I 
113TH CONGRESS 
1ST SESSION 
H. R. 567 
To amend the Social Security Act to replace the Medicaid program and 
the Children’s Health Insurance program with a block grant to the 
States, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 6, 2013 
Mr. ROKITA (for himself, Mr. LAMBORN, Mr. GARRETT, Mr. SCALISE, Mr. 
MULVANEY, Mr. HUELSKAMP, Mr. BROUN of Georgia, Mr. WESTMORE-
LAND, Mr. RADEL, Mr. ROSS, Mr. POE of Texas, Mr. HOLDING, Mr. 
HENSARLING, Mr. DUNCAN of South Carolina, Mr. COTTON, Mr. CUL-
BERSON, Mr. HUIZENGA of Michigan, Mrs. BLACK, Mr. BUCSHON, Mr. 
BISHOP of Utah, Mr. STEWART, Mr. FLEMING, Mr. PEARCE, Mr. AUSTIN 
SCOTT of Georgia, Mr. LAMALFA, Mr. MARCHANT, Mr. ROE of Ten-
nessee, Mr. PALAZZO, Mrs. LUMMIS, Mrs. BLACKBURN, Mr. FLORES, Mr. 
GOHMERT, Mr. AMODEI, Mr. MCHENRY, and Mr. SCHWEIKERT) intro-
duced the following bill; which was referred to the Committee on Energy 
and Commerce, and in addition to the Committees on Ways and Means, 
Education and the Workforce, the Judiciary, Natural Resources, House 
Administration, Rules, and Appropriations, for a period to be subse-
quently determined by the Speaker, in each case for consideration of such 
provisions as fall within the jurisdiction of the committee concerned 
A BILL 
To amend the Social Security Act to replace the Medicaid 
program and the Children’s Health Insurance program 
with a block grant to the States, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘State Health Flexibility Act of 2013’’. 
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Health grants to the States for health care services to indigent individ-
uals. 
‘‘TITLE XXII—BLOCK GRANTS TO STATES FOR HEALTH CARE 
SERVICES TO INDIGENT INDIVIDUALS 
‘‘Sec. 2201. Purpose. 
‘‘Sec. 2202. Grants to States. 
‘‘Sec. 2203. Administrative and fiscal accountability. 
‘‘Sec. 2204. Nondiscrimination provisions. 
‘‘Sec. 2205. Emergency assistance. 
‘‘Sec. 2206. Definitions. 
Sec. 3. Repeal of PPACA, HCERA, and the Federal requirements of Medicaid 
and CHIP. 
Sec. 4. Severability. 
Sec. 5. Effective date. 
SEC. 2. HEALTH GRANTS TO THE STATES FOR HEALTH 
CARE SERVICES TO INDIGENT INDIVIDUALS. 
(a) HEALTH CARE BLOCK GRANT TO STATES.—The 
Social Security Act is amended by adding at the end the 
following new title: 
‘‘TITLE XXII—BLOCK GRANTS TO 
STATES FOR HEALTH CARE 
SERVICES TO INDIGENT INDI-
VIDUALS 
‘‘SEC. 2201. PURPOSE. 
‘‘The purpose of this title is to provide Federal finan-
cial assistance to the States, in the form of a single grant, 
to allow the States maximum flexibility in providing, and 
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financing the provision of, health-care-related items and 
services to indigent individuals. 
‘‘SEC. 2202. GRANTS TO STATES. 
‘‘(a) IN GENERAL.—Subject to the requirements of 
this title, each State is entitled to receive from the Sec-
retary of the Treasury a grant for each quarter of fiscal 
years 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021, 
2022, and 2023, in an amount that is equal to 25 percent 
of the total amount received by a State under title XIX 
and title XXI for fiscal year 2012. 
‘‘(b) APPROPRIATION.—Out of any money in the 
Treasury of the United States not otherwise appropriated, 
there are appropriated for fiscal years 2014, 2015, 2016, 
2017, 2018, 2019, 2020, 2021, 2022, and 2023 such sums 
as are necessary for grants under this section. 
‘‘(c) REQUIREMENTS RELATING TO INTERGOVERN-
MENTAL FINANCING.—The Secretary of the Treasury 
shall make the transfer of funds under grants under sub-
section (a) directly to each State in accordance with the 
requirements of section 6503 of title 31, United States 
Code. 
‘‘(d) EXPENDITURE OF FUNDS.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), amounts received by a State under this 
title for any fiscal year shall be expended by the 
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State in such fiscal year or in the succeeding fiscal 
year. 
‘‘(2) USE OF RAINY DAY FUND PERMITTED.— 
Of the amounts received by a State under this title, 
the State may set aside, in a separate account, such 
amounts as the State deems necessary to provide, 
without fiscal limitation, health-care-related items 
and services for indigent individuals during— 
‘‘(A) periods of unexpectedly high rates of 
unemployment; or 
‘‘(B) periods related to circumstances that 
are not described in subparagraph (A) and that 
cause unexpected increases in the need for such 
items and services for such individuals. 
‘‘(3) FUNDS REMAINING AFTER FISCAL YEAR 
2022.—If, after fiscal year 2023, a State has funds 
in the account under paragraph (2), the State may 
only expend such funds if such funds are used in a 
manner that is permitted under subsection (e), as 
such subsection is in effect on September 30, 2023. 
‘‘(e) USE OF FUNDS.—A State may only use the 
amounts received under subsection (a) as follows: 
‘‘(1) GENERAL
PURPOSE.—For the purpose 
under section 2201, including the provision of 
health-care-related items and services as required 
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under section 2205. Nothing in this title shall be 
construed as limiting the flexibility of a State to de-
termine which providers of such items and services 
qualify to receive payment from a grant made to the 
State under this title. 
‘‘(2) FUNDING FOR RISK ADJUSTMENT MECHA-
NISMS.—To fund qualified high risk pools, reinsur-
ance pools, or other risk-adjustment mechanisms 
used for the purpose of subsidizing the purchase of 
private health insurance for the high-risk population. 
‘‘(3) AUTHORITY TO USE PORTION OF FEDERAL 
ASSISTANCE
FOR
OTHER
WELFARE-RELATED
PRO-
GRAMS.— 
‘‘(A) IN GENERAL.—Subject to the limit 
under subparagraph (B), to carry out a State 
program pursuant to any or all of the following 
provisions of law: 
‘‘(i) Part A of title IV of this Act. 
‘‘(ii) Section 1616 of this Act. 
‘‘(iii) The Food and Nutrition Act of 
2008. 
‘‘(B) LIMITATION.—A State may not use 
more than 30 percent of the amount received 
under subsection (a) for a fiscal year to carry 
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out a State program, or programs, under sub-
paragraph (A). 
‘‘(C) REQUIREMENTS
ON
FUNDS.—Any 
amounts that are used under subparagraph 
(A)— 
‘‘(i) shall not be subject to any of the 
requirements of subsection (d), subsection 
(f), section 2204, or section 2205; and 
‘‘(ii) shall be subject to— 
‘‘(I) 
the 
audit 
requirements 
under section 2203; and 
‘‘(II) 
any 
requirements 
that 
apply to Federal funds provided di-
rectly for such State program. 
‘‘(f) MAINTENANCE
OF CURRENT LAW RESTRIC-
TIONS ON USE OF FEDERAL FUNDS.— 
‘‘(1) IN GENERAL.— 
‘‘(A) NO
FUNDING
FOR
ABORTIONS.— 
None of the funds appropriated in this title 
shall be expended for any abortion. 
‘‘(B) NO FUNDS FOR COVERAGE OF ABOR-
TION.—None of the funds appropriated in this 
title shall be expended for health benefits cov-
erage that includes coverage of abortion. 
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‘‘(C) HEALTH
BENEFITS
COVERAGE
DE-
FINED.—For purposes of this subsection, the 
term ‘health benefits coverage’ means the pack-
age of services covered by a managed care pro-
vider or organization pursuant to a contract or 
other arrangement. 
‘‘(2) EXCEPTIONS.—The limitations established 
in paragraph (1) shall not apply to an abortion— 
‘‘(A) if the pregnancy is the result of an 
act of rape or incest; or 
‘‘(B) in the case where a woman suffers 
from a physical disorder, physical injury, or 
physical illness that would, as certified by a 
physician, place the woman in danger of death 
unless an abortion is performed, including a 
life-endangering physical condition caused by or 
arising from the pregnancy itself. 
‘‘(3) STATE
FUNDS
USED
IN
CONJUNCTION 
WITH FEDERAL FUNDS.—The limitations established 
in paragraph (1) shall apply to any State funds used 
in conjunction with Federal funds appropriated 
under this title to provide, or finance the provision 
of, health-care-related items and services to indigent 
individuals pursuant to section 2201 or subsections 
(d)(2), (e)(1), or (e)(2) of this section. 
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‘‘(4) OPTION
TO
PURCHASE
SEPARATE
COV-
ERAGE OR PLAN.—Nothing in this subsection shall 
be construed as prohibiting a State from purchasing 
separate coverage for abortions for which funding is 
prohibited under this subsection, or a health plan 
that includes such abortions, so long as such cov-
erage or plan is paid for entirely using funds not 
provided by this title. 
‘‘(5) OPTION TO OFFER COVERAGE OR PLAN.— 
Nothing in this subsection shall restrict any health 
insurance issuer from offering separate coverage for 
abortions for which funding is prohibited under this 
subsection, or a health plan that includes such abor-
tions, so long as— 
‘‘(A) premiums for such separate coverage 
or plan are paid entirely with funds not pro-
vided by this title; and 
‘‘(B) administrative costs and all services 
offered through such separate coverage or plan 
are paid for using only premiums collected for 
such coverage or plan. 
‘‘(6) CONSCIENCE PROTECTIONS.— 
‘‘(A) None of the funds appropriated in 
this Act may be made available to a Federal 
agency or program, or to a State or local gov-
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ernment, if such agency, program, or govern-
ment subjects any institutional or individual 
health care entity to discrimination on the basis 
that the health care entity does not provide, pay 
for, provide coverage of, or refer for abortions. 
‘‘(B) In this paragraph, the term ‘health 
care entity’ includes an individual physician or 
other health care professional, a hospital, a pro-
vider-sponsored organization, a health mainte-
nance organization, a health insurance plan, or 
any other kind of health care facility, organiza-
tion, or plan. 
‘‘(g) NO FUNDING FOR ILLEGAL ALIENS.—Except as 
provided under this section and section 2205, no funds 
appropriated in this title may be used to provide health- 
care-related items and services to an alien who is not law-
fully admitted for permanent residence or otherwise per-
manently residing in the United States under color of law. 
‘‘(h) NONENTITLEMENT.—Nothing in this title shall 
be construed as providing an individual with an entitle-
ment to health-care-related items and services under this 
title. 
‘‘SEC. 
2203. 
ADMINISTRATIVE 
AND 
FISCAL 
ACCOUNT-
ABILITY. 
‘‘(a) AUDITS.— 
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‘‘(1) CONTRACT WITH APPROVED AUDITING EN-
TITY.—Not later than October 1, 2014, and annu-
ally thereafter, a State shall contract with an ap-
proved auditing entity (as defined under paragraph 
(3)(B)) for purposes of conducting an audit under 
paragraph (2) (with respect to the fiscal year ending 
September 30 of such year). 
‘‘(2) AUDIT REQUIREMENT.—Under a contract 
under paragraph (1), an approved auditing entity 
shall conduct an audit of the expenditures or trans-
fers made by a State from amounts received under 
a grant under this title, or from State funds de-
scribed in section 2202(f)(3), with respect to the fis-
cal year which such audit covers, to determine the 
extent to which such expenditures and transfers 
were expended in accordance with this title. 
‘‘(3) ENTITY CONDUCTING AUDIT.— 
‘‘(A) IN
GENERAL.—With respect to a 
State, the audit under paragraph (2) shall be 
conducted by an approved auditing entity in ac-
cordance with generally accepted auditing prin-
ciples. 
‘‘(B) APPROVED AUDITING ENTITY.—For 
purposes of this section, the term ‘approved au-
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diting entity’ means, with respect to a State, an 
entity that is— 
‘‘(i) approved by the Secretary of the 
Treasury; 
‘‘(ii) approved by the chief executive 
officer of the State; and 
‘‘(iii) independent of any Federal, 
State, or local agency. 
‘‘(4) SUBMISSION OF AUDIT.—Not later than 
December 31, 2014, and annually thereafter, a State 
shall submit the results of the audit under para-
graph (2) (with respect to the fiscal year ending on 
September 30 of such year) to the State legislature 
and to the Secretary of the Treasury. 
‘‘(5) 
ADDITIONAL
ACCOUNTING
REQUIRE-
MENTS.—The provisions of chapter 75 of title 31, 
United States Code, shall apply to the audit require-
ments of this section. 
‘‘(b) REIMBURSEMENT AND PENALTY.— 
‘‘(1) IN GENERAL.—If, through an audit con-
ducted under subsection (a), an approved auditing 
entity finds that any amounts paid to a State under 
a grant under this title were not expended in accord-
ance with this title— 
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‘‘(A) the State shall pay to the Treasury of 
the United States any such amount, plus 10 
percent of such amount as a penalty; or 
‘‘(B) the Secretary of the Treasury shall 
offset such amount plus the 10 percent penalty 
against any other amount in any other fiscal 
year that the State may be entitled to receive 
under a grant under this title. 
‘‘(2) MISUSE OF STATE FUNDS.—If, through an 
audit conducted under subsection (a), an approved 
auditing entity finds that a State violated the re-
quirements of section 2202(f)(3), the State shall pay 
to the Treasury of the United States 100 percent of 
the amount of State funds that were used in viola-
tion of section 2202(f)(3) as a penalty. Insofar as a 
State fails to pay any such penalty, the Secretary of 
the Treasury shall offset the amount not so paid 
against the amount of any grant otherwise payable 
to the State under this title. 
‘‘(c) ANNUAL REPORTING REQUIREMENTS.— 
‘‘(1) IN GENERAL.—Not later than January 31, 
2015, and annually thereafter, each State shall sub-
mit to the Secretary of the Treasury and the State 
legislature a report on the activities carried out by 
the State during the most recently completed fiscal 
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year with funds received by the State under a grant 
under this title for such fiscal year. 
‘‘(2) CONTENT.—A report under paragraph (1) 
shall, with respect to a fiscal year— 
‘‘(A) contain the results of the audit con-
ducted by an approved auditing entity for a 
State for such fiscal year, in accordance with 
the requirements of subsection (a) of this sec-
tion; 
‘‘(B) specify the amount of the grant made 
to the State under this title that is used to 
carry out a program under section 2202(e)(3); 
and 
‘‘(C) be in such form and contain such 
other information as the State determines is 
necessary to provide— 
‘‘(i) an accurate description of the ac-
tivities conducted by the State for the pur-
pose described under section 2201 and any 
other use of funds permitted under sub-
sections (d) and (e) of section 2202; and 
‘‘(ii) a complete record of the pur-
poses for which amounts were expended in 
accordance with this title. 
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‘‘(3) CONFORMITY
WITH
ACCOUNTING
PRIN-
CIPALS.—Any financial information in the report 
under paragraph (1) shall be prepared and reported 
in accordance with generally accepted accounting 
principles, including the provisions of chapter 75 of 
title 31, United States Code. 
‘‘(4) PUBLIC
AVAILABILITY.—A State shall 
make copies of the reports required under this sec-
tion available on a public Web site and shall make 
copies available in other formats upon request. 
‘‘(d) FAILURE TO COMPLY WITH REQUIREMENTS.— 
The Secretary of the Treasury shall not make any pay-
ment to a State under a grant authorized by section 
2202(a)— 
‘‘(1) if an audit for a State is not submitted as 
required under subsection (a), during the period be-
tween the date such audit is due and the date on 
which such audit is submitted; 
‘‘(2) if a State fails to submit a report as re-
quired under subsection (c), during the period be-
tween the date such report is due and the date on 
which such report is submitted; or 
‘‘(3) if a State violates a requirement of section 
2202(f), during the period beginning on the date the 
Secretary becomes aware of such violation and the 
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date on which such violation is corrected by the 
State. 
‘‘(e) ADMINISTRATIVE
SUPERVISION
AND
OVER-
SIGHT.— 
‘‘(1) LIMITED ROLE FOR SECRETARY OF TREAS-
URY AND THE ATTORNEY GENERAL.— 
‘‘(A) TREASURY.—The authority of the 
Secretary of the Treasury under this title is 
limited to— 
‘‘(i) promulgating regulations, issuing 
rules, or publishing guidance documents to 
the extent necessary for purposes of imple-
menting subsection (a)(3)(B), subsection 
(b), and subsection (d); 
‘‘(ii) making quarterly payments to 
the States under grants under this title in 
accordance with section 2202(a); 
‘‘(iii) approving entities under sub-
section (a)(3)(B) for purposes of the audits 
required under subsection (a); 
‘‘(iv) withholding payment to a State 
of a grant under subsection (d) or offset-
ting a payment of such a grant to a State 
under subsection (b); and 
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‘‘(v) exercising the authority relating 
to nondiscrimination that is specified in 
section 2204(b). 
‘‘(B) ATTORNEY GENERAL.—The authority 
of the Attorney General to supervise the 
amounts received by a State under this title is 
limited to the authority under section 2204(c). 
‘‘(2) FEDERAL SUPERVISION.— 
‘‘(A) IN
GENERAL.—Except as provided 
under paragraph (1), an administrative officer, 
employee, department, or agency of the United 
States (including the Secretary of Health and 
Human Services) may not— 
‘‘(i) supervise— 
‘‘(I) the amounts received by the 
States under this title; or 
‘‘(II) the use of such amounts by 
the States; or 
‘‘(ii) promulgate regulations or issue 
rules in accordance with this title. 
‘‘(B) LIMITATION
ON
SECRETARY
OF 
HEALTH
AND
HUMAN
SERVICES.—The Sec-
retary of Health and Human Services shall 
have no authority over any provision of this 
title. 
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