As many as 37 states are set to lose more than $1 billion meant for health care for low-income children because they will miss a September deadline to spend the money. The states had three years to use a grant appropriated by Congress in 1998, but the Health Care Financing Administration estimates 75 percent of them will not meet the deadline.
Under the law that created the new Children's Health Insurance Program> (CHIP), Congress anticipated that some states would move more quickly than others, so it gave them all three years to spend each year's allotment. It stipulated that, at the end of the third federal fiscal year -- Sept. 30, 2000 -- unspent money from year one, 1998, would be redistributed to the states that had spent their entire first year's grant.
Few, however, expected that the size of the surplus would be so large or that so many states would leave money unspent. The Health Care Financing Administration (HCFA), which oversees CHIP, has estimated that 37 states could leave as much as $1.9 billion -- 44 percent of their 1998 grant of $4.3 billion -- in the federal treasury by the close of the fiscal year.
The amount of money at stake has already led some in Congress to suggest siphoning the surplus for other programs, although such a move now appears unlikely.
"Congress did not anticipate it would take as long as it has for states to get their programs up and running," said Jocelyn Guyer, a health care expert for the Center on Budget and Policy Priorities in Washington.
CHIP is intended to ensure health care for the children of parents who work, but earn too little to afford private insurance. Often cited by President Clinton as one of his greatest achievements, it builds on the national Medicaid program, which provides free health care to non-working adults and to the nation's poorest children, those living just above and below the federal poverty level.
Enacted in 1997, Congress funded CHIP at $24 billion over five years. When fully implemented, it is expected to insure as many as five of the 11 million children who currently lack health care coverage.
As of Sept. 30, Texas, which the Census Bureau estimates has one million low-income children without health insurance, will give up as much as $443 million, or 78 percent of its 1998 grant. California stands to miss out on almost $600 million, or 70 of its award. More than 1.2 million uninsured children in California are considered low-income, meaning their parents earn less than twice the federal poverty level, or $34,100 for a family of four.
Oklahoma and Georgia could lose as much as $84 million.
Because the Texas legislature meets every other year, it did not enact a CHIP law until mid-1999, more than 18 months after the federal program was created. Texas just started to enroll children in CHIP this spring.
"Texas is the 800-pound gorilla when it comes to uninsured kids," Guyer said. It is "a large part of why there are unspent funds."
The National Governors' Association argues that most of the states have made remarkable progress in establishing what were essentially brand new programs. Before CHIP, only a handful of states, including Florida, Pennsylvania, New York, Massachusetts and Rhode Island, had extended health insurance to some children of the working poor.
Since 1997, the NGA says, states efforts have brought into either CHIP or Medicaid four million children who otherwise would not have health insurance.
HCFA officials insist that many states have stepped up their efforts to enroll kids since the agency drafted its estimate of 1998 expenditures this winter, but they declined to provide more recent numbers to Stateline.org.
In any case, Congressional appropriators have already seen the HCFA estimate and some Senators have suggested spending the leftover pot on other things. The Senate is now debating the 2001 health care budget that includes a provision to rescind the entire $1.9 billion 1998 CHIP surplus.
A bipartisan alliance led by Senator William Roth of Delaware has won an agreement from the Senate leadership to remove the cut, making passage extremely unlikely. The House version of the bill would protect the CHIP surplus.
That is good news for the 13 states that are on pace to spend their entire 1998 grant. As the CHIP law proscribes, many of them are expecting to receive a bonus this year.
According to HCFA, 13 states are eligible for extra money: Alabama, Alaska, Delaware, Indiana, Kentucky, Maine, Massachusetts, Mississippi, Missouri, Nebraska, New York, North Carolina, and South Carolina.
1998 CHIP SURPLUS PER STATE