(A)

in paragraph (1), by striking An application and inserting Subject to paragraph (4), an application; and

(B)

by adding at the end the following new paragraph:

(4)

(A)

An experimental, pilot, or demonstration project undertaken under subsection (a) may be approved or renewed by a State if such project is described in subparagraph (B).

(B)

An experimental, pilot, or demonstration project is described in this subparagraph if such project provides for a waiver of requirements with respect to a State plan (or a waiver of such plan) under title XIX such that—

(i)

individuals enrolled under such plan (or such waiver) may elect to participate in such project with respect to a year;

(ii)

such individuals who elect to so participate—

(I)

are furnished with an electronic benefits transfer card in an amount determined appropriate by the State for purposes of purchasing primary care services and medications during such year;

(II)

are furnished a cash payment by the State equal to the amount of funds remaining on the individual’s electronic benefits transfer card at the end of such year; and

(III)

are enrolled in a catastrophic insurance program determined appropriate by the State for purposes of covering services not described in subclause (I) and covering services that are described in such subclause if such individual exceeds the amount of funds provided to such individual on such card for such year; and

(iii)

Federal expenditures under such title for the period during which such project is in effect are equal to or lesser than what such expenditures would have been during such period if such project were not in effect.

(C)

(i)

In no case may a project described in subparagraph (B) result in an expenditure to pay for any abortion or to assist in the purchase, in whole or in part, of health benefit coverage that includes coverage of abortion.

(ii)

Clause (i) shall not apply to an abortion only if necessary to save the life of the mother or if the pregnancy is the result of an act of rape or incest.

(D)

For purposes of a State’s approval or renewal of an experimental, pilot, or demonstration project under subparagraph (A), each reference to the Secretary in subsection (a) shall be deemed to be a reference to the State.; and