[House Report 109-192]
[From the U.S. Government Publishing Office]
109th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 109-192
======================================================================
STATE HIGH RISK POOL FUNDING EXTENSION ACT OF 2005
_______
July 27, 2005.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Barton of Texas, from the Committee on Energy and Commerce,
submitted the following
R E P O R T
[To accompany H.R. 3204]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Commerce, to whom was referred
the bill (H.R. 3204) to amend title XXVII of the Public Health
Service Act to extend Federal funding for the establishment and
operation of State high risk health insurance pools, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
CONTENTS
Page
Amendment........................................................ 1
Purpose and Summary.............................................. 3
Background and Need for Legislation.............................. 4
Hearings......................................................... 4
Committee Consideration.......................................... 4
Committee Votes.................................................. 5
Committee Oversight Findings..................................... 5
Statement of General Performance Goals and Objectives............ 5
New Budget Authority, Entitlement Authority, and Tax Expenditures 5
Committee Cost Estimate.......................................... 5
Congressional Budget Office Estimate............................. 5
Federal Mandates Statement....................................... 7
Advisory Committee Statement..................................... 7
Constitutional Authority Statement............................... 7
Applicability to Legislative Branch.............................. 8
Section-by-Section Analysis of the Legislation................... 8
Changes in Existing Law Made by the Bill, as Reported............ 9
Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``State High Risk Pool Funding Extension
Act of 2005''.
SEC. 2. 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).''.
Purpose and Summary
The purpose of H.R. 3204 is to extend Federal funding for
the establishment and operation of State high risk health
insurance pools.
Background and Need for Legislation
The State High Risk Pool Funding Extension Act of 2005
extends Federal funding that was made available under the Trade
Act of 2002 for the establishment and operation of State high-
risk health insurance pools.
High-risk pools provide health insurance for individuals
who have been unable to purchase coverage due to pre-existing
conditions, chronic illnesses, or conditions that make them too
expensive to insure. Risk pools allow eligible individuals to
purchase health insurance, pay premiums, and receive health
coverage through private insurers. In states that operate
pools, total premiums are capped at a fixed percentage of
market-based premiums, which helps to guarantee that the
product remains affordable. Because high-risk pools cover many
individuals who have major health problems, the costs of
operating the pools exceed the funds received through
beneficiary premiums. States operating pools have historically
made up for this shortfall through taxes upon health insurers
and also in some instances general fund revenues.
The Trade Act of 2002 provided new federal funding for
state high-risk pools. The Act provided $40 million for fiscal
years 2003 and 2004 for states to cover a portion of the losses
of qualified state high-risk pools. These funds were
distributed to states according to a formula that was based on
the number of uninsured persons living in the state. The Act
also provided $20 million for fiscal year 2003 for seed grants
to states seeking to establish high-risk pools.
H.R. 3204 would extend seed grant funding to $15 million
for fiscal year 2005, and would provide $50 million for each of
fiscal years 2005 through 2009 for the operation of a qualified
high-risk pool. H.R. 3204 also makes several changes to the
definition of a ``qualified high risk'' pool that would be
eligible for Federal grant money. In addition, H.R. 3204 would
alter the allotment formula for distributing grant money. This
formula would stipulate that \1/3\ of the allotted grant money
would be allocated in equal amounts among qualifying states,
\1/3\ of such amount will be allocated based on the number of
uninsured individuals in a state, and \1/3\ of such amount will
be allocated based on the number of individuals enrolled in the
state's high risk pool. Finally, this legislation provides
bonus grants to ensure that a significant portion of the
Federal funding is used to provide supplemental consumer
benefits for current and potential pool enrollees.
Hearings
The Committee on Energy and Commerce has not held hearings
on the legislation.
Committee Consideration
On Tuesday, June 14, 2005, the Subcommittee on Health met
in open markup session and approved H.R. 3204, the State High
Risk Pool Funding Extension Act of 2005, for full Committee
consideration, by a voice vote, a quorum being present. On
Wednesday, July 20, 2005, the full Committee met in open markup
session and ordered H.R. 3204 favorably reported to the House,
amended, by a voice vote, a quorum being present.
Committee Votes
There were no record votes taken in connection with
ordering H.R. 3204 reported. A motion by Mr. Barton to order
H.R. 3204 reported to the House, amended, was agreed to by a
voice vote.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee has not held oversight
or legislative hearings on this legislation.
Statement of General Performance Goals and Objectives
The goals of H.R. 3204 are to extend Federal funding for
the establishment and operation of State high risk health
insurance pools, and also to expand the definition of a
``qualified high risk pool'' that would qualify for Federal
funding.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee finds that H.R.
3204, the State High Risk Pool Funding Extension Act of 2005,
would result in no new or increased budget authority,
entitlement authority, or tax expenditures or revenues.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 25, 2005.
Hon. Joe Barton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3204, the State
High Risk Pool Funding Extension Act of 2005.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Shinobu
Suzuki.
Sincerely,
Elizabeth M. Robinson
(For Douglas Holtz-Eakin, Director).
Enclosure.
H.R. 3204--State High Risk Pool Funding Extension Act of 2005
Summary: H.R. 3204 would amend the Public Health Service
Act to extend the funding for the creation and operation of a
state high-risk health insurance pool. The high-risk pools
offer health insurance to individuals who cannot obtain
coverage in the marketplace. Under an authorization that
expired in 2004, the Department of Health and Human Services
(HHS) provided seed grants to states to create a high-risk
health insurance pool and operational grants for the losses
incurred in connection with the operation of a pool. H.R. 3204
would extend the funding for the seed grants through 2006 and
would increase and extend the funding for the operational
grants through 2009. In addition would alter how grants are
allotted to states. This estimate assumes that H.R. 3204 will
be enacted near the end of fiscal year 2005. CBO estimates that
enactment of H.R. 3204 would have no effect on direct spending
in 2005 but would increase direct spending by $30 million in
2006 and $230 million over the 2006-2010 period. Enacting H.R.
3204 would not affect revenues.
H.R. 3204 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would extend and expand appropriation for grants to states
that operate high-risk insurance pools.
Estimated cost to the federal government: The estimate
budgetary impact of H.R. 3204 is shown in the following table.
The costs of this legislation fall within budget function 550
(health).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------
2005 2006 2007 2008 2009 2010
----------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING
Budget Authority.................................... 65 50 50 50 50 0
Estimated Outlays................................... 0 30 50 50 50 50
----------------------------------------------------------------------------------------------------------------
Basis of estimate: H.R. 3204 would amend the Public Health
Service Act to reauthorize a program that provided grants to
states that establish a qualifying health insurance pool for
high-risk individuals. The bill would appropriate $15 million
in 2005 for seed grants to states to establish qualified high-
risk health insurance pools, and would appropriate $50 million
a year for fiscal years 2005 through 2009 for grants to states
to defray the cost of operating high-risk pools. The original
program appropriated funds for seed grants during 2003 and for
grants to defray operating costs during 2003 and 2004. CBO
estimates that enacting H.R. 3204 would have no effect on
direct spending in 2005 but would increase direct spending by
$230 million over the 2006-2010 period.
The seed grant program would provide grants of up to $1
million to each state that establishes a qualified high-risk
insurance program. Based on the experience of the original seed
grant program, and on information from HHS regarding the number
of states likely to qualify for seed grants in 2005 and 2006,
CBO estimates that direct spending for seed grants would total
$5 million over the 2005-2010 period.
H.R. 3204 would eliminate both the original requirement
that each state match the amount of the federal grant to defray
the cost of operating a high-risk pool and the corresponding
limit on the federal contribution to no more than half of the
operating loss of the pool. The bill would require that a
portion of the fiscal year 2005 funds for operational grants be
used for grants to provide supplemental benefits, such as
premium subsidies for low-income individuals, a reduction in
premiums or other cost-sharing requirements, an expansion or
broadening of the pool of individuals eligible for coverage, or
increased benefits to enrollees or potential enrollees in a
qualified high-risk pool. However, on June 30 of the following
fiscal year, unspent funds allocated to grants for supplemental
benefits would be distributed to the states receiving
operational grants that cover incurred losses.
The bill also would modify the formula for allocating funds
to states to give one third of the funds to eligible states
equally and apportion remaining two-thirds based on the number
of uninsured individuals in each state and the number of
enrollees in the state's qualified high-risk pool. Previously,
all funds were allotted based solely on the number of uninsured
individuals in the state. Based on the operating losses of the
existing pools (in 31 states), CBO expects that of the
appropriated funds would be spent, with direct spending of $230
million over the 2006-2010 period.
Intergovernmental and private-sector impact: H.R. 3204
contains no intergovernmental or private-sector mandates as
defined in the UMRA and would benefit states by providing
funding to establish and continue operations of high-risk pools
for health insurance.
Previous CBO etimate: On February 10, 2005, CBO transmitted
an estimate of S. 288, the State High Risk Pool Funding
Extension Act of 2005, as reported by the Senate Committee on
Health, Education, Labor, and Pensions on February 10, 2005.
CBO's estimates of two bills reflect differences in the level
of appropriations: S. 288 would appropriate more than H.R. 3204
($90 million in fiscal year 2005 and $75 million a year for
fiscal years 2006 through 2009).
Estimate prepared by: Federal costs: Shinobu Suzuki; Impact
on state, local, and tribal governments: Leo Lex; Impact on the
private sector: Chapin White.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional authority for this legislation is provided in
Article I, section 8, clause 3, which grants Congress the power
to regulate commerce with foreign nations, among the several
States, and with the Indian tribes.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Section-by-Section Analysis of the Legislation
Section 1. Short title
This section designates the bill as the ``State High Risk
Pool Funding Extension Act of 2005''.
Section 2. Extension of Funding for Establishment and Operation of
State High Risk Health Insurance Pool
Section 2 amends section 2745(c) of the Public Health
Service Act to extend the authorization of appropriations for
seed grants, operation of state high risk pools.
Section 2 also changes the requirements for qualified high
risk pools. A state that charges 200 percent of the premium for
standard risk rates may now qualify for Federal grant funding
provided that the state uses 50 percent of the amount of the
grant to carry out this subsection to reduce premiums for
enrollees. Section 2 also states that a ``qualified high risk
pool'' has the meaning given such term in section 2744(c)(2) of
the Public Health Service Act, 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 in section 2744) that includes a high
risk pool as a component. This modification was intended to
ensure that Washington and Oregon, which operate high risk
pools in this fashion, could qualify for Federal grant funding.
Section 2 also changes the distribution formula so that \1/
3\ of the grant money is allocated in equal amounts among
qualifying states, \1/3\ of such amount is allocated based on
the number of uninsured individuals in a state, and \1/3\ of
such amount is allocated based on the number of individuals
enrolled in the state's high risk pool.
Section 2 requires the Secretary of Health and Human
Services to 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.
In addition, section 2 provides for bonus grants for
supplemental consumer benefits. Up to 50 percent of the
appropriated amount will be available for states only to
provide for low-income premium subsidies; a reduction in
premium trends, actual premiums, or other cost-sharing
requirements, or 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.
Funds appropriated under this subsection for a fiscal year
shall remain available for obligation through the end of the
following fiscal year. If on June 30th of a fiscal year the
Secretary determines that the full amount of funding will not
be made available, such remaining amounts shall be made
available and allotted among qualifying States for the fiscal
year in accordance with the formula.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SECTION 2745 OF THE PUBLIC HEALTH SERVICE ACT
* * * * * * *
SEC. 2745. PROMOTION OF QUALIFIED HIGH RISK POOLS.
(a) * * *
(b) Matching Funds for Operation of Pools.--
(1) In general.--In the case of a State that has
established a qualified high risk pool that--
(A) restricts premiums charged under the pool
to no more than 150 percent (or 200 percent in
the case of a State that meets the requirements
of paragraph (3)) of the premium for applicable
standard risk rates;
(B) offers a choice of two or more coverage
options through the pool; and
(C) has in effect a mechanism reasonably
designed to ensure continued funding of losses
incurred by the State [after the end of fiscal
year 2004] after the end of the last fiscal
year for which a grant is provided under this
paragraph in connection with operation of the
pool;
the Secretary shall provide, from the funds
appropriated under subsection (c)(2) and allotted to
the State under paragraph (2), a grant of up to 50
percent of the losses incurred by the State in
connection with the operation of the pool.
(2) Allotment.--The amounts appropriated under
subsection (c)(2) for a fiscal year (before fiscal year
2005) shall be made available to the States in
accordance with a formula that is based upon the number
of uninsured individuals in the States. 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).
(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.
[(c) Funding.--Out of any money in the Treasury of the United
States not otherwise appropriated, there are authorized and
appropriated--
[(1) $20,000,000 for fiscal year 2003 to carry out
subsection (a); and
[(2) $40,000,000 for each of fiscal years 2003 and
2004 to carry out subsection (b).
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.
[(d) Qualified High Risk Pool and State Defined.--For
purposes of this section, the term ``qualified high risk pool''
has the meaning given such term in section 2744(c)(2) and the
term ``State'' means any of the 50 States and the District of
Columbia.]
(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. 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).
(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.
(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.
(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.
(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).