Abstract
In order to better inform the debate as federal policymakers prepare to reauthorize the State Children's Health Insurance Program (SCHIP) in 2007, this brief analyzes the key components of the financing structure of SCHIP including capped federal block-grant funding, the methodology for determining state's allotments of federal funding, the period of availability of allotments, and the redistribution of unspent funds. In addition, estimates presented in this brief indicate that under Congressional Budget Office baseline assumptions, SCHIP is reauthorized but annual SCHIP funding will be permanently frozen at $5.04 billion without any increases for population growth or healthcare inflation. As a result, states will suffer an aggregate federal SCHIP funding shortfall of $10.4 billion to $12.1 billion over the 5-year period from 2008 through 2012, thus placing SCHIP coverage of many low-income children at significant risk. As part of SCHIP reauthorization, federal policymakers should include substantial increases to SCHIP funding above baseline levels to avert these shortfalls.