Families USA sees reduction in those covered by SCHIP

The advocacy group Families USA in Washington, DC, says the Bush administration’s projection that State Children’s Health Insurance Program (SCHIP) enrollment will drop by 900,000 between fiscal years 2003 and 2006 may underestimate the losses because of the worsening financial condition in states.

The projected drop in enrollment is the result of three major problems, according to Families USA:

  1. The amount of federal SCHIP funds made available to states in fiscal years 2002, 2003, and 2004 is considerably lower than amounts that were made available in the previous four years.
  2. Almost $3 billion of previously allotted SCHIP funds are scheduled to be taken away from states and will revert to the U.S. Treasury.
  3. States are experiencing significant budget problems that are causing them to reduce their commitments to low-income health coverage.

"The State Children’s Health Insurance Program has been successful at improving health coverage for millions of children, but there are still millions more in need," according to Families USA executive director Ron Pollack. "Now is not the time for the federal government to turn its back on children’s health coverage. Congress should act now so that the program’s funding problems can be fixed and do not result in 1 million children losing their health coverage."

The report says that the 2002-2004 SCHIP funding dip was included in the Balanced Budget Act of 1997 because it was presumed that the federal budget would be in worse shape in fiscal years 2002-2004 than in the years immediately before and after that period. It is occurring at the same time when federal funding is needed most because program enrollment, unemployment, state budget problems, and health care costs are growing.

The funds that will revert to the Treasury are primarily a result of the fact that Congress front-loaded SCHIP allocations to the states, Families USA says. Specifically, Congress allocated more funding to the states in each of the first four years of program implementation than it did for any of the succeeding five years.

"This makes little sense because SCHIP, like all new public programs, needed time to get under way," the report says. "States first had to pass legislation to start the program and then to develop the program’s administrative infrastructure. Only then could they begin the process of informing the public and reaching out to potentially eligible families."

An Office of Management and Budget estimate of a 900,000 drop in SCHIP enrollment was based primarily on expenditure estimates submitted by states. The state estimates took into account the SCHIP funding dip and the loss of expiring federal funds. But because the estimate was prepared early in the year, it could not account for the full impact of the economic slowdown on state budgets.

The Families USA report looked at five states — North Carolina, Rhode Island, Utah, Kentucky, and Montana — to determine the kinds of budgetary decisions being made, including freezing enrollment of new children or limiting time periods when new children can enroll; increasing family premium requirements; and eliminating simplified enrollment procedures that make it easier for a family to enroll their children in SCHIP.

(To download the report, go to www.familiesusa.org.)