Senate Democrats


Failure by Republican Congress threatens the health care of over 600,000 children nationwide

Washington, DC — New Jersey Senator Bob Menendez and Wisconsin Governor Jim Doyle today held a conference call with reporters to discuss the rapidly-approaching shortfall in funding for the State Children’s Health Insurance Program (SCHIP), a shortfall that will put the health insurance of over 600,000 low-income children at risk. Though this funding crisis has been on the horizon for months, like so much in the Do Nothing Republican Congress, it has been ignored. A state-by-state analysis of the importance of the SCHIP program and the dangerous consequences if it is not fully funded follows this release.

A bipartisan program that helps fund state health insurance programs for low-income children across America, SCHIP is a critical support for American families who are increasingly struggling to get by. If left without the funding they need, state-run programs like the innovative BadgerCare in Wisconsin will be forced to make tough decisions that will leave even more American children without health insurance. States like New Jersey could face a funding shortfall of more than $150 million–nationwide the total gap is more than $888 million. Democrats in Washington and across America have consistently fought to ensure America’s children keep the health insurance they depend on. Legislation Senator Menendez has co-sponsored in the Senate will fix the gap. Sadly, a Do Nothing Congress that has so far accomplished little for the American people seems unlikely to address the problem in its waning days. Democrats today called for a new direction, where the health of America’s children is considered a priority.

“Not a single member of Congress would let their own child go without health care,” Senator Menendez said. “So why will this Congress allow America’s neediest children to do without health care? We must pass the Keep Children Covered Act to ensure states like New Jersey aren’t forced to take drastic steps due to millions in SCHIP shortfalls.”

“This is just another example of how when it comes to health care, the Republican Congress is part of the problem, not part of the solution,” Governor Doyle said. “Wisconsin’s BadgerCare program is a model for the nation in providing health insurance to working families and kids, but unless Congress takes action in the next two weeks, we’ll face a significant funding shortfall. I hope that Congress and President Bush will do the right thing and provide this funding so we can continue to provide the services people depend on.”

Tens of millions of Americans–and millions of children–lack health care in America today, but the 109th Congress has failed to address the problem. Democrats believe the least leaders in Washington can do is to keep more from unnecessarily losing the care they do have. With children set to lose their health insurance because the Republican Congress has failed to do its job, it is time for a new direction.


States Face Funding Shortfall in Children’s Health Insurance Programs

The Republican-controlled Congress is rushing to adjourn without addressing a looming shortfall in federal funding for the State Children’s Health Insurance Program (SCHIP). The shortfall is projected to affect 17 states in Fiscal Year 2007 and could place as many as 610,000 children at risk of losing their health coverage. At a time when the number of uninsured Americans is rising, Congress should be working to expand health coverage, not allowing children to lose the coverage they now have.

SCHIP has been an important addition to the health care safety net. The program was created as part of the Balanced Budget Act of 1997 to provide coverage to children who would otherwise be uninsured. The program is targeted to children in low-income families who do not qualify for Medicaid but are unable to afford private insurance. SCHIP has been a success:

  • While the number of uninsured adults has risen, the number of uninsured children has decreased since the implementation of SCHIP, from 10.7 million in 1997 to 8.3 million in 2005. (U.S. Census Bureau, August 2006)
  • The program now covers about 6.1 million children a year. (Congressional Research Service, September 21, 2006)

SCHIP’s funding structure has created challenges for many states. Unlike Medicaid, SCHIP does not establish an individual entitlement to benefits and funding does not automatically increase to cover everyone who is eligible. Instead, Congress appropriated a total of $40 billion in federal funds from Fiscal Year 1998 to Fiscal Year 2007 for the program. The legislation that created SCHIP specifies how that funding is to be allocated to each state each year and includes rules regarding how long states can retain their annual allotment and how unused funds are redistributed to other states. These rules have been modified several times to make short-term fixes to funding problems. Congress, for example, enacted changes in 2000 and in 2003 related to the extension and reallocation of unspent allotments for Fiscal Years 1998 and 1999 (P.L. 106-554) and for Fiscal Years 2000 and 2001 (P.L. 108-74).

Federal funding shortfalls are a growing problem. When SCHIP was first implemented, most states could not spend their allotments within the three-year time-frame because they were still ramping up enrollment in this new program. But SCHIP programs have matured and enrollment has increased to meet the rising demand caused by an erosion of private health coverage for children. Now most states fully exhaust their annual allotments. This progress has created a new challenge: as more states spend their full allotment, the amount of unspent funds that can be redistributed shrinks. Moreover, a total of $1.4 billion in SCHIP funds was allowed to expire and revert to the Treasury at the end of Fiscal Years 2003 and 2004. As a result, additional funding has become necessary to prevent shortfalls. Congress recognized the need for additional funds – not just extending and reallocating unspent SCHIP funds – earlier this year when it appropriated $283 million in new funds to respond to projected SCHIP shortfalls in 12 states for Fiscal Year 2006 in the budget reconciliation bill (P.L. 109-171).

Congress has not acted to prevent upcoming SCHIP shortfalls. In Fiscal Year 2007 (which begins October 1), states are once again facing a shortfall in SCHIP funding. The Center on Budget and Policy Priorities estimates that 17 states will have a nearly $890 million shortfall in federal SCHIP funds for Fiscal Year 2007. The Centers for Medicare and Medicaid Services and the Congressional Research Service similarly estimate shortfalls of $900 million to $950 million. These shortfalls will force states to make difficult choices: scaling back eligibility for the program, reducing benefits, raising copayments and other charges, or cutting payments to health care providers. Without Congressional action to provide additional SCHIP funds, as many as 610,000 children would be at risk of losing their health coverage. (CBPP, September 21, 2006)

  • States facing a shortfall include: Alaska, Georgia, Illinois, Iowa, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, North Carolina, Rhode Island, South Dakota, and Wisconsin. (CBPP, September 21, 2006)

The SCHIP shortfall comes at a time when the number of uninsured children has begun to rise. The number of uninsured Americans has increased each year of the Bush Administration, reaching a record 46.6 million in 2005. Thanks to Medicaid and SCHIP, the number of children without health insurance has declined or remained flat during much of this period of rising uninsurance. But the most recent data from the Census Bureau finds that the number of uninsured children increased in 2005 to 8.3 million, up from 7.9 million in 2004. (U.S. Census Bureau, August 2006) This troubling development will only grow worse if Congress fails to address the SCHIP funding shortfall. Congress can and should increase SCHIP funds to ensure that the 610,000 children at risk of losing health coverage remain insured.

17 States Face Federal SCHIP Funding Shortfall for FY 2007

State Projected Shortfall
Alaska $8,930,000
Georgia $112,951,000
Illinois $234,418,000
Iowa $15,439,000
Louisiana $3,748,000
Maine $550,000
Maryland $64,586,000
Massachusetts $124,398,000
Minnesota $30,335,000
Mississippi $37,519,000
Missouri $26,652,000
Nebraska $10,982,000
New Jersey $150,001,000
North Carolina $16,930,000
Rhode Island $41,480,000
South Dakota $2,475,000
Wisconsin $6,718,000
Total $888,111,000

Source: Center on Budget and Policy Priorities, September 21, 2006.