PeachCare facing money crunch

ATLANTA - Georgia's PeachCare for Kids program will run out of federal funds in January, threatening health insurance coverage for 250,000 children, unless Congress acts to redistribute the money, state health officials warned this week.

"The money is there. It can be reallocated,'' Dr. Rhonda Medows, Georgia's commissioner of community health, told members of the agency's board Thursday. PeachCare began during the late 1990s as Georgia's version of a new children's health insurance program enacted by Congress.

It covers children in families with incomes too high to qualify for Medicaid but who can't afford private health insurance and don't get it through their jobs.

The federal government provides 73 percent of the program's funds.

Carie Summers, chief financial officer for the Department of Community Health, said the program is financially sound at the federal level.

However, the formula the feds use to allocate the money to states hasn't been changed since the program's inception, she said.

As a result, Georgia and 17 other states are facing a shortfall early in the upcoming federal fiscal year, while some states are rolling up surpluses, Summers said. Texas, for example, is looking at a surplus of $1 billion, she said.

Medows said the formula is based on the number of children in each state who are uninsured. In effect, she said, Georgia is being punished because PeachCare has been doing a good job covering kids.

"The formula actually penalizes us,'' she said. "The more children we move in (to PeachCare), the less our allotment.''

Medows said Gov. Sonny Perdue has brought up the issue with Health and Human Services Secretary Mike Leavitt, and she has discussed it with officials from the Centers for Medicare and Medicaid Services, an agency within HHS.

She said the National Governors Association is urging congressional delegations in the affected states to address the problem.

A lot of money is stake. Georgia's projected PeachCare shortfall is $141 million for the current state fiscal year and $179 million for fiscal 2008, which starts next July, according to figures released by the DCH.

Medows said that if Congress doesn't act, the state could be forced to pick up that shortfall, either through a general budget appropriation or by diverting Medicaid funds into PeachCare.

"We don't have a choice,'' she said. "We cannot disenroll these children.''