Extension of funding for establishment and operation of State high risk health insurance pools

(a)

Authorization of appropriations

Subsection (c) of section 2745 of the Public Health Service Act (42 U.S.C. 300gg–45) is amended to read as follows:

(c)

Authorization of appropriations

(1)

Seed grants

For the purpose of carrying out subsection (a), there is authorized to be appropriated $15,000,000 for fiscal year 2005. (2)

Operation of pools

For the purpose of carrying out subsection (b), there is authorized to be appropriated $50,000,000 for each of the fiscal years 2005 through 2009. (3)

Availability; rule of construction

Funds appropriated under this subsection for a fiscal year shall remain available for obligation through the end of the following fiscal year. Nothing in this section shall be construed as providing a State with an entitlement to a grant under this section.

(b)

Change in requirements for qualified high risk pools

(1)

Change in requirement for operational grants

Subsection (b) of such section is amended— (A)in paragraph (1)(A), by inserting (or 200 percent in the case of a State that meets the requirements of paragraph (3)) after 150 percent; (B)in paragraph (1)(C), by striking after the end of fiscal year 2004 and inserting after the end of the last fiscal year for which a grant is provided under this paragraph; and (C)by adding at the end the following new paragraph:

(3)

Special rule for pools charging higher premiums

In the case of a qualified high risk pool of a State which charges premiums that exceed 150 percent of the premium for applicable standard risks, the State shall use at least 50 percent of the amount of the grant provided to carry out this subsection to reduce premiums for enrollees.

(2)

Change in definition of qualified high risk pool

Subsection (d) of such section is amended to read as follows:

(d)

Definitions

In this section: (1)

Qualified high risk pool

The term qualified high risk pool has the meaning given such term in section 2744(c)(2), except that a State may elect to meet the requirement of subparagraph (A) of such section (insofar as it requires the provision of coverage to all eligible individuals) through providing for the enrollment of eligible individuals through an acceptable alternative mechanism (as defined for purposes of section 2744) that includes a high risk pool as a component. (2)

Standard risk rate

The term standard risk rate means a rate that— (A)is determined under the State high risk pool by considering the premium rates charged by other health insurers offering health insurance coverage to individuals in the insurance market served; (B)is established using reasonable actuarial techniques; and (C)reflects anticipated claims experience and expenses for the coverage involved. (3)

State

The term State means any of the 50 States and the District of Columbia.

(3)

Effective date

The amendments made by this subsection shall apply to grants for fiscal years beginning with fiscal year 2005. (c)

Change in allotment formula for operational grants

Subsection (b)(2) of such section is amended— (1)by inserting (before fiscal year 2005) after for a fiscal year; and (2)by adding at the end the following:

The amount appropriated under subsection (c)(2) for a fiscal year beginning with fiscal year 2005 (less the portion of such amount made available to carry out subsection (f)) shall be made available to the States (including entities that operate the high risk pool under applicable State law in a State) that qualify for a grant under subsection (b) as follows: (A)An amount equal to 1/3 of such amount shall be allocated in equal amounts among such qualifying States. (B)An amount equal to 1/3 of such amount shall be allocated among such States so that the amount provided to a State bears the same ratio to such available amount as the number of uninsured individuals in the State bears to the total number of uninsured individuals in all such States (as determined by the Secretary). (C)An amount equal to 1/3 of such amount shall be allocated among such States so that the amount provided to a State bears the same ratio to such available amount as the number of individuals enrolled in health care coverage through the qualified high risk pool of the State bears to the total number of individuals so enrolled through qualified high risk pools in all such States (as determined by the Secretary).

(d)

Administrative provisions; annual report

Such section is amended by adding at the end the following new subsection:

(e)

Administrative provisions; annual report

(1)

Applications

To be eligible for a grant under this section, a State shall submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require. (2)

No entitlement

Nothing in this section shall be construed as providing a State with an entitlement to a grant under this section. (3)

Annual report

The Secretary shall submit to Congress an annual report on grants provided under this section. Each such report shall include information on the distribution of such grants among the States and the use of grant funds by States.

(e)

Bonus grants for supplemental consumer benefits

Such section is further amended— (1)in subsection (c)(2), as added by subsection (a), by adding at the end the following: Of the amount appropriated under the preceding sentence for fiscal year 2005, up to 50 percent shall be available for the purpose of carrying out subsection (f).; and (2)by adding at the end the following new subsection:

(f)

Bonus grants for supplemental consumer benefits

(1)

In general

In the case of each State that has established a qualified high risk pool, the Secretary shall provide, from the funds made available under subsection (c)(2) to carry out this subsection, a grant to be used to provide supplemental consumer benefits to enrollees or potential enrollees (or defined subsets of such enrollees or potential enrollees) in qualified high risk pools. (2)

Benefits

Funds provided to a State under paragraph (1) may be used only to provide one or more of the following benefits: (A)Low-income premium subsidies. (B)A reduction in premium trends, actual premiums, or other cost-sharing requirements. (C)An expansion or broadening of the pool of individuals eligible for coverage, such as through eliminating waiting lists, increasing enrollment caps, or providing flexibility in enrollment rules. (3)

Limitation

In no case shall the amount of a grant under this subsection to a State, from the amount made available under subsection (c)(2) for a fiscal year to carry out this subsection, exceed 10 percent of the amount so made available. (4)

Rule of construction

Nothing in this subsection shall be construed to prohibit a State that, on the date of enactment of this subsection, is in the process of implementing programs to provide benefits of the type described in paragraph (2), from being eligible for a grant under this subsection. (5)

Funding

(A)

Availability

Funds appropriated under this subsection for a fiscal year shall remain available for obligation through the end of the following fiscal year. (B)

Reallotment

If, on June 30 of a fiscal year for which funds are made available under this subsection, the Secretary determines that the full amounts will not be made available for grants under this subsection, such remaining amounts shall be made available and allotted among qualifying States under subsection (b) for the fiscal year in accordance with the formula under subsection (b)(2).