GEORGIA CONSIDERS HOW TO ADAPT TO SCHIP FUNDING SHORTFALL

GEORGIA CONSIDERS HOW TO ADAPT TO SCHIP FUNDING SHORTFALL

Volume 28, Issue 486 March 5, 2007

Anna C. Spencer

While Congress debates the reauthorization of the State Children’s Health Insurance Program (SCHIP), states that are facing budget shortfalls are facing hard choices. On March 11, for example, Georgia will freeze enrollment in its SCHIP, PeachCare for Kids. Unless Congress acts, Georgia—which confronts a $131 million shortfall in federal SCHIP funding—will be one of 14 states that will run out of program funds before the next federal fiscal year begins.

Roughly 273,000 children are covered by PeachCare. Each month, between 3,000 and 5,000 children enroll in the program, which means that through October, 12,000-15,000 children will be denied PeachCare coverage because of the freeze. While the state has sufficient funds to cover its portion of the program costs, without the federal matching dollars, Georgia “had no choice but to freeze enrollment until further notice,” said Rebecca Kellenberg, director of eligibility and quality control for PeachCare for Kids and Medicaid. “PeachCare can’t continue to accept new kids into the program.”

The potential federal funding shortfall is leading state legislators to consider a number of other measures to control growth in PeachCare. In early February, House Speaker Glenn Richardson introduced a bill (HB263) that would lower the income eligibility for PeachCare. Currently, children in families with annual incomes of up to 235 percent of the federal poverty level (FPL) are eligible; the bill would lower that to 200 percent of FPL.

“Until Congress steps up and fulfills their commitment to the people of Georgia, it is prudent to take some steps now to ensure that we can continue to provide PeachCare to our citizens,” Senator Richardson told the Atlanta Chronicle. If enacted, the bill would affect about 5.3 percent of PeachCare enrollees, resulting in nearly 15,000 kids losing coverage. Nearly 70 percent of PeachCare beneficiaries have incomes lower than 150 percent of the poverty level.

In addition, on February 23, the Senate’s PeachCare Task Force released an outline of reform proposals, which includes raising premiums from 0.7 percent of household income to 1.5 percent; instituting a $25 co-pay for preventable emergency room visits; and, including basic dental coverage in the plan (exams, x-rays, preventive care), but making comprehensive dental and vision care an optional add-on. Georgia Rep. Ron Stephens introduced HB620, which would move the poorest children from SCHIP to Medicaid. The proposed legislation would expand eligibility for the state’s Medicaid program to children birth through age one in families with incomes up to 200 percent of the FPL, and children ages one through 18 in families with incomes up to 150 percent of the FPL.

The reauthorization crisis notwithstanding, a number of factors are putting extra stains on PeachCare. Between 2000-2004 there was a 7.7 percent decline in the number of Georgia employers offering health coverage to their employees, compared to the national average of 4.9 percent. At the same time, the state experienced a 27 percent jump in population growth. Georgia is the ninth largest state in the Union, and PeachCare is the nation’s fourth largest children’s health insurance program. An estimated 100,000 Georgia children are eligible but not enrolled in PeachCare, leaving “no end in sight for potential growth in the number of kids who need coverage,” said Kellenberg.

Georgia officials say the state also is at a disadvantage because the formula used to calculate state allotments is “flawed”—funding is based in part on the number of low-income and uninsured children. Because the state has “been so successful in implementing the SCHIP program, the number of uninsured children has decreased, which means funding [per enrollee] has decreased but the need has remained the same,” said Kellenberg. “It is our hope that Congress will address the inequities in the current funding formula by, at the least, adding a cost-of-maintenance factor.” (Georgia is not alone in being critical of the funding formula, but other states want to change other specific provisions.)

Federal Action?

Lawmakers on Capitol Hill have been debating whether to provide stopgap funding for states with SCHIP budget shortfalls, even before they take up possible changes to the funding formula. In response to these rumblings, the Georgia Legislature announced March 2 that it would take a two-week hiatus, putting on hold any deliberations about reforming the PeachCare program. “We’re trying to give Congress a chance to act,” House Majority Leader Jerry Keen said at a press conference. Federal lawmakers are currently considering a supplemental appropriations bill that, among other things, would give $750 million to states with SCHIP budget shortfalls through the end of September 2007.