Senator Eliot Shapleigh - El Paso, Texas

As practically everyone is aware, health care costs have been soaring over the past several years along with corresponding increases in health insurance premiums. Even though health care spending has slowed lately, American consumers are being required to shoulder a greater share of their own costs. Spending in 2005 (latest data) on medical care set a new U.S. record of $1.99 trillion, which is about 16 percent of the nation's economic output.

The Centers for Medicare and Medicaid Services recently noted that federal and state governments currently pay around 40 percent of all health bills. American households provide about 31 percent of costs through private insurance premiums, taxes, deductibles and out-of-pocket expenditures.

Unfortunately, approximately 5.5 million Texans, or one out of every four, do not have health insurance, and that's the highest rate in the nation. There are another 3 million or so covered only by Medicaid or the Children's Health Insurance Program (CHIP). To be eligible for CHIP, a family must earn too much money to qualify for Medicaid, yet not enough to afford private health insurance for the children.

The monthly income levels to qualify for assistance differs depending on the number of family members, but ranges from around $800 for one household member to $2,800 for eight or more for Children's Medicaid and $1,634 to $5,600 for CHIP.

In 1997, Congress authorized a block grant to fund the state Children's health Insurance Program (SCHIP), known in Texas as CHIP. Monies were provided to each state based on perceived need. The law mandated a state had to spend its annual SCHIP block grant within three years. Funds not used would be returned and redistributed among those states that spent their full allocations.

In the early years of the program, Texas lapsed (lost because it didn't spend) substantial funds, primarily because of late implementation. (Block allocations started in fiscal year 1998, but the program did not begin in the Lone Star State until May 2000.)

The need in Texas was significant, and for the first three years following implementation, there was record enrollment. In 2003 the Texas Legislature passed numerous bills designed to reduce enrollment and spending, primarily through changes in eligibility rules. Similar procedures were enacted in 22 other states.

These actions resulted in enrollment in the CHIP program dropping some 36.4 percent over the next two years, which amounted to more than 185,000 children. Since June 2005, the number of children enrolled in the program has fluctuated around the same level -- 326,500.

Before the 2003 Texas Legislature cuts, the Texas Health and Human Services Commission (HHSC) projected a funding shortfall to occur sometime between late 2006 and 2008. The legislative changes prevented this from happening, but it also meant that the state lapsed SCHIP funds because it did not spend all that the federal government had allocated. The excess, of course, was returned and redistributed to those states that had spent their allotments.

Next month, some $20 million is scheduled to lapse in Texas. These funds added to the previous lapsed monies total more than $913 million. In other words, Texas has given away to other states more than three times the $288 million in federal SCHIP funds provided the state in 2005 to run the CHIP program.

Congress is scheduled to debate the reauthorization of the block grant sometime this year. If Congress provides only enough money to support current enrollment, hundreds of thousands of children will still miss out on health care assistance. Texas needs to make very effort to counter the possible attempts to reduce the SCHIP allocation based on the state's current enrollment.

One step being made in this regard is the introduction of House Bill 729, which seeks to return the eligibility requirements for CHIP to the pre-2003 level. In doing so, the state would not be out any extra money, according to data collected by the HHSC, which indicated that during the 2006 budget year, the state left unspent some $400 million in state funds dedicated for CHIP and Medicaid. Those dollars would cover all the children who have lost CHIP coverage.

Since the reason the 2003 bills were enacted was to decrease the budget deficit, and since the state now has an approximately $14 billion surplus, perhaps consideration might be given to using some of those funds to provide health care coverage for the state's most valuable asset -- our children.