Freezing SCHIP Funding in Coming Years Would Reverse Recent Gains in Children’s Health Coverage


Resource: Excerpt from Freezing SCHIP Funding in Coming Years Would Reverse Recent Gains in Children’s Health Coverage authored by Center on Budget and Policy Priorities (November 28, 2006)
Available at: www.mrmib.ca.gov/MRMIB/HFP/CBP11.06Report.pdf, and
http://www.healthrightsproject.org/in/schip/archivedreports/CBPP_SCHIP.pdf

Due in large part to the State Children’s Health Insurance Program (SCHIP), the percentage of low-income children in the United States without health coverage has fallen by one-quarter since SCHIP was created in 1997, despite the erosion of private health coverage over this period. More than 4 million low-income children, most of whom would otherwise be uninsured, are enrolled in SCHIP.

This remarkable success, however, is now threatened. Unlike Medicaid, an entitlement program whose federal funding increases automatically to compensate for increases in health-care costs (as well as increases in caseloads), SCHIP is a block grant with a fixed annual funding level. As a result, the federal SCHIP funding that states receive is not keeping pace with the rising cost of health care or population growth.

In fiscal year 2007, the final year of SCHIP’s original ten-year authorization, many states are expected to have inadequate SCHIP funds to cover the same number of beneficiaries as in 2006.

We estimate, based on states’ most recent SCHIP spending projections for fiscal year 2007, that 17 states will face a combined shortfall this year of nearly $921 million — equivalent to the cost of covering 630,000 children through SCHIP

KEY FINDINGS

SCHIP has reduced the number of uninsured low-income children significantly, but a substantial share of this progress will be undone if SCHIP funding is frozen (by being held to the SCHIP “budget baseline”) when the program is reauthorized next year.

The baseline assumes that SCHIP funding will be frozen for the next ten years at the 2007 funding level of $5 billion, with no adjustment for rising health care costs or for expected increases in the number of children due to normal population growth.

If SCHIP funding is frozen at its 2007 level when the program is reauthorized, states will face a shortfall of $12.7 billion to $14.6 billion for 2008-2012.

If SCHIP funding is frozen, in 2008, some 24 states will face a shortfall equivalent to the cost of covering up to 1 million children. In 2012, some 36 states will face a shortfall equivalent to the cost of covering up to 2.1 million children.