Health Insurance: State High Risk Pools

Bernadette Fernandez
Analyst in Health Care Financing

In an effort to expand the options for health coverage, 35 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 preexisting 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 (P.L. 104-191). 

In general, state high risk pools tend to be small and enroll a small percentage of the uninsured. In 2008, a total of 199,418 individuals were enrolled in the 34 high risk pools in operation that year. State-established nonprofit organizations typically run these pools, with private insurance companies handling 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 150% to 200% of market rates, and pools are subsidized through insurer assessments and other funding mechanisms. 

The Trade Act of 2002 (P.L. 107-210) appropriated a total of $100 million for FY2003-FY2004. With the expiration of authorizing legislation for federal funding of state pools, the 109th Congress took up this issue. The House passed H.R. 4519, the State High Risk Pool Funding Extension Act of 2006, which reauthorized federal grants to state high risk pools through FY2010, and changed the funding formula used for such grants. The Act authorized $15 million for seed grants and $75 million for operational and bonus grants for FY2006. The Senate passed H.R. 4519 without amendment, and it was signed into law (P.L. 109-172) on February 10, 2006. 

As part of the budget reconciliation process, the Senate passed S. 1932, the Deficit Reduction Act of 2005 (DRA) conference agreement, which provided appropriations for the grants authorized under H.R. 4519. The measure also included conforming language on enactment of H.R. 4519. The House agreed to the Senate-amended DRA bill, and it was signed it into law (P.L. 109-171) on February 8, 2006. The Centers for Medicare and Medicaid Services (CMS) awarded grants to 31 states that experienced operational losses in 2005. Of those 31 states, 25 also received bonus grants. In 2006, CMS awarded seed grants to five states, and to another five states in 2007. 

The 110th Congress took up the issue of extending the federal grant program by making funding available pursuant to the Consolidated Appropriations Act of 2008 (P.L. 110-161). The grant funding totaled $49,127,000. In July 2008, CMS announced that 30 states received operational and bonus grants totaling $49,126,500. 

The 111th Congress provided $75,000,000 in appropriations for grants to state high risk pools under the Omnibus Appropriations Act of 2009 (P.L. 111-8). In May of 2009, CMS announced the availability of these grants. To date, the grant awards have not been posted by CMS. 

The Patient Protection and Affordable Care Act (P.L. 111-148, PPACA) was signed into law on March 23, 2010. On March 30, 2010, PPACA was amended by the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152). PPACA requires the Secretary of Health and Human Services to establish a temporary high risk pool program, no later than 90 days after enactment, to provide health insurance coverage to eligible individuals. To date, the Secretary has issued letters to governors and insurance commissioners to survey state interest in participating in this new high risk pool program.


Date of Report: May 19, 2010
Number of Pages: 15
Order Number: RL31745
Price: $29.95

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