Analysis: Congress gives healthcare gift

WASHINGTON, Dec. 11 (UPI) -- Congress delivered a last-minute holiday package over the weekend for 600,000 low-income children who faced losing their government-sponsored health insurance coverage, but they will still be at the mercy of congressional "grinches" next year.

An 11th-hour deal in Congress allowed the State Children's Health Insurance Program to redistribute $275 million from states with unused funds to states facing shortfalls. The language was added to a House bill on National Institutes of Health funding just before Congress adjourned over the weekend.

"This is good news for children," said Mary Ann McCaffrey, chair of the committee on federal government affairs at the American Academy of Pediatrics.

"It's a real holiday present," she told United Press International.

Without the additional funding, which was cut out of earlier year-end healthcare legislation during a series of closed-door meetings, 14 states would have run out of federal funding to continue covering children already enrolled. But even with the additional funds, the program is slated to run out of money in May 2007, and the entire program must be reauthorized by the next Congress for the first time since it was created 10 years ago.

The estimated cost of maintaining current enrollment in the program, which provides coverage for about 4 million children whose family income is too high to qualify for Medicaid, is an increase of $900 million over the current annual budget of just over $5 billion, meaning more bailouts will be needed next year.

"This is a welcome development because Congress previously wasn't going to address SCHIP at all," Edwin Park, senior health policy analyst at the think tank Center on Budget and Policy Priorities, told UPI. "But it constitutes only a stop-gap measure.

"If Congress does not act very early on in 2007 to address the remainder of the shortfall, states will either have to find more money, or cut back on coverage for children."

The bill, passed with broad bipartisan support, has good prospects for reauthorization, but a quirk of the program's funding threatens to undermine it.

Under entitlement programs like Medicaid, the federal government must provide sufficient matching funds to states to cover all eligible enrollees. In contrast, the SCHIP program is funded through block grants to states, which then set their own eligibility guidelines.

Funding shortfalls in states with large uninsured populations and high costs of living have been offset by redistributing unused funds from other states. But unused funds are dwindling as former surplus states expand their programs. Studies have found that more than two-thirds of the nation's roughly 9 million uninsured children are eligible for coverage through SCHIP or Medicaid, and as states seek out and enroll those children, more of available funds are being used.

States with tight eligibility requirements, like Utah, are also increasingly concerned about seeing their funds sent to states like New Jersey, which covers children in families with incomes up to $75,000 per year and has also extended coverage to their parents.

Even in order to push through the stop-gap funding, supporters of the program had to agree to cap the funding, leaving the state of Texas at $20 million to appease Rep. Joe Barton, R-Texas, chairman of the House Energy and Commerce Committee, which has oversight over national insurance.

This year Congress merely authorized the distribution of funding it were already expecting to spend on the program, Joseph Antos, a health economist at the conservative American Enterprise Institute, told UPI. Next year it will have to find more money if the program is going to continue to serve even the same number of children, given the high rate of inflation for healthcare.

"It will be difficult to find funding next year, even though members of Congress on both sides of the aisle like (SCHIP)," he said.

The problem will be compounded by the fact that Congress will face two shortfalls next year, Rachel Klein, deputy director of health policy at patient advocacy group Families USA, told UPI. The first will come in May when the emergency funding runs out, and the second later when Congress must reauthorize the program.

"The shortfall is a problem that gets worse every year," she said. "We need to give the program enough funding to keep the kids currently enrolled, but also to finish the job SCHIP started by enrolling all eligible uninsured children -- and that will take more money."

With so many seats in Congress changing hands, SCHIP supporters will have to step up their lobbying efforts to make sure new members know how important the program is to children, said APP's McCaffrey.

But for now, "everybody looks like Santa Claus," she said.