To provide a demonstration project under which Medicare and Medicaid beneficiaries are provided the choice of health benefits coverage and access to a debit style card for the purpose of purchasing qualified health benefits coverage and paying for other health care expenses.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Choice in Healthcare Act''.

SEC. 2. MEDICARE AND MEDICAID CHOICE.

    (a) In General.--Notwithstanding any other provision of law, the 
Secretary of Health and Human Services (referred to in this Act as the 
``Secretary'') shall establish a demonstration program (referred to in 
this Act as the ``demonstration program'') under which Medicare and 
Medicaid eligible beneficiaries (as defined in section 4) are 
provided--
            (1) the option of purchasing qualifying health benefits 
        coverage; and
            (2) access to a debit style card (referred to in this Act 
        as a ``Medi-Choice card'') for the purpose of purchasing health 
        benefits coverage in accordance with the demonstration program 
        and for paying certain other out-of-pocket health care 
        expenditures.
    (b) Qualifying Health Benefits Coverage.--In this Act, the term 
``qualifying health benefits coverage'' means health benefits coverage 
that meets the following requirements:
            (1) Benefits coverage.--In the case of--
                    (A) a dual eligible beneficiary, the coverage 
                provides benefits that are at least as comprehensive as 
                the benefits provided, as of the date of the enactment 
                of this Act, under parts A, B, and D of title XVIII of 
                the Social Security Act and under the State Medicaid 
                plan under title XIX of such Act in California;
                    (B) a Medicare eligible beneficiary who is not a 
                dual eligible beneficiary, the coverage provides 
                benefits that are at least as comprehensive as the 
                benefits provided, as of the date of the enactment of 
                this Act, under parts A, B, and D of title XVIII of the 
                Social Security Act; and
                    (C) a Medicaid eligible beneficiary who is not a 
                dual eligible beneficiary, the coverage provides 
                benefits that are at least as comprehensive as the 
                benefits provided, as of the date of the enactment of 
                this Act, under the State Medicaid plan under title XIX 
                of the Social Security Act in California.
            (2) Guarantee issue; no preexisting condition exclusions.--
        The coverage is offered and available under the demonstration 
        program on a guaranteed issue basis without regard to health 
        status and does not apply any preexisting condition exclusion 
        (as defined in section 2701(b)(1)(A) of the Public Health 
        Service Act).
            (3) Community rating.--Premiums for the coverage are 
        uniform and do not vary by age, health status, geographic area, 
        or other characteristics of the enrolled individual.

SEC. 3. MEDI-CHOICE CARD.

    (a) Provision.--The Secretary shall enter into a contract with a 
major credit card provider or financial institution for the purpose of 
issuing Medi-Choice cards under the demonstration program.
    (b) Use.--
            (1) Toward purchasing qualifying benefits coverage.--Medi-
        Choice cards shall be used to purchase qualifying health 
        benefits coverage for eligible beneficiaries enrolled in the 
        demonstration program.
            (2) Toward out of pocket costs.--Amounts remaining on such 
        a card after the application of paragraph (1) may be used--
                    (A) to pay copayments or deductibles and other cost 
                sharing on behalf of enrolled eligible beneficiaries; 
                and
                    (B) for other qualified medical expenses (as 
                defined in section 223(d)(2) of the Internal Revenue 
                Code of 1986) of such beneficiaries.
            (3) Unused amount.--Amounts on a Medi-Choice card not 
        otherwise used under this paragraph shall remain available 
        under the card until expended by or on behalf of an enrolled 
        eligible beneficiary during the period of participation in the 
        demonstration program.

SEC. 4. ELIGIBLE BENEFICIARIES.

    (a) In General.--In this Act, the term ``eligible beneficiary'' 
means an individual--
            (1) who is a legal permanent resident of the United States 
        residing within the area covered by the demonstration program; 
        and
            (2)(A) who is eligible for medical assistance for full 
        benefits under the State plan under title XIX of the Social 
        Security Act for California as of the date of the enactment of 
        this Act; or
            (B) who is entitled to benefits under part A of title XVIII 
        of the Social Security Act.
    (b) Exclusion.--The term ``eligible beneficiary'' does not include 
any individual for a month if the individual, as of the first day of 
the month is--
            (1) enrolled by reason of disability in the program under 
        title XIX of the Social Security Act;
            (2) entitled to benefits under chapter 55 of title 10, 
        United States Code, including under the TRICARE program (as 
        defined in section 1072(7) of such title);
            (3) imprisoned under Federal, State, or local authority; or
            (4) an alien who is not a lawful permanent resident of the 
        United States.
    (c) References.--In this Act:
            (1) Medicare eligible beneficiary.--The term ``Medicare 
        eligible beneficiary'' means an eligible beneficiary described 
        in subsection (a)(2)(B).
            (2) Medicaid eligible beneficiary.--The term ``Medicaid 
        eligible beneficiary'' means an eligible beneficiary described 
        in subsection (a)(2)(A).
            (3) Dual eligible beneficiary.--The term ``dual eligible 
        beneficiary'' means an eligible beneficiary who is both a 
        Medicare eligible beneficiary and a Medicaid eligible 
        beneficiary.

SEC. 5. FUNDING OF MEDI-CHOICE CARDS.

    (a) Amounts.--Under the demonstration program, subject to the 
succeeding subsections, the Secretary shall make funds available 
through the Medi-Choice card as follows:
            (1) Dual eligible beneficiaries.--For a dual eligible 
        beneficiary the annual amount of the deposit--
                    (A) for 2012 is equal to the sum of--
                            (i) the United States average nominal 
                        dollar value of medical assistance under title 
                        XIX of the Social Security Act; and
                            (ii) the United States average nominal 
                        dollar value of the benefits under parts A, B, 
                        and D of title XVIII of such Act;
                    (B) for any subsequent year is equal to the annual 
                amount specified in this paragraph for the preceding 
                year increased by the annual inflation adjustment 
                described in subsection (d) for such subsequent year.
            (2) Other medicaid eligible beneficiaries.--For a Medicaid 
        eligible beneficiary who is not a dual eligible beneficiary, 
        the annual amount of the deposit--
                    (A) for 2012 is equal to the United States average 
                nominal dollar value of medical assistance under title 
                XIX of the Social Security Act; and
                    (B) for any subsequent year is equal to the annual 
                amount specified in this paragraph for the preceding 
                year increased by the annual inflation adjustment 
                described in subsection (d) for such subsequent year.
            (3) Other medicare eligible beneficiaries.--For a Medicare 
        eligible beneficiary who is not a dual eligible beneficiary, 
        the annual amount of the deposit shall--
                    (A) for 2012 be equal to the United States average 
                nominal dollar value of the benefits under parts A, B, 
                and D of title XVIII of the Social Security Act; and
                    (B) for any subsequent year is equal to the annual 
                amount specified in this paragraph for the preceding 
                year increased by the annual inflation adjustment 
                described in subsection (d) for such subsequent year.
            (4) Rounding.--Any amount computed under paragraph (1)(B), 
        (2)(B), or (3)(B) that is not a multiple of $12 shall be 
        rounded to the nearest multiple of $12.
    (b) Risk Adjustment.--The payment amounts under subsection (a) for 
an individual shall be adjusted, using a methodology specified by the 
Secretary, in a manner that takes into account the relative risk 
factors (such as those described in section 1853(a)(1)(C)(i) of the 
Social Security Act) associated with such individual. Such adjustment 
shall be made in such a manner as not to change the total amount of 
payments made under this section as a result of such adjustment.
    (c) Medi-Choice Reductions for Higher-Income Individuals.--In the 
case of an individual whose modified adjusted gross income (as defined 
in paragraph (4) of section 1839(i)(4) of the Social Security Act), 
exceeds the threshold amount specified in paragraph (2) of such 
section, as adjusted under paragraph (5) of such section, the annual 
amount under subsection (a)(2) shall be reduced by one percent for each 
percent of such excess, but not to exceed a reduction of 50 percentage 
points.
    (d) Annual Inflation Adjustment.--The annual inflation adjustment 
under paragraphs (1)(B) and (2)(B) for a year is equal to the average 
of--
            (1) the annual rate of increase in the consumer price index 
        for urban consumers (all items; United States city average) for 
        the year, as projected by the Secretary in consultation with 
        the Bureau of Labor Statistics before the beginning of the 
        year; and
            (2) the annual rate of increase in the medical care 
        component of the consumer price index for all urban consumers 
        (United States city average) for the year, as projected by the 
        Secretary in consultation with the Bureau of Labor Statistics 
        before the beginning of the year.
    (e) Monthly Deposits.--Deposits of amounts to Medi-Choice cards 
under this section shall be credited on a monthly basis and prorated 
for partial months of program enrollment.

SEC. 6. SCOPE OF DEMONSTRATION PROGRAM.

    (a) Area.--The demonstration program shall be conducted in the 
counties of Kern, Tulare, Kings, Fresno, Merced, Madera, Stanislaus, 
and San Joaquin in California.
    (b) Period of Demonstration Project.--
            (1) Duration.--The demonstration program shall be conducted 
        for a period of 10 years.
            (2) Initial enrollment.--Eligible beneficiaries shall be 
        permitted to enroll in the demonstration program beginning on 
        June 1, 2013.
    (c) Numerical Limitation.--No more than 100,000 eligible 
beneficiaries may be enrolled in the demonstration program at any time.

SEC. 7. PAYMENT OF COSTS.

    (a) In General.--The Secretary shall be responsible for the cost of 
operating the demonstration program, including all amounts deposited 
onto Medi-Choice cards. The cost of operation of the program insofar as 
they are attributable (as determined by the Secretary) to--
            (1) Medicare eligible beneficiaries and benefits under part 
        A, part B, or part D of title XVIII of the Social Security Act 
        shall be payable from the respective trust fund or account 
        under the respective part, and the amounts in such trust funds 
        or account shall be available to make such payments; or
            (2) Medicaid eligible beneficiaries and benefits under 
        title XIX of such Act shall be payable from amounts 
        appropriated to carry out such title and the amounts so 
        appropriated shall be available to make such payments.
    (b) No Duplicate Payments.--Except as provided in section 8(d)(2), 
no amounts shall be payable under title XVIII or XIX of the Social 
Security Act for benefits or medical assistance for an eligible 
beneficiary participating in the demonstration program.

SEC. 8. MISCELLANEOUS.

    (a) Assistance in Enrollment.--The Secretary shall maintain a toll 
free phone number to assist eligible beneficiaries with enrollment 
under the demonstration program and shall make information available to 
eligible beneficiaries in the demonstration area describing the options 
available, which shall include a comparison of plan costs and benefits.
    (b) Not Treated as Income.--Amounts paid into a Medi-Choice card 
shall not be treated as income for purposes of the Internal Revenue 
Code of 1986 or for purposes of determining eligibility for any Federal 
program.
    (c) Premium Obligations.--An individual participating in the 
demonstration--
            (1) is not responsible for payment of any premium otherwise 
        applicable under part B or D of title XVIII or under title XIX 
        of the Social Security Act; but
            (2) shall use benefits applied to the Medi-Choice card for 
        the purpose of purchasing qualifying health benefits coverage.
    (d) Relation to Medicaid Benefits.--
            (1) In general.--In the case of an individual who 
        participates in the demonstration program, the individual is 
        not entitled to any payment under a State plan under title XIX 
        of the Social Security Act with respect to any benefits 
        relating to items and services for which coverage is provided 
        under this title.
            (2) Continuation of medical assistance for noncovered items 
        and services.--Nothing in this Act shall affect the continued 
        provision of medical assistance under title XIX of such Act for 
        items and services, such as dental, vision, or long-term care 
        facility services, for which benefits are not provided under 
        this Act regardless of medical necessity.

Summary: Choice in Healthcare Act - Directs the Secretary of Health and Human Services (HHS) to establish a demonstration program under which Medicare and Medicaid eligible beneficiaries are given: (1) the option of purchasing qualifying health benefits coverage, and (2) access to a debit style card for purchasing such coverage under the program and for paying certain other out-of-pocket health care expenditures. Directs the Secretary to contract with a major credit card provider or financial institution for issuing Medi-Choice cards under the program. Limits the demonstration program to specified counties in California and to a period of ten years.