To provide incentives to States to apply for section 1115 waivers to use Federal funds to provide for affordable employer-based health insurance coverage for the uninsured workers of small businesses in the State.

Summary: Small Business Health Insurance Relief Act of 2002 - Authorizes the Secretary of Health and Human Services to make incentive payments to States that provide uninsured employees health insurance coverage as part of an approved waiver application under the Social Security Act (where States are permitted to use Medicaid program or State children's health insurance program (SCHIP) funds for experimental projects).Requires that such health insurance coverage be provided: (1) without regard to health status, preexisting condition, or location of residency within a State; (2) through employer-sponsored health insurance or by buying into Medicaid or SCHIP; (3) at a specified level of actuarial equivalence; and (4) for a nominal amount of an employee's income.Limits eligibility to lawful U.S. residents (and their spouses and dependents) who are otherwise not entitled to benefits under the Medicaid or SCHIP and are employed by a small business that does not offer affordable (or any) health insurance.

SECTION 1. SHORT TITLE; FINDINGS.

    (a) Short Title.--This Act may be cited as the ``Small Business 
Health Insurance Relief Act of 2002''.
    (b) Findings.--The Congress finds the following:
            (1) Of the 39,000,000 uninsured Americans, 72 percent are 
        either full-time workers or dependents of those workers.
            (2) Of the uninsured working population, 56 percent are 
        employed by small businesses.
            (3) Of the working population, more than 74 percent are 
        covered by employer-sponsored health insurance.
            (4) Small businesses are less likely to offer health 
        insurance to their employees, and employees of those small 
        businesses are less likely to participate in a health plan when 
        it is offered to them, when compared with larger businesses and 
        employees of larger businesses.
            (5) Implementation of the policy set forth in this Act in 
        participating States will reduce the number of low-income 
        workers without health insurance in those States.
            (6) Because individuals without health insurance do not 
        seek preventive care or early intervention, when those 
        individuals suffer from a serious medical condition, they are 
        often faced with large medical bills which they cannot pay.
            (7) The costs of unpaid medical bills by individuals 
        without health insurance are often shifted to private and 
        Government payers.
            (8) By increasing access to affordable health insurance for 
        low-income workers, this Act will contribute to the health and 
        well-being of those individuals, as well as reduce costs for 
        those who bear the burden of uncompensated care.

SEC. 2. INCENTIVES TO PROVIDE HEALTH INSURANCE COVERAGE FOR THE WORKING 
              UNINSURED.

    (a) In General.--For each State that applies for a waiver under 
section 1115 of the Social Security Act (42 U.S.C. 1315) that includes, 
as a part of that waiver, the use of funds otherwise paid to the State 
under the medicaid program or the State children's health insurance 
program to provide eligible uninsured employees health insurance 
coverage that meets the requirements of subsection (b), the Secretary 
may award the State, upon approval of that waiver, an incentive payment 
(not to exceed $1,000,000) to assist the State in carrying out the 
waiver.
    (b) Requirements.--To be eligible for an incentive payment under 
subsection (a), an application for a section 1115 waiver, with respect 
to health insurance coverage, shall meet the following requirements:
            (1) Coverage.--Provide a process and a timeline for 
        achieving coverage of all eligible uninsured employees 
        statewide, without regard to health status or preexisting 
        condition, or location of residency within the State.
            (2) Manner of provision of health insurance coverage.--
        Provide health insurance coverage through employer-sponsored 
        health insurance or by buying into the medicaid or the State 
        children's health insurance programs, including the provision 
        of wraparound health benefits.
            (3) Benefits.--
                    (A) Actuarial equivalence.--(i) In the case of 
                health insurance coverage provided through employer-
                sponsored health insurance coverage or by purchasing 
                coverage through the State children's health insurance 
                programs, provides for a benefit package that is at 
                least actuarially equivalent to the required scope of 
                health insurance coverage under section 2103 of the 
                Social Security Act (42 U.S.C. 1397cc) (relating to 
                coverage requirements for children's health insurance 
                under the State children's health insurance program).
                    (ii) In the case of health insurance coverage 
                provided by purchasing coverage through the medicaid 
                program, provides for a benefit package that is at 
                least actuarially equivalent to the required scope of 
                medical assistance (as defined in section 1905(a) of 
                the Social Security Act (42 U.S.C. 1396d(a)) under the 
                State plan of the State.
                    (B) Limit on employee cost sharing.--Provide that 
                an employee covered under the program pay no more than 
                a nominal amount of the employee's income (as 
                determined by the State) for costs of premiums, 
                deductibles, coinsurance, and copayments under the 
                plan.
            (4) Consultation with affected entities.--Provide for 
        consultation with representatives of affected entities and 
        organizations, both public and private, in developing a plan to 
        provide such health insurance coverage.
            (5) Outreach mechanisms.--Describe the outreach mechanisms 
        to be used to assure coverage of all eligible individuals, 
        including measures to assure coverage of individuals in hard-
        to-reach populations and to assure benefits are provided to 
        eligible individuals located in underserved areas.
            (6) Quality assurance.--Provide, and describe, mechanisms 
        to be used to assure, monitor, and maintain the quality of 
        items and services furnished under the waiver.
            (7) Maintenance of effort.--Provide that employers who, as 
        of the date of the enactment of this Act, offer health 
        insurance coverage to or pay a percentage of premiums for such 
        health insurance coverage for employees and who participate 
        under the demonstration project maintain or increase levels of 
        coverage or contributions to employees health insurance over 
        those levels in effect before the implementation of the waiver.
            (8) Budget.--Incorporate a budget. Such budget shall 
        include a description (and an estimate of costs) of 
        transitional activities to be undertaken in implementing the 
        proposed plan.
            (9) Implementation.--Describe the method (including a 
        timetable and period of transition) for implementing the 
        waiver.
    (c) Construction.--Nothing in this Act shall be construed as 
preempting State laws that provide greater protections or benefits than 
the protections or benefits required under this Act.
    (d) Definitions.--As used in this Act:
            (1) Eligible uninsured employees.--The term ``eligible 
        uninsured employees'' means--
                    (A) any resident of the United States--
                            (i) who is a citizen or national of the 
                        United States, or lawful resident alien;
                            (ii) who resides in any particular State;
                            (iii) who is employed in a work site of an 
                        employer that is a small business located in 
                        the State;
                            (iv)(I) whose employer does not offer 
                        employer-sponsored health insurance; or
                            (II) whose employer offers such insurance 
                        but at a cost that is not affordable for the 
                        resident (as determined by the State); and
                            (v) who is not entitled to benefits under 
                        title XIX or XXI of the Social Security Act 
                        based on eligibility requirements under those 
                        titles in effect on or after the date of the 
                        enactment of this Act; and
                    (B) the spouse and dependent children of such 
                resident
            (2) Lawful resident alien.--The term ``lawful resident 
        alien'' means an alien lawfully admitted for permanent 
        residence and any other alien lawfully residing permanently in 
        the United States under color of law, including an alien 
        granted asylum or with lawful temporary resident status under 
        section 210, 210A, or 245A of the Immigration and Nationality 
        Act.
            (3) Small business.--The term ``small business'' means an 
        employer who employs 50 or fewer employees.
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (5) State.--The term ``State'' means a State, the District 
        of Columbia, the Commonwealth of Puerto Rico, the United States 
        Virgin Islands, Guam, American Samoa, and the Commonwealth of 
        the Northern Mariana Islands.