To provide for 2 demonstration projects to study the effect of allowing States to extend medicaid coverage to certain low-income families not otherwise qualified to receive medicaid benefits.

Directs the Secretary of Health and Human Services to establish three-year demonstration projects in two States to study the effect on access to, and costs of, health care of extending Medicaid (title XIX of the Social Security Act) coverage to individuals who are not otherwise eligible for Medicaid benefits, but whose income is below 150 percent of the Federal poverty level. Prohibits project coverage of long-term care or pregnancy-related services. Limits the amount of cost-sharing required of project beneficiaries.