On September 30 $1.1 billion in earmarked funds for the State Children’s Health Insurance Program (SCHIP) reverted back to the U.S. Treasury in spite of broad bipartisan support to redistribute the unspent funds to the states. This amount could provide health coverage for 750,000 of the nation’s 8.4 million uninsured children for one year. This further translates into coverage for 184,200 children in New York, 13,900 in Maryland, 6,600 in Virginia, 2,500 in the District of Columbia and 60,000 in California, to name only a few.
Senators Jay Rockefeller (D-WV), Lincoln Chafee (R-RI), Ted Kennedy (D-MA), and Olympia Snowe (R-ME) and Representatives Joe Barton (R-TX) and John Dingell (D-MI) introduced The Children’s Health Protection and Improvement Act of 2004 (S 2759 and HR 4936). This bipartisan legislation will keep the $1.1 billion within the SCHIP program to address unmet health needs through 2007 when the bill would have to be reauthorized. This legislation provides Congress additional time to develop a more comprehensive solution to the challenges faced by states over the next several years.

The loss in SCHIP funding hits states particularly hard at a time when most states are still suffering from historically large budget shortfalls. Without the $1.1 billion, many state programs are expected to run out of money to run the SCHIP program. Specifically, 17 states are projected to lack sufficient federal funding between now and fiscal year 2007, six of them in the current fiscal year 2005. The expiration of temporary fiscal relief on June 30, 2004 and a steady rise in enrollments since the program’s inception further contribute to the states’ problems.

The SCHIP program was created by Congress in 1997 to provide free or low-cost health care coverage to children whose parents make too much money for Medicaid eligibility, but do not receive family health care through their employer and cannot afford to buy private insurance. SCHIP has proven to be one of the most important, bipartisan and effective programs for child health and well-being introduced in the last few decades.

The unspent $1.1 billion can be attributed to the design of the original SCHIP legislation which gave states $40 billion over ten years to develop and implement the program. Under the law, states received relatively high funding in the first four years, just as they were launching their programs. Funding was designed to taper off in the next five years and to increase in the tenth year. States are allowed three years to spend money from a given year. Unspent funds revert back to the U.S. Treasury. Unfortunately, the funding pattern did not match the development and growth of the program. The $1.1 billion is money from fiscal years 1998 – 2000 that states have not yet been able to spend.

Despite the bipartisan, bicameral support for extending the SCHIP money, at this time it appears unlikely Congress will act. Despite discussing the need to insure all children in his nominating convention speech, President Bush has not pushed Congress to extend the money. If not resolved this legislative session, advocates will continue to push next session. In past years, Congress has passed legislation preserving SCHIP funding even after the expiration date, so retroactive restoration is possible.

For More Information:

CBPP: Congress Can Preserve $1.1 Billion in Expiring CHIP Funds and Help Avert Cutbacks
CBPP: Assessing Administration’s Claims that Extending SCHIP Funds is Not Necessary to Sustain Enrollment
Families USA: $1.1 Billion in Children’s Health Insurance Funds to be Returned to the U.S. Treasury
KFF: A Progress Report on Medicaid and SCHIP
Washington Post article: Words, Actions at Odds on Children’s Health Care

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