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Rockefeller Calls for Congress to Wipe Out SCHIP Funding Shortfalls During Lame Duck

By John Reichard, CQ HealthBeat Editor

November 16, 2006 -- Seventeen states will run out of federal dollars to fund their State Children's Health Insurance Programs (SCHIPs) before the end of fiscal 2007 unless Congress intervenes, West Virginia Democratic Senator John D. Rockefeller IV said at a Senate hearing Thursday afternoon. Congress must act during the current lame-duck session to wipe out the shortfalls totaling $920 million or else place 630,000 children at risk of losing their health insurance coverage, Rockefeller said in his opening statement at a hearing by the Senate Finance Committee's Subcommittee on Health.

Rockefeller has introduced legislation (S 3913) that would wipe out the shortfall by tapping unspent fiscal 2004 SCHIP allotments to the states as well as appropriating new money. Rep. John Barrow, D-Ga., has introduced a companion measure in the House (HR 6098) that Rep. John D. Dingell of Michigan, the top Democrat on the House Energy and Commerce Committee, is co-sponsoring. Senate Finance Committee Charles E. Grassley, R-Iowa, also has developed a proposal addressing the shortfall, but legislative analysts said his bill wouldn't go as far to end the shortfalls as the Rockefeller bill.

According to one analyst, Grassley appears to be trying to find a middle ground between those on the right who see SCHIP as a block grant program and those on the left who would like to see it become an entitlement. Those on the right believe that repeated congressional intervention to end shortfalls is tantamount to turning the block grant program into an entitlement. The Bush administration has resisted the idea of appropriating new money and sees unspent state allocations as a source of money to end shortfalls.

Grassley's bill would cost an estimated $450 million or so in new appropriated money while also relying on redistributed funds, the analyst said, while the Rockefeller measure has received a score from the Congressional Budget Office of between $300 and $400 million. It was not clear why the Rockefeller measure would appear to score at a lower level while providing more money to end the shortfalls.

State officials present at the hearing represented three different funding situations. Utah, for example, has unspent SCHIP money, West Virginia has spent its funds, and New Jersey has a shortfall. A Utah official said his state's current annual spending is about equal to its SCHIP allocation. While it has unspent funds from prior years—states have three years to spend their annual allocations—the state's governor wants to insure more children, and if that effort is fully funded, Utah will quickly spend its prior allocations and require added funding above its current level in future years.

A New Jersey official said her state has historically spent its entire SCHIP allotment and has been eligible for SCHIP funds not used by other states. But the pool of funds to be reallocated is shrinking as states cover more uninsured children, and the official said Congress faces an urgent need to increase annual allocations to states to meet a growing national need for health care coverage.

In an Oct. 24 letter, the National Governors Association urged House and Senate leaders to address the fiscal 2007 funding shortfalls before Congress adjourns this year and not to put off action until next year when Congress is due to reauthorize the SCHIP program. Sen. Orrin G. Hatch, R-Utah, said at the hearing that the program "must be reauthorized" because of its importance to children's health.

In a statement released late Thursday, the incoming chairman of the Senate Finance Committee, Montana Democrat Max Baucus, also expressed a sense of urgency about acting this year on fiscal 2007 funding shortfalls. "I still hope we can come together to find a way to address this issue before the year ends," he said. "The first shortfall state will begin running out of federal funds in January. Delaying federal action on providing funding to these states in need may force states to cut enrollment, threatening harm to thousands of children." Baucus added that "I hope that Sen. Grassley and I can work together with other members of the committee to find a solution to address this problem soon."

But reauthorization won't be cheap, with the annual cost of maintaining the current coverage level of 6.2 million pegged at $10 billion to $12 billion a year.

Rockefeller said, however, that despite that accomplishment, the current number of uninsured children in the U.S.—8.4 million—is about the same as the 10 million kids who were uninsured when SCHIP was created in 1997.
Rockefeller said that one of the goals of reauthorization must be an expansion of coverage, not just maintaining current levels of enrollment.

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