SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘American Health Care 
Act of 2017’’. 
SEC. 2. TABLE OF CONTENTS. 
The table of contents of this Act is as follows: 
Sec. 1. Short title. 
Sec. 2. Table of contents. 
TITLE I—ENERGY AND COMMERCE 
Subtitle A—Patient Access to Public Health Programs 
Sec. 101. The Prevention and Public Health Fund. 
Sec. 102. Community health center program. 
Sec. 103. Federal payments to States. 
Subtitle B—Medicaid Program Enhancement 
Sec. 111. Repeal of Medicaid provisions. 
Sec. 112. Repeal of Medicaid expansion. 
Sec. 113. Elimination of DSH cuts. 
Sec. 114. Reducing State Medicaid costs. 
Sec. 115. Safety net funding for non-expansion States. 
Sec. 116. Providing incentives for increased frequency of eligibility redetermina-
tions. 
Sec. 117. Permitting States to apply a work requirement for nondisabled, non-
elderly, nonpregnant adults under Medicaid. 
Subtitle C—Per Capita Allotment for Medical Assistance 
Sec. 121. Per capita allotment for medical assistance. 
Subtitle D—Patient Relief and Health Insurance Market Stability 
Sec. 131. Repeal of cost-sharing subsidy. 
Sec. 132. Patient and State Stability Fund. 
Sec. 133. Continuous health insurance coverage incentive. 
Sec. 134. Increasing coverage options. 
Sec. 135. Change in permissible age variation in health insurance premium 
rates. 
Subtitle E—Implementation Funding 
Sec. 141. American Health Care Implementation Fund. 
TITLE II—COMMITTEE ON WAYS AND MEANS 
Subtitle A—Repeal and Replace of Health-Related Tax Policy 
Sec. 201. Recapture excess advance payments of premium tax credits. 
Sec. 202. Additional modifications to premium tax credit. 
Sec. 203. Small business tax credit. 
Sec. 204. Individual mandate.
Sec. 205. Employer mandate. 
Sec. 206. Repeal of the tax on employee health insurance premiums and health 
plan benefits. 
Sec. 207. Repeal of tax on over-the-counter medications. 
Sec. 208. Repeal of increase of tax on health savings accounts. 
Sec. 209. Repeal of limitations on contributions to flexible spending accounts. 
Sec. 210. Repeal of medical device excise tax. 
Sec. 211. Repeal of elimination of deduction for expenses allocable to medicare 
part D subsidy. 
Sec. 212. Reduction of income threshold for determining medical care deduc-
tion. 
Sec. 213. Repeal of Medicare tax increase. 
Sec. 214. Refundable tax credit for health insurance coverage. 
Sec. 215. Maximum contribution limit to health savings account increased to 
amount of deductible and out-of-pocket limitation. 
Sec. 216. Allow both spouses to make catch-up contributions to the same health 
savings account. 
Sec. 217. Special rule for certain medical expenses incurred before establish-
ment of health savings account. 
Subtitle B—Repeal of Certain Consumer Taxes 
Sec. 221. Repeal of tax on prescription medications. 
Sec. 222. Repeal of health insurance tax. 
Subtitle C—Repeal of Tanning Tax 
Sec. 231. Repeal of tanning tax. 
Subtitle D—Remuneration From Certain Insurers 
Sec. 241. Remuneration from certain insurers. 
Subtitle E—Repeal of Net Investment Income Tax 
Sec. 251. Repeal of net investment income tax. 
TITLE I—ENERGY AND 
COMMERCE 
Subtitle A—Patient Access to 
Public Health Programs 
SEC. 101. THE PREVENTION AND PUBLIC HEALTH FUND. 
(a) IN GENERAL.—Subsection (b) of section 4002 of 
the Patient Protection and Affordable Care Act (42 
U.S.C. 300u–11), as amended by section 5009 of the 21st 
Century Cures Act, is amended—
(1) in paragraph (2), by adding ‘‘and’’ at the 
end; 
(2) in paragraph (3)— 
(A) by striking ‘‘each of fiscal years 2018 
and 2019’’ and inserting ‘‘fiscal year 2018’’; 
and 
(B) by striking the semicolon at the end 
and inserting a period; and 
(3) by striking paragraphs (4) through (8). 
(b) RESCISSION OF UNOBLIGATED FUNDS.—Of the 
funds made available by such section 4002, the unobli-
gated balance at the end of fiscal year 2018 is rescinded. 
SEC. 102. COMMUNITY HEALTH CENTER PROGRAM. 
Effective as if included in the enactment of the Medi-
care Access and CHIP Reauthorization Act of 2015 (Pub-
lic Law 114–10, 129 Stat. 87), paragraph (1) of section 
221(a) of such Act is amended by inserting ‘‘, and an ad-
ditional $422,000,000 for fiscal year 2017’’ after ‘‘2017’’. 
SEC. 103. FEDERAL PAYMENTS TO STATES. 
(a) IN GENERAL.—Notwithstanding section 504(a), 
1902(a)(23), 1903(a), 2002, 2005(a)(4), 2102(a)(7), or 
2105(a)(1) of the Social Security Act (42 U.S.C. 704(a), 
1396a(a)(23), 
1396b(a), 
1397a, 
1397d(a)(4), 
1397bb(a)(7), 1397ee(a)(1)), or the terms of any Med-
icaid waiver in effect on the date of enactment of this Act
that is approved under section 1115 or 1915 of the Social 
Security Act (42 U.S.C. 1315, 1396n), for the 1-year pe-
riod beginning on the date of the enactment of this Act, 
no Federal funds provided from a program referred to in 
this subsection that is considered direct spending for any 
year may be made available to a State for payments to 
a prohibited entity, whether made directly to the prohib-
ited entity or through a managed care organization under 
contract with the State. 
(b) DEFINITIONS.—In this section: 
(1) PROHIBITED ENTITY.—The term ‘‘prohib-
ited entity’’ means an entity, including its affiliates, 
subsidiaries, successors, and clinics— 
(A) that, as of the date of enactment of 
this Act— 
(i) is an organization described in sec-
tion 501(c)(3) of the Internal Revenue 
Code of 1986 and exempt from tax under 
section 501(a) of such Code; 
(ii) is an essential community provider 
described in section 156.235 of title 45, 
Code of Federal Regulations (as in effect 
on the date of enactment of this Act), that 
is primarily engaged in family planning
services, reproductive health, and related 
medical care; and 
(iii) provides for abortions, other than 
an abortion— 
(I) if the pregnancy is the result 
of an act of rape or incest; or 
(II) in the case where a woman 
suffers from a physical disorder, phys-
ical injury, or physical illness that 
would, as certified by a physician, 
place the woman in danger of death 
unless an abortion is performed, in-
cluding a life-endangering physical 
condition caused by or arising from 
the pregnancy itself; and 
(B) for which the total amount of Federal 
and State expenditures under the Medicaid pro-
gram under title XIX of the Social Security Act 
in fiscal year 2014 made directly to the entity 
and to any affiliates, subsidiaries, successors, or 
clinics of the entity, or made to the entity and 
to any affiliates, subsidiaries, successors, or 
clinics of the entity as part of a nationwide 
health 
care 
provider 
network, 
exceeded 
$350,000,000.
(2) DIRECT
SPENDING.—The term ‘‘direct 
spending’’ has the meaning given that term under 
section 250(c) of the Balanced Budget and Emer-
gency Deficit Control Act of 1985 (2 U.S.C. 900(c)). 
Subtitle B—Medicaid Program 
Enhancement 
SEC. 111. REPEAL OF MEDICAID PROVISIONS. 
The Social Security Act is amended— 
(1) in section 1902 (42 U.S.C. 1396a)— 
(A) in subsection (a)(47)(B), by inserting 
‘‘and provided that any such election shall cease 
to be effective on January 1, 2020, and no such 
election shall be made after that date’’ before 
the semicolon at the end; and 
(B) in subsection (l)(2)(C), by inserting 
‘‘and ending December 31, 2019,’’ after ‘‘Janu-
ary 1, 2014,’’; 
(2) 
in 
section 
1915(k)(2) 
(42 
U.S.C. 
1396n(k)(2)), by striking ‘‘during the period de-
scribed in paragraph (1)’’ and inserting ‘‘on or after 
the date referred to in paragraph (1) and before 
January 1, 2020’’; and 
(3) in section 1920(e) (42 U.S.C. 1396r–1(e)), 
by striking ‘‘under clause (i)(VIII), clause (i)(IX), or 
clause (ii)(XX) of subsection (a)(10)(A)’’ and insert-
ing ‘‘under clause (i)(VIII) or clause (ii)(XX) of sec-
tion 1902(a)(10)(A) before January 1, 2020, section 
1902(a)(10)(A)(i)(IX),’’. 
SEC. 112. REPEAL OF MEDICAID EXPANSION. 
(a) IN GENERAL.—Title XIX of the Social Security 
Act (42 U.S.C. 1396 et seq.) is amended— 
(1) in section 1902 (42 U.S.C. 1396a)— 
(A) in subsection (a)(10)(A)— 
(i) in clause (i)(VIII), by inserting 
‘‘and ending December 31, 2019,’’ after 
‘‘2014,’’; 
(ii) in clause (ii)(XX), by inserting 
‘‘and ending December 31, 2017,’’ after 
‘‘2014,’’; and 
(iii) in clause (ii), by adding at the 
end the following new subclause: 
‘‘(XXIII) 
beginning 
January 
1, 
2020— 
‘‘(aa) who are expansion enrollees 
(as defined in subsection (nn)(1)); or 
‘‘(bb) who are grandfathered ex-
pansion enrollees (as defined in sub-
section (nn)(2));’’; and 
(B) by adding at the end the following new 
subsection:
‘‘(nn) EXPANSION ENROLLEES.—In this title: 
‘‘(1) IN GENERAL.—The term ‘expansion en-
rollee’ means an individual— 
‘‘(A) who is under 65 years of age; 
‘‘(B) who is not pregnant; 
‘‘(C) who is not entitled to, or enrolled for, 
benefits under part A of title XVIII, or enrolled 
for benefits under part B of title XVIII; 
‘‘(D) who is not described in any of sub-
clauses 
(I) 
through 
(VII) 
of 
subsection 
(a)(10)(A)(i); and 
‘‘(E) whose income (as determined under 
subsection (e)(14)) does not exceed 133 percent 
of the poverty line (as defined in section 
2110(c)(5)) applicable to a family of the size in-
volved. 
‘‘(2) GRANDFATHERED
EXPANSION
ENROLL-
EES.—The term ‘grandfathered expansion enrollee’ 
means an expansion enrollee who— 
‘‘(A) was enrolled under the State plan 
under this title (or under a waiver of such plan) 
as of December 31, 2019; and 
‘‘(B) does not have a break in eligibility 
for medical assistance under such State plan
(or waiver) for more than one month after such 
date. 
‘‘(3) APPLICATION OF RELATED PROVISIONS.— 
Any reference in subsection (a)(10)(G), (k), or (gg) 
of this section or in section 1903, 1905(a), 1920(e), 
or 1937(a)(1)(B) to individuals described in sub-
clause (VIII) of subsection (a)(10)(A)(i) shall be 
deemed to include a reference to expansion enrollees 
(including grandfathered expansion enrollees).’’; and 
(2) in section 1905 (42 U.S.C. 1396d)— 
(A) in subsection (y)(1), in the matter pre-
ceding subparagraph (A)— 
(i) by inserting ‘‘and that has elected 
to cover newly eligible individuals before 
March 1, 2017’’ after ‘‘that is one of the 
50 States or the District of Columbia’’; 
and 
(ii) by inserting after ‘‘subclause 
(VIII) of section 1902(a)(10)(A)(i)’’ the 
following: ‘‘who, for periods after Decem-
ber 31, 2019, are grandfathered expansion 
enrollees 
(as 
defined 
in 
section 
1902(nn)(2))’’; and 
(B) in subsection (z)(2)—
(i) in subparagraph (A), by inserting 
after ‘‘section 1937’’ the following: ‘‘and, 
for periods after December 31, 2019, who 
are grandfathered expansion enrollees (as 
defined in section 1902(nn)(2))’’; and 
(ii) in subparagraph (B)(ii)— 
(I) in subclause (III), by adding 
‘‘and’’ at the end; and 
(II) by striking subclauses (IV), 
(V), and (VI) and inserting the fol-
lowing new subclause: 
‘‘(IV) 2017 and each subsequent year is 80 
percent.’’. 
(b) SUNSET OF ESSENTIAL HEALTH BENEFITS RE-
QUIREMENT.—Section 1937(b)(5) of the Social Security 
Act (42 U.S.C. 1396u–7(b)(5)) is amended by adding at 
the end the following: ‘‘This paragraph shall not apply 
after December 31, 2019.’’. 
SEC. 113. ELIMINATION OF DSH CUTS. 
Section 1923(f) of the Social Security Act (42 U.S.C. 
1396r–4(f)) is amended— 
(1) in paragraph (7)— 
(A) in subparagraph (A)— 
(i) in clause (i)—
(I) in the matter preceding sub-
clause (I), by striking ‘‘2025’’ and in-
serting ‘‘2019’’; and 
(ii) in clause (ii)— 
(I) in subclause (I), by adding 
‘‘and’’ at the end; 
(II) in subclause (II), by striking 
the semicolon at the end and inserting 
a period; and 
(III) by striking subclauses (III) 
through (VIII); and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(C) EXEMPTION FROM REDUCTION FOR 
NON-EXPANSION STATES.— 
‘‘(i) IN GENERAL.—In the case of a 
State that is a non-expansion State for a 
fiscal year, subparagraph (A)(i) shall not 
apply to the DSH allotment for such State 
and fiscal year. 
‘‘(ii) NO CHANGE IN REDUCTION FOR 
EXPANSION
STATES.—In the case of a 
State that is an expansion State for a fis-
cal year, the DSH allotment for such State
waiver of such plan) by reason of clause 
(i), before the date on which the individual 
loses such eligibility, inform the individual 
of the date on which the individual would 
no longer be considered ineligible by reason 
of such clause to receive medical assistance 
under the State plan or under any waiver 
of such plan and the date on which the in-
dividual would be eligible to reapply to re-
ceive such medical assistance. 
‘‘(v) QUALIFIED LOTTERY WINNINGS 
DEFINED.—In this subparagraph, the term 
‘qualified lottery winnings’ means winnings 
from a sweepstakes, lottery, or pool de-
scribed in paragraph (3) of section 4402 of 
the Internal Revenue Code of 1986 or a 
lottery operated by a multistate or multi-
jurisdictional lottery association, including 
amounts awarded as a lump sum payment. 
‘‘(vi) QUALIFIED LUMP SUM INCOME 
DEFINED.—In this subparagraph, the term 
‘qualified lump sum income’ means income 
that is received as a lump sum from one 
of the following sources:
‘‘(I) Monetary winnings from 
gambling (as defined by the Secretary 
and including monetary winnings from 
gambling activities described in sec-
tion 1955(b)(4) of title 18, United 
States Code). 
‘‘(II) Income received as liquid 
assets from the estate (as defined in 
section 1917(b)(4)) of a deceased in-
dividual.’’; and 
(ii) by striking ‘‘(14) EXCLUSION’’ 
and inserting ‘‘(15) EXCLUSION’’. 
(2) RULES OF CONSTRUCTION.— 
(A) INTERCEPTION OF LOTTERY WINNINGS 
ALLOWED.—Nothing in the amendment made 
by paragraph (1)(B)(i) shall be construed as 
preventing a State from intercepting the State 
lottery winnings awarded to an individual in the 
State to recover amounts paid by the State 
under the State Medicaid plan under title XIX 
of the Social Security Act for medical assistance 
furnished to the individual. 
(B) APPLICABILITY
LIMITED
TO
ELIGI-
BILITY OF RECIPIENT OF LOTTERY WINNINGS 
OR LUMP SUM INCOME.—Nothing in the amend-
ment made by paragraph (1)(B)(i) shall be con-
strued, with respect to a determination of 
household income for purposes of a determina-
tion of eligibility for medical assistance under 
the State plan under title XIX of the Social Se-
curity Act (42 U.S.C. 1396 et seq.) (or a waiver 
of such plan) made by applying modified ad-
justed gross income under subparagraph (A) of 
section 1902(e)(14) of such Act (42 U.S.C. 
1396a(e)(14)), as limiting the eligibility for 
such medical assistance of any individual that is 
a member of the household other than the indi-
vidual (or the individual’s spouse) who received 
qualified lottery winnings or qualified lump-sum 
income (as defined in subparagraph (J) of such 
section 1902(e)(14), as added by paragraph 
(1)(B)(i) of this subsection). 
(b) REPEAL OF RETROACTIVE ELIGIBILITY.— 
(1) IN GENERAL.— 
(A) STATE PLAN REQUIREMENTS.—Section 
1902(a)(34) of the Social Security Act (42 
U.S.C. 1396a(a)(34)) is amended by striking 
‘‘in or after the third month before the month 
in which he made application’’ and inserting ‘‘in
or after the month in which the individual made 
application’’. 
(B) DEFINITION
OF
MEDICAL
ASSIST-
ANCE.—Section 1905(a) of the Social Security 
Act (42 U.S.C. 1396d(a)) is amended by strik-
ing ‘‘in or after the third month before the 
month in which the recipient makes application 
for assistance’’ and inserting ‘‘in or after the 
month in which the recipient makes application 
for assistance’’. 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall apply to medical assistance 
with respect to individuals whose eligibility for such 
assistance is based on an application for such assist-
ance made (or deemed to be made) on or after Octo-
ber 1, 2017. 
(c) UPDATING ALLOWABLE HOME EQUITY LIMITS IN 
MEDICAID.— 
(1) IN
GENERAL.—Section 1917(f)(1) of the 
Social Security Act (42 U.S.C. 1396p(f)(1)) is 
amended— 
(A) in subparagraph (A), by striking ‘‘sub-
paragraphs (B) and (C)’’ and inserting ‘‘sub-
paragraph (B)’’; 
(B) by striking subparagraph (B);
(C) by redesignating subparagraph (C) as 
subparagraph (B); and 
(D) in subparagraph (B), as so redesig-
nated, by striking ‘‘dollar amounts specified in 
this paragraph’’ and inserting ‘‘dollar amount 
specified in subparagraph (A)’’. 
(2) EFFECTIVE DATE.— 
(A) IN GENERAL.—The amendments made 
by paragraph (1) shall apply with respect to eli-
gibility determinations made after the date that 
is 180 days after the date of the enactment of 
this section. 
(B) EXCEPTION
FOR
STATE
LEGISLA-
TION.—In the case of a State plan under title 
XIX of the Social Security Act that the Sec-
retary of Health and Human Services deter-
mines requires State legislation in order for the 
respective plan to meet any requirement im-
posed by amendments made by this subsection, 
the respective plan shall not be regarded as fail-
ing to comply with the requirements of such 
title solely on the basis of its failure to meet 
such an additional requirement before the first 
day of the first calendar quarter beginning after 
the close of the first regular session of the
(B) in subsection (d)(1), by striking ‘‘to 
which’’ and inserting ‘‘to which, subject to sec-
tion 1903A(a),’’; and 
(2) by inserting after such section 1903 the fol-
lowing new section: 
‘‘SEC. 1903A. PER CAPITA-BASED CAP ON PAYMENTS FOR 
MEDICAL ASSISTANCE. 
‘‘(a) APPLICATION OF PER CAPITA CAP ON PAY-
MENTS FOR MEDICAL ASSISTANCE EXPENDITURES.— 
‘‘(1) IN GENERAL.—If a State has excess ag-
gregate medical assistance expenditures (as defined 
in paragraph (2)) for a fiscal year (beginning with 
fiscal year 2020), the amount of payment to the 
State under section 1903(a)(1) for each quarter in 
the following fiscal year shall be reduced by 1⁄4 of 
the excess aggregate medical assistance payments 
(as defined in paragraph (3)) for that previous fiscal 
year. In this section, the term ‘State’ means only the 
50 States and the District of Columbia. 
‘‘(2) EXCESS AGGREGATE MEDICAL ASSISTANCE 
EXPENDITURES.—In this subsection, the term ‘ex-
cess aggregate medical assistance expenditures’ 
means, for a State for a fiscal year, the amount (if 
any) by which—
‘‘(A) the amount of the adjusted total med-
ical assistance expenditures (as defined in sub-
section (b)(1)) for the State and fiscal year; ex-
ceeds 
‘‘(B) the amount of the target total med-
ical assistance expenditures (as defined in sub-
section (c)) for the State and fiscal year. 
‘‘(3) EXCESS AGGREGATE MEDICAL ASSISTANCE 
PAYMENTS.—In this subsection, the term ‘excess ag-
gregate medical assistance payments’ means, for a 
State for a fiscal year, the product of— 
‘‘(A) the excess aggregate medical assist-
ance expenditures (as defined in paragraph (2)) 
for the State for the fiscal year; and 
‘‘(B) the Federal average medical assist-
ance matching percentage (as defined in para-
graph (4)) for the State for the fiscal year. 
‘‘(4) FEDERAL AVERAGE MEDICAL ASSISTANCE 
MATCHING
PERCENTAGE.—In this subsection, the 
term ‘Federal average medical assistance matching 
percentage’ means, for a State for a fiscal year, the 
ratio (expressed as a percentage) of— 
‘‘(A) the amount of the Federal payments 
that would be made to the State under section 
1903(a)(1) for medical assistance expenditures
for calendar quarters in the fiscal year if para-
graph (1) did not apply; to 
‘‘(B) the amount of the medical assistance 
expenditures for the State and fiscal year. 
‘‘(b) ADJUSTED TOTAL MEDICAL ASSISTANCE EX-
PENDITURES.—Subject to subsection (g), the following 
shall apply: 
‘‘(1) IN GENERAL.—In this section, the term 
‘adjusted total medical assistance expenditures’ 
means, for a State— 
‘‘(A) for fiscal year 2016, the product of— 
‘‘(i) the amount of the medical assist-
ance expenditures (as defined in paragraph 
(2)) for the State and fiscal year, reduced 
by the amount of any excluded expendi-
tures (as defined in paragraph (3)) for the 
State and fiscal year otherwise included in 
such medical assistance expenditures; and 
‘‘(ii) the 1903A FY16 population per-
centage (as defined in paragraph (4)) for 
the State; or 
‘‘(B) for fiscal year 2019 or a subsequent 
fiscal year, the amount of the medical assist-
ance expenditures (as defined in paragraph (2)) 
for the State and fiscal year that is attributable
to 1903A enrollees, reduced by the amount of 
any excluded expenditures (as defined in para-
graph (3)) for the State and fiscal year other-
wise included in such medical assistance ex-
penditures and includes non-DSH supplemental 
payments 
(as 
defined 
in 
subsection 
(d)(4)(A)(ii)) and payments described in sub-
section (d)(4)(A)(iii) but shall not be construed 
as including any expenditures attributable to 
the program under section 1928. In applying 
subparagraph (B), non-DSH supplemental pay-
ments (as defined in subsection (d)(4)(A)(ii)) 
and 
payments 
described 
in 
subsection 
(d)(4)(A)(iii) shall be treated as fully attrib-
utable to 1903A enrollees. 
‘‘(2) MEDICAL ASSISTANCE EXPENDITURES.— 
In this section, the term ‘medical assistance expendi-
tures’ means, for a State and fiscal year, the med-
ical assistance payments as reported by medical 
service category on the Form CMS-64 quarterly ex-
pense report (or successor to such a report form, 
and including enrollment data and subsequent ad-
justments to any such report, in this section referred 
to collectively as a ‘CMS-64 report’) for which pay-
ment is (or may otherwise be) made pursuant to sec-
tion 1903(a)(1). 
‘‘(3) EXCLUDED EXPENDITURES.—In this sec-
tion, the term ‘excluded expenditures’ means, for a 
State and fiscal year, expenditures under the State 
plan (or under a waiver of such plan) that are at-
tributable to any of the following: 
‘‘(A) DSH.—Payment adjustments made 
for disproportionate share hospitals under sec-
tion 1923. 
‘‘(B) 
MEDICARE
COST-SHARING.—Pay-
ments made for medicare cost-sharing (as de-
fined in section 1905(p)(3)). 
‘‘(C) SAFETY NET PROVIDER PAYMENT AD-
JUSTMENTS IN NON-EXPANSION STATES.—Pay-
ment adjustments under subsection (a) of sec-
tion 1923A for which payment is permitted 
under subsection (c) of such section. 
‘‘(4) 1903A FY 16 POPULATION PERCENTAGE.— 
In this subsection, the term ‘1903A FY16 popu-
lation percentage’ means, for a State, the Sec-
retary’s calculation of the percentage of the actual 
medical assistance expenditures, as reported by the 
State on the CMS–64 reports for calendar quarters
in fiscal year 2016, that are attributable to 1903A 
enrollees (as defined in subsection (e)(1)). 
‘‘(c) TARGET TOTAL MEDICAL ASSISTANCE EXPEND-
ITURES.— 
‘‘(1) CALCULATION.—In this section, the term 
‘target total medical assistance expenditures’ means, 
for a State for a fiscal year and subject to para-
graph (4), the sum of the products, for each of the 
1903A enrollee categories (as defined in subsection 
(e)(2)), of— 
‘‘(A) the target per capita medical assist-
ance expenditures (as defined in paragraph (2)) 
for the enrollee category, State, and fiscal year; 
and 
‘‘(B) the number of 1903A enrollees for 
such enrollee category, State, and fiscal year, as 
determined under subsection (e)(4). 
‘‘(2) TARGET PER CAPITA MEDICAL ASSISTANCE 
EXPENDITURES.—In this subsection, the term ‘tar-
get per capita medical assistance expenditures’ 
means, for a 1903A enrollee category and State— 
‘‘(A) for fiscal year 2020, an amount equal 
to— 
‘‘(i) the provisional FY19 target per 
capita amount for such enrollee category
(as calculated under subsection (d)(5)) for 
the State; increased by 
‘‘(ii) the applicable annual inflation 
factor (as defined in paragraph (3)) for 
fiscal year 2020; and 
‘‘(B) for each succeeding fiscal year, an 
amount equal to— 
‘‘(i) the target per capita medical as-
sistance expenditures (under subparagraph 
(A) or this subparagraph) for the 1903A 
enrollee category and State for the pre-
ceding fiscal year, increased by 
‘‘(ii) the applicable annual inflation 
factor for that succeeding fiscal year. 
‘‘(3) APPLICABLE
ANNUAL
INFLATION
FAC-
TOR.—In paragraph (2), the term ‘applicable annual 
inflation factor’ means, for a fiscal year— 
‘‘(A) for each of the 1903A enrollee cat-
egories described in subparagraphs (C), (D), 
and (E) of subsection (e)(2), the percentage in-
crease in the medical care component of the 
consumer price index for all urban consumers 
(U.S. city average) from September of the pre-
vious fiscal year to September of the fiscal year 
involved; and
‘‘(B) for each of the 1903A enrollee cat-
egories described in subparagraphs (A) and (B) 
of subsection (e)(2), the percentage increase de-
scribed in subparagraph (A) plus 1 percentage 
point. 
‘‘(4) DECREASE
IN
TARGET
EXPENDITURES 
FOR REQUIRED EXPENDITURES BY CERTAIN POLIT-
ICAL SUBDIVISIONS.— 
‘‘(A) IN GENERAL.—In the case of a State 
that had a DSH allotment under section 
1923(f) for fiscal year 2016 that was more than 
6 times the national average of such allotments 
for all the States for such fiscal year and that 
requires political subdivisions within the State 
to contribute funds towards medical assistance 
or other expenditures under the State plan 
under this title (or under a waiver of such plan) 
for a fiscal year (beginning with fiscal year 
2020), the target total medical assistance ex-
penditures for such State and fiscal year shall 
be decreased by the amount that political sub-
divisions in the State are required to contribute 
under the plan (or waiver) without reimburse-
ment from the State for such fiscal year, other
than contributions described in subparagraph 
(B). 
‘‘(B) EXCEPTIONS.—The contributions de-
scribed in this subparagraph are the following: 
‘‘(i) Contributions required by a State 
from a political subdivision that, as of the 
first day of the calendar year in which the 
fiscal year involved begins— 
‘‘(I) has a population of more 
than 5,000,000, as estimated by the 
Bureau of the Census; and 
‘‘(II) imposes a local income tax 
upon its residents. 
‘‘(ii) Contributions required by a 
State from a political subdivision for ad-
ministrative expenses if the State required 
such contributions from such subdivision 
without reimbursement from the State as 
of January 1, 2017. 
‘‘(d) CALCULATION OF FY19 PROVISIONAL TARGET 
AMOUNT FOR EACH 1903A ENROLLEE CATEGORY.—Sub-
ject to subsection (g), the following shall apply: 
‘‘(1) CALCULATION OF BASE AMOUNTS FOR FIS-
CAL YEAR 2016.—For each State the Secretary shall
calculate (and provide notice to the State not later 
than April 1, 2018, of) the following: 
‘‘(A) The amount of the adjusted total 
medical assistance expenditures (as defined in 
subsection (b)(1)) for the State for fiscal year 
2016. 
‘‘(B) The number of 1903A enrollees for 
the State in fiscal year 2016 (as determined 
under subsection (e)(4)). 
‘‘(C) The average per capita medical as-
sistance expenditures for the State for fiscal 
year 2016 equal to— 
‘‘(i) the amount calculated under sub-
paragraph (A); divided by 
‘‘(ii) the number calculated under sub-
paragraph (B). 
‘‘(2) FISCAL YEAR 2019 AVERAGE PER CAPITA 
AMOUNT BASED ON INFLATING THE FISCAL YEAR 
2016 AMOUNT TO FISCAL YEAR 2019 BY CPI-MED-
ICAL.—The Secretary shall calculate a fiscal year 
2019 average per capita amount for each State 
equal to— 
‘‘(A) the average per capita medical assist-
ance expenditures for the State for fiscal year
2016 (calculated under paragraph (1)(C)); in-
creased by 
‘‘(B) the percentage increase in the med-
ical care component of the consumer price index 
for all urban consumers (U.S. city average) 
from September, 2016 to September, 2019. 
‘‘(3) AGGREGATE
AND
AVERAGE
EXPENDI-
TURES PER CAPITA FOR FISCAL YEAR 2019.—The 
Secretary shall calculate for each State the fol-
lowing: 
‘‘(A) The amount of the adjusted total 
medical assistance expenditures (as defined in 
subsection (b)(1)) for the State for fiscal year 
2019. 
‘‘(B) The number of 1903A enrollees for 
the State in fiscal year 2019 (as determined 
under subsection (e)(4)). 
‘‘(4) PER CAPITA EXPENDITURES FOR FISCAL 
YEAR 2019 FOR EACH 1903A ENROLLEE CATEGORY.— 
The Secretary shall calculate (and provide notice to 
each State not later than January 1, 2020, of) the 
following: 
‘‘(A)(i) For each 1903A enrollee category, 
the amount of the adjusted total medical assist-
ance expenditures (as defined in subsection
(b)(1)) for the State for fiscal year 2019 for in-
dividuals in the enrollee category, calculated by 
excluding from medical assistance expenditures 
those expenditures attributable to expenditures 
described in clause (iii) or non-DSH supple-
mental expenditures (as defined in clause (ii)). 
‘‘(ii) In this paragraph, the term ‘non- 
DSH supplemental expenditure’ means a pay-
ment to a provider under the State plan (or 
under a waiver of the plan) that— 
‘‘(I) is not made under section 1923; 
‘‘(II) is not made with respect to a 
specific item or service for an individual; 
‘‘(III) is in addition to any payments 
made to the provider under the plan (or 
waiver) for any such item or service; and 
‘‘(IV) complies with the limits for ad-
ditional payments to providers under the 
plan (or waiver) imposed pursuant to sec-
tion 1902(a)(30)(A), including the regula-
tions specifying upper payment limits 
under the State plan in part 447 of title 
42, Code of Federal Regulations (or any 
successor regulations).
‘‘(iii) An expenditure described in this 
clause is an expenditure that meets the criteria 
specified in subclauses (I), (II), and (III) of 
clause (ii) and is authorized under section 1115 
for the purposes of funding a delivery system 
reform pool, uncompensated care pool, a des-
ignated state health program, or any other 
similar expenditure (as defined by the Sec-
retary). 
‘‘(B) For each 1903A enrollee category, 
the number of 1903A enrollees for the State in 
fiscal year 2019 in the enrollee category (as de-
termined under subsection (e)(4)). 
‘‘(C) For fiscal year 2016, the State’s non- 
DSH supplemental and pool payment percent-
age is equal to the ratio (expressed as a per-
centage) of— 
‘‘(i) the total amount of non-DSH 
supplemental expenditures (as defined in 
subparagraph (A)(ii)) and payments de-
scribed in subparagraph (A)(iii) for the 
State for fiscal year 2016; to 
‘‘(ii) the amount described in sub-
section (b)(1)(A) for the State for fiscal 
year 2016.
‘‘(D) For each 1903A enrollee category an 
average medical assistance expenditures per 
capita for the State for fiscal year 2019 for the 
enrollee category equal to— 
‘‘(i) the amount calculated under sub-
paragraph (A) for the State, increased by 
the non-DSH supplemental and pool pay-
ment percentage for the State (as cal-
culated under subparagraph (C)); divided 
by 
‘‘(ii) the number calculated under sub-
paragraph (B) for the State for the en-
rollee category. 
‘‘(5) PROVISIONAL FY19 PER CAPITA TARGET 
AMOUNT FOR EACH 1903A ENROLLEE CATEGORY.— 
Subject to subsection (f)(2), the Secretary shall cal-
culate for each State a provisional FY19 per capita 
target amount for each 1903A enrollee category 
equal to the average medical assistance expenditures 
per capita for the State for fiscal year 2019 (as cal-
culated under paragraph (4)(D)) for such enrollee 
category multiplied by the ratio of— 
‘‘(A) the product of—
‘‘(i) the fiscal year 2019 average per 
capita amount for the State, as calculated 
under paragraph (2); and 
‘‘(ii) the number of 1903A enrollees 
for the State in fiscal year 2019, as cal-
culated under paragraph (3)(B); to 
‘‘(B) the amount of the adjusted total 
medical assistance expenditures for the State 
for fiscal year 2019, as calculated under para-
graph (3)(A). 
‘‘(e) 1903A ENROLLEE; 1903A ENROLLEE CAT-
EGORY.—Subject to subsection (g), for purposes of this 
section, the following shall apply: 
‘‘(1) 1903A ENROLLEE.—The term ‘1903A en-
rollee’ means, with respect to a State and a month 
and subject to subsection (i)(1)(B), any Medicaid 
enrollee (as defined in paragraph (3)) for the month, 
other than such an enrollee who for such month is 
in any of the following categories of excluded indi-
viduals: 
‘‘(A) CHIP.—An individual who is pro-
vided, under this title in the manner described 
in section 2101(a)(2), child health assistance 
under title XXI.
‘‘(B) IHS.—An individual who receives 
any medical assistance under this title for serv-
ices for which payment is made under the third 
sentence of section 1905(b). 
‘‘(C) BREAST
AND
CERVICAL
CANCER 
SERVICES
ELIGIBLE
INDIVIDUAL.—An indi-
vidual who is entitled to medical assistance 
under this title only pursuant to section 
1902(a)(10)(A)(ii)(XVIII). 
‘‘(D) PARTIAL-BENEFIT ENROLLEES.—An 
individual who— 
‘‘(i) is an alien who is entitled to med-
ical assistance under this title only pursu-
ant to section 1903(v)(2); 
‘‘(ii) is entitled to medical assistance 
under this title only pursuant to subclause 
(XII) 
or 
(XXI) 
of 
section 
1902(a)(10)(A)(ii) (or pursuant to a waiv-
er that provides only comparable benefits); 
‘‘(iii) is a dual eligible individual (as 
defined in section 1915(h)(2)(B)) and is 
entitled to medical assistance under this 
title (or under a waiver) only for some or 
all of medicare cost-sharing (as defined in 
section 1905(p)(3)); or
‘‘(iv) is entitled to medical assistance 
under this title and for whom the State is 
providing a payment or subsidy to an em-
ployer for coverage of the individual under 
a group health plan pursuant to section 
1906 or section 1906A (or pursuant to a 
waiver that provides only comparable bene-
fits). 
‘‘(2) 1903A ENROLLEE CATEGORY.—The term 
‘1903A enrollee category’ means each of the fol-
lowing: 
‘‘(A) ELDERLY.—A category of 1903A en-
rollees who are 65 years of age or older. 
‘‘(B) BLIND AND DISABLED.—A category 
of 1903A enrollees (not described in the pre-
vious subparagraph) who are eligible for med-
ical assistance under this title on the basis of 
being blind or disabled. 
‘‘(C) CHILDREN.—A category of 1903A 
enrollees (not described in a previous subpara-
graph) who are children under 19 years of age. 
‘‘(D) EXPANSION
ENROLLEES.—A cat-
egory of 1903A enrollees (not described in a 
previous subparagraph) for whom the amounts 
expended for medical assistance are subject to
an increase or change in the Federal medical 
assistance percentage under subsection (y) or 
(z)(2), respectively, of section 1905. 
‘‘(E) OTHER NONELDERLY, NONDISABLED, 
NON-EXPANSION
ADULTS.—A 
category 
of 
1903A enrollees who are not described in any 
previous subparagraph. 
‘‘(3) MEDICAID ENROLLEE.—The term ‘Med-
icaid enrollee’ means, with respect to a State for a 
month, an individual who is eligible for medical as-
sistance for items or services under this title and en-
rolled under the State plan (or a waiver of such 
plan) under this title for the month. 
‘‘(4) DETERMINATION
OF
NUMBER
OF
1903A 
ENROLLEES.—The number of 1903A enrollees for a 
State and fiscal year, and, if applicable, for a 1903A 
enrollee category, is the average monthly number of 
Medicaid enrollees for such State and fiscal year 
(and, if applicable, in such category) that are re-
ported through the CMS–64 report under (and sub-
ject to audit under) subsection (h). 
‘‘(f) SPECIAL PAYMENT RULES.— 
‘‘(1) APPLICATION IN CASE OF RESEARCH AND 
DEMONSTRATION PROJECTS AND OTHER WAIVERS.— 
In the case of a State with a waiver of the State
plan approved under section 1115, section 1915, or 
another provision of this title, this section shall 
apply to medical assistance expenditures and medical 
assistance payments under the waiver, in the same 
manner as if such expenditures and payments had 
been made under a State plan under this title and 
the limitations on expenditures under this section 
shall supersede any other payment limitations or 
provisions (including limitations based on a per cap-
ita limitation) otherwise applicable under such a 
waiver. 
‘‘(2) TREATMENT OF STATES EXPANDING COV-
ERAGE AFTER FISCAL YEAR 2016.—In the case of a 
State that did not provide for medical assistance for 
the 1903A enrollee category described in subsection 
(e)(2)(D) during fiscal year 2016 but which provides 
for such assistance for such category in a subse-
quent year, the provisional FY19 per capita target 
amount for such enrollee category under subsection 
(d)(5) shall be equal to the provisional FY19 per 
capita target amount for the 1903A enrollee cat-
egory described in subsection (e)(2)(E). 
‘‘(3) IN CASE OF STATE FAILURE TO REPORT 
NECESSARY DATA.—If a State for any quarter in a 
fiscal year (beginning with fiscal year 2019) fails to
satisfactorily submit data on expenditures and en-
rollees in accordance with subsection (h)(1), for such 
fiscal year and any succeeding fiscal year for which 
such data are not satisfactorily submitted— 
‘‘(A) the Secretary shall calculate and 
apply subsections (a) through (e) with respect 
to the State as if all 1903A enrollee categories 
for which such expenditure and enrollee data 
were not satisfactorily submitted were a single 
1903A enrollee category; and 
‘‘(B) the growth factor otherwise applied 
under subsection (c)(2)(B) shall be decreased 
by 1 percentage point. 
‘‘(g) RECALCULATION OF CERTAIN AMOUNTS FOR 
DATA ERRORS.—The amounts and percentage calculated 
under paragraphs (1) and (4)(C) of subsection (d) for a 
State for fiscal year 2016, and the amounts of the ad-
justed total medical assistance expenditures calculated 
under subsection (b) and the number of Medicaid enrollees 
and 1903A enrollees determined under subsection (e)(4) 
for a State for fiscal year 2016, fiscal year 2019, and any 
subsequent fiscal year, may be adjusted by the Secretary 
based upon an appeal (filed by the State in such a form, 
manner, and time, and containing such information relat-
ing to data errors that support such appeal, as the Sec-
retary specifies) that the Secretary determines to be valid, 
except that any adjustment by the Secretary under this 
subsection for a State may not result in an increase of 
the target total medical assistance expenditures exceeding 
2 percent. 
‘‘(h) REQUIRED
REPORTING
AND
AUDITING
OF 
CMS–64 DATA; TRANSITIONAL INCREASE IN FEDERAL 
MATCHING PERCENTAGE FOR CERTAIN ADMINISTRATIVE 
EXPENSES.— 
‘‘(1) REPORTING.—In addition to the data re-
quired on form Group VIII on the CMS–64 report 
form as of January 1, 2017, in each CMS-64 report 
required to be submitted (for each quarter beginning 
on or after October 1, 2018), the State shall include 
data on medical assistance expenditures within such 
categories of services and categories of enrollees (in-
cluding each 1903A enrollee category and each cat-
egory of excluded individuals under subsection 
(e)(1)) and the numbers of enrollees within each of 
such enrollee categories, as the Secretary determines 
are necessary (including timely guidance published 
as soon as possible after the date of the enactment 
of this section) in order to implement this section 
and to enable States to comply with the requirement 
of this paragraph on a timely basis.
paragraph (1) unless the State has a plan, ap-
proved under subparagraph (B), for such period 
that specifies— 
‘‘(i) the applicable block grant cat-
egory with respect to which the State will 
apply the option under this subsection for 
such period; 
‘‘(ii) the conditions for eligibility of 
block grant individuals within such appli-
cable block grant category for block grant 
health care assistance under the option, 
which shall be instead of other conditions 
for eligibility under this title, except that 
in the case of a State that has elected the 
applicable block grant category described 
in— 
‘‘(I) subparagraph (A) of para-
graph (6), the plan must provide for 
eligibility for pregnant women and 
children required to be provided med-
ical 
assistance 
under 
subsections 
(a)(10)(A)(i) and (e)(4) of section 
1902; or 
‘‘(II) subparagraph (B) of para-
graph (6), the plan must provide for
eligibility for pregnant women re-
quired to be provided medical assist-
ance under subsection (a)(10)(A)(i); 
and 
‘‘(iii) the types of items and services, 
the amount, duration, and scope of such 
services, the cost-sharing with respect to 
such services, and the method for delivery 
of block grant health care assistance under 
this subsection, which shall be instead of 
the such types, amount, duration, and 
scope, cost-sharing, and methods of deliv-
ery for medical assistance otherwise re-
quired under this title, except that the plan 
must provide for assistance for— 
‘‘(I) hospital care; 
‘‘(II) surgical care and treat-
ment; 
‘‘(III) medical care and treat-
ment; 
‘‘(IV) obstetrical and prenatal 
care and treatment; 
‘‘(V) prescribed drugs, medicines, 
and prosthetic devices;
‘‘(VI) other medical supplies and 
services; and 
‘‘(VII) health care for children 
under 18 years of age. 
‘‘(B) REVIEW AND APPROVAL.—A plan de-
scribed in subparagraph (A) shall be deemed 
approved by the Secretary unless the Secretary 
determines, within 30 days after the date of the 
Secretary’s receipt of the plan, that the plan is 
incomplete or actuarially unsound and, with re-
spect to such plan and its implementation 
under this subsection, the requirements of para-
graphs (1), (10)(B), (17), and (23) of section 
1902(a) shall not apply. 
‘‘(3) AMOUNT OF BLOCK GRANT FUNDS.— 
‘‘(A) FOR
INITIAL
FISCAL
YEAR.—The 
block grant amount under this paragraph for a 
State for the initial fiscal year in the first 10- 
fiscal-year period is equal to the sum of the 
products (for each applicable block grant cat-
egory for such State and period) of— 
‘‘(i) the target per capita medical as-
sistance expenditures for such State for 
such fiscal year (under subsection (c)(2));
‘‘(ii) the number of 1903A enrollees 
for such category and State for fiscal year 
2019, as determined under subsection 
(e)(4); and 
‘‘(iii) the Federal average medical as-
sistance matching percentage (as defined 
in subsection (a)(4)) for the State for fis-
cal year 2019. 
‘‘(B) 
FOR
ANY
SUBSEQUENT
FISCAL 
YEAR.—The block grant amount under this 
paragraph for a State for each succeeding fiscal 
year (in any 10-fiscal-year period) is equal to 
the block grant amount under subparagraph 
(A) (or this subparagraph) for the State for the 
previous fiscal year increased by the annual in-
crease in the consumer price index for all urban 
consumers (all items; U.S. city average) for the 
fiscal year involved. 
‘‘(C) 
AVAILABILITY
OF
ROLLOVER 
FUNDS.—The block grant amount under this 
paragraph for a State for a fiscal year shall re-
main available to the State for expenditures 
under this subsection for the succeeding fiscal 
year but only if an election is in effect under
this subsection for the State in such succeeding 
fiscal year. 
‘‘(4) FEDERAL PAYMENT AND STATE RESPONSI-
BILITY.—The Secretary shall pay to each State with 
an election in effect under this subsection for a fiscal 
year, from its block grant amount under paragraph 
(3) available for such fiscal year, an amount for 
each quarter of such fiscal year equal to the en-
hanced FMAP described in the first sentence of sec-
tion 2105(b) of the total amount expended under the 
State plan under this subsection during such quar-
ter, and the State is responsible for the balance of 
funds to carry out such plan. 
‘‘(5) BLOCK GRANT INDIVIDUAL DEFINED.—In 
this subsection, the term ‘block grant individual’ 
means, with respect to a State for a 10-fiscal-year 
period, an individual who is not disabled (as defined 
for purposes of the State plan) and who is within an 
applicable block grant category for the State and 
such period. 
‘‘(6) APPLICABLE BLOCK GRANT CATEGORY DE-
FINED.—In this subsection, the term ‘applicable 
block grant category’ means with respect to a State 
for a 10-fiscal-year period, either of the following as
under this title for 2020 or a subsequent year dur-
ing the period specified in section 2201, such dollar 
amount specified by the Administrator), but do not 
exceed $350,000 (or, with respect to allocations 
made under this title for 2020 or a subsequent year 
during such period, such dollar amount specified by 
the Administrator), in an amount equal to 75 per-
cent (or, with respect to allocations made under this 
title for 2020 or a subsequent year during such pe-
riod, such percentage specified by the Administrator) 
of the amount of such claims. 
‘‘SEC. 2204. ALLOCATIONS. 
‘‘(a) APPROPRIATION.—For the purpose of providing 
allocations for States (including pursuant to section 
2203(b)) under this title there is appropriated, out of any 
money in the Treasury not otherwise appropriated— 
‘‘(1) for 2018, $15,000,000,000; 
‘‘(2) for 2019, $15,000,000,000; 
‘‘(3) for 2020, $10,000,000,000; 
‘‘(4) for 2021, $10,000,000,000; 
‘‘(5) for 2022, $10,000,000,000; 
‘‘(6) for 2023, $10,000,000,000; 
‘‘(7) for 2024, $10,000,000,000; 
‘‘(8) for 2025, $10,000,000,000; and 
‘‘(9) for 2026, $10,000,000,000.
The amount otherwise appropriated under the previous 
sentence for 2020 shall be increased by $15,000,000,000, 
to be used and available under subsection (d) only for the 
purposes described in paragraphs (6) and (7) of section 
2202(a). The amount otherwise appropriated under this 
subsection shall be increased by $8,000,000,000 for the 
period beginning with 2018 and ending with 2023, to be 
allocated to States with a waiver in effect under section 
2701(b) of the Public Health Service Act with respect to 
the purpose described in paragraph (1)(C) of such section, 
in accordance with an allocation methodology specified by 
the Secretary that takes into account the relative alloca-
tion of other amounts appropriated under this subsection 
among such States, and to be used by (and made available 
under subsection (d), for any year during such period that 
such waiver is in effect, to) such States for the purpose 
of providing assistance to reduce premiums or other out- 
of-pocket costs of individuals who are subject to an in-
crease in the monthly premium rate for health insurance 
coverage as a result of such waiver. 
‘‘(b) ALLOCATIONS.— 
‘‘(1) PAYMENT.— 
‘‘(A) IN GENERAL.—From amounts appro-
priated under subsection (a) for a year, the Ad-
ministrator shall, with respect to a State and
not later than the date specified under subpara-
graph (B) for such year, allocate, subject to 
subsection (e), for such State (including pursu-
ant to section 2203(b)) the amount determined 
for such State and year under paragraph (2). 
‘‘(B) SPECIFIED DATE.—For purposes of 
subparagraph (A), the date specified in this 
subparagraph is— 
‘‘(i) for 2018, the date that is 45 days 
after the date of the enactment of this 
title; and 
‘‘(ii) for 2019 and subsequent years, 
January 1 of the respective year. 
‘‘(2) 
ALLOCATION
AMOUNT
DETERMINA-
TIONS.— 
‘‘(A) FOR 2018 AND 2019.— 
‘‘(i) IN
GENERAL.—For purposes of 
paragraph (1), the amount determined 
under this paragraph for 2018 and 2019 
for a State is an amount equal to the sum 
of— 
‘‘(I) the relative incurred claims 
amount described in clause (ii) for 
such State and year; and
‘‘(II) the relative uninsured and 
issuer participation amount described 
in clause (iv) for such State and year. 
‘‘(ii) RELATIVE
INCURRED
CLAIMS 
AMOUNT.—For purposes of clause (i), the 
relative incurred claims amount described 
in this clause for a State for 2018 and 
2019 is the product of— 
‘‘(I) 85 percent of the amount 
appropriated under subsection (a) for 
the year; and 
‘‘(II) the relative State incurred 
claims proportion described in clause 
(iii) for such State and year. 
‘‘(iii) RELATIVE
STATE
INCURRED 
CLAIMS PROPORTION.—The relative State 
incurred claims proportion described in 
this clause for a State and year is the 
amount equal to the ratio of— 
‘‘(I) the adjusted incurred claims 
by the State, as reported through the 
medical loss ratio annual reporting 
under section 2718 of the Public 
Health Service Act for the third pre-
vious year; to
‘‘(II) the sum of such adjusted 
incurred claims for all States, as so 
reported, for such third previous year. 
‘‘(iv) 
RELATIVE
UNINSURED
AND 
ISSUER
PARTICIPATION
AMOUNT.—For 
purposes of clause (i), the relative unin-
sured and issuer participation amount de-
scribed in this clause for a State for 2018 
and 2019 is the product of— 
‘‘(I) 15 percent of the amount 
appropriated under subsection (a) for 
the year; and 
‘‘(II) the relative State uninsured 
and issuer participation proportion de-
scribed in clause (v) for such State 
and year. 
‘‘(v) RELATIVE
STATE
UNINSURED 
AND
ISSUER
PARTICIPATION
PROPOR-
TION.—The relative State uninsured and 
issuer participation proportion described in 
this clause for a State and year is— 
‘‘(I) in the case of a State not 
described in clause (vi) for such year, 
0; and
determined for such State by sub-
stituting ‘2015’ for each reference in 
such subclause to ‘the third preceding 
year’ and by substituting ‘all such 
States’ for the reference in item (bb) 
of such subclause to ‘all States de-
scribed in clause (vi)’ is greater than 
the ratio described in such subclause 
that would be determined for such 
State by substituting ‘2013’ for each 
reference in such subclause to ‘the 
third preceding year’ and by sub-
stituting ‘all such States’ for the ref-
erence in item (bb) of such subclause 
to ‘all States described in clause (vi)’. 
‘‘(II) The State has fewer than 
three health insurance issuers offering 
qualified health plans through the Ex-
change for 2017. 
‘‘(B) FOR 2020 THROUGH 2026.—For pur-
poses of paragraph (1), the amount determined 
under this paragraph for a year (beginning with 
2020) during the period described in section 
2201 for a State is an amount determined in
accordance with an allocation methodology spec-
ified by the Administrator which— 
‘‘(i) takes into consideration the ad-
justed incurred claims of such State, the 
number of residents of such State who for 
the previous year were not enrolled in a 
health plan or otherwise did not have 
health 
insurance 
coverage 
(including 
through a Federal or State health pro-
gram) and whose income is below 100 per-
cent of the poverty line applicable to a 
family of the size involved, and the number 
of health insurance issuers participating in 
the insurance market in such State for 
such year; 
‘‘(ii) is established after consultation 
with health care consumers, health insur-
ance issuers, State insurance commis-
sioners, and other stakeholders and after 
taking into consideration additional cost 
and risk factors that may inhibit health 
care consumer and health insurance issuer 
participation; and 
‘‘(iii) reflects the goals of improving 
the health insurance risk pool, promoting a
more competitive health insurance market, 
and increasing choice for health care con-
sumers. 
‘‘(c) ANNUAL DISTRIBUTION OF PREVIOUS YEAR’S 
REMAINING FUNDS.— In carrying out subsection (b), the 
Administrator shall, with respect to a year (beginning with 
2020 and ending with 2027), not later than March 31 of 
such year— 
‘‘(1) determine the amount of funds, if any, 
from the amounts appropriated under subsection (a) 
for the previous year but not allocated for such pre-
vious year; and 
‘‘(2) if the Administrator determines that any 
funds were not so allocated for such previous year, 
allocate such remaining funds, in accordance with 
the allocation methodology specified pursuant to 
subsection (b)(2)(B)— 
‘‘(A) to States that have submitted an ap-
plication approved under section 2203(a) for 
such previous year for any purpose for which 
such an application was approved; and 
‘‘(B) for States for which allocations were 
made pursuant to section 2203(b) for such pre-
vious year, to be used by the Administrator for 
such States, to carry out the Federal Invisible
Risk Sharing Program in such States under 
section 2205; 
with, respect to a year before 2027, any remaining 
funds being made available for allocations to States 
for the subsequent year. 
‘‘(d) AVAILABILITY.—Amounts appropriated under 
subsection (a) for a year and allocated to States in accord-
ance with this section shall remain available for expendi-
ture through December 31, 2027. 
‘‘(e) CONDITIONS FOR AND LIMITATIONS ON RE-
CEIPT OF FUNDS.—The Secretary may not make an allo-
cation under this title for a State, with respect to a pur-
pose described in section 2202— 
‘‘(1) in the case of an allocation that would be 
made to a State pursuant to section 2203(a), if the 
State does not agree that the State will make avail-
able non-Federal contributions towards such purpose 
in an amount equal to— 
‘‘(A) for 2020, 7 percent of the amount al-
located under this subsection to such State for 
such year and purpose; 
‘‘(B) for 2021, 14 percent of the amount 
allocated under this subsection to such State 
for such year and purpose;
‘‘(C) for 2022, 21 percent of the amount 
allocated under this subsection to such State 
for such year and purpose; 
‘‘(D) for 2023, 28 percent of the amount 
allocated under this subsection to such State 
for such year and purpose; 
‘‘(E) for 2024, 35 percent of the amount 
allocated under this subsection to such State 
for such year and purpose; 
‘‘(F) for 2025, 42 percent of the amount 
allocated under this subsection to such State 
for such year and purpose; and 
‘‘(G) for 2026, 50 percent of the amount 
allocated under this subsection to such State 
for such year and purpose; 
‘‘(2) in the case of an allocation that would be 
made for a State pursuant to section 2203(b), if the 
State does not agree that the State will make avail-
able non-Federal contributions towards such purpose 
in an amount equal to— 
‘‘(A) for 2020, 10 percent of the amount 
allocated under this subsection to such State 
for such year and purpose;
credited in accordance with paragraphs (2) and 
(3) of such section); and 
‘‘(C) in the case of an individual who had 
been enrolled under dependent coverage under a 
group health plan or health insurance coverage 
by reason of section 2714 and such dependent 
coverage of such individual ceased because of 
the age of such individual, is not enrolling dur-
ing the first open enrollment period following 
the date on which such coverage so ceased. 
‘‘(2) LOOK-BACK PERIOD.—The term ‘look-back 
period’ means, with respect to an enforcement period 
applicable to an enrollment of an individual for a 
plan year beginning with plan year 2019 (or, in the 
case of an enrollment of an individual during a spe-
cial enrollment period, beginning with plan year 
2018) in health insurance coverage described in sub-
section (a)(1), the 12-month period ending on the 
date the individual enrolls in such coverage for such 
plan year. 
‘‘(3) ENFORCEMENT
PERIOD.—The term ‘en-
forcement period’ means— 
‘‘(A) with respect to enrollments during a 
special enrollment period for plan year 2018, 
the period beginning with the first month that
is during such plan year and that begins subse-
quent to such date of enrollment, and ending 
with the last month of such plan year; and 
‘‘(B) with respect to enrollments for plan 
year 2019 or a subsequent plan year, the 12- 
month period beginning on the first day of the 
respective plan year.’’. 
SEC. 134. INCREASING COVERAGE OPTIONS. 
Section 1302 of the Patient Protection and Afford-
able Care Act (42 U.S.C. 18022) is amended— 
(1) in subsection (a)(3), by inserting ‘‘and with 
respect to a plan year before plan year 2020’’ after 
‘‘subsection (e)’’; and 
(2) in subsection (d), by adding at the end the 
following: 
‘‘(5) SUNSET.—The provisions of this sub-
section shall not apply after December 31, 2019, 
and after such date any reference to this subsection 
or level of coverage or plan described in this sub-
section and any requirement under law applying 
such a level of coverage or plan shall have no force 
or effect (and such a requirement shall be applied as 
if this section had been repealed).’’.
SEC. 135. CHANGE IN PERMISSIBLE AGE VARIATION IN 
HEALTH INSURANCE PREMIUM RATES. 
Section 2701(a)(1)(A)(iii) of the Public Health Serv-
ice Act (42 U.S.C. 300gg(a)(1)(A)(iii)), as inserted by sec-
tion 1201(4) of the Patient Protection and Affordable 
Care Act, is amended by inserting after ‘‘(consistent with 
section 2707(c))’’ the following: ‘‘or, for plan years begin-
ning on or after January 1, 2018, as the Secretary may 
implement through interim final regulation, 5 to 1 for 
adults (consistent with section 2707(c)) or such other 
ratio for adults (consistent with section 2707(c)) as the 
State involved may provide (or, in the case of a State with 
a waiver under subsection (b) in effect for such a plan 
year, the ratio applied for such plan year in accordance 
with such waiver)’’. 
SEC. 136. PERMITTING STATES TO WAIVE CERTAIN ACA RE-
QUIREMENTS TO ENCOURAGE FAIR HEALTH 
INSURANCE PREMIUMS. 
(a) IN GENERAL.—Section 2701 of the Public Health 
Service Act (42 U.S.C. 300gg) is amended by adding at 
the end the following new subsection: 
‘‘(b) PERMISSIBLE STATE WAIVER TO ENCOURAGE 
FAIR HEALTH INSURANCE PREMIUMS.— 
‘‘(1) IN GENERAL.—A State may submit an ap-
plication to the Secretary for one or more of the fol-
lowing purposes:
‘‘(A) In the case of plan years beginning 
on or after January 1, 2018, to apply, subject 
to 
paragraph 
(5), 
under 
subsection 
(a)(1)(A)(iii), instead of the ratio specified in 
such subsection, a higher ratio specified by the 
State (consistent with section 2707(c)). 
‘‘(B) In the case of plan years beginning 
on or after January 1, 2020, for health insur-
ance coverage offered in the individual or small 
group market in such State, to apply, subject to 
paragraph (5), instead of the essential health 
benefits specified under subsection (b) of sec-
tion 1302 of the Patient Protection and Afford-
able Care Act, essential health benefits as speci-
fied by the State. 
‘‘(C) In the case of a State that has in 
place a program that carries out the purpose 
described in paragraph (1) or (2) of section 
2202(a) of the Social Security Act or partici-
pates in the program established under section 
2205 of such Act, for health insurance offered 
in the individual market in such State, with re-
spect to an individual who is an applicable pol-
icyholder of such coverage with respect to an 
enforcement period (as defined in section
2710A(b)) applicable to enrollments for a plan 
year beginning with plan year 2019 (or, in the 
case of enrollments during a special enrollment 
period, beginning with plan year 2018), to— 
‘‘(i) subject to paragraph (5), not 
apply any increase to the monthly premium 
rate that would otherwise apply under sec-
tion 2710A to such individual for such cov-
erage; and 
‘‘(ii) instead, subject to paragraph 
(5)— 
‘‘(I) apply subsection (a)(1) as if 
health status were included as a fac-
tor described in subparagraph (A) of 
such subsection; and 
‘‘(II) not apply section 2705(b). 
‘‘(2) DEFAULT APPROVAL.—An application sub-
mitted under paragraph (1) is approved unless the 
Secretary notifies the State submitting the applica-
tion, not later than 60 days after the date of the 
submission of such application, that the application 
has been denied for not being in compliance with 
any requirement of paragraph (3) and of the reason 
for such denial.