1. Providing flexibility with respect to premium assistance under Medicaid (a) In general Section 1906 of the Social Security Act ( 42 U.S.C. 1396e ) is amended— (1) in subsection (c)(2), by striking such plan. and inserting such group health plan. ; and (2) by inserting after subsection (c) the following new subsection: (d) State option for nonelderly, nondisabled adults (1) In general Beginning on January 1, 2018, in the case of a State electing the option described in paragraph (2) of subsection (a), the Secretary may, upon the approval of a State plan amendment submitted by the State, waive the requirement of paragraph (3) of such subsection to the extent such requirement provides for payment of premiums and deductibles and other cost-sharing obligations with respect to the items and services described in such paragraph furnished to individuals described in paragraph (3) of this subsection. (2) Cost-effectiveness (A) In general The Secretary may approve a State plan amendment under this subsection if the Secretary determines that the payment of premiums and deductibles and other cost-sharing obligations under the group health plan or plans involved is cost-effective relative to the amount of expenditures under the State plan, including administrative expenditures, and excluding payments for copayments or coinsurance, that the State would have made to provide comparable coverage of the individuals described in paragraph (3) involved. (B) Determination For purposes of subparagraph (A), cost-effectiveness shall be determined— (i) on an annual basis by comparing— (I) the amount of expenditures per employer for coverage under the group health plan or plans involved of the individuals described in paragraph (3) for the preceding 4 calendar quarters; to (II) the average per capita amount of expenditures that the State made under the State plan to provide comparable coverage of such individuals for such calendar quarters