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 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 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).''.

            Passed the House of Representatives July 27, 2005.

            Attest:

                                                 JEFF TRANDAHL,

                                                                 Clerk.

Summary: State High Risk Pool Funding Extension Act of 2005 - (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 operating losses 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 risk 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: (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 and appropriates funds for FY 2006.

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.