New Jersey could be forced to scale back efforts to provide health coverage to low-income children and parents starting next month unless Congress closes shortfalls in the State Children's Health Insurance Program (SCHIP). The federal government's Fiscal year starts October 1 and so far adequate funding for SCHIP has not been put into the budget. Without sufficient funding being added before Congress adjourns in December, New Jersey and at least 17 other states face shortfalls that jeopardize SCHIP coverage.

Health care coverage for children and their parents under these programs is critical for low-income working people, so it is essential that Congress acts. Gov. Jon S. Corzine joined 11 other state governors in a letter to President Bush urging that the money be added. "If it fails to send states this money, Congress will be failing children across the nation," said NJPP President Jon Shure

Through the NJ FamilyCare program, New Jersey provides health coverage to roughly 121,000 children and 45,000 parents. Eligibility is based on income level; the lowest-income families get are covered at no charge to them and others pay on a sliding scale. The state projects it will need $304 million in federal SCHIP funding next year to maintain the program at its current level, but only $105 million will be available unless additional federal funds are allocated.

The Washington-based Center on Budget and Priorities estimates that about 500,000 children nationally could lose coverage as a result of this funding shortfall. The Center found New Jersey's potential shortfall to be the second highest in the nation.

Without the additional funding, New Jersey faces choices that include: reducing enrollment in NJ FamilyCare, cutting back on the health care the program provides, charging low-income families much more for health care or reducing payments to health-care providers. These changes could significantly reduce low-income children's access to needed health care. If New Jersey were to cut enrollment, large numbers of the children dropped from the program could lose their health coverage entirely and become uninsured.

Last year an NJPP report disclosed that many employees of the state's largest and most profitable businesses and their family members are in FamilyCare-in many cases because employers do not offer coverage. Losing SCHIP funding would only worsen the plight of these people.

A funding shortfall would undermine progress New Jersey has made to expand the number of children and parents participating in NJ Family Care. When the federal government enacted SCHIP in 1997 to respond to the lack of health coverage for growing numbers of children, New Jersey established the NJ Kid Care program. FamilyCare replaced it 2000. Eligibility for children was set at 3.5 times the federal poverty level, the most inclusive standard in the nation. Eligibility for parents was set at twice the poverty level adults with no children also could participate if their income doesn't exceed the poverty level.

Because of the large number of low-income persons in the state who needed health care coverage, costs of the program quickly escalated. To limit expenditures, changes were made in NJ FamilyCare, such as limiting eligibility to parents and other adults who were already enrolled in or had applied for, the program as of June 14, 2002. However, because parents could no longer apply for the program, enrollment of children also suffered. In addition, the cost of charity care provided by hospitals increased. In response, most of the cutbacks were restored in state legislation enacted in 2005. As a result, there has been a significant increase in the number of children and parents served in this program.

Because New Jersey had been ahead of other states in enrolling children and parents in NJ FamilyCare, it has received more federal support than most states. Not only does New Jersey spend its entire annual SCHIP allotment, it has been eligible for SCHIP funds not used by other states, which helped to fund expansion of the state program. However, these reallocated funds have been diminishing over the years, creating the urgent need for Congress to increase annual allocations to states to meet the growing need for health care insurance.

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