103 
(1) IN GENERAL.—Each State health security 
program shall establish and submit to the Board for 
each year a proposed and a final State health secu-
rity budget, which specifies the following: 
(A) The total expenditures (including ex-
penditures for administrative costs) to be made 
under the program in the State for covered 
health care services under this Act, consistent 
with subsection (b), broken down as follows: 
(i) By the 4 components (described in 
section 601(a)(2)), consistent with sub-
section (b). 
(ii) Within the operating component— 
(I) expenditures for operating 
costs of hospitals and other facility- 
based services in the State; 
(II) expenditures for payment to 
comprehensive health service organiza-
tions; 
(III) expenditures for payment of 
services provided by health care prac-
titioners; and 
(IV) expenditures for other cov-
ered items and services. 
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104 
Amounts included in the operating compo-
nent include amounts that may be used by 
providers for capital expenditures. 
(B) The total revenues required to meet 
the State health security expenditures. 
(2) PROPOSED BUDGET DEADLINE.—The pro-
posed budget for a year shall be submitted under 
paragraph (1) not later than June 1 before the year. 
(3) FINAL BUDGET.—The final budget for a 
year shall— 
(A) be established and submitted under 
paragraph (1) not later than October 1 before 
the year, and 
(B) take into account the amounts estab-
lished under the national health security budget 
under section 601 for the year. 
(4) 
ADJUSTMENT
IN
ALLOCATIONS
PER-
MITTED.— 
(A) IN
GENERAL.—Subject to subpara-
graphs (B) and (C), in the case of a final budg-
et, a State may change the allocation of 
amounts among components. 
(B) NOTICE.—No such change may be 
made unless the State has provided prior notice 
of the change to the Board. 
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105 
(C) DENIAL.—Such a change may not be 
made if the Board, within such time period as 
the Board specifies, disapproves such change. 
(b) EXPENDITURE LIMITS.— 
(1) IN GENERAL.—The total expenditures speci-
fied in each State health security budget under sub-
section (a)(1) shall take into account Federal con-
tributions made under section 604. 
(2) LIMIT ON CLAIMS PROCESSING AND BILL-
ING
EXPENDITURES.—Each State health security 
budget shall provide that State administrative ex-
penditures, including expenditures for claims proc-
essing and billing, shall not exceed 3 percent of the 
total expenditures under the State health security 
program, unless the Board determines, on a case-by- 
case basis, that additional administrative expendi-
tures would improve health care quality and cost ef-
fectiveness. 
(3) WORKER ASSISTANCE.—A State health se-
curity program may provide that, for budgets for 
years before 2013, up to 1 percent of the budget 
may be used for purposes of programs providing as-
sistance to workers who are currently performing 
functions in the administration of the health insur-
ance system and who may experience economic dis-
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