‘‘(8) CONSUMER
PROTECTIONS.—The manner 
in which the State will ensure compliance with sec-
tions 2221, 2222, 2223, and 2224. 
‘‘(9) PUBLIC REVIEW.—The manner in which 
the State will provide for the public review of insti-
tutional changes in services provided, markets and 
regions covered, withdrawal or movement of services, 
closures or downsizing, and other actions that affect 
the provision of health insurance under the plan. 
‘‘(10) SERVICES IN RURAL AND UNDERSERVED 
AREAS; CULTURAL
COMPETENCY.—The manner in 
which the State will ensure— 
‘‘(A) coverage in rural and underserved 
areas; and 
‘‘(B) that the needs of culturally diverse 
populations are met. 
‘‘(11) MECHANISMS
TO
MINIMIZE
ADVERSE 
RISK SELECTION.—The manner in which the State 
will encourage mechanisms to minimize adverse risk 
selection that provide choice of health plans and con-
trol costs. 
‘‘(12) LIMITATION
ON
ADMINISTRATIVE
EX-
PENDITURES.—The manner in which the State will 
ensure that all qualified plans in the State expend 
at least 90 percent (or, during the first 2 years of
the plan, 85 percent) of total income received from 
premiums on the provision of covered health care ben-
efits (excluding all costs for marketing, advertising, 
health plan administration, profits, or capital accu-
mulation) to individuals. 
‘‘(13) 
SELF-EMPLOYED
AND
MULTI-
EMPLOYED.—The manner in which the State will 
address self-employed individuals and multiwage 
earner families. 
‘‘(14) REQUIREMENT TO MAINTAIN MEDICAID 
BENEFITS.—The manner in which the State will en-
sure that individuals who are eligible for medical as-
sistance under title XIX and who receive benefits 
under the expansion phase (phase I) plan shall re-
ceive any items or services that are not available 
under the expansion phase (phase I) plan but that 
are available under the State medicaid program 
under title XIX through ‘wraparound coverage’ 
under such program. 
‘‘(15) COST CONTAINMENT; RISK SELECTION.— 
What cost containment strategies the State will em-
ploy and how the State will reduce adverse risk se-
lection. 
‘‘(16) OTHER MATTERS.—Any other matter de-
termined appropriate by the Secretary.
‘‘(b) CURRENT LEVEL OF COVERAGE.— 
‘‘(1) IN GENERAL.—The Secretary shall develop 
a standardized survey approach that provides timely 
and up-to-date data to determine the percentage of 
the population of each State that is currently cov-
ered by a health insurance plan or program that 
provides coverage that meets the requirements of 
section 2203(a). 
‘‘(2) BIANNUAL SURVEY.—The Secretary shall 
provide for the conduct of the survey developed 
under paragraph (1) not less than biannually to 
make coverage determinations for purposes of para-
graph (1). 
‘‘(3) USE OF ALTERNATIVE SYSTEM.—The Sec-
retary shall permit a State to utilize an alternative 
population-based monitoring system to make deter-
minations with respect to coverage in the State for 
purposes of paragraph (1) if the Secretary deter-
mines that such system meets or exceeds the meth-
odological standards utilized in the survey developed 
under paragraph (1). 
‘‘(4) BASE COVERAGE GAP.—For purposes of 
subsection (a)(1)(A), the base coverage gap for a 
State shall be equal to 100 percent of the eligible in-
dividuals and families in the State for the year in-
volved, less the current level of coverage for those in-
dividuals and families for such year as determined 
under paragraph (1) or (3). 
‘‘(c) REDUCING THE LEVEL OF UNINSURED INDIVID-
UALS.— 
‘‘(1) IN GENERAL.—To be eligible to receive 
funds under this part, a State shall agree to admin-
ister an expansion phase (phase I) plan with a goal 
of providing health insurance coverage for 100 per-
cent of the eligible residents of the State by not later 
than 4 years after the date of approval of the State’s 
expansion phase (phase I) plan. 
‘‘(2) PERMISSIBLE ACTIVITIES.—A State may 
use amounts provided under this part for any activi-
ties consistent with this part that are appropriate to 
enroll individuals in health plans and health pro-
grams to meet the targets contained in the State 
plan under subsection (a)(2)(B), including through 
the use of direct payments to health plans or, in the 
case of a single State plan, directly to providers of 
services. 
‘‘(d) PROCESS
FOR SUBMISSION, APPROVAL, AND 
AMENDMENT OF EXPANSION PHASE (PHASE I) PLAN.— 
The provisions of section 2106 apply to an expansion 
phase (phase I) plan under this part in the same manner
as they apply to a State plan under title XXI, except that 
no expansion phase (phase I) plan may be effective earlier 
than January 1, 2004, and all expansion phase (phase I) 
plans must be submitted for approval by not later than 
December 31, 2005. 
‘‘SEC. 2203. COVERAGE REQUIREMENTS FOR EXPANSION 
PHASE (PHASE I) PLANS. 
‘‘(a) REQUIRED SCOPE OF HEALTH INSURANCE COV-
ERAGE.—Health insurance coverage provided under this 
part shall consist of at least the benefits provided under 
the Federal Employees Health Benefits Program standard 
Blue Cross/Blue Shield preferred provider option service 
benefit plan, described in and offered under section 
8903(1) of part 5, United States Code, plus mental health 
and substance abuse treatment benefits parity for all indi-
viduals, and benefits for early and periodic screening and 
diagnosis services (EPSDT) under section 1905(a)(4)(B) 
for all individuals under 21 years of age. 
‘‘(b) LIMITATIONS ON PREMIUMS AND COST-SHAR-
ING.— 
‘‘(1) DESCRIPTION; GENERAL CONDITIONS.—An 
expansion phase (phase I) plan shall include a de-
scription, consistent with this subsection, of the 
amount (if any) of premiums, cost-sharing, or other
similar charges imposed. Any such charges shall be 
imposed pursuant to a public schedule. 
‘‘(2) LIMITATIONS
ON
PREMIUMS
AND
COST- 
SHARING.— 
‘‘(A) INDIVIDUALS AND FAMILIES WITH IN-
COME
BELOW
150
PERCENT
OF
POVERTY 
LINE.—In the case of an individual or family 
whose income is at or below 150 percent of the 
poverty line— 
‘‘(i) the State plan may not impose a 
premium; and 
‘‘(ii) 
the 
total 
annual 
aggregate 
amount of cost-sharing imposed by a State 
with respect to all individuals in a family 
may not exceed 0.5 percent of the family’s 
income for the year involved. 
‘‘(B) INDIVIDUALS
AND
FAMILIES
WITH 
INCOME BETWEEN 150 AND 300 PERCENT OF 
POVERTY LINE.—In the case of an individual or 
family whose income exceeds 150 percent but 
does not exceed 300 percent of the poverty 
line— 
‘‘(i) the State plan may not impose a 
premium that exceeds an amount that is 
equal to—
‘‘(I) 20 percent of the average 
cost of providing benefits to an indi-
vidual (or a family) under this part in 
the year involved; or 
‘‘(II) 3 percent of the family’s in-
come for the year involved; and 
‘‘(ii) 
the 
total 
annual 
aggregate 
amount of premiums and cost-sharing 
(combined) imposed by a State with re-
spect to all individuals in a family may not 
exceed 5 percent of the family’s income for 
the year involved. 
‘‘(C) INDIVIDUALS AND FAMILIES WITH IN-
COME
ABOVE
300
PERCENT
OF
POVERTY 
LINE.—In the case of an individual or family 
whose income exceeds 300 percent of the pov-
erty line— 
‘‘(i) the State plan may not impose a 
premium that exceeds 20 percent of the 
average cost of providing benefits to an in-
dividual (or a family of the size involved) 
under this part in the year involved; and 
‘‘(ii) 
the 
total 
annual 
aggregate 
amount of premiums and cost-sharing 
(combined) imposed by a State with re-
spect to all individuals in a family may not 
exceed 7 percent of the family’s income for 
the year involved. 
‘‘(D) SELF-EMPLOYED INDIVIDUALS.—The 
State shall establish rules for self-employed in-
dividuals based on individual and family in-
come. 
‘‘(3) COLLECTION.—The State shall establish 
procedures for collecting any premiums, cost-shar-
ing, or other similar charges imposed under this 
part. Such procedures shall provide for annual rec-
onciliations and adjustments. 
‘‘(c) APPLICATION OF CERTAIN REQUIREMENTS.— 
‘‘(1) RESTRICTION ON APPLICATION OF PRE-
EXISTING CONDITION EXCLUSIONS.—The expansion 
phase (phase I) plan shall not permit the imposition 
of any preexisting condition exclusion for covered 
benefits under the plan. 
‘‘(2) CHOICE OF PLANS.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the expansion phase (phase 
I) plan shall offer eligible individuals and fami-
lies a choice of qualified plans from which to re-
ceive benefits under this part. At least 1 plan 
shall be a preferred provider option plan.
‘‘(B) WAIVER.—The Secretary— 
‘‘(i) may waive the requirement under 
subparagraph (A) if determined appro-
priate; and 
‘‘(ii) shall waive such requirement in 
the case of a State that establishes a single 
State plan. 
‘‘SEC. 2204. ALLOTMENTS. 
‘‘(a) STATE ALLOTMENTS.— 
‘‘(1) IN
GENERAL.—With respect to a fiscal 
year, the Secretary shall allot to each State with an 
expansion phase (phase I) plan approved under this 
part the amount determined under paragraph (2) for 
such State for such fiscal year. 
‘‘(2) DETERMINATION
OF
COST
OF
COV-
ERAGE.—The amount determined under this para-
graph is the amount equal to— 
‘‘(A) the product of— 
‘‘(i) the Federal participation rate for 
the State as determined under subsection 
(b) or, if applicable, the enhanced Federal 
participation rate for the State, as deter-
mined under subsection (c); 
‘‘(ii) the estimated cost for the min-
imum benefits package required to comply
under section 2203, not to exceed the sum 
of— 
‘‘(I) the total annual Government 
and employee contributions required 
for individual or self and family health 
benefits coverage under the Federal 
Employees Health Benefits Program 
standard Blue Cross/Blue Shield pre-
ferred provider option service benefit 
plan, described in and offered under 
section 8903(1) of title 5, United 
States Code (adjusted for age and 
other factors, as the Secretary deter-
mines appropriate); and 
‘‘(II) the estimated average cost- 
sharing expense for an individual or 
family; and 
‘‘(iii) the estimated number of resi-
dents to be enrolled in the expansion phase 
(phase I) plan; less 
‘‘(B) the sum of— 
‘‘(i) the individual or family health in-
surance contribution and cost-sharing pay-
ments to be made in accordance with sec-
tion 2203(b); and
‘‘(ii) any applicable employer contribu-
tion to such payments. 
‘‘(b) FEDERAL PARTICIPATION RATE.—For purposes 
of subsection (a)(2)(A)(i), the Federal participation rate 
for a State shall be equal to the enhanced FMAP deter-
mined for the State under section 2105(b). 
‘‘(c) ENHANCED FEDERAL PARTICIPATION RATE.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(a)(2)(A)(i), the enhanced Federal participation rate 
for a State shall be equal to the Federal participa-
tion rate for such State under subsection (b), as ad-
justed by the Secretary based on the decrease in the 
base coverage gap in the State. 
‘‘(2) AMOUNT OF ADJUSTMENT AND APPLICA-
TION.— 
‘‘(A) AMOUNT
OF
ADJUSTMENT.—The 
Federal participation rate under subsection (b) 
with respect to a State shall be increased by— 
‘‘(i) 1 percentage point if the base 
coverage gap of the State has decreased by 
at least 50 percent within 2 years after the 
date of approval of the expansion phase 
(phase I) plan, as determined by the Sec-
retary; and
‘‘(ii) 3 percentage points if the base 
coverage gap of the State has decreased by 
100 percent within 4 years after the date 
of approval of the expansion phase (phase 
I) plan, as determined by the Secretary. 
‘‘(B) APPLICATION.—The increase de-
scribed in— 
‘‘(i) subparagraph (A)(i) shall only 
apply to a State for the period beginning 
with the month of the determination under 
such subparagraph and ending with the 
month preceding the month of the deter-
mination under subparagraph (A)(ii) (if 
any), but in no event for more than 24 
months; and 
‘‘(ii) subparagraph (A)(ii) shall apply 
to a State for any year (or portion thereof) 
beginning with the month of the deter-
mination under such subparagraph. 
‘‘(3) FULL COVERAGE.—For purposes of this 
part, a State shall be deemed to have decreased its 
base coverage gap by 100 percent if the Secretary 
determines that— 
‘‘(A) 98 percent of all eligible residents of 
the State are provided health insurance cov-
erage under the expansion phase (phase I) plan; 
and 
‘‘(B) the remaining 2 percent of such resi-
dents are served by alternative health care de-
livery systems as demonstrated by the State. 
‘‘(d) GRANTS TO INDIAN TRIBES, NATIVE HAWAIIAN 
ORGANIZATIONS, 
AND
ALASKA
NATIVE
ORGANIZA-
TIONS.— 
‘‘(1) IN GENERAL.—Out of funds appropriated 
under subsection (e), the Secretary shall reserve an 
amount, not to exceed 1 percent of the total allot-
ments determined under subsection (a) for a fiscal 
year, to make grants to Indian tribes, Native Hawai-
ian organizations, and Alaska Native organizations 
for development and implementation of universal 
health insurance coverage plans for members of such 
tribes and organizations. 
‘‘(2) PLAN.—To be eligible to receive a grant 
under paragraph (1), an Indian tribe, Native Hawai-
ian organization, or Alaska Native organization shall 
submit a universal health insurance coverage plan to 
the Secretary at such time, in such manner, and 
containing such information, as the Secretary may 
require.
‘‘(3) REGULATIONS.—The Secretary shall issue 
regulations specifying the requirements of this part 
that apply to Indian tribes, Native Hawaiian organi-
zations, and Alaska Native organizations receiving 
grants under paragraph (1). 
‘‘(e) APPROPRIATION.— 
‘‘(1) IN GENERAL.—Out of any funds in the 
Treasury not otherwise appropriated, there is appro-
priated to carry out this title such sums as may be 
necessary for fiscal year 2004 and each fiscal year 
thereafter. 
‘‘(2) BUDGET AUTHORITY.—Paragraph (1) con-
stitutes budget authority in advance of appropria-
tions Acts and represents the obligation of the Fed-
eral Government to provide States, Indian tribes, 
Native Hawaiian organizations, and Alaska Native 
organizations with the allotments determined under 
this section and the grants for administrative and 
outreach activities under section 2205. 
‘‘SEC. 2205. ADMINISTRATION. 
‘‘(a) PAYMENTS.— 
‘‘(1) IN GENERAL.— 
‘‘(A) QUARTERLY.—Subject to subpara-
graph (B) and subsection (b), the Secretary 
shall make quarterly payments to each State
with an expansion phase (phase I) plan ap-
proved under this part, from its allotment 
under section 2204. 
‘‘(B) FUNDING FOR ADMINISTRATION AND 
OUTREACH.— 
‘‘(i) AUTHORITY TO MAKE GRANTS.— 
In addition to the allotments determined 
under section 2204, the Secretary may 
make grants to States, Indian tribes, Na-
tive Hawaiian organizations, and Alaska 
Native organizations for expenditures for 
administrative and outreach activities. 
‘‘(ii) AMOUNTS.— 
‘‘(I) 
IN
GENERAL.—A 
grant 
awarded under this subparagraph 
shall not exceed the applicable per-
centage (as determined under sub-
clause (II)) of the total amount allot-
ted to the State, Indian tribe, Native 
Hawaiian organization, or Alaska Na-
tive organization under section 2204. 
‘‘(II) 
APPLICABLE
PERCENT-
AGE.—For purposes of subclause (I), 
the applicable percentage is—
‘‘(aa) 10 percent for 2005 
through 2009; and 
‘‘(bb) 3 percent for 2010 
and each year thereafter. 
‘‘(2) ADVANCE PAYMENT; RETROSPECTIVE AD-
JUSTMENT.—The Secretary may make payments 
under this part for each quarter on the basis of ad-
vance estimates by the State and such other inves-
tigation as the Secretary may find necessary, and 
may reduce or increase the payments as necessary to 
adjust for any overpayment or underpayment for 
prior quarters. 
‘‘(3) FLEXIBILITY IN SUBMITTAL OF CLAIMS.— 
Nothing in this subsection shall be construed as pre-
venting a State from claiming as expenditures in the 
quarter expenditures that were incurred in a pre-
vious quarter. 
‘‘(b) AUTHORITY FOR BLENDED RATE FOR HEALTH 
SECURITY, MEDICAID, AND SCHIP FUNDS.—The Sec-
retary shall establish procedures for blending the pay-
ments that a State is entitled to receive under this title, 
title XIX, and title XXI into 1 payment rate if— 
‘‘(1) the State requests such a blended pay-
ment; and
‘‘(2) the Secretary finds that the State meets 
maintenance of effort requirements established by 
the Secretary. 
‘‘(c) LIMITATIONS ON FEDERAL PAYMENTS BASED 
ON COST CONTAINMENT.— 
‘‘(1) DETERMINATION
OF
BASELINE.—Each 
year (beginning with 2004), the Secretary shall es-
tablish a baseline projection for the national rate of 
growth in private health insurance premiums for 
such year. 
‘‘(2) REQUIREMENT.—Beginning with fiscal 
year 2005 and each fiscal year thereafter, any pay-
ment made to a State under section 2204 shall not 
exceed the amount paid to the State under such sec-
tion for the preceding fiscal year, adjusted for 
changes in enrollment and a premium inflation ad-
justment that is 0.5 percent below the baseline pro-
jection determined under paragraph (1) for the year, 
unless the State adopts (and the Secretary approves) 
cost containment strategy that will reduce the rate 
of growth of spending. 
‘‘(d) OTHER LIMITATIONS ON USE OF FUNDS.— 
‘‘(1) IN GENERAL.—A State participating under 
part A, and, effective January 1, 2008, all States 
under part B, shall ensure that any payments re-
ceived by the State under section 2205 or 2116(a) 
are not used by any individual or entity, including 
providers or health plans that contract to provide 
services herein, to finance directly or indirectly, or to 
otherwise facilitate expenditures to influence health 
care workers of such individual or entity with re-
spect to issues related to unionization. 
‘‘(2) CONSTRUCTION.—Nothing in this sub-
section shall be construed to limit expenditures made 
for the purpose of good faith collective bargaining or 
pursuant to the terms of a bona fide collective bar-
gaining agreement. 
‘‘(e) WAIVER
OF
FEDERAL
REQUIREMENTS.—A 
State may request (and the Secretary may grant) a waiver 
of any provision of Federal law that the State determines 
is necessary in order to carry out an approved expansion 
phase (phase I) plan under this part. 
‘‘(f) REPORT.—Not later than January 1, 2005, and 
each January 1 thereafter, the Secretary, in consultation 
with the General Accounting Office and the Congressional 
Budget Office, shall prepare and submit to the appro-
priate committees of Congress a report on the number of 
States receiving payments under this part for the year for 
which the report is being prepared as well as the level of 
insurance coverage attained by each such State.
‘‘SEC. 2206. DEFINITIONS. 
‘‘In this title: 
‘‘(1) COST-SHARING.—The term ‘cost-sharing’ 
has the meaning given such term under the Federal 
Employees Health Benefits Program standard Blue 
Cross/Blue Shield preferred provider option service 
benefit plan described in and offered under section 
8903(1) of part 5, United States Code, and includes 
deductibles, copayments, coinsurance, as such terms 
are defined for purposes of such plan. 
‘‘(2) ELIGIBLE RESIDENTS OF A STATE.— 
‘‘(A) IN
GENERAL.—The term ‘eligible 
residents of a State’ means an individual or 
family who— 
‘‘(i) is (or consists of) a resident of 
the State involved; 
‘‘(ii) except as provided in subpara-
graph (B), has a family income that does 
not exceed 300 percent of the poverty line; 
‘‘(iii) is (or consists of) a citizen of 
the United States, a legal resident alien, or 
an individual otherwise residing in the 
United States under the authority of Fed-
eral law; and 
‘‘(iv) in the case of an individual, is 
not eligible for benefits under the medicare
program under title XVIII or for medical 
assistance under the medicaid program 
under title XIX (other than under the ap-
plication 
of 
section 
1902(a)(10)(A)(ii)(XIV)). 
‘‘(B) OPTION TO PROVIDE COVERAGE FOR 
INDIVIDUALS AND FAMILIES WITH HIGHER IN-
COME.—If approved by the Secretary, a State 
may increase the percentage described in sub-
paragraph (A)(ii), or eliminate all income eligi-
bility criteria in order to provide coverage under 
this part to more individuals and families. 
‘‘(3) EXPANSION PHASE (PHASE I) PLAN.—The 
term ‘expansion phase (phase I) plan’ means the 
State universal health insurance coverage plan sub-
mitted under section 2201(b). 
‘‘(4) HEALTH
CARE
SERVICES.—The term 
‘health care services’ includes medical, surgical, 
mental health, and substance abuse services, wheth-
er provided on an inpatient or outpatient basis. 
‘‘(5) 
HEALTH
CARE
WORKER.—The 
term 
‘health care worker’ means an individual employed 
by an employer that provides— 
‘‘(A) health care services; or
‘‘(B) necessary related services, including 
administrative, food service, janitorial, or main-
tenance service to an entity that provides such 
health care services. 
‘‘(6) HEALTH PLAN.—The term ‘health plan’ 
includes health insurance coverage, as defined in sec-
tion 2791(b)(1) of the Public Health Service Act (42 
U.S.C. 300gg–91(b)(1)) and group health plans, as 
defined in section 2791(a) of such Act (42 U.S.C. 
300gg91(b)(1)). 
‘‘(7) MENTAL HEALTH AND SUBSTANCE ABUSE 
TREATMENT BENEFITS PARITY.— 
‘‘(A) IN
GENERAL.—The term ‘mental 
health and substance abuse treatment benefits 
parity’ means, with respect to health coverage, 
that the coverage does not impose treatment 
limitations or financial requirements on the cov-
erage of mental health benefits if similar re-
quirements are not imposed on coverage of 
medical and surgical benefits in comparable set-
tings (including inpatient and outpatient set-
tings). 
‘‘(B) 
TREATMENT
LIMITATIONS.—The 
term ‘treatment limitations’ means limits on the 
frequency of treatment, number of visits, or
other limits on the scope and duration of treat-
ment, as covered by a group health plan (or 
health insurance coverage offered in connection 
with such a plan). Such term does not include 
limits on benefits or coverage based solely on 
medical necessity. 
‘‘(C) 
FINANCIAL
REQUIREMENTS.—The 
term ‘financial requirements’ means copay-
ments, deductibles, out-of-network charges, out- 
of-pocket contributions or fees, annual limits, 
and lifetime aggregate limits imposed on cov-
ered individuals. 
‘‘(8) POVERTY LINE.—The term ‘poverty line’ 
has the meaning given such term in section 673(2) 
of the Community Services Block Grant Act (42 
U.S.C. 9902(2)), including any revision required by 
such section. 
‘‘(9) PREMIUM.—The term ‘premium’ includes 
any enrollment fees and other similar charges. 
‘‘(10) QUALIFIED PLAN.—The term ‘qualified 
plan’ means a health plan that satisfies the coverage 
requirements described under section 2203 and par-
ticipates in an expansion phase (phase I) plan.’’.
TITLE 
II—HEALTH 
SECURITY 
FOR 
ALL 
AMERICANS—UNI-
VERSAL PHASE (PHASE II) 
SEC. 201. UNIVERSAL PHASE (PHASE II) STATE UNIVERSAL 
HEALTH INSURANCE COVERAGE PLANS. 
Title XXII of the Social Security Act, as added by 
section 101, is amended by adding at the end the fol-
lowing: 
‘‘PART B—UNIVERSAL PHASE (PHASE II) PLANS 
‘‘SEC. 2211. PURPOSE; MANDATORY STATE PLANS. 
‘‘(a) PURPOSE.—The purposes of this part are to— 
‘‘(1) require States to establish and implement 
State-administered systems to ensure universal 
health insurance coverage; and 
‘‘(2) provide funds to States for the establish-
ment and implementation of such systems. 
‘‘(b) UNIVERSAL PHASE (PHASE II) PLAN RE-
QUIRED.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), not later than January 1, 2007, a State 
shall submit to the Secretary a plan that sets forth 
how the State intends to use the funds provided 
under this part to ensure universal, affordable, and 
comprehensive health insurance coverage to eligible
residents of the State consistent with the provisions 
of this part. 
‘‘(2) STATES WITH PHASE I PLANS.— 
‘‘(A) IN GENERAL.—Not later than Janu-
ary 1, 2007, a State with a phase I State plan 
shall submit an addendum to such plan that 
provides assurances to the Secretary that such 
plan conforms to the requirements of this part. 
‘‘(B) CONVERSION TO UNIVERSAL PHASE 
(PHASE II) PLAN.—If an addendum to an ex-
pansion phase (phase I) plan is approved by the 
Secretary— 
‘‘(i) the plan shall be automatically 
converted to a universal phase (phase II) 
plan; and 
‘‘(ii) section 2214 and any provision 
of part A that is inconsistent with this 
part shall not apply to the plan. 
‘‘(3) FAILURE
TO
SUBMIT
PLAN
OR
ADDEN-
DUM.—If a State fails to submit a plan as required 
in paragraph (1) (or an addendum as required in 
paragraph (2)), or fails to have such plan or adden-
dum approved by the Secretary, such State shall be 
in violation of this part; and any residents of such 
a State may bring a cause of action against the
State in Federal district court to require the State 
to comply with the provisions of this part. 
‘‘SEC. 2212. PLAN REQUIREMENTS. 
‘‘(a) IN GENERAL.—A universal phase (phase II) 
plan shall include a description, consistent with the re-
quirements of this part, of the following: 
‘‘(1) DETAILS
OF
THE
UNIVERSAL
PHASE 
(PHASE II) PLAN.—The activities that the State in-
tends to carry out using funds received under this 
part to ensure that all eligible residents of the State 
have access to the coverage provided under this part, 
including how the State will coordinate efforts under 
the program under this part with existing State ef-
forts to increase to 100 percent the health insurance 
coverage of eligible residents of the State by Janu-
ary 1, 2009. 
‘‘(2) REQUIREMENTS
FOR
EMPLOYERS.—The 
manner in which the State will ensure that employ-
ers within the State will comply with the require-
ments of section 2214. 
‘‘(3) PART A PROVISIONS.—The following provi-
sions apply to a universal phase (phase II) plan 
under this part in the same manner as such provi-
sions apply to an expansion phase (phase I) plan 
under part A:
‘‘(A) STATE
OUTREACH
PROGRAMS; AC-
CESS.—Section 2202(a)(4). 
‘‘(B) ASSURANCE OF COVERAGE OF ESSEN-
TIAL SERVICES.—Section 2202(a)(5). 
‘‘(C) REPRESENTATION ON BOARDS AND 
COMMISSIONS.—Section 2202(a)(6). 
‘‘(D) DISCLOSURE
OF
INFORMATION
TO 
THE PUBLIC.—Section 2202(a)(7). 
‘‘(E) CONSUMER PROTECTIONS AND WORK-
FORCE STANDARDS.—Section 2202(a)(8). 
‘‘(F) 
PUBLIC
REVIEW.—Section 
2202(a)(9). 
‘‘(G) SERVICES
IN
RURAL
AND
UNDER-
SERVED AREAS; CULTURAL COMPETENCY.—Sec-
tion 2202(a)(10). 
‘‘(H) 
PURCHASING
POOLS.—Section 
2202(a)(11). 
‘‘(I) LIMITATION ON ADMINISTRATIVE EX-
PENDITURES.—Section 2202(a)(12). 
‘‘(J) 
SELF-EMPLOYED
AND
MULTI-
EMPLOYED.—Section 2202(a)(13). 
‘‘(K) 
MEDICAID
WRAPAROUND
COV-
ERAGE.—Section 2202(a)(14). 
‘‘(4) OTHER MATTERS.—Any other matter de-
termined appropriate by the Secretary.
‘‘(b) PERMISSIBLE ACTIVITIES.—A State may use 
amounts provided under this part for any activities con-
sistent with this part that are appropriate to enroll indi-
viduals in health plans to ensure that all eligible residents 
of the State are provided coverage under this part, includ-
ing through the use of direct payments to health plans 
or providers of services. 
‘‘(c) COST CONTAINMENT; COMPETITIVE BIDDING.— 
Notwithstanding subsection (b), State purchasing pools 
shall solicit bids from health plans at least annually. 
‘‘(d) PROCESS
FOR SUBMISSION, APPROVAL, AND 
AMENDMENT OF UNIVERSAL PHASE (PHASE II) PLAN.— 
Section 2106 applies to a universal phase (phase II) plan 
under this part in the same manner as such section applies 
to a State plan under title XXI, except that no universal 
phase (phase II) plan may be effective earlier than Janu-
ary 1, 2008, and all such plans must be submitted for 
approval by not later than January 1, 2007. 
‘‘SEC. 2213. COVERAGE REQUIREMENTS FOR UNIVERSAL 
PHASE (PHASE II) PLANS. 
‘‘(a) REQUIRED SCOPE OF HEALTH INSURANCE COV-
ERAGE.—Section 2203(a) applies to a universal phase 
(phase II) plan under this part. 
‘‘(b) UNIVERSAL COVERAGE.—All States shall ensure 
that by January 1, 2009, 100 percent of eligible residents
of the State have health insurance coverage that meets 
the requirements of section 2203(a). 
‘‘(c) LIMITATIONS ON PREMIUMS AND COST-SHAR-
ING.—Section 2203(b) applies to a universal phase (phase 
II) plan under this part. 
‘‘(d) APPLICATION OF CERTAIN REQUIREMENTS.— 
Section 2203(c) applies to a universal phase (phase II) 
plan under this part. 
‘‘SEC. 2214. REQUIREMENTS FOR EMPLOYERS REGARDING 
THE PROVISION OF BENEFITS. 
‘‘(a) 
REQUIREMENTS.—Subject 
to 
subsection 
(c)(2)(B), an employer in a State shall comply with the 
following requirements: 
‘‘(1) EMPLOYERS
WITH
LESS
THAN
500
EM-
PLOYEES.— 
‘‘(A) IN GENERAL.—An employer with less 
than 500 employees shall enroll each employee 
in a State-designated purchasing pool. 
‘‘(B) CONTRIBUTIONS.— 
‘‘(i) IN
GENERAL.—Notwithstanding 
subparagraph (A) and subject to clause 
(ii), the employer shall make a contribution 
on behalf of each employee for health in-
surance coverage that is equal to at least 
80 percent of the total premiums for such