Budget Reconciliation: Projections of Funding in the State Children's Health Insurance Program (SCHIP)

Publication Date: October 2005

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Health

Type:

Abstract:

In FY2005, six states faced the prospect of running out of federal funds in the State Children's Health Insurance Program (SCHIP). This was the first time since the program's creation in 1997 that multiple states faced such a shortfall. The shortfalls were avoided by the redistribution of funds from other states' original SCHIP allotments that had not been spent by the end of the three-year period of availability.

However, in FY2006, the available unspent original allotments are projected to be inadequate to cover the other states' shortfalls. Under current law, more than a dozen states are projected to exhaust their federal SCHIP funds in FY2006, even after the redistribution of unspent funds from other states. In FY2007, the number of states facing shortfalls and the size of those shortfalls grow as the pool of unspent allotments shrinks.

To address this, the reconciliation proposal approved by the Senate Finance Committee would reduce the period of availability for original allotments from three years to two. This would dramatically increase the amount of unspent original allotments available for redistribution to shortfall states. According to the intermediate-demand scenario in the Congressional Research Service (CRS) SCHIP Projection Model, the proposal is projected to eliminate the shortfalls in FY2006 and nearly do so in FY2007. Even after the reduction of funds from this shortened period of availability, states losing additional original allotment funds under the proposal would still have, on average, nearly double the amount of funds necessary to cover their projected demand for federal SCHIP funds in FY2006 and FY2007.

The results based on the CRS SCHIP Projection Model could change as new data become available or as changes are made in the legislative language. If either occurs, this report will be updated as necessary.