The Senate Finance Health Subcommittee held a hearing Tuesday to discuss issues related to the approaching reauthorization of SCHIP -- including financing, funding distribution and how states can use their allotments -- CQ HealthBeat reports. SCHIP was created in 1997 as part of the balanced-budget law to help states provide coverage for children in families whose annual incomes are too high to qualify for Medicaid but too low to afford private insurance. The law provides coverage for families with annual incomes up to 200% of the federal poverty level. Witnesses at the hearing spoke of the program's success in reducing the number of uninsured children by one third, as well as the program's steadily growing enrollment. Sen. Edward Kennedy (D-Mass.), co-creator of the program, testified that SCHIP "has been an extraordinary success by any measure" but said that more must be done to enroll some of the 8.4 million uninsured children in the U.S. in either SCHIP or Medicaid. He also testified that rising health care costs mean an additional $12 billion will be needed between 2008 and 2012 to "just break even" with existing SCHIP funding levels. CMS Administrator Mark McClellan testified that there are plenty of surplus funds to account for necessary program expenditures. However, Chris Peterson, a specialist in social legislation for the Congressional Research Service, said 40 states currently spend more annually than they receive in their annual SCHIP allotment. No shortfalls have yet been reported by those states because they have been able to use funds and redistributed money, but shortfalls will become more likely over time, Peterson said. According to a statement from Jocelyn Guyer, senior program director at the Center for Children and Families, "We are at significant risk of losing our recent gains and missing the chance to move forward if we do not confront SCHIP funding shortfalls" (Carey, CQ HealthBeat, 7/25).

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