I 
108TH CONGRESS 
1ST SESSION H. R. 2979
To amend the Social Security Act to provide grants and flexibility through 
demonstration projects for States to provide universal, comprehensive, 
cost-effective systems of health care coverage, with simplified administra-
tion. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 25, 2003
Mr. TIERNEY (for himself, Mr. SANDERS, Ms. MILLENDER-MCDONALD, Ms. 
JACKSON-LEE of Texas, Mr. KILDEE, Mr. KUCINICH, Mr. OWENS, Mr. 
NADLER, Ms. NORTON, Mr. CONYERS, Mr. HINCHEY, Mr. GEORGE MIL-
LER of California, Ms. SCHAKOWSKY, Mr. MCDERMOTT, Mr. STARK, Mr. 
OLVER, Mr. BRADY of Pennsylvania, Mr. EVANS, Ms. WATERS, Ms. 
BALDWIN, Mr. UDALL of New Mexico, Mr. MARKEY, Ms. LEE, Mrs. 
CHRISTENSEN, Mr. CAPUANO, Mr. MCGOVERN, Mr. KENNEDY of Rhode 
Island, Mrs. MALONEY, Mr. DAVIS of Illinois, Ms. SOLIS, Mr. WEINER, 
Mr. LANTOS, Mr. PAYNE, Ms. CARSON of Indiana, Mr. FILNER, Mr. 
MEEHAN, Mr. LYNCH, Mr. THOMPSON of Mississippi, Mr. HASTINGS of 
Florida, Mr. DEFAZIO, Mr. GUTIERREZ, Mr. LEWIS of Georgia, Mr. 
DELAHUNT, Mr. FATTAH, and Mrs. JONES of Ohio) introduced the fol-
lowing bill; which was referred to the Committee on Energy and Com-
merce 
A BILL 
To amend the Social Security Act to provide grants and 
flexibility through demonstration projects for States to 
provide universal, comprehensive, cost-effective systems 
of health care coverage, with simplified administration.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘States’ Right To Innovate in Health Care Act of 2003’’. 
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows:
Sec. 1. Short title; table of contents. 
Sec. 2. Findings and purposes. 
Sec. 3. Amendment to Social Security Act. 
‘‘TITLE XXII—STATE COMPREHENSIVE HEALTH CARE AND COST 
CONTAINMENT DEMONSTRATION PROJECTS 
‘‘Sec. 2201. Planning grants. 
‘‘Sec. 2202. Demonstration grants. 
‘‘Sec. 2203. State plan requirements. 
‘‘Sec. 2204. Interstate arrangements. 
‘‘Sec. 2205. Definitions.’’.
SEC. 2. FINDINGS AND PURPOSES. 
(a) FINDINGS.—Congress finds the following: 
(1) In 1998, annual health care expenditures in 
the United States totaled $1.15 trillion, or $4,094 
per person. 
(2) In 1998, health care expenditures rep-
resented 13.5 percent of the gross domestic product 
(GDP) in the United States and grew at the rate of 
5.6 percent while the gross domestic product grew 
only at the rate of 4.9 percent. 
(3) Businesses, and consumers, would save ap-
proximately $562.8 billion over 7 years if health care 
expenditures were increasing at the same rate as 
GDP growth.
(4) Because many individuals do not have 
health insurance coverage, they may incur health 
care costs which they do not fully reimburse, result-
ing in cost-shifting to others. 
(5) As a consequence of the piecemeal health 
care system in the United States, administrative 
overhead costs approximately $1,000 per person an-
nually while other Western industrialized nations 
with universal health care systems spend approxi-
mately $200 per person annually for administrative 
overhead. 
(b) PURPOSE.—It is the purpose of this Act to en-
courage States—
(1) to develop plans for universal, comprehen-
sive, cost-effective systems of health care with sim-
plified administration to individuals residing in such 
States; and 
(2) to implement such plans by offering transi-
tional grants and by removing Federal statutory and 
administrative barriers that may inhibit or discour-
age efforts by States to provide such health care 
while maintaining Federal payments for health care 
under Federal health care programs.
‘‘(d) STATE PLAN REQUIRED.—The Secretary may 
not approve a demonstration grant under this section un-
less the State has a State plan to carry out the grant con-
sistent with the requirements of section 2203. 
‘‘(e) FUNDING.—
‘‘(1) TRANSITIONAL
GRANT
AMOUNT.—The 
amount awarded under this section to a State with 
a demonstration grant approved under this section 
may 
not 
exceed 
an 
aggregate 
amount 
of 
$10,000,000 plus $3 multiplied by the number of el-
igible State residents of the State, to assist the 
State in the transition of the health care delivery 
and financing infrastructure. Such amount shall be 
made available to a State during the period of tran-
sition, as provided in the State plan. The number of 
eligible State residents of a State shall be deter-
mined based on the best available Census Bureau 
data as of the July 1 before the date the grant 
under this section is approved. 
‘‘(2) 
MAINTENANCE
OF
FEDERAL
FUNDS 
UNDER WAIVERS.—Pursuant to the waivers under 
subsection (f), the Federal Government shall pay to 
a State amounts for health care under Federal 
health care programs that would otherwise have 
been payable by the Federal Government but for the
State’s universal, comprehensive health care system 
under this section. 
‘‘(3) GENERAL
3 PERCENTAGE
POINTS
IN-
CREASE IN FMAP FOR CALENDAR QUARTERS OCCUR-
RING DURING THE PERIOD OF THE DEMONSTRATION 
GRANT.—
‘‘(A) IN GENERAL.—Notwithstanding any 
other provision of law, for each State for which 
a demonstration grant is approved under this 
section, the FMAP of the State shall be in-
creased by 3 percentage points for each cal-
endar quarter occurring during the period re-
ferred to in subsection (c). 
‘‘(B) FMAP.—In this paragraph, the term 
‘FMAP’ means the Federal medical assistance 
percentage, as defined in section 1905(b) of the 
Social Security Act (42 U.S.C. 1396d(b)). 
‘‘(f) WAIVER OF ERISA PREEMPTION AND WAIVERS 
TO POOL FUNDS.—As part of a demonstration grant 
under this section and subject to the benefit maintenance 
requirements applicable under section 2203(b), a State 
may request (and the Secretary may grant) the following 
waivers of requirements and provisions to the extent nec-
essary to carry out the State plan under section 2203:
‘‘(1) ERISA.—Waiving application of section 
514 of the Employee Retirement Income Security 
Act of 1974. 
‘‘(2) MEDICARE.—Waiving provisions necessary 
to permit the State—
‘‘(A) to use funds otherwise paid under 
title XVIII for beneficiaries residing in the 
State; and 
‘‘(B) to permit the State to enter into an 
arrangement with the Secretary under which el-
igible State residents who are not otherwise en-
rolled for benefits under parts A and B of such 
title are enrolled for such benefits under such 
title and the State provides for such actuarially 
appropriate reimbursement to the Secretary 
with respect to coverage of such benefits for 
such residents as is necessary to assure that the 
Trust Funds under such title are not adversely 
affected by virtue of such waiver, such reim-
bursement subject to—
‘‘(i) an independent audit, to be re-
viewed by the Comptroller General of the 
United States, assuring that such reim-
bursement does not adversely affect in any
way the Trust Funds for medicare eligible 
beneficiaries, and 
‘‘(ii) in the case that the audit deter-
mines that additional reimbursement to the 
Secretary is required, such additional reim-
bursement, with appropriate adjustments 
for interest attributable to the late reim-
bursement. 
‘‘(3) MEDICAID.—Waiving provisions necessary 
to permit the State to use funds otherwise paid to 
the State under title XIX. 
‘‘(4) SCHIP.—Waiving provisions necessary to 
permit the State to use funds otherwise paid to the 
State under title XXI. 
‘‘(5) FEHBP.—Waiving provisions necessary to 
permit the State to use funds otherwise paid under 
chapter 89 of title 5, United States Code, or allow-
ing the Office of Personnel Management to purchase 
health care coverage for Federal employees and re-
tirees in the State under the State plan. 
‘‘(6) USE OF OTHER FUNDS.—Waiving provi-
sions necessary to permit the State to use funds oth-
erwise provided under other Federal programs for 
the provision of health care coverage or services, 
identified by the State.
‘‘(7) OTHER
LAWS.—Waiving of other provi-
sions of Federal law identified by the State under 
section 2203(e)(3) only if the Secretary determines 
such a waiver to be appropriate after consultation 
with the head of the Federal agency or department 
concerned. 
The Secretary may grant a waiver under this subsection 
only if the State provides the Secretary with satisfactory 
assurances that necessary safeguards have been taken to 
protect the health and welfare of individuals provided serv-
ices under the waiver and that financial accountability is 
maintained for any funds expended under the waiver. The 
Secretary may grant a waiver under paragraph (1) only 
with the concurrence of the Secretary of Labor. 
‘‘(g) REENROLLMENT
OF ELIGIBLE STATE RESI-
DENTS WHO MOVE FROM A PARTICIPATING STATE.—In 
the case of an eligible State resident who is covered under 
a State plan under section 2203, who (but for such cov-
erage) is eligible to be enrolled in a program described in 
subsection (f) (including the medicare and medicaid pro-
grams), and who is not enrolled in such a program because 
of such coverage, if the resident leaves the State to reside 
in a State that does not have such a State plan in effect, 
the resident shall be permitted, notwithstanding any other 
provision of law, to enroll immediately in such a program
if the resident is still otherwise eligible to be so enrolled. 
In the case of such enrollment in the medicare program, 
the resident shall be treated for purposes of section 
1882(s)(2) (relating to availability of medigap policies 
without underwriting) as if the resident had turned 65 
years of age on the date the resident enrolls in the medi-
care program. 
‘‘(h) DUTIES OF THE SECRETARY.—
‘‘(1) GUIDANCE AND INFORMATION.—The Sec-
retary shall—
‘‘(A) provide guidance to State health care 
authorities regarding applications for grants 
under this title and exchange information with, 
and otherwise assist, such authorities upon the 
request of the authorities; 
‘‘(B) set application procedures; 
‘‘(C) review and approve applications for 
demonstration grants under this section, includ-
ing providing for appropriate waivers described 
in subsection (f); 
‘‘(D) provide appropriate levels of funding 
for such approved applications consistent with 
such section;
‘‘(E) conduct such evaluation, monitoring, 
compliance, and other review functions as may 
be appropriate; 
‘‘(F) develop guidelines, standards, and 
formats for States to follow in evaluating, re-
porting, and collecting data in order to enable 
the Commission to monitor State plan adminis-
tration and compliance, and to evaluate and 
compare the effectiveness of State plans; and 
‘‘(G) implement any other requirements or 
activities necessary and appropriate under this 
title. 
‘‘(2) ANNUAL
REPORT.—The Secretary shall 
submit to the President and the Congress an annual 
report. Such report shall be submitted not later than 
March 30 of each year and shall include information 
concerning States that receive grants under this title 
and the effectiveness of any health care programs 
assisted by such grants during the previous year. 
‘‘(3) APPROVAL
PROCESS.—The provisions of 
section 2106(c) shall apply to State plans and the 
Secretary under this title in the same manner as 
they apply to State plans and the Secretary under 
such section.
‘‘SEC. 2203. STATE PLAN REQUIREMENTS. 
‘‘(a) COVERAGE.—
‘‘(1) IN GENERAL.—A State plan shall provide 
a process and a timeline for achieving coverage of all 
eligible State residents statewide, without regard to 
employment status, income, health status or pre-
existing condition, or location of residency within the 
State. 
‘‘(2) OUTREACH MECHANISMS.—A State plan 
shall describe the outreach mechanisms to be used to 
assure coverage of all eligible individuals, including 
measures to assure coverage of individuals in hard-
to-reach populations and to assure benefits are pro-
vided to eligible individuals located in underserved 
areas. 
‘‘(b) BENEFITS.—
‘‘(1) BASIC BENEFITS.—A State plan shall pro-
vide for health benefits that—
‘‘(A) are at least actuarially equivalent to 
the standard Blue Cross/Blue Shield preferred 
provider option service benefit plan, described 
in and offered under section 8903(1) of title 5, 
United States Code; and 
‘‘(B) include benefits for at least the fol-
lowing items and services:
‘‘(i) Inpatient and outpatient hospital 
services, 
including 
emergency 
services 
available 24 hours a day. 
‘‘(ii) Long term, acute, and chronic 
care services, including skilled nursing fa-
cility services, intermediate care facility 
services home health services, home and 
community-based long-term care services, 
hospice care, and services in intermediate 
care facilities for individuals diagnosed 
with mental retardation. 
‘‘(iii) Professional services of health 
care practitioners authorized to provide 
health care services under State law. 
‘‘(iv) 
Community-based 
primary 
health care services, including rural health 
clinic 
services 
and 
Federally-qualified 
health center services. 
‘‘(v) Laboratory, x-ray services, and 
diagnostic tests. 
‘‘(vi) Preventive care, including pre-
natal, well-baby, and well-child care, appro-
priate immunizations, pap smears, screen-
ing 
mammography, 
colorectal 
cancer
screening, physical examinations, and fam-
ily planning. 
‘‘(vii) 
Prescription 
drugs 
and 
biologicals, including insulin and medical 
foods. 
‘‘(viii) Mental health services. 
‘‘(ix) Substance abuse treatment serv-
ices. 
‘‘(x) Vision services, including routine 
eye examinations, eyeglasses, and contact 
lenses. 
‘‘(xi) Hearing services, including hear-
ing aids. 
‘‘(xii) Dental services, including rou-
tine check ups. 
‘‘(xiii) Durable medical equipment, in-
cluding home dialysis supplies and equip-
ment. 
‘‘(xiv) Emergency ambulance services.
‘‘(xv) Prosthetics. 
‘‘(xvi) Outpatient therapy, including 
physical therapy, occupational therapy, and 
speech language pathology services and re-
lated services.
‘‘(2) ASSURANCE THAT BENEFITS ARE NOT RE-
DUCED
FOR
INDIVIDUALS
COVERED
UNDER
FED-
ERAL PROGRAMS.—Insofar as the State under the 
plan incorporates funding provided by Federal pro-
grams described in section 2202(f), the State plan 
may not provide for a reduction in benefits (includ-
ing coverage, access, availability, duration, and bene-
ficiary rights, and, if applicable, vaccine benefits 
under section 1928) otherwise provided for under 
such programs or an increase in cost-sharing and 
premiums otherwise provided for under such pro-
grams. 
‘‘(3) CONTINUATION
OF
BENEFITS
FOR
CER-
TAIN ALIENS.—Nothing in this title shall be con-
strued as affecting the access of aliens described in 
section 2204(1)(D) to health care services provided 
under law for such aliens as of the date of the enact-
ment of this title. 
‘‘(c) QUALITY ASSURANCE.—
‘‘(1) IN GENERAL.—A State plan shall provide, 
and describe, mechanisms to be used to assure, mon-
itor, and maintain the quality of items and services 
furnished under the plan. 
‘‘(2) HEALTH OUTCOMES.—A State plan shall 
describe the plan’s projected effect on health out-
comes in the State, including estimates of health 
benefits, decreased morbidity and mortality, and im-
proved productivity resulting from reduction in the 
number of individuals without health benefits. 
‘‘(d) PROGRAMS
FOR
MEDICAL
EDUCATION.—A 
State plan shall describe health professions training and 
graduate medical education activities applicable under the 
plan, and shall provide, under the State plan, for payment 
from Federal, State, and local governments for such train-
ing and education activities in the amounts that would 
otherwise be payable by such governments but for the 
State’s universal, comprehensive health care system under 
the State plan. 
‘‘(e) FINANCING.—
‘‘(1) BUDGET.—A State plan shall incorporate 
a budget which contains—
‘‘(A) detailed projections of health care ex-
penditures presently and under the proposed 
system, including an identification and calcula-
tion of the amount of funding to be provided by 
the Federal, State, and local governments under 
the plan and an assurance that the amount of 
expenditures made by the State and local gov-
ernments will not be reduced as a result of the 
implementation of the plan; and
‘‘(B) a description (and an estimate of 
costs) of transitional activities to be undertaken 
in implementing the proposed system. 
‘‘(2) COST CONTAINMENT.—A State plan shall 
describe the means to be used to contain costs under 
the plan, including when and how the plan will in-
crease efficiencies. 
‘‘(3) FEDERAL EXPENDITURE LIMIT.—A State 
plan shall contain assurances that aggregate Federal 
expenditures on health care (including Federal ex-
penditures under titles 5, 10, and 38 of the United 
States Code, and under this Act) under the plan will 
not exceed aggregate Federal expenditures that 
would have been incurred in the absence of such 
plan. 
‘‘(f) IMPLEMENTATION.—
‘‘(1) IN GENERAL.—A State plan shall describe 
the method (including a timetable and period of 
transition) for implementing the plan. 
‘‘(2) COORDINATION.—A State plan shall iden-
tify all Federal, State, and local programs that pro-
vide health care services in the State and describe 
how such programs would be incorporated in, or co-
ordinated with, the health coverage system under the 
plan.
‘‘(3) FEDERAL WAIVERS REQUIRED.—A State 
plan shall identify any waivers of Federal law re-
quired to implement the plan, including the use of 
any pooled Federal funds and other waivers de-
scribed in section 2202(f). 
‘‘(4) APPROVAL
OF
STATE
LEGISLATURE.—A 
State plan shall provide that State approvals and 
commitments (including approval of the State legis-
lature) necessary for the implementation of the plan 
will be obtained by not later than 1 year after the 
date of the Secretary’s approval of the plan. Any ap-
proval of a grant is conditioned upon the timely 
completion of such approvals and commitments. 
‘‘(g) EVALUATION.—A State plan shall provide for a 
process for its evaluation, and shall comply with any eval-
uation reporting or data collection requirements imposed 
by the Secretary. 
‘‘(h) CONSTRUCTION.—Nothing in this title shall be 
construed as preempting State laws that provide greater 
protections or benefits than the protections or benefits re-
quired under this title. 
‘‘SEC. 2204. INTERSTATE ARRANGEMENTS. 
‘‘(a) IN GENERAL.—One or more contiguous States 
in a geographic region may file a joint application for 
planning and demonstration grants under this title.
‘‘(b) CONGRESSIONAL APPROVAL.—Congress hereby 
authorizes and approves States entering into Interstate 
Compacts in order to conduct joint health care programs 
under such a grant. 
‘‘(c) REFERENCES TO STATE.—In the case of a joint 
application described in subsection (a), any reference in 
this title to a State is deemed to refer to all of the States, 
and the approval of a grant with respect to such a joint 
application shall be counted as 1 State for purposes of 
applying sections 2201(c) and 2202(b). 
‘‘SEC. 2205. DEFINITIONS. 
‘‘As used in this title: 
‘‘(1) ELIGIBLE
STATE
RESIDENT.—The term 
‘eligible State resident’ means any resident of the 
United States who is a citizen or national of the 
United States, or lawful resident alien, and who re-
sides in any particular State. Such term may in-
clude, at the option of a State, the following:
‘‘(A) State employees and dependents of 
such employees. 
‘‘(B) Employees, and dependents of such 
employees, working in a work site of a business 
located in the State. 
‘‘(C) One or more classes of non-
immigrants (as defined in section 101(a)(15) of
the Immigration and Nationality Act) specified 
in the State plan. 
‘‘(D) Aliens unlawfully present in the 
United States. 
‘‘(2) LAWFUL
RESIDENT
ALIEN.—The term 
‘lawful resident alien’ means an alien lawfully admit-
ted for permanent residence and any other alien law-
fully residing permanently in the United States 
under color of law, including an alien granted asy-
lum or with lawful temporary resident status under 
section 210, 210A, or 245A of the Immigration and 
Nationality Act. 
‘‘(3) SECRETARY.—The term ‘Secretary’ means 
the Secretary of Health and Human Services. 
‘‘(4) STATE.—Subject to section 2204(c), the 
term ‘State’ means a State, the District of Colum-
bia, the Commonwealth of Puerto Rico, the United 
States Virgin Islands, Guam, American Samoa, and 
the Commonwealth of the Northern Mariana Is-
lands. 
‘‘(5) STATE
PLAN.—The term ‘State plan’ 
means a comprehensive health care plan of a State 
participating in a State Care demonstration project
under this title that meets the requirements of sec-
tion 2203.’’.
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