronic healthcare information system included improved quality of care, reduced costs associated with medication errors, more accurate and complete medical documentation, more accurate capture of codes and charges, and improved communication among providers enabling them to respond more quickly to patients' needs.

By providing the most appropriate care at the most appropriate time, we can reap huge savings. A January 2005 Report by the Center for Information Technology Leadership, CITL, found that moving to standardized health information exchange and interoperability would save nearly $80 billion annually in the United States.

The benefits of adoption and use of health care information technologies, systems and services will be widespread: employers will realize cost savings, clinicians will gain new electronic support tools and patient information to help guide medical decisions, and patients will benefit from a more efficient health care system and from a safer health care system with fewer unnecessary treatments and more attention to preventive care. And, taxpayers and our federal programs will benefit. Researchers have suggested that up to 30 percent of annual Medicare health care spending could be saved by eliminating unnecessary and duplicative procedures, and improving quality by eliminating errors.

The benefits of health information technologies and services become most compelling on an individual level. I met an extraordinary woman just a month ago. Renae Wallace, a small business owner in Kingsley, MI told me about her son Randall. Randall is just about to turn 8, but because he was born with complex heart and lung defects, he has seen the inside of a surgery room more times than most people see in a lifetime.

Renae takes her son to providers in Traverse City, Grand Rapids, and Ann Arbor. But because there is no way for these providers to talk to each other, she has to carry around a file two inches thick of medical records--X-rays, MRI scans, surgical notes--on Randall. Otherwise, the health care professionals who are taking care of Randall wouldn't have the benefit of the results of the treatment that Randall has gotten previously. Because they wouldn't have all the information they need, Randall might not get the most appropriate care. Renae has made sure that all of the providers taking care of her son have as much of the information as possible--but it would make a lot more sense if the doctors and hospitals and nurses were able to

have that information without Renae having to carry it around.

We need to ensure that our health care professionals have all of the relevant clinical information available to them in whatever setting a patient needs care, at the time the patient needs the care so that they can provide the best and most appropriate treatment possible. We know that adoption of health information technology can play a critical role in improving patient outcomes and at the same time greatly reduce costs. But it can't happen without the federal government playing a role.

The members of the Health Information Technology Leadership Panel concurred that without Federal leadership, neither their individual companies nor the industrial sector as a whole can achieve the breadth of HIT adoption that would be required to realize the needed transformation of health care.

The bill that Senator Snowe and I are introducing recognizes that both Federal leadership and Federal investment are necessary and appropriate. The focus of the investment provided by the ``Health Information Technology Act of 2005'' is on improving health care for patients with heart disease, cancer, stroke, diabetes, chronic obstructive pulmonary disease, asthma, and other diseases and conditions by driving transformation of systems in physician offices and other health care settings. Our bill includes a number of funding incentive approaches intended to improve health care through adoption of information technology.

First, we create a 5-year, $4 billion competitive grant program for hospitals, physicians, skilled nursing facilities, community health centers and community mental health centers to offset investments in new technologies and information services. Importantly, the grant program is funded by a mandatory appropriation from the Medicare trust funds. This is critical to ensuring that funds will actually be available for the grant program. It also makes sense as the trust funds will see savings through lower outlays due to less duplicative and unnecessary care.

The grant program would authorize funding for the: purchase, lease, and installment of computer software and hardware and related services; upgrade of existing computer technology; purchase communications capabilities necessary for clinical data access, storage, and exchange; services associated with acquiring, implementing, operating, or optimizing the use of new or existing computer software and hardware and clinical health care informatics systems; provision of education and training for staff on information systems and technology designed to improve patient safety; and purchase, lease, subscription, integration service of clinical decision support tools that provide ongoing continuous quality improvement functions.

Second, we allow accelerated depreciation of qualified health care information system expenditures in 2005-2010.

Third, we adjust Medicare payments to providers who use HIT that improves the quality and accuracy of clinical decision-making. We begin by addressing payments for treatment of Medicare beneficiaries with heart disease, cancer, stroke, diabetes, and chronic obstructive pulmonary disease because we know these conditions consume a large portion of our Medicare resources.

We know that the Medicare program will reap the benefit of providers using health information networks. The Office of the National Coordinator for Health Information Technology said on March 2 of this year that the annual savings attributable to widespread electronic health record adoption are likely to lie between 7.5 percent-30 percent of annual health care spending.

It only makes sense to establish new payment codes to account for the costs of purchasing and using health information technology and services with patient-specific applications.

Our legislation also will make it much easier for physicians and other health care professionals to treat patients by reducing the communication barriers that currently exist. The ``Health Information Technology Act'' provides that the Secretary shall adopt data standards for interoperability between providers and links funding to the adoption of those standards.

We know that electronic health care information systems can reap huge benefits. The GAO found these systems improve quality of care, reduce costs and improve communication among providers.

But we also know that we can't expect our health care providers to make this investment alone as they struggle to meet their daily needs. Our country must have a national commitment to building an information infrastructure, and the Federal Government needs to step up to the plate and provide much-needed funds to get the ball rolling.

We could only have dreamed about clinical computerized information systems when the Medicare and Medicaid programs began. Today, we have them at our disposal. The sooner we get them into our hospitals, physician offices, nursing homes, community health centers and community mental health centers, the sooner our patients, providers, and pocketbooks will see the rewards.

I am very pleased to announce the support of the following organizations: American College of Physicians, Federation of American Hospitals, National Council for Community Behavioral Healthcare, the National Association of Children's Hospitals, American Heart Association, National Rural Health Association, National Business Coalition on Health, American Academy of Family Physicians, National Association of Community Health Centers, American Health Care Association, IBM, Health Vision, Healthcare Information and Management Systems Society, eHealth Initiative, AdvaMed, American Health Information Management Association, Verizon, Altarum, Michigan Health and Hospital Association, Automation Alley, Small Business Association of Michigan, Detroit Chamber, Michigan State Medical Society, Detroit Medical Center, Marquette General Health System, Oakwood Healthcare System, Henry Ford Health System, MPRO, Michigan's Medicare Quality Improvement Organization; Microsoft Corporation, Axolotl Corp, Delmarva Foundation, Dell Inc, DiagnosisOne, Greenway Medical Technologies, HealthInsight, Healthgate, Inland Northwest Health Services, Kyrptiq, Lumetra, Medical Review of North Carolina, Misys Healthcare Systems, National Alliance for Primary Care Informatics, Partners Healthcare System, Siemens Corporation, Philips Medical Systems, WebMD Corporation, and the Virgin Islands Medical Institute.

I am also very pleased to have the support of the AFL-CIO, Trinity Health, NextGen, The Society of Thoracic Surgeons, American Association of Homes and Services for the Aging, St. John Health, Michigan Primary Care Association, the American Health Quality Association, and Comtek and look forward to receiving their forthcoming letters.

I ask unanimous consent to have the text of the bill and additional material printed in the Record.

Sen. Olympia J. SnoweR-ME · Jun 13, 2005

Mr. President, today I join my colleague, Senator Stabenow of Michigan, in introducing the ``Health Information Technology Act of 2005'', which will serve to improve the quality of health care…

Mr. President, today I join my colleague, Senator Stabenow of Michigan, in introducing the ``Health Information Technology Act of 2005'', which will serve to improve the quality of health care through implementation of information technology; IT, in hospitals, health centers and physician practices throughout the country. At a time when the Institute of Medicine (IOM) has reported that up to 98,000 Americans die each year due to medical errors, we cannot afford to wait. When we also consider the escalating cost of health care in this country, we must recognize that this level of growth in spending has created a crisis. Information technology is one solution, and this legislation will assert the federal government's role in providing leadership in this area and provide financial incentives to spur rapid adoption of information technology in medicine. Our legislation is necessary because as a nation we face two stark problems.

The first of these is a serious patient safety problem. The good news is that solutions exist: We have the technological ability to dramatically reduce medical errors and thus save lives. Many have heard about how drug interactions can be avoided by software systems which check a patient's prescriptions for hazards. Yet there are so many other applications which can improve health. For example, by reviewing and analyzing information, a health provider can help a patient better manage chronic diseases such as diabetes and heart disease, and avoid adverse outcomes.

Our second major problem is the escalating cost of health care. Costs are reduced when tests don't have to be repeated and data isn't delayed. In fact, a patient may obtain faster, higher quality care when, for example, multiple practitioners can review diagnostic test results right at their desktops. In an age where millions of Americans share family pictures over the internet in seconds, isn't it long past time that a physician should be able to retrieve an x-ray just as easily?

The President certainly recognizes the disparity in technology in health versus other parts of our economy. He has declared a goal for every American to have an electronic medical record within 10 years. I concur--we need this and more. In fact, once that record is in place we can do so many things better. From preventing drug interactions, to managing chronic diseases, to simply helping providers operate more efficiently. Most of us have been told at one time or another, ``we're waiting to get the test results mailed'', or ``we're still waiting for your chart''. Health care is one of the last bastions of such inefficiency.

The bad news is that high start-up costs and a lack of standards have prevented us from reaping the benefits of new technologies. I am certainly looking forward to the progress we will make with Dr. David Brailer heading the new Office of the National Coordinator for Health Information Technology at the Department of Health and Human Services. The President has made technology implementation a priority, and there is no doubt that a lack of standards has prevented IT adoption by many health care providers. One must know that a system purchased will be compatible with others, and that--no matter what may happen in the future to a vendor--the huge investment one makes in building an electronic medical record won't be lost. In other words, your system must be able to communicate with other systems, and your investment in building electronic medical records must be preserved. So when a patient moves, their electronic ``chart'' should be able to move right along with them, and their continuity of care shouldn't be interrupted.

Yet standards alone aren't enough. Today many providers are struggling to make these investments, and for those which serve beneficiaries of Medicare, Medicaid and SCHIP, it can be exceedingly difficult.

The legislation which we are introducing today will bring the solution within our reach. In the last Congress I worked with Senator Bob Graham to introduce legislation which provided a grants program to give assistance to hospitals and long term care facilities to enable investment in IT. As I join today with Senator Stabenow to introduce this legislation, we have made several crucial enhancements to the previous bill. The legislation now includes both federally-qualified health centers and community mental health centers as eligible to receive IT grants. In addition, physician practices can also participate. All three are key treatment environments where both costs and errors must be addressed.

Our new legislation even provides an alternative to those for-profit providers who do not wish to apply for a grant. Under this bill, such providers will be able to expense the cost of a qualified system.

The legislation supports expenditures for a variety of expenses required to implement health care information technology. These include such components as computer hardware and software, plus installation and training costs. In addition, when installed we require that every system must meet the HHS Secretary's interoperability standards.

We know we will realize significant savings through information technology. On that there is bipartisan consensus. Yet as providers are facing even declining payment rates, they also are told they must institute changes in the way they practice, including implementing information technology. We know that much of the savings in health care IT will accrue to the patient and payer--in such aspects as fewer duplicate tests, greater efficiency, and better health management. Thus it is appropriate that the Federal Government would assist with the often prohibitive start-up costs--particularly for those who serve beneficiaries of Medicare, Medicaid and SCHIP.

I again want to stress the first goal of this legislation: To help build a safer medical-delivery system. The great successes of our health care system are largely due to our highly committed and talented health care professionals. The problem we are addressing today is not theirs, but is an endemic weakness of the system they depend upon. However, to utilize the solution, the Federal Government must step forward and provide the leadership necessary to make system changes a reality.

When the Medicare and Medicaid programs began, we could only have dreamed about computerized clinical information systems. Now, today, we have this technology at our disposal, and I strongly believe that we cannot afford to delay implementation. I hope my colleagues will join us in support of this legislation so we may soon achieve the goals of improving patient safety and reducing our escalating health care costs.

Sen. Harry ReidD-NV · Jun 13, 2005

Faced with uncertainties in electricity energy markets, turmoil in the Middle East, the need to cut back on the fossil fuel emissions linked to global warming, air pollution that contributes to high rates of asthma and fills even our national parks with smog, the United States must diversify its energy supply by promoting the growth of renewable energy.

Since 1999, Las Vegas electricity rates have increased by 50 percent. In the same time period, natural gas prices across Nevada rose 45 percent. We need to change the energy equation. We need to diversify the nation's energy supply to reduce volatility and ensure a stable supply of electricity. We must harness the brilliance of the sun, the strength of the wind, and the heat of the Earth to provide clean renewable energy for our Nation.

Mr. President, I rise today to introduce a bill with Senators Feinstein, Cantwell, Snowe, Jeffords, Lieberman and Kerry that expands the existing Section 45 production tax credit for renewable energy resources to cover all renewable energy resources. Our legislation accomplishes this by ensuring that geothermal, incremental geothermal, solar, open-loop biomass, incremental hydropower, landfill gas, and animal waste to the list of renewable energy resources that would qualify for a production tax credit.

Our legislation also makes the production tax credit permanent to signal America's longterm commitment to renewable energy resources. The existing production tax credit will expire at the end of the year. Since it inception in 1992, the production tax credit has expired and been renewed three times--in 1999, 2001, and 2004. Development of wind energy has closely mirrored these renewal cycles. Clearly, the private investment necessary to develop renewable energy resources requires the business certainty afforded by a long-term extension of the production tax credit. Our bill allows for co-production credits to encourage blending of renewable energy with traditional fuels and provides a credit for renewable facilities on Native American and Native Alaskan lands.

In northern Nevada, the Pyramid Lake Paiute Tribe is working with Advanced Thermal Systems to develop geothermal resources on Indian lands that will spur economic development by creating business opportunities and jobs for tribal members.

This legislation also provides production incentives to not-for- profit public power utilities and rural electric cooperatives, which serve 25 percent of the Nation's power customers, by allowing them to transfer their credits to taxable entities. The good news is that the production tax credit for renewable energy resources really works to promote the growth of renewable energy.

In 1990, the cost of wind energy was 22.5 cents per kilowatt hour and, today, with new technology and the help of a modest production tax credit, wind is a competitive energy source at approximately 5.5 cents per kilowatt hour. In the last 5 years, wind energy has experienced a 30 percent growth rate. The production tax credit provides 1.8 cents for every kilowatt-hour of electricity produced. Similar to wind energy, this credit will allow geothermal energy, incremental hydropower, and landfill gas to immediately compete with fossil fuels, while biomass will follow closely behind. The Department of Energy estimates that we could increase our geothermal energy production almost tenfold, supplying ten percent of the energy needs of the West. As fantastic as it sounds, enough sunlight falls on 100 square miles of southern Nevada that--if covered with solar panels--could power the entire Nation.

Let's never lose sight of the fact that renewable energy resources are domestic sources of energy, and using them instead of foreign sources contributes to our energy security. Renewables provide fuel diversify and price stability. After all, the fuel--from the wind, the sun, and heat from the core of the earth--cost nothing. And they provide jobs, especially in rural areas that have been largely left out of America's recent economic growth. The production tax credit for renewable energy resources is a powerful, fast-acting stimulus to the economy. According to the Western Governors Association, the Department of Energy's Initiative to deploy 1,000 Megawatts of concentrated solar power in the Southwestern area of the United States by the year 2006 would create approximately 10,000 jobs and estimated expenditures of more than $3.7 billion over 14 years.

Nevada has already developed 200 megawatts of geothermal power, with a longer-term potential of more than 2,500 megawatts; this development will provide billions of dollars in private investment and create thousands of jobs. Our production tax credit means immediate economic development and jobs.

In the U.S. today, we get 2 percent of our electricity from renewable energy sources like wind, solar, geothermal, and biomass. But the potential for much greater supply is here. For example, Nevada could use geothermal energy to meet one-third of its electricity needs, but today this source of energy only supplies 2 percent. I am proud to say that Nevada has adopted one of the most aggressive Renewable Portfolio Standards in the Nation, requiring 15 percent of the State's electricity needs be met by renewable energy resources in 2013.

After pouring billions of dollars into oil and gas, we need to invest in a clean energy future. Fossil fuel plants pump over 11 million tons of pollutants into our air each year. Federal energy policy must promote reductions in greenhouse gas emissions. By including landfill gas in this legislation, we systematically reduce the largest single human source of methane emissions in the United States, effectively eliminating the greenhouse gas equivalent of 233 million tons of carbon dioxide.

Medical studies have revealed an alarming link between soot particles from power plants and motor vehicles and lung cancer and heart disease. The adverse health effects of power plant and vehicle emissions cost Americans billions of dollars in medical care, and our cost in human suffering is immeasurable. Simply put, the human cost of dirty air is staggering. If we factor in environmental and health effects, the real cost of energy becomes apparent, and renewable energy becomes the fuel of choice.

America's abundant and untapped renewable resources can fuel our journey into a more prosperous and safer tomorrow without compromising air and water quality. Renewable energy is a critical component of a successful, forward-looking, and secure energy policy for the 21st Century.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Show 1 more

Sen. Daniel K. AkakaD-HI · Jun 13, 2005

Mr. President, I rise today to introduce the Federal Contractor Extraterritorial Jurisdiction for Human Trafficking Offenses Act of 2005, which builds upon bipartisan efforts to combat the abhorrent…

Human trafficking is unfortunately among the fastest growing international criminal activities. According to the U.S. State Department's 2005 Trafficking in Persons Report, 600,000 to 800,000 victims are transported across international borders each year. These victims often come from the world's most vulnerable populations and regions affected by wars or humanitarian disasters.

With the promise of well-paying jobs, victims are often enticed to foreign countries, where upon arrival, their passports or travel papers are confiscated, and they are forced, many times beaten, until they agree to work without pay or serve as prostitutes. The perpetrators of human trafficking are typically motivated by profits derived from the use of forced labor or commercial sex exploitation. Because one of the common motivations of trafficking is forced prostitution: 80 percent of the victims are women and 50 percent of the victims are children.

In 2001, awareness of human trafficking grew in London during a murder investigation where the victim was a small African boy. While trying to determine the identity of the victim, investigators discovered that, in London alone, 300 African children between the ages of 4 and 7 could not be accounted for. That staggering statistic provides an insight into the pervasiveness of child trafficking and demonstrates that it can occur in all countries, including the most affluent.

This issue has long been a concern of mine. Nearly 6 years ago, I learned of a human trafficking ring that enslaved foreign workers and smuggled them to the U.S. Commonwealth of the Northern Mariana Islands, CNMI. The workers were forced to work in factories or serve as prostitutes. Senators Frank Murkowski, Jeff Bingaman, and I introduced S. 1052 to tighten immigration law in the CNMI to prevent future human trafficking rings. Although our bill passed the Senate, it was not taken up in the House.

Unfortunately, that was only one of numerous human trafficking conspiracies discovered within the United States. The State Department estimates that 14,500 to 17,500 human trafficking victims are brought into our country every year.

We cannot address this issue without recognizing the efforts of my friend and departed colleague, Senator Paul Wellstone, who through his leadership, the Victims of Trafficking and Violence Protection Act of 2000, P.L. 106-386, was enacted. This law first established our Nation's commitment to the prosecution of traffickers and the protection of victims of trafficking.

Since 2000, and the passage of this Act, there has been a surge in government activity relating to the prevention and prosecution of human trafficking offenses. In 2003 alone, there were approximately 3,000 convictions of human traffickers worldwide.

We have learned a great deal more about the conditions under which members of a population are likely to become victims of trafficking. Those who are displaced from their homes or suffering from poverty are much more likely to become victims of trafficking. Unfortunately, military forces and organizations charged with protecting and providing for vulnerable populations have, at times, actually encouraged the trafficking of humans.

There have been instances in the Congo and in Bosnia where increased demand for prostitution and forced labor caused by foreign peacekeeping troops and humanitarian aid workers accelerated the exploitation of already vulnerable populations.

There have even been reports where contractors, working on behalf of the United States Government, have contributed to, and even participated in, the trafficking of humans abroad. Nothing is more contrary to the freedoms we cherish than the trafficking of humans, which is why I introduce today the Federal Contractor Extraterritorial Jurisdiction for Human Trafficking Offenses Act.

My bill closes a loophole in U.S. criminal law. Under current law, Federal contractors who engage in human trafficking offenses abroad are subject to prosecution in the United States only if ``employed by or accompanying the Armed Forces.'' The bill closes this loophole by permitting the prosecution of Federal contractors of ``any executive agency.''

I believe all U.S. contractors should be treated the same, and all should be held to the same standards. A paycheck from the United States should never be used to purchase a human life.

I wish to point out that this legislation respects the sovereignty of foreign governments to prosecute these crimes locally. If a prosecution has occurred or is pending by the foreign government, U.S. authorities are precluded from prosecuting except upon approval of the U.S. Attorney General.

Rather, my measure authorizes the prosecution of a U.S. contractor who engages in human trafficking abroad but flees the foreign country to avoid prosecution. This happened, according to at least one report, where an employee of a Federal contractor in Bosnia bought a woman to serve as a sex slave. This individual fled the country after local authorities discovered the crime, and he returned to the U.S. to avoid prosecution. My bill would empower U.S. prosecutors to bring such an individual to justice.

Mr. President, I ask by unanimous consent that the text of my bill be printed in the Record.

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Introduced in SenateIssued June 13, 2005

        [Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1225 Introduced in Senate (IS)]

109th CONGRESS
1st Session
S. 1225

To expand access to affordable health care and to strengthen the health
care safety net and make health care services more available in rural
and underserved areas.

_______________________________________________________________________

IN THE SENATE OF THE UNITED STATES

June 13, 2005

Ms. Collins (for herself and Ms. Landrieu) introduced the following
bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

A BILL

To expand access to affordable health care and to strengthen the health
care safety net and make health care services more available in rural
and underserved areas.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Access to
Affordable Health Care Act''.
(b) Table of Contents.--The table of contents of this Act is as
follows:

Sec. 1. Short title; table of contents.
TITLE I--EXPANSION OF ACCESS TO AFFORDABLE HEALTH CARE FOR SMALL
BUSINESSES

Subtitle A--Small Business Tax Credit

Sec. 101. Credit for employee health insurance expenses.
Subtitle B--Grants to States for Small Business Purchasing Groups

Sec. 121. Grants for small employer purchasing groups.
Sec. 122. Qualified small employer purchasing groups.
Subtitle C--Health Benefits Information for Small Employers

Sec. 131. Grant program to facilitate health benefits information for
small employers.
Subtitle D--Grant Program to Encourage State Innovation

Sec. 141. Grant program to encourage State innovation.
TITLE II--EXPANSION OF ACCESS TO AFFORDABLE HEALTH CARE FOR INDIVIDUALS
AND FAMILIES

Subtitle A--Internal Revenue Code Provisions

Sec. 201. Refundable health insurance costs credit.
Sec. 202. Advance payment of credit to issuers of qualified health
insurance.
Subtitle B--FamilyCare

Sec. 211. Renaming of title XXI program.
Sec. 212. Familycare coverage of parents under the medicaid program and
title XXI.
Sec. 213. Optional coverage of children through age 20 under the
medicaid program and title XXI.
Sec. 214. Elimination of ``dip'' in CHIP allotments for fiscal years
2003 and 2004.
Sec. 215. Additional CHIP revisions.
Sec. 216. Limitations on conflicts of interest.
Sec. 217. Technical and conforming amendments to authority to pay
medicaid expansion costs from title XXI
appropriation.
Subtitle C--Simplified Enrollment

Sec. 221. Automatic enrollment of children born to title XXI parents.
Sec. 222. Application of simplified title XXI procedures under the
medicaid program.
Sec. 223. Elimination of 100 hour rule and other AFDC-related
eligibility restrictions.
Subtitle D--State Option to Extend Medicaid Coverage to Certain Low-
Income Individuals

Sec. 231. State option to extend medicaid coverage to certain low-
income individuals.
Subtitle E--Improving Welfare-to-Work Transition Under Medicaid

Sec. 241. Improving welfare-to-work transition under medicaid.
Subtitle F--Grants to Promote Innovative Outreach and Enrollment Under
Medicaid and SCHIP

Sec. 251. Grants to promote innovative outreach and enrollment under
medicaid and SCHIP.
Sec. 252. State option to provide for simplified determinations of a
child's financial eligibility for medical
assistance under medicaid or child health
assistance under SCHIP.
Subtitle G--Demonstration Programs to Improve Medicaid and SCHIP
Outreach to Homeless Individuals and Families

Sec. 261. Demonstration programs to improve medicaid and SCHIP outreach
to homeless individuals and families.
TITLE III--STRENGTHENING THE HEALTH CARE SAFETY NET

Sec. 301. Increase in funding for the consolidated health centers
program.
TITLE IV--EXPANSION OF ACCESS TO HEALTH CARE IN RURAL AND UNDERSERVED
AREAS

Sec. 401. Expansion of funding.
Sec. 402. Loan repayment and scholarship programs.
TITLE V--EXPANDED ACCESS TO AFFORDABLE LONG-TERM CARE

Sec. 501. Treatment of premiums on qualified long-term care insurance
contracts.
Sec. 502. Credit for taxpayers with long-term care needs.
Sec. 503. Additional consumer protections for long-term care insurance.
TITLE VI--PROMOTING HEALTHIER LIFESTYLES

Sec. 601. Community partnerships to promote healthy lifestyles.
Sec. 602. Worksite wellness grant program.
Sec. 603. Comprehensive school health education.
TITLE VII--MEDICARE FAIRNESS

Subtitle A--Medicare Value and Quality Demonstration

Sec. 701. Findings.
Sec. 702. Demonstration project to encourage the provision of high-
quality, cost-effective inpatient hospital
services.
Sec. 703. Demonstration project to encourage the provision of high-
quality, cost-effective physicians'
services.
Subtitle B--Graduate Medical Education Demonstration

Sec. 711. Clinical rotation demonstration project.

TITLE I--EXPANSION OF ACCESS TO AFFORDABLE HEALTH CARE FOR SMALL
BUSINESSES

Subtitle A--Small Business Tax Credit

SEC. 101. CREDIT FOR EMPLOYEE HEALTH INSURANCE EXPENSES.

(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to business-related
credits) is amended by inserting after section 45I the following:

``SEC. 45J. EMPLOYEE HEALTH INSURANCE EXPENSES.

``(a) General Rule.--For purposes of section 38, in the case of an
employer, the employee health insurance expenses credit determined
under this section is an amount equal to the applicable percentage of
the amount paid by the taxpayer during the taxable year for qualified
employee health insurance expenses.
``(b) Applicable Percentage.--For purposes of subsection (a), the
applicable percentage is equal to--
``(1) 50 percent in the case of an employer with less than
10 employees, and
``(2) 30 percent in the case of an employer with more than
9 but less than 26 employees.
``(c) Per Employee Dollar Limitation.--The amount of qualified
employee health insurance expenses taken into account under subsection
(a) with respect to any qualified employee for any taxable year shall
not exceed--
``(1) $2,000 in the case of self-only coverage, and
``(2) $4,000 in the case of family coverage (as so
defined).
``(d) Special Rules and Definitions.--For purposes of this
section--
``(1) Eligibility for credit.--No credit shall be allowed
under subsection (a) with respect to any employer which, with
respect to the number of employees employed during any period,
employs more than 20 percent of highly compensated employees
(within the meaning of section 414(q)).
``(2) Determination of employment.--
``(A) In general.--An employer shall be considered
an employer described in paragraph (1) or (2) of
subsection (b) if such employer employed an average of
the number of employees described in such paragraph on
business days during either of the 2 preceding calendar
years. For purposes of the preceding sentence, a
preceding calendar year may be taken into account only
if the employer was in existence throughout such year.
``(B) Employers not in existence in preceding
year.--In the case of an employer which was not in
existence throughout the 1st preceding calendar year,
the determination under subparagraph (A) shall be based
on the average number of employees that it is
reasonably expected such employer will employ on
business days in the current calendar year.
``(3) Qualified employee health insurance expenses.--
``(A) In general.--The term `qualified employee
health insurance expenses' means any amount paid by an
employer for health insurance coverage to the extent
such amount--
``(i) is attributable to coverage provided
to any employee while such employee is a
qualified employee; and
``(ii) is at least 50 percent of the
premium for such coverage.
``(B) Exception for amounts paid under salary
reduction arrangements.--No amount paid or incurred for
health insurance coverage pursuant to a salary
reduction arrangement shall be taken into account under
subparagraph (A).
``(C) Health insurance coverage.--The term `health
insurance coverage' has the meaning given such term by
section 9832(b)(1).
``(4) Qualified employee.--
``(A) In general.--The term `qualified employee'
means, with respect to any period, an employee of an
employer if the total amount of wages paid or incurred
by such employer to such employee at an annual rate
during the taxable year is not less than $5,000.
``(B) Treatment of certain employees.--For purposes
of subparagraph (A), the term `employee'--
``(i) shall not include an employee within
the meaning of section 401(c)(1), but
``(ii) shall include a leased employee
within the meaning of section 414(n).
``(C) Wages.--The term `wages' has the meaning
given such term by section 3121(a) (determined without
regard to any dollar limitation contained in such
section).
``(e) Certain Rules Made Applicable.--For purposes of this section,
rules similar to the rules of section 52 shall apply.
``(f) Denial of Double Benefit.--No deduction or credit under any
other provision of this chapter shall be allowed with respect to
qualified employee health insurance expenses taken into account under
subsection (a).''.
(b) Credit To Be Part of General Business Credit.--Section 38(b) of
the Internal Revenue Code of 1986 (relating to current year business
credit) is amended by striking ``plus'' at the end of paragraph (18),
by striking the period at the end of paragraph (19) and inserting ``,
plus'', and by inserting after paragraph (19) the following:
``(20) the employee health insurance expenses credit
determined under section 45J.''.
(c) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by adding at the end the following:

``Sec. 45J. Employee health insurance
expenses.''.
(d) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred in taxable years beginning after
December 31, 2005.

Subtitle B--Grants to States for Small Business Purchasing Groups

SEC. 121. GRANTS FOR SMALL EMPLOYER PURCHASING GROUPS.

(a) In General.--The Secretary of Labor (referred to in this
section as the ``Secretary'') shall award grants to States to assist
such States in planning, developing, and operating qualified small
employer purchasing groups.
(b) Application Requirements.--To be eligible to receive a grant
under this section, a State shall prepare and submit to the Secretary
an application in such form, at such time, and containing such
information, certifications, and assurances as the Secretary shall
reasonably require.
(c) Use of Funds.--Amounts awarded under this section may be used
to finance the costs associated with planning, developing, and
operating a qualified small employer purchasing group that meets the
requirements of section 122. Such costs may include the costs
associated with--
(1) engaging in education and outreach efforts to inform
small employers, insurers, and the public about the small
employer purchasing group;
(2) soliciting bids and negotiating with insurers to make
available group health plans;
(3) preparing the documentation required to receive
certification by the Secretary as a qualified small employer
purchasing group; and
(4) such other activities determined appropriate by the
Secretary.
(d) Authorization of Appropriations.--There are authorized to be
appropriated to carry out this section, such sums as may be necessary
for each of fiscal years 2006 through 2010.

SEC. 122. QUALIFIED SMALL EMPLOYER PURCHASING GROUPS.

(a) Qualified Small Employer Purchasing Groups Described.--
(1) In general.--A qualified small employer purchasing
group is an entity that--
(A) is a nonprofit entity certified under State
law;
(B) has a membership consisting solely of small
employers;
(C) is administered solely under the authority and
control of its member employers;
(D) with respect to each State in which its members
are located, consists of not fewer than the number of
small employers established by the State as appropriate
for such a group;
(E) offers a program under which group health plans
are offered to eligible employees and eligible
individuals (including the dependents of such employees
and individuals) through its member employers; and
(F) an insurer, agent, broker, or any other
individual or entity engaged in the sale of insurance--
(i) does not form or underwrite; and
(ii) does not hold or control any right to
vote with respect to.
(2) Special rule.--Notwithstanding paragraph (1)(B), an
employer member of a small employer purchasing group that has
been certified by the State as meeting the requirements of
paragraph (1) may retain its membership in the group if the
number of employees of the employer increases such that the
employer is no longer a small employer.
(b) Board of Directors.--Each qualified small employer purchasing
group established under this section shall be governed by a board of
directors or have active input from an advisory board consisting of
individuals and businesses participating in the group.
(c) Membership.--
(1) In general.--A qualified small employer purchasing
group shall accept all small employers residing within the area
served by the group as members if such employers request such
membership.
(2) Voting.--Members of a qualified small employer
purchasing group shall have voting rights consistent with the
rules established by the State.
(d) Duties of Qualified Small Employer Purchasing Groups.--Each
qualified small employer purchasing group shall--
(1) enter into agreements with insurers offering qualified
group health plans;
(2) enter into agreements with small employers for the
purchase of health insurance;
(3) enroll only eligible employees, eligible individuals,
and the dependents of such employees and individuals in group
health plans; and
(4) provide enrollee information to the State.
(e) Limitation on Activities.--A qualified small employer
purchasing group shall not--
(1) perform any activity involving approval or enforcement
of payment rates for providers;
(2) assume financial risk in relation to any such health
plan; or
(3) perform other activities identified by the State as
being inconsistent with the performance of its duties.
(f) Rules of Construction.--
(1) Establishment not required.--Nothing in this section
shall be construed as requiring that a State organize, operate
or otherwise establish a qualified small employer purchasing
group, or otherwise require the establishment of purchasing
groups.
(2) Voluntary participation.--Nothing in this section shall
be construed as requiring any individual or small employer to
purchase a group health plan exclusively through a qualified
small employer purchasing group.
(g) Definition.--In this subtitle, the term ``small employer''
means an employer that employs at least 1, but not more than 50
employees. Such term shall include sole proprietorships and self-
employed individuals.

Subtitle C--Health Benefits Information for Small Employers

SEC. 131. GRANT PROGRAM TO FACILITATE HEALTH BENEFITS INFORMATION FOR
SMALL EMPLOYERS.

(a) In General.--The Small Business Administration shall award
grants to 1 or more States, local governments, and non-profit
organizations for the purposes of--
(1) demonstrating new and effective ways to provide
information about the benefits of health insurance to small
employers, including tax benefits, increased productivity of
employees, and decreased turnover of employees;
(2) making small employers aware of their current rights in
the marketplace under Federal and State health insurance reform
laws; and
(3) making small employers aware of the tax treatment of
insurance premiums.
(b) Authorization.--There is authorized to be appropriated to carry
out this section, such sums as may be necessary for each of fiscal
years 2006 through 2010.

Subtitle D--Grant Program to Encourage State Innovation

SEC. 141. GRANT PROGRAM TO ENCOURAGE STATE INNOVATION.

(a) In General.--The Secretary of Health and Human Services (in
this section referred to as the ``Secretary'') shall establish a
program (in this section referred to as the ``program'') to award
demonstration grants under this section to States to allow States to
demonstrate the effectiveness of innovative ways to increase access to
health insurance through market reforms and other innovative means.
Such innovative means may include any of the following:
(1) Alternative group purchasing or pooling arrangements,
such as purchasing cooperatives for small businesses,
reinsurance pools, or high risk pools.
(2) Individual or small group market reforms.
(3) Consumer education and outreach.
(4) Subsidies to individuals, employers, or both, in
obtaining health insurance.
(b) Scope; Duration.--The program shall be limited to not more than
10 States and to a total period of 5 years, beginning on the date the
first demonstration grant is made.
(c) Conditions for Demonstration Grants.--
(1) In general.--The Secretary may not provide for a
demonstration grant to a State under the program unless the
Secretary finds that under the proposed demonstration grant--
(A) the State will provide for demonstrated
increase of access for some portion of the existing
uninsured population through a market innovation (other
than merely through a financial expansion of a program
initiated before the date of enactment of this Act);
(B) the State will comply with applicable Federal
laws;
(C) the State will not discriminate among
participants on the basis of any health status-related
factor (as defined in section 2791(d)(9) of the Public
Health Service Act (42 U.S.C. 300gg-91(d)(9)), except
to the extent a State wishes to focus on populations
that otherwise would not obtain health insurance
because of such factors; and
(D) the State will provide for such evaluation, in
coordination with the evaluation required under
subsection (d), as the Secretary may specify.
(2) Application.--The Secretary shall not provide a
demonstration grant under the program to a State unless--
(A) the State submits to the Secretary such an
application, in such a form and manner, as the
Secretary specifies;
(B) the application includes information regarding
how the demonstration grant will address issues such as
governance, targeted population, expected cost, and the
continuation after the completion of the demonstration
grant period; and
(C) the Secretary determines that the demonstration
grant will be used consistent with this section.
(3) Focus.--A demonstration grant proposal under this
section need not cover all uninsured individuals in a State or
all health care benefits with respect to such individuals.
(d) Evaluation.--The Secretary shall enter into a contract with an
appropriate entity outside the Department of Health and Human Services
to conduct an overall evaluation of the program at the end of the
program period. Such evaluation shall include an analysis of
improvements in access, costs, quality of care, or choice of coverage,
under different demonstration grants.
(e) Option To Provide for Initial Planning Grants.--Notwithstanding
the previous provisions of this section, under the program the
Secretary may provide for a portion of the amounts appropriated under
subsection (f) (not to exceed $5,000,000) to be made available to any
State for initial planning grants to permit States to develop
demonstration grant proposals under the previous provisions of this
section.
(f) Authorization of Appropriations.--There are authorized to be
appropriated such sums as may be necessary to carry out this section.
Amounts appropriated under this subsection shall remain available until
expended.
(g) State Defined.--In this section, the term ``State'' has the
meaning given such term for purposes of title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.).

TITLE II--EXPANSION OF ACCESS TO AFFORDABLE HEALTH CARE FOR INDIVIDUALS
AND FAMILIES

Subtitle A--Internal Revenue Code Provisions

SEC. 201. REFUNDABLE HEALTH INSURANCE COSTS CREDIT.

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

``SEC. 36. HEALTH INSURANCE COSTS FOR UNINSURED ELIGIBLE INDIVIDUALS.

``(a) Allowance of Credit.--In the case of an uninsured eligible
individual, there shall be allowed as a credit against the tax imposed
by this subtitle for the taxable year an amount equal to the amount
paid by the taxpayer during such taxable year for qualified health
insurance for the taxpayer and the taxpayer's spouse and dependents.
``(b) Limitations.--
``(1) In general.--The amount allowed as a credit under
subsection (a) to the taxpayer for the taxable year shall not
exceed the lesser of--
``(A) the sum of the monthly limitations for
coverage months during such taxable year for the
individuals referred to in subsection (a) for whom the
taxpayer paid during the taxable year any amount for
coverage under qualified health insurance, or
``(B) 90 percent of the amount paid by the taxpayer
during such taxable year for qualified health insurance
for such individuals.
``(2) Monthly limitation.--
``(A) In general.--The monthly limitation for an
individual for each coverage month of such individual
during the taxable year is the amount equal to \1/12\
of--
``(i) $1,000 if such individual is the
taxpayer,
``(ii) $1,000 if--
``(I) such individual is the spouse
of the taxpayer,
``(II) the taxpayer and such spouse
are married as of the first day of such
month, and
``(III) the taxpayer files a joint
return for the taxable year, and
``(iii) $500 if such individual is an
individual for whom a deduction under section
151(c) is allowable to the taxpayer for such
taxable year.
``(B) Limitation to 2 dependents.--Not more than 2
individuals may be taken into account by the taxpayer
under subparagraph (A)(iii).
``(C) Special rule for married individuals.--In the
case of an individual--
``(i) who is married (within the meaning of
section 7703) as of the close of the taxable
year but does not file a joint return for such
year, and
``(ii) who does not live apart from such
individual's spouse at all times during the
taxable year,
the limitation imposed by subparagraph (B) shall be
divided equally between the individual and the
individual's spouse unless they agree on a different
division.
``(3) Phaseout of credit.--
``(A) In general.--The amount which would (but for
this paragraph) be taken into account under subsection
(a) shall be reduced (but not below zero) by the amount
determined under subparagraph (B).
``(B) Amount of reduction.--The amount determined
under this subparagraph is the amount which bears the
same ratio to the amount which would be so taken into
account for the taxable year as--
``(i) the excess of--
``(I) the taxpayer's modified
adjusted gross income for the preceding
taxable year, over
``(II) $15,000 ($25,000 in the case
of family coverage), bears to
``(ii) $15,000 ($35,000 in the case of
family coverage).
``(C) Modified adjusted gross income.--The term
`modified adjusted gross income' means adjusted gross
income determined--
``(i) without regard to this section and
sections 911, 931, and 933, and
``(ii) after application of sections 86,
135, 137, 219, 221, and 469.
``(4) 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 the
taxpayer.
``(B) Employer-subsidized coverage.--
``(i) In general.--Such term shall not
include any month for which such individual is
eligible to participate in any subsidized
health plan (within the meaning of section
162(l)(2)) maintained by any employer of the
taxpayer or of the spouse of the taxpayer.
``(ii) Premiums to nonsubsidized plans.--If
an employer of the taxpayer or the spouse of
the taxpayer maintains a health plan which is
not a subsidized health plan (as so defined)
and which constitutes qualified health
insurance, employee contributions to the plan
shall be treated as amounts paid for qualified
health insurance.
``(C) Cafeteria plan and flexible spending account
beneficiaries.--Such term shall not include any month
during a taxable year if any amount is not includible
in the gross income of the taxpayer for such year under
section 106 with respect to--
``(i) a benefit chosen under a cafeteria
plan (as defined in section 125(d)), or
``(ii) a benefit provided under a flexible
spending or similar arrangement.
``(D) 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.
``(E) Certain other coverage.--Such term shall not
include any month during a taxable year with respect to
an individual if, at any time during such year, any
benefit is provided to such individual under--
``(i) chapter 89 of title 5, United States
Code,
``(ii) chapter 55 of title 10, United
States Code,
``(iii) chapter 17 of title 38, United
States Code, or
``(iv) any medical care program under the
Indian Health Care Improvement Act.
``(F) Prisoners.--Such term shall not include any
month with respect to an individual if, as of the first
day of such month, such individual is imprisoned under
Federal, State, or local authority.
``(G) 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)).
``(5) Coordination with deduction for health insurance
costs of self-employed individuals.--In the case of a taxpayer
who is eligible to deduct any amount under section 162(l) for
the taxable year, this section shall apply only if the taxpayer
elects not to claim any amount as a deduction under such
section for such year.
``(c) Qualified Health Insurance.--For purposes of this section,
the term `qualified health insurance' means health insurance coverage
(as defined in section 9832(b)(1)), including coverage under a COBRA
continuation provision (as defined in section 9832(d)(1)).
``(d) Archer MSA Contributions.--If a deduction would be allowed
under section 220 to the taxpayer for a payment for the taxable year to
the Archer MSA of an individual, subsection (a) shall not apply to the
taxpayer for such taxable year.
``(e) Special Rules.--
``(1) Coordination with medical expense deduction.--The
amount which would (but for this paragraph) be taken into
account by the taxpayer under section 213 for the taxable year
shall be reduced by the credit (if any) allowed by this section
to the taxpayer for such year.
``(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) Coordination with advance payment.--Rules similar to
the rules of section 32(g) shall apply to any credit to which
this section applies.
``(f) Expenses Must Be Substantiated.--A payment for insurance to
which subsection (a) applies may be taken into account under this
section only if the taxpayer substantiates such payment in such form as
the Secretary may prescribe.
``(g) Regulations.--The Secretary shall prescribe such regulations
as may be necessary to carry out the purposes of 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 6050T the following:

``SEC. 6050U. 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,
``(C) the aggregate amount of payments described in
subsection (a),
``(D) the qualified health insurance credit advance
amount (as defined in section 7528(e)) received by such
person with respect to the individual described in
subparagraph (A), and
``(E) 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,
``(3) the information required under subsection (b)(2)(B)
with respect to such payments, and
``(4) the qualified health insurance credit advance amount
(as defined in section 7528(e)) received by such person with
respect to the individual described in paragraph (2).
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 (xiii) through (xviii) as clauses
(xiv) through (xix), respectively, and by inserting
after clause (xii) the following:
``(xiii) section 6050U (relating to returns
relating to payments for qualified health
insurance),''.
(B) Paragraph (2) of section 6724(d) of such Code
is amended by striking ``or'' at the end of
subparagraph (AA), by striking the period at the end of
the subparagraph (BB) and inserting ``, or'', and by
adding at the end the following:
``(CC) section 6050U(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 6050T
the following:

``Sec. 6050U. Returns relating to
payments for qualified health
insurance.''.
(c) Criminal Penalty for Fraud.--Subchapter B of chapter 75 of the
Internal Revenue Code of 1986 (relating to other offenses) is amended
by adding at the end the following:

``SEC. 7276. PENALTIES FOR OFFENSES RELATING TO HEALTH INSURANCE TAX
CREDIT.

``Any person who knowingly misuses Department of the Treasury
names, symbols, titles, or initials to convey the false impression of
association with, or approval or endorsement by, the Department of the
Treasury of any insurance products or group health coverage in
connection with the credit for health insurance costs under section 36
shall on conviction thereof be fined not more than $10,000, or
imprisoned not more than 1 year, or both.''.
(d) Conforming Amendments.--
(1) Section 162(l) of the Internal Revenue Code of 1986 is
amended by adding at the end the following:
``(6) Election to have subsection apply.--No deduction
shall be allowed under paragraph (1) for a taxable year unless
the taxpayer elects to have this subsection apply for such
year.''.
(2) 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''.
(3) 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:

``Sec. 36. Health insurance costs for
uninsured eligible individuals.
``Sec. 37. Overpayments of tax.''.
(4) The table of sections for subchapter B of chapter 75 of
such Code is amended by adding at the end the following:

``Sec. 7276. Penalties for offenses
relating to health insurance
tax credit.''.
(e) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2005, without regard to whether
final regulations to carry out such amendments have been
promulgated by such date.
(2) Penalties.--The amendments made by subsections (c) and
(d)(4) shall take effect on the date of the enactment of this
Act.

SEC. 202. ADVANCE PAYMENT OF CREDIT TO ISSUERS OF QUALIFIED HEALTH
INSURANCE.

(a) In General.--Chapter 77 of the Internal Revenue Code of 1986
(relating to miscellaneous provisions) is amended by inserting after
section 7527 the following:

``SEC. 7527A ADVANCE PAYMENT OF HEALTH INSURANCE CREDIT FOR PURCHASERS
OF QUALIFIED HEALTH INSURANCE.

``(a) General Rule.--Every plan sponsor of a group health plan
providing, or qualified health insurance issuer of, qualified health
insurance to an eligible individual shall--
``(1) make qualified premium payments with respect to such
individual in an amount equal to the qualified health insurance
credit advance amount, and
``(2) treat such payments in the manner provided in
subsection (g).
``(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) Definitions.--For purposes of this section--
``(1) Qualified health insurance issuer.--The term
`qualified health insurance issuer' means a health insurance
issuer described in section 9832(b)(2) (determined without
regard to the last sentence thereof) offering coverage in
connection with a group health plan.
``(2) Group health plan.--The term `group health plan' has
the meaning given such term by section 5000(b)(1) (determined
without regard to subsection (d) thereof).
``(3) Qualified premium payments.--The term `qualified
premium payments' means any amount paid or incurred, cost
incurred, or health coverage value provided, with respect to
qualified health insurance for an eligible individual and the
individual's spouse and dependents. For purposes of the
preceding sentence, in the case of a group health plan, the
health coverage value is equal to the applicable premium under
the plan for the qualified health insurance coverage provided
to an eligible individual and the individual's spouse and
dependents, as determined under section 4980B.
``(d) 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 a
plan sponsor of a group health plan or qualified health insurance
issuer 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.
``(e) Qualified Health Insurance Credit Advance Amount.--For
purposes of this section, the term `qualified health insurance credit
advance amount' means, with respect to any plan sponsor of a group
health plan providing, or qualified health insurance issuer of,
qualified health insurance, 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 sponsor or issuer.
``(f) Required Documentation for Receipt of Payments of Advance
Amount.--No payment of a qualified health insurance credit advance
amount with respect to any eligible individual may be made under
subsection (a) unless the plan sponsor of the group health plan or
qualified health insurance issuer provides to the Secretary--
``(1) the qualified health insurance credit eligibility
certificate of such individual, and
``(2) the return relating to such individual under section
6050U.
``(g) Qualified Premium Payments To Be Treated as Payments of
Withholding Amounts and Certain Employer Tax.--
``(1) In general.--For purposes of this title, qualified
premium payments made or costs incurred by the sponsor of a
group health plan, or any entity designated by the sponsor to
make such payments or incur such costs--
``(A) shall not be treated as compensation, and
``(B) shall be treated, in such manner as provided
by the Secretary, as made out of--
``(i) amounts required to be deposited by
the taxpayer as estimated income tax under
section 6654 or 6655,
``(ii) amounts required to be deducted and
withheld under section 3401 (relating to wage
withholding),
``(iii) amounts of the taxes imposed under
section 3111(a) or 50 percent of taxes imposed
under section 1401(a) (relating to FICA
employer taxes), or
``(iv) amounts required to be deducted
under section 3102 with respect to taxes
imposed under section 3101(a) or 50 percent of
taxes imposed under section 1401(a) (relating
to FICA employee taxes),
as if such sponsor, or such designated entity, had paid
to the Secretary an amount equal to such payments.
``(2) Qualified premium payments exceed taxes due.--In the
case of any entity, if for any time period the aggregate
qualified premium payments exceed the amounts described in
paragraph (1)(B), the Secretary shall reduce amounts described
in such paragraph for any succeeding time period as necessary
to reflect such excess.
``(3) Failure to make qualified premium payments.--For
purposes of this title (including penalties), failure to make a
qualified premium payment with respect to an eligible
individual at the time provided therefor shall be treated as
the failure at such time to deduct and withhold under chapter
24 of such Code in an amount equal to the amount of such
qualified premium payments.
``(h) Regulations.--The Secretary shall prescribe such regulations
as may be necessary to carry out the purposes of this section.''.
(b) Clerical Amendment.--The table of sections for chapter 77 of
the Internal Revenue Code of 1986 is amended by inserting after the
item relating to section 7527 the following:

``Sec. 7527A. Advance payment of health
insurance credit for purchasers
of qualified health
insurance.''.
(c) Effective Date.--The amendments made by this section shall take
effect on January 1, 2007, without regard to whether final regulations
to carry out such amendments have been promulgated by such date.

Subtitle B--FamilyCare

SEC. 211. RENAMING OF TITLE XXI PROGRAM.

(a) In General.--The heading of title XXI of the Social Security
Act (42 U.S.C. 1397aa et seq.) is amended to read as follows:

``TITLE XXI--FAMILYCARE PROGRAM''.

(b) Program References.--Any reference in any provision of Federal
law or regulation to ``SCHIP'' or ``State children's health insurance
program'' under title XXI of the Social Security Act shall be deemed a
reference to the FamilyCare program under such title.

SEC. 212. FAMILYCARE COVERAGE OF PARENTS UNDER THE MEDICAID PROGRAM AND
TITLE XXI.

(a) Incentives To Implement FamilyCare Coverage.--
(1) Under medicaid.--
(A) Establishment of new optional eligibility
category.--Section 1902(a)(10)(A)(ii) of the Social
Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)) is
amended--
(i) by striking ``or'' at the end of
subclause (XVII);
(ii) by adding ``or'' at the end of
subclause (XVIII); and
(iii) by adding at the end the following:
``(XIX) who are individuals
described in subsection (k)(1)
(relating to parents of categorically
eligible children);''.
(B) Parents described.--Section 1902 of the Social
Security Act is further amended by inserting after
subsection (j) the following:
``(k)(1)(A) Individuals described in this paragraph are
individuals--
``(i) who are the parents of an individual who is under 19
years of age (or such higher age as the State may have elected
under section 1902(l)(1)(D)) and who is eligible for medical
assistance under subsection (a)(10)(A);
``(ii) who are not otherwise eligible for medical
assistance under such subsection, under section 1931, or under
a waiver approved under section 1115 or otherwise (except under
subsection (a)(10)(A)(ii)(XIX)); and
``(iii) whose family income exceeds the income level
applicable under the State plan under part A of title IV as in
effect as of July 16, 1996, but does not exceed the highest
income level applicable to a child in the family under this
title.
``(B) In establishing an income eligibility level for individuals
described in this paragraph, a State may vary such level consistent
with the various income levels established under subsection (l)(2)
based on the ages of children described in subsection (l)(1) in order
to ensure, to the maximum extent possible, that such individuals shall
be enrolled in the same program as their children.
``(C) An individual may not be treated as being described in this
paragraph unless, at the time of the individual's enrollment under this
title, the child referred to in subparagraph (A)(i) of the individual
is also enrolled under this title.
``(D) In this subsection, the term `parent' includes an individual
treated as a caregiver for purposes of carrying out section 1931.
``(2) In the case of a parent described in paragraph (1) who is
also the parent of a child who is eligible for child health assistance
under title XXI, the State may elect (on a uniform basis) to cover all
such parents under section 2111 or under this title.''.
(C) Enhanced matching funds available if certain
conditions met.--Section 1905 of the Social Security
Act (42 U.S.C. 1396d) is amended--
(i) in the fourth sentence of subsection
(b), by striking ``or subsection (u)(3)'' and
inserting ``, (u)(3), or (u)(4)''; and
(ii) in subsection (u)--
(I) by redesignating paragraph (4)
as paragraph (6), and
(II) by inserting after paragraph
(3) the following:
``(4) For purposes of subsection (b) and section 2105(a)(1):
``(A) FamilyCare parents.--The expenditures described in
this subparagraph are the expenditures described in the
following clauses (i) and (ii):
``(i) Parents.--If the conditions described in
clause (iii) are met, expenditures for medical
assistance for parents described in section 1902(k)(1)
and for parents who would be described in such section
but for the fact that they are eligible for medical
assistance under section 1931 or under a waiver
approved under section 1115.
``(ii) Certain pregnant women.--Expenditures for
medical assistance for pregnant women under section
1902(l)(1)(A) in a family the income of which exceeds
the income level applicable under section 1902(l)(2)(A)
to a family of the size involved as of January 1, 2005.
``(iii) Conditions.--The conditions described in
this clause are the following:
``(I) The State has a State child health
plan under title XXI which (whether implemented
under such title or under this title) has an
effective income level for children that is at
least 200 percent of the poverty line.
``(II) Such State child health plan does
not limit the acceptance of applications, does
not use a waiting list for children who meet
eligibility standards to qualify for
assistance, and provides benefits to all
children in the State who apply for and meet
eligibility standards.
``(III) The State plans under this title
and title XXI do not provide coverage for
parents with higher family income without
covering parents with a lower family income.
``(IV) The State does not apply an income
level for parents that is lower than the
effective income level (expressed as a percent
of the poverty line) that has been specified
under the State plan under title XIX (including
under a waiver authorized by the Secretary or
under section 1902(r)(2)), as of January 1,
2005, to be eligible for medical assistance as
a parent under this title.
``(iv) Definitions.--For purposes of this
subsection:
``(I) The term `parent' has the meaning
given such term for purposes of section
1902(k)(1).
``(II) The term `poverty line' has the
meaning given such term in section
2110(c)(5).''.
(D) Appropriation from title xxi allotment for
certain medicaid expansion costs.--Subparagraph (B) of
section 2105(a)(1) of the Social Security Act, as
amended by section 217(a), is amended to read as
follows:
``(B) FamilyCare parents.--Expenditures for medical
assistance that is attributable to expenditures
described in section 1905(u)(4)(A).''.
(E) Only counting enhanced portion for coverage of
additional pregnant women.--Section 1905 of the Social
Security Act (42 U.S.C. 1396d) is amended--
(i) in the fourth sentence of subsection
(b), by inserting ``(except in the case of
expenditures described in subsection (u)(5))''
after ``do not exceed''; and
(ii) in subsection (u), by inserting after
paragraph (4) (as inserted by subparagraph
(C)), the following:
``(5) For purposes of the fourth sentence of subsection (b) and
section 2105(a), the following payments under this title do not count
against a State's allotment under section 2104:
``(A) Regular fmap for expenditures for pregnant women with
income above january 1, 2005 income level and below 185 percent
of poverty.--The portion of the payments made for expenditures
described in paragraph (4)(A)(ii) that represents the amount
that would have been paid if the enhanced FMAP had not been
substituted for the Federal medical assistance percentage.''.
(2) Under title xxi.--
(A) FamilyCare coverage.--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. OPTIONAL FAMILYCARE COVERAGE OF PARENTS OF TARGETED LOW-
INCOME CHILDREN.

``(a) Optional Coverage.--Notwithstanding any other provision of
this title, a State child health plan may provide for coverage, through
an amendment to its State child health plan under section 2102, of
FamilyCare assistance for individuals who are targeted low-income
parents in accordance with this section, but only if--
``(1) the State meets the conditions described in section
1905(u)(4)(A)(iii); and
``(2) the State elects to provide medical assistance under
section 1902(a)(10)(A)(ii)(XIX), under section 1931, or under a
waiver under section 1115 to individuals described in section
1902(k)(1)(A)(i) and elects an applicable income level for such
individuals that consistent with paragraphs (1)(B) and (2) of
section 1902(k), ensures to the maximum extent possible, that
those individuals shall be enrolled in the same program as
their children if their children are eligible for coverage
under title XIX (including under a waiver authorized by the
Secretary or under section 1902(r)(2)).''.
``(b) Definitions.--For purposes of this title:
``(1) FamilyCare assistance.--The term `FamilyCare
assistance' has the meaning given the term child health
assistance in section 2110(a) as if any reference to targeted
low-income children were a reference to targeted low-income
parents.
``(2) Targeted low-income parent.--The term `targeted low-
income parent' has the meaning given the term targeted low-
income child in section 2110(b) as if the reference to a child
were deemed a reference to a parent (as defined in paragraph
(3)) of the child; except that in applying such section--
``(A) there shall be substituted for the income
level described in paragraph (1)(B)(ii)(I) the
applicable income level in effect for a targeted low-
income child;
``(B) in paragraph (3), January 1, 2005, shall be
substituted for July 1, 1997; and
``(C) in paragraph (4), January 1, 2005, shall be
substituted for March 31, 1997.
``(3) Parent.--The term `parent' includes an individual
treated as a caregiver for purposes of carrying out section
1931.
``(4) Optional treatment of pregnant women as parents.--A
State child health plan may treat a pregnant woman who is not
otherwise a parent as a targeted low-income parent for purposes
of this section but only if the State has established an income
level under section 1902(l)(2)(A)(i) for pregnant women that is
at least 185 percent of the income official poverty line
described in such section.
``(c) References to Terms and Special Rules.--In the case of, and
with respect to, a State providing for coverage of FamilyCare
assistance to targeted low-income parents under subsection (a), the
following special rules apply:
``(1) Any reference in this title (other than subsection
(b)) to a targeted low-income child is deemed to include a
reference to a targeted low-income parent.
``(2) Any such reference to child health assistance with
respect to such parents is deemed a reference to FamilyCare
assistance.
``(3) In applying section 2103(e)(3)(B) in the case of a
family provided coverage under this section, the limitation on
total annual aggregate cost-sharing shall be applied to the
entire family.
``(4) In applying section 2110(b)(4), any reference to
`section 1902(l)(2) or 1905(n)(2) (as selected by a State)' is
deemed a reference to the income level applicable to parents
under section 1931 or under a waiver approved under section
1115, or, in the case of a pregnant woman described in
subsection (b)(4), the income level established under section
1902(l)(2)(A).
``(5) In applying section 2102(b)(3)(B), any reference to
children is deemed a reference to parents.''.
(B) Additional allotment for states providing
familycare.--
(i) In general.--Section 2104 of the Social
Security Act (42 U.S.C. 1397dd) is amended by
inserting after subsection (c) the following:
``(d) Additional Allotments for State Providing FamilyCare.--
``(1) Appropriation; total allotment.--For the purpose of
providing additional allotments to States to provide FamilyCare
coverage under section 2111, there is appropriated, out of any
money in the Treasury not otherwise appropriated--
``(A) for fiscal year 2006, $2,000,000,000;
``(B) for fiscal year 2007, $3,000,000,000;
``(C) for fiscal year 2008, $3,000,000,000;
``(D) for fiscal year 2009, $6,000,000,000;
``(E) for fiscal year 2010, $7,000,000,000;
``(F) for fiscal year 2011, $8,000,000,000;
``(G) for fiscal year 2012, $9,000,000,000;
``(H) for fiscal year 2013, $10,000,000,000; and
``(I) for fiscal year 2014 and each fiscal year
thereafter, the amount of the allotment provided under
this paragraph for the preceding fiscal year increased
by the percentage increase (if any) in the medical care
expenditure category of the Consumer Price Index for
All Urban Consumers (United States city average).
``(2) State and territorial allotments.--
``(A) In general.--In addition to the allotments
provided under subsections (b) and (c), subject to
paragraphs (3) and (4), of the amount available for the
additional allotments under paragraph (1) for a fiscal
year, the Secretary shall allot to each State with a
State child health plan approved under this title--
``(i) in the case of such a State other
than a commonwealth or territory described in
clause (ii), the same proportion as the
proportion of the State's allotment under
subsection (b) (determined without regard to
subsection (f)) to 98.95 percent of the total
amount of the allotments under such section for
such States eligible for an allotment under
this subparagraph for such fiscal year; and
``(ii) in the case of a commonwealth or
territory described in subsection (c)(3), the
same proportion as the proportion of the
commonwealth's or territory's allotment under
subsection (c) (determined without regard to
subsection (f)) to 1.05 percent of the total
amount of the allotments under such section for
commonwealths and territories eligible for an
allotment under this subparagraph for such
fiscal year.
``(B) Availability and redistribution of unused
allotments.--In applying subsections (e) and (f) with
respect to additional allotments made available under
this subsection, the procedures established under such
subsections shall ensure such additional allotments are
only made available to States which have elected to
provide coverage under section 2111.
``(3) Use of additional allotment.--Additional allotments
provided under this subsection are not available for amounts
expended before October 1, 2005. Such amounts are available for
amounts expended on or after such date for child health
assistance for targeted low-income children, as well as for
FamilyCare assistance.
``(4) Requiring election to provide familycare coverage.--
No payments may be made to a State under this title from an
allotment provided under this subsection unless the State has
made an election to provide FamilyCare assistance.''.
(ii) Conforming amendments.--Section 2104
of the Social Security Act (42 U.S.C. 1397dd)
is amended--
(I) in subsection (a), by inserting
``subject to subsection (d),'' after
``under this section,'';
(II) in subsection (b)(1), by
inserting ``and subsection (d)'' after
``Subject to paragraph (4)''; and
(III) in subsection (c)(1), by
inserting ``subject to subsection
(d),'' after ``for a fiscal year,''.
(C) No cost-sharing for pregnancy-related
benefits.--Section 2103(e)(2) of the Social Security
Act (42 U.S.C. 1397cc(e)(2)) is amended--
(i) in the heading, by inserting ``and
pregnancy-related services'' after ``preventive
services''; and
(ii) by inserting before the period at the
end the following: ``and for pregnancy-related
services''.
(3) Effective date.--The amendments made by this subsection
apply to items and services furnished on or after October 1,
2005, whether or not regulations implementing such amendments
have been issued.
(b) Rules for Implementation Beginning With Fiscal Year 2008.--
(1) Required coverage of familycare parents.--Section
1902(a)(10)(A)(i) of the Social Security Act (42 U.S.C.
1396a(a)(10)(A)(i)) is amended--
(A) by striking ``or'' at the end of subclause
(VI);
(B) by striking the semicolon at the end of
subclause (VII) and insert ``, or''; and
(C) by adding at the end the following:
``(VIII) who are described in
subsection (k)(1) (or would be
described if subparagraph (A)(ii) of
such subsection did not apply) and who
are in families with incomes that do
not exceed 100 percent of the poverty
line applicable to a family of the size
involved;''.
(2) Expansion of availability of enhanced match under
medicaid for pre-chip expansions.--Paragraph (4) of section
1905(u) of the Social Security Act (42 U.S.C. 1396d(u)), as
inserted by subsection (a)(1)(C), is amended--
(A) by amending clause (ii) of subparagraph (A) to
read as follows:
``(ii) Certain pregnant women.--Expenditures for
medical assistance for pregnant women under section
1902(l)(1)(A) in a family the income of which exceeds
the 133 percent of the income official poverty line.'';
and
(B) by adding at the end the following:
``(B) Children in families with income above medicaid
mandatory level not previously described.--The expenditures
described in this subparagraph are expenditures (other than
expenditures described in paragraph (2) or (3)) for medical
assistance made available to any child who is eligible for
assistance under section 1902(a)(10)(A) (other than under
clause (i)) and the income of whose family exceeds the minimum
income level required under subsection 1902(l)(2) (or, if
higher, the minimum level required under section 1931 for that
State) for a child of the age involved (treating any child who
is 19 or 20 years of age as being 18 years of age).''.
(3) Offset of additional expenditures for enhanced match
for pre-chip expansion; elimination of offset for required
coverage of familycare parents.--
(A) In general.--Section 1905(u)(5) of the Social
Security Act (42 U.S.C. 1396d(u)(5)), as added by
subsection (a)(1)(E), is amended--
(i) by amending subparagraph (A) to read as
follows:
``(A) Regular fmap for expenditures for pregnant women with
income above 133 percent of poverty.--The portion of the
payments made for expenditures described in paragraph
(4)(A)(ii) that represents the amount that would have been paid
if the enhanced FMAP had not been substituted for the Federal
medical assistance percentage.''; and
(ii) by adding at the end the following:
``(B) FamilyCare parents under 100 percent of poverty.--
Payments for expenditures described in paragraph (4)(A)(i) in
the case of parents whose income does not exceed 100 percent of
the income official poverty line applicable to a family of the
size involved.
``(C) Regular fmap for expenditures for certain children in
families with income above medicaid mandatory level.--The
portion of the payments made for expenditures described in
paragraph (4)(B) that represents the amount that would have
been paid if the enhanced FMAP had not been substituted for the
Federal medical assistance percentage.''.
(B) Conforming amendments.--Subparagraph (B) of
section 2105(a)(1) of the Social Security Act, as
amended by section 217(a) and subsection (a)(1)(D), is
amended to read as follows:
``(B) Certain familycare parents and others.--
Expenditures for medical assistance that is
attributable to expenditures described in section
1905(u)(4), except as provided in section
1905(u)(5).''.
(4) Effective date.--The amendments made by this subsection
apply as of October 1, 2007, to fiscal years beginning on or
after such date and to expenditures under the State plan on and
after such date, whether or not regulations implementing such
amendments have been issued.
(c) Making Title XXI Base Allotments Permanent.--Section 2104(a) of
the Social Security Act (42 U.S.C. 1397dd(a)) is amended--
(1) by striking ``and'' at the end of paragraph (9);
(2) by striking the period at the end of paragraph (10) and
inserting ``; and''; and
(3) by adding at the end the following:
``(11) for fiscal year 2008 and each fiscal year
thereafter, the amount of the allotment provided under this
subsection for the preceding fiscal year increased by the
percentage increase (if any) in the medical care expenditure
category of the Consumer Price Index for All Urban Consumers
(United States city average).''.
(d) Optional Application of Presumptive Eligibility Provisions to
Parents.--Section 1920A of the Social Security Act (42 U.S.C. 1396r-1a)
is amended by adding at the end the following:
``(e) A State may elect to apply the previous provisions of this
section to provide for a period of presumptive eligibility for medical
assistance for a parent (as defined for purposes of section 1902(k)(1))
of a child with respect to whom such a period is provided under this
section.''.
(e) Conforming Amendments.--
(1) Eligibility categories.--Section 1905(a) of the Social
Security Act (42 U.S.C. 1396d(a)) is amended, in the matter
before paragraph (1)--
(A) by striking ``or'' at the end of clause (xii);
(B) by inserting ``or'' at the end of clause
(xiii); and
(C) by inserting after clause (xiii) the following:
``(xiv) who are parents described (or treated as if
described) in section 1902(k)(1),''.
(2) Income limitations.--Section 1903(f)(4) of the Social
Security Act (42 U.S.C. 1396b(f)(4)) is amended--
(A) effective October 1, 2007, by inserting
``1902(a)(10)(A)(i)(VIII),'' after
``1902(a)(10)(A)(i)(VII),''; and
(B) by inserting ``1902(a)(10)(A)(ii)(XIX),'' after
``1902(a)(10)(A)(ii)(XVIII),''.
(3) Conforming amendment relating to no waiting period for
pregnant women.--Section 2102(b)(1)(B) of the Social Security
Act (42 U.S.C. 1397bb(b)(1)(B)) is amended--
(A) by striking ``, and'' at the end of clause (i)
and inserting a semicolon;
(B) by striking the period at the end of clause
(ii) and inserting ``; and''; and
(C) by adding at the end the following:
``(iii) may not apply a waiting period
(including a waiting period to carry out
paragraph (3)(C)) in the case of a targeted
low-income parent who is pregnant.''.

SEC. 213. OPTIONAL COVERAGE OF CHILDREN THROUGH AGE 20 UNDER THE
MEDICAID PROGRAM AND TITLE XXI.

(a) Medicaid.--
(1) In general.--Section 1902(l)(1)(D) of the Social
Security Act (42 U.S.C. 1396a(l)(1)(D)) is amended by inserting
``(or, at the election of a State, 20 or 21 years of age)''
after ``19 years of age''.
(2) Conforming amendments.--
(A) Section 1902(e)(3)(A) of the Social Security
Act (42 U.S.C. 1396a(e)(3)(A)) is amended by inserting
``(or 1 year less than the age the State has elected
under subsection (l)(1)(D))'' after ``18 years of
age''.
(B) Section 1902(e)(12) of the Social Security Act
(42 U.S.C. 1396a(e)(12)) is amended by inserting ``or
such higher age as the State has elected under
subsection (l)(1)(D)'' after ``19 years of age''.
(C) Section 1920A(b)(1) of the Social Security Act
(42 U.S.C. 1396r-1a(b)(1)) is amended by inserting ``or
such higher age as the State has elected under section
1902(l)(1)(D)'' after ``19 years of age''.
(D) Section 1928(h)(1) of the Social Security Act
(42 U.S.C. 1396s(h)(1)) is amended by inserting ``or 1
year less than the age the State has elected under
section 1902(l)(1)(D)'' before the period at the end.
(E) Section 1932(a)(2)(A) of the Social Security
Act (42 U.S.C. 1396u-2(a)(2)(A)) is amended by
inserting ``(or such higher age as the State has
elected under section 1902(l)(1)(D))'' after ``19 years
of age''.
(b) Title XXI.--Section 2110(c)(1) of the Social Security Act (42
U.S.C. 1397jj(c)(1)) is amended by inserting ``(or such higher age as
the State has elected under section 1902(l)(1)(D))''.
(c) Effective Date.--The amendments made by this section take
effect on October 1, 2006, and apply to medical assistance and child
health assistance provided on or after such date, whether or not
regulations implementing such amendments have been issued.

SEC. 214. ELIMINATION OF ``DIP'' IN CHIP ALLOTMENTS FOR FISCAL YEARS
2003 AND 2004.

Paragraphs (6) and (7) of section 2104(a) of the Social Security
Act (42 U.S.C. 1397dd(a)) are amended by striking ``$3,150,000,000''
each place it appears and inserting ``$4,150,000,000''.

SEC. 215. ADDITIONAL CHIP REVISIONS.

(a) Limiting Cost-Sharing to 2.5 Percent for Families With Income
Below 150 Percent of Poverty.--Section 2103(e)(3)(A) of the Social
Security Act (42 U.S.C. 1397cc(e)(3)(A)) is amended--
(1) by striking ``and'' at the end of clause (i);
(2) by striking the period at the end of clause (ii) and
inserting ``; and''; and
(3) by adding at the end the following new clause:
``(iii) total annual aggregate cost-sharing
described in clauses (i) and (ii) with respect
to all such targeted low-income children in a
family under this title that exceeds 2.5
percent of such family's income for the year
involved.''.
(b) Reporting of Enrollment Data.--
(1) Quarterly reports.--Section 2107(b)(1) of such Act (42
U.S.C. 1397gg(b)(1)) is amended by adding at the end the
following: ``In quarterly reports on enrollment required under
this paragraph, a State shall include information on the age,
gender, race, ethnicity, service delivery system, and family
income of individuals enrolled.''.
(2) Annual reports.--Section 2108(b)(1)(B)(i) of such Act
(42 U.S.C. 1397hh(b)(1)(B)(i)) is amended by inserting
``primary language of enrollees,'' after ``family income,''.
(c) Employer Coverage Waiver Changes.--Section 2105(c)(3) of such
Act (42 U.S.C. 1397ee(c)(3)) is amended--
(1) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii) and indenting appropriately;
(2) by designating the matter beginning with ``Payment may
be made'' as a subparagraph (A) with the heading ``In general''
and indenting appropriately;
(3) in subparagraph (A) (as so designated)--
(A) in the matter preceding clause (i) (as
redesignated by paragraph (1)), by striking ``targeted
low-income children'' and inserting ``a targeted low-
income child, a targeted low-income parent, or a
pregnant woman who is treated as a targeted low-income
parent under section 2111(b)(4)'';
(B) in clause (i) (as so redesignated), by striking
``children'' and inserting ``child, targeted low-income
parent, or pregnant woman treated as such a parent'';
and
(C) in clause (ii) (as so redesignated), by
striking ``children'' and inserting ``child, parent, or
pregnant women''; and
(4) by adding at the end the following new subparagraphs:
``(B) Application of requirements.--In carrying out
subparagraph (A)--
``(i) the Secretary shall not require a
minimum employer contribution level that is
separate from the requirement of cost-
effectiveness under subparagraph (A)(i), but a
State shall identify a reasonable minimum
employer contribution level that is based on
data demonstrating that such a level is
representative to the employer-sponsored
insurance market in the State and shall monitor
employer contribution levels over time to
determine whether substitution is occurring and
report the findings in annual reports under
section 2108(a);
``(ii) the State shall establish a waiting
period of at least 6 months without group
health coverage, but may establish reasonable
exceptions to such period and shall not apply
such a waiting period to a child who is
provided coverage under a group health plan
under section 1906;
``(iii) subject to clause (iv), the State
shall provide satisfactory assurances that the
minimum benefits and cost-sharing protections
established under this title are provided,
either through the coverage under subparagraph
(A) or as a supplement to such coverage; and
``(iv) coverage under such subparagraph
shall not be considered to violate clause (iii)
because it does not comply with requirements
relating to reviews of health service decisions
if the enrollee involved is provided the option
of being provided benefits directly under this
title.
``(C) Access to external review process.--In
carrying out subparagraph (A), if a State provides
coverage under a group health plan that does not meet
the following external review requirements, the State
must give applicants and enrollees (at initial
enrollment and at each redetermination of eligibility)
the option to obtain health benefits coverage other
than through that group health plan:
``(i) The enrollee has an opportunity for
external review of a--
``(I) delay, denial, reduction,
suspension, or termination of health
services, in whole or in part,
including a determination about the
type or level of services; and
``(II) failure to approve, furnish,
or provide payment for health services
in a timely manner.
``(ii) The external review is conducted by
the State or a impartial contractor other than
the contractor responsible for the matter
subject to external review.
``(iii) The external review decision is
made on a timely basis in accordance with the
medical needs of the patient. If the medical
needs of the patient do not dictate a shorter
time frame, the review must be completed--
``(I) within 90 calendar days of
the date of the request for internal or
external review; or
``(II) within 72 hours if the
enrollee's physician or plan determines
that the deadline under subclause (I)
could seriously jeopardize the
enrollee's life or health or ability to
attain, maintain, or regain maximum
function (except that a State may
extend the 72-hour deadline by up to 14
days if the enrollee requests an
extension).
``(iv) The external review decision shall
be in writing.
``(v) Applicants and enrollees have an
opportunity--
``(I) to represent themselves or
have representatives of their choosing
in the review process;
``(II) timely review their files
and other applicable information
relevant to the review of the decision;
and
``(III) fully participate in the
review process, whether the review is
conducted in person or in writing,
including by presenting supplemental
information during the review
process.''.
(d) Sense of the Senate Regarding Authority To Use SCHIP Funds To
Purchase Family Coverage.--It is the sense of the Senate that section
2105(c)(3) of the Social Security Act (42 U.S.C. 1397ee(c)(3)) permits
States to use funds provided under the State children's health
insurance program established under title XXI of that Act (42 U.S.C.
1397aa et seq.) to help low-income working families and pregnant women
eligible for assistance under that program pay their share of employer-
sponsored health insurance coverage.
(e) Effective Date.--The amendments made by this section apply as
of October 1, 2006, whether or not regulations implementing such
amendments have been issued.

SEC. 216. LIMITATIONS ON CONFLICTS OF INTEREST.

(a) Limitation on Conflicts of Interest in Marketing Activities.--
(1) Title xxi.--Section 2105(c) of the Social Security Act
(42 U.S.C. 300aa-5(c)) is amended by adding at the end the
following:
``(8) Limitation on expenditures for marketing
activities.--Amounts expended by a State for the use of an
administrative vendor in marketing health benefits coverage to
low-income children under this title shall not be considered,
for purposes of subsection (a)(2)(D), to be reasonable costs to
administer the plan unless the following conditions are met
with respect to the vendor:
``(A) The vendor is independent of any entity
offering the coverage in the same area of the State in
which the vendor is conducting marketing activities.
``(B) No person who is an owner, employee,
consultant, or has a contract with the vendor either
has any direct or indirect financial interest with such
an entity or has been excluded from participation in
the program under this title or title XVIII or XIX or
debarred by any Federal agency, or subject to a civil
money penalty under this Act.''.
(b) Prohibition of Affiliation With Debarred Individuals.--
(1) Medicaid.--Section 1903(i) of the Social Security Act
(42 U.S.C. 1396b(i))is amended--
(A) by striking the period at the end of paragraph
(20) and inserting ``; or''; and
(B) by inserting after paragraph (20) the
following:
``(21) with respect to any amounts expended for an entity
that receives payments under the plan unless--
``(A) no person with an ownership or control
interest (as defined in section 1124(a)(3)) in the
entity is a person that is debarred, suspended, or
otherwise excluded from participating in procurement or
non-procurement activities under the Federal
Acquisition Regulation; and
``(B) such entity has not entered into an
employment, consulting, or other agreement for the
provision of items or services that are material to
such entity's obligations under the plan with a person
described in subparagraph (A).''.
(2) Title xxi.--Section 2107(e)(1) of the Social Security
Act (42 U.S.C. 1397gg(e)(1)) is amended--
(A) in subparagraph (B), by striking ``and (17)''
and inserting ``(17), and (21)''; and
(B) by adding at the end the following:
``(E) Section 1902(a)(67) (relating to prohibition
of affiliation with debarred individuals).''.
(c) Effective Date.--The amendments made by this section shall
apply to expenditures made on or after October 1, 2006, whether or not
regulations implementing such amendments have been issued.

SEC. 217. TECHNICAL AND CONFORMING AMENDMENTS TO AUTHORITY TO PAY
MEDICAID EXPANSION COSTS FROM TITLE XXI APPROPRIATION.

(a) Authority To Pay Medicaid Expansion Costs From Title XXI
Appropriation.--Section 2105(a) of the Social Security Act (42 U.S.C.
1397ee(a)) is amended to read as follows:
``(a) Allowable Expenditures.--
``(1) In general.--Subject to the succeeding provisions of
this section, the Secretary shall pay to each State with a plan
approved under this title, from its allotment under section
2104, an amount for each quarter equal to the enhanced FMAP of
the following expenditures in the quarter:
``(A) Child health assistance under medicaid.--
Expenditures for child health assistance under the plan
for targeted low-income children in the form of
providing medical assistance for expenditures described
in the fourth sentence of section 1905(b).
``(B) Reserved.--[reserved].
``(C) Child health assistance under this title.--
Expenditures for child health assistance under the plan
for targeted low-income children in the form of
providing health benefits coverage that meets the
requirements of section 2103.
``(D) Assistance and administrative expenditures
subject to limit.--Expenditures only to the extent
permitted consistent with subsection (c)--
``(i) for other child health assistance for
targeted low-income children;
``(ii) for expenditures for health services
initiatives under the plan for improving the
health of children (including targeted low-
income children and other low-income children);
``(iii) for expenditures for outreach
activities as provided in section 2102(c)(1)
under the plan; and
``(iv) for other reasonable costs incurred
by the State to administer the plan.
``(2) Order of payments.--Payments under a subparagraph of
paragraph (1) from a State's allotment for expenditures
described in each such subparagraph shall be made on a
quarterly basis in the order of such subparagraph in such
paragraph.
``(3) No duplicative payment.--In the case of expenditures
for which payment is made under paragraph (1), no payment shall
be made under title XIX.''.
(b) Conforming Amendments.--
(1) Section 1905(u).--Section 1905(u)(1)(B) of the Social
Security Act (42 U.S.C. 1396d(u)(1)(B)) is amended by inserting
``and section 2105(a)(1)'' after ``subsection (b)''.
(2) Section 2105(c).--Section 2105(c)(2)(A) of the Social
Security Act (42 U.S.C. 1397ee(c)(2)(A)) is amended by striking
``subparagraphs (A), (C), and (D) of''.
(c) Effective Date.--The amendments made by this section shall be
effective as if included in the enactment of the Balanced Budget Act of
1997 (Public Law 105-33; 111 Stat. 251).

Subtitle C--Simplified Enrollment

SEC. 221. AUTOMATIC ENROLLMENT OF CHILDREN BORN TO TITLE XXI PARENTS.

Section 2102(b)(1) of the Social Security Act (42 U.S.C.
1397bb(b)(1)) is amended by adding at the end the following:
``(C) Automatic eligibility of children born to a
parent being provided familycare.--Such eligibility
standards shall provide for automatic coverage of a
child born to an individual who is provided assistance
under this title in the same manner as medical
assistance would be provided under section 1902(e)(4)
to a child described in such section.''.

SEC. 222. APPLICATION OF SIMPLIFIED TITLE XXI PROCEDURES UNDER THE
MEDICAID PROGRAM.

(a) Application Under Medicaid.--
(1) In general.--Section 1902(l) of the Social Security Act
(42 U.S.C. 1396a(l)) is amended--
(A) in paragraph (3), by inserting ``subject to
paragraph (5)'', after ``Notwithstanding subsection
(a)(17),''; and
(B) by adding at the end the following:
``(5) With respect to determining the eligibility of individuals
under 19 years of age (or such higher age as the State has elected
under paragraph (1)(D)) for medical assistance under subsection
(a)(10)(A) and, separately, with respect to determining the eligibility
of individuals for medical assistance under subsection
(a)(10)(A)(i)(VIII) or (a)(10)(A)(ii)(XIX), notwithstanding any other
provision of this title, if the State has established a State child
health plan under title XXI--
``(A) the State may not apply a resource standard;
``(B) the State shall use the same simplified eligibility
form (including, if applicable, permitting application other
than in person) as the State uses under such State child health
plan with respect to such individuals;
``(C) the State shall provide for initial eligibility
determinations and redeterminations of eligibility using
verification policies, forms, and frequency that are no less
restrictive than the policies, forms, and frequency the State
uses for such purposes under such State child health plan with
respect to such individuals; and
``(D) the State shall not require a face-to-face interview
for purposes of initial eligibility determinations and
redeterminations unless the State requires such an interview
for such purposes under such child health plan with respect to
such individuals.''.
(2) Effective date.--The amendments made by paragraph (1)
apply to determinations of eligibility made on or after the
date that is 1 year after the date of enactment of this Act,
whether or not regulations implementing such amendments have
been issued.
(b) Presumptive Eligibility.--
(1) In general.--Section 1920A(b)(3)(A)(i) of the Social
Security Act (42 U.S.C. 1396r-1a(b)(3)(A)(i)) is amended by
inserting ``a child care resource and referral agency,'' after
``a State or tribal child support enforcement agency,''.
(2) Application to presumptive eligibility for pregnant
women under medicaid.--Section 1920(b) of the Social Security
Act (42 U.S.C. 1396r-1(b)) is amended by adding at the end
after and below paragraph (2) the following flush sentence:
``The term `qualified provider' includes a qualified entity as defined
in section 1920A(b)(3).''.
(3) Application under title xxi.--
(A) In general.--Section 2107(e)(1)(D) of the
Social Security Act (42 U.S.C. 1397gg(e)(1)) is amended
to read as follows:
``(D) Sections 1920 and 1920A (relating to
presumptive eligibility).''.
(B) Conforming elimination of resource test.--
Section 2102(b)(1)(A) of such Act (42 U.S.C.
1397bb(b)(1)(A)) is amended--
(i) by striking `` and resources (including
any standards relating to spenddowns and
disposition of resources)''; and
(ii) by adding at the end the following:
``Effective 1 year after the date of enactment
of the Access to Affordable Health Care Act,
such standards may not include the application
of a resource standard or test.''.
(c) Automatic Reassessment of Eligibility for Title XXI and
Medicaid Benefits for Children Losing Medicaid or Title XXI
Eligibility.--
(1) Loss of medicaid eligibility.--Section 1902(a) of the
Social Security Act (42 U.S.C. 1396a(a)) is amended--
(A) by striking ``and'' at the end of paragraph
(66):
(B) by striking the period at the end of paragraph
(67) and inserting ``; and'', and
(B) by inserting after paragraph (67) the
following:
``(68) provide, in the case of a State with a State child
health plan under title XXI, that before medical assistance to
a child (or a parent of a child) is discontinued under this
title, a determination of whether the child (or parent) is
eligible for benefits under title XXI shall be made and, if
determined to be so eligible, the child (or parent) shall be
automatically enrolled in the program under such title without
the need for a new application.''.
(2) Loss of title xxi eligibility and coordination with
medicaid.--Section 2102(b) (42 U.S.C. 1397bb(b)) is amended--
(A) in paragraph (3), by redesignating
subparagraphs (D) and (E) as subparagraphs (E) and (F),
respectively, and by inserting after subparagraph (C)
the following:
``(D) that before health assistance to a child (or
a parent of a child) is discontinued under this title,
a determination of whether the child (or parent) is
eligible for benefits under title XIX is made and, if
determined to be so eligible, the child (or parent) is
automatically enrolled in the program under such title
without the need for a new application;'';
(B) by redesignating paragraph (4) as paragraph
(5); and
(C) by inserting after paragraph (3) the following
new paragraph:
``(4) Coordination with medicaid.--The State shall
coordinate the screening and enrollment of individuals under
this title and under title XIX consistent with the following:
``(A) Information that is collected under this
title or under title XIX which is needed to make an
eligibility determination under the other title shall
be transmitted to the appropriate administering entity
under such other title in a timely manner so that
coverage is not delayed and families do not have to
submit the same information twice. Families shall be
provided the information they need to complete the
application process for coverage under both titles and
be given appropriate notice of any determinations made
on their applications for such coverage.
``(B) If a State does not use a joint application
under this title and such title, the State shall--
``(i) promptly inform a child's parent or
caretaker in writing and, if appropriate,
orally, that a child has been found likely to
be eligible under title XIX;
``(ii) provide the family with an
application for medical assistance under such
title and offer information about what (if any)
further information, documentation, or other
steps are needed to complete such application
process;
``(iii) offer assistance in completing such
application process; and
``(iv) promptly transmit the separate
application under this title or the information
obtained through such application, and all
other relevant information and documentation,
including the results of the screening process,
to the State agency under title XIX for a final
determination on eligibility under such title.
``(C) Applicants are notified in writing of--
``(i) benefits (including restrictions on
cost-sharing) under title XIX; and
``(ii) eligibility rules that prohibit
children who have been screened eligible for
medical assistance under such title from being
enrolled under this title, other than
provisional temporary enrollment while a final
eligibility determination is being made under
such title.
``(D) If the agency administering this title is
different from the agency administering a State plan
under title XIX, such agencies shall coordinate the
screening and enrollment of applicants for such
coverage under both titles.
``(E) The coordination procedures established
between the program under this title and under title
XIX shall apply not only to the initial eligibility
determination of a family but also to any renewals or
redeterminations of such eligibility.''.
(3) Effective date.--The amendments made by paragraphs (1)
and (2) apply to individuals who lose eligibility under the
medicaid program under title XIX, or under a State child health
insurance plan under title XXI, respectively, of the Social
Security Act on or after October 1, 2006 (or, if later, 60 days
after the date of enactment of this Act), whether or not
regulations implementing such amendments have been issued.
(d) Provision of Medicaid and CHIP Applications and Information
Under the School Lunch Program.--Section 9(b)(2)(B)(iii) of the Richard
B. Russell National School Lunch Act (42 U.S.C. 1758(b)(2)(B)(iii)) is
amended by adding at the end the following:
``(III) Notice of availablity of
health benefits under medicaid and
chip.--Descriptive material distributed
in accordance with clause (i) shall
also contain information (provided on a
form separate from the application form
for free and reduced price lunches) on
the availability of medical assistance
under title XIX of the Social Security
Act (42 U.S.C. 1396 et seq.) and of
child health and FamilyCare assistance
under title XXI of such Act, including
information on how to obtain an
application for assistance under such
programs.''.
(e) 12-Months Continuous Eligibility.--
(1) Medicaid.--Section 1902(e)(12) of the Social Security
Act (42 U.S.C. 1396a(e)(12)) is amended--
(A) by striking ``At the option of the State, the
plan may'' and inserting ``The plan shall'';
(B) by striking ``an age specified by the State
(not to exceed 19 years of age)'' and inserting ``19
years of age (or such higher age as the State has
elected under subsection (l)(1)(D)) or, at the option
of the State, who is eligible for medical assistance as
the parent of such a child''; and
(C) in subparagraph (A), by striking ``a period
(not to exceed 12 months)'' and inserting ``the 12-
month period beginning on the date''.
(2) Title xxi.--Section 2102(b)(2) of such Act (42 U.S.C.
1397bb(b)(2)) is amended by adding at the end the following:
``Such methods shall provide 12-months continuous eligibility
for children under this title in the same manner that section
1902(e)(12) provides 12-months continuous eligibility for
children described in such section under title XIX. If a State
has elected to apply section 1902(e)(12) to parents, such
methods may provide 12-months continuous eligibility for
parents under this title in the same manner that such section
provides 12-months continuous eligibility for parents described
in such section under title XIX.''.
(3) Effective date.--
(A) In general.--The amendments made by this
subsection take effect on October 1, 2006 (or, if
later, 60 days after the date of enactment of this
Act), whether or not regulations implementing such
amendments have been issued.

SEC. 223. ELIMINATION OF 100 HOUR RULE AND OTHER AFDC-RELATED
ELIGIBILITY RESTRICTIONS.

(a) In General.--Section 1931(b)(1)(A)(ii) of the Social Security
Act (42 U.S.C. 1396u-1(b)(1)(A)(ii)) is amended by inserting ``other
than the requirement that the child be deprived of parental support or
care by reason of the death, continued absence from the home,
incapacity, or unemployment of a parent,'' after ``section 407(a),''.
(b) Conforming Amendment.--Section 1905(a) of the Social Security
Act (42 U.S.C. 1396d(a)) is amended, in the matter before paragraph
(1), in clause (ii), by striking ``if such child is (or would, if
needy, be) a dependent child under part A of title IV''.
(c) Effective Date.--The amendments made by this section apply to
eligibility determinations made on or after October 1, 2006, whether or
not regulations implementing such amendments have been issued.

Subtitle D--State Option to Extend Medicaid Coverage to Certain Low-
Income Individuals

SEC. 231. STATE OPTION TO EXTEND MEDICAID COVERAGE TO CERTAIN LOW-
INCOME INDIVIDUALS.

(a) State Option.--Section 1902(a)(10)(A)(ii) of the Social
Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)), as amended by section
212(a)(1)(A), is amended--
(1) by striking ``or'' at the end of subclause (XVIII);
(2) by adding ``or'' at the end of subclause (XIX); and
(3) by adding at the end the following:
``(XX) who are individuals who are
not otherwise eligible for medical
assistance under this subparagraph, or
under a waiver approved under section
1115, or otherwise, as of the date of
enactment of this subclause and whose
family income does not exceed 125
percent of the income official poverty
line (as defined by the Office of
Management and Budget and revised
annually in accordance with section
673(2) of the Omnibus Budget
Reconciliation Act of 1981) applicable
to a family of the size involved;''.
(b) Conforming Amendments.--
(1) Medical assistance eligibility categories.--Section
1905(a) of such Act (42 U.S.C. 1396d(a)), as amended by section
212(e)(1), is amended in the matter preceding paragraph (1)--
(i) by striking ``or'' at the end of clause
(xiii);
(ii) by adding ``or'' at the end of clause
(xiv); and
(iii) by inserting after clause (xiv) the
following:
``(xv) who are individuals described in section
1902(a)(10)(A)(ii)(XX),''.
(2) Exemption from upper income limitation.--Section
1903(f)(4) of such Act (42 U.S.C. 1396b(f)(4)), as amended by
section 212(e)(2)(B), is amended by inserting
``1902(a)(10)(A)(ii)(XX),'' after ``1902(a)(10)(A)(ii)(XIX),''.
(c) Effective Dates.--The amendments made by this subsection take
effect on October 1, 2006.

Subtitle E--Improving Welfare-to-Work Transition Under Medicaid

SEC. 241. IMPROVING WELFARE-TO-WORK TRANSITION UNDER MEDICAID.

(a) Making Provision Permanent.--
(1) In general.--Subsection (f) of section 1925 of the
Social Security Act (42 U.S.C. 1396r-6) is repealed.
(2) Conforming amendment.--Section 1902(e)(1) of the Social
Security Act (42 U.S.C. 1396a(e)(1)) is repealed.
(b) State Option of Initial 12-Month Eligibility.--Section 1925 of
the Social Security Act (42 U.S.C. 1396r-6) is amended--
(1) in subsection (a), by adding at the end the following:
``(5) Option of 12-month initial eligibility period.--A
State may elect to treat any reference in this subsection to a
6-month period (or 6 months) as a reference to a 12-month
period (or 12 months). In the case of such an election,
subsection (b) shall not apply.''; and
(2) in subsection (b)(1), by inserting ``and subsection
(a)(5)'' after ``paragraph (3)''.
(c) Simplification.--
(1) Removal of administrative reporting requirements for
additional 6-month extension.--Section 1925(b)(2) of the Social
Security Act (42 U.S.C. 1396r-6(b)(2)) is amended--
(A) by striking subparagraph (B);
(B) in subparagraph (A)(i)--
(i) in the heading, by striking ``and
requirements'';
(ii) by striking ``(I)'' and all that
follows through ``(II)'' and inserting ``(i)'';
(iii) by striking ``, and (III)'' and
inserting ``and (ii)''; and
(iv) by redesignating such subparagraph as
subparagraph (A) (with appropriate
indentation); and
(C) in subparagraph (A)(ii)--
(i) in the heading, by striking ``reporting
requirements and'';
(ii) by striking ``notify the family of the
reporting requirement under subparagraph
(B)(ii) and'' and inserting ``provide the
family with notification of''; and
(iii) by redesignating such subparagraph as
subparagraph (B) (with appropriate
indentation).
(2) Removal of requirement for previous receipt of medical
assistance.--Section 1925(a)(1) of the Social Security Act (42
U.S.C. 1396r-6(a)(1)) is amended--
(A) by inserting ``but subject to subparagraph
(B)'' after ``any other provision of this title'';
(B) by redesignating the matter after
``Requirement.--'' as a subparagraph (A) with the
heading ``In general.--'' and with the same indentation
as subparagraph (B) (as added by subparagraph (C)); and
(C) by adding at the end the following:
``(B) State option to waive requirement for 3
months previous receipt of medical assistance.--A State
may, at its option, elect also to apply subparagraph
(A) in the case of a family that had applied for and
was eligible for such aid for fewer than 3 months
during the 6 immediately preceding months described in
such subparagraph.''.
(3) Permitting increase or waiver of 185 percent of poverty
earning limit.--Section 1925(b)(3)(A)(iii)(III) of the Social
Security Act (42 U.S.C. 1396r-6(b)(3)(A)(iii)(III)) is
amended--
(A) by inserting ``(at its option)'' after ``the
State''; and
(B) by inserting ``(or such higher percent as the
State may specify)'' after ``185 percent''.
(4) Exemption for states covering needy families up to 185
percent of poverty.--Section 1925 of the Social Security Act
(42 U.S.C. 1396r-6), as amended by subsection (a), is amended--
(A) in each of subsections (a)(1) and (b)(1), by
inserting ``but subject to subsection (f),'' after
``Notwithstanding any other provision of this title,'';
and
(B) by adding at the end the following:
``(f) Exemption for State Covering Needy Families up to 185 Percent
of Poverty.--
``(1) In general.--At State option, the provisions of this
section shall not apply to a State that uses the authority
under section 1902(a)(10)(A)(ii)(XIX), section 1931(b)(2)(C),
or otherwise to make medical assistance available under the
State plan under this title to eligibleindividuals described in
section 1902(k)(1), or all individuals described in section
1931(b)(1), and who are in families with gross incomes
(determined without regard to work-related child care expenses
of such individuals) at or below 185 percent of the income
official poverty line (as defined by the Office of Management
and Budget, and revised annually in accordance with section
673(2) of the Omnibus Budget Reconciliation Act of 1981)
applicable to a family of the size involved.
``(2) Application to other provisions of this title.--The
State plan of a State described in paragraph (1) shall be
deemed to meet the requirements of section
1902(a)(10)(A)(i)(I).''.
(d) Effective Date.--The amendments made by this section take
effect on October 1, 2006, whether or not regulations implementing such
amendments have been issued.

Subtitle F--Grants to Promote Innovative Outreach and Enrollment Under
Medicaid and SCHIP

SEC. 251. GRANTS TO PROMOTE INNOVATIVE OUTREACH AND ENROLLMENT UNDER
MEDICAID AND SCHIP.

(a) Grants for Expanded Outreach Activities.--Title XXI of the
Social Security Act (42 U.S.C. 1397aa et seq.), as amended by section
212(a)(2), is amended by adding at the end the following:

``SEC. 2112. EXPANDED OUTREACH ACTIVITIES.

``(a) In General.--The Secretary shall award grants to eligible
entities to--
``(1) conduct innovative outreach and enrollment efforts
that are designed to increase the enrollment and participation
of eligible children under this title and title XIX; and
``(2) promote understanding of the importance of health
insurance coverage for prenatal care and children.
``(b) Priority for Award of Grants.--In making grants under
subsection (a), the Secretary shall give priority to--
``(1) eligible entities that propose to target geographic
areas with high rates of--
``(A) eligible but unenrolled children, including
such children who reside in rural areas; or
``(B) racial and ethnic minorities and health
disparity populations, including those proposals that
address cultural and linguistic barriers to enrollment;
and
``(2) eligible entities that plan to engage in outreach
efforts with respect to individuals described in paragraph (1)
and that are--
``(A) Federal health safety net organizations; or
``(B) faith-based organizations or consortia.
``(c) Application.--An eligible entity that desires to receive a
grant under this section 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) quality and outcomes performance measures to evaluate
the effectiveness of activities funded by a grant awarded under
this section to ensure that the activities are meeting their
goals; and
``(2) an assurance that the entity shall--
``(A) conduct an assessment of the effectiveness of
such activities against such performance measures; and
``(B) collect and report enrollment data and other
information determined as a result of conducting such
assessments to the Secretary, in such form and manner
as the Secretary shall require.
``(d) Dissemination of Enrollment Data and Information Determined
from Effectiveness Assessments; Annual Report.--The Secretary shall--
``(1) disseminate to eligible entities and make publicly
available the enrollment data and information reported in
accordance with subsection (c)(2)(B); and
``(2) submit an annual report to Congress on the outreach
activities funded by grants awarded under this section.
``(e) Definitions.--In this section:
``(1) Eligible entity.--The term `eligible entity' means
any of the following:
``(A) A State.
``(B) A Federal health safety net organization.
``(C) A national, local, or community-based public
or nonprofit private organization.
``(D) 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.
``(E) An elementary or secondary school.
``(2) Federal health safety net organization.--The term
`Federal health safety net organization' means--
``(A) an Indian tribe, tribal organization, or an
urban Indian organization receiving funds under title V
of the Indian Health Care Improvement Act (25 U.S.C.
1651 et seq.);
``(B) a federally-qualified health center (as
defined in section 1905(l)(2)(B));
``(C) a hospital defined as a disproportionate
share hospital for purposes of section 1923;
``(D) a covered entity described in section
340B(a)(4) of the Public Health Service Act (42 U.S.C.
256b(a)(4)); and
``(E) any other entity or a 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; service unit.--The terms `Indian', `Indian
tribe', `tribal organization', `urban Indian organization', and
`Service Unit' have the meanings given such terms in section 4
of the Indian Health Care Improvement Act (25 U.S.C. 1603).
``(f) Appropriation.--There is appropriated, out of any money in
the Treasury not otherwise appropriated, $50,000,000 for each of fiscal
years 2006 and 2007 for the purpose of awarding grants under this
section. 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.''.
(b) Extending Use of Outstationed Workers To Accept Title XXI
Applications.--Section 1902(a)(55) of the Social Security Act (42
U.S.C. 1396a(a)(55)) is amended by inserting ``, and applications for
child health assistance under title XXI'' after ``(a)(10)(A)(ii)(IX)''.

SEC. 252. STATE OPTION TO PROVIDE FOR SIMPLIFIED DETERMINATIONS OF A
CHILD'S FINANCIAL ELIGIBILITY FOR MEDICAL ASSISTANCE
UNDER MEDICAID OR CHILD HEALTH ASSISTANCE UNDER SCHIP.

(a) Medicaid.--Section 1902(e) of the Social Security Act (42
U.S.C. 1396a(e)) is amended by adding at the end the following:
``(13)(A) At the option of the State, the plan may provide
that financial eligibility requirements for medical assistance
are met for an individual who is under an age specified by the
State (except as provided in subparagraph (C), not to exceed 21
years of age) by using a determination made within a reasonable
period (as determined by the State) before its use for this
purpose, of the individual's family or household income, or if
applicable for purposes of determining eligibility under this
title or title XXI, assets or resources, by a Federal or State
agency, or a public or private entity making such determination
on behalf of such agency, specified by the plan, including (but
not limited to) an agency administering the State program
funded under part A of title IV, the Food Stamp Act of 1977,
the Richard B. Russell National School Lunch Act, or the Child
Nutrition Act of 1966, notwithstanding any differences in
budget unit, disregard, deeming, or other methodology, but only
if--
``(i) the agency has fiscal liabilities or
responsibilities affected or potentially affected by
such determination; and
``(ii) any information furnished by the agency
pursuant to this subparagraph is used solely for
purposes of determining eligibility for medical
assistance under this title or for child health
assistance under title XXI.
``(B) Nothing in subparagraph (A) shall be construed--
``(i) to authorize the denial of medical assistance
under this title or of child health assistance under
title XXI to an individual who, without the application
of this paragraph, would qualify for such assistance;
``(ii) to relieve a State of the obligation under
subsection (a)(8) to furnish medical assistance with
reasonable promptness after the submission of an
initial application that is evaluated or for which
evaluation is requested pursuant to this paragraph; or
``(iii) to relieve a State of the obligation to
determine eligibility for medical assistance under this
title or for child health assistance under title XXI on
a basis other than family or household income (or, if
applicable, assets or resources) if an individual is
determined ineligible for such assistance on the basis
of information furnished pursuant to this paragraph.
``(C) At the option of a State, the financial eligibility
process described in subparagraph (A) may apply to an
individual who is older than age 21 if the individual's
eligibility for medical assistance under this title is based on
pregnancy or if the individual is a parent, guardian, or other
caretaker relative of an individual found eligible under
subparagraph (A).''.
(b) SCHIP.--Section 2107(e)(1) of the Social Security Act (42
U.S.C. 1397gg(e)(1)) is amended by adding at the end the following:
``(E) Section 1902(e)(13) (relating to the State
option to base an individual's eligibility for
assistance on financial determinations made by a
program providing nutrition or other public assistance
(except that the State option under subparagraph (C) of
such section shall apply under this title only if an
individual is pregnant)).''.
(c) Effective Date.--The amendments made by this section take
effect on October 1, 2005.

Subtitle G--Demonstration Programs to Improve Medicaid and SCHIP
Outreach to Homeless Individuals and Families

SEC. 261. DEMONSTRATION PROGRAMS TO IMPROVE MEDICAID AND SCHIP OUTREACH
TO HOMELESS INDIVIDUALS AND FAMILIES.

(a) Authority.--The Secretary of Health and Human Services may
award demonstration grants to not more than 7 States (or other
qualified entities) to conduct innovative programs that are designed to
improve outreach to homeless individuals and families under the
programs described in subsection (b) with respect to enrollment of such
individuals and families under such programs and the provision of
services (and coordinating the provision of such services) under such
programs.
(b) Programs for Homeless Described.--The programs described in
this subsection are as follows:
(1) Medicaid.--The program under title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.).
(2) CHIP.--The program under title XXI of the Social
Security Act (42 U.S.C. 1397aa et seq.).
(3) TANF.--The program under part of A of title IV of the
Social Security Act (42 U.S.C. 601 et seq.).
(4) SAMHSA block grants.--The program of grants under part
B of title XIX of the Public Health Service Act (42 U.S.C.
300x-1 et seq.).
(5) Food stamp program.--The program under the Food Stamp
Act of 1977 (7 U.S.C. 2011 et seq.).
(6) Workforce investment act.--The program under the
Workforce Investment Act of 1999 (29 U.S.C. 2801 et seq.).
(7) Welfare-to-work.--The welfare-to-work program under
section 403(a)(5) of the Social Security Act (42 U.S.C.
603(a)(5)).
(8) Other programs.--Other public and private benefit
programs that serve low-income individuals.
(c) Appropriations.--For the purposes of carrying out this section,
there is appropriated for fiscal year 2006, out of any funds in the
Treasury not otherwise appropriated, $10,000,000, to remain available
until expended.

TITLE III--STRENGTHENING THE HEALTH CARE SAFETY NET

SEC. 301. INCREASE IN FUNDING FOR THE CONSOLIDATED HEALTH CENTERS
PROGRAM.

It is the sense of the Senate that the amounts appropriated for
consolidated health centers under section 330 of the Public Health
Service Act (42 U.S.C. 254b) should be doubled over the 5-fiscal year
period beginning with fiscal year 2006.

TITLE IV--EXPANSION OF ACCESS TO HEALTH CARE IN RURAL AND UNDERSERVED
AREAS

SEC. 401. EXPANSION OF FUNDING.

It is the sense of the Senate that the amounts appropriated for
National Health Service Corps under subpart II of part D of title III
of the Public Health Service Act (42 U.S.C. 254d et seq.) should be
doubled over the 5-fiscal year period beginning with fiscal year 2006
to assist in provide support for physicians, dentists, and other health
care clinicians who serve in rural and inner city areas.

SEC. 402. LOAN REPAYMENT AND SCHOLARSHIP PROGRAMS.

Section 338C of the Public Health Service Act (42 U.S.C. 254m) is
amended by adding at the end the following:
``(e) Notwithstanding any other provision of this title, periods of
obligated service may be served and fulfilled on a part time basis if--
``(1) such part time service is agreed to by both the
placement site or sites and the recipient of the scholarship or
loan repayment; and
``(2) the recipient's total obligation is fulfilled.''.

TITLE V--EXPANDED ACCESS TO AFFORDABLE LONG-TERM CARE

SEC. 501. TREATMENT OF PREMIUMS ON QUALIFIED LONG-TERM CARE INSURANCE
CONTRACTS.

(a) In General.--Part VII of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to additional itemized
deductions) is amended by redesignating section 224 as section 225 and
by inserting after section 223 the following new section:

``SEC. 224. PREMIUMS ON QUALIFIED LONG-TERM CARE INSURANCE CONTRACTS.

``(a) In General.--In the case of an individual, there shall be
allowed as a deduction an amount equal to the applicable percentage of
the amount of eligible long-term care premiums (as defined in section
213(d)(10)) paid during the taxable year for coverage for the taxpayer,
his spouse, and dependents under a qualified long-term care insurance
contract (as defined in section 7702B(b)).
``(b) Applicable Percentage.--For purposes of subsection (a)--
``(1) In general.--Except as otherwise provided in this
subsection, the applicable percentage shall be determined in
accordance with the following table based on the number of
years of continuous coverage (as of the close of the taxable
year) of the individual under any qualified long-term care
insurance contracts (as defined in section 7702B(b)):

``If the number of years of
The applicable long-term
continuous coverage is--
care percentage is--
Less than 1............................      60
At least 1 but less than 2.............      70
At least 2 but less than 3.............      80
At least 3 but less than 4.............      90
At least 4.............................    100.
``(2) Special rules for individuals who have attained age
55.--In the case of an individual who has attained age 55 as of
the close of the taxable year, the following table shall be
substituted for the table in paragraph (1).

``If the number of years of
The applicable long-term
continuous coverage is--
care percentage is--
Less than 1............................      70
At least 1 but less than 2.............      85
At least 2.............................    100.
``(3) Only coverage after 2002 taken into account.--Only
coverage for periods after December 31, 2004, shall be taken
into account under this subsection.
``(4) Continuous coverage.--An individual shall not fail to
be treated as having continuous coverage if the aggregate
breaks in coverage during any 1-year period are less than 60
days.
``(c) Coordination With Other Deductions.--Any amount paid by a
taxpayer for any qualified long-term care insurance contract to which
subsection (a) applies shall not be taken into account in computing the
amount allowable to the taxpayer as a deduction under section 162(l) or
213(a).''.
(b) Long-Term Care Insurance Permitted To Be Offered Under
Cafeteria Plans and Flexible Spending Arrangements.--
(1) Cafeteria plans.--Section 125(f) of the Internal
Revenue Code of 1986 (defining qualified benefits) is amended
by inserting before the period at the end ``; except that such
term shall include the payment of premiums for any qualified
long-term care insurance contract (as defined in section 7702B)
to the extent the amount of such payment does not exceed the
eligible long-term care premiums (as defined in section
213(d)(10)) for such contract''.
(2) Flexible spending arrangements.--Section 106 of such
Code (relating to contributions by an employer to accident and
health plans) is amended by striking subsection (c).
(c) Conforming Amendments.--
(1) Section 62(a) of the Internal Revenue Code of 1986 is
amended by inserting after paragraph (20) the following new
item:
``(21) Premiums on qualified long-term care insurance
contracts.--The deduction allowed by section 224.''.
(2) The table of sections for part VII of subchapter B of
chapter 1 of such Code is amended by striking the last item and
inserting the following new items:

``Sec. 224. Premiums on qualified long-
term care insurance contracts.
``Sec. 225. Cross reference.''.
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2004.
(2) Cafeteria plans and flexible spending arrangements.--
The amendments made by subsection (b) shall apply to taxable
years beginning after December 31, 2004.

SEC. 502. CREDIT FOR TAXPAYERS WITH LONG-TERM CARE NEEDS.

(a) In General.--Subpart A of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to nonrefundable
personal credits) is amended by inserting after section 25B the
following new section:

``SEC. 25C. CREDIT FOR TAXPAYERS WITH LONG-TERM CARE NEEDS.

``(a) Allowance of Credit.--
``(1) In general.--There shall be allowed as a credit
against the tax imposed by this chapter for the taxable year an
amount equal to the applicable credit amount multiplied by the
number of applicable individuals with respect to whom the
taxpayer is an eligible caregiver for the taxable year.
``(2) Applicable credit amount.--For purposes of paragraph
(1), the applicable credit amount shall be determined in
accordance with the following table:

``For taxable years beginning
The applicable
in calendar year--
credit amount is--
2005...........................................     $1,000
2006...........................................      1,500
2007...........................................      2,000
2008...........................................      2,500
2009 or thereafter.............................      3,000.
``(b) Limitation Based on Adjusted Gross Income.--
``(1) In general.--The amount of the credit allowable under
subsection (a) shall be reduced (but not below zero) by $100
for each $1,000 (or fraction thereof) by which the taxpayer's
modified adjusted gross income exceeds the threshold amount.
For purposes of the preceding sentence, the term `modified
adjusted gross income' means adjusted gross income increased by
any amount excluded from gross income under section 911, 931,
or 933.
``(2) Threshold amount.--For purposes of paragraph (1), the
term `threshold amount' means--
``(A) $150,000 in the case of a joint return, and
``(B) $75,000 in any other case.
``(3) Indexing.--In the case of any taxable year beginning
in a calendar year after 2005, each dollar amount contained in
paragraph (2) shall be increased by an amount equal to the
product of--
``(A) such dollar amount, and
``(B) the medical care cost adjustment determined
under section 213(d)(10)(B)(ii) for the calendar year
in which the taxable year begins, determined by
substituting `August 2005' for `August 1996' in
subclause (II) thereof.
If any increase determined under the preceding sentence is not
a multiple of $50, such increase shall be rounded to the next
lowest multiple of $50.
``(c) Definitions.--For purposes of this section--
``(1) Applicable individual.--
``(A) In general.--The term `applicable individual'
means, with respect to any taxable year, any individual
who has been certified, before the due date for filing
the return of tax for the taxable year (without
extensions), by a physician (as defined in section
1861(r)(1) of the Social Security Act) as being an
individual with long-term care needs described in
subparagraph (B) for a period--
``(i) which is at least 180 consecutive
days, and
``(ii) a portion of which occurs within the
taxable year.
Such term shall not include any individual otherwise
meeting the requirements of the preceding sentence
unless within the 39\1/2\ month period ending on such
due date (or such other period as the Secretary
prescribes) a physician (as so defined) has certified
that such individual meets such requirements.
``(B) Individuals with long-term care needs.--An
individual is described in this subparagraph if the
individual meets any of the following requirements:
``(i) The individual is at least 6 years of
age and--
``(I) is unable to perform (without
substantial assistance from another
individual) at least 3 activities of
daily living (as defined in section
7702B(c)(2)(B)) due to a loss of
functional capacity, or
``(II) requires substantial
supervision to protect such individual
from threats to health and safety due
to severe cognitive impairment and is
unable to perform, without reminding or
cuing assistance, at least 1 activity
of daily living (as so defined) or to
the extent provided in regulations
prescribed by the Secretary (in
consultation with the Secretary of
Health and Human Services), is unable
to engage in age appropriate
activities.
``(ii) The individual is at least 2 but not
6 years of age and is unable due to a loss of
functional capacity to perform (without
substantial assistance from another individual)
at least 2 of the following activities: eating,
transferring, or mobility.
``(iii) The individual is under 2 years of
age and requires specific durable medical
equipment by reason of a severe health
condition or requires a skilled practitioner
trained to address the individual's condition
to be available if the individual's parents or
guardians are absent.
``(2) Eligible caregiver.--
``(A) In general.--A taxpayer shall be treated as
an eligible caregiver for any taxable year with respect
to the following individuals:
``(i) The taxpayer.
``(ii) The taxpayer's spouse.
``(iii) An individual with respect to whom
the taxpayer is allowed a deduction under
section 151 for the taxable year.
``(iv) An individual who would be described
in clause (iii) for the taxable year if section
151(c)(1)(A) were applied by substituting for
the exemption amount an amount equal to the sum
of the exemption amount, the standard deduction
under section 63(c)(2)(C), and any additional
standard deduction under section 63(c)(3) which
would be applicable to the individual if clause
(iii) applied.
``(v) An individual who would be described
in clause (iii) for the taxable year if--
``(I) the requirements of clause
(iv) are met with respect to the
individual, and
``(II) the requirements of
subparagraph (B) are met with respect
to the individual in lieu of the
support test of section 152(a).
``(B) Residency test.--The requirements of this
subparagraph are met if an individual has as his
principal place of abode the home of the taxpayer and--
``(i) in the case of an individual who is
an ancestor or descendant of the taxpayer or
the taxpayer's spouse, is a member of the
taxpayer's household for over half the taxable
year, or
``(ii) in the case of any other individual,
is a member of the taxpayer's household for the
entire taxable year.
``(C) Special rules where more than 1 eligible
caregiver.--
``(i) In general.--If more than 1
individual is an eligible caregiver with
respect to the same applicable individual for
taxable years ending with or within the same
calendar year, a taxpayer shall be treated as
the eligible caregiver if each such individual
(other than the taxpayer) files a written
declaration (in such form and manner as the
Secretary may prescribe) that such individual
will not claim such applicable individual for
the credit under this section.
``(ii) No agreement.--If each individual
required under clause (i) to file a written
declaration under clause (i) does not do so,
the individual with the highest modified
adjusted gross income (as defined in section
32(c)(5)) shall be treated as the eligible
caregiver.
``(iii) Married individuals filing
separately.--In the case of married individuals
filing separately, the determination under this
subparagraph as to whether the husband or wife
is the eligible caregiver shall be made under
the rules of clause (ii) (whether or not one of
them has filed a written declaration under
clause (i)).
``(d) Identification Requirement.--No credit shall be allowed under
this section to a taxpayer with respect to any applicable individual
unless the taxpayer includes the name and taxpayer identification
number of such individual, and the identification number of the
physician certifying such individual, on the return of tax for the
taxable year.
``(e) Taxable Year Must Be Full Taxable Year.--Except in the case
of a taxable year closed by reason of the death of the taxpayer, no
credit shall be allowable under this section in the case of a taxable
year covering a period of less than 12 months.''.
(b) Conforming Amendments.--
(1) Section 6213(g)(2) of the Internal Revenue Code of 1986
is amended by striking ``and'' at the end of subparagraph (L),
by striking the period at the end of subparagraph (M) and
inserting ``, and'', and by inserting after subparagraph (M)
the following new subparagraph:
``(N) an omission of a correct TIN or physician
identification required under section 25C(d) (relating
to credit for taxpayers with long-term care needs) to
be included on a return.''.
(2) The table of sections for subpart A of part IV of
subchapter A of chapter 1 of such Code is amended by inserting
after the item relating to section 25B the following new item:

``Sec. 25C. Credit for taxpayers with
long-term care needs.''.
(c) Effective Dates.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2004.

SEC. 503. ADDITIONAL CONSUMER PROTECTIONS FOR LONG-TERM CARE INSURANCE.

(a) Additional Protections Applicable to Long-Term Care
Insurance.--Subparagraphs (A) and (B) of section 7702B(g)(2) of the
Internal Revenue Code of 1986 (relating to requirements of model
regulation and Act) are amended to read as follows:
``(A) In general.--The requirements of this
paragraph are met with respect to any contract if such
contract meets--
``(i) Model regulation.--The following
requirements of the model regulation:
``(I) Section 6A (relating to
guaranteed renewal or
noncancellability), and the
requirements of section 6B of the model
Act relating to such section 6A.
``(II) Section 6B (relating to
prohibitions on limitations and
exclusions).
``(III) Section 6C (relating to
extension of benefits).
``(IV) Section 6D (relating to
continuation or conversion of
coverage).
``(V) Section 6E (relating to
discontinuance and replacement of
policies).
``(VI) Section 7 (relating to
unintentional lapse).
``(VII) Section 8 (relating to
disclosure), other than section 8F
thereof.
``(VIII) Section 11 (relating to
prohibitions against post-claims
underwriting).
``(IX) Section 12 (relating to
minimum standards).
``(X) Section 13 (relating to
requirement to offer inflation
protection), except that any
requirement for a signature on a
rejection of inflation protection shall
permit the signature to be on an
application or on a separate form.
``(XI) Section 25 (relating to
prohibition against preexisting
conditions and probationary periods in
replacement policies or certificates).
``(XII) The provisions of section
26 relating to contingent nonforfeiture
benefits, if the policyholder declines
the offer of a nonforfeiture provision
described in paragraph (4).
``(ii) Model act.--The following
requirements of the model Act:
``(I) Section 6C (relating to
preexisting conditions).
``(II) Section 6D (relating to
prior hospitalization).
``(III) The provisions of section 8
relating to contingent nonforfeiture
benefits, if the policyholder declines
the offer of a nonforfeiture provision
described in paragraph (4).
``(B) Definitions.--For purposes of this
paragraph--
``(i) Model provisions.--The terms `model
regulation' and `model Act' mean the long-term
care insurance model regulation, and the long-
term care insurance model Act, respectively,
promulgated by the National Association of
Insurance Commissioners (as adopted as of
September 2000).
``(ii) Coordination.--Any provision of the
model regulation or model Act listed under
clause (i) or (ii) of subparagraph (A) shall be
treated as including any other provision of
such regulation or Act necessary to implement
the provision.
``(iii) Determination.--For purposes of
this section and section 4980C, the
determination of whether any requirement of a
model regulation or the model Act has been met
shall be made by the Secretary.''.
(b) Excise Tax.--Paragraph (1) of section 4980C(c) of the Internal
Revenue Code of 1986 (relating to requirements of model provisions) is
amended to read as follows:
``(1) Requirements of model provisions.--
``(A) Model regulation.--The following requirements
of the model regulation must be met:
``(i) Section 9 (relating to required
disclosure of rating practices to consumer).''
``(ii) Section 14 (relating to application
forms and replacement coverage).
``(iii) Section 15 (relating to reporting
requirements), except that the issuer shall
also report at least annually the number of
claims denied during the reporting period for
each class of business (expressed as a
percentage of claims denied), other than claims
denied for failure to meet the waiting period
or because of any applicable preexisting
condition.
``(iv) Section 22 (relating to filing
requirements for marketing).
``(v) Section 23 (relating to standards for
marketing), including inaccurate completion of
medical histories, other than paragraphs (1),
(6), and (9) of section 23C, except that--
``(I) in addition to such
requirements, no person shall, in
selling or offering to sell a qualified
long-term care insurance contract,
misrepresent a material fact; and
``(II) no such requirements shall
include a requirement to inquire or
identify whether a prospective
applicant or enrollee for long-term
care insurance has accident and
sickness insurance.
``(vi) Section 24 (relating to
suitability).
``(vii) Section 29 (relating to standard
format outline of coverage).
``(viii) Section 30 (relating to
requirement to deliver shopper's guide).
The requirements referred to in clause (vi) shall not
include those portions of the personal worksheet
described in Appendix B relating to consumer protection
requirements not imposed by section 4980C or 7702B.
``(B) Model act.--The following requirements of the
model Act must be met:
``(i) Section 6F (relating to right to
return), except that such section shall also
apply to denials of applications and any refund
shall be made within 30 days of the return or
denial.
``(ii) Section 6G (relating to outline of
coverage).
``(iii) Section 6H (relating to
requirements for certificates under group
plans).
``(iv) Section 6I (relating to policy
summary).
``(v) Section 6J (relating to monthly
reports on accelerated death benefits).
``(vi) Section 7 (relating to
incontestability period).
``(C) Definitions.--For purposes of this paragraph,
the terms `model regulation' and `model Act' have the
meanings given such terms by section 7702B(g)(2)(B).''.
(c) Effective Date.--The amendments made by this section shall
apply to policies issued more than 1 year after the date of the
enactment of this Act.

TITLE VI--PROMOTING HEALTHIER LIFESTYLES

SEC. 601. COMMUNITY PARTNERSHIPS TO PROMOTE HEALTHY LIFESTYLES.

(a) Grants.--The Secretary of Health and Human Services (referred
to in this title as the ``Secretary'') shall award grants to States to
enable such States to provide assistance to eligible community
partnerships that will carry out activities to promote healthy
lifestyles.
(b) Eligibility.--
(1) State.--To be eligible to receive a grant under
subsection (a), a State shall prepare and submit to the
Secretary an application at such time, in such manner and
containing such information as the Secretary may require.
(2) Community partnership.--To be eligible to receive
assistance from a State under a grant under subsection (a), an
entity shall--
(A) be a partnership consisting of one or more
public and private organizations (such as hospitals,
health centers, other health care providers, employers,
local educational agencies, community organizations,
and public health organizations); and
(B) prepare and submit to the State an application
at such time, in such manner and containing such
information as the State may require, including a
description of the activities that the partnership will
carry out with assistance provided under this section.
(c) Activities.--A State shall use amounts received under a grant
under this section to support activities conducted by an eligible
community partnership to promote health lifestyles, including--
(1) activities to reduce the primary risk factors for
diseases, such as smoking, obesity, and sedentary lifestyles;
(2) implementing employee health promotion programs in the
workplace using best practices to improve health access,
education, and prevention promotion and disease management;
(3) activities to decrease hospital inpatient admissions of
individuals with chronic diseases; and
(4) the development of programs relating to mental health
and substance abuse.
(d) Authorization of Appropriations.--There are authorized to be
appropriated to carry out this section, such sums as may be necessary
for each of fiscal years 2006 through 2010.

SEC. 602. WORKSITE WELLNESS GRANT PROGRAM.

(a) Grants.--The Secretary shall award grants to States (through
State health departments or other State agencies working in
consultation with the State health agency) to enable such States to
provide assistance to employers that employ not to exceed 100 employees
to enable such employers to establish and operate worksite wellness
programs for their employees.
(b) Application.--To be eligible to receive a grant under
subsection (a), a State shall prepare and submit to the Secretary an
application at such time, in such manner, and containing such
information as the Secretary may require, including--
(1) a description of the manner in which the State intends
to use amounts received under the grant; and
(2) assurances that the State will only use amounts
provided under such grant to provide assistance to employers
that can demonstrate that they are in compliance with minimum
program characteristics (relative to scope and regularity of
services offered) that are developed by the Secretary in
consultation with experts in public health and representatives
of small employers.
(c) Allocation.--Grants shall be allocated among States based on
the population of individuals employed by small employers in such
States.
(d) Program Characteristics.--In developing minimum program
characteristics under subsection (b)(2), the Secretary shall ensure
that all activities established or enhanced under a grant under this
section have clearly defined goals and objectives and demonstrate how
receipt of such assistance will help to achieve established State or
local health objectives based on the National Health Promotion and
Disease Prevention Objectives.
(e) Use of Funds.--Amounts received under a grant awarded under
subsection (a) shall be used by a State to provide grants to employers
(as described in subsection (a)), nonprofit organizations, or public
authorities, or to operate State-based worksite wellness programs.
(f) Special Emphasis.--In funding employer worksite wellness
projects under this section, a State shall give special emphasis to--
(1) the development of joint wellness programs between
employers;
(2) the development of employee assistance programs dealing
with substance abuse;
(3) maximizing the use of, and coordination with, existing
community resources such as nonprofit health organizations; and
(4) encouraging the participation of dependents of
employees and retirees in wellness programs.
(g) Authorization of Appropriations.--There are authorized to be
appropriated to carry out this section, such sums as may be necessary
for each of fiscal years 2006 through 2010.

SEC. 603. COMPREHENSIVE SCHOOL HEALTH EDUCATION.

(a) In General.--The Secretary shall use amounts appropriated in
each fiscal year under subsection (d) to expand comprehensive school
health education programs administered by the Centers for Disease
Control and Prevention under sections 301 and 311 of the Public Health
Service Act (42 U.S.C. 241 and 243).
(b) Specified Use of Funds.--In meeting the requirement of
subsection (a), the Secretary shall expand the number of children
receiving planned, sequential kindergarten through 12th grade
comprehensive school education as a component of comprehensive programs
of school health, including--
(1) physical education programs that provide lifelong
physical activity;
(2) healthy school food service selections;
(3) programs that promote a healthy and safe school
environment;
(4) schoolsite health promotion for faculty and staff;
(5) integrated school and community health promotion
efforts; and
(6) school nursing disease prevention and health promotion
services.
(c) Coordination of Existing Programs.--The Secretary of Health and
Human Services, the Secretary of Education, and the Secretary of
Agriculture shall work cooperatively to coordinate existing school
health education programs within the jurisdiction of their respective
Departments in a manner that maximizes the efficiency and effectiveness
of Federal expenditures for such programs.
(d) Authorization of Appropriations.--There are authorized to be
appropriated to carry out this section, such sums as may be necessary
for each of fiscal years 2006 through 2010.

TITLE VII--MEDICARE FAIRNESS

Subtitle A--Medicare Value and Quality Demonstration

SEC. 701. FINDINGS.

The Senate makes the following findings:
(1) The United States Government should reward physicians,
hospitals, and other health care providers that provide high-
quality, cost-effective health care to beneficiaries under the
medicare program.
(2) The Journal of the American Medical Association has
published quality indicators in an article entitled ``Quality
of Medical Care Delivered to Medicare Beneficiaries: A Profile
at State and National Levels''.
(3) The cost of health care is--
(A) reflected in the type and volume of physicians'
services and in physician ordering and prescribing
behavior; and
(B) reflected in the amount of the average payment
to hospitals under the medicare program for each
medicare beneficiary in each State.
(4) Physician and hospital practice patterns contribute to
the total cost and quality of care for each medicare
beneficiary in each State.
(5) The original medicare fee-for-service program under
parts A and B of title XVIII of the Social Security Act does
not include a mechanism to pay for interventions designed to
improve quality of care. While the framework for payments to
managed care organizations under the Medicare+Choice program
under part C of such title allows for the reallocation of
capitation revenues to cover such things as disease state
management and quality improvement infrastructure, even the
most optimistic projections for managed care enrollment leave
the majority of medicare beneficiaries in the original medicare
fee-for-service program.

SEC. 702. DEMONSTRATION PROJECT TO ENCOURAGE THE PROVISION OF HIGH-
QUALITY, COST-EFFECTIVE INPATIENT HOSPITAL SERVICES.

(a) Purpose.--The purpose of the demonstration project conducted
under this section is to encourage the provision of high-quality, cost-
effective health care to beneficiaries under the medicare program under
title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) by
providing incentive payments to hospitals located in States in which
high-quality and cost-effective services are being provided in order to
finance further quality improvements.
(b) Demonstration Project.--
(1) Establishment.--Not later than 6 months after the date
of enactment of this Act, the Secretary shall establish a
demonstration project under which--
(A) the Secretary provides bonus payments to
providers of inpatient hospital services that deliver
high-quality health care at low costs in accordance
with the methodology established by the Agency for
Healthcare Research and Quality under paragraph (2);
and
(B) the Secretary funds a plan at each site to
increase the number of providers of inpatient hospital
services that provide high-quality, low-cost health
care to beneficiaries under the medicare program under
title XVIII of the Social Security Act.
(2) Value and quality ranking methodology.--
(A) In general.--The Agency for Healthcare Research
and Quality shall establish a value and quality ranking
methodology under which the Secretary awards bonus
payments to providers of inpatient hospital services
located in those States that demonstrate that such
providers in the State are providing high value because
of the high-quality, cost-effective health care
services being provided to medicare beneficiaries.
(B) Basis.--The methodology established under
subparagraph (A) shall be based on the rank and
performance on medicare quality indicators contained in
the article entitled ``Quality of Medical Care
Delivered to Medicare Beneficiaries: A Profile at State
and National Levels'' published in the October 4, 2000,
issue of the Journal of the American Medical
Association or such other quality indicators as the
Secretary determines to be appropriate.
(3) Sites.--The Secretary shall select 2 States in which to
conduct the demonstration project--
(A) from among the top 25 States (as ranked using
the methodology established under paragraph (2)) that
are also among the group of 25 States with the lowest
per capita cost to the medicare program under title
XVIII of the Social Security Act during the most recent
12-month period for which data are available; and
(B) based upon information contained in
applications submitted to the Secretary by such States
at such time, in such form and manner, and containing
such information as the Secretary may require.
(4) Duration of project.--The demonstration project shall
be conducted over a 5-year period.
(c) Reports.--The Secretary shall submit to the appropriate
committees of Congress interim reports on the demonstration project and
a final report on the project within 6 months after the conclusion of
the project together with recommendations for such legislative or
administrative action as the Secretary determines appropriate.
(d) Waiver.--The Secretary shall waive such provisions of titles XI
and XVIII of the Social Security Act (42 U.S.C. 1301 et seq. and 1395
et seq.) as may be necessary to conduct the demonstration project under
this section.
(e) Definitions.--In this section:
(1) Provider of inpatient hospital services.--The term
``provider of inpatient hospital services'' means any
individual or entity that receives payment under the medicare
program under title XVIII of the Social Security Act (42 U.S.C.
1395 et seq.) for providing an inpatient hospital service (as
defined in section 1861(b) of such Act (42 U.S.C. 1395x(b))).
(2) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(f) Funding.--There are appropriated from the Federal Hospital
Insurance Trust Fund under section 1817 of the Social Security Act (42
U.S.C. 1395i) such sums as the Secretary determines are necessary to
conduct the demonstration project under this section.

SEC. 703. DEMONSTRATION PROJECT TO ENCOURAGE THE PROVISION OF HIGH-
QUALITY, COST-EFFECTIVE PHYSICIANS' SERVICES.

(a) Purpose.--The purpose of the demonstration project conducted
under this section is to encourage the provision of high-quality, cost-
effective health care to beneficiaries under the medicare program under
title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) by
providing incentive payments to physicians located in States in which
high-quality and cost-effective services are being provided in order to
finance further quality improvements.
(b) Demonstration Project.--
(1) Establishment.--Not later than 6 months after the date
of enactment of this Act, the Secretary shall establish a
demonstration project under which--
(A) the Secretary provides bonus payments to
providers of physicians' services that deliver high-
quality, cost-effective health care in accordance with
the methodology established by the Agency for
Healthcare Research and Quality under paragraph (2);
and
(B) the Secretary funds a plan in each State to
increase the number of providers of physicians'
services that provide high-quality, cost-effective
health care to beneficiaries under the medicare program
under title XVIII of the Social Security Act.
(2) Value and quality ranking methodology.--
(A) In general.--The Agency for Healthcare Research
and Quality shall establish a value and quality ranking
methodology under which the Secretary awards bonus
payments to providers of physicians' services located
in those States that demonstrate that such providers in
the State are providing high value because of the high-
quality, cost-effective health care services being
provided to medicare beneficiaries.
(B) Basis.--The methodology established under
subparagraph (A) shall be based on the rank and
performance on medicare quality indicators contained in
the article entitled ``Quality of Medical Care
Delivered to Medicare Beneficiaries: A Profile at State
and National Levels'' published in the October 4, 2000,
issue of the Journal of the American Medical
Association or such other quality indicators as the
Secretary determines to be appropriate.
(3) Sites.--The Secretary shall select 2 States in which to
conduct the demonstration project--
(A) from among the top 25 States (as ranked using
the methodology established under paragraph (2)) that
are also among the 25 States with the lowest per capita
cost to the medicare program under title XVIII of the
Social Security Act during the most recent 12-month
period for which data are available; and
(B) based upon information contained in
applications submitted to the Secretary by such States
at such time, in such form and manner, and containing
such information as the Secretary may require.
(4) Duration of project.--The demonstration project shall
be conducted over a 5-year period.
(c) Reports.--The Secretary shall submit to the appropriate
committees of Congress interim reports on the demonstration project and
a final report on the project within 6 months after the conclusion of
the project together with recommendations for such legislative or
administrative action as the Secretary determines appropriate.
(d) Waiver.--The Secretary shall waive such provisions of titles XI
and XVIII of the Social Security Act (42 U.S.C. 1301 et seq. and 1395
et seq.) as may be necessary to conduct the demonstration project under
this section.
(e) Definitions.--In this section:
(1) Provider of physicians' services.--The term ``provider
of physicians' services'' means any individual or entity that
receives payment under the medicare program under title XVIII
of the Social Security Act (42 U.S.C. 1395 et seq.) for
providing physicians' services (as defined in section 1861(q)
of such Act (42 U.S.C. 1395x(q))).
(2) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(f) Funding.--There are appropriated from the Federal Supplementary
Medical Insurance Trust Fund under section 1841 of the Social Security
Act (42 U.S.C. 1395t) such sums as the Secretary determines are
necessary to conduct the demonstration project under this section.

Subtitle B--Graduate Medical Education Demonstration

SEC. 711. CLINICAL ROTATION DEMONSTRATION PROJECT.

(a) Establishment.--Not later than 6 months after the date of
enactment of this Act, the Secretary shall establish a demonstration
project that provides for demonstration grants designed to provide
financial or other incentives to hospitals to attract educators and
clinical practitioners so that hospitals that serve beneficiaries under
the medicare program under title XVIII of the Social Security Act (42
U.S.C. 1395 et seq.) who are residents of underserved areas may host
clinical rotations.
(b) Duration of Project.--The demonstration project shall be
conducted over a 5-year period.
(c) Funding.--
(1) In general.--Subject to paragraph (2), the Secretary
shall pay the costs of the demonstration project conducted
under this section from the Federal Hospital Insurance Trust
Fund under section 1817 of the Social Security Act (42 U.S.C.
1395i).
(2) Cap on funding.--The Secretary may not expend more than
$20,000,000 to conduct the demonstration project under this
section.
(3) Budget neutrality for demonstration project.--
Notwithstanding any other provision of law, the Secretary shall
provide for an appropriate reduction in the aggregate amount of
additional payments made under subsection (d)(5)(B) of section
1886 of the Social Security Act (42 U.S.C. 1395ww) for the
indirect costs of medical education and for direct graduate
medical education costs under subsection (h) of such section to
reflect any increase in amounts expended from the Federal
Hospital Insurance Trust Fund as a result of the demonstration
project conducted under this section.
(d) Reports.--The Secretary shall submit to the appropriate
committees of Congress interim reports on the demonstration project and
a final report on such project within 6 months after the conclusion of
the project together with recommendations for such legislative or
administrative action as the Secretary determines appropriate.
(e) Waiver.--The Secretary shall waive such provisions of titles XI
and XVIII of the Social Security Act (42 U.S.C. 1301 et seq. and 1395
et seq.) as may be necessary to conduct the demonstration project under
this section.
(f) Definitions.--In this section:
(1) Hospital.--The term ``hospital'' means any subsection
(d) hospital (as defined in section 1886(d)(1)(B) of the Social
Security Act (42 U.S.C. 1395ww(d)(1)(B)) that had indirect or
direct costs of medical education during the most recent cost
reporting period preceding the date of enactment of this Act.
(2) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(3) Underserved area.--The term ``underserved area'' means
such medically underserved urban areas and medically
underserved rural areas as the Secretary may specify.
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