Download Locations

• Open CRS (User submitted)
• University of North Texas Libraries

Summary

The Balanced Budget Act of 1997 (BBA 97, P.L. 105-33) created the State Children's Health Insurance Program (SCHIP), which is authorized for FY1998 through FY2007. The purpose of the program is to help states pay for health coverage of children in families whose income is above the levels that would allow them to be eligible for the state's Medicaid program as of March 31, 1997. At the time of enactment, Congress appropriated to SCHIP nearly $40 billion for the 10-year period of its authorization, with each state receiving access to a portion of the annual amount. Because SCHIP is a capped-grant program, it is possible for states to exhaust all of the federal SCHIP funds available to them in a given year. However, most states have not been able to spend their allotments within the period of time specified by law. Only one state, Rhode Island, has ever exhausted all of its available federal SCHIP funds. When this occurred (beginning in FY2003), Rhode Island either deferred filing its SCHIP claims until the next fiscal year, when new federal SCHIP money was available, or the state filed claims under regular Medicaid, which it can do for the majority of its SCHIP expenditures. By claiming under Medicaid, however, Rhode Island receives a 20% smaller federal payment than it would get under SCHIP. In January 2005, the Secretary of Health and Human Services (HHS) proposed a procedure for redistributing states' unspent FY2002 original allotments. States that were projected to exhaust all available federal SCHIP balances in FY2005, based on their estimated FY2005 expenditures, received the necessary funds to prevent a shortfall. These five "shortfall states" were Arizona, Minnesota, Mississippi, New Jersey and Rhode Island. The remaining unspent FY2002 allotments were to be redistributed among all states that had spent all of their FY2002 original allotments, including the five shortfall states. This schema was intended to prevent any shortfall in FY2005. However, once the schema was announced, Rhode Island officials determined that they had submitted an inaccurate expenditure estimate and, unless the redistribution scheme is altered, the state will face a shortfall in FY2005 of at least $17 million. HHS may revise the redistribution to address this. The Congressional Research Service (CRS) SCHIP Projection Model projects that seven to 14 states will exhaust their available federal SCHIP funds in FY2006, and 13 to 22 states in FY2007. The range in the number of states projected to exhaust their funds reflects the methodology used in the model; rather than choosing a single amount for states' projected demand for federal SCHIP funds, the results in this report are based on each state's "low-demand scenario" and "high-demand scenario" for FY2005-FY2007. Unlike in FY2005, the funds available for redistribution in FY2006 and FY2007 are projected to be inadequate to make up all states' shortfall. This is because increasing amounts of shortfalls are projected against a shrinking pool of available unspent funds from states' original allotments.

XML