WASHINGTON – The Maryland program that provides health insurance to thousands of low-income children in the state will take a double budget hit this week, with a cut in federal funding and the loss of transferred funds from other states.
Unless those funding sources for the Maryland Children’s Health Insurance Program can be restored, the state will have to find additional resources to keep the program running at its current level, state health officials said.
“Maryland has greatly benefited from unspent funds in the past so it’s really important that they stay in the program,” said Debbie Chang, the deputy secretary for health care financing in the state Department of Health and Mental Hygiene.
The 26 percent reduction in federal funding for the State Children’s Health Insurance Program in fiscal 2003, which begins Tuesday, will cut $1 billion from the program nationally. It is expected to cost Maryland $62.5 million, according to estimates from the Center on Budget and Policy Priorities.
The state will also lose $137.1 million that it expected to get in a federal redistribution of SCHIP funds that went unspent in other states. Beginning this week, states now have to return that money to the Treasury.
SCHIP provides insurance for 4.6 million children nationwide whose parents’ income is too high to qualify for Medicare, but not high enough that private insurance is affordable.
Maryland uses the federal money to cover families who earn up to 300 percent of the federal poverty level, or $54,000 for a family of four. The state has been able to extend coverage to more than 100,000 children since the program began in 1998.
“There are many uninsured children in Maryland. The Maryland Children’s Health Insurance Program gives them access to the basic and essential medical care that children need,” Chang said.
SCHIP was designed so states would have three years to spend their federal allocation. The deadline to spend the money was extended in fiscal 2000, giving 40 states until this week to spend their unused funds.
Congress put a lot of money up front and planned at the outset to cut back at the end of fiscal 2002 — the so-called “SCHIP dip” that takes effect this week.
Edwin Park, a financial analyst for the Center on Budget and Policy Priorities, said the “front-loaded” distribution of federal funding, which allocated money more generously during program’s infant years when many states did not have their programs started, is a big part of the problem.
“Congress gave SCHIP a lot of money up front. Some states took a year or two to get their program started so the money wasn’t spent. Now, when the program needs the money, it has to be given away,” Park said.
Concerned about the hit to the SCHIP, Sen. Lincoln Chafee, R-R.I., and Sen. Jay Rockefeller, D-W.Va., have introduced legislation designed to extend the deadline for states to spend their money until fiscal 2006 and increase overall funding for the states.
The National Governor’s Association has also made SCHIP “one of the top priorities” this year in an effort to “keep money in the program,” said Matt Salo, director of health legislation for the association.
Chang said she is working with the legislators to extend the life of the “unspent” funds that normally would have been redistributed to the state.
State health officials said they would not give up without a fight.
“We’ll do everything we can to make sure that the segment of population that needs medical care the most, gets it,” said J.B. Hanson, a spokesman for the Department of Health and Mental Hygiene. “Maryland is one of the better states when it comes to health coverage and we want to continue that track record.”