Texas Kids Need CHIP: Can Texas Show Them the Federal Money?

By Melanie R. Margolis

The years of outreach efforts for the State Children’s Health Insurance Program (CHIP) were paying off. Enrollment in and awareness of the CHIP program were on the rise. In Texas, enrollment in CHIP rose from 358,163 children in June 2001 to 526,690 children in June 2002. See http://www.hhsc.state.tx.us/research/CHIP/ChipRenewStatewide.html. According to an Urban Institute report on July 31, 2003, the share of low-income uninsured children nationwide whose parents had heard of their state's CHIP program increased from 47.2% to 70.6% between 1999 and 2002, indicating a CHIP awareness increase of 23.3%. See http://www.urban.org/urlprint.cfm?ID=8497#fig2.

At the same time that states were working hard to get the word out about CHIP to families who were eligible, Texas was on the road to a budget crisis. At the start of the 78th Legislative Session in January 2003, State Comptroller Carole Keeton Strayhorn let it be known that the state faced a $9.9 billion shortfall. See Welcome Legislators; A $9.9 billion job awaits, Austin American-Statesman, Jan. 14, 2003. During the Legislative Session, CHIP suffered some changes, a casualty of these state budgetary problems. The changes to Texas CHIP included, for example, a 90-day waiting period and a six-month enrollment period replacing the one-year enrollment period. The Texas Health and Human Services Commission has estimated that the legislative changes to CHIP will result in the elimination of between 157,000 and 169,000 children, about one-third of the total Texas enrollment, from the program by 2005. See Texas ranked at bottom in insuring kids, Houston Chronicle, June 11, 2003, at A32; Leaders put a positive spin on legislation, Houston Chronicle, June 4, 2003, at A25.

As Texas is scaling back its CHIP spending, the federal government comes along and makes available additional matching funding. On August 15, 2003, President George W. Bush signed into law H.R. 2854, extending the availability of certain CHIP funds to states. Untapped federal CHIP funds for fiscal years 1998 through 2001 will be made available to states rather than simply be retained by the federal government. H.R. 2854 states that:

[o]f the amounts allotted to a State…for fiscal year 2000 that were not expended by the State by the end of fiscal year 2002, 50 percent of that amount shall remain available for expenditure by the State through the end of fiscal year 2004….

[o]f the amounts allotted to a State…for fiscal year 2001 that were not expended by the State by the end of fiscal year 2003, 50 percent of that amount shall remain available for expenditure by the State through the end of fiscal year 2005.

See http://thomas.loc.gov/cgi-bin/query/z?c108:H.R.2854:. The other half of the unused funds would be made available to states that spent their full allotment of CHIP funding. States will also have the opportunity until the end of fiscal year 2004 to access some of their unspent funds from fiscal years 1998 and 1999 that were lost at the end of fiscal year 2002. According to Families USA, this reallocation could mean up to $124 million for Texas CHIP. See http://www.familiesusa.org/site/DocServer/SHIP_Fix_Aug_7_2003.pdf?docID=1441.

The problem is that the newly available funds do not just automatically flow into Texas CHIP. CHIP remains, as it has always been, a matching program. Unless Texas spends adequate funds on CHIP to trigger the federal match, the state’s children will not benefit from the newly available funds. After the setbacks the program suffered in the 78th Texas Legislature, Texas is spending less on CHIP, and all the state’s federal CHIP money was not being drawn in years past. Over the years, Texas has left some $618 million in federal matching funds on the table by not spending enough money on CHIP for the federal funds to kick in. See Chipping Away: Texas racing to the bottom on children’s health care, Houston Chronicle, August 26, 2003, at A18. The federal government has made funding available, but Texas has a long way to go before Texas kids will benefit from it.