prehensive health insurance plans certified under title II
for a fiscal year in an amount determined under section
102.
SEC. 102. AMOUNT OF STATE PAYMENT.
The amount of payment made to a State for a fiscal
year under section 101 shall be equal to the State’s alloca-
tion of the total amount available for payments under this
title for the fiscal year under section 103, as determined
in accordance with the following formula:
(1) 50 percent of the total amount available
shall be allocated among the States on the basis of
the ratio of the population of each State to the pop-
ulation of all States.
(2) 50 percent of the total amount available
shall be allocated among the States in amounts de-
termined in accordance with the representative reve-
nue system established by the Advisory Commission
on Intergovernmental Relations.
SEC. 103. TOTAL AMOUNT AVAILABLE FOR PAYMENTS.
The total amount available for payments to States
for a fiscal year under this title is equal to the following:
(1) For fiscal year 1998, $1,000,000,000.
(2) For fiscal year 1999, $2,000,000,000.
(3) For fiscal year 2000, $28,000,000,000.
(4) For fiscal year 2001, $29,000,000,000.
(5) For fiscal year 2002, $30,000,000,000.
(6) For fiscal year 2003, $31,000,000,000.
TITLE II—REQUIREMENTS FOR
COMPREHENSIVE 
HEALTH
PLANS
SEC. 201. IMPLEMENTATION OF CERTIFIED HEALTH INSUR-
ANCE PLANS BY STATES.
(a) IN GENERAL.—Not later than July 1, 1999, each
State shall submit to the Secretary a comprehensive health
insurance plan designed to be administered by the State
and containing the provisions required under this title,
and shall have such plan in place and operating not later
than January 1, 2000.
(b) CERTIFICATION OF PLANS BY SECRETARY.—The
Secretary shall certify for a fiscal year those State plans
developed and implemented under this title which meet the
applicable requirements of this title for the fiscal year.
SEC. 202. REQUIRED PROVISIONS OF HEALTH INSURANCE
PLAN.
Each State shall have maximum flexibility in develop-
ing and implementing its comprehensive health insurance
plan under this title, except that the plan shall include
at least the following provisions:
(1) COVERAGE.—Health insurance coverage
meeting the requirements of this title for all individ-
uals in the State without regard to employment sta-
tus, income, or pre-existing condition or other health
status.
(2) 
PORTABILITY
AND
GUARANTEED
RE-
NEWAL.—A prohibition against the denial, cancella-
tion, or refusal to renew the coverage of an individ-
ual or employer except—
(A) on the basis of nonpayment of pre-
miums,
(B) on the basis of fraud or misrepresenta-
tion, or
(C) because the plan is ceasing to provide
any coverage in a geographic area.
(3) BENEFITS.—
(A) COMPARABLE
TO
FEHBP.—Coverage
comparable to the coverage available to employ-
ees of the Federal Government under the Fed-
eral 
Employees 
Health 
Benefits 
Program
(FEHBP) (as determined by the Secretary).
Coverage under title XVIII of the Social Secu-
rity Act or coverage under a State plan under
title XIX of such Act shall be deemed to meet
the requirement of the previous sentence.
(B) AVAILABILITY OF HOME- AND COMMU-
NITY-BASED CARE.—The offering of home- and
community-based care as an alternative to insti-
tutional care if medically appropriate.
(4) COMMUNITY RATING OF PREMIUMS.—A re-
quirement that the premium charged shall be equiv-
alent for all individuals within any community, ex-
cept that the premium may vary with respect to an
individual on the basis of the individual’s age or the
number of members of the individual’s family cov-
ered.
(5) STATE
SUPPLEMENTAL
PREMIUM
PAY-
MENTS.—The payment by the State of supplemental
amounts to ensure that all individuals may obtain
coverage at reasonable rates.
(6) QUALITY OF CARE.—The creation of ade-
quate mechanisms designed to assure, monitor, and
maintain the provision of high quality health care to
individuals in the State.
(7) COST CONTAINMENT.—The creation of ade-
quate mechanisms designed to control premiums and
the costs of providing high quality health care to in-
dividuals in the State.
SEC. 203. WAIVER OF ERISA LIMITATION ON STATE REGU-
LATION OF SELF-INSURED PLANS.
Section 514(b) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1144(b)) is amended by
adding at the end the following paragraph:
‘‘(9) Subsection (a) shall not apply to any State
law to the extent such law conforms to or reflects
the provisions of a comprehensive health insurance
plan developed and implemented by the State and
certified by the Secretary of Health and Human
Services under title II of the American Health Secu-
rity Partnership Act of 1995.’’.
SEC. 204. REQUIRING OPERATION OF CERTIFIED PLAN TO
RECEIVE MEDICAID PAYMENTS.
Section 1903 of the Social Security Act (42 U.S.C.
1396b) is amended by adding at the end the following new
subsection:
‘‘(x)(1) In order to receive payments under this title
for any quarter beginning on or after January 1, 2000,
a State must have in effect a comprehensive health insur-
ance plan certified for the fiscal year in which the quarter
occurs by the Secretary under section 201(b) of the Amer-
ican Health Security Partnership Act of 1995.
‘‘(2)(A) The provisions of this subsection shall not
apply to a State for any quarter—
‘‘(i) that follows the quarter during which the
State meets the requirements of this subsection; or
‘‘(ii) with respect to which the Secretary deter-
mines that the State is unable to comply with the
relevant requirements of this subsection—
‘‘(I) for good cause (but such a waiver may
not be for a period in excess of 4 quarters), or
‘‘(II) due to circumstances beyond the con-
trol of such State.
‘‘(B) For purposes of determining deadlines imposed
under this subsection, any time period during which a
State was found under subparagraph (A)(ii)(II) to be un-
able to comply with the requirements of this subsection
shall not be taken into account, and the Secretary shall
modify all such deadlines with respect to such State ac-
cordingly.’’.
SEC. 205. INCREASE IN MINIMUM COMMUNITY SPOUSE RE-
SOURCE ALLOWANCE UNDER MEDICAID.
(a) IN GENERAL.—Section 1924(f)(2)(A)(i) of the
Social Security Act (42 U.S.C. 1396r-5(f)(2)(A)(i)) is
amended by striking ‘‘$12,000’’ and inserting ‘‘$50,000’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to quarters beginning on or
after October 1, 1995.
TITLE III—FINANCING
MECHANISMS
SEC. 301. INCREASE IN TOP INCOME TAX RATE APPLICA-
BLE TO CORPORATIONS.
(a) IN GENERAL.—Subsection (b) of section 11 of the
Internal Revenue Code of 1986 is amended by striking
‘‘35 percent’’ each place it appears and inserting ‘‘36 per-
cent’’.
(b) CONFORMING AMENDMENTS.—
(1) The last sentence of section 11(b) of such
Code is amended by striking ‘‘$100,000’’ and insert-
ing ‘‘$200,000’’.
(2) Clause (iii) of section 852(b)(3)(D) of such
Code is amended by striking ‘‘65 percent’’ and in-
serting ‘‘64 percent’’.
(3) Subsection (a) of section 1201 of such Code
is amended by striking ‘‘35 percent’’ each place it
appears and inserting ‘‘36 percent’’.
(4) Paragraphs (1) and (2) of section 1445(e)
of such Code are each amended by striking ‘‘35 per-
cent’’ and inserting ‘‘36 percent’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1995.
SEC. 302. REVISION OF FEDERAL MEDICAL ASSISTANCE
PERCENTAGE UNDER MEDICAID.
Section 1905(b) of the Social Security Act (42 U.S.C.
1396d(b)) is amended—
(1) in the first sentence, by striking ‘‘83 per
centum’’ and inserting ‘‘the applicable maximum
percentage described in the second sentence’’; and
(2) by inserting after the first sentence the fol-
lowing new sentence: ‘‘In the previous sentence, the
‘applicable maximum percentage’ is 83 per centum
for quarters occurring during fiscal years prior to
fiscal year 1998 and 60 per centum for quarters oc-
curring during fiscal year 1998 and each succeeding
fiscal year.’’.
SEC. 303. INCREASE IN EXCISE TAXES ON TOBACCO PROD-
UCTS.
(a) CIGARETTES.—Subsection (b) of section 5701 of
the Internal Revenue Code of 1986 is amended—
(1) by striking ‘‘$12 per thousand ($10 per
thousand on cigarettes removed during 1991 or
1992)’’ in paragraph (1) and inserting ‘‘$49.50 per
thousand’’, and
(2) by striking ‘‘$25.20 per thousand ($21 per
thousand on cigarettes removed during 1991 or
1992)’’ in paragraph (2) and inserting ‘‘$103.95 per
thousand’’.
(b) CIGARS.—Subsection (a) of section 5701 of such
Code is amended—
(1) by striking ‘‘$1.125 cents per thousand
(93.75 cents per thousand on cigars removed during
1991 or 1992)’’ in paragraph (1) and inserting
‘‘$38.621⁄2 per thousand’’, and
(2) by striking ‘‘equal to’’ and all that follows
in paragraph (2) and inserting ‘‘equal to 52.594 per-
cent of the price for which sold but not more than
$123.75 per thousand.’’.
(c) CIGARETTE PAPERS.—Subsection (c) of section
5701 of such Code is amended by striking ‘‘0.75 cent
(0.625 cent on cigarette papers removed during 1991 or
1992)’’ and inserting ‘‘3.09 cents’’.
(d) CIGARETTE TUBES.—Subsection (d) of section
5701 of such Code is amended by striking ‘‘1.5 cents (1.25
cents on cigarette tubes removed during 1991 or 1992)’’
and inserting ‘‘6.19 cents’’.
(e) SMOKELESS TOBACCO.—Subsection (e) of section
5701 of such Code is amended—
(1) by striking ‘‘36 cents (30 cents on snuff re-
moved during 1991 or 1992)’’ in paragraph (1) and
inserting ‘‘$12.86’’, and
(2) by striking ‘‘12 cents (10 cents on chewing
tobacco removed during 1991 or 1992)’’ in para-
graph (2) and inserting ‘‘$12.62’’.
(f) PIPE TOBACCO.—Subsection (f) of section 5701
of such Code is amended by striking ‘‘67.5 cents (56.25
cents on pipe tobacco removed during 1991 or 1992)’’ and
inserting ‘‘$13.171⁄2’’.
(g) EFFECTIVE DATE.—The amendments made by
this section shall apply to articles removed (as defined in
section 5702(k) of the Internal Revenue Code of 1986)
after December 31, 1996.
TITLE IV—TAX DEDUCTIBILITY
OF HEALTH INSURANCE
SEC. 401. TAX DEDUCTIBILITY OF HEALTH INSURANCE.
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
additional itemized deductions) is amended by redesignat-
ing section 220 as section 221 and by inserting after sec-
tion 219 the following new section:
‘‘SEC. 220. HEALTH INSURANCE COSTS.
‘‘(a) IN GENERAL.—In the case of an individual,
there shall be allowed as a deduction an amount equal to
80 percent (or 100 percent, in the case of an individual
who is a self-employed individual within the meaning of
section 401(c)) of the amount paid during the taxable year
for insurance which constitutes medical care for the tax-
payer, his spouse, and dependents.
‘‘(b) LIMITATION BASED ON EARNED INCOME.—No
deduction shall be allowed under subsection (a) to the ex-
tent that the amount of such deduction exceeds the sum
of—
‘‘(1) the taxpayer’s wages, salaries, tips, and
other employee compensation includible in gross in-
come, plus
‘‘(2) the taxpayer’s earned income (as defined
in section 401(c)(2)).
‘‘(c) OTHER COVERAGE.—Subsection (a) shall not
apply to any taxpayer for any calendar month for which
the taxpayer is eligible to participate in any subsidized
health plan maintained by any employer of the taxpayer
or of the spouse of the taxpayer.
‘‘(d) SPECIAL RULES.—
‘‘(1) COORDINATION
WITH
MEDICAL
DEDUC-
TION, ETC.—Any amount paid by a taxpayer for in-
surance to which subsection (a) applies shall not be
taken into account in computing the amount allow-
able to the taxpayer as a deduction under section
213(a).
‘‘(2) DEDUCTION NOT ALLOWED FOR SELF-EM-
PLOYMENT
TAX
PURPOSES.—The deduction allow-
able by reason of this section shall not be taken into
account in determining an individual’s net earnings
from self-employment (within the meaning of section
1402(a)) for purposes of chapter 2.’’
(b) CONFORMING AMENDMENTS.—
(1) Subsection (l) of section 162 of such Code
is hereby repealed.
(2) Subsection (a) of section 62 of such Code
is amended by inserting after paragraph (15) the
following new item:
‘‘(16) HEALTH INSURANCE COSTS.—The deduc-
tion allowed by section 220.’’
(3) The table of sections for part VII of sub-
chapter B of chapter 1 of such Code is amended by
striking the last item and inserting the following
new items:
‘‘Sec. 220. Health insurance costs.
‘‘Sec. 221. Cross reference.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1995.
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