[[Page S11377]]

     insured with primary mortgage insurance, extended mortgage
     insurance, and supplemental mortgage insurance.
       ``(2) Premiums.--The issuer of securities guaranteed by the
     Association under this subsection that are backed by
     qualifying privately insured mortgages shall--
       ``(A) for primary mortgage insurance, collect from the
     mortgagor, and remit to the qualified mortgage insurer, the
     premium or premiums as may be established by the qualified
     mortgage insurer in accordance with applicable Federal or
     State law; and
       ``(B) for extended mortgage insurance and supplemental
     mortgage insurance, pay and remit the premium or premiums to
     the qualified mortgage insurer from the sums attributable to
     the difference between the interest rates applicable to the
     mortgages in the particular pool and the interest rate set
     forth on the trust certificate or security guaranteed by the
     Association based on and backed by such mortgages, and
     without additional premium charge therefore to the mortgagor.
       ``(3) Disposition of property upon default.--Upon default
     by a mortgagor of a mortgage guaranteed under this
     subsection, the property covered by the mortgage shall be
     disposed of by the issuer of the securities guaranteed under
     this subsection or the qualified mortgage insurer in
     accordance with the customary policies and procedures of that
     issuer and insurer.
       ``(4) Authority.--As part of the authority provided to the
     Association to issue guarantees under this subsection for
     fiscal year 2002, the Association may, during fiscal year
     2002, issue guarantees of the timely payment of principal and
     interest on trust certificates or other securities based on
     and backed by qualifying privately insured mortgages in an
     aggregate amount equal to not more than $50,000,000,000.
       ``(5) Regulatory power of the secretary.--The Secretary
     shall--
       ``(A) have authority to review and approve premiums and
     other terms and conditions established for the primary
     mortgage insurance covering the mortgages contained in the
     trusts or pools guaranteed by the Association under this
     subsection, and shall have the authority to approve
     participation in the program based on safety and soundness;
       ``(B) prescribe such rules and regulations as shall be
     necessary and proper to ensure that the purposes of the Home
     Ownership Expansion Act of 2001 are accomplished.
       ``(i) Definitions.--As used in this section:
       ``(1) Conventional mortgage limit.--The term `conventional
     mortgage limit' means the greater of the applicable maximum
     original principal obligation of conventional mortgages
     established by--
       ``(A) the Federal National Mortgage Association, pursuant
     to section 302(b)(2); or
       ``(B) the Federal Home Loan Mortgage Corporation, pursuant
     to section 305(a)(2) of the Federal Home Loan Mortgage
     Corporation Act (12 U.S.C. 1454(a)(2)).
       ``(2) Coverage percentage.--The term `coverage percentage'
     means the percentage of the total of the outstanding
     principal balance on a mortgage, and accrued interest,
     advances, and reasonable expenses related to property
     preservation and foreclosure, that is subject to payment in
     the event of a claim under a policy of primary mortgage
     insurance on a qualifying privately insured mortgage.
       ``(3) Extended mortgage insurance.--The term `extended
     mortgage insurance' means insurance that--
       ``(A) is issued by a qualified mortgage insurer;
       ``(B) guarantees and insures against losses on the
     mortgage;
       ``(C) has the same coverage percentage and other
     substantially similar terms and conditions as the primary
     mortgage insurance for the mortgage;
       ``(D) becomes effective upon mandatory cancellation or
     termination of the primary mortgage insurance, and remains in
     effect until the mortgage is paid in full; and
       ``(E) is not subject to mandatory cancellation or
     termination.
       ``(4) Mandatory cancellation or termination.--The term
     `mandatory cancellation or termination' means cancellation or
     termination of mortgage insurance, as provided in section 3
     of the Homeowners Protection Act of 1998 (12 U.S.C. 4902) or
     by a protected State law, as defined in section 9 of that
     Act.
       ``(5) Primary mortgage insurance.--The term `primary
     mortgage insurance' means insurance that--
       ``(A) is issued by a qualified mortgage insurer;
       ``(B) guarantees and insures against losses on the
     mortgage, under standard terms and conditions generally
     offered in the private mortgage guaranty insurance industry;
       ``(C) has a coverage percentage equal to--
       ``(i) not less than 12 percent, if the principal-to-value
     ratio is greater than 80 percent and not greater than 85
     percent;
       ``(ii) not less than 25 percent, if the principal-to-value
     ratio is greater than 85 percent and not greater than 90
     percent;
       ``(iii) not less than 30 percent, if the principal-to-value
     ratio is greater than 90 percent and not greater than 95
     percent; and
       ``(iv) not less than 35 percent, if the principal-to-value
     ratio is greater than 95 percent; and
       ``(D) may be canceled or terminated by the mortgagor,
     issuer, or qualified mortgage insurer only pursuant to
     mandatory cancellation or termination.
       ``(6) Principal-to-value ratio.--The term `principal-to-
     value ratio' means the ratio of the original outstanding
     principal balance of a first mortgage to the value of the
     property securing the mortgage, as established at the time of
     origination by appraisal or other reliable indicia of
     property, conducted or performed not earlier than 6 months
     before the date of origination, and not later than that date
     of origination.
       ``(7) Qualified mortgage insurer.--The term `qualified
     mortgage insurer' means a provider of private mortgage
     insurance, as defined in section 2 of the Homeowners
     Protection Act of 1998 (12 U.S.C. 4901), that--
       ``(A) is authorized and licensed by a State or an
     instrumentality of a State to transact private mortgage
     insurance business in the State in which the provider is
     transacting that business, excluding any entity that is
     exempt from State licensing requirements;
       ``(B) is rated in 1 of the 2 highest rating categories by
     not less than 1 nationally recognized statistical rating
     organization; and
       ``(C) meets such additional qualifications as may be
     determined by the Association.
       ``(8) Qualifying privately insured mortgage.--The term
     `qualifying privately insured mortgage' means a first
     mortgage--
       ``(A) that is not--
       ``(i) insured under title II of this Act, except as
     specifically provided in this section;
       ``(ii) insured under title V of the Housing Act of 1949 (42
     U.S.C. 1471 et seq.);
       ``(iii) insured or guaranteed under chapter 37 of title 38,
     United States Code; or
       ``(iv) made or guaranteed under part B of title V of the
     Public Health Service Act (42 U.S.C. 290bb et seq.);
       ``(B) that--
       ``(i) is secured by property comprising 1-to-4 family
     dwelling units;
       ``(ii) has a term of not longer than 30 years;
       ``(iii) has a principal-to-value ratio of more than 80
     percent; and
       ``(iv) has an original principal obligation that does not
     exceed the conventional mortgage limit;
       ``(C) not more than 1 payment of which has been delinquent
     by more than 30 days, and no payment of which has been
     delinquent by more than 60 days, during the 12-month period
     immediately preceding the time of guarantee; and
       ``(D) that is covered by primary mortgage insurance,
     extended mortgage insurance, and supplemental mortgage
     insurance.
       ``(9) Supplemental mortgage insurance.--The term
     `supplemental mortgage insurance' means insurance that--
       ``(A) is issued by a qualified mortgage insurer;
       ``(B) guarantees and insures against losses on the mortgage
     under such terms and conditions as are reasonably acceptable
     to the Association;
       ``(C) becomes effective on the date on which the guaranty
     becomes effective; and
       ``(D) terminates as if subject to automatic termination
     under section 3(b) of the Homeowners Protection Act of 1998
     (12 U.S.C. 4902(b)), subject to the conditions stated in that
     section, or when the mortgage is paid in full, whichever
     occurs first.
       ``(10) Trust or pool.--A trust or pool referred to in this
     section means a trust or pool composed only of--
       ``(A) qualifying privately insured mortgages; or
       ``(B) mortgages insured under title II.''.
       (c) Guaranty Fee.--Section 306(g)(3)(A) of the National
     Housing Act (12 U.S.C. 1721(g)(3)(A)) is amended--
       (1) by inserting ``(i)'' after ``(A)''; and
       (2) by adding at the end the following:
       ``(ii) The Association shall assess and collect a fee in an
     amount equal to not more than 8 basis points, as determined
     by the Secretary, in order to generate revenues to the
     Federal Government in excess of the cost to the Federal
     Government, as defined in section 502 of the Federal Credit
     Reform Act of 1990 (2 U.S.C. 661a), of the guaranty of the
     timely payment of principal and interest on trust
     certificates or other securities based on or backed by
     qualifying privately insured mortgages under subsection
     (h).''.
       (d) Voluntary Program Participation; No Federal Contractor
     Status.--Section 306(g) of the National Housing Act (12
     U.S.C. 1721(g)) is amended by adding at the end the
     following:
       ``(4) Nothing in this subsection shall be construed to
     require any issuer to issue any trust certificate or security
     that is based on and backed by a trust or pool composed of
     qualifying privately insured mortgages.
       ``(5) Notwithstanding any other provision of law, a
     qualified mortgage insurer that participates in the guarantee
     program under subsection (h) shall not be considered, by
     virtue of such participation, as entering into a contract
     with any Federal department or agency, or participating in
     any program or activity receiving Federal financial
     assistance, or participating in any program or activity
     conducted by any Federal department or agency. Nothing in
     this paragraph is intended to deny or otherwise affect the
     rights of the Association as the assignee, holder, or
     beneficiary of a mortgage insurance contract.''.
       (e) Reinsurer Ratings Requirements.--Section 306(g) of the
     National Housing Act (12 U.S.C. 1721(g)), as amended by this
     Act, is amended by adding at the end the following:
       ``(6) A qualified mortgage insurer may not reinsure any
     portion of its obligations under subsection (h) with any
     reinsurance that--
       ``(A) is not rated in 1 of the 2 highest rating categories
     by not less than 1 nationally recognized statistical rating
     organization; or
       ``(B) fails to meet such other requirements as the
     Secretary may deem appropriate.''.

[[Page S11378]]

     SEC. 3. CONFORMING AMENDMENTS.

       (a) Guarantees.--Section 306(g)(1) of the National Housing
     Act (12 U.S.C. 1721(g)(1)) is amended--
       (1) by inserting ``or subsection (h)'' after the term
     ``this subsection'' each place it appears;
       (2) by inserting ``(A)'' after ``(1)'';
       (3) by striking ``The Association shall collect'' and
     inserting the following:
       ``(B) The Association shall collect'';
       (4) by striking ``In the event'' and inserting the
     following:
       ``(C) In the event'';
       (5) by striking ``In any case'' and inserting the
     following:
       ``(D) In any case'';
       (6) in subparagraph (D), as so designated by paragraph (4)
     of this subsection--
       (A) by striking ``(I)'' and inserting ``(i)'';
       (B) by striking ``(II)'' and inserting ``(ii)''; and
       (C) by striking ``(III)'' and inserting ``(iii)'';
       (7) by striking ``The Association is hereby empowered,''
     and all that follows through ``against which the guaranteed
     securities are issued.'' and inserting the following:
       ``(E)(i) The Association may, in connection with any
     guaranty under this subsection or subsection (h), whether
     before or after any default by the issuer or any default by
     the qualified mortgage insurer (in the case of securities
     based on and backed by qualifying privately insured
     mortgages)--
       ``(I) provide by contract with the issuer for the
     extinguishment, upon default by the issuer, of any
     redemption, equitable, legal, or other right, title, or
     interest of the issuer in any mortgage or mortgages
     constituting the trust or pool against which the guaranteed
     securities are issued; or
       ``(II) provide by contract with the qualified mortgage
     insurer for the extinguishment, upon default by the qualified
     mortgage insurer, of any redemption, equitable, legal, or
     other right, title, or interest of the qualified mortgage
     insurer in such mortgage or mortgages, as well as any related
     primary mortgage insurance, extended mortgage insurance, or
     supplemental mortgage insurance coverage or any future
     premiums and proceeds related thereto.
       ``(ii) With respect to any issue of guaranteed securities--
       ``(I) in the event of default by the issuer, and pursuant
     otherwise to the terms of the contract, the mortgages that
     constitute the trust or pool referred to in clause (i) shall
     become the absolute property of the Association, subject only
     to the unsatisfied rights of the holders of the securities
     based on and backed by that trust or pool; and
       ``(II) in the event of default by the qualified mortgage
     insurer, and pursuant otherwise to the terms of the contract,
     any right of the qualified mortgage insurer with respect to
     the mortgages that constitute such trust or pool and any
     related primary mortgage insurance, extended mortgage
     insurance, or supplemental mortgage insurance coverage and
     any future premiums and proceeds related thereto shall become
     the absolute property of the Association, subject only to the
     unsatisfied rights of the holders of the securities based on
     and backed by such trust or pool and to the unsatisfied
     rights of any insured issuer with respect to any mortgage
     insurance coverage.
       ``(F) No State, local, or Federal law (other than a Federal
     statute enacted expressly in limitation of this subsection
     after the date of enactment of the Home Ownership Expansion
     Act of 2001), shall preclude or limit the exercise by the
     Association of--
       ``(i) its power to contract with the issuer, or the
     qualified mortgage insurer on the terms stated in
     subparagraph (E);
       ``(ii) its rights to enforce any such contract with the
     issuer or the qualified mortgage insurer; or
       ``(iii) its ownership rights, as provided in subparagraph
     (E), with respect to the mortgages constituting the trust or
     pool against which the guaranteed securities are issued, and
     with respect to any related primary mortgage insurance,
     extended mortgage insurance, or supplemental mortgage
     insurance coverage and any future premiums and proceeds
     related thereto.'';
       (8) by striking ``The full faith'' and inserting the
     following:
       ``(G) The full faith''; and
       (9) by striking ``There shall be'' and inserting the
     following:
       ``(H) There shall be''.
       (b) Separate Accountability.--Section 307 of the National
     Housing Act (12 U.S.C. 1722) is amended--
       (1) by striking ``All'' and inserting ``(a) In General.--
     All''; and
       (2) by adding at the end the following:
       ``(b) Limitation.--Notwithstanding subsection (a), with
     respect to qualifying privately insured mortgages (as defined
     in section 306(i)), related earnings described in subsection
     (a) of this section or other amounts as become available
     after such allowances and as are attributable to the fees and
     charges assessed or collected in connection with the guaranty
     of trust certificates or securities based on or backed by
     such qualifying privately insured mortgages shall inure to
     the benefit of and may be retained by the Secretary in
     support of programs under titles II and III of this Act.''.

     SEC. 4. IMPLEMENTATION AND REPORT.

       (a) In General.--The Government National Mortgage
     Association shall provide for the initial implementation of
     this Act and the amendments made by this Act by--
       (1) giving notice to its participating issuers; and
       (2) submitting a report to the Chairpersons and Ranking
     Members of the Committee on Banking, Housing, and Urban
     Affairs of the Senate, and the Committee on Financial
     Services of the House of Representatives, that confirms that
     the authority of the Secretary of Housing and Urban
     Development under section 306(h)(5) of the National Housing
     Act, as added by this Act, does not adversely impact the
     safety and soundness of the Government National Mortgage
     Association.
       (b) Publication.--The notice required by subsection (a)
     shall be published not later than 120 days after the date of
     enactment of this Act.
       (c) Report.--The report submitted in accordance with
     subsection (a) shall include an economic analysis of the
     adequacy of the guarantee fee provided for in section
     306(g)(3)(A)(ii) of the National Housing Act, as added by
     this Act.
                                 ______

      By Mr. BINGAMAN (for himself, Mr. Jeffords, Mr. Leahy, and Mrs.
        Murray):
  S. 1625. A bill to require the Secretary of Health and Human Services
to approve up to 4 State waivers to allow a State to use its allotment
under the State children's health insurance program under title XXI of
the Social Security Act to increase the enrollment of children eligible
for medical assistance under the Medicaid Program under title XIX of
such Act; to the Committee on Finance.
  Mr. BINGAMAN. Mr. President, the legislation I am introducing today
with Senators Jeffords, Leahy, and Murray entitled the ``Children's
Health Equity Act of 2001'' addresses an inequity that was created
during the establishment of the State Children's Health Insurance
Program, CHIP, that unfairly penalized certain States that had done the
right thing and had expanded Medicaid coverage to children prior to the
enactment of the bill.
  While the Congress recognized this fact for some States and
``grandfathered'' in their expansions so those States could use the new
CHIP funding for the children of their respective states, the
legislation failed to do so for others, including New Mexico. This had
the effect of penalizing a certain group of states for having done the
right thing.
  As a result, the ``Children's Health Equity Act of 2001'' addresses
this inequity by allowing four States, including New Mexico, Vermont,
Washington, and Rhode Island, to be allowed to also utilize their CHIP
allotments for coverage of children covered by Medicaid above their
1996 levels, putting them on a more level field with all other States
in the country.
  Mr. President, as you know, in 1997 Congress and President Clinton
agreed to establish the State Children's Health Insurance Program,
CHIP, and provide $48 billion over 10 years as an incentive to States
to provide health care coverage to uninsured, low-income children up
200 percent of poverty or beyond.
  During the negotiations of the Balanced Budget Act, BBA, of 1997,
Congress and the Administration properly recognized that certain states
were already undertaking Medicaid or separate state-run expansions of
coverage to children up to 185 percent of poverty or above and that
they would be allowed to use the new CHIP funding for those purposes.
The final bill specifically allowed the States of Florida, New York,
and Pennsylvania to convert their separate state-run programs into CHIP
expansions and States that had expanded coverage to children through
Medicaid after March 31, 1997, were also allowed to use CHIP funding
for their expansions.
  Unfortunately, New Mexico and other States that had enacted similar
expansions prior to March 1997 were denied the use of CHIP funding for
their expansions. This created an inequity among the states where some
were allowed to have their prior programs ``grandfathered'' into CHIP
and others were denied. Again, our bill addresses this inequity.
  New Mexico has a strong record of attempting to expand coverage to
children through the Medicaid program. In 1995, prior to the enactment
of CHIP, New Mexico expanded coverage to for all children through age
18 through the Medicaid program up to 185 percent of poverty. After
CHIP was passed, New Mexico further expanded its coverage up to 235
percent of poverty, above the level of the vast majority of states
across the country.

[[Page S11379]]

  Due to the inequity caused by CHIP, New Mexico has been allocated
$182 million from CHIP between fiscal years 1998 and 2000, and yet, has
only been able to spend slightly over $5 million as of the end of last
fiscal year. In other words, New Mexico has been allowed to spend only
3 percent of its Federal CHIP allocations.
  New Mexico is unable to spend its funding because it had enacted its
expansion of coverage to children up to 185 percent of poverty prior to
the enactment of CHIP and our State was not ``grandfathered'' into CHIP
as other comparable States were.
  The consequences for the children of New Mexico are enormous.
According to the Census Bureau, New Mexico has an estimated 129,000
uninsured children. In other words, almost 22 percent of all the
children in New Mexico are uninsured, despite the fact the State has
expanded coverage up to 235 percent of poverty. This is the fourth
highest rate of uninsured children in the country.
  This is a result of the fact that an estimated 103,000 of the 129,000
uninsured children in New Mexico are below 200 percent of poverty.
These children are, consequently, eligible for Medicaid but currently
unenrolled. With the exception of those few children between 185 and
200 percent of poverty who are eligible for CHIP funding, all of the
remaining uninsured children below 185 percent of poverty in New Mexico
are denied CHIP funding despite their need.
  Exacerbating this inequity is the fact that many states are accessing
their CHIP allotments to cover kids at poverty levels far below New
Mexico's current or past eligibility levels. The children in those
states are certainly no more worthy of health insurance coverage than
the children of New Mexico.
  As the most recent policy statement by the National Governors'
Association reads, ``The Governors believe that it is critical that
innovative States not be penalized for having expanded coverage to
children before the enactment of S-CHIP, which provides enhanced
funding to meet these goals. To this end, the Governors support
providing additional funding flexibility to states that had already
significantly expanded coverage to the majority of uninsured children
in their States.''
  Consequently, the bill I am introducing today corrects this inequity.
The bill reflects a carefully-crated response to the unintended
consequences of CHIP and brings much needed assistance to children
currently uninsured in my State and other similarly situated States,
including Washington, Vermont, and Rhode Island.
  Rather than simply changing the effective date included in the BBA
that helped a smaller subset of States, this initiative includes strong
maintenance of effort language as well as incentives for our State to
conduct outreach and enrollment efforts and program simplification to
find and enroll uninsured kids because we feel strongly that they
receive the health coverage for which they are eligible.
  The bill does not take money from other States' CHIP allotments. It
simply allows our States to spend our States' specific CHIP allotments
from the Federal Government on our uninsured children, just as other
States across the country are doing.
  Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
  There being no objection, the bill was ordered to be printed in the
Record, as follows:

                                S. 1625

       Be it enacted by the Senate and House of Representatives of
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Children's Health Equity Act
     of 2001''.

     SEC. 2. APPROVAL OF UP TO 4 STATE WAIVERS TO ALLOW TITLE XXI
                   ALLOTMENTS TO BE USED FOR INCREASING THE
                   ENROLLMENT OF MEDICAID CHILDREN.

       (a) Definitions.--In this section:
       (1) Child.--With respect to a State, the term ``child'' has
     the meaning given such term for purposes of the State
     medicaid program under title XIX of the Social Security Act.
       (2) Child health assistance.--The term ``child health
     assistance'' has the meaning given that term in section
     2110(a) of the Social Security Act (42 U.S.C. 1397jj(a)).
       (3) Enhanced fmap.--The term ``enhanced FMAP'' has the
     meaning given that term in section 2105(b) of such Act (42
     U.S.C. 1397ee(b)).
       (4) Federal medical assistance percentage.--The term
     ``Federal medical assistance percentage'' has the meaning
     given that term in section 1905(b) of such Act (42 U.S.C.
     1396d(b)).
       (5) Poverty line.--The term ``poverty line'' has the
     meaning given that term in section 2110(c)(5) of such Act (42
     U.S.C. 1397jj(c)(5)).
       (6) Secretary.--The term ``Secretary'' means the Secretary
     of Health and Human Services.
       (7) State child health plan.--The term ``State child health
     plan'' has the meaning given that term under section
     2110(c)(7) of such Act (42 U.S.C. 1397jj(c)(7)).
       (b) Approval of Certain Waivers.--The Secretary shall
     approve not more than 4 waiver applications under which the
     Secretary shall pay to a State that the Secretary determines
     satisfies the requirements described in subsection (c) the
     payment authorized under subsection (d).
       (c) Requirements.--The requirements described in this
     subsection are the following:
       (1) SCHIP income eligibility.--The State has a State child
     health plan that (whether implemented under title XIX or XXI
     of the Social Security Act)--
       (A) has the highest income eligibility standard permitted
     under title XXI of such Act as of January 1, 2001;
       (B) subject to paragraph (2), does not limit the acceptance
     of applications for children; and
       (C) provides benefits to all children in the State who
     apply for and meet eligibility standards on a statewide
     basis.
       (2) No waiting list imposed.--With respect to children
     whose family income is at or below 200 percent of the poverty
     line, the State does not impose any numerical limitation,
     waiting list, or similar limitation on the eligibility of
     such children for child health assistance under such State
     plan.
       (3) Additional requirements.--The State has implemented at
     least 4 of the following policies and procedures (relating to
     coverage of children under titles XIX and title XXI of the
     Social Security Act):
       (A) Uniform, simplified application form.--With respect to
     children who are eligible for medical assistance under
     section 1902(a)(10)(A) of that Act (42 U.S.C.
     1396a(a)(10)(A)), the State uses the same uniform, simplified
     application form (including, if applicable, permitting
     application other than in person) for purposes of
     establishing eligibility for benefits under titles XIX and
     XXI of that Act.
       (B) Elimination of asset test.--The State does not apply
     any asset test for eligibility under section 1902(l) or title
     XXI of the Social Security Act (42 U.S.C. 1396a(l), 1397aa et
     seq.) with respect to children.
       (C) Adoption of 12-month continuous enrollment.--The State
     provides that eligibility shall not be regularly redetermined
     more often than once every year under title XXI of such Act
     or for children described in section 1902(a)(10)(A) of such
     Act (42 U.S.C. 1396a(a)(10)(A)).
       (D) Same verification and redetermination policies;
     automatic reassessment of eligibility.--With respect to
     children who are eligible for medical assistance under
     section 1902(a)(10)(A) of such Act (42 U.S.C.
     1396a(a)(10)(A)), the State provides for initial eligibility
     determinations and redeterminations of eligibility using the
     same verification policies (including with respect to face-
     to-face interviews), forms, and frequency as the State uses
     for such purposes under title XXI of that Act, and, as part
     of such redeterminations, provides for the automatic
     reassessment of the eligibility of such children for
     assistance under titles XIX and XXI.
       (E) Outstationing enrollment staff.--The State provides for
     the receipt and initial processing of applications for
     benefits under title XXI of such Act and for children under
     title XIX of that Act at facilities defined as
     disproportionate share hospitals under section 1923(a)(1)(A)
     of such Act (42 U.S.C. 1396r-4(a)(1)(A)) and Federally-
     qualified health centers described in section 1905(l)(2)(B)
     of that Act (42 U.S.C. 1396d(l)(2)(B)) consistent with
     section 1902(a)(55) of that Act (42 U.S.C. 1396a(a)(55)).
       (d) Payment Authorized.--
       (1) In general.--Notwithstanding any provision of title XIX
     or XXI of the Social Security Act, or any other provision of
     law, with respect to a State with a waiver approved under
     this section that satisfies the requirements of subsection
     (c) (and that otherwise has a State child health plan
     approved under title XXI of the Social Security Act), the
     Secretary shall pay to the State from its allotment under
     section 2104 of the Social Security Act (42 U.S.C. 1397dd) an
     amount for each fiscal year (beginning with fiscal year 2002)
     determined under subparagraph (D) as follows:
       (A) Base expenditure amount.--The Secretary shall determine
     the total amount of expenditures for medical assistance under
     title XIX of the Social Security Act in the State for
     children described in paragraph (2) for fiscal year 1995.
       (B) Current expenditure amount.--The Secretary shall
     determine the total amount of expenditures for medical
     assistance under title XIX of such Act in the State for
     children described in paragraph (2) for the fiscal year
     involved.
       (C) Increased expenditures.--The Secretary shall determine
     the number (if any) by which the total amount determined
     under subparagraph (B) exceeds the total amount determined
     under subparagraph (A).

[[Page S11380]]

       (D) Bonus amount.--The amount determined under this
     subparagraph for a fiscal year is equal to the product of the
     following:
       (i) The total amount determined under subparagraph (C).
       (ii) The difference between the enhanced FMAP and the
     Federal medical assistance percentage for that State for the
     fiscal year involved.
       (2) Children described.--For purposes of paragraph (1)(A),
     the children described in this paragraph are--
       (A) children who are eligible and enrolled for medical
     assistance under title XIX of the Social Security Act; and
       (B) children who--
       (i) would be described in subparagraph (A) but for having
     family income that exceeds the highest income eligibility
     level applicable to such individuals under the State plan;
     and
       (ii) would be considered disabled under section
     1614(a)(3)(C) of the Social Security Act (42 U.S.C.
     1382c(a)(3)(C)) (determined without regard to the reference
     to age in that section but for having earnings or deemed
     income or resources, as determined under title XVI of such
     Act for children) that exceed the requirements for receipt of
     supplemental security income benefits.
       (3) Order of title xxi payments.--With respect to a State
     with a waiver approved under this section, payments to the
     State under section 2105(a) of the Social Security Act (42
     U.S.C. 1397ee(a)) for a fiscal year shall, notwithstanding
     paragraph (2) of such section, be made in the following
     order:
       (A) First, for expenditures for items described in
     paragraph (1)(A) of section 2105(a) of such Act.
       (B) Second, for expenditures for items described in
     paragraph (1)(B) of such section.
       (C) Third, for the payment authorized under subsection
     (d)(1) of this section.
       (D) Fourth, for expenditures for items described in
     paragraph (1)(C) of section 2105(a) of the Social Security
     Act.
       (E) Fifth, for expenditures for items described in
     paragraph (1)(D) of such section.
                                 ______

      By Mr. BINGAMAN (for himself, Mr. Cochran, Mr. Daschle, Mrs.
        Lincoln, Ms. Collins, Mrs. Carnahan, Mr. Hutchinson, and Mr.
        Corzine):
  S. 1626. A bill to provide disadvantaged children with access to
dental services; to the Committee on Finance.
  Mr. BINGAMAN. Mr. President, the legislation I am introducing today
with Senators Cochran, Daschle, Lincoln, Collins, Carnahan, Hutchinson
of Arkansas, and Corzine entitled the ``Children's Dental Health
Improvement Act of 2001'' is designed to improve the access and
delivery of dental health services to our Nation's children through
Medicaid, the State Children's Health Insurance Program, SCHIP, the
Indian Health Service, IHS, and our Nation's safety net of community
health centers.
  The oral health problems facing children are highlighted in a
landmark report issued by the Surgeon General and the Department of
Health and Human Services, HHS, last year entitled Oral Health in
America: A Report of the Surgeon General in which he observed that our
Nation is facing what amounts to ``a `silent epidemic' of dental and
oral diseases.''
  In fact, dental caries, which refers to both decayed teeth or filled
cavities, is the most common childhood disease. According to the
Surgeon General, ``Among 5- to 17-year olds, dental caries is more than
5 times as common as a reported history of asthma and 7 times as common
as hay fever.'' In short, dental care is, as the Surgeon General adds,
``the most prevalent unmet health need among American children.''
  The severity of this problem is even greater among children is
poverty. Poor children aged 2 to 9 have twice the levels of untreated
decayed teeth as nonpoor children. Moreover, the Surgeon General has
found that poor Mexican American children have rates of untreated
decayed teeth that exceed 70 percent, a rate of true epidemic
proportions.
  For these children, their personal suffering is real. Many of the
oral diseases and disorders can cause severe pain, undermine self-
esteem and self-image, discourage normal social interaction, cause
other health problems, compromise nutritional status, and lead to
chronic stress and depression as well as incur great financial cost.
Lack of treatment is estimated to result in a loss of 1.6 million
school days annually, according to the National Center for Health
Statistics.
  The General Accounting Office, GAO, in its April 2000 report,
entitled ``Oral Health: Dental Disease is a Chronic Problem Among Low-
Income Populations,'' adds, ``Poor children suffer nearly 12 times more
restricted-activity days, such as missed school, than higher-income
children as a result of dental problems.''
  Incredibly, this could all be prevented. As the Surgeon General's
report notes, prevention programs in oral health that have been
designed and evaluated for children using a variety of fluoride and
dental sealant strategies has the ``potential of virtually eliminating
dental caries in all children.''
  Unfortunately, children do not get the dental services they need.
According to the Surgeon General,'' Although over 14 percent of
children under 18 have no form of private or public medical insurance,
more than twice that many, 23 million children, have no dental
insurance.'' The report adds, ``There are at least 2.6 children without
dental insurance for each child without medical insurance.''
  One important provision in the bill would grant States flexibility to
provide dental coverage to low-income children through the State
Children's Health Insurance Program, just as States currently are able
to do through Medicaid.
  Unfortunately, SCHIP law prohibits coverage of children for services
unless they are completely uninsured. As authors Ruth Almeida, Ian
Hill, and Genevieve Kenney of an Urban Institute report entitled Does
SCHIP Spell Better Dental Care for Children? An Early Look at New
Initiatives write, ``. . . many low-income children are covered by
employer-based or other private health insurance for their medical
care, but do not have a comprehensive dental benefit. Because these
children are privately insured, they are not eligible for SCHIP and
cannot avail themselves of dental coverage under SCHIP. Expanding SCHIP
to furnish dental services on a wraparound basis to privately covered
low-income children without dental coverage could help achieve broader
improvements in children's oral health.''
  For low-income children with medical coverage but no dental insurance
through the private sector, their only option would be to completely
dump their private coverage for their children in order to access SCHIP
coverage.
  Instead, the ``Children's Dental Health Improvement Act of 2001''
would create an option for states to provide low-income families with
the ability to receive wrap-around dental coverage through SCHIP
without having to completely drop their private insurance. This reduces
the crowd-out of private insurance, which was a priority of the
Congress during passage of SCHIP, and it provides low-income children
with dental services that other children in the same economic
circumstance are already receiving through SCHIP.
  In implementing such a change, I want to make it clear that I am in
strong support of providing additional funding to SCHIP to ensure that
these services are provided without reducing current levels of SCHIP
funding. I am concerned about SCHIP funding in forthcoming years,
particularly in those years referred to as the ``CHIP dip'' when
funding levels drop from over $4 billion annually to around $3 billion.
I have other legislation entitled, S. 1016, the ``Start Healthy, Stay
Healthy Act of 2001,'' that addresses this very problem.
  With those additional funds, I strongly believe that SCHIP, just as
Medicaid, should provide services to low-income children who are both
uninsured and underinsured. Children need a comprehensive set of child
health services, including dental services, to ensure their appropriate
health and development.
  However, coverage for these services is often not enough. Even when
children do have dental coverage, the access to care is often sorely
lacking. Medicaid is the largest insurer of dental coverage to
children. Yet, despite the design of the Medicaid program to ensure
access to comprehensive services for children, including dental care,
the Inspector General of the Department of Health and Human Services
reported in 1996 that only 18 percent of children eligible for Medicaid
received even a single preventive dental service. The same report shows
that no State provides preventive services to more than 50 percent of
eligible children. The factors are complex but the primary one is due
to limited dentist participation in Medicaid.

[[Page S11381]]

  According to GAO, in its September 2000 report entitled Oral Health:
Factors Contributing to Low Use of Dental Services by Low-Income
Populations, ``Of 39 states that provided information about dentists'
participation in Medicaid, 23 reported that fewer than half of the
states' dentists saw at least one Medicaid patient during 1999.'' Even
worse, a 1998 survey by the National Conference of State Legislatures
indicates that fewer than 20 percent of dentists participate in the
Medicaid program nationwide.
  The GAO concludes poor participation rates by dentists is due in
large part to poor reimbursement rates in Medicaid. As the GAO points
out, ``Our analysis showed that Medicaid payment rates are often well
below dentists' normal fees. Only 13 states had Medicaid rates that
exceeded two-thirds of the average regional fees dentists charged. . .
.''
  Clearly, Medicaid is chronically underfunded with respect to dental
care. The Surgeon General's report notes, ``On average, state Medicaid
agencies contribute only 2.3 percent of their child health expenditures
to dental care, whereas nationally, the percentage of all child health
expenditures dedicated to dental care is more than 10 times that rate,
almost 30 percent.''
  The good news is that many States, including New Mexico, are taking
actions to improve the participation of dentists in the Medicaid
program by raising low payment rates and reducing administrative
requirements. These efforts were highlighted by the GAO in its
September 2000 report. To further encourage such efforts, the
``Children's Dental Health Improvement Act of 2001'' provides $50
million annually as financial incentives and planning grants to states
to undertake additional improvements in their Medicaid programs
delivery of dental health services to children.
  In addition to Medicaid and SCHIP, the federal government administers
other health care programs providing dental services or providers for
low-income children and their families, including services administered
by community health centers and the Indian Health Service, IHS.
Unfortunately, both of these programs are underfunded and, as the GAO
found, ``report difficulty in meeting the dental needs of their target
populations.''
  For example, the GAO found that ``HHS and health center officials
report that the demand for dental services significantly exceeds the,
urban and rural health, centers' capacity to deliver it. In 1998 . . .,
a little more than half of the nearly 700 health center grantees funded
under this program had active dental programs.'' This is also true for
public health departments across the country.
  To assist the health centers and public health departments with this
need, the ``Children's Dental Health Improvement Act of 2001'' provides
$40 million to community health centers and public health departments
to expand dental health services through the hiring of additional
dental health professionals to serve low-income populations.
  This is particularly a problem that needs to be addressed in areas
with severe dental health professional shortages, such as New Mexico.
For example, New Mexico ranked next to last in the Nation with just
32.1 dentists per 100,000 population in 1998, according to HHS. This
compares to the national average of 48.4 per 100,000. Moreover, the
number of dentists in New Mexico declined by 7 percent between 1991 and
1998 while the State's population grew 12 percent. The result was a 17
percent decline in dentists per capita during the period.
  With regard to American Indian and Alaska Native populations, the
need is so great and the funding so little that a comprehensive
solution is requiring throughout the IHS system. With respect to the
unmet need, the GAO notes that ``American Indian and Alaska Native
children aged 2 to 4 years old have five times the rate of dental decay
that all children have.''
  Unfortunately, the GAO adds, ``. . . about one-fourth of IHS' dentist
positions at 269 HIS and tribal facilities were vacant in April 2000.
Vacancies have been chronic at IHS facilities, in the past 5 years, at
least 67 facilities have had one or more dentist position vacant for at
least a year. According to IHS officials, the primary reason for these
vacancies is that IHS is unable to provide a competitive salary for new
dentists. . .''
  The GAO continues, ``The IHS' dental personnel shortages translate
into a large unmet need for dental services among American Indians and
Alaska Natives. IHS reports that only 24 percent of the eligible
population had a dental visit in 1998. The personnel shortages have
also reduced the scope of services that facilities are able to provide.
According to IHS officials, available services have concentrated more
on acute and emergency care, while routine and restorative care have
dropped as a percentage of workload. Emergency services increased from
one-fifth of the workload in 1990 to more than one-third of the
workload in 1999.'
  To help alleviate this workforce shortage, the ``Children's Dental
Health Improvement Act of 2001'' provides IHS with the authority to
offer multi-year retention bonuses to dental providers offering
services through the IHS and tribal programs.
  The bill also provides for some technical amendments to ensure that
tribal organizations and community health centers are allowed to apply
for school-based dental sealant funding from the Centers for Disease
Control and Prevention, CDC.
  And finally, to help address this ``silent epidemic,'' HHS
implemented what is referred to as the Oral Health Initiative, OHI, to
coordinate dental health services in both the Health Resources and
Services Administration, HRSA, and the Center for Medicaid and Medicare
Services, CMS, formerly known as the Health Care Financing
Administration. Despite the progress of the Initiative, it has no legal
authority unlike other programs that target specific health needs of
children, such as Emergency Medical Services for Children or the
Traumatic Brain Injury Program. Because it lacks formal status and
program control, the OHI is susceptible to future disruptions or
dispanding.

  To ensure the continuation of the OHI, the ``Children's Health
Improvement Act of 2001'' provides statutory authority for the OHI and
authorized funding of $25 million to improve the oral health of low-
income populations served by both the public and private sector.
  The bipartisan legislation I am introducing today would improve the
access and delivery of dental health services to our Nation's children
through Medicaid, the State Children's Health Insurance Program, SCHIP,
the Indian Health Service, IHS, and our Nation's safety net of
community health centers. These problems are well-documented and call
out for congressional action as soon as possible.
  I would like to thank the American Dental Association, the American
Dental Education Association, the American Academy of Pediatric
Dentistry, the National Association of Community Health Centers, Inc.,
the National Association of Children's Hospitals, the American Dental
Hygienists' Association, and the Children's Dental Health Project for
their outstanding support and/or their technical advice on this
legislation. This bill is a result of their outstanding work.
  In particular, I want to thank Dr. Burt Edelstein and Libby Mullin of
the Children's Dental Health Project for their vast knowledge and
technical assistance on this issue. I want to thank Judy Sherman of the
American Dental Association, Myla Moss of the American Dental Education
Association, Dr. Heber Simmons and Scott Litch of the American Academy
of Pediatric Dentistry, Karen Sealander of the American Dental
Hygienists' Association, and Heather Mizeur of the National Association
of Community Health Centers, Inc., for their valuable insight,
technical advice, and support for this legislation. I look forward to
working with them all to ensure that we achieve increased access to
oral health care for our children.
  In addition to those organizations, I would like to thank the
following groups for their support of the bill, including: Academy of
General Dentistry, American Academy of Child and Adolescent Psychiatry,
American Academy of Oral and Maxillofacial Pathology, American Academy
of Periodontology, American Association of Dental Examiners, American
Association of Dental Research, American

[[Page S11382]]

Association of Endodontists, American Association of Public Health
Dentistry, American Association of Oral and Maxillofacial Surgeons,
American Association of Orthodontists, American Association of Women
Dentists, American College of Dentists, American College of Preventive
Medicine, American Dental Trade Association, American Public Health
Association, American Society of Dentistry for Children, American
Student Dental Association, Association of Clinicians of the
Underserved, Association of Maternal and Child Health Programs,
Association of State and Territorial Dental Directors, Dental Dealers
of America, Dental Manufacturers of America, Inc., Family Voices,
Hispanic Dental Association, International College of Dentists, USA,
March of Dimes, National Association of City and County Health
Officers, National Association of Local Boards of Health, National
Dental Association, National Health Law Program, New Mexico Department
of Health, Partnership for Prevention, Society of American Indian
Dentists, Special Care Dentistry, and United Cerebral Palsy
Associations.
  I request unanimous consent that a Fact Sheet and the text of the
bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the
Record, as follows:

                                S. 1626

       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 ``Children's
     Dental Health Improvement Act of 2001''.
       (b) Table of Contents.--The table of contents of this Act
     is as follows:

Sec. 1. Short title; table of contents.

TITLE I--IMPROVING DELIVERY OF PEDIATRIC DENTAL SERVICES UNDER MEDICAID
                               AND SCHIP

Sec. 101. Grants to improve the provision of dental services under
              medicaid and SCHIP.
Sec. 102. Authority to provide dental coverage under SCHIP as a
              supplement to other health coverage.

    TITLE II--IMPROVING DELIVERY OF PEDIATRIC DENTAL SERVICES UNDER
  COMMUNITY HEALTH CENTERS, PUBLIC HEALTH DEPARTMENTS, AND THE INDIAN
                             HEALTH SERVICE

Sec. 201. Grants to improve the provision of dental health services
              through community health centers and public health
              departments.
Sec. 202. Dental officer multiyear retention bonus for the Indian
              Health Service.
Sec. 203. Streamline process for designating dental health professional
              shortage areas.
Sec. 204. Demonstration projects to increase access to pediatric dental
              services in underserved areas.

   TITLE III--IMPROVING ORAL HEALTH PROMOTION AND DISEASE PREVENTION
                                PROGRAMS

Sec. 301. Oral health initiative.
Sec. 302. CDC reports.
Sec. 303. Early childhood caries.
Sec. 304. School-based dental sealant program.

TITLE I--IMPROVING DELIVERY OF PEDIATRIC DENTAL SERVICES UNDER MEDICAID
                               AND SCHIP

     SEC. 101. GRANTS TO IMPROVE THE PROVISION OF DENTAL SERVICES
                   UNDER MEDICAID AND SCHIP.

       Title V of the Social Security Act (42 U.S.C. 701 et seq.)
     is amended by adding at the end the following:

     ``SEC. 511. GRANTS TO IMPROVE THE PROVISION OF DENTAL
                   SERVICES UNDER MEDICAID AND SCHIP.

       ``(a) Authority to Make Grants.--In addition to any other
     payments made under this title to a State, the Secretary
     shall award grants to States that satisfy the requirements of
     subsection (b) to improve the provision of dental services to
     children who are enrolled in a State plan under title XIX or
     a State child health plan under title XXI (in this section,
     collectively referred to as the `State plans').
       ``(b) Requirements.--In order to be eligible for a grant
     under this section, a State shall provide the Secretary with
     the following assurances:
       ``(1) Improved service delivery.--The State shall have a
     plan to improve the delivery of dental services to children
     who are enrolled in the State plans, including providing
     outreach and administrative case management, improving
     collection and reporting of claims data, and providing
     incentives, in addition to raising reimbursement rates, to
     increase provider participation.
       ``(2) Adequate payment rates.--The State has provided for
     payment under the State plans for dental services for
     children at levels consistent with the market-based rates and
     sufficient enough to enlist providers to treat children in
     need of dental services.
       ``(3) Ensured access.--The State shall ensure it will make
     dental services available to children enrolled in the State
     plans to the same extent as such services are available to
     the general population of the State.
       ``(c) Application.--A State shall submit an application to
     the Secretary for a grant under this section in such form and
     manner and containing such information as the Secretary may
     require.
       ``(d) Authorization of Appropriations.--There are
     authorized to be appropriated to make grants under this
     section $50,000,000 for fiscal year 2002 and each fiscal year
     thereafter.
       ``(e) Application of Other Provisions of Title.--
       ``(1) In general.--Except as provided in paragraph (2), the
     other provisions of this title shall not apply to a grant
     made under this section.
       ``(2) Exceptions.--The following provisions of this title
     shall apply to a grant made under subsection (a) to the same
     extent and in the same manner as such provisions apply to
     allotments made under section 502(c):
       ``(A) Section 504(b)(6) (relating to prohibition on
     payments to excluded individuals and entities).
       ``(B) Section 504(c) (relating to the use of funds for the
     purchase of technical assistance).
       ``(C) Section 504(d) (relating to a limitation on
     administrative expenditures).
       ``(D) Section 506 (relating to reports and audits), but
     only to the extent determined by the Secretary to be
     appropriate for grants made under this section.
       ``(E) Section 507 (relating to penalties for false
     statements).
       ``(F) Section 508 (relating to nondiscrimination).
       ``(G) Section 509 (relating to the administration of the
     grant program).''.

     SEC. 102. AUTHORITY TO PROVIDE DENTAL COVERAGE UNDER SCHIP AS
                   A SUPPLEMENT TO OTHER HEALTH COVERAGE.

       (a) Authority To Provide Coverage.--
       (1) SCHIP.--
       (A) In general.--Section 2105(a)(1)(C) of the Social
     Security Act (42 U.S.C. 1397ee(a)(1)(C)) is amended--
       (i) by inserting ``(i)'' after ``(C)''; and
       (ii) by adding at the end the following:
       ``(ii) notwithstanding clause (i), in the case of a State
     that satisfies the conditions described in subsection (c)(8),
     for child health assistance that consists only of coverage of
     dental services for a child who would be considered a
     targeted low-income child if that portion of subparagraph (C)
     of section 2110(b)(1) relating to coverage of the child under
     a group health plan or under health insurance coverage did
     not apply, and such child has such coverage that does not
     include dental services; and''.
       (B) Conditions described.--Section 2105(c) of the Social
     Security Act (42 U.S.C. 1397ee(c)) is amended by adding at
     the end the following:
       ``(8) Conditions for provision of dental services only
     coverage.--For purposes of subsection (a)(1)(C)(ii), the
     conditions described in this paragraph are the following:
       ``(A) Income eligibility.--The State child health plan
     (whether implemented under title XIX or this XXI)--
       ``(i) has the highest income eligibility standard permitted
     under this title as of January 1, 2001;
       ``(ii) subject to subparagraph (B), does not limit the
     acceptance of applications for children; and
       ``(iii) provides benefits to all children in the State who
     apply for and meet eligibility standards.
       ``(B) No waiting list imposed.--With respect to children
     whose family income is at or below 200 percent of the poverty
     line, the State does not impose any numerical limitation,
     waiting list, or similar limitation on the eligibility of
     such children for child health assistance under such State
     plan.''.
       (C) State option to waive waiting period.--Section
     2102(b)(1)(B) of the Social Security Act (42 U.S.C.
     1397bb(b)(1)(B)) is amended--
       (i) in clause (i), by striking ``and'' at the end;
       (ii) in clause (ii), by striking the period and inserting
     ``; and''; and
       (iii) by adding at the end the following new clause:
       ``(iii) at State option, may not apply a waiting period in
     the case of child described in section 2105(a)(1)(C)(ii), if
     the State satisfies the requirements of section 2105(c)(8)
     and provides such child with child health assistance that
     consists only of coverage of dental services.''.
       (2) Application of enhanced match under medicaid.--Section
     1905 of the Social Security Act (42 U.S.C. 1396d) is
     amended--
       (A) in subsection (b), in the fourth sentence, by striking
     ``or subsection (u)(3)'' and inserting ``(u)(3), or (u)(4)'';
     and
       (B) in subsection (u)--
       (i) by redesignating paragraph (4) as paragraph (5); and
       (ii) by inserting after paragraph (3) the following new
     paragraph:
       ``(4) For purposes of subsection (b), the expenditures
     described in this paragraph are expenditures for dental
     services for children described in section 2105(a)(1)(C)(ii),
     but only in the case of a State that satisfies the
     requirements of section 2105(c)(8).''.
       (b) Effective Date.--The amendments made by subsection (a)
     take effect on October 1, 2001 and apply to child health
     assistance and medical assistance provided on or after that
     date.