(b) FEDERAL FINANCIAL PARTICIPATION FOR EM-
PLOYER-SPONSORED INSURANCE.—Section 2105 of such 
Act (42 U.S.C. 1397d) is amended— 
(1) in subsection (a)(1)(C), by inserting before 
the semicolon at the end the following: ‘‘and, subject 
to paragraph (3)(C), in the form of payment of the 
premiums for coverage under a group health plan 
that includes coverage of targeted low-income chil-
dren and benefits supplemental to such coverage’’; 
and 
(2) paragraph (3) of subsection (c) is amended 
to read as follows: 
‘‘(3) PURCHASE OF EMPLOYER-SPONSORED IN-
SURANCE.— 
‘‘(A) IN
GENERAL.—Payment may be 
made to a State under subsection (a)(1)(C), 
subject to the provisions of this paragraph, for 
the purchase of family coverage under a group 
health plan that includes coverage of targeted 
low-income children unless such coverage would 
otherwise substitute for coverage that would be 
provided to such children but for the purchase 
of family coverage. 
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‘‘(B) WAIVER OF CERTAIN PROVISIONS.— 
With respect to coverage described in subpara-
graph (A)— 
‘‘(i) notwithstanding section 2102, no 
minimum benefits requirement (other than 
those otherwise applicable with respect to 
services referred to in section 2102(a)(7)) 
under this title shall apply; and 
‘‘(ii) no limitation on beneficiary cost- 
sharing otherwise applicable under this 
title or title XIX shall apply. 
‘‘(C) REQUIRED
PROVISION
OF
SUPPLE-
MENTAL BENEFITS.—If the coverage described 
in subparagraph (A) does not provide coverage 
for 
the 
services 
referred 
to 
in 
section 
2102(a)(7), the State child health plan shall 
provide coverage of such services as supple-
mental benefits. 
‘‘(D) LIMITATION ON FFP.—The amount 
of the payment under paragraph (1)(C) for cov-
erage described in subparagraph (A) (and sup-
plemental benefits under subparagraph (C) for 
individuals so covered) during a fiscal year may 
not exceed the product of— 
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‘‘(i) the national per capita expendi-
ture under this title (taking into account 
both Federal and State expenditures) for 
the previous fiscal year (as determined by 
the Secretary using the best available 
data); 
‘‘(ii) the enhanced FMAP for the 
State and fiscal year involved; and 
‘‘(iii) the number of targeted low-in-
come children for whom such coverage is 
provided. 
‘‘(E) VOLUNTARY ENROLLMENT.—A State 
child health plan— 
‘‘(i) may not require a targeted low- 
income child to enroll in coverage described 
in subparagraph (A) in order to obtain 
child health assistance under this title; 
‘‘(ii) before providing such child 
health assistance for such coverage of a 
child, shall make available (which may be 
through an Internet website or other 
means) to the parent or guardian of the 
child information on the coverage available 
under this title, including benefits and 
cost-sharing; and 
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‘‘(iii) shall provide at least one oppor-
tunity per fiscal year for beneficiaries to 
switch coverage under this title from cov-
erage described in subparagraph (A) to the 
coverage that is otherwise made available 
under this title. 
‘‘(F) INFORMATION
ON
COVERAGE
OP-
TIONS.—A State child health plan shall— 
‘‘(i) describe how the State will notify 
potential beneficiaries of coverage de-
scribed in subparagraph (A); 
‘‘(ii) provide such notification in writ-
ing at least during the initial application 
for enrollment under this title and during 
redeterminations of eligibility if the indi-
vidual was enrolled before October 1, 2008; 
and 
‘‘(iii) post a description of these cov-
erage options on any official website that 
may be established by the State in connec-
tion with the plan. 
‘‘(G) SEMIANNUAL VERIFICATION OF COV-
ERAGE.—If coverage described in subparagraph 
(A) is provided under a group health plan with 
respect to a targeted low-income child, the 
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State child health plan shall provide for the col-
lection, at least once every six months, of proof 
from the plan that the child is enrolled in such 
coverage. 
‘‘(H) RULE OF CONSTRUCTION.—Nothing 
in this section is to be construed to prohibit a 
State from— 
‘‘(i) offering wrap around benefits in 
order for a group health plan to meet any 
State-established minimum benefit require-
ments; 
‘‘(ii) establishing a cost-effectiveness 
test to qualify for coverage under such a 
plan; 
‘‘(iii) establishing limits on beneficiary 
cost-sharing under such a plan; 
‘‘(iv) paying all or part of a bene-
ficiary’s cost-sharing requirements under 
such a plan; 
‘‘(v) paying less than the full cost of 
the employee’s share of the premium under 
such a plan, including prorating the cost of 
the premium to pay for only what the 
State determines is the portion of the pre-
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mium that covers targeted low-income chil-
dren; 
‘‘(vi) using State funds to pay for 
benefits above the Federal upper limit es-
tablished under subparagraph (C); 
‘‘(vii) allowing beneficiaries enrolled in 
group health plans from changing plans to 
another coverage option available under 
this title at any time; or 
‘‘(viii) providing any guidance or in-
formation it deems appropriate in order to 
help beneficiaries make an informed deci-
sion regarding the option to enroll in cov-
erage described in subparagraph (A). 
‘‘(I) GROUP HEALTH PLAN DEFINED.—In 
this paragraph, the term ‘group health plan’ 
has the meaning given such term in section 
2791(a)(1) of the Public Health Service Act (42 
U.S.C. 300gg–91(a)(1)).’’. 
SEC. 106. IMPROVING BENEFICIARY CHOICE IN SCHIP. 
(a) REQUIRING OFFERING OF ALTERNATIVE COV-
ERAGE OPTIONS.—Section 2102 of the Social Security Act 
(42 U.S.C. 1397b), as amended by sections 101(a), 104, 
and 105(a), is amended— 
(1) in subsection (a)— 
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State to the qualified entity with respect to such 
coverage provided to a targeted low-income child. 
Such limitation may not be less than 90 percent of 
the per capita monthly payment made for coverage 
offered under the State child health plan that is not 
in the form of an alternative coverage option. Noth-
ing in this paragraph shall be construed— 
‘‘(A) as requiring a State to provide for 
the full payment of premiums for qualified al-
ternative coverage; 
‘‘(B) as preventing a State from charging 
additional premiums to cover the difference be-
tween the cost of qualified alternative coverage 
and the amount of such payment limitation; 
‘‘(C) as preventing a State from using its 
own funds to provide a dollar limitation that ex-
ceeds the Federal financial participation as lim-
ited under section 2105(c)(10). 
‘‘(3) QUALIFIED ALTERNATIVE COVERAGE DE-
FINED.—In this section, the term ‘qualified alter-
native coverage’ means health insurance coverage 
that— 
‘‘(A) meets the coverage requirements of 
section 2103 (other than cost-sharing require-
ments of such section); and 
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‘‘(B) is offered by a qualified insurer, and 
not directly by the State. 
‘‘(4) QUALIFIED
INSURER
DEFINED.—In this 
section, the term ‘qualified insurer’ means, with re-
spect to a State, an entity that is licensed to offer 
health insurance coverage in the State.’’. 
(b) FEDERAL
FINANCIAL
PARTICIPATION
FOR 
QUALIFIED ALTERNATIVE COVERAGE.—Section 2105 of 
such Act (42 U.S.C. 1397d) is amended— 
(1) in subsection (a)(1)(C), as amended by sec-
tion 105(b), by inserting before the semicolon at the 
end the following: ‘‘and, subject to paragraph 
(8)(C), in the form of payment of the premiums for 
coverage for qualified alternative coverage’’; and 
(2) in subsection (c), as amended by sections 
101(b) and 102(a)(1), by adding at the end the fol-
lowing new paragraph: 
‘‘(10) PURCHASE OF QUALIFIED ALTERNATIVE 
COVERAGE.— 
‘‘(A) IN
GENERAL.—Payment may be 
made to a State under subsection (a)(1)(C), 
subject to the provisions of this paragraph, for 
the purchase of qualified alternative coverage. 
‘‘(B) WAIVER OF CERTAIN PROVISIONS.— 
With respect to coverage described in subpara-
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graph (A), no limitation on beneficiary cost- 
sharing otherwise applicable under this title or 
title XIX shall apply. 
‘‘(C) LIMITATION ON FFP.—The amount of 
the payment under paragraph (1)(C) for cov-
erage described in subparagraph (A) during a 
fiscal year in the aggregate for all such cov-
erage in the State may not exceed the product 
of— 
‘‘(i) the national per capita expendi-
ture under this title (taking into account 
both Federal and State expenditures) for 
the previous fiscal year (as determined by 
the Secretary using the best available 
data); 
‘‘(ii) the enhanced FMAP for the 
State and fiscal year involved; and 
‘‘(iii) the number of targeted low-in-
come children for whom such coverage is 
provided. 
‘‘(D) VOLUNTARY ENROLLMENT.—A State 
child health plan— 
‘‘(i) may not require a targeted low- 
income child to enroll in coverage described 
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in subparagraph (A) in order to obtain 
child health assistance under this title; 
‘‘(ii) before providing such child 
health assistance for such coverage of a 
child, shall make available (which may be 
through an Internet website or other 
means) to the parent or guardian of the 
child information on the coverage available 
under this title, including benefits and 
cost-sharing; and 
‘‘(iii) shall provide at least one oppor-
tunity per fiscal year for beneficiaries to 
switch coverage under this title from cov-
erage described in subparagraph (A) to the 
coverage that is otherwise made available 
under this title. 
‘‘(E) INFORMATION
ON
COVERAGE
OP-
TIONS.—A State child health plan shall— 
‘‘(i) describe how the State will notify 
potential beneficiaries of coverage de-
scribed in subparagraph (A); 
‘‘(ii) provide such notification in writ-
ing at least during the initial application 
for enrollment under this title and during 
redeterminations of eligibility if the indi-
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vidual was enrolled before October 1, 2008; 
and 
‘‘(iii) post a description of these cov-
erage options on any official website that 
may be established by the State in connec-
tion with the plan. 
‘‘(F) RULE OF CONSTRUCTION.—Nothing 
in this section is to be construed to prohibit a 
State from— 
‘‘(i) establishing limits on beneficiary 
cost-sharing under such alternative cov-
erage; 
‘‘(ii) paying all or part of a bene-
ficiary’s cost-sharing requirements under 
such coverage; 
‘‘(iii) paying less than the full cost of 
a child’s share of the premium under such 
coverage, insofar as the premium for such 
coverage exceeds the limitation established 
by the State under subparagraph (C); 
‘‘(iv) using State funds to pay for 
benefits above the Federal upper limit es-
tablished under subparagraph (C); or 
‘‘(v) providing any guidance or infor-
mation it deems appropriate in order to 
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help beneficiaries make an informed deci-
sion regarding the option to enroll in cov-
erage described in subparagraph (A).’’. 
SEC. 107. ALLOTMENT DISTRIBUTION FORMULA. 
(a) ALLOTMENTS TO 50 STATES AND THE DISTRICT 
OF COLUMBIA.— 
(1) IN GENERAL.—Section 2104(b) of the So-
cial Security Act (42 U.S.C. 1397dd(b)) is amend-
ed— 
(A) in paragraph (1), by striking ‘‘the 
same proportion’’ and all that follows and in-
serting ‘‘the product of the number of SCHIP 
targeted children, as determined under para-
graph (2) for the second preceding fiscal year, 
the State and Federal per capita SCHIP ex-
penditures for the second preceding fiscal year, 
as determined under such paragraph, and the 
enhanced FMAP for the State for the second 
preceding fiscal year.’’; 
(B) by amending paragraph (2) to read as 
follows: 
‘‘(2) NUMBER OF SCHIP TARGETED CHILDREN 
AND PREGNANT WOMEN AND NATIONAL PER CAPITA 
SCHIP EXPENDITURES.— 
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‘‘(A) IN
GENERAL.—By not later than 
September 30 of each year (beginning with 
2007), the Secretary (in consultation with the 
Director of the Bureau of the Census and using 
the best available data for the fiscal year ending 
in the previous year) shall determine and pub-
lish in the Federal Register— 
‘‘(i) the average number of low-income 
targeted children (described in subpara-
graph (B)) for any month during such pre-
ceding fiscal year; and 
‘‘(ii) the combined State and Federal 
per capita SCHIP expenditures (described 
in subparagraph (C)) for such preceding 
fiscal year. 
‘‘(B) LOW-INCOME SCHIP TARGETED CHIL-
DREN.—Low-income targeted children described 
in this subparagraph with respect to a sub-
section (b) State are children (including preg-
nant women described in section 2105(c)(8)(E)) 
residing in the State who are not covered under 
a group health plan or health insurance cov-
erage (as defined for purposes of section 
2110(b)(1)(C)) and whose family income— 
‘‘(i) exceeds the lesser of— 
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‘‘(I) the Medicaid applicable in-
come level (as defined in section 
2110(b)(4)); or 
‘‘(II) 150 percent of the poverty 
line; but 
‘‘(ii) does not 200 percent of the pov-
erty line. 
‘‘(C) STATE
AND
FEDERAL
PER
CAPITA 
SCHIP EXPENDITURES.—The State and Federal 
per capita SCHIP expenditures for a fiscal year 
is equal to— 
‘‘(i) the aggregate Federal and State 
expenditures made that are attributable to 
allotments under this title for subsection 
(b) States for the fiscal year; divided by 
‘‘(ii) the average total number of tar-
geted low-income children (including preg-
nant 
women 
described 
in 
section 
2105(c)(8)(E)) for whom health assistance 
was made available from such allotments 
for such fiscal year.’’; and 
(C) by striking paragraphs (3) and (4) and 
inserting the following: 
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‘‘(3) SUBSECTION (B) STATE DEFINED.—In this 
subsection, the term ‘subsection (b) State’ means 
one of the 50 States or the District of Columbia. 
‘‘(4) PROPORTIONAL REDUCTION IF TOTAL AL-
LOTMENTS
EXCEED
AMOUNT
AVAILABLE.—If the 
Secretary estimates that the total of the allotments 
under this subsection for a fiscal year (in combina-
tion with allotments made under subsection (c)) will 
exceed the aggregate amount available for allotments 
for such fiscal year under subsection (a), the Sec-
retary shall reduce the amount of each allotment 
under this subsection in a pro-rata manner so that 
such total does not exceed the aggregate amount 
available for allotments.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to allotments for fiscal 
years beginning with fiscal year 2008. 
(b) NO
REDISTRIBUTION
OF
UNUSED
ALLOT-
MENTS.— 
(1) IN GENERAL.—Section 2104(f) of such Act 
(42 U.S.C. 1397dd) is amended to read as follows: 
‘‘(f) NO
REDISTRIBUTION
OF
UNUSED
ALLOT-
MENTS.—There shall be no redistribution of allotments 
from States that are not expended within the period of 
availability under subsection (e).’’. 
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(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to allotments for fiscal 
years beginning with fiscal year 2005. 
SEC. 108. FIVE-YEAR REAUTHORIZATION. 
(a) IN GENERAL.—Section 2104(a) of the Social Se-
curity Act (42 U.S.C. 1397dd(a)) is amended— 
(1) by striking ‘‘and’’ at the end of paragraph 
(9); 
(2) by striking the period at the end of para-
graph (10) and inserting a semicolon; and 
(3) by adding at the end the following new 
paragraphs: 
‘‘(11) for fiscal year 2008, $7,000,000,000; 
‘‘(12) for fiscal year 2009, $7,000,000,000; 
‘‘(13) for fiscal year 2010, $7,000,000,000; 
‘‘(14) for fiscal year 2011, $7,500,000,000; and 
‘‘(15) for fiscal year 2012, $8,000,000,000.’’. 
(b) CONTINUATION OF ADDITIONAL ALLOTMENTS TO 
TERRITORIES.—Section 2104(c)(4)(B) of the Social Secu-
rity Act (42 U.S.C. 1397dd(c)(4)(B)) is amended by strik-
ing ‘‘fiscal year 2007’’ and inserting ‘‘each of fiscal years 
2007 through 2012’’. 
(c) APPLICATION TO OTHER SCHIP FUNDING FOR 
FISCAL YEAR 2008.—Notwithstanding any other provi-
sion of law, if funds are appropriated under any law (other 
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than this Act) to provide allotments to States under title 
XXI of the Social Security Act for all (or any portion) 
of fiscal year 2008— 
(1) any amounts that are so appropriated that 
are not so allotted and obligated before the date of 
the enactment of this Act are rescinded; and 
(2) any amount provided for such title XXI al-
lotments to a State under this Act (and the amend-
ments made by this Act) for such fiscal year shall 
be reduced by the amount of such appropriations so 
allotted and obligated before such date. 
SEC. 109. ENHANCING THE PROGRAMMATIC FOCUS ON 
CHILDREN AND PREGNANT WOMEN. 
(a) IN GENERAL.—Section 2107(f) of the Social Se-
curity Act (42 U.S.C. 1397gg(f)) is amended by striking 
‘‘childless’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall take effect on the date of the enact-
ment of this Act but shall not apply to projects, including 
extensions, amendments, or renewals to such projects, that 
are in effect or have been approved on the date of the 
enactment of this Act. 
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SEC. 110. GRANTS FOR OUTREACH AND ENROLLMENT. 
(a) GRANTS.—Title XXI of the Social Security Act 
(42 U.S.C. 1397aa et seq.) is amended by adding at the 
end the following: 
‘‘SEC. 2111. GRANTS TO IMPROVE OUTREACH AND ENROLL-
MENT. 
‘‘(a) OUTREACH AND ENROLLMENT GRANTS; NA-
TIONAL CAMPAIGN.— 
‘‘(1) IN GENERAL.—From the amounts appro-
priated for a fiscal year under subsection (f), subject 
to paragraph (2), the Secretary shall award grants 
to eligible entities to conduct outreach and enroll-
ment efforts that are designed to increase the enroll-
ment and participation of eligible children under this 
title and title XIX. 
‘‘(2) 10 PERCENT SET ASIDE FOR NATIONAL 
ENROLLMENT CAMPAIGN.—An amount equal to 10 
percent of such amounts for the fiscal year shall be 
used by the Secretary for expenditures during the 
fiscal year to carry out a national enrollment cam-
paign in accordance with subsection (g). 
‘‘(b) AWARD OF GRANTS.— 
‘‘(1) PRIORITY FOR AWARDING.— 
‘‘(A) IN
GENERAL.—In awarding grants 
under subsection (a), the Secretary shall give 
priority to eligible entities that— 
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‘‘(i) propose to target geographic 
areas with high rates of— 
‘‘(I) eligible but unenrolled chil-
dren, including such children who re-
side in rural areas; or 
‘‘(II) racial and ethnic minorities 
and health disparity populations, in-
cluding those proposals that address 
cultural and linguistic barriers to en-
rollment; and 
‘‘(ii) submit the most demonstrable 
evidence required under paragraphs (1) 
and (2) of subsection (c). 
‘‘(B) 10 PERCENT SET ASIDE FOR OUT-
REACH
TO
INDIAN
CHILDREN.—An amount 
equal to 10 percent of the funds appropriated 
under subsection (f) for a fiscal year shall be 
used by the Secretary to award grants to In-
dian Health Service providers and urban Indian 
organizations receiving funds under title V of 
the Indian Health Care Improvement Act (25 
U.S.C. 1651 et seq.) for outreach to, and en-
rollment of, children who are Indians. 
‘‘(2) 2-YEAR AVAILABILITY.—A grant awarded 
under this section for a fiscal year shall remain 
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available for expenditure through the end of the suc-
ceeding fiscal year. 
‘‘(c) APPLICATION.—An eligible entity that desires to 
receive a grant under subsection (a) shall submit an appli-
cation to the Secretary in such form and manner, and con-
taining such information, as the Secretary may decide. 
Such application shall include— 
‘‘(1) evidence demonstrating that the entity in-
cludes members who have access to, and credibility 
with, ethnic or low-income populations in the com-
munities in which activities funded under the grant 
are to be conducted; 
‘‘(2) evidence demonstrating that the entity has 
the ability to address barriers to enrollment, such as 
lack of awareness of eligibility, stigma concerns and 
punitive fears associated with receipt of benefits, 
and other cultural barriers to applying for and re-
ceiving child health assistance or medical assistance; 
‘‘(3) specific quality or outcomes performance 
measures to evaluate the effectiveness of activities 
funded by a grant awarded under this section; and 
‘‘(4) an assurance that the eligible entity 
shall— 
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‘‘(A) conduct an assessment of the effec-
tiveness of such activities against the perform-
ance measures; 
‘‘(B) cooperate with the collection and re-
porting of enrollment data and other informa-
tion in order for the Secretary to conduct such 
assessments; and 
‘‘(C) in the case of an eligible entity that 
is not the State, provide the State with enroll-
ment data and other information as necessary 
for the State to make necessary projections of 
eligible children and pregnant women. 
‘‘(d) SUPPLEMENT, NOT SUPPLANT.—Federal funds 
awarded under this section shall be used to supplement, 
not supplant, non-Federal funds that are otherwise avail-
able for activities funded under this section. 
‘‘(e) DEFINITIONS.—In this section: 
‘‘(1) ELIGIBLE ENTITY.—The term ‘eligible en-
tity’ means any of the following: 
‘‘(A) A State with an approved child health 
plan under this title. 
‘‘(B) A local government. 
‘‘(C) An Indian tribe or tribal consortium, 
a tribal organization, an urban Indian organiza-
tion receiving funds under title V of the Indian 
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Health Care Improvement Act (25 U.S.C. 1651 
et seq.), or an Indian Health Service provider. 
‘‘(D) A Federal health safety net organiza-
tion. 
‘‘(E) A State, national, local, or commu-
nity-based public or nonprofit private organiza-
tion. 
‘‘(F) A faith-based organization or con-
sortia, to the extent that a grant awarded to 
such an entity is consistent with the require-
ments of section 1955 of the Public Health 
Service Act (42 U.S.C. 300x–65) relating to a 
grant award to non-governmental entities. 
‘‘(G) An elementary or secondary school. 
‘‘(H) A national, local, or community-based 
public or nonprofit private organization, includ-
ing organizations that use community health 
workers or community-based doula programs. 
‘‘(2) FEDERAL HEALTH SAFETY NET ORGANI-
ZATION.—The term ‘Federal health safety net orga-
nization’ means— 
‘‘(A) a Federally-qualified health center (as 
defined in section 1905(l)(2)(B)); 
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‘‘(B) a hospital defined as a dispropor-
tionate share hospital for purposes of section 
1923; 
‘‘(C) a covered entity described in section 
340B(a)(4) of the Public Health Service Act 
(42 U.S.C. 256b(a)(4)); and 
‘‘(D) any other entity or consortium that 
serves children under a federally-funded pro-
gram, including the special supplemental nutri-
tion program for women, infants, and children 
(WIC) established under section 17 of the Child 
Nutrition Act of 1966 (42 U.S.C. 1786), the 
head start and early head start programs under 
the Head Start Act (42 U.S.C. 9801 et seq.), 
the school lunch program established under the 
Richard B. Russell National School Lunch Act, 
and an elementary or secondary school. 
‘‘(3) INDIANS; INDIAN TRIBE; TRIBAL ORGANI-
ZATION; URBAN INDIAN ORGANIZATION.—The terms 
‘Indian’, ‘Indian tribe’, ‘tribal organization’, and 
‘urban Indian organization’ have the meanings given 
such terms in section 4 of the Indian Health Care 
Improvement Act (25 U.S.C. 1603). 
‘‘(4) COMMUNITY HEALTH WORKER.—The term 
‘community health worker’ means an individual who 
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