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Update on the State Childrens Health Insurance Proram 
October 2002
by Carol Ruppel

Families USA, the Center for Budget and Policy Priorities and other groups dedicated to expanding health insurance to cover more low-income people are reporting that federal funding for the State Children’s Health Insurance Program (SCHIP) dropped by 26 percent in fiscal year 2002, and the situation will not improve in the next two years.  This is the anticipated “SCHIP dip.”  SCHIP insures children in families whose income is too high to be eligible for Medicaid.  Eligible family income varies from state to state, ranging from just over the state’s Medicaid cutoff to three times the federal poverty level (FPL), and depends upon the state’s ability and willingness to fund the program.  FPL is currently $18,100 for a family of four.  SCHIP was established under the Balanced Budget Act of 1997, and its funding was tied to budget projections made at that time.  Consequently, several states will be forced to cut their SCHIP rolls.  The Center for Budget and Policy Priorities reports that 18 states are expected to face federal funding shortfalls for their SCHIPs by 2007.  
      The program is a capped federal entitlement, which means that Congress makes an annual allotment, and states must set eligibility limits according to both the federal rules for the program, their federal allotments and the state’s ability and willingness to expand coverage.  Congress allocated $4.275 billion for fiscal years 1998-2001; $3.15 billion for 2002-2004, $4.05 billion for 2005-2006 and $5 billion for fiscal year 2007.  States match federal funds at different percentages, depending upon their economies.  The Office of Management and Budget (OMB) predicts that SCHIP enrollment will decline by 900,000 between 2003 and 2006.  The combination of lower federal funding and severe budget shortfalls in nearly every state do not bode well for either Medicaid or SCHIP.
      According to the Kaiser Commission on Medicaid and the Uninsured, this year 11 states insure kids with family incomes up to but under twice FPL; 25 states and the District of Columbia insure kids living in families earning twice FPL and 14 states insure kids living in families between two and three times FPL.  As of July, 18 state SCHIPs cover parents, but with stricter income cutoffs.   
      Senators Rockefeller (D-WV), Chafee (R-RI), Hatch (R-UT), Kennedy (D-MA), Kerry (D-MA), Wellstone (D-MN), Toricelli (D-NJ) and Clinton (D-NY) are sponsoring S. 2860, the Children’s Health Improvement and Protection Act to maintain enrollment.  Unfortunately, with so little time left in the session, Congress is unlikely to act on the bill.  However, Congress may pass a measure that will at least allow carryover funds to remain in states that are required to return them if unspent after three years.