Kids' health funds diverted to adults, GAO says

Lawmakers say practice violates Congress' intent


WASHINGTON - Congressional investigators said yesterday that the Bush administration had improperly allowed states to divert federal money from the Children's Health Insurance Program to provide aid for childless adults, shortchanging children in some states.

Senators said this practice violated the intent of Congress, and they vowed to stop it if the administration did not.

Health care experts said states were stretching the children's health program beyond its original purpose because they were strapped for money and had many people without insurance.

The General Accounting Office said states, such as New York and Maryland, that use their full allotments of federal money for children could suffer as a result of the misuse of federal money in other states.

"Allowing the expenditure of unspent funds on childless adults could prevent the reallocation of these funds to states that have already exhausted their allocations," the GAO report said.

Congress created the program in 1997, with the explicit purpose of providing health insurance to uninsured children in low-income families. The GAO said that using the money to insure adults without children was "inconsistent with the statutory objectives" of the program.

Democratic Sen. Max Baucus of Montana and Republican Sen. Charles E. Grassley of Iowa said states using money for the program, called CHIP, on childless adults were violating the clear intent of Congress.

The GAO said the "impermissible expenditures" reduced the amount of money available to cover children. If money remains unspent in a state, it is redistributed to other states with unmet needs.

As a former governor, Health and Human Services Secretary Tommy G. Thompson has encouraged states to cover more people through creative, innovative use of federal money. In 14 years as governor of Wisconsin, he often expressed frustration with federal officials who delayed or withheld approval for his novel ideas, and as secretary, he has given states more flexibility than they have had in decades.

Thompson has waived many requirements of federal law so states can use money from Medicaid and the children's health program to cover people who would not otherwise be eligible.

But the GAO said Thompson was making these decisions without giving the public an adequate opportunity to comment on the changes.

Leighton Ku of the Center on Budget and Policy Priorities said at least a dozen states had spent their 2000 allotments of CHIP money on children, as Congress intended, and would be shortchanged if other states chose to spend money on childless adults.

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