To permit Medicare-eligible retired members of the Armed Forces and their Medicare-eligible dependents to enroll in the Federal Employees Health Benefits program.

SECTION 1. EXPANSION OF FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM TO 
              INCLUDE RETIRED MEMBERS AND DEPENDENTS WHO ARE MEDICARE 
              ELIGIBLE.

    (a) Federal Employee Health Benefits Program Option.--The Secretary 
of Defense, after consulting with the other administering Secretaries 
under chapter 55 of title 10, United States Code, shall enter into an 
agreement with the Office of Personnel Management under which certain 
persons are offered enrollment in a health benefits plan under chapter 
89 of title 5, United States Code, in lieu of receiving care in 
treatment facilities of the uniformed services or through the Civilian 
Health and Medical Program of the Uniformed Services or the TRICARE 
program. The agreement may provide for enrollment limitations if the 
Office of Personnel Management determines that the limitations are 
necessary to allow for adequate planning for access for services under 
chapter 89 of title 5, United States Code.
    (b) Eligible Persons.--(1) The following persons shall be eligible 
for enrollment under this section:
            (A) A member or former member of the uniformed services 
        described in section 1074(b) of title 10, United States Code, 
        who is or becomes entitled to hospital insurance benefits under 
        part A of title XVIII of the Social Security Act (42 U.S.C. 
        1395c et seq.).
            (B) A dependent of a person described in subparagraph (A) 
        if the dependent is otherwise eligible for health care under 
        chapter 55 of title 10, United States Code and is or becomes 
        entitled to hospital insurance benefits under part A of title 
        XVIII of the Social Security Act (42 U.S.C. 1395c et seq.).
    (2) Persons described in paragraph (1) shall not be required to 
satisfy any eligibility criteria specified in chapter 89 of title 5, 
United States Code, as a condition for enrollment in a health benefits 
plan offered through the Federal Employee Health Benefits program 
pursuant to subsection (a).
    (c) Contributions.--(1) In the case of a person described in 
subsection (b) who enrolls in a health benefits plan offered through 
the Federal Employee Health Benefits program pursuant to subsection 
(a), the administering Secretary concerned shall be responsible for 
Government contributions that the Office of Personnel Management 
determines are necessary to cover all costs in excess of beneficiary 
contributions under paragraph (2).
    (2) The contribution required from an enrolled person under this 
section shall be equal to the amount that would be withheld from the 
pay of a similarly situated Federal employee who enrolls in a health 
benefits plan under chapter 89 of title 5, United States Code.
    (d) Management of Participation.--The authority responsible for 
approving retired or retainer pay or equivalent pay in the case of a 
member or former member shall manage the participation of the member or 
former member, and dependents of the member or former member, who 
enroll in a health benefits plan offered through the Federal Employee 
Health Benefits program pursuant to subsection (a). The Office of 
Personnel Management shall maintain separate risk pools for persons 
described in subsection (b) until such time as the Director of the 
Office of Personnel Management determines that complete inclusion 
chapter 89 of title 5, United States Code, of persons described in 
subsection (b) will not adversely affect Federal employees and 
annuitants enrolled in health benefits plans under such chapter.
    (e) Effect of Cancellation.--The cancellation by a person described 
in subsection (b) of coverage under the Federal Employee Health 
Benefits program shall be irrevocable for purposes of this section.
    (f) Reporting Requirements.--Not later than November 1 of each 
year, the Secretary of Defense and the Director of the Office of 
Personnel Management shall jointly submit a report to Congress 
describing the provision of health care services to persons under this 
section during the preceding fiscal year. The report shall address or 
contain the following:
            (1) The number of persons enrolled in health benefits plans 
        offered through the Federal Employee Health Benefits program 
        pursuant to subsection (a), both in terms of total number and 
        as a percentage of all persons receiving health care through 
        the health care system of the uniformed services.
            (2) The out-of-pocket cost to enrollees under such health 
        benefits plans.
            (3) The cost to the Government (including the Department of 
        Defense, the Department of Transportation, and the Department 
        of Health and Human Services) of providing care under such 
        health benefits plans.
            (4) A comparison of the costs determined under paragraphs 
        (2) and (3) and the costs that would have otherwise been 
        incurred by the Government and enrollees under alternative 
        health care options available to the administering Secretaries.
            (5) The effect of this section on the cost, access, and 
        utilization rates of other health care options under the health 
        care system of the uniformed services.
    (g) Time for Option.--The Secretary of Defense shall begin to offer 
the health benefits option under subsection (a) not later than October 
1, 1997.
    (h) Conforming Amendments.--Chapter 89 of title 5, United States 
Code, is amended--
            (1) in section 8905--
                    (A) by redesignating subsections (d) through (f) as 
                subsections (e) through (g), respectively; and
                    (B) by inserting after subsection (c) the following 
                new subsection:
    ``(d) An individual whom the Secretary of Defense determines is an 
eligible person under the special authority provided to the Secretary 
may enroll in a health benefits plan under this chapter in accordance 
with the agreement between the Secretary and the Office and applicable 
regulations under this chapter.'';
            (2) in section 8906(b)--
                    (A) in paragraph (1), by striking ``paragraphs (2) 
                and (3)'' and inserting in lieu thereof ``paragraphs 
                (2), (3), and (4)''; and
                    (B) by adding at the end the following new 
                paragraph:
    ``(4) In the case of individuals who enroll in a health plan in 
accordance with section 8905(d) of this title, the Government 
contribution shall be determined in accordance with the agreement 
between the Secretary and the Office.''; and
            (3) in section 8906(g)--
                    (A) in paragraph (1), by striking ``paragraph (2)'' 
                and inserting in lieu thereof ``paragraphs (2) and 
                (3)''; and
                    (B) by adding at the end the following new 
                paragraph:
    ``(3) The Government contribution described in subsection (b)(4) 
for beneficiaries who enroll in accordance with section 8905(d) of this 
title shall be paid in accordance with the agreement between the 
Secretary and the Office.''.

Summary: Directs the Secretary of Defense to enter into an agreement with the Office of Personnel Management (OPM) under which current or former military personnel who are or become entitled to hospital insurance benefits under part A of title XVIII (Medicare) of the Social Security Act are offered enrollment in a Federal employees health benefits plan in lieu of receiving care in military treatment facilities or through the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS).  Allows such enrollment for any dependent of such individual if the dependent is entitled to health care under CHAMPUS and is or becomes entitled to hospital insurance benefits under Medicare.  Outlines provisions concerning:  (1) contributions for such coverage; (2) management of member participation; and (3) cancellation of coverage.  Directs the Secretary and the OPM Director to report jointly to the Congress each year on the provision of such services to eligible persons during the preceding fiscal year.  Requires the Secretary to offer such health benefits option no later than October 1, 1997.