I

107TH CONGRESS

1ST SESSION H. R. 1033

To amend the Social Security Act to provide grants and flexibility through

demonstration projects for States to provide universal, comprehensive,

cost-effective systems of health care coverage, with simplified

administration.

IN THE HOUSE OF REPRESENTATIVES

MARCH 14, 2001

Mr. TIERNEY (for himself, Mr. BONIOR, Mr. CAPUANO, Ms. CARSON of Indiana, Mr. CONYERS, Mr. DEFAZIO, Mr. HILLIARD, Mr. MCDERMOTT, Mr.

NADLER, Ms. NORTON, Mr. OLVER, Ms. RIVERS, Mr. SANDERS, Mr.

WEINER, Mr. STARK, Mr. FATTAH, Mr. MCGOVERN, Ms. LEE, Ms.

SCHAKOWSKY, Ms. WATERS, Mr. BALDACCI, Mr. KUCINICH, Mr. GUTIERREZ, Mrs. MEEK of Florida, Mr. KILDEE, Ms. MILLENDER-MCDONALD,

Mr. GEORGE MILLER of California, Mrs. CHRISTENSEN, Mr. HINCHEY,

Mr. LANTOS, Mrs. JONES of Ohio, Mr. FILNER, Mr. LEWIS of Georgia,

Mr. EVANS, Mr. HASTINGS of Florida, Ms. JACKSON-LEE of Texas, Mr.

BRADY of Pennsylvania, Mr. PAYNE, Ms. BALDWIN, Mr. MARKEY, Mr.

THOMPSON of Mississippi, Mr. OWENS, and Mr. DAVIS of Illinois) introduced the following bill; which was referred to the Committee on Energy

and Commerce

A BILL

To amend the Social Security Act to provide grants and

flexibility through demonstration projects for States to

provide universal, comprehensive, cost-effective systems

of health care coverage, with simplified administration.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
2

•HR 1033 IH

1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

3 ‘‘States’ Right To Innovate in Health Care Act of 2001’’.

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

5 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings and purposes.

Sec. 3. Amendment to Social Security Act.

‘‘TITLE XXII—STATE COMPREHENSIVE HEALTH CARE AND COST

CONTAINMENT DEMONSTRATION PROJECTS

‘‘Sec. 2201. Planning grants.

‘‘Sec. 2202. Demonstration grants.

‘‘Sec. 2203. State plan requirements.

‘‘Sec. 2204. Interstate arrangements.

‘‘Sec. 2205. Definitions.’’.

6 SEC. 2. FINDINGS AND PURPOSES.

7 (a) FINDINGS.—Congress finds the following:

8 (1) In 1998, annual health care expenditures in

9 the United States totaled $1.15 trillion, or $4,094

10 per person.

11 (2) In 1998, health care expenditures rep12 resented 13.5 percent of the gross domestic product

13 (GDP) in the United States and grew at the rate of

14 5.6 percent while the gross domestic product grew

15 only at the rate of 4.9 percent.

16 (3) Businesses, and consumers, would save ap17 proximately $562.8 billion over 7 years if health care

18 expenditures were increasing at the same rate as

19 GDP growth.
3

•HR 1033 IH

1 (4) Because many individuals do not have

2 health insurance coverage, they may incur health

3 care costs which they do not fully reimburse, result4 ing in cost-shifting to others.

5 (5) As a consequence of the piecemeal health

6 care system in the United States, administrative

7 overhead costs approximately $1,000 per person an8 nually while other Western industrialized nations

9 with universal health care systems spend approxi10 mately $200 per person annually for administrative

11 overhead.

12 (b) PURPOSE.—It is the purpose of this Act to en13 courage States—

14 (1) to develop plans for universal, comprehen15 sive, cost-effective systems of health care with sim16 plified administration to individuals residing in such

17 States; and

18 (2) to implement such plans by offering transi19 tional grants and by removing Federal statutory and

20 administrative barriers that may inhibit or discour21 age efforts by States to provide such health care

22 while maintaining Federal payments for health care

23 under Federal health care programs.
4

•HR 1033 IH

1 SEC. 3. AMENDMENT TO SOCIAL SECURITY ACT.

2 The Social Security Act (42 U.S.C. 301 et seq.) is

3 amended by adding at the end the following new title:

4 ‘‘TITLE XXII—STATE COMPREHENSIVE

5 HEALTH CARE AND COST CONTAINMENT

6 DEMONSTRATION PROJECTS

7 ‘‘SEC. 2201. PLANNING GRANTS.

8 ‘‘(a) APPLICATION.—A State may apply to the Sec9 retary for a State planning grant under this section to

10 develop a State plan to offer universal comprehensive

11 health care, with simplified administration, and to improve

12 the cost-effectiveness of the health care delivery system.

13 ‘‘(b) CONTENTS.—The Secretary may not approve

14 such a State planning grant for a State unless the applica15 tion for the grant includes or provides for the following:

16 ‘‘(1) BUDGET.—A budget and a budget jus17 tification.

18 ‘‘(2) PLANNING PROCESS.—A description of

19 how under the grant the State shall—

20 ‘‘(A) identify options to provide a uni21 versal, comprehensive, and cost-effective system

22 of health care, with simplified administration,

23 that is affordable and accessible to all eligible

24 beneficiaries in the State; and

25 ‘‘(B) conduct an analysis that compares

26 projected overall health expenditures over a 7-
5

•HR 1033 IH

1 year period under the proposed system with the

2 projected overall health expenditures that would

3 otherwise occur during such period.

4 ‘‘(3) OPPORTUNITY FOR PUBLIC PARTICIPA5 TION.—Assurances that the State will include a

6 process for public contribution and participation in

7 the planning process.

8 ‘‘(c) NUMBER OF STATES; PERIOD OF GRANT.—The

9 Secretary may not award State planning grants under this

10 section to more than 10 States. A State planning grant

11 under this section shall be effective for a period of up to

12 30 months. In awarding State planning grants under this

13 section the Secretary shall give preference to States from

14 a variety of geographic areas in the United States.

15 ‘‘(d) AMOUNT.—The amount of a State planning

16 grant under this section to a State may not exceed

17 $3,750,000.

18 ‘‘(e) TECHNICAL ASSISTANCE.—The Secretary shall

19 provide States with technical assistance in applying for

20 and implementing State planning grants under this sec21 tion. At the request of the Secretary, other Departments

22 and Offices of the Federal Government shall provide

23 States with such technical assistance.
6

•HR 1033 IH

1 ‘‘SEC. 2202. DEMONSTRATION GRANTS.

2 ‘‘(a) APPLICATION.—A State that has developed a

3 State plan may apply to the Secretary for approval of a

4 demonstration grant under this section to achieve a cost5 effective delivery system of universal, comprehensive

6 health care with simplified administration. The Secretary

7 shall notify the chief executive officer of all States of the

8 availability of demonstration grants under this section.

9 ‘‘(b) APPROVAL.—The Secretary shall approve the

10 applications of not more than 5 States under this section.

11 In approving grants under this section the Secretary shall

12 give preference to States from a variety of geographic

13 areas in the United States. If the Secretary determines

14 that a State no longer meets the conditions for approval

15 of the grant, the Secretary shall notify the State of such

16 determination and provide the State with an opportunity

17 to correct deficiencies in a timely manner. If the Secretary

18 further determines that a State has not corrected such de19 ficiencies in a timely manner, the Secretary shall termi20 nate the grant (including waivers authorized under the

21 grant).

22 ‘‘(c) PERIOD.—A demonstration grant approved

23 under this section shall be effective for 7 years from the

24 date of final approval of the demonstration grant applica25 tion under subsection (b).
7

•HR 1033 IH

1 ‘‘(d) STATE PLAN REQUIRED.—The Secretary may

2 not approve a demonstration grant under this section un3 less the State has a State plan to carry out the grant con4 sistent with the requirements of section 2203.

5 ‘‘(e) FUNDING.—

6 ‘‘(1) TRANSITIONAL GRANT AMOUNT.—The

7 amount awarded under this section to a State with

8 a demonstration grant approved under this section

9 may not exceed an aggregate amount of

10 $10,000,000 plus $3 multiplied by the number of el11 igible State residents of the State, to assist the

12 State in the transition of the health care delivery

13 and financing infrastructure. Such amount shall be

14 made available to a State during the period of tran15 sition, as provided in the State plan. The number of

16 eligible State residents of a State shall be deter17 mined based on the best available Census Bureau

18 data as of the July 1 before the date the grant

19 under this section is approved.

20 ‘‘(2) MAINTENANCE OF FEDERAL FUNDS

21 UNDER WAIVERS.—Pursuant to the waivers under

22 subsection (f), the Federal Government shall pay to

23 a State amounts for health care under Federal

24 health care programs that would otherwise have

25 been payable by the Federal Government but for the
8

•HR 1033 IH

1 State’s universal, comprehensive health care system

2 under this section.

3 ‘‘(f) WAIVER OF ERISA PREEMPTION AND WAIVERS

4 TO POOL FUNDS.—As part of a demonstration grant

5 under this section and subject to the benefit maintenance

6 requirements applicable under section 2203(b), a State

7 may request (and the Secretary may grant) the following

8 waivers of requirements and provisions to the extent nec9 essary to carry out the State plan under section 2203:

10 ‘‘(1) ERISA.—Waiving application of section

11 514 of the Employee Retirement Income Security

12 Act of 1974.

13 ‘‘(2) MEDICARE.—Waiving provisions necessary

14 to permit the State—

15 ‘‘(A) to use funds otherwise paid under

16 title XVIII for beneficiaries residing in the

17 State; and

18 ‘‘(B) to permit the State to enter into an

19 arrangement with the Secretary under which el20 igible State residents who are not otherwise en21 rolled for benefits under parts A and B of such

22 title are enrolled for such benefits under such

23 title and the State provides for such actuarially

24 appropriate reimbursement to the Secretary

25 with respect to coverage of such benefits for
9

•HR 1033 IH

1 such residents as is necessary to assure that the

2 Trust Funds under such title are not adversely

3 affected by virtue of such waiver, such reim4 bursement subject to—

5 ‘‘(i) an independent audit, to be re6 viewed by the Comptroller General of the

7 United States, assuring that such reim8 bursement does not adversely affect in any

9 way the Trust Funds for medicare eligible

10 beneficiaries, and

11 ‘‘(ii) in the case that the audit deter12 mines that additional reimbursement to the

13 Secretary is required, such additional reim14 bursement, with appropriate adjustments

15 for interest attributable to the late reim16 bursement.

17 ‘‘(3) MEDICAID.—Waiving provisions necessary

18 to permit the State to use funds otherwise paid to

19 the State under title XIX.

20 ‘‘(4) SCHIP.—Waiving provisions necessary to

21 permit the State to use funds otherwise paid to the

22 State under title XXI.

23 ‘‘(5) FEHBP.—Waiving provisions necessary to

24 permit the State to use funds otherwise paid under

25 chapter 89 of title 5, United States Code, or allow-
10

•HR 1033 IH

1 ing the Office of Personnel Management to purchase

2 health care coverage for Federal employees and re3 tirees in the State under the State plan.

4 ‘‘(6) USE OF OTHER FUNDS.—Waiving provi5 sions necessary to permit the State to use funds oth6 erwise provided under other Federal programs for

7 the provision of health care coverage or services,

8 identified by the State.

9 ‘‘(7) OTHER LAWS.—Waiving of other provi10 sions of Federal law identified by the State under

11 section 2203(e)(3) only if the Secretary determines

12 such a waiver to be appropriate after consultation

13 with the head of the Federal agency or department

14 concerned.

15 The Secretary may grant a waiver under this subsection

16 only if the State provides the Secretary with satisfactory

17 assurances that necessary safeguards have been taken to

18 protect the health and welfare of individuals provided serv19 ices under the waiver and that financial accountability is

20 maintained for any funds expended under the waiver. The

21 Secretary may grant a waiver under paragraph (1) only

22 with the concurrence of the Secretary of Labor.

23 ‘‘(g) REENROLLMENT OF ELIGIBLE STATE RESI24 DENTS WHO MOVE FROM A PARTICIPATING STATE.—In

25 the case of an eligible State resident who is covered under
11

•HR 1033 IH

1 a State plan under section 2203, who (but for such cov2 erage) is eligible to be enrolled in a program described in

3 subsection (f) (including the medicare and medicaid pro4 grams), and who is not enrolled in such a program because

5 of such coverage, if the resident leaves the State to reside

6 in a State that does not have such a State plan in effect,

7 the resident shall be permitted, notwithstanding any other

8 provision of law, to enroll immediately in such a program

9 if the resident is still otherwise eligible to be so enrolled.

10 In the case of such enrollment in the medicare program,

11 the resident shall be treated for purposes of section

12 1882(s)(2) (relating to availability of medigap policies

13 without underwriting) as if the resident had turned 65

14 years of age on the date the resident enrolls in the medi15 care program.

16 ‘‘(h) DUTIES OF THE SECRETARY.—

17 ‘‘(1) GUIDANCE AND INFORMATION.—The Sec18 retary shall—

19 ‘‘(A) provide guidance to State health care

20 authorities regarding applications for grants

21 under this title and exchange information with,

22 and otherwise assist, such authorities upon the

23 request of the authorities;

24 ‘‘(B) set application procedures;
12

•HR 1033 IH

1 ‘‘(C) review and approve applications for

2 demonstration grants under this section, includ3 ing providing for appropriate waivers described

4 in subsection (f);

5 ‘‘(D) provide appropriate levels of funding

6 for such approved applications consistent with

7 such section;

8 ‘‘(E) conduct such evaluation, monitoring,

9 compliance, and other review functions as may

10 be appropriate;

11 ‘‘(F) develop guidelines, standards, and

12 formats for States to follow in evaluating, re13 porting, and collecting data in order to enable

14 the Commission to monitor State plan adminis15 tration and compliance, and to evaluate and

16 compare the effectiveness of State plans; and

17 ‘‘(G) implement any other requirements or

18 activities necessary and appropriate under this

19 title.

20 ‘‘(2) ANNUAL REPORT.—The Secretary shall

21 submit to the President and the Congress an annual

22 report. Such report shall be submitted not later than

23 March 30 of each year and shall include information

24 concerning States that receive grants under this title
13

•HR 1033 IH

1 and the effectiveness of any health care programs

2 assisted by such grants during the previous year.

3 ‘‘(3) APPROVAL PROCESS.—The provisions of

4 section 2106(c) shall apply to State plans and the

5 Secretary under this title in the same manner as

6 they apply to State plans and the Secretary under

7 such section.

8 ‘‘SEC. 2203. STATE PLAN REQUIREMENTS.

9 ‘‘(a) COVERAGE.—

10 ‘‘(1) IN GENERAL.—A State plan shall provide

11 a process and a timeline for achieving coverage of all

12 eligible State residents statewide, without regard to

13 employment status, income, health status or pre14 existing condition, or location of residency within the

15 State.

16 ‘‘(2) OUTREACH MECHANISMS.—A State plan

17 shall describe the outreach mechanisms to be used to

18 assure coverage of all eligible individuals, including

19 measures to assure coverage of individuals in hard20 to-reach populations and to assure benefits are pro21 vided to eligible individuals located in underserved

22 areas.

23 ‘‘(b) BENEFITS.—

24 ‘‘(1) BASIC BENEFITS.—A State plan shall pro25 vide for health benefits that—
14

•HR 1033 IH

1 ‘‘(A) are at least actuarially equivalent to

2 the standard Blue Cross/Blue Shield preferred

3 provider option service benefit plan, described

4 in and offered under section 8903(1) of title 5,

5 United States Code; and

6 ‘‘(B) include benefits for at least the fol7 lowing items and services:

8 ‘‘(i) Inpatient and outpatient hospital

9 services, including emergency services

10 available 24 hours a day.

11 ‘‘(ii) Long term, acute, and chronic

12 care services, including skilled nursing fa13 cility services, intermediate care facility

14 services home health services, home and

15 community-based long-term care services,

16 hospice care, and services in intermediate

17 care facilities for individuals diagnosed

18 with mental retardation.

19 ‘‘(iii) Professional services of health

20 care practitioners authorized to provide

21 health care services under State law.

22 ‘‘(iv) Community-based primary

23 health care services, including rural health

24 clinic services and Federally-qualified

25 health center services.
15

•HR 1033 IH

1 ‘‘(v) Laboratory, x-ray services, and

2 diagnostic tests.

3 ‘‘(vi) Preventive care, including pre4 natal, well-baby, and well-child care, appro5 priate immunizations, pap smears, screen6 ing mammography, colorectal cancer

7 screening, physical examinations, and fam8 ily planning.

9 ‘‘(vii) Prescription drugs and

10 biologicals, including insulin and medical

11 foods.

12 ‘‘(viii) Mental health services.

13 ‘‘(ix) Substance abuse treatment serv14 ices.

15 ‘‘(x) Vision services, including routine

16 eye examinations, eyeglasses, and contact

17 lenses.

18 ‘‘(xi) Hearing services, including hear19 ing aids.

20 ‘‘(xii) Dental services, including rou21 tine check ups.

22 ‘‘(xiii) Durable medical equipment, in23 cluding home dialysis supplies and equip24 ment.

25 ‘‘(xiv) Emergency ambulance services.
16

•HR 1033 IH

1 ‘‘(xv) Prosthetics.

2 ‘‘(xvi) Outpatient therapy, including

3 physical therapy, occupational therapy, and

4 speech language pathology services and re5 lated services.

6 ‘‘(2) ASSURANCE THAT BENEFITS ARE NOT RE7 DUCED FOR INDIVIDUALS COVERED UNDER FED8 ERAL PROGRAMS.—Insofar as the State under the

9 plan incorporates funding provided by Federal pro10 grams described in section 2202(f), the State plan

11 may not provide for a reduction in benefits (includ12 ing coverage, access, availability, duration, and bene13 ficiary rights, and, if applicable, vaccine benefits

14 under section 1928) otherwise provided for under

15 such programs or an increase in cost-sharing and

16 premiums otherwise provided for under such pro17 grams.

18 ‘‘(3) CONTINUATION OF BENEFITS FOR CER19 TAIN ALIENS.—Nothing in this title shall be con20 strued as affecting the access of aliens described in

21 section 2204(1)(D) to health care services provided

22 under law for such aliens as of the date of the enact23 ment of this title.

24 ‘‘(c) QUALITY ASSURANCE.—
17

•HR 1033 IH

1 ‘‘(1) IN GENERAL.—A State plan shall provide,

2 and describe, mechanisms to be used to assure, mon3 itor, and maintain the quality of items and services

4 furnished under the plan.

5 ‘‘(2) HEALTH OUTCOMES.—A State plan shall

6 describe the plan’s projected effect on health out7 comes in the State, including estimates of health

8 benefits, decreased morbidity and mortality, and im9 proved productivity resulting from reduction in the

10 number of individuals without health benefits.

11 ‘‘(d) PROGRAMS FOR MEDICAL EDUCATION.—A

12 State plan shall describe health professions training and

13 graduate medical education activities applicable under the

14 plan, and shall provide, under the State plan, for payment

15 from Federal, State, and local governments for such train16 ing and education activities in the amounts that would

17 otherwise be payable by such governments but for the

18 State’s universal, comprehensive health care system under

19 the State plan.

20 ‘‘(e) FINANCING.—

21 ‘‘(1) BUDGET.—A State plan shall incorporate

22 a budget which contains—

23 ‘‘(A) detailed projections of health care ex24 penditures presently and under the proposed

25 system, including an identification and calcula-
18

•HR 1033 IH

1 tion of the amount of funding to be provided by

2 the Federal, State, and local governments under

3 the plan and an assurance that the amount of

4 expenditures made by the State and local gov5 ernments will not be reduced as a result of the

6 implementation of the plan; and

7 ‘‘(B) a description (and an estimate of

8 costs) of transitional activities to be undertaken

9 in implementing the proposed system.

10 ‘‘(2) COST CONTAINMENT.—A State plan shall

11 describe the means to be used to contain costs under

12 the plan, including when and how the plan will in13 crease efficiencies.

14 ‘‘(3) FEDERAL EXPENDITURE LIMIT.—A State

15 plan shall contain assurances that aggregate Federal

16 expenditures on health care (including Federal ex17 penditures under titles 5, 10, and 38 of the United

18 States Code, and under this Act) under the plan will

19 not exceed aggregate Federal expenditures that

20 would have been incurred in the absence of such

21 plan.

22 ‘‘(f) IMPLEMENTATION.—

23 ‘‘(1) IN GENERAL.—A State plan shall describe

24 the method (including a timetable and period of

25 transition) for implementing the plan.
19

•HR 1033 IH

1 ‘‘(2) COORDINATION.—A State plan shall iden2 tify all Federal, State, and local programs that pro3 vide health care services in the State and describe

4 how such programs would be incorporated in, or co5 ordinated with, the health coverage system under the

6 plan.

7 ‘‘(3) FEDERAL WAIVERS REQUIRED.—A State

8 plan shall identify any waivers of Federal law re9 quired to implement the plan, including the use of

10 any pooled Federal funds and other waivers de11 scribed in section 2202(f).

12 ‘‘(4) APPROVAL OF STATE LEGISLATURE.—A

13 State plan shall provide that State approvals and

14 commitments (including approval of the State legis15 lature) necessary for the implementation of the plan

16 will be obtained by not later than 1 year after the

17 date of the Secretary’s approval of the plan. Any ap18 proval of a grant is conditioned upon the timely

19 completion of such approvals and commitments.

20 ‘‘(g) EVALUATION.—A State plan shall provide for a

21 process for its evaluation, and shall comply with any eval22 uation reporting or data collection requirements imposed

23 by the Secretary.

24 ‘‘(h) CONSTRUCTION.—Nothing in this title shall be

25 construed as preempting State laws that provide greater
20

•HR 1033 IH

1 protections or benefits than the protections or benefits re2 quired under this title.

3 ‘‘SEC. 2204. INTERSTATE ARRANGEMENTS.

4 ‘‘(a) IN GENERAL.—One or more contiguous States

5 in a geographic region may file a joint application for

6 planning and demonstration grants under this title.

7 ‘‘(B) CONGRESSIONAL APPROVAL.—Congress hereby

8 authorizes and approves States entering into Interstate

9 Compacts in order to conduct joint health care programs

10 under such a grant.

11 ‘‘(c) REFERENCES TO STATE.—In the case of a joint

12 application described in subsection (a), any reference in

13 this title to a State is deemed to refer to all of the States,

14 and the approval of a grant with respect to such a joint

15 application shall be counted as 1 State for purposes of

16 applying sections 2201(c) and 2202(b).

17 ‘‘SEC. 2205. DEFINITIONS.

18 ‘‘As used in this title:

19 ‘‘(1) ELIGIBLE STATE RESIDENT.—The term

20 ‘eligible State resident’ means any resident of the

21 United States who is a citizen or national of the

22 United States, or lawful resident alien, and who re23 sides in any particular State. Such term may in24 clude, at the option of a State, the following:
21

•HR 1033 IH

1 ‘‘(A) State employees and dependents of

2 such employees.

3 ‘‘(B) Employees, and dependents of such

4 employees, working in a work site of a business

5 located in the State.

6 ‘‘(C) One or more classes of non7 immigrants (as defined in section 101(a)(15) of

8 the Immigration and Nationality Act) specified

9 in the State plan.

10 ‘‘(D) Aliens unlawfully present in the

11 United States.

12 ‘‘(2) LAWFUL RESIDENT ALIEN.—The term

13 ‘lawful resident alien’ means an alien lawfully admit14 ted for permanent residence and any other alien law15 fully residing permanently in the United States

16 under color of law, including an alien granted asy17 lum or with lawful temporary resident status under

18 section 210, 210A, or 245A of the Immigration and

19 Nationality Act.

20 ‘‘(3) SECRETARY.—The term ‘Secretary’ means

21 the Secretary of Health and Human Services.

22 ‘‘(4) STATE.—Subject to section 2204(c), the

23 term ‘State’ means a State, the District of Colum24 bia, the Commonwealth of Puerto Rico, the United

25 States Virgin Islands, Guam, American Samoa, and
22

•HR 1033 IH

1 the Commonwealth of the Northern Mariana Is2 lands.

3 ‘‘(5) STATE PLAN.—The term ‘State plan’

4 means a comprehensive health care plan of a State

5 participating in a State Care demonstration project

6 under this title that meets the requirements of sec7 tion 2203.’’.

Æ