NEW YORK (AP) -- Forty states including Minnesota may have to give up hundreds of millions of dollars of federal money earmarked for health insurance for children in low-income families because they haven't used all their allotted funds, The New York Times reported Sunday.
About 45 percent of the $4.2 billion provided in 1997 by Congress hasn't been spent by the states, state and federal officials said.
Any money left after a Sept. 30 deadline will be redistributed to the 10 states that used their full allotments of federal money under the Children's Health Insurance Program, a program created by Congress in 1997.
States may not use the new federal money to cover children eligible for Medicaid. This has created problems for states like Minnesota and Washington, which expanded Medicaid eligibility before 1997 and were already covering most low-income children.
Minnesota has spent less than $500,000 of its $28.4 million allotment. Washington State has spent $2.2 million of its $46.7 million allocation.
"We did something progressive, but we did it too early," Mary B. Kennedy, the Medicaid director in Minnesota, told the Times.
California and Texas -- which together have 29 percent of the nation's 11 million uninsured children -- stand to lose $590 million and $446.3 million, respectively.
The states that have used all of their allotments -- Alaska, Indiana, Kentucky, Maine, Massachusetts, Missouri, New York, North Carolina, Pennsylvania and South Carolina -- will have one year to spend the extra money, after which it will revert to the Treasury.
The Children's Health Insurance Program was designed to help children in families with too much income to qualify for Medicaid and too little to afford private insurance.
Congress in 1997 committed to providing a total of $40 billion for the program nationwide over 10 years. States had three years beginning Oct. 1, 1997, to use the first year's installment of $4.2 billion.
State officials say the program provides care to more than two million children while stimulating improvements in Medicaid. But spending has lagged behind expectations.
Officials in 20 states say they encountered major problems implementing the program because in some cases it took more than a year to start enrollment; some states couldn't find enough eligible children, and others said the complex application procedure deterred enrollment.
"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," said William N. Lindsay, head of the board that supervises the program in Colorado.
Some states complained that the federal government administered the program in such a rigid, inflexible way that it prevented them from spending the money for children who might have benefited.
"The federal law and regulations provided New Mexico with a lot more money than we could possibly use," complained J. Barry Blitzer, deputy secretary of the Human Services Department in New Mexico. "We have 30,000 uninsured kids, of whom no more than 1,000 are eligible for the new program."
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