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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2515 Introduced in Senate (IS)]

106th CONGRESS
  2d Session
                                S. 2515

To amend the Social Security Act to guarantee comprehensive health care 
               coverage for all children born after 2001.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                              May 4, 2000

Mr. Rockefeller introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
To amend the Social Security Act to guarantee comprehensive health care 
               coverage for all children born after 2001.

    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; FINDINGS.

    (a) Short Title.--This Act may be cited as the ``MediKids Health 
Insurance Act of 2000''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents; findings.
Sec. 2. Benefits for all children born after 2001.
                     ``TITLE XXII--MEDIKIDS PROGRAM

        ``Sec. 2201. Eligibility.
        ``Sec. 2202. Benefits.
        ``Sec. 2203. Premiums.
        ``Sec. 2204. MediKids Trust Fund.
        ``Sec. 2205. Oversight and accountability.
        ``Sec. 2206. Addition of care coordination services.
        ``Sec. 2207. Administration and miscellaneous.
Sec. 3. MediKids premium.
Sec. 4. Refundable credit for cost-sharing expenses under MediKids 
                            program.
Sec. 5. Financing from tobacco liability payments.
Sec. 6. Report on long-term revenues.
    (c) Findings.--Congress finds the following:
            (1) More than 11 million American children are uninsured.
            (2) Children who are uninsured receive less medical care 
        and less preventive care and have a poorer level of health, 
        which result in lifetime costs to themselves and to the entire 
        American economy.
            (3) Although SCHIP and Medicaid are successfully extending 
        a health coverage safety net to a growing portion of the 
        vulnerable low-income population of uninsured children, we now 
        see that they alone cannot achieve 100 percent health insurance 
        coverage for our nation's children due to inevitable gaps 
        during outreach and enrollment, fluctuations in eligibility, 
        and variations in access to private insurance at all income 
        levels.
            (4) As all segments of our society continue to become more 
        and more transient, with many changes in employment over the 
        working lifetime of parents, the need for a reliable safety net 
        of health insurance which follows children across State lines, 
        already a major problem for the children of migrant and 
        seasonal farmworkers, will become a major concern for all 
        families in the United States.
            (5) The Medicare program has successfully evolved over the 
        years to provide a stable, universal source of health insurance 
        for the nation's disabled and those over age 65, and therefore 
        provides a tested model for designing a program to reach out to 
        America's children
            (6) The problem of insuring 100 percent of all American 
        children could be gradually solved by automatically enrolling 
        all children born after December 31, 2001, in a program modeled 
        after Medicare (and to be known as ``MediKids''), and allowing 
        those children to be transferred into other equivalent or 
        better insurance programs, including either private insurance, 
        SCHIP, or Medicaid, if they are eligible to do so, but 
        maintaining the child's default enrollment in MediKids for any 
        times when the child's access to other sources of insurance is 
        lost.
            (7) A family's freedom of choice to use other insurers to 
        cover children would not be interfered with in any way, and 
        children eligible for SCHIP and Medicaid would continue to be 
        enrolled in those programs, but the underlying safety net of 
        MediKids would always be available to cover any gaps in 
        insurance due to changes in medical condition, employment, 
        income, or marital status, or other changes affecting a child's 
        access to alternate forms of insurance.
            (8) The MediKids program can be administered without 
        impacting the finances or status of the existing Medicare 
        program.
            (9) The MediKids benefit package can be tailored to the 
        special needs of children and updated over time.
            (10) The financing of the program can be administered 
        without difficulty by a yearly payment of affordable premiums 
        through a family's tax filing (or adjustment of a family's 
        earned income tax credit).
            (11) The cost of the program will gradually rise as the 
        number of children using MediKids as the insurer of last resort 
        increases, and a future Congress always can accelerate or slow 
        down the enrollment process as desired, while the societal 
        costs for emergency room usage, lost productivity and work 
        days, and poor health status for the next generation of 
        Americans will decline.
            (12) Over time 100 percent of American children will always 
        have basic health insurance, and we can therefore expect a 
healthier, more equitable, and more productive society.

SEC. 2. BENEFITS FOR ALL CHILDREN BORN AFTER 2001.

    (a) In General.--The Social Security Act is amended by adding at 
the end the following new title:

                     ``TITLE XXII--MEDIKIDS PROGRAM

``SEC. 2201. ELIGIBILITY.

    ``(a) Eligibility of Individuals Born After December 31, 2001.--An 
individual who meets the following requirements with respect to a month 
is eligible to enroll under this title with respect to such month:
            ``(1) Age.--The individual is born after December 31, 2001, 
        and has not attained 23 years of age.
            ``(2) Citizenship.--The individual is a citizen or national 
        of the United States or is permanently residing in the United 
        States under color of law.
    ``(b) Enrollment Process.--An individual may enroll in the program 
established under this title only in such manner and form as may be 
prescribed by regulations, and only during an enrollment period 
prescribed by the Secretary consistent with the provisions of this 
section. Such regulations shall provide a process under which--
            ``(1) individuals who are born in the United States after 
        December 31, 2001, are deemed to be enrolled at the time of 
        birth and a parent or guardian of such an individual is 
        permitted to pre-enroll in the month prior to the expected 
        month of birth;
            ``(2) individuals who are born outside the United States 
        after such date and who become eligible to enroll by virtue of 
        immigration into (or an adjustment of immigration status in) 
        the United States are deemed enrolled at the time of entry or 
        adjustment of status;
            ``(3) eligible individuals may otherwise be enrolled at 
        such other times and manner as the Secretary shall specify, 
        including the use of outstationed eligibility sites as 
        described in section 1902(a)(55)(A) and the use of presumptive 
        eligibility provisions like those described in section 1920A; 
        and
            ``(4) at the time of automatic enrollment of a child, the 
        Secretary provides for issuance to a parent or custodian of the 
        individual a card evidencing coverage under this title and for 
        a description of such coverage.
The provisions of section 1837(h) apply with respect to enrollment 
under this title in the same manner as they apply to enrollment under 
part B of title XVIII.
    ``(c) Date Coverage Begins.--
            ``(1) In general.--The period during which an individual is 
        entitled to benefits under this title shall begin as follows, 
        but in no case earlier than January 1, 2002:
                    ``(A) In the case of an individual who is enrolled 
                under paragraph (1) or (2) of subsection (b), the date 
                of birth or date of obtaining appropriate citizenship 
                or immigration status, as the case may be.
                    ``(B) In the case of an another individual who 
                enrolls (including pre-enrolls) before the month in 
                which the individual satisfies eligibility for 
                enrollment under subsection (a), the first day of such 
                month of eligibility.
                    ``(C) In the case of an another individual who 
                enrolls during or after the month in which the 
                individual first satisfies eligibility for enrollment 
                under such subsection, the first day of the following 
                month.
            ``(2) Authority to provide for partial months of 
        coverage.--Under regulations, the Secretary may, in the 
        Secretary's discretion, provide for coverage periods that 
        include portions of a month in order to avoid lapses of 
        coverage.
            ``(3) Limitation on payments.--No payments may be made 
        under this title with respect to the expenses of an individual 
        enrolled under this title unless such expenses were incurred by 
        such individual during a period which, with respect to the 
        individual, is a coverage period under this section.
    ``(d) Expiration of Eligibility.--An individual's coverage period 
under this part shall continue until the individual's enrollment has 
been terminated because the individual no longer meets the requirements 
of subsection (a) (whether because of age or change in immigration 
status).
    ``(e) Entitlement to MediKids Benefits for Enrolled Individuals.--
An individual enrolled under this section is entitled to the benefits 
described in section 2202.
    ``(f) Low-Income Information.--At the time of enrollment of a child 
under this title, the Secretary shall make an inquiry as to whether or 
not the family income of the family that includes the child is less 
than 150 percent of the poverty line for a family of the size involved. 
If the family income is below such level, the Secretary shall encode in 
the identification card issued in connection with eligibility under 
this title a code indicating such fact. The Secretary also shall 
provide for a toll-free telephone line at which providers can verify 
whether or not such a child is in a family the income of which is below 
such level.
    ``(g) Construction.--Nothing in this title shall be construed as 
requiring (or preventing) an individual who is enrolled under this 
section from seeking medical assistance under a State medicaid plan 
under title XIX or child health assistance under a State child health 
plan under title XXI.

``SEC. 2202. BENEFITS.

    ``(a) Secretarial Specification of Benefit Package.--
            ``(1) In general.--The Secretary shall specify the benefits 
        to be made available under this title consistent with the 
        provisions of this section and in a manner designed to meet the 
        health needs of children.
            ``(2) Updating.--The Secretary shall update the 
        specification of benefits over time to ensure the inclusion of 
        age-appropriate benefits as the enrollee population gets older.
            ``(3) Annual updating.--The Secretary shall establish 
        procedures for the annual review and updating of such benefits 
        to account for changes in medical practice, new information 
        from medical research, and other relevant developments in 
        health science.
            ``(4) Input.--The Secretary shall seek the input of the 
        pediatric community in specifying and updating such benefits.
    ``(b) Inclusion of Certain Benefits.--
            ``(1) Medicare core benefits.--Such benefits shall include 
        (to the extent consistent with other provisions of this 
        section) at least the same benefits (including coverage, 
        access, availability, duration, and beneficiary rights) that 
        are available under parts A and B of title XVIII.
            ``(2) All required medicaid benefits.--Such benefits shall 
        also include all items and services for which medical 
        assistance is required to be provided under section 
        1902(a)(10)(A) to individuals described in such section, 
        including early and periodic screening, diagnostic services, 
        and treatment services.
            ``(3) Inclusion of prescription drugs.--Such benefits also 
        shall include (as specified by the Secretary) prescription 
        drugs and biologicals.
            ``(4) Cost-sharing.--
                    ``(A) In general.--Subject to subparagraph (B), 
                such benefits also shall include the cost-sharing (in 
                the form of deductibles, coinsurance, and copayments) 
                applicable under title XVIII with respect to comparable 
                items and services, except that no cost-sharing shall 
                be imposed with respect to early and periodic screening 
                and diagnostic services included under paragraph (2).
                    ``(B) No cost-sharing for lowest income children.--
                Such benefits shall not include any cost-sharing for 
                children in families the income of which (as determined 
                for purposes of section 1905(p)) does not exceed 150 
                percent of the official income poverty line (referred 
                to in such section) applicable to a family of the size 
                involved.
                    ``(C) Refundable credit for cost-sharing for other 
                low-income children.--For a refundable credit for cost-
                sharing in the case of children in certain families, 
                see section 35 of the Internal Revenue Code of 1986.
    ``(c) Payment Schedule.--The Secretary, with the assistance of the 
Medicare Payment Advisory Commission, shall develop and implement a 
payment schedule for benefits covered under this title. To the extent 
feasible, such payment schedule shall be consistent with comparable 
payment schedules and reimbursement methodologies applied under parts A 
and B of title XVIII.
    ``(d) Input.--The Secretary shall specify such benefits and payment 
schedules only after obtaining input from appropriate child health 
providers and experts.
    ``(e) Enrollment in Health Plans.--The Secretary shall provide for 
the offering of benefits under this title through enrollment in a 
health benefit plan that meets the same (or similar) requirements as 
the requirements that apply to Medicare+Choice plans under part C of 
title XVIII. In the case of individuals enrolled under this title in 
such a plan, the Medicare+Choice capitation rate described in section 
1853(c) shall be adjusted in an appropriate manner to reflect 
differences between the population served under this title and the 
population under title XVIII.

``SEC. 2203. PREMIUMS.

    ``(a) Amount of Monthly Premiums.--
            ``(1) In general.--The Secretary shall, during September of 
        each year (beginning with 2001), establish a monthly MediKids 
        premium. Subject to paragraph (2), the monthly MediKids premium 
        for a year is equal to \1/12\ of the annual premium rate 
        computed under subsection (b).
            ``(2) Elimination of monthly premium for demonstration of 
        equivalent coverage (including coverage under low-income 
        programs).--The amount of the monthly premium imposed under 
        this section for an individual for a month shall be zero in the 
        case of an individual who demonstrates to the satisfaction of 
        the Secretary that the individual has basic health insurance 
        coverage for that month the actuarial value of which, as 
        determined by the Secretary, is at least actuarially equivalent 
        to the benefits available under this title. For purposes of the 
        previous sentence enrollment in a medicaid plan under title 
        XIX, a State child health insurance plan under title XXI, or 
        under the medicare program under title XVIII is deemed to 
        constitute basic health insurance coverage described in such 
        sentence.
    ``(b) Annual Premium.--
            ``(1) National, per capita average.--The Secretary shall 
        estimate the average, annual per capita amount that would be 
        payable under this title with respect to individuals residing 
        in the United States who meet the requirement of section 
        2201(a)(1) as if all such individuals were eligible for (and 
        enrolled) under this title during the entire year (and assuming 
that section 1862(b)(2)(A)(i) did not apply).
            ``(2) Annual premium.--Subject to subsection (d), the 
        annual premium under this subsection for months in a year is 
        equal to the average, annual per capita amount estimated under 
        paragraph (1) for the year.
    ``(c) Payment of Monthly Premium.--
            ``(1) Period of payment.--In the case of an individual who 
        participates in the program established by this title, subject 
        to subsection (d), the monthly premium shall be payable for the 
        period commencing with the first month of the individual's 
        coverage period and ending with the month in which the 
        individual's coverage under this title terminates.
            ``(2) Collection through tax return.--For provisions 
        providing for the payment of monthly premiums under this 
        subsection, see section 59B of the Internal Revenue Code of 
        1986.
            ``(3) Protections against fraud and abuse.--The Secretary 
        shall develop, in coordination with States and other health 
        insurance issuers, administrative systems to ensure that claims 
        which are submitted to more than one payor are coordinated and 
        duplicate payments are not made.
    ``(d) Reduction in Premium for Certain Low-Income Families.--For 
provisions reducing the premium under this section for certain low-
income families, see section 59B(c) of the Internal Revenue Code of 
1986.

``SEC. 2204. MEDIKIDS TRUST FUND.

    ``(a) Establishment of Trust Fund.--
            ``(1) In general.--There is hereby created on the books of 
        the Treasury of the United States a trust fund to be known as 
        the `MediKids Trust Fund' (in this section referred to as the 
        `Trust Fund'). The Trust Fund shall consist of such gifts and 
        bequests as may be made as provided in section 201(i)(1) and 
        such amounts as may be deposited in, or appropriated to, such 
        fund as provided in this title.
            ``(2) Premiums.--Premiums collected under section 2203 
        shall be transferred to the Trust Fund.
    ``(b) Incorporation of Provisions.--
            ``(1) In general.--Subject to paragraph (2), subsections 
        (b) through (i) of section 1841 shall apply with respect to the 
        Trust Fund and this title in the same manner as they apply with 
        respect to the Federal Supplementary Medical Insurance Trust 
        Fund and part B, respectively.
            ``(2) Miscellaneous references.--In applying provisions of 
        section 1841 under paragraph (1)--
                    ``(A) any reference in such section to `this part' 
                is construed to refer to title XXII;
                    ``(B) any reference in section 1841(h) to section 
                1840(d) and in section 1841(i) to sections 1840(b)(1) 
                and 1842(g) are deemed references to comparable 
                authority exercised under this title;
                    ``(C) payments may be made under section 1841(g) to 
                the Trust Funds under sections 1817 and 1841 as 
                reimbursement to such funds for payments they made for 
                benefits provided under this title; and
                    ``(D) the Board of Trustees of the MediKids Trust 
                Fund shall be the same as the Board of Trustees of the 
                Federal Supplementary Medical Insurance Trust Fund.

``SEC. 2205. OVERSIGHT AND ACCOUNTABILITY.

    ``(a) Through Annual Reports of Trustees.--The Board of Trustees of 
the MediKids Trust Fund under section 2204(b)(1) shall report on an 
annual basis to Congress concerning the status of the Trust Fund and 
the need for adjustments in the program under this title to maintain 
financial solvency of the program under this title.
    ``(b) Periodic GAO Reports.--The Comptroller General of the United 
States shall periodically submit to Congress reports on the adequacy of 
the financing of coverage provided under this title. The Comptroller 
General shall include in such report such recommendations for 
adjustments in such financing and coverage as the Comptroller General 
deems appropriate in order to maintain financial solvency of the 
program under this title.

``SEC. 2206. INCLUSION OF CARE COORDINATION SERVICES.

    ``(a) In General.--
            ``(1) Program authority.--The Secretary, beginning in 2002, 
        may implement a care coordination services program in 
        accordance with the provisions of this section under which, in 
        appropriate circumstances, eligible individuals may elect to 
        have health care services covered under this title managed and 
        coordinated by a designated care coordinator.
            ``(2) Administration by contract.--The Secretary may 
        administer the program under this section through a contract 
        with an appropriate program administrator.
            ``(3) Coverage.--Care coordination services furnished in 
        accordance with this section shall be treated under this title 
as if they were included in the definition of medical and other health 
services under section 1861(s) and benefits shall be available under 
this title with respect to such services without the application of any 
deductible or coinsurance.
    ``(b) Eligibility Criteria; Identification and Notification of 
Eligible Individuals.--
            ``(1) Individual eligibility criteria.--The Secretary shall 
        specify criteria to be used in making a determination as to 
        whether an individual may appropriately be enrolled in the care 
        coordination services program under this section, which shall 
        include at least a finding by the Secretary that for cohorts of 
        individuals with characteristics identified by the Secretary, 
        professional management and coordination of care can reasonably 
        be expected to improve processes or outcomes of health care and 
        to reduce aggregate costs to the programs under this title.
            ``(2) Procedures to facilitate enrollment.--The Secretary 
        shall develop and implement procedures designed to facilitate 
        enrollment of eligible individuals in the program under this 
        section.
    ``(c) Enrollment of Individuals.--
            ``(1) Secretary's determination of eligibility.--The 
        Secretary shall determine the eligibility for services under 
        this section of individuals who are enrolled in the program 
        under this section and who make application for such services 
        in such form and manner as the Secretary may prescribe.
            ``(2) Enrollment period.--
                    ``(A) Effective date and duration.--Enrollment of 
                an individual in the program under this section shall 
                be effective as of the first day of the month following 
                the month in which the Secretary approves the 
                individual's application under paragraph (1), shall 
                remain in effect for one month (or such longer period 
                as the Secretary may specify), and shall be 
                automatically renewed for additional periods, unless 
                terminated in accordance with such procedures as the 
                Secretary shall establish by regulation. Such 
                procedures shall permit an individual to disenroll for 
                cause at any time and without cause at re-enrollment 
                intervals.
                    ``(B) Limitation on reenrollment.--The Secretary 
                may establish limits on an individual's eligibility to 
                reenroll in the program under this section if the 
                individual has disenrolled from the program more than 
                once during a specified time period.
    ``(d) Program.--The care coordination services program under this 
section shall include the following elements:
            ``(1) Basic care coordination services.--
                    ``(A) In general.--Subject to the cost-
                effectiveness criteria specified in subsection (b)(1), 
                except as otherwise provided in this section, enrolled 
                individuals shall receive services described in section 
                1905(t)(1) and may receive additional items and 
                services as described in subparagraph (B).
                    ``(B) Additional benefits.--The Secretary may 
                specify additional benefits for which payment would not 
                otherwise be made under this title that may be 
                available to individuals enrolled in the program under 
                this section (subject to an assessment by the care 
                coordinator of an individual's circumstance and need 
                for such benefits) in order to encourage enrollment in, 
                or to improve the effectiveness of, such program.
            ``(2) Care coordination requirement.--Notwithstanding any 
        other provision of this title, the Secretary may provide that 
        an individual enrolled in the program under this section may be 
        entitled to payment under this title for any specified health 
        care items or services only if the items or services have been 
        furnished by the care coordinator, or coordinated through the 
        care coordination services program. Under such provision, the 
        Secretary shall prescribe exceptions for emergency medical 
        services as described in section 1852(d)(3), and other 
        exceptions determined by the Secretary for the delivery of 
        timely and needed care.
    ``(e) Care Coordinators.--
            ``(1) Conditions of participation.--In order to be 
        qualified to furnish care coordination services under this 
        section, an individual or entity shall--
                    ``(A) be a health care professional or entity 
                (which may include physicians, physician group 
                practices, or other health care professionals or 
                entities the Secretary may find appropriate) meeting 
                such conditions as the Secretary may specify;
                    ``(B) have entered into a care coordination 
                agreement; and
                    ``(C) meet such criteria as the Secretary may 
                establish (which may include experience in the 
                provision of care coordination or primary care 
                physician's services).
            ``(2) Agreement term; payment.--
                    ``(A) Duration and renewal.--A care coordination 
                agreement under this subsection shall be for one year 
                and may be renewed if the Secretary is satisfied that 
                the care coordinator continues to meet the conditions 
                of participation specified in paragraph (1).
                    ``(B) Payment for services.--The Secretary may 
                negotiate or otherwise establish payment terms and 
                rates for services described in subsection (d)(1).
                    ``(C) Liability.--Case coordinators shall be 
                subject to liability for actual health damages which 
                may be suffered by recipients as a result of the care 
                coordinator's decisions, failure or delay in making 
                decisions, or other actions as a care coordinator.
                    ``(D) Terms.--In addition to such other terms as 
                the Secretary may require, an agreement under this 
                section shall include the terms specified in 
                subparagraphs (A) through (C) of section 1905(t)(3).

``SEC. 2207. ADMINISTRATION AND MISCELLANEOUS.

    ``(a) In General.--Except as otherwise provided in this title--
            ``(1) the Secretary shall enter into appropriate contracts 
        with providers of services, other health care providers, 
        carriers, and fiscal intermediaries, taking into account the 
        types of contracts used under title XVIII with respect to such 
        entities, to administer the program under this title;
            ``(2) individuals enrolled under this title shall be 
        treated for purposes of title XVIII as though the individual 
        were entitled to benefits under part A and enrolled under part 
        B of such title;
            ``(3) benefits described in section 2202 that are payable 
        under this title to such individuals shall be paid in a manner 
        specified by the Secretary (taking into account, and based to 
        the greatest extent practicable upon, the manner in which they 
        are provided under title XVIII);
            ``(4) provider participation agreements under title XVIII 
        shall apply to enrollees and benefits under this title in the 
        same manner as they apply to enrollees and benefits under title 
        XVIII; and
            ``(5) individuals entitled to benefits under this title may 
        elect to receive such benefits under health plans in a manner, 
        specified by the Secretary, similar to the manner provided 
        under part C of title XVIII.
    ``(b) Coordination With Medicaid and SCHIP.--Notwithstanding any 
other provision of law, individuals entitled to benefits for items and 
services under this title who also qualify for benefits under title XIX 
or XXI or any other Federally funded program may continue to qualify 
and obtain benefits under such other title or program, and in such case 
such an individual shall elect either--
            ``(1) such other title or program to be primary payor to 
        benefits under this title, in which case no benefits shall be 
        payable under this title and the monthly premium under section 
        2203 shall be zero; or
            ``(2) benefits under this title shall be primary payor to 
        benefits provided under such program or title, in which case 
        the Secretary shall enter into agreements with States as may be 
        appropriate to provide that, in the case of such individuals, 
        the benefits under titles XIX and XXI or such other program 
        (including reduction of cost-sharing) are provided on a `wrap-
        around' basis to the benefits under this title.''.
    (b) Conforming Amendments to Social Security Act Provisions.--
            (1) Section 201(i)(1) of the Social Security Act (42 U.S.C. 
        401(i)(1)) is amended by striking ``or the Federal 
        Supplementary Medical Insurance Trust Fund'' and inserting 
        ``the Federal Supplementary Medical Insurance Trust Fund, and 
        the MediKids Trust Fund''.
            (2) Section 201(g)(1)(A) of such Act (42 U.S.C. 
        401(g)(1)(A)) is amended by striking `` and the Federal 
        Supplementary Medical Insurance Trust Fund established by title 
        XVIII'' and inserting ``, the Federal Supplementary Medical 
        Insurance Trust Fund, and the MediKids Trust Fund established 
        by title XVIII''.
            (3) Section 1853(c) of such Act (42 U.S.C. 1395w-23(c)) is 
        amended--
                    (A) in paragraph (1), by striking ``or (7)'' and 
                inserting ``, (7), or (8)'', and
                    (B) by adding at the end the following:
            ``(8) Adjustment for medikids.--In applying this subsection 
        with respect to individuals entitled to benefits under title 
        XXII, the Secretary shall provide for an appropriate adjustment 
        in the Medicare+Choice capitation rate as may be appropriate to 
        reflect differences between the population served under such 
        title and the population under parts A and B.''.
    (c) Maintenance of Medicaid Eligibility and Benefits for 
Children.--
            (1) In general.--In order for a State to continue to be 
        eligible for payments under section 1903(a) of the Social 
        Security Act (42 U.S.C. 1396b(a))--
                    (A) the State may not reduce standards of 
                eligibility, or benefits, provided under its State 
                medicaid plan under title XIX of the Social Security 
                Act or under its State child health plan under title 
                XXI of such Act for individuals under 23 years of age 
                below such standards of eligibility, and benefits, in 
                effect on the date of the enactment of this Act; and
                    (B) the State shall demonstrate to the satisfaction 
                of the Secretary of Health and Human Services that any 
                savings in State expenditures under title XIX or XXI of 
                the Social Security Act that results from children from 
                enrolling under title XXII of such Act shall be used in 
                a manner that improves services to beneficiaries under 
                title XIX of such Act, such as through increases in 
                provider payment rates, expansion of eligibility, 
                improved nurse and nurse aide staffing and improved 
                inspections of nursing facilities, and coverage of 
                additional services.
            (2) MediKids as primary payor.--In applying title XIX of 
        the Social Security Act, the MediKids program under title XXII 
        of such Act shall be treated as a primary payor in cases in 
        which the election described in section 2207(b)(2) of such Act, 
        as added by subsection (a), has been made.
    (d) Expansion of MedPAC Membership to 19.--
            (1) In general.--Section 1805(c) of the Social Security Act 
        (42 U.S.C. 1395b-6(c)) is amended--
                    (A) in paragraph (1), by striking ``17'' and 
                inserting ``19''; and
                    (B) in paragraph (2)(B), by inserting ``experts in 
                children's health,'' after ``other health 
                professionals,''.
            (2) Initial terms of additional members.--
                    (A) In general.--For purposes of staggering the 
                initial terms of members of the Medicare Payment 
                Advisory Commission under section 1805(c)(3) of the 
                Social Security Act (42 U.S.C. 1395b-6(c)(3)), the 
                initial terms of the 2 additional members of the 
                Commission provided for by the amendment under 
subsection (a)(1) are as follows:
                            (i) One member shall be appointed for 1 
                        year.
                            (ii) One member shall be appointed for 2 
                        years.
                    (B) Commencement of terms.--Such terms shall begin 
                on January 1, 2001.

SEC. 3. MEDIKIDS PREMIUM.

    (a) General Rule.--Subchapter A of chapter 1 of the Internal 
Revenue Code of 1986 (relating to determination of tax liability) is 
amended by adding at the end the following new part:

                     ``PART VIII--MEDIKIDS PREMIUM

                              ``Sec. 59B. MediKids premium.

``SEC. 59B. MEDIKIDS PREMIUM.

    ``(a) Imposition of Tax.--In the case of an individual to whom this 
section applies, there is hereby imposed (in addition to any other tax 
imposed by this subtitle) a MediKids premium for the taxable year.
    ``(b) Individuals Subject to Premium.--
            ``(1) In general.--This section shall apply to an 
        individual if the taxpayer has a MediKid at any time during the 
        taxable year.
            ``(2) MediKid.--For purposes of this section, the term 
        `MediKid' means, with respect to a taxpayer, any individual 
        with respect to whom the taxpayer is required to pay a premium 
        under section 2203(c) of the Social Security Act for any month 
        of the taxable year.
    ``(c) Amount of Premium.--For purposes of this section, the 
MediKids premium for a taxable year is the sum of the monthly premiums 
under section 2203 of the Social Security Act for months in the taxable 
year.
    ``(d) Exceptions Based on Adjusted Gross Income.--
            ``(1) Exemption for very low-income taxpayers.--
                    ``(A) In general.--No premium shall be imposed by 
                this section on any taxpayer having an adjusted gross 
                income not in excess of the exemption amount.
                    ``(B) Exemption amount.--For purposes of this 
                paragraph, the exemption amount is--
                            ``(i) $16,300 in the case of a taxpayer 
                        having 1 MediKid,
                            ``(ii) $19,950 in the case of a taxpayer 
                        having 2 MediKids,
                            ``(iii) $25,550 in the case of a taxpayer 
                        having 3 MediKids, and
                            ``(iv) $30,150 in the case of a taxpayer 
                        having 4 or more MediKids.
                    ``(C) Phaseout of exemption.--In the case of a 
                taxpayer having an adjusted gross income which exceeds 
                the exemption amount but does not exceed twice the 
                exemption amount, the premium shall be the amount which 
                bears the same ratio to the premium which would (but 
                for this subparagraph) apply to the taxpayer as such 
                excess bears to the exemption amount.
                    ``(D) Inflation adjustment of exemption amounts.--
                In the case of any taxable year beginning in a calendar 
                year after 2001, each dollar amount contained in 
                subparagraph (C) shall be increased by an amount equal 
                to the product of--
                            ``(i) such dollar amount, and
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        determined by substituting `calendar year 1999' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.
                If any increase determined under the preceding sentence 
                is not a multiple of $50, such increase shall be 
                rounded to the nearest multiple of $50.
            ``(2) Premium limited to 5 percent of adjusted gross 
        income.--In no event shall any taxpayer be required to pay a 
        premium under this section in excess of an amount equal to 5 
        percent of the taxpayer's adjusted gross income.
    ``(e) Coordination With Other Provisions.--
            ``(1) Not treated as medical expense.--For purposes of this 
        chapter, any premium paid under this section shall not be 
        treated as expense for medical care.
            ``(2) Not treated as tax for certain purposes.--The premium 
        paid under this section shall not be treated as a tax imposed 
        by this chapter for purposes of determining--
                    ``(A) the amount of any credit allowable under this 
                chapter, or
                    ``(B) the amount of the minimum tax imposed by 
                section 55.
            ``(3) Treatment under subtitle f.--For purposes of subtitle 
        F, the premium paid under this section shall be treated as if 
it were a tax imposed by section 1.''.
    (b) Technical Amendments.--
            (1) Subsection (a) of section 6012 of such Code is amended 
        by inserting after paragraph (9) the following new paragraph:
            ``(10) Every individual liable for a premium under section 
        59B.''.
            (2) The table of parts for subchapter A of chapter 1 of 
        such Code is amended by adding at the end the following new 
        item:

                              ``Part VIII. MediKids premium.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to months beginning after December 2001, in taxable years ending 
after such date.

SEC. 4. REFUNDABLE CREDIT FOR COST-SHARING EXPENSES UNDER MEDIKIDS 
              PROGRAM.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by redesignating section 35 as section 36 and by inserting 
after section 34 the following new section:

``SEC. 35. COST-SHARING EXPENSES UNDER MEDIKIDS PROGRAM.

    ``(a) Allowance of Credit.--In the case of an individual who has a 
MediKid (as defined in section 59B) at any time during the taxable 
year, there shall be allowed as a credit against the tax imposed by 
this subtitle an amount equal to 50 percent of the amount paid by the 
taxpayer during the taxable year as cost-sharing under section 
2202(b)(4) of the Social Security Act.
    ``(b) Limitation Based on Adjusted Gross Income.--The amount of the 
credit which would (but for this subsection) be allowed under this 
section for the taxable year shall be reduced (but not below zero) by 
an amount which bears the same ratio to such amount of credit as the 
excess of the taxpayer's adjusted gross income for such taxable year 
over the exemption amount (as defined in section 59B(d)) bears to such 
exemption amount.''.
    (b) Technical Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting before the period ``or 
        from section 35 of such Code''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of such Code is amended by striking 
        the last item and inserting the following new items:

                              ``Sec. 35. Cost-sharing expenses under 
                                        MediKids program.
                              ``Sec. 36. Overpayments of tax.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 5. FINANCING FROM TOBACCO LIABILITY PAYMENTS.

    Amounts that are recovered by the United States in the civil action 
brought on September 22, 1999, under the Medical Care Recovery Act, the 
Medicare Secondary Payer provisions, and section 1962 of title 18, 
United States Code, in the United States District Court for the 
District of Columbia against the industry engaged in the production and 
sale of tobacco products and persons engaged in public relations and 
lobbying for such industry and that are attributable to the 
expenditures of the Department of Health and Human Services for 
tobacco-related illnesses shall be deposited in the MediKids Trust Fund 
established under section 2204(a) of the Social Security Act, as added 
by section 2(a) of the MediKids Health Insurance Act of 2000.

SEC. 6. REPORT ON LONG-TERM REVENUES.

    Within one year after the date of the enactment of this Act, the 
Secretary of the Treasury shall propose a gradual schedule of 
progressive tax changes to fund the program under title XXII of the 
Social Security Act, as the number of enrollees grows in the out-years.
                                 <all>
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