With 17 states facing shortfalls in 2007 in the State Children’s Health Insurance Program (SCHIP), Congress attached a partial fix to the National Institutes of Health Reform Act, H.R. 6164, the day before adjourning.   The legislation calls for redistributing existing unspent fiscal year 2004 and 2005 funds from states without shortfalls to those that have them.  The nine states that are expected to face shortfalls first – AK, GA, IL, MD, MA, MN, NE, NJ and RI – will receive approximately $219 million in redistributed funds.  The other eight states whose shortfalls will occur later in the year will not receive any funds – IA, LA, ME, NS, MO, NC, SD, and WI.
States receiving these funds who also cover low-income parents will be able to continue coverage but only at the lower Medicaid matching rate, requiring them to use more SCHIP money to cover the same number of families.  If states with shortfalls choose to reduce the number of parents they serve, leaving them uninsured, it could result in reduced coverage for children because enrollment of children tends to drop when parents are not covered.

Redistributing funds will address only about one-fifth of the projected gap in funding and beginning in early May states will again face shortfalls projected at $816 million for the remainder of the year affecting all 17 of the states.  Because Congress passed only a stop-gap measure, it will need to revisit the SCHIP shortfall early next year.  If new funding is not provided states will have to reduce eligibility, reduce enrollment, scale back benefits, increase cost-sharing and/or cut payments to health care providers.  The $816 million shortfall is equivalent to the cost of covering approximately 560,000 children under SCHIP.

See Center on Budget and Policy Priorities article:  http://www.cbpp.org/12-11-06health.htm

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