If this Congress does not take action soon, nearly 630,000 children may lose their health care. Why? A quirky health care program called the State Children's Health Insurance Program (SCHIP). SCHIP was created in 1997 to shore up Medicaid. It covers children whose families have incomes that exceed Medicaid eligibility levels, but are still struggling to get by. It's been remarkably successful- the share of low-income children who are uninsured has fallen by one fourth since 1997, despite a decline in employer-provided benefits. Many eligible children may get cut off the program now, though, for two reasons: First, health care costs are going up. It costs more to provide insurance for the same number of beneficiaries. Second, SCHIP is a mandatory block grant program (much like the Temporary Assistance for Needy Families- TANF, or welfare). Mandatory block grants are a particular type of mandatory program, whose funding is guaranteed every year. Typically, funding for mandatory programs automatically adjusts according to participation levels and program costs (For example, Medicare is mandatory program whose funding is guaranteed and automatically adjusts- that's why it keeps getting more expensive, despite a Congress and Administration that's hostile to increased spending on human needs programs.). SCHIP has a guaranteed funding level every year- for now, that level is $5 billion. But funding for SCHIP, while guaranteed, does not automatically adjust. It stays flat unless Congress acts. So these two factors have conspired against SCHIP. As costs have risen, it no longer has enough guaranteed funding to cover all the children enrolled, and Congress has yet to raise this level. Some predict that funding shortfalls for FY 2007 may cause states to cut 630,000 children off SCHIP. For more on this dynamic, see this Center on Budget and Policy Priorities (CBPP) paper. Yesterday, the Senate Finance Committee held a hearing on SCHIP. From BNA ($): Those testifying before the Senate Finance Subcommittee on Health received support from current panel chairman Sen. Orrin Hatch (R-Utah) and incoming chairman Sen. John D. Rockefeller (D-W.Va.), with the latter calling for Congress to address the fiscal 2007 shortfall before the 109th Congress adjourns... "In my judgment, Congress should not go home until these shortfalls are filled," Rockefeller said. "Families should not have to spend the holidays wondering if their children will have health insurance come January." The longer we wait to fix SCHIP, the harder it will become for state administrators to fully fund the program. Congress should fix SCHIP funding immediately.