To amend the Social Security Act to guarantee comprehensive health care coverage for all children born after 2006.

June 23, 2005

Mr. STARK (for himself, Mr. ABERCROMBIE, Mr. BERMAN, Mr. BRADY of Pennsylvania, Mr. BROWN of Ohio, Mrs. CHRISTENSEN, Mr. CONYERS, Mr. CROWLEY, Mr. CUMMINGS, Mr. DAVIS of Illinois, Mr. DOGGETT, Mr. ENGEL, Mr. FALEOMAVAEGA, Mr. FILNER, Mr. GUTIERREZ, Mr. HINCHEY, Mr. JEFFERSON, Mr. KILDEE, Mr. KUCINICH, Ms. LEE, Mrs. MCCARTHY, Mr. MCDERMOTT, Mr. MCGOVERN, Ms. MILLENDER-MCDONALD, Mr. PALLONE, Mr. RANGEL, Mr. RUSH, Mr. RYAN of Ohio, Ms. SCHAKOWSKY, Mr. SHERMAN, Mr. VAN HOLLEN, Mr. WEINER, Mr. WEXLER, Ms. WOOLSEY, and Mr. GEORGE MILLER of California) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, 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

To amend the Social Security Act to guarantee comprehensive health care coverage for all children born after 2006.

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; FINDINGS.

(a) Short Title- This Act may be cited as the `MediKids Health Insurance Act of 2005'.

(b) Table of Contents- The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents; findings.

Sec. 2. Benefits for all children born after 2006.

`TITLE XXII--MEDIKIDS PROGRAM

Sec. 3. MediKids premium.

Sec. 4. Refundable credit for cost-sharing expenses under MediKids program.

Sec. 5. Report on long-term revenues.

(c) Findings- Congress finds the following:

(1) More than 9 million American children are uninsured.

(2) Children who are uninsured receive less medical care and less preventive care and have a poorer level of health, which result in lifetime costs to themselves and to the entire American economy.

(3) Although SCHIP and Medicaid are successfully extending a health coverage safety net to a growing portion of the vulnerable low-income population of uninsured children, they alone cannot achieve 100 percent health insurance coverage for our nation's children due to inevitable gaps during outreach and enrollment, fluctuations in eligibility, variations in access to private insurance at all income levels, and variations in States' ability to provide required matching funds.

(4) As all segments of society continue to become more transient, with many changes in employment over the working lifetime of parents, the need for a reliable safety net of health insurance which follows children across State lines, already a major problem for the children of migrant and seasonal farmworkers, will become a major concern for all families in the United States.

(5) The medicare program has successfully evolved over the years to provide a stable, universal source of health insurance for the nation's disabled and those over age 65, and provides a tested model for designing a program to reach out to America's children.

(6) The problem of insuring 100 percent of all American children could be gradually solved by automatically enrolling all children born after December 31, 2006, in a program modeled after Medicare (and to be known as `MediKids'), and allowing those children to be transferred into other equivalent or better insurance programs, including either private insurance, SCHIP, or Medicaid, if they are eligible to do so, but maintaining the child's default enrollment in MediKids for any times when the child's access to other sources of insurance is lost.

(7) A family's freedom of choice to use other insurers to cover children would not be interfered with in any way, and children eligible for SCHIP and Medicaid would continue to be enrolled in those programs, but the underlying safety net of MediKids would always be available to cover any gaps in insurance due to changes in medical condition, employment, income, or marital status, or other changes affecting a child's access to alternate forms of insurance.

(8) The MediKids program can be administered without impacting the finances or status of the existing Medicare program.

(9) The MediKids benefit package can be tailored to the special needs of children and updated over time.

(10) The financing of the program can be administered without difficulty by a yearly payment of affordable premiums through a family's tax filing (or adjustment of a family's earned income tax credit).

(11) The cost of the program will gradually rise as the number of children using MediKids as the insurer of last resort increases, and a future Congress always can accelerate or slow down the enrollment process as desired, while the societal costs for emergency room usage, lost productivity and work days, and poor health status for the next generation of Americans will decline.

(12) Over time 100 percent of American children will always have basic health insurance, and we can therefore expect a healthier, more equitable, and more productive society.

SEC. 2. BENEFITS FOR ALL CHILDREN BORN AFTER 2006.

(a) In General- The Social Security Act is amended by adding at the end the following new title:

`TITLE XXII--MEDIKIDS PROGRAM

`SEC. 2201. ELIGIBILITY.

`(a) Eligibility of Individuals Born After December 31, 2006; All Children Under 23 Years of Age in Fifth Year- An individual who meets the following requirements with respect to a month is eligible to enroll under this title with respect to such month:

`(1) AGE-

`(A) FIRST YEAR- As of the first day of the first year in which this title is effective, the individual has not attained 6 years of age.

`(B) SECOND YEAR- As of the first day of the second year in which this title is effective, the individual has not attained 11 years of age.

`(C) THIRD YEAR- As of the first day of the third year in which this title is effective, the individual has not attained 16 years of age.

`(D) FOURTH YEAR- As of the first day of the fourth year in which this title is effective, the individual has not attained 21 years of age.

`(E) FIFTH AND SUBSEQUENT YEARS- As of the first day of the fifth year in which this title is effective and each subsequent year, the individual has not attained 23 years of age.

`(2) CITIZENSHIP- The individual is a citizen or national of the United States or is permanently residing in the United States under color of law.

`(b) Enrollment Process- An individual may enroll in the program established under this title only in such manner and form as may be prescribed by regulations, and only during an enrollment period prescribed by the Secretary consistent with the provisions of this section. Such regulations shall provide a process under which--

`(1) individuals who are born in the United States after December 31, 2006, are deemed to be enrolled at the time of birth and a parent or guardian of such an individual is permitted to pre-enroll in the month prior to the expected month of birth;

`(2) individuals who are born outside the United States after such date and who become eligible to enroll by virtue of immigration into (or an adjustment of immigration status in) the United States are deemed enrolled at the time of entry or adjustment of status;

`(3) eligible individuals may otherwise be enrolled at such other times and manner as the Secretary shall specify, including the use of outstationed eligibility sites as described in section 1902(a)(55)(A) and the use of presumptive eligibility provisions like those described in section 1920A; and

`(4) at the time of automatic enrollment of a child, the Secretary provides for issuance to a parent or custodian of the individual a card evidencing coverage under this title and for a description of such coverage.

The provisions of section 1837(h) apply with respect to enrollment under this title in the same manner as they apply to enrollment under part B of title XVIII. An individual who is enrolled under this title is not eligible to be enrolled under an MA or MA-PD plan under part C of title XVIII.

`(c) Date Coverage Begins-

`(1) IN GENERAL- The period during which an individual is entitled to benefits under this title shall begin as follows, but in no case earlier than January 1, 2007:

`(A) In the case of an individual who is enrolled under paragraph (1) or (2) of subsection (b), the date of birth or date of obtaining appropriate citizenship or immigration status, as the case may be.

`(B) In the case of another individual who enrolls (including pre-enrolls) before the month in which the individual satisfies eligibility for enrollment under subsection (a), the first day of such month of eligibility.

`(C) In the case of another individual who enrolls during or after the month in which the individual first satisfies eligibility for enrollment under such subsection, the first day of the following month.

`(2) AUTHORITY TO PROVIDE FOR PARTIAL MONTHS OF COVERAGE- Under regulations, the Secretary may, in the Secretary's discretion, provide for coverage periods that include portions of a month in order to avoid lapses of coverage.

`(3) LIMITATION ON PAYMENTS- No payments may be made under this title with respect to the expenses of an individual enrolled under this title unless such expenses were incurred by such individual during a period which, with respect to the individual, is a coverage period under this section.

`(d) Expiration of Eligibility- An individual's coverage period under this section shall continue until the individual's enrollment has been terminated because the individual no longer meets the requirements of subsection (a) (whether because of age or change in immigration status).

`(e) Entitlement to MediKids Benefits for Enrolled Individuals- An individual enrolled under this title is entitled to the benefits described in section 2202.

`(f) Low-Income Information-

`(1) INQUIRY OF INCOME- At the time of enrollment of a child under this title, the Secretary shall make an inquiry as to whether the family income (as determined for purposes of section 1905(p)) of the family that includes the child is within any of the following income ranges:

`(A) UP TO 150 PERCENT OF POVERTY- The income of the family does not exceed 150 percent of the poverty line for a family of the size involved.

`(B) BETWEEN 150 AND 200 PERCENT OF POVERTY- The income of the family exceeds 150 percent, but does not exceed 200 percent, of such poverty line.

`(C) BETWEEN 200 AND 300 PERCENT OF POVERTY- The income of the family exceeds 200 percent, but does not exceed 300 percent, of such poverty line.

`(2) CODING- If the family income is within a range described in paragraph (1), the Secretary shall encode in the identification card issued in connection with eligibility under this title a code indicating the range applicable to the family of the child involved.

`(3) PROVIDER VERIFICATION THROUGH ELECTRONIC SYSTEM- The Secretary also shall provide for an electronic system through which providers may verify which income range described in paragraph (1), if any, is applicable to the family of the child involved.

`(g) Construction- Nothing in this title shall be construed as requiring (or preventing) an individual who is enrolled under this title from seeking medical assistance under a State medicaid plan under title XIX or child health assistance under a State child health plan under title XXI.

`SEC. 2202. BENEFITS.

`(a) Secretarial Specification of Benefit Package-

`(1) IN GENERAL- The Secretary shall specify the benefits to be made available under this title consistent with the provisions of this section and in a manner designed to meet the health needs of enrollees.

`(2) UPDATING- The Secretary shall update the specification of benefits over time to ensure the inclusion of age-appropriate benefits to reflect the enrollee population.

`(3) ANNUAL UPDATING- The Secretary shall establish procedures for the annual review and updating of such benefits to account for changes in medical practice, new information from medical research, and other relevant developments in health science.

`(4) INPUT- The Secretary shall seek the input of the pediatric community in specifying and updating such benefits.

`(5) LIMITATION ON UPDATING- In no case shall updating of benefits under this subsection result in a failure to provide benefits required under subsection (b).

`(b) Inclusion of Certain Benefits-

`(1) MEDICARE CORE BENEFITS- Such benefits shall include (to the extent consistent with other provisions of this section) at least the same benefits (including coverage, access, availability, duration, and beneficiary rights) that are available under parts A and B of title XVIII.

`(2) ALL REQUIRED MEDICAID BENEFITS- Such benefits shall also include all items and services for which medical assistance is required to be provided under section 1902(a)(10)(A) to individuals described in such section, including early and periodic screening, diagnostic services, and treatment services.

`(3) INCLUSION OF PRESCRIPTION DRUGS- Such benefits also shall include (as specified by the Secretary) benefits for prescription drugs and biologicals which are not less than the benefits for such drugs and biologicals under the standard option for the service benefit plan described in section 8903(1) of title 5, United States Code, offered during 2005.

`(4) COST-SHARING-

`(A) IN GENERAL- Subject to subparagraph (B), such benefits also shall include the cost-sharing (in the form of deductibles, coinsurance, and copayments) which is substantially similar to such cost-sharing under the health benefits coverage in any of the four largest health benefits plans (determined by enrollment) offered under chapter 89 of title 5, United States Code, and including an out-of-pocket limit for catastrophic expenditures for covered benefits, except that no cost-sharing shall be imposed with respect to early and periodic screening and diagnostic services included under paragraph (2).

`(B) REDUCED COST-SHARING FOR LOW INCOME CHILDREN- Such benefits shall provide that--

`(i) there shall be no cost-sharing for children in families the income of which is within the range described in section 2201(f)(1)(A);

`(ii) the cost-sharing otherwise applicable shall be reduced by 75 percent for children in families the income of which is within the range described in section 2201(f)(1)(B); or

`(iii) the cost-sharing otherwise applicable shall be reduced by 50 percent for children in families the income of which is within the range described in section 2201(f)(1)(C).

`(C) CATASTROPHIC LIMIT ON COST-SHARING- For a refundable credit for cost-sharing in the case of cost-sharing in excess of a percentage of the individual's adjusted gross income, see section 36 of the Internal Revenue Code of 1986.

`(c) Payment Schedule- The Secretary, with the assistance of the Medicare Payment Advisory Commission, shall develop and implement a payment schedule for benefits covered under this title. To the extent feasible, such payment schedule shall be consistent with comparable payment schedules and reimbursement methodologies applied under parts A and B of title XVIII.

`(d) Input- The Secretary shall specify such benefits and payment schedules only after obtaining input from appropriate child health providers and experts.

`(e) Enrollment in Health Plans- The Secretary shall provide for the offering of benefits under this title through enrollment in a health benefit plan that meets the same (or similar) requirements as the requirements that apply to Medicare Advantage plans under part C of title XVIII (other than any such requirements that relate to part D of such title). In the case of individuals enrolled under this title in such a plan, the payment rate shall be based on payment rates provided for under section 1853(c) in effect before the date of the enactment of the Medicare Prescription Drug, Modernization, and Improvement Act of 2003 (Public Law 108-173), except that such payment rates shall be adjusted in an appropriate manner to reflect differences between the population served under this title and the population under title XVIII.

`SEC. 2203. PREMIUMS.

`(a) Amount of Monthly Premiums-

`(1) IN GENERAL- The Secretary shall, during September of each year (beginning with 2006), establish a monthly MediKids premium for the following year. Subject to paragraph (2), the monthly MediKids premium for a year is equal to 1/12 of the annual premium rate computed under subsection (b).

`(2) ELIMINATION OF MONTHLY PREMIUM FOR DEMONSTRATION OF EQUIVALENT COVERAGE (INCLUDING COVERAGE UNDER LOW-INCOME PROGRAMS)- The amount of the monthly premium imposed under this section for an individual for a month shall be zero in the case of an individual who demonstrates to the satisfaction of the Secretary that the individual has basic health insurance coverage for that month. For purposes of the previous sentence enrollment in a medicaid plan under title XIX, a State child health insurance plan under title XXI, or under the medicare program under title XVIII is deemed to constitute basic health insurance coverage described in such sentence.

`(b) Annual Premium-

`(1) NATIONAL PER CAPITA AVERAGE- The Secretary shall estimate the average, annual per capita amount that would be payable under this title with respect to individuals residing in the United States who meet the requirement of section 2201(a)(1) as if all such individuals were eligible for (and enrolled) under this title during the entire year (and assuming that section 1862(b)(2)(A)(i) did not apply).

`(2) ANNUAL PREMIUM- Subject to subsection (d), the annual premium under this subsection for months in a year is equal to 25 percent of the average, annual per capita amount estimated under paragraph (1) for the year.

`(c) Payment of Monthly Premium-

`(1) PERIOD OF PAYMENT- In the case of an individual who participates in the program established by this title, subject to subsection (d), the monthly premium shall be payable for the period commencing with the first month of the individual's coverage period and ending with the month in which the individual's coverage under this title terminates.

`(2) COLLECTION THROUGH TAX RETURN- For provisions providing for the payment of monthly premiums under this subsection, see section 59B of the Internal Revenue Code of 1986.

`(3) PROTECTIONS AGAINST FRAUD AND ABUSE- The Secretary shall develop, in coordination with States and other health insurance issuers, administrative systems to ensure that claims which are submitted to more than one payor are coordinated and duplicate payments are not made.

`(d) Reduction in Premium for Certain Low-Income Families- For provisions reducing the premium under this section for certain low-income families, see section 59B(d) of the Internal Revenue Code of 1986.

`SEC. 2204. MEDIKIDS TRUST FUND.

`(a) Establishment of Trust Fund-

`(1) IN GENERAL- There is hereby created on the books of the Treasury of the United States a trust fund to be known as the `MediKids Trust Fund' (in this section referred to as the `Trust Fund'). The Trust Fund shall consist of such gifts and bequests as may be made as provided in section 201(i)(1) and such amounts as may be deposited in, or appropriated to, such fund as provided in this title.

`(2) PREMIUMS- Premiums collected under section 59B of the Internal Revenue Code of 1986 shall be periodically transferred to the Trust Fund.

`(3) TRANSITIONAL FUNDING BEFORE RECEIPT OF PREMIUMS- In order to provide for funds in the Trust Fund to cover expenditures from the fund in advance of receipt of premiums under section 2203, there are transferred to the Trust Fund from the general fund of the United States Treasury such amounts as may be necessary.

`(b) Incorporation of Provisions-

`(1) IN GENERAL- Subject to paragraph (2), subsection (b) (other than the last sentence) and subsections (c) through (i) of section 1841 shall apply with respect to the Trust Fund and this title in the same manner as they apply with respect to the Federal Supplementary Medical Insurance Trust Fund and part B, respectively.

`(2) MISCELLANEOUS REFERENCES- In applying provisions of section 1841 under paragraph (1)--

`(A) any reference in such section to `this part' is construed to refer to title XXII;

`(B) any reference in section 1841(h) to section 1840(d) and in section 1841(i) to sections 1840(b)(1) and 1842(g) are deemed references to comparable authority exercised under this title;

`(C) payments may be made under section 1841(g) to the Trust Funds under sections 1817 and 1841 as reimbursement to such funds for payments they made for benefits provided under this title; and

`(D) the Board of Trustees of the MediKids Trust Fund shall be the same as the Board of Trustees of the Federal Supplementary Medical Insurance Trust Fund.

`SEC. 2205. OVERSIGHT AND ACCOUNTABILITY.

`(a) Periodic GAO Reports- The Comptroller General of the United States shall periodically submit to Congress reports on the operation of the program under this title, including on the financing of coverage provided under this title.

`(b) Periodic MedPAC Reports- The Medicare Payment Advisory Commission shall periodically report to Congress concerning the program under this title.

`SEC. 2206. INCLUSION OF CARE COORDINATION SERVICES.

`(a) In General-

`(1) PROGRAM AUTHORITY- The Secretary, beginning in 2007, may implement a care coordination services program in accordance with the provisions of this section under which, in appropriate circumstances, eligible individuals under section 2201 may elect to have health care services covered under this title managed and coordinated by a designated care coordinator.

`(2) ADMINISTRATION BY CONTRACT- The Secretary may administer the program under this section through a contract with an appropriate program administrator.

`(3) COVERAGE- Care coordination services furnished in accordance with this section shall be treated under this title as if they were included in the definition of medical and other health services under section 1861(s) and benefits shall be available under this title with respect to such services without the application of any deductible or coinsurance.

`(b) Eligibility Criteria; Identification and Notification of Eligible Individuals-

`(1) INDIVIDUAL ELIGIBILITY CRITERIA- The Secretary shall specify criteria to be used in making a determination as to whether an individual may appropriately be enrolled in the care coordination services program under this section, which shall include at least a finding by the Secretary that for cohorts of individuals with characteristics identified by the Secretary, professional management and coordination of care can reasonably be expected to improve processes or outcomes of health care and to reduce aggregate costs to the programs under this title.

`(2) PROCEDURES TO FACILITATE ENROLLMENT- The Secretary shall develop and implement procedures designed to facilitate enrollment of eligible individuals in the program under this section.

`(c) Enrollment of Individuals-

`(1) SECRETARY'S DETERMINATION OF ELIGIBILITY- The Secretary shall determine the eligibility for services under this section of individuals who are enrolled in the program under this section and who make application for such services in such form and manner as the Secretary may prescribe.

`(2) ENROLLMENT PERIOD-

`(A) EFFECTIVE DATE AND DURATION- Enrollment of an individual in the program under this section shall be effective as of the first day of the month following the month in which the Secretary approves the individual's application under paragraph (1), shall remain in effect for one month (or such longer period as the Secretary may specify), and shall be automatically renewed for additional periods, unless terminated in accordance with such procedures as the Secretary shall establish by regulation. Such procedures shall permit an individual to disenroll for cause at any time and without cause at re-enrollment intervals.

`(B) LIMITATION ON REENROLLMENT- The Secretary may establish limits on an individual's eligibility to reenroll in the program under this section if the individual has disenrolled from the program more than once during a specified time period.

`(d) Program- The care coordination services program under this section shall include the following elements:

`(1) BASIC CARE COORDINATION SERVICES-

`(A) IN GENERAL- Subject to the cost-effectiveness criteria specified in subsection (b)(1), except as otherwise provided in this section, enrolled individuals shall receive services described in section 1905(t)(1) and may receive additional items and services as described in subparagraph (B).

`(B) ADDITIONAL BENEFITS- The Secretary may specify additional benefits for which payment would not otherwise be made under this title that may be available to individuals enrolled in the program under this section (subject to an assessment by the care coordinator of an individual's circumstance and need for such benefits) in order to encourage enrollment in, or to improve the effectiveness of, such program.

`(2) CARE COORDINATION REQUIREMENT- Notwithstanding any other provision of this title, the Secretary may provide that an individual enrolled in the program under this section may be entitled to payment under this title for any specified health care items or services only if the items or services have been furnished by the care coordinator, or coordinated through the care coordination services program. Under such provision, the Secretary shall prescribe exceptions for emergency medical services as described in section 1852(d)(3), and other exceptions determined by the Secretary for the delivery of timely and needed care.

`(e) Care Coordinators-

`(1) CONDITIONS OF PARTICIPATION- In order to be qualified to furnish care coordination services under this section, an individual or entity shall--

`(A) be a health care professional or entity (which may include physicians, physician group practices, or other health care professionals or entities the Secretary may find appropriate) meeting such conditions as the Secretary may specify;

`(B) have entered into a care coordination agreement; and

`(C) meet such criteria as the Secretary may establish (which may include experience in the provision of care coordination or primary care physician's services).

`(2) AGREEMENT TERM; PAYMENT-

`(A) DURATION AND RENEWAL- A care coordination agreement under this subsection shall be for one year and may be renewed if the Secretary is satisfied that the care coordinator continues to meet the conditions of participation specified in paragraph (1).

`(B) PAYMENT FOR SERVICES- The Secretary may negotiate or otherwise establish payment terms and rates for services described in subsection (d)(1).

`(C) LIABILITY- Care coordinators shall be subject to liability for actual health damages which may be suffered by recipients as a result of the care coordinator's decisions, failure or delay in making decisions, or other actions as a care coordinator.

`(D) TERMS- In addition to such other terms as the Secretary may require, an agreement under this section shall include the terms specified in subparagraphs (A) through (C) of section 1905(t)(3).

`SEC. 2207. ADMINISTRATION AND MISCELLANEOUS.

`(a) In General- Except as otherwise provided in this title--

`(1) the Secretary shall enter into appropriate contracts with providers of services, other health care providers, carriers, and fiscal intermediaries, taking into account the types of contracts used under title XVIII with respect to such entities, to administer the program under this title;

`(2) beneficiary protections for individuals enrolled under this title shall not be less than the beneficiary protections (including limits on balance billing) provided medicare beneficiaries under title XVIII;

`(3) benefits described in section 2202 that are payable under this title to such individuals shall be paid in a manner specified by the Secretary (taking into account, and based to the greatest extent practicable upon, the manner in which they are provided under title XVIII); and

`(4) provider participation agreements under title XVIII shall apply to enrollees and benefits under this title in the same manner as they apply to enrollees and benefits under title XVIII.

`(b) Coordination With Medicaid and SCHIP- Notwithstanding any other provision of law, individuals entitled to benefits for items and services under this title who also qualify for benefits under title XIX or XXI or any other Federally funded health care program that provides basic health insurance coverage described in section 2203(a)(2) may continue to qualify and obtain benefits under such other title or program, and in such case such an individual shall elect either--

`(1) such other title or program to be primary payor to benefits under this title, in which case no benefits shall be payable under this title and the monthly premium under section 2203 shall be zero; or

`(2) benefits under this title shall be primary payor to benefits provided under such title or program, in which case the Secretary shall enter into agreements with States as may be appropriate to provide that, in the case of such individuals, the benefits under titles XIX and XXI or such other program (including reduction of cost-sharing) are provided on a `wrap-around' basis to the benefits under this title.'.

(b) Conforming Amendments to Social Security Act Provisions-

(1) Section 201(i)(1) of the Social Security Act (42 U.S.C. 401(i)(1)) is amended by striking `or the Federal Supplementary Medical Insurance Trust Fund' and inserting `the Federal Supplementary Medical Insurance Trust Fund, and the MediKids Trust Fund'.

(2) Section 201(g)(1)(A) of such Act (42 U.S.C. 401(g)(1)(A)) is amended by striking `and the Federal Supplementary Medical Insurance Trust Fund established by title XVIII' and inserting `, the Federal Supplementary Medical Insurance Trust Fund, and the MediKids Trust Fund established by title XVIII'.

(c) Maintenance of Medicaid Eligibility and Benefits for Children-

(1) IN GENERAL- In order for a State to continue to be eligible for payments under section 1903(a) of the Social Security Act (42 U.S.C. 1396b(a))--

(A) the State may not reduce standards of eligibility, or benefits, provided under its State medicaid plan under title XIX of the Social Security Act or under its State child health plan under title XXI of such Act for individuals under 23 years of age below such standards of eligibility, and benefits, in effect on the date of the enactment of this Act; and

(B) the State shall demonstrate to the satisfaction of the Secretary of Health and Human Services that any savings in State expenditures under title XIX or XXI of the Social Security Act that results from children enrolling under title XXII of such Act shall be used in a manner that improves services to beneficiaries under title XIX of such Act, such as through expansion of eligibility, improved nurse and nurse aide staffing and improved inspections of nursing facilities, and coverage of additional services.

(2) MEDIKIDS AS PRIMARY PAYOR- In applying title XIX of the Social Security Act, the MediKids program under title XXII of such Act shall be treated as a primary payor in cases in which the election described in section 2207(b)(2) of such Act, as added by subsection (a), has been made.

(d) Expansion of Medpac Membership to 19-

(1) IN GENERAL- Section 1805(c) of the Social Security Act (42 U.S.C. 1395b-6(c)) is amended--

(A) in paragraph (1), by striking `17' and inserting `19'; and

(B) in paragraph (2)(B), by inserting `experts in children's health,' after `other health professionals,'.

(2) INITIAL TERMS OF ADDITIONAL MEMBERS-

(A) IN GENERAL- For purposes of staggering the initial terms of members of the Medicare Payment Advisory Commission under section 1805(c)(3) of the Social Security Act (42 U.S.C. 1395b-6(c)(3)), the initial terms of the 2 additional members of the Commission provided for by the amendment under subsection (a)(1) are as follows:

(i) One member shall be appointed for 1 year.

(ii) One member shall be appointed for 2 years.

(B) COMMENCEMENT OF TERMS- Such terms shall begin on January 1, 2006.

(3) DUTIES- Section 1805(b)(1)(A) of such Act (42 U.S.C. 1395b-6(b)(1)(A)) is amended by inserting before the semicolon at the end the following: `and payment policies under title XXII'.

SEC. 3. MEDIKIDS PREMIUM.

(a) General Rule- Subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to determination of tax liability) is amended by adding at the end the following new part:

`PART VIII--MEDIKIDS PREMIUM

`Sec. 59B. MediKids premium.

`SEC. 59B. MEDIKIDS PREMIUM.

`(a) Imposition of Tax- In the case of a taxpayer to whom this section applies, there is hereby imposed (in addition to any other tax imposed by this subtitle) a MediKids premium for the taxable year.

`(b) Individuals Subject to Premium-

`(1) IN GENERAL- This section shall apply to a taxpayer if a MediKid is a dependent of the taxpayer for the taxable year.

`(2) MEDIKID- For purposes of this section, the term `MediKid' means any individual enrolled in the MediKids program under title XXII of the Social Security Act.

`(c) Amount of Premium- For purposes of this section, the MediKids premium for a taxable year is the sum of the monthly premiums (for months in the taxable year) determined under section 2203 of the Social Security Act with respect to each MediKid who is a dependent of the taxpayer for the taxable year.

`(d) Exceptions Based on Adjusted Gross Income-

`(1) EXEMPTION FOR VERY LOW-INCOME TAXPAYERS-

`(A) IN GENERAL- No premium shall be imposed by this section on any taxpayer having an adjusted gross income not in excess of the exemption amount.

`(B) EXEMPTION AMOUNT- For purposes of this paragraph, the exemption amount is--

`(i) $19,245 in the case of a taxpayer having 1 MediKid,

`(ii) $24,135 in the case of a taxpayer having 2 MediKids,

`(iii) $29,025 in the case of a taxpayer having 3 MediKids, and

`(iv) $33,915 in the case of a taxpayer having 4 or more MediKids.

`(C) PHASEOUT OF EXEMPTION- In the case of a taxpayer having an adjusted gross income which exceeds the exemption amount but does not exceed twice the exemption amount, the premium shall be the amount which bears the same ratio to the premium which would (but for this subparagraph) apply to the taxpayer as such excess bears to the exemption amount.

`(D) INFLATION ADJUSTMENT OF EXEMPTION AMOUNTS- In the case of any taxable year beginning in a calendar year after 2005, each dollar amount contained in subparagraph (C) shall be increased by an amount equal to the product of--

`(i) such dollar amount, and

`(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting `calendar year 2004' for `calendar year 1992' in subparagraph (B) thereof.

If any increase determined under the preceding sentence is not a multiple of $50, such increase shall be rounded to the nearest multiple of $50.

`(2) PREMIUM LIMITED TO 5 PERCENT OF ADJUSTED GROSS INCOME- In no event shall any taxpayer be required to pay a premium under this section in excess of an amount equal to 5 percent of the taxpayer's adjusted gross income.

`(e) Coordination With Other Provisions-

`(1) NOT TREATED AS MEDICAL EXPENSE- For purposes of this chapter, any premium paid under this section shall not be treated as expense for medical care.

`(2) NOT TREATED AS TAX FOR CERTAIN PURPOSES- The premium paid under this section shall not be treated as a tax imposed by this chapter for purposes of determining--

`(A) the amount of any credit allowable under this chapter, or

`(B) the amount of the minimum tax imposed by section 55.

`(3) TREATMENT UNDER SUBTITLE F- For purposes of subtitle F, the premium paid under this section shall be treated as if it were a tax imposed by section 1.'.

(b) Technical Amendments-

(1) Subsection (a) of section 6012 of such Code is amended by inserting after paragraph (9) the following new paragraph:

`(10) Every individual liable for a premium under section 59B.'.

(2) The table of parts for subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:

`Part VIII. MediKids premium'.

(c) Effective Date- The amendments made by this section shall apply to months beginning after December 2006, in taxable years ending after such date.

SEC. 4. REFUNDABLE CREDIT FOR CERTAIN COST-SHARING EXPENSES UNDER MEDIKIDS PROGRAM.

(a) In General- Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to refundable credits) is amended by redesignating section 36 as section 37 and by inserting after section 35 the following new section:

`SEC. 36. CATASTROPHIC LIMIT ON COST-SHARING EXPENSES UNDER MEDIKIDS PROGRAM.

`(a) In General- In the case of a taxpayer who has a MediKid (as defined in section 59B) at any time during the taxable year, there shall be allowed as a credit against the tax imposed by this subtitle an amount equal to the excess of--

`(1) the amount paid by the taxpayer during the taxable year as cost-sharing under section 2202(b)(4) of the Social Security Act, over

`(2) 5 percent of the taxpayer's adjusted gross income for the taxable year.'.

(b) Coordination With Other Provisions- The excess described in subsection (a) shall not be taken into account in computing the amount allowable to the taxpayer as a deduction under section 162(l) or 213(a).

(c) Technical Amendments-

(1) The table of sections for subpart C of part IV of subchapter A of chapter 1 of such Code is amended by redesignating the item relating to section 36 as an item relating to section 37 and by inserting before such item the following new item:

`Sec. 36. Catastrophic limit on cost-sharing expenses under MediKids program.'.

(2) Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting `or 36' after `section 35'.

(d) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2006.

SEC. 5. REPORT ON LONG-TERM REVENUES.

Within one year after the date of the enactment of this Act, the Secretary of the Treasury shall propose a gradual schedule of progressive tax changes to fund the program under title XXII of the Social Security Act, as the number of enrollees grows in the out-years.

END