not be considered a taxable transfer made by such 
individual notwithstanding any other provision of 
this subtitle, and such interest shall, after such 
transfer, be treated as a Roth HSA with respect to 
which such spouse is the account beneficiary. 
‘‘(7) TREATMENT AFTER DEATH OF ACCOUNT 
BENEFICIARY.—If an individual acquires an account 
beneficiary’s interest in a health savings account by 
reason of the death of the account beneficiary, such 
health savings account shall be treated as if the indi-
vidual were the account beneficiary. 
‘‘(f) COST-OF-LIVING ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of any calendar 
year beginning after 2016, the $5,000 dollar amount 
in subsection (b)(2) shall be increased by an amount 
equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
year, determined— 
‘‘(i) by substituting ‘calendar year 
2015’ for ‘calendar year 1992’ in subpara-
graph (B) thereof, and 
‘‘(ii) by substituting ‘CPI medical care 
component’ for ‘CPI’. 
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‘‘(2) CPI MEDICAL
CARE
COMPONENT.—For 
purposes of this paragraph, the term ‘CPI medical 
care component’ means the medical care component 
for the Consumer Price Index for All Urban Con-
sumers published by the Department of Labor. 
‘‘(3) ROUNDING.—If the amount of any in-
crease under the preceding sentence is not a mul-
tiple of $50, such increase shall be rounded to the 
next lowest multiple of $50. 
‘‘(g) REPORTS.—The Secretary may require— 
‘‘(1) the trustee of a Roth HSA to make such 
reports regarding such account to the Secretary and 
to the account beneficiary with respect to contribu-
tions, distributions, the return of excess contribu-
tions, and such other matters as the Secretary deter-
mines appropriate, and 
‘‘(2) any person who provides an individual with 
creditable coverage to make such reports to the Sec-
retary and to the account beneficiary with respect to 
such plan as the Secretary determines appropriate. 
The reports required by this subsection shall be filed at 
such time and in such manner and furnished to such indi-
viduals at such time and in such manner as may be re-
quired by the Secretary.’’. 
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(b) LIMIT
ON CONTRIBUTIONS
TO DEDUCTIBLE 
HEALTH SAVINGS ACCOUNTS.—Section 223 of such Code 
is amended by adding at the end the following new sub-
section: 
‘‘(i) LIMITED CONTRIBUTIONS AFTER 2016.— 
‘‘(1) IN GENERAL.—No contribution may be ac-
cepted by a health savings account after December 
31, 2016. 
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not 
apply— 
‘‘(A) in the case of a rollover contribution 
described in subsection (f)(5) or section 
220(f)(5), or 
‘‘(B) in the case of a month for which an 
individual is covered by insurance that con-
stitutes medical care and that is provided by an 
employer with respect to which an election is in 
effect for such month under section 131(b) of 
the World’s Greatest Healthcare Plan of 
2017.’’. 
(c) CLERICAL AMENDMENT.—The table of parts for 
subchapter F of chapter 1 of such Code is amended by 
adding a the end the following new item: 
‘‘PART IX. ROTH HEALTH SAVINGS ACCOUNTS’’. 
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(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2016. 
SEC. 202. ELIMINATION OF MEDICAL EXPENSE DEDUCTION. 
Section 213 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new sub-
section: 
‘‘(g) TERMINATION.—Except in the case of long-term 
care premiums (as defined in subsection (d)(10)), sub-
section (a) shall not apply to any amounts paid during 
any taxable year beginning after December 31, 2015.’’. 
SEC. 203. TREATMENT OF HSA AFTER DEATH OF ACCOUNT 
BENEFICIARY. 
(a) IN GENERAL.—Section 223(f)(8) of the Internal 
Revenue Code of 1986 is amended to read as follows: 
‘‘(8) TREATMENT AFTER DEATH OF ACCOUNT 
BENEFICIARY.—If an individual acquires an account 
beneficiary’s interest in a health savings account by 
reason of the death of the account beneficiary, such 
health savings account shall be treated as if the indi-
vidual were the account beneficiary.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply with respect to interests acquired 
after the date of the enactment of this Act. 
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SEC. 204. TREATMENT OF CONCIERGE MEDICINE. 
(a) HSAS.— 
(1) ROTH HSA.—Section 530A(c)(2)(A) of the 
Internal Revenue Code of 1986, as added by section 
201(a) of this Act, is amended by adding at the end 
the following: ‘‘Such term shall include the payment 
of a monthly or other prepaid amount for the fur-
nishing (or access to the furnishing) by a physician 
or group of physicians of physician professional serv-
ices (and ancillary services).’’. 
(2) HSA.—Section 223(d)(2)(A) of such Code 
is amended by adding at the end the following: 
‘‘Such term shall include the payment of a monthly 
or other prepaid amount for the furnishing (or ac-
cess to the furnishing) by a physician or group of 
physicians of physician professional services (and an-
cillary services).’’. 
(b) NOT TREATED AS HEALTH INSURANCE COV-
ERAGE.— 
(1) IN GENERAL.—For purposes of title XXVII 
of the Public Health Service Act (42 U.S.C. 300gg), 
subtitle B of title I of the Employee Retirement and 
Income Security Act of 1974 (29 U.S.C. 1021 et 
seq.), PPACA, and this Act, the offering of con-
cierge medicine shall not be treated as the offering 
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of health insurance coverage and shall not be subject 
to regulations as such coverage under such Acts. 
(2) CONCIERGE MEDICINE DEFINED.—In this 
subsection, the term ‘‘concierge medicine’’ means the 
furnishing (or access to the furnishing) by a physi-
cian or group of physicians of physician professional 
services (and ancillary services) in return for pay-
ment of a monthly or other prepaid amount. 
TITLE III—STATE FLEXIBILITY 
IN REGULATION OF HEALTH 
INSURANCE COVERAGE 
SEC. 301. STATE FLEXIBILITY IN REGULATION OF HEALTH 
INSURANCE COVERAGE. 
(a) IN GENERAL.—States are given the flexibility 
under section 122(b) to revise their regulations of the 
health insurance marketplace, without regard to many of 
the requirements imposed under PPACA, in order to pro-
mote freedom of choice of affordable health insurance cov-
erage options offered outside of an Exchange. 
(b) CONSTRUCTION.—Nothing in the Employee Re-
tirement and Income Security Act of 1974 (29 U.S.C. 
1001 et seq.) or of any amendments made by the Health 
Insurance Portability and Accountability Act of 1996 
(Public Law 104–191) shall be interpreted as preventing 
an employer from offering, or making an employer con-
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tribution towards, individual health insurance coverage for 
employees and dependent family members. 
(c) ASSOCIATION HEALTH PLANS.—Nothing in this 
Act shall be construed as prohibiting the formation of as-
sociation health plans (as defined under State law). 
(d) HIGH-RISK POOLS.—Nothing in this Act shall be 
construed as prohibiting States from establishing pooling 
arrangements for high-risk individuals. 
TITLE IV—MEDICAID PAYMENT 
REFORM 
SEC. 401. MEDICAID PAYMENT REFORM. 
(a) IN GENERAL.—Title XIX of the Social Security 
Act (42 U.S.C. 1396 et seq.) is amended by inserting after 
section 1903 the following section: 
‘‘SEC. 1903A. REFORMED PAYMENT TO STATES. 
‘‘(a) REFORMED PAYMENT SYSTEM.— 
‘‘(1) IN GENERAL.—For quarters beginning on 
or after the implementation date (as defined in sub-
section (k)(1)), in lieu of amounts otherwise payable 
to a State under this title (including any payments 
attributable to section 1923), except as otherwise 
provided in this section, the amount payable to such 
State shall be equal to the sum of the following: 
‘‘(A) 
ADJUSTED
AGGREGATE
BENE-
FICIARY-BASED AMOUNT.—The aggregate bene-
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ficiary-based amount specified in subsection (b) 
for the quarter and the State, adjusted under 
subsection (e). 
‘‘(B) CHRONIC
CARE
QUALITY
BONUS.— 
The amount (if any) of the chronic care quality 
bonus payment specified in subsection (f) for 
the quarter for the State. 
‘‘(2) REQUIREMENT OF STATE SHARE.— 
‘‘(A) IN GENERAL.—A State shall make, 
from non-Federal funds, expenditures in an 
amount equal to its State share (as determined 
under subparagraph (B)) for a quarter for 
items, services, and other costs for which, but 
for paragraph (1), Federal funds would have 
been payable under this title. 
‘‘(B) STATE SHARE.—The State share for 
a State for a quarter in a fiscal year is equal 
to the product of— 
‘‘(i) the aggregate beneficiary-based 
amount specified in subsection (b) for the 
quarter and the State; and 
‘‘(ii) the ratio of— 
‘‘(I) the State percentage de-
scribed in subparagraph (D)(ii) for 
such State and fiscal year; to 
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‘‘(II) the Federal percentage de-
scribed in subparagraph (D)(i) for 
such State and fiscal year. 
‘‘(C) NONPAYMENT FOR FAILURE TO PAY 
STATE SHARE.— 
‘‘(i) IN GENERAL.—If a State fails to 
expend the amount required under sub-
paragraph (A) for a quarter in a fiscal 
year, the amount payable to the State 
under paragraph (1) shall be reduced by 
the product of the amount by which the 
State payment is less than the State share 
and the ratio of— 
‘‘(I) the Federal percentage de-
scribed in subparagraph (D)(i) for 
such State and fiscal year; to 
‘‘(II) the State percentage de-
scribed in subparagraph (D)(ii) for 
such State and fiscal year. 
‘‘(ii) GRACE PERIOD.—A State shall 
not be considered to have failed to provide 
payment of its required State share for a 
quarter under subparagraph (A) if the ag-
gregate State payment towards the State’s 
required State share for the 4-quarter pe-
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riod beginning with such quarter exceeds 
the required State share amount for such 
4-quarter period. 
‘‘(D) FEDERAL
AND
STATE
PERCENT-
AGES.—In this paragraph, with respect to a 
State and a fiscal year: 
‘‘(i) 
FEDERAL
PERCENTAGE.—The 
Federal percentage described in this clause 
is 75 percent or, if higher, the Federal 
medical assistance percentage for such 
State for such fiscal year. 
‘‘(ii) STATE PERCENTAGE.—The State 
percentage described in this clause is 100 
percent minus the Federal percentage de-
scribed in clause (i). 
‘‘(E) RULES
FOR
CREDITING
TOWARD 
STATE SHARE.— 
‘‘(i) GENERAL LIMITATION TO MATCH-
ABLE EXPENDITURES.—A payment for ex-
penditures shall not be counted toward the 
State share under subparagraph (A) unless 
Federal payments may be used for such 
expenditures consistent with paragraph 
(3)(B). 
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‘‘(ii) FURTHER LIMITATIONS ON AL-
LOWABLE EXPENDITURES.—A payment for 
expenditures shall not be counted towards 
the State share under subparagraph (A) if 
the expenditure is for any of the following: 
‘‘(I) 
ABORTION.—Expenditures 
for an abortion. 
‘‘(II) 
INTERGOVERNMENTAL 
TRANSFERS.—An expenditure that is 
attributable to an intergovernmental 
transfer. 
‘‘(III) CERTIFIED
PUBLIC
EX-
PENDITURES.—An expenditure that is 
attributable to certified public expend-
itures. 
‘‘(iii) CREDITING FRAUD AND ABUSE 
RECOVERIES.—Amounts recovered by a 
State through the operation of its Medicaid 
fraud and abuse control unit described in 
section 1903(q) shall be fully counted to-
ward the State share under subparagraph 
(A). 
‘‘(F) CONSTRUCTION.—Nothing in the 
paragraph shall be construed as preventing a 
State from expending, from non-Federal funds, 
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an amount under this title in excess of the 
amount of the State share. 
‘‘(G) DETERMINATION BASED UPON SUB-
MITTED CLAIMS.—In applying this paragraph 
with respect to expenditures of a State for a 
quarter, the determination of the expenditures 
for such State for such quarter shall be made 
after the end of the period (which, as of the 
date of the enactment of this section, is 2 
years) for which the Secretary accepts claims 
for payment under this title with respect to 
such quarter. 
‘‘(3) USE OF FEDERAL PAYMENTS.— 
‘‘(A) APPLICATION OF MEDICAID LIMITA-
TIONS.—A State may only use Federal pay-
ments received under subsection (a) for expend-
itures for which Federal funds would have been 
payable under this title but for this section. 
‘‘(B) LIMITATION
FOR
CERTAIN
ELIGI-
BLES.— 
‘‘(i) APPLICATION
OF
100
PERCENT 
FEDERAL POVERTY LINE LIMIT ON ELIGI-
BILITY.—Subject to clause (iii), a State 
may not use such Federal payments to 
provide medical assistance for an indi-
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