To amend title XXI of the Social Security Act to impose requirements on coverage of children in higher income families under the State Children's Health Insurance Program (SCHIP).

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Children Come First Act of 2007''.

SEC. 2. LIMITATION ON PAYMENTS FOR STATES COVERING CHILDREN IN FAMILIES 
              WITH INCOME BETWEEN 200 AND 300 PERCENT OF THE POVERTY 
              LINE; OPTION OF PREMIUM ASSISTANCE FOR CHILDREN OF HIGHER 
              INCOME FAMILIES.

    (a) In General.--Section 2105(c) of the Social Security Act (42 
U.S.C. 1397ee(c)) is amended by adding at the end the following new 
paragraph:
            ``(8) Limitation on payments for states covering children 
        of higher income families.--
                    ``(A) In general.--No payment shall be made under 
                this section for child health assistance provided for a 
                child of a higher income family (as defined in 
                subparagraph (B)) under the State child health plan 
                unless--
                            ``(i) the family demonstrates that health 
                        insurance coverage for the child is--
                                    ``(I) unattainable, in accordance 
                                with subparagraph (C); or
                                    ``(II) unaffordable, in accordance 
                                with subparagraph (D); and
                            ``(ii) the plan permits the family to be 
                        provided child health assistance through the 
                        form of premium assistance described in 
                        subparagraph (E) rather than through Medicaid 
                        or otherwise.
                    ``(B) Higher income family.--For purposes of this 
                paragraph, the term `higher income family' means a 
                family the income of which exceeds 200 percent, but 
                does not exceed 300 percent, of the poverty line.
                    ``(C) Unattainability.--For purposes of this 
                paragraph, health insurance coverage shall be treated 
                as unattainable with respect to the child of a higher 
                income family if the family can demonstrate an 
                inability to obtain health insurance coverage for the 
                child (as determined in accordance with standards 
                established by the Secretary).
                    ``(D) Unaffordability.--
                            ``(i) In general.--For purposes of this 
                        paragraph, health insurance coverage shall be 
                        treated as unaffordable with respect to the 
                        child of a higher income family if the premium 
                        for such coverage exceeds the percentage (as 
                        determined by the Secretary under clause (ii)) 
                        of the adjusted gross income of the family. In 
                        applying the previous sentence to family 
                        coverage, there shall only be taken into 
                        account the portion of such premium that is 
                        actuarially attributable to children (as 
                        computed for purposes of subparagraph 
                        (E)(iii)).
                            ``(ii) Percentage determined.--The 
                        Secretary shall determine a percentage under 
                        this clause based on factors such as family 
                        size, the average premium for health insurance 
                        coverage in the private sector for children, 
                        and such other factors as the Secretary deems 
                        appropriate.
                    ``(E) Premium assistance option.--
                            ``(i) In general.--The premium assistance 
                        option under this subparagraph shall be in the 
                        form of payment of premium for a policy that 
                        provides health insurance benefits to the child 
                        of a higher income family involved. Except as 
                        otherwise specifically provided, the State 
                        child health plan shall establish standards for 
                        such benefits and premium contributions.
                            ``(ii) Treatment.--Payment of premium 
                        assistance under this subparagraph shall be 
                        treated as child health assistance for purposes 
                        of obtaining Federal financial participation 
                        under section 2105.
                            ``(iii) Application to family coverage.--In 
                        the case of premium assistance under this 
                        subparagraph applied to coverage of one or more 
                        children under family coverage that covers a 
                        parent of such a child or other individuals who 
                        are not children, the amount of the premium 
                        payment under the option under this 
                        subparagraph shall be adjusted to take into 
                        account only the portion of the health 
                        insurance benefits that are actuarially 
                        attributable to such children.
                    ``(F) Exception for currently covered 
                individuals.--Subparagraph (A) shall not apply until 
                October 1, 2011, to children who are enrolled under 
                this part as targeted low-income children as of October 
                1, 2008.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to State child health plans for payment for items and services 
furnished on or after October 1, 2008.

Summary: Children Come First Act of 2007 - Amends title XXI (State Children's Health Insurance Program) (SCHIP) of the Social Security Act to prohibit SCHIP payments for children in families with income between 200% and 300% of the poverty line (higher income families) unless: (1) health insurance coverage for the family is demonstrably unattainable or unaffordable; and (2) the state SCHIP plan permits the family to receive child health assistance through specified optional premium assistance rather than through Medicaid or otherwise.