CHIP: 40 States Will Return $1.9B in Unspent Funds

      Forty states are expected to lose $1.9 billion in CHIP funding at the end of this month because they failed to spend the full amounts the federal government gave them in 1997, the New York Times reports. After CHIP was approved, Congress provided a total of $40 billion over 10 years for states to set up and administer programs, and gave states three years to use the first year's installment of $4.2 billion. According to state and federal officials, 45% of that first installment, or $1.9 billion, will be left over by the end of the month. California and Texas, which together account for 29% of the nation's 11 million uninsured children, account for more than half the unspent funds. States gave various reasons for not spending the entire allotment, including reluctance to spend state money to obtain the full federal allotment, inability to find enough eligible children to use the entire allotment and unintentionally delaying enrollment by using "complex" application processes and forms. Because federal regulations prevent states from covering Medicaid-eligible children under CHIP, states such as Minnesota and Washington, which had expanded Medicaid eligibility before CHIP's inception in 1997, were already covering most low-income children. Other states have argued that the federal government administers CHIP "in a rigid, inflexible way," preventing them from using the money. However, 10 states -- Alaska, Indiana, Kentucky, Maine, Massachusetts, Missouri, New York, North Carolina, Pennsylvania and South Carolina -- have spent their entire allocations. As a result, the government will give those states the $1.9 billion in unspent funds, which they have until Sept. 30, 2001, to use.

States That Will Lose Money
      The following is a sample of states expected to lose funding and the reason for the forfeiture:

• Colorado: The state has spent $22.7 million of its $41.8 million allotment and expects to lose $19.1 million. William Lindsay, president of the Child Health Policy Board in Colorado, said, "If we enrolled every single eligible child in Colorado, we still couldn't spend our full allocation of federal money. Our economy is doing so well, there are fewer eligible kids than what was estimated when the federal government did its initial allocation of money."
• Louisiana: The state expects to lose $63.7 million of its $101.7 million allocation. State Sen. Donald Hines (D) said that Louisiana "had difficulty coming up with state matching money," after experiencing a budget shortfall over the last two years that led to recent cuts in the state's health and hospitals budget.
• New Mexico: The state will leave $57.8 million of its $62.9 million allotment unspent. J. Barry Bitzer, deputy secretary for the state Human Services Department, said that the federal government provided "a lot more money than [the state] could possibly use," as only 1,000 of 30,000 uninsured remaining uninsured children would be eligible for CHIP.
• Florida: The state expects to lose $69 million of its $201 million allotment. Gov. Jeb Bush's (R) spokesperson Justin Sayfie said that the state experienced a "lag in getting the program up and running."
• Illinois: The state used $55 million of its $122.5 million allocation, leaving $67.5 million unspent. Eric Robinson, spokesperson for the state Department of Public Aid, said that "it's unrealistic to think [Illinois] could have used $122 million in three years," adding, "We can't just flip a switch and achieve full enrollment."
• California: The state expects to lose $590 million of a total $854 million. Diana Bonta, director of the California Department of Health Services, said that the state's program "got off to a slow start" under Gov. Pete Wilson's (R) administration, but has since "increased [enrollment] at a brisk pace," from 56,000 to 330,000 (Pear, New York Times, 9/25).