To amend titles XIX and XXI of the Social Security Act to permit States to cover low-income youth up to age 23 with an enhanced matching rate.

Summary: Medicaid/SCHIP Optional Coverage for Young Adults Act of 2003 - Amends titles XIX (Medicaid) and XXI (State Children's Health Insurance) (SCHIP) of the Social Security Act to give States the option of providing SCHIP and Medicaid coverage, with an enhanced matching rate, to low-income youth up to age 23.

Directs the Secretary to provide for grants to small and rural States in order to enable them to implement expansions of eligibility for children and young adults under SSA titles XIX and XXI.

SECTION 1. SHORT TITLE.

    This Act may be cited as ``Medicaid/SCHIP Optional Coverage for 
Young Adults Act of 2003''.

SEC. 2. PROVIDING STATE OPTION FOR SCHIP AND MEDICAID COVERAGE OF YOUNG 
              ADULTS UP TO AGE 23.

    (a) In General.--
            (1) Medicaid.--(A) 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 option of the State, who have not attained 20, 
        21, or 22 years of age, as the State may elect)'' after ``have 
        not attained 19 years of age''.
            (B) Clause (i) of section 1905(a) of the Social Security 
        Act (42 U.S.C. 1396d(a)) is amended by striking ``under the age 
        of 21, or, at the option of the State, under the age of 20, 19, 
        or 18 as the State may choose'' and inserting ``under the age 
        of 23, or, at the option of the State, under the age of 22, 21, 
        20, 19, or 18 as the State may elect''.
            (2) SCHIP.--Section 2110(c)(1) of such Act (42 U.S.C. 
        1397jj(c)(1)) is amended by inserting after ``19 years of age'' 
        the following: ``(or, at the option of the State and subject to 
        the availability of additional allotments under section 
        2104(d), 20, 21, 22, or 23 years of age)''.
    (b) Availability of Enhanced Matching Funds.--
            (1) Under medicaid.--Section 1905 of the Social Security 
        Act (42 U.S.C. 1396d) is amended--
                    (A) in the fourth sentence of subsection (b), by 
                striking ``or subsection (u)(3)'' and inserting ``, 
                (u)(3), or (u)(4)(A)''; and
                    (B) in subsection (u)--
                            (i) by adding at the end of paragraph (1) 
                        the following new subparagraph:
            ``(C) Only with respect to expenditures described in 
        paragraph (4)(A), if the State is providing for benefits under 
        its State child health plan under title XXI for children under 
        19 years of age exclusively through benefits under its State 
        plan under this title, the State is also providing under such 
        plan the benefits for individuals over 18 years of age who are 
        eligible for such benefits only because of an election referred 
        to in such paragraph.'';
                            (ii) by redesignating paragraph (4) as 
                        paragraph (5); and
                            (iii) by inserting after paragraph (3) the 
                        following new paragraph:
    ``(4) For purposes of the fourth sentence of subsection (b) and 
section 2105(a), the expenditures described in this paragraph are 
expenditures for medical assistance for individuals who are over 18 
(and less than 23) years of age and who are eligible for such medical 
assistance because of an election by the State under section 
1902(l)(1)(D) or clause (i) of section 1905(a).''.
            (2) Additional allotments for providing coverage of 
        optional young adults.--
                    (A) In general.--Section 2104 of such Act (42 
                U.S.C. 1397dd) is amended by inserting after subsection 
                (c) the following:
    ``(d) Additional Allotments for the Provision of Coverage to 
Optional Young Adults.--
            ``(1) Appropriation; total allotment.--For the purpose of 
        providing additional allotments to States under this title, 
        there is appropriated, out of any money in the Treasury not 
        otherwise appropriated, for each of fiscal years 2004 through 
        2007, $200,000,000.
            ``(2) State and territorial allotments.--In addition to the 
        allotments provided under subsections (b) and (c), subject to 
        paragraph (3), 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--
                    ``(A) in the case of such a State other than a 
                commonwealth or territory described in subparagraph 
                (B), the same proportion as the proportion of the 
                State's allotment under subsection (b) (determined 
                without regard to subsection (f)) to the total amount 
                of the allotments under subsection (b) for such States 
                eligible for an allotment under this paragraph for such 
                fiscal year; and
                    ``(B) 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 the total amount of the 
                allotments under subsection (c) for commonwealths and 
                territories eligible for an allotment under this 
                paragraph for such fiscal year.
            ``(3) Use of additional allotment.--Additional allotments 
        provided under this subsection are not available for amounts 
        expended before October 1, 2003. Such amounts are available for 
        amounts expended on or after such date only for--
                    ``(A) expenditures described in section 
                1905(u)(4)(A); and
                    ``(B) child health assistance for individuals who 
                are targeted low-income children and over 18 years of 
                age and who are low-income children only because of an 
                election by the State under section 2110(c)(1).''.
                    (B) Conforming amendments.--Section 2104 of the 
                Social Security Act (42 U.S.C. 1397dd) is amended--
                            (i) in subsection (a), in the matter 
                        preceding paragraph (1), 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) Effective Date.--The amendments made by this section apply to 
items and services furnished on or after October 1, 2003, without 
regard to whether regulations implementing such amendments have been 
promulgated.

SEC. 3. GRANTS TO IMPLEMENT MEDICAID AND SCHIP EXPANSIONS.

    (a) In General.--The Secretary of Health and Human Services shall 
provide for grants to small and rural States (as defined by the 
Secretary) in order to enable such States to implement expansions of 
eligibility for children and young adults their State medicaid plans 
under title XIX of the Social Security Act and State child health plans 
under title XXI of such Act. Such grants shall be available for 
planning, implementation, and outreach with respect to such expanded 
eligibility populations.
    (b) Terms and Conditions.--Grants under this section shall be made 
available under such terms and conditions, including the approval of a 
grant application, as the Secretary shall specify.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to provide for grants under 
this section.