To amend the Public Health Service Act to extend funding for the operation of State high risk health insurance pools.

Summary: State High Risk Pool Funding Extension Act of 2006 - (Sec. 2) Amends the Public Health Service Act to reauthorize funds for grants to each state that has not created a qualified high risk pool for the state's cost to create and initially operate such a pool.

Increases the maximum allowable premium charged under a qualified high risk pool to 200% of the premium for applicable standard risk rates. Defines "standard risk rate" as a rate that: (1) is determined under the state high risk pool by considering the premiums charged by other health insurers in the same market; (2) is established using reasonable actuarial techniques; and (3) reflects anticipated claims experience and expenses.

Permits grants awarded by the Secretary of Health and Human Services to states with existing qualified high risk pools to cover losses incurred by a state in connection with the operation of such a pool to be made to entities that operate such a pool under applicable state law. Changes the allocation of such grants to give 40% to eligible states equally, 30% based on the number of uninsured individuals in a state relative to all states, and 30% based on the number of enrollees in a state's qualified high risk pool relative to all states. (Currently, all funds are allotted based solely on the number of uninsured individuals in the state.)

 Requires a state which charges premiums that exceed 150% of the premium for applicable standard risks to use at least 50% of the grant amount to reduce premiums for enrollees.

Limits the maximum grant amount allotted to territories.

Requires the Secretary to award grants to states with qualified high risk pools for the provision of supplemental consumer benefits, which must include one or more of the following benefits: (1) low-income premium subsidies; (2) a reduction in premium trends, actual premiums, or other cost-sharing requirements; (3) an expansion or broadening of the pool of individuals eligible for coverage; (4) less stringent rules or additional waiver authority with respect to coverage of preexisting conditions; (5) increased benefits; or (6) establishment of disease management programs. Limits to 10% of appropriated funds the amount that any state may be allotted.

Authorizes appropriations for FY2006-FY2010.

Sets forth reporting requirements.

Revises the definition of "qualified high risk pool" to allow a state to elect to meet the requirement to provide all eligible individuals with health insurance coverage by utilizing an acceptable alternative mechanism that includes a high risk pool as a component.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``State High Risk Pool Funding 
Extension Act of 2006''.

SEC. 2. EXTENSION OF FUNDING FOR OPERATION OF STATE HIGH RISK HEALTH 
              INSURANCE POOLS.

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

``SEC. 2745. RELIEF FOR HIGH RISK POOLS.

    ``(a) Seed Grants to States.--The Secretary shall provide from the 
funds appropriated under subsection (d)(1)(A) a grant of up to 
$1,000,000 to each State that has not created a qualified high risk 
pool as of the date of enactment of the State High Risk Pool Funding 
Extension Act of 2006 for the State's costs of creation and initial 
operation of such a pool.
    ``(b) Grants for Operational Losses.--
        ``(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 200 percent 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 in 
        connection with operation of the pool after the end of the last 
        fiscal year for which a grant is provided under this paragraph;
    the Secretary shall provide, from the funds appropriated under 
    paragraphs (1)(B)(i) and (2)(A) of subsection (d) and allotted to 
    the State under paragraph (2), a grant for the losses incurred by 
    the State in connection with the operation of the pool.
        ``(2) Allotment.--Subject to paragraph (4), the amounts 
    appropriated under paragraphs (1)(B)(i) and (2)(A) of subsection 
    (d) for a fiscal year shall be allotted and made available to the 
    States (or the entities that operate the high risk pool under 
    applicable State law) that qualify for a grant under paragraph (1) 
    as follows:
            ``(A) An amount equal to 40 percent of such appropriated 
        amount for the fiscal year shall be allotted in equal amounts 
        to each qualifying State that is one of the 50 States or the 
        District of Columbia and that applies for a grant under this 
        subsection.
            ``(B) An amount equal to 30 percent of such appropriated 
        amount for the fiscal year shall be allotted among qualifying 
        States that apply for such a grant so that the amount allotted 
        to such a State bears the same ratio to such appropriated 
        amount as the number of uninsured individuals in the State 
        bears to the total number of uninsured individuals (as 
        determined by the Secretary) in all qualifying States that so 
        apply.
            ``(C) An amount equal to 30 percent of such appropriated 
        amount for the fiscal year shall be allotted among qualifying 
        States that apply for such a grant so that the amount allotted 
        to a State bears the same ratio to such appropriated 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 (as determined by the Secretary) in all qualifying 
        States that so apply.
        ``(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 the State to carry out this 
    subsection to reduce premiums for enrollees.
        ``(4) Limitation for territories.--In no case shall the 
    aggregate amount allotted and made available under paragraph (2) 
    for a fiscal year to States that are not the 50 States or the 
    District of Columbia exceed $1,000,000.
    ``(c) Bonus Grants for Supplemental Consumer Benefits.--
        ``(1) In general.--In the case of a State that is one of the 50 
    States or the District of Columbia, that has established a 
    qualified high risk pool, and that is receiving a grant under 
    subsection (b)(1), the Secretary shall provide, from the funds 
    appropriated under paragraphs (1)(B)(ii) and (2)(B) of subsection 
    (d) and allotted to the State under paragraph (3), 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.--A State shall use amounts received under a 
    grant under this subsection 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.
            ``(D) Less stringent rules, or additional waiver authority, 
        with respect to coverage of pre-existing conditions.
            ``(E) Increased benefits.
            ``(F) The establishment of disease management programs.
        ``(3) Allotment; limitation.--The Secretary shall allot funds 
    appropriated under paragraphs (1)(B)(ii) and (2)(B) of subsection 
    (d) among States qualifying for a grant under paragraph (1) in a 
    manner specified by the Secretary, but in no case shall the amount 
    so allotted to a State for a fiscal year exceed 10 percent of the 
    funds so appropriated for the fiscal year.
        ``(4) Rule of construction.--Nothing in this subsection shall 
    be construed to prohibit a State that, on the date of the enactment 
    of the State High Risk Pool Funding Extension Act of 2006, is in 
    the process of implementing a program to provide benefits of the 
    type described in paragraph (2), from being eligible for a grant 
    under this subsection.
    ``(d) Funding.--
        ``(1) Appropriation for fiscal year 2006.--There are authorized 
    to be appropriated for fiscal year 2006--
            ``(A) $15,000,000 to carry out subsection (a); and
            ``(B) $75,000,000, of which, subject to paragraph (4)--
                ``(i) two-thirds of the amount appropriated shall be 
            made available for allotments under subsection (b)(2); and
                ``(ii) one-third of the amount appropriated shall be 
            made available for allotments under subsection (c)(3).
        ``(2) Authorization of appropriations for fiscal years 2007 
    through 2010.--There are authorized to be appropriated $75,000,000 
    for each of fiscal years 2007 through 2010, of which, subject to 
    paragraph (4)--
            ``(A) two-thirds of the amount appropriated for a fiscal 
        year shall be made available for allotments under subsection 
        (b)(2); and
            ``(B) one-third of the amount appropriated for a fiscal 
        year shall be made available for allotments under subsection 
        (c)(3).
        ``(3) Availability.--Funds appropriated for purposes of 
    carrying out this section for a fiscal year shall remain available 
    for obligation through the end of the following fiscal year.
        ``(4) Reallotment.--If, on June 30 of each fiscal year for 
    which funds are appropriated under paragraph (1)(B) or (2), the 
    Secretary determines that all the amounts so appropriated are not 
    allotted or otherwise made available to States, such remaining 
    amounts shall be allotted and made available under subsection (b) 
    among States receiving grants under subsection (b) for the fiscal 
    year based upon the allotment formula specified in such subsection.
        ``(5) No entitlement.--Nothing in this section shall be 
    construed as providing a State with an entitlement to a grant under 
    this section.
    ``(e) 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.
    ``(f) 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 
States and the use of grant funds by States.
    ``(g) Definitions.--In this section:
        ``(1) Qualified high risk pool.--
            ``(A) In general.--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--
            ``(A) 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) that is established using reasonable actuarial 
        techniques; and
            ``(C) that 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 and includes Puerto Rico, the Virgin 
    Islands, Guam, American Samoa, and the Northern Mariana Islands.''.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.