To help people whose health conditions make it difficult for them to obtain insurance coverage, the Trade Act of 2002 initiated federal matching payments to support state high-risk pools and promote coverage expansion through them. Some 30 states already had high-risk pools, but enrollment was very limited, largely because of high premiums, exclusion of coverage for preexisting conditions, and high cost-sharing. In interviewing officials from high-risk pools that received grants in the program's first year, the authors found that most states did not use grant funds to make their pools more accessible or affordable; instead, 18 of 19 states used some or all funds to refinance existing programs. Only one state used its entire grant award to reduce enrollee premiums, expand covered benefits, or otherwise enact changes to promote enrollment. Policymakers may need to strengthen grant requirements and/or financial incentives to promote expansion of coverage via state high-risk pools.