Title: State Health Flexibility Act of 2017
Policy area: Health

Summary:
State Health Flexibility Act of 2017
This bill amends the Social Security Act (SSAct) to replace federal requirements for Medicaid and the Children's Health Insurance Program (CHIP) with health care block grants to states. A state may use block grant funds to: (1) provide health care services to indigent individuals; (2) fund risk adjustment mechanisms for the purpose of subsidizing the cost of private health insurance for the high-risk population; and (3) support other welfare-related programs, as specified by the bill.
In addition to repealing titles XIX (Medicaid) and XXI (CHIP) of the SSAct, the bill repeals: (1) the Patient Protection and Affordable Care Act, and (2) the Health Care and Educational Reconciliation Act of 2010.
With respect to an alien not lawfully admitted for permanent residence in the United States, a state may use grant funds to provide only emergency health care services, as specified by the bill.
A state shall contract with an approved auditing entity for annual audits of its grant fund expenditures.
The bill limits the authority of any federal agency to supervise a state's use of funds received under the block grant program.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 352 Introduced in House (IH)]

<DOC>






115th CONGRESS
  1st Session
                                H. R. 352

 To amend the Social Security Act to replace the Medicaid program and 
   the Children's Health Insurance program with a block grant to the 
                    States, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 6, 2017

    Mr. Rokita (for himself, Mr. Messer, Mr. Franks of Arizona, Mr. 
Farenthold, Mr. Westerman, Mr. DesJarlais, Mr. Moolenaar, Mr. Palazzo, 
     Mrs. Black, Mr. Schweikert, Mr. Jody B. Hice of Georgia, Mr. 
  Loudermilk, Mr. Pittenger, Mr. Bishop of Utah, Mr. Duncan of South 
    Carolina, Mr. Cole, Mr. Olson, Mr. Rohrabacher, Mr. Cramer, Mr. 
  Meadows, Mr. Brat, Mr. Stewart, Mr. Pearce, Mr. Trott, Mr. Banks of 
Indiana, Mr. Barr, and Mr. Allen) introduced the following bill; which 
 was referred to the Committee on Energy and Commerce, and in addition 
     to the Committees on Rules, Ways and Means, Education and the 
Workforce, the Judiciary, Natural Resources, House Administration, and 
   Appropriations, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
 To amend the Social Security Act to replace the Medicaid program and 
   the Children's Health Insurance program with a block grant to the 
                    States, and for other purposes.

    Be it enacted by the Senate and House of Representatives 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 ``State Health 
Flexibility Act of 2017''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Health grants to the States for health care services to 
                            indigent individuals.
   ``TITLE XXII--BLOCK GRANTS TO STATES FOR HEALTH CARE SERVICES TO 
                          INDIGENT INDIVIDUALS

        ``Sec. 2201. Purpose.
        ``Sec. 2202. Grants to States.
        ``Sec. 2203. Administrative and fiscal accountability.
        ``Sec. 2204. Nondiscrimination provisions.
        ``Sec. 2205. Definitions.
Sec. 3. Repeal of PPACA, HCERA, and the Federal requirements of 
                            Medicaid and CHIP.
Sec. 4. Severability.
Sec. 5. Effective date.

SEC. 2. HEALTH GRANTS TO THE STATES FOR HEALTH CARE SERVICES TO 
              INDIGENT INDIVIDUALS.

    (a) Health Care Block Grant to States.--The Social Security Act is 
amended by adding at the end the following new title:

   ``TITLE XXII--BLOCK GRANTS TO STATES FOR HEALTH CARE SERVICES TO 
                          INDIGENT INDIVIDUALS

``SEC. 2201. PURPOSE.

    ``The purpose of this title is to provide Federal financial 
assistance to the States, in the form of a single grant, to allow the 
States maximum flexibility in providing, and financing the provision 
of, health-care-related items and services to indigent individuals.

``SEC. 2202. GRANTS TO STATES.

    ``(a) In General.--Subject to the requirements of this title, each 
State is entitled to receive from the Secretary of the Treasury a grant 
for each quarter of each of fiscal years 2018 through 2026, in an 
amount that is equal to 25 percent of the total amount received by a 
State under title XIX and title XXI for fiscal year 2013.
    ``(b) Appropriation.--Out of any money in the Treasury of the 
United States not otherwise appropriated, there are appropriated for 
each of fiscal years 2018 through 2026 such sums as are necessary for 
grants under this section.
    ``(c) Requirements Relating to Intergovernmental Financing.--The 
Secretary of the Treasury shall make the transfer of funds under grants 
under subsection (a) directly to each State in accordance with the 
requirements of section 6503 of title 31, United States Code.
    ``(d) Expenditure of Funds.--
            ``(1) In general.--Except as provided in paragraph (2), 
        amounts received by a State under this title for any fiscal 
        year shall be expended by the State in such fiscal year or in 
        the succeeding fiscal year.
            ``(2) Use of rainy day fund permitted.--Of the amounts 
        received by a State under this title, the State may set aside, 
        in a separate account, such amounts as the State deems 
        necessary to provide, without fiscal limitation, health-care-
        related items and services for indigent individuals during--
                    ``(A) periods of unexpectedly high rates of 
                unemployment; or
                    ``(B) periods related to circumstances that are not 
                described in subparagraph (A) and that cause unexpected 
                increases in the need for such items and services for 
                such individuals.
            ``(3) Funds remaining after fiscal year 2027.--If, after 
        fiscal year 2027, a State has funds in the account under 
        paragraph (2), the State may only expend such funds if such 
        funds are used in a manner that is permitted under subsection 
        (e), as such subsection is in effect on September 30, 2028.
    ``(e) Use of Funds.--A State may only use the amounts received 
under subsection (a) as follows:
            ``(1) General purpose.--Nothing in this title shall be 
        construed as limiting the flexibility of a State to determine 
        which providers of such items and services qualify to receive 
        payment from a grant made to the State under this title.
            ``(2) Funding for risk adjustment mechanisms.--To fund 
        qualified high risk pools, reinsurance pools, or other risk-
        adjustment mechanisms used for the purpose of subsidizing the 
        purchase of private health insurance for the high-risk 
        population.
            ``(3) Authority to use portion of federal assistance for 
        other welfare-related programs.--
                    ``(A) In general.--Subject to the limit under 
                subparagraph (B), to carry out a State program pursuant 
                to any or all of the following provisions of law:
                            ``(i) Part A of title IV of this Act.
                            ``(ii) Section 1616 of this Act.
                            ``(iii) The Food and Nutrition Act of 2008.
                    ``(B) Limitation.--A State may not use more than 30 
                percent of the amount received under subsection (a) for 
                a fiscal year to carry out a State program, or 
                programs, under subparagraph (A).
                    ``(C) Requirements on funds.--Any amounts that are 
                used under subparagraph (A)--
                            ``(i) shall not be subject to any of the 
                        requirements of subsection (d), subsection (f), 
                        or section 2204; and
                            ``(ii) shall be subject to--
                                    ``(I) the audit requirements under 
                                section 2203; and
                                    ``(II) any requirements that apply 
                                to Federal funds provided directly for 
                                such State program.
    ``(f) Maintenance of Current Law Restrictions on Use of Federal 
Funds.--
            ``(1) In general.--
                    ``(A) No funding for abortions.--None of the funds 
                appropriated in this title shall be expended for any 
                abortion.
                    ``(B) No funds for coverage of abortion.--None of 
                the funds appropriated in this title shall be expended 
                for health benefits coverage that includes coverage of 
                abortion.
                    ``(C) Health benefits coverage defined.--For 
                purposes of this subsection, the term `health benefits 
                coverage' means the package of services covered by a 
                managed care provider or organization pursuant to a 
                contract or other arrangement.
            ``(2) Exceptions.--The limitations established in paragraph 
        (1) shall not apply to an abortion--
                    ``(A) if the pregnancy is the result of an act of 
                rape or incest; or
                    ``(B) in the case where a woman suffers from a 
                physical disorder, physical injury, or physical illness 
                that would, as certified by a physician, place the 
                woman in danger of death unless an abortion is 
                performed, including a life-endangering physical 
                condition caused by or arising from the pregnancy 
                itself.
            ``(3) State funds used in conjunction with federal funds.--
        The limitations established in paragraph (1) shall apply to any 
        State funds used in conjunction with Federal funds appropriated 
        under this title to provide, or finance the provision of, 
        health-care-related items and services to indigent individuals 
        pursuant to section 2201 or subsection (d)(2), (e)(1), or 
        (e)(2) of this section.
            ``(4) Option to purchase separate coverage or plan.--
        Nothing in this subsection shall be construed as prohibiting a 
        State from purchasing separate coverage for abortions for which 
        funding is prohibited under this subsection, or a health plan 
        that includes such abortions, so long as such coverage or plan 
        is paid for entirely using funds not provided by this title.
            ``(5) Option to offer coverage or plan.--Nothing in this 
        subsection shall restrict any health insurance issuer from 
        offering separate coverage for abortions for which funding is 
        prohibited under this subsection, or a health plan that 
        includes such abortions, so long as--
                    ``(A) premiums for such separate coverage or plan 
                are paid entirely with funds not provided by this 
                title; and
                    ``(B) administrative costs and all services offered 
                through such separate coverage or plan are paid for 
                using only premiums collected for such coverage or 
                plan.
            ``(6) Conscience protections.--
                    ``(A) None of the funds appropriated in this Act 
                may be made available to a Federal agency or program, 
                or to a State or local government, if such agency, 
                program, or government subjects any institutional or 
                individual health care entity to discrimination on the 
                basis that the health care entity does not provide, pay 
                for, provide coverage of, or refer for abortions.
                    ``(B) In this paragraph, the term `health care 
                entity' includes an individual physician or other 
                health care professional, a hospital, a provider-
                sponsored organization, a health maintenance 
                organization, a health insurance plan, or any other 
                kind of health care facility, organization, or plan.
    ``(g) No Funding for Illegal Aliens.--
            ``(1) In general.--Except as provided in paragraph (2), no 
        funds appropriated in this title may be used to provide health-
        care-related items and services to an alien who is not lawfully 
        admitted for permanent residence or otherwise permanently 
        residing in the United States under color of law.
            ``(2) Emergency assistance.--A State that receives a grant 
        under this title for a fiscal year shall provide payment for 
        health-care-related items and services provided to an alien 
        described in paragraph (1), consistent with the requirements of 
        section 1867, if--
                    ``(A) such health-care-related items and services 
                are--
                            ``(i) necessary for the treatment of an 
                        emergency medical condition (as defined in 
                        subsection (e) of such section); and
                            ``(ii) health-care-related items and 
                        services that such State would provide payment 
                        for under this title, if provided to an 
                        indigent individual;
                    ``(B) the individual would meet all necessary 
                eligibility requirements if paragraph (1) did not apply 
                for health-care-related items and services under the 
                State program funded under this title; and
                    ``(C) such items and services are not related to an 
                organ transplant procedure.
    ``(h) Nonentitlement.--Nothing in this title shall be construed as 
providing an individual with an entitlement to health-care-related 
items and services under this title.

``SEC. 2203. ADMINISTRATIVE AND FISCAL ACCOUNTABILITY.

    ``(a) Audits.--
            ``(1) Contract with approved auditing entity.--Not later 
        than October 1, 2018, and annually thereafter, a State shall 
        contract with an approved auditing entity (as defined under 
        paragraph (3)(B)) for purposes of conducting an audit under 
        paragraph (2) (with respect to the fiscal year ending September 
        30 of such year).
            ``(2) Audit requirement.--Under a contract under paragraph 
        (1), an approved auditing entity shall conduct an audit of the 
        expenditures or transfers made by a State from amounts received 
        under a grant under this title, or from State funds described 
        in section 2202(f)(3), with respect to the fiscal year which 
        such audit covers, to determine the extent to which such 
        expenditures and transfers were expended in accordance with 
        this title.
            ``(3) Entity conducting audit.--
                    ``(A) In general.--With respect to a State, the 
                audit under paragraph (2) shall be conducted by an 
                approved auditing entity in accordance with generally 
                accepted auditing principles, including the provisions 
                of chapter 75 of title 31, United States Code.
                    ``(B) Approved auditing entity.--For purposes of 
                this section, the term `approved auditing entity' 
                means, with respect to a State, an entity that is--
                            ``(i) approved by the Secretary of the 
                        Treasury;
                            ``(ii) approved by the chief executive 
                        officer of the State; and
                            ``(iii) independent of any Federal, State, 
                        or local agency.
            ``(4) Submission of audit.--Not later than December 31, 
        2018, and annually thereafter, a State shall submit the results 
        of the audit under paragraph (2) (with respect to the fiscal 
        year ending on September 30 of such year) to the State 
        legislature and to the Secretary of the Treasury.
    ``(b) Reimbursement and Penalty.--
            ``(1) In general.--If, through an audit conducted under 
        subsection (a), an approved auditing entity finds that any 
        amounts paid to a State under a grant under this title were not 
        expended in accordance with this title--
                    ``(A) the State shall pay to the Treasury of the 
                United States any such amount, plus 10 percent of such 
                amount as a penalty; or
                    ``(B) the Secretary of the Treasury shall offset 
                such amount plus the 10-percent penalty against any 
                other amount in any other fiscal year that the State 
                may be entitled to receive under a grant under this 
                title.
            ``(2) Misuse of state funds.--If, through an audit 
        conducted under subsection (a), an approved auditing entity 
        finds that a State violated the requirements of section 
        2202(f)(3), the State shall pay to the Treasury of the United 
        States 100 percent of the amount of State funds that were used 
        in violation of section 2202(f)(3) as a penalty. Insofar as a 
        State fails to pay any such penalty, the Secretary of the 
        Treasury shall offset the amount not so paid against the amount 
        of any grant otherwise payable to the State under this title.
    ``(c) Annual Reporting Requirements.--
            ``(1) In general.--Not later than January 31, 2019, and 
        annually thereafter, each State shall submit to the Secretary 
        of the Treasury a report on the activities carried out by the 
        State during the most recently completed fiscal year with funds 
        received by the State under a grant under this title for such 
        fiscal year.
            ``(2) Content.--A report under paragraph (1) shall, with 
        respect to a fiscal year--
                    ``(A) contain the results of the audit conducted by 
                an approved auditing entity for a State for such fiscal 
                year, in accordance with the requirements of subsection 
                (a) of this section;
                    ``(B) specify the amount of the grant made to the 
                State under this title that is used to carry out a 
                program under section 2202(e)(3); and
                    ``(C) be in such form and contain such other 
                information as the State determines is necessary to 
                provide--
                            ``(i) an accurate description of the 
                        activities conducted by the State for the 
                        purpose described under section 2201 and any 
                        other use of funds permitted under subsections 
                        (d) and (e) of section 2202; and
                            ``(ii) a complete record of the purposes 
                        for which amounts were expended in accordance 
                        with this title.
            ``(3) Conformity with accounting principals.--Any financial 
        information in the report under paragraph (1) shall be prepared 
        and reported in accordance with generally accepted accounting 
        principles, including the provisions of chapter 75 of title 31, 
        United States Code.
            ``(4) Public availability.--A State shall make copies of 
        the reports required under this section available on a public 
        Web site and shall make copies available in other formats upon 
        request.
    ``(d) Suspension of Payments for Failure To Comply With Certain 
Requirements.--
            ``(1) In general.--The Secretary of the Treasury shall 
        suspend payments made to a State under a grant authorized by 
        section 2202(a) during any payment suspension period.
            ``(2) Suspension period defined.--For purposes of paragraph 
        (1), the term `payment suspension period' means--
                    ``(A) in the case of an audit required to be 
                submitted under subsection (a), the period that begins 
                on the date such audit is required to be so submitted 
                and ends on the date on which the State submits such 
                audit;
                    ``(B) in the case of a report required to be 
                submitted under subsection (c), the period that begins 
                on the date such report is required to be so submitted 
                and ends on the date on which the State submits such 
                report; or
                    ``(C) in the case of a violation by a State of a 
                requirement of section 2202(f), the period that begins 
                on the date on which the State is informed of such 
                violation and ends on the date on which such violation 
                is corrected by the State.
    ``(e) Administrative Supervision and Oversight.--
            ``(1) Limited role for secretary of the treasury and the 
        attorney general.--
                    ``(A) Treasury.--The authority of the Secretary of 
                the Treasury under this title is limited to--
                            ``(i) promulgating regulations, issuing 
                        rules, or publishing guidance documents to the 
                        extent necessary for purposes of implementing 
                        subsection (a)(3)(B), subsection (b), and 
                        subsection (d);
                            ``(ii) making quarterly payments to the 
                        States under grants under this title in 
                        accordance with section 2202(a);
                            ``(iii) approving entities under subsection 
                        (a)(3)(B) for purposes of the audits required 
                        under subsection (a);
                            ``(iv) withholding payment to a State of a 
                        grant under subsection (d) or offsetting a 
                        payment of such a grant to a State under 
                        subsection (b); and
                            ``(v) exercising the authority relating to 
                        nondiscrimination that is specified in section 
                        2204(b).
                    ``(B) Attorney general.--The authority of the 
                Attorney General under this title is limited to the 
                authority under section 2204(c).
            ``(2) Federal supervision.--
                    ``(A) In general.--Except as provided under 
                paragraph (1), an administrative officer, employee, 
                department, or agency of the United States (including 
                the Secretary of Health and Human Services) may not--
                            ``(i) supervise--
                                    ``(I) the amounts received by the 
                                States under this title; or
                                    ``(II) the use of such amounts by 
                                the States; or
                            ``(ii) promulgate regulations or issue 
                        rules in accordance with this title.
                    ``(B) Limitation on secretary of health and human 
                services.--The Secretary of Health and Human Services 
                shall have no authority under this title.
    ``(f) Reservation of State Powers.--Nothing in this section shall 
be construed to limit the power of a State, including the power of a 
State to pursue civil and criminal penalties under State law against 
any individual or entity that misuses, or engages in fraud or abuse 
related to, the funds provided to a State under this title.

``SEC. 2204. NONDISCRIMINATION PROVISIONS.

    ``(a) No Discrimination Against Individuals.--No individual shall 
be excluded from participation in, denied the benefits of, or subjected 
to discrimination under, any program or activity funded in whole or in 
part with amounts paid to a State under this title on the basis of such 
individual's--
            ``(1) disability under section 504 of the Rehabilitation 
        Act of 1973 (29 U.S.C. 794);
            ``(2) sex under title IX of the Education Amendments of 
        1972 (20 U.S.C. 1681 et seq.); or
            ``(3) race, color, or national origin under title VI of the 
        Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.).
    ``(b) Compliance.--
            ``(1) If the Secretary of the Treasury determines that a 
        State or an entity that has received funds from amounts paid to 
        a State under a grant under this title has failed to comply 
        with a provision of law referred to in subsection (a), the 
        Secretary of the Treasury shall notify the chief executive 
        officer of the State of such failure to comply and shall 
        request that such chief executive officer secure such 
        compliance.
            ``(2) If, not later than 60 days after receiving 
        notification under paragraph (1), the chief executive officer 
        of a State fails or refuses to secure compliance with the 
        provision of law referred to in such notification, the 
        Secretary of the Treasury may--
                    ``(A) refer the matter to the Attorney General with 
                a recommendation that an appropriate civil action be 
                instituted; or
                    ``(B) exercise the powers and functions provided 
                under section 505 of the Rehabilitation Act of 1973 (29 
                U.S.C. 794a), title IX of the Education Amendments of 
                1972 (20 U.S.C. 1681 et seq.), or title VI of the Civil 
                Rights Act of 1964 (42 U.S.C. 2000d et seq.) (as 
                applicable).
    ``(c) Civil Actions.--If a matter is referred to the Attorney 
General under subsection (b)(2)(A), or the Attorney General has reason 
to believe that a State or entity has failed to comply with a provision 
of law referred to in subsection (a), the Attorney General may bring a 
civil action in an appropriate district court of the United States for 
such relief as may be appropriate, including injunctive relief.

``SEC. 2205. DEFINITIONS.

    ``For purposes of this title:
            ``(1) Health-care-related items and services.--The term 
        `health-care-related items and services' shall be defined by a 
        State with respect to use of such term for purposes of the 
        application of this title to the State.
            ``(2) High-risk population.--The term `high-risk 
        population' means individuals who are described in one of the 
        following subparagraphs:
                    ``(A) Individuals who, by reason of the existence 
                or history of a medical condition, are able to acquire 
                health coverage only at rates which are at least 150 
                percent of the standard risk rates for such coverage.
                    ``(B) Individuals who are provided health coverage 
                by a qualified high risk pool.
            ``(3) Indigent individual.--The term `indigent individual' 
        shall be defined by a State with respect to use of such term 
        for purposes of the application of this title to the State.
            ``(4) Qualified high risk pool.--The term `qualified high 
        risk pool' has the meaning given such term in section 
        2745(g)(1)(A) of the Public Health Service Act.
            ``(5) Risk-adjustment mechanism defined.--For purposes of 
        this section, the term `risk-adjustment mechanism' means any 
        risk-spreading mechanism to subsidize the purchase of private 
        health insurance for the high-risk population, including a 
        qualified high risk pool.''.
    (b) Report on Reduction of Federal Administrative Expenditures.--
Beginning not later than October 31, 2019, and annually thereafter 
until October 31, 2028, the Secretary of Health and Human Services, in 
consultation with the Secretary of the Treasury, shall submit a report 
to the Committee on Energy and Commerce in the House of Representatives 
and the Finance Committee in the Senate containing a description of the 
total reduction in Federal expenditures required to administer and 
provide oversight for the programs to provide health-care-related items 
and services to indigent individuals under this Act, compared to the 
expenditures required to administer and provide oversight for the 
programs under titles XIX and XXI of the Social Security Act, as in 
effect on September 30, 2012.
    (c) State Defined.--Section 1101(a)(1) of the Social Security Act 
(42 U.S.C. 1301(a)(1)) is amended--
            (1) in the first sentence, by striking ``XIX, and XXI'' and 
        inserting ``and XXII''; and
            (2) in the fourth sentence, by striking ``titles XIX and 
        XXI'' and inserting ``title XXII''.

SEC. 3. REPEAL OF PPACA, HCERA, AND THE FEDERAL REQUIREMENTS OF 
              MEDICAID AND CHIP.

    (a) PPACA.--The Patient Protection and Affordable Care Act (Public 
Law 111-148) is repealed, and the provisions of law amended or repealed 
by such Act are restored or revived as if such Act had not been 
enacted.
    (b) HCERA.--Title I and subtitle B of title II of the Health Care 
and Education Reconciliation Act of 2010 (Public Law 111-152) are 
repealed, and the provisions of law amended or repealed by such title 
or subtitle, respectively, are restored or revived as if such title and 
subtitle had not been enacted.
    (c) Medicaid and CHIP.--Titles XIX and XXI of the Social Security 
Act are repealed.

SEC. 4. SEVERABILITY.

    If any provision of this Act, or the application of such provision 
to any person or circumstance, is found to be unconstitutional, the 
remainder of this Act, or the application of that provision to other 
persons or circumstances, shall not be affected.

SEC. 5. EFFECTIVE DATE.

    This Act and the amendments and repeals made by this Act shall take 
effect with respect to items and services furnished on or after October 
1, 2018.
                                 <all>