II

105TH CONGRESS

1ST SESSION S. 13

To provide access to health insurance coverage for uninsured children and

pregnant women.

IN THE SENATE OF THE UNITED STATES

JANUARY 21, 1997

Mr. DASCHLE (for himself, Ms. MIKULSKI, Mr. KENNEDY, Mr. BREAUX, Mr.

DODD, Mrs. MURRAY, Mr. INOUYE, Mr. JOHNSON, Ms. MOSELEYBRAUN, Mr. ROCKEFELLER, Mr. DURBIN, Mr. KERRY, Mr. GLENN, and

Mr. LAUTENBERG) introduced the following bill; which was read twice

and referred to the Committee on Finance

A BILL

To provide access to health insurance coverage for uninsured

children and pregnant women.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Children’s Health Coverage Act’’.

6 (b) TABLE OF CONTENTS.—The table of contents for

7 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Definitions.
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TITLE I—HEALTH INSURANCE COVERAGE FOR ELIGIBLE

CHILDREN

Sec. 101. Establishment of program to provide eligible children with access to

health insurance coverage.

Sec. 102. Procedure for obtaining coverage under certified health plans.

Sec. 103. Subsidy adjustment.

Sec. 104. Limitation on preexisting condition exclusion period and prohibition

on discrimination.

Sec. 105. Maintenance of effort.

Sec. 106. Oversight by Secretary.

Sec. 107. Rules of construction.

TITLE II—HEALTH INSURANCE COVERAGE FOR PREGNANT

WOMEN

Sec. 201. Expanding health insurance coverage for pregnant women.

Sec. 202. Grants for innovative outreach.

TITLE III—CHILDREN’S HEALTH COVERAGE SUBSIDY CREDITS

Sec. 301. Health coverage provided to premium subsidy eligible children

through a tax credit for insurers.

Sec. 302. Health coverage provided to premium subsidy eligible children

through a refundable income tax credit.

1 SEC. 2. DEFINITIONS.

2 As used in this Act:

3 (1) CERTIFIED HEALTH PLAN.—The term ‘‘cer4 tified health plan’’ means a health plan that—

5 (A) is not an employer sponsored health

6 plan;

7 (B) provides family coverage or child only

8 coverage options; and

9 (C) is certified by a State under section

10 101(b)(1).

11 (2) ELIGIBLE CHILD.—The term ‘‘eligible

12 child’’ means an individual who has not attained the

13 age of 19.
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1 (3) HEALTH INSURANCE ISSUER.—The term

2 ‘‘health insurance issuer’’ means an insurance com3 pany, insurance service, or insurance organization

4 (including a health maintenance organization, as de5 fined in paragraph (3)) which is licensed to engage

6 in the business of insurance in a State and which is

7 subject to State law which regulates insurance (with8 in the meaning of section 514(b)(2) of the Employee

9 Retirement Income Security Act of 1974).

10 (4) HEALTH MAINTENANCE ORGANIZATION.—

11 The term ‘‘health maintenance organization’’

12 means—

13 (A) a Federally qualified health mainte14 nance organization (as defined in section

15 1301(a) of the Public Health Service Act (42

16 U.S.C. 300e(a))),

17 (B) an organization recognized under State

18 law as a health maintenance organization, or

19 (C) a similar organization regulated under

20 State law for solvency in the same manner and

21 to the same extent as such a health mainte22 nance organization.

23 (5) POVERTY LINE.—The term ‘‘poverty line’’

24 means the income official poverty line (as defined by

25 the Office of Management and Budget, and revised
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1 annually in accordance with section 673(2) of the

2 Omnibus Budget Reconciliation Act of 1981) appli3 cable to a family of the size involved.

4 (6) PREMIUM SUBSIDY ELIGIBLE CHILD.—The

5 term ‘‘premium subsidy eligible child’’ means any in6 dividual who—

7 (A) is an eligible child who was born after

8 December 31, 1984;

9 (B) is a citizen or qualified alien (as de10 fined in section 431(b) of the Personal Respon11 sibility and Work Opportunity Reconciliation

12 Act of 1996 (8 U.S.C. 1641(b));

13 (C) has a family income determined under

14 section 102(b) which does not exceed 300 per15 cent of the poverty line or has a family income

16 within the limits described in section 103(b)(2);

17 (D) is not eligible for assistance under a

18 program under title XIX of the Social Security

19 Act or, except as provided in section 102(e),

20 under a similar State program providing health

21 insurance or other health care coverage; and

22 (E)(i) except as provided in section 101(e)

23 or clause (ii), has not been covered, during the

24 12-month period ending on the date on which

25 the individual applies for subsidy-eligible health
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1 coverage under this title, under a health plan

2 offered by a health insurance issuer (unless

3 such plan was funded under title IX of the So4 cial Security Act (42 U.S.C. 1101 et seq.))

5 and—

6 (I) such individual does not have ac7 cess to employer sponsored health cov8 erage; or

9 (II) the employer of the individual or

10 family involved offers employer sponsored

11 health coverage and the employer contribu12 tion for such 12-month period does not ex13 ceed—

14 (aa) in the case of an individual

15 (or family) described in section

16 103(a)(2)(A), 80 percent or more of

17 the costs of enrollment in the plan; or

18 (bb) in the case of an individual

19 (or family) described in section

20 103(a)(2)(B), 50 percent or more of

21 the costs of enrollment in the plan; or

22 (ii) is, as of the date of enactment of this

23 Act, covered under a health plan that is not a

24 group health plan (as defined in section 2791 of

25 the Public Health Service Act), and the family
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1 of such individual is not eligible to claim a de2 duction under section 162(l) of the Internal

3 Revenue Code of 1986.

4 (7) SECRETARY.—The term ‘‘Secretary’’ means

5 the Secretary of Health and Human Services.

6 (8) SUBSIDY ELIGIBLE HEALTH COVERAGE.—

7 The term ‘‘subsidy eligible health coverage’’ means

8 health insurance coverage under—

9 (A) a certified health plan; or

10 (B) an employer sponsored health plan

11 providing family coverage or child-only coverage

12 options;

13 for which a subsidy is available under this title.

14 TITLE I—HEALTH INSURANCE

15 COVERAGE FOR ELIGIBLE

16 CHILDREN

17 SEC. 101. ESTABLISHMENT OF PROGRAM TO PROVIDE ELI18 GIBLE CHILDREN WITH ACCESS TO HEALTH

19 INSURANCE COVERAGE.

20 (a) ESTABLISHMENT.—The Secretary shall establish

21 a program under which a premium subsidy eligible child,

22 and the family of such child, may receive a subsidy to be

23 used to pay a portion of the premium associated with the

24 enrollment of the child for subsidy eligible health coverage
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1 under a certified health plan or employer sponsored health

2 plan.

3 (b) STATE RESPONSIBILITIES.—Under the program

4 established under subsection (a)—

5 (1) the insurance commissioner of a State may

6 certify a health plan if the commissioner determines

7 that—

8 (A) the health plan—

9 (i) provides family or child-only cov10 erage;

11 (ii) meets general coverage guidelines

12 that are established by the Secretary and

13 designed to ensure that the plan provides

14 comprehensive coverage, including preven15 tive, basic, and catastrophic benefits that

16 meet the health care needs of children (ei17 ther as part of a family plan or a child18 only plan);

19 (B) the average premium for the enroll20 ment of a child under such plan is reasonable

21 when taking into consideration the demographic

22 and health status related factors of the popu23 lation for which the plan will be marketed;
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1 (C) each premium subsidy eligible child

2 that is enrolled under the plan will be assessed

3 the same premium;

4 (D) the plan provides for guaranteed issue

5 with respect to premium subsidy eligible chil6 dren;

7 (E) complies with the provisions of section

8 104 regarding preexisting condition exclusions;

9 (F) the health insurance issuer involved is

10 participating in any applicable reinsurance pro11 gram that has been established by the State to

12 defray the costs of unevenly distributed risk

13 among issuers; and

14 (G) the plan meets any other criteria es15 tablished by the State;

16 (2) the insurance commissioner of the State

17 shall provide information on the availability of cer18 tified health plans and the availability of subsidies in

19 accordance with this title;

20 (3) the appropriate State entity (as determined

21 by the Chief Executive Officer of the State) shall

22 conduct income verification and reconciliation activi23 ties with respect to eligible children and families de24 siring to participate in the program in the State and

25 issue certificates in accordance with section 102;
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1 (4) the appropriate State entity (as determined

2 under paragraph (4)) shall be responsible for the

3 collection of premiums from premium subsidy eligi4 ble children and the forwarding of such premiums to

5 the appropriate certified health plans;

6 (5) the State (through its own authority or act7 ing in conjunction with the Secretary under sub8 section (f)(3)) shall ensure that each eligible child in

9 the State has a reasonable choice of health insurance

10 issuers that offer child-only coverage consistent with

11 the standards developed by the Secretary under this

12 title;

13 (6) the State will establish any other require14 ments and procedures necessary to carry out this

15 title within the State; and

16 (7) the State shall comply with any other re17 quirements established by the Secretary.

18 (c) PARTICIPATION OF ISSUERS.—

19 (1) IN GENERAL.—Any health plan may submit

20 an application with the appropriate State insurance

21 commissioner for certification under this section and

22 such plan shall be certified if it meets the require23 ments of subsection (b)(1). Employer-sponsored

24 health plans shall not be required to be certified

25 under this title.
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1 (2) REQUIREMENT FOR FEDERAL CONTRAC2 TORS.—

3 (A) IN GENERAL.—Each health insurance

4 issuer that provides health coverage under con5 tract with any Federal program and that offers

6 1 or more health plans that provide family cov7 erage options shall submit an application, with

8 the appropriate State insurance commissioner,

9 for the certification of 1 or more health plans

10 that provide the children’s only coverage de11 scribed in subsection (b)(1)(A). Such an issuer

12 shall apply for the certification of at least 1

13 health plan that provides child-only coverage,

14 and may apply for the certification of 1 or more

15 health plans that provide family coverage if

16 such plans provides coverage for children as de17 scribed in subsection (b)(1)(A).

18 (B) PENALTY.—A health insurance issuer

19 shall be ineligible to provide benefits under a

20 Federal contract described in subparagraph (A)

21 if—

22 (i) the issuer fails, in good faith, to

23 submit an application as required under

24 subparagraph (A);
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1 (ii) the State insurance commissioner

2 fails to certify a health plan of the issuer

3 as meeting the requirements of this title;

4 or

5 (iii) the issuer fails to make any modi6 fications to the application or to a health

7 plan as requested by the State insurance

8 commissioner for the certification of a

9 health plan.

10 (C) PARTICIPATION IN INDIVIDUAL MAR11 KET.—Notwithstanding subparagraph (A), a

12 health insurance issuer described in such sub13 paragraph shall not be required to offer cov14 erage in the individual market (as defined in

15 section 2791(e)(1)) unless the issuer is other16 wise participating in such market. Such an is17 suer shall be required to offer coverage to eligi18 ble children under this title through the partici19 pation of the issuer in all group purchasing ar20 rangements operating in the area served by the

21 issuer, except that with respect to employer22 sponsored health plans, the obligation of an is23 suer to offer child-only coverage shall be limited

24 to employers to which such issuers are other25 wise offering coverage.
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1 (3) EXPEDITED PROCEDURES.—The State in2 surance commissioner of a State shall establish expe3 dited procedures for the certification of health plans

4 that have been offered in the insurance market in

5 the State during the 1-year period preceding the

6 date on which a certification is sought.

7 (4) OFFERING OF COVERAGE.—A health insur8 ance issuer shall offer certified health plans to each

9 eligible child residing in the area served by the is10 suer regardless of the family income of such child.

11 Coverage provided under such plans may vary in ac12 cordance with this Act depending on whether the en13 rollee is an eligible child or a premium subsidy eligi14 ble child. Such coverage may be offered through in15 surance agents or brokers.

16 (d) AVERAGE COVERAGE AMOUNT.—

17 (1) DETERMINATION.—The Secretary, in con18 sultation with State insurance commissioners and

19 other experts in the field of health insurance, shall

20 determine the average coverage amount with respect

21 to certified health plans. The amount shall be based

22 on the average costs of comprehensive health insur23 ance coverage for children as determined using data

24 derived from existing State initiatives that have been
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1 established to provide health care coverage for unin2 sured children and data on the average market rates

3 for health plans offering coverage reasonably similar

4 to that of the coverage offered under certified health

5 plans.

6 (2) ADJUSTMENTS.—The Secretary shall annu7 ally adjust the average coverage amount determined

8 under paragraph (1) to ensure that such amount ac9 curately reflects the reasonable costs associated with

10 the purchase of coverage under a certified health

11 plan and regional variations in health care costs.

12 (3) APPLICATION OF AMOUNT TO CHILD POR13 TION OF PLAN.—In establishing and applying the

14 average coverage amount under paragraph (1), the

15 Secretary shall ensure that the amount relates solely

16 to the comprehensive coverage applicable to the pre17 mium subsidy eligible child. If coverage of a pre18 mium subsidy eligible child is under a certified fam19 ily plan, the average coverage amount shall relate

20 solely to that portion of the plan that provides the

21 coverage for the eligible child.

22 (e) WAIVER OF PREVIOUS COVERAGE LIMITATION.—

23 (1) ESTABLISHMENT OF PROCESS.—The Sec24 retary shall establish a process to waive the limita25 tion described in section 2(6)(D) with respect to an
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1 individual if the Secretary determines that the indi2 vidual was covered under a health plan during the

3 period referred to in such section as a dependent of

4 another individual and that the coverage was termi5 nated involuntarily or the loss of coverage results

6 from a change in employment.

7 (2) LIMITATION.—The process established

8 under paragraph (1) shall not permit a waiver with

9 respect to previous coverage that was terminated by

10 an employer (or with respect to which the contribu11 tion of the employer toward such coverage was re12 duced) unless the Secretary determines that such

13 coverage was terminated because the employer

14 ceased its operations or because of other cir15 cumstances clearly unrelated to the availability of

16 subsidies under this title.

17 (f) PROVISION OF TECHNICAL ASSISTANCE BY SEC18 RETARY.—

19 (1) ALTERNATIVE PROCEDURES.—The Sec20 retary, at the request of and in conjunction with the

21 insurance commissioner of a State, shall assist the

22 State in establishing alternative rate review and ap23 proval procedures that apply to the health plans
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1 seeking certification under this section. Any proce2 dures established under this paragraph shall be con3 sistent with the goals and requirements of this title.

4 (2) STRATEGIES TO IMPROVE INSURANCE MAR5 KET.—

6 (A) IN GENERAL.—The Secretary, at the

7 request of and in conjunction with a State,

8 shall develop and pursue strategies to encour9 age competition, prevent fraudulent practices,

10 ensure the adequacy of rates to prevent access

11 barriers, and achieve goals consistent with this

12 title with respect to the health insurance mar13 ket in the State. Such strategies may include

14 the establishment of commercial insurance pool15 ing arrangements that may be used by small

16 businesses and integrated with other purchasing

17 pools, the implementation of competitive bid18 ding mechanisms, and the coordination of in19 surance delivery systems with delivery systems

20 under title XIX of the Social Security Act.

21 (B) TERMINATION.—The Secretary may

22 require that a State terminate or revise a strat23 egy implemented by the State under paragraph

24 (1) if the Secretary determines that the strat25 egy conflicts with a provision of this title.
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1 (3) CHOICE OF ISSUERS.—The Secretary, at

2 the request of and in conjunction with a State, shall

3 assist the State in identifying and implementing

4 strategies to ensure that choice is provided to eligi5 ble children in accordance with subsection (b)(5).

6 Such strategies may include the strategies described

7 in paragraph (2)(A).

8 (g) PROCEDURES TO IDENTIFY THOSE ELIGIBLE

9 FOR MEDICAID.—In carrying out the program under this

10 title, the Secretary shall establish procedures to identify

11 premium subsidy eligible children whose enrollment in a

12 certified health plan is subsidized under this title and who

13 subsequently become eligible for assistance under a State

14 plan under title XIX of the Social Security Act as a result

15 of disability, the amount of health care costs, or similar

16 factors. Such procedures, while ensuring the continuity

17 and coordination of care, shall ensure that assistance

18 under such title XIX is the primary payer for children eli19 gible for such assistance.

20 SEC. 102. PROCEDURE FOR OBTAINING COVERAGE UNDER

21 CERTIFIED HEALTH PLANS.

22 (a) APPLICATION.—

23 (1) IN GENERAL.—To be eligible to receive a

24 subsidy for the purchase of coverage under a cer25 tified health plan under this title, a family on behalf
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1 of a premium subsidy eligible child shall submit to

2 the State entity designated under section 101(b)(4)

3 an application that shall contain such income and

4 employment information as the State determines

5 necessary to make a determination with respect to

6 the eligibility of such applicant for a subsidy under

7 this title.

8 (2) TIME FOR FILING.—A family on behalf of

9 a premium subsidy eligible child may file an applica10 tion for a subsidy under this title at any time in ac11 cordance with this subsection.

12 (3) USE OF SIMPLE FORM.—For purposes of

13 this subsection, the State entity shall use an applica14 tion that shall be as simple in form as possible and

15 understandable to the average individual. The appli16 cation may require attachment of such documenta17 tion as deemed necessary by the State in order to

18 ensure eligibility for a subsidy.

19 (4) AVAILABILITY OF FORMS.—The State entity

20 shall make an application form available through

21 health care providers and participating issuers, pub22 lic assistance offices, public libraries, and at other

23 locations (including post offices) accessible to a

24 broad cross-section of families.

25 (b) ISSUANCE OF CERTIFICATE.—
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1 (1) IN GENERAL.—

2 (A) NOTIFICATION OF APPLICANT.—If the

3 State entity described in subsection (a) deter4 mines that an applicant is eligible for a subsidy

5 under this title, the entity shall notify the appli6 cant of such eligibility and request that the ap7 plicant designate a certified health plan that

8 the applicant desires to enroll in.

9 (B) NOTIFICATION OF PLAN.—Upon a des10 ignation under subparagraph (A), the entity

11 shall forward a certificate of eligibility on behalf

12 of the applicant to the designated plan. Such

13 certificate shall contain identifying information

14 concerning the applicant and the eligible child

15 involved and the amount of the subsidy for

16 which the applicant is eligible.

17 (2) DETERMINATION BY STATE.—As elected by

18 a family at the time of the submission of an applica19 tion under subsection (a), the State entity shall

20 make a determination concerning family income ei21 ther—

22 (A) by multiplying by a factor of 4 the in23 come of the family for the 3-month period im24 mediately preceding the month in which the ap25 plication is made, or
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1 (B) based upon estimated income for the

2 entire year in which the application is submit3 ted.

4 (3) TERM.—A certificate under paragraph (1)

5 shall remain in effect for the 6-month period begin6 ning on the date of the issuance of the certificate.

7 To continue to be eligible for a subsidy, a family

8 must apply to renew the certificate at the end of

9 each 6-month period.

10 (c) ENROLLMENT.—Upon receipt of a certificate of

11 eligibility under subsection (b), a certified health plan

12 shall ensure that the eligible child involved is appropriately

13 enrolled and that a copy of the enrollment and coverage

14 materials are provided to the enrollee. With respect to the

15 certified health plan involved, the plan shall use the certifi16 cate in accordance with section 103 to compute the

17 amount of the premiums that are owed by the family in18 volved.

19 (d) PAYMENT OF PREMIUMS.—

20 (1) IN GENERAL.—Upon receipt of the appro21 priate enrollment materials from a certified health

22 plan under subsection (c), a premium subsidy eligi23 ble child, the family income of which does not exceed

24 the limit described in section 103(a)(2)(B)(i), shall
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1 be responsible for remitting to the State entity de2 scribed in subsection (a) the amount of the subsidy

3 adjusted premium owed under such plan.

4 (2) SUBSIDY ADJUSTED PREMIUM.—As used in

5 paragraph (1), the term ‘‘subsidy adjusted pre6 mium’’ means the total amount of the premium as7 sessed for the coverage of a premium subsidy eligible

8 child under a certified health plan less the amount

9 of the subsidy adjustment for which the child is eli10 gible under section 103.

11 (3) PAYMENT OF ISSUER.—A State shall, under

12 section 101(b)(4), establish procedures for the col13 lection of premiums under this subsection and the

14 payment of such premiums to the appropriate cer15 tified health plans.

16 (e) COVERAGE UNDER CERTAIN STATE PRO17 GRAMS.—

18 (1) COORDINATION OF PROGRAMS.—The Sec19 retary, in conjunction with States, shall provide for

20 the coordination of the program established under

21 this title with State programs that provide health in22 surance or other health care coverage for children.

23 Such coordination may include the use of subsidies

24 made available under this title to obtain coverage

25 that supplements any partial coverage provided
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1 through such a State program or other coordinated

2 arrangement.

3 (2) ELIGIBILITY.—With respect to an eligible

4 child who is participating in a State program de5 scribed in paragraph (1), a State may, notwithstand6 ing section 2(6)(D), determine that such child is a

7 premium subsidy eligible child.

8 (3) ADJUSTMENT OF AVERAGE COVERAGE

9 AMOUNT.—The Secretary shall adjust the average

10 coverage amount under section 101(d) with respect

11 to an eligible child who is determined to be a pre12 mium subsidy eligible child under paragraph (2) to

13 reflect the cost of enrolling the child in any plan

14 providing supplemental coverage as described in

15 paragraph (1).

16 SEC. 103. SUBSIDY ADJUSTMENT.

17 (a) PREMIUM SUBSIDY ELIGIBLE CHILDREN.—

18 (1) ELIGIBILITY.—An eligible child who has

19 been determined by a State entity under section

20 102(b) to be a premium subsidy eligible child shall

21 be eligible for a premium subsidy adjustment in the

22 amount determined under paragraph (2) to be ap23 plied by the certified plan involved when computing

24 the amount of the premium owed by such child.

25 (2) AMOUNT.—
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1 (A) FULL SUBSIDY.—

2 (i) IN GENERAL.—With respect to a

3 family, the family income of which does

4 not exceed 200 percent of the poverty line

5 for a family of the size involved, the

6 amount of a premium subsidy adjustment

7 specified in this paragraph for a premium

8 subsidy eligible child shall, subject to

9 clause (ii), be equal to 90 percent of the

10 annual premium for the child for such year

11 for coverage of the child under a certified

12 health plan.

13 (ii) LIMITATION.—The amount of a

14 subsidy adjustment for which a premium

15 subsidy eligible child is eligible under

16 clause (i) may not exceed the average cov17 erage amount for the child as determined

18 under section 101(d) with respect to the

19 region in which the plan is offered.

20 (B) GRADUATED SUBSIDY.—

21 (i) IN GENERAL.—With respect to a

22 family, the family income of which exceeds

23 200, but does not exceed 300, percent of

24 the poverty line for a family of the size in25 volved, the amount of a premium subsidy
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1 adjustment specified in this paragraph for

2 a premium subsidy eligible child shall be

3 determined by substituting ‘‘the applicable

4 percentage’’ for ‘‘90 percent’’ in subpara5 graph (A).

6 (ii) APPLICABLE PERCENTAGE.—For

7 purposes of clause (i), the term ‘‘applicable

8 percentage’’ shall be determined using the

9 following table:

The applicable

percentage

‘‘If the family income: shall be:

Exceeds 200, but does not exceed 225, percent

of poverty ....................................................... 80

Exceeds 225, but does not exceed 250, percent

of poverty ....................................................... 60

Exceeds 250, but does not exceed 275, percent

of poverty ....................................................... 40

Exceeds 275, but does not exceed 300, percent

of poverty ....................................................... 20

Exceeds 300 percent of poverty (subject to subsection (b)(2)) ................................................ 10

10 (b) OTHER ELIGIBLE CHILDREN.—

11 (1) IN GENERAL.—A premium subsidy eligible

12 child who is determined by the State to be a child

13 described in paragraph (2), shall be eligible for a

14 premium subsidy adjustment in the amount deter15 mined under paragraph (3) to be obtained through

16 a refundable tax credit determined under section

17 34A of the Internal Revenue Code of 1986.
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1 (2) INCOME LIMITATION.—A premium subsidy

2 eligible child described in this paragraph is a pre3 mium subsidy eligible child the family income of

4 which exceeds 300 percent of the poverty line for a

5 family of the size involved, but the adjusted gross in6 come (as defined in section 62 of the Internal Reve7 nue Code of 1986) of which is less than $75,000.

8 (3) AMOUNT.—

9 (A) IN GENERAL.—A premium subsidy eli10 gible child described in paragraph (2) shall be

11 eligible for a premium subsidy adjustment

12 which shall, subject to subparagraph (B), be

13 equal to 10 percent of the annual premium for

14 the child for such year for coverage of the child

15 under a certified health plan.

16 (B) LIMITATION.—The amount of a sub17 sidy adjustment for which a premium subsidy

18 eligible child is eligible under subparagraph (A)

19 may not exceed the average coverage amount

20 for the child as determined under section

21 101(d) with respect to the region in which the

22 plan is offered.

23 (4) PURCHASE OF COVERAGE BY THOSE NOT

24 ELIGIBLE FOR SUBSIDY.—An eligible child who is

25 not a premium subsidy eligible child and who enrolls
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1 in a certified health plan shall be responsible for the

2 payment of the entire premium amount for coverage

3 under the plan. Such certified plan shall comply with

4 the applicable State insurance requirements and if

5 such requirements permit, may elect not to comply

6 with the provisions of subparagraphs (D) (relating

7 to guaranteed issue) and (E) (relating to preexisting

8 condition exclusion) of section 101(b)(1).

9 (c) DETERMINATIONS OF INCOME.—For purposes of

10 this section and section 102(b):

11 (1) IN GENERAL.—The term ‘‘income’’ means

12 adjusted gross income (as defined in section 62(a) of

13 the Internal Revenue Code of 1986)—

14 (A) determined without regard to sections

15 135, 162(l), 911, 931, and 933 of such Code;

16 and

17 (B) increased by—

18 (i) the amount of interest received or

19 accrued which is exempt from tax, plus

20 (ii) the amount of social security ben21 efits (described in section 86(d) of such

22 Code) which is not includible in gross in23 come under section 86 of such Code.

24 (2) FAMILY INCOME.—The term ‘‘family in25 come’’ means, with respect to a family, the sum of
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1 the income for all members of the family, not includ2 ing the income of a dependent child with respect to

3 which no return is required under the Internal Reve4 nue Code of 1986.

5 (d) PROHIBITION ON REMITTING FUNDS.—A health

6 insurance issuer may not in any manner remit any portion

7 of the premium that a family is responsible for under this

8 title.

9 SEC. 104. LIMITATION ON PREEXISTING CONDITION EXCLU10 SION PERIOD AND PROHIBITION ON DIS11 CRIMINATION.

12 (a) PREEXISTING CONDITIONS.—

13 (1) IN GENERAL.—No preexisting condition ex14 clusion shall be imposed by a certified health plan or

15 an employer-sponsored health plan, with respect to

16 the enrollment and coverage of any premium subsidy

17 eligible child.

18 (2) DEFINITION.—As used in this subsection,

19 the term ‘‘preexisting condition exclusion’’ shall have

20 the meaning given such term by section 2701(b)(1)

21 of the Public Health Service Act (as added by sec22 tion 102 of the Health Insurance Portability and Ac23 countability Act of 1996).

24 (b) PROHIBITION OF DISCRIMINATION ON BASIS OF

25 HEALTH STATUS.—
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1 (1) IN ELIGIBILITY TO ENROLL.—

2 (A) IN GENERAL.—Subject to subpara3 graph (B), a health insurance issuer may not

4 establish rules for eligibility (including contin5 ued eligibility) of any premium subsidy eligible

6 child to enroll in a certified health plan or em7 ployer-sponsored health plan based on any of

8 the following factors in relation to the premium

9 subsidy eligible child:

10 (i) Health status.

11 (ii) Medical condition (including both

12 physical and mental illnesses).

13 (iii) Claims experience.

14 (iv) Receipt of health care.

15 (v) Medical history.

16 (vi) Genetic information.

17 (vii) Evidence of insurability (includ18 ing conditions arising out of acts of domes19 tic violence).

20 (viii) Disability.

21 (B) NO APPLICATION TO BENEFITS OR EX22 CLUSIONS.—Subparagraph (A) shall not be con23 strued—

24 (i) to require a certified health plan or

25 employer-sponsored health plan to provide
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1 particular benefits other than those pro2 vided under the terms of the coverage, or

3 (ii) to prevent such plan from estab4 lishing limitations or restrictions on the

5 amount, level, extent, or nature of the ben6 efits or coverage for similarly situated chil7 dren enrolled in the plan.

8 (2) IN PREMIUM CONTRIBUTIONS.—

9 (A) IN GENERAL.—With respect to a cer10 tified health plan or employer-sponsored health

11 plan, a health insurance issuer may not require

12 that any premium subsidy eligible child (as a

13 condition of enrollment or continued enrollment

14 under the certified or employer-sponsored

15 health plan involved) to pay a premium or con16 tribution that is greater than such premium or

17 contribution for a similarly situated child en18 rolled in the plan on the basis of any factor de19 scribed in paragraph (1)(A) in relation to the

20 child.

21 (B) CONSTRUCTION.—Nothing in subpara22 graph (A) shall be construed—

23 (i) to restrict the amount that an em24 ployer may be charged for coverage under

25 a plan; or
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1 (ii) to prevent a health insurance is2 suer from establishing premium discounts

3 or rebates or modifying otherwise applica4 ble copayments or deductibles in return for

5 adherence to programs of health promotion

6 and disease prevention.

7 (c) EMPLOYER MAY NOT DISCRIMINATE AGAINST

8 INDIVIDUALS ELIGIBLE FOR A SUBSIDY.—

9 (1) GENERAL RULE.—An employer that elects

10 to make employer contributions on behalf of an indi11 vidual who is an employee of such employer, or who

12 is a dependent of such employee, for health insur13 ance coverage of the type described in section

14 101(b)(1)(A) shall not condition, or vary such con15 tributions with respect to any such individual by rea16 son of such individual’s or dependent’s status as an

17 child eligible for a premium subsidy under this title.

18 (2) ELIMINATION OF CONTRIBUTIONS.—An em19 ployer shall not be treated as failing to meet the re20 quirements of paragraph (1) if the employer ceases

21 to make employer contributions for health insurance

22 coverage for all its employees.

23 SEC. 105. MAINTENANCE OF EFFORT.

24 A State may not modify the eligibility requirements

25 for children under the State program under title XIX of
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1 the Social Security Act, as in effect on July 1, 1996, in

2 any manner that would have the effect of reducing the

3 eligibility of children for coverage under such program.

4 SEC. 106. OVERSIGHT BY SECRETARY.

5 In the case of a determination by the Secretary that

6 a State has failed to carry out or substantially enforce a

7 provision (or provisions) of this title, the Secretary shall

8 carry out or enforce such provision (or provisions) with

9 respect to the coverage of eligible children in such State.

10 SEC. 107. RULES OF CONSTRUCTION.

11 Nothing in this title shall be construed—

12 (1) as establishing premiums for health plans

13 or otherwise limiting the competitive health insur14 ance market within a State;

15 (2) as limiting the ability of a State to establish

16 health insurance purchasing pools, initiate a com17 petitive bidding process with respect to certified

18 health plans, or pursue other innovative strategies

19 aimed at maximizing the potential of market forces

20 to achieve quality and cost effectiveness; or

21 (3) as superseding any provision of State law

22 which—

23 (A) provides for the application of criteria,

24 in addition to those described in section

25 101(b)(1), for the certification of health plans
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1 so long as such criteria do not directly conflict

2 with the goals of the criteria described in such

3 section; or

4 (B) establishes, implements, or continues

5 in effect any standard or requirement relating

6 solely to health insurance issuers in connection

7 with certified health plans or the coverage of el8 igible children, except to the extent that such

9 standard or requirement prevents the applica10 tion of a requirement of this title.

11 SEC. 108. MISCELLANEOUS PROVISIONS.

12 (a) TRANSITION RULE.—With respect to the 12-

13 month period described in section 2(6)(E), such period

14 shall be reduced as follows:

15 (1) For premium subsidy eligible children desir16 ing to enroll in a certified plan during the first full

17 month after the date on which this Act becomes ef18 fective, the period shall be 6 months.

19 (2) For premium subsidy eligible children desir20 ing to enroll in a certified plan during the second

21 full month after the date on which this Act becomes

22 effective, the period shall be 7 months.

23 (3) For premium subsidy eligible children desir24 ing to enroll in a certified plan during the third full
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1 month after the date on which this Act becomes ef2 fective, the period shall be 8 months.

3 (4) For premium subsidy eligible children desir4 ing to enroll in a certified plan during the fourth full

5 month after the date on which this Act becomes ef6 fective, the period shall be 9 months.

7 (5) For premium subsidy eligible children desir8 ing to enroll in a certified plan during the fifth full

9 month after the day on which this Act becomes ef10 fective, the period shall be 10 months.

11 (6) For premium subsidy eligible children desir12 ing to enroll in a certified plan during the sixth full

13 month after the day on which this Act becomes ef14 fective, the period shall be 11 months.

15 TITLE II—HEALTH INSURANCE

16 COVERAGE FOR PREGNANT

17 WOMEN

18 SEC. 201. EXPANDING HEALTH INSURANCE COVERAGE FOR

19 PREGNANT WOMEN.

20 (a) ESTABLISHMENT OF GRANT PROGRAM.—The

21 Secretary shall establish a program to provide grants to

22 States to enable such States to assist pregnant women in

23 obtaining appropriate prenatal, perinatal and postnatal

24 care.
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1 (b) APPLICATION.—To be eligible to receive a grant

2 under this section, a State shall prepare and submit to

3 the Secretary an application at such time, in such manner,

4 and containing such information as the Secretary may re5 quire.

6 (c) AMOUNT OF GRANT.—

7 (1) IN GENERAL.—From the amount available

8 for grants under subsection (e) for a fiscal year, the

9 Secretary shall award a grant to each State in an

10 amount that is equal to an amount which bears the

11 same relationship to such amount as the pregnancy

12 coverage amount of the State as determined under

13 paragraph (2) bears to the pregnancy coverage

14 amount for all States.

15 (2) PREGNANCY COVERAGE AMOUNT.—For pur16 poses of paragraph (1), the pregnancy coverage

17 amount of a State shall be equal to—

18 (A) the number of estimated uninsured

19 pregnant women in the State the family income

20 of which does not exceed 300 percent of the

21 poverty line for a family of the size involved;

22 and

23 (B) the average per capita cost of provid24 ing pregnancy benefits to such women.
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1 (3) GUIDELINES.—The Secretary, in consulta2 tion with the National Association of Insurance

3 Commissioners and the American Academy of Actu4 aries, shall establish guidelines for the determination

5 of the amounts described in subparagraphs (A) and

6 (B) of paragraph (2).

7 (d) USE OF AMOUNTS.—A State shall use amounts

8 received under a grant provided under this section to as9 sist pregnant women in obtaining appropriate prenatal,

10 perinatal and postnatal care as approved by the Secretary.

11 (e) AUTHORIZATION OF APPROPRIATIONS.—There is

12 authorized to be appropriated such sums as may be nec13 essary to carry out this section.

14 SEC. 202. GRANTS FOR INNOVATIVE OUTREACH.

15 (a) ESTABLISHMENT OF GRANT PROGRAM.—The

16 Secretary shall establish a program to provide categorical

17 grants to States to assist children and pregnant women

18 in obtaining health care services and coverage for which

19 they are eligible.

20 (b) APPLICATION.—To be eligible to receive a grant

21 under this section, a State shall prepare and submit to

22 the Secretary an application at such time, in such manner,

23 and containing such information as the Secretary may re24 quire.
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1 (c) AMOUNT OF GRANT.—The Secretary shall deter2 mine the amount of a grant provided under this section.

3 (d) USE OF AMOUNTS.—A State shall use amounts

4 received under a grant provided under this section to carry

5 out innovative outreach activities to promote the timely

6 enrollment of pregnant women and children in health

7 plans or other programs that provide prenatal care and

8 other pregnancy-related services or comprehensive care for

9 children.

10 (e) AUTHORIZATION OF APPROPRIATIONS.—There is

11 authorized to be appropriated such sums as may be nec12 essary to carry out this section.

13 TITLE III—CHILDREN’S HEALTH

14 COVERAGE SUBSIDY CREDITS

15 SEC. 301. HEALTH COVERAGE PROVIDED TO PREMIUM SUB16 SIDY ELIGIBLE CHILDREN THROUGH A TAX

17 CREDIT FOR INSURERS.

18 (a) IN GENERAL.—Subpart B of part IV of sub19 chapter A of chapter 1 of the Internal Revenue Code of

20 1986 (relating to other credits) is amended by adding at

21 the end the following:
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1 ‘‘SEC. 30B. CHILDREN’S HEALTH COVERAGE SUBSIDY CRED2 IT FOR INSURERS.

3 ‘‘(a) DETERMINATION OF AMOUNT.—There shall be

4 allowed as a credit against the applicable tax for the tax5 able year an amount equal to the eligible premium sub6 sidies provided by a health insurance issuer for coverage

7 under 1 or more certified health plans during the taxable

8 year under the Children’s Health Coverage Act.

9 ‘‘(b) APPLICABLE TAX.—For purposes of this sec10 tion, the term ‘applicable tax’ means the excess (if any)

11 of—

12 ‘‘(1) the sum of—

13 ‘‘(A) the tax imposed under this chapter

14 (other than the taxes imposed under the provi15 sions described in subparagraphs (C) through

16 (O) of section 26(b)(1)), plus

17 ‘‘(B) the tax imposed under chapter 21,

18 over

19 ‘‘(2) the credits allowable under subparts B and

20 D of this part.

21 ‘‘(c) ELIGIBLE PREMIUM SUBSIDIES.—The term ‘eli22 gible premium subsidies’ means premium subsidies for

23 premium subsidy eligible children (as defined in section

24 2(6) of the Children’s Health Coverage Act).

25 ‘‘(d) OTHER DEFINITIONS.—For purposes of this

26 section, the terms ‘health insurance issuer’ and ‘certified
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1 health plan’ have the meaning given those terms by section

2 2 of the Children’s Health Coverage Act.’’.

3 (b) TRANSFER TO TRUST FUNDS.—The Secretary of

4 the Treasury shall transfer from the general fund to the

5 Old-Age, Survivors, and Disability Insurance Trust Fund

6 and to the Hospital Insurance Trust Fund amounts equiv7 alent to the amount of the reduction in taxes imposed by

8 section 3111 of the Internal Revenue Code of 1986 by rea9 son of the credit determined under section 30B (relating

10 to the children’s health coverage subsidy credit for insur11 ers). Any such transfer shall be made at the same time

12 the reduced taxes would have been deposited in either such

13 Trust Fund.

14 (c) CONFORMING AMENDMENT.—The table of sec15 tions for subpart B of part IV of subchapter A of chapter

16 1 of the Internal Revenue Code of 1986 is amended by

17 adding at the end the following:

‘‘Sec. 30B. Children’s health coverage subsidy credit for insurers.’’.

18 (e) EFFECTIVE DATE.—The amendments made by

19 this section apply to taxable years beginning after Decem20 ber 31, 1997.

21 SEC. 302. HEALTH COVERAGE PROVIDED TO PREMIUM SUB22 SIDY ELIGIBLE CHILDREN THROUGH A RE23 FUNDABLE INCOME TAX CREDIT.

24 (a) IN GENERAL.—Subpart C of part IV of sub25 chapter A of chapter 1 of the Internal Revenue Code of
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1 1986 (relating to refundable personal credits) is amended

2 by inserting after section 34 the following:

3 ‘‘SEC. 34A. CHILDREN’S HEALTH COVERAGE.

4 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a pre5 mium subsidy eligible individual, there shall be allowed as

6 a credit against the tax imposed by this subtitle for the

7 taxable year an amount equal to the premium subsidy de8 termined under section 103(b)(3) of the Children’s Health

9 Coverage Act for such individual for the taxable year.

10 ‘‘(b) PREMIUM SUBSIDY ELIGIBLE INDIVIDUAL.—

11 For purposes of this section, the term ‘premium subsidy

12 eligible individual’ means, with respect to any period, an

13 individual who has as a dependent for the taxable year

14 1 or more premium subsidy eligible children described in

15 section 103(b)(2) of the Children’s Health Coverage Act.

16 ‘‘(c) REGULATIONS.—The Secretary shall prescribe

17 such regulations as may be necessary to carry out the pur18 poses of this section.’’.

19 (b) COORDINATION WITH DEDUCTIONS FOR HEALTH

20 INSURANCE EXPENSES.—

21 (1) SELF-EMPLOYED INDIVIDUALS.—Section

22 162(l) of the Internal Revenue Code of 1986 (relat23 ing to special rules for health insurance costs of self24 employed individuals) is amended by adding after

25 paragraph (5) the following:
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1 ‘‘(6) COORDINATION WITH CHILDREN’S

2 HEALTH COVERAGE CREDIT.—Paragraph (1) shall

3 not apply to any amount taken into account in com4 puting the amount of the credit allowed under sec5 tion 34A.’’.

6 (2) MEDICAL, DENTAL, ETC., EXPENSES.—Sec7 tion 213(e) of such Code (relating to exclusion of

8 amounts allowed for care of certain dependents) is

9 amended by inserting ‘‘or section 34A’’ after ‘‘sec10 tion 21’’.

11 (c) CONFORMING AMENDMENT.—The table of sec12 tions for subpart A of part IV of subchapter A of chapter

13 1 of the Internal Revenue Code of 1986 is amended by

14 inserting after the item relating to section 34 the follow15 ing:

‘‘Sec. 34A. Children’s health coverage.’’.

16 (d) EFFECTIVE DATE.—The amendments made by

17 this section apply to taxable years beginning after Decem18 ber 31, 1997.

Æ