Order Code RL31745
CRS Report for Congress
Received through the CRS Web
Health Insurance: State High Risk Pools
January 19, 2006
Bernadette Fernandez and Julie Stone
Analysts in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

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Health Insurance: State High Risk Pools
Summary
In an effort to expand the options for health coverage and reduce the number of
uninsured, 33 states have established high risk health insurance pools. These
programs target individuals who cannot obtain or afford health insurance in the
private market, primarily because of pre-existing health conditions. Also, many
states use their high risk pools to comply with the portability and guaranteed
availability provisions of the Health Insurance Portability and Accountability Act of
1996 (HIPAA, P.L. 104-191).
In general, high risk pools tend to be small and enroll a small percentage of the
uninsured. As of December 2004, 182,381 individuals participated in these state
pools. They typically are operated through state-established nonprofit organizations
that contract with private insurance companies to handle day-to-day operations.
Although benefit packages vary across states and plans, they generally reflect health
benefits that are available in the private insurance market. The majority of high risk
pools cap premiums between 125% to 200% of market rates, and pools often are
subsidized through insurer assessments and other funding mechanisms.
Congress has acted in recent years to fund the expansion and operation of state
high risk pools. The Trade Act of 2002 (P.L. 107-210) appropriated $20 million for
the creation of new pools for FY2003, and $40 million each for FY2003 and FY2004
for the maintenance of existing pools. During the 108th Congress, the Senate passed
the “State High Risk Pool Funding Extension Act of 2004” (S. 2283), which would
have provided federal funding for new and existing high risk pools.
Interest in supporting high risk pools has continued into the 109th Congress,
motivated in part by the expiration of authorizing legislation for federal funding on
September 30, 2005. H.R. 3204, the “State High Risk Pool Funding Extension Act
of 2005,” would authorize additional appropriations to extend federal funding of state
high risk pools. The act authorizes $15 million for FY2005 in the form of seed
grants to states that have not yet established qualified high risk pools. H.R. 3204 also
authorizes $50 million, for each fiscal year between 2005 and 2009, in grants to
states to go toward operating expenses of existing pools. The act also changes the
funding formula used to allocate these operational grants. The House passed H.R.
3204 by voice vote on July 27, 2005. Once received in the Senate, the funding
formula was modified further, and the bill was passed by that chamber on October
19, 2005. Two months later, the House passed H.R. 4519 on December 17, 2005.
H.R. 4519 is identical to the Senate-passed version of H.R. 3204, except for deletion
of mandatory funding language for FY2006. The Senate is expected to pass H.R.
4519 without change.
The House-passed budget reconciliation bill included a provision to provide $90
million for operational grants to states for FY2006 and FY2007. The Senate-
amended and -passed conference agreement (S. 1932) would provide $75 million for
operational grants and $15 million for seed grants, distributed according to existing
statutory requirements. The measure also includes conforming language on
enactment of H.R. 4519. This report will be updated periodically.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Health Insurance Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Health Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
State High Risk Pools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
General Characteristics of State High Risk Pools . . . . . . . . . . . . . . . . . . . . . 4
Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Premiums and Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Enrollment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Federal Grants to State High Risk Pools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Legislative Activity during the 109th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
House . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Senate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Reconciliation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
List of Figures
Figure 1. Enrollment Distribution of State High Risk Pools, 2004 . . . . . . . . . . . 6
List of Tables
Table 1. Operational Grants Awarded to State High Risk Pools,
FY2003 and FY2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Appendix. Summary of State High Risk Pools, 2005/2006 . . . . . . . . . . . . . . . . 11

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Health Insurance: State High Risk Pools
Introduction
In an effort to expand the options for health coverage and reduce the number of
uninsured, a majority of states have established high risk health insurance pools.1
These programs target individuals who cannot obtain or afford health insurance in
the private market. High risk pools generally cover people who have sought health
coverage in the individual (nongroup) market, but have been denied coverage,
received quotes from insurers that are higher than the premiums offered by the high
risk pools, or received offers from insurers that permanently exclude coverage of
their pre-existing health conditions.2
Many states also use their high risk pools to comply with the portability and
guaranteed availability provisions of the Health Insurance Portability and
Accountability Act of 1996 (HIPAA, P.L. 104-191). For eligible individuals moving
from the group to nongroup market, HIPAA requires state-licensed health insurers
to make coverage available to such individuals, and prohibits exclusion of coverage
for pre-existing conditions. Of the 33 states with high risk pools, 28 states use their
pools to comply with HIPAA’s portability and guaranteed availability provisions.3
In general, state high risk pools tend to be small and enroll a small percentage
of the uninsured. As of December 2004, 182,381 individuals participated in high risk
pools, compared to over 18 million people who were uninsured for that entire year
in states with such pools.4 However, such limited enrollment reflects, in part, the
narrow focus of these pools: individuals with costly health conditions who continue
to seek health coverage.
1 Sources: Communicating for Agriculture and the Self-Employed, Inc., Comprehensive
Health Insurance for High-Risk Individuals: A State-By-State Analysis, Nineteenth Edition,
2005/2006, 2005. For online information about state high risk pools, see “State High-Risk
Health Insurance Pools, Dec. 31, 2004” at [http:\\www.statehealthfacts.org].
2 A medical condition for which treatment was recommended or received, or medical advice
was sought, prior to enrollment.
3 To comply with these provisions, states may either enforce the HIPAA individual market
guarantees (“federal fallback”), or establish an “acceptable alternative state mechanism,”
such as a high risk health insurance pool. For more information about HIPAA, see CRS
Report RL31634, The Health Insurance Portability and Accountability Act (HIPAA) of
1996: Overview and Guidance on Frequently Asked Questions, by Hinda Chaikind, Jean
Hearne, Bob Lyke, and Stephen Redhead. (Hereafter cited as CRS Report RL31634.)
4 CRS calculation based on data from the Current Population Survey (CPS), CPS Table
Creator, at [http://www.census.gov/hhes/www/cpstc/cps_table_creator.html].

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CRS-2
Health Insurance Context
High risk pools fill a niche in the health insurance system; a patchwork system
of private markets and public programs designed to meet the needs of different types
of health care consumers.5 In the private health insurance market, most people get
health coverage through the group market. This market provides health benefits to
groups of people that are drawn together by an employer or other organization, such
as a trade union. Such groups are generally formed for some purpose other than
obtaining insurance, like employment.
While most Americans receive their health coverage through the workplace —
as a current employee, a dependent of an employee, or a retiree — some individuals
do not have access to employer-sponsored insurance (ESI). They may be workers
who do not qualify for an offer of health benefits from their employer (e.g., because
the workers have part-time or seasonal employment status), or they may work for a
company that does not provide health insurance at all, or they may be unemployed.
Public programs also are a source of health coverage, but individuals and families
must meet eligibility requirements in order to qualify for benefits. Individuals who
cannot access ESI or are not eligible for public programs, may seek health insurance
in the nongroup market.
Applicants to the individual insurance market must go through robust medical
underwriting; that is, insurance carriers conduct an exhaustive analysis of each
applicant’s insurability. An applicant usually must provide her/his medical history,
and often undergo a physical exam. This information is used by carriers to assess the
potential medical claims for each person by comparing characteristics of the
applicant to the loss experience of others with similar characteristics. Once such an
evaluation has been conducted, the carrier decides whether or not to provide health
coverage and sets the terms for that coverage, including the premium amount. (In the
group market, insurers forgo underwriting in the traditional sense; i.e., reviewing
each person’s demographics and medical history. Instead, an insurer looks at the
characteristics of the group as a whole, such as its claims history, group
demographics, and geographic location. The insurer then charges a premium based
on the analysis of the group’s characteristics. There are exceptions to this for very
small groups.)
Federal and state laws restrict somewhat insurers’ ability to reject applications
or design coverage based on health factors in the nongroup market. Nonetheless,
some applicants are rejected from the individual market altogether, and others who
are approved may receive limited benefits or are charged premiums that are higher
than those in the group market for similar coverage.6 Rigorous underwriting results
in an enrollee population that is fairly healthy (three out of four enrollees report that
5 For a general discussion about health insurance, see CRS Report RL32237, Health
Insurance: A Primer, by Bernadette Fernandez.
6 M. Pauly and A. Percy, “Cost and Performance: A Comparison of the Individual and
Group Health Insurance Markets,” Journal of Health Politics, Policy and Law, Feb. 2000.

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CRS-3
their health is excellent or very good7), thereby excluding persons with moderate to
severe health conditions from the private nongroup insurance market. High risk
pools were designed to assist such individuals who — because of their health
conditions — have very few options for coverage in the private market.
Health Policy Context
High risk pools appeal to policymakers who prefer an incremental approach to
coverage expansion and reliance on current state oversight of health insurance.8
Supporters of high risk pools contend that states can use their existing regulatory
infrastructure, as well as their knowledge of health care markets, to efficiently insure
previously uninsurable individuals. Supporters also contend that the private,
nongroup market will benefit. They reason that by removing high risk persons from
the individual market and placing them in publicly subsidized insurance pools,
coverage in the individual market will become more affordable. They argue that
better risk spreading helps to stabilize the market, promote competition, and retain
insurance carriers — earning the support of such organizations.9 Moreover, high risk
pools function as a safety net for the nongroup market by assuring that individuals
have access to health insurance as long as they are willing and able to pay for it.
Others contend that high risk pools are generally too small and underfunded to
meet the needs of the majority of persons who cannot access health insurance in the
private market. By design pools experience losses, but federal attempts to subsidize
these losses have been limited: grants awarded for FY2003 and FY2004 could not
exceed 50% of any state pool’s losses for the year. Waiting lists for enrollment are
common, and premiums combined with other cost-sharing requirements can often
make the coverage offered by these pools unaffordable. As a result, some researchers
remain skeptical that high risk pools will be able to substantially reduce the number
of uninsured, particularly among those with serious medical conditions.10 With
respect to reducing the number of people without health coverage, consumer groups
7 General Accounting Office, “Private Health Insurance: Millions Relying on Individual
Market Face Cost and Coverage Trade-Offs,” Nov. 1996.
8 For example, see National Governors Association, Policy Position, “Private Sector Health
Care Reform Policy,” Dec. 14, 2000. Also, see examples from advisory groups and
academia, such as the National Association of Insurance Commissioners, News
Release,”NAIC Applauds Extension of Federal Funding for High-Risk Pools,” July 27,
2005, and M. Pauly, “How Private Health Insurance Pools Risk,” National Bureau of
Economic Research, Research Summary, summer 2005.
9 For example, see the National Association of Health Underwriters’ position on high risk
pools at [http://www.nahu.org/government/issues/Risk_Pools/High_Risk_Pools.htm], and
Council for Affordable Health Insurance, issue brief on high risk pools, at
[http://www.cahi.org/cahi_contents/issues/article.asp?id=489].
10 For example, see D. Chollet, “Expanding Individual Health Insurance Coverage: Are
High-Risk Pools The Answer?,” Health Affairs, Oct. 23, 2002, and Pollitz, et al., “Health
Insurance and Diabetes: The Lack of Available, Affordable, and Adequate Coverage,”
Clinical Diabetes, vol. 23, no. 2, 2005.

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CRS-4
generally advocate for expansion of the federal role in providing coverage, whether
through existing public programs or broader health care reform.11
While high risk pools have existed since the mid-1970s, only recently has
Congress acted to support the expansion and operation of high risk pools across the
country. The enactment of HIPAA during the 104th Congress specified state high risk
pools as acceptable mechanisms for complying with the group-to-individual market
requirements. The 107th Congress passed the Trade Act of 2002 (P.L. 107-210),
which appropriated $20 million for FY2003 for the creation of new pools, and $40
million for each of FY2003 and FY2004 for the maintenance of existing pools.
During the 108th Congress, the Senate passed S. 2283, the “State High Risk Pool
Funding Extension Act of 2004,” which would have extended federal funding for the
creation of new state high risk pools, and operation of existing ones. Similar funding
extension bills have separately passed the House and the Senate during the 109th
Congress (see detailed discussion under the “Legislative Activity during the 109th
Congress” section).
State High Risk Pools
As of December 2004, 33 states established high risk health insurance pools.12
States have a great deal of discretion regarding the establishment and operation of
these pools, including covered benefits, eligibility requirements, pre-existing
condition exclusion periods, and funding sources. The table in the Appendix
presents information about the main features of each state high risk pool.
General Characteristics of State High Risk Pools
Administration. State high risk pools typically are operated through state-
established nonprofit organizations that contract with private insurance companies
to handle daily operational functions. Boards oversee the management of high risk
pools and usually consist of representatives from insurance companies, consumer
groups, health care providers, and state agencies.
Premiums and Funding. In order to limit the cost of health coverage for
persons with costly medical conditions, all states cap high risk pool premiums.
Almost all states have caps between 125% and 200% of standard market rates. A
11 For example, see testimony presented by R. Pollack, Families USA, Education and the
Workforce Committee Employer-Employee Relations Subcommittee hearing, “Expanding
Access to Quality Health Care: Solutions for the Uninsured,” July 9, 2002, and American
Federation of State, County, and Municipal Employees, “Universal Health Coverage,”
resolution no. 14, June 26-30, 2000.
12 Of the 33 state high risk pools, the Idaho pool is unique. It is a reinsurance pool where
commercial carriers underwrite the coverage and directly provide health benefits to pool
participants. This is in contrast with a traditional high risk pool, where the pool itself acts
as the plan administrator, paying claims and providing benefits to enrollees. Nonetheless,
Idaho was included with the more-traditional state pools because of the similarities in
eligible groups (e.g., HIPAA eligibles), and benefits and plans offered.

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CRS-5
majority of states offer coverage at less than 150% of the average. Risk pools
generally operate at a loss, “because it isn’t feasible to pool a group of individuals
known to have major health problems and expect their premium contributions to
cover the entire cost.”13 Thus, many state pools tap other sources of funding to cover
their operating expenses.
States may augment premium collection with one or more of the following
sources: assessments on insurers, in some instances combined with offsetting tax
credits; general revenue and appropriations dollars; tobacco settlement funds; and
other sources.14 Almost all states with risk pools assess a fee on insurance carriers,
although nine of those states offset those assessments with tax credits. Five states
use appropriated monies or general revenue for additional risk pool funding, while
only two states specifically use tobacco settlement funds.
Benefits. Although health benefits provided through risk pools vary across
plans and states, they generally reflect coverage that is available in the private
market. For example, most pools cover maternity care, prescription drugs, and
mental health treatment, among other services. States usually offer more than one
plan from which enrollees may choose. Deductibles and other cost-sharing
requirements vary from state to state. Most states do not place maximum annual
limits on benefits, except for California, Idaho, South Dakota, Utah, and West
Virginia. In contrast, nearly all states have lifetime maximums on benefits, except
for Indiana, Kentucky, and New Mexico.15
Eligibility. States establish the eligibility criteria for high risk pools. As noted,
many states allow HIPAA-eligible persons to enroll in their high risk pools. HIPAA
eligibles are persons who do not have or are losing coverage and seeking it in the
individual market.16 They must meet the following requirements: (1) have at least
18 months of “creditable coverage” (specified in statute) without a significant break
in that coverage (63 or more days); (2) most recent coverage must have been through
a group health plan; (3) exhausted federal or state continuation coverage; (4) not
eligible for Medicaid or Medicare; and (5) not have any other health insurance. For
HIPAA eligibles, high risk pools guarantee the availability of health coverage and
prohibit exclusion of coverage for pre-existing conditions. Risk pools also are
designed to address the insurance needs of non-HIPAA-eligible persons with costly
medical conditions. A number of states provide for presumptive eligibility, allowing
13 Communicating for Agriculture and the Self-Employed, p. 14.
14 An assessment is a tax or fee. Some states fund the losses of their risk pools by requiring
insurers across the state to pay assessments. Generally, the amount of insurers’ assessment
is based on their share of the total premiums sold in the state for each year. Some states also
provide tax credits to these insurers, thus reducing the insurers’ tax liability and enabling
them to recover some or all of their expenditures on the assessments. Under the latter of
these funding mechanisms, the state assumes part or all of the cost burden for the losses of
the risk pools.
15 In ID and SD, annual maximums apply to specified benefits. In IN and KY, no lifetime
maximums apply to specified plans.
16 HIPAA also provides protections to certain people who wish to enroll in the group health
insurance market. See the aforementioned CRS Report RL31634 for more details.

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CRS-6
individuals to become automatically eligible for high risk pools if they have a certain
medical condition specified under state law. In addition to HIPAA eligibles and
persons with specific conditions, many states allow individuals who have
experienced coverage denials, coverage restrictions, or premium increases to enroll
in high risk pools.
Enrollment. High risk pool participation varies significantly across states,
with enrollment ranging from a high of 32,959 participants in Minnesota to a low of
118 enrollees in Iowa in 2004.17 Among all state high risk pools, the enrollment
distribution clusters toward the low end. To illustrate, one-third of all high risk pools
(11 states) by the end of 2004 had enrollments below 2,000 participants, and nearly
two-thirds (21 states) had enrollments below 4,000. In contrast, five states had more
than 10,000 participants (see Figure 1). As for new enrollment, all states but Florida
were accepting new participants.
Figure 1. Enrollment Distribution of State High Risk Pools, 2004
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Source: Communicating for Agriculture and the Self-Employed, Inc., Comprehensive Health
Insurance for High-Risk Individuals: A State-By-State Analysis, Nineteenth Edition, 2005/2006 ,
2005.
17 The latest enrollment data for most states is to the end of 2004. For the newest high risk
pool (WV), no enrollment data are yet available.

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CRS-7
Federal Grants to State High Risk Pools
With enactment of the Trade Act of 2002 (P.L. 107-210), the federal
government provided funding to state high risk health insurance pools for the first
time. The Trade Act appropriated $20 million in the form of seed grants to be
awarded to states that did not already have a high risk pool but wanted to establish
one. Awards of up to $1 million could be made per qualifying state. Six states
received seed grants in 2003: Maryland ($1 million), New Hampshire ($1 million),
Ohio ($150,000), South Dakota ($1 million), Utah ($52, 618), and West Virginia
($1,000,000).18
The Trade Act also appropriated $80 million to be split evenly over FY2003 and
FY2004 to defray some of the operating losses experienced by states with existing
high risk pools. As mentioned earlier, state high risk pools cap premiums in order
to provide some measure of cost protection for enrollees. Given such caps, the total
costs incurred by these pools generally exceed the amounts collected through
premiums. Therefore, pools need to tap other sources of funding to cover their
operational losses.
Under the Trade Act, each operational grant could cover up to 50% of a pool’s
operating losses for the year. To qualify, each state must have established a risk pool
that restricts premiums to no more than 150% of the premium for standard risk rates
in the state, offers a choice of two or more coverage options, and has in effect a
mechanism designed to ensure continued funding of losses incurred after the end of
FY2004. However, states may still be able to determine, within federal standards,
how much to charge enrollees in out-of-pocket costs, what benefits to include under
the plans, how long coverage for pre-existing conditions may be excluded, and whom
among otherwise uninsurable individuals will be eligible.
Table 1 shows which states received operational grants for FY2003 and
FY2004, and the funding levels. Nineteen states were awarded operational grants in
FY2003; 22 states in FY2004.19
18 Ohio was awarded a grant to conduct a study on the feasibility of creating a high risk pool.
Utah was awarded a grant to modify its existing health plan and become a newly “qualified”
high risk pool.
19 The FY2004 grantees include Massachusetts which operates a reinsurance program for
the non-group market that differs from traditional high risk pools. Nonetheless, the MA
program met the requirements of the federal grant program. For a more detailed discussion
about the MA reinsurance program, see “Communicating for Agriculture and the Self-
Employed,” pp. 249-250.

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CRS-8
Table 1. Operational Grants Awarded to State High Risk Pools,
FY2003 and FY2004
Grant amount, 2003
Grant amount, 2004
State
($, thousands)
($, thousands)
Alabama
2,826
— -
Alaska
542
484
Arkansas
1,928
1,893
Colorado
3,219
3,096
Connecticut
1,597
1,503
Illinois
8,144
7,473
Indiana
3,266
3,358
Iowa
1,107
368
Kansas
1,462
1,297
Kentucky
2,511
2,292
Maryland
— -
3,176
Massachusetts
— -
132
Minnesota
1,984
1,972
Mississippi
2,066
2,038
Montana
698
621
Nebraska
894
751
New Hampshire
225
532
New Mexico
2,048
1,739
North Dakota
329
293
Oklahoma
2,931
2,731
Utah
— -
1,395
Wisconsin
2,222
2,501
Wyoming
— -
358
Sources: Centers for Medicare and Medicaid Services, “HHS Awards Grants to Twenty-two States
to Offset Costs of Insurance for Residents Too Sick for Conventional Coverage,” News Release, Oct.
5, 2005; and K. Pollitz and E. Bangit, “Federal Aid to State High-Risk Pools: Promoting Health
Insurance Coverage or Providing Fiscal Relief?,” Issue Brief, Nov. 2005.
Note: Grant amounts are rounded to the nearest thousand.

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Legislative Activity during the 109th Congress
Congressional interest in support of high risk pools has continued into the 109th
session, motivated in part by the expiration of authorizing legislation for federal
funding on September 30, 2005. Below are brief descriptions of the House and
Senate bills that relate to the most recent legislative activity.
House
H.R. 3204, the “State High Risk Pool Funding Extension Act of 2005,” extends
federal funding for state high risk health insurance pools by authorizing additional
appropriations for the creation of new pools and operation of existing ones. The act
authorizes $15 million for FY2005 in the form of seed grants to states that have not
created qualified high risk pools. This language also authorizes $50 million, for
FY2005-FY2009, in grants to states to go toward operating expenses of existing
pools.
The allotment formula under the House version divided the funding for
operational grants into thirds: one-third to all qualifying states in equal amounts;
one-third based on state proportion of uninsured population for all qualifying states;
and one-third based on state proportion of the high risk pool population. (The
original formula allots funding for operational grants solely on the basis of number
of uninsured persons by state.) Moreover, the bill allows up to 50% of the FY2005
appropriation for operational grants to be allocated as bonus grants. Bonus grants
would be used to provide supplemental benefits (premium subsidies, high risk pool
expansion, increased benefits, and others) to pool enrollees or potential enrollees.
The House bill also modifies the requirements for qualifying for an operational
grant. It allows states to charge premiums up to 200% of applicable standard rates
(originally, the maximum was set at 150%), providing those states use at least 50%
of the grant toward premium assistance.
H.R. 3204 passed the House by voice vote on July 27, 2005.
Senate
The Senate first considered S. 288, a companion bill to H.R. 3204, which
included different funding formula from the House bill. Under S. 288, half of the
funding would go to all states in equal amounts, and the other half would be split
evenly and distributed according to state proportions of the uninsured population and
high risk pool population. Senator Durbin argued that the Senate formula “was
“extremely favorable” to smaller states at the expense of larger ones”20 and placed
a hold on S. 288.
20 M.A. Carey, “Senator Durbin Blocks Health Insurance Bill on Grounds It Would
Shortchange Illinois,” Congressional Quarterly Today, Sept. 14, 2005.

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CRS-10
The Senate then considered H.R. 3204 after it had passed the House. In
response to Senator Durbin’s concern about the impact of funding formula changes,
HELP Committee Chair Enzi offered a substitute which altered the House bill’s
formula. For FY2006-FY2010, the $50 million appropriation for operational grants
would be divided according to the following formula: 40% to all qualifying states
in equal amounts, 30% based on state proportion of uninsured population among all
qualifying states, and 30% based on state proportion of the high risk pool population.
The amendment also would provide an additional $25 million in appropriations for
bonus grants to be awarded to qualifying states for each fiscal year specified, and
allows operational grants to cover up to 100% of pool losses.
The Senate passed H.R. 3204 on October 19, 2005.
Two months later, the House passed H.R. 4519, the State High Risk Pool
Funding Extension Act of 2005, on December 17, 2005. H.R. 4519 is identical to the
Senate-passed version of H.R. 3204, with one exception. Under the funding
provision, H.R. 4519 authorizes funding for fiscal 2006, in contrast with H.R. 3204,
which both authorizes and provides funding for fiscal 2006. The Senate is expected
to pass H.R. 4519 without change.
Reconciliation
As part of the budget reconciliation process, the House Energy and Commerce
Committee included a provision to provide funding for state high risk pools. Section
3202 of the House reconciliation bill amends the Public Health Service Act to
provide $90 million in appropriations for grants to states for FY2006 and FY2007.
Eligible states would receive funding to cover up to 50% of operating expenses of
existing high risk pools. The operational grants would be distributed according to
existing statutory requirements.
The House approved the budget reconciliation bill on December 19, 2005.
The Deficit Reduction Act of 2005 (S. 1932) conference agreement includes
provisions for funding of state high risk pools. The Senate amended and agreed to
the conference agreement, and a vote is still pending in the House. Section 6202 of
the Senate measure amends the Public Health Service Act to provide $90 million in
appropriations for grants to states for FY2006. The bill provides $75 million for
operational grants and $15 million for seed grants. The grants would be distributed
according to existing statutory requirements. This measure includes conforming
language on enactment of H.R. 4519.

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CRS-11
Appendix. Summary of State High Risk Pools, 2005/2006
Pre-existing health
State
Enrollmenta
Eligibility requirementsb
condition exclusion
Funding sourcesd
periodc
Alabama
3,558
Eligible under the Health Insurance Portability and Accountability Act (HIPAA)
None
Assessments on
(6/30/05)
insurers, offset by
amount of premium
taxes paid to the state
Alaska
498 (5/31/05)
Eligible under HIPAA, Health Coverage Tax Credit (HCTC), state “high risk rules”
six months
Assessments on
insurance industry
Under high risk rules, individual must have experienced at least one of the following:
association members
- Denial of coverage within the last six months
- Has one of the health conditions listed on the risk pool’s website (e.g., AIDS)
- Received insurance riders that substantially restricts coverage
Arkansas
2,930
Eligible under HIPAA, HCTC, state “Resident Eligible” rules
Resident, HCTC
Insurance
Standard, and
Department Trust
spouse or dependent
Fund, grants under
Under the HCTC, persons who meet the federal HCTC requirements may be eligible as:
of HCTC Standard
the Trade Act of
- “Qualified Eligible”: has three months of creditable coverage without a significant break
eligible: six months
2002, assessments on
insurers
- “Standard Eligible”: must submit evidence of one of the following:
- Denial of coverage based on history or existence of health condition
- Cost of health coverage offered in substantial excess of the high risk pool premium
- Coverage under another state’s high risk pool
- “Qualifying Family Members” of HCTC eligible person

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CRS-12
Pre-existing health
State
Enrollmenta
Eligibility requirementsb
condition exclusion
Funding sourcesd
periodc
Under Resident Eligible rules, individual must submit evidence of one of the following:
- Rejection notice for health coverage based on history or existence of health condition
- Cost of health coverage in excess of the high risk pool premium
California
8,572 (5/05)
Inability to obtain coverage during the past 12 months due to one of the following:
90 days
Major Risk Medical
Insurance Fund
(tobacco tax
- Denial of coverage
revenues)
- Involuntary termination of health benefits, not due to fraud or non-payment of
premium
- Cost of health coverage offered in excess of the high risk pool premium
Colorado
4,896
Eligible under HIPAA, HCTC, prior coverage under another state’s high risk pool
six months
Assessments on
(6/1/05)
insurers, interest
Also eligible if meets at least one of the following:
from the Unclaimed
Properties Funds
- Denial of coverage
- Cost of health coverage offered in excess of the high risk pool premium
- Coverage for pre-existing conditions is excluded for more than six months
- Has one of the health conditions listed on the application
Connecticut
2,376
Eligible under HIPAA, HCTC
12 months
Assessments on
insurance industry
Small employers (up to 10 employees) can purchase health insurance for their employees
association members
through the state high risk pool

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CRS-13
Pre-existing health
State
Enrollmenta
Eligibility requirementsb
condition exclusion
Funding sourcesd
periodc
Florida
443 (closed
Received at least one of the following from two or more insurers:
12 months
Assessments on
for new
insurance industry
enrollment
association members
- Denial of coverage
since 1991)
- Health condition exclusion or benefit reduction
- Cost of health coverage offered in excess of the high risk pool premium
Idahoe
1,462
Eligible under HIPAA, HCTC
12 months
Carriers’ reinsurance
(6/1/05)
premiums, tax
revenue, assessments
Also eligible if meets at least one of the following:
on insurers
- Denial of coverage
- Cost of health coverage offered in excess of the high risk pool premium
Illinois
16,660
Eligible under HIPAA, HCTC, “traditional” high risk pool
six months
State appropriations,
(6/1/05)
assessments on
For traditional pool, must have received at least one of the following:
insurers
- Denial of coverage based on health conditions
- Cost of health coverage offered in excess of the high risk pool premium
Indiana
8,030
Eligible under HIPAA, HCTC
three months
General revenue,
assessments on
Also eligible if insurer denied comparable coverage
insurers

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CRS-14
Pre-existing health
State
Enrollmenta
Eligibility requirementsb
condition exclusion
Funding sourcesd
periodc
Iowa
118 (5/31/05)
Eligible under HIPAA, HCTC
six months
Assessments on
insurance industry
association members,
Also eligible if meets at least one of the following:
offset by amount of
premium or other
- Denial of coverage within last nine months
taxes paid to the state
- Health condition exclusion or benefit reduction
- Cost of health coverage offered in excess of the high risk pool premium
- Has one of the health conditions listed in program brochure
Kansas
1,727
Eligible under HIPAA, HCTC
90 days
Assessments on
insurers, may be
Also eligible if experiences at least one of the following:
offset by amount of
premium taxes paid
- Termination of coverage (not for non-payment of premium)
to the state
- Denial of coverage due to health conditions by two insurers
- Cost of health coverage offered in excess of the high risk pool premium
- Offer of insurance subject to permanent exclusion of a pre-existing health condition

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CRS-15
Pre-existing health
State
Enrollmenta
Eligibility requirementsb
condition exclusion
Funding sourcesd
periodc
Kentucky
3,363
Eligible under HIPAA
12 months
State appropriation
(5/31/05)
from Tobacco
Also eligible if meets at least one of the following:
Settlement,
assessments on
- Participation in state Guaranteed Acceptance Program (GAP)
insurers
- Has one of the health conditions specified in statute (e.g., leukemia)
- Denial of coverage comparable to pool’s coverage
- Cost of health coverage offered in excess of the high risk pool premium
Louisiana
1,236
Eligible under HIPAA
six months
General revenue,
assessments on
Also eligible if moving from another state’s high risk pool, or state resident who is not
insurers and patients
eligible for any health insurance coverage, Medicare, or Medicaid
Maryland
5,078
Eligible under HIPAA, HCTC, “Medically Eligible” rules, moving from another state’s high
None
Assessments on
risk pool
hospitals
Under Medically Eligible rules, individual must meet at least one of the following:
- Denial of coverage due to health conditions
- Offer of insurance subject to restriction or exclusion of a specific health condition
- Cost of health coverage offered in excess of the high risk pool premium
- Has one of the qualifying health conditions
Minnesota
32,959
Eligible under HIPAA, HCTC
six months
Assessments on
insurers,
Also eligible if meets at least one of the following:
other revenue

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CRS-16
Pre-existing health
State
Enrollmenta
Eligibility requirementsb
condition exclusion
Funding sourcesd
periodc
- Denial of coverage due to health conditions within last six months
- Notice of benefit reduction
Mississippi
4,304
Eligible under HIPAA, moving from another state’s high risk pool
Six months
Assessments on
(Nine months for
insurers
Also eligible if rejected for coverage similar to pool’s coverage
pregnancy)
Missouri
2,800
All state residents who meet the following requirements:
12 months
Assessments on
insurers, offset by
amount of premium
- Not eligible for coverage, or has coverage with premiums exceeding 300% of standard
taxes paid to the state
rates
- Involuntary termination of coverage (not for non-payment, fraud or other specified
circumstances)
Montana
3,540
Eligible under HIPAA, HCTC, “Association (Traditional) Plan” rules
12 months
Assessments on
(6/30/05)
insurers, offset by
Under Association Plan rules, must meet at least one of the following within the last six
amount of premium
months:
taxes paid to the state
- Denial of coverage from at least two insurers
- Offer of coverage with a restrictive rider or coverage limitation for a pre-existing
condition, from at least two insurers
- Has one of the qualifying medical conditions
- Cost of health coverage offered is more than 150% of the average rate used to calculate
risk pool’s premium

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CRS-17
Pre-existing health
State
Enrollmenta
Eligibility requirementsb
condition exclusion
Funding sourcesd
periodc
Nebraska
5,799
Eligible under HIPAA, HCTC, qualifying health conditions
Six months
Assessments on
insurers
Also eligible if denied coverage within the last six months, and meets one of the following:
- Offer of coverage with a coverage limitation exceeding 12 months
- Cost of health coverage offered in excess of the high risk pool premium
New
479 (5/31/05)
Eligible under HIPAA, HCTC
Nine months
Assessments on
Hampshire
insurers
Also eligible if meets at least one of the following:
- Denial of coverage due to health conditions
- Offer of coverage with a coverage limitation for a specific condition
- Cost of health coverage offered in excess of the high risk pool premium
- Has one of the qualifying medical conditions

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CRS-18
Pre-existing health
State
Enrollmenta
Eligibility requirementsb
condition exclusion
Funding sourcesd
periodc
New Mexico
1,553
HIPAA eligible
Six months
Assessments on
(6/1/05)
insurers, offset by a
Also eligible if experiences at least one of the following:
portion of premium
taxes paid to the state
- Denial of coverage
- Offer of coverage with a coverage limitation
- Has one of the qualifying medical conditions
- Cost of health coverage offered exceeds 125% of the high risk pool premium
- Transfer from the New Mexico Health Insurance Alliance
- Involuntary coverage termination due to:
- Insurer no longer issuing coverage
- Moving from another state’s high risk pool
- Current coverage not valid in NM
North Dakota
1,784
Eligible under HIPAA, HCTC
180 days
Assessments on
insurers, offset by
Also eligible if provides evidence of at least one of the following within the last 180 days:
amount of premium
taxes paid to the state
- Denial of coverage due to health conditions
- Offer of coverage with a substantial coverage limitation
- Cost of health coverage offered in excess of the high risk pool premium
- Has one of the qualifying medical conditions (e.g., Alzheimer’s)
Oklahoma
2,693
Eligible under HIPAA, HCTC
12 months
Assessments on
insurance industry
Also eligible if denied coverage by at least two insurers
association members

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CRS-19
Pre-existing health
State
Enrollmenta
Eligibility requirementsb
condition exclusion
Funding sourcesd
periodc
Oregon
10,070
Eligible under HIPAA, “Medical eligibility” rules, moving from another state’s high risk
Six months
Assessments on
pool
insurers, interest
earned on reserves
Under medical eligibility rules, individual must meet at least one of the following:
- Denial of coverage due to health conditions
- Insurance agent refusal to apply on behalf on individual due to individual’s health
conditions
- Offer of coverage with a substantial coverage limitation
- Offer of coverage with plan choice limitation
South
2,263
Eligible under HIPAA, HCTC
Six months
Assessments on
Carolina
insurers, offset by
amount of premium
Also eligible if meets at least one of the following:
and income taxes
paid to the state
- Denial of coverage due to health conditions
- Offer of coverage with a coverage limitation exceeding 12 months
- Cost of health coverage offered exceeds 150% of the high risk pool premium
South Dakota
532
Eligible under HIPAA
None
General revenue,
assessments on
insurers
Texas
27,573
Eligible under HIPAA, HCTC
12 months
Assessments on
(6/30/05)
insurers
Also eligible if meets at least one of the following:

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CRS-20
Pre-existing health
State
Enrollmenta
Eligibility requirementsb
condition exclusion
Funding sourcesd
periodc
- Denial of coverage due to health conditions
- Insurance agent documentation of inability to obtain coverage due to health conditions
- Offer of coverage with a coverage exclusion for a specific condition
- Cost of health coverage offered in excess of the high risk pool premium (expires
12/31/05 due to statute change)
- Has one of the qualifying medical conditions (e.g., ALS/Lou Gehrig’s Disease)
Utah
3,085
Eligible under HIPAA, moving from another state’s high risk pool
Six months
General revenue
(5/30/05)
Also eligible if denied coverage within 30 days of application to risk pool
Washington
2,970
Denial of coverage due to health conditions
Six months
Assessments on
(6/1/05)
insurers
Also eligible under “Medicare plan eligibility” rules by meeting at least one of the following:
- Rejection by carrier or use of non-uniform health screen
- Increase in premium
- Offer of coverage with a coverage restriction
- Pre-existing condition exclusion period that is different for standard enrollee in the
same plan
West Virginia
N/A
Eligible under HIPAA, HCTC
Six months
Assessments on
(enrollment
hospitals
data for new
Also eligible if meets at least one of the following:
program not
yet available)
- Denial of coverage due to health conditions
- Cost of health coverage offered in excess of the high risk pool premium
- Has one of the qualifying medical conditions

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CRS-21
Pre-existing health
State
Enrollmenta
Eligibility requirementsb
condition exclusion
Funding sourcesd
periodc
Wisconsin
18,341
Eligible under HIPAA, Medicare (due to disability), HIV+ health status
Six months
Assessments on
insurers
Also eligible if meets at least one of the following within the last nine months due to health
conditions:
- Denial or cancellation of coverage
- Notice of substantial coverage limitation or reduction
- For currently insured, notice of 50% or more increase in cost of coverage
- Notice of 50% or more increase in cost of health coverage applied for
Wyoming
689 (5/31/05)
Eligible under HIPAA
12 months
Assessments on
insurers, offset by a
Also eligible if meets at least one of the following:
portion of premium
taxes paid to the state
- Denial of coverage due to health conditions
- Cost of health coverage offered in excess of the high risk pool premium
- Offer of coverage with coverage restriction or coverage exclusion for pre-existing
condition
Total
182,381
Source: Communicating for Agriculture and the Self-Employed, Inc., Comprehensive Health Insurance for High-Risk Individuals: A State-By-State Analysis, Nineteenth Edition,
2005/2006, 2005.
Note: The funding sources, eligibility criteria and rules pertaining to pre-existing condition exclusions may vary by risk pools for those states that operate more than one risk pool.
a. Enrollment numbers are from the end of 2004, unless otherwise noted.
b. State residency is an eligibility requirement for all high risk pools.

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CRS-22
c. This is the time period during which coverage for pre-existing conditions is excluded. There are no coverage exclusions for HIPAA eligibles in the individual market.
d. All states collect premiums from pool participants to provide partial funding for pool operations.
e. Idaho’s pool is a reinsurance pool where commercial carriers underwrite the coverage and directly provide health benefits to pool participants. This is in contrast with a traditional
high risk pool, where the pool itself acts as the plan administrator, paying claims and providing benefits to enrollees. Nonetheless, Idaho was included with the more-traditional
state pools because of the similarities in eligible groups (e.g., HIPAA eligibles), and benefits and plans offered.

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