Many states face loss of unspent SCHIP funds

Congress will have to act fast to resolve a glitch in a law that provides funds for children's health insurance.

By Susan J. Landers, amednews staff. Sept. 18, 2000.

Washington -- Many states are facing the unusual problem of a surplus of federal funds that must be spent on children's health insurance in a big hurry.

Block grant funds awarded in 1998 under the State Children's Health Insurance Program, or SCHIP, that aren't spent by the end of this month are to be turned over to other states that spent their money faster, according to the 1997 law that created the program.

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The reallocation of about $2 billion is at stake as 37 states have failed to meet the deadline.

Every state and the District of Columbia has implemented a version of SCHIP and, so far, more than 2 million children have been enrolled.

The AMA has joined with other groups in promoting the program as part of its goal of universal health insurance coverage. Physicians' offices as well as schools and social service agencies are viewed as prime locations for informing parents of their children's eligibility.

There are an estimated 11 million children in the nation still without health insurance, and two-thirds are eligible for SCHIP, or the related entitlement program, Medicaid, according to the Children's Defense Fund.

Although states are facing an imminent deadline for the return of unspent SCHIP funds, Congress likely will step in with a legislative fix to resolve the problem, observers predict.

"We anticipate some kind of legislative attempts to let states keep at least some of the money," said Jane Alker, assistant director of government affairs at the Washington, D.C.-based advocacy group, Families USA.

As it stands, identical bills have been introduced in the House and Senate to extend states' spending deadlines for the 1998 funds until Sept. 30, 2002. States also have fiscal year 1999 and 2000 allocations to spend.

But the bills, introduced by Sen. Lincoln Chafee (R, R.I.) and Rep. Brian Bilbray (R, Calif.), do not address the situation of states that have spent their allotments and should expect to receive allocations of other states' unspent funds.

Compromise likely

The competing state interests make it hard to predict what Congress will do, said Gregg Haifley, a deputy director at the Children's Defense Fund's health division.

A compromise is the most likely outcome, Alker said, where states get to keep some money while some gets reallocated.

Without a compromise, California would lose $590 million of its $855 million allotment and Arizona, $76 million of its allotted $116 million.

States aren't entirely at fault in failing to spend their first-year funds, said Alker and Haifley. By providing the same funding level for each year, Congress failed to take into account the time a state would need to set up a program.

The state programs that met with the greatest success had several elements in common, Haifley said. Among them, aggressive leadership, outreach efforts and collaboration among state agencies, he said.

Design, however, apparently had little to do with a program's successful enrollment of children. The law allowed states to establish a separate SCHIP program, expand their Medicaid program or combine approaches.

High-achieving states such as Alaska, Louisiana and Maryland expanded their Medicaid programs. New York developed a separate SCHIP program. And Massachusetts created a combined Medicaid/SCHIP program.

Regardless of the outcome of the state funding battle, the bottom line is insuring more children, Haifley said. "It's more important to remember that there are kids out there now who need health care services and aren't getting them despite the fact that this program is available for them," he said.

"Children without insurance are more likely to have health problems that could be prevented or managed with routine care," notes the Children's Defense Fund in its recent report, "All Over the Map: A Progress Report on the State Children's Health Insurance Program."

ADDITIONAL INFORMATION:

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All Over the Map "A Progress Report on the State Children's Health Insurance Program" by the Children's Defense Fund (http://www.childrensdefense.org/chip/all_over.html)