WASHINGTON – Maryland lost its shot at $23 million in funding for the state children’s health insurance program Friday when $1.1 billion in unspent federal money for the program was returned to the Treasury.
Unless Congress steps in, this will be the first year since the State Children’s Health Insurance Program began in 1997 that the federal government will not redistribute money that was left over at the end of the fiscal year.
Normally, states that have not spent their full allotment have that money sent to other states — like Maryland — that have depleted their portion. Cutting off that transfer from other states will severely hurt Maryland’s program and the 100,000 kids it serves, said John G. Folkemer, Medicaid director for the state health department.
Folkemer said that if the feds make a practice of hanging on to that left-over money, Maryland could run out of funds for the program by 2007 — although he called that a worst-case scenario.
“We’re not expecting that that would happen,” Folkemer said.
The Maryland Children’s Health Insurance Program, or MCHIP, is part of the federal program that provides coverage for children whose families make too much money to be eligible for Medicaid, yet cannot afford private health insurance.
In Maryland, the federal government puts up 65 percent of the funding for the program and the state puts up the remaining 35 percent. But the majority of the federal government’s share comes in later rounds of funding, which draws on money that was allocated to other states but not spent because they could not make the local match.
In fiscal 2004, which ended Thursday, Folkemer said the state spent $169 million. Of that, the federal government put up $110 million and the state put up the rest. But the original allotment from the feds was $48 million — the other $62 million came only after other states could not spend their shares.
“Maryland got nowhere near the amount of CHIP money that we needed,” Folkemer said.
Congress in July proposed giving states more time to use their fiscal 2004 funds, as it has in the past. But the White House opposed the move this year.
President Bush intends to use the money for outreach, specifically his new “Coverage for Kids” program that will find children eligible for SCHIP and get them enrolled.
Congress can still reallocate the expired $1.1 billion retroactively as it has done in the past, Folkemer said. But in the meantime, the state has made recipients aware of the possibility that they may lose funds.
Families that earn up to 200 percent of the poverty level can be transferred to Medicaid coverage if they lost MCHIP coverage, he said, but that would cost the state more. Those who made more than twice the poverty level may lose medical coverage, unless the state finds a way to cover their medical costs, Folkemer said.
Advocates oppose the president’s outreach program, and say states should have adequate funding before trying to increase enrollment.
“How can you talk about outreach when funding is at risk?” asked Edwin Park, an analyst for the Center on Budget and Policy Priorities.
Because of dwindling funds and increasing medical costs, even the proposal to extend the deadline for SCHIP spending will not solve the growing funding problem facing states, Park said. But it would provide temporary aid to the states in the most immediate danger of losing funding and give Congress time to develop a long-term funding solution, which is what SCHIP needs the most, he said.
Park calculated that Maryland will have insufficient funds for MCHIP by fiscal 2006, he said. Nevertheless, unless Congress can pass a bill that the White House approves, losing the $1.1 billion will severely hurt Maryland and the rest of the country.
“It’s quite worrisome that things won’t be done,” Park said.
-30- CNS 10-01-04