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Texas Won't Benefit From Redistributed CHIP Money

By J. Lyn Carl,

Austin, TX –

The good news: Twenty-eight states were informed today of additional federal funds for their children's health insurance programs as U.S. Secretary of Health and Human Services Tommy Thompson announced the redistribution of more than $640 million in unspent State Children's Health Insurance Program (SCHIP) funding.

The bad news: Texas is not among those 28 states.

The redistribution of funds, according to Thompson, is to help states avoid funding shortfalls in programs providing health insurance for children of low-income families.

When federal SCHIP funds are allocated, states generally have three years to spend their allotment. While the U.S. Congress in the past has allowed some of the unspent funds to be redistributed to states that have used up all of their allocation, this year Thompson authorized redistribution of unspent funds from 2002 to states that needed additional funding to meet their needs.

Texas, which from November 2004 estimates is expected to spend $316 million on its Children's Health Insurance Program (CHIP), was not expected to have a shortfall of funding.

Texas' unexpended FY 2002 allotment of funds totaled more than $1.4 million, but the state did not receive any of the 2002 redistribution allotment.

"No child will lose health insurance because states don't have funds to administer a program that is critical to kids who would otherwise not have regular access to health care," Thompson said as he announced the redistribution.

Only five states indicated they would have run out of federal funding for their children's health insurance programs without the additional funds - Arizona, Minnesota, Mississippi, New Jersey and Rhode Island.

"I am very pleased that we can take action to prevent any loss or break in coverage because program funds weren't being used by states that need them the most," said Mark McClellan, M.D., Ph.D., administrator of the Centers for Medicare and Medicaid Services and son of Texas State Comptroller Carole Keeton Strayhorn. The agency McClellan heads oversees the SCHIP program. "We intend to do as much as possible to use SCHIP funds to improve access to coverage, and even with this redistribution, we expect to complete the 2005 fiscal year with over $5 billion in unspent federal matching funds," he said.

The reallocated 2002 funds are being made available to the states today.

The SCHIP began in 1997 as a partnership program between the state and federal governments. There are currently some 5.8 million children in the country who are part of the program. They qualify because their families earn too much for traditional Medicaid eligibility, but do not earn enough to be able to participate in health insurance benefits through their employer or to purchase insurance policies from private sector offerings.

In Texas, lawmakers in the 78th Legislature cut some funding for the Texas CHIP program, and made changes to policies and procedures as well, as the state dealt with a more than $10 billion budget shortfall. As a result, thousands of Texas children previously enrolled in the program dropped off the rolls.

As the 79th Legislature began last week, the state's leadership and numerous members of the Texas Legislature announced their intentions to restore funding cut last session for dental and vision benefits for CHIP enrollees. The Legislative Budget Board, in its base budget released last week, proposed a $2.4 billion increase in Medicaid and other health and human services spending, which includes CHIP funding.