States scramble as federal funds for child health care run out

ATLANTA – Maine and at least 13 other states are warning that hundreds of thousands of poor children could lose their health insurance if Congress doesn’t act soon to come through with more money for the program.

The situation is most severe in Georgia, where officials plan to stop enrolling children in the state’s PeachCare program starting March 11 because of a $131 million shortage.

In Maine, where the program now covers just more than 15,000 children, 3,186 youngsters will lose their coverage July 1 without $6.5 million in supplemental funding.

The problem is that many states have nearly used up their annual federal subsidy for child health care, and it is not even midway through the fiscal year – a situation some are blaming on the formula by which the money is doled out by Washington. Congress has been unwilling so far to deliver more money.

The uncertainty is making it difficult for some states to draw up their new budgets, because they do not know how much they ultimately will get from Washington.

In the meantime, states are scrambling to protect youngsters.

In Iowa, which is looking at a $16 million shortfall by the end of the state’s fiscal year in June, lawmakers are pushing for a $1 cigarette tax increase to pay for children’s health care and related programs. Some states plan to shift some children to the Medicaid rolls, at least temporarily. Others say they will pour in additional state dollars.

An Associated Press survey found that at least 14 states could face a shortfall of children’s health insurance funds before the next federal fiscal year begins in October.

Besides Maine, Georgia and Iowa, the other states are Illinois, Massachusetts, New Jersey, North Carolina, Wisconsin, Maryland, Minnesota, Mississippi, Nebraska, Rhode Island and Alaska.

Georgia contends it will run out of money in late March. Illinois, New Jersey, Maryland, Massachusetts and Alaska expect to exhaust their federal money this spring.

Carol Martin of the Atlanta suburb of Decatur has two children, ages 12 and 14, on PeachCare. Both have asthma.

“We really need this,” Martin said. “If you are not going to make children’s health a priority what is?”

At issue is the State Children’s Health Insurance Program, or SCHIP, which was started by Congress in 1998 and is funded by a combination of federal and state funds. Participants also pay premiums.

The program was envisioned as a way to provide health insurance to the children of the working poor – those who make too much to qualify for Medicaid but not enough to afford their own insurance.

SCHIP’s current budget is $5.5 billion. But states say the amount falls $745 million short of what they need.

The program has had funding problems in the past. But “you’ve never had this many states before. It’s never been this much of a shortfall before,” said Genevieve Kenney, a policy expert at the Washington-based Urban Institute. “And Congress isn’t moving.”

Georgia’s senators, Republicans Saxby Chambliss and Johnny Isakson, have proposed shifting money from states with surplus SCHIP money, such as Texas and Connecticut. But states with surpluses are not eager to give up the extra cash.

Dennis Smith, director of the Center for Medicaid and State Operations, said President Bush favors redistributing any unspent money to those states with deficits. “There’s plenty of money. It’s just in different places,” Smith said.

SCHIP funding is based, in part, on the number of uninsured children in each state. So, those states that use the program most aggressively to reduce their number of uninsured children end up coming up short on federal funds.