NCPA - National Center for Policy Analysis


December 14, 2007

With Congress deadlocked over the reauthorization of the State Children's Health Insurance Program, policymakers should set clear criteria to avert a federal taxpayer bailout of states that have mismanaged their S-CHIP programs, says Nina Owcharenko, a senior policy analyst with the Heritage Foundation.

So far, Congress has passed two continuing resolutions that provided temporary assistance to the states to maintain their programs.  This method of redistributing S-CHIP funds is deeply flawed, says Owcharenko:

  • Congress does not take into account whether a state's shortfall is a result of exploiting the current process or meeting a genuine need.
  • For example, of the 21 states projected to face a shortfall in fiscal year (FY) 2008, nine have S-CHIP programs that exceed the income eligibility threshold and/or cover adults.
  • In addition, based on Congressional Research Service (CRS) estimates of the timing of the funding shortfalls, nearly all of these nine states would be first in line to receive a bailout.
  • These overextended programs also account for the lion's share of the total shortfall; of the $1.6 billion shortfall projected by the CRS, close to $1.4 billion is associated with these nine states.

Of course, Congress does have the power of the purse; it enjoys full authority under the Constitution to raise revenue and direct federal spending, says Owcharenko.  However, Members must remain accountable for how they spend the taxpayers' money.  In the case of S-CHIP, the distribution of federal tax dollars is neither fair nor reasonable.

In extending S-CHIP for FY 2008, priority should be given to those states that have stayed within the intent of the original S-CHIP law.  This common-sense, fiscally responsible approach is best for taxpayers and for the population that S-CHIP was designed to serve.

Source: Nina Owcharenko, "SCHIP: Congress Must Stop Another State Bailout," WebMemo No. 1732, Heritage Foundation, December 11, 2007.


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