SCHIP, a federal health insurance program for low-income children and pregnant women, has been making news lately (CQ ($) has a good article on it). Here's a quick rundown of what's been happening: SCHIP is facing an urgent budget shortfall. Rep. David Obey (D, WI), Chairman of the House Appropriations Committee, announced yesterday that he will add about $750 million in SCHIP funding to a supplemental appropriations bill, whose primary purpose is war funding, that Congress will soon take up. Obey said that the temporary funding increase will be enough to stave off immediate cuts. However, the supplemental is expected to pass in early May- by which time some states may have run out of SCHIP funding. Georgia's SCHIP program, for example, is expected to hit a funding shortfall beginning in March. In the long-term, SCHIP still faces budget imbalances, and does not (and never did) have enough money to offer coverage to all eligible children. The program comes up for reauthorization this year, and lawmakers are working on a redesign that would at least provide enough funding to cover the same number of children who are now in the program for the next five years. Maintaining current service levels could cost between $12 to $15 billion- a relatively small amount of money in the context of budgets in the neighborhood of $3 trillion. In the FY08 budget proposal, the Bush administration asked for only an additional $5 billion, and has proposed shifting more costs to the states. Other plans are circulating to expand coverage to all eligible participants- about 6 million more children. A full expansion is estimated to cost about $45 to $60 billion over five years. And since SCHIP is subject to PAYGO, the rule that requires deficit-neutral mandatory spending, all that money would have to be offset with new revenues or spending cuts. Sen. Gordon Smith (R-OR) has called for a higher federal cigarrette tax to pay for an SCHIP expansion- what may be the first time a Republican has sincerely suggested raising taxes in recent memory.