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.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``State High Risk Pool Funding 
Extension Act of 2004''.

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

    (a) Extension of Availability of Seed Funding for Additional 
Year.--The second sentence of subsection (c) of section 2745 of the 
Public Health Service Act (42 U.S.C. 300gg-45) is amended by striking 
``under this subsection for a fiscal year'' and inserting ``under 
paragraph (1) shall be available for obligation through the end of 
fiscal year 2005 and funds appropriated under paragraph (2) for a 
fiscal year''.
    (b) Funding for Operation of State High Risk Pools in Fiscal Year 
2005.--Subsection (c)(2) of such section is amended by inserting ``and 
$50,000,000 for fiscal year 2005'' after ``2004''.
    (c) Change in Requirements for Qualified High Risk Pools.--
            (1) Change in requirement for operational grants.--
        Subsection (b)(1)(A) of such section is amended by striking 
        ``150 percent'' and inserting ``200 percent''.
            (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.
    (d) 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 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 50 percent of the amount 
                shall be allocated in equal amounts among such 
                qualifying States.
                    ``(B) An amount equal to 25 percent of the 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 25 percent of the 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).''.
    (e) Administrative Provisions.--Such section is amended by adding 
at the end the following new subsection:
    ``(e) Administrative Provisions.--
            ``(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.''.

Summary: State High Risk Pool Funding Extension Act of 2004 - Amends the Public Health Service Act to reauthorize funds for States to create and to operate existing high risk health insurance pools.

Increases the maximum allowable premium in a qualified high risk pool to 200 percent 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.

Expands the definition of "qualified high risk pool" to allow a State 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 and: (1) that provides for risk adjustment, risk spreading, or a risk spreading mechanism (among issuers or policies of an issuer) or for some financial subsidization for eligible individuals, including through assistance to participating issuers; or (2) under which each eligible individual is provided a choice of all individual health insurance coverage otherwise available.

Amends the formula for appropriating funds to States to operate such pools to give one-half of the funds to eligible States equally and apportion the other half based on the number of uninsured individuals in each State and the number of enrollees in the State's qualified high risk pool. (Currently, all funds are allotted based solely on the number of uninsured individuals in the State.)