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SECTION 1. SHORT TITLE.

This Act may be cited as ''Medicaid/SCHIP Optional Coverage for
Young Adults Act of 2003''.

SEC. 2. PROVIDING STATE OPTION FOR SCHIP AND MEDICAID COVERAGE OF YOUNG
ADULTS UP TO AGE 23.

(a) In General.--
(1) Medicaid.--(A) Section 1902(l)(1)(D) of the Social
Security Act (42 U.S.C. 1396a(l)(1)(D)) is amended by inserting
''(or, at the option of the State, who have not attained 20,
21, or 22 years of age, as the State may elect)'' after ''have
not attained 19 years of age''.
(B) Clause (i) of section 1905(a) of the Social Security
Act (42 U.S.C. 1396d(a)) is amended by striking ''under the age
of 21, or, at the option of the State, under the age of 20, 19,
or 18 as the State may choose'' and inserting ''under the age
of 23, or, at the option of the State, under the age of 22, 21,
20, 19, or 18 as the State may elect''.
(2) SCHIP.--Section 2110(c)(1) of such Act (42 U.S.C.
1397jj(c)(1)) is amended by inserting after ''19 years of age''
the following: ''(or, at the option of the State and subject to
the availability of additional allotments under section
2104(d), 20, 21, 22, or 23 years of age)''.
(b) Availability of Enhanced Matching Funds.--
(1) Under medicaid.--Section 1905 of the Social Security
Act (42 U.S.C. 1396d) is amended--
(A) in the fourth sentence of subsection (b), by
striking ''or subsection (u)(3)'' and inserting '',
(u)(3), or (u)(4)(A)''; and
(B) in subsection (u)--
(i) by adding at the end of paragraph (1)
the following new subparagraph:
''(C) Only with respect to expenditures described in
paragraph (4)(A), if the State is providing for benefits under
its State child health plan under title XXI for children under
19 years of age exclusively through benefits under its State
plan under this title, the State is also providing under such
plan the benefits for individuals over 18 years of age who are
eligible for such benefits only because of an election referred
to in such paragraph.'';
(ii) by redesignating paragraph (4) as
paragraph (5); and
(iii) by inserting after paragraph (3) the
following new paragraph:
''(4) For purposes of the fourth sentence of subsection (b) and
section 2105(a), the expenditures described in this paragraph are
expenditures for medical assistance for individuals who are over 18
(and less than 23) years of age and who are eligible for such medical
assistance because of an election by the State under section
1902(l)(1)(D) or clause (i) of section 1905(a).''.
(2) Additional allotments for providing coverage of
optional young adults.--
(A) In general.--Section 2104 of such Act (42
U.S.C. 1397dd) is amended by inserting after subsection
(c) the following:
''(d) Additional Allotments for the Provision of Coverage to
Optional Young Adults.--
''(1) Appropriation; total allotment.--For the purpose of
providing additional allotments to States under this title,
there is appropriated, out of any money in the Treasury not
otherwise appropriated, for each of fiscal years 2004 through
2007, $200,000,000.
''(2) State and territorial allotments.--In addition to the
allotments provided under subsections (b) and (c), subject to
paragraph (3), of the amount available for the additional
allotments under paragraph (1) for a fiscal year, the Secretary
shall allot to each State with a State child health plan
approved under this title--
''(A) in the case of such a State other than a
commonwealth or territory described in subparagraph
(B), the same proportion as the proportion of the
State's allotment under subsection (b) (determined
without regard to subsection (f)) to the total amount
of the allotments under subsection (b) for such States
eligible for an allotment under this paragraph for such
fiscal year; and
''(B) in the case of a commonwealth or territory
described in subsection (c)(3), the same proportion as
the proportion of the commonwealth's or territory's
allotment under subsection (c) (determined without
regard to subsection (f)) to the total amount of the
allotments under subsection (c) for commonwealths and
territories eligible for an allotment under this
paragraph for such fiscal year.
''(3) Use of additional allotment.--Additional allotments
provided under this subsection are not available for amounts
expended before October 1, 2003. Such amounts are available for
amounts expended on or after such date only for--
''(A) expenditures described in section
1905(u)(4)(A); and
''(B) child health assistance for individuals who
are targeted low-income children and over 18 years of
age and who are low-income children only because of an
election by the State under section 2110(c)(1).''.
(B) Conforming amendments.--Section 2104 of the
Social Security Act (42 U.S.C. 1397dd) is amended--
(i) in subsection (a), in the matter
preceding paragraph (1), by inserting ''subject
to subsection (d),'' after ''under this
section,'';
(ii) in subsection (b)(1), by inserting
''and subsection (d)'' after ''Subject to
paragraph (4)''; and
(iii) in subsection (c)(1), by inserting
''subject to subsection (d),'' after ''for a
fiscal year,''.
(c) Effective Date.--The amendments made by this section apply to
items and services furnished on or after October 1, 2003, without
regard to whether regulations implementing such amendments have been
promulgated.

SEC. 3. GRANTS TO IMPLEMENT MEDICAID AND SCHIP EXPANSIONS.

(a) In General.--The Secretary of Health and Human Services shall
provide for grants to small and rural States (as defined by the
Secretary) in order to enable such States to implement expansions of
eligibility for children and young adults their State medicaid plans
under title XIX of the Social Security Act and State child health plans
under title XXI of such Act. Such grants shall be available for
planning, implementation, and outreach with respect to such expanded
eligibility populations.
(b) Terms and Conditions.--Grants under this section shall be made
available under such terms and conditions, including the approval of a
grant application, as the Secretary shall specify.
(c) Authorization of Appropriations.--There are authorized to be
appropriated such sums as may be necessary to provide for grants under
this section.
Medicaid/SCHIP Optional Coverage for Young Adults Act of 2003 - Amends titles XIX (Medicaid) and XXI (State Children's Health Insurance) (SCHIP) of the Social Security Act to give States the option of providing SCHIP and Medicaid coverage, with an enhanced matching rate, to low-income youth up to age 23.

Directs the Secretary to provide for grants to small and rural States in order to enable them to implement expansions of eligibility for children and young adults under SSA titles XIX and XXI.